Allot Communications Announces Third Quarter 2015 Financial Results
HOD HASHARON,
Q3 2015 - Financial Highlights:
- Non-GAAP revenues were
$23.5 million , down 22% year over year - Non-GAAP gross margin reached 77%
- Non-GAAP operating profit was 1%
- Book-to-bill was above one
- The Company recorded positive operating cash flow of
$2.9 million - Net cash and cash equivalents as of
September 30, 2015 totaled$122.8 million
Financial results:
On a GAAP basis, total revenues for the third quarter of 2015 were
On a non-GAAP basis, total revenues for the third quarter of 2015 were
Q3 2015 - Key Achievements:
- During Q3 2015, 18 large orders were received, 4 of which were from new customers
- 7 of the large orders came from mobile-service providers and 7 were from fixed-line service providers
- In addition, 4 large orders were received for private and public cloud deployments
- During Q3, 2015, Allot received three, over
$1 million deals, compared to 6 in the previous quarter and 4 during Q3, 2014. - Allot is collaborating with HP by offering its virtualized security services on the HP OpenNFV cloud platform.
- Allot received an
$8 million expansion order from a tier-1 fixed line operator in APAC. - Allot received, after the end of the third quarter a follow on order of over
$10 million , from an existing Tier 1 service provider. This order is included in the fourth quarter's booking. - Published the latest MobileTrends report revealing that 6% of mobile subscribers visit risky websites every day.
"During the third quarter of 2015, our revenues and booking grew sequentially and we expect further sequential increase in the fourth quarter. We are also pleased with the strong momentum of our security segment," said Mr.
2015 Outlook
The Company reiterates its previously provided guidance and expects total non-GAAP revenues to be in the range of
Conference Call & Webcast:
The Allot management team will host a conference call to discuss third quarter 2015 earnings results today at
A replay of the conference call will be available from
About
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, regulatory matter expenses, acquisition-related expenses and compensation expenses related to the acquisitions.
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 are 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
TABLE - 1 AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except share and per share data) | ||||||||
Three Months Ended |
Nine Months Ended | |||||||
|
| |||||||
2015 |
2014 |
2015 |
2014 | |||||
(Unaudited) |
(Unaudited) | |||||||
Revenues |
$ 23,461 |
$ 30,101 |
$ 74,585 |
$ 86,551 | ||||
Cost of revenues |
6,042 |
8,059 |
20,242 |
24,311 | ||||
|
17,419 |
22,042 |
54,343 |
62,240 | ||||
Operating expenses: |
||||||||
Research and development costs, net |
6,446 |
7,240 |
19,946 |
21,649 | ||||
Sales and marketing |
10,532 |
11,411 |
33,176 |
32,544 | ||||
General and administrative |
2,867 |
2,798 |
9,492 |
8,616 | ||||
Total operating expenses |
19,845 |
21,449 |
62,614 |
62,809 | ||||
Operating profit (loss) |
(2,426) |
593 |
(8,271) |
(569) | ||||
Financial and other income (loss), net |
(910) |
224 |
(816) |
460 | ||||
Profit (loss) before income tax benefit |
