Allot Communications Ltd.
Aug 1, 2017
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Allot Communications Announces Second Quarter 2017 Financial Results

Revenues in Q2 up from Q1 2017, with smaller loss in Q2 compared to Q1 2017

HOD HASHARON, Israel, Aug. 1, 2017 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT; TASE: ALLT), a leading global provider of security and monetization solutions that enable service providers and enterprises to protect and personalize the digital experience, today announced its second quarter 2017 financial results.

 Q2 2017 Highlights

  • GAAP revenues were $19.5M, up from $18.4M in Q1 2017;
  • GAAP operating loss was $3.8M, down from $4.9M in Q1 2017;
  • Book-to-bill above one for the second consecutive quarter.

Management Comment

Erez Antebi, President & CEO of Allot Communications, commented, "The past quarter was the second consecutive quarter with book-to-bill ratio above one. We are also seeing a steady, consistent increase in the number of consumers who are enjoying the benefits of our network security solutions. Internally, we are aligning the organization to fit the new strategy and generate growth. I strongly believe we are on the right path to materialize on the market opportunities we identified as growth engines, and we continue to demonstrate the value of our solutions and commitment to customer success."

Q2 2017 Financial results

On a GAAP basis, total revenues for the second quarter of 2017 were $19.5 million, compared to $18.4 million reported for the first quarter of 2017. Net loss for the second quarter of 2017 was $4.0 million, or $0.12 per basic and diluted share. This compares with a net loss of $5.1 million, or $0.15 per basic and diluted share, in the first quarter of 2017.

On a non-GAAP basis, total revenues for the second quarter of 2017 were $19.5 million compared to $18.5 million reported for the first quarter of 2017. Net loss for the second quarter of 2017 was $2.3 million, or $0.07 per basic and diluted share. This compares with a net loss of $3.6 million, or $0.11 per basic and diluted share, in the first quarter of 2017.

Cash and investments as of June 30, 2017 totaled $111.3 million. The Company recorded a positive operating cash flow of $0.9 million during the quarter.

2017 Outlook

Management reiterates its previously issued guidance and expects 2017 revenues in the range of $80 - $84 million.  Revenues for the second half of 2017 are expected to be better than for the first half and the book to bill ratio for the year is expected to be above 1.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss second quarter 2017 earnings results today, August 1, 2017 at 8:30 AM ET, 3:30 p.m. 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 recording of the conference call will be available from 12:00PM ET on August 1, 2017 for 30 days. To access the recording, please dial: +1-866-276-1485; UK: +44(0) 800-917-1246; Intl: +972-3-925-5928

A live webcast of the conference call can be accessed on the Allot Communications website at: http://www.allot.com.  

The webcast will also be archived on the website following the conference call.

About Allot Communications

Allot Communications (NASDAQ: ALLT, TASE: ALLT) is a leading provider of security and monetization solutions that enables service providers and enterprises to protect and personalize the digital experience. Allot's flexible and highly scalable service delivery framework leverages the intelligence in data networks, enabling service providers to get closer to their customers, safeguard network assets and users, and accelerate time-to-revenue for value-added services. We employ innovative technology, proven know-how and a collaborative approach to provide the right solution for every network environment. Allot solutions are currently deployed at 5 of the top 10 global mobile operators and in thousands of CSP and enterprise networks worldwide. For more information, please 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 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 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 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 COMMUNICATIONS 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,


2017


2016



2017


2016


(Unaudited)



(Unaudited)










Revenues

$       19,502


$       22,958



$       37,937


$       45,896

Cost of revenues

6,662


6,524



12,980


13,667

Gross profit 

12,840


16,434



24,957


32,229










Operating expenses:









Research and development costs, net

5,364


5,957



10,897


12,818

Sales and marketing

8,747


8,846



17,727


19,117

General and administrative

2,519


2,570



5,060


5,267

Total operating expenses

16,630


17,373



33,684


37,202

Operating loss

(3,790)


(939)



(8,727)


(4,973)

Financial and other income , net

112


211



474


327

Loss before income tax benefit

(3,678)


(728)



(8,253)


(4,646)










Tax expenses

352


499



854


870

Net loss

(4,030)


(1,227)



(9,107)


(5,516)










 Basic net loss per share

$          (0.12)


$          (0.04)



