Radware Ltd. Stock

Ladies and gentlemen, thank you for standing by, and welcome to Radware's Third Quarter 2026 Earnings Call.

[Operator Instructions]

I must advise you that this call is being recorded. I would now like to hand over the call to our first speaker, Yisca Erez, Head of Investor Relations. Yisca, please go ahead.

Good morning, everyone, and welcome to Radware's Third 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 third 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 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 detailed from time to time in Radware's filings.

We refer you to the documents that 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 of such statement is made. I will now turn the call to Roy Zisapel.

Thank you, Yisca, and thank you all for joining us today. We delivered a strong third quarter, achieving record revenue while accelerating our year-over-year growth. Revenue reached $84.4 million, up 12%, marking our eighth quarter of double-digit growth over the last 9 quarters and reflecting solid execution across strategic priorities. Non-GAAP diluting EPS was $0.32 per share. Today, Radware is a leading cloud security platform company. Customers are increasingly looking for security solutions that can protect applications, APIs, infrastructure and emerging AI environments through a unified platform, combining advanced security capabilities with fully managed services. This is exactly what we deliver.

Cloud ARR reached $107 million, increasing 21% year-over-year, driven mainly by continued adoption of our security platform. We see rapid growth in API security. And during the quarter, we secured several meaningful API security wins, including a large deal with a leading payment infrastructure provider in the Americas. API security was an important part of this competitive replacement where we consolidated WAF, API and DDoS protection on the Radware platform, demonstrating the value of our integrated approach. The rapidly evolving threat landscape further amplifies the need for our broad application security platform approach.

According to our First Half 2026 Global Threat Analysis Report, web DDoS attacks increased 110% year-over-year, while malicious web and API activity more than doubled.

At the same time, AI is accelerating vulnerability discovery, shortening the time between exposure and exploitation, and increasing attacker automation. These trends increase the need for automated behavioral-based protection that operates in real time, which is at the core of our cloud security platform. Beyond accelerating cyber attacks, AI is also changing how organizations operate. As autonomous AI agents become more integrated into applications and business processes, they introduce new security, governance and trust challenges, creating new requirements for securing these interactions. To address these evolving requirements, we continue to expand our platform with new security modules focused specifically on securing new AI business environments.

Last quarter, we introduced Xploit Shield, which provides tailored runtime protection for new exploits discovered with traditional tools or by frontier models.

It provides immediate runtime protection to customers while they assess and remediate newly discovered vulnerabilities in their application code. Recently disclosed critical vulnerabilities such as PHP2Shell and Node2Shell bring this urgency to life, demonstrating how quickly the threat landscape can evolve and why proactive protection is critical. We are seeing strong customer interest in these capabilities and have already secured our first large Xploit Shield deal with a leading telecom provider in Asia. The carrier selected Radware as its primary cloud application security platform following a competitive evaluation with Xploit Shield serving as a key differentiator.

This win shows how our AI-driven innovation can address evolving customer requirements, strengthen our competitive position and drive broader platform adoption. We continue to expand our Agentic AI protection offering with 2 new capabilities. First, MCP Server Protection secures the emerging integration layer between AI agents and enterprise systems, and we already have production customers using this capability. And second, Agent Trust Management or Serve AI, enables organizations to safely interact with customers AI agents by assessing their identity, intent and trust and controlling the actions they can perform. Together, these capabilities extend our AI security strategy across 3 important dimensions: defending against AI-powered attacks, protecting the AI infrastructure organizations are deploying and securely enable AI agents to interact with our customers' enterprise applications and data.

We believe this greatly expands the total addressable market for our platform and further strengthen the breadth of our cloud security platform as AI becomes increasingly embedded in enterprise applications and workflows. Our technology leadership also received external validation during the quarter. IDC named Radware a leader in its 2026 Worldwide Web Application and API Protection platform assessment. We also received recognition from QKS Group, which named Radware a leader in its 2026 SPARK Matrix for DDoS mitigation and the most valuable pioneer in its AI Maturity Matrix for web application and API protection. We truly have technology leadership in the core markets we serve, WAF, API, DDoS and AI security.

While our cloud security platform remains a primary growth driver, our on-prem security business also continued to perform well. DefensePro X continued to benefit from the ongoing infrastructure refresh cycle as customers upgrade aging DDoS environments. With less than 1/3 of the end-of-sale installed base refresh to date and a strong pipeline ahead, we see meaningful opportunity from this cycle over the next several quarters. A good example of this momentum is the agreement we announced yesterday with a major global cloud provider to modernize and expand its DDoS protection infrastructure. Following a competitive evaluation, Radware was selected to significantly increase the customer protection capacity and performance while providing greater flexibility to scale.

In summary, the third quarter was another strong quarter of execution. We accelerated growth, increased ARR and continue to broaden our customer reach. At the same time, we accelerated the pace of innovation, expanding our cloud security platform into new AI security domains with new capabilities such as Xploit Shield, MCP Protection and Agent Trust Management. Looking ahead, AI is rapidly reshaping the security landscape, creating new challenges for our customers and significant new opportunities for us. We believe our broader platform, strong innovation engine and consistent execution position us well to capture this opportunity and deliver sustainable long-term growth. With that, I'll turn the call over to Guy.

Thank you, Roy, and good day, everyone. I'll review our third quarter financial performance, discuss the main trends reflected in the results and conclude with our outlook for the fourth quarter of 2026. As a reminder, unless stated otherwise, the financial metrics discussed today are presented on a non-GAAP basis. Reconciliation between GAAP and non-GAAP results are included in the press release we issued earlier today and are also available in the Investors section of our website. As discussed previously, SkyHawk is presented as a discontinued operation beginning the first quarter of 2026. Accordingly, the results I'll review today relate to continuing operations.

Third quarter revenue reached a record $84.4 million, increasing 12% year-over-year. This marks a further acceleration in our growth rate and reflects solid execution across the business. The quarter benefited from continued momentum in cloud security and demand for our DefensePro X in subscription and on-prem business models. Total ARR reached approximately $266 million, up 11% year-over-year, reflecting the continued expansion of our recurring revenue base. Cloud ARR ended the quarter at approximately $107 million, up 21% from a year ago. Cloud continues to be a large portion of our recurring business, representing 41% of total ARR compared with 37% in the third quarter of 2025. This shift in mix reflects the continued adoption of our cloud security platform that supports greater visibility into our revenue base.

Looking at regional performance. We delivered a strong performance across all geographies in the third quarter, with each region achieving double-digit year-over-year growth. Importantly, the growth was broad-based and reflects healthy demand across diverse verticals. In the Americas, revenue was $39.6 million, up 12% year-over-year, representing 47% of total revenue. On a trailing 12-month basis, revenue in the Americas grew 17% year-over-year.

EMEA revenue was $25.6 million, up 12% year-over-year and represented 30% of total revenue. On a trailing 12-month basis, revenue in EMEA grew 8% year-over-year. APAC revenue was $19.2 million, up 12% year-over-year, representing 23% of total revenue. On a trailing 12-month basis, revenue in APAC grew 5% year-over-year.

Moving now to profitability. Gross profit in the third quarter was $68.7 million, increasing 11% year-over-year. Gross margin was 81.4% compared with 82.4% in the third quarter of 2025. Gross margin was mainly impacted by the foreign exchange headwind, product mix and supply chain cost pressure we discussed in previous quarters. Operating income was $11.9 million compared to $12 million in the same period last year. The year-over-year comparison was primarily affected by the appreciation of the Israeli shekel against the U.S. dollar. Excluding this currency impact, operating income would have been $16.5 million, representing 37% growth compared with the third quarter of 2025. At the same time, we continue to invest in technology and innovation to capture the opportunity emerging from the rapidly evolving AI market and support our future growth.

Financial income was $4.5 million in the quarter compared to $5.2 million in the same period last year, reflecting lower market interest rate and reduced cash balance following share repurchases executed over recent quarters. We expect these factors to remain a modest headwind to finance income throughout the end of the year. Our effective tax rate was 15% compared to 13.5% in the same period last year. We expect the effective tax rate to be between 14% to 15% in the coming quarter. Net income from continuing operations was $13.9 million, down 6% year-over-year and diluted earnings per share from continuing operations were $0.32 compared to $0.33 in Q3 2025.

Excluding the $4.6 million unfavorable impact of the appreciation of the Israeli shekel against the U.S. dollar in the third quarter of 2026, non-GAAP net income from continued operations and non-GAAP income diluted EPS from continuing operations would have been $17.8 million and $0.41, respectively. This compares with the reported $14.8 million and $0.33 per diluted share in the third quarter of 2025, representing year-over-year growth of 20% in non-GAAP net income and 24% in non-GAAP diluted EPS.

Turning to cash flow and the balance sheet. Operating cash flow provided by continuing operations in Q3 2026 was $15.5 million compared to a negative $2.1 million in the same quarter last year. During the quarter, we continued to execute our capital allocation strategy and repurchased shares in approximately $13.7 million. This brings total share repurchases from the beginning of the year to approximately $62 million. We ended the quarter with $421.5 million in cash, cash equivalents, bank deposits and marketable securities, maintaining a strong balance sheet and financial flexibility to continue to support our strategic priorities.

And now to our guidance. For the fourth quarter of 2026, we expect total revenue to be in the range of $88 million to $90 million. We expect fourth quarter 2026 non-GAAP operating expenses to be between $57 million to $58 million. We expect fourth quarter 2026 non-GAAP diluted earnings per share to be between $0.34 and $0.35. With that, I'll turn the call back to the operator, and we will be happy to take your questions.

[Operator Instructions]

Our first question comes from Joe Gallo from Jefferies.

Roy, I just want to start high level. Where are customers in this AI journey? And where are you seeing the benefit the most pronounced today? It seems like it's in WAF and API. And then just in terms of your recent AI security products you launched earlier this year, when should we expect that to start benefiting growth? Is that a 4Q phenomenon or more of a next year?

Okay. Thanks, Joe. So I would say on AI, there are many, many different dimensions. So first, we are seeing more and more use of AI, red teaming, AI frontier models to discover vulnerabilities in existing applications, meaning this has nothing to do with AI agents or AI infrastructure. This is about each and every application and the PHP example is a great example from last week. In that regard, customers are under extreme stress to accelerate their ability to move from discovered vulnerability or exploit to protection mode. And here, we see a lot of customers high interest in working adding web application firewalls, API security in front of their apps and in the new Xploit Shield that really creates a tailored shield for you, for your apps given those scanning attempts.

So this is one strong, I would say, driver for our cloud security platform driven primarily with the significant increase in vulnerability discovery and attack tools powered by AI. So this is the first pillar. Second pillar is customers are looking today to understand or to see the AI applications running within their enterprise, which users are running which application. They want to make sure that there's no shadow AI. They want to make sure that proprietary information of the enterprise is not linked. This is the center together with protecting Agentic AI of our AI protect products that we have announced beginning of the year, and we see a continuous rise and more and more pipeline creation. I do think it's a 2027 opportunity, but we're definitely seeing the life there.

The third area of AI is using AI to actually automate the security operations. And here, we're seeing very good take-up of our Agentic SOC, which we call AI SOC Xpert across our DDoS, WAF, BOT and soon also API. So AI is today embedded in multiple dimensions of our offering, some as they relate to the existing infrastructure like protecting applications or automating the SOC. We are already seeing a strong uptick and that drives more use, more revenue for us in WAF, API and DDoS and some as it relates to the newly AI environments, we are seeing a build-out of the pipeline and initial customers. We already have, of course, customers and every quarter more and more, but I do think the real scale is next year.

That's really helpful. Maybe as a follow-up for Guy. Guy, you've done a great job accelerating the top line. Comps will now start to get a little bit more difficult, but Roy sounds super excited. And when you look at cloud or short-term billings, the growth profile there is approximately 20%. Is it fair to expect that growth can continue to inflect next year? Or is there anything that we should be aware of regarding the growth profile on-premise in our models?

So again, we're not guiding for next year, only for the coming quarter. We gave several data points, including our ARR, which is currently double digit. We have high hopes. We discussed it, and we think that they will yield revenues and ARR coming from all the waves of the API and AI for next year.

Roy started the call by saying 8 out of the last 9 quarters, we were at double digit, and there is no reason it will not continue to accelerate.

Our next question will come from George Notter from Wolfe Research.

I wanted to ask about the investments in the sales and marketing organization. Obviously, that was a number of quarters ago. I'm just curious on your perspective. Are you seeing the returns on those investments? What does that look like? Are you doing anything new in terms of the shape and organization of the selling and marketing organization going forward? Just bigger picture, how are you driving that organization?

George, so first, I think we've seen very good return on the investments we've done. We were able to increase spend, but also to reduce given the leverage in the model and the growth that we've seen actually as a percentage of revenues, our sales and marketing expenses have declined. So we like the efficiency. We like the growth. We are now ready to continue to deploy additional capabilities across the world. As I've mentioned, we are very optimistic on the future of the cloud security platform with all the additional modules. So we do believe that more investment towards Xploit Shield, AI security, API security in the field will provide us with great results. In addition to that, I do want to mention that we're seeing good traction, both on the MSSP side of our business and the OEM side of the business, so there's definitely room for further investments to continue to grow our business, and we are doing it now continuously across the year.

Got it. And then how about investments in scrubbing centers? Just curious where you are in terms of total mitigation capacity, AppSec PoPs, that sort of thing. Any update there would be great.

So like we say in the company, we no longer open physical offices with people. We open more PoPs now than offices. I think we just announced Bangkok a couple of weeks ago, and we continue to build every quarter more centers. There's, I think the next one is coming up in Indonesia, for example. Capacity-wise, we shared a plan of doubling the mitigation capacity this year, which we executed, and we continue to build now, extreme mega PoPs, extremely large PoPs or even bigger capacity together with more and more AppSec local PoPs to serve sovereign, PII, localized businesses across the world. So this is now ongoing in a continuous fashion.

And you see it also in our numbers. I think one thing to highlight is it's very capital efficient, what we're doing. So our, the fact that we're utilizing our own mitigators with the hardware and the ASICs allows us to, especially in these days to purchase significantly lower amount of servers in order to do large-scale mitigation. And as a result, our CapEx that is needed, which is for the most part in DDoS is our own devices is very, very efficient and effective. So we believe that's also from a business model, a competitive advantage.

Just to put it in numbers, so if you take cash from operation and free cash flow, so this quarter, free cash flow was $12.4 million. If you look at year-over-year, we did show some increase in CapEx from $1.9 million to $3.1 million year-over-year based on what Roy said, increased capacity, adding PoPs. But if you compare it to, let's say, other companies that build global networks, our free cash flow is very close to operating cash flow, and that's a big advantage.

Our next question comes from Jeffrey Hopson from Needham.

On the AI side, is this kind of a different sale for the sales force? Or is it just an additional conversation? And is it similar sets of competitors that you're seeing out there? Or are there a bunch of new AI entrants that you're competing against?

So very good question. So I think it depends on the AI use case that I've mentioned. So if I'm talking about shortening the time between vulnerability discovery to protection, so over there, I think it's very similar conversation to the conversation we already have with our AppSec customers around WAF and API and BOT. And it's a very advanced innovative solution, but I do believe it goes within the same persona in the customer. If we're talking on some of the Agentic AI protection, and I've mentioned, for example, MCP protection or AI agent protection, this is a new field today in security. There's plenty of start-ups, I think, over 20 and of course, some of the large players.

So there's still a lot of noise. I think the fact that it's fully integrated into our platform and really working hand-in-hand with some of the other modules and our expertise in data center and application protection is helping us a lot there. But definitely many more, the field is very fragmented. As I've mentioned, many players out there. If I'm looking on the last piece of AI, the ability to automate and accelerate SOC work, this is really for our customers on top of a platform. So it's really an upsell. It's to the same personas we are already selling, and it provides them with much faster investigation, forensics, mean time to restore service.

So this has a very high value, but it's clearly upsell to our incumbent customers. So different use cases, the different answers there. But if you're looking on the Agentic AI security itself, it's yet to be seen.

Got it. That's helpful. And maybe just AI and agentic threats. There's been a lot of headlines and risks out there. I guess is that, is the environment today just maybe AI is ahead of some of the sensors? Or is it more like customers out there aren't fully utilizing the existing tools that they already have?

No, with AI, you can, for example, the PHP vulnerability was suspected, but there was no exploit. But with AI, such exploit was possible to achieve, for example, in a very fast way. So AI is really on existing applications, existing codes, finding more vulnerabilities and actually make them actionable. Being able to develop exploit code to match them, it's a game changer for sure. And as a result, the risk for the enterprise customers is much higher, and they do need to shore up defenses. And those defenses must be also algorithmic, dynamic, run time, basically also using AI for the defense.

So I do think that this AI in the service of the attacker will cause all the enterprise customers to double down on their application security to do things differently. It's technology, it's also process, but a lot should go to automation, prevention, so to save the whole event from the get-go.

There are no further questions. I would now like to hand the call back to Roy for closing statement.

Okay. Thanks a lot, everyone, and have a great day.

Ladies and gentlemen, thank you for standing by, and welcome to Radware's Second Quarter 2026 Earnings Call. [Operator Instructions] I must advise you that today's call is being recorded.

I would now like to hand over the call to our first speaker, Yisca Erez, Head of Investor Relations. Yisca, please go ahead.

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 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 detailed from time to time in Radware's filings.

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 of such statement is made.

I will now turn the call to Roy Zisapel.

Thank you, Yisca, 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 2 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 2 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 strength of our API discovery, runtime protection and bot management capabilities. These wins highlight our existing customers are expanding their business with us by adding API security to the Radware 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 strengthen 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 7-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 U.S., U.K. and Japan, along with multiyear 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 Mythos, 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, 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 announced, the Xploit Shield, was designed to address. As the first-to-market solution, Xploit Shield automatically creates a tailored protection shield for each application based on the vulnerabilities found by the frontier model or other security scans, 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, Xploit 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 investments we made in the region translate 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 Xploit 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.

Thank you, Roy, and good day, everyone. I'll now walk through our second quarter financial results, provide some additional color on the key business trends behind the numbers and then review our outlook for the third quarter of 2026.

As a reminder, unless stated otherwise, the financial metrics discussed today are presented on a non-GAAP basis. Reconciliation between GAAP and non-GAAP results are included in the press release issued earlier today and are also available in the Investors section of our website.

We delivered another strong quarter with record revenue of $82.3 million, up 11% year-over-year, continuing the double-digit growth trajectory we established over the past several quarters. Importantly, this growth was broad-based across key parts of the business and reflect continued execution supported by growth in our subscription and product revenue streams.

Our cloud security business continued to perform well during the quarter with cloud ARR increasing 22% year-over-year and surpassing the $100 million milestone. Cloud ARR represented 40% of total ARR compared to 36% in the second quarter of 2025. Cloud growth was a key contributor to the continued expansion of subscription revenue, which remained our largest revenue stream and accounted for 55% of total revenue.

Looking at regional performance. In the Americas, revenue was $37.2 million, up 24% year-over-year, representing approximately 45% of total revenue. On a trailing 12-month basis, revenue in the Americas grew 21% year-over-year. The Americas remain our largest region and continue to be the important contributor to our overall growth profile.

EMEA revenue was $27.3 million, down 2% year-over-year and represented approximately 33% of total revenue. On a trailing 12-month basis, revenue in EMEA grew 3% year-over-year.

APAC revenue was $17.8 million, up 9% year-over-year, representing approximately 22% of total revenue. On a trailing 12-month basis, revenues in APAC grew 2% year-over-year.

Moving now to profitability. Gross profit in the second quarter was $67.3 million, increasing 10% year-over-year. Gross margin was 81.8% compared to 82.4% in the second quarter of 2025. Gross margin was mainly impacted by the foreign exchange headwind and supply chain cost pressure we discussed last quarter. Despite these factors, gross margin remained at a healthy level, reflecting the favorable economics of our business model and the continued contribution of our recurring revenue base.

Operating income was $10.9 million compared to $11.4 million in the same period last year. The year-over-year decline was primarily attributed to the strengthening of the Israeli shekel against the U.S. dollar. Excluding this impact, operating income for the second quarter of 2026 would have been $16.1 million, representing a 41% increase compared to the second quarter of 2025.

Financial income was $4.4 million in the quarter compared to $5.2 million in the same period last year as a result of a lower market interest rate and reduced cash balances following share repurchase over the past 2 quarters. We expect these factors to continue to modestly impact financial income during the second half of 2026.

Our effective tax rate was 14.6% compared to 13.8% in the same period last year. We expect the effective tax rate to be between 14% to 15% in the coming quarter.

Net income from continued operation was $13 million, down 9% year-over-year and diluted earnings per share from continued operation was $0.30 compared to $0.32 in Q2 2025. Excluding approximately $4.5 million unfavorable impact of the appreciation of the Israeli shekel against the U.S. dollar in the second quarter of 2026, non-GAAP net income and non-GAAP diluted EPS would have been $17.5 million and $0.40, respectively. This compares with the reported $14.3 million and $0.32 diluted share in the same quarter of 2025, representing a year-over-year growth of 22% in the non-GAAP net income and 25% in the non-GAAP diluted EPS.

Turning to cash flow and the balance sheet. Cash flow provided by continued operations in Q2 2026 was $13 million compared to $15.6 million in the same quarter last year. During the quarter, we continued to execute our capital allocation strategy and repurchased shares in the amount of approximately $18.8 million. We ended the quarter with $422.9 million in cash, cash equivalents, bank deposits and marketable securities, maintaining a strong balance sheet and financial flexibility to continue supporting our strategic priorities.

And now to our guidance. For the third quarter of 2026, we expect total revenue to be in the range of $82.5 million to $83.5 million. We expect third quarter of 2026 non-GAAP operating expenses to be between $57 million to $58 million. We expect third quarter of 2026 non-GAAP diluted earnings per share to be between $0.28 and $0.29.

