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 ir@radware.com. 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…

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…

[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…

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.