Radware Ltd (RDWR) 2014 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Radware's Q2 2014 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to our host, President and Chief Executive Officer, Roy Zisapel. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to Radware's second-quarter 2014 earnings conference call. Joining me today is Meir Moshe, our Chief Financial Officer. Meir will start the call by reviewing the financial results, and afterwards, I'll discuss the business highlights of the second-quarter results. After my comments, we'll open the discussion for Q&A. Meir?

Okay. Thank you, Roy, and welcome, everyone, to our second-quarter conference call.

First, I would like to review the Safe Harbor language. During the course of this conference call, we'll make projections of other forward-looking statements regarding future events or the future financial performance of the Company.

We wish to caution you that such statements are just predictions, and that actual events or results may differ materially, including, but are not limited to, general business conditions and our ability to address changes in our industry; changes in demand for our 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 from time to time with the Securities and Exchange Commission, specifically the Company's last Form 20-F filed in March 2014.

And now, ladies and gentlemen for the financials. For the second quarter of 2014, we reported record quarterly revenues of $53.1 million, representing 4% sequential growth and 13.3% year-over-year growth. Non-GAAP gross margin remained at 82%. The non-GAAP net income this quarter has increased to $8.2 million or $0.18 per diluted share compared to net income of $7.1 million or $0.15 per share in the second quarter last year, and net income of $7.8 million or $0.17 per diluted share in the first quarter of 2014.

$1.8 million of stock-based compensation expenses, $400,000 of amortization of intangible assets, $2 million of litigation costs associated with IC litigation and exchange rate expenses in the amount of $90,000, brings the GAAP net income this quarter to $4 million or $0.08 per diluted share compared to net income of $4.9 million or $0.11 per share in the second quarter of 2013. Non-GAAP operating expenses reached $35.5 million in the second quarter, bringing our non-GAAP operating margin to 15.2%.

The headcount for the end of this quarter was 856 employees. During the second quarter of 2014, the Company generated cash in the amount of approximately $11.5 million. And after repurchase of shares at approximately $5.6 million, the Company's overall cash position, including cash short-term and long-term bank deposits, and marketable securities, amounted to $309.4 million. And we have no debt. Shareholders equity amounted to $300 million.

Guidance for the third quarter. We expect revenues to range between $54 million to $55 million; 82% gross margin. OpEx will range between $35.7 million to $36 million. Financial income at $1.4 million; 12% to 13% tax rate; share count 46.8 million shares; and non-GAAP EPS to range between $0.19 to $0.20.

As you can see, ladies and gentlemen, record quarterly revenues, improved results, increase of cash, and we expect higher and better results in each of the following quarters of 2014. And now I'd like to turn the call over to Roy.

Thank you, Meir. We are pleased with our second-quarter results, demonstrating certain improvement in our international business with specific strength coming from Asia-Pacific.

We continue to execute well across the world and so we are growing again in double digits. Having said that, we have several large projects in North America that slid to the third quarter. The majority of these orders were already received in July; hence we continue to feel confident about our ongoing growth in the Americas.

Consistent with prior quarters, our overall growth is well-balanced across enterprise customers and specifically in the financial, cloud service providers and carrier segments. Our focus on the data center market for both applications in Israel and application security is paying off with these customers.

We had several customer win announcements during the quarter, demonstrating the strength we are seeing in these segments. Our biggest order came from a global cloud provider that chose our Attack Mitigation System to protect more than a dozen of its data centers around the world. Our Attack Mitigation Solution with DefensePro at the core is becoming the gold standard for data center attack mitigation. This win, replacing an incumbent, is strong evidence that there was a specific focus on detecting and protecting against large-scale and complex distributed denial of service attacks without impacting legitimate traffic to cloud tenants.

We are also seeing more and more carriers and service providers launching advanced services to their enterprise customers based on Radware solutions. M1, for example, is a leading full service provider of mobile and fixed communication services to over 2 million customers in Singapore. They recently launched a clean pipe data mitigation service for their enterprise and government customers based on our AMS solution.

