Radware (RDWR) AI Stock Analysis

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Radware

(NASDAQ:RDWR)

66Neutral

Radware's overall stock score reflects strong revenue growth and strategic initiatives in cloud security, offset by persistent profitability challenges and a high P/E ratio. The positive sentiment from the earnings call, particularly regarding growth in the Americas and cloud ARR, supports the stock's outlook, while technical analysis presents a mixed picture.

Positive Factors

Earnings

RDWR delivered a strong 4Q, beating consensus Rev/EPS by 2%/+$0.03 and guiding 1Q above expectations.

Revenue Growth

Cloud ARR growth inflected back to 19% growth y/y after bottoming at 15% last quarter.

Negative Factors

Cloud ARR Growth Concerns

Investors likely took caution on slowing Cloud ARR growth of 15%, down from 23% in the March quarter.

Market Sentiment

While more constructive on RDWR stock, Hold rating is maintained, pending a consistent trend of Revenue re-acceleration.

Radware (RDWR) vs. S&P 500 (SPY)

Market Cap

$843.49M

Dividend YieldN/A

Average Volume (3M)133.36K

Price to Earnings (P/E)143.7

Beta (1Y)0.78

Revenue Growth5.20%

EPS GrowthN/A

CountryUS

Employees1,137

SectorTechnology

Sector Strength40

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.14

Shares Outstanding42,686,535

10 Day Avg. Volume86,969

30 Day Avg. Volume133,361

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.67

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$27.00

Price Target Upside36.64% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Radware Business Overview & Revenue Model

Company DescriptionRadware Ltd. is a global leader in cybersecurity and application delivery solutions. The company is headquartered in Tel Aviv, Israel, and operates in sectors such as information technology and cybersecurity. Radware's core products and services include application delivery controllers, cloud security services, and application and network security solutions. The company caters to a wide range of industries, including retail, financial services, healthcare, and government, offering solutions that enhance the performance, security, and availability of applications and IT infrastructure.

How the Company Makes MoneyRadware generates revenue primarily through the sale of its cybersecurity and application delivery solutions. The company's revenue model is based on a combination of product sales, subscription services, and maintenance and support contracts. Key revenue streams include the sale of hardware and software products, as well as cloud-based security services. Radware also earns from professional services such as consulting, implementation, and training. Significant partnerships with technology vendors and service providers enhance its market reach and contribute to its earnings by facilitating the deployment and integration of its solutions in diverse IT environments.

Radware Financial Statement Overview

Summary

Radware's financials exhibit strengths in revenue growth and cash flow improvements, with a solid balance sheet featuring low leverage. However, persistent challenges in profitability and operational efficiency, as indicated by negative EBIT and fluctuating net income margins, present ongoing concerns.

Income Statement

Positive

Radware shows a moderate gross profit margin of 80.6% for 2024, indicating efficient cost management. However, the negative EBIT and fluctuating net income margins highlight profitability challenges. The revenue growth rate of 5.19% from 2023 to 2024 suggests a positive trend in sales, but persistent losses in EBIT indicate underlying operational inefficiencies.

Balance Sheet

Positive

The company maintains a solid equity position with an equity ratio of 51.1% in 2024. The debt-to-equity ratio is low at 0.06, suggesting minimal leverage and financial stability. ROE improved to 1.91% in 2024, reflecting a slight return to profitability, though the overall return remains modest.

Cash Flow

Neutral

Radware demonstrates significant improvement in free cash flow from negative in 2023 to $66.33 million in 2024, reflecting better cash management. The operating cash flow to net income ratio is robust at 11.86, indicating strong cash generation relative to net income. However, historical volatility in cash flows suggests potential risks in sustaining this performance.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
274.88M	261.29M	293.43M	286.50M	250.03M
	Gross Profit
221.63M	209.58M	239.54M	234.05M	204.94M
	EBIT
-3.19M	-31.68M	-3.34M	18.23M	6.17M
	EBITDA
24.50M	-19.44M	8.35M	28.42M	16.73M
	Net Income Common Stockholders
6.04M	-21.59M	-166.00K	7.81M	9.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
275.78M	330.59M	298.04M	287.89M	310.49M
	Total Assets
618.68M	571.92M	647.40M	634.87M	623.44M
	Total Debt
18.27M	20.70M	24.15M	27.45M	30.07M
	Net Debt
-80.44M	-49.83M	-22.04M	-65.06M	-24.70M
	Total Liabilities
261.60M	248.64M	278.96M	264.87M	234.98M
	Stockholders Equity
316.27M	284.09M	332.16M	369.99M	388.46M
Cash Flow		Free Cash Flow
66.33M	-8.93M	23.33M	66.17M	53.14M
	Operating Cash Flow
71.61M	-3.50M	32.15M	71.77M	61.81M
	Investing Cash Flow
-39.52M	92.78M	-56.02M	7.85M	-14.37M
	Financing Cash Flow
-3.91M	-64.93M	-22.46M	-41.88M	-33.42M

