Allot Announces Second Quarter 2018 Financial Results
Revenues increased 18% Year over Year with Continued Improvement in Margins
HOD HASHARON, Israel, Aug. 7, 2018 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT) (TASE: ALLT), a global provider of leading innovative network intelligence and security solutions for service providers worldwide, today announced its second quarter 2018 financial results.
Q2 2018 – Financial Highlights
- Revenues were $23.0 million, up 18% year-over-year;
- GAAP gross margin improved to 70.8% up from 65.8% in Q2 2017;
- Non-GAAP gross margin was 72.2% up from 67.6%in Q2 2017;
- GAAP operating loss narrowed to $2.8 million compared to $3.8 million in Q2 2017;
- Non-GAAP operating loss narrowed to $1.3 million compared to $2.4 million in Q2 2017;
- Book-to-bill was above one for the sixth consecutive quarter;
- Cash and cash equivalents increased to $105.9 million;
Financial Outlook
- Management continues to expect 2018 revenues to grow to between $91 - 95 million, with revenues trending toward the upper half of the range;
- 2018 Book to Bill is expected at above 1;
Management Comment
Erez Antebi, President & CEO of Allot, commented:
"I am very pleased with our progress as demonstrated through our second quarter results, which represent another quarter of growth and improvement in margins. We are investing additional resources in pursuing and capturing the increasing growth opportunities we see in our end markets. We expect these investments to continue to bring us growth.
"Much of our growth in the first half of the year came from actionable intelligence use cases and we are pleased with our improvements in this market segment. Furthermore, we are very encouraged by the market traction we are seeing for our security solutions. We expect to announce soon a new unified security deal for Telefonica Spain. We look forward to close additional security deals over the quarters and years ahead."
Q2 2018 Financial Results Summary
Total revenues for the second quarter of 2018 were $23.0 million, up 18% compared to $19.5 million in the second quarter of 2017.
Gross profit on a GAAP basis for the second quarter of 2018 was $16.3 million (gross margin of 70.8%), a 27% improvement compared with $12.8 million (gross margin of 65.8%) in the second quarter of 2017.
Gross profit on a non-GAAP basis for the second quarter of 2018 was $16.6 million (gross margin of 72.2%), a 26% improvement compared with $13.2 million (gross margin of 67.6%) in the second quarter of 2017. The higher level of gross margin represents a favorable sales mix in the quarter.
Net loss on a GAAP basis for the second quarter of 2018 was $2.4 million, or $0.07 per basic share, an improvement compared with a net loss of $4.0 million, or $0.12 per basic share, in the second quarter of 2017.
Non-GAAP net loss for the second quarter of 2018 was $1.2 million, or $0.04 per basic share, an improvement compared with a non-GAAP net loss of $2.3 million, or $0.07 per basic share, in the second quarter of 2017.
Cash and investments as of June 30, 2018 totaled $105.9 million, compared to $104.7 million in March 31, 2018.
Conference Call & Webcast:
The Allot management team will host a conference call to discuss second quarter 2018 earnings results today, August 7, 2018 at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:
US: +1-888-668-9141, UK: +44(0) 800-917-5108, Israel: +972-3-918-0609.
A live webcast and, following the end of the call, an archive of the conference call, will be accessible on the Allot Communications website at: http://investors.allot.com/index.cfm
About Allot Communications
Allot Communications Ltd. (NASDAQ, TASE: ALLT) is a provider of leading innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers. Our solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more. Allot's multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1000 enterprises. Our industry leading network-based security as a service solution has achieved over 50% penetration with some service providers and is already used by over 20 million subscribers in Europe. Allot. See. Control. Secure. For more information, visit www.allot.com
GAAP to Non-GAAP Reconciliation:
The difference between GAAP and non-GAAP revenues is related to the acquisitions made by the Company and represents revenues adjusted for the impact of the fair value adjustment to acquired deferred revenue related to purchase accounting. Non-GAAP net income is defined as GAAP net income after including deferred revenues related to the fair value adjustment resulting from purchase accounting and excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustment, restructuring expenses, changes in taxes related items and other acquisition-related expenses.