With that, I'll turn the call back to the operator, and we will be happy to take your questions.

[Operator Instructions] Our first question is from Joe Gallo from Jefferies.

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?

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. In our on-prem business, we do see -- 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 tag. They can be added to existing infrastructure, et cetera. 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 infrastructure, that does not impact us.

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?

Okay. I think there's multiple angles, and I tried to address some of them in my script. One is protecting AI infrastructure. That is still early. Our [ AI Protect ], 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, et cetera. There's definitely sense of urgency there. There's just a recent story about the OpenAI model attacking Hugging Face, et cetera, there's Mythos. I think there's a very large alert on the CISO level, security organizations. We definitely see that creating demand for our security services. Specifically, Xploit Shield is providing very strong benefit to all the remediation and shielding of those thousands of vulnerabilities being found. So this is definitely a very strong tailwind.

And then there is AI used to better security algorithms, some of the things I've mentioned in our API security or in Xploit 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 say AI infrastructure is still early, but securing with AI against all the new vulnerabilities and what AI can do on the attack is definitely very, very critical now.

If I can sneak in a quick follow-up. So tying everything you just said together, right, you've accelerated revenue growth 3 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 of quarters?

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.

Our next question is from Jeff Hopson from Needham.

Just coming 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?

Yes. So I think the -- 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 is the sheer amount, it's also the ability to exploit them much faster than before.

I mentioned it in my comments. Before -- until last year, we were talking weeks and months between a vulnerability being discovered and a weapon that's attacking. This window is shrinking dramatically. So not only you're 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 with fixed vulnerabilities, but more so, we are using our own Xploit Shield as a shield in front of our customer-facing software and portals and cloud.

Our Xploit 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. 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 Mythos, unrelated to AI, of upgrading their production software. They will do it in maintenance windows, they'll time it, et cetera.

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. So the whole process is broken. What did we do with Xploit 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 Mythos 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 rely on us as the first line of defense.

So the Xploit Shield product directly answers this need. And we got -- 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.

Got it. That's very helpful. And maybe on the on-prem versus the cloud, there's obviously the secular trend of moving to cloud. But has AI, I guess, changed that decision-making at all with maybe people slower to transition and put more sensitive AI workloads back on-prem instead of pushing things to the cloud?

Yes. 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, et cetera. And all of that has lower impact, by the way, on our on-prem business because we are selling to customers -- 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 -- 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-prem make it more critical, the on-prem data center, but it doesn't change significantly our business.

I want also to make another point is that, 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 enterprise 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 well. The on-prem security solutions we do, as I mentioned, and Guy mentioned in our comments, continue to scale our cloud security platform that is way broader than DDoS. It has the [ expertship ] we talked about, API, AI, WAF and so on and so forth.

Our next question is from George Notter from Wolfe Research.

I guess I'm just curious about -- obviously, there -- 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.

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 the -- for example, the signature updates against vulnerabilities that are being protected in real time, [ shield ], blocking and all kinds of other security services. So generally, our installed base is active.

So I don't see customers -- maybe in third-tier countries that try to save some money on the edge. But in the key markets, key customers, they are all under support. We do still have a lot of runway with our DefensePro refresh cycle, meaning we are -- 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.

Got it. Great. And then could you talk -- you mentioned that the pipeline is looking better. Obviously, these AI threats, I think, probably drive that. But is there anything more you can 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?

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 firewall in DDoS. But more and more, we are seeing these platforms, say, that are multimodal, multi-use cases and customers are consolidating application infrastructure security on our platforms.

And to that, API security, Xploit Shield, AI security are definitely helping us a lot. And we're seeing customers asking us for enterprise agreement, given the fact they want to consume more in a more flexible manner. So we're definitely seeing all those investments we've made in innovation in the new modules, also impacting the cloud security platform as a whole. So that's about pipeline.

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 are 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.

Got it. And then one last one. Can you just remind us how you're monetizing the Xploit 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.

Yes. So Xploit Shield is part of our cloud security platform. All of the revenues are subscription-based, in 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 Xploit Shield, and that gives you this isolation, this shield for that application against the vulnerabilities discovered by your AI scanning.

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

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

Ladies and gentlemen, thank you for standing by, and welcome to Radware's First Quarter 2026 Earnings Call.

[Operator Instructions] I must advise you that this call is being recorded today.

I'd now like to hand over the call to our first speaker today, Yisca Erez, Head of Investor Relations. Yisca, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Radware's First 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 first quarter are available in the Investor Relations section of our website.

During today's call, we will 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 include, but are not limited to, impacts 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 filings.

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 of such statement is made.

I will now turn the call to Roy Zisapel.

Thank you, Yisca, and thank you all for joining us today. We started 2026 with solid execution across the business and steady progress against our long-term strategic priorities, scaling our cloud security platform, growing our MSSP business, driving innovation and executing with discipline across regions and functions. In the first quarter, we delivered another quarter of double-digit growth in revenue, marking the fourth quarter of double-digit growth in the past 5 quarters. Revenue grew 11% year-over-year to $80 million, and EPS was $0.30.

Cloud security is driving our growth. Cloud ARR grew 23% year-over-year in the quarter, supported by strong demand for application security, hybrid DDoS services and our new API security. One cloud win example is with a large government institution in Latin America, where Radware was selected to secure critical applications and national-level digital infrastructure. The customer expanded its deployment across our full portfolio, including cloud application protection, API security and advanced DDoS mitigation. The decision was driven by our ability to deliver real-time protection at scale for highly sensitive mission-critical environments.

Another cloud deal we secured is a new logo hybrid cloud DDoS deployment with a large global fintech company. The customer selected Radware DefensePro X appliances, combined with our cloud DDoS service to address escalating volumetric and low-and-slow attacks that were impacting payment availability.

I would like now to share with you why we're so excited about the opportunity Radware is seeing in the security market. At our Investor Day, we outlined 4 major waves of disruption shaping our journey in the cybersecurity market. DDoS, application security, API protection and now Agentic AI security. Radware operates at the intersection of all 4, a position that become more critical as attacks grow increasingly automated, distributed and AI-driven.

In particular, our new API security solution is one of the fastest-growing areas of our portfolio and a meaningful contributor to our cloud security momentum. Following the Pynt integration, the API security testing company we acquired, we now offer an end-to-end API security solution spanning discovery, posture management, testing and real-time runtime protection. We see strong customer traction with tens of projects in various stages across production deployments, upgrades, testing and POCs. We believe many of our customers will choose to standardize their API security on Radware as part of our broader application security platform, and we feel very encouraged by the momentum and visibility we have as we look ahead to the rest of the year.

Next, AI continues to be both a catalyst and a clear differentiator for our platform. Our long-standing investment in behavioral algorithms and AI-powered automation remains the key reason customers choose Radware, particularly as attackers leverage AI-powered automation and manual responses can no longer keep pace. In addition, advanced AI penetration and code scanning tools are accelerating vulnerability discovery and compressing the time between exposure and exploitation. This widens the gap between what organizations can identify and what they can realistically remediate, making prevention-only and shift left approaches increasingly insufficient.

Radware addresses this challenge through real-time platform-based protection that secures application and infrastructure as attack occur. Our architecture is designed to operate at scale to stop zero-day exploits, API abuse and automated attack chains in production. In this environment, new AI security tools do not replace our cybersecurity platform. They underscore the necessity for runtime protection that can keep pace with machine speed threats. We see this as a clear tailwind for our business.

Furthermore, with the emergence of agentic AI and the broad access right granted to AI agents, a new and expanded attack surface must be protected. We introduced Agentic AI Protection last quarter, further expanding our cloud security platform. While still early, we are already seeing strong engagement as customers recognize that runtime protection is essential for their Agentic AI journey.

From a go-to-market perspective, execution in North America remains a key priority and a significant contributor to growth. Revenues from the Americas grew 40% year-over-year, representing nearly 50% of total revenues. Investments in leadership, sales coverage and partner engagement are translating into improved execution.

Within our go-to-market framework, our MSSP business is increasingly becoming more pronounced. Led by large strategic MSSP partners, the momentum is accelerating globally. During the quarter, we made meaningful progress onboarding Tier 1 carriers and service providers and building a substantial pipeline across regions that we expect to convert in the second half of the year. To that end, we just announced this week a partnership with Chief Telecom from Taiwan. Chief operates the Taipei Internet Exchange, which is the largest carrier-neutral Internet exchange in Taiwan and is the leading provider for direct private connections to global public clouds in the country. Through our partnership, Chief will provide Go Shield Pro, a new DDoS protection service for enterprises in Taiwan. The service combines Radware's AI-driven DDoS mitigation with Chief Telecom local network, enabling in-network scrubbing that minimizes latency. Delivered as a subscription, Godshield Pro provides immediate high-performance protection without the need for on-premise hardware.

On the product side, our on-premise DDoS protection solution, DefensePro X, had an outstanding quarter, driven by multiple large-scale refresh and expansion deals globally, including one of the largest SaaS companies in the world, a leading multinational e-commerce provider and one of the largest healthcare systems in the U.S. DefensePro X delivers unmatched performance, scale and resiliency, which customers consistently validate through repeat refresh and expansion activity. This powerful refresh cycle underscores the durability of our hybrid foundation while simultaneously accelerating subscription adoption.

In summary, Q1 marked a very strong start to 2026 with solid execution across the business. We delivered double-digit growth in revenues driven by cloud ARR, strong momentum with our new API security offering, continued strength in our hybrid portfolio led by DefensePro X and solid execution in North America. We continue to execute against our strategy and are well positioned for continued growth as we move through the year.

With that, I'll turn the call over to Guy.

Thank you, Roy, and good day, everyone. I will review the financial results and business performance for the first quarter of 2026 as well as our outlook for the second quarter of 2026.

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 press release issued earlier today and in the Investors section of our website.

As announced last quarter, the results of our subsidiary, SkyHawk, have been classified as a discontinued operation effective the first quarter of 2026 and are presented accordingly. As a result, all financial results discussed today related solely to continued operations. In connection with this change, the previously reported Hawk segment will no longer be presented separately. Comparative prior year figures have been adjusted to align with this presentation and ensure consistency.

We started 2026 with a solid first quarter, delivering revenue of $79.8 million, representing a year-over-year growth of 11% and marking this the fourth quarter of double-digit growth for the past 5 quarters. Cloud security offerings continue to play an important role in our overall performance. Cloud ARR grew 23% year-over-year in the first quarter, reaching $98 million, increasing to 39% of total ARR, up from 35% in the first quarter of 2025. This growth was the primary driver of total ARR, which increased 9% year-over-year to $250 million in the quarter.

Looking at regional performance. In the first quarter, the Americas region delivered robust growth with revenue increasing 40% year-over-year to $38.4 million. On a trailing 12-month basis, revenue in the Americas grew 15% year-over-year. Revenue from the Americas region represent nearly 50% of total revenue, and we are encouraged by the momentum in the region, which is also reflected in the strong pipeline for the coming quarters.

EMEA revenue in the first quarter was $25.1 million, a decrease of 11% year-over-year. On a trailing 12-month basis, revenue in the EMEA increased 8% year-over-year. In APAC, first quarter revenue was $16.3 million, the same as in the first quarter last year. On a trailing 12-month basis, revenue in APAC increased 3% year-over-year.

Turning to profitability. Gross margin was relatively consistent at 82.2% in the quarter compared to 82.4% in the same quarter last year. The slight change year-over-year reflects a favorable revenue mix, partially offset by supply chain and foreign exchange impacts. During the quarter, we experienced supply chain pressure, primarily driven by higher memory components costs. While this had a modest impact on gross margin, we are actively managing these dynamics through pricing and procurement.

Looking ahead, we expect memory-related cost pressure to persist in the near term. However, we believe we can manage it effectively and maintain margin discipline throughout the year. Operating income for the first quarter increased 4% year-over-year to $11 million, while operating margin declined by 90 basis points to 13.8%. Decline was directly impacted by a negative $2.6 million impact from currency exchange changes, predominantly the strengthening of the Israeli shekel. Constant exchange rate currency, the operating income for the first quarter would have been $13.6 million, a 28% increase year-over-year.

Financial income for the first quarter was $4.5 million compared with $5.2 million in the same period last year. primarily reflecting lower market interest rate and reduced cash balances following share repurchase over the past 2 quarters.

Looking ahead, we expect financial income to gradually decrease over the remaining quarters of 2026, reflecting the same dynamics. Our effective tax rate for the first quarter was 14.3% compared to 13.7% in the same period of 2025. We expect the effective tax rate to be between 14% to 15% in the coming quarter. Net income from continued operations in Q1 2026 was $13.4 million compared to $13.6 million in Q1 2025. Diluted earnings per share from continued operations were $0.30 compared to $0.31 in the same period last year.

Turning to cash and the balance sheet. Cash flow provided by continued operations in Q1 2026 was $19.9 million compared to $24.6 million in the same quarter last year. During the first quarter, we repurchased shares in the amount of approximately $29.4 million. We ended the quarter with a strong liquidity position, holding approximately $434 million in cash, cash equivalents, bank deposits and marketable securities.

And now to the guidance. Turning to our guidance to note that our operating expenses and EPS outlook reflect current foreign exchange rates. Strengthening of the Israeli shekel will impact operating expenses and EPS over the course of the year. We expect total revenue for the second quarter of 2026 to be in the range of $81 million to $82 million. We expect Q2 2026 non-GAAP operating expenses to be between $56 million to $57 million. Expected increase in Q2 2026 OpEx versus the first quarter of 2026 reflect our continued investment in innovation and go-to-market, along with approximately $2 million of exchange rate impact associated with the U.S. dollar weakening. We expect Q2 2026 non-GAAP diluted net earnings per share to be between $0.28 and $0.29.

With that, I'll turn the call back to the operator, and we'll be happy to take your questions.

[Operator Instructions] The first question is from Joe Gallo from Jefferies.

Can you just walk through the total ARR performance a little bit in 1Q? Cloud was very strong but you saw a decline in total ARR of $1 million quarter-over-quarter. Can you just kind of walk through that dynamic and how we should think about total ARR growth in 2026?

Yes. I think the trends that we've seen in Q1 happening to us generally almost every year, although this year, there was a small decline so far. And it's because many of the contracts are expiring end of the year, and then we might see some churn, which is not exactly linear throughout the quarters. But we do continue to expect strong cloud growth in the 20s, and we do expect, like we've guided before for ARR to continue between 8% to 9%. And as the cloud portion of the total ARR growing, that figure to continue to accelerate. Last year, I think in this period, we were at 7%, give or take, ARR growth. Now we are at 9%, and we think that trend would continue to happen as we scale the cloud.

Okay. That makes total sense. And then just as a follow-up, you mentioned memory-related costs will persist. How are you thinking about pricing? Are you able to kind of raise prices to offset some of that? And have you seen any changes in buying behavior related to memory costs from your customers?

We just took an action and raised for some of the hardware platforms that are highly affected by memory. We did increase price lists by 5% to 8%. We didn't see yet a change in buying behavior, although those pricing changes will now go into effect end of Q2. Our customers will be made aware of that. And I believe there will be some acceleration in some of the hybrid projects. But I don't expect a major change. We didn't increase prices by 10% or 20%. We are much more, I would say, disciplined in discounting to make sure gross margin stays intact and of course, pushing a lot of the cloud security, the API security and AI that are isolated from those memory and supply chain issues.

Our next question is from Jeffrey Hopson from Needham.

At your Analyst Day, you were talking a little bit about a new go-to-market strategy with a hunter/farmer model. Any update on where we are with that transition or any early contributions?

So thanks a lot, Jeffrey. As we stated, North America was our first to execute this transition. And in the last several quarters, I think we've started to see very strong growth and contribution from this activity, and we believe that would continue as we progress. We're very happy with the initial results, both on farming and on hunting. We are now country by country. It depends on the situation globally. We are executing that in Europe and in Asia, and we believe that we would see the same results. So I think the model itself proved itself. We're seeing very good results, not only in the numbers, by the way, which is the most important, but also in our strengthening customer relationships in the cross-sell and the broadening of the usage of our platforms in the key accounts. So we have many leading indicators to the improved business traction that we have, and we are continuing with implementation.

And you have new products in both API security and AI security that you've been highlighting. And I think those are going to be big longer-term drivers of growth. But do you expect like a large meaningful contribution from those products in 2026? Or are they still very early in the ramp?

So it is very early. The AI security we just launched, I don't know, 3 months ago, and the sales cycles in enterprise are 6 to 9 months on the short side, I would say. However, as it relates to API security, I was actually -- we were actually very surprised with the strong traction already in Q1, and we were able to close double-digit number of customers orders already within that quarter, and the traction continues to be very, very strong. So API security, I think it's much more immediate. It's a very easy expansion of our platform, especially for our existing customers. It's enabling another module on the same cloud platform. It's the same buyer, and we see a lot of interest in the market.

So I actually would increase my expectations from API security contribution for 2026 versus where I was, I would say, in the Analyst Day or 3 months ago. And AI, we continue. We increased the number of POCs. I believe we will start to closing orders this quarter. And from there, hopefully, we'll see a strong ramp. It's earlier to talk about it versus API where we see the business right now.

Okay. We have no further questions. I'd like to hand the call back to Roy for closing remarks.

Okay. Thank you, everyone, for joining us, and have a great day.

Good morning, everyone, and welcome to Radware's Investor Day. We are happy and excited to host you here in person and also on the webcast. So our agenda today -- we'll start wit Roy Zisapel, who will present the vision and the strategy followed by Connie Stack who will present the growth plan. And David Aviv will present the innovation and the offering. After a short break, David Roth and Randy Wood will present the go-to-market, and we'll conclude with the financial performance from Guy Avidan. After another break, we will have the Q&A session, live session with our executives.

And after we read the safe harbor statement carefully, I would like to introduce Roy Zisapel.

Okay. Good morning, everyone. It's a pleasure to have you today with us. We're excited to take this opportunity, we didn't do it for a couple of years, to give you a view of the business to focus on the core aspects of growth and frankly, also to share the progress we've made. And furthermore, as we are all coming together, we will give you some additional information or insight to some of the growth drivers we are playing specifically one in the go-to-market around MSSPs and one in the expansion of the products and the cloud platform around API and AI that -- it's a great opportunity to share and provide you the full view on that.

Okay. So let's start. Radware, we are delivering a comprehensive real-time protection to the crown jewels of our enterprise and carrier customers, the very large applications. We are 1,300 people, 3,500 customers, and those are generally very large customers. So the opportunity there is massive. We're one of the very, very few companies that built a cloud security platform, and we have today 65 locations with 30 terabits of capacity.

2025, as you all know by now, was a record deal for us. We crossed $300 million revenues. Our cloud security is scaling close to $100 million and actually accelerating in growth rate. And as a result of that, the vast majority of our business, now 80% of our business, is recurring business. If you think where we were several years ago as an appliance company and where we are today, is a massive shift into a subscription business model.

And as our cloud scales, so is our ARR and Guy will show it in his presentation, now total ARR for the company is growing 11%.

What are the investment highlights. So first, Radware today is a cloud-first security company. We have a leadership platform for cybersecurity to protect against this very complicated problem of mission-critical application protection. As I've mentioned, our cloud security business was the major growth driver is accelerating at scale. Beyond that, and Randy -- and David Roth in their go-to-market presentation will share more details on that. We are seeing strength also in our on-prem business, especially in second half 2025, and that drives subscription growth even further.

We worked very hard on our go-to-market. We have a global presence, and we've optimized it further. And we're now expanding it and David in the go-to-market presentation, will share with that, both with the OEMs but very importantly, [ in you ], if you saw our announcement from today morning about Bell Cyber, joining us as a new MSSP, the whole MSSP action that we have. And all of these has positioned the company for sustained double-digit growth.

So let's go deeper into each one of these. So first, our current markets. If you look on our current markets, we're playing in the web application protection and the DDoS protection, what's nice to see is that those markets continue to grow, and they're expected to roughly double by the end of 2028. So this very, very strong market demand behind us. People are putting more and more applications online, and those are becoming more critical and they need protection. And we, with a very strong platform are standing to deliver that.

So our platform is protecting any type of application. It can be a web application, it can be a mobile application, it can be an API application. And as all of us are hearing in recent weeks and months as it can be also an AI agent, and we'll talk about it.

So any type of application that can reside anywhere. We are indifferent if the application runs in public cloud, Azure, AWS, GCP or in private cloud, legacy, Kubernetes, wherever it runs, we can protect it against a whole set of attacks. And what you're seeing here is all kinds of families of attacks that hackers can take advantage of to bring the application down to target the confidentiality, integrity of our applications.

How do we do that? That's very important. We built one, one fully integrated, comprehensive platform. This is not a platform that we stitched from 10, 15 acquisitions. This is something built from the ground up to serve the protection of mission-critical applications. And over the last two years, and David Aviv in his presentation, is going to talk about what we've done with AI, we weaved in to each and every model, a lot of AI protection capabilities to make the platform even stronger.

The strength of this platform is resulting in major wins at the very high end of the market. And you can see in this slide, we are serving 9 out of the 10 top carriers. For example, 4 out of the 10 big SaaS companies in the world. One of them was a new customer for us. We just won second half of 2025 in North America. So we continue here to expand and people recognize the leadership we have in the solution. And you can see some of our large references below: Salesforce, Cisco, eBay and so on.

So let's now go deeper into the platform and the way we look on the growth and the market going forward. Connie is going to mention that and explain it in more details, but we are seeing 4 waves of growth. If you think where Radware is generating today the business, it's in the DDoS in the app, it's what we call the web economy. What do we mean by web economy? People were digitizing their business. They were putting web applications online and those need protection. This is where the business is today, and we believe we can continue to grow and foster here.

