Allot Communications Announces Second Quarter 2017 Financial Results

HOD HASHARON, Israel, Aug. 1, 2017 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT; TASE: ALLT), a leading global provider of security and monetization solutions that enable service providers and enterprises to protect and personalize the digital experience, today announced its second quarter 2017 financial results.

Q2 2017 Highlights

    --  GAAP revenues were $19.5M, up from $18.4M in Q1 2017;
    --  GAAP operating loss was $3.8M, down from $4.9M in Q1 2017;
    --  Book-to-bill above one for the second consecutive quarter.

Management Comment

Erez Antebi, President & CEO of Allot Communications, commented, "The past quarter was the second consecutive quarter with book-to-bill ratio above one. We are also seeing a steady, consistent increase in the number of consumers who are enjoying the benefits of our network security solutions. Internally, we are aligning the organization to fit the new strategy and generate growth. I strongly believe we are on the right path to materialize on the market opportunities we identified as growth engines, and we continue to demonstrate the value of our solutions and commitment to customer success."

Q2 2017 Financial results

On a GAAP basis, total revenues for the second quarter of 2017 were $19.5 million, compared to $18.4 million reported for the first quarter of 2017. Net loss for the second quarter of 2017 was $4.0 million, or $0.12 per basic and diluted share. This compares with a net loss of $5.1 million, or $0.15 per basic and diluted share, in the first quarter of 2017.

On a non-GAAP basis, total revenues for the second quarter of 2017 were $19.5 million compared to $18.5 million reported for the first quarter of 2017. Net loss for the second quarter of 2017 was $2.3 million, or $0.07 per basic and diluted share. This compares with a net loss of $3.6 million, or $0.11 per basic and diluted share, in the first quarter of 2017.

Cash and investments as of June 30, 2017 totaled $111.3 million. The Company recorded a positive operating cash flow of $0.9 million during the quarter.

2017 Outlook

Management reiterates its previously issued guidance and expects 2017 revenues in the range of $80 - $84 million. Revenues for the second half of 2017 are expected to be better than for the first half and the book to bill ratio for the year is expected to be above 1.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss second quarter 2017 earnings results today, August 1, 2017 at 8:30 AM ET, 3:30 p.m. 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 recording of the conference call will be available from 12:00PM ET on August 1, 2017 for 30 days. To access the recording, please dial: +1-866-276-1485; UK: +44(0) 800-917-1246; Intl: +972-3-925-5928

A live webcast of the conference call can be accessed on the Allot Communications website at: http://www.allot.com.

The webcast will also be archived on the website following the conference call.

About Allot Communications

Allot Communications (NASDAQ: ALLT, TASE: ALLT) is a leading provider of security and monetization solutions that enables service providers and enterprises to protect and personalize the digital experience. Allot's flexible and highly scalable service delivery framework leverages the intelligence in data networks, enabling service providers to get closer to their customers, safeguard network assets and users, and accelerate time-to-revenue for value-added services. We employ innovative technology, proven know-how and a collaborative approach to provide the right solution for every network environment. Allot solutions are currently deployed at 5 of the top 10 global mobile operators and in thousands of CSP and enterprise networks worldwide. For more information, please 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 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 are 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,
                                                                              --------                                     --------

                                                                                2017                       2016                       2017       2016
                                                                                ----                       ----                       ----       ----

                                                                       (Unaudited)                              (Unaudited)
                                                                       ----------                               ----------


    Revenues                                                                 $19,502                    $22,958                    $37,937    $45,896

    Cost of revenues                                                           6,662                      6,524                     12,980     13,667
                                                                               -----                      -----                     ------     ------

    Gross profit                                                              12,840                     16,434                     24,957     32,229
                                                                              ------                     ------                     ------     ------


    Operating expenses:

    Research and development costs, net                                        5,364                      5,957                     10,897     12,818

    Sales and marketing                                                        8,747                      8,846                     17,727     19,117

    General and administrative                                                 2,519                      2,570                      5,060      5,267
                                                                               -----                      -----                      -----      -----

    Total operating expenses                                                  16,630                     17,373                     33,684     37,202

    Operating loss                                                           (3,790)                     (939)                   (8,727)   (4,973)

    Financial and other income , net                                             112                        211                        474        327
                                                                                 ---                        ---                        ---        ---