These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. The non-GAAP results and a full reconciliation between GAAP and non-GAAP results is provided in the accompanying Table 2. The Company provides these non-GAAP financial measures because it believes they present a better measure of the Company's core business and management uses the non-GAAP measures internally to evaluate the Company's ongoing performance. Accordingly, the Company believes they are useful to investors in enhancing an understanding of the Company's operating performance.
Safe Harbor Statement
This release contains forward-looking statements, which express the current beliefs and expectations of Company management. Such statements involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements set forth in such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: our ability to compete successfully with other companies offering competing technologies; the loss of one or more significant customers; consolidation of, and strategic alliances by, our competitors, government regulation; the timing of completion of key project milestones which impact the timing of our revenue recognition; lower demand for key value-added services; our ability to keep pace with advances in technology and to add new features and value-added services; managing lengthy sales cycles; operational risks associated with large projects; our dependence on third party channel partners for a material portion of our revenues; court approval of the Company's proposed share buy-back program; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
| TABLE - 1 |
||||||||
| ALLOT COMMUNICATIONS LTD. |
||||||||
| AND ITS SUBSIDIARIES |
||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
| (U.S. dollars in thousands, except share and per share data) |
||||||||
| Three Months Ended |
Six Months Ended |
|||||||
| June 30, |
June 30, |
|||||||
| 2018 |
2017 |
2018 |
2017 |
|||||
| (Unaudited) |
(Unaudited) |
|||||||
| Revenues |
$ 23,003 |
$ 19,502 |
$ 44,735 |
$ 37,937 |
||||
| Cost of revenues |
6,712 |
6,662 |
13,636 |
12,980 |
||||
| Gross profit |
16,291 |
12,840 |
31,099 |
24,957 |
||||
| Operating expenses: |
||||||||
| Research and development costs, net |
6,298 |
5,364 |
12,091 |
10,897 |
||||
| Sales and marketing |
10,182 |
8,747 |
20,215 |
17,727 |
||||
| General and administrative |
2,579 |
2,519 |
5,045 |
5,060 |
||||
| Total operating expenses |
19,059 |
16,630 |
37,351 |
33,684 |
||||
| Operating loss |
(2,768) |
(3,790) |
(6,252) |
(8,727) |
||||
| Financial and other income, net |
806 |
112 |
1,036 |
474 |
||||
| Loss before income tax expenses |
(1,962) |
(3,678) |
(5,216) |
(8,253) |
||||
| Tax expenses |
455 |
352 |
887 |
854 |
||||
| Net Loss |
(2,417) |
(4,030) |
(6,103) |
(9,107) |
||||
| Basic net loss per share |
$ (0.07) |
$ (0.12) |
$ (0.18) |
$ (0.27) |
||||
| Diluted net loss per share |
$ (0.07) |
$ (0.12) |
$ (0.18) |
$ (0.27) |
||||
| Weighted average number of shares used in |
||||||||
| computing basic net loss per share |
33,655,940 |
33,200,982 |
33,606,236 |
33,146,715 |
||||
| Weighted average number of shares used in |
||||||||
| computing diluted net loss per share |
33,655,940 |
33,200,982 |
33,606,236 |
33,146,715 |
||||