But in recent years, people started to use the application economy. I'm talking about application to application information. I'm talking about APIs, and that's another wave of potential growth because that needs to be secured as well.

And last but not least, the AI economy, the agent economy, how AI agents are going to function and deliver productivity, commerce, et cetera. And we are going to share both on the product side and on the trend side, what are we seeing there?

So we're seeing 4 potential growth drivers for us. And let's now dive into the third one, the API security. So this is a fast-growing market now. It's becoming a $1 billion market this year, growing 30% CAGR. So very promising. And it's really in the large enterprise, we see 2026 and 2027 as a peak year of decision-making and consumption. So we are really at the right time for that.

We've built and released just short of two months ago, a very, very strong API security solution, very comprehensive. And we've topped it with the acquisition of Pynt that adds to us this API testing for preproduction. So today, we have a very wide and strong and we'll share more details about that API security solution. And we strongly believe we can participate very well in this new [ time ] and some for us.

As we go forward, we also prepared ourselves for the agentic AI security. And I will not share tons of additional market statistics on AI, you're probably overwhelmed by now with that. But it's clear that AI agents or agentic AI is going to be used heavily by enterprises to automate processes, to improve productivity, customer service, acceleration, business demand and so.

What you're going to see is that with these great outcomes or great potential, you're getting also a huge amount of possible threats and attacks that are very real and very risky. Hence, there's a clear need to secure those agentic AI and the attacks are completely different from attacks we've seen until today.

So there's a new market for AI cybersecurity. You can see the TAM by Gartner, the numbers are mind boggling. You're talking $170 billion at 2029. For a company like Radware, that's more than an ocean, it's a whole galaxy of potential.

What AI means to Radware or why do we think AI is an amazing opportunity for our company? For some companies, AI can be a tremendous risk. For us, it's a major upside. And there's 3 areas I want to highlight to you. First, with all this AI technology it's not only serving the good guys. Also, the bad guys took notice, which means AI allows them to create faster, better, stronger, more scalable attacks in very, very quick time. So for that, our customers, for their regular applications, forget agentic AI and API, for their regular applications, they need better security. That creates demand for cybersecurity platforms like us. It's going to -- there's going to be a clear differentiation between platforms that can do it and platforms that cannot protect in real time. You'll hear from David about our algorithm's strength. We're definitely ones that can do it. That's a tailwind of demand for our cybersecurity platforms.

The second point is that, and I've mentioned it on the platform, we've weaved in Gen AI and AI algorithms to our platforms to make it better. So making use of AI across an AI agents across our operations to make it faster. You'll hear it even on the gross margin from Guy to make it more cost effective. So high use of AI. This we call Protect with AI. We are utilizing AI to do better protection.

And the biggest potential from revenues and impact is the agentic AI. Those agents need protection. They need cybersecurity. And we just released two new offerings, the Protect AI to protect those agents and Serve AI to allow our enterprise customers to serve consumers that are coming with AI agents and not mistakenly, thinking they are automated bots that needs to be blocked. So this is both on the enablement and in the protection. So all in all, AI for us is a great opportunity. And with the new products we've launched just two weeks ago, we are heavily addressing and targeting this opportunity.

Now let's go into the cloud security performance by itself. This is our main growth driver, and I think it's executing very well. Not only that we're scaling, we're actually accelerating the growth. Last year, we increased growth rates from 19% to 23%. And as we shared, we are targeting 25% at least. The potential is there. We have a very strong solution. I'll just cover at a high level. Our technology stack there, we are executing extremely well for our customers, the outcomes, our ability to protect in real time is at the highest point in the market. So definitely, we're seeing that as a continued growth driver.

To that, which is today, again, centered on this web economy, the [ uptick ] and the DDoS, we're adding the API security and the AI security. And that's why we feel also the TAM and [ some ] expansion give us more tailwind behind these growth rates for the coming years. And to execute that, you're seeing us and we are releasing every time more and more data centers we're opening across the world. And if you ask yourself, okay, why are they continue to do so? It's because we want to get closer to more customers. There's a lot of data [ severnity ] issues in the world. If I'm a bank in Singapore, I'm not allowed to ship my traffic to Thailand or to Hong Kong. I want to be served from Singapore. There's performance considerations that are secondary, there's compliance and so on.

So we're opening and building the global infrastructure. I told you we're already at 65 nodes, so we are -- we have a very nice infrastructure, but we are continuing to build and scale this global infrastructure. And all of that together, we feel is a very good starting point to continued growth in the cloud era.

Beyond this growth driver that, as I said, we feel very strongly about it. We're starting to see also very good outcomes from our on-demand, on-premise appliance business. And the things we've done with this on-prem DDoS mitigation, which we call DefensePro X that I'm going to highlight are driving significant subscription growth. On the product side, [ Liver site cloud ], now we're talking product subscriptions, we're seeing very good outcomes there.

The DefensePro X is unique in the market because we're controlling in DDoS, we're controlling the full stack. We are the ones that are developing the FPGAs, we're developing the hardware, the software, the algorithms, the management platform, the orchestration and the cloud solution. There's no one else in the market that does all of that. We are unique in our capability. And that allows us, with the algorithmic-first approach, hardware investment in cloud to be, by far, the leader in the hybrid cloud DDoS market. So when customers are aiming really high to the very most advanced solutions, more sophisticated outcomes in DDoS, it's our opportunity to lose.

In the DefensePro X, the new generation of DefensePro, we've put a lot more subscription content than in previous generations. So a customer that migrates from a DefensePro 8 to a DefensePro 10, even for the same amount of total dollars will have more subscription content. And sometimes the whole solution will be sold a subscription. But beyond that, all the advanced feature set, application protection, network protection management are all sold as annual subscriptions. We're seeing now the impact of that, especially that we have now the tailwind of the end of sale announcements on DefensePro 8. So customers need to migrate when they upgrade with us, we immediately see that. And also new wins like I mentioned to you, the SaaS, global SaaS providers, does immediate contribution to our subscription.

The end result, and we've published it in Q4, our total subscription business, our total ARR and revenues here is growing now 21%. So you already know, cloud ARR is growing 23%. The total growing 21% product subscription are growing strong double digit. We are very excited by that. We think we can continue with that. It's a very, very important point. And I think a second growth driver that drives the overall subscription of the company go-to-market.

We're going to discuss today several core concepts of our go-to-market strategy. First, Randy, in his presentation is going to cover what we're doing in North America, what we've done, what are the outcomes we've seen, what's our plan going forward. And then David Roth is going to share two global initiatives. One is the OEM, give a bit more insight of the trends we're seeing there and the MSSPs. We believe MSSPs are a great way for us to expand to the mid-market. So are OEMs, but MSSPs even more. As a company, our direct touch is focused on the very large enterprises and we mentioned that. We don't have the resources or the scale to go mid-market. But with MSSPs, we can, and we're going to share more details on our plan, our traction, our results in the market. We're very excited by that. So within go to market, it's all about executing more with what we have, executing better, accelerating the growth and opening new ways to market to scale through the mid-market.

And all of that, if you capture everything I told you and where the company is today already with 11% ARR growth, 10% growth year-over-year, and all the investments we've done, I think it prepares us very well for the future. If you take the 25% CAGR on cloud, and Guy will cover it in detail in his presentation and play it out, that drags by itself without any additional assumptions, the ARR growth to 15% and our total revenue by year 2030 to $500 million. We're planning to achieve that and with strong profitability and cash flow like we always executed.

So to summarize my opening presentation, we are a cloud-first cybersecurity company. We're very unique in the strength of our platform and the expansion we are doing now into API and AI security with huge potential. Our cloud business is accelerating at scale. We're at $100 million, and we continue to forecast 25% ARR growth. With that, we're starting to enjoy the on-prem business subscription growth that together are driving the total subscription of the company to be above 20% growth rate. In the go-to-market, we are heavily investing in North America and broadening to the mid-market through MSSPs. And all of that will allow us to sustain double-digit growth for the coming years.

So thanks for attending. and I would like to ask Connie, our Chief Growth Officer, to take it from here.

Thank you, Roy. All right. Let's flip here. Hard act to follow, guy has a lot more experience at Radware than I do. I'm in month 11 so that will give you a comparison point. I've known Roy actually for about 6 years. He checked in with me annually over those 6 years to say, "Are you ready to come to work with Radware yet?" But if you go check me out on LinkedIn, you'll see two things: an AI-generated headshot which demonstrates we're all using AI now and you'll also see a long career in startups. I was a growth stage start-up hound. I've been at companies that have scaled from 0 to $100 million in ARR. I've been in companies that have scaled from [ 0 to 64 ] and have gone through a few successful acquisitions.

So in order for me to make the decision to join my first public company, which was a big leap for me, I talked to Roy about my role, like "Roy, are you really serious about hyper accelerating the growth of this company?" and he said, "Connie, I am very serious about it. We're doing some pretty cool things, and I think you can help us."

So he said, "Come on in and join us", and this is what I'm going to be doing. I care so much about growth, I insisted. I don't want a CMO title, I'm your Chief Growth Officer. I'm going to collaborate really closely with you, Roy. All the executive leadership team, everybody in the business, our board to be able to build meaningful strategic vision for the business.

But I absolutely will run marketing because I think I love that saying, "Vision without execution is hallucination." Owning the marketing team, owning the sales development group, I own top of funnel, right? I've got to make sure that these visionary strategies work and can be executed, can turn into sales motions for those two gentlemen in North America and around the world. And I'm going to introduce them in a moment.

So it was a big deal for me to leap into a public company, and I'm thrilled to be here. My first 11 months have been fantastic. I can tell you, I've probably joined the most startup-like public company I could ever imagine. We are -- we operate like a startup, which is fabulous.

So when I joined the business, I thought, "Okay, big task ahead of me, how are we going to develop a great growth strategy for Radware?" So I thought "Two things you need to understand, Connie", you need to understand the market, what is happening in the market today. And the second thing I need to understand is how do we evaluate all the options for growth that we have, right? Because sometimes it's easier, frankly, to do too much, right, and try to boil the ocean, but I wanted to focus, and I'll talk to you about how we're doing that in a moment.

So Roy said I will introduce this slide as well, he introduced it, I'll tell you a little bit more about how we think about it. I think about these waves of market disruption that have happened and how well positioned Radware is to take advantage of those.

The web economy, the app economy and the agent economy. They're all running in parallel today. There are companies out there that still run fairly traditional websites, they still matter. They care deeply about DDoS. They care about being protected against that. They care deeply about their application security and being protected. Radware is there.

We also have an emergent app economy, as you guys all know, in the early, whatever, 2010, let's say, there was a shift in software development to APIs, right? So that software could talk to software even if you didn't build that software. And that opened up a massive threat surface and we're there too. Roy talked about our relaunch effectively of our API security solution in the fall. But we've had API security, pieces of that solution for a few years now, and we have customers that are using it effectively. But we are excited about what we're going to bring to market with our full suite, and we'll talk about that in a moment as well.

And then the agent economy, I have to tell you, this is the piece that I'm so excited about. And Roy, honestly, he tempered all of us in our preparation meetings for this session today. He said, "Guys, don't go too focused on AI because we do so much more. You've got to be able to make sure everybody knows we're not abandoning our heritage and our legacy and all those customers that count on us to help them thrive in the web economy, in the application economy and now in the agent economy." So we're not going to overfocus there but I can tell you, I'm truly excited about this. We'll talk about a little more.

So the second thing, I see a few people out here that are about as old as me. So maybe you remember the Ansoff matrix from business school. I need to understand what's happening in the market, we just discussed that. I also need to understand how do I filter through all these growth opportunities and decide what are we going to focus on, right? What am I going to work with Randy most closely on in North America? What's going to resonate here? For Dave and Rest of World and so on.

So this was a good framework for me to evaluate these opportunities. And I'm going to double-click and dive down into all of those. For people who aren't familiar with Ansoff, it's basically focused on the products and services solutions you're selling into the markets you sell to, right? And that's essentially what I was -- a great framework for how to think about growth strategies.

So if we double-click here on we want to be able to penetrate further existing markets that we're already in. North America is a great example of that and with the products that we already have. As Roy said, right, yes, API is here, and it's exciting and yes, AI is coming, but we have a great solution indeed, cloud, AppSec and even our on-premise subscription solutions as well.

So we decided on our North America double down. I hope everybody is excited to hear that because some of the feedback that I've gotten from customers and prospects in the past is, "Connie we're concerned, is Radware committed to the U.S. market?" You bet. We've never not been committed to the U.S. market, but we're going to demonstrate that. And of course, being a marketer, I call it, there is a double down, or I would say, a triple down that's happening in North America. I'm not going to steal all of Randy's thunder because he has a deeper dive on that. But I am going to talk about a couple of points.

And then competitive displacement. When you're talking about penetrating a market with existing products and solutions in a market that's fairly saturated, you guys all know, many of the opportunities we're walking into from a sales perspective are -- it's a displacement decision, right? They're making a decision potentially to leave one of our major competitors. So we have to have aggressive sales motions aligned with those refresh cycles, and we do have those. We have -- we make superior product features are why people are coming to us, right? Some of the new stuff that we're introducing, the integration of an API solution into the Radware platform is very exciting to the market. We also have switching incentives. We want to take down those barriers to exit. And sometimes, if you're not right at the end of your license for a particular product or solution, we might help you coax that, move away from them faster with some incentives.

So this is what we're focused on. North America double down here is where I will introduce Randy Wood. Randy joined the company in July 2024. So he predated me, he's SVP of Sales in North America. He has done tremendous work. I'll let him tell you all about it. I obviously joined in March 2025 and I'm on month 11. That's my AI-generated headshot. And Chief Growth Officer, and as I said, work on strategy as well as run the marketing and the sales development team. And David Roth I used to be the newest, but now he's the newest. David just joined us in July in time to literally go -- or sorry, January in time to really travel around the world and hit all our scope, so he's going to share his insights there.

We want -- we're here, we're in this [ geo ], we're in North America. I'm north of Boston, Randy's in Virginia, David's in Dallas. So we are definitely focused on this market. We know in order for Radware to win big, we've got to win in North America, and Randy and David are going to tell you how we're doing that.

So our game-changing platform, I don't think we spend enough time talking about this, I say, to Roy. Sometimes, one of my most important stakeholders inside the company, right? And you might hear a lot of language about the Radware portal, the portal. It's a platform. We have got to start to say that loud and proud. We have an incredible platform, and it is one that has been built on a long legacy and knowledge of unique features for us, right? David, I can take no credit, David Aviv can. He's been the CTO for years.

We have been using AI since before it was called AI, right? We were one of the first companies to introduce machine learning and algorithms and behavior-based detection to neutralize threats in real time. We have a predictive engine, right? We are using, again, very sophisticated algorithms to be able to understand is this a risk and help you take care of it quickly. [ Anti-fragile ]. This is a system that learns and gets better. It doesn't get stuck in the past. It doesn't rely exclusively on signatures and that sort of stuff. It gets smarter every time and all that knowledge gets spread across all our customers. And we're covering all enforcement points, as Roy said, network application, API across cloud and on-prem. So all those components and where we can actually secure are very -- they're still important. All those aspects are important for us, and they will continue to be.

So let's move to product development. And here, we're talking about existing markets and new products that we've introduced or better described as new modules to the platform. So I'm going to talk to you guys a little bit about API security, a little deeper than Roy spoke of. EPIC-AI, the introduction that we made predated me again, that was in the 2024 time line, AI SOC X and AI DOC X and why these are important. They're important, number one, because we're sending a signal to every one of our customers. We're continuing to develop features and modules for you that matter, right? And that make a difference to your security posture and improve your protection. API security, complete solution for API testing to run time security. There are lots of API security, well not actually, there's a few on the market today. We believe ours is the most complete, particularly with the addition of the Pynt acquisition for API security testing. You will be able to test APIs before you push them live and then actually watch, observe in run time and be able to make sure you're protected against any threats to your APIs at that point as well.

AI SOC X, this is -- apologies, that is my responsibility, that typo. It's essentially copilot for your SOC analysts. We all know SOC analysts are very, very busy. They're always -- they're called upon to do a lot. They get buried in a lot of noise. So they're trying to say, "What is the signal?" AI SOC X helps them figure out what the signal is, and it really is -- they have a co-pilot that will allow them to do investigations faster and really reduce their mean time to resolution, which is what it's all about from a security perspective.

AI DOC X, this one -- it's one of those things like we're like, okay, we can make our customers' lives easier by building essentially an LLM of all our materials around configuration of our platform and all of the modules and solutions. We thought this is easy for us to do. Let's get that done. Customers love it. they're like, "Wow, this is incredible." I can find an easy way to understand the configuration of my WAF or what I should be doing with my API solution. So it really is -- this is a knowledge base, model on top, easy way to get quick answers, good answers to the questions you may have about configuring the platform.

And then we come to market development. Now market development here. I'm not talking about moving into another region of the globe. We're everywhere. We're in the largest economies around the world. So when I think about markets, I think about new opportunities to sell through. So here, we talk about OEM with Cisco and Check Point. David, again, not going to steal your thunder, he's going to dive into those.

I will spend a little bit more time though on the MSSP market. Roy mentioned that. Now this, again, predates me, that was a focused market that we wanted to get into a few -- at least a couple of years ago, and we have done that. And what that allows us to do is bring our solution to even more and more customers, right? We're only going to hire so many salespeople, and this gives us a lot more essentially sellers on the street. So we're very focused on MSSP. We've done a great job. We've also introduced new features and functions. And I think Randy or David is going to talk -- Dave is going to talk about those as well. So I'll just dive in here.

We're making news with this program. We are landing MSSPs around the world. David is going to talk about SPARK in New Zealand. I'm going to show you a video in a moment for MAIRE, our MSSP partner, in Milan, Italy. They're probably enjoying the Olympics right now, which is nice. But we're making really good headway really good progress here. And essentially, it is a force multiplier. And I said, I can tell you all about it or I can let one of our MSSP partners tell you about it.

[Presentation]

These kinds of customer testimonials and case studies are so valuable, and it's hard to get -- security people just don't want to target on the back. They don't want to talk about the solutions they use, but this is absolutely fantastic when we can get one of our MSSP partners out there and probably say, it's Radware. These are solutions we chose. We're going to bring them to our customer base because they offer superior protections.

All right. Next up, where I am definitely most excited is really around the diversification opportunity we have given this -- it's not a wave. Agentic security is a tsunami. I think we all know it. I don't want to pour it on too thick because any meeting you're in like this, you're going to hear about AI if any of you are planning to go to RSA security conference in a couple of weeks in San Francisco, you're going to see AI and -- [indiscernible] it is, it's that big a wave, and it is very exciting.

As Roy said, it's -- the CAGR is incredible. I actually think right now, Gartner is -- these are impressive numbers. One would argue they're underestimating. I will argue they're underestimating and I'll tell you why in a moment, but I'll plant a little seed about serving AI.

So what are we doing on diversification? And when I joined the business, we had kind of an informal tiger team on AI thinking about it and what should we do. I formalize that Tiger team, and we dove in. I worked very closely with David and Roy and a full team, cross-functional team across the business, including our sales leaders and so on and said, "Okay, where do we think the opportunities are in the market?" This is not rocket science to anybody. We saw a lot of our customers and prospects are having conversations with us about LLMs. They were building their own LLMs or using off-the-shelf L&Ms, be it the ones from OpenAI or Google or whatever.

So they have LLMs that they need to protect and we built that protection. We obviously have been in the lab space for a while. So firewalls are good for us. We know them. And this was a solution that we put into market relatively quickly. And it is available now, again, as an add-on to our Cloud app complete license.

Radware agentic protection. This is really an industry-first solution. I won't steal my own thunder because I have a slide, we'll go into that. And then bot management, Again, this is on the Serve AI side that we're going to talk about and why I think Gartner may be even underestimating AI security spend.

When I think about this and how we are formulating our thoughts to the market, right? When we're talking to customers and prospects, this is how we're framing it up for them. In the web and app economy, every one of our customers wants to know we as their partner, right, as a technology vendor are leveraging AI in our own solutions. Now hopefully, I've illustrated to you, yes, we are. AI SOC X., AI DOC X as well as Epic-AI, right? We've taken and put an AI wrapper around all of Radware's platform. So we are definitely leveraging AI.

In the agent economy, we know our customers want to use LLMs. They want to use agents in their own environments. They want to streamline workflows, they want to save money. We all see it in the news, right? When somebody probably says, "Hey, I cut my software engineering group in half." or "Hey, I used to have 10,000 agents in my call center, right now I have 5,000 because we're so effectively using these AI agents." And this is where protecting AI, LLM models and agents -- this is a solution that allows our customers to leverage that new technology securely, right? Use the LLM, use the agents but do it securely.

And then Serve AI, this is really exciting, and I think David's going to talk about OpenClaw. Show of hands, anybody here know about OpenClaw, recently, this new agent that went viral? A couple of hands excellent, OpenClaw. This is a consumer-facing agent. This has been built as an open source project, their desire is to get every one of you and me and everyone in this room using it to go take care of all the mundane tasks we don't want to do: shopping, online, booking, travel, whatever you might want to do, that's what they want to do. Our customers, eBay in particular, one of our publicly-disclosed customers, they are very concerned about this. As people start to use autonomous agents to go out and do tasks on their behalf, they want to make sure that these are not malicious. Just as with their [ traffic with bot ], and this is why again falls into Radware's sweet spots. They want to make sure this is legitimate agent traffic and we provide a solution for that. So we want to allow our customers to serve AI. There's a lot of cybersecurity companies in the market today that are focused on block, binary decision, block them. Don't let them on some of our major competitors are like, don't let AI crawlers come to your website and so on. There are going to be losers in the future if that's the strategy that they use, right? You're going to have to welcome these agents into your environment and serve them, make sure they can complete their tasks in order to drive your own sales and your own revenues.

