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May 25, 2024 2:43 AM EDT
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Allot Announces Q1 2023 Financial Results

Allot Announces Q1 2023 Financial Results

May 16, 2023 at 5:00 AM EDT

HOD HASHARON, Israel, May 16, 2023 /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 2023 financial results.

Allot Logo

Q1 Financial Highlights

  • First quarter revenues were $21.1 million;
  • SECaaS revenues were $2.3 million; March 2023 SECaaS ARR* was $9.3 million;
  • First quarter GAAP operating loss was $11.9 million, and non-GAAP operating loss was $8.2 million;
  • Q1 GAAP net loss was $11.4 million, and non-GAAP net loss was $7.7 million;

Financial Outlook

Looking ahead, management reiterates its financial expectations as follows:

  • Full year 2023 revenues of $110 million to $120 million (of which SECaaS revenues are expected to be between $11 million and $13 million);
  • Full year 2023 operating loss and net negative cash flow of between $15 million and $20 million;
  • December 2023 total ARR*, including SECaaS ARR* and Support & Maintenance ARR*, is expected to be between $56 million and $63 million;
  • Reiterates expectations to be profitable in 2024;

Management Comment

Erez Antebi, President & CEO of Allot, commented, "In light of continued challenging economic conditions and our lower revenues, we have been continuously working to reduce our expenses.  We remain committed to our target of reaching profitability in 2024 through the growth of the SECaaS business, combined with tight expense control. We believe that our strategy of transforming our business towards a recurring SECaaS revenue model will drive sustainable profitable growth and long-term shareholder value."

Q1 2023 Financial Results Summary

Total revenues for the first quarter of 2023 were $21.1 million, a decrease of 34% compared to $31.9 million in the first quarter of 2022.

Gross profit on a GAAP basis for the first quarter of 2023 was $13.5 million (gross margin of 63.8%), a 39% decline compared with $22.1 million (gross margin of 69.3%) in the first quarter of 2022.

Gross profit on a non-GAAP basis for the first quarter of 2023 was $14.2 million (gross margin of 67.2%), a 37% decline compared with $22.4 million (gross margin of 70.3%) in the first quarter of 2022. The gross margin level in the current quarter was impacted by product mix and the lower revenue level.

Net loss on a GAAP basis for the first quarter of 2023 was $11.4 million, or $0.30 per basic share, compared with a net loss of $6.1 million, or $0.17 per basic share, in the first quarter of 2022.

Net loss on a non-GAAP for the first quarter of 2023 was $7.7 million, or $0.21 per basic share compared with a non-GAAP net loss of $3.5 million, or $0.10 per basic share, in the first quarter of 2022.

Cash, short-term bank deposits and investments as of March 31, 2023 totaled $77.3 million, compared to $86.4 million as of December 31, 2022.

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












Dec. 2021 


Dec. 2022


Dec. 2023
target


2022 vs. 2021


2023 (target) vs. 2022 

Support & maintenance ARR *

42.0


42.5


41-43


1 %


(4%) -1%













SECaaS ARR **


5.2


9.2


15-20


77 %


63%-117%













Total ARR


47.2


51.7


 56-63


10 %


8%-22%













* 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 month of December and multiplied by 12.

 

Conference Call & Webcast:

The Allot management team will host a conference call to discuss its first quarter 2023 earnings results today, May 16, 2023 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: +972-3-918-0610

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 support & maintenance revenues, which is calculated based on these expected revenues in the first 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 month of December and multiplied by 12).