| TABLE - 2 |
||||||||
| ALLOT COMMUNICATIONS LTD. |
||||||||
| AND ITS SUBSIDIARIES |
||||||||
| RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
| (U.S. dollars in thousands, except per share data) |
||||||||
| Three Months Ended |
Six Months Ended |
|||||||
| June 30, |
June 30, |
|||||||
| 2018 |
2017 |
2018 |
2017 |
|||||
| (Unaudited) |
(Unaudited) |
|||||||
| GAAP Revenues |
$ 23,003 |
$ 19,502 |
$ 44,735 |
$ 37,937 |
||||
| Fair value adjustment for acquired deferred revenues write down |
- |
13 |
- |
37 |
||||
| Non-GAAP Revenues |
$ 23,003 |
$ 19,515 |
$ 44,735 |
$ 37,974 |
||||
| GAAP cost of revenues |
$ 6,712 |
$ 6,662 |
$ 13,636 |
$ 12,980 |
||||
| Share-based compensation (1) |
(90) |
(96) |
(170) |
(192) |
||||
| Amortization of intangible assets (2) |
(232) |
(242) |
(465) |
(474) |
||||
| Non-GAAP cost of revenues |
$ 6,390 |
$ 6,324 |
$ 13,001 |
$ 12,314 |
||||
| GAAP gross profit |
$ 16,291 |
$ 12,840 |
$ 31,099 |
$ 24,957 |
||||
| Gross profit adjustments |
$ 322 |
351 |
635 |
703 |
||||
| Non-GAAP gross profit |
$ 16,613 |
$ 13,191 |
$ 31,734 |
$ 25,660 |
||||
| GAAP operating expenses |
$ 19,059 |
$ 16,630 |
$ 37,351 |
$ 33,684 |
||||
| Share-based compensation (1) |
(630) |
(870) |
(1,254) |
(1,618) |
||||
| Amortization of intangible assets (2) |
(175) |
(135) |
(350) |
(269) |
||||
| Expenses related to M&A activities (3) |
(151) |
- |
(189) |
(89) |
||||
| Changes in tax related items (4) |
(170) |
- |
(170) |
- |
||||
| Non-GAAP operating expenses |
$ 17,933 |
$ 15,625 |
$ 35,388 |
$ 31,708 |
||||
| GAAP financial and other income |
$ 806 |
$ 112 |
$ 1,036 |
$ 474 |
||||
| Expenses related to M&A activities (3) |
(292) |
306 |
(142) |
379 |
||||
| Non-GAAP Financial and other income |
$ 514 |
$ 418 |
$ 894 |
$ 853 |
||||
| GAAP taxes on income |
$ 455 |
$ 352 |
$ 887 |
$ 854 |
||||
| Tax expenses (in respect of net deferred tax asset recorded) |
(19) |
(64) |
(38) |
(130) |
||||
| Non-GAAP taxes on income |
$ 436 |
$ 288 |
$ 849 |
$ 724 |
||||
| GAAP Net Loss |
$ (2,417) |
$ (4,030) |
$ (6,103) |
$ (9,107) |
||||
| Share-based compensation (1) |
720 |
966 |
1,424 |
1,810 |
||||
| Amortization of intangible assets (2) |
407 |
377 |
815 |
743 |
||||
| Expenses related to M&A activities (3) |
(141) |
306 |
47 |
468 |
||||
| Changes in tax related items (4) |
170 |
- |
170 |
- |
||||
| Fair value adjustment for acquired deferred revenues write down |
- |
13 |
- |
37 |
||||
| Tax expenses in respect of net deferred tax asset recorded |
19 |
64 |
38 |
130 |
||||
| Non-GAAP Net income (Loss) |
$ (1,242) |
$ (2,304) |
$ (3,609) |
$ (5,919) |
||||
| GAAP Loss per share (diluted) |
$ (0.07) |
$ (0.12) |
$ (0.18) |
$ (0.27) |
||||
| Share-based compensation |
0.02 |
0.03 |
0.04 |
0.05 |
||||
| Amortization of intangible assets |
0.01 |
0.01 |
0.02 |
0.02 |
||||
| Expenses related to M&A activities |
(0.01) |
0.01 |
0.00 |
0.01 |
||||
| Fair value adjustment for acquired deferred revenues write down |
- |
0.00 |
- |
0.00 |
||||
| Changes in taxes and headcount related items |
0.01 |
0.00 |
0.01 |
0.00 |
||||
| Tax benefit (in respect of net deferred tax asset recorded) |
0.00 |
0.00 |
- |
0.01 |
||||
| Non-GAAP Net loss per share (diluted) |
(0.04) |
$ (0.07) |
$ (0.11) |