So this is kind of how we're framing it up when we're talking to prospects and customers about the Radware solutions, which buckets they fit into and what is the business value they enable for our customers. Now again, I told you, you're going to hear AI a lot, if you feel -- hear about it all the time, why are we different? And why do we think we're positioned to win here. Most of the security solutions that you're going to see in the market today around AI, including, by the way, all the security built by the major providers of the models and agents, OpenAI, Google Gemini, Microsoft CoPilot and so on. They're guardrails-based and guardrails are very, very good. But you have to know what bad thing is going to happen for a guardrail to be effective, right? These are rules and policies. So as I said, this is the known. We have behavioral classifiers. This is patent-pending technology David and his team have developed in order for us to supplement guardrails, again, not saying they're not important, they are, but we supplement that with behavioral classifications that allow you to be secured against the unknowns. Was it Donald Rumsfeld, the unknown unknowns? Well, Radware, known unknowns. We're going to help people do that. This is the key differentiator for us.

All right. I'm probably going [ along ]. I apologize. I wanted to reiterate for everybody in the room, Radware innovation has been at the core of this business since the beginning of time. I mean even way back here, behavioral DDoS protection, Radware was forced to bring that to market, right? This whole idea of using machine learning and algorithms in order to help and protect against denial service attacks. I'm not going to go through everything, but I will point to Agentic protection, API security and our bot management, the Serve AI components that are coming. I don't think, frankly, the company gets enough credit for this, [ the first time ]. I don't think we've gotten enough credit for moving to the cloud, but that's just me, but I'm a new public company, girls.

All righty. This is our goal, and it's my goal right now just because of the fact that Radware is a 30-year-old company, you get stuck with that legacy tag, right? And this is really where my marketing -- I've got to flex that marketing muscle for sure because I got to get rid of that. I've got to be able to get few people focused on the innovation that we've had since day 1 in the business and have people think about Radware. And when they think about innovation, growth, entrepreneurship, revolutionary markets, I want them to think about Radware. So that's what I'm going to be doing. You'll see more announcements from us in the future regarding messaging, branding and that sort of stuff. Lots of cool stuff coming. Hopefully, you enjoy the presentation. Thank you.

Up next, David Aviv. My buddy at Radware. Thank you.

Hi, everyone. Good morning. Okay. So let's talk a little bit about the innovation to meet the disruption that is happening now in the market. So I'm sure you have seen this slide a couple of times today, so what I would like to do is to share and tell our story the way we evolve our products and solutions to lead in the current waves in the upcoming AI and the agent-driven world. It's going to be a big change. Soon but not soon, it's coming.

So let's start [ forward ] with that. My role is to incubate innovations to support the growth. Out of the entire piece that I'm going to talk today, I would like you to remember those three things. Only three things: Security leadership, cloud-first delivery and AI agentic security readiness. Only these three things, elaborate a little bit. Radware culture and DNA, I'll go in first. Connie mentioned it, Roy mentioned it. Many years ago, we baked machine learning in the product line.

So obviously, you know the machine learning, the early generation of AI and generative AI, very natural to run, and we'll see the results later on when we'll talk on AI. With that, we were able to bake and launch a behavioral, best-of-breed product line. So we consider the entire product line, the DDoS, the WAF, the bot manager and now the new baby, the API, best-of-breed. Now that we tell it to ourselves, customer will tell it. You will see some of the reasons for that.

Then obviously, with that building the best-of-breed, of which layer, we built a complete security stack. Now how do you package a stack? Through a cloud delivery, cloud motions, but not only the cloud, the cloud motion, the premise motion and very important the hybrid ones. Combined both the premise. And the premise gets more and more, it's a sign with [ history ]. Now premise becomes more popular because of the AI data center, et cetera. So by that, I can tell you that we are very confident when we say and we tell the market, we are ready to move to the next wave, which is the AI disruption. The next 15 minutes, you will see why we are very confident when we say that. So we're humble, but confident what we said. And that's -- and once again, provide, serving and protecting agents and much more dramatically everywhere, it doesn't matter where, which platform you're running.

So remember those three of the other key things, the key takeaways I would like you to get today. So let's dig a little bit into the security leadership. We have already discussed the algorithm first. And once again, you don't -- our customers have been enjoying the [indiscernible] technology 15 years ago baked into the DefensePro. So every DefensePro generation used 15 years ago, machine learning. As simple as it is, that technology wasn't [ plunged ] because it's a machine learning because it simply enable us to see things. No other competitor could see, could detect and amplify attacks, that are beyond the radar, below the radar noise. Very simply. And with that, we have evolved into building more and more detection and mitigation algorithms on top of it. So this is straightforward for us.

Obviously, Roy mentioned as well, On-prem leadership. On-prem leadership means that we provide today, we believe the best and actually the only DDoS hybrid solution in the market. Hybrid enabled and powered by a new generation of the FPGA scalable platform. So we have both the platform for the customer that require those ones and part was those algorithms at the premise, the cloud and the hybrid itself.

And next, the best of suite cloud platform. So I'd like to park little bit on that service portfolio and the entire stack, we have a full stack. The first time, we can say with an entire full stack starting from DDoS, when we say DDoS not only network expanded to application DDoS by far more important today in the sense of running against the APIs and any site outside. And you can see through the bot client side protection, enable you to simply protect yourself from third parties that are connected natively to the application back end, to the service back end, the web application firewall. Account takeover, we have already capital account takeover, which is one of the most vicious attacks today in which we try to actually take over the crown jewels of someone by manipulating it's credentials. And obviously, the new baby, API. With that, we have a full stack and it's empowered by AI.

So I'll give you just an example, one of the things that AI -- what does it mean powered by AI. When you run large customers, which has many, many applications, many endpoints you run, let's say, a web application firewall, you should have a rule-based. Rule-based create noise Why? Because the application chain themself. The customer don't have enough manpower start all the day and change rules on a daily basis, impossible, the results after a time, the rules are not tuned to the real use of the application. The noise, the false positive [ get ]. So we designed an autonomous agent, AI agents, looks on the security event, monitor them, understands and figures out automatically, hey, what kind of rules needs to be tuned, does the calculation, the algorithmical collection, provide their understanding the reasoning and provide recommendation automatically how to tune automatically the filters to reduce the noise, the false-positive noise. So we can now provide a huge business value, scale, provide scalable solutions to the customer with guaranteed SLA because what the -- what really matters to the customer, can you guarantee throughout the operation? My SLA. So I can slip quietly. That's the most important thing.

So that's just one example of the usage of the way we power our conjuration with AI. Connie mentioned, the SOC X, Connie mentioned also the DOC X . There are many, many things we don't want to overwhelm you, but that's part of making the cloud faster, smarter, better. And most important now also streamlining it for service excellence and customer experience. Very important automated process for service excellence, adding brains, basically the SOC X contract is adding a brain and subject matter expert brand like I showed you. You can see the screen what I described before, the way that does the auto policy generates a [ reduction ] is done automatically. Customer can come in, [indiscernible] accounting, hit the button and apply the rules inside. So that's better, smarter cloud with service excellence and customer experience motions.

So with that, we're adding a new model. So as we mentioned before, we had API, not a full suite. So why does it matter? Because you can see by the numbers now, the API growth outpaces the entire risk. Everyone uses API and let me tell you a small [indiscernible]. When you use AI, AI below runs APIs. So there will be acceleration of that by the usage of AI as well. The most important [indiscernible] application, but much more dramatically. API is changing API changes on a daily basis. weekly basis, daily basis, depending on the application itself. Once again, how do you cope with it? How do we provide a solution? How do you measure the risk? For that, we decided to move the completely new leading end-to-end API security suite. And with the newest acquisition of Pynt, we completed the entire API delivery pipeline. So we are supporting now the APIs, what we call the shift left from the build time when you start building them, designing them up to the run time, the shift right. So it provides now a full control on the API pipeline, testing, providing the build there, the application builder, feedback. Continuous discovery and reacting to the changes of the application. Every couple of hours, boom. We are launching the new discovery, we understand what are the changes. Based on that, we build the risk posture. Risk means proactive attribute. We are proactively alarming you guys, there is a risk here, either you patch it. If not, we can patch for you in the cloud, certain things, not everything. More dramatically, the real change is in the run time protection, the business logic. Think of the business logic. This is where the real attackers are going because they are hunting your crown jewels, hunting the real secrets of the enterprise. How? They simply manipulate credentials, they manipulate the credentials, tokens, whatever, identities. And by that, they are able to get into the crown jewels, very tough because it's -- I would say, quite a complicated security algorithm. So that's why we came up with now an end-to-end suite, which is adding a new model to the entire platform. And now we can say that we have an end-to-end full stack application security stack.

So now we are coming to the real stuff, the new stuff. As a CTO, I'm excited, obviously, on that and Roy warned me not to talk too much on that. So -- it's okay. But really, we have invested a lot in the application security, network security. So think of everything a company with the cloud delivery that we have now net security, application security and AI security, all the 3 layers together.

So let's go on that one. On the AI agent driven. Agent economy. Agents are building the new world, connected to anything you can think of, and you know the recent what is happening to the SaaS company because of that. But the most important time, I think, is that enterprise agents are here and to grow dramatically probably.

Now Connie also mentioned the open source of [ agentic ] fabric. It's likely a consumer. This is the lobster moment called in [indiscernible] design of OpenClaw is a lobster. So it's a lobster moment coming to the industry. It's very important because it's going to change anything. We don't have the time to deal with it. But think of just that agents are starting to talk to each other through communication through human communication channels, Slack, WhatApp, agent talks to an agent, open up its social network then start up a huge amount.

Most important thing for us, Gartner launched end of January, it's two weeks ago, a warning with agentic productivity comes with unacceptable cybersecurity risk. Very simple. Let's translate it. But before translating it, let's understand why. Those are injections part of the ecosystem that you don't know about. They don't exist and why? Regular application -- [ application mode ] in order to do an injection, you need to be a coder, a programmer. You need to understand. So you need to understand how to inject the [indiscernible]. So it will do the injection, divert the query. Here, with LLM, with natural language injection, the software programmer is the English guys, the English language becomes the program, which means the collapse boundaries between natural languages and instructions, these are those -- this is the main risk, collapse boundary, English, Chinese, Hebrew, French, whatever language is instruction. Why? We demonstrate and we'll see in a second that I can run white letters on a white background, human won't be able to see it, LLM machine will see it and do the instruction, obey the instructions, very simple.

It means that when we go to the agentic era, the risks are expanding exponentially, actually hyper exponentially every e-mail, every resource, every message, anything can be an attack payload. Very simple.

So let's demonstrate it. In Radware, we understood way back then -- I would say, I must admit we couldn't even estimate the growth and exposure, but we establish a security team dedicated for hunting those kinds of attacks. So first of all, we are now at the forefront of the research. Why? That's why, remember, I told you at the beginning, I feel very confident Radware moving from our current wave into the AI area, not just Bla Bla but real, real research backed by product and by attacks. So in June -- 18 of June '25, we attacked OpenAI, attacked OpenAI deep research agent. We are talking of the most graded agent in the world today, OpenAI. By third of September, they acknowledged and we discovered, we are not the only one to discover that new line, zero click attacks, indirect prompt injection, [ a family ], which [ leads translate ] into zero click attacks, zero click means. You are not aware of anything. You don't click on anything, and whoop, everyone steals your most important data. It's stolen not from your pocket from the credit card pocket. Think of that from the LLM provider. You don't know even. Completely silent. We demonstrated it at DLP. We called it shadow leak, its' at the news, Bloomberg, everyone, part of it.

So third of September, OpenAI admitted, corrected, told the world, "We fixed. New guardrails, behavioral guardrails, nobody can bypass." Well, the proof that guardrails are not enough, took us, the research team, 3 weeks. We breached and bypassed all guardrails of OpenAI. Guys, we are talking not on -- we are talking about OpenAI. It's really -- this is I would say, the most important, the most protected environment. So again, we bypassed it. Third of September, 26 of September and OpenAI fixed it in 16th of December. But this time, we took another step. Another step is the proof point for unacceptable cyber risk is done by a new attack called [ Zombie agent ] and that attack, much, much more dangerous than just DLP, we simply took over OpenAI environment by installing commands, malicious command, control commands into their agent, into the memory of the agent, which made the attack persistent attack. Remember the APT? Same APT, persistent attacks. Whenever we want, we can take over. This is a totally different generation of attacks of capabilities, which were demonstrated by us, by Radware. So that obviously amplifies the guardrail warning with productivity comes unacceptable cyber risk, which makes us a [ trapper ]. And that's why I'm saying with confidence because of the reserves that we have done to move from DDoS, application security, AI security. So it was not only manifested in research. We understood that the new AI agent risk require a completely new attitude, a new solution, a new approach, actually, and we went after that approach.

So I think you saw from Connie already. We are moving after two areas. I will start with Serve AI many -- but simply [ mechanize ] very, very simple. Internet was designed for human. Web was designed for human and the web protocol is for human browsing the. By the end of the year, this year, 60%, 70% of the traffic will be generated, automated traffic generated by agents that are coming to shop, to browse, to crawl. So the Internet is changing, is adding a new frontier, not only serving human but serving agents.

This week, there's an anecdote, Google announced WebMCP. I'm not going into that, but basically, it to serve agents. Well, if you serve agents, you need to protect against it because the agent can be malicious or legit. How do you know? You cannot do the Turing machine, the Turing test between human and agents it's now with an agent and an agent, how do we know? We know by understanding who you are, what is your intent and how do you behave? Once again, behavioral versus intent. It's totally different playground, I'm not going into that, but this is exactly the AI agent access control, the survey.

The other part is the agentive protection. Once again, we are running AI agent. We need to protect as we say. And I think you saw it, I would like to go a little bit. This is exactly a new paradigm. Where we understood guardrails are essential and not enough. We demonstrated it. Over and over again, by the way, we didn't breach only OpenAI. There's another announcement to another guerilla that we reached. And with our penetration of techniques, new techniques, I think we can breach most of them. We have the understanding on how to do. And with that understanding, we designed the second pillar, the [ BFL ] classifier and this is the differentiation. You have the [ no-no ], they're rule-based. And by the way, the rule-based brings us back 30 years ago, the early days of the firewalls. Basically, it's a firewall. But in this way, you cannot [ manage ] so many firewalls anywhere. You don't know how to program them all the time. And basically, are looking on the new -- what you know and what we know is changing on literally a daily basis. What we know, problem is what we don't know. That's why the second pillar is coming is totally driven, outcome driven. I'm not growing but think of. I need to understand what is the outcome of the agent, not it's input and output. That only thing I can say. We have multiple patents on that, proven to show those kind of defeating the silent attacks. Those are the critical things here. Those silent attack that I've -- that you saw before. Solution is designed to be platform agnostic, can run it anywhere simply runs on the API from the platform. Customers will have multiple platforms. So we support today Microsoft CoPilot, Foundry Studio, AWS Bedrock, home-grown agents. And with more customers, the support will expand. So the key here to see, to remember in this one, it's a solution which is platform agnostic. It has a behavioral piece for the silent attack. Once again, like 18 years ago, the first generation of pathologic engines that could detect and understand the attack that no other one could see that phase, that second layer is designed to do that in the AI space, the same culture, the same DNA with small [ gray error ]. There, That's it. But the idea -- this is the culture, the traditional of Radware and that's why we are prepared to the next generation.

So once again, the 3 pillars. I'm going back to the 3 pillars. The 3 things I wanted you to remember the security leadership, which is actually translated now into the Agentic as well, the [ cloud first ] and the fact that we have a full force innovation power right now unleashed in order positioned to lead the new cyber wave.

With that, thank you very much.

[Break]

All right. Welcome back, everybody. As you heard from Roy, from Connie, from David, this has been kind of teed up about the company's direction, what we're doing, how we're executing with the technology. Now Randy and I get the chance to kind of walk you through the go-to-market strategy. Before we do, why don't we do quick intros, Randy, you can go first.

Sure. Good morning. My name is Randy Wood, as previously introduced. I am in my 19th month at Radware, running North American sales. I'm from Northern Virginia. Prior to Radware, I spent 5 years at Akamai, running the North American business, parts of that business and ultimately the North American business. And I've got tours of duty, two tours of duty at Cisco Systems, totaling 13 years, F5, Red Hat, Symantec. I was the last Veritas employee ever hired before Symantec gobbled Veritas up, if you remember that catastrophe. And I've done a few start-ups along the way.

So excited to talk to you. I've got a couple of things to say. I'm going to hand it back to David, and then I will take over after his first slide or two.

David Roth, CRO running our global business. As you heard everyone talk about their history and kind of [ apropos ] that Roy went first. So from the absolute founding basis to now have me jump in and talk. I'm the newest out of that group. So January 7 was my first day. So I actually have about a month into the company, just a little over a month into the company. My background is a little over 37 years in the industry. I grew up in the big shops, IBM out of college, Microsoft, when it was a startup or an early growth company. To put it in perspective, I was in the first 2,000 employees at Microsoft, when Dawson Basic. We're the only products that had market dominance and I became a serial entrepreneur spinning out a Microsoft by the time that we were with the Department of Justice dealing with monopolistic challenges about how the company operated. So obviously, we had a lot of market share by the time that I left. I built and grew and exited 5 companies over 20 years, joined a cybersecurity company called Trend Micro just about 10 years ago. So I had a 10-year run at Trend, starting off as a global lead of business development. And by the time I left, I was CRO. And I was running a very large business in the America Enterprise. So really excited to be here.

The -- one of the key things I thought I'd share from the start is some of my first impressions because that's one of the core things I have in 30 days is the [ intros ] view of what I've seen at the company. To give you an idea, I've traveled across the world quite a bit in just under a month within the first 3 to 4 weeks. And actually, if I even go a week prior to January [indiscernible] I was in Tel Aviv. So right before starting, I met pretty much all of the core leadership in the company. David Aviv and I had a couple of good meetings and interaction. So part of my comment about the amazing people, I'd actually even take back to my interactions with the leadership in Israel.

I then did, as Connie mentioned, I was at every SKO. So I met with leadership from both the North America business as well as EMEA and Lisbon, Portugal and had time not only with the leaders, but regional directors and all the way down into individual contributors and all the different folks that support our business. I went on from there to Bangkok, Thailand and did the same thing with that group for Asia Pacific. And then beyond that, I also -- if there wasn't enough travel, I went and met with our Latin America team, which we call CALA, and I had the opportunity not only to spend time with the sales organization, but I also participated in an executive event where we had 150 clients, prospects and partners. So it's been a very busy first month.

I would tell you, we have the right technology, the right people. We're ready to execute. And we're -- this is all about operational execution at this point. I think the innovative technology, you've heard it from David Aviv, we have a great foundation. Going back to the DefensePro X. You're going to hear a lot from me on my talk about cloud growth as well as both API and security AI. I mentioned to somebody on break. I'm a bit of a growth junky. And I think Microsoft was probably my first fix to that situation. What it meant to look at a market and see how much growth there can really be and really coming up with the strategic attack plans to go win it.

I want to make sure it's really clear. I think these 4 waves that have been hit message after message, it was a big attraction for me to come here because fundamentally, in each one of these waves, new winners are defined, and I think we're extremely well positioned to be a winner in this next generation. So bottom line, I'm driven by growth. And I really see that as we have an amazing team for growing our people. I see partners that are ready to grow their business with us. And as our clients' growth adoption [ happens ], looking to the market, see our stock price go through the roof. These are the three core areas that we leverage to drive our growth. You'll hear quite a bit from Randy about what he's done in North America to build an amazing enterprise go-to-market.

People asked me even on break, "No matter what we hear from Randy's approach, how is this looking globally?" And I will tell you, we are looking to take the best practices in North America and establish the standards worldwide. We've enabled a lot of autonomy in this company, but under my direction forward, we're going to drive a lot of best practices on these three motions. You heard from Roy earlier on that with these channel partners like Guidepoint, Presidio, WWT, all the largest players, these folks are looking to build services around products like ours, right? They have really rich security service practices.

The OEM partnerships. This is really, really huge. This is an exponential growth opportunity and you already hear when I go back to this in a few slides, what we've already done in '25. And I would argue we have multiples above the great success of '25 ahead of us in this market.

And then on the MSSPs going back to Connie and the others, everyone's kind of mentioned what it means to unleash this community. I'll come back to it in a bit. But -- and by the way, we will emphasize some great examples in North America. But when I've traveled the world, we are seeing global opportunity happening. We had a great video earlier of the partner in Italy. The strategy actually is going to make total sense on how we roll that worldwide. And the best part of all, and I saw this firsthand at all the SKOs. This company knows how to win big in the enterprise. We are awesome and taking care of the most business-critical environments of telco, financial services, health care, life sciences. So imagine if we can unleash that at scale to mid-market. There's a lot of opportunity.

All right. Thank you, David. What I failed to tell you is I was also an officer in the Marine Corps, I spent a bunch of years in the Marine Corp. And as a marine, if, sometimes, if you can't headbutt it, it doesn't make sense. So one simple button is all I need to make these slides go forward.

Here's what I want to do. I want to take you through three slides to have you understand the essentials of sales and go-to-market in North America. And I want to start by describing 4 imperatives. The 4 imperatives that I've defined for what I think drives real growth and success quickly in this North American market. And where I want to start here is world-class organization. So I've been here for 19 months. I think it was the third day or maybe it was the second day with Roy and we got to the business of defining and rebuilding this sales organization. And I've come to understand years before that in a sales organization, almost every time every problem is a leadership problem. Somewhere there is a leadership problem in the sales organization. And so what I had to do first was get this leadership team right. I had to build the right leadership team, and that's what we did first and foremost. With this idea that we're going to bring to market a world-class sales organization. And if we had to start over, that's okay. And as it turns out, that's what we did.

