☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Ordinary Shares, NIS 0.05 par value per share | RDWR | The Nasdaq Stock Market LLC |
Large Accelerated Filer | Accelerated Filer |
Non-Accelerated Filer ☐ | Emerging growth company ☐ |
☒ | U.S. GAAP |
☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board |
☐ | Other |
Euros;euros;Ordinary Shares,ordinary shares, par value NIS 0.05 per share;"U.S."“U.S.” is to the United States; and®; OnDemand Switch®; Alteon®; APSolute®; LinkProof®; DefensePro®; CID®; SIPDirector®; AppDirector®; AppXcel®; AppXML®; AppWall®; APSolute Insite®; StringMatch Engine®; Web Server Director®; APSolute Vision®; vDirect®; Alteon VA®; AppShape®; FastView®; DefenseFlow®; Virtual DefensePro®; VADI® (Virtual Application Delivery Infrastructure); Radware SecurPath®; ShieldSquare® and the ShieldSquare Logo: ®, and we have non-registered trademarks for, among others, ADC-VX™,; Inflight™,; and CyberStack™ and SecurPath™. Unless the context otherwise indicates, all other trademarks and trade names appearing in this annual report are owned by their respective holders.- 4 -
FORWARD-LOOKING STATEMENTS- 5 - 8 8 8 8 A. [Reserved] 9 B. Capitalization and Indebtedness 9 C. Reasons for the Offer and Use of Proceeds 9 D. Risk Factors 9 3940A. History and Development of the Company 3940B. Business Overview 4041C. Organizational Structure 6163D. Property, Plants and Equipment 636563666466A. Operating Results 6466B. Liquidity and Capital Resources 7479C. Research and Development, Patents and Licenses, etc. 7882D. Trend Information 7883E. Critical Accounting Estimates 81878792A. Directors and Senior Management 8792B. Compensation 9196C. Board Practices 95100D. Employees 100105E. Share Ownership 101106F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation 109 104110A. Major Shareholders 104110B. Related Party Transactions 106112C. Interests of Experts and Counsel 110116111117A. Consolidated Statements and Other Financial Information 111117B. Significant Changes 111117- 6 -112118A. Offer and Listing Details 112118B. Plan of Distribution 112118C. Markets 112118D. Selling Shareholders 112118E. Dilution 112118F. Expenses of the Issue 112118113119A. Share Capital 113119B. Memorandum and Articles of Association 113119C. Material Contracts 113119D. Exchange Controls 113119E. Taxation 113135F. Dividends and Paying Agents 128135G. Statement by Experts 128135H. Documents on Display 128135I. Subsidiary Information 128135J. Annual Report to Security Holders 128135129136131138 132139132139132139132140[Reserved] 133140133140134141134141135142136143136143137144137144137145Insider Trading Policy 145 Cybersecurity 145 138147138147138147138147 140149- 7 -ITEM 1.Not applicable.ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.ITEM 3. KEY INFORMATION- 8 -A.[Reserved]B.Capitalization and Indebtednessremainbe profitable.The COVID-19 pandemic has impacted and may continue to impact our business, operating results and financial condition.- 9 -internal network system isinformation technology systems and data, or those of our service providers and other contractors, are compromised by cyber-attackers or other malicious actors, or by a critical system failure, our reputation, financial condition and operating results could be materially adversely affected.- 10 -An increasingThe amount of intangible assets and goodwill on our books may in the future lead to significant impairment charges.(ESG)(“ESG”) matters expose us to numerous risks, including risks to our reputation, business, financial performance and growth.
Risks Related to the Market for Our Ordinary Sharesour chairman of the board,(and following his death, his estate), Nava Zisapel, and Roy Zisapel, our President, Chief Executive Officer and a director, may exert significant influence in the election of our directors and over the outcome of other matters requiring shareholder approval.- 11 -•Political, economic and military instabilitythe COVID-19 pandemic and record levels of inflation that have resulted in significant volatility and disruptions in the global economy, including central banks in the markets in which we operate that have tightened their monetary policies and raised interest rates, which may impact current and anticipated market demand for our solutions. Uncertainties about current global economic conditions continue to pose a risk as our current or prospective customers may postpone or reduce demand and spending priorities in response to such uncertainties. This could result in, among other things, a reduction in our revenues or a failure to achieve anticipated revenue growth, longer sales cycles, and slower adoption of new technologies as well as downward pressure on the price of our solutions. For example, the United States and Israel have recently experienced high levels of inflation. In the event inflation persists or continues to increase, as well as otherOther macro conditions which may have other adverse effects on the economy, which are difficult to predict, such as instability of any bank with which we maintain a commercial relationship, with, eachinflation pressures, rising interest rates or a period of elevated interest rates. Each of the above events could have a material adverse effect on our business, operating results, and financial condition.- 12 -remainbe profitable."Business“Business Overview—Manufacturing and Suppliers"Suppliers”). We may not be able to diversify sources in a timely and cost-effective manner, which could harm our ability to deliver products to customers and adversely impact present and future sales and profitability.- 13 -(see the risk factor below titled “The COVID-19 pandemic has impacted and may continue to impact our business, operating results and financial condition”and the discussion under Item 4.B "Business Overview—Manufacturing and Suppliers"); lack of skilled labor;labor, the disruption of transportation networks;networks, and adverse weather conditions, could have a material adverse effect on our business, financial condition and results of operations.The COVID-19 pandemic has impacted and may continue to impact our business, operating results and financial condition.The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies and financial markets worldwide, placed constraints on the operations of businesses, caused disruptions in global supply chains, and decreased consumer mobility and activity. Our business has been affected in various ways, including in our sales and marketing, our supply chain and our employees.At the same time, the COVID-19 pandemic has negatively impacted our business by causing some delays in purchasing decisions by some of our customers, and some difficulties in acquiring new customers given travel limitations and limits on in-person interactions with our customers and prospective customers, as well as some disruptions in our supply chain and delivery of products to customers. For example, circumstances related to the COVID-19 pandemic have triggered disruptions in global supply chains and interruptions and delays involving freight carriers that, in turn, have caused difficulties in timely obtaining components from our suppliers, as well as transportation of our products after manufacture to our customers.- 14 -The extent to which COVID-19 will continue to impact our business, financial condition or results of operations, will depend on future developments, which are uncertain and cannot be predicted.88%92% of our direct product costs in 20222023 related to these vendors. If we are unable to continue to acquire from these ODMs and/or other components vendors on acceptable terms or should any of these ODMs and/or components vendors cease to supply us with such platforms or components for any reason, we may not be able to identify and integrate an alternative source of supply in a timely fashion or at the same costs. Any transition to one or more alternate manufacturers could result in delays, operational problems and increased costs, and may limit our ability to deliver our products to our customers on time during such a transition period, any of which could have a material adverse effect on our business, financial condition and results of operations.2021 and 2022,the past few years, which contributed to significant levels of employee attrition and is currently facing a severe shortage of skilled human capital, including qualified personnel in the cyber security domain. domain. Additionally, we may be unable to hire or retain talent who are trained in artificial intelligence (AI), machine learning and advanced algorithms, to keep pace with the rapid and continuous technological changes in our industry. In addition, while we utilize non-competition agreements with our employees as a means of improving our employee retention, we may be unable to enforce these agreements under applicable laws. In light of the foregoing, we may not be able to hire or retain sufficient personnel to support our business operations or, if we do, we may be required to offer increased compensation to attract such employees, which could have a material adverse effect on our business, financial condition and results of operations.- 15 -and increased migration to cloud environments.environments and the introduction of interactive AI technologies (LLM-based) that enable adversaries a faster time to launch cyber attacks. Such technological changes and transformations are accompanied by, in addition to a rapidly evolving and active cyber threat landscape that is accelerated by weaponized AI tools, changes in applicationnetworks, applications infrastructure, architecture tools and increasingly demanding compliance mandates. The challenges we face are centered around the timing and effectiveness of response and include:application levelcomplex application-level attacks, such as Business Logic Attacks (BLA), encrypted attacks, usage of open source third-party attack libraries, encrypted attacks,and/or AI, natural language processing (NLP) and automated attacks and edge/client delivery related attacks;- 16 -addressing new regulations and compliance standards, including those related to publicly exposed services that require the validation of safety of sensitive data provided or consumed by the service consumers;- 17 -artificial intelligenceAI to identify and exploit vulnerabilities from both technical and social engineering perspectives. In addition, the COVID-19 pandemic significantly impact online behavior and the continued remote and hybrid working arrangements may affectat our Company (and at many third-party providers), such as those that evolved during the security of businessesCOVID-19 pandemic and individuals (for example,continued after the pandemic, also increase cybersecurity risks due to the prevalence ofchallenges associated with managing remote computing assets and the security vulnerabilities inherentthat are present in many non-corporate and home networks), andnetworks. We may acquire companies or enter into information technology system integrations with companies that have cybersecurity vulnerabilities or unsophisticated security measures, which would expose us to increased risks. In addition, we have observedcannot comprehensively identify all misconfigurations, “bugs” or vulnerabilities in proprietary or third-party systems or software used by our business, or guarantee that patches or compensating controls will be applied before vulnerabilities can be exploited by a significant increase in cyberattack activity since the beginning of the pandemic that has also continued.threat actor. If we fail to identify and respond to new and increasingly complex methods of attack or to update our solutions to detect or prevent such threats in time to protect our end-users’ critical business data, the integrity of our solutions and reputation, as well as our business and operating results, could suffer.customers’ data of customers, employees, business partners and others, including personally identifiable information, as well as proprietary information belonging to our business such as trade secrets, and compromise our customers’ networks and applications that are secured by our physical and cloud solutions. Moreover, any use or integration of generative or other AI in our, or any third party’s, operations, products or services will pose new and/or unknown cybersecurity risks and challenges. If such a security breach results in the disruption or loss of availability, integrity or confidentiality of customers’ data, we could incur significant liability to our customers and to businesses or individuals whose information was being handled by our customers, in addition to liability imposed by regulatory agencies. There can be no assurance that limitation of liability, indemnification or other protective provisions that we attempt to include in our contracts would be applicable, enforceable or adequate in connection with a security breach, or would otherwise protect us from any such liabilities or damages with respect to any particular claim.internal network system isinformation technology systems and data, or those of our service providers and other contractors, are compromised by cyber-attackers or other malicious actors, or by a critical system failure, our reputation, financial condition and operating results could be materially adversely affected.are aimedthreaten the confidentiality, integrity and availability of our computer and information technology at our own internalcomputer and information technology systems and network environment. We are subject to many different types of attacks, including, among others, malware, viruses and attachments to e-mails, web application attacks, e-mails, web application attacks, Distributed Denial of Service (DDoS) attacks, and other disruptive activities of individuals or groups, all of which are designed to impede the performance of our solutions, penetrate our network security or the security of our cloud platform or our internal systems, misappropriate proprietary and other important data and personal information we process or maintain and/or cause other interruptions to our services. We and certain of our third-party providers regularly experience cyberattacks and other incidents, and we expect such attacks and incidents to continue in varying degrees. While to date no attacks or incidents have had a material impact on our operations or results, we cannot guarantee that material incidents will not occur in the future. We expect cyberattacks to accelerate on a global basis in both frequency and magnitude, as threat actors are increasingly sophisticated in using techniques and tools – including AI – that can circumvent controls, evade detection and remove forensic evidence. As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact on our information technology systems, confidential information or business. Furthermore, third parties may attempt to illegally induce employees or customers into disclosing our proprietary information or otherwise compromising the security of our internal networks, systems or physical facilities in order to gain access to our data or our customers’ data. An actual or perceived breach of security in our internal systems could adversely affect the integrity and market perception of our solutions. Furthermore, the costs to eliminate or address security threats and vulnerabilities before or after a cyber-security incident and any resulting regulatory or litigation actions could be significant.- 18 -claim.litigation (including class actions), reputational impacts, and the loss of partners, collaborators and customers. Additionally, our professional, product, and cyber liability insurance coverages may only cover certain liabilities in connection with a security breach or other security incident and may not adequately cover all liabilities actually incurred, and we cannot assure you that insurance will continue to be available to us on commercially reasonable terms, if at all, or that any insurer will not deny coverage as to any future claim.- 19 -20222023 and 2021,2022, our sales outside North, Central and South America represented approximately 58%60% and 55%58%, respectively, of our total sales. We also rely on third-party service providers around the world to supply physical hosting and cloud environments in order to deliver and support our cloud-based services. Our global business operations involve varying degrees of risk and uncertainty inherent in doing business in so many different jurisdictions. Such risks include, among others,others: difficulties and costs of staffing and managing foreign operations; the possibility of unfavorable circumstances and additional compliance costs arising from host country laws or regulations, including unexpected changes in the interpretations thereof and reduced protection for intellectual property rights in some countries; partial or total expropriation; export duties and quotas; local tax exposure; economic or political instability, including as a result of insurrection, war, natural disasters, and major environmental, climate or public health concerns, such as the COVID-19 pandemic; differences in business practices; recessionary environments in multiple foreign markets; and damage to, or failure of, systems at third-party hosting facilities around the word resulting in outages or interruptions in our cloud-based services. We cannot be certain that the foregoing factors will not have a material adverse effect on our future revenues and, as a result, on our business, operating results, and financial condition.Although we have been profitable in the past several years, weWe incurred net losses during 2022.2022 and 2023. Our ability to reach, maintain or increase profitability in the future depends in part on the following factors: the economic health of the global economy, including geopolitical tensions, the potential effects of the COVID-19 pandemic,tensions; record levels of inflation and rising interest rates ora period of elevated interest rates; the rate of growth of, and changes in technology trends in our market and other industries in which we currently or may in the future operate; our ability to develop and manufacture new products and technologies and deliver new solutions in a timely manner; the competitive position of our products and services; the continued acceptance of our solutions by our customers and in the industries that we serve; and our ability to manage expenses. In the future, it may be necessary to undertake cost reduction initiatives to remainbe profitable, which could lead to a deterioration of our competitive position. Any difficulties that we encounter as we reduce our costs could negatively impact our results of operations and cash flows. Our revenues may not continue to increase or may grow at a lower rate than we have experienced in the past several years or may even decline, which would negatively impact our results of operations and cash flows. We cannot assure you that we will remainbe profitable.- 20 -twelve12 months (and in some cases even longer, for example, with carrier customers) from initial presentation to sale. Long sales cycles result in a delay to our generation of revenue. Long sales cycles also subject us to risks not usually encountered in short sales cycles, including our customers’ budgetary constraints and internal acceptance reviews and processes prior to purchase. In addition, orders expected in one quarter could shift to another because of the timing of our customers’ procurement decisions. Furthermore, customers may defer orders in anticipation of new solutions or product enhancements introduced by us or by our competitors. These factors complicate our planning processes and reduce the predictability of our financial performance.- 21 -, our pursuit of potential acquisitions may divert our management’s attention from our core business and require considerable cash outlays at the expense of our existing operations, whether or not such transactions are consummated. A failure of any acquisitions or product developments to produce increased revenues could have a material adverse effect on our operations and profitability.- 22 -Euros,euros, thereby exposing us to currency fluctuations in such international sales transactions;- 23 -Commencing in 2022, although we engaged in foreign currency hedging transactions intendedNot all of our potential exposure to reduce the effect of fluctuations in foreign currency exchange rates on our financial position and results of operations not all of our potential exposure is covered and, regardless, by the foreign currency hedging transactions we engage in from time to time. Furthermore, there can be no assurance that any such hedging transactions will materially reduce the effect of fluctuations in foreign currency exchange rates on such results. For a further discussion of the impact on currency exchange rates on our business, see Item 11 “Quantitative and Qualitative Disclosures About Market Risk.”- 24 -regime.regime. GDPR and UK DP Laws can expose us to enforcement actions and investigations by regulatory authorities and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail and if we fail to disclose any material cybersecurity incident in an adequate and timely manner. Accordingly, a data security breach or privacy violation that leads to unauthorized access to, disclosure or modification of personal information, that prevents access to personal information or materially compromises the privacy, security, or confidentiality of the personal information, could result in fines, increased costs or loss of revenue. Our compliance with GDPR and UK DP Laws,, as well as other data privacy and cyber security laws around the world, evolving regulations of cloud computing, cross-border data transfer restrictions and other domestic or foreign regulations, has required and will continue to require us to invest significant resources in compliance and compliance-related areas. - 25 -States. States. These recent developments may require us to review and amend the legal mechanisms by which we make and/or receive personal data transfers to or in the U.S. Such legal developments also cause us to look at our operations and review our data flows to ensure we can continue to meet clients’ increasing requests for data to remain in-country or in-region. At the same time, if, contrary to this trend, regulations and standards related to cyber security are changed in a manner that makes them less onerous, our customers may view government and industry regulatory compliance as less critical to their businesses, and our customers may purchase fewer of our solutions, or none at all. In either case, our sales and financial results would be negatively impacted and could be materially adversely affected.have established processes to help alleviate these risks, including a review process for screening requests from our development organization for the use of open source software, but we cannot be sure that all open source software is submitted for approval prior to use in our products.products and while we scan the open-source software that we use in our products and patch discovered vulnerabilities, we have no assurance that they will be free from vulnerabilities or malicious code. The use of open-source software in our solutions may expose us, and our customers using our solutions, to additional vulnerabilities and security breaches, which may result in significant adverse impacts to us and our customers. In addition, open source license terms may be ambiguous and many of the risks associated with use of open source software cannot be eliminated, and could, if not properly addressed, negatively affect our business. We may face ownership claims from third parties over, or seeking to enforce the license terms applicable to, such open source software, including by demanding the release of the open source software, derivative works or our proprietary source code. Any such requirement to disclose our source code or other confidential information related to our products could materially and adversely affect our competitive position and may adversely impact our business, results of operations and financial condition. In addition, if the license terms for the open source code change, we may be forced to re-engineer our software or incur additional costs.- 26 -An increasingThe amount of intangible assets and goodwill on our books may in the future lead to significant impairment charges.2022,2023, approximately $87.7$83.7 million, compared to $51.9$87.7 million as of December 31, 2021.2022. We regularly review our intangible and tangible assets, including goodwill, for impairment. Goodwill is subject to impairment review at least annually, and other intangible assets are reviewed for impairment when there is an indication that impairment may have occurred. Impairment testing has led to, and may in the future lead to, significant additional impairment charges.while we intend to vigorously maintain our positions, we cannot be sure that our positions will be accepted, and we may end up paying additional taxes, whether as a result of litigation, if instituted, or settlement negotiations. While we have establishedOur reserves, which are based on various assumptions and estimates, that we believe are reasonable to cover such positions, these reserves may prove to be insufficient and as such, our future results may be adversely affected.