----

----

| Title of each classOrdinary Shares, NIS 0.05 par value per share | Name of each exchange on which registeredThe Nasdaq Stock Market LLC |
|------------------------------------------------------------------|----------------------------------------------------------------------|

----

| ☒ | U.S. GAAP |
|---------|-----------|

| ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board |
|---------|-------------------------------------------------------------------------------------------------------|

| ☐ | Other |
|---------|-------|

----

| Exhibit No. | Exhibit                                                                                                  |
|-------------|----------------------------------------------------------------------------------------------------------|
| 1.1         | Memorandum of Association ¶ (A)                                                                     |
| 1.2         | Amended and Restated Articles of Association (B)                                                         |
| 4.1         | Form of Directors and Officers Indemnity Deed (C)                                                        |
| 4.2         | Distributor Agreement with Bynet Data Communications Ltd. (D)                                            |
| 4.3         | Summary of Material Terms of the Lease Agreements for the Company's Headquarters (E)                     |
| 4.4         | 1997 Key Employee Share Incentive Plan, as amended and restated (F)                                      |
| 4.5         | 2010 Addendum (for international grantees) (G)                                                           |
| 4.6         | Radware Ltd. – 2010 Employee Share Purchase Plan (H)                                               |
| 4.7         | Amended and Restated Compensation Policy for Executive Officers and Directors (I)                        |
| 8.1         | List of Subsidiaries*                                                                                    |
| 12.1        | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002** |

----

| 12.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**                                                                                                                                                                                                                                                                                                                                                                                                                     |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 13.1 | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***                                                                                                                                                                                                                                                                                                                                                                     |
| 13.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002***                                                                                                                                                                                                                                                                                                                                                                     |
| 15.1 | Consent of Independent Registered Public Accounting Firm**                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 101  | The following financial information from the Registrant's Annual Report on Form 20-F for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Comprehensive Income (Loss); (iv) Statements of Changes in Shareholders' Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and in detail* |

----

|   | RADWARE LTD. |                       |
|--------|--------------|----------------------------|
|   |         |                       |   |
|   | By:          | /s/ Doron Abramovitch |   |
|   |         | Doron Abramovitch          |   |
|   |         | Chief Financial Officer    |   |
|   |         |                       |   |

----

|                                                     | Page      |
|----------------------------------------------------------|-----------|
|                                                     |      |
| Reports of Independent Registered Public Accounting Firm | F2 - F3   |
|                                                     |      |
| Consolidated Balance Sheets                              | F4 - F5   |
|                                                     |      |
| Consolidated Statements of Income (Loss)                 | F6        |
|                                                     |      |
| Consolidated Statement of Comprehensive Income (Loss)    | F7        |
|                                                     |      |
| Statements of Changes in Shareholders' Equity            | F8        |
|                                                     |      |
| Consolidated Statements of Cash Flows                    | F9 - F10  |
|                                                     |      |
| Notes to Consolidated Financial Statements               | F11 - F50 |

----

|             | /s/ KOST FORER GABBAY & KASIERER |
|------------------|--------------------------------------|
| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
| April 27, 2017   | A Member of Ernst & Young Global |

----

|             | /s/ KOST FORER GABBAY & KASIERER |
|------------------|--------------------------------------|
| Tel-Aviv, Israel | KOST FORER GABBAY & KASIERER     |
| April 27, 2017   | A Member of Ernst & Young Global |

----

----

|                                                                                                                                                                  |   | December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                                                                                                  |   | 2016         |    |   | 2015 |   |
|                                                                                                                                                                  |   |         |    |   |   |   |
| ASSETS                                                                                                                                                                |   |         |    |   |   |   |
|                                                                                                                                                                  |   |         |    |   |   |   |
| CURRENT ASSETS:                                                                                                                                                       |   |         |    |   |   |   |
|                                                                                                                                                                  |   |         |    |   |   |   |
| Cash and cash equivalents                                                                                                                                             |   | $            | 79,639  |   |   | $ | 33,744 |   |
| Available-for-sale marketable securities                                                                                                                              |   |         | 20,452  |   |   |   | 16,003 |   |
| Short-term bank deposits                                                                                                                                              |   |         | 125,995 |   |   |   | 80,922 |   |
|  Trade receivables (net of allowance for doubtful accounts and sales reserves in a total amount of $ 1,236 and $ 1,686 in 2016 and 2015, respectively) |   |         | 19,407  |   |   |   | 26,410 |   |
| Other current assets and prepaid expenses                                                                                                                             |   |         | 4,159   |   |   |   | 5,042 |   |
| Inventories                                                                                                                                                           |   |         | 17,114  |   |   |   | 16,322 |   |
|                                                                                                                                                                  |   |         |    |   |   |   |   |   |
| Total current assets                                                                                                                                                  |   |         | 266,766 |   |   |   | 178,443 |   |
|                                                                                                                                                                  |   |         |    |   |   |   |   |   |
| LONG-TERM INVESTMENTS:                                                                                                                                                |   |         |    |   |   |   |   |   |
|                                                                                                                                                                  |   |         |    |   |   |   |   |   |
| Available-for-sale marketable securities                                                                                                                              |   |         | 74,967  |   |   |   | 87,814 |   |
| Long-term bank deposits                                                                                                                                               |   |         | 19,092  |   |   |   | 96,643 |   |
| Severance pay fund                                                                                                                                                    |   |         | 2,597   |   |   |   | 2,724 |   |
|                                                                                                                                                                  |   |         |    |   |   |   |   |   |
| Totallong-term investments                                                                                                                                            |   |         | 96,656  |   |   |   | 187,181 |   |
|                                                                                                                                                                  |   |         |    |   |   |   |   |   |
| Property and equipment, net                                                                                                                                           |   |         | 26,354  |   |   |   | 26,203 |   |
| Intangible assets, net                                                                                                                                                |   |         | 2,399   |   |   |   | 3,518 |   |
| Goodwill                                                                                                                                                              |   |         | 30,069  |   |   |   | 30,069 |   |
| Other long-term assets                                                                                                                                                |   |         | 8,092   |   |   |   | 5,473 |   |
|                                                                                                                                                                  |   |         |    |   |   |   |   |   |
| Total assets                                                                                                                                                          |   | $            | 430,336 |   |   | $ | 430,887 |   |

----

----

|                                                                                                                                                                                                                                                                                   |   | December 31, |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|----------|
|                                                                                                                                                                                                                                                                                   |   | 2016         |     |   | 2015 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                                                                                                   |   |         |     |   |   |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |
| Trade payables                                                                                                                                                                                                                                                                         |   | $            | 5,971    |   |   | $ | 9,255 |   |
| Deferred revenues                                                                                                                                                                                                                                                                      |   |         | 53,061   |   |   |   | 46,061 |   |
| Employees and payroll accruals                                                                                                                                                                                                                                                         |   |         | 11,713   |   |   |   | 10,791 |   |
| Other payables and accrued expenses                                                                                                                                                                                                                                                    |   |         | 14,519   |   |   |   | 11,307 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| Total current liabilities                                                                                                                                                                                                                                                              |   |         | 85,264   |   |   |   | 77,414 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| LONG-TERM LIABILITIES:                                                                                                                                                                                                                                                                 |   |         |     |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| Deferred revenues                                                                                                                                                                                                                                                                      |   |         | 31,100   |   |   |   | 25,136 |   |
| Other long-term liabilities                                                                                                                                                                                                                                                            |   |         | 14,209   |   |   |   | 9,214 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| Total long-term liabilities                                                                                                                                                                                                                                                            |   |         | 45,309   |   |   |   | 34,350 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| COMMITMENTS AND CONTINGENT LIABILITIES                                                                                                                                                                                                                                                 |   |         |     |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| SHAREHOLDERS' EQUITY:                                                                                                                                                                                                                                                                  |   |         |     |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| Share capital -                                                                                                                                                                                                                                                                        |   |         |     |   |   |   |   |   |
| Ordinary shares of NIS 0.05 par value -Authorized: 60,000,000 at December 31, 2016 and 2015; Issued: 52,913,976 and 52,619,945 shares at December 31, 2016 and 2015, respectively; Outstanding: 43,188,850 and 44,778,847 shares at December 31, 2016 and 2015, respectively |   |         | 663      |   |   |   | 661 |   |
| Additional paid-in capital                                                                                                                                                                                                                                                             |   |         | 325,338  |   |   |   | 312,784 |   |
|   Treasury stock (9,725,128) and (7,841,098) of ordinary shares at December 31, 2016 and 2015, respectively                                                                                                                                                             |   |         | (116,029 | ) |   |   | (94,049 | ) |
| Accumulated other comprehensive income (loss)                                                                                                                                                                                                                                          |   |         | (20      | ) |   |   | 1,257 |   |
| Retained earnings                                                                                                                                                                                                                                                                      |   |         | 89,811   |   |   |   | 98,470 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| Total shareholders' equity                                                                                                                                                                                                                                                             |   |         | 299,763  |   |   |   | 319,123 |   |
|                                                                                                                                                                                                                                                                                   |   |         |     |   |   |   |   |   |
| Total liabilities and shareholders' equity                                                                                                                                                                                                                                             |   | $            | 430,336  |   |   | $ | 430,887 |   |

