Radware (NASDAQ:RDWR) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.

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Summary

Radware Ltd reported record revenue of $82 million for Q2 2026, an 11% year-over-year increase, marking the company's seventh consecutive quarter of double-digit growth.

The company's cloud ARR surpassed $100 million, reflecting a 22% year-over-year increase, driven by strong demand for cloud security services and new API Security solutions.

Radware introduced Exploit Shield, a first-to-market solution to address AI-driven vulnerabilities, enhancing its cloud security platform and driving incremental demand.

The Americas region showed a 24% revenue increase, constituting 45% of total revenue, while EMEA and APAC regions showed mixed performance.

Gross profit rose by 10% year over year to $67.3 million, despite a slight decline in gross margin due to foreign exchange and supply chain pressures.

Management highlighted continued investments in innovation and go-to-market strategies, particularly in North America and Asia Pacific, to drive future growth.

Guidance for Q3 2026 anticipates revenue between $82.5 and $83.5 million, with EPS expected between $0.28 and $0.29.

Full Transcript

Denise, Operator

Ladies and gentlemen, thank you for standing by and welcome to Radware's second quarter 2026 earnings call. Our prepared remarks today will be followed by a question and answer session, at which time, if you wish to ask a question, you will need to either raise your hand using your mobile or desktop application or press star-9 on your telephone keypad and wait for your name to be announced. I must advise you that today's call is being recorded. I would now like to hand over the call to our first speaker, Jiska Erez, Head of Investor Relations.

Jiska, please go ahead.

Jiska Erez, Head of Investor Relations

Thank you, Denise. Good morning, everyone, and welcome to Radware's second quarter 2026 earnings conference call. Joining me today are Roy Zisapel, President and Chief Executive Officer, and Guy Avidan, Chief Financial Officer. A copy of today's press release and financial statements, as well as the investor kit for the second quarter, are available in the Investor Relations section of our website. During today's call we may make projections or other forward-looking statements regarding future events or the future financial performance of the company.

These forward-looking statements are subject to various risks and uncertainties, and actual results could differ materially from Radware's current forecast and estimates. Factors that could cause or contribute to such differences, but are not limited to, impact from changing or severe global economic conditions, general business conditions and our ability to address changes in our industry, changes in demand for products, the timing and the amount of orders, and other risks detailed from time to time in Radware's filing.

We refer you to the documents the company files and furnishes from time to time with the SEC, specifically the company's last Annual Report on Form 20-F as filed on March 13, 2026. We undertake no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date such statement is made. I will now turn the call to Roy Zisapel.

Roy Zisapel, CEO

Thank you, Jiska, and thank you all for joining us today. We delivered another strong quarter, achieving record revenue while continuing to execute against our strategic priorities. Revenue grew 11% year over year to a record of 82 million, representing our seventh quarter of double-digit growth over the last two years. These results reflect the continued strength of our business model and the growing demand for our cloud security, which remains the largest contributor to our recurring revenue growth.

During the second quarter, cloud ARR exceeded $100 million, reflecting continued demand for our cloud security services, strong execution within our MSSP channel, and increasing traction for our new API Security solutions. That traction is evident in the growing number of customer wins, PoCs, and pipeline opportunities we see for API Security following its launch earlier this year. API Security also highlights the value customers see in our broadening cloud security platform as they increasingly look to consolidate application, API, and infrastructure protection with one trusted security partner.

As a result, more customers are adopting the full Radware platform, leveraging more cloud security services from our comprehensive, fully integrated AI-powered solution. Just a couple of recent API Security wins among many we had this quarter are with two leading financial service providers in Asia Pacific, which selected our solution to protect business-critical applications processing a combined 250 million API calls per month. In both cases, Radware was chosen due to the strengths of our API discovery, runtime protection, and bot management capabilities.

