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Allot Announces Fourth Quarter & Full Year 2020 Financial Results

Allot Announces Fourth Quarter & Full Year 2020 Financial Results

February 9, 2021 at 5:00 AM EST
2020 revenue grew by 23% year-over-year
New security recurring revenue deals executed in 2020 reached total of $192M MAR

HOD HASHARON, Israel, Feb. 9, 2021 /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 fourth quarter and full year 2020 financial results.

 Financial Highlights

  • Fourth quarter revenues were $39.1 million, up 28% year-over-year;
  • Full year revenues were $135.9 million, up 23% year-over-year;
  • Gross margin on a non-GAAP basis increased in 2020 to 71% compared to 70% in 2019;
  • MAR *(maximum annual revenue potential of concluded transactions) reported for 2020 reached $192 million;
  • GAAP operating loss for Q4 2020 was $1.2 million compared to $1.9 in Q4 2019;
  • Non-GAAP operating profit for Q4 2020 was $0.5 million compared to a loss of $1.8 million in Q4 2019;

Financial Outlook

  • Management expects 2021 revenues to grow to between $145-150 million;
  • Management expects to close additional recurring security deals to be executed in 2021 with MAR* expected to exceed $180 million;
  • Management expects recurring security revenues in 2021 to be between $6 -$8 million, and expected to exceed $25 million in 2022;

Management Comment

Erez Antebi, President & CEO of Allot, commented: "We are very happy with our achievements in 2020, showing strong continued revenue growth and solid performance throughout the year. Threats on the internet are on the rise and growing numbers of consumers and operators see the need for Network based protection. Despite travel restrictions and delays as result of COVID, we signed recurring security revenue deals with a total MAR of $192M – significantly above our target for the year. We see this as a testament for the strong need for easy to use network based cybersecurity services."

Continued Mr. Antebi, "We see 2021 as a transformation year for the market as our recurring security partners begin to launch their services and we will see the early ramp of revenues. We continue to invest in our offerings and in sales and marketing, to capitalize on the opportunities ahead of us. We are very encouraged by the traction we are gaining and expect to continue signing additional recurring security revenue deals during 2021 with an MAR of $180 million, ensuring our long-term sustainable growth. We look forward to reaping the rewards in the coming years."

Q4 2020 Financial Results Summary

Total revenues for the fourth quarter of 2020 were $39.1 million, an increase of 28% compared to $30.6 million in the fourth quarter of 2019.

Gross profit on a GAAP basis for the fourth quarter of 2020 was $27.5 million (gross margin of 70.3%), a 32% improvement compared with $20.8 million (gross margin of 68.0%) in the fourth quarter of 2019.

Gross profit on a non-GAAP basis for the fourth quarter of 2020 was $27.7 million (gross margin of 70.9%), a 32% improvement compared with $21.0 million (gross margin of 68.7%) in the fourth quarter of 2019.

Net loss on a GAAP basis for the fourth quarter of 2020 was $1.7 million, or $0.05 per basic share, compared with a net loss of $1.7 million, or $0.05 per basic share, in the fourth quarter of 2019.

Net income on a non-GAAP for the fourth quarter of 2020 was $0.4 million, or $0.01 earnings per basic share compared with a non-GAAP net loss of $1.7 million, or $0.05 loss per basic share, in the fourth quarter of 2019.

2020 Financial Results Summary

Total revenues for 2020 were $135.9 million, an increase of 23% compared to $110.1 million in 2019.

Gross profit on a GAAP basis for 2020 was $95.8 million (gross margin of 70.5%), a 26% improvement compared with $76.3 million (gross margin of 69.3%) in 2019.

Gross profit on a non-GAAP basis for 2020 was $96.8 million (gross margin of 71.2%), a 25% improvement compared with $77.3 million (gross margin of 70.2%) in 2019.

Net loss on a GAAP basis for 2020 was $9.3 million, or $0.27 per basic share, compared with a net loss of $8.7 million, or $0.25 per basic share, in 2019.

Net loss on a non-GAAP for 2020 was $3.6 million, or $0.10 per basic share, a decrease compared with a non-GAAP net loss of $7.5 million, or $0.22 per basic share, in 2019.

