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Radware Ltd (RDWR)
NASDAQ:RDWR

Radware (RDWR) AI Stock Analysis

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Radware

(NASDAQ:RDWR)

Rating:72Outperform
Price Target:
$26.00
▲(5.78%Upside)
Radware's overall stock score of 72 reflects a strong financial performance and positive earnings call outlook, with notable growth in revenue and cloud security initiatives. Technical indicators support a bullish trend, although the high P/E ratio suggests caution on valuation grounds. The company is well-positioned for growth, but profitability and valuation remain areas to watch.
Positive Factors
Earnings
RDWR delivered a strong quarter, beating consensus revenue and EPS expectations.
Market Strategy
Changes in the go-to-market strategy indicate a proactive approach to capturing more market share.
Revenue Growth
Cloud ARR growth remained strong at 19%, with total revenue growing for the third consecutive quarter.
Negative Factors
Revenue Consistency
Despite strong performance, a consistent trend of revenue re-acceleration is needed for a positive re-evaluation.
Stock Rating
A Hold rating is maintained on RDWR stock, pending a consistent trend of revenue re-acceleration.

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

Radware Business Overview & Revenue Model

Company DescriptionRadware Ltd., together with its subsidiaries, develops, manufactures, and markets cyber security and application delivery solutions for applications in cloud, physical, and software defined data centers worldwide. The company offers DefensePro, a real-time network attack mitigation device; AppWall, a Web application firewall; Radware Kubernetes WAF, a Web application firewall solution for CI/CD environments orchestrated by Kubernetes; and DefenseFlow, a cyber-command and control application. It also provides Alteon, an application delivery controller/load balancer for web, cloud, and mobile based applications; and LinkProof NG, a multi-homing and enterprise gateway solution for connectivity of enterprise and cloud-based applications. In addition, the company offers Security Updates Subscription, which provides protection from network elements, hosts and applications against the latest security vulnerabilities and threats; ERT Active Attackers Feed that provides customers with information pertaining to attack sources recently involved in DDoS attacks and web attacks; Alteon Global Elastic License that enables a high level of flexibility for ADC services across datacenters, private and public clouds; APSolute Vision, a network monitoring tool for cyber security and application delivery solutions; and MSSP Portal, a DDoS detection and mitigation service portal. Further, it provides Cloud DDoS Protection Service, which offers a range of enterprise-grade DDoS protection services in the cloud, as well as technical support, professional, managed, and training and certification services to its customers. The company sells its products primarily to independent distributors, including value added resellers, original equipment manufacturers, and system integrators. Radware Ltd. was founded in 1996 and is headquartered in Tel Aviv, Israel.
How the Company Makes MoneyRadware makes money primarily through the sale of its cybersecurity and application delivery solutions. The company's revenue streams include product sales, subscription services, and professional services. Product sales involve one-time purchases of hardware and software solutions. Subscription services generate recurring revenue through cloud-based offerings and security services that provide ongoing protection and updates. Professional services, which include consulting, training, and implementation support, also contribute to Radware's earnings. Key partnerships with technology providers, resellers, and managed security service providers (MSSPs) enhance the company's market reach and revenue potential.

Radware Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: 8.00%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial performance with significant growth in revenue and cloud security business, supported by strategic partnerships. However, there are concerns about revenue stagnation in APAC and potential tariffs, although these are not expected to have significant impacts.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
First quarter revenue increased by 11% year-over-year to $72 million, marking the third consecutive quarter of double-digit revenue growth.
Cloud Security Business Success
Cloud security ARR grew by 19% year-over-year to $80 million, with the expectation to reach close to $100 million by the end of the year.
Significant OEM Partnerships
Partnerships with Cisco and Checkpoint saw over 20% growth year-over-year, with notable deals including a million-dollar five-year cloud deal with a UK retailer.
Increased Non-GAAP Earnings
Non-GAAP earnings per share increased by 69% to $0.27, with adjusted EBITDA for Q1 2025 increasing by 72% to $10.8 million.
Geographical Revenue Growth
EMEA revenue increased by 25% year-over-year, while the Americas saw a 14% year-over-year growth over the trailing twelve months.
Negative Updates
APAC Revenue Stagnation
APAC revenue was reported as flat year-over-year for the trailing twelve months.
Potential Tariff Impact
Although the impact is expected to be minimal, there was an initial concern about tariffs affecting the supply chain, prompting adjustments to reduce cost pressures.
Company Guidance
In the first quarter of 2025, Radware exceeded its guidance with strong financial performance and strategic advancements. Revenue increased by 11% year-over-year to $72 million, marking the third consecutive quarter of double-digit growth. The company reported a non-GAAP earnings per share increase of 69% to $0.27, and cash flow from operations reached $22 million. A significant contributor to this success was the cloud security business, with an annual recurring revenue (ARR) increase of 19% year-over-year to $80 million. Radware aims to achieve over 20% ARR growth and reach $100 million in cloud security ARR by the year's end. The company's strategy focuses on expanding market share in cloud security, leading in AI innovation, and enhancing its go-to-market presence, with recent expansions in cloud service centers across Peru, India, and Kenya. Looking ahead, Radware plans to increase investments in sales, marketing, and R&D to capitalize on growth opportunities, particularly in North America, supported by a new leadership team with expertise in driving ARR for SaaS companies.