(3,336) |
817 |
(9,087) |
(109) | ||||
Tax expenses |
67 |
52 |
374 |
134 | ||||
Net profit (loss) |
$ (3,403) |
$ 765 |
$ (9,461) |
$ (243) | ||||
Basic net profit (loss) per share |
$ (0.10) |
$ 0.02 |
$ (0.28) |
$ (0.01) | ||||
Diluted net profit (loss) per share |
$ (0.10) |
$ 0.02 |
$ (0.28) |
$ (0.01) | ||||
Weighted average number of shares |
||||||||
used in computing basic net |
||||||||
earnings per share |
33,512,755 |
33,234,558 |
33,443,418 |
33,096,065 | ||||
Weighted average number of shares |
||||||||
used in computing diluted net |
||||||||
earnings per share |
33,512,755 |
33,631,356 |
33,443,418 |
33,096,065 |
TABLE - 2 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 |
Three Months Ended | ||||||||
|
| ||||||||
(Unaudited) |
(Unaudited) | ||||||||
$ |
% of Revenues |
$ |
% of Revenues | ||||||
GAAP operating profit (loss) |
$ (2,426) |
-10% |
$ 593 |
2% | |||||
Share-based compensation (1) |
1,754 |
1,894 |
|||||||
Amortization of intangible assets (2) |
778 |
457 |
|||||||
Expenses related to M&A activities (3) |
101 |
- |
|||||||
Fair value adjustment for acquired deferred revenues write down |
11 |
11 |
|||||||
Non-GAAP Operating income |
$ 218 |
1% |
$ 2,955 |
10% | |||||
GAAP net profit (loss) |
$ (3,403) |
-15% |
$ 765 |
3% | |||||
Share-based compensation (1) |
1,754 |
1,894 |
|||||||
Amortization of intangible assets (2) |
778 |
457 |
|||||||
Expenses related to M&A activities (3) |
119 |
- |
|||||||
Fair value adjustment for acquired deferred revenues write down |
11 |
11 |
|||||||
Non-GAAP net income (Loss) |
$ (741) |
-3% |
$ 3,127 |
10% | |||||
GAAP profit (loss) per share (diluted) |
$ (0.10) |
$ 0.02 |
|||||||
Share-based compensation |
0.05 |
0.05 |
|||||||
Amortization of intangible assets |
0.03 |
0.02 |
|||||||
Expenses related to M&A activities |
0.00 |
- |
|||||||
Fair value adjustment for acquired deferred revenues write down |
0.00 |
0.00 |
|||||||
Non-GAAP Net income (loss) per share (diluted) |
$ (0.02) |
$ 0.09 |
|||||||
(1) Share-based compensation: |
|||||||||
Cost of revenues |
$ 80 |
$ 90 |
|||||||
Research and development costs, net |
426 |
476 |
|||||||
Sales and marketing |
680 |
830 |
|||||||
General and administrative |
568 |
498 |
|||||||
$ 1,754 |
$ 1,894 |
||||||||
(2) Amortization of intangible assets |
|||||||||
Cost of revenues |
$ 620 |
$ 400 |
|||||||
Sales and marketing |
158 |
57 |
|||||||
$ 778 |
$ 457 |
||||||||
(3) Expenses related to M&A activities |
|||||||||
General and administrative |
$ 101 |
$ - |
|||||||
Research and development costs, net |
- |
- |
|||||||
Sales and marketing |
- |
- |
|||||||
Financial expensees |
18 |
- |
|||||||
$ 119 |
$ - |
||||||||
TABLE - 2 cont. AND ITS SUBSIDIARIES RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. dollars in thousands, except per share data) | |||||||||
Nine Months Ended |
Nine Months Ended | ||||||||
|
| ||||||||
(Unaudited) |
(Unaudited) | ||||||||
$ |
% of Revenues |
$ |
% of Revenues | ||||||
GAAP operating loss |
$ (8,271) |
-11% |
$ (569) |
-1% | |||||
Share-based compensation (1) |
5,547 |
5,872 |
|||||||
Amortization of intangible assets (2) |
2,075 |
1,387 |
|||||||
Expenses related to M&A activities (3) |
678 |
33 |
|||||||
