Allot Announces Fourth Quarter and Full Year 2019 Financial Results

HOD HASHARON, Israel, Feb. 4, 2020 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for service providers and enterprises worldwide, today announced its unaudited fourth quarter and full year 2019 financial results.

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Financial Highlights

    --  Fourth quarter revenues were $30.6 million, up 14% year-over-year;
    --  Full year revenues were $110.1 million, up 15% year-over-year;
    --  Backlog increased by $69 million to $138 million at year-end 2019
        compared with $69 million at year-end 2018;
    --  Year-end cash and investments totaled $117.6 million compared to $103.9
        million at year-end 2018;
    --  Allot signed in 2019 recurring security revenue agreements with a total
        MAR* of $85 million.

Financial Outlook

    --  Management expects 2020 revenues to grow to between $135-140 million,
        representing accelerated double digit growth;
    --  Management expects to close additional recurring security revenue deals
        in 2020.  The MAR* of new deals to be signed in 2020 is expected to
        exceed $140 million;

Management Comment

Erez Antebi, President & CEO of Allot, commented: "We are very pleased with our performance in 2019. Our Visibility & Control business continued to perform well due to ongoing solid execution. We are also happy with our performance in the security space and we had a successful year bringing on several new operators to our security offerings, some of them in a revenue share arrangement. We believe that the recurring revenue and growth we gain from these deals will have a significantly positive long-term impact on our future. We expect to win further such deals in the coming year."

Continued Mr. Antebi, "Looking out to 2020, we expect accelerated top-line growth. While we continue to invest in our offerings and in sales and marketing, our expenses should grow at a slower rate than our revenue and subsequently we expect to reach profitability in the last quarter of 2020 . We look forward to continued growth as we successfully execute on our strategy."

Q4 2019 Financial Results Summary

Total revenues for the fourth quarter of 2019 were $30.6 million, an increase of 14% compared to $26.9 million in the fourth quarter of 2018.

Gross profit on a GAAP basis for the fourth quarter of 2019 was $20.8 million (gross margin of 68.0%), a 12% improvement compared with $18.6 million (gross margin of 69.1%) in the fourth quarter of 2018.

Gross profit on a non-GAAP basis for the fourth quarter of 2019 was $21.0 million (gross margin of 68.7%), a 11% improvement compared with $18.9 million (gross margin of 70.3%) in the fourth quarter of 2018.

Net loss on a GAAP basis for the fourth quarter of 2019 was $1.7 million, or $0.05 per basic share, compared with a net loss of $1.8 million, or $0.05 per basic share, in the fourth quarter of 2018.

Non-GAAP net loss for the fourth quarter of 2019 was $1.7 million, or $0.05 per basic share, compared with a non-GAAP net loss of $0.5 million, or $0.01 per basic share, in the fourth quarter of 2018.

2019 Financial Results Summary

Total revenues for 2019 were $110.1 million, an increase of 15% compared to $95.8 million in 2018.

Gross profit on a GAAP basis for 2019 was $76.3 million (gross margin of 69.3%), a 15% improvement compared with $66.5 million (gross margin of 69.4%) in 2018.

Gross profit on a non-GAAP basis for 2019 was $77.3 million (gross margin of 70.2%), a 14% improvement compared with $67.8 million (gross margin of 70.7%) in 2018.

Net loss on a GAAP basis for 2019 was $8.7 million, or $0.25 per basic share, an improvement compared with a net loss of $10.4 million, or $0.31 per basic share, in 2018.

Non-GAAP net loss for 2019 was $7.5 million, or $0.22 per basic share, a decrease compared with a non-GAAP net loss of $5.1 million, or $0.15 per basic share, in 2018.

Cash and investments as of December 31, 2019 totaled $117.6 million, compared to $114.8 million as of September 30, 2019 and $103.9 million as of December 31, 2018.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss fourth quarter and full year 2019 earnings results today, February 4, 2020 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: 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 and enterprises 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 23 million subscribers in Europe. Allot. See. Control. Secure.

