Allot Announces First Quarter 2024 Financial Results

HOD HASHARON, Israel, May 29, 2024 /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 first quarter 2024 financial results.

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Financial Highlights for the First Quarter

    --  First quarter revenues were $21.9 million, up 4% year-over-year;
    --  First quarter gross margins improved year over year by 8.1% to 69.0% on
        a GAAP basis and by 4.7% to 70.4% on a non-GAAP basis;
    --  SECaaS revenues were $3.4 million for Q1 up 51% year-over-year and March
        2024 SECaaS ARR* was $13.7 million;
    --  Net loss improved and was reduced significantly year over year: on a
        GAAP basis, net loss reduced by 77.9% to $2.5 million and on a non-GAAP
        basis, net loss reduced by 88.8% to $0.9 million;

Financial Outlook

For the full year 2024, management reiterates that it expects:

    --  Non-GAAP operating profit and net cash flow breakeven;
    --  Continued yearly double-digit growth of SECaaS revenues and ARR;

Management Comment

Eyal Harari, CEO of Allot commented, "We are pleased with the strong progress we have made stabilizing the business and lowering expenses to align our operating costs to current revenue levels. Revenues improved year-over-year, and we lowered our expenses by 26% (on a Non-GAAP basis), significantly reducing our operating and net loss. We are working hard to bring the business back to profitability while maintaining our investment in our long-term growth engine, Security as a Service (SECaaS)."

"I am thrilled with the opportunity to join Allot. I believe we have a bright future, and I am looking forward to working with the Allot team to drive profitable growth," added Mr. Harari.

Q1 2024 Financial Results Summary

Total revenues for the first quarter of 2024 were $21.9 million, an increase of 4% compared to $21.1 million in the first quarter of 2023.

Gross profit on a GAAP basis for the first quarter of 2024 was $15.1 million (gross margin of 69.0%), a 12% increase compared with $13.5 million (gross margin of 63.8%) in the first quarter of 2023.

Gross profit on a non-GAAP basis for the first quarter of 2024 was $15.4 million (gross margin of 70.4%), an 8% increase compared with $14.2 million (gross margin of 67.2%) in the first quarter of 2023.

Net loss on a GAAP basis for the first quarter of 2024 was $2.5 million, or $0.07 per basic share, an improvement compared with a net loss of $11.4 million, or $0.30 per basic share, in the first quarter of 2023.

Net loss on a non-GAAP for the first quarter of 2024 was $0.9 million, or $0.03 per basic share an improvement compared with a non-GAAP net loss of $7.7 million, or $0.21 per basic share, in the first quarter of 2023.

Cash, short-term bank deposits, and investments as of March 31, 2024, totaled $52.6 million, compared to $54.9 million as of December 31, 2023.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss its first quarter 2024 earnings results today, May 29, 2024, at 9:00 am ET, 4:00 pm Israel time. To access the conference call, please dial one of the following numbers:

US: 1-888-642-5032, 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.

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 1,000 enterprises. Our industry-leading network-based security as a service solution is already used by many millions of subscribers globally. Allot. See. Control. Secure.

For more information, visit www.allot.com.

Performance Metrics

* Total ARR - Support & Maintenance ARR (measures the current annual run rate of support & maintenance revenues, which is calculated based on the expected revenues for the first quarter of 2024, excluding one-time items, and multiplied by 4) and SECaaS ARR (measures the current annual run rate of SECaaS revenues, which is calculated based on estimated revenues for the month of Mar. 2024 and multiplied by 12).

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 and changes in taxes-related items.

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 accounts receivables, including our ability to collect outstanding accounts and assess their collectability on a quarterly basis; our ability to meet expectations with respect to our financial guidance and outlook; 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; 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.

