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    RDWR
    Earnings call· Jun 2026(Q2 FY26)

    RADWARE Q2 FY26 earnings call RDWR

    Jul 29, 2026 Source

    Executive summary

    Radware Q2 FY26 — Record Revenue Driven by Cloud Security and AI-Driven Threat Protection

    Radware delivered a strong quarter with record revenue, driven by robust cloud security demand and strategic investments in AI-powered threat protection. The company is capitalizing on the evolving cybersecurity landscape, particularly the urgency created by AI-driven vulnerability exploitation, while expanding its platform and strengthening its go-to-market execution in key regions.

    Highlights

    4

    • Achieved record revenue of $82.3 million, an 11% increase year-over-year.

    • Cloud ARR exceeded $100 million, growing 22% year-over-year and representing 40% of total ARR.

    • Americas revenue grew 24% year-over-year to $37.2 million, contributing 45% of total revenue.

    • Non-GAAP diluted EPS would have been $0.40, up 25% year-over-year, excluding the unfavorable impact of Israeli shekel appreciation.

    Concerns

    4

    • Gross margin slightly decreased to 81.8% from 82.4% year-over-year, impacted by foreign exchange headwinds and supply chain costs.

    • Operating income declined to $10.9 million from $11.4 million year-over-year, primarily due to the strengthening Israeli shekel.

    • Diluted earnings per share from continued operations decreased to $0.30 from $0.32 in Q2 2025.

    • Financial income decreased to $4.4 million from $5.2 million year-over-year due to lower market interest rates and reduced cash balances.

    Guidance & targets

    5
    CategoryTargetConfidence
    Total Revenue
    $82.5 million to $83.5 million
    high materiality
    High
    Non-GAAP Operating Expenses
    $57 million to $58 million
    medium materiality
    High
    Non-GAAP Diluted Earnings Per Share
    $0.28 and $0.29
    high materiality
    High
    Effective Tax Rate
    14% to 15%
    medium materiality
    High
    Cloud ARR Growth
    25%
    high materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas
    Remains the largest region and an important contributor to overall growth profile.
    % of total revenue: 45%Trailing 12-month revenue growth: 21% YoY
    		$37.2M24%——
    EMEA
    % of total revenue: 33%Trailing 12-month revenue growth: 3% YoY
    		$27.3M-2%——
    APAC
    Beginning to see positive returns from go-to-market investments.
    % of total revenue: 22%Trailing 12-month revenue growth: 2% YoY
    		$17.8M9%——

    Operational metrics

    11
    Non-GAAP Gross Margin
    81.8%vs 82.4% in Q2 FY25
    Q2 FY26

    Mainly impacted by foreign exchange headwind and supply chain cost pressure.

    Non-GAAP Operating Margin
    13.2%
    Q2 FY26

    Calculated as Non-GAAP Operating Income ($10.9M) divided by Total Revenue ($82.3M).

    Non-GAAP Operating Income
    $10.9Mvs $11.4M in Q2 FY25
    Q2 FY26

    Year-over-year decline primarily attributed to the strengthening of the Israeli shekel against the U.S. dollar.

    Non-GAAP Operating Income (ex-FX impact)
    $16.1Mup 41% vs Q2 FY25
    Q2 FY26

    Excluding approximately $4.5 million unfavorable impact of Israeli shekel appreciation.

    Financial Income
    $4.4Mvs $5.2M in Q2 FY25
    Q2 FY26

    Result of lower market interest rate and reduced cash balances following share repurchase.

    Effective Tax Rate
    14.6%vs 13.8% in Q2 FY25
    Q2 FY26
    Non-GAAP Net Income (ex-FX impact)
    $17.5Mup 22% YoY
    Q2 FY26

    Excluding approximately $4.5 million unfavorable impact of Israeli shekel appreciation.

    Non-GAAP Diluted EPS (ex-FX impact)
    $0.40up 25% YoY
    Q2 FY26

    Excluding approximately $4.5 million unfavorable impact of Israeli shekel appreciation.

    Cash and investments balance
    $422.9M
    Q2 FY26

    Includes cash, cash equivalents, bank deposits and marketable securities.

    Subscription revenue as % of total revenue
    55%
    Q2 FY26

    Subscription revenue remained the largest revenue stream.