- 27 -2022, compared to $465.8 million as of December 31, 2021.2022. The performance of the capital markets is the primary factor that affects the values of funds that are held in marketable securities. While we believe we have taken a conservative approach in our investments, by investing the majority of our debt marketable securities portfolio at securities that are rated A- or higher, theseThese assets are subject to market fluctuations and various developments, including, without limitation, rating agency downgrades that may impair their value. We expect that market conditions will continue to fluctuate and that the fair value of our investments may be affected accordingly, including, without limitation, by the economic effects of the COVID-19 pandemic and the rising levels of inflation and interest rates or a period of elevated interest rates.- 28 -20222023 and 2021,2022, we had $8.1$13.9 million and $4.4$8.1 million, respectively, of net financial income, that was primarily derived from changes in foreign currency exchange rates and the value of our investments.investments and interest income from our bank deposits. The performance of the capital markets affects the values of our funds that are held in marketable securities. These assets are subject to market fluctuations and will yield uncertain returns. Due to certain market developments, including investments’ rating downgrades, the fair value of these investments may decline. If market conditions continue to fluctuate, the fair value of our investments may be impacted accordingly. Although our investment guidelines stress diversification and capital preservation, our investments are subject to a variety of risks, including risks related to general economic conditions, interest rate fluctuations and market volatility.2022, and our net income would have decreased by $0.5 million during the year ended December 31, 2021.2022. Any significant decline in our financial income or the value of our investments as a result of continued high interest rates, deterioration in the credit worthiness of the securities in which we have invested, general market conditions or other factors could have an adverse effect on our results of operations and financial condition.- 29 -including:including, for example:•blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians and those with government connections or involved in Russian military activities;- 30 -blocking sanctions against Russian and Belarusian individuals, including the Russian President, other politicians and those with government connections or involved in Russian military activities;EUE.U. persons in the so-called People’s Republic of Donetsk and the so-called People’s Republic of Luhansk (and, with respect to the E.U., the areas of Kherson and Zaporizhzhia not controlled by the Ukrainian government), with all of these new restrictions largely tracking prior prohibitions relating to Crimea and Sevastopol;asincluding E.U. and U.K. prohibitions on exporting a whole, includingwide range of “industrial” goods to Russia (and on importing a large number of “revenue-generating” goods from Russia). The restrictions also include bans on the export of large numbers of “luxury” items to Russia (and in some cases also to Belarus), tighter controls on exports and re-exportsreexports of dual-use items, stricter licensing policy with respect to issuing export licenses, and/or increased use of “end-use” controls to block or impose licensing requirements on exports, as well as higher import tariffs and a prohibition on exporting luxury goods to Russia and Belarus;tariffs; andStates.States;- 31 -2021, 7% and 5%, respectively, of our total revenues were from sales to customers located in Russia. We continuously review and monitor our contractual relationships with suppliers and customers to establish whether any of them are the target of the applicable sanctions. In the event that we identify a party with which we have a business relationship that is the target of applicable sanctions, we would immediately activate a legal analysis of what gives rise to the business relationship, including any contract, to estimate the most appropriate course of action to comply with the sanction regulations, together with the impact of a contractual termination according to the applicable law, and then proceed as required by the regulatory authorities. However, given the range of possible outcomes, the full costs, burdens, and limitations on our and our customer’s and business partners’ businesses are currently unknown and may become significant.resulting frominclude changes in laws and regulations on climate change, which may increase our compliance costs and limit our ability to operate. Similarly, the evolving customer and other stakeholder expectations and regulatory requirements to reduce carbon emissions could present a risk of loss of business if we are not able to meet those expectations or requirements.environmental, social and governance (ESG)ESG matters expose us to numerous risks, including risks to our reputation, business, financial performance and growth.- 32 -the Market for Our Ordinary SharesYehuda Zisapel, our chairman of the board, Nava Zisapel, and Roy Zisapel, our President, Chief Executive Officer and director, may exert significant influenceOperations in the election of our directors and over the outcome of other matters requiring shareholder approval.IsraelAsPolitical, economic and military instability in the Middle East or Israel, including the state of March 26,war declared in Israel in October 2023, Yehuda Zisapel,may harm our business.Chairman offuture. This would increase taxes and decrease our Board of Directors, beneficially owned approximately 4.44% ofnet profit.outstanding ordinary shares; Nava Zisapel, beneficially owned approximately 6.98% of our outstanding ordinary shares;officers and their son, Roy Zisapel, our President, Chief Executive Officer and director, beneficially owned approximately 3.40% of our outstanding ordinary shares (see Item 6.E “Share Ownership”). As a result, if these shareholders act together, they could exert significant influence on the election of our directors and on decisions by our shareholders on matters submitted to shareholder vote, including mergers, consolidations and the sale of all or substantially all of our assets. This concentration of ownership of our ordinary shares could delay or prevent proxy contests, mergers, tender offers, or other purchases of our ordinary shares that might otherwise give our shareholders the opportunity to realize a premium over the then-prevailing market price for our ordinary shares. This concentration of ownership may also adversely affect our share price.assert U.S. securities laws claims in Israel.Provisions of our Articles of Association and Israeli law as well as the terms of our equity incentive plan could delay, prevent or make a change of control of us more difficult or costly, which could depress the price of our ordinary shares.The provisions in our Articles of Association relating to the election of our directors in three staggered classes, the submission of shareholder proposals for shareholders meetingsthe quorum requirement for adjourned shareholder meetings may have the effect of delaying or making an unsolicited acquisition of our Company more difficult. Israeli corporate and tax laws, including the ability of our Board of Directors to adoptresponsibilities as a shareholder will be governed by Israeli law, which may differ in some respects from the rights plan without further shareholder approval, may alsoand responsibilities of shareholders of U.S. companies.thea material adverse effect on our results of delaying, preventing or making an acquisition of us more difficult. For example, under the Companies Law, upon the request of a creditor of either party to a proposed merger, an Israeli court may delay or prevent the merger if it concludes that thereoperations.a reasonable concern that,affected by global economic conditions, uncertainties and downturns, including as a result of the merger,state of war declared in Israel in October 2023 and instability in the surviving companyMiddle East (see the risk factor below titled “Political, economic and military instability in the Middle East or Israel, including the state of war declared in Israel in October 2023, may harm our business”), the war in Ukraine (see the risk factor below titled “Our business may be affected by sanctions, export controls and similar measures targeting Russia and other countries and territories as well as other responses to Russia’s military conflict in Ukraine, including indefinite suspension of operations in Russia and dealings with Russian entities by many multi-national businesses across a variety of industries”), the tensions between China and Taiwan, and central banks in the markets in which we operate that have tightened their monetary policies and raised interest rates, which may impact current and anticipated market demand for our solutions. Uncertainties about current global economic conditions continue to pose a risk as our current or prospective customers may postpone or reduce demand and spending priorities in response to such uncertainties. This could result in, among other things, a reduction in our revenues or a failure to achieve anticipated revenue growth, longer sales cycles, and slower adoption of new technologies as well as downward pressure on the price of our solutions. Other macro conditions may have other adverse effects on the economy, which are difficult to predict, such as instability of any bank with which we maintain a commercial relationship, inflation pressures, rising interest rates or a period of elevated interest rates. Each of the above events could have a material adverse effect on our business, operating results, and financial condition.satisfyhire or retain talent who are trained in artificial intelligence (AI), machine learning and advanced algorithms, to keep pace with the obligationsrapid and continuous technological changes in our industry. In addition, while we utilize non-competition agreements with our employees as a means of improving our employee retention, we may be unable to enforce these agreements under applicable laws. In light of the foregoing, we may not be able to hire or retain sufficient personnel to support our business operations or, if we do, we may be required to offer increased compensation to attract such employees, which could have a material adverse effect on our business, financial condition and results of operations.partiesintroduction of interactive AI technologies (LLM-based) that enable adversaries a faster time to launch cyber attacks. Such technological changes and transformations are accompanied by, in addition to a rapidly evolving and active cyber threat landscape that is accelerated by weaponized AI tools, changes in networks, applications infrastructure, architecture tools and increasingly demanding compliance mandates. The challenges we face are centered around the timing and effectiveness of response and include:merger.changes in applications’ deployment frameworks, workflows and architectures, massive usage of Application Programming Interface (API) stacks, third-party attacks that require browser security presence, supply chain attacks and new edge delivery technologies in response to the rise of modern applications buildup and delivery requirements;Key Employee Share Incentive Plan (1997), as amended,solution portfolio might expose us to direct competition with new players and might require additional investments in the associated sales and marketing practices.the Share Incentive Plan provides that,if we fail to gain market acceptance of our new solutions or enhanced solutions, our business, operating results, and financial condition could be materially adversely affected.“Hostile Takeover” (which is defined to include, among others, an unsolicited acquisition of more than 20%significant cybersecurity incident. Moreover, any actual or perceived cyber-attack, other security breach, exposure or theft of our outstanding shares),or our customers’ data, regardless of whether the vesting of allbreach or a portiontheft is attributable to the failure of our outstanding equity awards will accelerate, unless otherwise determined bysolutions, could:Boardsecurity solutions,Directors (orwhich could have a committee thereof).material adverse effect on our operations, financial condition and reputation.an acquisitionour solutions may be unable to anticipate these techniques and provide timely or effective protection to our end-users’ networks or applications, particularly due to the increased use by attackers of tools and techniques that are designed to circumvent security controls, to avoid detection and to remove or obfuscate evidence. The global marketplace also expects actors to increasingly develop innovative attack methodologies utilizing AI to identify and exploit vulnerabilities from both technical and social engineering perspectives. In addition, continued remote and hybrid working arrangements at our Company (and at many third-party providers), such as those that evolved during the COVID-19 pandemic and continued after the pandemic, also increase cybersecurity risks due to the challenges associated with managing remote computing assets and the security vulnerabilities that are present in many non-corporate and home networks. We may acquire companies or enter into information technology system integrations with companies that have cybersecurity vulnerabilities or unsophisticated security measures, which would expose us to increased risks. In addition, we cannot comprehensively identify all misconfigurations, “bugs” or vulnerabilities in proprietary or third-party systems or software used by our business, or guarantee that patches or compensating controls will be applied before vulnerabilities can be exploited by a threat actor. If we fail to identify and respond to new and increasingly complex methods of attack or to update our solutions to detect or prevent such threats in time to protect our end-users’ critical business data, the integrity of our Company that triggers the said acceleration will be more costly to a potential acquirer. These provisions could cause our ordinary shares to trade at prices below the price for which third parties might be willing to pay to gain control over us. Third parties who are otherwise willing to pay a premium over prevailing market prices to gain control of us may be unwilling to do so because of these provisions.- 33 -Our share price has been volatile in the pastsolutions and may be subject to volatility in the future.The market price for our ordinary shares,reputation, as well as the prices of shares of other technology companies, has been volatile. For example, during 2022 the lowest closing price of our share was $17.42, compared to the highest closing price of our share of $41.67 during the same year. The volatility of our share price may have a negative impact on our financial performance as a result of its negative impact on employee retention. Numerous factors, many of which are beyond our control, may cause the market pricebusiness and trading volume of our ordinary shares to fluctuate significantly and decrease further, including:operating results, could suffer.operating results that do not meet forecasts by securities analysts;announcements concerning usFurthermore, security breaches or our competitors;the introduction of new products and new industry standards;general market conditions and changes in market conditionsdefects in our industry;the general state of securities markets (particularly the technology sector);•political, economic and other developments in the State of Israel, the U.S. and worldwide, including, for example, the recent military conflict in Ukraine; andany of the events underlying any of the other riskssolutions could result in loss or uncertainties set forth elsewhere in this annual report actually occurs.If we are characterized as a passive foreign investment company, our U.S. shareholders may suffer adverse tax consequences.Generally, if for any taxable year, after applying certain “look through” tax rules, (i) 75% or more of our gross income is passive income, or (ii) at least 50% of the fair market value of our assets, averaged quarterly over our taxable year, are held for the productionalteration of, or produce, passive income, we would be characterizedunauthorized access to, data of customers, employees, business partners and others, including personally identifiable information, as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. If we are classifiedwell as a PFIC, our U.S. shareholders could suffer adverse U.S. tax consequences, including having gain realized on the sale of our ordinary shares treated as ordinary income, as opposed to capital gain income, and having potentially punitive interest charges apply to such gain. Similar rules would apply to certain “excess distributions” made with respectproprietary information belonging to our ordinary shares.- 34 -Forbusiness such as trade secrets, and compromise our taxable year ended December 31, 2022,customers’ networks and applications that are secured by our physical and cloud solutions. Moreover, any use or integration of generative or other AI in our, or any third party’s, operations, products or services will pose new and/or unknown cybersecurity risks and challenges. If such a security breach results in the disruption or loss of availability, integrity or confidentiality of customers’ data, we do not believe that we should be classified as a PFIC.could incur significant liability to our customers and to businesses or individuals whose information was being handled by our customers, in addition to liability imposed by regulatory agencies. There can be no assurance however, that the IRS will not challenge this treatment, and it is possiblelimitation of liability, indemnification or other protective provisions that the IRS couldwe attempt to treatinclude in our contracts would be applicable, enforceable or adequate in connection with a security breach, or would otherwise protect us as a PFIC for 2022 and prior taxable years. The tests for determining PFIC status are applied annually, and require a factual determinationfrom any such liabilities or damages with respect to any particular claim.depends on, among other things, the compositionour solutions will be free of flaws or vulnerabilities. Our end-users may also misuse our income, assets and activities in each taxable year, and can only be made annually after the close of each taxable year. Furthermore, the aggregate value of our gross assets is likely to be determined in part by reference to the trading price of our ordinary shares,solutions, which could fluctuate significantly. We haveresult in vulnerabilities to a substantial balancebreach or theft of cash and other liquid investments, which are passive assets for purposes of the PFIC determination. Accordingly, if our market capitalization declines significantly, it may make our classification as a PFIC more likely for the current or future taxable years. Accordingly,business data. Furthermore, there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our information technology systems and confidential information.not become a PFICbe profitable.taxable years. periods. Our decision to increase operating expenses and the scope of such increases depends upon several factors, including the market situation and the effectiveness of our past expenditures. We may continue to make additional expenditures in anticipation of generating higher revenues, which we may not realize, if at all, until sometime in the future. This could cause reductions in our profitability or lead to losses. Additionally, a failure of any acquisition or product development initiative to produce increased revenues could have a material adverse effect on our operations and profitability.shareholdersdollars. When the U.S. dollar is weak, our foreign currency-denominated expenses will be higher, whereas if the U.S. dollar is strong, our foreign currency-denominated expenses will be lower. If the NIS strengthens against the U.S. dollar, the dollar value of our Israeli expenses will increase and may have a material adverse effect on our business, operating results, and financial condition;consulta claim be asserted. Moreover, the occurrence of errors and defects, whether caused by our products or the components supplied by another vendor, may result in significant customer relations problems and injure our reputation, thereby impairing the market acceptance of our products.advisorsliabilities, including due to tax positions we have taken, could materially adversely affect our results of operations and financial condition.U.S. tax consequencesE.U., the areas of investing in our ordinary shares. For a more detailed discussionKherson and Zaporizhzhia not controlled by the Ukrainian government), with all of the rulesthese new restrictions largely tracking prior prohibitions relating to PFICsCrimea and related tax consequences, please seeSevastopol;sectionexport of this annual report titled Item 10.E “Taxation—United States Federal Income Tax Considerations.”large numbers of “luxury” items to Russia (and in some cases also to Belarus), tighter controls on exports and reexports of dual-use items, stricter licensing policy with respect to issuing export licenses, and/or increased use of “end-use” controls to block or impose licensing requirements on exports, as well as higher import tariffs;Ifis treated as owning at least 10% of our ordinary shares, such holderwhich may be subject to adverse U.S. federal income tax consequences.interpreted broadly (with a similar prohibition also enacted by the United Kingdom);Depending uponaggregate valueprovision of certain professional services, including accounting, trust and voting powercorporate formation, auditing, and management consulting services, among others; andour ordinary shares thatservices related to the worldwide maritime transportation of seaborne Russian oil, if purchased above a specific price cap.persons are treated as owning (directly, indirectly, or constructively), we couldDepartment of Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council and other relevant governmental authorities. We must be treated as a controlled foreign corporation (a “CFC”). Additionally, because our group consists of one or more U.S. subsidiaries, certain of our non-U.S. subsidiaries will be treated as CFCs, regardless of whether or not we are treated as a CFC. If a U.S. person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “U.S. shareholder” with respect to each CFC in our group (if any), which may subject such person to adverse U.S. federal income tax consequences. Specifically, a U.S. shareholder of a CFC may be required to annually report and include in its U.S. taxable income its pro rata share of each CFC’s “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property, whether or not we make any distributions of profits or income of a CFC to such U.S. shareholder. If you are treated as a U.S. shareholder of a CFC, failure to comply with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect to your U.S. federal income tax return for the year for which reporting was due from starting. Additionally, a U.S. shareholder that is an individual would generally be denied certain tax deductions or indirect foreign tax credits that may otherwise be allowable to a U.S. shareholder that is a U.S. corporation. We cannot provide any assurances that we will assist investors in determining whether we or any of our non-U.S. subsidiaries are treated as CFCs or whether any investor is treated as a U.S. shareholder with respect to any of such CFC, nor do we expect to furnish to any U.S. shareholders information that may be necessaryready to comply with the aforementioned reportingexisting and tax paying obligations.any other potential additional measures imposed in connection with the conflict in Ukraine. The United States Internal Revenue Service provided limited guidance on situationsimposition of such measures could adversely impact our business, including preventing us from performing existing contracts, recognizing revenue, pursuing new business opportunities or receiving payment for products already supplied or services already performed with customers.investors may rely on publicly available alternative informationwe have a business relationship that is the target of applicable sanctions, we would immediately activate a legal analysis of what gives rise to the business relationship, including any contract, to estimate the most appropriate course of action to comply with the sanction regulations, together with the impact of a contractual termination according to the applicable law, and then proceed as required by the regulatory authorities. However, given the range of possible outcomes, the full costs, burdens, and limitations on our and our customer’s and business partners’ businesses are currently unknown and may become significant.and tax paying obligationsare incomplete or inaccurate, or if we fail to achieve progress with respect to foreign-controlled CFCs. U.S. investors should consult their advisors regardingour ESG goals on a timely basis, or at all, our reputation, business, financial performance and growth could be adversely affected. In addition, this emphasis on ESG matters has resulted and may result in the potential applicationadoption of these rulesnew laws and regulations, including new reporting requirements. If we fail to their investment incomply with new laws, regulations or reporting requirements, our ordinary shares.
