Allot Announces Third Quarter 2018 Financial Results
HOD HASHARON, Israel, Nov. 6, 2018 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a global provider of leading innovative network intelligence and security solutions for service providers worldwide, today announced its third quarter 2018 financial results.
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Third Quarter 2018 - Financial Highlights
-- Revenues were $24.2 million, up 16% year-over-year and up 5%
sequentially;
-- GAAP gross margin improved to 69.4% up from 62.4% in Q3 2017;
-- Non-GAAP gross margin improved to 70.7% up from 68.2% in Q3 2017;
-- GAAP operating loss narrowed to $2.5 million compared to $4.4 million in
Q3 2017;
-- Non-GAAP operating loss narrowed to $1.1 million compared to $1.3
million in Q3 2017;
-- Book-to-bill below one in Q3 and above one for the nine-months ended
September 30, 2018;
-- Cash and cash equivalents as of September 30, 2018 totaled $104.7
million;
Financial Outlook
-- Management is increasing 2018 revenue expectations to between $93 - $95
million;
-- Full year 2018 Book to Bill ratio is expected at above 1;
Management Comment
Erez Antebi, President & CEO of Allot, commented: "Our strong growth continues, and we are very much on track with our plans. In line with our strategy, we have recently successfully closed a couple of security deals in which we provide products and support and we share in the ongoing revenue with the CSP as the services gain increased traction with end users. I am confident in our direction. As we continue to improve our execution, I am very encouraged to see a growing market acceptance supporting our belief that CSPs have a big opportunity in delivering secure connectivity to the mass market.
Continued Mr. Antebi: "Our DPI business is showing strength as we continue to win new deals and new accounts. Overall, the value of the new deals we won during the first three quarters of 2018 is approximately double of that which we won during all of 2017. These new customers are creating a strong foundation for sustainable growth."
Q3 2018 Financial Results Summary
Total revenues for the third quarter of 2018 were $24.2 million, an improvement of 16% compared to $20.9 million in the third quarter of 2017. Revenues for the nine months ended September 30, 2018, were $69.0 million compared to $58.8 million during the same period in 2017, an increase of 17%.
Gross profit on a GAAP basis for the third quarter of 2018 was $16.8 million (gross margin of 69.4%), a 29% improvement compared with $13.0 million (gross margin of 62.4%) in the third quarter of 2017.
Gross profit on a non-GAAP basis for the third quarter of 2018 was $17.1 million (gross margin of 70.7%), a 20% improvement compared with $14.2 million (gross margin of 68.2%) in the third quarter of 2017. The higher level of gross margin was driven by a favorable sales mix delivered in the quarter.
Net loss on a GAAP basis for the third quarter of 2018 was $2.5 million, or $0.07 per basic share, an improvement compared with a net loss of $4.6 million, or $0.14 per basic share, in the third quarter of 2017.
Non-GAAP net loss for the third quarter of 2018 was $1.1 million, or $0.03 per basic share, an improvement compared with a non-GAAP net loss of $1.3 million, or $0.04 per basic share, in the third quarter of 2017.
Cash and cash equivalents as of September 30, 2018 totaled $104.7 million, compared to $105.9 million in June 30, 2018.
Conference Call & Webcast:
The Allot management team will host a conference call to discuss third quarter 2018 earnings results today, November 6, 2018 at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:
US: +1-888-668-9141, UK: +44(0) 800-917-5108, Israel: +972-3-918-0609.
A live webcast and, following the end of the call, an archive of the conference call, will be accessible on the Allot 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 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 20 million subscribers in Europe. Allot. See. Control. Secure. For more information, visit www.allot.com
GAAP to Non-GAAP Reconciliation:
The difference between GAAP and non-GAAP revenues is related to the acquisitions made by the Company and represents revenues adjusted for the impact of the fair value adjustment to acquired deferred revenue related to purchase accounting. Non-GAAP net income is defined as GAAP net income after including deferred revenues related to the fair value adjustment resulting from purchase accounting and excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustment, restructuring expenses, changes in taxes related items and other acquisition-related expenses.