Cash and investments as of December 31, 2020 totaled $99.4 million, compared to $107.2 million as of September 30, 2020 and $117.6 million as of December 31, 2019.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss fourth quarter and full year 2020 earnings results today, February 9, 2021 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, 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 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

*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 customer's 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, 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 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

+1 646 201 9246

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

   

Year Ended

 

December 31,

   

December 31,

 

2020

 

2019

   

2020

 

2019

 

(Unaudited)

 

(Unaudited)

   

(Unaudited)

 

(Audited)

                 

Revenues

$       39,091

 

$       30,567

   

$     135,922

 

$     110,100

Cost of revenues

11,627

 

9,784

   

40,082

 

33,834


Gross profit  

27,464

 

20,783

   

95,840

 

76,266

                 

Operating expenses:

               

Research and development costs, net

12,611

 

8,563

   

43,447

 

31,461

Sales and marketing

12,787

 

12,186

   

47,528

 

47,105

General and administrative

3,223

 

1,954

   

13,894

 

6,678

Total operating expenses

28,621

 

22,703

   

104,869

 

85,244

Operating loss

(1,157)

 

(1,920)

   

(9,029)

 

(8,978)

Financial and other income, net

343

 

600

   

1,857

 

1,960

Loss before income tax expenses

(814)

 

(1,320)

   

(7,172)

 

(7,018)

                 

Tax expenses

867

 

362

   

2,176

 

1,641

Net Loss

(1,681)

 

(1,682)

   

(9,348)

 

(8,659)

                 

 Basic net loss per share

$          (0.05)

 

$          (0.05)

   

$          (0.27)

 

$          (0.25)

                 
                 

 Diluted net loss per share

$          (0.05)

 

$          (0.05)

   

$          (0.27)

 

$          (0.25)

                 

Weighted average number of shares used in 

               

computing basic net loss per share

35,317,213

 

34,450,317

   

35,007,201

 

34,250,582

                 

Weighted average number of shares used in 

               

computing diluted net loss per share

35,317,213

 

34,450,317

   

35,007,201

 

34,250,582

 

 

 

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

 

Year Ended

   

December 31,

 

December 31,

   

2020

 

2019

 

2020

 

2019

   

(Unaudited)

 

(Unaudited)

GAAP cost of revenues

$     11,627

 

$        9,784

 

$     40,082

 

$     33,834

 Share-based compensation (1) 

(113)

 

(76)

 

(355)

 

(264)

 Amortization of intangible assets (2) 

(152)

 

(152)

 

(608)

 

(853)

 Changes in taxes and headcount related items (4)

-

 

-

 

-

 

75

Non-GAAP cost of revenues

$     11,362

 

$        9,556

 

$     39,119

 

$     32,792

                 

 GAAP gross profit 

$     27,464

 

$     20,783

 

$     95,840

 

$     76,266

 Gross profit adjustments 

265

 

228

 

963

 

1,042

 Non-GAAP gross profit 

$     27,729

 

$     21,011

 

$     96,803

 

$     77,308

                 

 GAAP operating expenses 

$     28,621

 

$     22,703

 

$   104,869

 

$     85,244

 Share-based compensation (1) 

(1,663)

 

(942)

 

(4,843)

 

(3,156)

 Amortization of intangible assets (2) 

-

 

(189)

 

-

 

(754)

 Income (Expenses) related to M&A activities (3) 

-

 

1,246

 

(82)

 

3,980

 Changes in taxes and headcount related items (4)

296

 

-

 

296

 

(31)

 Non-GAAP operating expenses 

$     27,254

 

$     22,818

 

$   100,240

 

$     85,283

                 

 GAAP financial and other income 

$           343

 

$           600

 

$        1,857

 

$        1,960

 Exchange rate differences* 

(84)

 

(119)

 

(552)

 

83

 Non-GAAP Financial and other income 

$           259

 

$           481

 

$        1,305

 

$        2,043

                 

 GAAP taxes on income 

$           867

 

$           362

 

$        2,176

 

$        1,641

 Tax expenses in respect of net deferred tax asset recorded 

(15)

 

(25)

 

(202)

 

(74)

 Changes in tax related items 

(500)

 

-

 

(500)

 

-

 Non-GAAP taxes on income 

$           352

 

$           337

 

$        1,474

 

$        1,567

                 

 GAAP Net Loss 

$      (1,681)

 

$      (1,682)

 

