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May 24, 2018 12:54 PM EDT
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Allot Announces First Quarter 2018 Financial Results

Allot Announces First Quarter 2018 Financial Results

May 8, 2018 at 5:00 AM EDT
Revenues increased 18% Year over Year

HOD HASHARON, Israel, May 8, 2018 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT) (TASE: ALLT), a global provider of leading innovative network intelligence and security solutions for service providers worldwide, today announced its first quarter 2018 financial results.

Q1 2018 – Financial Highlights

  • Revenues were $21.7 million, up 18% year-over-year;
  • GAAP gross margin was 68%; Non-GAAP gross margin was 70%;
  • GAAP operating loss of $3.5 million; non-GAAP operating loss of $2.3 million;
  • Book-to-bill above one for the fifth consecutive quarter;

Financial Outlook:

  • Management maintains its previously issued guidelines for 2018.
  • Management continues to expect 2018 revenues to grow to between $91 - 95 million with the second half of the year stronger than the first half, reflecting typical seasonality;
  • 2018 Book to Bill is expected at above 1;

Management Comment

Erez Antebi, President & CEO of Allot, commented:

"The results in the first quarter of 2018 show we are on track in successfully executing the turnaround process we began last year and the transition to a security company.

"We see a growing number of communication service providers worldwide realize that offering secure broadband at a premium price creates a substantial revenue potential as well as providing an important service to their customers. 

"Allot's position as a leading technology provider for such security services puts us in a unique position to take advantage of this market opportunity.  We strongly believe that with over 20 million subscribers  protected by AllotSecure technology worldwide, this is just the beginning."

Q1 2018 Financial Results Summary

Total revenues for the first quarter of 2018 were $21.7 million, up 18% compared to $18.4 million in the first quarter of 2017.

Gross profit on a GAAP basis for the first quarter of 2018 was $14.8 million (gross margin of 68.1%), a 22% improvement compared with $12.1 million (gross margin of 65.7%) in the first quarter of 2017.

Gross profit on a non-GAAP basis for the first quarter of 2018 was $15.1 million (gross margin of 69.6%), a 21% improvement compared with $12.5 million (gross margin of 67.5%) in the first quarter of 2017.

Net loss on a GAAP basis for the first quarter of 2018 was $3.7 million, or $0.11 per basic share, compared with a net loss of $5.1 million, or $0.15 per basic share, in the first quarter of 2017.

Non-GAAP net loss for the first quarter of 2018 was $2.4 million, or $0.07 per basic share, compared with a non-GAAP net loss of $3.6 million, or $0.11 per basic share, in the first quarter of 2017.

Cash and investments as of March 31, 2018 totaled $104.7 million. The Company recorded negative operating cash flow of $1.1 million during the first quarter of 2018.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss first quarter 2018 earnings results today, May 8, 2018 at 8:30 am ET, 3:30 pmIsrael 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 live webcast and, following the end of the call, an archive of the conference call, will be accessible on the Allot Communications website at: http://investors.allot.com/index.cfm  

About Allot Communications

Allot Communications Ltd. (NASDAQ, TASE: ALLT) is a provider of leading innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers. Our solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more. Allot's multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1000 enterprises. Our industry leading network-based security as a service solution has achieved over 50% penetration with some service providers and is already used by over 20 million subscribers in Europe. Allot. See. Control. Secure. For more information, 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, changes in taxes related items 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


March 31,


2018


2017


(Unaudited)





Revenues

$       21,732


$       18,435

Cost of revenues

6,924


6,318

Gross profit 

14,808


12,117





Operating expenses:




Research and development costs, net

5,793


5,533

Sales and marketing

10,033


8,980

General and administrative

2,466


2,541

Total operating expenses

18,292


17,054

Operating loss

(3,484)


(4,937)

Financial and other income, net

230


362

Loss before income tax expenses

(3,254)


(4,575)





Tax expenses

432


502

Net Loss

(3,686)


(5,077)





 Basic net loss per share

$          (0.11)


$          (0.15)









 Diluted net loss per share

$          (0.11)


$          (0.15)





Weighted average number of shares used in




computing basic net loss per share

33,555,980


33,091,845





Weighted average number of shares used in




computing diluted net loss per share

33,555,980


33,091,845

 

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




March 31,




2018


2017




(Unaudited)








 GAAP Revenues

$     21,732


$     18,435


 Fair value adjustment for acquired deferred revenues write down

-


24


 Non-GAAP Revenues

$     21,732


$     18,459








GAAP cost of revenues

$        6,924


$        6,318


 Share-based compensation (1)

(80)


(95)


 Amortization of intangible assets (2)

(232)


(232)


Non-GAAP cost of revenues

$        6,612


$        5,991








 GAAP gross profit

$     14,808


$     12,117


 Gross profit adjustments

$           312


351


 Non-GAAP gross profit

$     15,120


$     12,468








 GAAP operating expenses

$     18,292


$     17,054


 Share-based compensation (1)

(624)


(749)


 Amortization of intangible assets (2)

(175)


(135)


 Expenses related to M&A activities (3)

(38)


(89)


 Non-GAAP operating expenses

$     17,455


$     16,081








 GAAP financial and other income

$           230


$           362


 Expenses related to M&A activities (3)

150


74


 Non-GAAP Financial and other income

$           380


$           436








 GAAP taxes on income

$           432


$           502


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

(19)


(67)


 Non-GAAP taxes on income

$           413


$           435








 GAAP Net Loss

$      (3,686)


$      (5,077)


 Share-based compensation (1)

704


844


 Amortization of intangible assets (2)

407


367


 Expenses related to M&A activities (3)

188


163


 Fair value adjustment for acquired deferred revenues write down

-


24


 Tax expenses in respect of net deferred tax asset recorded

19


67


 Non-GAAP Net income (Loss)

$      (2,368)


$      (3,612)








 GAAP Loss per share (diluted)

$        (0.11)


$        (0.15)


 Share-based compensation

0.02


0.03


 Amortization of intangible assets

0.01


0.01


 Expenses related to M&A activities

0.01


0.00


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

0.00


0.00


 Non-GAAP Net loss per share (diluted)

(0.07)


$        (0.11)














Weighted average number of shares used in





computing GAAP diluted net loss per share

33,555,980


33,091,845














Weighted average number of shares used in





computing non-GAAP diluted net loss per share

33,555,980


33,091,845














TABLE  - 2 cont.

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




March 31,




2018


2017




(Unaudited)








(1) Share-based compensation (*):






Cost of revenues

$             80


$             95



Research and development costs, net

155


229



Sales and marketing

222


241



General and administrative

247


279




$           704


$           844








 (2) Amortization of intangible assets






Cost of revenues

$           232


$           232



Sales and marketing

175


135




$           407


$           367








 (3) Expenses related to M&A activities






General and administrative

$             38


$             89



Financial income

150


74




$           188


$           163














 

 

TABLE  - 3

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)













March 31,


December 31,



2018


2017



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            22,835


$            15,342

Short term deposits


16,943


31,043

Restricted deposit


228


428

Marketable securities


64,682


63,194

Trade receivables, net


21,991


22,737

Other receivables and prepaid expenses


4,390


2,649

Inventories


8,174


7,897

Total current assets


139,243


143,290






LONG-TERM ASSETS:





Severance pay fund


303


302

Deferred taxes


282


301

Other assets


347


1,135

Total long-term assets


932


1,738






PROPERTY AND EQUIPMENT, NET


5,198


5,002

GOODWILL AND INTANGIBLE ASSETS, NET


38,616


34,495






Total assets


$          183,989


$          184,525






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$               6,470


$               5,857

Deferred revenues


11,032


11,370

Other payables and accrued expenses


15,579


14,277

Total current liabilities


33,081


31,504






LONG-TERM LIABILITIES:





Deferred revenues


4,235


3,878

Accrued severance pay


781


747

Other long term liabilities


5,516


5,267

Total long-term liabilities


10,532


9,892






SHAREHOLDERS' EQUITY


140,376


143,129






Total liabilities and shareholders' equity


$          183,989


$          184,525
















 

 

TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)






Three Months Ended


March 31,


2018


2017


(Unaudited)


(Unaudited)





Cash flows from operating activities:








Net Loss

$        (3,686)


$     (5,077)

Adjustments to reconcile net income  to net cash used in operating activities:




Depreciation

498


529

Stock-based compensation related to options granted to employees

704


844

Amortization of intangible assets

407


367

Capital loss

3


4

Decrease in accrued severance pay, net

33


28

Decrease in other assets

788


308

Decrease in accrued interest and  amortization of premium on marketable securities

246


126

Decrease in trade receivables

746


1,260

Increase in other receivables and prepaid expenses

(1,879)


(622)

Increase in inventories

(277)


(762)

Decrease in long-term deferred taxes, net

19


67

Increase in trade payables

602


1,849

Increase (Decrease) in employees and payroll accruals

(499)


276

Increase (Decrease) in deferred revenues

731


(853)

Increase in other payables and accrued expenses

486


491





Net cash used in operating activities

(1,078)


(1,165)





Cash flows from investing activities:




Decrease in restricted deposit

200


-

Redemption of short-term deposits

14,100


473

Purchase of property and equipment

(694)


(811)

Investment in marketable securities

(7,061)


(6,588)

Proceeds from redemption or sale of marketable securities

4,991


4,749

Acquisitions

(3,048)


-

Net cash provided by (used in) investing activities

8,488


(2,177)





Cash flows from financing activities:








Exercise of employee stock options

83


24





Net cash provided by financing activities

83


24









Increase (Decrease) in cash and cash equivalents

7,493


(3,318)

Cash and cash equivalents at the beginning of the period

15,342


23,326





Cash and cash equivalents at the end of the period

$        22,835


$     20,008

 

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

Public Relations Contact:

Vered Zur
Vice-President Marketing
International dialing +972-54-240-0042
vzur@allot.com

Cision View original content:http://www.prnewswire.com/news-releases/allot-announces-first-quarter-2018-financial-results-300644338.html

SOURCE Allot Communications Ltd.