So in the theory of organizational dynamics, the forming, storming, norming and performing, we went from forming and storming to performing in 12 months. We moved that quickly to rebuild from the ground up this new sales organization. And I want to describe to you what that sales organization is to this day in North America, we're done building and rebuilding. We continue to build and to invest. We'll continue to do that.

In fact, we've done that coming into this new fiscal year. But we're through that rebuilding phase. We built from the ground up a brand-new hunting and acquisition team. This is the vanguard for new logo acquisition. We're organized vertically in verticals that we think make sense where we can own and get traction quickly, that's financial services, health care, life sciences, state and local education is a market we're bringing which has led specifically this year. The Canadian market, the service provider carrier market, we hunt with great competency and know-how in those markets.

We've also rebuilt what we call our farming business. This is the installed base business. These are the keepers of the crown jewels. This is the business we own, the business that we guard with great jealousy where we seek to grow, to create real cross-sell, upsell opportunity. We've rebuilt 100% our sales development resource team. That's a 100% churn from the leadership down to bring a world-class SDR capability that feeds the top of the funnel. This team reports to Connie as part of that marketing operation, but we have great alignment into that hunting organization. So we hunt, we farm. We have a rightsized channel organization focused almost exclusively on our hunting business to give real scale and repeatability in our partner-led business. What this means in the last 18 months is we've up-leveled 30 people, about 30 people, which is about 85% of the total organization. This is a complete overhaul. These are world-class, highly experienced, highly competent sales professionals that came from places like Akamai and Cloudflare and Fastly with real market know-how and great sales tenure and experience since day 1. We rebuilt that leadership team. Josh Bafalis runs that hunting organization. He was a notable performer we were lucky enough to take from Cloudflare, and we've added to that leadership team. So we split that hunting business now East and West by vertical, where we have even better coverage.

What this means is we're bringing a whole new level of capability, whereby we do business on our customers' terms. We build better customer advocacy, better customer intimacy, better know-how by market where we speak their language. We're doing things like showing up to FS-ISAC, which two years ago, we didn't do. We've shown up to now three, and we're going to our fourth FS-ISAC in 3, 2 weeks in Orlando, and the reaction has been, where have you been?

Same thing with [indiscernible].

Same thing with [indiscernible]. Glad to see you. We have main stage presentations so the brand is evolving. Our presence is better, it's bigger, it's different than it's ever been. It's just -- it's a hole in the field. And we bring this new level of vertical know-how and overall better sales competency, our performance last year, I think proves that point. First, imperative world-class organization.

Number two, imperative high-performance mindset. Maybe this is the marine in me, but I believe that performance and performance alone dictates the predator in any food chain. And I'm very much a predator in this market. We have to, in the most positive way, we have to operate with this sense of predatory mindset and its performance and being performance-minded that guides us that sort of becomes our mantra, performance and performance alone dictates the predator.

A few growth statistics to stand out. Our cloud ARR growth last year was an impressive 25%. That's in line with company expectations. I think I grew it bigger this year. Roy talked quite a bit about our subscription business and how that's new and so additive to overall performance, and we grew that at an astounding 57%, and I think we're just getting started.

This is a motion we know. This is the sales motion we understand. But from a high-performance perspective, 3 things stand out. And you've heard this theme, David gave you 3 things. One of them is cloud sales growth and customer retention, it's top of mind. I have to grow in cloud, I have to grow it quickly. I have to go win my fair share. That is where we [ swear ] we focus. I'll talk about how we're doing that in terms of sales plan strategy. Number two, new customer acquisition, I don't care what we sell. I need to acquire new customers and new logos. This tends to be an elephant hunting business a little bit, and that's okay. We know how to hunt elephants, the sales cycle is a little bit longer. We're trying to diversify that business. So it's not just those elephants that we're hunting, but we're having great success hunting elephants. And number three, it's imperative that we protect the base. Cross-sell and renewal are imperative. That's the crown jewels. That's a farming team that's getting very close and intimate with our installed base of customers and that motion alone is paying enormous dividends. Two years ago, we weren't operating that way. And so we're seeing churn downgrade really level off to normal acceptable standards in that cross-sell, upsell opportunity is accelerating. Number three, we need to optimize our force multipliers. These are accelerants to the business. This drives scalability, repeatability largely through partnerships.

So MSSP acquisition enablement, scale, repeatability. David is going to talk about MSSP. Our MSSP business has grown dramatically. We are onboarding, this quarter alone, three new large MSSP customers to add to our war chest of MSSP partners and providers now. This is an enormous opportunity where we have clearly differentiated ourselves and our ability to scale in a very repeatable way.

Partners I talked about, we aspire to drive no less than 50% of our business through partners. This is a tough business. This is a business of investment. This is a business where you have to show up. And I'm not sure we showed up where we should have, how we should have two years ago, but we are now. This is showing up with Guidepoint, who's got this strange diversified business, but they're very prominent in our world and the same thing with WWT and Presidio. And the big players and sometimes the small more niche sort of regional players showing up there is imperative so that you get that top of mind.

Cisco and Check Point, we've talked about. What's important there is just better targeting and execution. We provide Cisco and Check Point a capability they otherwise can't address with their customers. This is a huge differentiation for them and you're seeing quite a bit of contribution top of funnel in the acquisition business in North America.

And finally, it's just all about partnering with Connie's team and marketing and bringing real brand relevance, making that Radware brand incredibly prominent and well known in the things we do today and in that agentic AI journey that we're going to take tomorrow.

Number three, [ for ] small parts. Number four, know your strengths and develop new ones. It's my fourth imperative. This might be my most important one. I learned a saying from John Chambers at Cisco years ago, "You need to deal with the world the way it is, not the way you wish it was." It's like the most important thing John Chambers taught me a lot. That one sticks to my mind. And until you can deal with the world the way it is, you need to understand what your strengths are. You have to be very clear about your strengths. And then you have to lead from that position of strength and find a way to develop new ones. Let's leave our weaknesses behind for now. They don't serve me. I'm going to focus on my strength, so I'm going to develop new ones. This is such an important point, the idea of going from market share to wallet share to what I'll call tech biogenesis. That's innovation, building innovation that I want to end on my final slide with strength-based execution. This is the strategy that we're pursuing in North America.

Here's where we start. From a market share perspective, and you've heard David talk about it, Roy brought it up, Connie reinforced it, our core strength at Radware, make no mistake in North America, it's not my only strength, but it's my key strength is on-prem plus hybrid cloud, DDoS, sales at scale. It's not as if we're the best at what we do here. We're the only ones who do what we do here. There's no arrogance in that, that's just the way it is. We're the only ones who do this. And the customer we've onboarded this year make that point clear.

The displacement -- competitive displacement we've done is breathtaking. The amount of new business that we've driven by this key core competency, this strength is the difference that made the difference for me this year. Now that's not where we stop, but it's where we leverage. This is real market share opportunity. Hybrid DDoS, we're the only ones that can do it. And it's a great story. And guess what? It's not going away. It's not going anywhere anytime soon.

We are squarely in the fight with our customers right now. When we talk cybersecurity, we are in the fight in a very meaningful, demonstrable, tangible way with our customers, keeping them in business from this one core strength. So it's imperative that we continue to sell there that we leverage and penetrate and we protect that base.

Where does that take me? That takes me from market share to wallet share. Now I've earned the right to compete for your business. This is in the cloud. I'm selling cloud DDoS as part of my hybrid solution and I've earned the right, the opportunity to have new conversations. For me, you heard David talk about API security execution. It's all about API security execution in North America. The opportunity is that big, and it's not a penetrator to sold out market competitive market, and we now bring a product that competes better than anybody. Of that, I'm sure.

Here's how that conversation with an application owner or a CISO goes with API security, first conversation, right here in New York City, large financial institutions. How many APIs do you think you have? I don't know, 200, 250 and you come in and you do API discovery and you start a proof of concept and before you know it, you found 20,000 APIs they didn't know had, 20,000. That attack surface is enormous. That threat is as big as anything has ever been in the risk. And so their willingness to solve that problem is a top priority before anything else. Before AI, before we get to AI because we're going there, but we still have to solve this API problem because that's the world we're in. And we have a product, we tell a story, we provide the technical competency, I think, that differentiates us from all of our key competitors. It's time to market, it's getting there fast. It's earning the right to have that conversation. And from there, it's cloud upsell. It's cloud expansion. Well, I've got a WAF or I need a WAF or I need bot mitigation or I need the next great thing. You want to have the AI conversation. These are how these sales calls evolve. This is the wedge the sales play for me.

And finally, I talked about this idea of technology biogenesis. You've heard a lot about innovation. David Aviv did an amazing job talking about the innovation that we bring. This is an innovative company bringing innovative stuff to market ahead of market. This is sort of I'm a hockey guy, we're going to skate to where the puck is going. We're headed that way. And along the way, I'm going to deal with the world the way it is, I'm going to play to my strength. I'm going to develop new strengths, and that's what we're doing now. We're going to drive cloud ARR because we're a cloud-first business. We're going to move to the AI opportunity and we're going to make the absolute most of the API security opportunity in front of us. That's the North American strategy from a hunting, farming, SDR, vertical market perspective, a brand-new organization where the enthusiasm and the energy in this world-class organization is as strong as I've ever seen. And I've seen a lot of great sales organizations. We have built a really good one here.

That's what I wanted to tell you. I'm going to hand it back to David.

Thank you, Randy. And what you just learned and heard is now the gold standard for our business worldwide. This is now on me to ensure that every one of his peers around the world are living up to this level of commitment and execution, and we do it decisively.

One of the things before I dive into OEM partnership and the MSSP side is I also want to do a mini version of story tell the way Randy was just sharing. Over my last set of years, probably done as many EBCs, executive briefing times as any CRO out there. If I look at the conversation -- first of all, when we talk about the crown jewels at the core of our presentation, that we secured the crown jewels. This is going to tie together through this -- the rest of this talk is crown jewels are the applications, right? Why? Because the applications are the business. That's what the business is being driven through, all right? As cloud was first getting adopted at all. One of the first challenges the security teams, we've got vendors in the tech side, but just the security teams were seen as the slow people and the [ no ] know people. That was a big issue in the beginning of cloud adoption, right? So we needed to get to the notion of security at the speed of business. When David Aviv puts a slide up showing that we uniquely posture the end-to-end solution for API security as a platform. What does that mean to the client? They get security at the speed of business. As fast as a developer is executing on the shift left and we're securing them at the code level all the way forward to when it's in run time. That changes the game for our clients to be the yes people, but yes, and secure.

All right. So I just want to reinforce that one part. The second thing on double clicking on that APR journey is and out of all those EBCs I did, I worked in a company for the last 10 years that was an early player in the attack surface management market and the Cyber Exposure management market. And every major company in security, a multibillion-dollar company out there have platform solutions to claim, helping corporations be predictive, proactive by finding the leaks or the challenges in their attack surface before it hits them. I could tell you firsthand already that the company I came from, and every one of the top competitors do not have what David walked them through. So what they're showing, a series of sensory data to say on an attack surface level, here's what you can see on where you're vulnerable, so you can figure out how to shore it up and get ahead of it before you hurt. There's a massive opportunity for even all those organizations to partner with us and see what it means to get the API level view because you already heard it from Randy. That example of hundreds of APIs they thought they had, it was tens of thousands. That's more normal than you know. So I'm very excited about what that means. The other products are going to reinforce from all those EBCs is over a year ago, sitting with, say, 10 CIOs or CISOs at a time. I'd say 3, 4 of the people in the room a year to 18 months ago could have been in the camp trying to block and stop AI. We're going to block and stop it. David kind of talked about what goes wrong with that, why vendors try to support an approach to accomplish that? If I think about my last 90 to 120 days and the briefings that went on, that number now is down to 1 out of 10. And even that 1 out of 10, the other 9 are looking at them saying, how is that going for you? It's not possible. They can't block it. You saw a bunch of logos on the screen from David earlier. These are brand name companies, who doesn't have Microsoft, who doesn't have Google, who doesn't have ServiceNow, who doesn't have Salesforce, right? Guess what? They have AI. AI is here. So the one thing I find too is this is going to also on the brand opportunity with Connie. Not only do we have the CISO's attention, when I sit down and talk to CISOs today, and the AI topic comes up, they ask me if we can sit down with their CEO or some members of their board. That's how big of a topic this is heading into.

Let me get back the OEM. Why is it such a big deal? This relationship set that we have with Cisco and Check Point, we're talking about organizations here that are touching and have tapered relationships with over 100,000 enterprises in the world, over 150 countries. Imagine the notion and again, our goal for scalability and repeatability is this ability to turn other people's customers to ours. And you already heard from Randy that the product set that they have on their price list, they cannot deliver without us, right? But when it comes to our category, there's a really strong compelling message with that.

I'll give you a great example with Cisco. I told you about all my travels when I was in our Asia PAC meeting, we had a breakout where our regional leader for ANZ, Australia and New Zealand, took the stage with this peer from Cisco. Less than 5 minutes into the talk, the Cisco leader clicks the slide, and he's showing the adoption of technologies went through two accounts, it showed what Cisco products are in place, what competitors of Cisco are in place and then he clicked again and circles popped up on this first one, there were 5 Radware competitors that he specifically said, we together want to knock these folks out. We already have at Cisco. He says the EA in place. So they're driving a motion, a go-to-market motion with their clients. When they have these EAs in place, were the CFO, people like [ Guys Pearce ] and as well as the CIO, they're trying to accomplish more vendor consolidation. And if Radware helps them bring more under that Cisco umbrella, that team is motivated to do it. And by the way, you're going to hear me talk about MSSP in a bit where they're completely running out front for us. In this case, we do it together. So Cisco and Check Point lever just the specialist for what our expertise is in these offerings. But we get the cloud, the access that otherwise, how long would it take us to get to these same shops, right? It's very, very powerful. The numbers, 85 new logos in 2025, that was a 25% year-over-year increase from 2024. And I believe this -- I mentioned earlier on that these are very powerful updates. I think we have a way high ceiling above where we are in relationships like this. We also, with these relationships, took 122 accounts and upgraded. So we're carrying folks forward to a more modern and even including cross-sell, upsell capabilities. And what I'm seeing across the board is the excitement from both these companies on API and AppSec being the next place that they push together. So really exciting Check Point, Cisco. By the way, again, the reinforcement is even though it's called OEM, our products are represented as Radware. The branding still comes through, they get to know us at these customers.

Let's shift over to MSSP, where I mentioned Randy and his team are in the front line with the OEM model that I described. And as you also heard from Randy, with the channel partners who are on the front line, we need to find a way to get scale where we can't be on the front line to get to everything that is out there for us. This mid-market opportunity is massive. When I gave you that example even with Cisco and Check Point with over 100 enterprises around the world, that number and -- give or take, it's probably closer to 140,000 includes the middle market business of $100 million revenue companies all the way up to the multibillion-dollar largest companies in the world. So how do we actually go downstream? You heard me say I'm impressed beyond belief about this company's ability to execute on the elephants. As I was hearing Randy describe it, and he also kind of hinted towards it, I'm very excited about the next level of game, which is the gazelles and the zebra. We need sales cycles that happen in the 90-day period, not just the 9- to 12-month period, right? This area gives us that access. You heard from Connie that we go back a few years on building this. When you see the next few slides, you'll see why there's a few -- like kind of work went into this. I think I came in just at an awesome time because what Randy and team accomplished in '25 was the foundational platform of proving that this is a massively repeatable and scalable business. And that's going to get us the force of multiplication and get us access to the market that would be a completely different approach that would take both in time and execution if we try to lift it all by ourselves. So turning these other folks client bases into ours is really the whole point.

There has to be -- the word partnership to not just be a logo on a screen or I call it the Barney deals, I love you, you love me, but there's really nothing much more than a press release. This is why there's a business behind it. Radware brings to these MSSPs an operational service that would be extremely hard for them to hire for, to build out and execute on. We give them a white label portal. So what their client base sees keeps them within their branding, their logo, while by being powered by Radware. It ensures that we have their back. From the moment that it goes past the first line of support that we handle the Tier 2 and Tier 3 SOC support for them. And as I mentioned, for Connie talking about the few years of buildup in this, we actually have built a very rich enablement program that I'll walk you through.

But why did we do all this? Because they do all of this. They deliver, drive the marketing. You're going to see an example of this in the next click. They deliver the sales execution. You're not having our folks. Like you actually heard Randy say it earlier, he called them a customer. Getting access to their customers, we treat them as a customer just to bring them in, nurture them to nail this alignment, and then we go from customer mode to partner mode to access all of their customers. Makes sense. And of course, for them to do that, they want to be the first line of support. What I'm going to share with you is a commercial that ties all this together, especially going back to what I mentioned that being able to do the security at the speed of business I think our partner sells this and markets it even better than anyone else could. It's a relationship with SPARK. I'm bringing it back to Australia and New Zealand. Unfortunately, overnight, Randy thought, "Hey, maybe I can do an Australian accident" and this one is not going to happen. But the beautiful part is this relationship is a relatively recent win for us last year, and it went from getting them onboarded and deploying and executing to now, they'd describe us as really what ensures the clients can have the confidence to grow.

And if you think about it, in the Tier 1 communication provider space, delivering MSSP, this is a great margin business because the core of selling pipes is a commoditized business. This is what the enablement looks like for them. Very rich portal, it gives them the hub of getting all of the information that they need to be successful. We put them through a Tier 1 support certification program. So not only are they on the front line, but we make sure they do it the right way. We also train their folks to be able to be the sellers of the solution that they can be. So again, instead of building out our own sales force in this and accessing this market in this way, their sales force becomes an extension of us. We give them all of the co-branded materials. We establish a lead generation support enablement. And again, things like templates kits, sales script e-mail templates, pre-built marketing campaign kits. This is all of the thing that really helps. Like we'd go out and fish on our own, but why don't we set up a charter of a fishing charter license, that everyone goes and catches fish our way and all the fish that come in, we get a cut of, right? That's what this model is. To each others to do it. So if you're doing it by yourself, there's not the same scale, especially when we talk mid-market.

So here goes the Australia-New Zealand...

[Presentation]

Again, driving that middle market to an action and our brand is right there. We're hitting home on how and why this all works.

So why are these folks doing it? I mean we could -- if I jump right into the middle, can't they just do this themselves? Even if they actually went about the do-it-yourself scenario, which I mentioned already, the expertise required, getting access to the tech and so forth, even if we just looked at what it meant cost-wise, none of these folks can afford the loss of time to market. They're all in the battle for their lives to actually ensure that they're creating this differentiation against their market in their market and they need this coverage yesterday. So it's a new revenue stream, a profitable high-margin revenue stream compared to their legacy or where they've come from [ to get ] foundational leading kind of going back to David's point earlier, is they get the benefits of this leading DDoS synapse protection service. By the way, this is all driving our cloud security growth model. Everything you were hearing earlier about our numbers, this success and the kind of things we're talking about today are part of the example that came into the results we shared about our cloud ARR growth in 2025. And it's amazingly sustainable. This is a sustainable and growing, exciting business. And it adds a revenue base from an existing client base for all these folks. Lower risk, no CapEx, it gives them a full managed capability that we're providing, the white labeling we give them so that they get their brand coverage, keep it consistent for their clients. I already talked about the comparison against do-it-yourself. And on the monetization, I said it earlier, speed to market is huge. We give them all the enablement they require to be successful and they got a pricing area that gives them the ability to deliver high margins. I said earlier that I'm not -- I think the core partnerships is where we're really working together with companies to ensure that our value proposition hits through to their clients. So the clients are successful from it. They're -- this partner is growing their business from it. And in turn, it drives a whole market segment for us, but otherwise, would take us a lot longer to get to.

I want to kind of reinforce that to John, the President of Bell cyber. And for anybody who doesn't know, this is a managed service of Bell Canada. This is part of Randy's world. You'll see the reinforcement that they know what David was talking about earlier. The attack surfaces are ever changing. It's challenging. It's concerning to their clients. They need a way for it -- knowing that the attackers have automated techniques. We actually -- and they have ways to evade detection. They need a partner that outmaneuver the attacker. That's really what they're looking for and what they get from us. By the way, to give you an idea, even though Bell Canada is in the tens of billions, this services business is over $0.5 billion business and growing for Bell Canada, Bell Cyber. And what they talk about in this is that their most critical industry mid-market [indiscernible] customers are the ones that pay for this out of the Bell Canada base. That's where this is sold. It's our sweet spot. The financial services, the health care, the markets -- the same markets that Randy talked through earlier. So it's a great alignment.

So by the way, what I just gave you that quote from, that was February, right, Connie. It was a really recent like days ago kind of release, maybe the last 30 days, I don't know, but it was recent. Yes? Very recent. What I'm going to show you next gives you a year to look at what happened in 2025 with a Tier 1 U.S. provider. By the way, I hit home on this Tier 1 concept. I'm a big believer that with leverage models with partnerships and to accomplish what Randy mentioned earlier about how closely we can work together, you can't go broad and thin. That doesn't work. So 80-20, 85-15, you need ratios where you're going to say, "I'm going to get 85% of my business from 15% of these partners or 80% of the business with 20% of these partners." Even when you heard him bring up that there could be some smaller regional players here and there. It fits into that model, right? I guarantee you for each one of his teams. They know out of the bigger, broader players who each team focuses with and if there's a regional one they need, they don't go beyond how many they can count on their hand, right? This is focused, deep relationships. So we did the same thing in the MSSP world. Somebody can go and look at the MSSP Track list, it's a big list of companies out there. But if you take the 80-20 rule, you're going to find that there's 20% at the elite top that do the biggest amount of revenue in the market that we want to own. So that's why we went Tier 1 providers first. And even after we knock through every one of these Tier 1 providers in each major market around the world, we're also going to then take on each of the major AppSec, [ SOC ] as a Service, [ SOC ] providers that are also on the top of that list of MSSP, which come in right after these kinds of names.