    Cloud ARR as % of total ARR
    40%vs 36% in Q2 FY25
    Q2 FY26

    Industry KPIs

    7
    MetricValueDetails
    Revenue growth$82.3MUSD
    Arr net new arr$100M (Cloud ARR); $250M (Total ARR)USD
    Pricing model mixsubscription-based
    Large deal new logo metrics7-digit dealUSD
    Multi product platform attachgrowing numbercustomers
    Operating FCF margin rule of 4013.2% (operating margin); 15.8% (FCF margin)%
    Ai product adoption monetizationgrowing numbercustomers

    Product announcements

    2
    ProductTypeDetails
    Xploit Shieldlaunch
    Cloud-augmented protection capabilities for DefensePro Xupdate

    Deals & partnerships

    2
    Two leading financial service providersAPI security solution deployment

    Selected Radware's API security solution in Asia Pacific due to strength of API discovery, runtime protection, and bot management capabilities. Existing customers expanding business by adding API security.

    Global leader in business and financial informationDefensePro X deployment and subscriptions7-digit dealmultiyear

    Selected DefensePro X for a worldwide refresh of its DDoS protection infrastructure across the U.S., U.K., and Japan, along with multiyear application and network protection subscriptions.

    Risks & headwinds

    4
    Foreign exchange headwindQ2 FY26, expected to modestly impact H2 FY26

    Approximately $4.5 million unfavorable impact on non-GAAP net income and diluted EPS

    Supply chain cost pressureQ2 FY26

    Impacted gross margin (down to 81.8% from 82.4%)

    Lower market interest rates and reduced cash balancesQ2 FY26, expected to modestly impact H2 FY26

    Financial income decreased to $4.4 million from $5.2 million

    Acceleration of AI-driven vulnerability discovery and exploitationOngoing

    Shrinking window between vulnerability disclosure and widespread exploitation

    Mitigation: Launch of Xploit Shield to provide tailored protection and critical time for remediation.

    What to watch in Q3 FY26

    5

    Cloud ARR growth rate

    next quarter
    Current22%
    Target25%

    Why it matters

    Cloud ARR is a key indicator of the company's strategic shift and future growth potential.

    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.

    Q&A highlights

    7

    Are customers changing buying behaviors for on-premise solutions due to supply chain issues, leading to pull-forwards or push-outs?

    Some delays are observed for new data center deployments due to global supply chain issues (servers, switches), but it's not critical. On-prem DDoS mitigation sales are less impacted as they can be added to existing infrastructure or for upgrades, not necessarily new data centers.

    “We do see some delays not because of our supply chain, but because of global supply chain issues in moving to, I would say, new data centers, et cetera, because -- servers delays, switches delays, et cetera. But I wouldn't say it's of any critical nature.”

    asked by Joseph Gallo · answered by Roy Zisapel

    2 min read5 chapters

    Detailed Narrative

    01

    Cloud Security Platform Momentum

    Radware's cloud security business demonstrated strong performance, with Cloud ARR surpassing $100 million, marking a 22% year-over-year increase. This growth was fueled by continued demand for cloud security services, effective execution within the MSSP channel, and increasing adoption of new API security solutions. The company highlighted customer wins, POCs, and pipeline opportunities for API security, including two leading financial service providers in Asia Pacific.

    02

    On-Premise Security Strength and Enhancements

    The on-premise security solution, DefensePro X, delivered another strong quarter, benefiting from ongoing refresh cycles as customers upgrade infrastructure against sophisticated DDoS attacks. Radware enhanced its on-prem platform with cloud-augmented protection capabilities, combining AI-powered cloud intelligence with on-prem enforcement, differentiating its offering for hybrid environments. A 7-digit deal with a global financial information leader for a worldwide DDoS protection refresh was cited as an example.

    03

    AI-Driven Threat Landscape and Xploit Shield Launch

    The cybersecurity market is rapidly evolving due to AI-driven attack tools, accelerating vulnerability discovery and exploitation. Radware noted the shrinking window between vulnerability disclosure and exploitation, citing examples like Anthropic Mythos. To address this, the company launched Xploit Shield, a first-to-market solution that automatically creates tailored protection shields for applications, allowing organizations critical time to remediate vulnerabilities while maintaining business continuity.

    04

    Go-to-Market Execution and Regional Growth

    North America remains a strategic focus, with revenue in the Americas growing 24% year-over-year to $37.2 million, representing 45% of total revenue. This growth reflects successful investments in the region's go-to-market strategy, including a hunter-farmer sales model. Encouraging results were also observed in Asia Pacific, with revenue up 9% year-over-year, indicating positive returns from regional investments.

    05

    Financial Performance and Currency Impact

    While achieving record revenue, profitability was impacted by external factors. Gross margin saw a slight decline to 81.8% due to foreign exchange headwinds🌐 and supply chain costs. Operating income and diluted EPS were also negatively affected by the appreciation of the Israeli shekel against the U.S. dollar. Excluding this FX impact🌐, non-GAAP operating income would have increased 41% and non-GAAP diluted EPS 25% year-over-year.

    AI-generated summary of the company’s earnings call. Not investment advice.