Q2 2026 Radware Ltd Earnings Call

July 29, 2026

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Roy Zisapel: They increasingly look to consolidate application, API, and infrastructure protection with one trusted security partner. As a result, more customers are adopting the full Radware platform, leveraging more Cloud Security Services from our comprehensive, fully integrated AI-powered solution. Just a couple of recent API Security wins among many we had this quarter are with two leading financial service providers in Asia Pacific, which selected our solution to protect business-critical applications, processing a combined 250 million API calls per month. In both cases, Radware was chosen due to the strength of our API discovery, runtime protection, and bot management capabilities. These wins highlight how existing customers are expanding their business with us by adding API Security to their Radware cloud security platform deployments. Beyond the continued strength in our cloud security platform, our on-prem security solution, DefensePro X, delivered another strong quarter.

Enter your participant ID, followed by pound. You have joined the meeting as an attendee and will be muted throughout the meeting. They increasingly look to consolidate application, API, and infrastructure protection with one trusted security partner.

As a result more customers are adopting the full Hardware platform leveraging more Cloud Security Services from our comprehensive fully integrated AI powered solution.

Just a couple of recent API security Wings. Among many we had this quote with 2 leading financial service providers in Asia Pacific, which selected our solution to protect business, critical applications processing and combined, 250 million API calls per month.

In both cases, Radware was chosen due to the strength of our API, discovery, runtime protection, and bot management capabilities.

These Wings highlight how existing customers are expanding their business with us by adding API security to the ra Cloud security platform deployment.

Roy Zisapel: The ongoing refresh cycle continues to provide meaningful opportunities as customers upgrade aging infrastructure and strengthen resilience against increasingly sophisticated DDoS attacks. In addition, we continue to attract new customers who value the performance, scalability, and protection capabilities of the DefensePro X platform. We recently enhanced our on-prem platform with the introduction of cloud-augmented protection capabilities that combine AI-powered cloud intelligence with the speed, privacy, and operational control of on-prem deployments. These enhancements take our on-prem security devices to the next level. We believe this significantly strengthens our value proposition for customers operating hybrid environments and further differentiates our offering in the market. Unlike traditional on-prem security vendors, Radware combines the intelligence of its global cloud security platform, API and AI security capabilities to help protect on-prem workloads, giving customers a unique blend of cloud-scale intelligence and on-prem enforcement.

Beyond the continued strength in our Cloud security platform, our on-prem security solution. Defense Pro X delivered, another strong quarter.

The ongoing refresh cycle continues to provide meaningful opportunities as customers upgrade aging infrastructure and strengthen resilience against increasingly sophisticated, inordinate attacks.

In addition, we continue to attract new customers. Who value their performance scalability and protection capabilities of the defense Pro X platform.

We recently enhanced our on-prem platform with the introduction of cloud-augmented protection capabilities that combine AI-powered cloud intelligence with the speed, privacy, and operational control of on-prem deployments.

This enhancements, take our on-prem security devices to the next level.

We believe this significantly strengths in our value proposition for customers operating hybrid environments and further differentiates our offering in the market.

Unlike traditional on-prem security vendors.

That will combine the intelligence of its Global Cloud security platform API and AI security capabilities to help protect on-prem workloads, giving customers a unique blend of cloud scale, intelligence and on-prem forces.

Roy Zisapel: A nice example among many of DefensePro X wins we secured during the quarter was a seven-digit deal with a global leader in business and financial information. As part of a worldwide refresh of its DDoS protection infrastructure, the customer selected DefensePro X for deployment across the US, UK, and Japan, along with multi-year application protection and network protection subscriptions. The cybersecurity market continues to evolve rapidly. Organizations are facing greater application complexity, expanding API ecosystems, increasingly sophisticated attacks leveraging AI attack tools, and growing pressure to secure environments and new AI infrastructure. Our innovation engine and investments are completely aligned with these trends, which we believe will only strengthen in the coming quarters. For example, in recent weeks, we see the acceleration of vulnerability discovery and exploitation driven by emerging capabilities of frontier AI models. Historically, organizations often had weeks or even months before vulnerability disclosure and widespread exploitation.

A nice example, among many of Defense Pro X wins with secure during the quarter was a 7 digit deal with a global leader in business and financial information.

As part of a worldwide, refresh of its dos, protection infrastructure, the customer, selected a defense Pro X for deployment across the US, UK and Japan along with multi-year application protection and network protection subscriptions.

The cyber security Market continues to evolve. Rapidly organizations are facing greater application. Complexity, expanding API, ecosystems increasingly sophisticated attacks, leveraging, AI, attack tools, and growing pressure to secure environments and new AI infrastructure.

Our innovation engine and investments are completely aligned with these trends, which we believe will only strengthen in the coming quarters.

For example in recent weeks we see the acceleration of vulnerability Discovery and exploitation driven by emerging capabilities of Frontier. AI models.