Our strength in this market is being amplified by continued innovation. As we discussed on our previous call, our innovation is focused on private and public cloud, cyber security, and software-defined network architecture, where we see strong activity and interest from these type of customers who are technology-savvy and early adopters. Speaking on SDN. we are starting to see tangible projects and major customer accounts that are taking advantage of the SDN benefits we provide for application delivery and attack mitigation.

We've also continued to advance our partnership in this space. And at the recent Cisco live event, we demonstrated the integration of Radware application delivery controllers and Attack Mitigation Solutions into Cisco application-centric infrastructure.

During last quarter, we released a new study titled State of the Union eCommerce-based Suite with Performance in Spring 2014. The study reveals that while 75% of the top 100 retail websites employ a content delivery network, the median homepage takes a full second longer to become interactive than the median page that does not use a CDN. Simply put, there is more to acceleration than just using a CDN. This outcome demonstrates the importance of our FastView solution that allows our customers to significantly accelerate their dynamic content and web transactions.

The solution is even more critical when web delivery over mobile network is required. Coupled with FastView, we provide our customers with our application performance monitoring modules that enable users to monitor end-to-end web application response time, with the ability to drill down to the application transaction end-user location.

We have received strong customer feedback on this comprehensive application performance monitoring and acceleration capabilities, and announced federal wins last quarter utilizing our best-in-class capabilities in this space. For example, JD Williams, a leading Internet and catalog home shopping company, achieved a 25% reduction in page-load times for its websites by deploying our FastView solution. Faster response time means higher conversion rates for JD Williams, who has over 6 million customers and operates 28 brand websites over desktop tablet and mobile devices.

Another nice win comes from UnionPay. UnionPay has become the world's largest card brand with 3.5 billion cards in circulation. They recently deployed Radware ADC and FastView, and gained up to three times faster response time for their website.

To summarize, today, we have a leadership position in the market as it relates to our product and solution offerings. We continue to advance our application delivery and security solutions. We have started to see faster growth coming from our international markets. Coupled with ongoing growth in the North America business, and as evidenced by our guidance, we are confident in our ability to continue to grow in double-digit rates for the remainder of the year.

Before concluding, I would like to thank our customers and partners for their continued support and trust. And I would like to thank the Radware team for all their efforts, commitment, and success in growing our business.

With that, I would like to open the discussion for Q&A. Operator, can we have the questions?

(Operator Instructions) Alex Henderson, Needham and Company.

Nice quarter. Wanted to ask a couple of questions. First, just a simple one. Can you talk a little bit about the exchange rate in the quarter, and what's going on relative to the exchange rate currently, whether that's an impact? How much of an impact it was in the second quarter?

The impact of the second quarter exchange rate was around $100,000, $150,000 this quarter.

Okay. and just given the -- it hit a three-year high at the end of the quarter and it's backed off subsequently, is that -- are you using the end of the quarter rate? Or are you using the current lower rate now? Or what are you assuming there?

Okay. If we are taking it by year-over-year, so what I mentioned $150,000, it was relatively to Q1. Year-over-year, this is more likely like $700,000 to $800,000. That means on EPS terms, this is about $0.02 of the EPS. Going forward, right now, we assume taking into our numbers, this is another strengthening of the Israeli shekel that impact about $100,000 -- an additional $100,000 on Q3 results. That means our operating expenses are higher about $100,000 on review versus Q2, only as a result of the exchange rate.

Can you just remind me if you do anything on the hedging front on that?

No, we don't.

I didn't think so. Okay, thanks. Second question, can you talk a little bit about the geographic split? I don't know that I caught it on the presentation. Could you just reiterate what the geographic split was and what the conditions are you are seeing in Europe? It looks like the European business has picked up. Is that a function of the changeover in the sales organization? Is it macro? Is it company-specific or general?

First of all, the split between regions, this is North America, 39% of the revenues; EMEA, 25%; and Asia Pac was 36% of revenues.

Thanks.

And regarding what we see in EMEA, I think it's in the changes we've done, we started to do last year and some of the things we are doing, we are seeing they are now growing in double-digit. We believe there is a room for even further improvement, but at this point, we are starting in on the last three quarters to see them steadily growing. The strength in international business was driven -- more seen in APAC this quarter and maybe a very nice quarter for us.