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, other acquisition-related expenses 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:

EK Global Investor Relations

Ehud Helft

+1 212 378 8040

allot@ekgir.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,


2023


2022


(Unaudited)





Revenues

$       21,126


$       31,896

Cost of revenues

7,651


9,792

Gross profit  

13,475


22,104





Operating expenses:




Research and development costs, net

10,494


12,030

Sales and marketing

10,887


11,689

General and administrative

3,960


4,037

Total operating expenses

25,341


27,756

Operating loss

(11,866)


(5,652)

Financial and other income, net

794


247

Loss before income tax expenses

(11,072)


(5,405)





Tax expenses

290


722

Net Loss

(11,362)


(6,127)





 Basic net loss per share

$         (0.30)


$         (0.17)









 Diluted net loss per share

$         (0.30)


$         (0.17)





Weighted average number of shares used in 




computing basic net loss per share

37,421,720


36,539,247





Weighted average number of shares used in 




computing diluted net loss per share

37,421,720


36,539,247

 

 

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,



2023


2022



(Unaudited)

GAAP cost of revenues

$           7,651


$          9,792

 Share-based compensation (1) 

(531)


(181)

 Amortization of intangible assets (2) 

(193)


(152)

Non-GAAP cost of revenues

$           6,927


$          9,459






 GAAP gross profit 

$        13,475


$        22,104

 Gross profit adjustments 

724


333

 Non-GAAP gross profit 

$        14,199


$        22,437






 GAAP operating expenses 

$        25,341


$        27,756

 Share-based compensation (1) 

(2,937)


(2,356)

 Non-GAAP operating expenses 

$        22,404


$        25,400






 GAAP financial and other income 

$              794


$             247

 Expenses related to M&A activities (3) 

14


-

 Exchange rate differences* 

(43)


(73)

 Non-GAAP Financial and other income 

$              765


$             174






 GAAP taxes on income 

$              290


$             722

 Changes in tax related items 

(25)


-

 Non-GAAP taxes on income 

$              265


$             722






 GAAP Net Loss 

$      (11,362)


$        (6,127)

 Share-based compensation (1) 

3,468


2,537

 Amortization of intangible assets (2) 

193


152

 Expenses related to M&A activities (3) 


14


-

 Exchange rate differences* 

(43)


(73)

 Changes in tax related items 


25


-

 Non-GAAP Net income (loss) 

$         (7,705)


$        (3,511)






 GAAP Loss per share (diluted) 

$           (0.30)


$          (0.17)

 Share-based compensation 

0.09


0.07

 Amortization of intangible assets 

0.00


0.00

 Expenses related to M&A activities 

0.00


-

Changes in taxes and headcount related items


-


-

 Exchange rate differences* 

(0.00)


0.00

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

$           (0.21)


$          (0.10)











Weighted average number of shares used in 




computing GAAP diluted net loss per share

37,421,720


36,539,247











Weighted average number of shares used in 




computing non-GAAP diluted net loss per share

37,421,720


36,539,247






* 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,



2023


2022



(Unaudited)







(1) Share-based compensation:





          Cost of revenues

$              531


$             181

          Research and development costs, net

1,202


845

         Sales and marketing

1,037


913

         General and administrative

698


598


$           3,468


$          2,537





 (2) Amortization of intangible assets 




           Cost of revenues

$              193


$             152



$              193


$             152






 (3) Expenses related to M&A activities 




         Financial income

$                14


$                -



$                14


$                -

 

 

 

TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)













March 31,


December 31,



2023


2022



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$                     14,608


$                 12,295

Short-term bank deposits


51,765


68,765

Restricted deposits


1,050


1,050

Available-for-sale marketable securities


9,909


4,293

Trade receivables, net


39,610


44,167

Other receivables and prepaid expenses


7,223


7,985

Inventories


16,715


13,262

Total current assets


140,880


151,817






LONG-TERM ASSETS:





Severance pay fund


361


371

Operating lease right-of-use assets


4,665


5,387

Trade receivables, net


5,005


4,934

Other assets 


1,226


864

Total long-term assets


11,257


11,556






PROPERTY AND EQUIPMENT, NET


13,186


14,236

GOODWILL AND INTANGIBLE ASSETS, NET


35,068


35,344






Total assets


$                  200,391


$               212,953






LIABILITIES AND SHAREHOLDERS'
EQUITY





CURRENT LIABILITIES:





