Welcome to the RADWARE conference call discussing fourth quarter and full year 2024 results, and thank you all for holding. At this time, our participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded February 12, 2025. I would now like to turn the call over to Yiska Edens, Director, Investor Relations at Radware. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Radware's fourth quarter and full year 2024 earnings conference call. Joining me today are Roy Zisipel, President and Chief Executive Officer, and Gaia Vidan, Chief Financial Officer. A copy of today's press release and financial statements, as well as the investor kit for the first quarter, are available in the investor relations sector 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 what was current forecast and estimates. Factors that could cause or contribute to such differences include, 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 in the amount of orders, and other risks, details from time to time in Rado'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 18, 2024. We undertake no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date of such statement is made. I will now turn the call to Roy Zisapel.

And thank you all for joining us today. I'm pleased to report the top and bottom line exceeding our fourth quarter guidance. During the fourth quarter, we achieved 12% year-over-year revenue growth and more than doubled our non-GAAP earnings per share, a strong testament to the high leverage in our business model. A key driver of our growth in the quarter was our cloud security business. I'm pleased to report our focus here continues to pay off. In the fourth quarter, we accelerated cloud ARR growth to 19%, up from 15% in the third quarter of 2024. We also achieved double-digit growth in cloud bookings and customer acquisition and surpassed 1,000 production customers in the cloud. In 2025, we will increase our investment in our cloud security business on multiple fronts. First, we plan to open a record number of new cloud security centers to expand our presence. Second, we intend to invest more in cloud R&D to continue to lead the market by the strength of our security capabilities. And finally, we plan to continue to grow our OEM and MSSP partnerships to accelerate our market share gains in cloud security. Through these combined efforts, we believe we can exceed a 20% ARR growth rate and establish close to $100 million ARR cloud security business by the end of 2025. Growth last year was achieved amid a rapidly evolving cybersecurity landscape. 2024 was marked by a sharp escalation in both the frequency and sophistication of cyber attacks. This was driven primarily by major geopolitical tensions and rapid adoption of Gen.AI by threat actors. Countries like the U.S., Israel, and Ukraine were among the most targeted nations, with attackers leveraging AI-powered tools to automate and enhance the precision of their attacks. AI power tools have effectively lowered the barrier to entry for attackers while simultaneously raising the urgency for organizations to strengthen their cyber defenses. In parallel, throughout 2024, we made significant strides in fusing AI across our security offering with our Epic AI framework, giving us a distinct advantage in an evolving threat landscape. We are literally fighting AI with AI. Our AI SOC expert is the latest addition to Epic AI. The new cloud service offers SOC teams precisely tailored automated remediation plans for data center security incidents. It has already been well received by customers cutting mean time to resolution by up to 95%. We have a comprehensive set of AI-driven capabilities in our release pipeline for 2025, ensuring our customers stay ahead of emerging threats with the most advanced protection available. Moving to Defense Pro X, our DDoS protection solution, I'm happy to report a continuous steady uptake in adoption of Defense Pro X by our customers, driven by its exceptional detection and blocking of sophisticated attacks. We recently expanded our Defense Pro X portfolio with new platforms complementing the full lineup. We are still in the early stages of Defense Pro X refreshes for our existing install base and see significant growth opportunities in the coming two years. A good example is a seven-digit win in a European Internet service provider. Initially planned for late 2025, this Defense Pro X refresh was expedited after a massive cyber attack disrupted access to several of the services and critical customers. Similarly, we closed a seven-digit deal with a U.S. service provider for a hybrid Cloud DDoS deal combining Defense Pro X and Cloud DDoS protection and completely displacing the incumbent Cloud DDoS provider. This win is a great example of the significant competitive advantage we have with hybrid DDoS, which enhances both the customer's security posture and network latency. OEM partners further amplified our success in 2024. Cisco and Checkpoint sustained double-digit growth in the fourth quarter, setting a new annual record for total OEM bookings. As we move forward, our recently expanded offering included in Cisco Enterprise Agreement will unlock even more new growth opportunities and further streamline purchasing and license management for Cisco Radware customers. These important partnerships produced some notable deals during the fourth quarter. For example, in partnership with Checkpoint, we closed a seven-digit deal with one of the largest banks in the world. As a long-standing hardware customer, the bank relies on our DDoS solution as a critical line of defense against attacks. In partnership with Cisco, we secured new logo win with a U.S. IoT solution provider. After a DDoS attack in October 2024 and dissatisfaction with their incumbent, Cloud DDoS provider response, the customers sought alternatives. We won the deal by offering the most comprehensive and automated Cloud Edo solution in the market. In addition to customers, industry analysts continue to reinforce our position as a trusted innovator in the cybersecurity space. In the fourth quarter, RADO was named a leader and fast mover in the GigaOM radar for application and API security. The report highlights our strengths in vulnerability detection, account takeover protection, and bot management. In summary, I'm pleased to report a strong fourth quarter and a solid 2024. Last year, we made a significant progress advancing our cloud security business and OEM partnerships, both key drivers of our success. We accelerated our transition to subscription and cloud business model, achieving high levels in bookings and cash flow from operations. Looking ahead to 2025, our focus is on accelerating growth, with total ARR growth remaining the leading indicator of our revenue trajectory. We are committed to investing in the expansion of our security business, particularly in cloud security. Additionally, our AI-driven capabilities will fuel innovation and strengthen our security offerings. We are confident in our strategy to deliver strong near-term performance and long-term success, and I'm excited about the opportunities that lie ahead. Before I close, I want to take this opportunity to thank our employees for their dedication and commitment in making our achievements in 2024 possible. With that, I will turn the call over to Guy.

