AND FINANCIAL REVIEW AND PROSPECTS Our discussion and analysis of our financial condition and results of operation are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Our operating and financial review and prospects should be read in conjunction with our financial statements, accompanying notes thereto and other financial information appearing elsewhere in this annual report. 62 A. Operating Results Overview General We are a provider of application security and delivery solutions for multi-cloud environments. Our solutions secure the digital experience by providing infrastructure, application, and network protection and availability services to companies globally. Our solutions are deployed by, among others, enterprises, carriers, and cloud service providers. We began sales in 1997, and currently have 26 local offices, subsidiaries or branches globally across Asia-Pacific, Europe, and North, Central and South America. Most of our revenues are generated in dollars or are dollar-linked, and the majority of our expenses are incurred in dollars. As such, the dollar is our functional currency. Our consolidated financial statements are prepared in dollars and in accordance with U.S. GAAP. Our revenues are derived from sales of our solutions: • We recognize physical and software product revenues when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment, and we recognize revenues from cloud subscriptions, as part of the product revenues, ratably over the subscription period. • Revenues from post-contract customer support (PCS), which mainly represents help-desk support and unit repairs or replacements, professional services, and ERT services, are recognized ratably over the contract or subscription period, which is typically between one year and three years. Most of our sales are through channels such as resellers and distributors. Our revenues are also attributed to geographic areas based on the location of the end-users. In the years ended December 31, 2025, 2024, and 2023, revenues derived from sales of the Company’s products and product subscriptions constituted approximately 63%, 57%, and 56%, respectively, of our total revenues, with the remaining revenues being derived from services. Results of Operations The following discussion of our results of operations for the years ended December 31, 2025, 2024, and 2023, including the following tables, which present selected financial information in dollars and as a percentage of total revenues, are based upon our consolidated statements of operations contained in our financial statements for those periods, and the related notes, included in this annual report. 63 The following table sets forth, for the periods indicated, certain financial data concerning our consolidated operating results: 2025 2024 2023 (US $ in thousands) Revenues: Products 189,582 155,437 145,541 Services 112,268 119,443 115,751 $ 301,850 $ 274,880 $ 261,292 Cost of revenues: Products 49,033 42,178 41,450 Services 9,306 11,074 10,260 58,339 53,252 51,710 Gross profit 243,511 221,628 209,582 Operating expenses, net: Research and development, net 78,981 74,723 82,617 Sales and marketing 127,586 122,450 126,237 General and administrative 25,536 28,342 32,408 Total operating expenses, net 232,103 225,515 241,262 Operating profit (loss) 11,408 (3,887 ) (31,680 ) Financial income, net 17,899 16,552 13,927 Income (loss) before taxes on income 29,307 12,665 (17,753 ) Taxes on income 9,050 6,627 3,837 Net income (loss) 20,257 6,038 (21,590 ) The following table sets forth, for the periods indicated, certain financial data expressed as a percentage of our total revenues: 2025 2024 2023 Revenues: Products 63 % 57 % 56 % Services 37 43 44 100 100 100 Cost of Revenues: Products 16 15 16 Services 3 4 4 19 19 20 Gross profit 81 81 80 Operating expenses, net: Research and development, net 26 27 32 Sales and marketing 42 45 48 General and administrative 9 10 12 Total operating expenses, net 77 82 92 Operating profit (loss) 4 (1 ) (12 ) Financial income, net 6 6 5 Income (loss) before taxes on income 10 5 (7 ) Taxes on income (3 ) (2 ) (1 ) Net income (loss) 7 % 2 % (8 )% 64 Comparison of Years Ended December 31, 2025, 2024, and 2023. Revenues. Our revenues are derived from sales of our solutions. Revenues from physical products and software-based products are recognized when control of the promised goods is transferred to the customer, either upon shipment or when the product is delivered, depending on the commercial terms of each transaction. Revenues from cloud subscriptions are recognized ratably over the subscription period. Revenues from post-contract customer support, which represent mainly help-desk support, unit repairs or replacements, professional services and ERT services are recognized ratably over the contract period. For additional details regarding the manner in which we recognize revenues, see the discussion under the caption “Critical Accounting Estimates – Revenue Recognition” below. The following table provides a breakdown of our consolidated revenues by type of revenues both in dollars and as a percentage of total revenues for the past three fiscal years, as well as the percentage change between such periods: (US$ in thousands, except percentages) 2025 2024 2023 % Change 2025 vs. 2024 % Change 2024 vs. 2023 Products 189,582 63 % 155,437 57 % 145,541 56 % 22 % 7 % Services 112,268 37 % 119,443 43 % 115,751 44 % (6 )% 3 % Total 301,850 100 % 274,880 100 % 261,292 100 % 10 % 5 % The following table shows a breakdown of our consolidated revenues by geographical distribution both in dollars and as a percentage of total revenues for the past three fiscal years, as well as the percentage change between such periods: (US$ in thousands, except percentages) 2025 2024 2023 % Change 2025 vs. 2024 % Change 2024 vs. 2023 North, Central and South America (principally the United States)(*) 124,530 41 % 117,740 43 % 103,435 40 % 6 % 14 % EMEA (Europe, the Middle East and Africa) 111,253 37 % 94,075 34 % 96,488 37 % 18 % (3 )% Asia-Pacific 66,067 22 % 63,065 23 % 61,369 23 % 5 % 3 % Total 301,850 100 % 274,880 100 % 261,292 100 % 10 % 5 % (*) For the years ended December 31, 2025, 2024, and 2023, our revenues from the United States were $92.7 million, $83.4 million, and $73.0 million, respectively, representing 31%, 31%, and 28% of total revenues for these years, respectively. 65 Revenues in 2025 were $301.8 million compared with revenues of $274.9 million in 2024, an increase of 10%. The increase in revenues was primarily attributable to sustained momentum in our cloud security portfolio and the continued strong performance of DefenseProX, supported by both new customer wins and product refresh cycles. These factors contributed to robust growth in the EMEA region, where revenues increased 18% year-over-year. Revenues in 2024 were $274.9 million compared with revenues of $261.3 million in 2023, an increase of 5%. The increase in revenue was primarily attributed to the growing demand for our cloud-based solutions, especially our cloud security products, the successful DefensePro X refresh, and the increased contribution from our OEM partnerships, fueling a growth in the Americas, where revenue increased 14% year-over-year. In 2025, our product revenues were $189.6 million, an increase of 22% compared to $155.5 million in 2024. The increase in product revenues was primarily attributable to continued growth in demand for our cloud‑based DDoS protection and cloud application protection subscription products, as well as higher hardware sales across our DDoS and Alteon product lines in the EMEA region. This performance reflects both new customer acquisitions and ongoing product refresh cycles. In 2024, our product revenues were $155.5 million, an increase of 7% compared to $145.5 million in 2023. The increase in revenues is attributed primarily to an increase in our cloud DDoS protection and cloud