Roy Zisapel: Today, that window is shrinking rapidly. During the quarter, the industry closely followed examples such as Claude Mythos, which demonstrated how AI can accelerate vulnerability discovery and actual exploitation. In fact, a recent Radware survey showed that AI-driven vulnerability discovery is now among the top concerns for security professionals. As AI tools accelerate the pace and sophistication of attacks, security teams are struggling to keep up. With thousands of new critical vulnerabilities, rapidly shrinking window between disclosure and exploitation, and the need to patch applications at a significantly higher pace and scale that is often risky and unrealistic, it is clear that current vulnerability and patch management processes are broken. This is exactly the challenge our latest product announced, the Xploit Shield, was designed to address.

Historically organization offer, often had weeks or even months before, vulnerability disclosure, and widespread widespread exploitation.

Today that window is shrinking rapidly.

During the quarter, the industry closely followed examples such as entropic meters, which demonstrated? Our AI can accelerate vulnerability Discovery, and actual exploitation.

In fact, a recent radio survey showed that AI driven vulnerability, Discovery is now among the top concerns for Security Professionals.

As AI tools accelerate, the pace and sophistication of attacks security, teams are struggling to keep up.

Shrinking window between disclosure and exploitation.

And the need to patch applications that are significantly higher pace and scale. That is often risky and unrealistic. It's clear that current vulnerability and Patch management processes are broken.

Roy Zisapel: As the first-to-market solution, Xploit Shield automatically creates a tailored protection shield for each application based on the vulnerabilities found by the frontier model or other security scans, helping organizations reduce risk and maintain business continuity while the software vulnerabilities are assessed and remediated. As AI continues to accelerate the threat landscape, we believe demand for this type of protection will continue to grow across both existing and new customers. Simply put, Xploit Shield gives organizations the critical time they need to fix their vulnerabilities while remaining protected. From a go-to-market perspective, North America remains a major strategic focus and an important source of growth. The investment we made in the region translate into stronger execution. Revenue in the Americas grew 24% during Q2 and represented 45% of total revenue.

This is exactly the challenge. Our latest product announced the exploit Shield was designed to address.

As the first to Market solution exploit Shield, automatically creates a tailored protection shield for each application based on the vulnerability found by the frontier model or other security scans.

Helping organizations reduce risk and maintain business continuity, while the software vulnerabilities are assessed and remediated.

As AI continues to accelerate the threat landscape. We Believe demand for this type of protection will continue to grow across both existing and new customers.

Simply put exploit Shield gives organizations the critical time they need to fix the vulnerabilities while remaining protected.

From a go to market perspective, North America remains a major strategic focus, and an important source of growth.

The investment we made in the region is translating to stronger execution.

Roy Zisapel: We also saw encouraging results in Asia Pacific during the quarter and are beginning to see positive returns from our go-to-market investments. In summary, we delivered a record quarter with double-digit growth, reflecting the steady execution of our strategy. Our innovation engine is operating at full strength, as demonstrated by the recently introduced API Security, AI Protection, and now the Xploit Shield solution, and is driving incremental demand for our Cloud Security Services. We remain focused on scaling our cloud security business, expanding adoption of our security platform, and strengthening our partner ecosystem. We are confident that continued execution of this strategy will drive further growth and long-term shareholder value. With that, I'll turn the call over to Guy.

Revenue in the Americas. Grew 24%, during the second quarter and represented 45% of total revenue.

We also saw encouraging results in asia-pacific during the quarter and are beginning to see positive returns from our go to market Investments.

In summary, we deliver the record quarter with double digit growth reflecting the steady execution of our strategy.

Our Innovation engine is operating at full strength as demonstrated by the recently introduced API security AI protection and now the exploit Shield solution

and is driving incremental demand for our Cloud Security Plus

We remain focused on scaling, our Cloud security business expanding adoption of our security platform and strengthening our partner ecosystem.

Guy Avidan: Thank you, Roy, and good day, everyone. I'll now walk through our Q2 financial results, provide some additional color on the key business trends behind the numbers, and then review our outlook for Q3 2026. As a reminder, unless stated otherwise, the financial metrics discussed today are presented on a non-GAAP basis. Reconciliation between GAAP and non-GAAP results are included in the press release issued earlier today and are also available in the investor section of our website. We delivered another strong quarter with record revenue of $82.3 million, up 11% year-over-year, continuing the double-digit growth trajectory we established over the past several quarters.

We are confident that continued execution of this strategy will drive further growth and long-term shareholder value with that. I'll turn the call over to guy.

Thank you, Roy, and good day, everyone.

and now, walk through our second quarter Financial results,

Let me provide some additional color on the key business trend behind the numbers, and then review our outlook for the third quarter of 2026.

As a reminder, unless stated otherwise, the financial metrics discussed today are presented on a non-GAAP basis.

Reconciliation between gaap and non-gaap results are included in the press release issued earlier today.

And are also available in the investor section of our website.

We delivered another strong quarter with record revenue of 82.3 million up 11% year-over-year.

In the double digit growth trajectory we established over the past, several quarters.

Importantly.

This growth was broad-based across key parts of the business and reflects continued execution.

Supported by growth in our subscription and product revenue streams.