Thank you, Roy, and good day, everyone. I'm pleased to provide the analysis of our financial results and business performance for the fourth quarter and the full year of 2024, as well as our outlook for the first quarter of 2025. Before beginning the financial overview, I would like to remind you that unless otherwise indicated, all financial results are non-GAAP. Full reconciliation of our results on a GAAP-to-non-GAAP basis is available in the earning press release issued earlier today, and on the Investor section of our website. Revenue for the fourth quarter of 2024 grew 12% year-over-year to $73 million, while full-year 2024 revenue increased by 5% to $275 million. This growth was fueled by the strong momentum in our cloud security business, the successful Defense Pro X refresh, and increased contribution from our OEM partnerships. Total ARR grew 8% year-over-year to $227 million, with cloud ARR rising 19% to $77.3 million, accelerating from 15% growth in Q3 2024. This ARR growth propelled cloud and subscription revenue to 48% of total revenue in Q4 and 47% for the full year, compared to 44% in both periods last year. Additionally, increases reflected in our recurring revenue, which accounted for 78% for the total revenue in the fourth quarter and 80% for the full year of 2024. In the fourth quarter of 2024, our regional performance highlighted strong growth In the Americas, where revenue increased 33% year-over-year to $32.8 million, accounting for 45% of total revenue. Throughout 2024, the Americas demonstrated steady progress, achieving a 14% year-over-year growth to $117.7 million. In EMEA, Q4 revenue came in at $23.3 million, a 6% year-over-year decline, contributing 32% of total revenue. Full-year revenue for EMEA was $94.1 million, down 2% from the previous year. In APAC, Q4 revenue increased 8% year-over-year to $16.9 million, contributing 23% of total revenue and for the full year APAC revenue grew 3% to $63.1 million. I'll now discuss profits and expenses. Gross margin in Q4 2024 was 82.4%, an expansion of 40 basis points compared to Q4 2023. For the full year of 2024, gross margin was 82.2% compared to 81.9% in 2023. Operating income nearly tripled in the fourth quarter of 2024 to $9 million compared to $3.4 million in the same period of last year. For the four-year year of 2024, operating income also nearly tripled to $26.8 million compared to $9.3 million for 2023. A testament to our operational efficiency and cost discipline. Throughout 2024, we maintained a disciplined approach to managing expenses, focusing on reducing operating costs while driving revenue growth. This strategy has enabled us to leverage existing resources efficiency, fueling top-line growth, and enhancing profitability. Looking ahead, we remain committed to this disciplined approach with targeted investment to support continued growth, especially in cloud security. Radware adjusted EBITDA for the fourth quarter of 2024 doubled to $11 million compared to $5.4 million in the same period of last year. Ruddware's adjusted EBITDA, excluding the HOX business for the fourth quarter of 2024, was $13.7 million compared to $8.2 million in the same period of last year. Ruddware's adjusted EBITDA for the full year of 2024 nearly doubled to $34.7 million compared to $17.6 million in 2023. Radware's adjusted EBITDA for the full year of 2024, excluding the Hawks business, was $45.6 million compared to $28.4 million in 2023. Radware's core adjusted EBITDA margin, excluding the hogs business, were 18.8% and 16.6% for the fourth quarter and the full year of 2024, respectively. The income was $5 million and $17.8 million in the first quarter and full year of 2024, respectively, compared to $3.8 million and $13.7 million in the fourth quarter and full year of 2023, respectively. The tax rate for the fourth quarter of 2024 was 15.4% compared to 24.3% in the same period of last year. For the full year of 2024, tax rate was also 15.4% compared to 17.7% in the same period of last year. We expect the tax rate to remain approximately the same next quarter. Net income in the fourth quarter more than doubled to $11.9 million compared to $5.5 million in the same period last year. For the full year, net income for 2024 doubled to $37.7 million compared to $18.9 million in 2023. The looted earnings per share for Q4 2024 increased to $0.27 compared to the $0.13 we had in Q4 2023. For the full year, soluted earnings per share doubled to $0.87 from $0.43 in 2023. Turning to the cash flow statement and the balance sheet. Cash flow from operation in Q4 2024 reached $12.7 million compared to $2.7 million in the same period last year. Cash flow from operation for 2024 was $71.6 million compared to the negative cash flow from operation of $3.5 million in 2023. We ended the fourth quarter with approximately $420 million in cash, cash equivalent, bank deposit, and marketable securities. Before concluding with our guidance, I would like to highlight that we're entering 2025 with a strong RPO of $350 million, representing 13% year-over-year growth and underscoring our solid future revenue commitment. Our focus remains on driving top-line growth through strategic investments that support long-term expansion, predominantly in high-potential areas like cloud security and AI-driven solution. While prioritizing revenue growth, we remain disciplined with our expenses, ensuring OPEX align with top-line performance, all while maintaining our strong commitment to profitability and operational excellence. And now I'll move to guidance. We expect total revenue for the first quarter of 2025 to be in the range of $70 to $71 million. We expect Q1 2025 non-GAAP operating expenses to be between $50.5 to $51.5 million. And we expect Q1 2025 non-GAAP diluted net earnings per share to be between $0.22 and $0.23. I'll now turn the call over to the operator for questions. Operator, please.