application protection subscription products revenues, the growing demand for our cloud-based solutions, and an increase in our DefensePro X product revenues, primarily due to the successful DefensePro X refresh. In 2025, our service revenues were $112.3 million, a decrease of 6% compared to $119.4 million in 2024. The decrease in service revenues was primarily attributable to lower revenues from support services, reflecting our continued transition toward cloud‑based and subscription‑based offerings. In 2024, our service revenues were $119.4 million, an increase of 3% compared to $115.8 million in 2023. The increase in service revenues was mainly attributed to the increase in revenues from support services for our on-premises devices and an increase in our managed services revenues. During 2025, our revenues from the enterprise market increased by 7% to $232.0 million from $216.5 million in 2024, and revenues from the carrier market increased by 20% to $69.9 million from $58.4 million in 2024. During 2024, our revenues from the enterprise market increased by 8% to $216.5 million from $201.2 million in 2023, and revenues from the carrier market decreased by 3% to $58.4 million from $60.1 million in 2023. 66 Our revenues in North, Central and South America increased in 2025 by 6% compared to 2024. Revenues in the Asia-Pacific region increased in 2025 by 5% compared to 2024 and revenues in EMEA region increased in 2025 by 18% compared to 2024. Revenue growth in the North, Central and South America and Asia‑Pacific regions was primarily driven by a significant increase in revenues from our cloud security subscription products, partially offset by lower revenues from hardware products and support services. Revenue growth in the EMEA region was primarily attributable to a significant increase in revenues from our cloud security subscription products, as well as higher hardware product revenues across our DDoS and Alteon product lines. Our revenues in North, Central and South America increased in 2024 by 14% compared to 2023. Revenues in the Asia-Pacific region increased in 2024 by 3% compared to 2023. The growth in our North, Central and South America and Asia-Pacific regions revenues was mainly attributed to an increase in our cloud security subscription products revenues and our DefensePro X product revenues. Revenues from the EMEA region decreased in 2024 by 2% compared to 2023. The decrease in our EMEA region was mainly attributed to a decrease in sales of our hardware-based products, partially offset by an increase in customer services revenues. Cost of Revenues. Cost of revenues refers to both products and services revenues and consists primarily of the cost of circuit boards and other components required for the assembly of our products, salaries and related personnel expenses for those engaged in the final assembly, and in providing support and maintenance service of our products, license and hosting fees paid to third parties, fees paid to managed security service providers (related parties), inventory write-offs, amortization of acquired technology and other overhead costs. The following table sets forth a breakdown of our cost of revenues between products and services for the periods indicated, in absolute figures and as a percentage of the relative product and services revenues: (US$ in thousands, except percentages) 2025 2024 2023 Cost of Products 49,033 25.9 % 42,178 27.1 % 41,450 28.5 % Cost of Services 9,306 8.3 % 11,074 9.3 % 10,260 8.9 % Total 58,339 19.3 % 53,252 19.4 % 51,710 19.8 % Cost of products as a percentage of product revenues in 2025 was 25.9%, compared to 27.1% in 2024. Cost of products in both 2025 and 2024 included amortization of intangible assets of $4.0 million. Our cost of products as a percentage of product revenues, excluding amortization of intangible assets, represented approximately 23.8% of product revenues in 2025, compared to 24.6% in 2024. Excluding amortization of intangible assets, the decrease in cost of products as a percentage of product revenues was mainly attributed to the increase in our products revenues. 67 Cost of services as a percentage of service revenues in 2025 was 8.3% compared to 9.3% in 2024. Cost of products as a percentage of product revenues in 2024 was 27.1%, compared to 28.5% in 2023. Cost of products in both 2024 and 2023 included amortization of intangible assets of $4.0 million. Our cost of products as a percentage of product revenues, excluding amortization of intangible assets, represented approximately 24.6% of product revenues in 2024, compared to 25.7% in 2023. Excluding amortization of intangible assets, the decrease in cost of products as a percentage of product revenues was mainly attributed to the increase in our products revenues. Cost of services as a percentage of service revenues in 2024 was 9.3% compared to 8.9% in 2023. Operating Expenses. The following table sets forth a breakdown of our operating expenses, net for the periods indicated as well as the percentage change between such periods: (US$ in thousands, except percentages) 2025 2024 2023 % Change 2025 vs. 2024 % Change 2024 vs. 2023 Research and development, net $ 78,981 $ 74,723 $ 82,617 6 % (10 )% Sales and marketing 127,586 122,450 126,237 4 % (3 )% General and administrative 25,536 28,342 32,408 (10 )% (13 )% Total $ 232,103 $ 225,515 $ 241,262 3 % (7 )% Operating expenses increased by 3% to $232.1 million in 2025, compared to $225.5 million in 2024. The $6.6 million increase was primarily attributable to a $4.0 million rise in personnel‑related costs, driven mainly by higher average headcount year‑over‑year and the impact of the depreciation of the U.S. dollar relative to the NIS. Additional contributors included a $2.4 million increase in payments to subcontractors and finder fees, a $1.7 million increase in hosting‑related expenses, and a $2.1 million increase in sales‑event and marketing‑related expenditures. These increases were partially offset by a $2.2 million decrease in share‑based compensation expense, as well as reductions of $0.7 million in office‑related expenses and $0.7 million in the revaluation of contingent consideration and other general and administrative costs. Our operating expenses decreased by 7% in 2024 to $225.5 million from $241.3 million in 2023. The decrease of $15.8 million was primarily attributed to a decrease of $7.9 million in share-based compensation expenses and a decrease of $5.8 million in personnel costs and related expenses, mainly due to a decrease in average headcount compared to the previous year, partially offset by an increase in incentive commissions due to better sales performances in 2024, as well as a decrease of $1.1 million in fees paid to subcontractors and a decrease of $1.0 million in marketing costs. Research and Development Expenses, Net. Research and development (“R&D”), expenses, net consist primarily of salaries and related personnel expenses, costs of subcontractors, and prototype expenses related to the design, development, quality assurance and enhancement of our solutions, and depreciation of equipment purchased for the development and testing processes. All R&D costs are expensed as incurred. We believe that continued investment in R&D is critical to attaining our strategic product objectives. 