Fair value adjustment for acquired deferred revenues write down |
33 |
34 |
|||||||
Non-GAAP Operating income |
$ 62 |
0% |
$ 6,757 |
8% | |||||
GAAP Net Loss |
$ (9,461) |
-13% |
$ (243) |
0% | |||||
Share-based compensation (1) |
5,547 |
5,872 |
|||||||
Amortization of intangible assets (2) |
2,075 |
1,387 |
|||||||
Expenses related to M&A activities (3) |
960 |
33 |
|||||||
Fair value adjustment for acquired deferred revenues write down |
33 |
34 |
|||||||
Non-GAAP net income (loss) |
$ (846) |
-1% |
$ 7,083 |
8% | |||||
GAAP loss per share (diluted) |
$ (0.28) |
$ (0.01) |
|||||||
Share-based compensation |
0.16 |
0.17 |
|||||||
Amortization of intangible assets |
0.06 |
0.04 |
|||||||
Expenses related to M&A activities |
0.03 |
0.00 |
|||||||
Fair value adjustment for acquired deferred revenues write down |
0.00 |
0.00 |
|||||||
Non-GAAP Net income (loss) per share (diluted) |
$ (0.03) |
$ 0.21 |
|||||||
(1) Share-based compensation: |
|||||||||
Cost of revenues |
$ 245 |
$ 268 |
|||||||
Research and development costs, net |
1,271 |
1,432 |
|||||||
Sales and marketing |
2,172 |
2,462 |
|||||||
General and administrative |
1,859 |
1,710 |
|||||||
$ 5,547 |
$ 5,872 |
||||||||
(2) Amortization of intangible assets |
|||||||||
Cost of revenues |
$ 1,701 |
$ 1,199 |
|||||||
Sales and marketing |
374 |
188 |
|||||||
$ 2,075 |
$ 1,387 |
||||||||
(3) Expenses related to M&A activities |
|||||||||
General and administrative |
$ 452 |
$ 33 |
|||||||
Research and development costs, net |
45 |
- |
|||||||
Sales and marketing |
181 |
- |
|||||||
Finanacial expensees |
282 |
- |
|||||||
$ 960 |
$ 33 |
||||||||
TABLE - 3 AND ITS SUBSIDIARIES RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED REVENUES (U.S. dollars in thousands, except share and per share data) | |||||||
Three Months Ended |
Nine Months Ended | ||||||
|
| ||||||
2015 |
2014 |
2015 |
2014 | ||||
(Unaudited) |
(Unaudited) | ||||||
GAAP Revenues |
$ 23,461 |
|
$ 74,585 |
$ 86,551 | |||
Fair value adjustment for acquired deferred revenues write down |
11 |
11 |
$ 33 |
$ 34 | |||
Non-GAAP Revenues |
$ 23,472 |
|
$ 74,618 |
$ 86,585 |
TABLE - 4 AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) | ||||
|
| |||
2015 |
2014 | |||
(Unaudited) |
(Audited) | |||
ASSETS |
||||
CURRENT ASSETS: |
||||
Cash and cash equivalents |
$ 28,112 |
$ 19,180 | ||
Short term deposits |
36,750 |
59,000 | ||
Marketable securities and restricted cash |
57,975 |
54,271 | ||
Trade receivables, net |
22,491 |
23,759 | ||
Other receivables and prepaid expenses |
4,723 |
5,383 | ||
Inventories |
9,159 |
10,109 | ||
Total current assets |
159,210 |
171,702 | ||
LONG-TERM ASSETS: |
||||
Severance pay fund |
277 |
262 | ||
Deferred taxes |
1,856 |
1,716 | ||
Other assets |
3,208 |
4,948 | ||
Total long-term assets |
5,341 |
6,926 | ||
PROPERTY AND EQUIPMENT, NET |
5,287 |
5,957 | ||
GOODWILL AND INTANGIBLE ASSETS, NET |
44,431 |
28,363 | ||
Total assets |
$ 214,269 |
$ 212,948 | ||
LIABILITIES AND SHAREHOLDERS' |
||||
CURRENT LIABILITIES: |
||||
Trade payables |
$ 5,112 |
$ 6,300 | ||
Deferred revenues |
13,727 |
12,704 | ||
Other payables and accrued expenses |
13,600 |
14,524 | ||
Total current liabilities |
32,439 |
33,528 | ||
LONG-TERM LIABILITIES: |
