Allot Announces Third Quarter 2018 Financial Results

Revenues increased 16% Year over Year with Continued Improvement in Margins

News provided by

Allot Communications Ltd.

Nov 06, 2018, 05:00 ET

HOD HASHARON, Israel, Nov. 6, 2018 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a global provider of leading innovative network intelligence and security solutions for service providers worldwide, today announced its third quarter 2018 financial results.

Third Quarter 2018 – Financial Highlights

  • Revenues were $24.2 million, up 16% year-over-year and up 5% sequentially;
  • GAAP gross margin improved to 69.4% up from 62.4% in Q3 2017;
  • Non-GAAP gross margin improved to 70.7% up from 68.2% in Q3 2017;
  • GAAP operating loss narrowed to $2.5 million compared to $4.4 million in Q3 2017;
  • Non-GAAP operating loss narrowed to $1.1 million compared to $1.3 million in Q3 2017;
  • Book-to-bill below one in Q3 and above one for the nine-months ended September 30, 2018;
  • Cash and cash equivalents as of September 30, 2018 totaled $104.7 million;

Financial Outlook

  • Management is increasing 2018 revenue expectations to between $93 - $95 million;
  • Full year 2018 Book to Bill ratio is expected at above 1;

Management Comment

Erez Antebi, President & CEO of Allot, commented: "Our strong growth continues, and we are very much on track with our plans. In line with our strategy, we have recently successfully closed a couple of security deals in which we provide products and support and we share in the ongoing revenue with the CSP as the services gain increased traction with end users. I am confident in our direction.  As we continue to improve our execution, I am very encouraged to see a growing market acceptance supporting our belief that CSPs have a big opportunity in delivering secure connectivity to the mass market.

Continued Mr. Antebi: "Our DPI business is showing strength as we continue to win new deals and new accounts. Overall, the value of the new deals we won during the first three quarters of 2018 is approximately double of that which we won during all of 2017. These new customers are creating a strong foundation for sustainable growth."

Q3 2018 Financial Results Summary

Total revenues for the third quarter of 2018 were $24.2 million, an improvement of 16% compared to $20.9 million in the third quarter of 2017. Revenues for the nine months ended September 30, 2018, were $69.0 million compared to $58.8 million during the same period in 2017, an increase of 17%.

Gross profit on a GAAP basis for the third quarter of 2018 was $16.8 million (gross margin of 69.4%), a 29% improvement compared with $13.0 million (gross margin of 62.4%) in the third quarter of 2017.

Gross profit on a non-GAAP basis for the third quarter of 2018 was $17.1 million (gross margin of 70.7%), a 20% improvement compared with $14.2 million (gross margin of 68.2%) in the third quarter of 2017. The higher level of gross margin was driven by a favorable sales mix delivered in the quarter.

Net loss on a GAAP basis for the third quarter of 2018 was $2.5 million, or $0.07 per basic share, an improvement compared with a net loss of $4.6 million, or $0.14 per basic share, in the third quarter of 2017.

Non-GAAP net loss for the third quarter of 2018 was $1.1 million, or $0.03 per basic share, an improvement compared with a non-GAAP net loss of $1.3 million, or $0.04 per basic share, in the third quarter of 2017.

Cash and cash equivalents as of September 30, 2018 totaled $104.7 million, compared to $105.9 million in June 30, 2018.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss third quarter 2018 earnings results today, November 6, 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 website at: http://investors.allot.com/index.cfm

About Allot

Allot Ltd. (NASDAQ: ALLT) (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 LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)









Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

(Unaudited)

(Unaudited)








Revenues

$      24,217

$      20,857

$     68,952

$     58,794

Cost of revenues

7,417

7,840

21,053

20,820

Gross profit  

16,800

13,017

47,899

37,974








Operating expenses:






Research and development costs, net

6,695

5,202

18,786

16,099

Sales and marketing

9,880

9,779

30,095

27,506

General and administrative

2,755

2,449

7,800

7,509

Total operating expenses

19,330

17,430

56,681

51,114

Operating loss

(2,530)

(4,413)

(8,782)

(13,140)

Financial and other income, net

571

82

1,607

556

Loss before income tax expenses

(1,959)

(4,331)

(7,175)

(12,584)








Tax expenses

536

294

1,424

1,148

Net loss

(2,495)

(4,625)

(8,599)

(13,732)








 Basic net loss per share

$         (0.07)

$        (0.14)

$        (0.26)

$        (0.41)
















 Diluted net loss per share

$         (0.07)

$        (0.14)

$        (0.26)

$        (0.41)








Weighted average number of shares






used in computing basic  net






loss per share

33,761,279

33,303,744

33,658,485

33,199,633








Weighted average number of shares






used in computing diluted net






loss per share

33,761,279

33,303,744

33,658,485

33,199,633

TABLE  - 2

ALLOT LTD.