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one to ask a question at this time. One moment while we post our first question. Our first question comes from Chris Reamer with Barclays. Please proceed.

Thanks for taking my questions, and congratulations on a solid quarter. I was wondering if you could describe the environment in the different regions. Just, for example, looking at the Americas, you've had some strong growth there over the last three quarters. I was wondering if you could describe maybe some of the customer behavior and how we should be looking at the different regions going forward, what's impacting them, how are they making their decisions, especially versus maybe some of the behaviors you were seeing, let's say, two years ago.

Okay, thanks a lot, Chris. So first I think what we're seeing across the world was still some cautious ending by the large enterprise customers. With that, the cyber activity and the cyber attacks are consistently rising in sophistication and in the critical impact on these enterprises. So we are seeing those enterprises moving on cloud security and cyber security purchases. And I want to remind, we are protecting the mission critical applications and data centers. So we are really protecting the ground jewels of our customers. We are seeing them moving because of this high necessity. So sometimes they need to allocate immediate budget if there's incidental threats, and sometimes they simply need to make sure they are ahead of the threat landscape. So I think this is really driving the behavior of our market, sometimes even IT budgets or even security budgets to some extent as we're dealing with the real-time protection. We've seen strong market, we've seen the growth. At the same time, in the international market, we do believe as we are leveraging the OEM partners, the MSST, some of the points I've mentioned in my remarks, we can translate that to revenue growth. In the booking side, we saw some good performance, I would say, in the international market in second half and specifically in Q4, it would flow into revenues. As Guy mentioned, the RPO are high, et cetera. It would flow in the coming year also into the revenue recognition.

Great. Thanks. That's good color. Just referring to your comments about your intention to increase investment, especially in R&D and new centers, Should we be looking at increased R&D from the levels of this year, or would that be kind of offset by other OPEX savings?

Yeah, so I think in general we will look for investment above the current levels. Other investments we would make across the business we would do through reallocation of resources and expenses internally. But for cloud specifically, and given that we're seeing accelerated growth and higher potential for growth, we want to invest a bit more in R&D and also in centers, as well as in the go-to-market. I think some of the – we can do more with our OEM partners. We can do more with MSSPs. So cloud security specifically, we're going to put more investment, and we believe it would also match revenue growth as well.

Got it. Thanks. That's it for me.

Thank you. The next question comes from Ryan Koontz with Needham & Company. Please proceed.

Great. Thank you for the question, and you have a very nice quarter. Nice to see the cloud ARR re-accelerating here. Is this specifically related to some of the changes you've made to go-to-market in the Americas, or is this more maybe related to channels and efforts you've had underway for some time?

