Radware (RDWR) Q2 2026: Cloud ARR Surpasses $100M as AI Security Drives Pipeline Expansion
Radware’s cloud security business crossed a $100 million annual recurring revenue milestone, propelled by demand for AI-driven protection and API security. The quarter’s results highlight the company’s ability to capitalize on evolving cyber threats and hybrid infrastructure trends, with North America growth outpacing other regions. Forward pipeline signals continued upside as new solutions like Exploit Shield gain traction among enterprise buyers.
Summary
- Cloud Security Adoption Accelerates: Cloud ARR topped $100 million, reflecting robust demand for integrated, AI-powered protection.
- Hybrid and API Security Fuel Upsell: Customers are consolidating spend across Radware’s platform, expanding deals with new API and exploit protection modules.
- Pipeline Outpaces Revenue Growth: Cloud security pipeline growth exceeds current ARR gains, signaling sustained momentum into future quarters.
Business Overview
Radware provides cybersecurity solutions focused on protecting applications, APIs, and networks from advanced threats, generating revenue through a mix of product sales and recurring cloud-based subscriptions. Its business is anchored in two core segments: cloud security, which includes DDoS mitigation, web application firewall (WAF), and API protection, and on-premises security, led by the DefensePro X hardware platform. The company serves enterprises and service providers globally, with subscription revenue now comprising the majority of total sales.
Performance Analysis
Radware delivered record revenue in Q2, continuing a streak of double-digit growth as cloud security adoption accelerated. Cloud ARR, a key forward indicator, rose 22% year-over-year and now represents 40% of total ARR, up from 36% a year ago. This expansion was underpinned by strong execution in the managed security service provider (MSSP, outsourced security operations) channel and rapid uptake of new API security solutions, which saw notable wins in financial services and high-volume API environments.
Regional performance was uneven: The Americas led with 24% revenue growth and now contribute 45% of total sales, benefiting from focused go-to-market investments and a revitalized sales organization. Asia Pacific rebounded with 9% growth, while IMEA (Israel, Middle East, Africa) declined 2% but remains a stable contributor. Gross margin held at a robust 81.8%, though slightly compressed by FX and supply chain costs. Operating income was pressured by currency headwinds, but underlying profitability improved when adjusted for these factors.
- Subscription Revenue Dominance: Subscriptions accounted for 55% of revenue, reinforcing the shift to recurring, high-margin business models.
- Cloud Platform Expansion: API security and the new Exploit Shield module are driving cross-sell and larger platform deals.
- Capital Allocation: Share repurchases continued, with $18.8 million returned to shareholders, maintaining balance sheet strength.
Cash flow remains healthy, supporting ongoing R&D and go-to-market investments. The company’s focus on innovation and customer consolidation is translating into larger, multi-year deals and a growing pipeline of enterprise platform agreements.
Executive Commentary
"Our innovation engine is operating at full strength, as demonstrated by the recently introduced API security, AI protection, and now the exploit shield solution, and is driving incremental demand for our cloud security platform."
Roy Zisapel, President and Chief Executive Officer
"Cloud ARR represented 40% of total ARR compared to 36% in the second quarter of 2025. Cloud growth was a key contributor to the continued expansion of subscription revenue, which remained our largest revenue stream and accounted for 55% of total revenue."
Guy Avidan, Chief Financial Officer
Strategic Positioning
1. Cloud Security as Growth Engine
Radware’s cloud security platform is now the primary growth driver, with ARR milestones and recurring revenue dominance reflecting a successful transition from legacy hardware to SaaS (software-as-a-service, subscription-based delivery). The launch of API security and Exploit Shield positions Radware to address urgent enterprise needs around vulnerability management and AI-driven threats.
2. Hybrid and On-Premise Synergy
Hybrid deployments remain a differentiator, as customers increasingly blend cloud and on-prem security for regulatory, privacy, and operational reasons. DefensePro X, Radware’s on-prem DDoS appliance, saw continued refresh opportunities, with high-profile, multi-region wins. The integration of cloud intelligence into on-prem devices creates a unique value proposition for hybrid enterprises.