Guy Avidan: Our cloud security business continued to perform well during the quarter, with cloud ARR increasing 22% year over year and surpassing the $100 million milestone. Cloud ARR represented 40% of total ARR, compared to 36% in Q2 2025. Cloud growth was a key contributor to the continued expansion of subscription revenue, which remained our largest revenue stream and accounted for 55% of total revenue. Looking at regional performance. In the Americas, revenue was $37.2 million, up 24% year over year, representing approximately 45% of total revenue. On a trailing 12-month basis, revenue in the Americas grew 21% year over year. The Americas remain our largest region and continue to be the important contributor to our overall growth profile. EMEA revenue was $27.3 million, down 2% year over year and represented approximately 33% of total revenue.

Our Cloud security business continue to perform well during the quarter with Cloud ARR, increasing 22% year-over-year and surpassing the 100 million dollar milestone.

Cloud ARR represented, 40% of total ARR compared to 36% in the second quarter of 2025.

Cloud, growth was a key contributor to the continued expansion of subscription Revenue.

which remained our largest revenue stream and accounted for 55% of total revenue.

Looking at Regional performance.

in the Americas Revenue was 37.2 million up to 24%, year-over-year representing approximately 45% of total revenue

on a trailing 12-month basis Revenue in the Americas, grew 21% year-over-year

As remained our largest region and continue to be the important contributor to our overall growth profile.

Guy Avidan: On a trailing 12-month basis, revenue in EMEA grew 3% year over year. APAC revenue was $17.8 million, up 9% year over year, representing approximately 22% of total revenue. On a trailing 12-month basis, revenues in APAC grew 2% year over year. Moving now to profitability. Gross profit in the second quarter was $67.3 million, increasing 10% year over year. Gross margin was 81.8% compared to 82.4% in Q2 2025. Gross margin was mainly impacted by the foreign exchange headwind and supply chain cost pressure we discussed last quarter. Despite these factors, gross margin remained at a healthy level, reflecting the favorable economics of our business model and a continued contribution of our recurring revenue base. Operating income was $10.9 million, compared to $11.4 million in the same period last year.

After the revenue.

On a trailing 12 months basis, Revenue may I grew, 3% year-over-year.

Revenue was 17.8 million up, 9% year-over-year, representing approximately 22% of total revenue.

on a trailing 12-month basis, revenues in a back route to percent year-over-year,

Now to profitability.

Gross profit in the second quarter was $67.3 million, increasing 10% year-over-year.

And was 81.8% compared to 82.4% in the second quarter of 2025.

Gross margin was mainly impacted by the foreign exchange headwind and supply chain supply chain cost pressure, we discussed last quarter.

Despite these factors, gross margin remained at a healthy level.

This reflects the favorable economics of our business model and the continued contribution of our recurring revenue base.

Guy Avidan: The year-over-year decline was primarily attributed to the strengthening of the Israeli shekel against the US dollar. Excluding this impact, operating income for Q2 2026 would have been $16.1 million, representing a 41% increase compared to Q2 2025. Financial income was $4.4 million in the quarter, compared to $5.2 million in the same period last year, as a result of a lower market interest rate and reduced cash balances following share repurchase over the past two quarters. We expect these factors to continue to modestly impact financial income during H2 2026. Our effective tax rate was 14.6% compared to 13.8% in the same period last year. We expect the effective tax rate to be between 14% to 15% in the coming quarter.

Operating income was $10.9 million, compared to $11.4 million in the same period last year.

The year-over-year decline was primarily attributed to the strengthening of the Israeli shekel against the US dollar.

Excluding this impact, operating income for the second quarter of 2026 would have been $16.1 million, representing a 41% increase compared to the second quarter of 2025.

Financial income was 4.4 million in the quarter compared to 5.2 million in the same period last year.

As a result of a lower Market interest rate and reduced cash, balances following share repurchase over the past 2 quarters.

We expect these factors to continue to modest impact Financial income during the second half of 2026.

Our effective tax rate was 14.6% compared to 13.8% in the same period last year.

We expect the effective tax rate to be between 14 to 15% in the coming quarter.

Guy Avidan: Net income from continued operation was $13 million, down 9% year over year, and diluted earnings per share from continued operation was $0.30 compared to $0.32 in Q2 2025. Excluding approximately $4.5 million unfavorable impact of the appreciated of the Israeli shekel against the US dollar in Q2 2026, non-GAAP net income and non-GAAP diluted EPS would have been $17.5 million and $0.40 respectively. This compared with the reported $14.3 million and $0.32 diluted share in the same quarter of 2025, representing a year-over-year growth of 22% in the non-GAAP net income and 25% in the non-GAAP diluted EPS. Turning to cash flow and the balance sheet. Cash flow provided by continued operation in Q2 2026 was $13 million, compared to $15.6 million in the same quarter last year.

Net income from continued, operation will 13 million down 9% year-over-year and diluted earning per share from continued. Operation was 30 cents.

Compared to 32 cents in Q2 2025.

