Welcome to the Radware conference call discussing second quarter 2023 results, and thank you all for holding. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by 1 on your telephone keypad. If you would like to withdraw your question, press star one again. As a reminder, this conference is being recorded August 2, 2023. I would now like to turn the call over to Yisca Erez, Director, Investor Relations at Radware. Please go ahead. Good morning, everyone, and welcome to Radware's second quarter 2023 earnings conference call. Joining me today, President and Chief Executive Officer, and Guy Avidan, Chief Financial Officer. A copy of today's press release and financial statements for the second quarter are available in the investor relations section of our website. During today's call, we may make projections or forward-looking statements regarding future events, 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 differences include, but are not limited to, the changing or severe global economic conditions, the COVID-19 pandemic, general business conditions, and our ability to address changes in our industry, changes in demand for products, amounts 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 with the SEC, specifically the company's last annual report on Form 20-F, as filed on March 30, 2023. 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, thank you all for joining us today. We ended the second quarter of 2023 with revenues of $65.6 million and non-GAAP earnings per share of $0.10. Total ARR growth accelerated to over a year for $208 million, compared to a 5% growth recorded in the first quarter of 2023. Our cloud security business had another strong quarter. Cloud ARR growth accelerated to 23%, reaching $59 million at the end of the second quarter. This strong cloud performance was reflected across multiple metrics, including cloud bookings, new logos, and the total number of cloud customers, which all grew double digits. The growing cloud business and the growth in our product subscriptions are gradually forming a sustainable and durable SaaS business model. This progress is reflected in the steady growth in recurring revenue, which increased by 7% in the quarter and now accounts for 79% of total revenues, as compared to 65% in the second quarter of last year. While the cloud security business produced strong results in the second quarter, the appliance encounters strong headwinds, which we believe is a temporary pullback. The spending patterns of large customers have impacted CapEx purchases. Over the last few weeks of the second quarter, we witnessed increased delays in closing large on-prem deals globally, primarily among large enterprises and carriers. To the best of our knowledge, we have not lost competitor, environment, and now we have to be prudent in expenses. To that end, we have proactively taken steps to optimize and align our goals and maintain stronger profitability. We reduced sales and marketing expenses and reallocated spend towards growth markets and our cloud delivery and go-to-market efforts. Guy will elaborate more on this in his remarks. While large and service providers consider their investments more carefully, strengthening cyber defenses remain a business priority. Organizations around the world are experiencing a dramatic increase in sophistication of cyberattacks. In the first half of 2023, we are observing a significant shift in the DDoS market pattern. Increasingly, DDoS attacks are incorporating a mix of Layer 3, 4, and Layer 7 attack vectors. The Layer 7 DDoS or Web DDoS attacks are not about sheer capacity of traffic. Rather, they are encrypted, high volume requests per second that evade standard Web Application Firewalls and network-based DDoS tools. The attacks hit many large enterprises across different countries and industries. Services, airports, and healthcare organizations. Microsoft, which was among the affected organizations, disclosed multiple waves of Layer 7 attacks that caused outages in services like Azure, Outlook, and OneDrive. To mitigate these Web DDoS attacks, we introduced our new Cloud Web DDoS Protection service. The Web DDoS service is based on 2 years of AI algorithms, has uniquely positioned us to combat this emerging generation of aggressive Layer 7 attacks, which are leaving companies vulnerable.... Our behavioral-based solution, the attack by 2 orders of magnitude higher than any on-prem solution. Unlike any other solution in the market, it surgically blocks, blocking legitimate traffic. With the fast training of item and excellent proven results in dozens of customers, market differentiator that will set the ground for future DDoS cloud and appliance growth for our business. In the second quarter, we are to our Bot Manager, which are part of the 360-degree cloud application protection. The advanced solution prevents bots from bypassing traditional security controls to gain unlawful access to native Android