AND ITS SUBSIDIARIES

RECONCILATION OF GAAP TO NON-GAAP  CONSOLIDATED  STATEMENTS  OF  OPERATIONS

(U.S. dollars in thousands, except per share data)











Three Months Ended

Nine Months Ended


September 30,

September 30,


2018

2017

2018

2017


(Unaudited)

(Unaudited)









 GAAP Revenues 

$     24,217

$     20,857

$      68,952

$     58,794

 Fair value adjustment for acquired deferred revenues write down 

-

-

-

37

 Non-GAAP Revenues 

$     24,217

$     20,857

$      68,952

$     58,831









GAAP cost of revenues

$       7,417

$        7,840

$      21,053

$     20,820

 Share-based compensation (1) 

(86)

(87)

(256)

(279)

 Amortization of intangible assets (2) 

(232)

(232)

(697)

(706)

 Restructuring expenses (4) 

-

(887)

-

(887)

Non-GAAP cost of revenues

$       7,099

$        6,634

$      20,100

$     18,948









 GAAP gross profit 

$     16,800

$     13,017

$      47,899

$     37,974

 Gross profit adjustments 

318

1,206

953

1,908

 Non-GAAP gross profit 

$     17,118

$     14,223

$      48,852

$     39,882









 GAAP operating expenses 

$     19,330

$     17,430

$      56,681

$     51,114

 Share-based compensation (1) 

(658)

(489)

(1,912)

(2,107)

 Amortization of intangible assets (2) 

(175)

(135)

(525)

(404)

 Expenses related to M&A activities (3) 

(112)

-

(301)

(89)

 Restructuring expenses (4) 

-

(1,264)

-

(1,264)

Changes in tax related items (5)

(210)

-

(380)

-

 Non-GAAP operating expenses 

$     18,175

$     15,542

$      53,563

$     47,250









 GAAP financial and other income 

$           571

$             82

$        1,607

$           556

 Expenses related to M&A activities (3) 

(7)

162

(149)

541

 Non-GAAP Financial and other income 

$           564

$           244

$        1,458

$        1,097









 GAAP taxes on income 

$           536

$           294

$        1,424

$        1,148

 Tax expenses (in respect of net deferred tax asset recorded) 

44

(67)

7

(197)

 Non-GAAP taxes on income 

$           580

$           227

$        1,431

$           951









 GAAP Net Loss 

$     (2,495)

$      (4,625)

$      (8,599)

$   (13,732)

 Share-based compensation (1) 

744

576

2,168

2,386

 Amortization of intangible assets (2) 

407

367

1,222

1,110

 Expenses related to M&A activities (3) 

105

162

152

630

 Restructuring expenses (4) 

-

2,151

-

2,151

Changes in tax related items (5)

210

-

380

-

 Fair value adjustment for acquired deferred revenues write down 

-

-

-

37

 Tax expenses (in respect of net deferred tax asset recorded) 

(44)

67

(7)

197

 Non-GAAP Net Loss 

$     (1,073)

$      (1,302)

$      (4,684)

$      (7,221)









 GAAP Loss per share (diluted) 

$        (0.07)

$        (0.14)

$        (0.26)

$        (0.41)

 Share-based compensation 

0.02

0.02

0.07

0.07

 Amortization of intangible assets 

0.01

0.01

0.04

0.03

 Expenses related to M&A activities 

(0.00)

0.01

0.00

0.02

 Restructuring expenses 

-

0.06

-

0.06

Changes in taxes related items

0.01

-

0.01

-

 Fair value adjustment for acquired deferred revenues write down 

-

0.00

-

0.00

 Tax expenses (in respect of net deferred tax asset recorded) 

(0.00)

0.00

(0.00)

0.01

 Non-GAAP Net Loss per share (diluted) 

$        (0.03)

$        (0.04)

$        (0.14)

$        (0.22)









Weighted average number of shares






used in computing GAAP diluted net






earnings per share

33,761,279

33,303,744

33,658,485

33,199,633









Weighted average number of shares






used in computing non-GAAP diluted net






earnings per share

33,761,279

33,303,744

33,658,485

33,199,633


















TABLE  - 2 cont.

ALLOT LTD.

AND ITS SUBSIDIARIES

RECONCILATION OF GAAP TO NON-GAAP  CONSOLIDATED  STATEMENTS  OF  OPERATIONS

(U.S. dollars in thousands, except per share data)











Three Months Ended

Nine Months Ended


September 30,

September 30,


2018

2017

2018

2017


(Unaudited)

(Unaudited)









(1) Share-based compensation (*):







Cost of revenues

$             86

$             87

$           256

$           279

Research and development costs, net

178

7

504

453

Sales and marketing

264

221

701

708

General and administrative

216

261

707

946


$           744

$           576

$        2,168

$        2,386









 (2) Amortization of intangible assets 







Cost of revenues

$           232

$           232

$           697

$           706

Sales and marketing

175

135

525

404


$           407

$           367

$        1,222

$        1,110









 (3) Expenses related to M&A activities 







General and administrative 

$             31

$              -

$              69

$             89

Research and development costs, net

81

-

232

-

Financial expenses (income)