----

----

|                                  |   | Year endedDecember 31, |    |
|---------------------------------------|--------|------------------------|---------|
|                                  |   | 2016                   |    |   | 2015 |   |   | 2014 |   |
|                                  |   |                   |    |   |   |   |   |   |   |
| Revenues:                             |   |                   |    |   |   |   |   |   |   |
| Products                              |   | $                      | 110,186 |   |   | $ | 136,793 |   |   | $ | 143,466 |   |
| Services                              |   |                   | 86,399  |   |   |   | 79,773 |   |   |   | 78,426 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Total revenues                        |   |                   | 196,585 |   |   |   | 216,566 |   |   |   | 221,892 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cost of revenues:                     |   |                   |    |   |   |   |   |   |   |   |   |   |
| Products                              |   |                   | 27,320  |   |   |   | 29,159 |   |   |   | 29,448 |   |
| Services                              |   |                   | 8,375   |   |   |   | 9,041 |   |   |   | 10,284 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Total cost of revenues                |   |                   | 35,695  |   |   |   | 38,200 |   |   |   | 39,732 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Gross profit                          |   |                   | 160,890 |   |   |   | 178,366 |   |   |   | 182,160 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Operating expenses:                   |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Research and development, net         |   |                   | 51,732  |   |   |   | 49,987 |   |   |   | 44,081 |   |
| Sales and marketing                   |   |                   | 103,774 |   |   |   | 93,347 |   |   |   | 93,203 |   |
| General and administrative            |   |                   | 18,133  |   |   |   | 17,033 |   |   |   | 19,797 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Total operating expenses              |   |                   | 173,639 |   |   |   | 160,367 |   |   |   | 157,081 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Operating income (loss)               |   |                   | (12,749 | ) |   |   | 17,999 |   |   |   | 25,079 |   |
| Financial income, net                 |   |                   | 5,741   |   |   |   | 5,867 |   |   |   | 5,802 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Income (loss) before taxes on income  |   |                   | (7,008  | ) |   |   | 23,866 |   |   |   | 30,881 |   |
| Taxes on income                       |   |                   | 1,651   |   |   |   | 5,297 |   |   |   | 5,931 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net income (loss)                     |   | $                      | (8,659  | ) |   | $ | 18,569 |   |   | $ | 24,950 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Basic net earnings (loss) per share   |   | $                      | (0.20   | ) |   | $ | 0.40 |   |   | $ | 0.55 |   |
|                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
| Diluted net earnings (loss) per share |   | $                      | (0.20   | ) |   | $ | 0.40 |   |   | $ | 0.53 |   |

----

----

|                                                                                     |   | Year endedDecember 31, |   |
|------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                     |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                                                                                     |   |                   |   |   |   |   |   |   |   |
| Net income (loss)                                                                        |   | $                      | (8,659 | ) |   | $ | 18,569 |   |   | $ | 24,950 |   |
|                                                                                     |   |                   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss) before tax:                                            |   |                   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains (losses) on available-for-sale securities:                              |   |                   |   |   |   |   |   |   |   |   |   |   |
| Changes in unrealized gains                                                              |   |                   | 68     |   |   |   | 3,903 |   |   |   | (1,098 | ) |
| Less: reclassification adjustments for gains included in net income (loss)               |   |                   | (1,771 | ) |   |   | (2,438 | ) |   |   | (424 | ) |
|                                                                                     |   |                   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss) before tax                                             |   |                   | (1,703 | ) |   |   | 1,465 |   |   |   | (1,522 | ) |
| Income tax benefits (expense) related to components of other comprehensive income (loss) |   |                   | 426    |   |   |   | (419 | ) |   |   | - |   |
|                                                                                     |   |                   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), net of tax                                            |   |                   | (1,277 | ) |   |   | 1,046 |   |   |   | (1,522 | ) |
|                                                                                     |   |                   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss)                                                              |   | $                      | (9,936 | ) |   | $ | 19,615 |   |   | $ | 23,428 |   |

----

----

|                                                |   | Number ofoutstanding Ordinaryshares |       |   | Sharecapital |   |   | Additionalpaid-incapital |   |   | Treasurystock, at cost |   |   | Accumulatedother comprehensiveincome (loss) |     |   | Retained earnings |   |   | Total  |   |
|-----------------------------------------------------|--------|-------------------------------------|------------|--------|--------------|--------|--------|--------------------------|--------|--------|------------------------|--------|--------|---------------------------------------------|----------|--------|-------------------|--------|--------|--------|--------|
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |
| Balance as of December 31, 2013                     |   |                                | 44,733,589 |   |         | $      | 611    |                     |   | $      | 262,809                |   |   | $                                           | (25,984  | )      |              | $      | 1,733  |   |   | $ | 54,951 |   |   | $ | 294,120 |   |
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase of ordinary shares                       |   |                                | (887,855   | )      |         |   | -      |                     |   |   | -                      |   |   |                                        | (15,169  | )      |              |   | -      |   |   |   | - |   |   |   | (15,169 | ) |
| Issuance of shares upon exercise of stock options   |   |                                | 3,080,763  |   |         |   | 43     |                     |   |   | 22,450                 |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 22,493 |   |
| Stock based compensation                            |   |                                | -          |   |         |   | -      |                     |   |   | 7,382                  |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 7,382 |   |
| Tax benefit related to exercise of stock options    |   |                                | -          |   |         |   | -      |                     |   |   | 1,443                  |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 1,443 |   |
| Other comprehensive loss, net of tax                |   |                                | -          |   |         |   | -      |                     |   |   | -                      |   |   |                                        | -        |   |              |   | (1,522 | )      |   |   | - |   |   |   | (1,522 | ) |
| Net income                                          |   |                                | -          |   |         |   | -      |                     |   |   | -                      |   |   |                                        | -        |   |              |   | -      |   |   |   | 24,950 |   |   |   | 24,950 |   |
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2014                     |   |                                | 46,926,497 |   |         |   | 654    |                     |   |   | 294,084                |   |   |                                        | (41,153  | )      |              |   | 211    |   |   |   | 79,901 |   |   |   | 333,697 |   |
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase of ordinary shares                       |   |                                | (2,824,772 | )      |         |   | -      |                     |   |   | -                      |   |   |                                        | (52,896  | )      |              |   | -      |   |   |   | - |   |   |   | (52,896 | ) |
| Issuance of shares upon exercise of stock options   |   |                                | 677,122    |   |         |   | 7      |                     |   |   | 8,739                  |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 8,746 |   |
| Stock based compensation                            |   |                                | -          |   |         |   | -      |                     |   |   | 9,329                  |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 9,329 |   |
| Tax benefit related to exercise of stock options    |   |                                | -          |   |         |   | -      |                     |   |   | 632                    |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 632 |   |
| Other comprehensive income, net of tax              |   |                                | -          |   |         |   | -      |                     |   |   | -                      |   |   |                                        | -        |   |              |   | 1,046  |   |   |   | - |   |   |   | 1,046 |   |
| Net income                                          |   |                                | -          |   |         |   | -      |                     |   |   | -                      |   |   |                                        | -        |   |              |   | -      |   |   |   | 18,569 |   |   |   | 18,569 |   |
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2015                     |   |                                | 44,778,847 |   |         |   | 661    |                     |   |   | 312,784                |   |   |                                        | (94,049  | )      |              |   | 1,257  |   |   |   | 98,470 |   |   |   | 319,123 |   |
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase of ordinary shares                       |   |                                | (1,884,030 | )      |         |   | -      |                     |   |   | -                      |   |   |                                        | (21,980  | )      |              |   | -      |   |   |   | - |   |   |   | (21,980 | ) |
| Issuance of shares upon exercise of stock options   |   |                                | 294,033    |   |         |   | 2      |                     |   |   | 1,581                  |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 1,583 |   |
| Stock based compensation                            |   |                                | -          |   |         |   | -      |                     |   |   | 11,520                 |   |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | 11,520 |   |
| Tax deficiency related to exercise of stock options |   |                                | -          |   |         |   | -      |                     |   |   | (547                   | )      |   |                                        | -        |   |              |   | -      |   |   |   | - |   |   |   | (547 | ) |
| Other comprehensive loss, net of tax                |   |                                | -          |   |         |   | -      |                     |   |   | -                      |   |   |                                        | -        |   |              |   | (1,277 | )      |   |   | - |   |   |   | (1,277 | ) |
| Net loss                                            |   |                                | -          |   |         |   | -      |                     |   |   | -                      |   |   |                                        | -        |   |              |   | -      |   |   |   | (8,659 | ) |   |   | (8,659 | ) |
|                                                |   |                                |       |   |         |   |   |                     |   |   |                   |   |   |                                        |     |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of December 31, 2016                     |   |                                | 43,188,850 |   |         | $      | 663    |                     |   | $      | 325,338                |   |   | $                                           | (116,029 | )      |              | $      | (20    | )      |   | $ | 89,811 |   |   | $ | 299,763 |   |