These wins highlight how existing customers are expanding their business with us by adding API Security to the other cloud security platform deployment. Beyond the continued strength in our cloud security platform, our on-prem security solution, DefensePro X, delivered another strong quarter. The ongoing refresh cycle continues to provide meaningful opportunities as customers upgrade aging infrastructure and strengthen resilience against increasingly sophisticated DDoS attacks.

In addition, we continue to attract new customers who value the performance, scalability, and protection capabilities of the DefensePro X platform. We recently enhanced our on-prem platform with the introduction of cloud-augmented protection capabilities that combine AI-powered cloud intelligence with the speed, privacy, and operational control of on-prem deployments. These enhancements take our on-prem security devices to the next level. We believe this significantly strengthens our value proposition for customers operating in hybrid environments and further differentiates our offering in the market.

Unlike traditional on-prem security vendors, Radware combines the intelligence of its global cloud security platform, API and AI security capabilities to help protect on-prem workloads, giving customers a unique blend of cloud-scale intelligence and on-prem enforcement. A nice example among many of DefensePro X wins we secured during the quarter was a seven-digit deal with a global leader in business and financial information. As part of a worldwide refresh of its DDoS protection infrastructure, the customer selected DefensePro X for deployment across the US, UK, and Japan along with multi-year application protection and network protection subscriptions.

The cybersecurity market continues to evolve rapidly. Organizations are facing greater application complexity, expanding API ecosystems, increasingly sophisticated attacks leveraging AI attack tools, and growing pressure to secure environments and new AI infrastructure. Our innovation engine and investments are completely aligned with these trends, which we believe will only strengthen in the coming quarters. For example, in recent weeks we see the acceleration of vulnerability discovery and exploitation driven by emerging capabilities of frontier AI models.

Historically, organizations often had weeks or even months before vulnerability disclosure and widespread exploitation. Today, that window is shrinking rapidly. During the quarter, the industry closely followed examples such as Anthropic Metos, which demonstrated how AI can accelerate vulnerability discovery and actual exploitation. In fact, a recent Radware survey showed that AI-driven vulnerability discovery is now among the top concerns for security professionals.

As AI tools accelerate the pace and sophistication of attacks, security teams are struggling to keep up with thousands of new critical vulnerabilities, a rapidly shrinking window between disclosure and exploitation, and the need to patch applications at a significantly higher pace and scale that is often risky and unrealistic. It's clear that current vulnerability and patch management processes are broken. This is exactly the challenge our latest product announcement, the Exploit Shield, was designed to address.

As the first-to-market solution, Exploit Shield automatically creates a tailored protection shield for each application based on the vulnerabilities found by the frontier model or other security scanners, helping organizations reduce risk and maintain business continuity while the software vulnerabilities are assessed and remediated. As AI continues to accelerate the threat landscape, we believe demand for this type of protection will continue to grow across both existing and new customers.

Simply put, Exploit Shield gives organizations the critical time they need to fix their vulnerabilities while remaining protected. From a go-to-market perspective, North America remains a major strategic focus and an important source of growth. The investment we made in the region translates into stronger execution. Revenue in the Americas grew 24% during the second quarter and represented 45% of total revenue. We also saw encouraging results in Asia Pacific during the quarter and are beginning to see positive returns from our go-to-market investments.

In summary, we delivered a record quarter with double-digit growth, reflecting the steady execution of our strategy. Our innovation engine is operating at full strength, as demonstrated by the recently introduced API Security, AI Protection, and now the Exploit Shield solution, and is driving incremental demand for our cloud security platform. We remain focused on scaling our cloud security business, expanding adoption of our security platform, and strengthening our partner ecosystem.

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

Denise, Operator

Thank you. To ask a question, please raise your hand using your mobile or desktop application, or press star 9 on your telephone keypad and wait for your name to be announced. Our first question is from Joe Gallo from Jefferies. Joe, please go ahead.

