Allot Communications Announces Fourth Quarter and Full Year 2017 Financial Results
HOD HASHARON, Israel, Feb. 6, 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 fourth quarter and year end 2017 financial results.
Q4 2017 - Financial Highlights
-- Revenues were $23.2 million; -- GAAP gross margin was 67%; Non-GAAP gross margin was 68%; -- GAAP operating loss of $4.3 million; Non-GAAP operating loss of $1.3 million; -- Book-to-bill above one for the fourth consecutive quarter
2017 - Financial Highlights
-- Revenues were $82.0 million; -- GAAP gross margin was 65%; Non-GAAP gross margin was 68%; -- GAAP operating loss of $17.4 million; Non-GAAP operating loss of $8.6 million; -- Security revenues in 2017 grew 42% to $24.2 million compared to 2016; -- Backlog grew by $13.3 million compared to year-end 2016
Financial outlook:
-- Management expects 2018 revenues to grow to between $91-$95 million with the second half of the year stronger than the first half, reflecting typical seasonality; -- 2018 Book to Bill expected at above 1; -- Security revenues expected to continue to grow year-over-year, generating most of the expected growth in 2018
Management Comment
Erez Antebi, President & CEO of Allot Communications, commented:
"In 2017 we made significant progress implementing our strategy to transform Allot into a security company and improve on our execution. I am pleased with the progress we have made this year, as evidenced by the ongoing growth throughout the year as well as the strong increase in security revenues and backlog. Several weeks ago, we acquired Netonomy, a technology company developing Home Router security software, and we are pleased to be adding this important element to the Allot Secure platform. I look forward to continuing the strong growth of the Company as a whole, and more specifically, the security offering in 2018 and beyond."
Q4 2017 Financial Results Summary
Total revenues for the fourth quarter of 2017 were $23.2 million, up 11% compared to $20.9 million in the third quarter of 2017.
Net loss on a GAAP basis for the fourth quarter of 2017 was $4.3 million, or $0.13 per basic share, compared with a net loss of $4.6 million, or $0.14 per basic share, in the prior quarter. During the fourth quarter of 2017, the Company incurred one-time non-cash charges of $1.5 million in connection to changes in tax related items.
Non-GAAP net loss for the fourth quarter of 2017 was $1.5 million, or $0.04 per basic share, compared with a non-GAAP net loss of $1.3 million, or $0.04 per basic share, in the prior quarter.
Cash and investments as of December 31, 2017 totaled $110.0 million. The Company recorded positive operating cash flow of $1.1 million during the fourth quarter of 2017.
2017 Financial Results Summary
Total revenues for the full year of 2017 were $82.0 million, a decrease of 9% compared to $90.4 million in the prior year.
Net loss on a GAAP basis for the full year of 2017 was $18.1 million, or $0.54 per basic share, compared with a net loss of $8.0 million, or $0.24 per basic share, in the prior year. During 2017, the Company incurred a cost of $2.4 million related to its restructuring activities and one-time non-cash charges of $1.5 million in connection to changes in tax related items.
Non-GAAP net loss for the full year of 2017 was $8.7 million, or $0.26 per basic share, compared with a non-GAAP net loss of $0.7 million, or $0.02 per basic share, in the prior year.
The Company recorded a negative operating cash flow of $0.2 million during 2017.
Conference Call & Webcast:
The Allot management team will host a conference call to discuss fourth quarter 2017 earnings results today, February 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 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 18 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 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 Year Ended December 31, December 31, ------------ ------------ 2017 2016 2017 2016 ---- ---- ---- ---- (Unaudited) (Unaudited) (Unaudited) (Audited) ---------- ---------- ---------- -------- Revenues $23,198 $23,487 $81,992 $90,369 Cost of revenues 7,710 7,348 28,530 27,895 Gross profit 15,488 16,139 53,462 62,474 ------ ------ ------ ------ Operating expenses: Research and development costs, net 5,753 5,461 21,852 24,221 Sales and marketing 10,810 7,476 38,316 35,290 General and administrative 3,187 1,910 10,696 9,812 ----- ----- ------ ----- Total operating expenses 19,750 14,847 70,864 69,323 Operating income (loss) (4,262) 1,292 (17,402) (6,849) Financial and other income, net 338 423 894 1,059 --- --- --- ----- Profit (loss) before income tax expenses (3,924) 1,715 (16,508) (5,790) Tax expenses 416 773 1,564 2,204 --- --- ----- ----- Net income (loss) (4,340) 942 (18,072) (7,994) ====== === ======= ====== Basic net income (loss) per share $(0.13) $0.03 $(0.54) $(0.24) ====== ===== ====== ====== Diluted net income (loss) per share $(0.13) $0.03 $(0.54) $(0.24) ====== ===== ====== ====== Weighted average number of shares used in 33,412,701 33,090,708 33,253,158 33,202,309 computing basic net loss per share === Weighted average number of shares used in 33,412,701 33,415,193 33,253,158 33,202,309 computing diluted net loss per share ===
