Allot Announces Second Quarter 2020 Financial Results
HOD HASHARON, Israel, Aug. 4, 2020 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for communication service providers and enterprises worldwide, today announced its unaudited second quarter 2020 financial results.
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Highlights of the Second Quarter
-- Second quarter revenues were $32.8 million, up 23% year-over-year;
-- Non-GAAP gross margin increased to 70.7%, up from 69.8% in the second
quarter of 2019;
-- GAAP gross margin increased to 70.0%, up from 68.7% in the second
quarter of 2019;
-- Non-GAAP net loss of $2.4 million and GAAP net loss $3.6 million; Net
loss includes a $1.5 million doubtful debt expense from a system
integrator in Latin America experiencing financial difficulties;
-- Since the May 2020 first quarter earnings call, two recurring security
revenue expansion deals were signed with existing customers
Financial Outlook
-- Management reiterates its prior-issued guidance, with expectations for
full year 2020 revenues to be between $135 - $140 million, representing
accelerated double-digit growth over those of 2019. In addition,
management expects that third quarter revenue will exceed those reported
for the second quarter of 2020;
-- Management continues to expect to be profitable in the fourth quarter
this year;
-- Management continues to expect to close additional Recurring Security
Revenue deals in 2020 and reiterates that the MAR* (maximum annual
revenue potential of concluded transactions) of new deals expected to be
signed in 2020 should exceed $140 million.
Management Comment
Erez Antebi, President & CEO of Allot, commented: "We are very pleased with our performance in the second quarter. We grew revenues 23% year-over-year, while improving gross margins and continuing our advance to profitability."
Continued Mr. Antebi, "COVID-19 continues to present Allot with both challenges and opportunities. While it is taking longer to close deals and the absence of travel is challenging business development activities, we are continuing to work towards meeting our goals and are on track to achieving our original 2020 plan. I believe that in the long-term, the growing need for successful connectivity and the increased amount of threats consumers face on the internet, will further increase demand for Allot's solutions."
Second Quarter 2020 Financial Results Summary
Total revenues for the second quarter of 2020 were $32.8 million, an increase of 23% compared to $26.6 million in the second quarter of 2019.
Gross profit on a GAAP basis for the second quarter of 2020 was $23.0 million (gross margin of 70.0%), compared with $18.3 million (gross margin of 68.7%) in the second quarter of 2019, representing a 26% improvement.
Gross profit on a non-GAAP basis for the second quarter of 2020 was $23.2 million (gross margin of 70.7%), a 25% improvement compared with $18.5 million (gross margin of 69.8%) in the second quarter of 2019.
Net loss on a GAAP basis for the second quarter of 2020 was $3.6 million, or $0.10 per basic share, compared with a net loss of $1.5 million, or $0.04 per basic share, in the second quarter of 2019.
Non-GAAP net loss for the second quarter of 2020 was $2.4 million, or $0.07 per basic share, compared with a non-GAAP net loss of $2.1 million, or $0.06 per basic share, in the second quarter of 2019.
It is noted that the operating expenses for the second quarter of 2020 include a doubtful debt expense of $1.5 million.
Cash and investments as of June 30, 2020 totaled $109.2 million, compared with $110.7 million, as of March 31, 2020.
Conference Call & Webcast
The Allot management team will host a conference call to discuss second quarter 2020 earnings results today, August 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: 1-888-407-2553, UK: 0-800-917-5108, Israel: +972-3-918-0610
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
Additional Resources
Allot Blog: https://www.allot.com/blog
Follow us on Twitter: @allot_ltd
Follow us on LinkedIn: https://www.linkedin.com/company/allot-communications
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, 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: those related to the COVID-19 pandemic, 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.
Investor Relations
Contact Public Relations Contact
GK Investor
Relations
Seth Greenberg, Allot Ltd.