    Loss before income tax benefit                                           (3,678)                     (728)                   (8,253)   (4,646)


    Tax expenses                                                                 352                        499                        854        870
                                                                                 ---                        ---                        ---        ---

    Net loss                                                                 (4,030)                   (1,227)                   (9,107)   (5,516)
                                                                              ======                     ======                     ======     ======


     Basic net loss per share                                                $(0.12)                   $(0.04)                   $(0.27)   $(0.17)
                                                                              ======                     ======                     ======     ======


     Diluted net loss per share                                              $(0.12)                   $(0.04)                   $(0.27)   $(0.17)
                                                                              ======                     ======                     ======     ======


    Weighted average number of shares

    used in computing basic  net

    earnings per share                                                    33,200,982                 33,234,040                 33,146,715 33,357,014
                                                                          ==========                 ==========                 ========== ==========


    Weighted average number of shares

    used in computing diluted net

    earnings per share                                                    33,200,982                 33,234,040                 33,146,715 33,357,014
                                                                          ==========                 ==========                 ========== ==========


                                                                                                      TABLE  - 2

                                                                                              ALLOT COMMUNICATIONS 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                                  Six Months Ended

                                                                                                June 30,                                           June 30,
                                                                                                --------                                           --------

                                                                                                                  2017                                                2016       2017        2016
                                                                                                                  ----                                                ----       ----        ----

                                                                                              (Unaudited)                                         (Unaudited)
                                                                                               ----------                                         ----------


     GAAP Revenues                                                                                             $19,502                                             $22,958    $37,937     $45,896

     Fair value adjustment for acquired deferred revenues write down                                                13                                                  36         37         101

     Non-GAAP Revenues                                                                                         $19,515                                             $22,994    $37,974     $45,997
                                                                                                               -------                                             -------    -------     -------


    GAAP cost of revenues                                                                                       $6,662                                              $6,524    $12,980     $13,667

     Share-based compensation (1)                                                                                 (96)                                              (104)     (192)      (173)

     Amortization of intangible assets (2)                                                                       (242)                                              (233)     (474)      (481)

    Non-GAAP cost of revenues                                                                                   $6,324                                              $6,187    $12,314     $13,013
                                                                                                                ------                                              ------    -------     -------


     GAAP gross profit                                                                                         $12,840                                             $16,434    $24,957     $32,229

     Gross profit adjustments                                                                                      351                                                 373        703         755

     Non-GAAP gross profit                                                                                     $13,191                                             $16,807    $25,660     $32,984
                                                                                                               -------                                             -------    -------     -------


     GAAP operating expenses                                                                                   $16,630                                             $17,373    $33,684     $37,202

     Share-based compensation (1)                                                                                (870)                                            (1,220)   (1,618)    (2,806)

     Amortization of intangible assets (2)                                                                       (135)                                              (132)     (269)      (270)

     Expenses related to M&A activities (3)                                                                          -                                                  -      (89)          -

     Non-GAAP operating expenses                                                                               $15,625                                             $16,021    $31,708     $34,126
                                                                                                               -------                                             -------    -------     -------


     GAAP financial and other income                                                                              $112                                                $211       $474        $327

     Expenses related to M&A activities (3)                                                                        306                                               (135)       379         143

     Non-GAAP Financial and other income                                                                          $418                                                 $76       $853        $470
                                                                                                                  ----                                                 ---       ----        ----


     GAAP taxes on income                                                                                         $352                                                $499       $854        $870

     Tax benefit (in respect of net deferred tax asset recorded)                                                  (64)                                               (69)     (130)      (131)

     Non-GAAP taxes on income                                                                                     $288                                                $430       $724        $739
                                                                                                                  ====                                                ====       ====        ====


     GAAP Net Loss                                                                                            $(4,030)                                           $(1,227)  $(9,107)   $(5,516)

     Share-based compensation (1)                                                                                  966                                               1,324      1,810       2,979

     Amortization of intangible assets (2)                                                                         377                                                 365        743         751

     Expenses related to M&A activities (3)                                                                        306                                               (135)       468         143

     Fair value adjustment for acquired deferred revenues write down                                                13                                                  36         37         101

     Tax benefit (in respect of net deferred tax asset recorded)                                                    64                                                  69        130         131