68 R&D expenses, net, were $79.0 million in 2025, an increase of $4.3 million, or 6%, compared with R&D expenses, net of $74.7 million in 2024. This increase was primarily attributable to: (1) a $2.9 million increase in personnel‑related expenses, mainly reflecting higher average headcount compared to the prior year and the impact of the weakening of the U.S. dollar relative to the NIS; (2) a $1.3 million increase in amounts paid to subcontractors; and (3) a $0.4 million increase in hosting fees, partially offset by a $0.4 million decrease in share‑based compensation expenses (see also “Share‑based compensation expenses” below). R&D expenses, net, were $74.7 million in 2024, a decrease of $7.9 million, or 10%, compared with R&D expenses, net of $82.6 million in 2023. This decrease was primarily a result of: (1) a $5.2 million decrease in personnel costs, mainly due to a decrease in average headcount compared to the previous year, (2) a $1.1 million decrease in amounts paid to subcontractors, and (3) a decrease of $2.4 million in share-based compensation expenses (see also “Share-based compensation expenses” below), partially offset by a $0.7 million increase in hosting fees. Sales and Marketing Expenses. Sales and marketing expenses consist primarily of salaries, commissions, and related personnel expenses for those engaged in the sales and marketing of our products and services, operational costs of our offices that are located outside Israel and are engaged in the promotion, marketing and support of our solutions, in addition to the related trade shows, advertising, promotions, website maintenance, and public relations expenses, and amortization of intangible assets. Sales and marketing expenses were $127.6 million in 2025, an increase of $5.1 million, or 4%, compared with sales and marketing expenses of $122.5 million in 2024. This increase was primarily attributable to: (1) a $2.1 million increase in sales‑events and marketing‑related expenses; (2) a $1.3 million increase in hosting fees, reflecting greater reliance on cloud‑based infrastructure to support sales enablement tools, customer trials, and other selling activities; (3) a $1.1 million increase in amounts paid to subcontractors and finder fees; and (4) a $1.2 million increase in share‑based compensation expenses (see also “Share‑based compensation expenses” below), partially offset by a $0.5 million decrease in office‑related costs. Sales and marketing expenses were $122.5 million in 2024, a decrease of $3.7 million, or 3%, compared with sales and marketing expenses of $126.2 million in 2023. This decrease was mainly related to a decrease of $1.0 million in personnel costs, due to a decrease in average headcount compared to the previous year, partially offset by an increase in sales incentive commissions, a decrease of $1.7 million in share-based compensation expenses (see also “Share-based compensation expenses” below) and a decrease of $1.0 million in marketing related costs. General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related personnel expenses for executive, accounting, and administrative personnel, professional fees (which include legal, audit and additional consulting fees), bad debt expenses, acquisition related costs, and other general corporate expenses. General and administrative expenses were $25.5 million in 2025, a decrease of $2.8 million, or 10%, compared to a general and administrative expenses of $28.3 million in 2024. The decrease in general and administrative expenses in 2025 was primarily attributable to: (1) a $3.0 million decrease in share‑based compensation expenses (see also “Share‑based compensation expenses” below); (2) a $0.2 million decrease in professional fees; (3) a $0.5 million decrease related to the revaluation of contingent consideration recorded in connection with the acquisition of the SecurityDAM; and (4) a $0.3 million decrease in other general and administrative expenses. These decreases were partially offset by a $1.2 million increase in personnel‑related expenses. 69 General and administrative expenses were $28.3 million in 2024, a decrease of $4.1 million, or 13%, compared to a general and administrative expenses of $32.4 million in 2023. The decrease in general and administrative expenses in 2024 was primarily due to (1) a $3.8 million decrease in share-based compensation expenses (see also “Share-based compensation expenses” below), and (2) a decrease of $0.4 million related to revaluation of contingent consideration recorded as part of the acquisition of the business of SecurityDAM. For a discussion of the impact of foreign currency fluctuations on our business, see Item 11 “Quantitative and Qualitative Disclosures about Market Risk.” Share-based compensation expenses. Our expenses also include the recognition of share-based compensation, which is allocated among cost of sales, research, and development expenses, sales and marketing expenses and general and administrative expenses, based on the division in which the recipient of the option grant is employed. The share-based compensation is amortized to operating expenses over the requisite service period of the individual options. The following tables summarize the share options and restricted share units (RSUs) that were granted during the years 2025, 2024 and 2023, and their weighted average grant-date fair value: Share options: 2025 2024 2023 Grants 120,000 299,856 331,899 Weighted-average grant-date fair value 7.83 6.11 5.48 RSUs: 2025 2024 2023 Grants 1,077,315 1,517,180 1,390,718 Weighted-average grant-date fair value 26.02 21.49 15.82 Share-based compensation expenses in 2025 totaled $24.0 million, a decrease of $2.0 million, or 8%, compared with expenses of $26.0 million in 2024. The decrease in our share‑based compensation expenses in 2025 was primarily attributable to a $3.0 million decrease in general and administrative expenses, reflecting lower expenses associated with equity‑based grants made to our Chief Executive Officer in previous years, and a $0.4 million decrease in research and development expenses, mainly due to lower grants made in 2025 compared to 2024. These decreases were partially offset by a $1.2 million increase in sales and marketing expenses, primarily reflecting higher equity‑based grants awarded to our new U.S. sales leadership team. 70 Share-based compensation expenses in 2024 totaled $26.0 million, a decrease of $8.0 million, or 24%, compared with expenses of $34.0 million in 2023. The decrease in our share-based compensation expenses in 2024 was mainly due to RSU grants made at a lower weighted-average price granted towards the end of 2023, which resulted in recording lower expenses in 2024 and lower expenses from the equity-based grants made to our Chief Executive Officer during 2022. Financial Income, Net. Financial income, net consists primarily of interest earned on short- and long-term bank deposits, amortization of premiums, accretion of discounts, interest and dividends earned on investments in marketable securities, gain from the sale of marketable securities and from income and expenses from the translation of monetary balance sheet items denominated in non-dollar currencies. Financial income, net was $17.9 million in 2025, compared with $16.6 million in 2024. The net increase of $1.3 million was primarily attributable to higher average interest rates on our bank deposits, which generated a $3.4 million increase in interest income and gains from investments and bank deposits. These increases were partially offset by a $2.0 million decline in foreign currency exchange gains, principally reflecting the revaluation of balance sheet items denominated in foreign currencies.. Financial income, net was $16.6 million in 2024, compared with $13.9 million in 2023. The net increase of $2.7 million was primarily due to higher average interest rates on our bank deposits, which resulted in a $3.9 million increase in interest income and gains from our investments and bank deposits, partially offset by a $1.4 million decrease in foreign currency exchange gains, mainly due to revaluation of balance sheet items stated in foreign currencies. Income Taxes. Israeli companies are generally subject to corporate tax on their taxable income at the rate of 23% for the 2025, 2024, and 2023 tax years. We elected to apply the Preferred Enterprise regime under the Law for the Encouragement of Capital Investment, 1959 (the “Investments Law”) as of the 2014 tax year. The election is irrevocable. Under the