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Investor Relations Contact:
EK Global Investor Relations
Ehud Helft
+1 212 378 8040
allot@ekgir.com

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


                                                                                                        March 31,


                                                                                                   2024       2023


                                                                                                        (Unaudited)





     Revenues                                                                                  $21,890    $21,126



     Cost of revenues                                                                            6,792      7,651



     Gross profit                                                                               15,098     13,475





     Operating expenses:



     Research and development costs, net                                                         7,149     10,494



     Sales and marketing                                                                         7,790     10,887



     General and administrative                                                                  2,902      3,960



     Total operating expenses                                                                   17,841     25,341



     Operating loss                                                                            (2,743)  (11,866)



     Financial and other income, net                                                               540        794



     Loss before income tax expenses                                                           (2,203)  (11,072)





     Tax expenses                                                                                  307        290



     Net Loss                                                                                  (2,510)  (11,362)





     
              Basic net loss per share                                                       $(0.07)   $(0.30)





     
              Diluted net loss per share                                                     $(0.07)   $(0.30)





     Weighted average number of shares used in



     computing basic net loss per share                                                     38,411,724 37,421,720





     Weighted average number of shares used in



     computing diluted net loss per share                                                   38,411,724 37,421,720


                                                                
              
                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


                                                                                                                                                March 31,


                                                                                                                                      2024                      2023


                                                                                                                                               (Unaudited)



     GAAP cost of revenues                                                                                  $6,792                                 $7,651



      Share-based compensation (1)                                                                           (154)                                 (531)



      Amortization of intangible assets (2)                                                                  (152)                                 (193)



     Non-GAAP cost of revenues                                                                              $6,486                                 $6,927





      GAAP gross profit                                                                                    $15,098                                $13,475



      Gross profit adjustments                                                                                 306                                    724



      Non-GAAP gross profit                                                                                $15,404                                $14,199





      GAAP operating expenses                                                                              $17,841                                $25,341



      Share-based compensation (1)                                                                         (1,206)                               (2,937)



      Non-GAAP operating expenses                                                                          $16,635                                $22,404





      GAAP financial and other income                                                                         $540                                   $794



      Expenses related to M&A activities (3)                                                                                                          14



      Exchange rate differences*                                                                                94                                   (43)



      Non-GAAP Financial and other income                                                                     $634                                   $765





      GAAP taxes on income                                                                                    $307                                   $290



      Changes in tax related items                                                                            (44)                                  (25)



      Non-GAAP taxes on income                                                                                $263                                   $265





      GAAP Net Loss                                                                                       $(2,510)                             $(11,362)



      Share-based compensation (1)                                                                           1,360                                  3,468



      Amortization of intangible assets (2)                                                                    152                                    193



      Expenses related to M&A activities (3)                                                                                                          14



      Exchange rate differences*                                                                                94                                   (43)



      Changes in tax related items                                                                              44                                     25



      Non-GAAP Net income (loss)                                                                            $(860)                              $(7,705)





      GAAP Loss per share (diluted)                                                                        $(0.07)                               $(0.30)



      Share-based compensation                                                                                0.04                                   0.09



      Amortization of intangible assets



      Expenses related to M&A activities



      Exchange rate differences*



      Changes in tax related items



      Non-GAAP Net income (loss) per share (diluted)                                                       $(0.03)                               $(0.21)







     Weighted average number of shares used in



     computing GAAP diluted net loss per share                                                          38,411,724                             37,421,720







     Weighted average number of shares used in



     computing non-GAAP diluted net loss per share                                                      38,411,724                             37,421,720





     * Financial income or expenses related to exchange rate differences in connection with revaluation of assets and



      liabilities in non-dollar denominated currencies.



      ** While amortization of acquired intangible assets is excluded from the measures, the revenue of the acquired



      companies is reflected in the measures and the acquired assets contribute to revenue generation.








                                                             
              
                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


                                                                                                                                                March 31,


                                                                                                                                      2024                      2023


                                                                                                                                               (Unaudited)





     (1) Share-based compensation:


                                                            
              Cost of revenues                                                 $154                      $531


                                                            
              Research and development costs, net                               498                     1,202


                                                            
              Sales and marketing                                               443                     1,037


                                                            
              General and administrative                                        265                       698


                                                                                                                                    $1,360                    $3,468





      (2) Amortization of intangible assets


                                                            
              Cost of revenues                                                 $152                      $193


                                                                                                                                      $152                      $193





      (3) Expenses related to M&A activities


                                                            
              Financial income                               
              $         -                      $14


                                                                                                                    
              $         -                      $14


                                                     
              
                TABLE  - 3


                                                     
              
                ALLOT LTD.