Excluding an approximately $4.5 million unfavorable impact from the appreciation of the Israeli shekel against the US dollar in the second quarter of 2026.

Non-GAAP net income and non-GAAP diluted EPS would have been $17.5 million and $0.40, respectively.

This Compares with the reported 14.3 million and 32 cents deluded share in the same quarter of 2025.

Representing a year of the Year growth of 22% in the non-gaap net income and 25% in the non-gaap diluted eps.

Turning into cash flow and the balance sheet.

Cash flow provided by continued operation in Q2 2026 was 13 million, compared to 15.6 million in the same quarter last year.

Guy Avidan: During the quarter, we continued to execute our capital allocation strategy and repurchase shares in the amount of approximately $18.8 million. We ended the quarter with $422.9 million in cash equivalent, bank deposits, and marketable securities, maintaining a strong balance sheet and financial flexibility to continue supporting our strategic priorities. Now to our guidance. For Q3 2026, we expect total revenue to be in the range of $82.5 to $83.5 million. We expect Q3 2026 non-GAAP operating expenses to be between $57 to $58 million. We expect Q3 2026 non-GAAP diluted earnings per share to be between $0.28 and $0.29. With that, I'll turn the call back to the operator, and we will be happy to take your questions.

During the quarter, we continue to execute our Capital, allocation strategy, and repurchase shares in the amount of approximately 18.8 million.

We entered the quarter with $422.9 million in cash.

Cash equivalent.

Bank deposit and marketable securities.

Maintaining a strong balance sheet and financial flexibility to continue supporting our strategic priorities.

And out to our guidance.

for the third quarter of 2026, we expect our Revenue to be in the range of

82 and a half to 83 and a half million dollars.

we expect third quarter of 2026, non-gaap operating expenses to be between,

57 to 58 million.

We expect third quarter of 2026 non-GAAP diluted earnings per share to be between $0.28 and $0.29.

With that.

And we will be happy to take your questions.

Operator: Thank you. To ask a question, please raise your hand using your mobile or desktop application, or press star nine on your telephone keypad and wait for your name to be announced. Our first question is from Joseph Gallo from Jefferies. Joe, please go ahead.

Thank you to ask a question, please raise your hand using your mobile or desktop application, or press star 9 on your telephone keypad and wait for your name to be announced.

Our first question is from Joe Gallo from Jefferies.

Joseph Gallo: Hey, guys. Good morning, or I guess good afternoon for you. Thanks for the question. It was great to hear about some of the on-premise strengths. Are you seeing customers change any buying behaviors as it relates to the supply chain and memory prices, whether it's pull forward or push outs?

Joe Gallo: Hey, guys. Good morning, or I guess good afternoon for you. Thanks for the question. It was great to hear about some of the on-premise strengths. Are you seeing customers change any buying behaviors as it relates to the supply chain and memory prices, whether it's pull forward or push outs?

Joe, please go ahead. Hey guys. Good morning or I guess good afternoon for you. Thanks for the question. It was great to hear about some of the on-premise streams. Are you seeing customers change any buying behaviors as it relates to the supply chain and memory prices, whether it's pull forward or push outs.

Guy Avidan: We do see some delays, not because of our supply chain, but because of global supply chain issues in moving to, I would say, new data centers, et cetera, because servers delays, switches delays, et cetera. I wouldn't say it's of any critical nature. In our on-prem business, we are generally in the on-prem business, we're selling the DDoS mitigation. Those are not large number of devices, although they are on the higher end of the price tags. They can be added to existing infrastructure, et cetera. When a customer is planning a complete new data center, we might see a push-out because of supply chain or prices, but if they are upgrading or enhancing existing infrastructures, that does not impact us.

Roy Zisapel: We do see some delays, not because of our supply chain, but because of global supply chain issues in moving to, I would say, new data centers, et cetera, because servers delays, switches delays, et cetera. I wouldn't say it's of any critical nature. In our on-prem business, we are generally in the on-prem business, we're selling the DDoS mitigation. Those are not large number of devices, although they are on the higher end of the price tags. They can be added to existing infrastructure, et cetera. When a customer is planning a complete new data center, we might see a push-out because of supply chain or prices, but if they are upgrading or enhancing existing infrastructures, that does not impact us.

Um,

you know, we do see some delays not because of our supply chain but because of global supply chain issues in in moving to a, I would say new data centers Etc because servers delays, which is delays, Etc. But I wouldn't say it's a, it's of any critical nature in our on-prem business. We do see, you know, we are generally in the on-prem business, we're setting the Dos mitigation. Those are not large number of devices, although they are on the higher end of the, of the price tags. Um, they can be added to existing infrastructure, Etc. So when a customer is planning, a complete new data center, we might see a push out because of supply chain or prices, but

Is they are upgrading or enhancing existing infrastructures that does not impact us.

Joseph Gallo: Okay, that's really helpful. On the call, you guys talked a lot about AI and the benefits there. Are you seeing that materially contribute to revenue today? Or how should we think about the timing of benefit from all these AI tailwinds?