$ (0.18) |
||||
| Weighted average number of shares used in |
||||||||
| computing GAAP diluted net loss per share |
33,655,940 |
33,200,982 |
33,606,236 |
33,146,715 |
||||
| Weighted average number of shares used in |
||||||||
| computing non-GAAP diluted net loss per share |
33,655,940 |
33,200,982 |
33,606,236 |
33,146,715 |
||||
| TABLE - 2 cont. |
||||||||
| ALLOT COMMUNICATIONS LTD. |
||||||||
| AND ITS SUBSIDIARIES |
||||||||
| RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
| (U.S. dollars in thousands, except per share data) |
||||||||
| Three Months Ended |
Six Months Ended |
|||||||
| March 31, |
June 30, |
|||||||
| 2018 |
2017 |
2018 |
2017 |
|||||
| (Unaudited) |
(Unaudited) |
|||||||
| (1) Share-based compensation: |
||||||||
| Cost of revenues |
$ 90 |
$ 96 |
$ 170 |
$ 192 |
||||
| Research and development costs, net |
171 |
217 |
326 |
446 |
||||
| Sales and marketing |
215 |
246 |
437 |
487 |
||||
| General and administrative |
244 |
407 |
491 |
685 |
||||
| $ 720 |
$ 966 |
$ 1,424 |
$ 1,810 |
|||||
| (2) Amortization of intangible assets |
||||||||
| Cost of revenues |
$ 232 |
$ 242 |
$ 465 |
$ 474 |
||||
| Sales and marketing |
175 |
135 |
350 |
269 |
||||
| $ 407 |
$ 377 |
$ 815 |
$ 743 |
|||||
| (3) Expenses related to M&A activities |
||||||||
| General and administrative |
$ - |
$ - |
$ 38 |
$ 89 |
||||
| Research and development costs, net |
151 |
- |
151 |
- |
||||
| Financial expenses (income) |
(292) |
306 |
(142) |
379 |
||||
| $ (141) |
$ 306 |
$ 47 |
$ 468 |
|||||
| (4) Changes in tax related items |
||||||||
| Sales and marketing |
$ 100 |
$ - |
$ 100 |
$ - |
||||
| General and administrative |
70 |
- |
70 |
- |
||||
| $ 170 |
$ - |
$ 170 |
$ - |
|||||
| TABLE - 3 |
||||
| ALLOT COMMUNICATIONS LTD. |
||||
| AND ITS SUBSIDIARIES |
||||
| CONSOLIDATED BALANCE SHEETS |
||||
| (U.S. dollars in thousands) |
||||
| June 30, |
December 31, |
|||
| 2018 |
2017 |
|||
| (Unaudited) |
(Audited) |
|||
| ASSETS |
||||
| CURRENT ASSETS: |
||||
| Cash and cash equivalents |
$ 20,371 |
$ 15,342 |
||
| Short term deposits |
20,943 |
31,043 |
||
| Restricted deposit |
580 |
428 |
||
| Marketable securities |
64,037 |
63,194 |
||
| Trade receivables, net |
24,626 |
22,737 |
||
| Other receivables and prepaid expenses |
2,772 |
2,649 |
||
| Inventories |
8,010 |
7,897 |
||
| Total current assets |
141,339 |
143,290 |
||
| LONG-TERM ASSETS: |
||||
| Severance pay fund |
298 |
302 |
||
| Deferred taxes |
263 |
301 |
||
| Other assets |
742 |
1,135 |
||
| Total long-term assets |
1,303 |
1,738 |
||
| PROPERTY AND EQUIPMENT, NET |
5,482 |
5,002 |
||
| GOODWILL AND INTANGIBLE ASSETS, NET |
38,208 |
34,495 |
||
| Total assets |
$ 186,332 |
$ 184,525 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
| CURRENT LIABILITIES: |
||||
| Trade payables |
$ 6,357 |
$ 5,857 |
||
| Deferred revenues |
11,828 |
11,370 |
||
| Other payables and accrued expenses |
19,479 |
14,277 |
||
| Total current liabilities |
37,664 |
31,504 |
||
| LONG-TERM LIABILITIES: |
||||
| Deferred revenues |
4,382 |
3,878 |
||
| Accrued severance pay |
769 |
747 |
||
| Other long term liabilities |
5,236 |
5,267 |
||
| Total long-term liabilities |
10,387 |
9,892 |
||
| SHAREHOLDERS' EQUITY |
138,281 |
143,129 |
