How will the partnership with Tet affect Radware's revenue growth and margins?

Impact on Revenue Growth

The managed‑security‑services agreement with Tet gives Radware a foothold in the Latvian ISP market and a platform to roll out its AI‑driven cloud‑protection suite to Tet’s wholesale and retail customer base. ISP contracts are typically multi‑year and volume‑driven, so the deal should add a recurring‑revenue stream that lifts the top line by low‑single‑digit percentages in FY‑24 and accelerates to mid‑single‑digit growth in FY‑25 as cross‑selling of additional services (DDoS mitigation, web‑application firewalls, and threat‑intelligence feeds) ramps. Because the partnership is positioned as a “managed security services provider” model, Radware will capture not only product licences but also ongoing service fees, which historically command higher renewal rates and lower churn than pure hardware sales.

Effect on Margins

Cloud‑based, AI‑powered services are among Radware’s highest‑margin offerings (gross margins > 70 %). The Tet deal is expected to shift revenue mix away from lower‑margin on‑prem hardware toward these SaaS‑type contracts, thereby expanding overall gross margin by roughly 150–200 basis points once the partnership is fully operational. However, the rollout will entail upfront integration, training, and possible revenue‑share arrangements with Tet, which could suppress EBITDA margin in the near term. After the initial ramp‑up (Q4‑24), the incremental high‑margin recurring revenue should lift adjusted EBITDA margin to the high‑30 % range, outpacing the company’s historical average.

Trading Implications

The partnership upgrades Radware’s growth narrative from modest‑to‑moderate to a more compelling recurring‑revenue story, justifying a re‑rating of the stock from “hold” to “buy” for investors seeking exposure to the expanding cyber‑security SaaS segment. Expect the market to price in roughly a 5–7 % upside over the next 6‑12 months, with a potential breakout above the 50‑day EMA if the company confirms the first‑quarter revenue contribution in its earnings release. Risks include integration delays, currency exposure (EUR/USD), and the possibility that the revenue‑share model dilutes net margin more than anticipated. A stop‑loss positioned a few percent below the current support level (≈ $7.20) would protect against a broader sector pull‑back.