----

----

|                                                                                                                   |   | Year endedDecember 31, |    |
|------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                                                   |   | 2016                   |    |   | 2015 |   |   | 2014 |   |
|                                                                                                                   |   |                   |    |   |   |   |   |   |   |
| Cash flows from operating activities:                                                                                  |   |                   |    |   |   |   |   |   |   |
|                                                                                                                   |   |                   |    |   |   |   |   |   |   |
| Net income (loss)                                                                                                      |   | $                      | (8,659  | ) |   | $ | 18,569 |   |   | $ | 24,950 |   |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities:                               |   |                   |    |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                          |   |                   | 10,372  |   |   |   | 9,401 |   |   |   | 8,102 |   |
| Stock based compensation                                                                                               |   |                   | 11,520  |   |   |   | 9,329 |   |   |   | 7,382 |   |
| Gain from sale of available-for-sale marketable securities                                                             |   |                   | (1,771  | ) |   |   | (2,438 | ) |   |   | (424 | ) |
| Amortization of premiums, accretion of discounts and accrued interest on available-for-sale marketable securities, net |   |                   | 1,949   |   |   |   | 3,208 |   |   |   | 2,964 |   |
| Accrued interest on bank deposits                                                                                      |   |                   | 1,179   |   |   |   | (1,998 | ) |   |   | 1,069 |   |
| Increase (decrease) in accrued severance pay, net                                                                      |   |                   | 401     |   |   |   | 125 |   |   |   | (158 | ) |
| Changes in deferred income taxes, net                                                                                  |   |                   | (2,687  | ) |   |   | 215 |   |   |   | (1,775 | ) |
| Decrease (increase) in trade receivables, net                                                                          |   |                   | 7,003   |   |   |   | (773 | ) |   |   | (726 | ) |
| Decrease (increase) in other current assets and prepaid expenses                                                       |   |                   | 883     |   |   |   | (103 | ) |   |   | (1,913 | ) |
| Decrease (increase) in inventories                                                                                     |   |                   | (792    | ) |   |   | 522 |   |   |   | (2,654 | ) |
| Increase (decrease) in trade payables                                                                                  |   |                   | (3,284  | ) |   |   | (562 | ) |   |   | 1,019 |   |
| Increase in deferred revenues (short-term and long-term)                                                               |   |                   | 12,964  |   |   |   | 3,849 |   |   |   | 8,638 |   |
| Increase in other payables and accrued expenses and other long-term liabilities                                        |   |                   | 8,855   |   |   |   | 424 |   |   |   | 7,146 |   |
| Excess tax deficiency (benefit) from stock-based compensation stock options                                            |   |                   | 547     |   |   |   | (632 | ) |   |   | (1,443 | ) |
|                                                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                                                              |   |                   | 38,480  |   |   |   | 39,136 |   |   |   | 52,177 |   |
|                                                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                  |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                     |   |                   | (9,404  | ) |   |   | (13,774 | ) |   |   | (9,482 | ) |
| Proceeds from (investment in) other long-term assets                                                                   |   |                   | (53     | ) |   |   | (100 | ) |   |   | 34 |   |
| Proceeds from (investment in) bank deposits, net                                                                       |   |                   | 31,295  |   |   |   | (33,824 | ) |   |   | (20,929 | ) |
| Purchase of available-for-sale marketable securities                                                                   |   |                   | (16,219 | ) |   |   | (13,442 | ) |   |   | (44,063 | ) |
| Proceeds from maturity of available-for-sale marketable securities                                                     |   |                   | 17,205  |   |   |   | 26,530 |   |   |   | 29,390 |   |
| Proceeds from redemption of available-for-sale marketable securities                                                   |   |                   | 5,535   |   |   |   | 27,757 |   |   |   | 10,393 |   |
| Purchase of an intangible asset                                                                                        |   |                   | -       |   |   |   | - |   |   |   | (1,375 | ) |
|                                                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) investing activities                                                                    |   |                   | 28,359  |   |   |   | (6,853 | ) |   |   | (36,032 | ) |

----

----

|                                                          |   | Year endedDecember 31, |    |
|---------------------------------------------------------------|--------|------------------------|---------|
|                                                          |   | 2016                   |    |   | 2015 |   |   | 2014 |   |
|                                                          |   |                   |    |   |   |   |   |   |   |
| Cash flows from financing activities:                         |   |                   |    |   |   |   |   |   |   |
|                                                          |   |                   |    |   |   |   |   |   |   |
| Proceeds from exercise of stock options                       |   |                   | 1,583   |   |   |   | 8,746 |   |   |   | 22,493 |   |
| Excess tax (deficiency) benefit from stock-based compensation |   |                   | (547    | ) |   |   | 632 |   |   |   | 1,443 |   |
| Repurchase of Ordinary shares                                 |   |                   | (21,980 | ) |   |   | (52,896 | ) |   |   | (15,169 | ) |
|                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) financing activities           |   |                   | (20,944 | ) |   |   | (43,518 | ) |   |   | 8,767 |   |
|                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |
| Increase (decrease) in cash and cash equivalents              |   |                   | 45,895  |   |   |   | (11,235 | ) |   |   | 24,912 |   |
| Cash and cash equivalents at the beginning of the year        |   |                   | 33,744  |   |   |   | 44,979 |   |   |   | 20,067 |   |
|                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at the end of the year              |   | $                      | 79,639  |   |   | $ | 33,744 |   |   | $ | 44,979 |   |
|                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:             |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                                          |   |                   |    |   |   |   |   |   |   |   |   |   |
| Cash paid during the year for income taxes                    |   | $                      | 1,730   |   |   | $ | 1,853 |   |   | $ | 2,285 |   |

----

----

| NOTE 1:- | GENERAL |
|----------|---------|

|  | a. | Radware Ltd. (the “Company”), an Israeli corporation commenced operations in April 1997. The Company and its subsidiaries (the “Group") are engaged in the development, manufacture and sale of Cyber Security and Application Delivery solutions designed to ensure optimal service level for applications in virtual, cloud and software defined data centers. The Company's products are marketed worldwide. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | The Company has established wholly-owned subsidiaries in the United States, France, Germany, Singapore, the United Kingdom, Japan, Korea, Canada, India, Australia, Italy, Hong Kong and China. In addition, the Company has established representative offices in Taiwan and Spain. The Company holds 91% of its Israeli subsidiary. The Company's subsidiaries are engaged primarily in sales, marketing and support activities of its core products, except for the Israeli subsidiary which is engaged primarily in real-time consumer applications across the web. The Israeli subsidiary operations were immaterial for the years ended December 31, 2014, 2015 and 2016. The net income (loss) attributable to non-controlling interests represents 0.29%, (0.69%) and (1.92%) out of consolidated net income (loss) in 2014, 2015 and 2016, respectively. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | c. | The Company depends on a few vendors to supply certain hardware platforms and components for the production of its products. If one of these suppliers fails to deliver or delays the delivery of the necessary components, the Company will be required to seek alternative sources of supply. A change in suppliers could result in manufacturing delays, which could cause a possible loss of sales and, consequently, could adversely affect the Company's results of operations and financial position. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
|----------|---------------------------------|

|  | a. | Use of estimates: |
|--|----|-------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | b. | Financial statements in United States dollars: |
|--|----|------------------------------------------------|

|  | c. | Principles of consolidation: |
|--|----|------------------------------|

|  | d. | Cash equivalents: |
|--|----|-------------------|

|  | e. | Bank deposits: |
|--|----|----------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | f. | Investment in marketable securities: |
|--|----|--------------------------------------|

|  | g. | Inventories: |
|--|----|--------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | h. | Property and equipment, net: |
|--|----|------------------------------|

|                                         | %                                                                        |
|----------------------------------------------|--------------------------------------------------------------------------|
|                                         |                                                                     |
| Computers, peripheral equipment and software | 15 - 33 (mainly 33)                                                      |
| Office furniture and equipment               | 6 - 20 (mainly 15)                                                       |
| Leasehold improvements                       | Over the shorter of the term ofthe lease or the useful life of the asset |

|  | i. | Impairment of long lived assets and intangible assets subject to amortization: |
|--|----|--------------------------------------------------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | j. | Goodwill: |
|--|----|-----------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | k. | Contingencies |
|--|----|---------------|

|  | l. | Revenue recognition: |
|--|----|----------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | m. | Shipping and handling fees and costs: |
|--|----|---------------------------------------|

|  | n. | Cost of revenues: |
|--|----|-------------------|

|  | o. | Warranty costs: |
|--|----|-----------------|

|  | p. | Research and development expenses: |
|--|----|------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | q. | Grants: |
|--|----|---------|