• | Products – We offer a range of cloud-based subscriptions, |
• | Services – We offer |
• | Radware’s Core Business - this segment consists of our core business operations, including our cloud security as-a-service products, application and data centers security products and our application availability products; and |
• | The Hawks’ Business – this segment consists of the operations of our two subsidiaries: SkyHawk Security, a spinoff of our former cloud native protector business which now provides an agentless Cloud-native threat Detection and Response (CDR), combined with Cloud Infrastructure Entitlement Manage (CIEM), Cloud Security Posture Management CSPM and Autonomous Purple Team for AWS Google Cloud and Azure, and EdgeHawk, which is engaged in transforming routers and network nodes into security platforms. |
o | Cloud DDoS Protection Service. Our Cloud DDoS Protection Service provides a full range of enterprise-grade DDoS protection services in the cloud. Based on our DDoS protection technology, it aims to offer organizations wide security coverage, accurate detection and short time to protect from today’s dynamic and evolving DDoS attacks. We offer a multi-vector DDoS attack detection and mitigation service, handling network-layer attacks, server-based attacks and application-layer DDoS attacks. |
◾ | Always-On Cloud DDoS Protection Service. This service provides always-on protection where traffic is always routed through Radware’s cloud security scrubbing centers with no on-premise device required for detection and mitigation. This service is recommended for organizations that have applications hosted in the cloud or those that are not able to deploy an on-premise attack mitigation device in their data center. |
◾ | Always-On Hybrid Cloud DDoS Protection Service. This service integrates with our on-premise DDoS Protection device. The traffic is mitigated in the on-premise device and diverted through Radware’s cloud security scrubbing centers upon a large volumetric DDoS attack that aims to saturate the internet pipe. This service is recommended for organizations that place a high premium on the user experience and wish to avoid even the slightest possible downtime as a result of DDoS attacks. |
◾ | On-Demand Cloud DDoS Protection Service. This service protects against internet pipe saturation and is activated when the attack threatens to saturate the organization’s internet pipe. This service is recommended for organizations that are looking for the lowest cost solution and are less sensitive to real-time detection of DDoS attacks. |
◾ | On-Demand Cloud Hybrid DDoS Protection Service. The on-premise DefensePro device detects and mitigates all types of DDoS attacks in real-time, while volumetric DDoS attacks are diverted and mitigated in the cloud. This service is recommended for organizations that can deploy an on-premise device in their data centers. |
o | Cloud Web DDoS Protection. We offer our Cloud DDoS Protection users an additional protection layer dedicated to detecting and mitigating sophisticated application-layer DDoS attacks. Our Cloud Web DDoS Protection uses advanced L7 behavioral-based detection and mitigation techniques to block sophisticated Web DDoS Tsunami attacks, offering protection against advanced HTTP/S floods that use randomization techniques to bypass traditional protections. |
o | Cloud WAF Our Cloud WAF is available in two packages: |
o | Enterprise Package: Includes a comprehensive web security coverage, including OWASP Top-10, advanced attacks and zero-day attack protection, that is fully managed and monitored 24x7 and designed to guarantee service availability at any given time with protection against today’s emerging web application and DDoS attacks. |
o | Enterprise Premium Package: Includes all web security and managed services offered in the Enterprise package, in addition to a dedicated technical account manager and |
o | Bot |
o |
o | Cloud Application Protection Services. Our Cloud Application Protection Services |
◾ | Protect Digital Assets and Data. Our Cloud Application Protection Services |
◾ | Protect Against OWASP Vulnerabilities. Our solution |
◾ | Protect Against Zero-Day Attacks. Our positive security model assists in stopping unknown threats in their tracks. Our machine-learning analysis engine continuously studies application traffic and end-user behavior to build and |
◾ | Detect, Manage, and Mitigate Bots. Our solution detects and distinguishes between “good” bots and “bad” bots to protect websites, mobile apps, and APIs against a wide range of application attacks, such as account takeover credential, denial of inventory, ad and payment fraud, web scraping and more. |
◾ | Protect APIs. API attacks are a rapidly growing threat to business applications and customer data. Our solution combines behavioral analysis and policy automation to protect evolving API matrix from increasingly sophisticated API assaults. |
◾ | Client-Side Protection From Supply Chain Attacks. As server-side security improves, more hackers target the less protected and rarely monitored client side. Radware helps protect end users’ data when interacting with any third-party services in the application supply chain, including form jacking, skimming and DOM XSS. |
◾ | Mitigate Application-Level DDoS Assaults. Our Web DDoS |
o | DefensePro Attack Mitigation Device. DefensePro® provides automated DDoS protection from fast-moving, high-volume, encrypted, or very-short-duration threats and is |
o | Radware Kubernetes WAF. Radware Kubernetes WAF is a Web Application Firewall solution for CI/CD environments orchestrated by Kubernetes. Our Kubernetes WAF integrates with common software provisioning, testing and visibility tools in the CI/CD pipeline offering both IT security and DevOps personnel detailed insight down to the pod and container levels, and enables organizations to implement application and data security in on-premise and cloud-based implementations. |
o | Alteon® Application Delivery Controller (ADC). Alteon is our application delivery and security solution that manages application traffic across cloud and data center locations, optimizing availability and performance. It provides advanced, end-to-end local and global load balancing capabilities for web, cloud and mobile-based applications. Alteon integrates multiple application protection services to provide protection against an array of cyber threats. Alteon’s analytics also provides insightful visibility so that IT managers can manage and guarantee application service level agreement (SLA) and stay ahead of cyberattacks. |
• | Alteon Deliver Package. For applications that require high performance ADCs with advanced layer 4-7 ADC functionality. |
• | Alteon Perform Package. For deployments requiring performance optimization, advanced application performance monitoring, global server load balancing, link load balancing, and automated/optimized ADC service operation. |
• | Alteon Secure Package. For applications that require our most advanced protections, including an embedded WAF module, authentication gateway, bot management, threat intelligence feeds (ERT Security Updates Service, ERT Active Attackers Feed, and ERT Location-based Mitigation), and SSL processing from perimeter security devices (with its embedded SSL inspection module). |
o | LinkProof NG. LinkProof® NG is a multi-homing and enterprise gateway solution that allows service level availability and continuous connectivity of enterprise and cloud-based applications. It is an application-aware multi-homing and link load balancing module that delivers 24/7 continuous connectivity and service level assurance, improved performance, and cost-effective scalability of bandwidth for corporate and cloud-based applications. |
o | Cyber |
o |
o | Cyber Controller X: In addition to the “Standard” license features, provides the ability to manage the DefensePro X product line using the new Cyber Controller X stream. |
o | Cyber Controller Plus: An add-on on top of either the “Standard” or “X” licenses, enabling orchestration, automation and out-of-path capabilities for attack life-cycle management. |
o | MSSP Portal. The Managed Security Service Provider (MSSP) Portal is a turnkey, multi-tenant DDoS detection and mitigation service portal. The Portal collects and aggregates security attack measurement and events (including traffic utilization, attack distribution and alerts) and displays them in real-time and historical reports. Our MSSP Portal enables service providers to resell cyber security mitigation services to their customers as a managed service. |
o | ERT Security Updates Subscription (SUS). Our Security Update Subscription is a security-advisory and managed monitoring and detection system dedicated to protecting network elements, hosts, and applications against the latest security vulnerabilities and threats. The Security Update Subscription delivers periodic, emergency, and custom attack signature updates to subscribers to protect against known attack patterns. The service is available for DefensePro and Alteon Integrated WAF. |
o | ERT Active Attackers Feed. Our ERT Active Attackers Feed (EAAF) is a threat intelligence feed designed to protect against emerging DDoS threats, including those involving IoT botnets and new DNS attack vectors. The EAAF subscription enhances our attack mitigation solution by identifying and blocking IP addresses involved in major attacks in real time to offer preemptive protection from known attackers. This subscription is available for DefensePro, Alteon ADC and Cloud Application Protection Services. |
o | ERT Protection Packages. Our ERT Protection packages bundle our ERT services into two packages: ERT Silver Protection Package and ERT Gold Protection Package. ERT Silver Protection Package consolidates ERT Security Update Subscription, ERT Active Attackers Feed, and Location-based Mitigation. ERT Gold Protection Package includes ERT under Attack Service on top of the ERT Silver Package. |
o | Alteon Global Elastic License (GEL). Alteon GEL is a purchasing and deployment subscription that enables a high level of flexibility for ADC services across datacenters, private and public clouds. GEL enables dynamic ADC capacity allocation and the ability to move that capacity across environments, without having to invest separately in a dedicated ADC infrastructure for each and every location where organization’s applications are deployed (e.g. on-premise, public cloud, etc.). This application delivery licensing model helps to eliminate planning risks in the purchase and deployment of ADC services, enabling continuous investment protection of the ADC infrastructure throughout its lifecycle duration. |
o | Location-based Mitigation. Our location-based mitigation solution is a subscription offering that enables network traffic filtering by countries and regions based on the geolocation mapping of IP subnets. The subscription also supports per-policy block and allow lists, making it a beneficial solution for carriers and service providers that wish to protect multitenant networks. The subscription helps organizations comply with global and industry regulation requirements such as the Office of Foreign Assets Control and others. This subscription is available for DefensePro and Alteon ADC. |
o | Certainty Support Program. We offer technical support for all our products through our Certainty Support Program. Certainty support levels include: |
o |
o | Standard. This level increases access to the technical support center 24/7/365 and adds next business day replacement of failed hardware and waives customer shipping costs. |
o | Advanced. This level increases the certainty support level standard to four |
o | Professional Services. Our professional services group is staffed by a global team of experts possessing extensive knowledge and experience in security and application delivery both in data centers and the cloud. The group offers a full range of services to design, implement, automate, and optimize our customer solutions. We offer the following key professional services: |
o | Design and Planning. This service plans and designs applications for future growth with Radware engineers. The service starts with a review of business goals, network optimization assessment and an overview of application architecture and security requirements to help create a comprehensive deployment plan that is tailored to organizational IT requirements. |
o | Application and Security Optimization Services. This service analyzes and reviews the current implementation and design and provides recommendations to help optimize the system and achieve business goals. |
o | Resident Engineer. Our Resident Engineer service is a proactive on-site engineer who performs operations, design and automation activities. From initial deployment to ongoing management and day-to-day operation, our Resident Engineer service decreases the time demands on our customers’ staff, allowing them to focus on their core business. |
o | Technical Account Manager. Our technical account manager |
o | ERT |
o | ERT Managed Security Service. Our ERT offers a fully managed application- and network-security service. The service covers a broad range of attack types from different forms of DDoS to a variety of application attacks against our customers’ servers or data centers. It includes immediate response, onboarding, consulting, remote management, and reporting. |
o | ERT Under-Attack Service. The ERT under-attack service offers 24x7 access to a security expert within 10 minutes. The ERT engineer will take the lead, fight off attacks and provide postmortem analysis of security events. The ERT under-attack service lets organizations know there is someone to rely on, guaranteeing support throughout the attack life cycle from the moment it begins. The ERT experts are available 24x7 and assist large enterprises worldwide with complex multi-vector attacks against their networks, data centers and application services. |
• | Innovation, Proprietary Technologies, and Thought Leadership. We are offering innovative solutions in our domain. We were one of the first companies to offer hybrid attack mitigation solutions; behavioral DDoS attacks detection with automated real-time signature creation for attack mitigation; device fingerprinting technology implementation for Bot-based attacks detection; auto-policy generation for our WAF solution; protection against encrypted attacks without opening the sessions for DDoS protection; and |
• | Automation. We are offering automated attack detection and mitigation solutions that reduce the total cost of ownership of cyber security solutions, including behavioral analysis technology to detect zero-day DDoS attacks; automated real-time signature creation for DDoS attacks mitigation; intent-based behavioral analysis and machine learning (or “ML”) models to detect automated Bot attacks; and machine learning (positive security model) to detect zero-day web application attacks. |
• | Wide attacks coverage. Our solutions offer a wide coverage against attacks, including mitigation of all four generations of Bot attacks; negative and positive security models to defend against known (OWASP top-10) and zero-day web application attacks (standard solutions typically cover OWASP top-10 attacks only); and advanced DDoS attacks protection such as DNS flood attacks, burst floods, SSL flood attacks, IoT botnets and |
• | Industry Awards. We gained multiple industry awards during |
o | Quadrant Knowledge Solutions – |
o | Quadrant Knowledge Solutions – |
o | Quadrant Knowledge Solutions – |
o |
o | GigaOm Research – GigaOm Radar for Application and API Protection: March |
• | Focus on cloud and application security. We aim to offer superior and innovative cyber security solutions and cloud-based solutions and expand our portfolio in these two dimensions. We also invest in go-to-market efforts related to cloud security services and public cloud solutions. |
• | Invest in data center solutions. We continue to develop and sell holistic cyber security and application delivery solutions for physical, cloud, and hybrid data centers and cloud applications. |
• | Increase our market footprint. We believe that a significant market opportunity exists to sell our solutions with the complementary products and services provided by other organizations with whom we wish to collaborate. To that end, we have already established strategic relationships with various third parties, including leading global-class partners, such as Cisco, Check Point, and Nokia, which provide critical access to certain large customers allowing us to sell our solutions. We intend to further increase our market footprint through collaboration with leading partners. |
• | Expand our footprint in the medium sized enterprise market. The needs of the mid-market enterprises regarding the management of cyber security risks are substantially similar to the needs of the large enterprise market, but their capacity and access to skilled talent are more limited. We believe that our fully managed cloud security services can be a great fit for this market, and we intend to further expand our market footprint in this segment. |
• | Pursue acquisitions and investments. In order to achieve our business objectives, we may evaluate and pursue the acquisition of, or significant investments in, other complementary companies, technologies, products, and/or businesses that enable us to enhance and increase our technological capabilities and expand our product and service offerings. |
We work with our suppliers to maintain compliance with various environmental laws and guidelines, such as RoHS and WEEE in the EU, and adopted our Conflict Minerals Policy available at www.radware.com/corporategovernance/conflictminerals (information contained on our website, including in our Conflict Minerals Policy, is not incorporated herein by reference and shall not constitute part of this annual report), which outlines our practices and procedures with respect to responsible sourcing of minerals from conflict-affected and high-risk areas; and |
Name of Subsidiary | Place of Incorporation |
Radware Inc. | New Jersey, United States |
Radware UK Limited | United Kingdom |
Radware France | France |
Radware Srl | Italy |
Radware GmbH | Germany |
Nihon Radware KK | Japan |
Radware Australia Pty. Ltd. | Australia |
Radware Singapore Pte. Ltd. | Singapore |
Radware Korea Ltd. | Korea |
Radware Canada Inc. | Canada |
Radware India Pvt. Ltd. | India |
Kaalbi Technologies Limited Ltd. | India |
Radware (India) Cyber Security Solutions Private Limited | India |
Radware China Ltd. 睿伟网络科技(上海)有限公司 | China |
Radware (Hong Kong) Limited | Hong Kong |
Radyoos Media Ltd.* | Israel |
Radware Canada Holdings Inc. | Canada |
Radware Iberia, S.L.U. | Spain |
Edgehawk Security Ltd. | Israel |
SkyHawk (CNP) Security Ltd.** | Israel |
SkyHawk Security, Inc.*** | Delaware, United States |
CSR Cloud Security Ltd. | Israel |
Radware (Colombia) S.A.S. | Colombia |
AB-NET Communications Ltd. Binat Business Ltd. BYNET Data Communications Ltd.* Bynet Data Centers Ltd. CloudRide Ltd.* BYNET Electronics Ltd.* BYNET SEMECH (outsourcing) Ltd.* Bynet Software Systems Ltd. Bynet System Applications Ltd.* | Ceragon Networks Ltd. Internet Binat Ltd.* Packetlight Networks Ltd. RAD-Bynet Properties and Services (1981) Ltd.* Radbit Computers, Inc. RADCOM Ltd. RAD Data Communications Ltd.* Radiflow Ltd. | RADWIN Ltd. DC Protection Ltd. (previously known as SecurityDAM Ltd.) |
2022 | 2021 | 2020 | ||||||||||
(US $ in thousands) | ||||||||||||
Revenues: | $ | 172,161 | $ | 170,438 | $ | 132,934 | ||||||
Products | 121,265 | 116,058 | 117,093 | |||||||||
Services | 293,426 | 286,496 | 250,027 | |||||||||
Cost of revenues: | 43,014 | 42,191 | 34,645 | |||||||||
Products | 10,870 | 10,255 | 10,439 | |||||||||
Services | 53,884 | 52,446 | 45,084 | |||||||||
Gross profit | 239,542 | 234,050 | 204,943 | |||||||||
Operating expenses, net: | ||||||||||||
Research and development, net | 86,562 | 74,098 | 66,836 | |||||||||
Sales and marketing | 126,533 | 119,842 | 113,015 | |||||||||
General and administrative | 29,786 | 21,885 | 18,924 | |||||||||
Total operating expenses | 242,881 | 215,825 | 198,775 | |||||||||