||
| Total liabilities and shareholders' equity |
$ 186,332 |
$ 184,525 |
||
| - |
- |
|||
| TABLE - 4 |
|||||||
| ALLOT COMMUNICATIONS LTD. |
|||||||
| AND ITS SUBSIDIARIES |
|||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
| (U.S. dollars in thousands) |
|||||||
| Three Months Ended |
Six Months Ended |
||||||
| June 30, |
June 30, |
||||||
| 2018 |
2017 |
2018 |
2017 |
||||
| (Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||
| Cash flows from operating activities: |
|||||||
| Net Loss |
$ (2,417) |
$ (4,030) |
$ (6,103) |
$ (9,107) |
|||
| Adjustments to reconcile net income to net cash used in operating activities: |
|||||||
| Depreciation |
555 |
535 |
1,053 |
1,065 |
|||
| Stock-based compensation related to options granted to employees |
720 |
966 |
1,424 |
1,809 |
|||
| Amortization of intangible assets |
407 |
376 |
815 |
743 |
|||
| Capital loss |
36 |
3 |
39 |
7 |
|||
| Decrease (Increase) in accrued severance pay, net |
(7) |
56 |
26 |
84 |
|||
| Decrease (Increase) in other assets |
(395) |
258 |
393 |
566 |
|||
| Decrease in accrued interest and amortization of premium on marketable securities |
169 |
376 |
415 |
502 |
|||
| Decrease in trade receivables |
(2,635) |
(1,469) |
(1,889) |
(209) |
|||
| Decrease (Increase) in other receivables and prepaid expenses |
1,597 |
1,028 |
(282) |
406 |
|||
| Decrease (Increase) in inventories |
164 |
(2,087) |
(113) |
(2,849) |
|||
| Decrease in long-term deferred taxes, net |
19 |
67 |
38 |
134 |
|||
| Increase (Decrease) in trade payables |
(113) |
4,287 |
489 |
6,136 |
|||
| Increase (Decrease) in employees and payroll accruals |
214 |
340 |
(285) |
616 |
|||
| Increase (Decrease) in deferred revenues |
943 |
(108) |
1,674 |
(961) |
|||
| Increase in other payables and accrued expenses |
2,920 |
269 |
3,405 |
760 |
|||
| Net cash provided by (used in) operating activities |
2,177 |
867 |
1,099 |
(298) |
|||
| Cash flows from investing activities: |
|||||||
| Increase in restricted deposit |
(352) |
- |
(152) |
- |
|||
| Redemption of (Investment in) short-term deposits |
(4,000) |
4,805 |
10,100 |
5,278 |
|||
| Purchase of property and equipment |
(874) |
(949) |
(1,568) |
(1,760) |
|||
| Investment in marketable securities |
(10,896) |
(8,950) |
(17,957) |
(15,538) |
|||
| Proceeds from redemption or sale of marketable securities |
11,422 |
7,662 |
16,413 |
12,411 |
|||
| Acquisitions |
- |
- |
(3,048) |
- |
|||
| Net cash provided by (used in) investing activities |
(4,700) |
2,568 |
3,788 |
391 |
|||
| Cash flows from financing activities: |
|||||||
| Exercise of employee stock options |
59 |
17 |
142 |
41 |
|||
| Net cash provided by financing activities |
59 |
17 |
142 |
41 |
|||
| Increase (Decrease) in cash and cash equivalents |
(2,464) |
3,452 |
5,029 |
134 |
|||
| Cash and cash equivalents at the beginning of the period |
22,835 |
20,008 |
15,342 |
23,326 |
|||
| Cash and cash equivalents at the end of the period |
$ 20,371 |
$ 23,460 |
$ 20,371 |
$ 23,460 |
|||
| Investor Relations Contact: |
Public Relations Contact: |
| GK Investor Relations |
Vered Zur |
| Ehud Helft/Gavriel Frohwein |
VP Marketing |
| +1-646-688-3559 |
|
SOURCE Allot Communications Ltd.
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