$          (0.27)


$          (0.17)










 Diluted net loss per share

$          (0.12)


$          (0.04)



$          (0.27)


$          (0.17)










Weighted average number of shares









used in computing basic  net









earnings per share

33,200,982


33,234,040



33,146,715


33,357,014










Weighted average number of shares









used in computing diluted net









earnings per share

33,200,982


33,234,040



33,146,715


33,357,014

 

 

 

TABLE  - 2

ALLOT COMMUNICATIONS 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


Six Months Ended



June 30,


June 30,



2017


2016


2017


2016



(Unaudited)


(Unaudited)










 GAAP Revenues

$     19,502


$     22,958


$     37,937


$     45,896

 Fair value adjustment for acquired deferred revenues write down

13


36


37


101

 Non-GAAP Revenues

$     19,515


$     22,994


$     37,974


$     45,997










GAAP cost of revenues

$        6,662


$        6,524


$     12,980


$     13,667

 Share-based compensation (1)

(96)


(104)


(192)


(173)

 Amortization of intangible assets (2)

(242)


(233)


(474)


(481)

Non-GAAP cost of revenues

$        6,324


$        6,187


$     12,314


$     13,013










 GAAP gross profit

$     12,840


$     16,434


$     24,957


$     32,229

 Gross profit adjustments

351


373


703


755

 Non-GAAP gross profit

$     13,191


$     16,807


$     25,660


$     32,984










 GAAP operating expenses

$     16,630


$     17,373


$     33,684


$     37,202

 Share-based compensation (1)

(870)


(1,220)


(1,618)


(2,806)

 Amortization of intangible assets (2)

(135)


(132)


(269)


(270)

 Expenses related to M&A activities (3)

-


-


(89)


-

 Non-GAAP operating expenses

$     15,625


$     16,021


$     31,708


$     34,126










 GAAP financial and other income

$           112


$           211


$           474


$           327

 Expenses related to M&A activities (3)

306


(135)


379


143

 Non-GAAP Financial and other income

$           418


$             76


$           853


$           470










 GAAP taxes on income

$           352


$           499


$           854


$           870

 Tax benefit (in respect of net deferred tax asset recorded)

(64)


(69)


(130)


(131)

 Non-GAAP taxes on income

$           288


$           430


$           724


$           739










 GAAP Net Loss

$      (4,030)


$      (1,227)


$      (9,107)


$      (5,516)

 Share-based compensation (1)

966


1,324


1,810


2,979

 Amortization of intangible assets (2)

377


365


743


751

 Expenses related to M&A activities (3)

306


(135)


468


143

 Fair value adjustment for acquired deferred revenues write down

13


36


37


101

 Tax benefit (in respect of net deferred tax asset recorded)

64


69


130


131

 Non-GAAP Net income (Loss)

$      (2,304)


$           432


$      (5,919)


$      (1,411)










 GAAP Loss per share (diluted)

$        (0.12)


$        (0.04)


$        (0.27)


$        (0.17)

 Share-based compensation

0.03


0.04


0.05


0.09

 Amortization of intangible assets

0.01


0.01


0.02


0.02

 Expenses related to M&A activities

0.01


(0.00)


0.01


0.01

 Fair value adjustment for acquired deferred revenues write down

0.00


0.00


0.00


0.00

 Tax benefit (in respect of net deferred tax asset recorded)

0.00


0.00


0.01


0.01

 Non-GAAP Net income (Loss) per share (diluted)

$        (0.07)


$          0.01


$        (0.18)


$        (0.04)










Weighted average number of shares used in








computing GAAP diluted net earnings per share

33,200,982


33,234,040


33,146,715


33,357,014



















Weighted average number of shares used in








computing non-GAAP diluted net earnings per share

33,200,982


33,736,414


33,146,715


33,357,014

 

 

 

TABLE  - 2 cont.