                                                
              
                AND ITS SUBSIDIARIES


                                           
              
                CONSOLIDATED  BALANCE  SHEETS


                                            
              
                (U.S. dollars in thousands)






                                                                                                  March 31,  December 31,


                                                                                                        2024          2023


                                                                                                 (Unaudited)   (Audited)




                                    
              
                ASSETS



     CURRENT ASSETS:



     Cash and cash equivalents                                                                      $22,718       $14,192



     Restricted deposit                                                                               1,182         1,728



     Short-term bank deposits                                                                                     10,000



     Available-for-sale marketable securities                                                        28,657        28,853



     Trade receivables, net  (net of allowance for credit                                            15,019        14,828


     losses of $25,363 and $25,253 on March 31, 2024 and


     December 31, 2023, respectively)



     Other receivables and prepaid expenses                                                           6,996         8,437



     Inventories                                                                                     11,707        11,874



     Total current assets                                                                            86,279        89,912





     NON-CURRENT ASSETS:



     Severance pay fund                                                                                 389           395



     Restricted deposit                                                                                              158



     Operating lease right-of-use assets                                                              2,505         3,057



     Other assets                                                                                     1,091           704



     Property and equipment, net                                                                     10,403        11,189



     Intangible assets, net                                                                             763           915



     Goodwill                                                                                        31,833        31,833



     Total non-current assets                                                                        46,984        48,251





     Total assets                                                                                  $133,263      $138,163




                        
              
                LIABILITIES AND SHAREHOLDERS'

                                    
              
                EQUITY



     CURRENT LIABILITIES:



     Trade payables                                                                                    $709          $969



     Deferred revenues                                                                               15,168        14,892



     Short-term operating lease liabilities                                                           1,494         1,453



     Other payables and accrued expenses                                                             18,075        22,094



     Total current liabilities                                                                       35,446        39,408





     LONG-TERM LIABILITIES:



     Deferred revenues                                                                                8,531         7,437



     Long-term operating lease liabilities                                                              202           702



     Accrued severance pay                                                                            1,016         1,080



     Convertible debt                                                                                39,823        39,773



     Total long-term liabilities                                                                     49,572        48,992





     SHAREHOLDERS' EQUITY                                                                            48,245        49,763





     Total liabilities and shareholders' equity                                                    $133,263      $138,163


                                                                                                   
              
                TABLE  - 4


                                                                                                   
              
                ALLOT LTD.


                                                                                              
              
                AND ITS SUBSIDIARIES


                                                                                      
              
                CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                         
              
                (U.S. dollars in thousands)




                                                                                                                                                                 Three Months Ended


                                                                                                                                                                 March 31,


                                                                                                                                                        2024       2023


                                                                                                                                                                 (Unaudited)





       Cash flows from operating activities:



       Net Loss                                                                                                                                    $(2,510) $(11,362)



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

    ---


       Depreciation                                                                                                                                   1,215      1,320



       Stock-based compensation                                                                                                                       1,360      3,468



       Amortization of intangible assets                                                                                                                152        276



       Increase (Decrease) in accrued severance pay, net                                                                                               (58)        60



       Decrease in other assets, other receivables and prepaid expenses                                                                                 717        499



       Decrease (Increase) in accrued interest and  amortization of premium/discount on marketable securities                                         (372)        19



       Decrease in operating leases liability                                                                                                         (459)   (1,105)



       Decrease in operating lease right-of-use asset                                                                                                   552        722



       Decrease (Increase) in trade receivables                                                                                                       (191)     4,486



       Decrease (Increase) in inventories                                                                                                               167    (3,453)



       Increase (Decrease) in trade payables                                                                                                          (262)       739