Thanks. Thank you. So I think it was broad-based. Some of that came from North America, obviously. Some of it came from international. You know, I mentioned some of the wins we had with Checkpoint and Cisco. You know, I highlighted only a couple of large ones, but they had very strong activity with the OEMs and our channel partners in cloud. In general, we're seeing more and more of our channels and more of our sales teams and geographies embedded in cloud security and not only appliances. So we're definitely seeing quarter over quarter more and more pipeline growth, more, I mentioned, double-digit bookings, double-digit customer growth. So a lot of the indicators in cloud were actually pointing in the right direction. I think we still have runway, both with our channels and our internal organization, with the current capacity to have everyone even more engaged in cloud security sales, and that's obviously our plan for 2025. This sounds very logical.

On the competitive front, then, are you seeing kind of any further differentiation? What's the competitive environment like now compared to, say, a year ago for you?

I think, you know, in cloud security for the applications and data centers, as our position, and you see it also from the analyst ratings, industry analyst ratings, and so on, is that we are really excelling in the security, in the level of security, the automation, the algorithms, et cetera. In that respect, I think we had a very good year in 2024. We released many new algorithms, next-generation algorithms. Some of them are AI and Gen AI based on LLMs for APIs and for TDoS and this AI SOC expert I mentioned. Some are other mathematical algorithms. So I think in that respect, we really strengthened our competitive advantage leading with security, your best security, this market. We have very good competitors, you know, Cloudflare and Akamai, But I think, as you can see, we're doing well. I've mentioned we are putting our eye towards close to 100 million ARR by end of this year, so we feel very good about our competitive position.

That's great commentary. And, you know, in terms of your broader ecosystem that you're selling into with your customers, are there any integrations you're delivering to market that are maybe helping you in terms of partners or Northline interfaces at all that you're working on?

Yeah. So, first, you know, with our existing set of partners, we're constantly enhancing the integrations. I've mentioned some stuff on Cisco, but same with Checkpoint. We're constantly enhancing the use case. We have a whole set of, for example, integration to SIM systems. So we released the integration from our cloud security, both for AWS and Azure.

That's all I have. The brilliant score, guys.

Star one at this time. The next question comes from Tim Haran with Oppenheimer. Please proceed.

Thanks, guys. With Coffler and Akamai being two-year primary competitors, they're very focused on bundling with CDN and other networking and compute. Do you think that's the trend that customers are looking for, or do they want more, you know, best-in-class kind of a la carte, you know, at a high level? And then could you elaborate on, you know, specifically what you did with the go-to-market on direct sales or how else you can improve it from here?

So definitely we see the trend of platformization or integrated solution in the broader security market. and we are delivering the same in what we believe is the niche that we should target, which is the application and data center protection. So it's the web application firewall, the DDoS, the API, and both. And we've integrated into our cloud apps like CDN capabilities, load balancing as a service, DNS, network analytics. So everything you need in order to deliver the application, it's already bundled in our solution, and we actually have a tiered approach. It's not a la carte what we sell. It's really a standard, advanced, and complete packages of this platform, and then based on the number of applications and the scale of capacity that you need, that's how pricing is being set. So we're definitely there, and since we've added each and every quarter in the last, I think, six quarters, those additional capabilities, we're actually seeing customers purchasing the firewall as a service, the network analytics, and using it as part of these packages. What we don't do, we don't cross the line to compute with the public cloud providers or on the same side with large enterprises in the private cloud or regular data centers. So everything about delivering and mainly securing the application with the core being security, that's what we do in the platform. And we are targeting very large enterprises and service providers where security is key. It's not nice to have. So, you know, in our customers, good enough is not good at all. In security, and that's where we are excelling. And over there, we don't see the need to bundle compute. They're all set in that regard. So that's for the first question. Regarding the go-to-market approach, we are a channel organization. We do have direct touch sales motion across the world. We did strengthen that, especially in North America, on both hunting and farming, go-to-market approaches. And together with that, we're putting more and more efforts into OEMs, into MSSTs, to scale channels in general, to scale the business. And I think, you know, at least in the OEMs, MSSTs, some channels, we are seeing that scale. As mentioned, OEM being record here, by the way. So we are seeing that start of the scale through channels taking effect.

If there were questions in queue at this time, I would like to turn the call back to management for closing comments.

Thank you, everyone, for attending, and have a great day.

That concludes today's teleconference. You may disconnect your life at this time. Thank you for your participation, and have a great day.