This company originally was trying to work with a competitor of ours when we won them over. By the end of '24, with the competitor, they weren't able to bring that capability to their client base more than 100 or so customers. They were stuck and not growing. It wasn't working, it wasn't scaling. So we said this needs to be repeatable, it needs to be scalable. I think everyone agree this chart looks pretty scalable. And through the different things I showed you on how we do it, this thing is very repeatable. We went from 168 onboarded customers February '25, and somewhere between November and December, we broke through 1,000.

The other thing in these relationships is these partnerships like this and their engagement with Randy's team are constantly asking us for the next modules. When can we have the next thing as I think I heard somebody bring up in one of the SKOs is this exact company asked us as soon as we're ready to productize our AI offering, they want to talk to us about how to bring in that module capability. So it's just the notion of having a platform and adding modules as we go. There's two things you could see out of a chart like this. One is turning their customers into ours. The other is expanding our module coverage to those customers.

That leads me to Guy. Thank you, everybody.

Thank you, David, and thank you, Randy, for an inspiring presentation. When they talk about go-to-market, they mean business. All right. So good morning, and again, welcome, everybody, to Radware's Investor Day 2026. In today's session, we will discuss Radware's financial journey. We will talk quickly about the last 3 years, then we touch again the 2026 sustainable growth some KPIs regarding our long-term model, and I'll conclude with the investment highlight. Last slide is obviously -- thank you. But one slide before the last slide is going to be an interesting slide. So stay till the end of the presentation.

Revenue was growing very nice from 2023 to 2025. We ended the year with $302 million in revenue. Total AI [ ground ] grew, and you can see significant growth from -- and this is year-over-year growth from 4% to 8% and then 11% cloud ARR growth 22% then 19% and then back again to growth. Q3 was 24%, then we finished the year with 23%. Most of what we talk today is about our double-digit growth. That's the main growth engine in our business model. And the leverage you can see in the EBITDA margin actually more than doubled over the last three years. And when you look at the EPS, nearly tripled over the last 3 years. So we saw very nice leverage in our -- very nice OpEx leverage in our model in the last three years.

So we just had the earning call last week. So I'll go over the numbers pretty quick, 10% growth year-over-year in Q4, ending Q4 at $80 million, steady gross margin around 82%, 240 basis points improvement in operating margin and 19% improvement in EPS growth. So that's actually what is fueling our growth from a strong foundation. Now if you look at the 2025 numbers, so again, 10%. If we're looking on our annual 2025 numbers, from strong foundations to double digit growth, and we're talking about sustainable double-digit growth, on an annual revenue, the company grew by 10%. But if you look at the other KPIs that actually allude to the future and what we expect to do in the future, we're talking about 11% total ARR growth, 13% RPO growth that will give us the backlog for '26 and beyond and 23% cloud ARR growth. Other indicators from the P&L, 82% gross margin, 13.1%, operating margin, 32% EPS growth and on the balance sheet, you can see that 13.8% free cash flow margin, and we ended the year with $461 million cash, cash equivalents and marketable securities.

So now we look at the path to sustainability in '26 and obviously, beyond I'll touch, 4 parameters, top line, gross margin, OpEx and capital allocation. Two things, two parameters drive our growth in 2026, and we believe it will continue also in the future. The #1 growth engine is cloud, cloud cyber and the KPI is cloud ARR, and we expect it to continue to grow and grow at 25%. And the other parameters is increased subscription revenue. So Cloud ARR growth driver for 2026 and beyond in -- by way of recap because my colleagues, my friends already discussed most of these topics. It's divided to the technology side. New platform, [ you need ] go-to market and regional participation. So as David Aviv already talked, we have a leading differentiated technology based on behavioral algorithm and unified platform that actually across all our solutions from DDoS, AppSec, API security and AI and all is coupled also with the EPIC-AI that Roy described before. Connie talked about the amazing opportunity in the new modules, API security and AI, we're looking at an amazing addressable market with very good potential for serviceable addressable market because we're touching the LLM firewall, API protection at the agenetic protection and the agentic [indiscernible]. So yes, it's a great addressable market. High per CAGR, we're looking at a 60% CAGR in this market and good cross-selling opportunities. This addressable market just in terms of numbers is at least 10x bigger than what we're looking today on DDoS plus AppSec. Just saw before my presentation, David and Randy's presentation about the go-to-market MSSP classical case for force multiplier. We're adding MSSPs, they're adding customers. Customers are adding circuits. And again, we're adding more services. So huge potential for growth and great collaboration with Cisco and Check Point, our OEM partners. And Randy discussed also what he did and what he's planning to do in North America. When I'm saying participation, I mean, predominantly the U.S.

The other element of the growth on the top line is actually the non-cloud ARR. And the non-cloud AR actually comes mainly -- the drivers are mainly subscription, that's product subscription and software subscriptions. So we're shifting from our CapEx selling business model to more and more subscription. We already announced it on the DefensePro X last year, and we will continue to do it with other products throughout 2026.

The other element is, obviously, we're adding more and more software-led product coupled with the appliances. So we have the application protection on the DefensePro, we have the [indiscernible] and many, many other software-based products that obviously are sold as a subscription. Roy already touched the number that we announced, 21% subscription revenue growth, and that comes from both cloud subscription as well as product subscription.

So if we look on the coming chart, as of the last year, we had 38% of our total ARR as Cloud ARR and for the overall revenue of the company, 80% of Radware's revenue is based on recurring revenues. If you look on the last 5 years, we managed to both close to -- or actually above 23% growth in cloud ARR. And the growth, especially in the last 3 years, was driven definitely because of the weight, the growing weight of cloud ARR, but also nice single-digit growth also on the side of the non-cloud ARR. So this is pushing us to a sustainable double-digit growth in scale. If we're taking this model and based on what we talked earlier today, we expect that the cloud ARR will continue to grow sustainably at a rate of 25% year-over-year and single-digit growth based on non-cloud subscription, which is now a bigger number than our services. So the two together will take us to the target year of 2030 that we expect to sell $500 million and year-over-year growth on ARR of 16%.

The second point is gross margin. So we're about -- the way we see it in 2026, we're about to face some headwind from cost of goods sold related to memory prices that increased in the market as well as some impact from FX changes, new Israeli shekel versus to U.S. dollars. But at the same time, we will see also a tailwind that will come from more efficient use of our network. And that's our current network. We currently have 65 global cloud security services around the globe, 30 terabit DDoS mitigation, and we're about to increase this network during 2026 by 4 to 6 new point of presence. Our ability to improve utilization of this network will definitely be a tailwind to our gross margin.

The other point in improving gross margin, which is also related to cloud ARR is adding automation, AI-based automation to our SOC and other processes related to our cloud operation.

So OpEx. On the OpEx side, we're talking for the last few quarters that we are increasing investment when it comes to innovation and especially innovation, as David discussed before in the API security area and in the AI security. So we're doing that, and we will continue to do that in 2026. Connie, Randy, David talked about go-to-market, a, go-to market in North America; b, investment in brand awareness and the whole story that we're telling, investing more money in the correlation between cybersecurity, leading cybersecurity and the name, Radware.

So if you look at the bottom part of the slide, you can see a bridge that takes you from the operating margin of 13.1% that we had in 2025 to a bit lower operating margin that we expect on 2026. And the two main numbers that you should focus on, we do expect leverage to continue seeing leverage in our model based on top line and gross profit growth, but this leverage is based on constant currency. On the other hand, we expect, based on our forecast, that our OpEx will grow by 4.4% just because of strong new Israeli shekel versus the U.S. dollar. And that will bring us to 12% for 2026.

So in terms of capital allocation, we're looking to continue to invest in innovation. We closed an M&A deal on January, and we're looking at other very interesting companies in M&A to expand our platform, our cloud platform, share repurchase. We did a press release last Friday, and this is definitely an intention of the company, the company, even with the lower operating margin is planning to continue and generate a lot of cash in 2026 and cash to maintain flexibility in a dynamic environment.

A few more points about cash. So we ended the year with around $461 million in cash, cash equivalents and marketable securities. Most of our cash is actually invested in deposits, the interest rates in deposits currently is the highest in the market that we can get. We generated $50.1 million cash from operation in 2025. And free cash flow came in at $41.6 million. It is important to say based on our architecture and the way we build our cloud operation, normally, the ratio between free cash flow and cash flow from operation in Radware is way better than our, let's say, competitors in that space. We are building the network based on Radware equipment and as a result, definitely, we're gaining better performance, but also better economics.

So we talked -- everybody talked today and also me about sustainable double-digit growth in scale. And here, I'm going to show you a bit more conservative numbers going into 2026. So normally -- and this is the last time I'm going to show you an annual guidance. We're going to be back to our quarterly guidance, but me as a conservative CFO, I'm going to take the 8% to 9% growth in revenue that will lead us to $326 million to $329 million, $230 million in OpEx as a result of increased investments in technology and go-to-market and the FX impact, and that will lead us to the number that we've already seen, 12% operating margin.

So you've seen this 4-wave chart like a zillion time already this day. The two points that I would like to add to this chart is actually related to the disruption and probably the acceleration and inflection point that, that could cause to the way we grow. Bear in mind that this process, DDoS, AppSec, as of today, took us 13 years. These two -- the way we call it, two new modules, two new markets, which are 10x bigger than this market. This is going to happen in 2, 3, 4 years. So the disruption to the market, the disruption of pretty much everything that happened in Radware is going to be a great opportunity. The disruption will drive acceleration and will probably drive an inflection point sometime here. I mentioned again, $500 million in revenue, 25% CAGR in cloud ARR and 15% CAGR total.

So again, talking about the investment highlights, and that's now the last slide. Accelerating cloud and subscription growth, we're looking at very large addressable market and growing market, large TAM, large [ SAM ] and very fast-growing CAGR, high-growth segments, as Randy mentioned, Randy and David mentioned, before outpacing the market, extended differentiated cloud security platform and clear path to sustainable growth, profitability and cash generation.

Now currently, the way we look at ourselves and probably you look at Radware, you put us in a bucket of on-prem companies. If we put Radware here at the growth rate of 2025 and multiple of between 2 and 3, definitely, it is clear that we're let's say the cheapest in this bucket. We talked a lot about our shift.

Definitely most of what we do today is cyber, most of what we are focusing is cloud based on subscription model. Radware actually should be in this class in this packet of cloud companies. And even on today's of multiple again between 2 and 3, we're very low in this market. And if we take it based on today's growth to the median or close to the average of this sector, we're talking about multiples that are close to 10x. And with that thank you.

So we are in the Q&A session, and you are welcome to ask.

This is Grant Darling with Jefferies. Maybe to start off, what's the biggest opportunity for upside? Is it MSSP, improved direct sales or OEM? And maybe if you could comment on that in relation to what's assumed in terms of that $500 million ARR number.

You could speak to North America first.

Yes. From a North American perspective, in terms of biggest opportunity upside, it's clearly cloud. It's the cloud for us. It's winning our fair share in the cloud. Again, strength-based execution. It's taking what we're very good at and expanding and developing new strengths. Specifically, I think API security gives us an enormous advantage and opportunity to go expand to expand in existing logos, that existing base of customer and new customer acquisition. It's a competitive market.

It's not -- by no means is it a layup. And you have to show up on time, on target, first pass with the right product. It becomes a very -- we had this conversation during break. It's a feature-by-feature, very often POC-based evaluation process. But that unlocks -- that alone unlocks enormous opportunity to drive ARR and specifically cloud ARR growth in North America.

I think that does also echo on a global basis. I see that in Asia Pacific as well as our EMEA business. The only other thing I'd say to -- and by the way, I'm already hearing this, I mentioned the time I've been in front of clients so far, the existing customers and their movement from our foundation that they've been with us to cloud, hybrid cloud specifically. And then they actually jump right in and tell me about how they're beginning to adopt API. So that -- I think our team is doing a great motion already on the description that you just heard from Randy. And I'm also seeing it out of our strategic partners, including those VAR channel value-add partners. I'd say out of every partner I saw in Latin America, for example, they each had a combination of existing client as well as prospect they brought to the event.

Yes. And I'll say one more thing with respect to that growth contribution force multiplier, and we talked a lot about this. The MSSP opportunity is enormous. And he talked the Pareto rule, the 20% are going to drive 80% of the business. You saw that one chart, that's a North American service provider, where we went from nothing to 1,250 unique customers in a year. That is enormous cloud ARR contribution in MSSP. And I have the opportunity to do that 4, 5, 6 more times this year, not just in DDoS because that was just DDoS, but also in AppSec and the new aspects of [ Aspect ]. So you can see it becomes quite a large contributor at scale to that ARR growth. That's a big part of that cloud growth strategy, I think, worldwide, certainly in North America.

One last part, too, is the OEM aspect takes muscle memory cycles, and it has to come from both sides, further investments that the Cisco and Check Points make as well as us. I gave you an example of an ANZ team, an ANZ team that we're showing they're building that muscle interaction together. But in Randy's team alone, each one of the 3 regions, it's not a complete fabric where everyone's got the motions perfectly there so far. We've got certain team areas that are going faster. So the more that becomes a growth engine, there's multiples of where we're going to get both the cloud growth and that relationship, but overall, our entire platform. I hope that gives you some ideas.

So regarding the other part of the question, how we get to the $500 million. So obviously, we start at the $302 million that we ended 2025. Now if you look on 2 elements, recurring, nonrecurring. So we ended 2025 at 80%, 20% nonrecurring. On the target year, we expect to be close to 90% on the recurring. Recurring again, is the cloud ARR and non-cloud ARR and services. I'll start with the non-cloud ARR, which is based on subscription of our appliances as well as the software component with some headwind on the services. All in all, this element, we expect to continue and grow single digit. And the ARR portion, we expect it to grow at 25% and that would bring us to $500 million.

Jeff Hopson from Needham. Maybe for Randy, what is so challenging about the North American market? And why does it require a different approach that maybe has led to the changes that we've seen over the past 18 months?

That's a great question. I think it's a more discriminating buyer in North America. And I only know North America, but I know that to be a highly competitive market. That's where companies typically go first and try and go big. And so for us, it's building that new strength, right, leveraging what we have and finding ways to accelerate that cloud growth based on the core competency of who we are. There's a certain brand recognition and expectation that we have in North America, and we're trying to change and evolve that so that we're just not that on-prem DDoS hybrid DDoS provider, but we're also a very competent, very credible, very competitive cloud provider.

And so it's a different conversation. It requires a different sales motion in North America, where previously, we were trying to tend to the installed base and new customer acquisition in a single sales motion. The dynamics of this market necessitate that we handle it differently. We have to deal with the installed base customers separately and exclusively and bring that new hunting motion, which doesn't get distracted in the important business of maintaining customer intimacy and advocacy, that's important, but can now go hunt distinctive new logos across the portfolio of what we sell.

So I think -- and I don't -- Europe is a country-based sort of approach. And so it's handled sort of country by country. It's managed that way. North America is a different dynamic and even the way we would segment the market. So for me to try and go after the entire market would be a huge distraction, which is why we focused vertically. We think we can win repeatedly and scale in health care, life science and financial services state local education is a great market for us. So that's kind of where we've pointed our guns and where we've now been successful going to market in this new way.

I want maybe to add to that is that all over the world, we're seeing opportunities, and that's what David mentioned, to actually align all our organization, go-to-market organization to same best practices. So I think similar, I would say, outcomes or improvements. There are other markets that we're looking for as well as bringing some of the best practices here to North America. So I think we just need to do the work. There's ample potential all over the world for improvement of growth rates by aligning and organizing in similar ways that we've done here. And David is on the job to do that, as he mentioned.

We had -- I've had this conversation a few times this morning just about brand. And I think the Radware brand in North America is its own sort of thing that's evolved for 30 years. I don't own the brand. We don't own the brand. I can influence the brand. And so I think in very direct specific measured ways, we've begun to positively influence the Radware brand such that it's a cloud-first brand. And that's by bringing to market great salespeople, great sales leadership, a new face to the sales force.

We had an executive exchange we do once a year this year in Scottsdale, and we had 60, 65 distinct existing customers and prospects in the executive exchange. It's a 2.5-day event. And after the first half of the first day, I was pulled outside by a couple of existing customers to say, hey, something feels different here. The content is different, the message is different. It feels different. You guys have really upped your game. Like you just -- you're saying different things and it feels pretty good. And we get the same feedback at the FS-ISAC event, the HIMSS events at Black Hat and RSA.

So it's also -- it's showing up and doing business on customers' terms and really trying to influence the brand in a new way. And it's everything to do with the people we've hired, those 30 new people and the great leadership team that we've built that are projecting that brand in every conversation we have.

One thing and Roy kind of reinforced the global nature. I kind of also want to say that this is not a combination of our first rodeo and going through this before, you could see where you can cut through in a given market around the world, like in India or pick a certain submarket of EMEA or Asia and so forth, where it might work for that area, but it doesn't necessarily mean that it's going to cut through what Randy mentioned earlier about what it means to make the difference in U.S.A. and North America because of the exact things he brought up earlier.

But when you actually nail it and win here, it actually has an echoing effect everywhere. That's why we're making such a big deal about this North American focus. This will create a high tide where all boats will rise off of that. The other thing I was going to say about growth is there's really 3 main knobs. The 18-month investment that Randy was talking about getting the team right and the focus down is a knob that's important on executing. The second -- and it also gets the outputs you mentioned on that effect where these folks that are out in the field and representing us are all coming together to drive this -- the new Radware perception, right? Then the 2 other main knobs we have are partnerships and marketing. So we -- and by the way, I would argue the more orchestrated all 3 of these knobs are and not seen as silos or independent things is where the power is amplified.

Yes. And I just want to quickly address the brand since I own it. We -- when I joined the business, I told you about what we focused on, right? What are the growth drivers? What should we go after? And I partner very closely with David and his team to build product that we are now launching into the market. A brand needs to be credible. It needs to be ownable. We're now in that position where we can credibly own a new brand. And that is a big project coming up for me, for my team. So again, I alluded to that before. We're going to be doing some work there.

Doing it 2 years ago, probably it wouldn't have had the effect, right? It's -- everybody's heard, it's a bad analogy, but I'll use it anyway, lipstick on the pig. This is more than that now. We are more than what Radware was as short as 3 years ago. And I think we're ready now and have built a solid solution platform foundation that will sing in a new brand and new messaging. We're going to improve in North America our brand awareness, and we're going to improve the perception of the brand, as I said in my slides, get rid of that legacy tag and start to make sure security buyers see Radware as synonymous with innovation.

Bob Johnston with Herald Investment Management. It's been helpful. One thing I'd like to do is just dig more into the incentives. You talked about going to Hunter Gatherer. How is that divided? Number of reps, what percentage in either one? And how are they being incented? And then globally, you've had OEM relationships in the past and incentives weren't correct. So how do you feel that you're now setting up incentives with OEMs, with MSSPs to do the expansion that you're looking for to get to $500 million in ARR?

You start with North America, and I'll cover the ...

Okay. Yes, I'll start from a North American perspective. From a coverage compensation perspective, it is a typical commission-based compensation plan, a little bit different between hunter and farmer on the hunter side. It's all annual contract value-based commission. The split is typical in the industry in terms of base and commission, that's 50-50, 60-40 is typically where you see the comp plans come in.

On the hunting side -- I'm sorry, on the farming side, it's a little bit different because we're asking those farmers to do more than one thing. We want you to grow cross-sell and upsell. And for that, there's an ACV component of the comp plan, but there's also an ARR component. We want you to pay attention to ARR, preserve and grow ARR. That is the essentials of that job. And it's a different sales type of person, executive account management than it is from hunting. So the skills are different, where we've hired is different. The up level we've done is purposeful and different.

You'll find the mix between those teams in North America, it's about 50-50 between hunters and farmers. I also lump in my service provider carrier team and my Canada team tends to do a little bit of both. It's just a smaller market, but they're pretty confident with their know-how and experience and customers. From a partner perspective, we have completely revamped our partner program.

The big part of partnering in North America, and maybe this is back to one of the challenges and difference in North America is it tends to be a very partner-led, partner-centric market. And so in some ways, it's the cost of doing business. You have to show up on their terms and you have to be there. There's a whole lot of partner hustle, and you can't try and be all things to all partners because you'll never get there. A big Cisco can do that, Radware can't do that.

So I have to be very specific and targeted in terms of who we embrace from a partnership and how we go to market together. And then we need to create very attractive, very lucrative sales financial opportunities for our partners to make it make sense, to get their attention because they have a lot of people courting them trying to be their primary vendor in whatever the technology.

So it's a lot about showing up, showing up, for example, last week, GuidePoint had their sales kickoff in Orlando. It's just table stakes. I have to be there. I have to be there, and I have to be part of that experience, and I have to show up and we have to create and talk about the joint opportunities that we can create and pursue. So that those GuidePoint reps all over the country are thinking first Radware when it comes to this particular opportunity.

So we have a sophisticated, mature, modern partner program that is very strong, attractively incentive-based to attract and recruit and retain and then pay and partner that partner community. That's a good part of what's working. And as we grow, we aspire to just grow that part of the business.

And regarding the overall -- as Randy mentioned, we moved all compensation plans in the company to be ACV and ARR based from total deal value or CapEx. So the whole company is aligned to ARR and ACV. Some of the challenges you've mentioned like MSSP, then being -- selling on a yearly basis and cloud contracts, et cetera, have gone away once the whole company works on annualized terms. So there's no more those large CapEx quotas, et cetera, and should I do MSSP or just try to sell them equipment. No, you should do MSSP because of the scale effect.