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 Year Ended December 31, December 31, ------------ ------------ 2017 2016 2017 2016 ---- ---- ---- ---- (Unaudited) (Unaudited) ---------- ---------- GAAP Revenues $23,198 $23,487 $81,992 $90,369 Fair value adjustment for acquired - 31 37 165 deferred revenues write down Non-GAAP Revenues $23,198 $23,518 $82,029 $90,534 ------- ------- ------- ------- GAAP cost of revenues $7,710 $7,348 $28,530 $27,895 Share-based compensation (1) (83) (109) (362) (345) Amortization of intangible assets (2) (232) (367) (938) (1,173) Restructuring expenses (4) - - (887) (127) Changes in taxes related items (5) (56) - (56) - Non-GAAP cost of revenues $7,339 $6,872 $26,287 $26,250 ------ ------ ------- ------- GAAP gross profit $15,488 $16,139 $53,462 $62,474 Gross profit adjustments $372 507 2,280 1,810 Non-GAAP gross profit $15,860 $16,646 $55,742 $64,284 ------- ------- ------- ------- GAAP operating expenses $19,750 $14,847 $70,864 $69,323 Share-based compensation (1) (706) (845) (2,813) (4,667) Amortization of intangible assets (2) (135) (132) (539) (535) Expenses related to M&A activities (3) (178) 962 (267) 962 Restructuring expenses (4) (200) - (1,464) (1,163) Changes in taxes related items (5) (1,416) - (1,416) - Non-GAAP operating expenses $17,115 $14,832 $64,365 $63,920 ------- ------- ------- ------- GAAP financial and other income $338 $423 $894 $1,059 Expenses related to M&A activities (3) 84 (348) 625 (179) Non-GAAP Financial and other income $422 $75 $1,519 $880 ---- --- ------ ---- GAAP taxes on income $416 $773 $1,564 $2,204 Tax expenses (in respect of net 214 (36) 17 (230) deferred tax asset recorded) Non-GAAP taxes on income $630 $737 $1,581 $1,974 ==== ==== ====== ====== GAAP Net Income (Loss) $(4,340) $942 $(18,072) $(7,994) Share-based compensation (1) 789 954 3,175 5,012 Amortization of intangible assets (2) 367 499 1,477 1,708 Expenses (Income) related to M&A activities (3) 262 (1,310) 892 (1,141) Restructuring expenses (4) 200 - 2,351 1,290 Changes in taxes related items (5) 1,472 - 1,472 - Fair value adjustment for acquired deferred - 31 37 165 revenues write down Tax income (expenses) in respect of net (214) 36 (17) 230 deferred tax asset recorded Non-GAAP Net income (Loss) $(1,464) $1,152 $(8,685) $(730) ======= ====== ======= ===== GAAP Loss per share (diluted) $(0.13) $0.03 $(0.54) $(0.24) Share-based compensation 0.02 0.03 0.10 0.15 Amortization of intangible assets 0.01 0.01 0.04 0.05 Expenses related to M&A activities 0.01 (0.04) 0.03 (0.03) Restructuring expenses 0.01 - 0.07 0.04 Changes in taxes and headcount related items 0.05 0.00 0.04 0.00 Tax expenses (in respect of net deferred (0.01) 0.00 0.00 0.01 tax asset recorded) Non-GAAP Net loss per share (diluted) $(0.04) $0.03 $(0.26) $(0.02) ====== ===== ====== ====== Weighted average number of shares used in computing GAAP diluted net earnings per share 33,412,701 33,415,193 33,253,158 33,202,309 ========== ========== ========== ========== Weighted average number of shares used in computing non-GAAP diluted net earnings per share 33,412,701 33,697,889 33,253,158 33,202,309 ========== ========== ========== ==========
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 Year Ended December 31, December 31, ------------ ------------ 2017 2016 2017 2016 ---- ---- ---- ---- (Unaudited) (Unaudited) ---------- ---------- (1) Share-based compensation (*): Cost of revenues $83 $109 $362 $345 Research and development costs, net 155 244 608 1,223 Sales and marketing 307 322 1,015 1,745 General and administrative 244 279 1,190 1,699 $789 $954 $3,175 $5,012 ---- ---- ------ ------ (2) Amortization of intangible assets Cost of revenues $232 $367 $938 $1,173 Sales and marketing 135 132 539 535 $367 $499 $1,477 $1,708 ---- ---- ------ ------ (3) Expenses related to M&A activities General and administrative $178 $(962) $267 $(962) Research and development costs, net - - - - Sales and marketing - - - - Financial expenses (income) 84 (348) 625 (179) $262 $(1,310) $892 $(1,141) ---- ------- ---- ------- (4) Restructuring expenses* Cost of revenues $ - $ - $887 $127 Research and development