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Allot Announces First Quarter 2022 Financial Results

Allot Announces First Quarter 2022 Financial Results

May 17, 2022 at 5:00 AM EDT

HOD HASHARON, Israel , May 17, 2022 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for service providers and enterprises worldwide, today announced its unaudited first quarter 2022 financial results.

Allot Logo

 First Quarter 2022 Financial Highlights

  • First quarter revenues were $31.9 million, up 2% year-over-year;
  • Gross margin on a non-GAAP basis was 70%;
  • GAAP operating loss was $5.7 million and non-GAAP operating loss was $3 million;
  • GAAP net loss was $6.1 million and non-GAAP net loss was $3.5 million.

Financial Outlook

For 2022, management expects:

  • Revenues to be between $135-140 million;
  • Additional recurring security deals to be executed, providing incremental MAR** of more than $180 million (note amended MAR definition adopting a more conservative approach referring to applicable customer segments only);
  • December 2022 total ARR* including SECaaS ARR* and Support & Maintenance ARR* to be between $53-$55 million, representing approximately 15% year-over-year growth versus 2021 at the midpoint;
  • December 2022 SECaaS ARR* to be at least  $12 million;
  • Recurring security revenue to be at least $7 million.

Management Comment

Erez Antebi, President & CEO of Allot, commented: "While our first quarter results met  our expectations, during the last few months, we faced headwinds as a result of delays in SECaaS service launches, the war in Europe and negative foreign exchange rates fluctuation.  As a result, we have adjusted our forecast for the year to reflect a delay in adoption.  Looking at the number of CSPs interested in SECaaS services and the growing need for such a protection, we plan to continue our investments and remain confident in our strategic direction and our long-term success."

Q1 2022 Financial Results Summary

Total revenues for the first quarter of 2022 were $31.9 million, an increase of 2% compared to $31.2 million in the first quarter of 2021.

Gross profit on a GAAP basis for the first quarter of 2022 was $22.1 million (gross margin of 69.3%), a 2% improvement compared with $21.6 million (gross margin of 69.2%) in the first quarter of 2021.

Gross profit on a non-GAAP basis for the first quarter of 2022 was $22.4 million (gross margin of 70.3%), a 3% improvement compared with $21.9 million (gross margin of 70.1%) in the first quarter of 2021.

Net loss on a GAAP basis for the first quarter of 2022 was $6.1 million, or $0.17 per basic share, compared with a net loss of $4.0 million, or $0.11 per basic share, in the first quarter of 2021.

Net loss on a non-GAAP for the first quarter of 2022 was $3.5 million, or $0.10 per basic share compared with a non-GAAP net loss of $2.2 million, or $0.06 per basic share, in the first quarter of 2021.

Cash and investments as of March 31, 2022 totaled $117.1 million, compared to $85.7 million as of December 31, 2021.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss its first quarter 2022 earnings results today, May 17, 2022 at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:

US:  1-888-642-5032, 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 and enterprises 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 1,000 enterprises. Our industry leading network-based security as a service solution is already used by over 20 million subscribers in Europe. Allot. See. Control. Secure.

For more information, visit www.allot.com

Performance Metrics

* Total ARR - Support & Maintenance ARR (measures the current annual run rate of the support & maintenance revenues, which is calculated based on these expected revenues in the fourth quarter and multiplied by 4) and SECaaS ARR (measures the current annual run rate of the SECaaS revenues, which is calculated based on these expected revenues in the current month of December and multiplied by 12).

** MAR (maximum annual revenue potential of concluded transactions) was estimated by Allot upon transaction signature and constitutes an approximation of the theoretical annual revenues Allot would receive if 100% of the applicable customer segments only subscribers, as estimated by Allot, signed up for the service.

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 and changes in taxes related items.

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.

Investor Relations Contact:

GK Investor Relations

Ehud Helft

+1 212 378 8040

allot@gkir.com

 

 

Public Relations Contact:

Seth Greenberg, Allot Ltd.