Operating income (loss) | (3,339 | ) | 18,225 | 6,168 | ||||||||
Financial income, net | 8,052 | 4,407 | 7,796 | |||||||||
Income before taxes on Income | 4,713 | 22,632 | 13,964 | |||||||||
Taxes on income | 4,879 | 14,821 | 4,328 | |||||||||
Net income (loss) | (166 | ) | 7,811 | 9,636 |
2023 | 2022 | 2021 | ||||||||||
(US $ in thousands) | ||||||||||||
Revenues: | ||||||||||||
Products | $ | 145,541 | $ | 172,161 | $ | 170,438 | ||||||
Services | 115,751 | 121,265 | 116,058 | |||||||||
261,292 | 293,426 | 286,496 | ||||||||||
Cost of revenues: | ||||||||||||
Products | 41,450 | 43,014 | 42,191 | |||||||||
Services | 10,260 | 10,870 | 10,255 | |||||||||
51,710 | 53,884 | 52,446 | ||||||||||
Gross profit | 209,582 | 239,542 | 234,050 | |||||||||
Operating expenses, net: | ||||||||||||
Research and development, net | 82,617 | 86,562 | 74,098 | |||||||||
Sales and marketing | 126,237 | 126,533 | 119,842 | |||||||||
General and administrative | 32,408 | 29,786 | 21,885 | |||||||||
Total operating expenses, net | 241,262 | 242,881 | 215,825 | |||||||||
Operating income (loss) | (31,680 | ) | (3,339 | ) | 18,225 | |||||||
Financial income, net | 13,927 | 8,052 | 4,407 | |||||||||
Income (loss) before taxes on income | (17,753 | ) | 4,713 | 22,632 | ||||||||
Taxes on income | 3,837 | 4,879 | 14,821 | |||||||||
Net income (loss) | (21,590 | ) | (166 | ) | 7,811 |
2022 | 2021 | 2020 | ||||||||||
Revenues: | 59 | % | 59 | % | 53 | % | ||||||
Products | 41 | 41 | 47 | |||||||||
Services | 100 | 100 | 100 | |||||||||
Cost of Revenues: | ||||||||||||
Products | 15 | 15 | 14 | |||||||||
Services | 4 | 3 | 4 | |||||||||
19 | 18 | 18 | ||||||||||
Gross profit | 81 | 82 | 82 | |||||||||
Operating expenses, net: | ||||||||||||
Research and development, net | 30 | 26 | 27 | |||||||||
Sales and marketing | 43 | 42 | 45 | |||||||||
General and administrative | 10 | 7 | 8 | |||||||||
Total operating expenses | 83 | 75 | 80 | |||||||||
Operating income (loss) | (1 | ) | 6 | 2 | ||||||||
Financial income, net | 3 | 2 | 3 | |||||||||
Income before taxes on income | 2 | 8 | 6 | |||||||||
Taxes on income | (2 | ) | (5 | ) | (2 | ) | ||||||
Net income (loss) | 0 | % | 3 | % | 4 | % |
2023 | 2022 | 2021 | ||||||||||
Revenues: | ||||||||||||
Products | 56 | % | 59 | % | 59 | % | ||||||
Services | 44 | 41 | 41 | |||||||||
100 | 100 | 100 | ||||||||||
Cost of Revenues: | ||||||||||||
Products | 16 | 15 | 15 | |||||||||
Services | 4 | 4 | 3 | |||||||||
20 | 19 | 18 | ||||||||||
Gross profit | 80 | 81 | 82 | |||||||||
Operating expenses, net: | ||||||||||||
Research and development, net | 32 | 30 | 26 | |||||||||
Sales and marketing | 48 | 43 | 42 | |||||||||
General and administrative | 12 | 10 | 7 | |||||||||
Total operating expenses, net | 92 | 83 | 75 | |||||||||
Operating income (loss) | (12 | ) | (1 | ) | 6 | |||||||
Financial income, net | 5 | 3 | 2 | |||||||||
Income (loss) before taxes on income | (7 | ) | 2 | 8 | ||||||||
Taxes on income | (1 | ) | (2 | ) | (5 | ) | ||||||
Net income (loss) | (8 | )% | 0 | % | 3 | % |
(US$ in thousands, except percentages) | 2022 | 2021 | 2020 | % Change 2022 vs. 2021 | % Change 2021 vs. 2020 | 2023 | 2022 | 2021 | % Change 2023 vs. 2022 | % Change 2022 vs. 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Products | 172,161 | 59 | % | 170,438 | 59 | % | 132,934 | 53 | % | 1 | % | 28 | % | 145,541 | 56 | % | 172,161 | 59 | % | 170,438 | 59 | % | (15 | )% | 1 | % | ||||||||||||||||||||||||||||||||||||||
Services | 121,265 | 41 | % | 116,058 | 41 | % | 117,093 | 47 | % | 4 | % | (1 | )% | 115,751 | 44 | % | 121,265 | 41 | % | 116,058 | 41 | % | (5 | )% | 4 | % | ||||||||||||||||||||||||||||||||||||||
Total | 293,426 | 100 | % | 286,496 | 100 | % | 250,027 | 100 | % | 2 | % | 15 | % | 261,292 | 100 | % | 293,426 | 100 | % | 286,496 | 100 | % | (11 | )% | 2 | % |
(US$ in thousands, except percentages) | 2022 | 2021 | 2020 | % Change 2022 vs. 2021 | % Change 2021 vs. 2020 | 2023 | 2022 | 2021 | % Change 2023 vs. 2022 | % Change 2022 vs. 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
North, Central and South America (principally the United States)(*) | 123,947 | 42 | % | 128,770 | 45 | % | 114,413 | 46 | % | (4 | )% | 13 | % | 103,435 | 40 | % | 123,947 | 42 | % | 128,770 | 45 | % | (17 | )% | (4 | )% | ||||||||||||||||||||||||||||||||||||||
EMEA (Europe, the Middle East and Africa) | 104,219 | 36 | % | 98,388 | 34 | % | 78,362 | 31 | % | 6 | % | 26 | % | 96,488 | 37 | % | 104,219 | 36 | % | 98,388 | 34 | % | (7 | )% | 6 | % | ||||||||||||||||||||||||||||||||||||||
Asia-Pacific | 65,260 | 22 | % | 59,338 | 21 | % | 57,252 | 23 | % | 10 | % | 4 | % | 61,369 | 23 | % | 65,260 | 22 | % | 59,338 | 21 | % | (6 | )% | 10 | % | ||||||||||||||||||||||||||||||||||||||
Total | 293,426 | 100 | % | 286,496 | 100 | % | 250,027 | 100 | % | 2 | % | 15 | % | 261,292 | 100 | % | 293,426 | 100 | % | 286,496 | 100 | % | (11 | )% | 2 | % |
(US$ in thousands, except percentages) | 2022 | 2021 | 2020 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||||||
Cost of Products | 43,014 | 25.0 | % | 42,191 | 24.8 | % | 34,645 | 26.1 | % | 41,450 | 28.5 | % | 43,014 | 25.0 | % | 42,191 | 24.8 | % | ||||||||||||||||||||||||||||||
Cost of Services | 10,870 | 9.0 | % | 10,255 | 8.8 | % | 10,439 | 8.9 | % | 10,260 | 8.9 | % | 10,870 | 9.0 | % | 10,255 | 8.8 | % | ||||||||||||||||||||||||||||||
Total | 53,884 | 18.4 | % | 52,446 | 18.3 | % | 45,084 | 18.0 | % | 51,710 | 19.8 | % | 53,884 | 18.4 | % | 52,446 | 18.3 | % |
(US$ in thousands, except percentages) | 2022 | 2021 | 2020 | % Change 2022 vs. 2021 | % Change 2021 vs. 2020 | 2023 | 2022 | 2021 | % Change 2023 vs. 2022 | % Change 2022 vs. 2021 | ||||||||||||||||||||||||||||||
Research and development, net | $ | 86,562 | $ | 74,098 | $ | 66,836 | 17 | % | 11 | % | $ | 82,617 | $ | 86,562 | $ | 74,098 | (5 | )% | 17 | % | ||||||||||||||||||||
Selling and marketing | 126,533 | 119,842 | 113,015 | 6 | % | 6 | % | |||||||||||||||||||||||||||||||||
Sales and marketing | 126,237 | 126,533 | 119,842 | 0 | % | 6 | % | |||||||||||||||||||||||||||||||||
General and administrative | 29,786 | 21,885 | 18,924 | 36 | % | 16 | % | 32,408 | 29,786 | 21,885 | 9 | % | 36 | % | ||||||||||||||||||||||||||
Total | $ | 242,881 | $ | 215,825 | $ | 198,775 | 13 | % | 9 | % | $ | 241,262 | $ | 242,881 | $ | 215,825 | (1 | )% | 13 | % |
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Grants | 250,284 | 248,233 | 1,037,444 | 331,899 | 250,284 | 248,233 | ||||||||||||||||||
Weighted average grant-date fair value | 6.77 | 6.87 | 4.74 | |||||||||||||||||||||
Weighted-average grant-date fair value | 5.48 | 6.77 | 6.87 |
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Grants | 1,947,499 | 1,143,097 | 995,419 | 1,390,718 | 1,947,499 | 1,143,097 | ||||||||||||||||||
Weighted average grant-date fair value | 21.31 | 32.57 | 22.54 | |||||||||||||||||||||
Weighted-average grant-date fair value | 15.82 | 21.31 | 32.57 |
• | Radware’s Core Business - this segment consists of our core business operations, including our cloud security as-a-service products, application and data centers security products and our application availability products; and |
• | The Hawks’ Business – this segment consists of the operations of our two subsidiaries: SkyHawk Security, a spinoff of our former cloud native protector business which now provides an agentless Cloud-native threat Detection and Response (CDR), combined with Cloud Infrastructure Entitlement Manage (CIEM), Cloud Security Posture Management CSPM and Autonomous Purple Team for AWS Google Cloud and Azure, and EdgeHawk, which is engaged in transforming routers and network nodes into security platforms. |
Year ended December 31, 2023 | ||||||||||||
Radware Core | Hawks | Total | ||||||||||
Revenues | $ | 260,322 | $ | 970 | $ | 261,292 | ||||||
Operating loss | $ | (16,802 | ) | $ | (14,878 | ) | $ | (31,680 | ) |
Year ended December 31, 2022 | ||||||||||||
Radware Core | Hawks | Total | ||||||||||
Revenues | $ | 290,408 | $ | 3,018 | $ | 293,426 | ||||||
Operating income (loss) | $ | 8,416 | $ | (11,755 | ) | $ | (3,339 | ) |
Year ended December 31, 2021 | ||||||||||||
Radware Core | Hawks | Total | ||||||||||
Revenues | $ | 283,913 | $ | 2,583 | $ | 286,496 | ||||||
Operating income (loss) | $ | 24,114 | $ | (5,889 | ) | $ | 18,225 |
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Net cash provided by operating activities | $ | 32,148 | $ | 71,774 | $ | 63,865 | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (3,500 | ) | $ | 32,148 | $ | 71,774 | |||||||||||||||||
Net cash provided by (used in) investing activities | (56,018 | ) | 7,849 | (14,368 | ) | 92,779 | (56,018 | ) | 7,849 | |||||||||||||||
Net cash used in financing activities | (22,458 | ) | (41,881 | ) | (35,477 | ) | (64,926 | ) | (22,458 | ) | (41,881 | ) |
Payments Due by Period (US $ in thousands) | Payments Due by Period (US $ in thousands) | |||||||||
Contractual obligations | Total | Less than 1 year* | 1-3 years | 3-5 years | More than 5 years | Total | Less than 1 year* | 1-3 years | 3-5 years | More than 5 years |
Operating leases (1) | 26,290 | 3,987 | 9,353 | 6,237 | 6,713 | 22,265 | 4,937 | 7,673 | 5,834 | 3,821 |
Total contractual cash obligations (2) | 26,290 | 3,987 | 9,353 | 6,237 | 6,713 | 22,265 | 4,937 | 7,673 | 5,834 | 3,821 |
• | Applications are migrating to the public cloud. The migration to public cloud exposes organizations to new threats that require consistent security across all cloud environments. Organizations also prefer to purchase security services as a subscription, to match the subscription-based consumption of hosting services. |
• | Datacenter architecture is changing. Datacenter architecture is changing to include various models such as a physical datacenter, a virtual datacenter, a software defined datacenter, and private or public cloud. New emerging edge clouds, coupled with the emerging 5G breakouts and SD-WAN, will enable enterprises to effectively leverage |
• | Application modernization requires new security tools. Application infrastructure is changing, from monolithic applications to modern applications and websites in which deployment workflows, front-end built-tools and API-centric architectures are used. The rise of cloud-native ecosystems, increasingly adapting cloud-direct and micro-services architecture packaged as containers, is providing a built-in “on-demand” elasticity and availability application infrastructure. This enables introducing and running the new generation of cloud-native applications, in a fast, adaptive and more efficient way by interacting with DevOps CICD tools and methods. As such, the AppSec blast radius is expanded and requires injection of security controls within the application lifecycle |
• | The above-mentioned cloud-native application delivery opens the door for leakage through the open cloud interface. A new family of attack surfaces manifested by the fact that the cloud APIs are publicly published, and DevOps processes are done from the outside of the cloud “perimeter” (the insider becomes the outsider). “Cloud-native” infiltrations are enabled by the usage of cloud-IAM (identify and access) misconfigurations or account take over techniques and by various vulnerabilities of publicly exposed web and API interfaces. This creates a need for a new protection posture for compliance, permissions hardening, vulnerabilities detection as well as cloud-native detection (infiltrations and exfiltration) and response tools under new industry categories: CIEM (Cloud Infrastructure Entitlement Management), CSPM (Cloud Security Posture Management) |
• | Organizations’ attack surfaces are increasing due to a changing economy. This was caused by a combination of two forces. First, working from home, primarily due to the restraints associated with COVID-19, required organizations to enable remote access to applications and services that were previously not exposed. This eliminated the traditional network perimeter, and now, even after The World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency, every home computer or mobile device has become the new perimeter. Second, an increase in the online consumption of goods has accelerated organizations’ digital transformation and migration to the cloud. The result is more opportunities for attackers to leverage the increased attack surface. |
• | Increasing complexity and intensity of security |
• | Increasing expectations for applications availability and frictionless performance, due to the increasing dependence on applications in today’s business world. Businesses are sensitive to the resilience and availability of their applications, given their customers’ expectations of flawless experience and optimal performance. As such, exposed web and API based applications are the target for attackers that utilize both the server side as well as the client/browser side platforms for spreading their malicious code. New security controls utilize the power of |
• |
• | Income taxes. |
Name | Age | Position |
Chairman of the Board of Directors | ||
Yair Tauman (1)(2)(3)(4) | Director | |
Stanley B. Stern (2)(4)(6)(7) | Director, Chairman of the | |
Naama Zeldis (2)(3)(4)(5) | Director, Chairperson of the Audit Committee | |
Director, Chairman of the Compensation Committee | ||
Director | ||
Director | ||
Roy Zisapel (5) | President, Chief Executive Officer and Director | |
Guy Avidan | Chief Financial Officer | |
Yoav Gazelle | Chief Business Officer | |
David Aviv | Chief Technology Officer | |
Gabi Malka | Chief Operating Officer | |
Sharon Trachtman | Chief Marketing Officer | |
Riki | Chief People Officer |
Salaries, fees, commissions and bonuses | Pension, retirement and other similar benefits | |||||||
2021 - All directors and officers as a group, consisting of 13 persons* | $ | 3,864,790 | $ | 531,240 | ||||
2022 - All directors and officers as a group, consisting of 14 persons** | $ | 3,307,407 | $ | 527,559 |
Salaries, fees, commissions and bonuses | Pension, retirement and other similar benefits | |||||||
2022 - All directors and officers as a group, consisting of 14 persons* | $ | 3,307,407 | $ | 527,559 | ||||
2023 - All directors and officers as a group, consisting of 15 persons** | $ | 2,419,283 | $ | 475,235 |
Name and Principal Position (1) | Year | Salary | Bonus (including Sales Commissions) (2) | Equity-Based | All Other | Year | Salary | Bonus (including Sales Commissions) (2) | Equity-Based Compensation (3) | All Other Compensation (4) | Total | |
Compensation (3) | Compensation (4) | Total | ||||||||||
(US$ In Thousands ) | ||||||||||||
(US$ In Thousands) | (US$ In Thousands) | |||||||||||
Roy Zisapel, President, Chief Executive Officer and Director | 2022 | 452 (5) | 382 (6) | 2,327 | 140* | 3,301 | 2023 | 450 (5) | (6) | 2,451 | 139* | 3,040 |
Guy Avidan, Chief Financial Officer | 2022 | 278 | 72 | 1,475 | 68 | 1,893 | 2023 | 308 | 261 | 67 | 636 | |
Yoav Gazelle, Chief Business Officer | 2022 | 239 | 228 | 1,250 | 39 | 1,756 | 2023 | 240 | 198 | 214 | 40 | 692 |
Gabi Malka, Chief Operating Officer | 2022 | 321 | 85 | 557 | 79 | 1,042 | 2023 | 319 | 139 | 73 | 531 | |
David Aviv, Chief Technology Officer | 2022 | 304 | 64 | 489 | 71 | 928 | 2023 | 300 | 139 | 72 | 511 |
(1) | Unless otherwise indicated herein, all Covered Executives are (i) employed on a full-time (100%) basis; and (ii) subject to customary confidentiality, intellectual property assignment and non-solicitation provisions as well as an undertaking not to compete with us or in our field of business for at least 12 months following termination of employment. |
(2) | Amounts reported in this column represent annual bonuses, including sales commissions. Consistent with our Compensation Policy, such bonuses are based upon (i) for non-sales executive officers - achievement of milestones and targets and the measurable results of the Company, as compared to our budget and/or work plan for the relevant year. The bonus (of up to 10% of the annual bonus) is based on the achievement and performance of pre-determined key performance indicators (KPIs), and, in any event, not to exceed the amount of |
(3) | Amounts reported in this column represent the grant date fair value in accordance with accounting guidance for share-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 2(s) to our consolidated financial statements included elsewhere in this annual report. |
(4) | Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (e.g., Managers Life Insurance Policy), education funds (“keren hishtalmut”), pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life or work disability insurance), phone, convalescence or recreation pay, relocation, payments for social security, tax gross-up payments and other benefits and perquisites consistent with |
(5) | As approved by our shareholders on July 28, 2022, as of such date, |
(6) | Consistent with our Compensation Policy, and as approved by our shareholders on July 28, 2022, |
Class | Term expiring at the annual meeting for the year | Directors | ||
Class | ||||
2024 | ||||
Class II | 2025 | Roy Zisapel, Naama Zeldis and Meir Moshe | ||
Class III | 2026 | Stanley Stern, Israel Mazin and Alex Pinchev* |
Salaries, fees, commissions and bonuses | Pension, retirement and other similar benefits | |||||||
2022 - All directors and officers as a group, consisting of 14 persons* | $ | 3,307,407 | $ | 527,559 | ||||
2023 - All directors and officers as a group, consisting of 15 persons** | $ | 2,419,283 | $ | 475,235 |
Name and Principal Position (1) | Year | Salary | Bonus (including Sales Commissions) (2) | Equity-Based Compensation (3) | All Other Compensation (4) | Total |
(US$ In Thousands) | ||||||
Roy Zisapel, President, Chief Executive Officer and Director | 2023 | 450 (5) | (6) | 2,451 | 139* | 3,040 |
Guy Avidan, Chief Financial Officer | 2023 | 308 | 261 | 67 | 636 | |
Yoav Gazelle, Chief Business Officer | 2023 | 240 | 198 | 214 | 40 | 692 |
Gabi Malka, Chief Operating Officer | 2023 | 319 | 139 | 73 | 531 | |
David Aviv, Chief Technology Officer | 2023 | 300 | 139 | 72 | 511 |
(1) | Unless otherwise indicated herein, all Covered Executives are (i) employed on a full-time (100%) basis; and (ii) subject to customary confidentiality, intellectual property assignment and non-solicitation provisions as well as an undertaking not to compete with us or in our field of business for at least 12 months following termination of employment. |
(2) | Amounts reported in this column represent annual bonuses, including sales commissions. Consistent with our Compensation Policy, such bonuses are based upon (i) for non-sales executive officers - achievement of milestones and targets and the measurable results of the Company, as compared to our budget and/or work plan for the relevant year. The bonus (of up to 10% of the annual bonus) is based on the achievement and performance of pre-determined key performance indicators (KPIs), and, in any event, not to exceed the amount of 200% of the base salary; and (ii) for sales executive officers - achievement of targets of revenues generated by the individual and/or his/her team or division and/or the Company and in any event, not to exceed the amount of four annual base salaries of such executive. |
(3) | Amounts reported in this column represent the grant date fair value in accordance with accounting guidance for share-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 2(s) to our consolidated financial statements included elsewhere in this annual report. |
(4) | Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (e.g., Managers Life Insurance Policy), education funds (“keren hishtalmut”), pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life or work disability insurance), phone, convalescence or recreation pay, relocation, payments for social security, tax gross-up payments and other benefits and perquisites consistent with Radware’s guidelines. Unless otherwise indicated herein, all Covered Executives (i) are entitled to a notice period of at least one month prior to termination (other than termination for cause), during which they are generally entitled to all compensation and rights under their employment agreements; and (ii) are not entitled to any special bonuses or benefits upon a change of control of our Company, other than a potential acceleration of the vesting of their share options pursuant to our equity incentive plan, as more fully described in Item 6.E “Share Ownership.” |