     Non-GAAP Net income (Loss)                                                                               $(2,304)                                               $432   $(5,919)   $(1,411)
                                                                                                               =======                                                ====    =======     =======


     GAAP Loss per share (diluted)                                                                             $(0.12)                                            $(0.04)   $(0.27)    $(0.17)

     Share-based compensation                                                                                     0.03                                                0.04       0.05        0.09

     Amortization of intangible assets                                                                            0.01                                                0.01       0.02        0.02

     Expenses related to M&A activities                                                                           0.01                                              (0.00)      0.01        0.01

     Fair value adjustment for acquired deferred revenues write down                                              0.00                                                0.00       0.00        0.00

     Tax benefit (in respect of net deferred tax asset recorded)                                                  0.00                                                0.00       0.01        0.01

     Non-GAAP Net income (Loss) per share (diluted)                                                            $(0.07)                                              $0.01    $(0.18)    $(0.04)
                                                                                                                ======                                               =====     ======      ======


    Weighted average number of shares used in

    computing GAAP diluted net earnings per share                                                           33,200,982                                          33,234,040 33,146,715  33,357,014
                                                                                                            ==========                                          ========== ==========  ==========



    Weighted average number of shares used in

    computing non-GAAP diluted net earnings per share                                                       33,200,982                                          33,736,414 33,146,715  33,357,014
                                                                                                            ==========                                          ========== ==========  ==========


                                                                                TABLE  - 2 cont.

                                                                            ALLOT COMMUNICATIONS 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                           Six Months Ended

                                                                  June 30,                                    June 30,
                                                                  --------                                    --------

                                                                                 2017                                         2016     2017       2016
                                                                                 ----                                         ----     ----       ----

                                                                 (Unaudited)                                 (Unaudited)
                                                                 ----------                                  ----------


    (1) Share-based compensation:

               Cost of revenues                                                     $96                                         $104     $192       $173

               Research and development costs, net                                  217                                          280      446        706

               Sales and marketing                                                  246                                          467      487      1,089

               General and administrative                                           407                                          473      685      1,011

                                                                                 $966                                       $1,324   $1,810     $2,979
                                                                                 ----                                       ------   ------     ------


     (2) Amortization of intangible assets

               Cost of revenues                                                    $242                                         $233     $474       $481

               Sales and marketing                                                  135                                          132      269        270

                                                                                 $377                                         $365     $743       $751
                                                                                 ----                                         ----     ----       ----


     (3) Expenses related to M&A activities

               General and administrative                              $              -                            $              -     $89   $      -

               Finanacial expenses                                                  306                                        (135)     379        143

                                                                                 $306                                       $(135)    $468       $143
                                                                                 ----                                        -----     ----       ----


                                                        TABLE  - 3

                                                 ALLOT COMMUNICATIONS LTD.

                                                   AND ITS SUBSIDIARIES

                                               CONSOLIDATED  BALANCE  SHEETS

                                                (U.S. dollars in thousands)


                                                                               June 30,           December 31,

                                                                                             2017                  2016
                                                                                             ----                  ----

                                                                             (Unaudited)           (Audited)
                                                                              ----------            --------


    ASSETS

    CURRENT ASSETS:

    Cash and cash equivalents                                                             $23,460               $23,326

    Short term deposits                                                                    24,543                29,821

    Marketable securities                                                                  63,252                60,507

    Trade receivables, net                                                                 24,367                24,158

    Other receivables and prepaid expenses                                                  3,926                 3,879

    Inventories                                                                            10,084                 7,235

    Total current assets                                                                  149,632               148,926
                                                                                          =======               =======


    LONG-TERM ASSETS:

    Severance pay fund                                                                        287                   252

    Deferred taxes                                                                            133                   267

    Other assets                                                                              570                 1,136

    Total long-term assets                                                                    990                 1,655
                                                                                              ---                 -----


    PROPERTY AND EQUIPMENT, NET                                                             5,076                 4,387
                                                                                            -----                 -----

    GOODWILL AND INTANGIBLE ASSETS, NET                                                    35,229                35,972
                                                                                           ------                ------


    Total assets                                                                         $190,927              $190,940
                                                                                         ========              ========


    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:

    Trade payables                                                                         $9,411                $3,275

    Deferred revenues                                                                      10,679                11,133