Radware Financial Statement Overview

Summary
Radware shows a stable financial performance with strong gross margins and effective cash flow management. The company maintains a conservative leverage profile, contributing to financial stability. However, the fluctuating net profit margins suggest areas for improvement in profitability. Overall, Radware is in a solid financial position with potential for growth through operational efficiencies.
Income Statement
68
Positive
Radware's revenue growth has been modest in recent years, with a TTM (Trailing-Twelve-Months) increase of 2.54%. The gross profit margin remains strong at 80.68%, reflecting efficient cost management. However, net profit margins have been inconsistent, with a current TTM net profit margin of 4.12%. There's a noticeable improvement in EBIT and EBITDA margins, indicating enhanced operational efficiency.
Balance Sheet
75
Positive
The debt-to-equity ratio is low at 0.05, indicating minimal leverage and financial stability. The equity ratio stands at 50.34%, showing a solid capital structure with significant equity financing. Return on equity has improved, now at 3.57%, suggesting better utilization of equity investments.
Cash Flow
70
Positive
Radware exhibits robust cash flow management with a consistent free cash flow generation. The operating cash flow to net income ratio is high at 6.25, indicating strong cash generation relative to earnings. Free cash flow has grown modestly, reflecting efficient capital expenditure management.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
281.87M274.88M261.29M293.43M286.50M250.03M
Gross Profit
227.44M221.63M209.58M239.54M234.05M204.94M
EBIT
1.67M-3.19M-31.68M-3.34M18.23M6.17M
EBITDA
13.55M7.95M-19.44M8.35M28.42M16.73M
Net Income Common Stockholders
11.60M6.04M-21.59M-166.00K7.81M9.64M
Balance SheetCash, Cash Equivalents and Short-Term Investments
330.59M275.78M330.59M298.04M287.89M310.49M
Total Assets
571.92M618.68M571.92M647.40M634.87M623.44M
Total Debt
20.70M18.27M20.70M24.15M27.45M30.07M
Net Debt
-49.83M-80.44M-49.83M-22.04M-65.06M-24.70M
Total Liabilities
248.64M261.60M248.64M278.96M264.87M234.98M
Stockholders Equity
284.09M316.27M284.09M332.16M369.99M388.46M
Cash FlowFree Cash Flow
67.99M66.33M-8.93M23.33M66.17M53.14M
Operating Cash Flow
72.57M71.61M-3.50M32.15M71.77M61.81M
Investing Cash Flow
-30.05M-39.52M92.78M-56.02M7.85M-14.37M
Financing Cash Flow
-3.07M-3.91M-64.93M-22.46M-41.88M-33.42M

Radware Technical Analysis

Technical Analysis Sentiment
Positive
Last Price24.58
Price Trends
50DMA
22.57
Positive
100DMA
22.52
Positive
200DMA
22.46
Positive
Market Momentum
MACD
0.40
Negative
RSI
64.39
Neutral
STOCH
83.10
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDWR, the sentiment is Positive. The current price of 24.58 is above the 20-day moving average (MA) of 23.77, above the 50-day MA of 22.57, and above the 200-day MA of 22.46, indicating a bullish trend. The MACD of 0.40 indicates Negative momentum. The RSI at 64.39 is Neutral, neither overbought nor oversold. The STOCH value of 83.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$1.15B24.605.32%-2.09%76.96%
74
Outperform
$1.32B27.4324.36%1.31%4.90%9.91%
73
Outperform
$11.26B26.349.82%3.51%-27.28%
72
Outperform
$1.04B91.593.78%9.54%
62
Neutral
$807.35M-6.09%
62
Neutral
$11.80B10.31-7.45%2.91%7.43%-7.78%
61
Neutral
$1.66B-21.26%-0.82%-146.80%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RDWR
Radware
24.58
6.04
32.58%
AKAM
Akamai
78.08
-11.63
-12.96%
NTCT
Netscout Systems
23.88
5.06
26.89%
VRNT
Verint Systems
19.11
-17.53
-47.84%
ATEN
A10 Networks
18.34
4.27
30.35%
CGNT
Cognyte Software
11.20
3.30
41.77%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.