3. AI Threat Landscape and Product Innovation
AI is reshaping both the threat environment and Radware’s own product development. The company’s Exploit Shield leverages AI models to automatically shield applications from newly discovered vulnerabilities, addressing the shrinking window between vulnerability disclosure and exploitation. This capability is resonating with security teams overwhelmed by the pace of AI-driven attacks and patch management risk.
4. Go-to-Market Execution and Regional Focus
North America’s outperformance is a direct result of sales reorganization and targeted investments, including the hunter-farmer model (specialized sales roles for new customer acquisition and account management). Early signs of similar momentum are emerging in Asia Pacific, while IMEA remains steady but less dynamic.
5. Platform Consolidation and Upsell
Customers are increasingly consolidating security spend with Radware, opting for multi-module platform agreements that span application, API, and infrastructure protection. This trend supports higher ACVs (annual contract values) and stickier, multi-year relationships.
Key Considerations
The quarter’s results demonstrate Radware’s ability to align innovation with market urgency, particularly as AI accelerates both attack sophistication and enterprise risk. Investors should note the interplay between cloud ARR growth, pipeline expansion, and the company’s ability to convert new product launches into upsell and cross-sell opportunities.
Key Considerations:
- Cloud ARR Momentum: Sustained double-digit growth in cloud ARR underpins the recurring revenue model and signals durable demand for integrated security solutions.
- AI-Driven Product Differentiation: Exploit Shield and AI security modules are early but show strong market interest, addressing a critical pain point in vulnerability management.
- Hybrid Architecture Resilience: Radware’s ability to serve both cloud and on-prem environments insulates it from rapid cloud migration cycles and regulatory-driven workload placement.
- Regional Execution Leverage: North America’s acceleration validates recent sales investments, with Asia Pacific showing early signs of similar traction.
Risks
Currency volatility, especially the Israeli shekel’s strength, pressured reported income and remains a potential headwind. Global supply chain delays could impact hardware refresh cycles, though management sees these as manageable. Competitive intensity in cloud security is high, and Radware’s continued growth depends on maintaining product differentiation and execution in both established and emerging markets.
Forward Outlook
For Q3 2026, Radware guided to:
- Total revenue of $82.5 to $83.5 million
- Non-GAAP operating expenses of $57 to $58 million
- Non-GAAP diluted EPS of $0.28 to $0.29
For full-year 2026, management maintained a focus on:
- Cloud ARR growth and expanding platform adoption
- Continued investment in innovation and go-to-market execution
Management emphasized that cloud security pipeline growth exceeds current ARR, providing confidence in sustained double-digit expansion. Investors should monitor the pace of Exploit Shield adoption and the conversion of pipeline into recurring revenue.
Takeaways
Radware enters the second half of 2026 with strong cloud momentum, a differentiated AI-driven product suite, and a growing base of recurring platform deals. The company’s ability to address both cloud and on-prem needs positions it well for hybrid enterprise environments.
- Cloud Security Drives Growth: With cloud ARR now over $100 million and representing 40% of total ARR, Radware’s SaaS transition is firmly established and accelerating.
- AI and API Modules Catalyze Upsell: New solutions like Exploit Shield and API security are increasing deal sizes and deepening customer relationships.
- Pipeline Signals Upside: Cloud platform pipeline growth outstrips current ARR, suggesting continued momentum if execution remains strong.
Conclusion
Radware’s Q2 2026 results confirm the company’s evolution into a cloud-first, AI-powered security platform provider with a resilient hybrid strategy. Execution on innovation and regional go-to-market is translating into revenue growth, while a robust pipeline and expanding platform adoption support a constructive forward outlook.
Industry Read-Through
Radware’s results underscore a sector-wide shift toward integrated, AI-enabled security platforms as enterprises grapple with the velocity of new vulnerabilities and regulatory complexity in hybrid environments. The rapid adoption of API and exploit protection modules signals that point solutions are giving way to consolidated platforms capable of addressing both cloud and on-prem needs. Competitors in cybersecurity must accelerate their innovation cycles and demonstrate tangible value in reducing operational risk, as customers increasingly demand holistic, subscription-based protection for mission-critical workloads. AI-driven attacks and vulnerability management are now board-level concerns, raising the bar for solution providers across the industry.