    Other payables and accrued expenses                                                    11,482                10,538
                                                                                           ------                ------

    Total current liabilities                                                              31,572                24,946
                                                                                           ======                ======


    LONG-TERM LIABILITIES:

    Deferred revenues                                                                       3,090                 3,597

    Accrued severance pay                                                                     711                   592

    Other long term liabilities                                                             4,857                 4,502

    Total long-term liabilities                                                             8,658                 8,691
                                                                                            -----                 -----


    SHAREHOLDERS' EQUITY                                                                  150,697               157,303
                                                                                          -------               -------


    Total liabilities and shareholders' equity                                           $190,927              $190,940
                                                                                         ========              ========


                                                                                                     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,
                                                                                                                                    --------                        --------

                                                                                                                                      2017                 2016                      2017            2016
                                                                                                                                      ----                 ----                      ----            ----

                                                                                                                              (Unaudited)         (Unaudited)              (Unaudited)    (Unaudited)


    Cash flows from operating activities:
    -------------------------------------


    Net Loss                                                                                                                      $(4,030)            $(1,227)                 $(9,107)       $(5,516)

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

    Depreciation                                                                                                                       535                  596                     1,065           1,195

    Stock-based compensation related to options granted to employees                                                                   966                1,324                     1,809           2,979

    Amortization of intangible assets                                                                                                  376                  365                       743             751

    Capital loss                                                                                                                         3                   21                         7              20

    Decrease in accrued severance pay, net                                                                                              56                    9                        84              27

    Decrease in other assets                                                                                                           258                  483                       566             374

    Decease in accrued interest and  amortization of premium on marketable securities                                                  376                  402                       502             740

    Decrease (Increase) in trade receivables                                                                                       (1,469)                 261                     (209)            542

    Decrease (Increase) in other receivables and prepaid expenses                                                                    1,028                 (92)                      406             242

    Increase in inventories                                                                                                        (2,087)               (513)                  (2,849)          (139)

    Decrease in long-term deferred taxes, net                                                                                           67                   61                       134             123

    Increase (Decrease) in trade payables                                                                                            4,287              (3,060)                    6,136         (2,905)

    Increase (Decrease) in employees and payroll accruals                                                                              340                 (12)                      616           (597)

    Increase (Decrease) in deferred revenues                                                                                         (108)               1,163                     (961)           (64)

    Increase (Decrease) in other payables and accrued expenses                                                                         269              (1,004)                      760           (404)


    Net cash provided by (used in) operating activities                                                                                867              (1,223)                    (298)        (2,632)
                                                                                                                                       ---               ------                      ----          ------


    Cash flows from investing activities:
    -------------------------------------


    Redemption of (Investment in) short-term deposits                                                                                4,805                (267)                    5,278           9,733

    Purchase of property and equipment                                                                                               (949)               (409)                  (1,760)          (736)

    Investment in marketable securities                                                                                            (8,950)             (8,200)                 (15,538)       (16,980)

    Proceeds from redemption or sale of marketable securities                                                                        7,662                7,690                    12,411          18,590

    Net cash provided by (used in) investing activities                                                                              2,568              (1,186)                      391          10,607
                                                                                                                                     -----               ------                       ---          ------


    Cash flows from financing activities:
    -------------------------------------


    Exercise of employee stock options                                                                                                  17                   15                        41              26

    Purchase of treasury stocks                                                                                                          -             (2,279)                        -        (3,326)

    Net cash provided by (used in) financing activities                                                                                 17              (2,264)                       41         (3,300)
                                                                                                                                       ---               ------                       ---          ------



    Increase (Decrease) in cash and cash equivalents                                                                                 3,452              (4,673)                      134           4,675

    Cash and cash equivalents at the beginning of the period                                                                        20,008               24,818                    23,326          15,470


    Cash and cash equivalents at the end of the period                                                                             $23,460              $20,145                   $23,460         $20,145
                                                                                                                                   =======              =======                   =======         =======


    Investor Relations Contact:

    GK Investor Relations
    Ehud Helft/Gavriel Frohwein
    +1 646 688 3559
    allot@gkir.com



    Public Relations Contact:

    Sigalit Orr
    Director Corporate Communications
    International dialing
     +972-54-268-1500
    sorr@allot.com

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SOURCE Allot Communications Ltd.