Preferred Enterprise regime, a preferred income of an enterprise located in the center of Israel is subject to a tax rate of 16%. Pursuant to Amendment 73 to the Investments Law adopted in 2017, a company located in the center of Israel that meets the conditions for “Preferred Technological Enterprises” is subject to a tax rate of 12%. We believe we meet those conditions. We operate our business in various countries and attempt to utilize an efficient operating model to optimize our tax payments based on the laws in the countries in which we operate. This can cause disputes between us and various tax authorities in different parts of the world. In 2025, we recorded pre-tax income of $29.3 million compared to pre-tax income of $12.7 million in 2024, and our tax expenses were $9.1 million in 2025, an increase of $2.5 million, or 38%, compared with tax expenses of $6.6 million in 2024. The increase in tax expenses was mainly attributed to the increase of 130% in our pre-tax income compared to the previous year. In 2025, Radware Ltd. was subject to a routine examination by the Israel Tax Authority with respect to its tax returns for the 2019–2022 tax years. In December 2025, Radware Ltd. entered into a settlement agreement with the Israel Tax Authority, thereby concluding the examination. We have previously recorded adequate tax provisions to fully cover the obligations arising from the settlement. Accordingly, the audit findings and related agreement did not have a material impact on our consolidated statements of operations or overall tax expense. 71 In 2024, we recorded pre-tax income of $12.7 million as compared to pre-tax loss of $17.8 million in 2023, and our tax expenses were $6.6 million in 2024, an increase of $2.8 million, or 73%, compared with tax expenses of $3.8 million in 2023. The increase in tax expenses was mainly attributed to the increase in our pre-tax income compared to the previous year and to an increase in our uncertain tax positions provision. For additional disclosure and explanations regarding our income taxes, including the Preferred Technology Enterprise program, see Note 14 to our consolidated financial statements included elsewhere in this annual report and Item 10.E “Taxation—Israeli Tax Considerations.” Reportable Segments The Company operates in two reportable segments: • Radware’s Core Business – This segment consists of our core business operations, including our cloud security as-a-service products, application and data centers security products and our application availability products; and • The Hawks’ Business – This segment consists of the operations of our two subsidiaries: SkyHawk Security, a spinoff of our former cloud native protector business, which now provides an agentless CDR, combined with CIEM, Cloud Security Posture Management CSPM and Autonomous Purple Team for AWS Google Cloud and Azure, and EdgeHawk, which is engaged in transforming routers and network nodes into security platforms. In February 2026, we resolved to sell or cease the operations of Skyhawk Security. The following tables set forth, for the periods indicated, certain financial data concerning our reportable segments (U.S. dollars in thousands): Year ended December 31, 2025 Radware Core Hawks Total Revenues $ 301,222 $ 628 $ 301,850 Operating income (loss) $ 24,712 $ (13,304 ) $ 11,408 Year ended December 31, 2024 Radware Core Hawks Total Revenues $ 274,384 $ 496 $ 274,880 Operating income (loss) $ 9,749 $ (13,636 ) $ (3,887 ) Year ended December 31, 2023 Radware Core Hawks Total Revenues $ 260,322 $ 970 $ 261,292 Operating loss $ (16,802 ) $ (14,878 ) $ (31,680 ) 72 Revenues of the Hawks’ reportable segment were immaterial during the years ended December 31, 2023 through December 31, 2025; therefore, there is no separate discussion about revenues of each segment during those years. For a discussion about the revenues on a consolidated basis, see Item 5.A “Operating Results.” Operating expenses of the Hawks’ business consist primarily of salaries and related personnel expenses, costs of subcontractors, agent fees and share-based compensation expenses. Operating loss of the Hawks’ business was $13.3 million in 2025, $13.6 million in 2024 and $14.9 million in 2023. The decrease of $0.3 million in the operating loss of the Hawks’ segment in 2025 compared to 2024 was primarily due to a $1.3 million decrease in share‑based compensation expense, reflecting lower equity‑grant activity at SkyHawk Security in 2025, partially offset by a $1.0 million increase in personnel‑related costs, mainly attributable to higher average headcount compared to the prior year and the impact of the depreciation of the U.S. dollar relative to the NIS. The decrease of $1.3 million in the operating loss of the Hawks’ segment in 2024 compared to 2023 was primarily a result of a decrease of $1.3 million in the share-based compensation expenses and a decrease of $0.5 million in costs of subcontractors and agents. The decrease in expenses was partially offset by a decrease of $0.5 million in the segment’s revenues. Operating expenses of the Radware core business segment consist primarily of salaries and related personnel expenses including commissions paid to our sales team, marketing related expenses, hosting services fees, rent and office maintenance fees, professional services, costs of subcontractors and share-based compensation expenses. The operating income of the Radware core business segment was $24.7 million in 2025, compared to operating income of $9.7 million in 2024 and operating loss of $16.8 million in 2023. The increase of $15.0 million in the operating income in 2025 compared to 2024 was primarily a result of the increase of $26.8 million in the Radware core segment’s revenues, partially offset by an increase of $6.6 million in the segment operational expenses, mainly due to a $3.0 million increase in personnel‑related costs, driven mainly by higher average headcount year‑over‑year and the impact of the depreciation of the U.S. dollar relative to the NIS. Additional contributors included a $2.4 million increase in payments to subcontractors and finder fees, a $1.7 million increase in hosting‑related expenses, and a $2.1 million increase in sales‑event and marketing‑related expenditures. These increases were partially offset by a $1.1 million decrease in share‑based compensation expense, as well as reductions of $0.7 million in office‑related expenses and $0.7 million in the revaluation of contingent consideration and other general and administrative costs. 73 The operating income of the Radware core business segment was $9.7 million in 2024, compared to operating loss of $16.8 million in 2023 and operating income of $8.4 million in 2022. The change of $26.5 million in the operating income (loss) in 2024 compared to 2023 was primarily a result of the increase of $14.1 million in the Radware core segment’s revenues, and a $5.1 million decrease in salaries and related personnel costs, mainly due to the decrease in average headcount compared to the previous year, and a decrease of $6.7 million in share-based compensation expenses, mainly due to RSU grants made at a lower weighted-average price granted towards the end of 2023, which resulted in lower expenses in 2024, and lower expenses from the equity-based grants made to our Chief Executive Officer during 2022. For additional details regarding these two reportable segments, see below and Notes 2ad and 15 to our consolidated financial statements included elsewhere in this annual report. Currency Fluctuations and Inflation Our financial results may be negatively impacted by foreign currency fluctuations and inflation. Information required by this section is set forth in Item 11 “Quantitative and Qualitative Disclosures about Market Risk” and in Item 3.D “Risk Factors—Currency exchange rates and fluctuations of exchange rates could have a material adverse