Allot Announces Second Quarter 2024 Financial Results
HOD HASHARON, Israel, Aug. 27, 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 financial results for the second quarter of 2024.
https://mma.prnewswire.com/media/703889/Allot_Logo.jpg
Financial Highlights for the Second Quarter
-- Revenues were $22.2 million, stable compared with that of the prior
quarter;
-- Non-GAAP gross margin was 70.6%;
-- Security as a Service (SECaaS) revenues continued to grow, increasing
54% year-over-year to $3.7 million;
-- June 2024 SECaaS ARR* was $14.6 million;
-- Operating loss improved significantly year over year: declining 84% to
$3.4 million on a GAAP basis and 95% to $1 million on a non-GAAP basis;
-- Operating cash flow was positive for the first time in three years,
coming in at $1.2 million;
-- Net cash** increased by $0.6 million during the quarter;
Financial Outlook
For the second half of 2024, management expects non-GAAP operating profit at around breakeven and the net cash position to not decrease.
Full year SECaaS revenue and SECaaS ARR* are expected to continue experiencing accelerated growth at around 50% year-over-year.
Management Comment
Eyal Harari, CEO of Allot commented, "We have made significant progress improving our operational efficiency and stabilizing the business, and we are very pleased to have returned to positive operating cash flow for the first time in three years. At the same time, we continue investing in our long-term growth engine, SECaaS.
"During the quarter, we demonstrated solid execution. We won new customers in both Allot Smart and Allot Secure, and we closed expansion contracts with existing customers. We have a strong and broad pipeline of opportunities, and we are making progress in converting that pipeline into orders.
"In my first few months at Allot, I have been meeting our customers and employees, looking for ways to leverage our strong assets and deep technological capabilities to better serve all our stakeholders. We are formulating a strategic plan to drive long-term profitable growth, and I look forward to realizing Allot's strong potential."
Q2 2024 Financial Results Summary
Total revenues for the second quarter of 2024 were $22.2 million, a 12% decrease compared to $25 million in the second quarter of 2023.
Gross profit on a GAAP basis for the second quarter of 2024 was $15.2 million (gross margin of 68.5%), a 12% decline compared with $17.3 million (gross margin of 69.2%) in the second quarter of 2023.
Gross profit on a non-GAAP basis for the second quarter of 2024 was $15.7 million (gross margin of 70.6%), a 12% decline compared with $17.9 million (gross margin of 71.4%) in the second quarter of 2023.
Operating loss on a GAAP basis for the second quarter of 2024 was $3.4 million, an 84% improvement compared with an operating loss of $21.5 million in the second quarter of 2023.
Operating loss on a non-GAAP basis for the second quarter of 2024 was $1 million, a 95% improvement compared with an $18.9 million loss in the second quarter of 2023.
Net loss on a GAAP basis for the second quarter of 2024 was $3.4 million, or $0.09 per basic share, an improvement compared to the net loss of $20.7 million, or $0.55 per basic share, in the second quarter of 2023.
Net loss on a non-GAAP basis for the second quarter of 2024 was $0.8 million, or $0.02 per basic share, an improvement compared to the non-GAAP net loss of $18.3 million, or $0.49 per basic share, in the second quarter of 2023.
Operating cash flow in the quarter was $1.2 million.
Cash and cash equivalents, short-term bank deposits, and investments as of June 30, 2024, totaled $53.2 million, an increase of $0.6 million versus $52.6 million at the end of the prior quarter and $54.8 million as of December 31, 2023.
Conference Call & Webcast:
The Allot management team will host a conference call to discuss its Second quarter 2024 earnings results today, August 27, 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
* SECaaS ARR - measures the current annual recurring of SECaaS revenues, which is calculated based on estimated revenues for the month of June 2024 and multiplied by 12.
** Net Cash - Cash and cash equivalents, short-term bank deposits, and investments net of convertible debt.
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.
Investor Relations Contact: Public Relations
Contact:
EK Global Investor Relations Seth Greenberg, Allot
Ltd.
