Allot Communications Ltd.
May 5, 2015
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Allot Communications Reports Non-GAAP 4.4% Revenue Growth for Q1 2015

Net Income Has Grown By More Than 40% Year Over Year

HOD HASHARON, Israel, May 5, 2015 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT), a leading supplier of service optimization and revenue generation solutions for fixed and mobile broadband operators and cloud providers worldwide, today announced its first quarter 2015 results, with non-GAAP revenues reaching $29.5 million.

Q1 2015 - Financial Highlights:

  • Non-GAAP Revenues were $29.5 million, up 4.4% year over year
  • Non-GAAP Gross Margin reached 76%
  • Non-GAAP Operating Margin was 10%
  • Book-to-bill was below one
  • The Company generated $2.1 million of Operating Cash Flow
  • Net Cash as of March 31, 2015 totaled $123.8 million

Financial results:

On a GAAP basis, total revenues for the first quarter of 2015 were $29.5 million compared to $30.6 million of revenue reported for the fourth quarter of 2014 and $28.3 million of revenue reported for the first quarter of 2014.  Net loss for the first quarter of 2015 was zero, or $0.00 per basic and diluted share. This compares with a net loss of $2.3 million, or $0.07 per basic and diluted share, in the fourth quarter of 2014 and a net loss of $0.4 million, or $0.01 per basic and diluted share, in the first quarter of 2014.

On a non-GAAP basis, total revenues for the first quarter of 2015 reached $29.5 million, compared with $30.6 million of revenue reported for the fourth quarter of 2014 and $28.3 million of revenue reported for the first quarter of 2014.  On a non-GAAP basis, net income for the first quarter of 2015 was $2.9 million, or $0.09 per basic share and diluted share. This compares with non-GAAP net income of $3.4 million, or $0.10 per basic and diluted share, in the fourth quarter of 2014 and non-GAAP net income of $2.1 million, or $0.06 per basic and diluted share, in the first quarter of 2014.

Q1 2015 - Key Achievements:

  • During Q1 2015, 18 large orders were received, 3 of which were from new customers
  • 8 of the large orders came from mobile-service providers and 8 were from fixed-line service providers
  • In addition, 2 large orders were received for private and public cloud deployments
  • Allot completed the acquisition of Optenet during the first quarter. The impact over the first quarter results was immaterial.
  • Allot launched SmartEngage which enables mobile operators to increase subscriber service uptake.
  • Received four orders from Tier-1 operators to enable delivery of Security-as-a-Service and Comply with Regulation.

"During the first quarter we completed the acquisition of Optenet, a global leader in the field of Security-as-a-Service. We believe that the acquisition will significantly enhance our security offering and support future growth opportunities," said Andrei Elefant, President & CEO of Allot Communications. "We continued to improve our margins in the first quarter, expend our customer base and increase our market share. Security and monetization remained top performers within our VAS offering and we continue to view these two segments as key growth engines to our future growth." 

Conference Call & Webcast:

The Allot management team will host a conference call to discuss first quarter 2015 earnings results today at 8:30 AM ET, 3:30 p.m. Israel time. To access the conference call, please dial one of the following numbers: US: +1646 254 3361, UK: +44(0)2034271906, Israel: +97237219510, participant code 6727250.

A replay of the conference call will be available from 12:00 AM ET on May 6 2015 for 30 days. To access the replay, please dial: US: +1 347 366 9565; UK: +44(0)2034270598, access code:  6727250. A live webcast of the conference call can be accessed on the Allot Communications website at www.allot.com. The webcast also will be archived on the website following the conference call.

About Allot Communications

Allot Communications Ltd. (NASDAQ, TASE: ALLT) empowers service providers to monetize and optimize their networks, enterprises to enhance productivity and consumers to enjoy an always-on digital lifestyle. Allot's advanced DPI-based broadband solutions identify and leverage network intelligence to analyze, protect, improve and enrich mobile, fixed and cloud service delivery and user experience. Allot's unique blend of innovative technology, proven know-how and collaborative approach to industry standards and partnerships enables network operators worldwide to elevate their role in the digital lifestyle ecosystem and to open the door to a wealth of new business opportunities. 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, regulatory matter expenses, acquisition-related expenses and restructuring costs.

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 may contain 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 expressed or implied by 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; 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; 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:

Rami Rozen
AVP Corporate Development
International access code +972-52-569-4441
rrozen@allot.com

Public Relations Contact:

Maya Lustig
Director Corporate Communications
International access code +972-54-677-8100
mlustig@allot.com

 

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




March 31,




2015


2014




(Unaudited)









Revenues

$      29,532


$      28,284



Cost of revenues

7,769


8,195



Gross profit  

21,763


20,089









Operating expenses:






Research and development costs, net

6,809


7,221



Sales and marketing

11,808


10,497



General and administrative

3,250


2,887



Total operating expenses

21,867


20,605



Operating  loss

(104)


(516)



Financial and other income, net

205


149



Profit (loss) before income tax benefit

101


(367)









Tax expenses

135


21



Net loss

(34)


(388)









 Basic net loss per share

$         (0.00)


$        (0.01)















 Diluted net loss per share

$         (0.00)


$        (0.01)









Weighted average number of shares






used in computing basic  net






earnings per share

33,357,909


32,939,195









Weighted average number of shares






used in computing diluted net






earnings per share

33,357,909


32,939,195















 