Joe Gallo: Okay, that's really helpful. On the call, you guys talked a lot about AI and the benefits there. Are you seeing that materially contribute to revenue today? Or how should we think about the timing of benefit from all these AI tailwinds?

Okay, that's really helpful. Um, on the call, you guys talked a lot about Ai and the benefits. There are you seeing that materially contribute to revenue today, or how should we think about the timing of benefit from all these AI talents?

Guy Avidan: Okay. I think there's multiple angles. I try to address some of them in my script. One is protecting AI infrastructures. That is still early. Our AI Protect, we just launched it a couple of months, a lot of interest, but our customers are early in deploying internally AI for mission-critical applications. We do see the level of interest, we do see the uptake on the platform, and so on. There is the whole notion of AI used on the attack side or for scanning for vulnerabilities, et cetera. There's definitely sense of urgency there. There's just a recent story about the OpenAI model attacking Hugging Face, et cetera, the Mythos. I think there's a very large alert on the CISO level, security organization. We definitely see that creating a demand for our security services.

Roy Zisapel: Okay. I think there's multiple angles. I try to address some of them in my script. One is protecting AI infrastructures. That is still early. Our AI Protect, we just launched it a couple of months, a lot of interest, but our customers are early in deploying internally AI for mission-critical applications. We do see the level of interest, we do see the uptake on the platform, and so on. There is the whole notion of AI used on the attack side or for scanning for vulnerabilities, et cetera. There's definitely sense of urgency there. There's just a recent story about the OpenAI model attacking Hugging Face, et cetera, the Mythos. I think there's a very large alert on the CISO level, security organization. We definitely see that creating a demand for our security services.

Okay, I think this, you know, multiple angles and I try to address some of them in in in my script. So 1 is protecting AI infrastructure. That is still early

Our AI protects, you know we just launched it a couple of months, a lot of interest but our customers are early in the deploying internally, AI for Mission critical applications. But we do see the level of Interest. We do see the the uptake on the platform and so on, then there is the whole notion of AI used on the attack side or for scanning for vulnerabilities Etc.

There's definitely a sense of urgency there. You know, just the recent story about the OpenAI model attacking Hugging Face, etc. There are myths.

Guy Avidan: Specifically, Exploit Shield is providing very strong benefit to all the remediation and shielding of those thousands of vulnerabilities being found. This is definitely a very strong tailwind. There is AI used to better security algorithms. Some of the things I've mentioned in our API Security or in Exploit Shield are heavily driven by AI algorithms that we leverage internally, and that gives us the ability to provide solutions we couldn't do before

Roy Zisapel: Specifically, Exploit Shield is providing very strong benefit to all the remediation and shielding of those thousands of vulnerabilities being found. This is definitely a very strong tailwind. There is AI used to better security algorithms. Some of the things I've mentioned in our API Security or in Exploit Shield are heavily driven by AI algorithms that we leverage internally, and that gives us the ability to provide solutions we couldn't do before for our customers. I think it depends where you are. I say AI infrastructure is still early. Securing with AI against all the new vulnerabilities and what AI can do on the attack, that's definitely very critical now.

I think there's a very large alert on the 6 levels, security organization. We definitely see that creating a demand for our security services. Specifically exploit Shield. Uh, is providing very strong benefit to all the remediation and shielding of those, uh, thousands of vulnerabilities being found. So, this is definitely a very strong, uh, deal with. And then there is AI used.

To, you know, better security algorithms.

Roy Zisapel: for our customers. I think it depends where you are. I say AI infrastructure is still early. Securing with AI against all the new vulnerabilities and what AI can do on the attack, that's definitely very critical now.

Joseph Gallo: If I can sneak in a quick follow-up. Tying everything you just said together, right? You've accelerated revenue growth three straight quarters. There's a lot of positivity on AI in the future. You're investing in go-to-market. Is there any reason why, in the financial model, we shouldn't expect continued acceleration over the next couple of quarters?

Joe Gallo: If I can sneak in a quick follow-up. Tying everything you just said together, right? You've accelerated revenue growth three straight quarters. There's a lot of positivity on AI in the future. You're investing in go-to-market. Is there any reason why, in the financial model, we shouldn't expect continued acceleration over the next couple of quarters?

Some of the things I've mentioned in our API security or an exploit Shield are heavily driven by AI algorithms that we leveraging internally. And that gives us the ability to provide Solutions. We couldn't do before for our customers. So I think it depends where you are. I say AI infrastructure is still early but securing with AI against all the new vulnerabilities and what AI can do on the attack? That's definitely very very uh critical. Now

If I can sneak in a quick follow-up—so, tying everything you just said together, right? You've accelerated revenue growth for three straight quarters. There's a lot of positivity on AI and the future, and you're investing in go-to-market. Is there any reason why, in the financial model, we shouldn't expect continued acceleration over the next couple of quarters?

Roy Zisapel: Definitely, that's the direction we're going. We are sharing all the time the total ARR numbers, and we think that's the best future indicator for our growth. It takes the on-prem and the cloud together. Like we said before, on the cloud, we are now at 22%. Our target is to get it to 25% as a first step, and then beyond, the opportunity is there, it's up for us to execute.