$      (9,348)

 

$      (8,659)

 Share-based compensation (1) 

1,776

 

1,018

 

5,198

 

3,420

 Amortization of intangible assets (2) 

152

 

341

 

608

 

1,607

 Expenses (Income) related to M&A activities (3) 

-

 

(1,246)

 

82

 

(3,980)

 Changes in taxes and headcount related items (4)

(296)

 

-

 

(296)

 

(44)

 Exchange rate differences* 

(84)

 

(119)

 

(552)

 

83

 Tax expenses in respect of net deferred tax asset recorded 

15

 

25

 

202

 

74

 Changes in tax related items 

 

500

 

-

 

500

 

-

 Non-GAAP Net income (loss) 

$           382

 

$      (1,663)

 

$      (3,606)

 

$      (7,499)

                 

 GAAP Loss per share (diluted) 

$        (0.05)

 

$        (0.05)

 

$        (0.27)

 

$        (0.25)

 Share-based compensation 

0.05

 

0.03

 

0.15

 

0.10

 Amortization of intangible assets 

0.01

 

0.01

 

0.02

 

0.05

 Expenses (Income) related to M&A activities 

-

 

(0.04)

 

0.01

 

(0.12)

Changes in taxes and headcount related items (4)

 

(0.01)

 

-

 

(0.01)

 

(0.00)

 Exchange rate differences* 

(0.00)

 

(0.00)

 

(0.01)

 

0.00

 Changes in tax related items 

 

0.01

 

-

 

0.01

 

-

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

$          0.01

 

$        (0.05)

 

$        (0.10)

 

$        (0.22)

                 
                 

Weighted average number of shares used in 

             

computing GAAP diluted net loss per share

35,317,213

 

34,450,317

 

35,007,201

 

34,250,582

                 
                 

Weighted average number of shares used in 

             

computing non-GAAP diluted net income (loss) per share

37,574,546

 

34,450,317

 

35,007,201

 

34,250,582

                 

* 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

 

Year Ended

   

December 31,

 

December 31,

   

2020

 

2019

 

2020

 

2019

   

(Unaudited)

 

(Unaudited)

                 

(1) Share-based compensation:

             
 

Cost of revenues

$           113

 

$             76

 

$           355

 

$           264

 

Research and development costs, net

412

 

230

 

1,368

 

847

 

Sales and marketing

683

 

350

 

2,145

 

1,257

 

General and administrative

568

 

362

 

1,330

 

1,052

   

$        1,776

 

$        1,018

 

$        5,198

 

$        3,420

                 

 (2) Amortization of intangible assets 

             
 

Cost of revenues

$           152

 

$           152

 

$           608

 

$           853

 

Sales and marketing

-

 

189

 

-

 

754

   

$           152

 

$           341

 

$           608

 

$        1,607

                 

 (3) Expenses (Income) related to M&A activities 

             
 

General and administrative 

$              -

 

$      (1,374)

 

$              -

 

$      (4,882)

 

Research and development costs, net

-

 

128

 

82

 

902

   

$              -

 

$      (1,246)

 

$             82

 

$      (3,980)

                 

 (4) Changes in taxes and headcount related items  

             
 

Cost of revenues

$              -

 

$              -

 

$              -

 

$           (75)

 

Sales and marketing

(296)

 

-

 

(296)

 

16

 

General and administrative

-

 

-

 

-

 

15

   

$         (296)

 

$              -

 

$         (296)

 

$           (44)

 

 

TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)

         
   

December 31,

 

December 31,

   

2020

 

2019

   

(Unaudited)

 

(Audited)

     

ASSETS

       

CURRENT ASSETS:

       

Cash and cash equivalents

 

$            23,599

 

$            16,930

Short-term bank deposits

 

47,225

 

5,557

Restricted deposit

 

1,200

 

23,183

Available-for-sale marketable securities

 

27,178

 

61,012

Trade receivables, net

 

20,685

 

29,008

Other receivables and prepaid expenses

 

14,205

 

6,528

Inventories

 

12,586

 

10,668

Total current assets

 

146,678

 

152,886

         

LONG-TERM ASSETS:

       

Restricted deposit

 

-

 

10,913

Long-term bank deposits

 

215

 

-

Severance pay fund

 

434

 

387

Operating lease right-of-use assets

 

4,458

 

6,368

Deferred taxes

 

420

 

517

Other assets 

 

2,975

 

926

Total long-term assets

 

8,502

 

19,111

         

PROPERTY AND EQUIPMENT, NET

 

11,993

 

8,135

GOODWILL AND INTANGIBLE ASSETS, NET

 

34,427

 

35,037

         

Total assets

 

$          201,600

 

$          215,169

         

LIABILITIES AND SHAREHOLDERS'
EQUITY

       

CURRENT LIABILITIES:

       

Trade payables

 

$               2,092

 

$            11,676

Deferred revenues

 

26,658

 

36,360

Short-term operating lease liabilities

 

2,813

 

3,151

Other payables and accrued expenses

 

27,299

 

22,255

Total current liabilities

 

58,862

 

73,442

         

LONG-TERM LIABILITIES:

       

Deferred revenues

 

9,782

 

5,262

Long-term operating lease liabilities

 

1,835

 

3,820

Accrued severance pay

 

969

 

794

Total long-term liabilities

 

12,586

 

9,876

         

SHAREHOLDERS' EQUITY

 

130,152

 

131,851

         

Total liabilities and shareholders' equity

 

$          201,600

 

$          215,169

 

 

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)

               
 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2020

 

2019

 

2020

 

2019

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Audited)

               

Cash flows from operating activities:

             
               

Net Loss

$        (1,681)

 

$     (1,682)

 

$      (9,348)

 

$     (8,659)

Adjustments to reconcile net income  to net cash provided by (used in) operating activities:

           

Depreciation

1,041

 

837

 

3,704

 

2,752

Stock-based compensation related to options granted to employees

1,776

 

1,018

 

5,198

 

3,420

Amortization of intangible assets

152

 

341

 

608

 

1,607

Capital loss 

18

 

-

 

18

 

-

Increase (Decrease) in accrued severance pay, net

92

 

(21)

 

128

 

(54)

Increase in other assets

(2,315)

 

(160)

 

(2,048)

 

(326)

Decrease in accrued interest and  amortization of premium on marketable securities 

11

 

7

 

357

 

343

Changes in operating leases, net

198

 

456

 

(413)

 

603

Decrease (Increase) in trade receivables

(1,740)

 

(8,034)

 

8,323

 

(2,915)

Increase in other receivables and prepaid expenses

(6,126)

 

(2,479)

 

(7,272)

 

(3,168)

Decrease (Increase) in inventories

2,950

 

(1,502)

 

(1,918)

 

(253)

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

(76)

 

33

 

96

 

(236)

Increase (Decrease) in trade payables

(8,807)

 

4,389

 

(9,584)

 

3,863

Increase in employees and payroll accruals

2,395

 

4,048

 

2,047

 

4,635

Increase (Decrease) in deferred revenues

4,215

 

5,760

 

(5,182)

 

23,520

Increase (Decrease) in other payables, accrued expenses and other long term liabilities

2,091

 

464

 

3,061

 

(9,040)

Net cash provided by (used in) operating activities

(5,806)

 

3,475

 

(12,225)

 

16,092

               

Cash flows from investing activities:

             

Decrease (Increase) in restricted deposit

519

 

(23,331)

 

32,896

 

(33,374)

Redemption of (Investment in) short-term deposits 

7,936

 

3,000

 

(41,883)

 

16,986

Purchase of property and equipment

(2,035)

 

(918)

 

(7,582)

 

(3,708)

Investment in available-for sale marketable securities

(844)

 

(8,154)

 

(1,219)

 

(39,950)

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

5,483

 

11,173

 

34,847

 

43,555

Net cash provided by (used in) investing activities

11,059

 

(18,230)

 

17,059

 

(16,491)

               

Cash flows from financing activities:

             
               

Exercise of employee stock options 

155

 

220

 

1,835

 

993

Net cash provided by financing activities

155

 

220

 

1,835

 

993

               
               

Increase (Decrease) in cash and cash equivalents

5,408

 

(14,535)

 

6,669

 

594

Cash and cash equivalents at the beginning of the period

18,191

 

31,465

 

16,930

 

16,336

Cash and cash equivalents at the end of the period

$        23,599

 

$     16,930

 

$     23,599

 

$     16,930

 

 

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SOURCE Allot Ltd.