       Decrease in employees and payroll accruals                                                                                                   (3,486)   (1,452)



       Increase (Decrease) in deferred revenues                                                                                                       1,370    (2,169)



       Decrease in other payables, accrued expenses and other long term liabilities                                                                   (554)     (901)



       Amortization of issuance costs of Convertible debt                                                                                                50         49



       Net cash used in operating activities                                                                                                        (2,309)   (8,804)





       Cash flows from investing activities:



       Decrease in restricted deposit                                                                                                                   704



       Investment in short-term bank deposits                                                                                                             -  (15,900)



       Withdrawal of short-term bank deposits                                                                                                        10,000     32,900



       Purchase of property and equipment                                                                                                             (429)     (270)



       Investment in marketable securities                                                                                                         (24,275)   (8,983)



       Proceeds from redemption or sale of marketable securities                                                                                     24,835      3,370



       Net cash provided by investing activities                                                                                                     10,835     11,117





       Cash flows from financing activities:



       Proceeds from exercise of stock options                                                                                                            -



       Issuance of convertible debt                                                                                                                       -



       Net cash provided by financing activities                                                                                                          -





       Increase in cash and cash equivalents                                                                                                          8,526      2,313



       Cash and cash equivalents at the beginning of the period                                                                                      14,192     12,295



       Cash and cash equivalents at the end of the period                                                                                           $22,718    $14,608




                                                    Other financial metrics (Unaudited)



       U.S. dollars in millions, except number of full time employees, top 10
        customers as a

     
     % of revenues and number of shares




                                                                                                                        Q1-2024         FY 2023          FY 2022



                                                    Revenues geographic breakdown



                    
              Americas                                                                                     4.3   20 %      16.6   18 %       21.8   18 %


                    
              EMEA                                                                                        12.5   57 %      56.1   60 %       71.2   58 %


                    
              Asia Pacific                                                                                 5.1   23 %      20.5   22 %       29.7   24 %



                                                                                                                           21.9  100 %      93.2  100 %      122.7  100 %




                                                    Revenue breakdown by type



                    
              Products                                                                                     7.4   34 %      37.6   40 %       61.1   50 %


                    
              Professional Services                                                                      3.0   14 %       6.1    7 %       11.6    9 %


                               SECaaS (Security as a Service)                                                               3.4   16 %      10.6   11 %        7.2    6 %


                    
              Support & Maintenance                                                                      8.1   36 %      38.9   42 %       42.8   35 %



                                                                                                                           21.9  100 %      93.2  100 %      122.7  100 %




                                                    Revenues per customer type



                    
              CSP                                                                                         17.3   79 %      75.1   81 %       98.3   80 %


                    
              Enterprise                                                                                   4.6   21 %      18.1   19 %       24.4   20 %



                                                                                                                           21.9  100 %      93.2  100 %      122.7  100 %




     
     Top 10 customers as a % of revenues                                                                             47 %            47 %             44 %




     
     Total number of full time employees                                                                              505              559               749


     
     (end of period)


       Non-GAAP Weighted average number of basic shares
        (in                                                                                                            38.4             37.9              37.0

     
      millions)






       Non-GAAP weighted average number of fully diluted                                                               42.1             40.3              39.5

     
     shares  (in millions)








                                                    SECaaS (Security as a Service) revenues
                  
                  -
                                                     U.S. dollars in millions (Unaudited)





       Q1-2024:                                 3.4


       Q4-2023:                                 3.2


       Q3-2023:                                 2.8


       Q2-2023:                                 2.4


       Q1-2023:                                 2.3




                                                    SECaaS ARR* (annualized recurring revenues)-U.S. dollars in millions
                                                     (Unaudited)





       Mar. 2024:                              13.7


       Dec. 2023:                              12.7


       Dec. 2022:                               9.2


       Dec. 2021:                               5.2




       *ARR: annualized recurring SECaaS revenues, calculated based on the monthly revenues
        multiplied by 12

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SOURCE Allot Ltd.