||||
Deferred revenues |
4,938 |
4,158 | ||
Accrued severance pay |
449 |
282 | ||
Other long term liabilities |
4,091 |
0 | ||
Total long-term liabilities |
9,478 |
4,440 | ||
SHAREHOLDERS' EQUITY |
172,352 |
174,980 | ||
Total liabilities and shareholders' equity |
$ 214,269 |
$ 212,948 |
TABLE - 5 AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (U.S. dollars in thousands) | |||||
Three Months Ended |
Nine Months Ended | ||||
|
| ||||
2015 |
2014 |
2015 |
2014 | ||
(Unaudited) |
(Unaudited) | ||||
Cash flows from operating activities: |
|||||
Net income (Loss) |
$ (3,403) |
$ 765 |
$ (9,461) |
$ (243) | |
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation |
725 |
764 |
2,121 |
2,326 | |
Stock-based compensation related to options granted to employees |
1,770 |
1,894 |
5,542 |
5,873 | |
Amortization of intangible assets |
779 |
457 |
2,013 |
1,387 | |
Capital loss |
123 |
- |
138 |
- | |
Decrease (Increase) in accrued severance pay, net |
99 |
(4) |
152 |
(7) | |
Decrease (Increase) in other assets |
334 |
131 |
(32) |
60 | |
Decrease in accrued interest and amortization of premium on marketable securities |
240 |
275 |
713 |
520 | |
Increase (Decrease) in trade receivables |
2,150 |
(1,539) |
25 |
(8,417) | |
Decrease (Increase) in other receivables and prepaid expenses |
844 |
(1,468) |
(469) |
(1,269) | |
Decrease (Increase) in inventories |
(1,705) |
835 |
60 |
756 | |
Increase (Decrease) in long-term deferred taxes, net |
- |
- |
(140) |
56 | |
Increase (Decrease) in trade payables |
(551) |
(2,121) |
686 |
2,181 | |
Increase (Decrease) in employees and payroll accruals |
(769) |
(598) |
(918) |
407 | |
Increase in deferred revenues |
1,265 |
1,313 |
1,648 |
1,677 | |
Increase in other payables and accrued expenses |
1,006 |
2,212 |
571 |
2,459 | |
Net cash provided by operating activities |
2,907 |
2,916 |
2,649 |
7,766 | |
Cash flows from investing activities: |
|||||
Redemption of short-term deposits |
- |
- |
38,000 |
29,500 | |
Investment in short-term deposit |
(15,750) |
(30,000) |
(15,750) |
(30,000) | |
Purchase of property and equipment |
(522) |
(900) |
(1,606) |
(2,513) | |
Investment in marketable securities |
(2,537) |
(885) |
(20,812) |
(19,866) | |
Proceeds from redemption or sale of marketable securities |
4,792 |
500 |
16,399 |
4,764 | |
Acquisitions |
- |
- |
(10,052) |
- | |
Loan provided to third party, net |
- |
157 |
- |
(2,235) | |
Net cash provided by (used in) investing activities |
(14,017) |
(31,128) |
6,179 |
(20,350) | |
Cash flows from financing activities: |
|||||
Exercise of employee stock options |
4 |
14 |
104 |
1,402 | |
Net cash provided by financing activities |
4 |
14 |
104 |
1,402 | |
Increase (Decrease) in cash and cash equivalents |
(11,106) |
(28,198) |
8,932 |
(11,182) | |
Cash and cash equivalents at the beginning of the period |
39,218 |
59,829 |
19,180 |
42,813 | |
Cash and cash equivalents at the end of the period |
$ 28,112 |
$ 31,631 |
$ 28,112 |
$ 31,631 |
Investor Relations Contact:
AVP Corporate Development
International access code +972-52-569-4441
rrozen@allot.com
Public Relations Contact:
International access code +972-54-268-1500
sorr@allot.com
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