and iOS mobile applications. It offers first-to-market integrated authentication for both iOS and Android devices, and new identity algorithms, allowing organizations to defend themselves against bot attacks with the highest accuracy and performance. Our investment in cloud innovation continue to pay off. I would like to share with you a few examples of the deals that demonstrate the critical value we bring to our customers and contributed to our Cloud ARR growth in the second quarter. We closed the deal with one of the largest transportation hubs in North America. This customer didn't have active, active DDoS protection for its data center. Instead, it was using a public cloud WAF solution. While we were engaging with the customer, it was hit with a wave of DDoS attacks that were targeted at the region. When the cloud provider, the customer recovered under our emergency. This enabled us to showcase our capabilities in real time and win the business. We also closed an important cloud DDoS deal with a large tier one carrier and managed security service provider in Asia Pacific. Recent services and government organizations impacted the provider's ability to protect some of its customers properly and exposed the weakness in the incumbent solution ability to mitigate this new wave of attacks. Our leaders in DDoS mitigation and proven expertise in these verticals position us as the go-to vendor to replace the incumbent and pave the way strategic reseller partnership agreement. Going forward, we intend to continue cloud security strategy and our SaaS business model, which an even more resilient and durable business model. Together with continuous improvement in our go-to, our expectation for recovery in the on-prem purchases, we trust we can strengthen our company performance. We are confident in our leadership position, in our technology and products, and we have significant advantages in mitigating real-time cyberattacks for large enterprises and carriers. We have a superb customer base, and we are becoming more and more critical to our customers' operations. All these assets position us very well to achieve our long-term targets. With that, I will now turn the call over to Guy. Thank you, Roy, and good day, everyone. I'm pleased to provide the analysis of our financial results and business performance for the second quarter of 2023, as well as our outlook for the third quarter of 2023. Before beginning the financial overview, I'd like to remind you that unless otherwise indicated, all financial results are non-GAAP. A full reconciliation of our results and non-GAAP basis is issued earlier today and on the investor section of our website. Revenue for 2023 was $65.6 million, compared to $75.1 million in the same period of last year. As Roy, the decline in revenue was due to large enterprises and service providers delaying the closing of large on-prem deals. The behavior pattern intensified in the last of the second quarter. We believe that some of the data to macro environment and budget constraints. Despite the macro headwinds and in accordance with our strategy, our cloud business continued to perform well, also in the second quarter. Cloud ARR in the second quarter of 2023 grew 23% year-over-year to $59 million, compared to $48 million at the end of the second the end of 2022. Cloud ARR accounted for 28% of total ARR, compared to 25% last year. The growth of our cloud business reflected in our recurring revenue, which increased 7% year-over-year, and now accounts for 69% of total revenue, compared to 65% in Q2 2022. The increase in recurring revenues, despite the headwinds we are witnessing, to more resilient subscription-based business model. Our original breakdown, revenues in the Americas in the second quarter of 2023 was $27 million, representing a 10%. On a trailing twelve-month basis, Americas revenue decreased by 6%. EMEA revenue in the second quarter was $23 million, compared to $30 million in Q2 2022. A decrease of 24% year-over-year and 11% decrease on a trailing twelve-month basis. Of the Americas and EMEA region is related to the decrease in sales of appliance based product in the quarter, predominantly to carriers and large enterprises. Finally, APAC revenue in the second quarter was $16 million, which represent an increase of 3% year-over-year. On a trailing twelve-month basis, APAC revenue was flat. Americas accounted for 41% of total revenue in the second quarter, EMEA accounted for 34% of total revenue, and APAC accounted for the remaining 25% of total revenue in the second quarter. I'll now discuss profit and expenses. Gross margin in Q2 2023 was 82.3%, compared to 83.3% in the same period in 2022. The change in gross margin is mainly attributed to higher costs related to Cloud Security Center launched during the last year, decline in revenue. Operating expenses in the second quarter were $52 million, at the lower end of guidance, representing percent compared to