Joe Gallo, Analyst at Jefferies

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

Roy Zisapel, CEO

You know, we do see some delays, not because of our supply chain, but because of global supply chain issues in moving to, I would say, new data centers, etc., because of server delays, switches delays, etc. But I wouldn't say it's of any critical nature. In our on-prem business we do see people—you know, we are generally in the on-prem business, we're selling the DDoS mitigation. Those are not large number of devices, although they are on the higher end of the price tags; they can be added to existing infrastructure, etc. So when a customer is planning a complete new data center, we might see a pushout because of supply chain or prices. But as they are upgrading or enhancing existing infrastructures, that does not impact us.

Joe Gallo, Analyst at Jefferies

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

Roy Zisapel, CEO

Okay, I think there's, you know, multiple angles, and I tried to address some of them in my script. So one is protecting AI infrastructures—that is still early. Our AI Protect, you know, we just launched it a couple of months. A lot of interest, but our customers are early in deploying internally AI for mission-critical applications. But we do see the level of interest, we do see the uptake on the platform, and so on. Then there is the whole notion of AI used on the attack side, or for scanning for vulnerabilities, etc. There's definitely a sense of urgency there. You know, there's just a recent story about the OpenAI model attacking Hugging Face, etc. The MITOs—I think there's a very large alert on the CISO-level security organization. We definitely see that creating a demand for our security services. Specifically, Exploit Shield is providing very strong benefit to all the remediation and shielding of those thousands of vulnerabilities being found. This is definitely a very strong takeaway.

And then there is AI used to, you know, better security algorithms. Some of the things I've mentioned in our API security or in Exploit Shield are heavily driven by AI algorithms that we leverage internally, and that gives us the ability to provide solutions we couldn't do before for our customers. So I think it depends where you are. I'd say AI infrastructure is still early, but securing with AI against all the new vulnerabilities and what AI can do on the attack—that's definitely very, very critical.

Joe Gallo, Analyst at Jefferies

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

Roy Zisapel, CEO

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

Joe Gallo, Analyst at Jefferies

Awesome. Thank you for the time.

Roy Zisapel, CEO

Thank you.

Denise, Operator

Our next question is from Jeff Hubson from Needham. Jeff, please go ahead.

Jeff Hubson, Analyst at Needham

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

Roy Zisapel, CEO

Yeah. So I think, you know, our answer is definitely we're seeing much stronger interest and traction. Every customer now needs to protect themselves against a much bigger number of vulnerabilities in their applications, in open sources, third-party libraries they're using. And not only it's the sheer amount, it's also the ability to exploit them much faster than before. I mentioned it in my comments. If before, until last year, we were talking on weeks and months between a vulnerability being discovered and a weapon that's attacking—this window is shrinking dramatically.

So not only you are aware now of more vulnerabilities in your software, the ability of the hackers to exploit them is significantly higher. So this creates a huge amount of sense of urgency in all our customers and also in Radware internally, of course. I can tell you we've scanned, of course, our software with models and we fixed vulnerabilities. But more so, we are using our own Exploit Shield in front of our customer-facing software and portals in cloud.

Our Exploit Shield product—its whole intention is to bring remedy to this issue. Meaning we understand, and our customers understand, there's a limit to how quickly, if at all, they can deploy patches. One, not always they can create a patch. It can be a legacy software; it can be a third party. You know, if we're talking about large banks, insurance companies, carriers, there are pieces of software that run for 30, 40 years—it's not easy to patch them.

Second, the risk of patching is high. Yes, you have a fix for this vulnerability; you don't know what else is going to be broken. So customers in production, in mission-critical applications, are concerned in general—unrelated to meters, unrelated to AI—of upgrading their production software. They will do it in maintenance windows; they'll time it, etc. The inability to patch, and the risk of patching, and the need to do it in a very careful manner is completely opposite to the scale and the speed of the AI attack tool.