effect on our results of operations.” Impact of Governmental Policies For information on the impact of governmental policies on our operations, see Item 4.B “Business Overview—Government Regulations,” Item 3.D “Risk Factors—Laws, regulations and industry standards affecting our business are evolving, and unfavorable changes could harm our business,” and Item 3.D “Risk Factors—Risks Related to Operations in Israel.” Related Parties We have entered into a number of agreements for the lease of real property and the purchase of certain products and services from certain companies, of which the heirs of the late Yehuda Zisapel, the heirs of the late Zohar Zisapel, and/or Nava Zisapel are co-founders, directors and/or shareholders, which form part of the RAD-Bynet Group. In February 2022, we also acquired the technology and operations of SecurityDAM, one of these RAD-Bynet Group entities. The heirs of the late Yehuda Zisapel, including his son, Roy Zisapel, our President and Chief Executive Officer and a director, hold all of the outstanding shares of SecurityDAM. Roy Zisapel also serves as a director of RAD Data Communications Ltd., Bynet Electronics Ltd., AB-NET Communications Ltd. and its wholly owned subsidiary, Bynet Data Centers Ltd., Bynet Data Communications Ltd. (and its wholly owned subsidiary RAD Negev Ltd.), and other companies in the RAD-Bynet Group. We have also entered into a number of agreements for the purchase of certain products and services from several companies, in which Yuval Cohen, Chairperson of our Board of Directors, or Fortissimo Capital (in which Mr. Cohen is the founder and managing partner), are shareholders and/or serve as directors. We refer to such companies as the “Fortissimo Portfolio Companies.” We believe that the terms of the transactions in which we have entered with these member entities of the RAD-Bynet Group or with any of the Fortissimo Portfolio Companies are not different in any material respect from terms we could obtain from third parties not associated or affiliated with us and are beneficial to us and no less favorable to us than terms that might be available to us from third parties. The pricing of the transactions was determined based on negotiations between the parties. Members of our management reviewed the pricing of the agreements and confirmed that they were not different in any material respect than that which could have been obtained from third parties not associated or affiliated with us. For more details about these transactions, see below under Item 7.B “Related Party Transactions.” 74 B. Liquidity and Capital Resources General In the past several years, we have financed our operations primarily through cash generated by operations. Cash and cash equivalents, short- and long-term bank deposits and short- and long-term marketable securities were $460.6 million on December 31, 2025, compared with $419.7 million and $363.7 million on December 31, 2024 and 2023, respectively. Principal Capital Expenditures and Divestitures Capital expenditures were $8.5 million, $5.3 million, and $5.4 million for the years ended December 31, 2025, 2024, and 2023, respectively. These expenditures were mainly comprised of investments in computers and peripheral equipment, lab equipment and testing tools, office furniture and equipment and leasehold improvements. In 2026, we anticipate that the majority of our capital expenditures will be primarily for additional infrastructure to support our cloud-based solutions and for R&D testing, lab equipment and computers. We did not have any principal divestitures in the past three years. Working Capital and Cash Flows The following table presents the major components of net cash flows used in and provided by operating, investing, and financing activities for the periods presented (dollars in thousands): 2025 2024 2023 Net cash provided by (used in) operating activities $ 50,091 $ 71,609 $ (3,500 ) Net cash provided by (used in) investing activities (30,070 ) (39,520 ) 92,779 Net cash used in financing activities (13,657 ) (3,913 ) (64,926 ) Net cash provided by (used in) operating activities for 2025, 2024 and 2023 was $50.1 million, $71.6 million, and $(3.5) million, respectively. Our net income (loss) in 2025, 2024, and 2023 was $20.3 million, $6.0 million, and $(21.6) million, respectively. The change resulted primarily from a decrease of $2.0 million in share-based compensation, a $21.6 million decrease in trade receivables, an $11.1 million decrease of accrued interest on bank deposits and a decrease of $4.4 million in other assets. All offset by an increase of $14.2 million in net income, an increase of $1.3 million in deferred revenues, and a $1.7 million increase in lease liabilities, net. 75 Net cash provided by operating activities was $71.6 million for the year ended December 31, 2024, compared to net cash used in operating activities of $3.5 million for the year ended December 31, 2023. The change resulted primarily from an increase of $27.6 million in net income, an increase of $14.7 million in other payables and accrued expenses, an increase of $20.5 million in deferred revenues, an increase of $6.6 million in accrued interest on bank deposits, an increase of $5.6 million in inventories, an increase of $3.4 million in trade payables, and a $6.0 million increase in trade receivables. These increases were partially offset by a decrease of $8.0 million in share-based compensation and a $2.2 million decrease in amortization of premium, accretion of discounts and accrued interest on marketable securities. Net cash used in investing activities was $30.1 million for the year ended December 31, 2025, compared to net cash used in investing activities of $39.5 million for the year ended December 31, 2024. The change was primarily due to a net decrease of $16.1 million in investments in short-term, long-term and other deposits offset by a net increase of $3.3 million in capital and increase in proceeds from marketable securities in the amount of $3.3 million. Net cash used in investing activities was $39.5 million for the year ended December 31, 2024, compared to net cash provided by investing activities of $92.8 million for the year ended December 31, 2023. The change was primarily due to a net increase of $134.1 million in investments in short-term, long-term and other deposits. Net cash used in financing activities was $13.7 million for the year ended December 31, 2025, an increase of $9.7 million compared to net cash used in financing activities of $3.9 million for the year ended December 31, 2024. The increase in net cash used in financing activities was mainly attributed to the $10.5 million in repurchase of our ordinary shares during 2025. Net cash used in financing activities was $3.9 million for the year ended December 31, 2024, a decrease of $61.0 million compared to net cash used in financing activities of $64.9 million for the year ended December 31, 2023. The decrease in net cash used in financing activities was mainly attributed to the decrease of $62.4 million in repurchase of our ordinary shares, partially offset by a $1.0 million increase in the contingent consideration paid to SecurityDAM. Cash, Cash Equivalents and Marketable Securities As of December 31, 2025, we had cash and cash equivalents, including short- and long-term bank deposits and short- and long-term marketable securities, of $460.6 million, compared to $419.7 million as of December 31, 2024 and $363.7 million as of December 31, 2023. As of December 31, 2025, all of our short- and long-term bank deposits were deposited in Israel with major Israeli banks, which are all rated ilAAA, as determined by S&P’s Maalot. As of December 31, 2025, the longest contractual duration of any of our bank deposits was 3.0 years, the weighted-average duration of our deposits was 1.89 years, and the weighted average time to maturity was 1.06 years. Our marketable