|  | r. | Accounting for stock-based compensation: |
|--|----|------------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|                                                      |   | Year endedDecember 31, |   |
|-----------------------------------------------------------|--------|------------------------|--------|
|                                                      |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                                                      |   |                   |   |   |   |   |   |   |   |
| Risk free interest rate                                   |   |                   | 1.12   | % |   |   | 1.21 | % |   |   | 1.10 | % |
| Dividend yields                                           |   |                   | 0      | % |   |   | 0 | % |   |   | 0 | % |
| Expected volatility                                       |   |                   | 34     | % |   |   | 34 | % |   |   | 40 | % |
| Weighted average expected term from grant date (in years) |   |                   | 3.88   |   |   |   | 3.86 |   |   |   | 3.72 |   |

|  | s. | Income taxes: |
|--|----|---------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | t. | Concentrations of credit risks: |
|--|----|---------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | u. | Employee related benefits: |
|--|----|----------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | v. | Fair value of financial instruments: |
|--|----|--------------------------------------|

|  | Level 1           | -    | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|--|--------------------------------------------------------------------------|---------------------|------------------------------------------------------------------------------------------------------------------|

|  | Level 2           | -    | Include other inputs that are directly or indirectly observable in the marketplace. |
|--|--------------------------------------------------------------------------|---------------------|-------------------------------------------------------------------------------------|

|  | Level 3           | -    | Unobservable inputs which are supported by little or no market activity. |
|--|--------------------------------------------------------------------------|---------------------|--------------------------------------------------------------------------|

|  | w. | Comprehensive income (loss): |
|--|----|------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | x. | Treasury stock: |
|--|----|-----------------|

|  | y. | Basic and diluted net income (loss) per share: |
|--|----|------------------------------------------------|

|  | z. | Business combinations: |
|--|----|------------------------|

|  | aa. | Reclassifications: |
|--|-----|--------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

|  | ab. | Impact of recently issued accounting pronouncements: |
|--|-----|------------------------------------------------------|

----

----

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
|----------|-----------------------------------------|

----

----

| NOTE 3:- |  MARKETABLE SECURITIES |
|----------|-----------------------------|

|                                           |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|
|                                           |   | 2016         |   |   | 2015 |   |
|                                           |   | Adjusted     |   |   | Gross unrealized |   |   | Gross unrealized |   |   | Market |   |   | Adjusted |   |   | Gross unrealized |   |   | Gross unrealized |   |   | Market |   |
|                                           |   | cost         |   |   | losses |   |   | gains |   |   | Value |   |   | cost |   |   | losses |   |   | gains |   |   | Value |   |
|                                           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures        |   | $            | 15,361 |   |   | $ | (10 | ) |   | $ | 51 |   |   | $ | 15,402 |   |   | $ | 5,895 |   |   | $ | (15 | ) |   | $ | 16 |   |   | $ | 5,896 |   |
| Corporate debentures                           |   |         | 5,046  |   |   |   | - |   |   |   | 4 |   |   |   | 5,050 |   |   |   | 4,393 |   |   |   | (1 | ) |   |   | 17 |   |   |   | 4,409 |   |
| Corporate shares                               |   |         | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,762 |   |   |   | - |   |   |   | 1,936 |   |   |   | 5,698 |   |
|                                           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale marketable securities |   | $            | 20,407 |   |   | $ | (10 | ) |   | $ | 55 |   |   | $ | 20,452 |   |   | $ | 14,050 |   |   | $ | (16 | ) |   | $ | 1,969 |   |   | $ | 16,003 |   |

|                                           |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|
|                                           |   | 2016         |   |   | 2015 |   |
|                                           |   | Adjusted     |   |   | Gross unrealized |   |   | Gross unrealized |   |   | Market |   |   | Adjusted |   |   | Gross unrealized |   |   | Gross unrealized |   |   | Market |   |
|                                           |   | cost         |   |   | losses |   |   | gains |   |   | Value |   |   | cost |   |   | losses |   |   | gains |   |   | Value |   |
|                                           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures        |   | $            | 31,040 |   |   | $ | (45 | ) |   | $ | 76 |   |   | $ | 31,071 |   |   | $ | 38,383 |   |   | $ | (117 | ) |   | $ | 149 |   |   | $ | 38,415 |   |
| Corporate debentures                           |   |         | 28,980 |   |   |   | (26 | ) |   |   | 65 |   |   |   | 29,019 |   |   |   | 32,008 |   |   |   | (143 | ) |   |   | 43 |   |   |   | 31,908 |   |
|                                           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale marketable securities |   | $            | 60,020 |   |   | $ | (71 | ) |   | $ | 141 |   |   | $ | 60,090 |   |   | $ | 70,391 |   |   | $ | (260 | ) |   | $ | 192 |   |   | $ | 70,323 |   |

|                                           |   | December 31, |   |
|------------------------------------------------|--------|--------------|--------|
|                                           |   | 2016         |   |   | 2015 |   |
|                                           |   | Adjusted     |   |   | Gross unrealized |   |   | Gross unrealized |   |   | Market |   |   | Adjusted |   |   | Gross unrealized |   |   | Gross unrealized |   |   | Market |   |
|                                           |   | cost         |   |   | Losses |   |   | gains |   |   | Value |   |   | cost |   |   | Losses |   |   | gains |   |   | Value |   |
|                                           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures        |   | $            | 7,738  |   |   | $ | (111 | ) |   | $ | - |   |   | $ | 7,627 |   |   | $ | 6,356 |   |   | $ | (71 | ) |   | $ | - |   |   | $ | 6,285 |   |
| Corporate debentures                           |   |         | 7,281  |   |   |   | (60 | ) |   |   | 29 |   |   |   | 7,250 |   |   |   | 11,342 |   |   |   | (136 | ) |   |   | - |   |   |   | 11,206 |   |
|                                           |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale marketable securities |   | $            | 15,019 |   |   | $ | (171 | ) |   | $ | 29 |   |   | $ | 14,877 |   |   | $ | 17,698 |   |   | $ | (207 | ) |   | $ | - |   |   | $ | 17,491 |   |

----

----

| NOTE 3:- |  MARKETABLE SECURITIES (Cont.) |
|----------|-------------------------------------|

|                                           |   | December 31, 2016                                                     |   |
|------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                           |   | Investments with continuous unrealized losses for less than 12 months |   |   | Investments with continuous unrealized losses for 12 months or greater |   |   | Total investments with continuous unrealized losses |   |
|                                           |   | FairValue                                                             |   |   | Unrealized losses |   |   | Fairvalue |   |   | Unrealized losses |   |   | Fairvalue |   |   | Unrealized losses |   |
|                                           |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures        |   | $                                                                     | 20,118 |   |   | $ | (139 | ) |   | $ | 2,325 |   |   | $ | (28 | ) |   | $ | 22,443 |   |   | $ | (167 | ) |
| Corporate debentures                           |   |                                                                  | 13,444 |   |   |   | (79 | ) |   |   | 1,013 |   |   |   | (6 | ) |   |   | 14,457 |   |   |   | (85 | ) |
|                                           |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale marketable securities |   | $                                                                     | 33,562 |   |   | $ | (218 | ) |   | $ | 3,338 |   |   | $ | (34 | ) |   | $ | 36,900 |   |   | $ | (252 | ) |

|                                           |   | December 31, 2015                                                     |   |
|------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                           |   | Investments with continuous unrealized losses for less than 12 months |   |   | Investments with continuous unrealized losses for 12 months or greater |   |   | Total investments with continuous unrealized losses |   |
|                                           |   | FairValue                                                             |   |   | Unrealized losses |   |   | Fairvalue |   |   | Unrealized losses |   |   | Fairvalue |   |   | Unrealized losses |   |
|                                           |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures        |   | $                                                                     | 16,041 |   |   | $ | (64 | ) |   | $ | 15,660 |   |   | $ | (139 | ) |   | $ | 31,701 |   |   | $ | (203 | ) |
| Corporate debentures                           |   |                                                                  | 9,697  |   |   |   | (93 | ) |   |   | 24,347 |   |   |   | (188 | ) |   |   | 34,044 |   |   |   | (281 | ) |
|                                           |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total available-for-sale marketable securities |   | $                                                                     | 25,738 |   |   | $ | (157 | ) |   | $ | 40,007 |   |   | $ | (327 | ) |   | $ | 65,745 |   |   | $ | (484 | ) |

