Radware’s record Q3 revenue masks cloud ARR growth slip to 21%, keeping premium valuation under scrutiny.

What happened

Radware reported record Q3 2026 revenue of $84.4 million, up 12% year-over-year, with non-GAAP EPS of $0.32 and GAAP EPS of $0.11. Cloud ARR grew 21% to $107 million, still above the 20% threshold but a step down from the 23% growth posted in Q1 2026. Cash flow from operations of $15.5 million and GAAP profitability show the business remains financially solid. However, the company did not provide new disclosures on API security or regional breakdown, leaving the key thesis questions unanswered. With shares trading at a premium multiple, the market will likely focus on whether cloud ARR growth stabilizes near 20% or continues to decelerate.

Implication

Investors should monitor whether cloud ARR growth stabilizes above 20% in subsequent quarters, as the dip to 21% in Q3 is within acceptable range but shows deceleration. The absence of API-specific metrics remains a concern; management has cited strong demand but has yet to quantify contribution, making the upside case less concrete. Regional diversification is still unproven; the master report flagged EMEA weakness, and Q3 did not provide a breakdown to confirm improvement. The balance sheet and cash generation provide downside support, but at P/E around 65 and EV/EBITDA near 29, the stock already prices in continued execution. A more attractive entry would be below $26, while an upgrade would require cloud ARR growth back above 23% and hard API disclosures.

Thesis delta

The Q3 report is consistent with the existing thesis but does not materially change it. Cloud ARR growth decelerated slightly from 23% to 21%, still comfortably above the 20% threshold, but the lack of new API or regional disclosures leaves the premium valuation debate unresolved. The thesis remains a WAIT, with conviction unchanged at 2.5.