costs, net - - 154 370 Sales and marketing - - 976 720 General and administrative 200 - 334 73 $200 $ - $2,351 $1,290 ---- -------- ------ ------ (5) Changes in taxes related items Research and development costs, net $201 $ - $201 $ - Sales and marketing 1,045 - 1,045 - Cost of revenues 56 - 56 - General and administrative 170 - 170 - $1,472 $ - $1,472 $ - ------ -------- ------ -------- (*) 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) December 31, December 31, 2017 2016 ---- ---- (Unaudited) (Audited) ---------- -------- ASSETS CURRENT ASSETS: Cash and cash equivalents $15,342 $23,326 Short term deposits 31,043 29,821 Restricted deposit 428 - Marketable securities 63,194 60,507 Trade receivables, net 22,737 24,158 Other receivables and prepaid expenses 2,649 3,879 Inventories 7,897 7,235 Total current assets 143,290 148,926 ------- ------- LONG-TERM ASSETS: Severance pay fund 302 252 Deferred taxes 340 267 Other assets 1,096 1,136 ----- ----- Total long-term assets 1,738 1,655 ----- ----- PROPERTY AND EQUIPMENT, NET 5,002 4,387 ----- ----- GOODWILL AND INTANGIBLE ASSETS, NET 34,495 35,972 ------ ------ Total assets $184,525 $190,940 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $5,857 $3,275 Deferred revenues 11,370 11,133 Other payables and accrued expenses 14,277 10,538 Liability related to settlement of OCS grants Total current liabilities 31,504 24,946 ------ ------ LONG-TERM LIABILITIES: Deferred revenues 3,878 3,597 Accrued severance pay 747 592 Other long term liabilities 5,267 4,502 Total long-term liabilities 9,892 8,691 ----- ----- SHAREHOLDERS' EQUITY 143,129 157,303 ------- ------- Total liabilities and shareholders' equity $184,525 $190,940 ======== ========
TABLE - 4 ALLOT COMMUNICATIONS LTD. AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) Three Months Ended Year Ended December 31, December 31, ------------ ------------ 2017 2016 2017 2016 ---- ---- ---- ---- (Unaudited) (Unaudited) (Unaudited) (Audited) ---------- ---------- ---------- -------- Cash flows from operating activities: ------------------------------------- Net Income (Loss) $(4,340) $942 $(18,072) $(7,994) Adjustments to reconcile net income to net cash provided by - - (used in) operating activities: Depreciation 632 569 2,191 2,334 Stock-based compensation related to options granted to employees 787 1,005 3,366 5,141 Amortization of intangible assets 366 499 1,477 1,709 Capital loss 13 4 27 24 Decrease (Increase) in accrued severance pay, net (8) (4) 105 (29) Decrease (Increase) in other assets (568) 828 40 1,576 Decrease in accrued interest and amortization of premium on marketable securities 319 215 913 1,238 Decrease (Increase) in trade receivables (86) 2,795 1,421 (284) Decrease in other receivables and prepaid expenses 1,841 206 1,350 699 Decrease (Increase) in inventories 1,214 1,410 (662) 2,934 Decrease (Increase) in long-term deferred taxes, net (272) 49 (72) 234 Increase (Decrease) in trade payables (611) 302 2,582 (3,832) Increase (Decrease) in employees and payroll accruals 34 (241) 1,139 (811) Increase (Decrease) in deferred revenues (518) (2,664) 518 (4,248) Increase (Decrease) in other payables and accrued expenses 2,287 (1,719) 3,448 (2,155) Net cash provided by (used in) operating activities 1,090 4,196 (229) (3,464) ----- ----- ---- ------ Cash flows from investing activities: ------------------------------------- Decrease (Increase) in restricted deposit (428) - (428) 203 Redemption of (Investment in) short-term deposits (9,300) (2,502) (1,222) 12,879 Purchase of property and equipment (776) (398) (2,833) (1,582) Proceeds from sale of property and equipment - 26 - 26 Investment in marketable securities (10,913) (7,598) (30,123) (29,695) Proceeds from redemption or sale of marketable securities 11,075 10,403 26,488 33,208 Net cash provided by (used in) investing activities (10,342) (69) (8,118) 15,039 ------- --- ------ ------ Cash flows from financing activities: ------------------------------------- Exercise of employee stock options 266 20 363 113 Purchase of treasury stocks - (506) - (3,832) Net cash provided by (used in) financing activities 266 (486) 363 (3,719) --- ---- --- ------ Increase (Decrease) in cash and cash equivalents (8,986) 3,641 (7,984) 7,856 Cash and cash equivalents at the beginning of the period 24,328 19,685 23,326 15,470 Cash and cash equivalents at the end of the period $15,342 $23,326 $15,342 $23,326 ======= ======= ======= =======
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
View original content:http://www.prnewswire.com/news-releases/allot-communications-announces-fourth-quarter-and-full-year-2017-financial-results-300593986.html
SOURCE Allot Communications Ltd.