Ehud Helft
+972 54 922 2294
+1 646 201 9246
sgreenberg@allot.com
allot@gkir.com
---
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 Six Months Ended
June 30, June 30,
---
2020 2019 2020 2019
---
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $32,790 $26,554 $62,079 $51,896
Cost of revenues 9,838 8,301 17,448 15,594
Gross profit 22,952 18,253 44,631 36,302
---
Operating expenses:
Research and development costs, net 10,396 7,633 19,095 14,807
Sales and marketing 11,780 11,209 23,302 22,686
General and administrative 4,554 923 7,595 3,628
---
Total operating expenses 26,730 19,765 49,992 41,121
Operating loss (3,778) (1,512) (5,361) (4,819)
Financial and other income, net 717 571 868 1,103
---
Loss before income tax expenses (3,061) (941) (4,493) (3,716)
Tax expenses 553 592 781 1,150
---
Net Loss (3,614) (1,533) (5,274) (4,866)
===
Basic net loss per share $(0.10) $(0.04) $(0.15) $(0.14)
? -
Diluted net loss per share $(0.10) $(0.04) $(0.15) $(0.14)
Weighted average number of shares used in
computing basic net loss per share 34,917,617 34,213,724 34,771,624 34,099,428
===
Weighted average number of shares used in
computing diluted net loss per share 34,917,617 34,213,724 34,771,624 34,099,428
===
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 Six Months Ended
June 30, June 30,
2020 2019 2020 2019
(Unaudited) (Unaudited)
GAAP cost of
revenues $9,838 $8,301 $17,448 $15,594
Share-based
compensation (1) (86) (61) (153) (121)
Amortization of
intangible
assets (2) (152) (232) (304) (464)
Non-GAAP cost of
revenues $9,600 $8,008 $16,991 $15,009
GAAP gross profit $22,952 $18,253 $44,631 $36,302
Gross profit
adjustments 238 293 457 585
Non-GAAP gross
profit $23,190 $18,546 $45,088 $36,887
GAAP operating
expenses $26,730 $19,765 $49,992 $41,121
Share-based
compensation (1) (1,146) (782) (2,003) (1,467)
Amortization of
intangible
assets (2) (189) (377)
Income (Expenses)
related to M&A
activities (3) (137) 1,832 (34) 1,537
Non-GAAP
operating
expenses $25,447 $20,626 $47,955 $40,814
GAAP financial
and other income $717 $571 $868 $1,103
Exchange rate
differences* (316) (31) (98) (33)
Non-GAAP
Financial and
other income $401 $540 $770 $1,070
GAAP taxes on
income $553 $592 $781 $1,150
Tax expenses in
respect of net
deferred tax
asset recorded (15) (17) (75) (33)
Non-GAAP taxes
on income $538 $575 $706 $1,117
GAAP Net Loss $(3,614) $(1,533) $(5,274) $(4,866)
Share-based
compensation (1) 1,232 843 2,156 1,588
Amortization of
intangible
assets (2) 152 421 304 841
Income (Expenses)
related to M&A
activities (3) 137 (1,832) 34 (1,537)
Exchange rate
differences (316) (31) (98) (33)
Tax expenses in
respect of net
deferred tax
asset recorded 15 17 75 33
Non-GAAP Net
Loss $(2,394) $(2,115) $(2,803) $(3,974)
GAAP Loss per
share (diluted) $(0.10) $(0.04) $(0.15) $(0.14)
Share-based
compensation 0.04 0.02 0.06 0.05
Amortization of
intangible
assets 0.00 0.02 0.01 0.02
Expenses (Income)
related to M&A
activities 0.00 (0.06) 0.00 (0.05)
Exchange rate
differences (0.01) (0.00) (0.00) (0.00)
Non-GAAP Net
loss per share
(diluted) $(0.07) $(0.06) $(0.08) $(0.12)
Weighted average
number of shares
used in
computing GAAP
diluted net loss
per share 34,917,617 34,213,724 34,771,624 34,099,428
Weighted average
number of shares
used in
computing non-
GAAP diluted net
loss per share 34,917,617 34,213,724 34,771,624 34,099,428
* 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 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 Six Months Ended
June 30, June 30,
2020 2019 2020 2019
(Unaudited) (Unaudited)
(1) Share-based
compensation:
Cost of revenues $86 $61 $153 $121
Research and development costs, net 361 214 603 383
Sales and marketing 533 327 911 610
General and administrative 252 241 489 474
$1,232 $843 $2,156 $1,588
(2) Amortization
of intangible
assets
Cost of revenues $152 $232 $304 $464
Sales and marketing 189 377