So the whole process is broken. What did we do with Exploit Shield? We understand you cannot patch, so let us shield it in between the attacker and your application. We create for you this tailored shield for your application based on the vulnerabilities of the scan by Metals or any other AI model. That shield is tailored exactly to them. And every attacker that will try to exploit, we will block it with Shield. That buys you time as an enterprise either to fix your software, assess the risk, or just, you know, rely on us as this first line of defense.

So the Exploit Shield product directly answers this need. And, you know, it's only been several weeks, but we are getting excellent feedback and interest from the market, and we're engaging now in the initial deals.

Jeff Hubson, Analyst at Needham

That's very helpful. And maybe on the on-prem versus

Roy Zisapel, CEO

Yeah, there's clearly a trend for some AI workloads to be positioned on-prem and not migrate to cloud for cost, for data, for regulation compliance, etc. All of that has lower impact, by the way, on our on-prem business because we are selling to large customers and carriers. They are, by definition, hybrid customers. They have their own data centers and they have cloud, and they're positioning our own—what we call our on-prem security. They'll position it in their legacy data centers and in their private cloud data centers.

So the fact there are more workloads on-premises makes it more critical, the on-prem data center, but it doesn't change significantly our business. I want also to make another point: in general our on-prem business is not cannibalized by the cloud, meaning we are mainly selling the DDoS appliances on-prem, and generally large enterprises will deploy what we call a hybrid solution leveraging our cloud DDoS and the on-prem device. So it's not one or the other, and we don't have that internal cannibalization between our cloud DDoS and on-prem solutions.

So in that sense, we feel good about our ability to grow the on-prem security solutions we do, while, as I mentioned and Guy mentioned in our comments, we continue to scale our cloud security platform that is way broader than DDoS. It has the Exploit Shield we talked about, API, AI, WAF, and so on and so forth.

Denise, Operator

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

George Nutter, Analyst at Wolfe Research

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

Roy Zisapel, CEO

Thanks, George. In general, our DefensePro that are running in production—customers don't let it get out of support because they also include the subscriptions, for example, the signature updates against vulnerabilities that are being protected in real time, geo-blocking, and all kinds of other security services. So generally our install base is active. I don't see customers—you know, maybe in third-tier countries—that try to save some money on the edge.

But in the key markets, key customers, they're all under support. We do still have a lot of runway with our DefensePro refresh cycle, meaning I don't think we're even at the middle of that. So there's still a very long runway for the refresh, and we're seeing also large customers migrating to us given the strength of the platform.

George Nutter, Analyst at Wolfe Research

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

Roy Zisapel, CEO

So in general, our cloud security platform pipeline growth is higher than our current ARR growth, which is obviously a very good forward-looking sign. So we are very encouraged by that. We continue to generate a lot of pipeline, and the pipeline for the cloud security platform goes on the main modules like web application firewalling, DDoS. But more and more we are seeing these platform sales that are multi-module, multi-use-cases, and customers are consolidating application infrastructure security on our platforms, and to that, API security, Exploit Shield, AI security are definitely helping us a lot and we're seeing customers asking us for enterprise agreements, given the fact they want to consume more in a more flexible manner. So we're definitely seeing all those investments we've made—innovation in the new modules—also impacting the cloud security platform as a whole. So that's about pipelines. Second, I think the North America growth we are demonstrating in the last several quarters is a clear outcome of the go-to-market investments you've mentioned, including the hunter–farmer split, the management we put in place, and so on.

I do feel that I'm starting to see similar trends now in Asia Pacific. It's the first quarter, I think, you're seeing such a movement on the revenue side. But our internal indications are quite positive as well there, and we are replicating this go-to-market across the world.

George Nutter, Analyst at Wolfe Research

And then one last one, can you just remind us how you're monetizing the Exploit Shield product? Is that fully a subscription? How are you charging? What's the basis for that? Anything you can say there would be great also. Thanks a lot.

Roy Zisapel, CEO

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

Denise, Operator

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

Roy Zisapel, CEO

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

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.