For more information, visit www.allot.com

*MAR (maximum annual revenue potential of concluded transactions) was estimated by Allot upon transaction signature and constitutes an approximation of the theoretical annual revenues Allot would receive if 100% of the customer's subscribers, as estimated by Allot, signed up for the service.

GAAP to Non-GAAP Reconciliation:

Non-GAAP net income is defined as GAAP net income after excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, restructuring expenses, changes in taxes and headcount related items, deferred tax asset adjustment, exchange rate differences related to revaluation of assets and liabilities denominated in non-dollar currencies 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 fourth 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                           
      
        Year Ended


                                                                                      December 31,                                     December 31,

                                                                                                                                                    ---

                                                                                         2019                              2018                          2019               2018

                                                                                                                                                                          ---

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






     Revenues                                                                        $30,567                           $26,885                      $110,100            $95,837



     Cost of revenues                                                                  9,784                             8,296                        33,834             29,349



     Gross profit                                                                     20,783                            18,589                        76,266             66,488

                                                                                                                                                                          ---




     Operating expenses:



     Research and development costs, net                                               8,563                             6,632                        31,461             25,418



     Sales and marketing                                                              12,186                            10,754                        47,105             40,849



     General and administrative                                                        1,954                             2,616                         6,678             10,416

                                                                                                                                                                          ---


     Total operating expenses                                                         22,703                            20,002                        85,244             76,683



     Operating loss                                                                  (1,920)                          (1,413)                      (8,978)          (10,195)



     Financial and other income, net                                                     600                               601                         1,960              2,208

                                                                                                                                                                          ---


     Loss before income tax expenses                                                 (1,320)                            (812)                      (7,018)           (7,987)





     Tax expenses                                                                        362                             1,005                         1,641              2,428

                                                                                                                                                                          ---


     Net Loss                                                                        (1,682)                          (1,817)                      (8,659)          (10,415)

                                                                                                                                                                          ===




     
               Basic net loss per share                                            $(0.05)                          $(0.05)                      $(0.25)           $(0.31)








     
               Diluted net loss per share                                          $(0.05)                          $(0.05)                      $(0.25)           $(0.31)






     Weighted average number of shares used in



     computing basic net loss per share                                           34,450,317                        33,860,114                    34,250,582         33,710,507

                                                                                                                                                                          ===




     Weighted average number of shares used in



     computing diluted net loss per share                                         34,450,317                        33,860,114                    34,250,582         33,710,507

                                                                                                                                                                          ===


                                                                                                                                                      
              
                TABLE  - 2


                                                                                                                                                      
              
                ALLOT 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,



                                                                                                                                                                            2019                                                    2018       2019         2018



                                                                                                                                          
              
                (Unaudited)                       
             
               (Unaudited)




     GAAP cost of revenues                                                                                                                                               $9,784                                                  $8,296    $33,834      $29,349



      Share-based compensation (1)                                                                                                                                         (76)                                                   (60)     (264)       (316)



      Amortization of intangible assets (2)                                                                                                                               (152)                                                  (233)     (853)       (930)



      Changes in taxes and headcount related items (5)                                                                                                                        -                                                   (17)        75         (17)



     Non-GAAP cost of revenues                                                                                                                                           $9,556                                                  $7,986    $32,792      $28,086

                                                                                                                                                                                                                                                          ---




      GAAP gross profit                                                                                                                                                 $20,783                                                 $18,589    $76,266      $66,488



      Gross profit adjustments                                                                                                                                              228                                                     310      1,042        1,263



      Non-GAAP gross profit                                                                                                                                             $21,011                                                 $18,899    $77,308      $67,751

                                                                                                                                                                                                                                                          ---




      GAAP operating expenses                                                                                                                                           $22,703                                                 $20,002    $85,244      $76,683