We are, you know, we're definitely. That's the direction we're going. We are sharing all the time, the total error numbers and we think that's the best future indicator for our growth. It takes the on-prem and the cloud together. But like we said before on the cloud, we are now at 22%, our Target is to get it to. 25 is the first step and then beyond the opportunity is there. It's up for us to execute.

Joseph Gallo: Awesome. Thank you for the time.

Joe Gallo: Awesome. Thank you for the time.

Roy Zisapel: Thank you.

Awesome. Thank you for your time.

Thank you.

Operator: Our next question is from Jeff Hopson from Needham. Jeff, please go ahead.

Our next question is from Jeff Hobson from NEM. Jeff, please go ahead.

Jeff Hopson: Hi. Thank you for the question. Just tying back to the AI conversation, are you seeing any impact from the Mythos model release, maybe just drawing attention more to customers, or do you guys have any plans to experiment yourself with frontier models like that, with cyber capabilities?

Hi. Thank you for the the question. Um,

Are you seeing any impact from the the Mythos model release? Um, maybe. Just drawing, attention more to customers or do you guys have any plans to experiment yourself? Uh, with Frontier models like that with cyber capabilities?

Roy Zisapel: Yeah. I think our answer is definitely we're seeing much stronger interest and traction. Every customer now needs to protect themselves against a much bigger number of vulnerabilities in their applications, in open sources, third-party libraries they're using. Not only it's the sheer amount, it's also the ability to exploit them much faster than before. I mentioned it in my comments, if before, until last year, we were talking on weeks and months between a vulnerability being discovered and a weapon that's attacking, this window is shrinking dramatically. Not only you're aware now of more vulnerabilities in your software, the ability of the hackers to exploit them is significantly higher. This creates huge amount of sense of urgency in all our customers and also in Radware internally, of course.

Yeah, so I think you know the our answer is definitely we're seeing much stronger interest and and and and and traction.

Every customer now needs to protect themselves against uh, much.

bigger number of vulnerabilities in their applications in open sources, third-party libraries, they're using

And not only is the sheer amount.

It's also the ability to exploit them much faster than before. I mentioned it in my comments; if before, until last year, we were talking about weeks and months as the time between a vulnerability being discovered and a weapon that’s attacking—this window is shrinking dramatically. So not only...

Roy Zisapel: I can tell you we've scanned, of course, our software with models. We fixed vulnerabilities. More so, we're using our own Exploit Shield as a shield in front of our customer-facing software and portals in cloud. Our Exploit Shield product, its whole intention is to bring remedy to this issue. Meaning we understand and our customers understand there's a limit to how quickly, if at all, they can deploy patches. One, not always they can create a patch. It can be a legacy software, it can be a third party. If we're talking about large banks, insurance companies, carriers, there are pieces of software that run for 30, 40 years. It's not easy to patch them. Second, the risk of patching is high. Yes, you have a fix for this vulnerability. You don't know what else is going to be broken.

You are aware now of Mobile neurabilities in your software. The ability of the hackers to exploit them is significantly higher. So this creates huge amount of sense of urgency in all our customers and also in internally. Of course I can tell you, we've scanned of course, our software with models and we fixed

Roy Zisapel: Customers in production, in mission-critical applications, are concerned, in general, unrelated to Mythos, unrelated to AI, of upgrading their production software. They will do it in maintenance windows, they'll time it, et cetera. The inability to patch and the risk of patching and the need to do it in a very careful manner is completely opposite to the scale and the speed of the AI attack tools. The whole process is broken. What did we do with Exploit Shield? We understand you cannot patch, so let us shield it. In between the attacker and your application, we create for you this tailored shield for your application based on the vulnerabilities of the scan by Mythos or any other AI model. That shield is tailored exactly to them, and every attacker that will try to exploit, we will block it with shield.

Vulnerabilities—but more. So we are using our own exploits here as a shield in front of our customer-facing software and portals in the cloud. Our Exploit Choose products, their whole intention is to bring remedy to this issue. Meaning, we understand—and our customers understand—there's a limit to how quickly, if at all, they can deploy patches. One, not always can they create a patch; it can be legacy software, it can be a third party. You know, if we're talking about large banks, insurance companies, carriers, there are pieces of software that run for 30 or 40 years—it's not easy to patch them. Second, the risk of patching is high. Yes, you have a fix for this vulnerability, but you don't know what else is going to be broken. So customers in production, in mission-critical applications, are concerned.

In general, unrelated to meters, unrelated to AI or upgrading their production software, they will do it during maintenance windows. They'll time it, etc.

The inability to patch and the risk of patching and they need to do it in a very careful manner is completely opposite to the scale and the speed of the AI attack too. So the whole process is broken. What did we do with exploit Shield? We understand you cannot patch. So let us Shield it.

In between the attacker and your application, we create for you this tailored,

Shield your application based on the vulnerabilities found by the scan, whether it's MITOS or any other AI model.

Roy Zisapel: That buys you time as an enterprise, either to fix your software, assess the risk, or just rely on us as the first line of defense. The Exploit Shield product directly answers this need. It's only been several weeks, but we are getting excellent feedback and interest from the market, and we're engaging now in the initial deals.

That Shield is tailored exactly to them, and every attacker that will try to exploit, we will block it with Shield. That buys you time as an enterprise, either to fix your software or assess the risk. Or just, you know, rely on us as this first line of defense. So, the exploited product directly answers this need, and, you know, it's only been several weeks, but we are getting excellent feedback and interest from the market, and we're engaging now in the initial deals.

Jeff Hopson: All right. That's very helpful. Maybe on the on-prem versus the cloud, there's obviously the secular trend of moving to cloud, but has AI, I guess, changed that decision-making at all with maybe people slower to transition and put more sensitive AI workloads back on-prem, instead of pushing things to the cloud?

Roy Zisapel: Yeah. There's clearly a trend for some AI workloads to be positioned on-prem and not migrate to cloud for cost, for data, for regulation, compliance, et cetera. All of that has lower impact, by the way, on our on-prem business, because we are selling to large customers and carriers. They are by definition hybrid customers. They have their own data centers and they have cloud, and they're positioning our, on what we call our on-prem security. They'll position it in their legacy data centers and in their private cloud data centers. The fact there are more workloads on-prem make it more critical, the on-prem data center, but it doesn't change significantly our business. I want also to make another point, is that in general, our on-prem business is not cannibalized by the cloud.

All right. That's very helpful. Um and and maybe on the on-prem versus the cloud. Um, there's obviously the the secular trend of moving the cloud but has AI, I I guess changed that decision making at all with. Um, you know, maybe people slower to transition and and put more sensitive. AI workloads back on Prem uh, instead of pushing things to the top,

Yeah, that's clearly a trend for for some AI workloads to be positioned on Prem and not to be great to Cloud for cost for data, uh for regulation, compliance Etc.

And all of that has lower impact, by the way, on our on-prem business because we are selling to large customers and carriers.

They are, by definition, hybrid customers. They have their own data centers and they have cloud, and they're positioning our, what we call, our on-prem security—they're positioning it in their, uh,

Private cloud data center. So, the fact that there are more workloads on-prem makes it more critical. The on-prem data center, but it doesn't change.

Roy Zisapel: Meaning, we are mainly selling the DDoS appliances on-prem, and generally large enterprise will deploy what we call a hybrid solution, leveraging our Cloud DDoS and the on-prem device. It's not one or the other, and we don't have that internal cannibalization between our Cloud DDoS and on-prem solutions. In that sense, we feel good about our ability to grow well. The on-prem security solutions we do, while, as I mentioned and Guy mentioned in our comments, continue to scale our cloud security platform that is way broader than DDoS. It has the AI Xploit Shield we talked about, API, AI, WAF, and so on and so forth.

Significantly our business. I want also to to make another point. Is that in general, our on-prem business is not cannibalized by the cloud.

Meaning we are mainly selling the data suppliers with on-prem and generally larger Enterprises will deploy what we call a hybrid solution? Leveraging, our cloud dedos and the on-prem device. So it's not 1 or the other and we don't have that internal cannibalization between our cloud and on-prem solutions. So in that sense, we feel good about our ability to to grow. Well, the on-prem Security Solutions, we do while as I mentioned and the guy mentioned in our comments to continue to scale our Cloud security platform. That is way broader than dose. It has the exploit Shield. We talked about API, AI, what? And so on and so forth.

Jeff Hopson: Makes sense. Thank you for the questions.

Makes sense. Thank you for the question.

Operator: Our next question is from George Notter from Wolfe Research. George, please go ahead.

Our next question is from George Nutter from Wolfe research, George, please, go ahead.

George Notter: Hi, guys. Thanks very much. I guess I'm just curious about, obviously with Mythos and these frontier models exposing vulnerabilities, there's also a concern about running hardware out of support. I guess I'm wondering if there's a significant installed base of DefensePro that's still out there that's being run out of support. Is that a potential opportunity for you guys to refresh more aggressively with customers? I'm just sort of thinking about what kind of opportunity that would look like. Thanks.

Hi guys. Thanks very much. Um, I guess I'm just curious about, um, you know, obviously there—uh, with methods and these frontier models exposing vulnerabilities, um, there's also a concern about running hardware, you know, out of support, and I guess I'm wondering if there's...

Roy Zisapel: Thanks, George. In general, our DefensePro that are running in production, customers don't let it get out of support because they also include the subscriptions, for example, the signature updates against vulnerabilities that are being protected in real-time, geo-blocking, and all kinds of other security services. Generally, our install base is active. I don't see customers, maybe in certain countries that try to save some money on the edge. In the key markets, key customers, they're all under support. We do still have a lot of runway with our DefensePro refresh cycle, meaning I don't think we're even at the middle of that. There's still a very long runway for the refresh, and we're seeing also large customers migrating to us given the strength of the platform.