(5) | As approved by our shareholders on July 28, 2022, as of such date, Roy Zisapel’s gross base salary increased from $400,000 to $450,000 and his annual bonus increased from $400,000 to $600,000 (however, the actual payout, based on performance, could reach $900,000 for overperformance). |
(6) | Consistent with our Compensation Policy, and as approved by our shareholders on July 28, 2022, Roy Zisapel is entitled to an annual bonus of up to $600,000 (however, the actual payout, based on performance, could reach $900,000 for overperformance). |
Class | Term expiring at the annual meeting for the year | Directors | ||
Class I | 2024 | Yair Tauman and Yuval Cohen | ||
Class II | 2025 | Roy Zisapel, Naama Zeldis and Meir Moshe | ||
Class III | 2026 | Stanley Stern, Israel Mazin and Alex Pinchev* |
Name of Body | No. of Meetings in 2022 | Average Attendance Rate** | ||||||
Board of Directors | 18 | 98.55 | % | |||||
Audit Committee | 6 | 100 | % | |||||
Compensation Committee | 16 | 100 | % |
Salaries, fees, commissions and bonuses | Pension, retirement and other similar benefits | |||||||
2022 - All directors and officers as a group, consisting of 14 persons* | $ | 3,307,407 | $ | 527,559 | ||||
2023 - All directors and officers as a group, consisting of 15 persons** | $ | 2,419,283 | $ | 475,235 |
Name and Principal Position (1) | Year | Salary | Bonus (including Sales Commissions) (2) | Equity-Based Compensation (3) | All Other Compensation (4) | Total |
(US$ In Thousands) | ||||||
Roy Zisapel, President, Chief Executive Officer and Director | 2023 | 450 (5) | (6) | 2,451 | 139* | 3,040 |
Guy Avidan, Chief Financial Officer | 2023 | 308 | 261 | 67 | 636 | |
Yoav Gazelle, Chief Business Officer | 2023 | 240 | 198 | 214 | 40 | 692 |
Gabi Malka, Chief Operating Officer | 2023 | 319 | 139 | 73 | 531 | |
David Aviv, Chief Technology Officer | 2023 | 300 | 139 | 72 | 511 |
(1) | Unless otherwise indicated herein, all Covered Executives are (i) employed on a full-time (100%) basis; and (ii) subject to customary confidentiality, intellectual property assignment and non-solicitation provisions as well as an undertaking not to compete with us or in our field of business for at least 12 months following termination of employment. |
(2) | Amounts reported in this column represent annual bonuses, including sales commissions. Consistent with our Compensation Policy, such bonuses are based upon (i) for non-sales executive officers - achievement of milestones and targets and the measurable results of the Company, as compared to our budget and/or work plan for the relevant year. The bonus (of up to 10% of the annual bonus) is based on the achievement and performance of pre-determined key performance indicators (KPIs), and, in any event, not to exceed the amount of 200% of the base salary; and (ii) for sales executive officers - achievement of targets of revenues generated by the individual and/or his/her team or division and/or the Company and in any event, not to exceed the amount of four annual base salaries of such executive. |
(3) | Amounts reported in this column represent the grant date fair value in accordance with accounting guidance for share-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 2(s) to our consolidated financial statements included elsewhere in this annual report. |
(4) | Amounts reported in this column include benefits and perquisites, including those mandated by applicable law. Such benefits and perquisites may include, to the extent applicable to the Covered Executive, payments, contributions and/or allocations for savings funds (e.g., Managers Life Insurance Policy), education funds (“keren hishtalmut”), pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurances (e.g., life or work disability insurance), phone, convalescence or recreation pay, relocation, payments for social security, tax gross-up payments and other benefits and perquisites consistent with Radware’s guidelines. Unless otherwise indicated herein, all Covered Executives (i) are entitled to a notice period of at least one month prior to termination (other than termination for cause), during which they are generally entitled to all compensation and rights under their employment agreements; and (ii) are not entitled to any special bonuses or benefits upon a change of control of our Company, other than a potential acceleration of the vesting of their share options pursuant to our equity incentive plan, as more fully described in Item 6.E “Share Ownership.” |
(5) | As approved by our shareholders on July 28, 2022, as of such date, Roy Zisapel’s gross base salary increased from $400,000 to $450,000 and his annual bonus increased from $400,000 to $600,000 (however, the actual payout, based on performance, could reach $900,000 for overperformance). |
(6) | Consistent with our Compensation Policy, and as approved by our shareholders on July 28, 2022, Roy Zisapel is entitled to an annual bonus of up to $600,000 (however, the actual payout, based on performance, could reach $900,000 for overperformance). |
Class | Term expiring at the annual meeting for the year | Directors | ||
Class I | 2024 | Yair Tauman and Yuval Cohen | ||
Class II | 2025 | Roy Zisapel, Naama Zeldis and Meir Moshe | ||
Class III | 2026 | Stanley Stern, Israel Mazin and Alex Pinchev* |
Name of Body | No. of Meetings in 2023 | Average Attendance Rate** | ||||||
Board of Directors | 13 | 94.23 | % | |||||
Audit Committee | 5 | 100 | % | |||||
Compensation Committee | 5 | 100 | % | |||||
Nomination and Corporate Governance Committee *** | 0 | N/A |
As of December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Approximate numbers of employees and subcontractors by geographic location: | ||||||||||||
Israel | 590 | 589 | 488 | |||||||||
North, Central and South America (principally the United States) | 229 | 252 | 226 | |||||||||
EMEA (Europe, the Middle East and Africa) | 113 | 124 | 125 | |||||||||
Asia-Pacific | 286 | 313( | *) | 304( | *) | |||||||
Total workforce | 1,218 | 1,278 | 1,143 | |||||||||
Approximate numbers of employees and subcontractors by category of activity: | ||||||||||||
Research and development | 479 | 494( | *) | 433( | *) | |||||||
Sales, technical support, business development and marketing | 602 | 647 | 578 | |||||||||
Management, operations and administration | 137 | 137 | 132 | |||||||||
Total workforce | 1,218 | 1,278 | 1,143 |
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Approximate numbers of employees and subcontractors by geographic location: | ||||||||||||
Israel | 589 | 488 | 494 | |||||||||
North, Central and South America (principally the United States) | 252 | 226 | 226 | |||||||||
EMEA (Europe, the Middle East and Africa) | 124 | 125 | 116 | |||||||||
Asia-Pacific | 313( | *) | 304( | *) | 286( | *) | ||||||
Total workforce | 1,278 | 1,143 | 1,122 | |||||||||
Approximate numbers of employees and subcontractors by category of activity: | ||||||||||||
Research and development | 494( | *) | 433( | *) | 416( | *) | ||||||
Sales, technical support, business development and marketing | 647 | 578 | 574 | |||||||||
Management, operations and administration | 137 | 132 | 132 | |||||||||
Total workforce | 1,278 | 1,143 | 1,122 |
Name | Number of ordinary shares | Percentage of outstanding ordinary shares** | ||||||
Yehuda Zisapel (1) | 1,949,211 | 4.44 | % | |||||
Roy Zisapel (2) | 1,491,134 | 3.40 | % | |||||
Gabi Seligsohn (3) | * | * | ||||||
Stanley Stern (3) | * | * | ||||||
Naama Zeldis (3) | * | * | ||||||
Yair Tauman (3) | * | * | ||||||
Yuval Cohen (4) | * | * | ||||||
Meir Moshe | * | * | ||||||
Gabi Malka (3) | * | * | ||||||
David Aviv (3) | * | * | ||||||
Sharon Trachtman (3) | * | * | ||||||
Guy Avidan (3) | * | * | ||||||
Yoav Gazelle (3) | * | * | ||||||
Riki Goldreich (3) | ||||||||
All directors and executive officers as a group (14 persons) (5) | 3,861,090 | 8.72 | % |
Name | Number of ordinary shares | Percentage of outstanding ordinary shares** | ||||||
Roy Zisapel (1) | 1,531,392 | 3.66 | % | |||||
Stanley Stern (2) | * | * | ||||||
Naama Zeldis (2) | * | * | ||||||
Yair Tauman (2) | * | * | ||||||
Yuval Cohen (2)(3) | * | * | ||||||
Meir Moshe (2) | * | * | ||||||
Israel Mazin (2) | * | * | ||||||
Alex Pinchev (3) | * | * | ||||||
Gabi Malka (2) | * | * | ||||||
David Aviv (2) | * | * | ||||||
Sharon Trachtman (2) | * | * | ||||||
Guy Avidan (2) | * | * | ||||||
Yoav Gazelle (2) | * | * | ||||||
Riki Goldriech (2) | * | * | ||||||
All directors and executive officers as a group (14 persons) (4) | 2,033,422 | 4.81 | % |
Name | Number of ordinary shares* | Percentage of outstanding ordinary shares** | ||||||
Senvest Management, LLC (1) | 4,044,695 | 9.23 | % | |||||
Nava Zisapel (2) | 3,060,176 | 6.98 | % | |||||
Artisan Partners Limited Partnership (3) | 2,925,957 | 6.68 | % | |||||
The Phoenix Holdings Ltd. (4) | 2,840,213 | 6.48 | % | |||||
Legal & General Investment Management Limited (5) | 2,570,026 | 5.86 | % |
Name | Number of ordinary shares* | Percentage of outstanding ordinary shares** | ||||||
Senvest Management, LLC (1) | 4,115,597 | 9.85 | % | |||||
Morgan Stanley (2) | 3,534,162 | 8.46 | % | |||||
Nava Zisapel (3) | 3,060,176 | 7.32 | % | |||||
First Trust Portfolios L.P. (4) | 2,446,925 | 5.86 | % | |||||
Artisan Partners (5) | 2,360,703 | 5.65 | % | |||||
Legal & General Investment Management Limited (6) | 2,115,897 | 5.06 | % |
Based on Amendment No. 19 to the Schedule 13G filed with the SEC by Senvest on February 9, 2024, Senvest beneficially owned 4,115,597 of our outstanding ordinary shares. Based on previous amendments to the Schedule 13G filed with the SEC by Senvest, Senvest beneficially owned (i) as of February 10, 2023, 4,044,695 of our outstanding ordinary shares and (ii) as of February 9, 2022, 3,180,659 of our outstanding ordinary shares. |
Based on Amendment No. 2 to the |
Entity | Products/Services |
Bynet Data Communications Ltd. | Network management, IT and communication equipment, testing and repair, mutual marketing activities |
Internet Binat Ltd. | IT and communication services |
Bynet System Applications Ltd. | Communication equipment and services |
Rad Data Communications Ltd. | Operating services and manpower |
Cloudride Ltd. | Cloud hosting services, mutual marketing activities |
Bynet Electronics Ltd. | Testing equipment and related services |
U.S. dollar against: | U.S. dollar against: | |||||||||||||
Year ended December 31, | NIS | Euro | NIS | Euro | ||||||||||
2018 | 8.1 | % | 4.6 | % | ||||||||||
2019 | (7.8 | )% | 2.0 | % | (7.8 | )% | 2.0 | % | ||||||
2020 | (7.0 | )% | (8.5 | )% | (7.0 | )% | (8.5 | )% | ||||||
2021 | (3.3 | )% | 8.4 | % | (3.3 | )% | 8.4 | % | ||||||
2022 | 13.2 | % | 6.1 | % | 13.2 | % | 6.1 | % | ||||||
2023 | 3.1 | % | (3.6 | )% |
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF |
Year Ended December 31, | ||||||||||||||||
2023* | 2022* | |||||||||||||||
(US$ in thousands) | ||||||||||||||||
Audit Fees (1) | 480 | 70 | % | 480 | 62 | % | ||||||||||
Audit-Related Fees (2) | - | 0 | % | - | 0 | % | ||||||||||
Tax Fees (3) | 126 | 18 | % | 214 | 28 | % | ||||||||||
All Other Fees (4) | 84 | 12 | % | 78 | 10 | % | ||||||||||
Total | 690 | 100 | % | 772 | 100 | % |
Year Ended December 31, | ||||||||||||||||
2021* | 2022* | |||||||||||||||
(US$ in thousands) | ||||||||||||||||
Audit Fees (1) | 405 | 42 | % | 480 | 62 | % | ||||||||||
Audit-Related Fees (2) | 234 | 25 | % | - | 0 | % | ||||||||||
Tax Fees (3) | 190 | 20 | % | 214 | 28 | % | ||||||||||
All Other Fees (4) | 127 | 13 | % | 78 | 10 | % | ||||||||||
Total | 956 | 100 | % | 772 | 100 | % |
Period | Total Number of Shares Purchased | Average Price Paid per Share (in US$) | Total Number of Shares Purchased as Part of Publicly Announced Plans | Approximate Dollar Value of Shares that May Yet To Be Purchased Under the Plans (1)(2)(3) | Total Number of Shares Purchased | Average Price Paid per Share (in US$) | Total Number of Shares Purchased as Part of Publicly Announced Plans | Approximate Dollar Value of Shares that May Yet To Be Purchased Under the Plans (1)(2)(3)(4) | ||||||||||||||||||||||||
January 1 through 31 | 166,939 | 31.82 | 166,939 | $ | 22,306,751 | 240,954 | 20.35 | 240,954 | $ | 62,543,697 | ||||||||||||||||||||||
February 1 through 28 | 200,342 | 31.77 | 200,342 | $ | 15,942,650 | 152,413 | 21.33 | 152,413 | $ | 59,293,385 | ||||||||||||||||||||||
March 1 through 31 | 378,806 | 31.90 | 378,806 | $ | 3,857,823 | 239,661 | 20.81 | 239,661 | $ | 54,305,274 | ||||||||||||||||||||||
April 1 through 30 | 468,722 | 31.13 | 468,722 | $ | 69,268,176 | 148,939 | 20.88 | 148,939 | $ | 51,194,812 | ||||||||||||||||||||||
May 1 through 31 | 208 | 23.96 | 208 | $ | 69,263,192 | 505,197 | 19.10 | 505,197 | $ | 41,546,833 | ||||||||||||||||||||||
June 1 through 30 | 132,804 | 21.83 | 132,804 | $ | 66,364,144 | 391,862 | 19.61 | 391,862 | $ | 33,860,764 | ||||||||||||||||||||||
July 1 through 31 | 154,267 | 21.90 | 154,267 | $ | 62,985,712 | 474,239 | 19.13 | 474,239 | $ | 24,786,459 | ||||||||||||||||||||||
August 1 through 31 | 43,607 | 21.82 | 43,607 | $ | 82,034,324 | 362,621 | 16.93 | 362,621 | $ | 18,648,641 | ||||||||||||||||||||||
September 1 through 30 | 87,717 | 21.58 | 87,717 | $ | 80,141,405 | 286,949 | 16.59 | 286,949 | $ | 75,238,481 | ||||||||||||||||||||||
October 1 through 31 | 10,000 | 21.76 | 10,000 | $ | 79,923,830 | 112,344 | 16.40 | 112,344 | $ | 73,396,541 | ||||||||||||||||||||||
November 1 through 30 | 255,507 | 20.29 | 255,507 | $ | 74,739,543 | 318,570 | 15.39 | 318,570 | $ | 68,494,670 | ||||||||||||||||||||||
December 1 through 31 | 371,000 | 19.65 | 371,000 | $ | 67,448,281 | 128,216 | 15.72 | 128,216 | $ | 66,478,592 |
RADWARE LTD. | ||
By: | Roy Zisapel President and Chief Executive Officer |
Page | |
Reports of Independent Registered Public Accounting Firm (PCAOB ID:1281) | F2 – |
Revenue Recognition | ||
Description of the Matter | As described in Note 2 to the consolidated financial statements, some of the Company’s contracts with customers consist of products, services and subscriptions, which are accounted for as separate performance obligations when they are distinct. In such cases, the transaction price is then allocated to the distinct performance obligations on a relative standalone selling price basis and recognizes associated revenue as control is transferred to the customer. Auditing the estimate of standalone selling price for performance obligation not sold separately involved subjective auditor judgment due to the absence of directly observable data which requires the Company to make subjective assumptions used to estimate the standalone selling price for each performance obligation. Standalone selling price for products and services can evolve over time due to changes in the Company’s pricing practices that are influenced by intense competition, changes in demand for products and services, and economic factors, among others. Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer contracts was extensive and required subjective auditor judgment. | |
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls relating to the revenue recognition process, including the estimate of standalone selling prices for each distinct performance obligation and review of assumptions used. Our audit procedures included testing management's estimate of standalone selling price for each distinct performance obligation included, among others, evaluating the appropriateness of the methodology applied and the reasonableness of management’s judgment and assumptions by comparing these assumptions with prior years and with the Company's and industry’s general and specific trends. We also inspected the source of historical data, pricing and other observable inputs such as customer grouping, tested the mathematical accuracy of the underlying data and evaluated the accounting policies and practices related to the estimate of standalone selling prices by management. In addition, we have tested the accuracy of management’s allocation of the transaction price to the performance obligations contained within sampled contracts and purchase orders with customers and evaluated whether revenue was recognized in the appropriate amounts and period. We also evaluated and tested the Company’s disclosures included in Note 2 to the consolidated financial statements. |
Tel-Aviv, Israel
Tel-Aviv, Israel
December 31, 2022 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 46,185 $ 92,513 Marketable securities 44,180 39,497 Short-term bank deposits 207,679 155,879 Trade receivables, net of allowance for credit losses of $174 at December 31, 2022 and 2021 17,752 13,191 Other current assets and prepaid expenses 7,196 8,046 Inventories 11,428 11,580 Total current assets 334,420 320,706 LONG-TERM INVESTMENTS: Marketable securities 90,148 98,224 Long-term bank deposits 43,765 79,708 Other assets 2,146 2,454 Total long-term investments 136,059 180,386 Property and equipment, net 21,068 20,240 Operating lease right-of-use assets 23,078 24,829 Intangible assets, net 19,686 10,731 Goodwill 68,008 41,144 Other long-term assets 41,269 37,334 Total assets $ 643,588 $ 635,370 F - December 31, 2022 2021 LIABILITIES AND EQUITY CURRENT LIABILITIES: Trade payables $ 6,464 $ 4,310 Deferred revenues 108,243 99,922 Operating lease liabilities 4,685 5,090 Employees and payroll accruals 32,380 26,284 Other payables and accrued expenses 12,263 30,281 Total current liabilities 164,035 165,887 LONG-TERM LIABILITIES: Deferred revenues 72,219 67,065 Operating lease liabilities 19,461 22,360 Other long-term liabilities 19,430 10,065 Total long-term liabilities 111,110 99,490 COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS’ EQUITY: Share capital - Ordinary shares of NIS 0.05 par value - Authorized: 90,000,000 at December 31, 2022 and 2021; Issued: 61,345,900 and 60,641,047 shares at December 31, 2022 and 2021, respectively; Outstanding: 44,306,891 and 45,871,957 shares at December 31, 2022 and 2021, respectively 732 730 Additional paid-in capital 498,168 471,173 Treasury shares 17,039,009 and 14,769,090 of ordinary shares at December 31, 2022 and 2021, respectively (303,299 ) (243,023 ) Accumulated other comprehensive loss (4,844 ) (455 Retained earnings 141,402 141,568 Total Radware Ltd. shareholders' equity Non-controlling interest Total shareholders’ equity 368,443 369,993 Total liabilities and shareholders’ equity $ 643,588 $ 635,370 F - RADWARE LTD. AND ITS SUBSIDIARIES Year ended December 31, 2022 2021 2020 Revenues: Products $ 172,161 $ 170,438 $ 132,934 Services 121,265 116,058 117,093 Total revenues 293,426 286,496 250,027 Cost of revenues: Products 43,014 42,191 34,645 Services 10,870 10,255 10,439 Total cost of revenues 53,884 52,446 45,084 Gross profit 239,542 234,050 204,943 Operating expenses, net: Research and development, net 86,562 74,098 66,836 Sales and marketing 126,533 119,842 113,015 General and administrative 29,786 21,885 18,924 Total operating expenses, net 242,881 215,825 198,775 Operating income (loss) (3,339 18,225 6,168 Financial income, net 8,052 4,407 7,796 Income before taxes on income 4,713 22,632 13,964 Taxes on income 4,879 14,821 4,328 Net income (loss) attributable to Radware Ltd.’s shareholders $ (166 $ 7,811 $ 9,636 Basic net earnings (loss) per share $ (0.00 $ 0.17 $ 0.21 Diluted net earnings (loss) per share $ (0.00 $ 0.16 $ 0.20 Weighted average shares used to compute net income (loss) per share: Basic 44,943,168 45,919,835 46,460,974 Diluted 44,943,168 47,503,091 47,739,540 F - RADWARE LTD. AND ITS SUBSIDIARIES Year ended December 31, 2022 2021 2020 Net income (loss) $ (166 $ 7,811 $ 9,636 Other comprehensive income (loss) before tax: Unrealized gains (losses) on marketable securities: Changes in unrealized gains (losses) (5,046 ) (2,999 339 Less: reclassification adjustments for gains included in net income (loss) 68 438 144 Cash flow hedging activities adjustments: Changes in unrealized gains (losses) (3,427 Less: reclassification adjustments for gains included in net income (loss) (2,795 (1,122 Other comprehensive income (loss) before tax (5,610 ) (2,561 483 Unrealized gains (losses) on marketable