And actually, given the ACV and ARR focus of the company and the comp plans aligned to that, it's very lucrative to land an MSSP. You've seen the numbers. So all the sales force are very, very interested in this type of partnership and scaling the business because it gets them way over their targets if they're able to execute that. So I think we're pretty much aligned. People see the value and the potential in that. And I think in our -- even in our President Club or what we call Circle of Excellence for 2025, I think two of the awarded teams, two of our most successful teams did it based on MSSP. So I think now in the company [indiscernible] ...

One other part that's critical on ensuring that these aren't Barney agreements and we truly are economically partnering. And you heard from Randy being there at that SKO is a big deal. But I think so fundamentally, we are executive, executive connected in that company, right? Their CEO came to a big event of ours before I came on board. I actually know the story. And the key of the relationship for us is we need to hold each other accountable that we can live up to even in QBRs to say, for what we needed from each other's last quarter, how did we do? Where somebody needs to do better, how do we do better?

This is also the reason where you don't necessarily even keep logos as a partner forever. There might be certain that have to cycle if from one side or the other, we're not being the kind of partners we need to be to each other. That's how the 80/20 rule or 85-15 rule works. So I think we're doing the right things on an executive-to-executive basis. Then it goes to in region, how those quarterly areas happen. And then within every -- within days and weeks of every quarter, how do the teams execute with each other. So yes, I think we have different stages of muscle memory on that across the world. But the goal now is to take the best practices we have in each region and keep raising the bar.

Jim McAree, Neuberger Berman. I get 2 different questions here. One is the API security market is very competitive and maybe connecting some dots. How important or how helpful is having a road map to agentic AI security in winning some business. And then the other question, completely different, has been on my mind for a number of years, how can we don't do more business with the U.S. federal government?

So I'll defer -- I have my own U.S. government. My background is very much U.S. government, national intelligence. It's kind of where I started years ago. So I know a thing about that market. It's the biggest market in the world. And my personal opinion is, while it's important, it is a loose market. It's a very difficult market. It can be lucrative, but the barrier to entry is very high. So I'll let Roy talk about that barrier entry.

There it is. Yes, you got me. I think you can hear me on the less. So an important market, a very lucrative market, a very difficult market. It could be things like fiscal cliff and continuing resolution and all those great things. And despite all that as a salesperson, at the first of the month, the rent is due because unfortunately like Roy doesn't care about all that. And so we're not -- although we are pursuing the SLED business, it's a little bit different, and I think we can be very successful there based on some great relationships we have. We're not -- we haven't put our toes in the Fed market.

To the API question, it is a very competitive market. It is a market -- it's -- I think it's -- we're still in the gold rush in that market that those monuments have by no means been erected to commemorate who won that market. I think we are going to show up and win our fair share and probably more. But having that agentic AI conversation in terms of innovation, it's the difference that makes a difference. Because I tell a very strong, believable, comprehensive API story, and I put my money where my mouth is in POC.

And then we have the opportunity to bring in David Aviv, who is, among other things, he's a magician and he brings magic. This is -- the agentic AI piece is real magic for us, and it's believable, and it's back to that -- the biogenesis I talked about in terms of innovation. And sometimes that's what takes the customer to the next place because we're creating real possibility as we're staring down what's next for us. So it's a great story. I think we tell it better than anybody.

Again, go to RSA, everybody is telling some version of an AI story, but we can show up and we can bring that magic to life, and I can solve your API security problem today. So it's a great story to tell, something that we just did our sales kickoff at the 1st of January, and it was the focus of main effort for the sales force. We're going to tell the API story. We're going to go win with API, and we're going to follow on with that AI piece. Roy, do you want to talk about?

Yes. I think on API, there are many players, but we have a very strong security solution per se in API itself. But we also bring this fully integrated platform. And when you talk about API security, it's true that there's API attacks, but the same API endpoint can be attacked by a DDoS. The same API endpoint can be attacked by a bot that will try to do over and over activities. So it's not enough to limit yourself in API security to API-specific attacks because there are other vectors that apply to the same API application.

So versus the start-ups that are coming with pure API-only security, we're coming with a broader, stronger solution. And versus some of the other players that are cloud security and so on, they generally went into API by acquisitions. So they don't have one platform. They have several products that together maybe can operate. We're bringing one fully integrated comprehensive platform. I think we're coming, like Randy said, at the right time, the right solution. And I think like we did in the other markets, we've been very successful in the large enterprises. We'll be very successful here as well. And with the MSSPs and the OEM, we're planning to leverage it also down to midsized enterprises.

I just wanted to add something on the AI piece and how important that is. Randy mentioned in his presentation that we rebuilt our SDR team. So for those who aren't familiar with the SDRs, these young kids out of college, very aggressive and hungry want to set up meetings for us, right? We want to get our salespeople more at that, right? And at in our world is meetings. And it's early days, so I can only provide anecdotes, but I can tell you that when we're sending out e-mails because it's cloud AppSec is competitive, because API is competitive, those e-mails don't get as many responses as AI. People are talking about AI. They want to have conversations about AI. So the direction that I've given to my SDR leader and the SDR team is use that as your wedge in. It doesn't mean we can pivot that conversation, right?

We can talk cloud AppSec because maybe they're not happy with their current provider. We can talk API security again because maybe they have an incomplete solution and they're seeing their APIs attacked by business logic attacks, which is one of our core differentiators. So AI, they're answering more e-mails, they're picking up more phone calls, and we're getting inbound, right? Our demand gen from an inbound perspective based on the discoveries that David talked about, ShadowLeak 1, ShadowLeak 2, ZombieAgent.

We have maximized our marketing wrapper around those. We've had webinars, right? We've had e-mail campaigns. We have nurture campaigns and everything set up. So capturing that early level demand, tossing that into the SDR pool and driving for meetings so we can get Randy, his team and all our team members globally more at that. And again, they'll pivot the conversation, whichever the way they'll pivot it, but AI is an amazing starter.

We'll take a question from Ryan Koontz from Needham. How do you manage channel conflicts across your OEM, MSSP and direct?

So channel conflict is a reality of the business. It's going to happen. You need to expect it's going to happen. And it has to be done by way of good agreements, good agreements make good friends. But it's also -- it's best mitigated through a modern, sophisticated partner channel system where you have, for example, a deal registration process and you honor and respect deal registration so that you just keep objectivity in your partners. And then when it's time to resolve that partner conflict, that you do it directly. You do it responsibly.

And sometimes maybe it's a little tough love to one of those partners, but it can't be something that drags on, that's debated and relitigated. It needs to be addressed. It needs to be resolved with a commitment to not do that again and to learn from it collectively and move on in a good, sophisticated mature channel program. And I think we have that.

We have a great deal registration program. We have great partner agreements, and we have the leadership courage that it takes to have the tough conversations when you find yourself, these can be very passionate issues for partners who think they themselves have a legitimate registration or first mover in a particular opportunity. So it's got to be managed in a very deliberate, respectful way. And I have a great channel leader with great channel know-how who does that at least on a weekly basis.

Randy, you mentioned very strong momentum in the North American organization. Can you give us some sense of the kind of the backlog that's building perhaps? And maybe what would give Guy confidence to become a little less conservative with his projections because it looks like we're growing double digits and poised to meaningfully accelerate.

I think 2 things stand out from leading indicators. Sales force readiness is important. And it took me the better part of 12 months to build a new sales force and bring readiness to near 100%, learn the Radware way, build sufficient, believable pipeline, do all those things that you have a competent ready sales force, they can now go shape, develop and close business. Number one, my readiness is at almost 100% in terms of new hires that we made within the last 12 months. So we've worked very hard, very quickly to do that.

Number two, pipeline, if you were to look at -- let's talk funnel, funnel is inclusive of all deals at all stages. My pipeline mix is breathtaking, is a word I would use, in terms of both diversity of deals. So we're selling the breadth of the portfolio, the maturity of the deals, how far advanced they are, how quickly we're growing and advancing that pipeline and then the size of these deals themselves. Both on-prem or hybrid DDoS deals, cloud deals, cloud AppSec deals, competitive replacement refresh deals, many routes to market, the pipeline growth in not just acquisition and hunting because you would believe it would be big there, it's big, but also in farming. Just by now treating these customers in a discrete different way, no distractions, the pipeline we're building there from that cross-sell, upsell motion and not one refresh passes us by.

We're starting these refresh conversations well out to go take advantage of that when the refresh is due. Those are very strong leading indicators. And what we didn't necessarily do on the hunting side is wait to see a bunch of success before we started investing and hiring more. We see these leading indicators and Roy said, go hire. And so I went and hired another sales director, and then we separated and expanded into the West Coast, which is where we were a little bit light. And so that in aggregate is a very strong -- I won't speak for Guy. I'll let Guy address that.

But those for me are very strong leading indicators in terms of what's possible and we started seeing it in Q4. Q4 is a very strong quarter for us because of the great selling Roy and I had a one-on-one early in the quarter. And he said, "Hey, what do you -- if things look good and strong, what do you attribute it to?" And I said, I attribute it to the things I just talked about, sales force readiness and the maturation and size of my pipeline is such that we're going to close consistently in a very strong way, and we did, and I expect that momentum to continue.

So again, look at the model. So as time go by, I'm less dependent on one deal. So yes, I have the backlog, I have the $400 million RPO, but I have the model, which is stronger. So as long as we can do a sustainable cloud ARR and non-cloud ARR growth, then my next quarters are secure. So the lateral model totally changed in the last few years. So it's in a way, easier for us to forecast the future even without knowing what's the next PO.

In each of the 2 of them talked about on the leading indicator side also is our solution architect and technical teams [ demo ] and POC cycles. When we talk about especially the larger game deals with the largest revenue don't get done with the POC. Do you agree? [indiscernible]

So that's another thing that I eyeball quite a bit, not only for North America, but for every region around the world is how we're doing with our leading indicators about our bets and our bets turning into demos and then demos to POC. I'd say, back to my first impression slide, super impressed with this company's win rate on POC.

We get it to a POC and the disciplines that this guys described earlier, we nailed down critical success criteria and our win rate is very high on entering a POC and coming out the other side. But I'm not going to take away that these can't still be 9- to 12-month sales cycles, but the -- we have the right indicators to track along the way on how we're really confident about how we think we're going to do on the other side.

No further questions. Thank you, everybody, for coming.

I would like to thank all of you for spending the time with us. Hopefully, it was constructive and helpful in understanding the business, the momentum and our -- not only what we do now, but also how we're going to the future. So thanks a lot for your support and trust in us.

Ladies and gentlemen, thank you for standing by, and welcome to Radware's Fourth Quarter and Full Year 2025 Earnings Call. Our prepared remarks today will be followed by question-and-answer session. [Operator Instructions] I must advise you that this call is being recorded today.

I'd now like to hand over the call to our first speaker today, Yisca Erez, Head of Investor Relations. Yisca, please go ahead.

Good morning, everyone, and welcome to Radware's Fourth Quarter and Full Year 2025 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 fourth quarter and full year 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 forecasts 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 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 28, 2025. 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.

Before I turn it over to Roy, I'd like to remind you that we're hosting our Investor Day on February 17, in New York City. If you haven't received the registration e-mail, please e-mail us at [email protected].

I will now turn the call to Roy Zisapel.

Thank you, Yisca, and thank you all for joining us today. I'm pleased to report that we ended 2025 on a high note with all major financial metrics, revenues, EPS, total ARR and cloud ARR reaching record highs. In Q4, revenue increased 10% year-over-year to $80 million and non-GAAP earnings per share grew 19% to $0.32. For the full year, we also delivered 10% year-over-year growth in revenues, surpassing $300 million while growing our RPO to $400 million.

Over the last year, we've executed a strategy to accelerate our revenue growth and strengthen our position as the best-of-breed provider in application and data center security. Our strategy is built on three core pillars: gaining meaningful market share in cloud security; leading through AI and algorithmic-driven innovation; and expanding our go-to-market footprint.

Well, we did it and our strategy proved itself. The cloud security business continued to grow at a healthy pace and remain a key driver of our results with cloud ARR rising 23% year-over-year and 7% sequentially to $95 million in the fourth quarter. This shows accelerated growth from 19% in the beginning of 2025 and demonstrates strengthening momentum throughout the year.

We achieved our goal of reaching nearly $100 million in cloud ARR by year-end, underscoring the confidence customers place in Radware to protect their mission-critical application. One example among the many cloud deals we secured in Q4 is a 7-digit deal with a European financial group, a new logo, which is undergoing a major data center build-out. We were selected to provide a comprehensive cloud, web and API solution, web DDoS protection and more, all aligned with the stringent regulatory and operational demands. Our strong technological leadership and trust relationship enabled us to overtake the competition.

To support rising cloud demands, we continue to invest in our cloud infrastructure. We expanded our global footprint with a new cloud security center in Singapore, and we also continued scaling our cloud security network, advancing mitigation capacity towards 30 terabit to stay ahead of the increased attack volume and fortifying the foundation for continued cloud security growth.

This quarter, we expanded our cloud security offering with the launch of our new Radware API security service. We view API security as a new wave of growth, the third wave following DDoS and application security. As APIs become increasingly central to modern software architecture, customers need real-time visibility and protection against business logic attacks and coverage for shadow APIs.

To further expand our API security offering, we announced the acquisition of Pynt Security, whose API testing technology identified vulnerabilities before the APIs reach production. With Pynt, we now offer a full life cycle API security solution, spanning testing, discovery, posture management and runtime protection, enhancing our value proposition, accelerating our road map and strengthening our position to capture opportunities in this rapidly expanding market. This is truly exciting news and an enhancement to our cloud security platform.

But we did not stop here. We just released our new Agentic AI Protection Solution, which marks yet another major expansion of the Radware security platform. As organizations use anonymous AI agents, risks like intent manipulation, prompt-based attacks and unauthorized data access increase. Our solution leverages a new set of behavioral algorithms and provide real-time AI agent discovery, intent detection, integration with top AI ecosystems and ongoing security management.

These advancements help enterprise adopt AI securely and supports Radware continued platform growth. This new capability positions Radware at the forefront of securing the next era of AI. We look forward to sharing more about our AI vision and road map on our Investor Day.

Fueled by strong cloud ARR momentum, subscription revenue surged 21% year-over-year, a sharp acceleration from 12% growth in 2024. Importantly, this momentum was also driven by robust demand for product subscription. This demand was driven by very strong DefensePro X cycle and major competitive displacements, resulting in exceptional double-digit year-over-year growth in DefensePro X in Q4 and for the full year of 2025. Looking ahead, our pipeline remains robust across both existing and new logos, and we plan to take full advantage of our technology leadership in this space.

We closed multiple large DefensePro X deals in the fourth quarter. One 8-digit win was a major strategic expansion with a government IT services agency in North America. Facing an upcoming end-of-life refresh, the customer selected our next-generation DefensePro architecture, reinforcing our deep technical engagement and proven on-prem capabilities as well as our long-term relationships.

Another important win is a multiyear, multimillion dollar agreement for a hybrid cloud DDoS with a new logo, top 10 global SaaS and IT services management leader. Facing repeated large-scale DDoS, the customer required fast, reliable mitigation at global scale and its legacy solution could no longer meet performance and resilience needs. The customer replaced its on-prem vendor and cloud DDoS vendor with Radware DefensePro X and Cloud DDoS Protection. Our detection accuracy, automation capabilities and proven ability to protect mission-critical applications were key differentiators that drove the wins and position us as a strategic partner for their continued expansion.

Overall, 2025 was a year of improved execution and meaningful progress across the business. We delivered record results driven by continued expansion in cloud security and increased momentum in our go-to-market engine. Additionally, we advanced our technology leadership with significant innovation in AI security and API security. With a stronger foundation, a strengthening go-to-market approach and enhanced TAM, leading security platform and rising demand for modern security solutions, we're carrying this momentum forward as we move into 2026.

With that, I will turn the call over to Guy.

Thank you, Roy, and good day, everyone. I will review the financial results and business performance for the fourth quarter and the full year of 2025 as well as our outlook for the first quarter of 2026.

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 press release issued earlier today and in the Investors section of our website.

We closed the fourth quarter with a strong finish, delivering record revenue and record non-GAAP earnings per share for both the quarter and the full year. In Q4, revenue increased 10% year-over-year to $80 million, driven primarily by continued momentum in our cloud security offering and the DefensePro X, both new logos and refresh. For the full year, we delivered 10% year-over-year growth in revenue to a record of $302 million.

Cloud security offering continued to be a key contributor to our performance. Cloud ARR grew strongly in the fourth quarter, increasing 23% year-over-year, and we ended 2025 with $95 million in cloud ARR. Cloud ARR was the primary catalyst behind the acceleration of total ARR from 8% in Q3 to 11% growth year-over-year, reaching $251 million and becoming a larger share of our overall ARR mix. We will elaborate on this trend at our upcoming Investor Day next week.

As we indicated on our last call, Q4 delivered exceptional booking performance, delivering RPO to a record of $400 million, up nearly $50 million from 2025 and 13% year-over-year growth. This reflects solid demand and improving deal visibility as we look ahead to 2026 and beyond.

Looking at regional performance. In the fourth quarter, the Americas region declined 4% year-over-year to $32 million, while in the full year of 2025, the Americas grew 6% year-over-year to $125 million, representing 41% of total revenue. As highlighted earlier, we had an exceptional booking quarter led by the Americas, and we expect this strength to translate into revenues over the coming quarters.

EMEA delivered performance in Q4, revenue increased 38% year-over-year to $32 million, accounting for 40% of total revenue. For the full year, EMEA revenue grew 18% year-over-year to $111 million, representing 37% of total revenue.

In APAC, fourth quarter revenue declined 3% year-over-year to $16 million, accounting for 20% of total revenue. For the full year, APAC revenue grew 5% year-over-year to $66 million, accounting for 22% of total revenue.

Turning to profitability. We delivered solid margin in the quarter, supported by favorable mix, model leverage and continued scalability in our cloud business. Gross margin was healthy at 82.2% in Q4 and in the full year of 2025 compared to 82.4% in Q4 2024 and 82.2% in 2024. Operating margin expanded by 240 basis points in the fourth quarter and by 330 basis points in the full year of 2025. Our operating expenses reflected targeted investment in innovation, cloud infrastructure, and go-to-market initiatives that support our future growth, and we plan to increase these investments in 2026.

Following February 2026 financial review, it was decided based on accounting principle to classify SkyHawk's operation as a discontinued operation and excluded from our non-GAAP reporting as of the first quarter of 2026. Importantly, we expect EdgeHawk to begin generating revenues in 2026. Therefore, we will be no longer providing EBITDA breakdown as we expect it to negative EBITDA contribution to be marginal.

Adjusted EBITDA for the fourth quarter of 2025 increased by 25% to $13.7 million compared to $11 million in the same period of last year. Excluding the Hawks business, adjusted EBITDA for the fourth quarter was $16.9 million, representing a 21.1% EBITDA margin, up from $13.7 million and 18.8% margin -- EBITDA margin in Q4 2024.

Adjusted EBITDA for the full year of 2025 increased by 37% to $47.4 million compared to $34.7 million in 2024. Excluding the Hawks business, adjusted EBITDA for 2025 was $58.8 million, representing a 19.5% EBITDA margin, up from $45.6 million and 16.6% EBITDA margin in 2024, a testament to the operational leverage in our core business.

Financial income for the fourth quarter and full year of 2025 was $5.1 million and $21.1 million, respectively, up from $5 million and $17.8 million in the same period of last year. Due to lower interest rate, share repurchase plan and M&As, we expect lower financial income in 2026.

Our effective tax rate for the fourth quarter was 14.9% compared to 15.4% in the same period of 2024. For the full year of 2025, effective tax rate was 15.3% compared to 15.4% in 2024. We expect the effective tax rate to remain approximately at the same level in the coming quarter.

Net income rose 21% year-over-year to $14.5 million compared to $11.9 million in Q4 2024. And diluted earnings per share increased by 19% to $0.32, up from $0.27 in the same period last year. For 2025, net income rose 37% year-over-year to $51.5 million compared to $37.7 million in 2024, and diluted earnings per share increased by 32% to a record of $1.15, up from $0.87 in the same period last year.

Turning to cash and the balance sheet. Cash flow from operations in Q4 2025 was $17.3 million compared to $12.7 million in the same period last year. Cash flow from operations in 2025 was $50.1 million compared to $71.6 million in 2024. During the fourth quarter, we repurchased shares in the amount of approximately $10.5 million. We ended the quarter with a strong liquidity position, holding approximately $461 million in cash, cash equivalents, bank deposits and marketable securities. This cash position provides us with flexibility to invest in organic growth, support cloud capacity expansion and product innovation, maintain a disciplined approach to capital allocation and pursue acquisitions that enhance our cloud platform, such as the acquisition of Pynt, a technology tuck-in acquisition, which strengthened our API security capabilities.

And now to the guidance. We expect total revenue for the first quarter of 2026 to be in the range of $78 million to $79 million. We expect Q1 2026 non-GAAP operating expenses to be between $54 million to $55 million. The expected increase in Q1 2026 OpEx versus the fourth quarter 2025 reflect our continued investment in innovation and go-to-market, along with approximately $1.5 million of exchange rate impact associated with the U.S. dollar weakening. We expect Q1 2026 non-GAAP diluted net earnings per share to be between $0.28 and $0.29.

With that, I'll turn the call back to the operator, and we'll be happy to take your questions.

[Operator Instructions] Our first question comes from Joseph Gallo from Jefferies.

Nice job this quarter. Our RPO grew 14% in 2025, which I think was double what you were targeting. Can you just talk a little bit more about what drove that strength and what your expectations for RPO growth are in 2026?

Yes. I think as Guy mentioned and also in my comments, we have very, very strong booking, driven both in cloud and in product subscriptions. So definitely, we saw a lot of momentum there. And as those subscriptions are being recognized over the period of the contract, obviously, RPOs are growing nicely. For next year, at this point, we expect RPOs to grow in line with the revenue growth. Of course, there's opportunities to do more than that. But at this point, that would be our expectation.