securities portfolio includes investments in debt securities of corporations, debt securities of U.S. government and in foreign banks and government debentures. The financial institutions that hold our marketable securities are major U.S. financial institutions, located in the United States. As of December 31, 2025, 98% of our marketable securities portfolio was invested in debt securities of corporations and 2% in financial institutions. From a geographic perspective, 89% of our marketable securities portfolio was invested in debt securities of U.S. issuers, 5% was invested in debt securities of European issuers and 6% was invested in debt securities of other geographic-located issuers. As of December 31, 2025, 82% of our marketable securities portfolio was rated A- or higher and 18% was rated BBB+, as determined by S&P. 76 There are no material legal restrictions, taxes, or other costs associated with transferring our funds held in U.S. financial institutions to Israeli financial institutions, and we have access to all of our cash as needed for our operations. Although we have various subsidiaries throughout the world, there are no material legal, tax, or other cost impediments to our transferring cash to these subsidiaries for operations as and when needed or to such subsidiaries transferring cash to us to meet our own cash obligations. Further, we believe we generate sufficient cash from our Israeli operations to fund our operating and capital requirements and, therefore, do not need or intend to repatriate any of the earnings of our foreign subsidiaries. Other Material Contractual Obligations The following table summarizes our material contractual obligations as of December 31, 2025 and the effect those commitments are expected to have on our liquidity and cash flow. Payments Due by Period (US $ in thousands) Contractual obligations Total Less than 1 year* 1-3 years 3-5 years More than 5 years Operating leases (1) 18,011 5,315 8,237 4,459 - Total contractual cash obligations (2) 18,011 5,315 8,237 4,459 - * Become due during 2026. (1) Consists of outstanding operating leases for the Company’s facilities. The lease agreements expire in the years 2025 to 2030, although certain of our leases have renewal options. (2) Severance payments of $5.2 million are payable only upon termination, retirement, or death of the respective employee, and there is no obligation for benefits accrued prior to 2007 if the employee voluntarily resigns. Since we are unable to reasonably estimate the timing of settlement, such payments are not included in the table. See also Note 2(x) of our consolidated financial statements. Market Risk We are exposed to market risk, including fluctuations in interest rates and foreign currency exchange rates. Additional information about market risk is set forth in Item 11 “Quantitative and Qualitative Disclosures about Market Risk.” Outlook Our capital requirements depend on numerous factors, including market acceptance of our products and services and the resources we allocate to our operating expenses. Since our inception, we have experienced substantial increases in our expenditures consistent with growth in our operations and personnel, and we may increase our expenditures in the foreseeable future in order to execute our strategy. We anticipate that operating activities as well as capital expenditures will demand the use of our cash resources. We believe that our cash balances will provide sufficient cash resources to finance our operations and the projected marketing and sales activities and research and development efforts and other elements of our strategy for a period of no less than the next 12 months. 77 C. Research and Development, Patents and Licenses, etc. In order to accommodate the rapidly changing needs of our markets, we place considerable emphasis on research and development projects designed to improve our existing product lines, develop new product lines and customize our products to meet our customers’ needs. As of December 31, 2025, we had 406 employees and 68 subcontractors engaged primarily in research and development activities, compared to 378 employees and 71 subcontractors at the end of 2024, and 408 employees and 71 subcontractors at the end of 2023. For a further discussion of research and development, see Item 5.A “Operating Results.” For a discussion regarding the benefits provided under programs of the IIA, see Item 4.B “Business Overview—Israeli Innovation Authority.” D. Trend Information We have identified the following key trends and uncertainties that we believe will materially influence our market, financial condition and the demand for our solutions: • Applications are migrating to the public cloud. The migration to public cloud exposes organizations to new threats that require consistent security across all cloud environments. Organizations also prefer to purchase security services as a subscription, to match the subscription-based consumption of hosting services. • Datacenter architecture is changing. Datacenter architecture is changing to include various models such as a physical datacenter, a virtual datacenter, a software defined datacenter, and private or public cloud. New emerging edge clouds, new AI-datacenters processing AI-enabled applications with connectivity to AI Providers, coupled with the 5G breakouts and SD-WAN, will enable enterprises to effectively leverage cloud-native services and edge computing services. Many organizations use a mixed infrastructure that includes a combination of one or more of the above and therefore require broader overarching protection that encompasses both the datacenter and multi-cloud-based applications. In addition, this mixed environment often involves multiple vendors and creates challenges in IT staffing and operational costs, which increase the needs for hybrid cloud services, managed “single pane of glass” style security services and modern automated data center technologies. • Application modernization requires new security tools. Application infrastructure is changing, from monolithic applications to modern applications and websites in which deployment workflows, front-end built-tools and API-centric architectures are used. The rise of cloud-native ecosystems, increasingly adapting cloud-direct and micro-services architecture packaged as containers, is providing a built-in “on-demand” elasticity and availability application infrastructure. This enables introducing and running the new generation of cloud-native applications, in a fast, adaptive and more efficient way by interacting with DevOps CICD tools and methods. As such, the AppSec blast radius is expanded and requires injection of security controls within the application lifecycle at early stages, to avoid slowdown in development, to sanitize, for example, usage of opensource software used by developers and might leak in malicious code (recent Log4J library). Various “shift-right” and “shift-left” methods are used and specifically adapted for various target deployment environments. 