      Share-based compensation (1)                                                                                                                                        (942)                                                  (634)   (3,156)     (2,546)



      Amortization of intangible assets (2)                                                                                                                               (189)                                                  (175)     (754)       (700)



      Income (Expenses) related to M&A activities (3)                                                                                                                     1,246                                                    (93)     3,980        (394)



      Restructuring expenses (4)                                                                                                                                              -                                                   (62)                  (62)



      Changes in taxes and headcount related items (5)                                                                                                                        -                                                   (40)      (31)       (420)



      Non-GAAP operating expenses                                                                                                                                       $22,818                                                 $18,998    $85,283      $72,561

                                                                                                                                                                                                                                                          ---




      GAAP financial and other income                                                                                                                                      $600                                                    $601     $1,960       $2,208



      Expenses related to M&A activities (3)                                                                                                                                  -                                                   (75)                 (224)



      Exchange rate differences*                                                                                                                                          (119)                                                               83            -



      Non-GAAP Financial and other income                                                                                                                                  $481                                                    $526     $2,043       $1,984

                                                                                                                                                                                                                                                          ---




      GAAP taxes on income                                                                                                                                                 $362                                                  $1,005     $1,641       $2,428



      Tax expenses in respect of net deferred tax asset recorded                                                                                                           (25)                                                  (123)      (74)       (116)



      Non-GAAP taxes on income                                                                                                                                             $337                                                    $882     $1,567       $2,312

                                                                                                                                                                                                                                                          ===




      GAAP Net Loss                                                                                                                                                    $(1,682)                                               $(1,817)  $(8,659)   $(10,415)



      Share-based compensation (1)                                                                                                                                        1,018                                                     694      3,420        2,862



      Amortization of intangible assets (2)                                                                                                                                 341                                                     408      1,607        1,630



      Expenses (Income) related to M&A activities (3)                                                                                                                   (1,246)                                                     18    (3,980)         170



      Restructuring expenses (4)                                                                                                                                              -                                                     62                     62



      Changes in taxes and headcount related items (5)                                                                                                                        -                                                     57       (44)         437



      Exchange rate differences                                                                                                                                           (119)                                                               83            -



      Tax expenses in respect of net deferred tax asset recorded                                                                                                             25                                                     123         74          116



      Non-GAAP Net Loss                                                                                                                                                $(1,663)                                                 $(455)  $(7,499)    $(5,138)

                                                                                                                                                                                                                                                          ===




      GAAP Loss per share (diluted)                                                                                                                                     $(0.05)                                                $(0.05)   $(0.25)     $(0.31)



      Share-based compensation                                                                                                                                             0.03                                                    0.02       0.10         0.08



      Amortization of intangible assets                                                                                                                                    0.01                                                    0.01       0.05         0.05



      Expenses (Income) related to M&A activities                                                                                                                        (0.04)                                                           (0.12)        0.01



      Restructuring expenses                                                                                                                                                  -                                                   0.00



      Changes in taxes and headcount related items                                                                                                                            -                                                           (0.00)        0.01



      Exchange rate differences                                                                                                                                          (0.00)                                                             0.00            -



      Tax expense in respect of net deferred tax asset recorded                                                                                                            0.00                                                    0.01       0.00         0.01



      Non-GAAP Net loss per share (diluted)                                                                                                                             $(0.05)                                                $(0.01)   $(0.22)     $(0.15)

                                                                                                                                                                                                                                                          ===






     Weighted average number of shares used in



     computing GAAP diluted net loss per share                                                                                                                       34,450,317                                              33,860,114 34,250,582   33,710,507








     Weighted average number of shares used in



     computing non-GAAP diluted net loss per share                                                                                                                   34,450,317                                              33,860,114 34,250,582   33,710,507






     * Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.