These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. The non-GAAP results and a full reconciliation between GAAP and non-GAAP results 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 third party channel partners for a material portion of our revenues; court approval of the Company's proposed share buy-back program; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
TABLE - 1
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---
2018 2017 2018 2017
---
(Unaudited) (Unaudited)
---
Revenues $24,217 $20,857 $68,952 $58,794
Cost of revenues 7,417 7,840 21,053 20,820
Gross profit 16,800 13,017 47,899 37,974
---
Operating expenses:
Research and
development costs,
net 6,695 5,202 18,786 16,099
Sales and marketing 9,880 9,779 30,095 27,506
General and
administrative 2,755 2,449 7,800 7,509
---
Total operating
expenses 19,330 17,430 56,681 51,114
Operating loss (2,530) (4,413) (8,782) (13,140)
Financial and other
income, net 571 82 1,607 556
---
Loss before income
tax expenses (1,959) (4,331) (7,175) (12,584)
Tax expenses 536 294 1,424 1,148
---
Net loss (2,495) (4,625) (8,599) (13,732)
===
Basic net loss per
share $(0.07) $(0.14) $(0.26) $(0.41)
Diluted net loss
per share $(0.07) $(0.14) $(0.26) $(0.41)
Weighted average number of shares
used in computing basic net
loss per share 33,761,279 33,303,744 33,658,485 33,199,633
===
Weighted average number of shares
used in computing diluted net
loss per share 33,761,279 33,303,744 33,658,485 33,199,633
===
TABLE - 2
ALLOT LTD.
AND ITS SUBSIDIARIES
RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
(Unaudited) (Unaudited)
GAAP Revenues $24,217 $20,857 $68,952 $58,794
Fair value
adjustment for
acquired deferred
revenues write down - 37
Non-GAAP Revenues $24,217 $20,857 $68,952 $58,831
---
GAAP cost of
revenues $7,417 $7,840 $21,053 $20,820
Share-based
compensation (1) (86) (87) (256) (279)
Amortization of
intangible assets
(2) (232) (232) (697) (706)
Restructuring
expenses (4) - (887) (887)
Non-GAAP cost of
revenues $7,099 $6,634 $20,100 $18,948
---
GAAP gross profit $16,800 $13,017 $47,899 $37,974
Gross profit
adjustments 318 1,206 953 1,908
Non-GAAP gross
profit $17,118 $14,223 $48,852 $39,882
---
GAAP operating
expenses $19,330 $17,430 $56,681 $51,114
Share-based
compensation (1) (658) (489) (1,912) (2,107)
Amortization of
intangible assets
(2) (175) (135) (525) (404)
Expenses related to
M&A activities (3) (112) (301) (89)
Restructuring
expenses (4) - (1,264) (1,264)
Changes in tax
related items (5) (210) (380) -
Non-GAAP operating
expenses $18,175 $15,542 $53,563 $47,250
---
GAAP financial and
other income $571 $82 $1,607 $556
Expenses related to
M&A activities (3) (7) 162 (149) 541
Non-GAAP Financial
and other income $564 $244 $1,458 $1,097
---
GAAP taxes on income $536 $294 $1,424 $1,148
Tax expenses (in
respect of net
deferred tax asset
recorded) 44 (67) 7 (197)
Non-GAAP taxes on
income $580 $227 $1,431 $951
===
GAAP Net Loss $(2,495) $(4,625) $(8,599) $(13,732)
Share-based
compensation (1) 744 576 2,168 2,386
Amortization of
intangible assets
(2) 407 367 1,222 1,110
Expenses related to
M&A activities (3) 105 162 152 630
Restructuring
expenses (4) - 2,151 2,151
Changes in tax
related items (5) 210 380 -
Fair value
adjustment for
acquired deferred
revenues write down - 37
Tax expenses (in
respect of net
deferred tax asset
recorded) (44) 67 (7) 197
Non-GAAP Net Loss $(1,073) $(1,302) $(4,684) $(7,221)
===
GAAP Loss per share
(diluted) $(0.07) $(0.14) $(0.26) $(0.41)
Share-based
compensation 0.02 0.02 0.07 0.07
Amortization of
intangible assets 0.01 0.01 0.04 0.03
Expenses related to
M&A activities (0.00) 0.01 0.00 0.02
Restructuring
expenses - 0.06 0.06
Changes in taxes
related items 0.01 0.01 -
Fair value
adjustment for
acquired deferred
revenues write down - 0.00 0.00
Tax expenses (in
respect of net
deferred tax asset
recorded) (0.00) 0.00 (0.00) 0.01
Non-GAAP Net Loss
per share (diluted) $(0.03) $(0.04) $(0.14) $(0.22)
===
Weighted average number of shares
used in computing GAAP diluted net
earnings per share 33,761,279 33,303,744 33,658,485 33,199,633
Weighted average number of shares
used in computing non-GAAP diluted net
earnings per share 33,761,279 33,303,744 33,658,485 33,199,633
TABLE - 2 cont.
ALLOT LTD.