----

----

| NOTE 4:- | FAIR VALUE MEASUREMENTS |
|----------|-------------------------|

|                                    |   | December 31, 2016                        |   |
|-----------------------------------------|--------|------------------------------------------|--------|
|                                    |   | Fair value measurements using input type |   |
|                                    |   | Level 1                                  |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Cash equivalents:                       |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Money market funds                      |   | $                                        | 578    |   |   | $ | - |   |   | $ | - |   |   | $ | 578 |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale:                     |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures |   |                                     | -      |   |   |   | 54,100 |   |   |   | - |   |   |   | 54,100 |   |
| Corporate debentures                    |   |                                     | -      |   |   |   | 41,319 |   |   |   | - |   |   |   | 41,319 |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total financial assets                  |   | $                                        | 578    |   |   | $ | 95,419 |   |   | $ | - |   |   | $ | 95,997 |   |

|                                    |   | December 31, 2015                        |   |
|-----------------------------------------|--------|------------------------------------------|--------|
|                                    |   | Fair value measurements using input type |   |
|                                    |   | Level 1                                  |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Cash equivalents:                       |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Money market funds                      |   | $                                        | 853    |   |   | $ | - |   |   | $ | - |   |   | $ | 853 |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale:                     |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign banks and government debentures |   |                                     | -      |   |   |   | 50,596 |   |   |   | - |   |   |   | 50,596 |   |
| Corporate debentures                    |   |                                     | -      |   |   |   | 47,523 |   |   |   | - |   |   |   | 47,523 |   |
| Corporate shares                        |   |                                     | 5,698  |   |   |   | - |   |   |   | - |   |   |   | 5,698 |   |
|                                    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total financial assets                  |   | $                                        | 6,551  |   |   | $ | 98,119 |   |   | $ | - |   |   | $ | 104,670 |   |

----

----

| NOTE 5:- |  INVENTORIES |
|----------|-------------------|

|                         |   | December 31, |   |
|------------------------------|--------|--------------|--------|
|                         |   | 2016         |   |   | 2015 |   |
|                         |   |         |   |   |   |   |
| Raw materials and components |   | $            | 1,989  |   |   | $ | 2,655 |   |
| Work-in-progress             |   |         | 429    |   |   |   | 442 |   |
| Finished products            |   |         | 14,696 |   |   |   | 13,225 |   |
|                         |   |         |   |   |   |   |   |   |
|                         |   | $            | 17,114 |   |   | $ | 16,322 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
|                                        |   | 2016         |   |   | 2015 |   |
| Cost:                                       |   |         |   |   |   |   |
|                                        |   |         |   |   |   |   |
| Computer, peripheral equipment and software |   | $            | 78,521 |   |   | $ | 71,571 |   |
| Office furniture and equipment              |   |         | 10,103 |   |   |   | 8,953 |   |
| Leasehold improvements                      |   |         | 5,607  |   |   |   | 5,193 |   |
|                                        |   |         |   |   |   |   |   |   |
|                                        |   |         | 94,231 |   |   |   | 85,717 |   |
| Accumulated depreciation:                   |   |         |   |   |   |   |   |   |
|                                        |   |         |   |   |   |   |   |   |
| Computer, peripheral equipment and software |   |         | 59,696 |   |   |   | 52,645 |   |
| Office furniture and equipment              |   |         | 5,382  |   |   |   | 4,554 |   |
| Leasehold improvements                      |   |         | 2,799  |   |   |   | 2,315 |   |
|                                        |   |         |   |   |   |   |   |   |
|                                        |   |         | 67,877 |   |   |   | 59,514 |   |
|                                        |   |         |   |   |   |   |   |   |
| Property and equipment, net                 |   | $            | 26,354 |   |   | $ | 26,203 |   |

----

----

| NOTE 7:- | INTANGIBLE ASSETS, NET |
|----------|------------------------|

|                                   |   | Weighted     |   |   |         |   |
|----------------------------------------|--------|--------------|--------|--------|--------------|--------|
|                                   |   | average      |   |   |         |   |
|                                   |   | amortization |   |   | December 31, |   |
|                                   |   | Period       |   |   | 2016         |   |   | 2015 |   |
|                                   |   | (years)      |   |   |         |   |   |   |   |
| Cost:                                  |   |         |   |   |         |   |   |   |   |
| Acquired technology                    |   | 7.6          |   |   | $            | 16,314 |   |   | $ | 16,314 |   |
| Customers relationships and brand name |   | 6.8          |   |   |         | 9,817  |   |   |   | 9,817 |   |
|                                   |   |         |   |   |         |   |   |   |   |   |   |
|                                   |   |         |   |   |         | 26,131 |   |   |   | 26,131 |   |
|                                   |   |         |   |   |         |   |   |   |   |   |   |
| Accumulated amortization:              |   |         |   |   |         |   |   |   |   |   |   |
| Acquired technology                    |   |         |   |   |         | 14,160 |   |   |   | 13,146 |   |
| Customers relationships and brand name |   |         |   |   |         | 9,572  |   |   |   | 9,467 |   |
|                                   |   |         |   |   |         |   |   |   |   |   |   |
|                                   |   |         |   |   |         | 23,732 |   |   |   | 22,613 |   |
|                                   |   |         |   |   |         |   |   |   |   |   |   |
| Intangible assets, net                 |   |         |   |   | $            | 2,399  |   |   | $ | 3,518 |   |

| December 31, |   |   |   |
|--------------|--------|--------|--------|
|         |   |   |   |
| 2017         |   | $      | 1,006  |   |
| 2018         |   |   | 687    |   |
| 2019         |   |   | 674    |   |
| 2020         |   |   | 32     |   |
|         |   |   |   |   |
| Total        |   | $      | 2,399  |   |

----

----

| NOTE 8:- | OTHER PAYABLES AND ACCRUED EXPENSES |
|----------|-------------------------------------|

|                       |   | December 31, |   |
|----------------------------|--------|--------------|--------|
|                       |   | 2016         |   |   | 2015 |   |
|                       |   |         |   |   |   |   |
| Accrued expenses and other |   | $            | 8,330  |   |   | $ | 6,769 |   |
| Subcontractors accrual     |   |         | 2,081  |   |   |   | 2,532 |   |
| Accrued taxes              |   |         | 4,108  |   |   |   | 2,006 |   |
|                       |   |         |   |   |   |   |   |   |
|                       |   | $            | 14,519 |   |   | $ | 11,307 |   |

| NOTE 9:- | COMMITMENTS AND CONTINGENT LIABILITIES |
|----------|----------------------------------------|

|  | a. | Lease commitments: |
|--|----|--------------------|

| 2017   |   | $      | 4,865  |   |
|--------|--------|--------|--------|--------|
| 2018   |   |   | 3,896  |   |
| 2019   |   |   | 3,222  |   |
| 2020   |   |   | 1,828  |   |
| 2021   |   |   | 668    |   |
|   |   |   |   |   |
|   |   | $      | 14,479 |   |

|  | b. | Litigation: |
|--|----|-------------|

|  | 1. | On August 29, 2013, F5 Networks, Inc. (“F5”) filed an amended answer and counterclaim in an action brought by Radware against F5 on May 1, 2013 for infringement of three Radware’s patents regarding link load balancing technology. The Company prevailed in its affirmative case at trial, resulting in a damages award of $6,871 plus costs. The Court also permanently enjoined F5 from infringing Radware’s patents-in-suit. In its counterclaim, F5 alleged infringement of four F5 patents related to cookie persistence technology by Radware. In particular, while F5 acknowledged that the Company is licensed to each of the F5 patents-in-suit, F5 contends that the Company’s AppDirector and Alteon product lines perform unlicensed modes of the patents-in-suit. F5’s counterclaim further alleged trade libel and unfair competition resulting from statements allegedly made by the company asserting that F5 is responsible for certain internet service problems at major banks, including the Bank of America. On December 6, 2013, the Company filed an answer denying the allegations in F5’s counterclaims. On June 26, 2014, pursuant to the parties’ joint stipulation, the Court dismissed with prejudice F5’s patent infringement counterclaim with respect to the Company’s AppDirector product line. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 9:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
|----------|------------------------------------------------|

|  | 2. | On April 4, 2016, F5  filed a lawsuit against the Company in the United States District Court for the Western District of Washington, alleging infringement of three U.S. patents of F5 relating to its ADC and WAF products.  The Company denies that any of its products infringe any valid claims of the asserted F5 patents and it intends to continue to vigorously oppose F5’s claims.  On December 16, 2016, the Company filed an amended counterclaim in this action for patent infringement of a recently issued Radware patent directed to outbound link load balancing.  However, since discovery and litigation is still in a preliminary stage, the Company cannot estimate what impact, if any, the litigation may have on its results of operations, financial condition or cash flows. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | On January 17, 2014, CRFD Research Inc. ("CRFD") filed a patent infringement complaint in the District of Delaware against Level 3 Communications LLC ("Level 3"), a reseller of products of Strangeloop Networks, the Canadian-based company that the Company acquired in 2013..  On January 21, 2014, Level 3 requested indemnification from Strangeloop seeking indemnification for patent infringement claims brought by CRFD against Level 3.  The Company has agreed to indemnify and defend Level 3 in this action.  On May 12, 2014, the District Court in Delaware granted the parties Stipulation of Dismissal with Prejudice dismissing the complaint against Level 3. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 4. | From time to time, the Company is party to other various legal proceedings, claims and litigation that arise in the normal course of business. It is the opinion of management that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial position, results of operations or cash flows and believes that it had provided an adequate accrual to cover the costs to resolve the aforementioned legal proceedings, demands and claims. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

