Allot Communications Ltd.
Oct 29, 2015
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Allot Communications Announces Third Quarter 2015 Financial Results

HOD HASHARON, Israel, Oct. 29, 2015 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ, TASE: ALLT), a leading global provider of intelligent broadband solutions that empowers communication service providers to optimize and monetize their networks, enterprises to enhance productivity and consumers to improve their digital lifestyle, today announced its third quarter 2015 results.

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 $23.5 million compared to $21.6 million of revenue reported for the second quarter of 2015 and $30.1 million of revenue reported for the third quarter of 2014.  Net loss for the third quarter of 2015 was $3.4 million, or $0.10 per basic and diluted share. This compares with a net loss of $6.0 million, or $0.18 per basic and diluted share, in the second quarter of 2015 and a net profit of $0.8 million, or $0.02 per basic and diluted share, in the third quarter of 2014.

On a non-GAAP basis, total revenues for the third quarter of 2015 were $23.5 million, compared with $21.6 million of revenue reported for the second quarter of 2015 and $30.1 million of revenue reported for the third quarter of 2014.  On a non-GAAP basis, net loss for the third quarter of 2015 was $0.7 million, or $0.02 per basic and diluted share. This compares with non-GAAP net loss of $3.0 million, or $0.09 per basic and diluted share, in the second quarter of 2015 and non-GAAP net income of $3.1 million, or $0.09 per basic and diluted share, in the third quarter of 2014.

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. Andrei Elefant, President & CEO of Allot Communications. "We continue to control our OPEX and align it with the revenue level without compromising our future growth," added Mr. Elefant. "We are encouraged with the new win of over $10 million that we booked in the beginning of the fourth quarter from an existing customer and we expect to recognize the majority of this order during 2016. This win together with the current backlog and prospects make us believe that we will return to growth in 2016," concluded Mr. Elefant.

2015 Outlook

The Company reiterates its previously provided guidance and expects total non-GAAP revenues to be in the range of $100 million to $105 million for full year 2015.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss third quarter 2015 earnings results today at 8:30 AM ET, 2:30 p.m. Israel time. To access the conference call, please dial one of the following numbers: US: +1212 444 0412, UK: +44(0)2031408286, Israel: +97237219510, participant code 4389708.

A replay of the conference call will be available from 12:00 AM ET on October 30 2015 for 30 days. To access the replay, please dial: US: +1 347 366 9565; UK: +44(0) 2034270598, access code:  4389708. 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 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 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



Nine Months Ended


September 30,



September 30,


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


Gross profit 

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

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


Three Months Ended


September 30, 2015


September 30, 2014


(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.

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)


Nine Months Ended


Nine Months Ended


September 30, 2015


September 30, 2014


(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

ALLOT COMMUNICATIONS LTD.

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


September 30,


September 30,


2015


2014


2015


2014


(Unaudited)


(Unaudited)









GAAP Revenues

$   23,461


$ 30,101


$   74,585


$   86,551









Fair value adjustment for acquired deferred revenues write down

11


11


$           33


$           34









Non-GAAP Revenues

$   23,472


$ 30,112


$   74,618


$   86,585

 



TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)



September 30,


December 31,



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'
EQUITY





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

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)


Three Months Ended


Nine Months Ended


September 30,


September 30,


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:

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

Public Relations Contact:

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

 

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SOURCE Allot Communications Ltd.

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