ALLOT COMMUNICATIONS 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


Six Months Ended



June 30,


June 30,



2017


2016


2017


2016



(Unaudited)


(Unaudited)










(1) Share-based compensation:









Cost of revenues

$             96


$           104


$           192


$           173


Research and development costs, net

217


280


446


706


Sales and marketing

246


467


487


1,089


General and administrative

407


473


685


1,011



$           966


$        1,324


$        1,810


$        2,979










 (2) Amortization of intangible assets









Cost of revenues

$           242


$           233


$           474


$           481


Sales and marketing

135


132


269


270



$           377


$           365


$           743


$           751










 (3) Expenses related to M&A activities









General and administrative

$              -


$              -


$             89


$              -


Finanacial expenses

306


(135)


379


143



$           306


$         (135)


$           468


$           143

 

 

 

TABLE  - 3

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)








June 30,


December 31,



2017


2016



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            23,460


$            23,326

Short term deposits


24,543


29,821

Marketable securities


63,252


60,507

Trade receivables, net


24,367


24,158

Other receivables and prepaid expenses


3,926


3,879

Inventories


10,084


7,235

Total current assets


149,632


148,926






LONG-TERM ASSETS:





Severance pay fund


287


252

Deferred taxes


133


267

Other assets


570


1,136

Total long-term assets


990


1,655






PROPERTY AND EQUIPMENT, NET


5,076


4,387

GOODWILL AND INTANGIBLE ASSETS, NET


35,229


35,972






Total assets


$          190,927


$          190,940






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$               9,411


$               3,275

Deferred revenues


10,679


11,133

Other payables and accrued expenses


11,482


10,538

Total current liabilities


31,572


24,946






LONG-TERM LIABILITIES:





Deferred revenues


3,090


3,597

Accrued severance pay


711


592

Other long term liabilities


4,857


4,502

Total long-term liabilities


8,658


8,691






SHAREHOLDERS' EQUITY


150,697


157,303






Total liabilities and shareholders' equity


$          190,927


$          190,940

 

 

 

TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)










Three Months Ended


Six Months Ended


June 30,


June 30,


2017


2016


2017


2016


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)









Cash flows from operating activities:
















Net Loss

$      (4,030)


$      (1,227)


$      (9,107)


$      (5,516)

Adjustments to reconcile net income  to net cash provided by  operating activities:








Depreciation

535


596


1,065


1,195

Stock-based compensation related to options granted to employees

966


1,324


1,809


2,979

Amortization of intangible assets

376


365


743


751

Capital loss

3


21


7


20

Decrease in accrued severance pay, net

56


9


84


27

Decrease in other assets

258


483


566


374

Decease in accrued interest and  amortization of premium on marketable securities

376


402


502


740

Decrease (Increase) in trade receivables

(1,469)


261


(209)


542

Decrease (Increase) in other receivables and prepaid expenses

1,028


(92)


406


242

Increase in inventories

(2,087)


(513)


(2,849)


(139)

Decrease in long-term deferred taxes, net

67


61


134


123

Increase (Decrease) in trade payables

4,287


(3,060)


6,136


(2,905)

Increase (Decrease) in employees and payroll accruals

340


(12)


616


(597)

Increase (Decrease) in deferred revenues

(108)


1,163


(961)


(64)

Increase (Decrease) in other payables and accrued expenses

269


(1,004)


760


(404)









Net cash provided by (used in) operating activities

867


(1,223)


(298)


(2,632)









Cash flows from investing activities:
















Redemption of (Investment in) short-term deposits

4,805


(267)


5,278


9,733

Purchase of property and equipment

(949)


(409)


(1,760)


(736)

Investment in marketable securities

(8,950)


(8,200)


(15,538)


(16,980)

Proceeds from redemption or sale of marketable securities

7,662


7,690


12,411


18,590

Net cash provided by (used in) investing activities

2,568


(1,186)


391


10,607









Cash flows from financing activities:
















Exercise of employee stock options

17


15


41


26

Purchase of treasury stocks

-


(2,279)


-


(3,326)

Net cash provided by (used in) financing activities

17


(2,264)


41


(3,300)

















Increase (Decrease) in cash and cash equivalents

3,452


(4,673)


134


4,675

Cash and cash equivalents at the beginning of the period

20,008


24,818


23,326


15,470









Cash and cash equivalents at the end of the period

$     23,460


$     20,145


$     23,460


$     20,145

 

 

 

Investor Relations Contact:

GK Investor Relations
Ehud Helft/Gavriel Frohwein
+1 646 688 3559
allot@gkir.com

 

Public Relations Contact:

Sigalit Orr
Director Corporate Communications
International dialing +972-54-268-1500
sorr@allot.com


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