Okay. No, that's helpful. And then, I know the EMEA was really strong. U.S. declined a little bit. Part of that is just due to the tough 4Q '24 comparables. But could you just unpack a little bit more? I know you've invested heavily in go-to-market in the Americas. Just an update on if any changes are remaining there and when we can see a rebound in the growth profile of the Americas?

Yes. I think on a booking perspective, North America had a very, very strong Q4 with very significant growth. Yes, you don't see it in the revenues, but from the numbers we see, the traction we see, we've done a lot of progress this year and in Q4 specifically. And as part of our 2026 plan, we are actually increasing our investments in North America. We'll talk about it in the Investor Day, but we are adding more personnel, additional ways to market and so on. So we think we're progressing well, and we're confident that we can continue to grow there significantly.

Our next question is from Chris Reimer from Barclays.

Congratulations on the strong quarter. I was wondering if you could talk about the broader market environment where we've seen a lot of volatility in relation to potential AI disruption in cloud services. How do you think security, in particular, is positioned? Would you agree that it's a bit more defensive? And then if you could just explain maybe why?

Yes. I think to begin with, obviously, attacks continue to take place and you need very strong security. And I think what's unique in security is that the hackers are also using AI. So not only that attacks continue, they're actually becoming more sophisticated, more volumetric, more frequent and more dangerous.

On top of that, the circle of possible attackers is being expanded because today, even someone who's not an expert using tools and it's becoming more and more as time goes, they can become very, very professional by using prompts on open-source models, on malicious models and so on. So even the gaps between the, I would say, a regular hacker and a very professional hacker is constantly eroding.

As a result of that, I think there's a fundamental shift and requirement on the defense side to use way more algorithms and AI. And it actually plays to our strength for many, many years, as you follow us, we are constantly talking about algorithmic security, AI-based security and so on. And it's becoming clear that that's the only way to protect.

So that's item number one. You need AI-based defense because the attackers are using AI. And it's not -- whether they displace the applications on the enterprise side or not, attacks continue becoming more frequent, more malicious. You need better security. Radware is positioned extremely well here. That's item number one.

Item number two is as you deploy those AI agents, you give them access to all of your tools, data, resources, enterprise applications. And suddenly, there's a huge risk from a risk -- productivity perspective, it's clear why we do it. It's clear why enterprise are interested and so on.

If you look from a security point of view, suddenly, those entities, those human entities have access to everything. And if I'm a hacker, I'm now targeting them instead of targeting the human and I'm getting control over them, the damage is enormous. There's no limit to the size of the damage, leaking personal information, changing files, deleting resources, you name it. It's a complete chaos.

We are targeting that market, protecting the agentic AI, those AI agents with our new AI security offering. So we're seeing a completely new TAM a huge opportunity in front of us to secure those agentic AI and a great growth opportunity. That's what we are targeting with the new solution. So for us, this agentic AI is a significant TAM expansion that we are going after, and we believe that can be another growth area for the company beyond DDoS, beyond the continuation of the WAF, but we're doing very well there. Beyond the new wave of API, we see agentic AI as yet another growth driver.

So I'm looking at AI on multiple ways, the attacker using AI and then the need to protect by AI, a lot of your applications. And then the second wave is protect the AI, agentic AI. And last but not least, as users will start to use those AI agents and AI browsers to approach applications, we will need to enable the service of those AI agents. And that's another layer. We are going to cover it in the Investor Day. We'll call that [ surve AI ]. So we're seeing three distinct major opportunities with AI, and we're excited of the opportunity ahead.

Great. That's really helpful. Good color. Just one more on the revenues guide for Q1. And forgive me if I'm wrong, but to me, it seems like it's a little higher than the usual Q1 seasonality. Are there any differences going into Q1 or maybe something specific impacting?

Well, actually, you're right. It is different. Normally, we're seeing a sharp decline after Q4. But as we both mentioned in our script, we saw strong demand in Q4, and we are entering the year with very solid backlog that give us confidence that Q1 revenue is going to be according to the guidance.

Our next question is from Ryan Koontz from Needham.

This is Jeff Hopson on for Ryan Koontz. Congrats on the quarter, and thanks for the question. For the API and the agentic AI security solutions, will any changes needed to be made to the sales motion to best sell these?

Yes. Great question. So for the API security, we think it's squarely within the knowledge, capabilities, existing go-to-market of our sales force. And it's actually a great extension and expansion of our current cloud security motion with customers. It's the same buyer and so on.

AI is a completely new market. It's even responsibilities for that within the organization of who will actually protect the agentic AI? Is it the CISO? Is it security operations? Is it the business? Are yet unclear. And for that, we've already assembled a dedicated agentic AI go-to-market overlay group that's actually working in tandem with our sellers and channels to advance our position in this market. And as the year will evolve, we'll see how to completely integrate it into our sales force.

But API completely integrated, already all our workforce is trained, accessing customers. And for AI, it's this overlay effort that I've mentioned.

Got it. And you also noted a win for DefensePro X refresh that was facing end of life. I guess how far along are we in that refresh cycle? Or how many customers are out there still needing to refresh?

So it's -- we announced end of sale, and we haven't crossed half of the way. So we still have a long runway here in terms of refresh.

Our next question is from George Notter from Wolfe Research.

A few questions. I was just curious about the agentic AI product. I'm trying to figure out how you guys are going to go to market with that in terms of just the commercial arrangement, how are you guys going to price it? I assume it's a subscription-based offering. Is it cloud managed? Does it run on DPX? Is it a hybrid model? Anything you can share would be really helpful. I've got some follow-up questions, too.

Okay. So at a high level, it's a hybrid model. It's subscription-based. It's cloud managed. And there are multiple options, some are per seat and some are a certain yearly subscription per agent and usage-based on tokens, depends if it's enterprise AI agent or it's a copilot like operation. We will provide much more information and details on all these AI, agentic AI options and go-to-market in our Investor Day, but that's the current go-to-market.

Got it. And is it sold a la carte? Or is it bundled as part of a larger Radware offering around cloud and subscription.

It can be done both ways.

Got it. Okay. And then I'm just curious, if you think about agentic AI and enterprises deploying agentic, I'm curious about how you see the intersection of the marketplace with your timing on product delivery. Certainly, it seems like many enterprises are struggling to roll out agentic and kind of move from proof of concept to commercial deployment. I know there's a lot of pitfalls in that process. Many of them are sort of operational and concerns about data and security, and that kind of feeds into your business. But how do you think about the timing of your product relative to the development of the marketplace? And then how quickly could this product ramp?

Yes. I think we have great timing because now it's really when enterprises will start moving those POCs into production. So it's very early time like you're saying. And we're coming with a very, very strong offering there. It's not only guardrails or some rules based on model. It's a complete behavioral algorithms, testing and POCs with customers have proven very, very strong results. So we think we're in a great time to the market. I think there's a lot of possible alliances as this market is very early and shaping up. And three, like you said, there's a major concern with those AI agents on compliance, on security, on data leak, and those are the problems we solve.

So I think here, security is even more critical as much as I can say that than in a regular application and already there is obviously critical because it's fundamental to the use of agentic AI. So I think the role is critical. I think it can drag with it a lot of our other offerings like API security, like web security for the same applications that the agent AI is covering. So there's tremendous opportunity for us.

There are no further questions. I'd like to hand over the call to Roy for a closing statement.

Thank you, everyone, and we look forward to meeting you next week in our Investor Day. Have a good day.

Welcome to the Radware conference call discussing third quarter 2025 results, and thank you all for holding. [Operator Instructions] As a reminder, this conference is being recorded today, October 29, 2025.

I would now like to turn this call over to Yisca Erez, Director of Investor Relations at Radware. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Radware's Third Quarter 2025 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 third 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 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 detailed from time to time in Radware's filings.

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 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.

Thank you, Yisca, and thank you all for joining us today. I'm pleased to share that we delivered another solid quarter with revenue of $75 million, representing 8% year-over-year growth. Non-GAAP earnings per share climbed 22% year-over-year to $0.28. The quarterly results demonstrate steady progress in delivering on our strategic priorities. We remain focused on expanding our business in cloud security, driving innovation through AI and automation and strengthening our global go-to-market capabilities.

Let's talk a bit about each one of those. Cloud security remained a key growth driver in the third quarter delivering another exceptional performance. Cloud security ARR climbed to $89 million, up from $72 million in Q3 last year. Our cloud ARR growth trajectory accelerated once again from 21% last quarter to 24% year-over-year growth in Q3. We also saw continued double-digit growth in active cloud customers and a strong wave of new logo acquisitions, backed by a robust and expanding pipeline.

This sustained momentum reflects our strength and competitive edge, the growing demand for our cloud security offerings and accelerated growth in North America. To meet this growing demand and our expanding customer base, we've continued to scale our global cloud infrastructure and resources. We're adding more R&D, delivery and sales personnel to support the growth. In the third quarter, we opened 2 additional cloud security centers and we plan to open 3 more in the fourth quarter, bringing the total number of centers opened in 2025 to 8.

The growth in cloud security ARR was a key contributor to our overall subscription revenue growth, which grew 21% and rose to 52% of total revenue in the third quarter compared to 47% in the same period last year. This shift from a product appliance revenue stream to a subscription revenue model driven by cloud security growth enhances both revenue visibility and long-term business stability.

One of the cloud deals we closed in the third quarter was a competitive displacement in the U.S. health care sector. The customer selected Radware Cloud DDoS Protection to replace their incumbent cloud-based solution. We secured this win through a combination of trusted relationship, Radware's best-of-grade DDoS technology and world-class support.

As part of our broader cloud application security portfolio, Radware continues to drive innovation in API security. With APIs now central to modern application and application layer attacks surging, our AI-powered protection dynamically adapt to evolving threats, mapping business logic and defending against complex multi-endpoint attacks. Complementing this, our API analytics capabilities provide deep insights into API behavior, empowering teams to detect anomalies, understand business logic sequences and optimize performance with actionable intelligence.

Following our success in cloud DDoS protection and cloud application security, we see API security as the third wave in our cloud security growth strategy and believe it is a significant potential for 2026.

Radware's leadership in application security continues to be recognized. We were named a leader in the 2025 SPARK Matrix for web application firewall and bot management and an overall leader in the 2025 KuppingerCole Leadership Compass Report for web application and API protection. These honors reflect our commitment for delivering intelligent, scalable and multilayered security, including web application firewall, API protection, bot management and DDoS mitigation across modern cloud environments.

Our go-to-market strategy continued to gain momentum this quarter. In North America, the team is now fully ramped, as reflected in a 28% year-over-year revenue growth in the Americas and 15% growth over the trailing 12 months. We recorded solid business with our OEM partners, making our second best quarter ever. This continued successful collaboration reflects the growing demand for our integrated solution and the strength of our joint value proposition.

One example of this is a strategic win in EMEA through Cisco with a telecom provider. Seeking to transition from a legacy DDoS competitor, the customer required a more advanced and future-ready solution to support its expanding infrastructure and services. Our technical leadership and responsiveness to the customer's evolving needs helped to build trust and positioned Cisco and Radware as a long-term strategic partner.

Another win with Cisco was with a large U.S. health care system. Facing increasing threats and limited internal resources, the organization sought comprehensive protection across web applications, API and bot traffic. After evaluating multiple vendors, they selected our solution for its broad coverage and operational efficiency and our ability to align with their evolving needs.

Third quarter performance was also fueled by a strong DefensePro X refresh cycle, which grew approximately 40% year-over-year alongside successful competitive displacement in DDoS that doubled during the quarter. As previously noted, the DefensePro X refresh opportunity remains substantial with less than 50% of our end-of-sale installed base upgraded to date. During the quarter, we secured several 7-digit DefensePro X refresh deals, including a deal with one of the largest telecom companies in the U.S., a deal with a European financial service provider and with a leading European bank, among others.

In closing, our third quarter performance highlights the steady progress we're making against our strategic plan. Cloud security continue to be our strong growth driver with robust ARR expansion and accelerating momentum. We're seeing the benefits of deeper collaboration across our partner and channel ecosystem, which is helping us scale efficiently and reach new customers.

At the same time, our continued investment in AI-powered innovation is enhancing our platform and reinforcing our competitive edge. With a healthy cloud security business, a growing global partner base and increasing demand for our security solutions, we believe in our ability to sustain our momentum and capture long-term growth opportunities.

With that, I will turn the call over to Guy.

Thank you, Roy, and good day, everyone. I will provide an overview of our financial results and business performance for the third quarter as well as our outlook for the fourth 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 Investors section of our website.

In the third quarter, revenue grew 8% year-over-year to $75.3 million, fueled by sustained demand in our cloud security business. Our cloud ARR growth accelerated from 21% in Q2 2025 to 24% year-over-year, reaching $89 million, a clear validation to our strategy. This momentum reflects the growing demand for our cloud solution and underscore the strength of our transition to a recurring cloud-first business model. This recurring revenue base is a cornerstone of our long-term growth.

Total ARR rose to $240 million, up 8% year-over-year, reflecting the momentum behind our revenue growth. Total ARR is serving as a strong indicator of our overall revenue trajectory. As our cloud security business continues to scale at a faster pace, we expect it to drive total ARR growth higher and, as a result, drive faster company revenue growth.

Looking at regional performance. In Q3, the Americas lead the growth race with revenue rising 28% year-over-year to $35.4 million, representing 47% of our total revenue, up from 40% in the same period of last year. On a trailing 12-month basis, the region grew by 15%. EMEA revenue was $22.8 million, representing a 10% decrease in year-over-year and accounting for 30% of total revenue. Trailing 12 months growth was 7%. APAC posted modest growth with revenue up 3% year-over-year to $17.1 million, contributing 23% of total revenue. On a trailing 12-month basis, APAC grew by 8%.

Turning to profitability. Gross margin remained strong at 82.2%, similar to that of Q3 2024, underscoring the efficiency of our operations. Operating income grew 34% year-over-year to $9.6 million, up from $7.2 million in Q3 2024, this growth achieved alongside continued investment in cloud initiatives, highlighting the scalability and resilience of our business model. We are executing our strategy of scaling our go-to-market and R&D capabilities. These investments are designed to capture rising demand and position Radware as the leader in cloud and AI-driven security.

Adjusted EBITDA for the third quarter of 2025 increased by 25% to $11.4 million compared to $9.2 million in the same period last year. Excluding the Hawks business, adjusted EBITDA was $14.4 million representing a 19.1% EBITDA margin, up from $11.9 million, and a 17.2% EBITDA margin in Q3 2024, a testament to the operational leverage in our core business.

Financial income for the quarter was $5.3 million, up from $4.9 million in the same period last year. Due to decrease in interest rates, we expect slightly lower financial income in the fourth quarter. Our effective tax rate for the quarter was 15.5%, the same as in Q3 2024. We expect the effective tax rate to remain approximately at the same level in the coming quarter.

Net income rose 24% year-over-year to $12.6 million compared to $10.2 million in Q3 2024. And diluted earnings per share increased by 22% to $0.28, up from $0.23 in the same period last year.

Turning to cash flow and balance sheet. Cash flow from operations in Q3 2025 was negative $4.2 million compared to positive $14.7 million in the same quarter of last year. The decline was primarily driven by an increase in accounts receivables due to timing of cash collections from several large deals and a decrease in deferred revenue.

Looking ahead, we expect RPO at year-end to exceed the level at the end of 2024 and anticipate a return to positive cash flow from operations in Q4 2025. We ended the quarter with a strong balance sheet, holding approximately $465 million in cash, cash equivalents, bank deposits and marketable securities.

And now for the guidance. We expect total revenue from the fourth quarter of 2025 to be in the range of $78 million to $79 million. We expect Q4 2025 non-GAAP operating expenses to be between $52.5 million to $53.5 million. We expect Q4 2025 non-GAAP diluted net earnings per share to be between $0.29 and $0.30.

I'll now turn the call over to the operator for questions. Operator, please?

[Operator Instructions] Our first questions come from the line of Chris Reimer with Barclays.

Congratulations on the strong results. First off, I was wondering if you could talk about how you feel your operations are going now. You mentioned that North America fully ramped and the 2 centers opened, plus another 3. Going forward, do you think there will be any other areas that you want to reorganize? Or are you satisfied with the level you're at now?

Thanks, Chris. So I think given our progress in North America, we actually would like to ramp our investments further. We see the potential. I think we've discussed it last quarter that given the momentum in cloud and the opportunities we see, we are planning to continue to increase there. I think still we will see that with good output on the profitability. But we are definitely very optimistic about North America and about us actually investing more for growth. That's on the sales and go-to-market side. And with that, across the world, we are continuing to expand the cloud security platform, the R&D investments there. We really feel there's a big opportunity.

Got it. Yes, that's helpful. And how would you describe your competitive position in the market now? Are you seeing any new players? What would you say is the most important thing the customer is saying when they make their decision?

Yes. So I think overall in the market, and we are competing in multiple areas, but in cloud security specifically, I think we are known for the strength of our security capabilities and specifically on the fact that we are very, very algorithmic based. A lot of our protections have a very strong algorithmic support and that makes us unique versus our competitors that, I would say, are more reliant on policies, rules, databases and so on.

The second thing that we are very strong is in the fully managed service that we provide as part of our offering. And we are able to do that not because we deploy or we have such a big amount of people, but because of the algorithms and the automation. So we actually use the technology to create a very strong advantage in the fully managed solutions. So customers, large customers that have the need, and I think, the majority are, to have augmentation to their capabilities, 24/7 global expertise in application security or DDoS, this is a major advantage. And I think you see that in our growth and the accelerated growth.

Our next questions come from the line of Joseph Gallo with Jefferies.

Can you just talk through the demand environment that you saw in the quarter? How did it compare to 2Q and what assumptions you're baking into your 4Q guide?

Okay. I think the demand across enterprise and carriers across the world was solid. I don't think it improved or degraded from previous quarters. We do see strong environment going into Q4. We're actually very encouraged with what we are seeing.

As it relates to guidance, I think Guy mentioned it and I'll let him talk about it more, but we see the ARR -- the total ARR growth, we're seeing as our guiding indicator for future revenue growth. And having that at 8%, that's how we're guiding forward. Of course, we have additional appliance deals and CapEx deals that can take it higher. But overall, short-term guidance is based on our total ARR growth.

Yes. So as Roy already mentioned, we have a pretty good visibility since currently around 82% of our business is based on recurring. So ARR is a very good indicator for guidance. But we also have now, after 1 month into the quarter, pretty good visibility about demand, which we feel pretty good.

We posted 24% growth on cloud ARR and we're back to the levels we used to see, let's say, 2 years ago. And we always mentioned going to 25%, but we're not saying 25% is the ceiling. So we think this is the main growth engine for us and it will continue to grow.

That's helpful. And maybe just as a follow-up. So ARR growth was super impressive and that's definitely the North Star for revenue growth going forward. But just on the billings side and the free cash flow weakness. You mentioned RPO will rebound. Will billings follow that same trajectory? And was there anything unusual to call out in 3Q relating to the timing of billings?

First, yes, we expect billing and cash collection to be stronger this quarter and we mentioned it's going to be positive cash from operations. We also alluded to the fact that we expect the backlog represented by RPO to be higher than the numbers we mentioned in December last year. We're mentioning the 8% because of ARR. We're looking at, let's say, high single-digit year-over-year RPO growth. So all the KPIs or, let's say, the negative cash from operation or the decrease in cash balances this quarter, we're planning to be positive in Q4.

Our next questions come from the line of Ryan Koontz with Needham & Company.

This is Jeff Hopson on for Ryan Koontz from Needham. Congrats on the strong performance in North America. Kind of talking about the competitive landscape like you were earlier, some of your large competitors have been focused on other things besides security like cloud computing, So I was just curious if this kind of presents an opportunity for you to gain more customers who may be focused on just security and not some of these other offerings that they have.

Yes. I think it's a great question and that's exactly what we are talking with customers. Actually, while some of our larger competitors are, I would say, broadening their offering and, by that, not necessarily staying as focused on application, API, data center security, we're actually double downing there. And the reason is we see more complicated attacks, more AI-based attacks, more challenges. And it's an extremely critical area for our customers.

So we continue to broaden the algorithmic moat that we're building. We continue to broaden the competitive advantages there. And therefore, we feel very good about the competitive positioning and the long-term strategy that we have. So we see a huge amount of opportunities. The market is the TAM and the SAM is huge for us versus our current revenues. And therefore, we continue to focus there, double down on security. I've mentioned API now as the third wave of growth. That's where we are investing.

And maybe just a follow up on the AI piece. You've been adding capabilities to SOC X. You announced the vulnerability you guys found in ChatGPT. Just kind of curious where we are with AI. And is it still just driving conversations? Or is it getting to that point of driving production and your AI offering, SOC X, could start to meaningfully contribute?

Yes. So I think we're using AI today on the general availability capabilities, mainly to improve the security we provide to our customers. So like you mentioned, SOC X is our agentic AI on the platform that automatically detects and mitigates for our customers' attacks by detecting early and providing recommendations or automatic modification to the security posture. In that sense, our customers are enjoying faster time to resolution. They are able also in a conversational way talk to our platform and understand exactly what's happening and what the recommendations are.

So to summarize, we're using a lot of AI and Gen AI in the platform to improve the security we provide to the customer. I do believe there might be also good opportunities in protecting the AI systems of our customers. To that end, you mentioned that we uncovered a major vulnerability in OpenAI agents, and we're working on these problems. And I'm sure we will update you in the coming quarters on our progress there as well.

Thank you. We have reached the end of our question-and-answer session. I would now like to hand the call back over to Roy Zisapel for any closing comments.

Thank you, everyone, and have a great day.

Thank you, ladies and gentlemen. This does now conclude today's conference call. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.