securities: Income tax benefits (income tax expenses) related to components of other comprehensive income (loss) 1,145 589 (111 ) Cash flow hedging activities adjustments: Income tax benefits (income tax expenses) related to components of other comprehensive income (loss) 76 Income tax benefits (income tax expenses) related to components of other comprehensive income (loss) 1,221 589 (111 Other comprehensive income (loss), net of tax (4,389 ) (1,972 372 Comprehensive income (loss) attributable to Radware Ltd.’s shareholders $ (4,555 $ 5,839 $ 10,008 F - RADWARE LTD. AND ITS SUBSIDIARIES Number of outstanding ordinary shares Share Capital Additional paid-in capital Treasury stock, at cost Accumulated other comprehensive income (loss) Retained earnings Total Radware Ltd. shareholders’ equity Non-controlling interest Total shareholders’ equity Balance as of January 1, 2020 46,987,757 $ 710 $ 414,581 $ (145,226 ) $ 1,145 $ 124,121 $ 395,331 $ $ 395,331 Repurchase of ordinary shares (1,953,960 ) - - (45,326 ) - - (45,326 (45,326 ) Issuance of shares upon exercise of share options and vesting of restricted shares units 1,353,092 11 11,892 - - - 11,903 11,903 Share-based compensation - - 16,545 - - - 16,545 16,545 Other comprehensive income, net of tax - - - - 372 - 372 372 Net income - - - - - 9,636 9,636 9,636 Balance as of December 31, 2020 46,386,889 721 443,018 (190,552 ) 1,517 133,757 388,461 388,461 Repurchase of ordinary shares (1,871,119 ) - - (52,471 ) - - (52,471 (52,471 ) Issuance of shares upon exercise of share options and vesting of restricted shares units 1,356,187 9 10,581 - - - 10,590 - 10,590 Share-based compensation - - 17,574 - - - 17,574 17,574 Other comprehensive loss, net of tax - - - - (1,972 - (1,972 (1,972 ) Net income - - - - - 7,811 7,811 7,811 Balance as of December 31, 2021 45,871,957 730 471,173 (243,023 ) (455 141,568 369,993 369,993 Repurchase of ordinary shares (2,269,919 ) - - (60,276 ) - - (60,276 (60,276 ) Issuance of shares upon exercise of share options and vesting of restricted shares units 704,853 2 2,032 - - - 2,034 2,034 Share-based compensation - - 24,963 - - - 24,963 1,284 26,247 Other comprehensive loss, net of tax - - - - (4,389 ) - (4,389 (4,389 ) Issuance of Preferred A shares in subsidiary 35,000 35,000 Net loss - - - - - (166 (166 (166 Balance as of December 31, 2022 44,306,891 $ 732 $ 498,168 $ (303,299 ) $ (4,844 ) $ 141,402 $ 332,159 $ 36,284 $ 368,443 F - Year ended December 31, 2022 2021 2020 Cash flows from operating activities: Net income (loss) $ (166 ) $ 7,811 $ 9,636 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 11,692 10,196 10,559 Share-based compensation 27,353 17,574 16,545 Gain on sale of marketable securities (68 ) (438 ) (639 ) Amortization of premiums, accretion of discounts and accrued interest on marketable securities, net 2,345 2,720 931 Changes in accrued interest on bank deposits (2,480 ) 2,424 (1,210 ) Increase in accrued severance pay, net 219 468 202 Decrease (increase) in trade receivables, net (4,561 ) 3,657 5,762 Changes in deferred income taxes, net (1,986 ) (3,466 ) 333 Increase in other assets and prepaid expenses (374 ) (4,625 ) (5,217 ) Decrease in inventories 152 2,355 5 Increase (decrease) in trade payables 2,154 428 (2,433 ) Increase in deferred revenues 13,475 20,063 16,797 Increase (decrease) in other payables and accrued expenses (14,054 ) 12,238 11,305 Operating lease right-of-use assets 6,033 5,532 5,593 Operating lease liabilities (7,586 ) (5,163 ) (4,304 ) Net cash provided by operating activities 32,148 71,774 63,865 Cash flows from investing activities: Purchase of property and equipment (8,814 ) (5,603 ) (8,671 ) Proceeds from (investing in) other long-term assets 35 49 (110 ) Proceeds from (investing in) bank deposits (13,377 ) 24,448 (23,878 ) Purchase of marketable securities (49,217 ) (88,300 ) (32,981 ) Proceeds from maturity of marketable securities 34,589 59,980 29,452 Proceeds from sale of marketable securities 10,766 17,275 21,820 Payment for the business acquisition of SecurityDAM Ltd. (30,000 ) - - Net cash provided by (used in) investing activities (56,018 7,849 (14,368 ) F - Year ended December 31, 2022 2021 2020 Cash flows from financing activities: Proceeds from exercise of share options 2,034 10,590 11,903 Payment of deferred consideration related to acquisition - - (2,054 ) Proceeds from issuance of Preferred A shares in subsidiary Repurchase of ordinary shares (59,492 ) (52,471 ) (45,326 ) Net cash used in financing activities (22,458 ) (41,881 ) (35,477 ) Increase (decrease) in cash and cash equivalents (46,328 37,742 14,020 Cash and cash equivalents at the beginning of the year 92,513 54,771 40,751 Cash and cash equivalents at the end of the year $ 46,185 $ 92,513 $ 54,771 Supplemental disclosure of cash flow information: Cash paid during the year for taxes on income $ 18,069 $ 2,748 $ 1,314 Non-cash investing activities: Right-of-use assets recognized with corresponding lease liabilities $ 4,282 $ 2,538 $ 15,272 F - RADWARE LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 65 ) 332,159 369,993 36,284 - 76 ) ) ) ) 87 ) ) ) - (1,122 ) ) - ) ) - - ) ) ) 98STATEMENTSSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - ) - - - - - - ) - - ) ) - - ) - ) - - ) - - - - - - - - ) ) - ) 109 ) 1110 35,000 - - ) 1211
U.S. dollars in thousands
NOTE 1:- | GENERAL |
a. | Radware Ltd. (the "Company"), an Israeli company commenced operations in April 1997. The Company and its subsidiaries (the "Group") are engaged in the development, manufacture and sale of cyber security and application delivery solutions for cloud, |
b. | On February 17, 2022, the Company acquired all of the technology and other intangible assets from SecurityDAM | |
c. | On January 18, 2022, the Company established |
d. | ||
The Company has established wholly-owned subsidiaries in various countries worldwide. The Company's subsidiaries are engaged primarily in sales, marketing and support activities of its core products. |
e. | ||
The Group primarily relies on two original design manufacturers to supply certain hardware platforms and components for the production of its products. If one of these suppliers fails to deliver or delays the delivery of the necessary platforms or components, the Group will be required to seek alternative sources of supply. A change in suppliers could result in manufacturing delays, which could cause a possible loss of sales and, consequently, could adversely affect the Company's operation and financial performance. |
F - 1312
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
|
|
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
a. | Use of estimates: |
b. | Financial statements in United States dollars: |
F - 14
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
c. | Principles of consolidation: |
d. | Cash equivalents: |
F - 13
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
e. | Bank deposits: |
f. | Investment in marketable securities: |
F - 15
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
Unrealized non-credit related losses and unrealized gains, net of tax, are reported as a separate component of accumulated other comprehensive income (loss)F - 14
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in the consolidated balance sheets until realized. Credit loss impairments for the years ended December 31, 2022, 2021 and 2020 were immaterial.thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
g. | Inventories: |
F - 16
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
h. | Property and equipment, net: |
% | |
Computers, peripheral equipment and software | 15 - 33 (mainly 33) |
Office furniture and equipment | 6 - 20 (mainly 15) |
Leasehold improvements | Over the shorter of the term of the lease or the useful life of the asset |
F - 15
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
i. | Impairment of long-lived assets and intangible assets subject to amortization: |
F - 17
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
j. | Goodwill: |
F - 1816
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
k. | Leases: |
l. |
F - 19
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
m. | Revenue recognition: |
• | Revenues from physical products and software-based products are recognized when control of the promised goods is transferred to the customer, either upon shipment or when the product is delivered, depending on the commercial terms of each transaction. Revenues from cloud subscriptions, included as product revenues, are recognized ratably, on a straight-line basis, over the subscription period. |
F - 17
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
• | Revenues from post-contract customer support ("PCS"), which represent mainly, help-desk support and unit repairs or replacements, professional services, and emergency response team (“ERT”) services are recognized ratably, on a straight-line basis, over the term of the related contract, which is typically between one year and three years. Renewals of support contracts create new performance obligations that are satisfied over the term with the revenues recognized ratably, on a straight-line basis, over the renewed period. |
F - 20
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 18
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Year ended December 31, | ||||||||
2023 | 2022 | |||||||
Products | $ | 50,703 | $ | 84,508 | ||||
Services | 95,816 | 103,966 | ||||||
Subscriptions | 114,773 | 104,952 | ||||||
$ | 261,292 | $ | 293,426 |
Year ended December 31, | ||||||||
2022 | 2021 | |||||||
Products | $ | 84,508 | $ | 90,292 | ||||
Services | 103,966 | 103,220 | ||||||
Subscriptions | 104,952 | 92,984 | ||||||
$ | 293,426 | $ | 286,496 |
F - 21
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 19
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
n. | Shipping and handling fees and costs: |
o. | Cost of revenues: |
F - 22
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
p. |
F - 20
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
q. | Research and development expenses, net: |
r. | Government grants: |
F - 23
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
s. | Accounting for share-based compensation: |
F - 21
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Market-condition based RSUs' vesting is dependent upon the fulfillment of certain market conditions and will vest, or partially vest, depending on the Company's share performance compared to other companies that are listed on the NASDAQ CTA Cybersecurity Index over the requisite service period, which is up to three years.
F - 2422
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Risk free interest rate | 2.74%-2.75% | - | 0.36% | |||||||||
Dividend yields | 0% | - | 0% | |||||||||
Expected volatility | 27.54%- 32.88% | - | 24.97% | |||||||||
Weighted average expected term from grant date (in years) | 2.43-5.17 | - | 4 |
Year ended December 31, | |||||
2023 | 2022 | 2021 | |||
Risk free interest rate | 4.06%-4.16% | 2.74%-2.75% | - | ||
Dividend yields | 0% | 0% | - | ||
Expected volatility | 29.83%-35.23% | 27.54%-32.88% | - | ||
Weighted-average expected term from grant date (in years) | 3-5.16 | 2.43-5.17 | - |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Risk free interest rate | 2.72% | 0.89% | 0.33% | 4.87 | % | 2.72 | % | 0.89 | % | |||||||||||||||
Dividend yields | 0% | 0% | 0% | 0 | % | 0 | % | 0 | % | |||||||||||||||
Expected volatility | 31% | 27% | 26% | 34 | % | 31 | % | 27 | % | |||||||||||||||
Weighted average expected term from grant date (in years) | 3.41 | 3.46 | 3.68 | |||||||||||||||||||||
Weighted-average expected term from grant date (in years) | 3.39 | 3.41 | 3.46 |
t. | Income taxes: |
F - 2523
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
u. | Concentrations of credit risks: |
F - 24
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
F - 26
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
v. | Derivative and hedging activities: |
F - 27
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 25
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
w. | Employee related benefits: |
F - 28
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 26
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
x. | Fair value of financial instruments: |
Level 1 | - | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
Level 2 | - | Include other inputs that are directly or indirectly observable in the marketplace. |
Level 3 | - | Unobservable inputs that are supported by little or no market activity. |
y. | Non-controlling interests: |
F - 29
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 27
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
z. | Comprehensive income (loss): |
aa. | Treasury shares: |
ab. | Basic and diluted net income (loss) per share: |
F - 30
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 28
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
ac. | ASC 280, "Segment Reporting"' establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding (“CODM”) how to allocate resources and in assessing performance. The Company's CODM is its Chief Executive Officer. |
ad. | Business combinations: |
F - 3129
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
ae. | New accounting pronouncements not yet effective: |
NOTE 3:- | ACQUISITIONS |
Consideration: | ||||
Cash consideration paid on closing date | $ | 30,000 | ||
Contingent consideration fair value | 9,525 | |||
Total purchase price | $ | 39,525 |
Identifiable assets acquired: | ||||
Technology | $ | 12,661 | ||
Goodwill | 26,864 | |||
$ | 39,525 |
F - 3230
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 4:-MARKETABLE SECURITIES
NOTE 4:- | MARKETABLE SECURITIES |
December 31, |
| |||||||||||||||||||||||||||||||
2022 | 2021 |
| ||||||||||||||||||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Market | Amortized | Gross unrealized | Gross unrealized | Market |
| ||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value |
| ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Foreign banks and government debentures | $ | 18,642 | $ | (537 | ) | $ | - | $ | 18,105 | $ | 18,246 | $ | - | $ | 107 | $ | 18,353 |
| ||||||||||||||
Corporate debentures | 26,639 | (595 | ) | 31 | 26,075 | 21,050 | (5 | ) | 99 | 21,144 |
| |||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total marketable securities | $ | 45,281 | $ | (1,132 | ) | $ | 31 | $ | 44,180 | $ | 39,296 | $ | (5 | ) | $ | 206 | $ | 39,497 |
|
December 31, | ||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Market | Amortized | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value | |||||||||||||||||||||||||
Foreign banks and government debentures | $ | 36,891 | $ | (312 | ) | $ | 45 | $ | 36,624 | $ | 18,642 | $ | (537 | ) | $ | - | $ | 18,105 | ||||||||||||||
Corporate debentures | 50,419 | (672 | ) | 1 | 49,748 | 26,639 | (595 | ) | 31 | 26,075 | ||||||||||||||||||||||
Total marketable securities | $ | 87,310 | $ | (984 | ) | $ | 46 | $ | 86,372 | $ | 45,281 | $ | (1,132 | ) | $ | 31 | $ | 44,180 |
December 31, |
| December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 |
| 2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Market | Amortized | Gross unrealized | Gross unrealized | Market |
| Amortized | Gross unrealized | Gross unrealized | Market | Amortized | Gross unrealized | Gross unrealized | Market | ||||||||||||||||||||||||||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value |
| cost | losses | gains | value | cost | losses | gains | value | ||||||||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign banks and government debentures | $ | 16,451 | $ | (1,018 | ) | $ | - | $ | 15,433 | $ | 34,317 | $ | (304 | ) | $ | 46 | $ | 34,059 |
| $ | 16,883 | $ | (132 | ) | $ | 38 | $ | 16,789 | $ | 16,451 | $ | (1,018 | ) | $ | - | $ | 15,433 | |||||||||||||||||||||||||||
Corporate debentures | 77,876 | (3,433 | ) | - | 74,443 | 64,699 | (649 | ) | 115 | 64,165 |
| 16,308 | (264 | ) | 12 | 16,056 | 77,876 | (3,433 | ) | - | 74,443 | |||||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total marketable securities | $ | 94,327 | $ | (4,451 | ) | $ | - | $ | 89,876 | $ | 99,016 | $ | (953 | ) | $ | 161 | $ | 98,224 |
| $ | 33,191 | $ | (396 | ) | $ | 50 | $ | 32,845 | $ | 94,327 | $ | (4,451 | ) | $ | - | $ | 89,876 |
December 31, | ||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Market | Amortized | Gross unrealized | Gross unrealized | Market | |||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value | |||||||||||||||||||||||||
Foreign banks and government debentures | $ | 288 | $ | (2 | ) | $ | - | $ | 286 | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
Corporate debentures | - | - | - | - | 289 | (17 | ) | - | 272 | |||||||||||||||||||||||
Total marketable securities | $ | 288 | $ | (2 | ) | $ | - | $ | 286 | $ | 289 | $ | (17 | ) | $ | - | $ | 272 |
December 31, |
| |||||||||||||||||||||||||||||||
2022 | 2021 |
| ||||||||||||||||||||||||||||||
Amortized | Gross unrealized | Gross unrealized | Market | Amortized | Gross unrealized | Gross unrealized | Market |
| ||||||||||||||||||||||||
cost | losses | gains | value | cost | losses | gains | value |
| ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Foreign banks and government debentures | $ | - | $ | - |
| $ | - | $ | - | $ | - | $ | - |
| $ | - | $ | - |
| |||||||||||||
Corporate debentures | 289 | (17 | ) | - | 272 | - | - |
| - | - |
| |||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total marketable securities | $ | 289 | $ | (17 | ) | $ | - | $ | 272 | $ | - | $ | - |
| $ | - | $ | - |
|
F - 3331
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 4:- | MARKETABLE SECURITIES (Cont.) |
December 31, 2023 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair Value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
Foreign banks and government debentures | $ | 3,618 | $ | (12 | ) | $ | 33,095 | $ | (434 | ) | $ | 36,713 | $ | (446 | ) | |||||||||
Corporate debentures | 9,985 | (34 | ) | 50,655 | (902 | ) | 60,640 | (936 | ) | |||||||||||||||
Total available-for-sale marketable securities | $ | 13,603 | $ | (46 | ) | $ | 83,750 | $ | (1,336 | ) | $ | 97,353 | $ | (1,382 | ) |
December 31, 2022 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair Value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||
Foreign banks and government debentures | $ | 1,574 | $ | (2 | ) | $ | 31,964 | $ | (1,552 | ) | $ | 33,538 | $ | (1,554 | ) | |||||||||
Corporate debentures | 27,677 | (739 | ) | 69,838 | (3,307 | ) | 97,515 | (4,046 | ) | |||||||||||||||
Total available-for-sale marketable securities | $ | 29,251 | $ | (741 | ) | $ | 101,802 | $ | (4,859 | ) | $ | 131,053 | $ | (5,600 | ) |
December 31, 2022 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | losses | value | losses | value | losses | |||||||||||||||||||
| ||||||||||||||||||||||||
Foreign banks and government debentures | $ | 1,574 | $ | (2 | ) | $ | 31,964 | $ | (1,552 | ) | $ | 33,538 | $ | (1,554 | ) | |||||||||
Corporate debentures | 27,677 | (739 | ) | 69,838 | (3,307 | ) | 97,515 | (4,046 | ) | |||||||||||||||
| ||||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 29,251 | $ | (741 | ) | $ | 101,802 | $ | (4,859 | ) | $ | 131,053 | $ | (5,600 | ) |
Debt securities with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values as of December 31, 2021 are as follows:
December 31, 2021 | ||||||||||||||||||||||||
Investments with continuous unrealized losses for less than 12 months | Investments with continuous unrealized losses for 12 months or greater | Total investments with continuous unrealized losses | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | losses | value | losses | value | losses | |||||||||||||||||||
| ||||||||||||||||||||||||
Foreign banks and government debentures | $ | 22,075 | $ | (202 | ) | $ | 10,491 | $ | (104 | ) | $ | 32,566 | $ | (306 | ) | |||||||||
Corporate debentures | 49,526 | (521 | ) | 13,903 | (132 | ) | 63,429 | (653 | ) | |||||||||||||||
| ||||||||||||||||||||||||
Total available-for-sale marketable securities | $ | 71,601 | $ | (723 | ) | $ | 24,394 | $ | (236 | ) | $ | 95,995 | $ | (959 | ) |
As of December 31, 2022,2023 and 2021,2022, interest receivable amounted to $952$837 and $994,$952, respectively, and is included within marketable securities in the consolidated balance sheets.