|                                             |   | Number of options |       |   | Weighted-average exercise price |   |   | Weighted- average remaining contractual term(in years) |   |   | Aggregate intrinsic value |   |
|--------------------------------------------------|--------|-------------------|------------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|---------------------------|--------|
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |
| Outstanding at January 1, 2016                   |   |              | 5,201,661  |   |                            | $      | 16.51  |                                                   |   |   | 3.06                      |   |   | $ | 2,748 |   |
| Granted                                          |   |              | 2,772,300  |   |                            |   | 12.94  |                                                   |   |   |                      |   |   |   |   |   |
| Exercised                                        |   |              | (139,400   | )      |                            |   | 12.18  |                                                   |   |   |                      |   |   |   |   |   |
| Expired                                          |   |              | (416,523   | )      |                            |   | 17.06  |                                                   |   |   |                      |   |   |   |   |   |
| Forfeited                                        |   |              | (1,389,150 | )      |                            |   | 19.09  |                                                   |   |   |                      |   |   |   |   |   |
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Outstanding at December 31, 2016                 |   |              | 6,028,888  |   |                            | $      | 14.33  |                                                   |   |   | 3.27                      |   |   | $ | 5,070 |   |
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Exercisable at December 31, 2016                 |   |              | 2,014,403  |   |                            | $      | 15.28  |                                                   |   |   | 1.85                      |   |   | $ | 597 |   |
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Vested and expected to vest at December 31, 2016 |   |              | 5,475,668  |   |                            | $      | 14.44  |                                                   |   |   | 3.16                      |   |   | $ | 4,236 |   |

|                                             |   | Number of options |      |   | Weighted-average exercise price |   |   | Weighted- average remaining contractual term(in years) |   |   | Aggregate intrinsic value |   |
|--------------------------------------------------|--------|-------------------|-----------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|---------------------------|--------|
|                                             |   |              |      |   |                            |   |   |                                                   |   |   |                      |   |
| Outstanding at January 1, 2015                   |   |              | 4,702,920 |   |                            | $      | 15.54  |                                                   |   |   | 3.22                      |   |   | $ | 30,474 |   |
| Granted                                          |   |              | 1,562,000 |   |                            |   | 18.96  |                                                   |   |   |                      |   |   |   |   |   |
| Exercised                                        |   |              | (600,393  | )      |                            |   | 14.57  |                                                   |   |   |                      |   |   |   |   |   |
| Expired                                          |   |              | (160,000  | )      |                            |   | 16.92  |                                                   |   |   |                      |   |   |   |   |   |
| Forfeited                                        |   |              | (302,866  | )      |                            |   | 17.76  |                                                   |   |   |                      |   |   |   |   |   |
|                                             |   |              |      |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Outstanding at December 31, 2015                 |   |              | 5,201,661 |   |                            | $      | 16.51  |                                                   |   |   | 3.06                      |   |   | $ | 2,748 |   |
|                                             |   |              |      |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Exercisable at December 31, 2015                 |   |              | 1,791,130 |   |                            | $      | 15.32  |                                                   |   |   | 1.91                      |   |   | $ | 1,578 |   |
|                                             |   |              |      |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Vested and expected to vest at December 31, 2015 |   |              | 4,878,629 |   |                            | $      | 16.44  |                                                   |   |   | 2.99                      |   |   | $ | 2,655 |   |

----

----

|                                             |   | Number of options |       |   | Weighted-average exercise price |   |   | Weighted- average remaining contractual term(in years) |   |   | Aggregate intrinsic value |   |
|--------------------------------------------------|--------|-------------------|------------|--------|---------------------------------|--------|--------|--------------------------------------------------------|--------|--------|---------------------------|--------|
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |
| Outstanding at January 1, 2014                   |   |              | 7,073,511  |   |                            | $      | 11.74  |                                                   |   |   | 2.62                      |   |   | $ | 44,716 |   |
| Granted                                          |   |              | 1,239,375  |   |                            |   | 17.14  |                                                   |   |   |                      |   |   |   |   |   |
| Exercised                                        |   |              | (3,058,966 | )      |                            |   | 7.35   |                                                   |   |   |                      |   |   |   |   |   |
| Expired                                          |   |              | -          |   |                            |   | -      |                                                   |   |   |                      |   |   |   |   |   |
| Forfeited                                        |   |              | (551,000   | )      |                            |   | 14.83  |                                                   |   |   |                      |   |   |   |   |   |
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Outstanding at December 31, 2014                 |   |              | 4,702,920  |   |                            | $      | 15.54  |                                                   |   |   | 3.22                      |   |   | $ | 30,474 |   |
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Exercisable at December 31, 2014                 |   |              | 1,265,300  |   |                            | $      | 15.57  |                                                   |   |   | 1.58                      |   |   | $ | 8,161 |   |
|                                             |   |              |       |   |                            |   |   |                                                   |   |   |                      |   |   |   |   |   |
| Vested and expected to vest at December 31, 2014 |   |              | 4,320,142  |   |                            | $      | 15.99  |                                                   |   |   | 3.14                      |   |   | $ | 26,033 |   |

----

----

| December 31, 2016 |        |
|-------------------|-------------|
| Outstanding       |        |   | Exercisable |   |
|              |        |   |   |   |   | Weighted |   |   |   |   |   |   |   |   |   |   |
|              |        |   |   |   |   | average |   |   | Weighted |   |   |   |   |   | Weighted |   |
| Ranges of         |        |   |   |   |   | remaining |   |   | average |   |   |   |   |   | average |   |
| exercise          |        |   | Number of |   |   | contractual |   |   | exercise |   |   | Number of |   |   | exercise |   |
| price             |        |   | options |   |   | life (years) |   |   | price |   |   | options |   |   | price |   |
|              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                 | 10.08-14.74 |   |   |   | 4,190,733 |   |   |   | 3.66 |   |   |   | 13.38 |   |   |   | 982,890 |   |   |   | 13.97 |   |
| $                 | 15.09-19.30 |   |   |   | 1,793,905 |   |   |   | 2.37 |   |   |   | 16.34 |   |   |   | 1,031,513 |   |   |   | 16.52 |   |
| $                 | 20.62-23.66 |   |   |   | 44,250 |   |   |   | 3.47 |   |   |   | 22.81 |   |   |   | - |   |   |   | - |   |
|              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              |        |   |   |   | 6,028,888 |   |   |   |   |   |   |   |   |   |   |   | 2,014,403 |   |   |   |   |   |

| December 31, 2015 |        |
|-------------------|-------------|
| Outstanding       |        |   | Exercisable |   |
|              |        |   |   |   |   | Weighted |   |   |   |   |   |   |   |   |   |   |
|              |        |   |   |   |   | average |   |   | Weighted |   |   |   |   |   | Weighted |   |
| Ranges of         |        |   |   |   |   | remaining |   |   | average |   |   |   |   |   | average |   |
| exercise          |        |   | Number of |   |   | contractual |   |   | exercise |   |   | Number of |   |   | exercise |   |
| price             |        |   | options |   |   | life (years) |   |   | price |   |   | options |   |   | price |   |
|              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                 | 12.18-14.74 |   |   |   | 1,861,208 |   |   |   | 2.98 |   |   |   | 13.91 |   |   |   | 863,792 |   |   |   | 13.56 |   |
| $                 | 15.09-19.30 |   |   |   | 2,557,703 |   |   |   | 2.67 |   |   |   | 16.69 |   |   |   | 927,338 |   |   |   | 16.96 |   |
| $                 | 20.62-23.66 |   |   |   | 782,750 |   |   |   | 4.53 |   |   |   | 22.10 |   |   |   | - |   |   |   | - |   |
|              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              |        |   |   |   | 5,201,661 |   |   |   |   |   |   |   |   |   |   |   | 1,791,130 |   |   |   |   |   |

| December 31, 2014 |        |
|-------------------|-------------|
| Outstanding       |        |   | Exercisable |   |
|              |        |   |   |   |   | Weighted |   |   |   |   |   |   |   |   |   |   |
|              |        |   |   |   |   | average |   |   | Weighted |   |   |   |   |   | Weighted |   |
| Ranges of         |        |   |   |   |   | remaining |   |   | average |   |   |   |   |   | average |   |
| exercise          |        |   | Number of |   |   | contractual |   |   | exercise |   |   | Number of |   |   | exercise |   |
| price             |        |   | options |   |   | life (years) |   |   | price |   |   | options |   |   | price |   |
|              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $                 | 7.65        |   |   |   | 60,350 |   |   |   | 0.25 |   |   |   | 7.65 |   |   |   | 60,350 |   |   |   | 7.65 |   |
| $                 | 11.94-14.47 |   |   |   | 1,861,533 |   |   |   | 3.32 |   |   |   | 13.58 |   |   |   | 334,200 |   |   |   | 12.19 |   |
| $                 | 15.09-19.30 |   |   |   | 2,781,037 |   |   |   | 3.21 |   |   |   | 17.03 |   |   |   | 870,750 |   |   |   | 17.41 |   |
|              |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|              |        |   |   |   | 4,702,920 |   |   |   |   |   |   |   |   |   |   |   | 1,265,300 |   |   |   |   |   |

