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)

Market Cap

$1.04B

Dividend YieldN/A

Average Volume (3M)155.34K

Price to Earnings (P/E)91.6

Beta (1Y)0.87

Revenue Growth9.54%

EPS GrowthN/A

CountryUS

Employees1,137

SectorTechnology

Sector Strength84

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)0.27

Shares Outstanding42,686,535

10 Day Avg. Volume105,241

30 Day Avg. Volume155,337

Financial Highlights & Ratios

PEG Ratio0.96

Price to Book (P/B)3.19

Price to Sales (P/S)0.00

P/FCF Ratio15.24

Enterprise Value/Market Cap0.91

Enterprise Value/Revenue0.87

Enterprise Value/Gross Profit4.13

Enterprise Value/Ebitda71.28

Forecast

1Y Price Target

$27.50

Price Target Upside11.88% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

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

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

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

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
281.87M	274.88M	261.29M	293.43M	286.50M	250.03M
	Gross Profit
227.44M	221.63M	209.58M	239.54M	234.05M	204.94M
	EBIT
1.67M	-3.19M	-31.68M	-3.34M	18.23M	6.17M
	EBITDA
13.55M	7.95M	-19.44M	8.35M	28.42M	16.73M
	Net Income Common Stockholders
11.60M	6.04M	-21.59M	-166.00K	7.81M	9.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
330.59M	275.78M	330.59M	298.04M	287.89M	310.49M
	Total Assets
571.92M	618.68M	571.92M	647.40M	634.87M	623.44M
	Total Debt
20.70M	18.27M	20.70M	24.15M	27.45M	30.07M
	Net Debt
-49.83M	-80.44M	-49.83M	-22.04M	-65.06M	-24.70M
	Total Liabilities
248.64M	261.60M	248.64M	278.96M	264.87M	234.98M
	Stockholders Equity
284.09M	316.27M	284.09M	332.16M	369.99M	388.46M
Cash Flow		Free Cash Flow
67.99M	66.33M	-8.93M	23.33M	66.17M	53.14M
	Operating Cash Flow
72.57M	71.61M	-3.50M	32.15M	71.77M	61.81M
	Investing Cash Flow
-30.05M	-39.52M	92.78M	-56.02M	7.85M	-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
VRNT	75 Outperform	$1.15B	24.60	5.32%	―	-2.09%	76.96%
ATEN	74 Outperform	$1.32B	27.43	24.36%	1.31%	4.90%	9.91%
AKAM	73 Outperform	$11.26B	26.34	9.82%	―	3.51%	-27.28%
RDWR	72 Outperform	$1.04B	91.59	3.78%	―	9.54%	―
CGNT	62 Neutral	$807.35M	―	-6.09%	―	―	―
Sector *	62 Neutral	$11.80B	10.31	-7.45%	2.91%	7.43%	-7.78%
NTCT	61 Neutral	$1.66B	―	-21.26%	―	-0.82%	-146.80%

* Technology Sector Average

Performance Comparison

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.