78 • The above-mentioned cloud-native application delivery opens the door for leakage through the open cloud interface. A new family of attack surfaces manifested by the fact that the cloud APIs are publicly published, and DevOps processes are done from the outside of the cloud “perimeter” (the insider becomes the outsider). “Cloud-native” infiltrations are enabled by the usage of cloud-IAM (identify and access) misconfigurations or account take over techniques and by various vulnerabilities of publicly exposed web and API interfaces. This creates a need for a new protection posture for compliance, permissions hardening, vulnerabilities detection as well as cloud-native detection (infiltrations and exfiltration) and response tools under new industry categories: CIEM (Cloud Infrastructure Entitlement Management), CSPM (Cloud Security Posture Management), CWPP (Cloud Workload Protector Platform), and CTDR (Cloud Threat Detection and Response). • Organizations’ attack surfaces are increasing due to a changing economy. This was caused by a combination of two forces. First, working from home, primarily due to the restraints associated with COVID-19, required organizations to enable remote access to applications and services that were previously not exposed. The second wave of remote and automated trade is boosted mainly by the “API economy” (a term used to describe that all of the enterprise communication is built on top of the APIs and all platforms expose the APIs to exchange data, thereby exposing them to cyber attacks) where both B2B and B2C transactions are using machines for trade automations. This eliminated the traditional network perimeter, and now, even after The World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency, every home computer or mobile device has become the new perimeter. Second, an increase in the online consumption of goods has accelerated organizations’ digital transformation and migration to the cloud. The result is more opportunities for attackers to leverage the increased attack surface. • Increasing complexity and intensity of security threats, including new AI-weaponized attacks. The collapsed boundaries between data and instructions, between agents and employees creates new silent exit blind spots, opening the door for the new ‘zero-click’ attack surfaces. The increasing complexity and intensity of the security threats landscape requires expertise in identifying the attacks and state-of-the-art security to mitigate the attacks and safeguard the assets. Attack delivery is aided by the growing presence of connected devices (IoT), which increases the threat surface against any kind of infrastructure, as well as traffic encryption (dark data) assisting in hiding attacks. We have also observed a new generation of availability attacks against application infrastructure utilizing new generation of Web/L7 DDoS tools that aim to evade all network DDoS/L3-4 protections. Furthermore, attack tools are increasingly available to all through the dark net and becoming more sophisticated as hackers use automation and weaponize AI. Increasing focus is currently centered around the new opportunities of weaponizing AI enabled by foundation models as well as customized weaponized SLMs . This leads to ever morphing and scalable attack vectors at all levels, from volumetric botnets through web and API-centric attacks, as well as new attack surfaces that utilize Kubernetes-platforms (container orchestration platform of choice). The mass amount of uncontrolled IoT devices and cloud hosting opens the door for a new generation of botnets and automated bots that are hard to classify and block. Most organizations are not able to keep up with these developments with their internal cybersecurity resources and seek managed security services. 79 • Increasing expectations for applications availability and frictionless performance, due to the increasing dependence on applications in today’s business world. Businesses are sensitive to the resilience and availability of their applications, given their customers’ expectations of flawless experience and optimal performance. As such, exposed web and API based applications and shortly also Agentic applications and Agentic commerce, are the target for attackers that utilize both the server side as well as the client/browser side platforms for spreading their malicious code. New security controls utilize the power of AI and machine learning to control the delivery of AppSec services (control false positives) as well as detection of zero-days and the new zero-click attacks for Agentic-centric applications. See also the discussion under Item 4.B “Business Overview–Our Growth Strategy” and “Business Overview–Competition” above and the risks and uncertainties described under Item 3.D “Risk Factors.” E. Critical Accounting Estimates In many cases, the accounting treatment of a particular transaction is specifically dictated in U.S. GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would produce a materially different result. Our management has reviewed these critical accounting policies, estimates and related disclosures with the Audit Committee of our Board of Directors. See Note 2 to our consolidated financial statements included elsewhere in this annual report, which contains additional information regarding our accounting policies, estimates and other disclosures required by U.S. GAAP. Our management believes that the significant accounting policies that affect its more significant judgments and estimates used in the preparation of its consolidated financial statements and that are the most critical to aid in fully understanding and evaluating our reported financial results include the following: • Revenue recognition; • Investment in marketable securities; • Goodwill and impairment of long-lived assets; • Share-based compensation; and • Income taxes. Revenue Recognition. We recognize revenues in accordance with Accounting Standards Codification (ASC) No. 606, “Revenue from Contracts with Customers.” As such, we identify a contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to each performance obligation in the contract and recognize revenues when (or as) we satisfy a performance obligation. The transaction price is determined based on the consideration which we expect to be entitled to in exchange for transferring the promised goods or services to our customer. This transaction price is exclusive of amounts collected on behalf of third parties, such as sales tax and value-added tax. Payment terms and conditions vary by contract type, although terms generally include a requirement to pay within less than a year. 80 Our solutions are sold primarily through distributors and resellers, all of which are considered end-users. Our arrangements typically contain various combinations of our products, subscriptions and PCS, which are distinct and are accounted for as separate performance obligations. We allocate the transaction price to each performance obligation based on its relative standalone selling price (“SSP”). If the SSP is not observable, we estimate the SSP taking into account available information such as geographic specific factors, customer grouping and internally approved historical pricing guidelines related to the performance obligation. For PCS and subscriptions, we determine the standalone selling price based on observable renewals prices or standalone subscription transactions. For products, the SSP is not observable, and therefore, we estimate the product SSP taking into account available information such as geographic specific factors, customer grouping and internally approved historical pricing guidelines. Deferred revenues represent mainly the unrecognized revenue collected for subscriptions and for PCS. Such revenues are recognized ratably over the term of the related agreement and are classified as short- and long-term based on their contractual term. We record a provision for estimated sale returns, credits and stock rotation granted to customers on our products in the same period that the related revenues are recorded in accordance with ASC 606. Those estimates are based on historical sales returns and other factors known to us. Such provisions amounted to $12.5 million and $5.3 million as of December 31, 2025 and 2024, respectively. Investment in Marketable Securities. We account for investments in marketable securities in accordance with Accounting Standards Codification (“ASC 320”), “Investments – Debt Securities.” Management determines the appropriate classification of our investments at the time of purchase and reevaluates such determinations at each balance sheet date. We classified all our debt securities as available-for-sale marketable securities. Debt securities are