Radware Technical Analysis

Technical Analysis Sentiment

Negative

Last Price19.76

Price Trends

50DMA

22.41

Negative

100DMA

22.58

Negative

200DMA

21.75

Negative

Market Momentum

MACD

-0.09

Positive

RSI

42.70

Neutral

STOCH

10.75

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDWR, the sentiment is Negative. The current price of 19.76 is below the 20-day moving average (MA) of 21.94, below the 50-day MA of 22.41, and below the 200-day MA of 21.75, indicating a bearish trend. The MACD of -0.09 indicates Positive momentum. The RSI at 42.70 is Neutral, neither overbought nor oversold. The STOCH value of 10.75 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RDWR.

Radware Risk Analysis

Radware disclosed 43 risk factors in its most recent earnings report. Radware reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Radware Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHKP	79 Outperform	$23.36B	28.91	30.15%	―	6.22%	6.15%
FFIV	79 Outperform	$13.79B	23.80	19.51%	―	3.02%	31.36%
PANW	78 Outperform	$101.68B	86.76	23.38%	―	13.86%	-46.44%
CSCO	74 Outperform	$228.00B	25.11	20.02%	2.93%	-5.34%	-30.57%
FTNT	70 Outperform	$65.14B	37.48	338.74%	―	12.27%	54.69%
RDWR	66 Neutral	$843.49M	143.71	2.01%	―	5.20%	―
Sector *	57 Neutral	$18.57B	9.42	-13.42%	2.72%	5.01%	-23.43%

* Technology Sector Average

Performance Comparison

RDWR

Radware

19.76

2.00

11.26%

CHKP

Check Point

215.52

51.38

31.30%

CSCO

Cisco Systems

54.54

7.71

16.46%

FFIV

F5 Networks

239.25

47.56

24.81%

FTNT

Fortinet

84.71

16.32

23.86%

PANW

Palo Alto Networks

153.57

19.28

14.36%

Radware Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -14.94% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong financial performance for Radware in 2024, with significant growth in revenue, particularly in the cloud security and Americas segments. The company's strategic focus on AI-driven solutions and OEM partnerships is driving growth and competitive positioning. However, there are challenges in the EMEA market with a decline in revenue. Overall, the highlights significantly outweigh the lowlights, indicating a robust performance and positive outlook.

Highlights

Strong Revenue Growth

Radware reported a 12% year-over-year revenue growth for Q4 2024, with full-year revenue increasing by 5% to $275 million.

Cloud ARR Acceleration

Cloud ARR grew 19% in Q4 2024, up from 15% in Q3 2024, contributing to a total ARR growth of 8% year-over-year to $227 million.

Increased Profitability

Operating income nearly tripled in Q4 2024 to $9 million, with a full-year operating income of $26.8 million, reflecting strong operational efficiency.

Strong Performance in the Americas

Revenue in the Americas increased 33% year-over-year in Q4 2024, contributing to a 14% year-over-year growth for the full year.

Strategic OEM Partnerships

Cisco and Check Point sustained double-digit growth in Q4, setting a new annual record for total OEM bookings.

AI-Driven Innovations

Significant strides in AI integration, including the release of AI SOC Xpert, cutting resolution time by up to 95%.

Lowlights

Decline in EMEA Revenue

Q4 2024 revenue in EMEA declined by 6% year-over-year, contributing to a full-year revenue decrease of 2%.

Company Guidance

During the Radware conference call discussing the fourth quarter and full year 2024 results, the company provided guidance and insights into their financial performance and strategic focus areas for 2025. The fourth quarter saw a 12% year-over-year revenue growth, with non-GAAP earnings per share more than doubling, driven largely by the cloud security business, which accelerated its annual recurring revenue (ARR) growth to 19%. The company plans to increase investments in cloud security by opening new centers, enhancing R&D, and expanding OEM and MSSP partnerships, aiming for over 20% ARR growth and a $100 million ARR cloud security business by the end of 2025. Financially, Radware reported a gross margin of 82.4% for Q4, with operating income nearly tripling to $9 million. Regional performance varied, with 33% revenue growth in the Americas, a 6% decline in EMEA, and an 8% increase in APAC. Looking forward, Radware anticipates Q1 2025 revenue between $70 million and $71 million, with non-GAAP diluted earnings per share expected to be between $0.22 and $0.23. The company remains focused on strategic investments in cloud security and AI-driven solutions, maintaining a disciplined approach to expenses while prioritizing revenue growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.