----

----

|                                |   | Year ended December 31, |      |
|-------------------------------------|--------|-------------------------|-----------|
|                                |   | 2016                    |      |
|                                |   | Number in thousands     |      |
|                                |   |                    |      |
| Outstanding at January 1, 2016      |   |                    | 818,364   |   |
| Granted                             |   |                    | 743,188   |   |
| Vested                              |   |                    | (154,633  | ) |
| Forfeited                           |   |                    | (123,989  | ) |
|                                |   |                    |      |   |
| Outstanding as of December 31, 2016 |   |                    | 1,282,930 |   |

|                          |   | Year endedDecember 31, |   |
|-------------------------------|--------|------------------------|--------|
|                          |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                          |   |                   |   |   |   |   |   |   |   |
| Cost of revenues              |   | $                      | 180    |   |   | $ | 141 |   |   | $ | 79 |   |
| Research and development, net |   |                   | 3,339  |   |   |   | 2,456 |   |   |   | 1,421 |   |
| Sales and marketing           |   |                   | 5,661  |   |   |   | 4,098 |   |   |   | 2,950 |   |
| General and administrative    |   |                   | 2,340  |   |   |   | 2,634 |   |   |   | 2,932 |   |
|                          |   |                   |   |   |   |   |   |   |   |   |   |   |
| Total expenses                |   | $                      | 11,520 |   |   | $ | 9,329 |   |   | $ | 7,382 |   |

----

----

| NOTE 11:- |  EARNINGS (LOSS) PER SHARE |
|-----------|---------------------------------|

|                                                           |   | Year endedDecember 31, |       |
|----------------------------------------------------------------|--------|------------------------|------------|
|                                                           |   | 2016                   |       |   | 2015 |   |   | 2014 |   |
|                                                           |   |                   |       |   |   |   |   |   |   |
| Numerator for basic and diluted net earnings (loss) per share: |   |                   |       |   |   |   |   |   |   |
|                                                           |   |                   |       |   |   |   |   |   |   |
| Net income (loss)                                              |   | $                      | (8,659     | ) |   | $ | 18,569 |   |   | $ | 24,950 |   |
|                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding, net of treasury stock:    |   |                   |       |   |   |   |   |   |   |   |   |   |
|                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |
| Denominator for basic net  earnings (loss) per share      |   |                   | 43,868,221 |   |   |   | 45,895,321 |   |   |   | 45,308,554 |   |
| Effect of dilutive securities:                                 |   |                   |       |   |   |   |   |   |   |   |   |   |
| Employee stock options                                         |   |                   | -          |   |   |   | 843,283 |   |   |   | 1,586,061 |   |
|                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |
| Denominator for diluted net earnings (loss) per share          |   |                   | 43,868,221 |   |   |   | 46,738,604 |   |   |   | 46,894,615 |   |
|                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |
| Basic net earnings (loss) per share                            |   | $                      | (0.20      | ) |   | $ | 0.40 |   |   | $ | 0.55 |   |
|                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |
| Diluted net earnings (loss) per  share                    |   | $                      | (0.20      | ) |   | $ | 0.40 |   |   | $ | 0.53 |   |

----

----

| NOTE 12:- |   TAXES ON INCOME |
|-----------|------------------------|

|                                     |   | 2016   |   |   | 2015   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                     |   |   |   |   |   |   |
| Beginning balance                        |   | $      | 12,306 |   |   | $      | 10,117 |   |
| Additions for prior year tax positions   |   |   | 911    |   |   |   | 36 |   |
| Additions for current year tax positions |   |   | -      |   |   |   | 2,153 |   |
|                                     |   |   |   |   |   |   |   |   |
| Ending balance                           |   | $      | 13,217 |   |   | $      | 12,306 |   |

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

|  | b. | Israeli Taxation: |
|--|----|-------------------|

|  | 1. | Foreign Exchange Regulations: |
|--|----|-------------------------------|

|  | 2. | Tax rates: |
|--|----|------------|

|  | 3. | Tax benefits under the Law for the Encouragement of Capital Investments, 1959 ("the Law"): |
|--|----|--------------------------------------------------------------------------------------------|

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

|  | c. | Taxes on income are comprised as follows: |
|--|----|-------------------------------------------|

|           |   | Year endedDecember 31, |   |
|----------------|--------|------------------------|--------|
|           |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|           |   |                   |   |   |   |   |   |   |   |
| Current taxes  |   | $                      | 4,338  |   |   | $ | 5,082 |   |   | $ | 7,706 |   |
| Deferred taxes |   |                   | (2,687 | ) |   |   | 215 |   |   |   | (1,775 | ) |
|           |   |                   |   |   |   |   |   |   |   |   |   |   |
|           |   | $                      | 1,651  |   |   | $ | 5,297 |   |   | $ | 5,931 |   |
|           |   |                   |   |   |   |   |   |   |   |   |   |   |
| Domestic       |   | $                      | 283    |   |   | $ | 3,084 |   |   | $ | 4,899 |   |
| Foreign        |   |                   | 1,368  |   |   |   | 2,213 |   |   |   | 1,032 |   |
|           |   |                   |   |   |   |   |   |   |   |   |   |   |
|           |   | $                      | 1,651  |   |   | $ | 5,297 |   |   | $ | 5,931 |   |

|            |   | Year endedDecember 31, |   |
|-----------------|--------|------------------------|--------|
|            |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
| Domestic taxes: |   |                   |   |   |   |   |   |   |   |
|            |   |                   |   |   |   |   |   |   |   |
| Current taxes   |   | $                      | 494    |   |   | $ | 2,715 |   |   | $ | 5,538 |   |
| Deferred taxes  |   |                   | (211   | ) |   |   | 369 |   |   |   | (639 | ) |
|            |   |                   |   |   |   |   |   |   |   |   |   |   |
|            |   |                   | 283    |   |   |   | 3,084 |   |   |   | 4,899 |   |
| Foreign taxes:  |   |                   |   |   |   |   |   |   |   |   |   |   |
|            |   |                   |   |   |   |   |   |   |   |   |   |   |
| Current taxes   |   |                   | 3,844  |   |   |   | 2,367 |   |   |   | 2,168 |   |
| Deferred taxes  |   |                   | (2,476 | ) |   |   | (154 | ) |   |   | (1,136 | ) |
|            |   |                   |   |   |   |   |   |   |   |   |   |   |
|            |   |                   | 1,368  |   |   |   | 2,213 |   |   |   | 1,032 |   |
|            |   |                   |   |   |   |   |   |   |   |   |   |   |
| Taxes on income |   | $                      | 1,651  |   |   | $ | 5,297 |   |   | $ | 5,931 |   |

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

|  | d. | Deferred income taxes: |
|--|----|------------------------|

|                                               |   | December 31, |   |
|----------------------------------------------------|--------|--------------|--------|
|                                               |   | 2016         |   |   | 2015 |   |
|                                               |   |         |   |   |   |   |
| Carryforward tax losses                            |   | $            | 2,210  |   |   | $ | 1,625 |   |
| Deferred revenues                                  |   |         | 5,764  |   |   |   | 4,172 |   |
| Temporary differences                              |   |         | 5,881  |   |   |   | 4,982 |   |
| Intangible assets                                  |   |         | 36     |   |   |   | 294 |   |
|                                               |   |         |   |   |   |   |   |   |
| Deferred tax assets before valuation allowance     |   |         | 13,891 |   |   |   | 11,073 |   |
| Valuation allowance                                |   |         | (1,495 | ) |   |   | (1,032 | ) |
|                                               |   |         |   |   |   |   |   |   |
| Net deferred tax asset                             |   |         | 12,396 |   |   |   | 10,041 |   |
|                                               |   |         |   |   |   |   |   |   |
| Intangible assets, including goodwill              |   |         | (2,997 | ) |   |   | (2,931 | ) |
| Depreciable assets                                 |   |         | (1,989 | ) |   |   | (1,840 | ) |
| Unrealized losses (gains) on marketable securities |   |         | 7      |   |   |   | (419 | ) |
|                                               |   |         |   |   |   |   |   |   |
| Deferred tax liability                             |   |         | (4,979 | ) |   |   | (5,190 | ) |
|                                               |   |         |   |   |   |   |   |   |
| Net deferred tax assets                            |   | $            | 7,417  |   |   | $ | 4,851 |   |

|                             |   | December 31, |   |
|----------------------------------|--------|--------------|--------|
|                             |   | 2016         |   |   | 2015 |   |
|                             |   |         |   |   |   |   |
| Domestic deferred tax asset, net |   | $            | 1,233  |   |   | $ | 598 |   |
| Foreign deferred tax asset, net  |   |         | 6,184  |   |   |   | 4,253 |   |
|                             |   |         |   |   |   |   |   |   |
|                             |   | $            | 7,417  |   |   | $ | 4,851 |   |