                                                                                                                                       
              
                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,



                                                                                                                                                                       2019                                            2018                2019     2018



                                                                                                                                     
              
                (Unaudited)                                     (Unaudited)






     (1) Share-based compensation:


         
              Cost of revenues                                                                                                                                      $76                                             $60                $264     $316


         
              Research and development costs, net                                                                                                                   230                                             174                 847      678


         
              Sales and marketing                                                                                                                                   350                                             227               1,257      928


         
              General and administrative                                                                                                                            362                                             233               1,052      940


                                                                                                                                                                     $1,018                                            $694              $3,420   $2,862






      (2) Amortization of intangible assets


         
              Cost of revenues                                                                                                                                     $152                                            $233                $853     $930


         
              Sales and marketing                                                                                                                                   189                                             175                 754      700


                                                                                                                                                                       $341                                            $408              $1,607   $1,630






      (3) Expenses (Income) related to M&A activities


         
              General and administrative                                                                                                                       $(1,374)                            
      $              -           $(4,882)     $69


         
              Research and development costs, net                                                                                                                   128                                              93                 902      325


         
              Financial income                                                                                                                                                                                    (75)                      (224)


                                                                                                                                                                   $(1,246)                                            $18            $(3,980)    $170






      (4) Restructuring expenses


         
              General and administrative                                                                                                    
              $              -                                            $62    
       $          -     $62


                                                                                                                                                
              $              -                                            $62    
       $          -     $62






      (5) Changes in taxes and headcount related items


         
              Sales and marketing                                                                                                           
              $              -                                            $40                 $16     $262


         
              Cost of revenues                                                                                                                                                                                      17                (75)      17


         
              General and administrative                                                                                                                                                                                               15      158


                                                                                                                                                
              $              -                                            $57               $(44)    $437







                    (*) 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)






                                                                                             
              
          December 31,  
       
       December 31,


                                                                                                                        2019                   2018



                                                                                              
              
          (Unaudited)    
       
       (Audited)






     
                ASSETS



     CURRENT ASSETS:



     Cash and cash equivalents                                                                                      $16,930                $16,336



     Short term deposits                                                                                              5,557                 22,543



     Restricted deposit                                                                                              23,183                    465



     Marketable securities                                                                                           61,012                 64,290



     Trade receivables, net                                                                                          29,008                 26,093



     Other receivables and prepaid expenses                                                                           6,935                  3,647



     Inventories                                                                                                     10,668                 11,345



     Total current assets                                                                                           153,293                144,719






     LONG-TERM ASSETS:



     Restricted deposit                                                                                              10,913                    257



     Severance pay fund                                                                                                 387                    345



     Operating lease right-of-use assets                                                                              6,368



     Deferred taxes                                                                                                     517                    281



     Other assets                                                                                                       519                    600




     Total long-term assets                                                                                          18,704                  1,483






     PROPERTY AND EQUIPMENT, NET                                                                                      8,135                  6,249




     GOODWILL AND INTANGIBLE ASSETS, NET                                                                             35,037                 37,393






     Total assets                                                                                                  $215,169               $189,844





                   
              
                LIABILITIES AND SHAREHOLDERS'
                                           EQUITY



     CURRENT LIABILITIES:



     Trade payables                                                                                                 $11,676                 $7,813



     Deferred revenues                                                                                               36,360                 13,855



     Short-term operating lease liabilities                                                                           3,151



     Other payables and accrued expenses                                                                             22,255                 21,052




     Total current liabilities                                                                                       73,442                 42,720






     LONG-TERM LIABILITIES:



     Deferred revenues                                                                                                5,262



     Long-term operating lease liabilities                                                                            3,820                  4,247



     Accrued severance pay                                                                                              794



     Other long term liabilities                                                                                                              806



     Total long-term liabilities                                                                                      9,876                  6,168






     SHAREHOLDERS' EQUITY                                                                                           131,851                135,903






     Total liabilities and shareholders' equity                                                                    $215,169               $189,844


                                                                                                        
         
                TABLE  - 4


                                                                                                        
         
                ALLOT LTD.