$152 $421 $304 $841
(3) Expenses
(Income) related
to M&A
activities
General and administrative
$ - $(1,947)
$ - $(1,947)
Research and development costs, net $137 $115 34 410
$137 $(1,832) $34 $(1,537)
TABLE - 3
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
June 30, December 31,
2020 2019
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $30,542 $16,930
Short-term bank
deposits 15,000 5,557
Restricted deposit 23,154 23,183
Available-for-
sale marketable
securities 40,038 61,012
Trade receivables,
net 21,524 29,008
Other receivables
and prepaid
expenses 8,128 6,528
Inventories 17,266 10,668
Total current
assets 155,652 152,886
LONG-TERM ASSETS:
Restricted deposit 440 10,913
Severance pay fund 390 387
Operating lease
right-of-use
assets 5,740 6,368
Deferred taxes 413 517
Other assets 767 926
Total long-term
assets 7,750 19,111
PROPERTY AND
EQUIPMENT, NET 10,146 8,135
GOODWILL AND
INTANGIBLE ASSETS,
NET 34,732 35,037
Total assets $208,280 $215,169
LIABILITIES AND
SHAREHOLDERS'
EQUITY
CURRENT
LIABILITIES:
Trade payables $7,476 $11,676
Deferred revenues 31,387 36,360
Short-term
operating lease
liabilities 3,111 3,151
Other payables and
accrued expenses 22,605 22,255
Total current
liabilities 64,579 73,442
LONG-TERM
LIABILITIES:
Deferred revenues 8,778 5,262
Long-term
operating lease
liabilities 3,065 3,820
Accrued severance
pay 797 794
Total long-term
liabilities 12,640 9,876
SHAREHOLDERS'
EQUITY 131,061 131,851
Total liabilities
and shareholders'
equity $208,280 $215,169
TABLE - 4
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
---
2020 2019 2020 2019
---
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
---
Net Loss $(3,614) $(1,533) $(5,274) $(4,866)
Adjustments to reconcile net income to net cash
used in operating activities:
---
Depreciation 897 617 1,685 1,233
Stock-based
compensation
related to options
granted to
employees 1,232 843 2,156 1,588
Amortization of
intangible assets 152 421 304 841
Increase (Decrease)
in accrued
severance pay, net (1) 15 (50)
Decrease (Increase)
in other assets (1) (344) 159 (277)
Decrease in accrued
interest and
amortization of
premium on
marketable
securities 57 164 228 241
Changes in
operating leases,
net 544 588 (167) 382
Decrease in trade
receivables 1,616 6,823 7,484 4,230
Decrease (Increase)
in other
receivables and
prepaid expenses (518) 773 (919) (374)
Decrease (Increase)
in inventories (2,113) 1,676 (6,598) (234)
Decrease (Increase)
in long-term
deferred taxes,
net 20 (149) 104 (182)
Decrease in trade
payables (6,468) (3,769) (4,200) (1,212)
Increase (Decrease)
in employees and
payroll accruals 1,024 517 (301) 1,540
Increase (Decrease)
in deferred
revenues 4,169 1,915 (1,457) 1,323
Increase (Decrease)
in other payables,
accrued expenses
and other long
term liabilities 2,235 (7,923) 517 (6,030)
Net cash provided
by (used in)
operating
activities (769) 634 (6,279) (1,847)
---
Cash flows from investing activities:
---
Decrease (Increase)
in restricted
deposit 9,002 42 10,502 (41)
Redemption of
(Investment in)
short-term
deposits (14,200) 933 (9,443) 4,919
Purchase of
property and
equipment (2,345) (748) (3,696) (1,477)
Investment in
available-for
sale marketable
securities (13,020) (375) (24,604)
Proceeds from
redemption or sale
of available-for
sale marketable
securities 8,523 12,190 21,446 23,569
Net cash provided
by (used in)
investing
activities 980 (603) 18,434 2,366
---
Cash flows from financing activities:
---
Exercise of
employee stock
options 837 56 1,457 662
Net cash provided
by financing
activities 837 56 1,457 662
---
Increase in cash
and cash
equivalents 1,048 87 13,612 1,181
Cash and cash
equivalents at the
beginning of the
period 29,494 17,430 16,930 16,336
Cash and cash
equivalents at the
end of the period $30,542 $17,517 $30,542 $17,517
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SOURCE Allot Ltd.
