Radware Q2 shows steady execution but cloud ARR growth edges lower

What happened

Radware reported record Q2 revenue of $82.3 million, up 11% year-over-year, while cloud ARR surged to $103 million, crossing the $100 million milestone, though growth decelerated to 22% from 23% in Q1. Non-GAAP EPS held at $0.30, but operating cash flow declined to $13.0 million from $19.9 million in the prior quarter. The results extend the company’s trend of double-digit revenue growth and recurring revenue expansion, yet absent regional detail or API-specific disclosures, the geographic concentration and monetization risks remain. At 65.7x earnings, the premium valuation already bakes in continued execution, so the print is steady but insufficient to warrant a rating upgrade. The next catalyst will require proof of API commercial conversion or a broadening of growth beyond North America.

Implication

The Q2 report confirms Radware’s cloud security engine is working, but the slight deceleration in cloud ARR growth from 23% to 22% and lower operating cash flow temper the bullish case. With shares trading at 65.7x earnings, the market already expects sustained high-teens to low-20s cloud growth and eventual API contribution. Until management provides regional breakdowns showing EMEA recovery or discloses API customer counts or ARR, the growth story remains concentrated and underappreciated risks persist. The stock offers limited upside at current levels, and a better entry point emerges below $26. Maintain a wait-and-watch approach, scanning for signs of more diversified momentum or hard API metrics in the next quarterly update.

Thesis delta

The Q2 results marginally strengthen the base case but do not resolve the core concerns. Cloud ARR growth remains robust though slightly moderated, and cash flow dipped, keeping the risk-reward balanced. No shift in the investment thesis; the WAIT rating holds until API metrics or improved geographic breadth materialize.