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

|  | e. | Foreign: |
|--|----|----------|

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

|  | f. | A reconciliation between the theoretical tax expense, assuming all income is taxed at the statutory tax rate applicable to income of the Company and the actual tax expense as reported in the statement of operations is as follows: |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                               |   | Year endedDecember 31, |   |
|----------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                               |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                                                                                               |   |                   |   |   |   |   |   |   |   |
| Income (loss) before taxes, as reported in the consolidated statements of income                   |   | $                      | (7,008 | ) |   | $ | 23,866 |   |   | $ | 30,881 |   |
|                                                                                               |   |                   |   |   |   |   |   |   |   |   |   |   |
| Statutory tax rate                                                                                 |   |                   | 25     | % |   |   | 26.5 | % |   |   | 26.5 | % |
| Theoretical tax expense (benefit) on the above amount at the Israeli statutory tax rate            |   | $                      | (1,752 | ) |   | $ | 6,324 |   |   | $ | 8,183 |   |
| Tax adjustment in respect of different tax rate of foreign subsidiary                              |   |                   | 427    |   |   |   | 622 |   |   |   | 190 |   |
| Non-deductible expenses and other permanent differences                                            |   |                   | 200    |   |   |   | 322 |   |   |   | 772 |   |
| Deferred taxes on losses for which valuation allowance was provided, net                           |   |                   | 463    |   |   |   | 377 |   |   |   | 270 |   |
| Utilization of tax losses and deferred taxes  for which valuation allowance was provided, net |   |                   | -      |   |   |   | (555 | ) |   |   | - |   |
| Stock compensation relating to stock options per ASC No. 718                                       |   |                   | 1,342  |   |   |   | 1,186 |   |   |   | 1,624 |   |
| Approved, Privileged and Preferred enterprise loss (benefits) (*)                                  |   |                   | 916    |   |   |   | (3,047 | ) |   |   | (5,154 | ) |
| Other                                                                                              |   |                   | 55     |   |   |   | 68 |   |   |   | 46 |   |
|                                                                                               |   |                   |   |   |   |   |   |   |   |   |   |   |
| Actual tax expense                                                                                 |   | $                      | 1,651  |   |   | $ | 5,297 |   |   | $ | 5,931 |   |

| (*)    | Basic earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status   |   | $      | 0.03   |   |   | $      | 0.07   |   |   | $      | 0.11   |   |
|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Diluted earnings per share amounts of the benefit resulting from the "Approved, Privileged and Preferred Enterprise" status |   | $      | 0.03   |   |   | $      | 0.06   |   |   | $      | 0.11   |   |

----

----

| NOTE 12:- |   TAXES ON INCOME (Cont.) |
|-----------|--------------------------------|

|  | g. | Income (loss) before income taxes is comprised as follows: |
|--|----|------------------------------------------------------------|

|                              |   | Year endedDecember 31, |    |
|-----------------------------------|--------|------------------------|---------|
|                              |   | 2016                   |    |   | 2015 |   |   | 2014 |   |
|                              |   |                   |    |   |   |   |   |   |   |
| Domestic                          |   | $                      | (11,475 | ) |   | $ | 20,247 |   |   | $ | 28,203 |   |
| Foreign                           |   |                   | 4,467   |   |   |   | 3,619 |   |   |   | 2,678 |   |
|                              |   |                   |    |   |   |   |   |   |   |   |   |   |
| Income (loss) before income taxes |   | $                      | (7,008  | ) |   | $ | 23,866 |   |   | $ | 30,881 |   |

| NOTE 13:- |   GEOGRAPHIC INFORMATION |
|-----------|-------------------------------|

|                                         |   | Year endedDecember 31, |    |
|----------------------------------------------|--------|------------------------|---------|
|                                         |   | 2016                   |    |   | 2015 |   |   | 2014 |   |
| Revenues from sales to customers located at: |   |                   |    |   |   |   |   |   |   |
|                                         |   |                   |    |   |   |   |   |   |   |
| The United States                            |   | $                      | 67,953  |   |   | $ | 69,125 |   |   | $ | 75,881 |   |
| America – other                        |   |                   | 16,780  |   |   |   | 19,560 |   |   |   | 17,605 |   |
| EMEA *)                                      |   |                   | 53,724  |   |   |   | 62,689 |   |   |   | 55,376 |   |
| Asia Pacific                                 |   |                   | 58,128  |   |   |   | 65,192 |   |   |   | 73,030 |   |
|                                         |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                         |   | $                      | 196,585 |   |   | $ | 216,566 |   |   | $ | 221,892 |   |

|  | *) | Europe, the Middle East and Africa. |
|--|----|-------------------------------------|

----

----

| NOTE 13:- |   GEOGRAPHIC INFORMATION (Cont.) |
|-----------|---------------------------------------|

|                                     |   | December 31, |   |
|------------------------------------------|--------|--------------|--------|
|                                     |   | 2016         |   |   | 2015 |   |
| Long-lived assets, by geographic region: |   |         |   |   |   |   |
|                                     |   |         |   |   |   |   |
| America (principally the United States)  |   | $            | 1,973  |   |   | $ | 2,101 |   |
| Israel                                   |   |         | 22,963 |   |   |   | 22,286 |   |
| EMEA - other                             |   |         | 357    |   |   |   | 578 |   |
| Asia Pacific                             |   |         | 1,061  |   |   |   | 1,238 |   |
|                                     |   |         |   |   |   |   |   |   |
|                                     |   | $            | 26,354 |   |   | $ | 26,203 |   |

| NOTE 14:- |   SELECTED STATEMENTS OF INCOME DATA |
|-----------|-------------------------------------------|

|                                                                                             |   | Year endedDecember 31, |   |
|--------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                             |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
| Financial income (expenses):                                                                     |   |                   |   |   |   |   |   |   |   |
|                                                                                             |   |                   |   |   |   |   |   |   |   |
| Interest on bank deposits and other                                                              |   | $                      | 2,947  |   |   | $ | 2,580 |   |   | $ | 2,053 |   |
| Amortization of premiums, accretion of discounts and interest on marketable debt securities, net |   |                   | 1,813  |   |   |   | 2,153 |   |   |   | 3,404 |   |
| Gain from sale of available-for-sale marketable securities                                       |   |                   | 1,771  |   |   |   | 2,438 |   |   |   | 424 |   |
| Bank charges                                                                                     |   |                   | (116   | ) |   |   | (157 | ) |   |   | (242 | ) |
| Foreign currency translation differences, net                                                    |   |                   | (674   | ) |   |   | (1,147 | ) |   |   | 163 |   |
|                                                                                             |   |                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |   | $                      | 5,741  |   |   | $ | 5,867 |   |   | $ | 5,802 |   |

----

----

|  | a. | The following related party balances are included in the balance sheets: |
|--|----|--------------------------------------------------------------------------|

|                                   |   | December 31, |   |
|----------------------------------------|--------|--------------|--------|
|                                   |   | 2016         |   |   | 2015 |   |
|                                   |   |         |   |   |   |   |
| Trade receivables and prepaid expenses |   | $            | 1,620  |   |   | $ | 2,084 |   |
|                                   |   |         |   |   |   |   |   |   |
| Trade payables and accrued expenses    |   | $            | 636    |   |   | $ | 1,323 |   |

|  | b. | The following related party transactions are included in the statements of income: |
|--|----|------------------------------------------------------------------------------------|

|                                                                    |   | Year endedDecember 31, |   |
|-------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                    |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                                                                    |   |                   |   |   |   |   |   |   |   |
| Revenues (1)                                                            |   | $                      | 1,766  |   |   | $ | 2,304 |   |   | $ | 3,651 |   |
|                                                                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Expenses, net - primarily lease, sub-contractors and communications (2) |   | $                      | 7,641  |   |   | $ | 6,331 |   |   | $ | 5,594 |   |
|                                                                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                                      |   | $                      | 1,869  |   |   | $ | 5,463 |   |   | $ | 4,209 |   |

|  | (1) | Distribution of the Company's products on a non-exclusive basis. |
|--|-----|------------------------------------------------------------------|

|  | (2) | The Company leases office space and purchases other miscellaneous services from certain companies, which are considered to be related parties. In addition, the Company subleases part of the office space to related parties and provides certain services to related parties. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 16:- |   EVENTS AFTER THE REPORTING DATE |
|-----------|----------------------------------------|

----