Allot Communications Announces Third Quarter 2017 Financial Results
HOD HASHARON, Israel, Nov. 7, 2017 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT; TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for service providers worldwide, today announced its third quarter 2017 financial results, ended September 30, 2017.
Q3 2017 - Financial Highlights
-- Revenues were $20.9 million, up 7% from the previous quarter;
-- GAAP gross margin was 62%, Non-GAAP gross margin was 68%;
-- GAAP operating loss of $4.4 million, Non-GAAP operating loss of $1.3
million;
-- Book-to-bill above one for the third consecutive quarter;
Management Comment
Erez Antebi, President & CEO of Allot Communications, commented, "I am particularly encouraged by the fact that in Q3 we continued to see an increase in revenues compared to all previous quarters this year, and it was the third consecutive quarter with a Book-to-Bill ratio above 1. We also focused our effort during the quarter on the reorganization of our Customer Facing Units and other internal areas to better serve our customers and align our efforts to our business strategy. Looking ahead into Q4, we see significant interest in the market for our offerings and our pipeline continues to strengthen. I expect continued growth as we approach the end of the current year and I believe we are now well positioned as a company for next year. I see Allot with much growth potential and I believe Allot will establish itself as an important player in the security market over the coming years."
Financial Results Summary
Total revenues for the third quarter of 2017 were $20.9 million, up 7% compared to $19.5 million in the second quarter of 2017.
Net loss on a GAAP basis for the third quarter of 2017 was $4.6 million, or $0.14 per basic and diluted share, compared with a net loss of $4.0 million, or $0.12 per basic and diluted share, in the prior quarter. During the third quarter of 2017 the Company incurred a one-time cost related to its restructuring activities of $2.2 million.
On a non-GAAP basis, net loss for the third quarter of 2017 was $1.3 million, or $0.04 per basic and diluted share, a reduction from a non-GAAP net loss of $2.3 million, or $0.07 per basic and diluted share, in the prior quarter.
Cash and investments as of September 30, 2017 totaled $109.9 million. The Company recorded a negative operating cash flow of $1.0 million during the third quarter of 2017.
2017 Outlook
Management reiterates its guidance for full year revenue issued earlier in the year. Expectations remain for revenues to come in between $80 - $84 million and better fourth quarter revenues compared with the third quarter of 2017.
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 third quarter 2017 earnings results today, November 7, 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 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: ALLT, TASE: ALLT) is a leading global provider of innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers. 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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
Revenues $20,857 $20,985 $58,794 $66,882
Cost of revenues 7,840 6,880 20,820 20,547
Gross profit 13,017 14,105 37,974 46,335
------ ------ ------ ------
Operating expenses:
Research and
development costs,
net 5,202 5,942 16,099 18,760
Sales and marketing 9,779 8,697 27,506 27,814
General and
administrative 2,449 2,635 7,509 7,902
----- ----- ----- -----
Total operating
expenses 17,430 17,274 51,114 54,476
Operating loss (4,413) (3,169) (13,140) (8,141)
Financial and other
income, net 82 309 556 637
--- --- --- ---
Loss before income
tax expenses (4,331) (2,860) (12,584) (7,504)
Tax expenses 294 561 1,148 1,431
--- --- ----- -----
Net loss (4,625) (3,421) (13,732) (8,935)
====== ====== ======= ======
Basic net loss per
share $(0.14) $(0.10) $(0.41) $(0.27)
====== ====== ====== ======
Diluted net loss
per share $(0.14) $(0.10) $(0.41) $(0.27)
====== ====== ====== ======
Weighted average number of shares used in
computing basic net
loss per share 33,303,744 33,012,229 33,199,633 33,241,185
========== ========== ========== ==========