F - 3432
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 5:- | FAIR VALUE MEASUREMENTS |
December 31, 2022 | December 31, 2023 | |||||||||||||||||||||||||||||||
Fair value measurements using input type | Fair value measurements using input type | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||||||||
Money market funds | $ | 3,642 | $ | - | $ | - | $ | 3,642 | $ | 11,990 | $ | - | $ | - | $ | 11,990 | ||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Other receivables and prepaid expenses: | ||||||||||||||||||||||||||||||||
Derivative instruments | - | 1,213 | - | 1,213 | ||||||||||||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||||||||||
Foreign banks and government debentures | - | 33,539 | - | 33,539 | - | 53,699 | - | 53,699 | ||||||||||||||||||||||||
Corporate debentures | - | 100,789 | - | 100,789 | - | 65,804 | - | 65,804 | ||||||||||||||||||||||||
Total financial assets | $ | 3,642 | $ | 134,328 | $ | - | $ | 137,970 | $ | 11,990 | $ | 120,716 | $ | - | $ | 132,706 | ||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Derivative instruments | $ | - | $ | 632 | $ | - | $ | 632 | ||||||||||||||||||||||||
Contingent consideration | - | - | 8,281 | 8,281 | $ | - | $ | - | $ | 6,332 | $ | 6,332 | ||||||||||||||||||||
Total financial liabilities | $ | - | $ | 632 | $ | 8,281 | $ | 8,913 | $ | - | $ | - | $ | 6,332 | $ | 6,332 |
December 31, 2021 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 488 | $ | - | $ | - | $ | 488 | ||||||||
Marketable securities: | ||||||||||||||||
Foreign banks and government debentures | - | 52,412 | - | 52,412 | ||||||||||||
Corporate debentures | - | 85,309 | - | 85,309 | ||||||||||||
Total financial assets | $ | 488 | $ | 137,721 | $ | - | $ | 138,209 |
F - 3533
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 5:- | FAIR VALUE MEASUREMENTS (Cont.) |
December 31, 2022 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets | ||||||||||||||||
Cash equivalents: | ||||||||||||||||
Money market funds | $ | 3,642 | $ | - | $ | - | $ | 3,642 | ||||||||
Marketable securities: | ||||||||||||||||
Foreign banks and government debentures | - | 33,539 | - | 33,539 | ||||||||||||
Corporate debentures | - | 100,789 | - | 100,789 | ||||||||||||
Total financial assets | $ | 3,642 | $ | 134,328 | $ | - | $ | 137,970 |
Liabilities | ||||||||||||||||
Derivative instruments | $ | - | $ | 632 | $ | - | $ | 632 | ||||||||
Contingent consideration | - | - | 8,281 | 8,281 | ||||||||||||
Total financial liabilities | $ | - | $ | 632 | $ | 8,281 | $ | 8,913 |
Year ended December 31, | ||||||||||||
December 31, 2022 | 2023 | 2022 | ||||||||||
Fair value at the beginning of the year | $ | - | $ | 8,281 | $ | - | ||||||
Acquisition date fair value of contingent consideration related to investment in SecurityDAM Ltd. (see Note 3) | 9,525 | |||||||||||
Changes in the fair value of contingent consideration in SecurityDAM Ltd. | 819 | |||||||||||
Acquisition date fair value of contingent consideration related to investment in SecurityDAM (see Note 3) | - | 9,525 | ||||||||||
Changes in the fair value of contingent consideration in SecurityDAM | 1,128 | 819 | ||||||||||
Reclassification of payable related to contingent consideration to other payables and accrued expenses (see Note 10) | (2,063 | ) | (3,077 | ) | (2,063 | ) | ||||||
Fair value at the end of the year | $ | 8,281 | $ | 6,332 | $ | 8,281 |
NOTE 6:- INVENTORIES
Inventories are comprised of the following:
|
| December 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Raw materials and components |
| $ | 1,899 |
|
| $ | 2,028 |
|
Work-in-progress |
|
| 1,004 |
|
|
| 729 |
|
Finished products |
|
| 8,525 |
|
|
| 8,823 |
|
| ||||||||
| $ | 11,428 |
|
| $ | 11,580 |
|
F - 3634
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 6:- | INVENTORIES |
December 31, | ||||||||
2023 | 2022 | |||||||
Raw materials and components | $ | 1,991 | $ | 1,899 | ||||
Work-in-progress | 119 | 1,004 | ||||||
Finished products | 13,434 | 8,525 | ||||||
$ | 15,544 | $ | 11,428 |
December 31, | ||||||||
2022 | 2021 | |||||||
| ||||||||
Cost: | ||||||||
| ||||||||
Computer, peripheral equipment and software | $ | 108,914 | $ | 103,291 | ||||
Office furniture and equipment | 14,034 | 13,489 | ||||||
Leasehold improvements | 8,185 | 7,493 | ||||||
| ||||||||
131,133 | 124,273 | |||||||
Accumulated depreciation: | ||||||||
| ||||||||
Computer, peripheral equipment and software | 92,918 | 88,323 | ||||||
Office furniture and equipment | 11,374 | 10,504 | ||||||
Leasehold improvements | 5,773 | 5,206 | ||||||
| ||||||||
110,065 | 104,033 | |||||||
| ||||||||
Property and equipment, net | $ | 21,068 | $ | 20,240 |
December 31, | ||||||||
2023 | 2022 | |||||||
Cost: | ||||||||
Computer, peripheral equipment and software | $ | 112,320 | $ | 108,914 | ||||
Office furniture and equipment | 14,187 | 14,034 | ||||||
Leasehold improvements | 8,268 | 8,185 | ||||||
134,775 | 131,133 | |||||||
Accumulated depreciation: | ||||||||
Computer, peripheral equipment and software | 98,199 | 92,918 | ||||||
Office furniture and equipment | 11,993 | 11,374 | ||||||
Leasehold improvements | 6,362 | 5,773 | ||||||
116,554 | 110,065 | |||||||
Property and equipment, net | $ | 18,221 | $ | 21,068 |
F - 35
NOTE 8:-RADWARE LTD. AND ITS SUBSIDIARIESINTANGIBLE ASSETS, NET
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 8:- | INTANGIBLE ASSETS, NET |
Weighted | ||||||||||||||||
average | ||||||||||||||||
amortization | December 31, | |||||||||||||||
period | 2022 | 2021 | ||||||||||||||
(years) | ||||||||||||||||
Cost: | ||||||||||||||||
Acquired technology | 7.6 | $ | 45,607 | $ | 32,946 | |||||||||||
Customers relationships and brand name | 5.8 | 9,817 | 9,817 | |||||||||||||
| ||||||||||||||||
55,424 | 42,763 | |||||||||||||||
Accumulated amortization: | ||||||||||||||||
Acquired technology | 25,921 | 22,215 | ||||||||||||||
Customers relationships and brand name | 9,817 | 9,817 | ||||||||||||||
| ||||||||||||||||
35,738 | 32,032 | |||||||||||||||
| ||||||||||||||||
Intangible assets, net | $ | 19,686 | $ | 10,731 |
December 31, | ||||||||
2023 | 2022 | |||||||
Cost: | ||||||||
Acquired technology | $ | 45,607 | $ | 45,607 | ||||
Customers relationships and brand name | 9,817 | 9,817 | ||||||
55,424 | 55,424 | |||||||
Accumulated amortization: | ||||||||
Acquired technology | 29,889 | 25,921 | ||||||
Customers relationships and brand name | 9,817 | 9,817 | ||||||
39,706 | 35,738 | |||||||
Intangible assets, net | $ | 15,718 | $ | 19,686 |
December 31, | ||||
2024 | $ | 3,968 | ||
2025 | 3,968 | |||
2026 | 3,725 | |||
2027 | 3,662 | |||
2028 | 395 | |||
Total | $ | 15,718 |
F - 3736
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 8:-INTANGIBLE ASSETS, NET (Cont.)
Future estimated amortization expenses for the years ending:
December 31, | ||||
| ||||
2023 | $ | 3,968 | ||
2024 | 3,968 | |||
2025 | 3,968 | |||
2026 | 3,725 | |||
2027 and thereafter | 4,057 | |||
| ||||
Total | $ | 19,686 |
NOTE 9:- | LEASES |
The Company has various operating leases for office space, vehicles and warehouse space that expire on different dates through 2030. Its lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. The Company provided several security deposits mainly to secure various operating lease agreements in connection with its office space.
2023 | $ | 3,987 | ||
2024 | 5,073 | |||
2025 | 4,280 | |||
2026 | 3,234 | |||
2027 | 3,003 | |||
2028 and thereafter | 6,713 | |||
| ||||
Total undiscounted lease payments | $ | 26,290 | ||
| ||||
Less: adjustment to discounted lease payments | (2,144 | ) | ||
| ||||
Total discounted lease payments | $ | 24,146 |
2024 | $ | 4,937 | ||
2025 | 4,168 | |||
2026 | 3,505 | |||
2027 | 3,058 | |||
2028 | 2,776 | |||
2029 and thereafter | 3,821 | |||
Total undiscounted lease payments | $ | 22,265 | ||
Less: adjustment to discounted lease payments | (1,561 | ) | ||
Total discounted lease payments | $ | 20,704 |
Weighted-average remaining lease term (years): | 5.49 | |||
Weighted-average discount rate: | 2.84 | % |
|
| |||
|
|
|
F - 38
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 9:- LEASES (Cont.)
2.7 | % |
F - 37
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 10:- | OTHER PAYABLES AND ACCRUED EXPENSES |
December 31, | ||||||||
2023 | 2022 | |||||||
Accrued expenses and other payables | $ | 5,083 | $ | 5,067 | ||||
Subcontractors accrual | 2,267 | 2,105 | ||||||
Accrued taxes | 3,146 | 3,028 | ||||||
Contingent consideration related to acquisition | 3,077 | 2,063 | ||||||
$ | 13,573 | $ | 12,263 |
December 31, | ||||||||
2022 | 2021 | |||||||
| ||||||||
Accrued expenses and other | $ | 5,067 | $ | 8,987 | ||||
Subcontractors accrual | 2,105 | 2,344 | ||||||
Accrued taxes | 3,028 | 18,950 | ||||||
Contingent consideration related to acquisition | 2,063 | - | ||||||
| ||||||||
$ | 12,263 | $ | 30,281 |
NOTE 11:- | COMMITMENTS AND CONTINGENT LIABILITIES |
a. | Litigation: |
From time to time, the Company is party to other various legal proceedings, claims and litigation that arise in the normal course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows and that the Company has provided an adequate accrual to cover the costs to resolve such legal proceedings, demands and claims.
b. | Royalties: |
A wholly owned Israeli subsidiary of the Company havehas been partially financed its research and development efforts through grants received from the Israeli Innovation Authority (the "IIA").IIA. In connection with the IIA grants, the Companysubsidiary is committed to pay royalties to the IIA from its revenue, up to 100% of the amount of the grants received plus 3% annual interest, in accordance with the R&D Law and the rules and regulations thereunder. The grants are deducted from research and development expenses. As of December 31, 2022,2023, the remaining contingent obligation of the Israeli subsidiary in connection with such payment of royalties is amounted to $333.$434.
F - 3938
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 12:- | SHAREHOLDERS’ EQUITY |
a. | Rights of shares: |
b. | Treasury shares: |
c. | Dividends: |
d. | Radware Ltd. Share Option Plans: |
F - 4039
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 12:- | SHAREHOLDERS’ EQUITY(Cont.) |
Share options exercised and outstanding | ||||
RSUs vested and outstanding | ||||
Ordinary shares available for issuance under the | ||||
Total reserved and authorized shares as of December 31, |
Number of options | Weighted- average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Outstanding at January 1, 2022 | 2,150,312 | $ | 24.17 | 3.39 | $ | 37,566 | ||||||||||
Granted | 250,284 | 25.55 | ||||||||||||||
Exercised | (155,406 | ) | 17.61 | |||||||||||||
Expired | (26,775 | ) | 21.32 | |||||||||||||
Forfeited | (260,386 | ) | 23.40 | |||||||||||||
Outstanding at December 31, 2022 | 1,958,029 | $ | 25.01 | 3.15 | $ | - | ||||||||||
Exercisable at December 31, 2022 | 1,032,328 | $ | 24.29 | 2.41 | $ | - | ||||||||||
Vested and expected to vest at December 31, 2022 | 1,908,623 | $ | 24.98 | 3.15 | $ | - |
Number of options | Weighted-average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||
Outstanding at January 1, 2023 | 1,958,029 | $ | 25.01 | 3.15 | $ | - | ||||||||||
Granted | 331,899 | 17.63 | ||||||||||||||
Exercised | (13,552 | ) | 20.77 | |||||||||||||
Expired | (228,910 | ) | 25.56 | |||||||||||||
Forfeited | (43,527 | ) | 26.70 | |||||||||||||
Outstanding at December 31, 2023 | 2,003,939 | $ | 23.70 | 2.77 | $ | 152 | ||||||||||
Exercisable at December 31, 2023 | 1,232,748 | $ | 24.60 | 2.05 | $ | - | ||||||||||
Vested and expected to vest at December 31, 2023 | 1,983,281 | $ | 23.69 | 2.76 | $ | 149 |
F - 4140
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 12:- | SHAREHOLDERS’ EQUITY (Cont.) |
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Outstanding | Outstanding | Exercisable | Outstanding | Exercisable | ||||||||||||||||||||||||||||||||||||||||
Weighted | Weighted- | |||||||||||||||||||||||||||||||||||||||||||
average | Weighted | Weighted | average | Weighted- | Weighted- | |||||||||||||||||||||||||||||||||||||||
Ranges of | Ranges of | remaining | average | average | Ranges of | remaining | average | average | ||||||||||||||||||||||||||||||||||||
exercise | exercise | Number of | contractual | exercise | Number of | exercise | exercise | Number of | contractual | exercise | Number of | exercise | ||||||||||||||||||||||||||||||||
price | price | options | life (years) | price | options | price | price | options | life (years) | price | options | price | ||||||||||||||||||||||||||||||||
$ | 20.26-24.89 | 1,381,402 | 3.13 | $ | 23.22 | 767,214 | $ | 23.18 | 15.12-19.75 | 331,899 | 4.62 | $ | 17.63 | - | $ | - | ||||||||||||||||||||||||||||
$ | 25.25-29.10 | 370,385 | 2.73 | $ | 27.10 | 225,114 | $ | 26.59 | 22.5-24.89 | 1,280,769 | 1.69 | $ | 23.29 | 987,866 | $ | 23.32 | ||||||||||||||||||||||||||||
$ | 32.71-35.43 | 206,242 | 4.11 | $ | 33.20 | 40,000 | $ | 32.71 | 25.25-29.1 | 200,149 | 1.82 | $ | 27.40 | 134,488 | $ | 26.93 | ||||||||||||||||||||||||||||
$ | 32.71-35.43 | 191,122 | 3.11 | $ | 33.06 | 110,394 | $ | 32.97 | ||||||||||||||||||||||||||||||||||||
1,958,029 | 1,032,328 | 2,003,939 | 1,232,748 |
Year ended December 31, | ||||
Outstanding at January 1, | ||||
Granted | ||||
Vested | ( | ) | ||
Forfeited | ( | ) | ||
Outstanding as of December 31, |
F - 4241
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 12:- | SHAREHOLDERS’ EQUITY(Cont.) |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Cost of revenues | $ | 399 | $ | 236 | $ | 188 | $ | 515 | $ | 399 | $ | 236 | ||||||||||||
Research and development, net | 7,215 | 5,412 | 4,409 | 7,709 | 7,215 | 5,412 | ||||||||||||||||||
Sales and marketing | 11,196 | 8,811 | 8,315 | 12,395 | 11,196 | 8,811 | ||||||||||||||||||
General and administrative | 7,286 | 3,115 | 3,633 | 10,531 | 7,286 | 3,115 | ||||||||||||||||||
Total expenses | $ | 26,096 | $ | 17,574 | $ | 16,545 | $ | 31,150 | $ | 26,096 | $ | 17,574 |
e. | Skyhawk (CNP) Security Ltd. Share Option Plans: |
F - 4342
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share and per share data
NOTE 12:- | SHAREHOLDERS’ EQUITY(Cont.) |
| Year ended | |||
| ||||
Cost of revenues | $ | - | ||
Research and development, net | 77 | |||
Sales and marketing | 45 | |||
General and administrative | 1,135 | |||
| ||||
Total expenses | $ | 1,257 |
Year ended December 31, | ||||||||
2023 | 2022 | |||||||
Cost of revenues | $ | - | $ | - | ||||
Research and development, net | 796 | 77 | ||||||
Sales and marketing | 159 | 45 | ||||||
General and administrative | 1,917 | 1,135 | ||||||
Total expenses | $ | 2,872 | $ | 1,257 |
A summary of employeesemployees’ and directorsdirectors’ options activity under the Skyhawk Share Option PlansPlan as of December 31, 20222023 is as follows:
Number of options | Weighted- average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | Number of options | Weighted-average exercise price | Weighted- average remaining contractual term (in years) | Aggregate intrinsic value | |||||||||||||||||||||||||
Outstanding at January 1, 2022 | - | $ | - | - | - | |||||||||||||||||||||||||||
Outstanding at January 1, 2023 | 20,341,993 | $ | 0.33 | 6.43 | 3,017,612 | |||||||||||||||||||||||||||
Granted | 20,467,841 | 0.33 | 1,428,000 | 0.48 | - | - | ||||||||||||||||||||||||||
Exercised | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Expired | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Forfeited | (125,848 | ) | 0.48 | - | - | (3,093,688 | ) | 0.48 | - | - | ||||||||||||||||||||||
Outstanding at December 31, 2022 | 20,341,993 | $ | 0.33 | 6.43 | - | |||||||||||||||||||||||||||
Outstanding at December 31, 2023 | 18,676,305 | $ | 0.32 | 5.74 | 3,017,612 | |||||||||||||||||||||||||||
Exercisable at December 31, 2022 | - | $ | - | - | - | |||||||||||||||||||||||||||
Exercisable at December 31, 2023 | 2,140,151 | $ | 0.01 | 5.69 | 1,005,871 | |||||||||||||||||||||||||||
Vested and expected to vest at December 31, 2022 | 20,341,993 | $ | 0.33 | 6.43 | - | |||||||||||||||||||||||||||
Vested and expected to vest at December 31, 2023 | 18,676,305 | $ | 0.32 | 5.74 | 3,017,612 |
F - 4443
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share data
NOTE 13:- | EARNINGS (LOSS) PER SHARE |
NOTE 13:-EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted net earnings (loss) per share:
Year ended December 31, | ||||||||||||