Trade payables


$                     12,400


$                 11,661

Deferred revenues


18,977


20,825

Short-term operating lease liabilities


2,361


2,542

Other payables and accrued expenses


23,388


25,573

Total current liabilities


57,126


60,601






LONG-TERM LIABILITIES:





Deferred revenues


6,964


7,285

Long-term operating lease liabilities


1,655


2,579

Accrued severance pay


990


940

Convertible debt


39,624


39,575

Total long-term liabilities


49,233


50,379






SHAREHOLDERS' EQUITY


94,032


101,973






Total liabilities and shareholders' equity


$                  200,391


$               212,953

 

 

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)






Three Months Ended


March 31,


2023


2022


(Unaudited)





Cash flows from operating activities:








Net Loss

$      (11,362)


$     (6,127)

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




Depreciation

1,320


1,414

Stock-based compensation

3,468


2,537

Amortization of intangible assets

276


235

Increase (Decrease) in accrued severance pay, net

60


(6)

Decrease (Increase) in other assets

(362)


417

Decrease in accrued interest and  amortization of premium on marketable securities 

19


32

Changes in operating leases, net

(383)


(372)

Decrease (Increase) in trade receivables

4,486


(725)

Decrease (Increase) in other receivables and prepaid expenses

861


(1,034)

Increase in inventories

(3,453)


(1,755)

Increase in trade payables

739


496

Decrease in employees and payroll accruals

(1,452)


(2,486)

Increase (Decrease) in deferred revenues

(2,169)


842

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

(901)


(271)

Amortization of issuance costs of Convertible debt

49


-

Net cash used in operating activities

(8,804)


(6,803)





Cash flows from investing activities:




Decrease in restricted deposit

-


120

Redemption of (Investment in) short-term deposits

17,000


(25,700)

Purchase of property and equipment

(270)


(1,275)

Investment in available-for sale marketable securities

(8,983)


-

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

3,370


3,158

Net cash provided by (used in) investing activities

11,117


(23,697)





Cash flows from financing activities:




Proceeds from exercise of stock options

-


235

Issuance of convertible debt

-


39,426

Net cash provided by financing activities

-


39,661









Increase in cash and cash equivalents

2,313


9,161

Cash and cash equivalents at the beginning of the period

12,295


11,717





Cash and cash equivalents at the end of the period

$        14,608


$     20,878

 

 

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












Q1-2023


FY 2022


FY 2021


Revenues geographic breakdown








Americas


2.3

11 %

21.8

18 %

19.4

14 %


EMEA


13.4

63 %

71.2

58 %

82.0

56 %


Asia Pacific


5.4

26 %

29.7

24 %

44.2

30 %




21.1

100 %

122.7

100 %

145.6

100 %










Revenue breakdown by type








Products


6.7

32 %

61.1

50 %

88.1

60 %


Professional Services

1.9

9 %

11.6

9 %

15.2

11 %


SECaaS (Security as a Service)

2.3

11 %

7.2

6 %

4.1

3 %


Support & Maintenance

10.2

48 %

42.8

35 %

38.2

26 %




21.1

100 %

122.7

100 %

145.6

100 %










Revenues per customer type








CSP


17.0

81 %

98.3

80 %

116.9

80 %


Enterprise


4.1

19 %

24.4

20 %

28.7

20 %




21.1

100 %

122.7

100 %

145.6

100 %










% of top-10 end-customers out of revenues

52 %


44 %


51 %











Total number of full time employees 

730


749


741


(end of period)

















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

37.4


37.0


36.1

















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

39.6


39.5


38.4




 

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



Q1-2023:

2.3

Q4-2022:

2.2

Q3-2022:

1.7

Q2-2022:

1.7

Q1-2022:

1.5



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



Mar. 2023:

9.3

Dec. 2022:

9.2

Dec. 2021:

5.2

Dec. 2020:

2.7



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

 

 

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SOURCE Allot Ltd.