Weighted average number of shares used in
computing diluted
net loss per share 33,303,744 33,012,229 33,199,633 33,241,185
========== ========== ========== ==========
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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
GAAP Revenues $20,857 $20,985 $58,794 $66,882
Fair value adjustment for
acquired deferred revenues
write down - 33 37 134
Non-GAAP Revenues $20,857 $21,018 $58,831 $67,016
------- ------- ------- -------
GAAP cost of revenues $7,840 $6,880 $20,820 $20,547
Share-based compensation
(1) (87) (62) (279) (236)
Amortization of intangible
assets (2) (232) (326) (706) (807)
Restructuring expenses (4) (887) (127) (887) (127)
Non-GAAP cost of revenues $6,634 $6,365 $18,948 $19,377
------ ------ ------- -------
GAAP gross profit $13,017 $14,105 $37,974 $46,335
Gross profit adjustments 1,206 548 1,908 1,304
Non-GAAP gross profit $14,223 $14,653 $39,882 $47,639
------- ------- ------- -------
GAAP operating expenses $17,430 $17,274 $51,114 $54,476
Share-based compensation
(1) (489) (1,015) (2,107) (3,820)
Amortization of intangible
assets (2) (135) (133) (404) (403)
Expenses related to M&A
activities (3) - - (89) -
Restructuring expenses (4) (1,264) (1,163) (1,264) (1,163)
Non-GAAP operating expenses $15,542 $14,963 $47,250 $49,090
------- ------- ------- -------
GAAP financial and other
income $82 $309 $556 $637
Expenses related to M&A
activities (3) 162 26 541 169
Non-GAAP Financial and
other income $244 $335 $1,097 $806
---- ---- ------ ----
GAAP taxes on income $294 $561 $1,148 $1,431
Tax expenses (in respect of
net deferred tax asset
recorded) (67) (62) (197) (194)
Non-GAAP taxes on income $227 $499 $951 $1,237
==== ==== ==== ======
GAAP Net Loss $(4,625) $(3,421) $(13,732) $(8,935)
Share-based compensation
(1) 576 1,077 2,386 4,056
Amortization of intangible
assets (2) 367 459 1,110 1,210
Expenses related to M&A
activities (3) 162 26 630 169
Restructuring expenses (4) 2,151 1,290 2,151 1,290
Fair value adjustment for
acquired deferred revenues
write down - 33 37 134
Tax expenses (in respect of
net deferred tax asset
recorded) 67 62 197 194
Non-GAAP Net income (Loss) $(1,302) $(474) $(7,221) $(1,882)
======= ===== ======= =======
GAAP Loss per share
(diluted) $(0.14) $(0.10) $(0.41) $(0.27)
Share-based compensation 0.02 0.03 0.07 0.12
Amortization of intangible
assets 0.01 0.02 0.03 0.03
Expenses related to M&A
activities 0.01 0.00 0.02 0.01
Restructuring expenses 0.06 0.04 0.06 0.04
Fair value adjustment for
acquired deferred revenues
write down - 0.00 0.00 0.00
Tax expenses (in respect of
net deferred tax asset
recorded) 0.00 0.00 0.01 0.01
Non-GAAP Net loss per share
(diluted) $(0.04) $(0.01) $(0.22) $(0.06)
====== ====== ====== ======
Weighted average number of shares used in
computing GAAP diluted net
earnings per share 33,303,744 33,012,229 33,199,633 33,241,185
========== ========== ========== ==========
Weighted average number of shares used in
computing non-GAAP diluted
net earnings per share 33,303,744 33,012,229 33,199,633 33,241,185
========== ========== ========== ==========
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 Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited)
---------- ----------
(1) Share-based compensation (*):
Cost of revenues $87 $62 $279 $236
Research and development costs, net 7 273 453 978
Sales and marketing 221 333 708 1,422
General and administrative 261 409 946 1,420
$576 $1,077 $2,386 $4,056
---- ------ ------ ------
(2) Amortization of intangible assets
Cost of revenues $232 $326 $706 $807
Sales and marketing 135 133 404 403
$367 $459 $1,110 $1,210
---- ---- ------ ------
(3) Expenses related to M&A activities
General and administrative $ - $ - $89 $ -
Financial expensees 162 26 541 169
$162 $26 $630 $169
---- --- ---- ----
(4) Restructuring expenses
Cost of revenues $887 $127 $887 $127
Research and development costs, net 154 370 154 370
Sales and marketing 976 720 976 720
General and administrative 134 73 134 73
$2,151 $1,290 $2,151 $1,290
------ ------ ------ ------
(*) Excluding share-based compensation related to the restructuring
plan, which was already included under restructuring expenses.