I see. And so the other question I had for you was just the Cisco ACE replacement environment. And then I'll cede the floor.

We continue to see their project. It's like an ongoing race for the last several years. We still see both carriers and large financial institutions, and some in the general enterprise, that are doing these replacements. And I think we have a very strong solution and track record in these projects with our body and virtual ADC architecture. And we continue to do well in that space.

I don't think it's going to -- the size of the projects or the pace, I don't believe they are going to pick up. So I don't think we are going to see an acceleration in the market for that. And we're actually seeing other opportunities that are beyond just a Cisco refresh that we believe are very strong and longer-term ones that we are executing well towards them. I mentioned the acceleration, for example. I mentioned Attack Mitigation, et cetera.

Okay. Thanks.

Jess Lubert, Wells Fargo Securities.

A couple of questions. First, can you provide some additional color as to how much North American revenue slipped out of the quarter? What type of customers drove the slips and when do you think these deals are now likely to close?

Okay, so every quarter, there's some orders that are slipping. It's the nature of the business. I would say this quarter, we saw some of the larger projects that we were targeting in our key verticals -- carriers and financial services, cloud, and some large Fortune 100 companies that we were expecting them to close and didn't close by now. I would say the majority of them, around 80%, have already closed. And the rest were still tracking.

So I think from an execution and our win rate, and market share, et cetera, we think we are progressing well. From the quarterly perspective, we did less than we wanted to do.

And then, Roy, last quarter, you mentioned you saw an uptick in the number of large deals. You announced a big cloud win this quarter. So, can you update us on what you're seeing with average deal size, and maybe help us understand where you are in the process of closing some of these bigger transactions that you talked about last quarter? And as these close, would it be fair to think that growth actually accelerates into the second half of the year?

Well, we continue to enjoy, every quarter, larger deals than we have seen in the past. And this quarter, we saw it as well. Also, some of the deals that slip and by now have closed are substantial in size. So, definitely seven-figure deals and multiple of deals. So we are definitely seeing a strong trend, especially in the segments that I've mentioned -- financial services, cloud, carriers, online customers. We are definitely seeing large strategic sales that we are doing.

And as we close them, especially there's a concentration, obviously, our revenues will move up. Currently, we gave the guidance that obviously takes into account our best view of the current market, but we are very encouraged by these wins. A lot of these wins are new customers for us. And the fact that we are landing more and more Fortune 100 customers, and leading carriers and cloud providers globally, for us, it's a very good sign also for repeat sales in the coming quarters and coming years.

So, Roy, would it be fair to say that visibility has improved? And then, I know for Meir, bigger deals often come with added expenses, so the size and complexities of these transactions increase. Can you help us understand what needs to happen from an investment perspective to get these deals closed in Q3 and Q4?

And then from a revenue perspective, you've given guidance for Q3. Should we be expecting a fairly strong Q4? A much bigger sequential increase than we've seen in the last couple of quarters? Because it seems like, in order to get to your 20% operating margin target that would like to happen, do you still think you can reach that figure by year-end?

Okay, so question by question. And I hope I will answer all of the ones that you've raised. So, firstly, from the large deals and their size and the investment that we need to do to close them. So we are seeing already for several quarters this trend. And I think we are well-equipped. And quarter by quarter, we are increasing our investment some also to serve these deals.

I don't think you should expect like a step function increase in our expenses. I think all of that is already in the model. And it's just that the trends that we see more of these deals in the pipeline and more of these deals starting to close, and with more customers. And so this is the first point.

Regarding your question about visibility, and I believe that this year we have definitely increased visibility versus last year. And some of it is coming from a stronger pipeline. Some of it is coming from our understanding of the buying patterns or the repeat sales of some of our large customers.

Regarding your question about the -- about Q4. At this point, as you know, we are providing guidance only to one quarter. So I will -- we will speak about our Q4 guidance in our next quarter release.

And regarding the 20% gross margin, I think Meir also discussed this last quarter. We are very obviously sensitive to the top line. And with a nice topline increase, the significant impact on the bottom line, you can see it also in previous years, like two years ago, when we reached the same. And you can track relatively where we are today, where we were there at the same time, in how we reached the 20%. I think it shows not only that it's theoretical but it's practically we can do it. But as I said, we'll give the specific guidance in Q4.