AND ITS SUBSIDIARIES
RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
(Unaudited) (Unaudited)
(1) Share-based compensation (*):
Cost of revenues $86 $87 $256 $279
Research and development costs, net 178 7 504 453
Sales and marketing 264 221 701 708
General and administrative 216 261 707 946
$744 $576 $2,168 $2,386
(2) Amortization of intangible assets
Cost of revenues $232 $232 $697 $706
Sales and marketing 175 135 525 404
$407 $367 $1,222 $1,110
(3) Expenses related to M&A activities
General and administrative $31
$ - $69 $89
Research and development costs, net 81 232
Financial expenses (income) (7) 162 (149) 541
$105 $162 $152 $630
(4) Restructuring expenses
Cost of revenues
$ - $887
$ - $887
Research and development costs, net 154 154
Sales and marketing 976 976
General and administrative 134 134
$ - $2,151
$ - $2,151
(5) Changes in tax related items
Sales and marketing $122
$ - $222
$ -
General and administrative 88 158
$210
$ - $380
$ -
(*) 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)
September 30, December 31,
2018 2017
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $15,724 $15,342
Short term deposits 24,443 31,043
Restricted deposit 690 428
Marketable securities 63,835 63,194
Trade receivables, net 26,452 22,737
Other receivables and
prepaid expenses 3,783 2,649
Inventories 11,952 7,897
Total current assets 146,879 143,290
LONG-TERM ASSETS:
Severance pay fund 332 302
Deferred taxes 308 301
Other assets 683 1,135
Total long-term assets 1,323 1,738
PROPERTY AND EQUIPMENT,
NET 5,421 5,002
GOODWILL AND INTANGIBLE
ASSETS, NET 37,801 34,495
Total assets $191,424 $184,525
LIABILITIES AND
SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Trade payables $12,183 $5,857
Deferred revenues 12,276 11,370
Other payables and
accrued expenses 19,444 14,277
Liability related to
settlement of OCS
grants
Total current
liabilities 43,903 31,504
LONG-TERM LIABILITIES:
Deferred revenues 4,405 3,878
Accrued severance pay 811 747
Other long term
liabilities 5,235 5,267
Total long-term
liabilities 10,451 9,892
SHAREHOLDERS' EQUITY 137,070 143,129
Total liabilities and
shareholders' equity $191,424 $184,525
TABLE - 4
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
---
2018 2017 2018 2017
---
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Cash flows from operating activities:
---
Net loss $(2,495) $(4,625) $(8,599) $(13,732)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 550 494 1,603 1,559
Stock-based compensation related to options granted to employees 744 770 2,168 2,579
Amortization of intangible assets 407 367 1,222 1,110
Capital loss 7 39 14
Decrease in accrued severance pay, net 8 29 34 113
Decrease in other assets 59 42 452 608
Decease in accrued interest and amortization of premium on marketable securities 197 92 612 594
Decrease (Increase) in trade receivables (1,826) 1,716 (3,715) 1,507
Increase in other receivables and prepaid expenses (1,003) (897) (1,285) (491)
Decrease (Increase) in inventories (3,942) 973 (4,055) (1,876)
Decrease (Increase) in long-term deferred taxes, net (45) 67 (7) 201
Increase (Decrease) in trade payables 5,826 (2,943) 6,315 3,193
Increase (Decrease) in employees and payroll accruals 105 489 (180) 1,105
Increase in deferred revenues 471 1,997 2,145 1,036
Increase in other payables and accrued expenses 119 401 3,524 1,161
Net cash provided by (used in) operating activities (825) (1,021) 273 (1,319)
---
Cash flows from investing activities:
---
Increase in restricted deposit (110) (262) -
Redemption of (Investment in) short-term deposits (3,500) 2,800 6,600 8,078
Purchase of property and equipment (491) (297) (2,058) (2,057)
Investment in marketable securities (7,236) (3,672) (25,193) (19,210)
Proceeds from redemption or sale of marketable securities 7,314 3,002 23,727 15,413
Acquisitions (3,048) -
Net cash provided by (used in) investing activities (4,023) 1,833 (234) 2,224
---
Cash flows from financing activities:
---
Exercise of employee stock options 201 56 343 97
Net cash provided by financing activities 201 56 343 97
---
Increase (Decrease) in cash and cash equivalents (4,647) 868 382 1,002
Cash and cash equivalents at the beginning of the period 20,371 23,460 15,342 23,326
Cash and cash equivalents at the end of the period $15,724 $24,328 $15,724 $24,328
Investor Relations Contact:
GK Investor Relations
Ehud Helft/Gavriel Frohwein
+1 646 688 3559
allot@gkir.com
Public Relations Contact:
Jodi Joseph Asiag
Director of Corporate Communications
jasiag@allot.com
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SOURCE Allot Communications Ltd.