2022 |
|
| 2021 |
|
| 2020 | ||||||
|
|
|
|
|
| |||||||
Numerator for basic and diluted net earnings (loss) per share: | ||||||||||||
| ||||||||||||
Net income (loss) | $ | (166 | ) | $ | 7,811 | $ | 9,636 | |||||
| ||||||||||||
Weighted average shares outstanding, net of treasury shares: | ||||||||||||
| ||||||||||||
Denominator for basic net earnings (loss) per share | 44,943,168 | 45,919,835 | 46,460,974 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee share options and RSUs |
| - |
| 1,583,256 |
| 1,278,566 | ||||||
| ||||||||||||
Denominator for diluted net earnings (loss) per share |
| 44,943,168 |
| 47,503,091 |
| 47,739,540 | ||||||
|
|
|
|
|
|
|
|
|
|
|
| |
Basic net earnings (loss) per share | $ | (0.00 | ) | $ | 0.17 | $ | 0.21 | |||||
| ||||||||||||
Diluted net earnings (loss) per share | $ | (0.00 | ) | $ | 0.16 | $ | 0.20 |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Numerator for basic and diluted net earnings (loss) per share: | ||||||||||||
Net income (loss) | $ | (21,590 | ) | $ | (166 | ) | $ | 7,811 | ||||
Weighted-average shares outstanding, net of treasury shares: | ||||||||||||
Denominator for basic net earnings (loss) per share | 42,871,770 | 44,943,168 | 45,919,835 | |||||||||
Effect of dilutive securities: | ||||||||||||
Employee share options and RSUs | - | - | 1,583,256 | |||||||||
Denominator for diluted net earnings (loss) per share | 42,871,770 | 44,943,168 | 47,503,091 | |||||||||
Basic net earnings (loss) per share | $ | (0.50 | ) | $ | (0.00 | ) | $ | 0.17 | ||||
Diluted net earnings (loss) per share | $ | (0.50 | ) | $ | (0.00 | ) | $ | 0.16 |
F - 4544
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME |
a. | General: |
2022 | 2021 | 2023 | 2022 | |||||||||||||
Beginning balance | $ | 5,312 | $ | 7,125 | $ | 7,434 | $ | 5,312 | ||||||||
Decrease related to settlement with tax authorities | - | (4,258 | ) | |||||||||||||
Decrease related to expired tax years | (723 | ) | - | (424 | ) | (723 | ) | |||||||||
Additions for prior year tax positions | 162 | 2,115 | 125 | 162 | ||||||||||||
Decrease for prior year tax positions | (244 | ) | (1,428 | ) | (1,879 | ) | (244 | ) | ||||||||
Additions for current year tax positions | 2,927 | 1,758 | 933 | 2,927 | ||||||||||||
Ending balance | $ | 7,434 | $ | 5,312 | $ | 6,189 | $ | 7,434 |
F - 4645
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
b. | Israeli taxation: |
1. | Foreign Exchange Regulations: |
2. | Tax rates: |
3. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 |
F - 46
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
F - 47
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
F - 4847
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
c. | Taxes on income are comprised as follows: |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Current taxes | $ | 6,865 | $ | 18,287 | $ | 3,995 | $ | 3,255 | $ | 6,865 | $ | 18,287 | ||||||||||||
Deferred taxes | (1,986 | ) | (3,466 | ) | 333 | 582 | (1,986 | ) | (3,466 | ) | ||||||||||||||
$ | 4,879 | $ | 14,821 | $ | 4,328 | $ | 3,837 | $ | 4,879 | $ | 14,821 | |||||||||||||
Domestic | $ | 2,820 | $ | 10,741 | $ | 2,648 | $ | 1,079 | $ | 2,820 | $ | 10,741 | ||||||||||||
Foreign | 2,059 | 4,080 | 1,680 | 2,758 | 2,059 | 4,080 | ||||||||||||||||||
$ | 4,879 | $ | 14,821 | $ | 4,328 | $ | 3,837 | $ | 4,879 | $ | 14,821 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Domestic taxes: | ||||||||||||
Current taxes | $ | 2,967 | $ | 12,890 | $ | 3,166 | ||||||
Deferred taxes | (147 | ) | (2,149 | ) | (518 | ) | ||||||
2,820 | 10,741 | 2,648 | ||||||||||
Foreign taxes: | ||||||||||||
Current taxes | 3,898 | 5,397 | 829 | |||||||||
Deferred taxes | (1,839 | ) | (1,317 | ) | 851 | |||||||
2,059 | 4,080 | 1,680 | ||||||||||
$ | 4,879 | $ | 14,821 | $ | 4,328 |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Domestic taxes: | ||||||||||||
Current taxes | $ | 488 | $ | 2,967 | $ | 12,890 | ||||||
Deferred taxes | 591 | (147 | ) | (2,149 | ) | |||||||
1,079 | 2,820 | 10,741 | ||||||||||
Foreign taxes: | ||||||||||||
Current taxes | 2,767 | 3,898 | 5,397 | |||||||||
Deferred taxes | (9 | ) | (1,839 | ) | (1,317 | ) | ||||||
2,758 | 2,059 | 4,080 | ||||||||||
$ | 3,837 | $ | 4,879 | $ | 14,821 |
F - 4948
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
d. | Deferred income taxes: |
December 31, | December 31, | |||||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
Carryforward losses and tax credit | $ | 8,456 | $ | 9,336 | $ | 12,249 | $ | 8,456 | ||||||||
Deferred revenues | 6,897 | 5,377 | 6,237 | 6,897 | ||||||||||||
Unrealized loss on marketable securities | 1,281 | 136 | 296 | 1,281 | ||||||||||||
ROU assets | 2,289 | 2,372 | 2,234 | 2,289 | ||||||||||||
Temporary differences | 9,327 | 6,583 | 9,566 | 9,327 | ||||||||||||
Deferred tax assets before valuation allowance | 28,250 | 23,804 | 30,582 | 28,250 | ||||||||||||
Valuation allowance | (5,162 | ) | (2,760 | ) | (8,434 | ) | (5,162 | ) | ||||||||
Net deferred tax assets | 23,088 | 21,044 | 22,148 | 23,088 | ||||||||||||
Intangible assets, including goodwill | (4,529 | ) | (4,543 | ) | (4,547 | ) | (4,529 | ) | ||||||||
Operating lease liabilities | (2,289 | ) | (2,372 | ) | (2,242 | ) | (2,289 | ) | ||||||||
Depreciable assets | (1,299 | ) | (1,699 | ) | (1,043 | ) | (1,299 | ) | ||||||||
Deferred tax liability | (8,117 | ) | (8,614 | ) | (7,832 | ) | (8,117 | ) | ||||||||
Net deferred tax assets | $ | 14,971 | $ | 12,430 | $ | 14,316 | $ | 14,971 |
e. | Foreign: |
F - 5049
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
f. | Income taxes of non-Israeli subsidiaries: |
F - 5150
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
g. | A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company and the actual tax expense as reported in the consolidated statements of income (loss) is as follows: |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Income (loss) before taxes, as reported in the consolidated statements of income (loss) | $ | (17,753 | ) | $ | 4,713 | $ | 22,632 | |||||
Statutory tax rate | 23 | % | 23 | % | 23 | % | ||||||
Theoretical tax expense (benefit) on the above amount at the Israeli statutory tax rate | $ | (4,083 | ) | $ | 1,084 | $ | 5,205 | |||||
Tax adjustment in respect of different tax rate of foreign subsidiary | (57 | ) | 48 | 33 | ||||||||
Non-deductible expenses and other permanent differences | 536 | 197 | 305 | |||||||||
Deferred taxes on losses for which valuation allowance was provided, net | 2,635 | 2,402 | 896 | |||||||||
Utilization of tax losses and deferred taxes for which valuation allowance was provided, net | - | - | (128 | ) | ||||||||
Foreign withholding taxes | 637 | 3,138 | 2,656 | |||||||||
Share compensation relating to share options per ASC No. 718 | 3,716 | 1,517 | (2,369 | ) | ||||||||
Income taxes in respect of prior years | 1,246 | (1,388 | ) | 687 | ||||||||
Change of tax rate | - | (505 | ) | 462 | ||||||||
Approved, Privileged and Preferred enterprise loss (benefits) (*) | (1,086 | ) | (1,457 | ) | 6,869 | |||||||
Other | 293 | (157 | ) | 205 | ||||||||
Actual tax expense | $ | 3,837 | $ | 4,879 | $ | 14,821 |
(*) Basic earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.06 | $ | 0.03 | $ | 0.15 | ||||||
Diluted earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.06 | $ | 0.03 | $ | 0.14 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Income (loss) before taxes, as reported in the consolidated statements of income (loss) | $ | 4,713 | $ | 22,632 | $ | 13,964 | ||||||
Statutory tax rate | 23 | % | 23 | % | 23 | % | ||||||
Theoretical tax expense (benefit) on the above amount at the Israeli statutory tax rate | $ | 1,084 | $ | 5,205 | $ | 3,212 | ||||||
Tax adjustment in respect of different tax rate of foreign subsidiary | 48 | 33 | (185 | ) | ||||||||
Non-deductible expenses and other permanent differences | 197 | 305 | 83 | |||||||||
Deferred taxes on losses for which valuation allowance was provided, net | 2,402 | 896 | 959 | |||||||||
Utilization of tax losses and deferred taxes for which valuation allowance was provided, net | - | (128 | ) | (152 | ) | |||||||
Foreign withholding taxes | 3,138 | 2,656 | 1,489 | |||||||||
Share compensation relating to share options per ASC No. 718 | 1,517 | (2,369 | ) | 1,258 | ||||||||
Income taxes in respect of prior years | (1,388 | ) | 687 | 292 | ||||||||
Change of tax rate | (505 | ) | 462 | (599 | ) | |||||||
Approved, Privileged and Preferred enterprise loss (benefits) (*) | (1,457 | ) | 6,869 | (1,844 | ) | |||||||
Other | (157 | ) | 205 | (185 | ) | |||||||
Actual tax expense | $ | 4,879 | $ | 14,821 | $ | 4,328 | ||||||
(*) Basic earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.03 | $ | 0.15 | $ | 0.04 | ||||||
Diluted earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status | $ | 0.03 | $ | 0.14 | $ | 0.04 |
F - 5251
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 14:- | TAXES ON INCOME (Cont.) |
h. | Income before taxes on income is comprised as follows: |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Domestic | $ | (33,444 | ) | $ | (1,105 | ) | $ | 17,817 | ||||
Foreign | 15,691 | 5,818 | 4,815 | |||||||||
Income before taxes on income | $ | (17,753 | ) | $ | 4,713 | $ | 22,632 |
NOTE 15:- | SEGMENTS REPORTING |
• | Radware’s Core Business - this segment consists of our core business operations, including our cloud security as-a-service products, application and data centers security products and our application availability products; and |
• | The Hawks’ Business – this segment consists of the operations of our two subsidiaries: SkyHawk, a spinoff of our former cloud native protector business which now provides an agentless Cloud-native threat Detection and Response (CDR), combined with Cloud Infrastructure Entitlement Manage (CIEM), Cloud Security Posture Management CSPM and Autonomous Purple Team for AWS Google Cloud and Azure, and EdgeHawk, which is engaged in transforming routers and network nodes into security platforms. |
F - 52
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- | SEGMENTS REPORTING (Cont.) |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Domestic | $ | (1,105 | ) | $ | 17,817 | $ | 7,751 | |||||
Foreign | 5,818 | 4,815 | 6,213 | |||||||||
Income before taxes on income | $ | 4,713 | $ | 22,632 | $ | 13,964 |
Year ended December 31, 2023 | ||||||||||||
Radware Core | Hawks | Total | ||||||||||
Revenues | $ | 260,322 | $ | 970 | $ | 261,292 | ||||||
Operating loss | $ | (16,802 | ) | $ | (14,878 | ) | $ | (31,680 | ) | |||
Financial income, net | $ | 13,927 | ||||||||||
Loss before taxes on income | $ | (17,753 | ) |
Year ended December 31, 2022 | ||||||||||||
Radware Core | Hawks | Total | ||||||||||
Revenues | $ | 290,408 | $ | 3,018 | $ | 293,426 | ||||||
Operating income (loss) | $ | 8,416 | $ | (11,755 | ) | $ | (3,339 | ) | ||||
Financial income, net | $ | 8,052 | ||||||||||
Income before taxes on income | $ | 4,713 |
Year ended December 31, 2021 | ||||||||||||
Radware Core | Hawks | Total | ||||||||||
Revenues | $ | 283,913 | $ | 2,583 | $ | 286,496 | ||||||
Operating income (loss) | $ | 24,114 | $ | (5,889 | ) | $ | 18,225 | |||||
Financial income, net | $ | 4,407 | ||||||||||
Income before taxes on income | $ | 22,632 |
NOTE 15:-Depreciation expenses of the Hawks’ business segment for the years ended December 31, 2023, 2022 and 2021 were $85, $45 and $16, respectively.GEOGRAPHIC INFORMATION
Depreciation expenses of the Radware’s core business segment for the years ended December 31, 2023, 2022 and 2021 were $8,191, $7,941 and $8,323, respectively.
F - 53
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 16:- | GEOGRAPHIC INFORMATION |
The Company operates in one reportable segment (see Note 1 for a brief description of the Company's business).
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Revenues from sales to customers located at: | ||||||||||||
| ||||||||||||
The United States | $ | 94,014 | $ | 98,937 | $ | 93,706 | ||||||
America - other | 29,933 | 29,833 | 20,707 | |||||||||
EMEA*) | 104,219 | 98,388 | 78,362 | |||||||||
Asia Pacific | 65,260 | 59,338 | 57,252 | |||||||||
| ||||||||||||
$ | 293,426 | $ | 286,496 | $ | 250,027 |
*) Europe, the Middle East and Africa.
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Revenues from sales to customers located at: | ||||||||||||
The United States | $ | 72,963 | $ | 94,014 | $ | 98,937 | ||||||
America - other | 30,472 | 29,933 | 29,833 | |||||||||
EMEA*) | 96,488 | 104,219 | 98,388 | |||||||||
Asia Pacific | 61,369 | 65,260 | 59,338 | |||||||||
$ | 261,292 | $ | 293,426 | $ | 286,496 |
*) | Europe, the Middle East and Africa. |
F - 53
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE 15:- GEOGRAPHIC INFORMATION (Cont.)
The following table presents long-lived assets and ROU assets as of December 31, 20222023 and 20212022 from a geographical perspective:
December 31, | ||||||||
2023 | 2022 | |||||||
Long-lived assets by geographic region: | ||||||||
America (principally the United States) | $ | 1,905 | $ | 1,892 | ||||
Israel | 34,888 | 39,200 | ||||||
EMEA - other | 753 | 1,039 | ||||||
Asia Pacific | 1,452 | 2,016 | ||||||
$ | 38,998 | $ | 44,147 |
December 31, | ||||||||
| 2022 |
| 2021 |
| ||||
| ||||||||
Long-lived assets, by geographic region: |
|
| ||||||
| ||||||||
America (principally the United States) | $ | 1,892 |
| $ | 2,609 |
| ||
Israel | 39,200 | 39,467 | ||||||
EMEA - other |
| 1,039 |
| 1,201 | ||||
Asia Pacific | 2,016 | 1,792 | ||||||
|
|
| ||||||
$ | 44,147 | $ | 45,069 |
NOTE 17:- | SELECTED CONSOLIDATED STATEMENTS OF INCOME (LOSS) DATA |
Financial income, net:
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Financial income, net: | ||||||||||||
| ||||||||||||
Interest on bank deposits and other | $ | 5,137 | $ | 4,131 | $ | 5,916 | ||||||
Amortization of premiums, accretion of discounts and interest on debt marketable securities, net | 1,754 | 1,855 | 3,700 | |||||||||
Gain on sale of marketable securities | 68 | 438 | 639 | |||||||||
Bank charges | (207 | ) | (200 | ) | (189 | ) | ||||||
Foreign currency differences, net | 1,300 |
| (1,817 | ) | (2,270 | ) | ||||||
| ||||||||||||
$ | 8,052 | $ | 4,407 | $ | 7,796 |
Year ended December 31, | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Financial income, net: | ||||||||||||
Interest on bank deposits and other | $ | 11,377 | $ | 5,137 | $ | 4,131 | ||||||
Amortization of premiums, accretion of discounts and interest on debt marketable securities, net | 2,787 | 1,754 | 1,855 | |||||||||
Gain (loss) on sale of marketable securities | (243 | ) | 68 | 438 | ||||||||
Bank charges | (197 | ) | (207 | ) | (200 | ) | ||||||
Foreign currency differences, net | 203 | 1,300 | (1,817 | ) | ||||||||
$ | 13,927 | $ | 8,052 | $ | 4,407 |
F - 54
RADWARE LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands
NOTE | BALANCES AND TRANSACTIONS WITH RELATED PARTIES |
a. | The following related party balances are included in the consolidated balance sheets: |
December 31, | ||||||||
2022 | 2021 | |||||||
Trade receivables and prepaid expenses | $ | 745 | $ | 5,255 | ||||
Trade payables and accrued expenses | $ | 1,968 | $ | 476 |
December 31, | ||||||||
2023 | 2022 | |||||||
Trade receivables and prepaid expenses | $ | 1,538 | $ | 745 | ||||
Trade payables and accrued expenses | $ | 707 | $ | 1,968 |
b. | The following related party transactions are included in the consolidated statements of income (loss): |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2023 | 2022 | 2021 | |||||||||||||||||||
Revenues (1) | $ | 2,327 | $ | 3,100 | $ | 3,177 | $ | 3,298 | $ | 2,327 | $ | 3,100 | ||||||||||||
Cost of revenues (2) | $ | 2,822 | $ | 11,482 | $ | 10,196 | $ | - | $ | 2,822 | $ | 11,482 | ||||||||||||
Operating expenses, net - primarily lease, subcontractors and communications (3) | $ | 8,018 | $ | 6,757 | $ | 5,201 | $ | 7,707 | $ | 8,018 | $ | 6,757 | ||||||||||||
Purchase of property and equipment | $ | 1,175 | $ | 189 | $ | 1,586 | $ | 194 | $ | 1,175 | $ | 189 |
(1) | Distribution of the Company's products by a related party on a non-exclusive basis. |
(2) | Related to cost of product purchased from one of the related |
(3) | The Company leases office space and purchases other miscellaneous services from certain companies, which are considered to be related parties. In addition, the Company provides certain services to related parties. |
F - 55