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Allot Announces First Quarter 2019 Financial Results

Allot Announces First Quarter 2019 Financial Results

May 14, 2019 at 5:00 AM EDT
17% Year-Over-Year Growth in Revenue and improvement in profitability parameters

HOD HASHARON, Israel, May 14, 2019 /PRNewswire/ -- Allot 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 2019 financial results.

Allot Logo (PRNewsfoto/Allot Communications Ltd.)

 First Quarter 2019 – Financial Highlights

  • Revenues were $25.3 million, up 17% year-over-year;
  • GAAP gross margin improved to 71.2% up from 68.1% in Q1 2018; Non-GAAP gross margin improved to 72.4% up from 69.6% in Q1 2018;
  • GAAP operating loss narrowed to $3.3 million compared to $3.5 million in Q1 2018; Non-GAAP operating loss narrowed to $1.8 million compared to $2.3 million in Q1 2018; 

Financial Outlook

  • Management maintains its 2019 expectations of revenues between $106-110 million, representing continued double-digit year-over-year growth;
  • Continue to expect full year 2019 book to bill ratio at above 1;
  • Management goal to sign security OPEX deals with an aggregate MAR (Maximum Annual Revenue) of $100M during 2019, remains unchanged.

Management Comment

Erez Antebi, President & CEO of Allot, commented: "We are pleased with the continued strong year-over-year growth in revenue as well as the improvement in profitability parameters in the quarter, and we are on target with our longer-term goals.  Our momentum in the quarter remained positive and includes the win of a contract to provide a full suite of solutions comprising of network-based traffic management and network security solutions to Rakuten Mobile in Japan. Our pipeline of potential security OPEX deals remains strong and we are actively working to close further deals. We look forward to continued and sustainable growth in 2019 and beyond."

Q1 2019 Financial Results Summary

Total revenues for the quarter were $25.3 million, up 17% compared to $21.7 million in the first quarter of 2018.

Gross profit on a GAAP basis for the quarter was $18.0 million (gross margin of 71.2%), a 22% improvement compared with $14.8 million (gross margin of 68.1%) in the first quarter of 2018.

Gross profit on a non-GAAP basis for the quarter of was $18.3 million (gross margin of 72.4%), a 21% improvement compared with $15.1 million (gross margin of 69.6%) in the first quarter of 2018.

Operating loss on a GAAP basis for the quarter was $3.3 million, an improvement compared with an operating loss of $3.5 million, in the first quarter of 2018.

Non-GAAP operating loss for the quarter of 2019 was $1.8 million, an improvement compared with a non-GAAP operating loss of $2.3 million in the first quarter of 2018.

Net loss on a GAAP basis for the quarter was $3.3million, or $0.1 per basic and diluted share, an improvement compared with a net loss of $3.7 million, or $0.11 per basic and diluted share, in the first quarter of 2018.

Non-GAAP net loss for the quarter was $1.9 million, or $0.05 per basic and diluted share, an improvement compared with a non-GAAP net loss of $2.4 million, or $0.07 per basic and diluted share, in the first quarter of 2018.

Cash and investments as of March 31, 2019 totaled $101.5 million, compared to $103.9 million as of December 31, 2018.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss first quarter 2019 earnings results today, May 14, 2019 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: 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 website at: http://investors.allot.com/index.cfm  

About Allot

Allot Ltd. (NASDAQ: ALLT, 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 21 million subscribers in Europe. Allot. See. Control. Secure.

For more information, visit www.allot.com

GAAP to Non-GAAP Reconciliation:

Non-GAAP net income is defined as GAAP net income after excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustment, exchange rate differences related to revaluation of assets and liabilities denominated in non-dollar currencies 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 is 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 fourth 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 LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

           
 

Three Months Ended

   
 

March 31,

   
 

2019

 

2018

   
 

(Unaudited)

 

(Unaudited)

   
           

Revenues

$       25,342

 

$       21,732

   

Cost of revenues

7,293

 

6,924

   

Gross profit  

18,049

 

14,808

   
           

Operating expenses:

         

Research and development costs, net

7,174

 

5,793

   

Sales and marketing

11,477

 

10,033

   

General and administrative

2,705

 

2,466

   

Total operating expenses

21,356

 

18,292

   

Operating loss

(3,307)

 

(3,484)

   

Financial and other income, net

532

 

230

   

Loss before income tax expenses

(2,775)

 

(3,254)

   
           

Tax expenses

558

 

432

   

Net Loss

(3,333)

 

(3,686)

   
           

 Basic net loss per share

$          (0.10)

 

$          (0.11)

   
           

 Diluted net loss per share

$          (0.10)

 

$          (0.11)

   
           

Weighted average number of shares used in 

         

computing basic net loss per share

33,983,863

 

33,555,980

   
           

Weighted average number of shares used in 

         

computing diluted net loss per share

33,983,863

 

33,555,980

   

 

 

TABLE  - 2

       

ALLOT 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,

         
   

2019

 

2018

         
   

(Unaudited)

         
                   

GAAP cost of revenues

$        7,293

 

$        6,924

         

 Share-based compensation (1) 

(60)

 

(80)

         

 Amortization of intangible assets (2) 

(232)

 

(232)

         

Non-GAAP cost of revenues

$        7,001

 

$        6,612

         
                   

 GAAP gross profit 

$     18,049

 

$     14,808

         

 Gross profit adjustments 

292

 

312

         

 Non-GAAP gross profit 

$     18,341

 

$     15,120

         
                   

 GAAP operating expenses 

$     21,356

 

$     18,292

         

 Share-based compensation (1) 

(685)

 

(624)

         

 Amortization of intangible assets (2) 

(188)

 

(175)

         

 Expenses related to M&A activities (3) 

(295)

 

(38)

         

 Non-GAAP operating expenses 

$     20,188

 

$     17,455

         
                   

 GAAP financial and other income 

$           532

 

$           230

         

 Exchange rate differences* 

(2)

 

150

         

 Non-GAAP Financial and other income 

$           530

 

$           380

         
                   

 GAAP taxes on income 

$           558

 

$           432

         

 Tax expenses in respect of net deferred tax asset recorded   

(16)

 

(19)

         

 Non-GAAP taxes on income 

$           542

 

$           413

         
                   

 GAAP Net Loss 

$      (3,333)

 

$      (3,686)

         

 Share-based compensation (1) 

745

 

704

         

 Amortization of intangible assets (2) 

420

 

407

         

 Expenses related to M&A activities (3) 

295

 

38

         

 Exchange rate differences 

(2)

 

150

         

 Tax expenses in respect of net deferred tax asset recorded 

16

 

19

         

 Non-GAAP Net Loss 

$      (1,859)

 

$      (2,368)

         
                   

 GAAP Loss per share (diluted) 

$        (0.10)

 

$        (0.11)

         

 Share-based compensation 

0.02

 

0.02

         

 Amortization of intangible assets 

0.02

 

0.01

         

 Expenses related to M&A activities 

0.01

 

0.00

         

 Exchange rate differences 

(0.00)

 

0.01

         

 Tax expense in respect of net deferred tax asset recorded 

0.00

 

0.00

         

 Non-GAAP Net loss per share (diluted) 

$        (0.05)

 

$        (0.07)

         
                   
                   

Weighted average number of shares used in 

               

computing GAAP diluted net loss per share

33,983,863

 

33,555,980

         
                   
                   

Weighted average number of shares used in 

               

computing non-GAAP diluted net loss per share

33,983,863

 

33,555,980

         
                   

* Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.

 

 
                   
                   

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,

         
   

2019

 

2018

         
   

(Unaudited)

         
                   

(1) Share-based compensation:

               
 

Cost of revenues

$             60

 

$             80

         
 

Research and development costs, net

169

 

155

         
 

Sales and marketing

283

 

222

         
 

General and administrative

233

 

247

         
   

$           745

 

$           704

         
                   

 (2) Amortization of intangible assets 

               
 

Cost of revenues

$           232

 

$           232

         
 

Sales and marketing

188

 

175

         
   

$           420

 

$           407

         
                   

 (3) Expenses related to M&A activities 

               
 

General and administrative 

$              -

 

$             38

         
 

Research and development costs, net

295

 

-

         
   

$           295

 

$             38

         
                   
                   
                   
                   

 

 

TABLE  - 3

 

ALLOT LTD.

 

AND ITS SUBSIDIARIES

 

CONSOLIDATED  BALANCE  SHEETS

 

(U.S. dollars in thousands)

 
           
           
   

March 31,

 

December 31,

 
   

2019

 

2018

 
   

(Unaudited)

 

(Audited)

 
       

ASSETS

         

CURRENT ASSETS:

         

Cash and cash equivalents

 

$            17,430

 

$            16,336

 

Short term deposits

 

18,557

 

22,543

 

Restricted deposit

 

548

 

465

 

Marketable securities 

 

64,713

 

64,290

 

Trade receivables, net

 

28,686

 

26,093

 

Other receivables and prepaid expenses

 

5,449

 

3,647

 

Inventories

 

13,255

 

11,345

 

Total current assets

 

148,638

 

144,719

 
           

LONG-TERM ASSETS:

         

Restricted deposit

 

257

 

257

 

Severance pay fund

 

341

 

345

 

Operating lease right-of-use assets

 

7,137

 

-

 

Deferred taxes

 

314

 

281

 

Other assets 

 

533

 

600

 

Total long-term assets

 

8,582

 

1,483

 

PROPERTY AND EQUIPMENT, NET

 

6,362

 

6,249

 

GOODWILL AND INTANGIBLE ASSETS, NET

 

36,223

 

37,393

 

Total assets

 

$          199,805

 

$          189,844

 
           

LIABILITIES AND SHAREHOLDERS'
EQUITY

         

CURRENT LIABILITIES:

         

Trade payables

 

$            10,370

 

$               7,813

 

Deferred revenues

 

13,299

 

13,855

 

Short-term operating lease liabilities

 

2,460

 

-

 

Other payables and accrued expenses

 

23,805

 

21,052

 

Total current liabilities

 

49,934

 

42,720

 
           

LONG-TERM LIABILITIES:

         

Deferred revenues

 

4,211

 

4,247

 

Long-term operating lease liabilities

 

4,471

 

-

 

Accrued severance pay

 

737

 

806

 

Other long term liabilities

 

5,763

 

6,168

 

Total long-term liabilities

 

15,182

 

11,221

 

SHAREHOLDERS' EQUITY

 

134,689

 

135,903

 

Total liabilities and shareholders' equity

 

$          199,805

 

$          189,844

 
           

 

 

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)

         
 

Three Months Ended

 
 

March 31,

 
 

2019

 

2018

 
 

(Unaudited)

 

(Unaudited)

 
         

Cash flows from operating activities:

       
         

Net Loss

$        (3,333)

 

$     (3,686)

 

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

       

Depreciation

616

 

498

 

Stock-based compensation related to options granted to employees

745

 

704

 

Amortization of intangible assets

420

 

407

 

Capital loss 

-

 

3

 

Decrease (Increase) in accrued severance pay, net

(65)

 

33

 

Decrease in other assets

67

 

788

 

Decrease in accrued interest and  amortization of premium on marketable securities 

77

 

246

 

Changes in operating leases, net

(206)

 

-

 

Decrease (Increase) in trade receivables

(2,593)

 

746

 

Increase in other receivables and prepaid expenses

(1,147)

 

(1,879)

 

Increase in inventories

(1,910)

 

(277)

 

Decrease (Increase) in long-term deferred taxes, net

(33)

 

19

 

Increase in trade payables

2,557

 

602

 

Increase (Decrease) in employees and payroll accruals

1,023

 

(499)

 

Increase (Decrease) in deferred revenues

(592)

 

731

 

Increase in other payables and accrued expenses

1,893

 

486

 

Net cash used in operating activities

(2,481)

 

(1,078)

 
         

Cash flows from investing activities:

       

Decrease (Increase) in restricted deposit

(83)

 

200

 

Redemption of short-term deposits 

3,986

 

14,100

 

Purchase of property and equipment

(729)

 

(694)

 

Investment in marketable securities

(11,584)

 

(7,061)

 

Proceeds from redemption or sale of marketable securities

11,379

 

4,991

 

Acquisitions

-

 

(3,048)

 

Net cash provided by investing activities

2,969

 

8,488

 
         

Cash flows from financing activities:

       
         

Exercise of employee stock options 

606

 

83

 

Net cash provided by financing activities

606

 

83

 
         
         

Increase in cash and cash equivalents

1,094

 

7,493

 

Cash and cash equivalents at the beginning of the period

16,336

 

15,342

 
         

Cash and cash equivalents at the end of the period

$        17,430

 

$     22,835

 
         
         

 

 

 

Investor Relations Contact:

GK Investor Relations

Ehud Helft/Gavriel Frohwein

+1 646 688 3559

allot@gkir.com

 

 

Public Relations Contact:

Jodi Joseph Asiag

Director of Corporate Communications

jasiag@allot.com

 

 

 

 

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SOURCE Allot Ltd.