(multiple speakers) Thanks, guys.

(multiple speakers) Our focus, though, is not -- yes. One comment. Our focus, though is not on definitely hitting the 20% as much as it is on revenue growth. So, we are putting more investment to secure growth for the long-term, because we think there are these opportunities. And that's what we've seen in the last several quarters. We can accelerate our growth rate and thus our target.

And with that, we will hit even hopefully higher than 20% gross margin in the future. So, we are not -- we are really focused on revenue growth and market share gains at this point.

Thanks, guys.

Ittai Kidron, Oppenheimer.

I guess I just want to go back to the North American, the deal slippage over there. And it seemed like it differed across multiple areas, not one. And so one would be concerned that there's something going on here that's not -- that's a little bit more than just a coincidence. And how much of the delay here would you put on either a change in the market itself or to just execution hasn't been really what it needed to be for you to close on this?

As I said, I think I mentioned that 80% of these deals are already booked. And so, I don't think there is a major thing there. I think the North America theater is providing us with several years and very, very strong growth rates. And also, if you look at H1, very solid one. So I don't see here a change of the market or a big issue in execution.

You know, when you deal with large customers and large processes, and large legal agreements, et cetera, sometimes this happens, especially when the capital budgets that are needed to be allocated are relatively high. So, again, we are very confident on that. And you can see also that our business overall is well-balanced now also in the international markets. So, I wanted to highlight that in my remark, just to give you some color. But we do feel very strong about the North American business.

Right. Well, I guess -- you mentioned that 80% of the things that got pushed out, you've already closed on, which is very good news, of course. But at the same time, then, I guess I would want to -- why isn't the guidance then, from a topline standpoint for the third quarter, higher than what it -- I mean, I would've expected your revenue got to be what it is without slippage. If there is slippage, I would've thought that guidance would've been higher.

And since these are large customers, you're talking about carriers, cloud, financial, Fortune 100 -- I would assume these are not small $100,000 deals. These are $0.5 million-plus type of deals. Is there a deceleration in some part of your business here that's kind of offsetting this? I'm just trying to gauge how much of this is just being way overly conservative versus, again, something going on here under the surface.

I don't think there's deceleration. The growth rates are showing a slight of an increase in the guidance in revenue versus the previous guidance that we give. But we need to balance everything together. Like last quarter, maybe if you would've asked me about some of these specific deals that slipped, is it built into the guidance? I might've told you yes at that point.

So, it's not 100% sure always on the sales, so we're giving a complete view. It is accurate that we are entering the quarter in North America with a very good start. That's correct.

Excellent. And then lastly, Meir, can you give us the split between enterprise and service provider? And also what was the contribution from Juniper and Check Point in the quarter?

Okay, from enterprise, it was 68% for the quarter and carrier, 32%. As for Juniper and Check Point, we don't split it to the market for several quarters so far.

Alright. Very good. Good luck, guys.

Michael Kim, Imperial Capital.

Just curious what the initial customer feedback and the progress has been for Attack Mitigation Network? Have you seen a ramp in trial activity? And was it a contributor in the quarter? Thanks.

So, Attack Mitigation Network is our strategy for the coming years. We started to do the software, the fine network pieces of Attack Mitigation Network in trials with several of our carriers. We just this week won a bank that will be our first financial customer for Attack Mitigation together with SDN. So we are seeing the early adopters definitely embracing the concept, and some of them actually buying very early into the cycle as they see huge benefits in this implementation.

So it's still early. The components of the SDN are not -- are far from being a major contributor, but the customers are looking at AMN as the next phase of building a cyber attack mitigation. They fully understand that one box in the edge of the data center will not be able to cover the complete landscape going forward. And a full network of sensors and mitigators on prime and in the cloud is necessary to provide 100% or close to 100% coverage for the data center.

So, we do see the advanced customers moving that way. We are seeing carriers that are starting to deploy our solutions beyond only for DDoS and IPS service also to be complete, always-on security, which some of them call. So we are seeing movement in this direction. We are seeing a lot of positive signs about it, and we are starting to see deals happening. But I think this concept of AMN will be our ongoing strategy for the next two to three years. And we will see more and more product launches and some of them of appliances, some of them of cloud services, and delivering on this vision of Attack Mitigation Network.