the same period in 2022. Financial income continues to grow and reach $3.4 million in the second quarter as a result of higher interest rates in the market. Net income in the second quarter was $4.5 million, as compared to $8.1 million in the same period last year. Radware's adjusted EBITDA for the second quarter was $4.1 million, which includes two point negative impact of the Hawks business. Diluted earnings per share for Q2 2023 was $0.10, compared to $0.18 in Q2 2020. Turning to the cash flow statement and the balance sheet. Operating activities in Q2 2023 was $4.9 million, compared to $32 million in the same period of last year. The lower cash flow from operation is attributed to the lower net income in Q2 2023, 2022. In the third revenue in Q2 2023, relative to the large increase in deferred revenue in Q2 2022. During the second quarter, we repurchased shares in the amount of approximately $19.7 million, out of the $100 million share repurchase plan that we have in place. As of 2023, $35 million remained in our share repurchase plan. We ended the with approximately cash, cash equivalent, short-term bank, and marketable securities. I'll conclude my remarks with guidance. Although the macroeconomics headwinds are temporary, the timing and intensity. During this time, Radware is mindful and is agile in adjusting its cost structure as needed. We are taking few steps, including resource reallocation and headcount reductions. These steps expenses with the changing market condition and will enable us to... We are committed to stability over time. New for the third quarter of 2023, to be in the range of $61 million-$64 million. We expect Q3 2023 non-GAAP operating expenses to be between $51 million and $52.5 million. Source real and headcount reduction, we expect our OpEx to decrease to approximately $50 million, exiting 2023. We expect non-GAAP diluted net earnings per share to be between $0.06 and $0.10 in the third quarter of 2023. I'll now turn the call over to the operator for questions. Thank you. At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. We'll take our first question from George Notter at Jefferies. Hi, guys. Thanks very much. I guess I wanted to ask about the change in the sales incentive plans. I know that you guys made some changes coming into the year. I know you, you tilted the plan, you know, more away from appliances and towards the Cloud business. You know, is that having an impact on appliance sales? Is that part of the narrative here also? On the macro environment, I guess I'm just wondering, you know, why you only started to see this kind of towards the end of the quarter. Was there something about the environment that kind of changed the dynamics for you in the marketplace, or is this something that's been building over time? Thanks. Yeah. First, regarding the compensation plan, we did move the plan, and I'm sure it has some impact. I don't think that's the major one in this regard. It's obvious that our sales force is, and more cloud-based sales like we want them to be. I don't think customers, that would change the dynamic. It might be more towards the new customers. Our decline came exis- main customers trend. I don't think that's the main, that's the main cause. It might have effect, like you mentioned in general, but I would not call it the, a top one in this area. Regarding the, regarding the way the quarter progressed, we started with a guidance that we thought took into account the, the, the environment and the challenge. As we've mentioned, the main difficulties we've experienced were in existing customers, where we felt we have good understanding of the environment, process, et cetera. Therefore, we were surprised in the last several weeks of the quarter, although everything was tracking well all that time, to get those push outs, budget cancellations, purchases, et cetera. We tried to take, of course, when we, when we built the guidance for Q3, the phenomena that we saw, and to take a way more cautious and conservative view also on the existing customer business, where we feel we are positioned very well, the value is proven, we are blocking attacks in real time. There's a high user satisfaction, as you can see from the ARR retention rates. So we feel good about our position, but we do need to find a way to accelerate those on-prem purchases also in our existing customers. Great, thank you. We'll move next to Tim Horan at Oppenheimer. Hi, this is Graham Paus on the line for Timothy Horan. Yeah, just on the AI front, you know, I just wanted to hear about what kind of trends you've seen across the security landscape versus this year versus last year. You mentioned AI with, some of these, you know, cloud DDoS service and Layer 7 attacks. I guess kind of how you guys are thinking about the impact of AI to your business, kind of over the second half of this year and really going into 2024. First, the real-time mitigation, detection and mitigation. On