+972 54 922 2294

sgreenberg@allot.com

 

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,



2022


2021



(Unaudited)







Revenues

$       31,896


$       31,183


Cost of revenues

9,792


9,591


Gross profit  

22,104


21,592







Operating expenses:





Research and development costs, net

12,030


10,567


Sales and marketing

11,689


11,593


General and administrative

4,037


3,200


Total operating expenses

27,756


25,360


Operating loss

(5,652)


(3,768)


Financial and other income, net

247


115


Loss before income tax expenses

(5,405)


(3,653)







Tax expenses

722


305


Net Loss

(6,127)


(3,958)







 Basic net loss per share

$         (0.17)


$         (0.11)












 Diluted net loss per share

$         (0.17)


$         (0.11)







Weighted average number of shares used in 





computing basic net loss per share

36,539,247


35,535,493







Weighted average number of shares used in 





computing diluted net loss per share

36,539,247


35,535,493












 

 

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,




2022


2021




(Unaudited)


GAAP cost of revenues

$                                            9,792


$                                          9,591


Share-based compensation (1) 

(181)


(119)


Amortization of intangible assets (2) 

(152)


(152)


Non-GAAP cost of revenues

$                                            9,459


$                                          9,320








 GAAP gross profit 

$                                          22,104


$                                        21,592


 Gross profit adjustments 

333


271


 Non-GAAP gross profit 

$                                           22,437


$                                        21,863








 GAAP operating expenses 

$                                           27,756


$                                        25,360


 Share-based compensation (1) 

(2,356)


(1,325)


 Non-GAAP operating expenses 

$                                           25,400


$                                        24,035








 GAAP financial and other income 

$                                                247


$                                             115


 Exchange rate differences* 

(73)


76


 Non-GAAP Financial and other income 

$                                               174


$                                             191








 GAAP taxes on income 

$                                                722


$                                             305


 Tax expenses in respect of net deferred tax asset recorded 

-


(67)


 Non-GAAP taxes on income 

$                                                722


$                                             238








 GAAP Net Loss 

$                                           (6,127)


$                                        (3,958)


 Share-based compensation (1) 

2,537


1,444


 Amortization of intangible assets (2) 

152


152


 Exchange rate differences* 

(73)


76


 Tax expenses in respect of net deferred tax asset recorded 

-


67


 Non-GAAP Net income (loss) 

$                                           (3,511)


$                                         (2,219)








 GAAP Loss per share (diluted) 

$                                             (0.17)


$                                          (0.11)


 Share-based compensation 

0.07


0.04


 Amortization of intangible assets 

0.00


0.01


 Exchange rate differences* 

0.00


0.00


 Tax expense in respect of net deferred tax asset recorded 

-


0.00


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

$                                             (0.10)


$                                           (0.06)














Weighted average number of shares used in 





computing GAAP diluted net loss per share

36,539,247


35,535,493














Weighted average number of shares used in 





computing non-GAAP diluted net loss per share

36,539,247


35,535,493








* 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 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,




2022


2021




(Unaudited)








(1) Share-based compensation:






Cost of revenues

$                                                181


$                                             119



Research and development costs, net

845


395



Sales and marketing

913


582



General and administrative

598


348




$                                            2,537


$                                          1,444








 (2) Amortization of intangible assets 






Cost of revenues

$                                                152


$                                             152




$                                                152


$                                             152








TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)



March 31,


December 31,



2022


2021



(Unaudited)


(Audited)

ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$                    20,878


$                 11,717

Short-term bank deposits


86,420


60,720

Restricted deposits


1,360


1,480

Available-for-sale marketable securities


8,243


11,531

Trade receivables, net


32,051


30,829

Other receivables and prepaid expenses


8,762


8,490

Inventories


12,847


11,092

Total current assets


170,561


135,859






LONG-TERM ASSETS:





Long-term bank deposits


215


215

Severance pay fund


421


407

Operating lease right-of-use assets


8,015


8,513

Trade receivables, net


6,146


6,643

Other assets 


1,222


1,639

Total long-term assets


16,019


17,417






PROPERTY AND EQUIPMENT, NET


14,861


15,000

GOODWILL AND INTANGIBLE ASSETS, NET


34,903


35,138






Total assets


$                 236,344


$               203,414






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$                      4,436


$                   3,940

Deferred revenues


24,255


22,138

Short-term operating lease liabilities


3,099


2,785

Other payables and accrued expenses


23,880


26,250

Total current liabilities


55,670


55,113






LONG-TERM LIABILITIES:





Deferred revenues


14,667


15,942

Long-term operating lease liabilities


4,283


5,467

Accrued severance pay


892


884

Convertible debt


39,426


-

Total long-term liabilities


59,268


22,293






SHAREHOLDERS' EQUITY


121,406


126,008






Total liabilities and shareholders' equity


$                  236,344


$               203,414

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)







Three Months Ended



March 31,



2022


2021



(Unaudited)







