Radware jumps on strong guidance

The company expects up to $40 million profit in 2014.

Technology company Radware Ltd. (Nasdaq:RDWR) yesterday surprised the market with better than expected results for the third quarter and strong guidance for the fourth quarter of the year. In response, the company share jumped 10.2% to $18.80 on six times its average turnover, reflecting an $846 million market cap and putting the share's return this year into positive territory at 4.4%.

Radware, part of the Zisapel brothers' RAD Data Communications Ltd. group, specializes in routing Internet loads. The company's third quarter revenue totaled $56.8 million, up 18.3%, compared with the corresponding quarter last year, and higher than the analysts' expectations of $54.7 million.

The company's gross profit margin rose from 80.9% in the same quarter last year to 82.5%. Despite an increase in operating expenses, including an 11% rise in research and development expenses and a similar rise in marketing and sales expenses, Radware increased its operating profit to $39 million. The company's net profit according to the accepted GAAP accounting rules was $7.8 million, compared with $2.9 million in the third quarter of 2013. Excluding expenses for registration of capital-based employee remuneration, depreciation of intangible assets, and legal expenses, non-GAAP net profit rose 44% in the third quarter to $11.2 million, $0.24 per share, $0.05 ahead of the market forecasts.

Radware's non-GAAP net profit totaled $27.2 million on $161 million in revenue in the first nine months of 2014. The company expects to finish 2014 with 14-15% growth in revenue, with fourth quarter revenue reaching $59-61 million and $220-222 million in revenue for the year as a whole.

The company expects an 82% gross profit margin in the fourth quarter, operating expenses of $36-36.5 million, and a non-GAAP net profit per share of $0.25-0.28, $0.01-0.04 per share more than the market forecast. Radware will then finish 2014 with a profit of $0.83-0.86 per share, amounting to $38.7-40 million, compared with $32 million in 2013.

At the end of the third quarter, Radware had $306 million in cash. CEO Roy Zisapel said, "Strong demand for our solutions resulted in record results. We believe that we're well positioned to continue growing."

Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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