one end, we are deepening the usage of algorithms constantly. We started with that many years ago. We have a whole battery of different algorithms across our DDoS, WAF, bot, API security. That has been, for years, our competitive advantage. Prepared remarks for Web DDoS, we believe we're in competitive advantages using algorithms. We are using AI, not only for remediation or accelerating certain processes, but for the actual detection and mitigation. That's a bit unique in the market. That's on our front. I think it improves our capabilities, it improves our efficacy, it improves time. There's a lot of benefits for AI in our land of security. At the same time, the hackers are also leveraging more and more algorithms, more and more AI. For instance, those Layer 7 attacks, Web DDoS attacks I referred to, they are way, and they are way more real user traffic than we ever saw before. That poses a huge challenge for the defense, because those sessions, though these attacks looks very, very similar to normal legit traffic. By using algorithms also on the attacker side, I would say the sophistication, the level of the challenge is increasing significantly. Taking those two parameters into account together, I believe the barrier to entry, so mitigating real-time attacks is getting higher and higher. You would need to have years of investment in those algorithms, understanding of the attack tools, et cetera, to be able to do. Therefore, competitively, although on one end, you can say is getting higher, the defense needs to invest more. All of that is true, but competitively, I think it's actually a, a good, a good phenomena for our... Gotcha. Thanks. just as one quick follow-up, you know, just looking at ARR, specifically the non-cloud portion of ARRs, looks like it's kind of fluctuated around that $145 million range. you know, I'm just curious, as, as customers move to the cloud, you know, what kind of uplift are you guys seeing in ARR? You know, so for every $1, like non-cloud ARR, what kind of conversion is that, you know, to the cloud? Is that not the right way to think about it? Thanks. I think there are 3 buckets in our ARR. 1 is the cloud, that has accelerated. 2 is product subscription. There are software that we sell as a subscription, also growing, and has grown nicely in the last quarter. Maintenance of appliances, that is more tied to the install base, and so on. You know, definitely we're traction in all our subscription product and cloud, that's growing consistently, and I think the maintenance would, would be more in line with our product sales. In some of our cloud can bring with them also appliance sales, namely the hybrid DDoS. In most of our business, for example, ADC and DDoS on-prem solutions, those have no relation to the, to the cloud business. It's not cannibalizing, nor it's supporting today, the sale of ADC. We are working, of course, to create between our cloud security to the ADC, to the DDoS on-prem, to accelerate that. You know, as the year progresses, I think we would launch several of such modules to create stronger ties between the two. Today, we're enjoying cloud growth that is unrelated, basically, to the product ARR. Great, thanks. We'll take our next question from Tavy Rosner at Barclays. Questions. I wanted to touch on OEMs and also on EMEA. Just wanted to check if the traction with OEM is in line with the broader revenues dynamics that we've seen. I also noticed that the declines in EMEA was a bit steeper than the rest of the geography. Just wanted to get some colors on both of these points, please. I'll take the OEM. We actually continue to see good, good traction with the, you know, we've mentioned in the analyst day that Cisco cloud solutions cloud DDoS solution into theirment. We're starting to see more activities from our OEMs in the cloud, and they continue to contribute good level of new customers, and there's now nice numbers coming from the OEM channel. We're definitely seeing growth year-over-year from that channel. Hi, Tavi, regarding your question about EMEA. Comparing to last year, we had one extraordinary deal in the second quarter of 2022. That's one. The second thing, as we mentioned, suffered due to macro headwinds on large enterprise and, and some of them were... All in all, we believe our, our business is- Okay, thanks for that. Just looking at, capital allocation, given your significant cash position, have you considered, you know, changing the pace, in terms of buybacks and any other considerations there? As mentioned, we are running on a $100 million plan. We still have, as of June 30, $35 million. Obviously, you know, prices, share prices changes, and as the pace of repurchase will change as well. Great. Thanks for taking my questions. Tavi. We have no further questions at this time. I'll turn the call back to Roy Zisapel for closing remarks. Thank you, everyone, and have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect.