Allot Communications Ltd.
May 3, 2016
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Allot Communications Announces First Quarter 2016 Financial Results

HOD HASHARON, Israel, May 3, 2016 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ, TASE: ALLT), a leading global provider of security and monetization solutions that enable service providers to protect and personalize the digital experience, today announced its first quarter 2016 financial results.

 Q1 2016 - Financial Highlights:

  • GAAP revenues were $22.9, Non-GAAP revenues were $23.0 million, down 22% year over year
  • GAAP gross margin was 69%, Non-GAAP gross margin was 70%
  • GAAP operating margin was negative 18%, Non-GAAP operating margin  was negative 8%
  • Book-to-bill was below one
  • The Company recorded negative operating cash flow of $1.4 million
  • Net cash and cash equivalents as of March 31st 2016 totaled $120.7 million
  • During the quarter we repurchased our shares in a total amount of $1.0 million

Q1 2016 Financial results:

On a GAAP basis, total revenues for the first quarter of 2016 were $22.9 million compared to $25.4 million of revenue reported for the fourth quarter of 2015 and $29.5 million of revenue reported for the first quarter of 2015. Net loss for the first quarter of 2016 was $4.3 million, or $0.13 per basic and diluted share. This compares with a net loss of $10.4 million, or $0.31 per basic and diluted share, in the fourth quarter of 2015 and a net loss of $0.03 million, or $0.00 per basic and diluted share, in the first quarter of 2015.

On a non-GAAP basis, total revenues for the first quarter of 2016 were $23.0 million, compared with $25.7 million of revenue reported for the fourth quarter of 2015 and $29.5 million of revenue reported for the first quarter of 2015.  On a non-GAAP basis, net loss for the first quarter of 2016 was $1.8 million, or $0.06 per basic and diluted share. This compares with non-GAAP net income of $0.7 million, or $0.02 per basic and diluted share, in the fourth quarter of 2015 and non-GAAP net income of $2.9 million, or $0.09 per basic and diluted share, in the first quarter of 2015.

Q1 2016 - Key Achievements:

  • During Q1 2016, 11 large orders were received.
  • 6 of the large orders came from mobile-service providers.
  • 4 of the large orders were from fixed-line service providers
  • 1 of the large orders was from cloud service provider.
  • During Q1 2016, Allot received two, over $1 million deals, compared to five in the previous quarter and zero during Q1, 2015.
  • Leading LATAM Operator Safeguards Businesses from Internet Security Threats with Allot Web Safe Business.
  • Launched the Service Gateway 9500, a powerful Intel-based appliance. The product received 6 orders during the first quarter.
  • Allot Smart Data Source was selected by five Tier 1 mobile operators and integrates with Oracle communication analytics to enable operators to monetize network data.
  • Published its 20th Allot Mobile Trends report, together with Kaspersky Lab, revealing that Mobile business users incur the highest malware risk.

2016 Outlook

Based on current backlog and the Company's funnel of opportunities, the Company reiterates 2016 guidance and expects revenues to be in the range of $102-$108 million in 2016, on a non-GAAP basis. Revenues for the second half of 2016 are expected to be higher than in the first half.

"Q1 results came in below our expectations mainly due to slow turning of backlog into revenues. However, we have several significant projects in deployment which we expect to materialize throughout the year. During the quarter, we launched the SG-9500, an Intel-based service gateway and shipped 6 orders. This new offering extends our addressable market by providing a mid-range solution with low cost of ownership, rich functionality and great scalability." Said Andrei Elefant, President & CEO of Allot Communications. "We are also encouraged by the progress made this quarter in the security segment as existing customers are continuously adding licenses and our funnel includes opportunities with new customers. Our strong backlog supports our original revenue guidance and we believe that revenues will grow during 2016, year over year."

Conference Call & Webcast:

The Allot management team will host a conference call to discuss first quarter 2016 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: +1-212-444-0895, UK: +44(0)2034271916, Israel: +97237630147, participant code 9640625.

A replay of the conference call will be available from 12:00 AM ET on May 10 2016 until June 1st 2016. To access the replay, please dial: US: National free number 18669325017, or +13473669565; UK: National free number 08003587735, or +44(0)2034270598, access code: 96406254#. 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 (NASDAQ, TASE: ALLT) is a leading provider of security and monetization solutions that enable service providers 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 update and 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


March 31,


2016


2015


(Unaudited)





Revenues

$      22,938


$      29,532

Cost of revenues

7,143


7,769

Gross profit 

15,795


21,763





Operating expenses:




Research and development costs, net

6,862


6,809

Sales and marketing

10,271


11,808

General and administrative

2,697


3,250

Total operating expenses

19,830


21,867

Operating  loss

(4,035)


(104)

Financial and other income, net

115


205

Profit (Loss) before income tax benefit

(3,920)


101





Tax expenses

370


135

Net loss

(4,290)


(34)





 Basic net loss per share

$         (0.13)


$        (0.00)









 Diluted net loss per share

$         (0.13)


$        (0.00)





Weighted average number of shares




used in computing basic  net




earnings per share

33,481,650


33,357,909





Weighted average number of shares




used in computing diluted net




earnings per share

33,481,650


33,357,909

 


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, 2016


March 31, 2015



(Unaudited)


(Unaudited)



$

% of Revenues


$

% of Revenues















 GAAP Operating loss

$   (4,035)

-18%


$         (104)

0%

 Share-based compensation (1)

1,655



1,867


 Amortization of intangible assets (2)

386



511


 Expenses related to M&A activities (3)

-



577


 Fair value adjustment for acquired deferred revenues write down

65



11


 Non-GAAP Operating income (loss)

$   (1,929)

-8%


$        2,862

10%








 GAAP Net loss

$   (4,290)

-19%


$           (34)

0%

 Share-based compensation (1)

1,655



1,867


 Amortization of intangible assets (2)

386



511


 Expenses related to M&A activities (3)

-



577


 Fair value adjustment for acquired deferred revenues write down

65



11


 Financial expenses

278



-


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

62



-


 Non-GAAP Net income (loss)

$   (1,844)

-8%


$        2,932

10%








 GAAP loss per share (diluted)

$     (0.13)



$        (0.00)


 Share-based compensation

0.05



0.05


 Amortization of intangible assets

0.01



0.02


 Expenses related to M&A activities

-



0.02


 Fair value adjustment for acquired deferred revenues write down

0.00



0.00


 Financial expenses

0.01



-


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

0.00



-


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

$     (0.06)



$         0.09









(1) Share-based compensation:







Cost of revenues

$         69



$            82



Research and development costs, net

426



420



Sales and marketing

622



752



General and administrative

538



613




$     1,655



$        1,867









 (2) Amortization of intangible assets







Cost of revenues

$       248



$          454



Sales and marketing

138



57




$       386



$          511









 (3) Expenses related to M&A activities







General and administrative

$         -



$          351



Research and development costs, net

-



$            45



Sales and marketing

-



$          181




$         -



$          577


 


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,


2016


2015


(Unaudited)





GAAP Revenues

$   22,938


$ 29,532





Fair value adjustment for acquired deferred revenues write down

65


11





Non-GAAP Revenues

$   23,003


$ 29,543

 

TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

 (U.S. dollars in thousands)



March 31,


March 31,



2016


2015



(Unaudited)


(Unaudited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            24,818


$           21,930

Short term deposits


32,700


46,500

Restricted cash


203



Marketable securities and restricted cash


62,994


55,344

Trade receivables, net


22,934


23,584

Other receivables and prepaid expenses


4,489


6,634

Inventories


9,795


8,321

Total current assets


157,933


162,313






LONG-TERM ASSETS:





Severance pay fund


252


260

Deferred taxes


439


1,620

Other assets


2,738


3,626

Total long-term assets


3,429


5,506






PROPERTY AND EQUIPMENT, NET


4,916


6,011

GOODWILL AND INTANGIBLE ASSETS, NET


37,295


45,903






Total assets


$          203,573


$        219,733






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$               6,164


$             5,876

Deferred revenues


13,097


12,340

Other payables and accrued expenses


13,865


15,232

Total current liabilities


33,126


33,448






LONG-TERM LIABILITIES:





Deferred revenues


4,654


4,777

Accrued severance pay


639


292

Other long term liabilities


4,314


3,915

Total long-term liabilities


9,607


8,984






SHAREHOLDERS' EQUITY


160,840


177,301






Total liabilities and shareholders' equity


$          203,573


$        219,733

 

TABLE  - 5

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 


Three Months Ended


March 31,


2016

2015


(Unaudited)




Cash flows from operating activities:






Net Loss

$                (4,290)

$                  (34)

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



Depreciation

600

762

Stock-based compensation related to options granted to employees

1,665

1,849

Amortization of intangible assets

386

449

Capital loss (gain)

(1)

4

Decrease in accrued severance pay, net

18

12

Increase in other assets

(109)

(178)

Decrease  in accrued interest and  amortization of premium on marketable securities

338

300

Increase in trade receivables

281

175

Decrease (Increase) in other receivables and prepaid expenses

334

(2,691)

Decrease in inventories

374

1,788

Increase in long-term deferred taxes, net

62

96

Increase (Decrease) in trade payables

155

(424)

Decrease in employees and payroll accruals

(595)

(409)

Increase (Decrease) in deferred revenues

(1,227)

100

Increase in other payables and accrued expenses

600

99




Net cash provided by (used in) operating activities

(1,409)

1,898




Cash flows from investing activities:






Redemption of short-term deposits

-

12,500

Investment in short-term deposit

10,000

-

Purchase of property and equipment

(327)

(666)

Investment in marketable securities

(8,780)

(6,727)

Proceeds from redemption and sale of marketable securities

10,900

5,528

Acquisitions of certain assets and liabilities

-

(9,859)



.

Net cash provided by investing activities

11,793

776




Cash flows from financing activities:






Exercise of employee stock options

11

76

Purchase of treasury stocks, net

(1,047)

-




Net cash provided by (used in) financing activities

(1,036)

76







Increase in cash and cash equivalents

9,348

2,750

Cash and cash equivalents at the beginning of the period

15,470

19,180




Cash and cash equivalents at the end of the period

$                24,818

$             21,930

 

Investor Relations Contact:

Public Relations Contact:

Rami Rozen

Sigalit Orr

AVP Corporate Development

Director Corporate Communications

International dialing +972-52-569-4441

International dialing +972-54-268-1500

rrozen@allot.com  

sorr@allot.com

 




 

 

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SOURCE Allot Communications Ltd.

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