TABLE - 3
ALLOT COMMUNICATIONS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
September 30, December 31,
2017 2016
---- ----
(Unaudited) (Audited)
---------- --------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $24,328 $23,326
Short term
deposits 21,743 29,821
Marketable
securities 63,851 60,507
Trade
receivables,
net 22,651 24,158
Other
receivables and
prepaid
expenses 4,432 3,879
Inventories 9,111 7,235
Total current
assets 146,116 148,926
------- -------
LONG-TERM
ASSETS:
Severance pay
fund 290 252
Deferred taxes 67 267
Other assets 528 1,136
--- -----
Total long-term
assets 885 1,655
--- -----
PROPERTY AND
EQUIPMENT, NET 4,870 4,387
----- -----
GOODWILL AND
INTANGIBLE
ASSETS, NET 34,862 35,972
------ ------
Total assets $186,733 $190,940
======== ========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
CURRENT
LIABILITIES:
Trade payables $6,468 $3,275
Deferred
revenues 12,116 11,133
Other payables
and accrued
expenses 12,247 10,538
------ ------
Total current
liabilities 30,831 24,946
------ ------
LONG-TERM
LIABILITIES:
Deferred
revenues 3,650 3,597
Accrued
severance pay 743 592
Other long term
liabilities 5,045 4,502
Total long-term
liabilities 9,438 8,691
----- -----
SHAREHOLDERS'
EQUITY 146,464 157,303
------- -------
Total
liabilities and
shareholders'
equity $186,733 $190,940
======== ========
TABLE - 4
ALLOT COMMUNICATIONS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
----------------------------------
Net Loss $(4,625) $(3,421) $(13,732) $(8,935)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 494 570 1,559 1,765
Stock-based
compensation
related to options
granted to
employees 770 1,197 2,579 4,176
Amortization of
intangible assets 367 459 1,110 1,210
Capital loss 7 - 14 20
Decrease (Increase)
in accrued
severance pay, net 29 (52) 113 (25)
Decrease in other
assets 42 375 608 747
Decrease in accrued
interest and
amortization of
premium on
marketable
securities 92 283 594 1,023
Decrease (Increase)
in trade
receivables 1,716 (3,621) 1,507 (3,079)
Decrease (Increase)
in other
receivables and
prepaid expenses (897) 251 (491) 493
Decrease (Increase)
in inventories 973 1,663 (1,876) 1,524
Decrease in long-
term deferred
taxes, net 67 62 201 185
Increase (Decrease)
in trade payables (2,943) (1,229) 3,193 (4,134)
Increase (Decrease)
in employees and
payroll accruals 489 (13) 1,105 (610)
Increase (Decrease)
in deferred
revenues 1,997 (1,520) 1,036 (1,584)
Increase (Decrease)
in other payables
and accrued
expenses 401 (34) 1,161 (438)
--- --- ----- ----
Net cash used in
operating
activities (1,021) (5,030) (1,319) (7,662)
------ ------ ------ ------
Cash flows from investing activities:
----------------------------------
Decrease in
restricted cash - 203 - 203
Redemption of
short-term
deposits 2,800 5,648 8,078 15,381
Purchase of
property and
equipment (297) (448) (2,057) (1,184)
Investment in
marketable
securities (3,672) (4,117) (19,210) (21,097)
Proceeds from
redemption or sale
of marketable
securities 3,002 3,215 15,413 21,805
----- ----- ------ ------
Net cash provided
by investing
activities 1,833 4,501 2,224 15,108
----- ----- ----- ------
Cash flows from financing activities:
----------------------------------
Exercise of
employee stock
options 56 69 97 95
Purchase of
treasury stocks - - - (3,326)
--- --- --- ------
Net cash provided
by (used in)
financing
activities 56 69 97 (3,231)
--- --- --- ------
Increase (Decrease)
in cash and cash
equivalents 868 (460) 1,002 4,215
Cash and cash
equivalents at the
beginning of the
period 23,460 20,145 23,326 15,470
------ ------ ------ ------
Cash and cash
equivalents at the
end of the period $24,328 $19,685 $24,328 $19,685
======= ======= ======= =======
Investor Relations Contact: Public Relations Contact:
GK Investor Relations Sigalit Orr
Ehud Helft/Gavriel Frohwein Director Corporate Communications
+1 646 688 3559 International dialing +972-54-268-1500
allot@gkir.com sorr@allot.com
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SOURCE Allot Communications Ltd.