                                                                                                    
           
             AND ITS SUBSIDIARIES


                                                                                                
         
           CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                  
           
            (U.S. dollars in thousands)




                                                                                                                                                     Three Months Ended               Year Ended


                                                                                                                                                        December 31,                 December 31,

                                                                                                                                                                                                  ---

                                                                                                                                                           2019                 2018                   2019         2018

                                                                                                                                                                                                                  ---

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






       
                Cash flows from operating activities:

    ---




       Net Loss                                                                                                                                       $(1,682)            $(1,817)              $(8,659)   $(10,415)



       Adjustments to reconcile net income  to net cash used in operating activities:



       Depreciation                                                                                                                                        722                  601                  2,637        2,204



       Stock-based compensation related to options granted to employees                                                                                  1,018                  694                  3,420        2,862



       Amortization of intangible assets                                                                                                                   341                  408                  1,607        1,630



       Capital loss                                                                                                                                                                                               39



       Decrease (Increase) in accrued severance pay, net                                                                                                  (21)                (18)                  (54)          16



       Decrease in other assets                                                                                                                            247                   83                     81          535



       Decrease in accrued interest and  amortization of premium on marketable securities                                                                    7                  193                    343          804



       Changes in operating leases, net                                                                                                                    456                                        603            -



       Decrease (Increase) in trade receivables                                                                                                        (8,034)                 359                (2,915)     (3,356)



       Decrease (Increase) in other receivables and prepaid expenses                                                                                   (2,886)                 184                (3,575)     (1,101)



       Decrease (Increase) in inventories                                                                                                              (1,387)                 607                  (138)     (3,448)



       Increase (Decrease) in long-term deferred taxes, net                                                                                                 33                   27                  (236)          20



       Increase (Decrease) in trade payables                                                                                                             4,389              (4,370)                 3,863        1,945



       Increase (Decrease) in employees and payroll accruals                                                                                             4,048                (998)                 4,635      (1,178)



       Increase in deferred revenues                                                                                                                     5,760                1,421                 23,520        3,566



       Increase (Decrease) in other payables, accrued expenses and other long term liabilities                                                             464                3,383                (9,040)       6,906





       Net cash provided by operating activities                                                                                                         3,475                  757                 16,092        1,029

                                                                                                                                                                                                                  ---




       
                Cash flows from investing activities:

    ---


       Increase in restricted deposit                                                                                                                 (23,331)                (32)              (33,374)       (294)



       Redemption of short-term deposits                                                                                                                 3,000                1,900                 16,986        8,500



       Purchase of property and equipment                                                                                                                (918)             (1,427)               (3,708)     (3,485)



       Investment in marketable securities                                                                                                             (8,154)             (9,584)              (39,950)    (34,777)



       Proceeds from redemption or sale of marketable securities                                                                                        11,173                8,924                 43,555       32,651



       Acquisitions                                                                                                                                                                                          (3,048)



       Net cash used in investing activities                                                                                                          (18,230)               (219)              (16,491)       (453)

                                                                                                                                                                                                                  ---




       
                Cash flows from financing activities:

    ---




       Exercise of employee stock options                                                                                                                  220                   74                    993          418



       Net cash provided by financing activities                                                                                                           220                   74                    993          418

                                                                                                                                                                                                                  ---






       Increase (Decrease) in cash and cash equivalents                                                                                               (14,535)                 612                    594          994



       Cash, cash equivalents and restricted cash at the beginning of the period                                                                        31,465               15,724                 16,336       15,342





       Cash and cash equivalents at the end of the period                                                                                              $16,930              $16,336                $16,930      $16,336

Investor Relations Contact:
GK Investor Relations

Ehud Helft/Gavriel Frohwein
+1-646-688-3559
allot@gkir.com

Public Relations Contact:
Seth Greenberg, Allot Ltd.
+972-54-922-2294
sgreenberg@allot.com

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SOURCE Allot Ltd.