Ehud Helft +972 54 922 2294
+1 212 378 8040 sgreenberg@allot.com
allot@ekgir.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
Jun 30, Jun 30,
2024 2023 2024 2023
(Unaudited) (Unaudited)
Revenues $22,164 $25,047 $44,054 $46,173
Cost of revenues 6,989 7,707 13,781 15,358
Gross profit 15,175 17,340 30,273 30,815
Operating expenses:
Research and development costs, net 7,326 10,752 14,475 21,246
Sales and marketing 7,911 10,522 15,701 21,409
General and administrative 3,304 17,558 6,206 21,518
Total operating expenses 18,541 38,832 36,382 64,173
Operating loss (3,366) (21,492) (6,109) (33,358)
Financial and other income, net 489 985 1,029 1,779
Loss before income tax expenses (2,877) (20,507) (5,080) (31,579)
Tax expenses 479 225 786 515
Net Loss (3,356) (20,732) (5,866) (32,094)
Basic net loss per share $(0.09) $(0.55) $(0.16) $(0.85)
Diluted net loss per share $(0.09) $(0.55) $(0.16) $(0.85)
Weighted average number of shares used in
computing basic net loss per share 38,712,407 37,743,328 38,562,065 37,583,412
Weighted average number of shares used in
computing diluted net loss per share 38,712,407 37,743,328 38,562,065 37,583,412
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,
2024 2023 2024 2023
(Unaudited)
(Unaudited)
GAAP cost of revenues $6,989 $7,707 $13,781 $15,358
Share-based compensation (1) (324) (348) (478) (879)
Amortization of intangible assets (2) (152) (194) (304) (387)
Non-GAAP cost of revenues $6,513 $7,165 $12,999 $14,092
GAAP gross profit $15,175 $17,340 $30,273 $30,815
Gross profit adjustments 476 542 782 1,266
Non-GAAP gross profit $15,651 $17,882 $31,055 $32,081
GAAP operating expenses $18,541 $38,832 $36,382 $64,173
Share-based compensation (1) (1,863) (2,077) (3,069) (5,014)
Non-GAAP operating expenses $16,678 $36,755 $33,313 $59,159
GAAP financial and other income $489 $985 $1,029 $1,779
Exchange rate differences* 110 (238) 204 (281)
Expenses related to M&A activities (3) 14 28
Non-GAAP Financial and other income $599 $761 $1,233 $1,526
GAAP taxes on income $479 $225 $786 $515
Changes in tax related items (133) (25) (177) (50)
Non-GAAP taxes on income $346 $200 $609 $465
GAAP Net Loss $(3,356) $(20,732) $(5,866) $(32,094)
Share-based compensation (1) 2,187 2,425 3,547 5,893
Amortization of intangible assets (2) 152 194 304 387
Expenses related to M&A activities (3) 14 28
Exchange rate differences* 110 (238) 204 (281)
Changes in tax related items 133 25 177 50
Non-GAAP Net loss $(774) $(18,312) $(1,634) $(26,017)
GAAP Loss per share (diluted) $(0.09) $(0.55) $(0.16) $(0.85)
Share-based compensation 0.06 0.06 0.10 0.16
Amortization of intangible assets 0.01 0.01 0.01 0.01
Expenses related to M&A activities 0.00 0.00
Exchange rate differences* 0.00 (0.01) (0.01)
Changes in tax related items
Non-GAAP Net loss per share (diluted) $(0.02) $(0.49) $(0.05) $(0.69)
Weighted average number of shares used in
computing GAAP diluted net loss per share 38,712,407 37,743,328 38,562,065 37,583,412
Weighted average number of shares used in
computing non-GAAP diluted net loss per share 38,712,407 37,743,328 38,562,065 37,583,412
* 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,
2024 2023 2024 2023
(Unaudited) (Unaudited)
(1) Share-based compensation:
Cost of revenues $324 $348 $478 $879
Research and
development costs, net 787 754 1,285 1,956
Sales and marketing 792 733 1,235 1,770
General and
administrative 284 590 549 1,288
$2,187 $2,425 $3,547 $5,893
(2) Amortization of intangible assets
Cost of revenues $152 $194 $304 $387
$152 $194 $304 $387
(3) Expenses related to M&A activities
Financial income
$ - $14
$ - $28
$ - $14
$ - $28
TABLE - 3
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands)
June 30, December 31,
2024 2023
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,883 $14,192
Short-term bank deposits 3,800 10,000
Restricted deposits 1,183 1,728
Available-for-sale marketable securities 32,313 28,853
Trade receivables, net (net of allowance for credit losses of 17,808 14,828
$25,341 and $25,253 on June 30, 2024 and December 31,
2023, respectively)
Other receivables and prepaid expenses 5,933 8,437
Inventories 9,606 11,874
Total current assets 86,526 89,912
LONG-TERM ASSETS:
Severance pay fund 409 395
Restricted deposit 158
Operating lease right-of-use assets 1,883 3,057
Other assets 1,025 704
Property and equipment, net 10,203 11,189