Cash flows from operating activities:










Net Loss

$        (6,127)


$     (3,958)


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





Depreciation

1,414


1,088


Stock-based compensation

2,537


1,444


Amortization of intangible assets

235


237


Decrease in accrued severance pay, net

(6)


(72)


Decrease in other assets

417


1,499


Decrease in accrued interest and  amortization of premium on marketable securities 

32


75


Changes in operating leases, net

(372)


(232)


Increase in trade receivables

(725)


(7,143)


Decrease (Increase) in other receivables and prepaid expenses

(1,034)


2,080


Increase  in inventories

(1,755)


(957)


Decrease in long-term deferred taxes, net

-


72


Increase (Decrease) in trade payables

496


(870)


Decrease in employees and payroll accruals

(2,486)


(1,909)


Increase in deferred revenues

842


14,972


Decrease in other payables, accrued expenses and other long term liabilities

(271)


(603)


Net cash  provided by (used in) operating activities

(6,803)


5,723







Cash flows from investing activities:





Decrease (Increase) in restricted deposit

120


(434)


Investment in short-term deposits

(25,700)


(24,300)


Purchase of property and equipment

(1,275)


(1,695)


Purchase of intangible assets

-


(1,652)


Proceeds from redemption or sale of available-for sale marketable securities

3,158


4,348


Net cash used in investing activities

(23,697)


(23,733)







Cash flows from financing activities:





Proceeds from exercise of stock options

235


1,559


Issuance of convertible debt

39,426


-


Net cash provided by financing activities

39,661


1,559












Increase (Decrease) in cash and cash equivalents

9,161


(16,451)


Cash and cash equivalents at the beginning of the period

11,717


23,599







Cash and cash equivalents at the end of the period

$        20,878


$       7,148







Other financial metrics (Unaudited)







U.S. dollars in millions, except number of full time employees, % of top-10 end-customers out of revenues and number of shares












Q1-2022


FY 2021


FY 2020


Revenues geographic breakdown








Americas


3.7

11%

19.4

14%

8.1

6%


EMEA


18.7

59%

82.0

56%

104.3

77%


Asia Pacific


9.5

30%

44.2

30%

23.5

17%




31.9

100%

145.6

100%

135.9

100%










Revenue breakdown by type








Products


17.2

54%

88.1

60%

92.5

68%


Professional Services

2.6

8%

15.2

11%

11.4

8%


SECaaS (Security as a Service)

1.5

5%

4.1

3%

1.9

2%


Support & Maintenance

10.6

33%

38.2

26%

30.1

22%




31.9

100%

145.6

100%

135.9

100%










Revenues per customer type








CSP


25.8

81%

116.9

80%

114.8

84%


Enterprise


6.1

19%

28.7

20%

21.1

16%




31.9

100%

145.6

100%

135.9

100%










% of top-10 end-customers out of revenues

57%


51%


71%











Total number of full time employees 

728


741


676


(end of period)

















Non-GAAP Weighted average number of basic shares  (in millions)

36.5


36.1


35








Non-GAAP weighted average number of fully diluted shares  (in millions)

38.7


38.4


37.2


 

SECaaS (Security as a Service) revenues- U.S. dollars in millions (Unaudited)















Q1-2022:

1.5









Q4-2021:

1.3









Q3-2021:

1.2









Q2-2021:

0.9



















SECaaS ARR* (annualized recurring revenues)- U.S. dollars in millions (Unaudited)















Mar. 2022:

5.9









Dec. 2021:

5.2









Dec. 2020:

2.7









Dec. 2019:

0.5



















*ARR: annualized recurring SECaaS revenues, calculated based on the monthly revenues multiplied by 12




 













ARR - U.S. dollars in millions (Unaudited)












Dec. 2020


Dec. 2021 


Dec. 2022 target


2021 vs. 2020


2022 (target) vs. 2021 

Support & maintenance ARR *

31.2


42.0


41-43


35%


(2%) -2%













SECaaS ARR **


2.7


5.2


at least 12


93%


131%













Total ARR



33.9


47.2


 53-55


39%


 12%-17%













* Support & Maintenance ARR measures the current annual run rate of the support & maintenance revenues, which is calculated based on these expected revenues in the fourth quarter and multiplied by 4.

** SECaaS ARR measures the current annual run rate of the SECaaS revenues, which is calculated based on these expected revenues in the current month of December and multiplied by 12.














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SOURCE Allot Ltd.