Welcome to the Radware conference call discussing first quarter 2025 results. Thank you all for holding. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded on May 7, 2025. I would now like to turn the call over to Yiska Erez, Director, Investor Relations at Radware. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Radware's first quarter 2025 earnings conference call. Joining me today are Roy Zisapel, President and Chief Executive Officer, and Gary 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 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. The forward-looking statements are subject to various risks and uncertainties, and actual results could differ materially from Radware's current forecasts and estimates. Factor that could cause or contribute to such differences include, but are not limited to, impact from the 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, details 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 28, 2025. We undertake no commitments 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 a strong start to 2025 exceeding our guidance. Our first quarter revenue increased 11% here over the year to $72 million. This is the third quarter in a row of double-digit revenue growth. Our non-GAAP earning per share rose 69% to $0.27, demonstrating the high leverage in our business model. And finally, cash flow from operations was $22 million. The major driver of our success is attributed to our cloud security business, reached by 19% in over here to $80 million. We also achieved double-digit growth in our total number of cloud customers, driven primarily by a rapid increase in new cloud application security booking. Given these strong metrics, we continue to believe that focus on and investment in this business will position us to exceed a 20% ARR growth rate and achieve close to $100 million in cloud security ARR by end of this year. The solid progress we've made against our strategy to lead us the best-of-breed provider in application and data center security. Our growth strategy continues to be centered around three pillars. Win significant market share in cloud security, lead through AI innovation and automation, and enhance our go-to-market footprint. As we highlighted last quarter, we are expanding our cloud security infrastructure in order to further scale our business. Recently, we opened new cloud service centers in Peru, India, and Kenya, and have plans to expand in other regions in the near future. Today, we support a network of over 50 cloud security service centers worldwide with a mitigation capacity of up to 15 terabit. This network enables customers to keep applications and data within their borders to meet strict data privacy regulations and provide excellent performance for local users. Our hybrid cloud security offering is another important business enabler for our customers. This offering has become a major competitive differentiator for us, translated into continued strong ARR growth. While some customers may favor cloud-only models, which we offer, many large enterprises clearly have a requirement for hybrid security across all their assets, those that are located in the cloud and those that are located in their private data centers, and our pipeline proves it. We continue to see steady, healthy demand that includes our Defense Pro X refresh. With the push toward vendor consolidation, a gradual hybrid approach for DDoS and application security, which offers both cloud services and on-prem solutions with integrated and consistent security capabilities, is giving us a clear edge. Our AI innovation efforts are also proving to be a competitive advantage. Our advanced AI-based algorithms and algorithms-first approach to security are delivering market-leading detection and mitigation results for our customers, making our solutions that prefer to change this firsthand as we continue to replace the competition in bigger ticket deals. Between the fourth quarter of 2024 and first quarter of this year, the total contract value of our competitive takeout doubled. We took out two competitors with our DDoS protection and web application firewall to close a seven-digit deal with a government IT company in Asia Pacific. The win provides another proof point of the strength of our security offering in web application security and DDoS mitigation under a unified SecOps platform security agreement to date. The multi-year eight-digit deal broadened our relationship with the US Fortune 500 financial services and payments company. They are significantly expanding with our full suite of cloud DDoS and application protection services to safeguard thousands of applications and billions of digital transactions. M-Channel also produced some major wins and continues to play an important role in our growth strategy. During the first quarter, our once again generated strong results, more than 20% of a five-year cloud deal with a UK retailer. At the end of 2024, the retailer was the target of a series of cyber attacks that disrupted its primary data centers and operations. With emergency onboarding onto our Cloud DDoS protection service, we successfully mitigated the attacks. With successful cross-selling, we expanded the deal to include our threat intelligence services, as well as our web application and API protection. So really a great platform sale. In another part of the win, we worked with Checkpoint to close the Cloud DDoS and application protection deal with a central bank in Latin America. Our win was based on our superior DDoS technology, strong SLAs, and double-digit growth. Strong demand for and market opportunities ahead, particularly in cloud security. We plan to increase investments in sales, marketing, and R&D. These efforts will focus on scaling our cloud security business, accelerating AI-driven innovation, and strengthening our presence in North America. This morning, we announced plans to accelerate our expansion in the U.S. market, led by a new leadership team with deep experience in driving ARR for SaaS companies. We are confident this team has the expertise to deliver meaningful results for our cloud business. In the first quarter of 2025, we demonstrated steady execution with progress across all financial parameters. In addition, we continue to scale our cloud security business, win marquee accounts, and drive cloud ARR, which is now at $80 million. We intend to accelerate our cloud ARR growth by securing new logos, collaborating with our OEM and channel partners, and driving AI innovation and automation. Additionally, by strengthening our presence in the U.S. market, we believe we will be well positioned to gain additional market share and accelerate. With that, I will turn the call over to Guy.