 

TABLE  - 2

ALLOT COMMUNICATIONS 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


Three Months Ended



March 31, 2015


March 31, 2014



(Unaudited)


(Unaudited)



$

% of Revenues


$

% of Revenues















 GAAP Operating loss 

$      (104)

0%


$         (516)

-2%

 Share-based compensation (1) 

1,867



1,992


 Amortization of intangible assets (2) 

511



465


 Expenses related to M&A activities (3) 

577



8


 Fair value adjustment for acquired deferred revenues write down 

11



12


 Non-GAAP Operating income 

$     2,862

10%


$        1,961

7%








 GAAP Net loss 

$        (34)

0%


$         (388)

-1%

 Share-based compensation (1) 

1,867



1,992


 Amortization of intangible assets (2) 

511



465


 Expenses related to M&A activities (3) 

577



8


 Fair value adjustment for acquired deferred revenues write down 

11



12


 Non-GAAP Net income 

$     2,932

10%


$        2,089

7%








 GAAP loss per share (diluted) 

$     (0.00)



$        (0.01)


 Share-based compensation 

0.05



0.06


 Amortization of intangible assets 

0.02



0.01


 Expenses related to M&A activities 

0.02



0.00


 Fair value adjustment for acquired deferred revenues write down 

0.00



0.00


 Non-GAAP Net income per share (diluted) 

$      0.09



$         0.06









(1) Share-based compensation:







Cost of revenues

$         82



$            88



Research and development costs, net

420



469



Sales and marketing

752



821



General and administrative

613



614




$     1,867



$        1,992









 (2) Amortization of intangible assets 







Cost of revenues

$       454



$          399



Sales and marketing

57



66




$       511



$          465









 (3) Expenses related to M&A activities 







General and administrative 

$       351



$              8



Research and development costs, net

45



-



Sales and marketing

181



-




$       577



$              8
















 

 

TABLE  - 3

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP  CONSOLIDATED  REVENUES

(U.S. dollars in thousands, except share and per share data)







Three Months Ended



March 31,



2015


2014



(Unaudited)







GAAP Revenues

$   29,532


$ 28,284







Fair value adjustment for acquired deferred revenues write down

11


12







Non-GAAP Revenues

$   29,543


$ 28,296







 

 

TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)













March 31,


March 31,



2015


2014



(Unaudited)


(Unaudited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            21,930


$           51,036

Short term deposits


46,500


30,500

Marketable securities and restricted cash


55,344


40,639

Trade receivables, net


23,584


21,414

Other receivables and prepaid expenses


6,634


8,906

Inventories


8,321


13,474

Total current assets


162,313


165,969






LONG-TERM ASSETS:





Severance pay fund


260


260

Deferred taxes


1,620


1,602

Other assets 


3,626


2,726

Total long-term assets


5,506


4,588






PROPERTY AND EQUIPMENT, NET


6,011


5,990

GOODWILL AND INTANGIBLE ASSETS, NET


45,995


29,756






Total assets


$          219,825


$        206,303






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$               5,876


$             4,887

Deferred revenues


12,340


13,527

Other payables and accrued expenses


15,324


12,851

Total current liabilities


33,540


31,265






LONG-TERM LIABILITIES:





Deferred revenues


4,777


2,520

Accrued severance pay


292


292

Other long term liabilities


3,915


0

Total long-term liabilities


8,984


2,812






SHAREHOLDERS' EQUITY


177,301


172,226






Total liabilities and shareholders' equity


$          219,825


$        206,303






 

 

TABLE  - 5


ALLOT COMMUNICATIONS LTD.


AND ITS SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS 


(U.S. dollars in thousands)







Three Months Ended



March 31,



2015

2014



(Unaudited)






Cash flows from operating activities:








Net Loss

$               (34)

$                (388)


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




Depreciation

762

800


Stock-based compensation related to options granted to employees

1,849

1,992


Amortization of intangible assets

449

465


Capital loss 

4

-


Decrease in accrued severance pay, net

12

4


Increase in other assets

(178)

(82)


Decrease in accrued interest and amortization of premium on marketable securities 

300

208


Increase (Decrease) in trade receivables

175

(4,506)


Increase in other receivables and prepaid expenses

(2,691)

(102)


Decrease in inventories

1,788

324


Increase in long-term deferred taxes, net

96

-


Increase (Decrease) in trade payables

(424)

1,696


Increase (Decrease) in employees and payroll accruals

(409)

1,062


Increase in deferred revenues

100

1,096


Increase in other payables and accrued expenses

292

876






Net cash provided by operating activities

2,091

3,445






Cash flows from investing activities:








Redemption of short-term deposits 

12,500

7,500


Purchase of property and equipment

(666)

(916)


Investment in marketable securities

(6,727)

(900)


Proceeds from redemption or sale of marketable securities

5,528

901


Acquisitions of certain assets and liabilities

(10,052)

-


Loan provided to third party, net

-

(2,563)






Net cash provided by investing activities

583

4,022






Cash flows from financing activities:








Exercise of employee stock options 

76

756






Net cash provided by financing activities

76

756










Increase in cash and cash equivalents

2,750

8,223


Cash and cash equivalents at the beginning of the period

19,180

42,813






Cash and cash equivalents at the end of the period

$             21,930

$             51,036






 

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SOURCE Allot Communications Ltd.

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