Radware (NASDAQ: RDWR) revenue climbs 12% but GAAP operating income slides

Posted by Donna Armstrong on Oct 28th, 2026

What happened

Radware Ltd. (NASDAQ: RDWR) reported third-quarter revenue of $84.4 million, up 12% from a year earlier, but GAAP operating income fell.

The Oct. 28 release shows sales growing faster than profit. That bears on whether the company's recent operating leverage will last.

GAAP operating income was $2.16 million, down 62.8% from $5.81 million in the third quarter of 2025. OptimistFi calculates that GAAP operating margin fell to 2.6% from 7.7%. GAAP net income from continuing operations was $4.5 million, or $0.11 per diluted share, against $8.2 million, or $0.19, a year earlier.

Cash generation was stronger. Cash flow from continuing operations was $15.5 million, against an outflow of $2.07 million in the same quarter of 2025. Cash, deposits and marketable securities totaled $421.5 million at Sept. 30.

Key numbers

Metric	Latest	Change	Source
Revenue, Q3 2026	$84.4 million	from $75.3 million, +12%	SEC 6-K, Exhibit 99.1
Cloud ARR	$107 million	+21%	SEC 6-K, Exhibit 99.1
GAAP operating income	$2.16 million	from $5.81 million, -62.8%	Calculated from SEC 6-K
GAAP diluted EPS, continuing operations	$0.11	from $0.19, -$0.08	SEC 6-K, Exhibit 99.1
Non-GAAP diluted EPS, continuing operations	$0.32	from $0.33, -$0.01	SEC 6-K, Exhibit 99.1
Operating cash flow, continuing operations	$15.5 million	from -$2.07 million	SEC 6-K, Exhibit 99.1

Read more: Radware (RDWR) company research

Where growth came from

Cloud ARR reached $107 million, up 21% from a year earlier. CEO Roy Zisapel said demand for the company's application security products is strong, citing cloud bookings and large deals.

The release defines ARR as the annualized value of booked orders for term-based cloud services, subscription licenses and maintenance contracts. It says ARR is not a forecast of future revenue.

Every region grew 12%. Americas revenue was $39.6 million, up from $35.4 million. EMEA revenue was $25.6 million, up from $22.8 million. Asia-Pacific revenue was $19.2 million, up from $17.1 million.

Stock perps: every US stock that trades as a perpetual future, by leverage, live

Why profit lagged revenue

Gross profit rose to $67.79 million from $61.13 million. Total operating expenses rose more, to $65.63 million from $55.32 million.

Research and development expense, net, climbed 31.4% to $24.06 million from $18.31 million. General and administrative expense rose to $9.85 million from $6.17 million. Share-based compensation inside operating expenses grew to $8.70 million from $5.18 million. The general and administrative line carried $4.04 million of it, up from $1.35 million.

Stripping out those items narrows the gap. Non-GAAP operating income was $11.89 million, against $11.96 million a year earlier. The adjusted measure was flat, not falling.

The currency adjustment

Radware says the shekel's rise against the U.S. dollar raised its expenses in the quarter. Reported non-GAAP net income from continuing operations was $13.9 million, or $0.32 per diluted share, against $14.8 million, or $0.33, a year earlier.

Without a $4.6 million unfavorable exchange-rate impact, the company says those figures would have been $17.8 million and $0.41. It calls that growth of 20% in non-GAAP net income and 24% in non-GAAP diluted EPS from the reported prior-year figures. The adjusted numbers are the company's own presentation. The reported results are lower.

Why it matters

OptimistFi has argued that Radware works if its security platform keeps winning enterprise demand and its operating leverage lasts. Revenue and cloud ARR growth support the first half of that view. The margin decline gives no evidence for the second half this quarter.

Share buybacks cushion per-share results but do not explain the drop. Radware bought back $13.69 million of stock in the quarter and $61.85 million over nine months. Weighted diluted shares were 43.55 million, down from 44.95 million, yet GAAP diluted EPS from continuing operations still fell.

The strongest counterargument to the bullish reading is that costs, not just currency, are rising. R&D and general and administrative expense both grew faster than revenue. One quarter cannot show whether that is investment ahead of growth or a lasting cost base.

OptimistFi reads the quarter as mixed for the case.

What's next

Radware management hosts a call on Oct. 28 at 8:30 a.m. ET to discuss third-quarter results and the fourth-quarter 2026 outlook. A replay is due within about 24 hours on the investors section of the company's website.

The next test is the fourth-quarter report. Cloud ARR growth holding near this quarter's pace and GAAP operating margin recovering would support the case. Another quarter of 12% revenue growth with shrinking GAAP operating income would weaken it.