Okay, great. And then some of your competitors, I think, have expanded their security capabilities, either through acquisition or some new developments. Are you seeing a bit more competition on the Attack Mitigation System? And is that resulting in maybe a greater frequency of competitive bid activity?

We -- for the last two years, there is more competition in the -- what I would call the DDoS market. And we think Attack Mitigation on the threat landscape is broader than that. And we are able to demonstrate also to customers the system threats and how they apply to the data centers. And so far, we don't see a change in the competitive landscape. But obviously, we are looking very carefully on that, and in parallel, continuing to push our innovation forward, and dedicating and increasing the resources that we put on this market.

Great. Thank you very much.

Joseph Wolf, Barclays.

Just a couple of questions. If you could go into the geography specifically in APAC, could you give us a little bit more color regionally within APAC where you're seeing specific strength in the competitive landscape there -- Japan, China, Singapore, those kinds of geographic breakdowns?

I think we had relatively a broad-based strength in Asia-Pac. And maybe with the exception of a bit of Japan, but all other countries, I think, perform very well and in line with our expectations. And we see a lot of -- we saw a lot of strength in the ADC market there. And all in all, we are quite satisfied from what we are now seeing and starting, hopefully, to trend there.

Okay. And then as you think about the new products, and you talked about the global cloud win, could you tie that into hiring plans? You talked about 856 employees. And as you think about the selling proposition, how many of your wins right now in Attack are based on a combination of the breadth of the Radware product? And how many -- how much are you just winning just on the Attack side of the business?

Okay. So in terms of investments and so on, I think what we're going to see relatively steady, like you've seen in past quarters and years, increase it in our investments, and generally in line with our revenue. And this trend of attracting and winning larger customers is with us for the last two or three years, and it's growing steadily.

Regarding where are the winds coming from, they are growth. Some customers are either buying into our ADC -- for example, acceleration specifically or into attack mitigation -- and some are buying a complete architecture for application delivery and security, which, in our case, is also integrated together, and attacks or information about performance is being exchanged between the different players in our solution.

So we have, for example, one large financial customer that did a significant seven-figure deal with us across all our solutions. At the same time, I mentioned the cloud provider that did a significant investment in our Attack Mitigation Network, et cetera. So, different cases, but we see the strength today across both product lines.

Great. And then finally, I guess just for Meir, could you just give us an update on the share buyback? You did $5.6 million. Could you tell us what's left and your thinking on the timing of going through the rest of the share buyback program?

Okay, as we said in that call, we have spent $5.6 million of buying above trend 51,000 shares. The total plan is $40 million for 12 months. It means another nine months remain in order to act under this plan. And we do it based on the guidance we get from the Board, how and in what terms to [track them in] each quarter.

But no plans to accelerate in the short-term?

We have a plan. We announced a plan. And the plan is $40 million.

No, no, no. But you're not looking at the current share price and accelerating that plan. It's more of a steady plan.

The amount of -- the amount of the (multiple speakers) share buyback?

The pace. The pace of the share buyback.

The pace I cannot share with you in this stage, the guidance from the Board, what terms we are making the buyback.

All right. Thank you.

Catharine Trebnick, Dougherty.

Thanks for taking my call. Quick question. Could we go back and discuss your North America opportunities and get more clarity on -- are those deals driven by AD securities? Or are they driven more by DDoS attacks? And then across the different geographic areas, can you give us an idea of how the pace of RFP opportunities for DDoS versus the ADC and the virtual ADCs? Thanks.

So, in general, we are -- still our largest portion of the business is ADCs. So we are definitely seeing, in terms of revenues [and dollar], more opportunities in the ADC market today than in security.

And in security, what we're seeing is that on specific customers like the carriers or cloud providers, that's a very hot issue. Right now is the need to protect the whole infrastructure. And so just several hours ago, I met a VP Operation of a large cloud provider, and he told me that beyond the issue of attacks and protecting the customer, there are key concerns. When customer A is attacked, how do they make sure that customer B, C, D, and E are not impacted?