Uh, a significant installed base of Defense Pro, that's still out there that's being run out of support. Is that a potential opportunity for you guys to refresh more aggressively with customers? I'm just sort of thinking about what kind of opportunity that would look like thanks. Yeah, thanks George Inn in general, our defense Pro that are running in production customers, don't let it go get out of support because they also include the subscriptions for the, uh, for example, the signature updates against vulnerabilities that are being protected in real time gear of blocking and all kinds of other security services. So generally our install base are is is active so I don't see customers.

You know, maybe in third year countries that try to save some money on the on the edge, but in the key markets key customers, they're all under support. We do still have a lot of Runway with our defense for research cycle. Meaning we are you know may I don't think we're even at the middle of that so there's still a very long runway for the refresh and we're seeing also large customers migrating to us given the strength of the platform.

George Notter: Got it. Great. You mentioned the pipeline is looking better. Obviously, these AI threats, I think, probably drive that. Is there anything more you could tell us about the pipeline or the changes that you're seeing? Also, obviously, you guys made a bunch of investments in the selling organization. You moved to this hunter-farmer model. Any more metrics or insights you can give us in terms of the progress there? Thanks.

Roy Zisapel: In general, our cloud security platform pipeline growth is higher than our current ARR growth, which is obviously a very good forward-looking sign. We are very encouraged by that. We continue to generate a lot of pipeline, and the pipeline for the cloud security platform grows on the main modules, like web application firewalling DDoS. More and more we are seeing these platform sales that are multi-model, multi-use cases, and customers are consolidating application infrastructure security on our platforms. To that, API Security, AI Xploit Shield, AI security, are definitely helping us a lot. We're seeing customers asking us for enterprise agreement, given the fact they want to consume more in a more flexible manner. We're definitely seeing all those investments we've made in innovation in the new modules, also impacting the cloud security platform as a whole. That's about pipelines.

Got it. Great. And then, um, could you talk you mentioned that the pipeline is looking better? Um, obviously you know, these AI threats, I think probably drive that. But is there anything more you could tell us about the pipeline or the changes that you're seeing? Uh, also obviously you guys made a bunch of investments in the selling organization. You moved to this hunter gatherer model. Any, any more metrics or insights? You can give us in terms of the progress there. Thanks. Yeah. So in general our Cloud security platform pipeline growth.

Is higher than our current day allow growth, which is obviously a very good forward-looking sign. So we are very encouraged by that. We continue to generate a lot of Pipeline and the pipeline for the cloud security platform goes on the main modules.

Like web application firewall in those, but more and more we are seeing this. This platform sale.

That are multi multimodel multi-use cases and customers are consolidating application infrastructure security. Uh on our platforms and to that API security. Exploit Shield, AI security are definitely helping us a lot. And we're seeing customers asking us for Enterprise agreement, given the fact they want to consume more and more in a more flexible manner. So we're definitely seeing all those Investments. We've made innovation in the new modules also impacting, the cloud security platform as a whole.

Roy Zisapel: Second, I think the North America growth we are demonstrating in the last several quarters is a clear outcome of the go-to-market investments you've mentioned, including the hunter-farmer split, the management we put in place, and so on. I do feel that I'm starting to see similar trends now in Asia-Pacific. It's the first quarter, I think, you're seeing such a movement on the revenue side, our internal indications are quite positive as well there, we are replicating this go-to-market across the world.

You're seeing such a movement on the revenue side, but our internal indications are quite positive there as well, and we are replicating.

This go to market across the world.

George Notter: Got it. One last one. Can you just remind us how you're monetizing the Exploit Shield product? Is that fully a subscription? How are you charging? What's the basis for that? Anything you can say there would be great also. Thanks a lot.

Roy Zisapel: Yeah. Exploit Shield is part of our cloud security platform. All of the revenues are subscription-based in everything that we do cloud security. Everything is subscription, and we charge per application. You're paying the amount of apps you have per year, and that's how we charge for Exploit Shield, and that gives you this isolation, this shield for that application against the vulnerabilities discovered by your AI scanning.

Yeah, and 1 last 1. Um, can you just remind us, um, that how you're monetizing? Uh, the exploit Shield product is that, uh, fully a subscription. How are you? How are you, charging? What, what's the basis for that? Anything you could say, there would be a great offer. Thanks a lot. Yeah. So exploit should is part of our Cloud security platform, all of the revenues are subscription-based in everything that we do Cloud security.

So everything is subscription, and we charge per application.

So your your your paying per the amount of apps you have per year and that's how we charge for exposure. Then that gives you this isolation, this shield for that application against the vulnerabilities discovered by your AI scandal.

George Notter: Thank you.

Thank you.

Operator: There are no further questions. I would like to now hand over the call to Roy for closing remarks. Roy, please go ahead.

Roy Zisapel: Thank you very much for joining us today and for the lively call. Thank you very much.

There are no further questions. I would now like to hand over the call to Roy for closing remarks, or I—please go ahead. Thank you very much for joining us today and for the lively call. Thank you very much.

Operator: Goodbye

Goodbye.

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