(7)

162

(149)

541


$           105

$           162

$           152

$           630









 (4) Restructuring expenses 







Cost of revenues

$              -

$           887

$               -

$           887

Research and development costs, net

-

154

-

154

Sales and marketing

-

976

-

976

General and administrative

-

134

-

134


$              -

$        2,151

$               -

$        2,151


















 (5) Changes in tax related items 







Sales and marketing

$           122

$              -

$           222

$              -

General and administrative

88

-

158

-


$           210

$              -

$           380

$              -



















(*) Excluding share-based compensation related to the restructuring plan, which was already included under restructuring expenses.










TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)












September 30,

December 31,


2018

2017


(Unaudited)

(Audited)



ASSETS



CURRENT ASSETS:



Cash and cash equivalents

$            15,724

$           15,342

Short term deposits

24,443

31,043

Restricted deposit

690

428

Marketable securities 

63,835

63,194

Trade receivables, net

26,452

22,737

Other receivables and prepaid expenses

3,783

2,649

Inventories

11,952

7,897

Total current assets

146,879

143,290





LONG-TERM ASSETS:



Severance pay fund

332

302

Deferred taxes

308

301

Other assets 

683

1,135

Total long-term assets

1,323

1,738





PROPERTY AND EQUIPMENT, NET

5,421

5,002

GOODWILL AND INTANGIBLE ASSETS, NET

37,801

34,495





Total assets

$          191,424

$        184,525





LIABILITIES AND SHAREHOLDERS'
EQUITY



CURRENT LIABILITIES:



Trade payables

$            12,183

$             5,857

Deferred revenues

12,276

11,370

Other payables and accrued expenses

19,444

14,277

Liability related to settlement of OCS grants



Total current liabilities

43,903

31,504





LONG-TERM LIABILITIES:



Deferred revenues

4,405

3,878

Accrued severance pay

811

747

Other long term liabilities

5,235

5,267

Total long-term liabilities

10,451

9,892





SHAREHOLDERS' EQUITY

137,070

143,129





Total liabilities and shareholders' equity

$          191,424

$        184,525

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)







Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Cash flows from operating activities:










Net loss

$                (2,495)

$             (4,625)

$            (8,599)

$          (13,732)

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation

550

494

1,603

1,559

Stock-based compensation related to options granted to employees

744

770

2,168

2,579

Amortization of intangible assets

407

367

1,222

1,110

Capital loss

-

7

39

14

Decrease in accrued severance pay, net

8

29

34

113

Decrease in other assets

59

42

452

608

Decease in accrued interest and  amortization of premium on marketable securities 

197

92

612

594

Decrease (Increase) in trade receivables

(1,826)

1,716

(3,715)

1,507

Increase in other receivables and prepaid expenses

(1,003)

(897)

(1,285)

(491)

Decrease (Increase) in inventories

(3,942)

973

(4,055)

(1,876)

Decrease (Increase) in long-term deferred taxes, net

(45)

67

(7)

201

Increase (Decrease) in trade payables

5,826

(2,943)

6,315

3,193

Increase (Decrease) in employees and payroll accruals

105

489

(180)

1,105

Increase in deferred revenues

471

1,997

2,145

1,036

Increase in other payables and accrued expenses

119

401

3,524

1,161






Net cash provided by (used in) operating activities

(825)

(1,021)

273

(1,319)






Cash flows from investing activities:










Increase in restricted deposit

(110)

-

(262)

-

Redemption of (Investment in) short-term deposits 

(3,500)

2,800

6,600

8,078

Purchase of property and equipment

(491)

(297)

(2,058)

(2,057)

Investment in marketable securities

(7,236)

(3,672)

(25,193)

(19,210)

Proceeds from redemption or sale of marketable securities

7,314

3,002

23,727

15,413

Acquisitions

-

-

(3,048)

-






Net cash provided by (used in) investing activities

(4,023)

1,833

(234)

2,224






Cash flows from financing activities:










Exercise of employee stock options 

201

56

343

97






Net cash provided by financing activities

201

56

343

97












Increase (Decrease) in cash and cash equivalents

(4,647)

868

382

1,002

Cash and cash equivalents at the beginning of the period

20,371

23,460

15,342

23,326






Cash and cash equivalents at the end of the period

$                15,724

$             24,328

$            15,724

$            24,328






Investor Relations Contact:
GK Investor Relations
Ehud Helft/Gavriel Frohwein
+1 646 688 3559
[email protected]


Public Relations Contact:
Jodi Joseph Asiag
Director of Corporate Communications 
[email protected]

SOURCE Allot Communications Ltd.

Related Links

http://www.allot.com

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