carried at fair value, with the unrealized gains and losses reported in “accumulated other comprehensive income (loss)” in shareholders’ equity, except for changes in allowance for expected credit losses, which is recorded in financial income, net. Realized gains and losses on sales of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities are included in financial income, net. We periodically evaluate our available-for-sale debt securities for impairment. If the amortized cost of an individual security exceeds its fair value, we consider our intent to sell the security or whether it is more likely than not that we will be required to sell the security before recovery of its amortized basis. If either of these criteria are met, we write down the security to its fair value and record the impairment charge in financial income, net in our consolidated statements of income (loss). If neither of these criteria are met, we determine whether credit loss exists. Credit loss is estimated by considering changes to the rating of the security by a rating agency and any adverse conditions specifically related to the security, as well as other factors. Credit loss impairments for both the years ended December 31, 2025 and 2024 were immaterial. 81 Goodwill and impairment of long-lived assets. Goodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Under ASC 350 “Intangibles – Goodwill and Other” (ASC 350), goodwill is not amortized, but rather is subject to an annual impairment test. ASC 350 requires goodwill to be tested for impairment at least annually or between annual tests in certain circumstances and written down when impaired. Goodwill is tested for impairment by comparing the fair value of each reporting unit with its carrying value. ASC 350 allows an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. If the qualitative assessment does not result in a more likely than not indication of impairment, no further impairment testing is required. If the entity elects not to use this option, or if the entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the entity prepares a quantitative analysis to determine whether the carrying value of a reporting unit exceeds its estimated fair value. If the carrying value of a reporting unit exceeds its estimated fair value, the entity recognizes an impairment of goodwill for the amount of this excess. We conduct our annual test of impairment for goodwill on December 31 of each year, or more frequently if impairment indicators are present. No impairment loss was recorded during each of 2025, 2024, and 2023. Share-based compensation. We account for share-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (ASC 718). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in our consolidated statements of income (loss). Some of our subsidiaries have share option plans pursuant to which qualified directors and employees may be granted options for the purchase of securities of the subsidiaries. Share-based compensation expenses recorded on the subsidiaries' level are presented in non-controlling interests. We recognize compensation expenses for the value of our awards based on the accelerated attribution method over the requisite service period of each of the awards, net of estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on actual historical pre-vesting forfeitures. We selected the Black-Scholes-Merton option pricing model to account for the fair value of our share-options awards with only service conditions and whereas the fair value of the RSUs awards is based on the market value of the underlying shares at the date of grant. On July 28, 2022, our shareholders approved an equity grant to the Chief Executive Officer of the Company, which is comprised of RSUs, market-condition based RSUs and market-condition based share options. The equity grant includes grants for the years 2022, 2023, and 2024 and are fixed monetary amounts ($7.725 million, $5.0 million and $5.0 million, respectively). Market-condition based RSUs’ vesting is dependent upon the fulfillment of certain market conditions and will vest, or partially vest, depending on the Company's share performance compared to other companies that are listed on the NASDAQ CTA Cybersecurity Index over the requisite service period, which is up to three years. Market-based condition share options’ vesting is dependent upon the fulfillment of certain market conditions and will vest depending on the Company's share performance over the requisite service period, which is up to three years. 82 The fair value of the market-condition based awards was determined using a Monte Carlo simulation methodology. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon actual historical stock price movements over a historical period equivalent to the option’s expected term. The expected option term represents the period of time that options are expected to be outstanding. Expected term of options is based on historical experience. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. We have historically not paid dividends and have no foreseeable plans to pay dividends. Income Taxes. We account for income taxes in accordance with ASC 740, “Income Taxes.” This statement prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We provide a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that a portion or all of the deferred tax assets will not be realized. ASC 740 contains a two-step approach to recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is only addressed if the first step has been satisfied (i.e., the position is more likely than not to be sustained), otherwise a full liability in respect of a tax position not meeting the more likely than not criteria is recognized. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We accrue interest and penalty, if any, that are related to unrecognized tax benefits in taxes on income. Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate or changes in tax laws. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related interest and penalties. In 2025, Radware Ltd. was subject to an examination by the Israel Tax Authority with respect to its tax returns for the 2019–2022 tax years. In December 2025, Radware Ltd. entered into a settlement agreement with the Israel Tax Authority, thereby concluding the examination. We have previously recorded adequate tax provisions to fully cover the obligations arising from the settlement. Accordingly, the audit findings and related agreement did not have a material impact on our consolidated statements of operations or overall tax expense. Accounting for tax positions requires judgments, including estimating reserves for potential uncertainties. We also assess our ability to utilize tax attributes, including those in the form of carryforwards for which the benefits have already been reflected in the financial statements. We do not record valuation allowances for deferred tax assets that we believe are more likely than not to be realized in future periods. While we believe the resulting tax balances as of December 31, 2025 and 2024 are appropriately accounted for, the ultimate outcome of such matters could result in favorable or unfavorable adjustments to our consolidated financial statements and such adjustments could be material. See Note 14 to our consolidated financial statements included elsewhere in this annual report for further information regarding income taxes. We have filed or are in the process of filing local and foreign tax returns that are subject to audit by the respective tax authorities. The amount of income tax we pay is subject to ongoing audits by the tax authorities, which often result in proposed assessments. See “Results of Operations—Income Taxes” above. 83 While we believe that we have adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved, audits are closed or when statutes of limitation on potential assessments expire.