Intangible assets, net 610 915
Goodwill 31,833 31,833
Total non-current assets 45,963 48,251
Total assets $132,489 $138,163
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $985 $969
Deferred revenues 15,565 14,892
Short-term operating lease liabilities 1,405 1,453
Other payables and accrued expenses 18,128 22,094
Total current liabilities 36,083 39,408
LONG-TERM LIABILITIES:
Deferred revenues 8,729 7,437
Long-term operating lease liabilities 132 702
Accrued severance pay 929 1,080
Convertible debt 39,873 39,773
Total long-term liabilities 49,663 48,992
SHAREHOLDERS' EQUITY 46,743 49,763
Total liabilities and shareholders' equity $132,489 $138,163
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,
2024 2023 2024 2023
(Unaudited) (Unaudited)
Cash flows from operating activities:
---
Net Loss $(3,356) $(20,732) $(5,866) $(32,094)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
---
Depreciation 1,156 1,327 2,371 2,647
Stock-based compensation 2,187 2,425 3,547 5,893
Amortization of intangible assets 153 277 305 553
Increase (Decrease) in accrued severance pay, net (107) 13 (165) 73
Decrease in other assets, other receivables and prepaid expenses 955 468 1,672 967
Increase in accrued interest and amortization of premium/discount on marketable securities (405) (166) (777) (147)
Decrease in operating leases liability (159) (438) (618) (1,543)
Decrease in operating lease right-of-use asset 622 728 1,174 1,450
Decrease (Increase) in trade receivables (2,789) 10,403 (2,980) 14,889
Decrease (Increase) in inventories 2,101 (1,645) 2,268 (5,098)
Increase (Decrease) in trade payables 278 (2,941) 16 (2,202)
Decrease in employees and payroll accruals (649) (1,042) (4,135) (2,494)
Increase (Decrease) in deferred revenues 595 870 1,965 (1,299)
Increase (Decrease) in other payables, accrued expenses and other long term liabilities 542 (923) (12) (1,824)
Amortization of issuance costs of Convertible debt 50 49 100 98
Net cash provided by (used in) operating activities 1,174 (11,327) (1,135) (20,131)
Cash flows from investing activities:
---
Decrease (Increase) in restricted deposit (1) (224) 703 (224)
Investment in short-term bank deposits (3,800) (3,800) (15,900)
Withdrawal of short-term bank deposits - 21,700 10,000 54,600
Purchase of property and equipment (957) (290) (1,386) (560)
Investment in marketable securities (10,477) (9,584) (34,752) (18,567)
Proceeds from redemption or sale of marketable securities 7,225 590 32,060 3,960
Net cash provided by (used in) investing activities (8,010) 12,192 2,825 23,309
Cash flows from financing activities:
---
Proceeds from exercise of stock options 1 1
Net cash provided by financing activities 1 1
Increase (Decrease) in cash and cash equivalents (6,835) 865 1,691 3,178
Cash and cash equivalents at the beginning of the period 22,718 14,608 14,192 12,295
Cash and cash equivalents at the end of the period $15,883 $15,473 $15,883 $15,473
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
Q2-2024 YTD 2024 FY 2023
Revenues geographic breakdown
---
Americas 2.1 10 % 6.4 15 % 16.6 18 %
EMEA 11.1 50 % 23.6 53 % 56.1 60 %
Asia Pacific 9.0 40 % 14.1 32 % 20.5 22 %
22.2 100 % 44.1 100 % 93.2 100 %
Revenues breakdown by type
---
Products 9.4 42 % 16.8 38 % 37.6 40 %
Professional Services 1.2 5 % 4.2 10 % 6.1 7 %
SECaaS (Security as a Service) 3.7 17 % 7.1 16 % 10.6 11 %
Support & Maintenance 7.9 36 % 16.0 36 % 38.9 42 %
22.2 100 % 44.1 100 % 93.2 100 %
Revenues per customer type
---
CSP 18.7 84 % 36.0 82 % 75.1 81 %
Enterprise 3.5 16 % 8.1 18 % 18.1 19 %
22.2 100 % 44.1 100 % 93.2 100 %
Top 10 customers as a % of revenues 50 % 45 % 47 %
Total number of full time employees 500 500 559
(end of period)
Non-GAAP Weighted average number of basic shares (in 38.7 38.6 37.9
millions)
Non-GAAP weighted average number of fully diluted 42.3 41.7 40.3
shares (in millions)
SECaaS (Security as a Service) revenues- U.S. dollars in millions (Unaudited)
---
Q2-2024: 3.7
Q1-2024: 3.4
Q4-2023: 3.2
Q3-2023: 2.8
Q2-2023: 2.4
SECaaS ARR* - U.S. dollars in millions (Unaudited)
---
Jun. 2024: 14.6
Dec. 2023: 12.7
Dec. 2022: 9.2
Dec. 2021: 5.2
Logo - https://mma.prnewswire.com/media/703889/Allot_Logo.jpg
View original content:https://www.prnewswire.com/news-releases/allot-announces-second-quarter-2024-financial-results-302231430.html
SOURCE Allot Ltd.