Thank you, Roy, and good day, everyone. I'll provide an overview of our financial results and business performance for the first quarter, as well as our outlook for the second quarter of 2025. Before beginning the financial overview, I would like to remind you that unless otherwise indicated, all financial results are non-GAAP. A full reconciliation of our results on a GAAP to non-GAAP basis is available in the Earnings press release issued earlier today and in the Investor section of our website. The revenue for the first quarter of 2025 grew 11% year-over-year to $72 million, driven given mainly by another solid performance of our cloud security business and good contribution from our OEM partnerships, 9% year-over-year to $230 million, with cloud ARR growing 19% to $80 million. Furthermore, recurring revenues grew to 82% of total revenue in the first quarter of 2025, compared to 79% and 78% in Q1 2024 and Q4 2024, respectively. In the first quarter of 2025, our regional performance showed growth across all regions. The Americas increased by 1% year-over-year to $27.4 million, accounting for 38% of total revenue. For the 12th trailing month, America's revenue grew 14% year-over-year. EMEA revenue in Q1 2025 increased 25% year-over-year to $28.4 million and accounted for 39% of DONG revenue. For the 12th trailing month, EMEA revenue grew 11% year-over-year. And APAC Q1 revenue increased 7% year-over-year to $16.3 million, dollars, contributing 23% of dollar revenue, and for the 12th trailing month, APAC revenue was flat year-over-year. I'll now discuss profits and expenses. Gross margin in Q1 2025 was 82.1%, a slight increase from 82% gross margin that was recorded in Q1 2024. Operating income doubled in the first quarter of 2025 to $8.6 million. compared to $4.3 million in the same period of last year. As Roy highlighted in his prepared remarks, in response to a strong demand for our security offering and the market opportunities ahead, mainly in cloud security, we plan to increase investment in sales, marketing, and R&D. This investment will focus on branding and expanding our cloud security business, accelerating AI-driven innovation and strengthening our presence in North America. A strong leverage in our business model allow us to increase investment that will support our ability to further drive top-line growth in the future while improving profitability. Broadward adjusted EBITDA for the first quarter of 2025 increased by 72% to $10.8 million, compared to $6.8 million in the same period of last year. Broadward adjusted EBITDA, excluding the HACS business for the first quarter of 2025, was $13.4 million and 18.6% margin, compared to $8.9 million and 13.7% margin in the same period of last year financial income was 5.4 million dollars in the first quarter of 2025 compared to 3.8 million dollars in the first quarter of 2024 the tax rate for the first quarter of 2025 was 15.5 percent compared to 15.3 percent in the same period of last year we expect the tax rate to remain approximately the same in the next quarter net income in the The first quarter of 2025 increased 73% year-over-year to $11.8 million, compared to $6.8 million in the same period last year. Deluded earnings per share for Q1 2025 increased 69% year-over-year to $0.27 compared to the $0.16 we had in Q1 2024. Turning to the cash flow statement and the balance sheet. Cash flow from operations in Q1 2025 reached $22.4 million compared to $21.1 million in the same period last year. We ended the first quarter with approximately $448 million in cash, cash equivalent, bank deposit, and marketable securities. To move to guidance, I would like to address the recently announced tariffs and their potential impact on hardware. We expect the effect on our business to be minimal. We are proactively adjusting our supply chain to further reduce any potential cost pressure. And currently, we do not anticipate any material impact on our operation or financial performance. To the guidance, we expect total revenue for the second quarter of 2025 to be in the range of $73 million to $74 million. We expect Q2 2025 non-GAAP operating expenses to be between $51 to $52 million. We expect Q2 2025 non-GAAP diluted net earning per share to be between $0.26 and $0.27. I'll now turn the call over to the operator, please.

Thank you. We will now be conducting 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 your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question is from Joseph Gallo from Jefferies. Please go ahead.

Hey, guys. Thanks for the question. Nice job on the quarter. I appreciate the tariff color. Just regarding macro, did you see any changes in buying behavior from your customers? You know, how was April, and what's embedded in your QQ guidance?

Okay, hi. We didn't see a noticeable change in the last several months. And also starting, you know, Q2, things are relatively the same, meaning not accelerating, not decelerating. And we didn't see anything specific to tariffs. In the beginning, you know, we saw many questions. And some distributors were asking, actually, to accelerate shipments. But this has calmed down after a week or so when the tariffs or the majority of them were put on hold. So we didn't see anything specific. And as Guy mentioned, as we focus more and more on the cloud business in North America, that is a bit isolated from the old hardware portion of our business.

That makes sense. Thank you for that. And then just as a follow-up, can you double-click on some of those U.S. market changes? You know, a lot of new senior leadership, which is great, but that can also result in a couple quarters of disruption. So is there any major change in process needed in the U.S. market, and is that accounted for in the 2Q guide?

Yeah, so great question. Actually, our announcement is after all those, you know, all this infrastructure is already in place. So, Randy, the head lead, I think is now going into his sales quarter, like nine months into the company. A lot of the individual sales heads, you know, were joining us between three to six months ago. So, we're actually now expecting more and more productivity ramp up from them. And I think the newest addition, Connie, our chief growth officer, she's like a month now into the company. So a lot of the major changes were already done, actually, last quarter, I think, and a quarter before. We already started to see the fruits of that, and we are very strong believers that the future is brighter and we can grow forward from here and add, and that's what we announced, that we're going to add even more resources as we go forward. So we think we have a strong leadership team in place that's already, you know, executed several quarters and gets more and more productive as time passes now. We don't see any disruption. We are up to that, so to speak. Great to hear.

There are no further questions at this time. I would like to turn the floor back over to Roy Zisapel for our closing comments.

Okay. Thank you very much, and have a great day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.