So it's a core -- it's not just selling additional services or additional capabilities to customer A. It's the core business issue and a core business risk for them that other customers will be impacted. And, as a result, the whole business model is at risk. So every shared infrastructure of that nature, and especially of the service provider, security is becoming a core business issue. And more and more of the customers in these segments are treating it this way. And as a result, we are definitely seeing there good traction with our products.

So, in the different markets, we do see a bit of a different trend. But all in all, both markets we are seeing now a lot of opportunities. And needless to say, carrier LTE and their doubts are driving a lot of traffic-steering opportunities for our ADC, and a lot of signaling opportunities, IMS core, et cetera. So, in both markets, we are seeing very strong drivers that we believe are going to serve us for the long-term and are not just one-quarter or two-quarter phenomena.

Okay, thanks. And then as a follow-on to that is, is there a percentage -- are you looking at the security piece of your business growing at a certain pace versus maybe the ADC market growing at a certain pace? And are you -- is your ADC revenue growing at the total addressable market of the ADC? And is -- do you think your DDoS part of the business security is growing faster or in line with Infinetics and IDC's estimates for DDoS? So I can get a handle on your growth for the year. Thanks.

We are looking on those market research. And I see currently we are growing in both markets around the market growth, and in each one ADC and our portion of the security business. And we don't have a target percentage for each; we think in both, there is significant growth opportunities for Radware, given our market share and given the market trends we are seeing. And I think we have a lot of opportunities in both.

And in addition, you know, although the market research is treating those separately, we believe that going forward -- and we have that vision for a long time -- and security is part of application delivery. You cannot deliver an application 24/7 globally without availability, performance and security. And as a result, although it's broken, we are seeing everything that we do in hardware is part of the overall application delivery challenge that our customers experience.

And as a result, ADCs or low balancers, the FastView acceleration, the Attack Mitigation Solution that we have, all of it is part of our strategy for a comprehensive application delivery. So going forward, I think in the next generation data center, with everything virtualized, automated, et cetera, application delivery in the comprehensive manner that I've mentioned is the key service that needs to run there. And we believe that going forward, that's how it will be treated. And as a result, you see both product lines are very, very strategic for us.

Okay, thanks. And then, competitively, who do you see the most in the different verticals? For example, who do you see most in -- and does it change by region?

In the ADC market, we mainly see F5, and in the security market, we mainly see Aldo, and it's across the world. It doesn't change by region.

And what would you say your win rate is going between F5 -- you guys aren't going to let me on another call, are you? (laughter) What would you guys say your win rate is between -- is going forward on with -- against F5 and your competitors?

So, in ADC, our win rate currently is very high. But we think the issue is that we need to get into more opportunities. We want to cover the market better and expand our channel. We think we have an extremely strong offering, very competitive and superior. We need to get in front of more customers to deliver that message.

You know, if we are winning so much in the Fortune 100, Fortune 500 cloud carrier, it's definitely -- we definitely can expand it to the medium-size enterprise as well. In the security, again, we have very high win rate. I think it suffers also from the same issue of getting in front of more customers, more deals. And we are working to expand our channel definitely. You know, for example, the deal we have with Check Point is a good way to expand the channel and others. Dedicated security cards; but we are working also there to expand our footprint in the market so we can participate more in competitive situations.

All right, thank you. Nice quarter. Appreciate the time. Bye bye.

(Operator Instructions) Rohit Chopra, Buckingham.

Meir, I just wanted to ask you a quick question here, a clarification on the headcount. Did you say that you had 856 for the quarter? Is that correct?

Yes, that's correct.

And last quarter I have that you had 884?

No. 848.

848. Okay. I just wanted to doublecheck that. Thank you. And then my question is this. Is there anything changing with your partners? And I know Ittai tried to get a sense of maybe the size of the partners. But is there a way that you could quantify or maybe qualitatively talk about the partners? What's happening at IBM? Is Check Point improving? Is it steady? Flat? What's actually happening there? What's happening at Alcatel? Maybe, Roy, if you can get into that. And then I have one more question.

On this specific color for partners, I think you can direct the question to them. But overall, we see strengthening partnerships, also in the names that you have mentioned. So we are progressing well in this area. We are getting into, I think, more and more customers and accounts together. And we are developing this partnership business well.

Okay. The other question I had, is there any way to quantify the ADC and security wins? Is there an overlap typically between Radware customers? Is there a percentage where an ADC customer is taking security products or a security customer is taking Radware ADC products, is there a way maybe to even quantify new versus existing? Is there anything that you can provide?

We obviously track these metrics internally. And obviously, some customers are customers only of one of the solution lines, can be of more than one product in the solution line. But of one of the solution line. And some customers are our customers across the board. And definitely, we're investing resources in cross-selling our ADC customers to security and our security customers to ADC.

And as I've mentioned, I believe going forward, it's going to be more and more integration and the -- and value exchange between them. So, those are not like independent decisions that can actually -- if you look on our Attack Mitigation Network concepts or other concepts we've shared, there is significantly more value if you're going to be a Radware customer across all your application delivery needs.

Is there any way to quantify new versus existing at Radware? I mean, is it -- are you selling 70% of your business to existing and 30% to news or anything that you can provide?

It depends on the quarter. It varies. But I would say it can vary between mid-60s to mid-80s. It depends on the quarter. When I count also service contract, which are always for existing customers. And for existing customers and between, I would say, maybe 15% or 20% to 35% going to new customers, depends on the quarter.

Thanks, Roy. Thanks, Meir.

Mike Glass, private investor.

Yes, Roy and Meir, great quarter, and congratulations on the renewed growth of the Company. It's good to see. I have two different areas of questions here. One is, you're sitting on $309 million of cash. And just around cash deployment, the stock price has languished the last couple of years. Have you guys considered doing an accretive acquisition? Or possibly like a self tender purchase of taking maybe $100 million and driving the stock price up for the shareholders?

We are definitely looking on acquisitions. We think that's a very good way to invest the cash for future growth and shareholder value. In the past years, we've done already five acquisitions, and we do plan to use it also in the future to accelerate growth and increase profitability. So we are definitely looking on that.

Beyond that, as we mentioned, we have a share buyback program of currently $40 million. So we are definitely looking on cash deployment, and we are definitely seeing it's not -- we are not looking on it as a problem, the fact that we are generating cash in a strong manner every year. But we are definitely looking very carefully how to deploy this cash for increased shareholder value.

And the second question there is around Check Point, a couple points in there. It seems like the sales teams aren't working all that great in the field, and there's not as much cross-selling, particularly in the United States, as could be. Have you considered doing some type of cross compensation between those sales organizations?

And then the second question would be -- Check Point's strategy is around blades, and just having the software run on the blades. Are you porting your software over to the blades and not having the physical DDoS box? It seems like that's a great opportunity that you're currently missing.

Well, I cannot speak -- I cannot share specifically our discussions with Check Point around a roadmap or compensation for sales force and so on. But in general, we are happy with the relationship. I think we are very solid relationships there. And I believe the partnership is advancing well.

And I heard from my team that we won the largest joint project to date together with Check Point a couple of days ago. So, you know I think we are progressing well. I agree there is always more room for improvement. And definitely, given Check Point's footprint in the market, there's probably more opportunities that we can leverage this relationship. And hopefully, we're making the right steps and taking it together with Check Point to do it.

Great. Thank you.

And we do have a follow-up from the line of Alex Henderson with Needham.

Yes, so I was hoping you could just give us a little bit more clarity on the rate on the growth and the security products. I know you don't break out the exact revenue associated with it, but could you just give us a little bit more clarity on what the rate of change in that business was?

It varies for the quarter. But, you know, this quarter, on product sales, the ADC and the security were pretty much the same growth rate.

Okay. So that does represent a little bit of a slowdown in the growth rate of security. Is that a function of those projects that were pushed out in the quarter and we should see it re-accelerate?

I would not read too much to one quarter in data. Some of the projects were ADC. Some of the projects were security. You know, I believe our security business is engaging very, very well. I'm not tracking just by one quarter really.

Okay. Thank you.

And no one else is in queue with a question.

Okay. Thank you very much, everybody, for joining us today. Have a nice day.

And ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.