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Oct 16, 2022 12:53 AM EDT
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Allot Announces Second Quarter 2022 Financial Results

Allot Announces Second Quarter 2022 Financial Results

August 16, 2022 at 5:00 AM EDT

HOD HASHARON, Israel, Aug. 16, 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 second quarter 2022 financial results.

Allot Logo

 Second Quarter 2022 Financial Highlights

  • Second quarter revenues were $32.8 million compared with $35.3 million in the second quarter of last year;
  • Gross margin on a non-GAAP basis was 70%;
  • GAAP operating loss was $6.5 million and non-GAAP operating loss was $4.2 million;
  • GAAP net loss was $6.2 million and non-GAAP net loss was $4.2 million.

Financial Outlook

For 2022, management adjusts its previously announced guidance as follows:

  • Revenues to be between $125 - 130 million; (the third quarter of 2022 is expected to be approximately $25 million);
  • Additional recurring security deals to be executed, providing incremental MAR** of more than $180 million for the full year 2022;
  • December 2022 total ARR* including SECaas ARR* and Support & Maintenance ARR* to be between $50-52 million, representing approximately 15% year-over-year growth versus 2021 at the midpoint;
  • December 2022 SECaas ARR* to be approximately $9 million;
  • Recurring security revenue to be approximately $7 million.

Management Comment

Erez Antebi, President & CEO of Allot, commented, "Several sizeable CAPEX deals that we expected to conclude and be able to at least partially deliver in the second and third quarters, are now not expected to close before the fourth quarter. As a result, we are modifying our revenue forecast for the remainder of this year."

Continued Mr. Antebi, "Looking at the DPI market in general, we continue to see many opportunities and an overall solid DPI market. In the SECaas business, we closed several new deals this quarter and 2 additional operators launched the security service."

"We are fully aware of the challenges we face. We have set a goal to be profitable in 2024 by growing our SECaas revenues and closely controlling our expenses.  We have full faith in our company, our team, our products and in our ability to meet these goals, " concluded Antebi.

Q2 2022 Financial Results Summary

Total revenues for the second quarter of 2022 were $32.8 million, a decrease of 7% compared to $35.3 million in the second quarter of 2021.

Gross profit on a GAAP basis for the second quarter of 2022 was $22.5 million (gross margin of 68.7%), an 8% decline compared with $24.5 million (gross margin of 69.3%) in the second quarter of 2021.

Gross profit on a non-GAAP basis for the second quarter of 2022 was $23.0 million (gross margin of 70.2%), a 7% decline compared with $24.8 million (gross margin of 70.2%) in the second quarter of 2021.

Net loss on a GAAP basis for the second quarter of 2022 was $6.2 million, or $0.17 per basic share, compared with a net loss of $4.0 million, or $0.11 per basic share, in the second quarter of 2021.

Net loss on a non-GAAP for the second quarter of 2022 was $4.2 million, or $0.11 per basic share compared with a non-GAAP net loss of $1.5 million, or $0.04 per basic share, in the second quarter of 2021.

Cash and investments as of June 30,2022 totaled $108.0 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 second quarter 2022 earnings results today, August 16, 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 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:

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



Six Months Ended


June 30,



June 30,


2022


2021



2022


2021


(Unaudited)



(Unaudited)










Revenues

$       32,772


$       35,288



$       64,668


$       66,471

Cost of revenues

10,242


10,822



20,034


20,413

Gross profit  

22,530


24,466



44,634


46,058










Operating expenses:









Research and development costs, net

12,480


11,373



24,510


21,940

Sales and marketing

12,220


12,818



23,909


24,411

General and administrative

4,303


4,080



8,340


7,280

Total operating expenses

29,003


28,271



56,759


53,631

Operating loss

(6,473)


(3,805)



(12,125)


(7,573)

Financial and other income, net

620


194



867


309

Loss before income tax expenses

(5,853)


(3,611)



(11,258)


(7,264)










Tax expenses

380


368



1,102


673

Net Loss

(6,233)


(3,979)



(12,360)


(7,937)










 Basic net loss per share

$         (0.17)


$         (0.11)



$         (0.34)


$         (0.22)



















 Diluted net loss per share

$         (0.17)


$         (0.11)



$         (0.34)


$         (0.22)










Weighted average number of shares used in 









 computing basic net loss per share

36,827,197


35,941,378



36,684,017


35,739,556










Weighted average number of shares used in 









  computing diluted net loss per share

36,827,197


35,941,378



36,684,017


35,739,556










 

 

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


Six Months Ended



June 30,


June 30,



2022


2021


2022


2021



(Unaudited)


(Unaudited)

GAAP cost of revenues

$        10,242


$        10,822


$       20,034


$       20,413

 Share-based compensation (1) 

(338)


(164)


(519)


(283)

 Amortization of intangible assets (2) 

(152)


(152)


(304)


(304)

Non-GAAP cost of revenues

$          9,752


$        10,506


$       19,211


$       19,826










 GAAP gross profit 

$        22,530


$        24,466


$       44,634


$       46,058

 Gross profit adjustments 

490


316


823


587

 Non-GAAP gross profit 

$        23,020


$        24,782


$       45,457


$       46,645










 GAAP operating expenses 

$        29,003


$        28,271


$       56,759


$       53,631

 Share-based compensation (1) 

(1,831)


(2,097)


(4,187)


(3,422)

 Non-GAAP operating expenses 

$        27,172


$        26,174


$       52,572


$       50,209










 GAAP financial and other income 

$             620


$            194


$            867


$            309

 Exchange rate differences* 

(316)


14


(389)


90

 Non-GAAP Financial and other income 

$             304


$            208


$            478


$            399










 GAAP taxes on income 

$             380


$            368


$         1,102


$            673

 Tax expenses in respect of net deferred tax asset recorded 

-


(102)


-


(169)

 Changes in tax related items 

(50)


-


(50)


-

 Non-GAAP taxes on income 

$             330


$            266


$         1,052


$            504










 GAAP Net Loss 

$         (6,233)


$        (3,979)


$      (12,360)


$        (7,937)

 Share-based compensation (1) 

2,169


2,261


4,706


3,705

 Amortization of intangible assets (2) 

152


152


304


304

 Exchange rate differences* 

(316)


14


(389)


90

 Tax expenses in respect of net deferred tax asset recorded 

-


102


-


169

 Changes in tax related items 


50


-


50


-

 Non-GAAP Net income (loss) 

$         (4,178)


$        (1,450)


$        (7,689)


$        (3,669)










 GAAP Loss per share (diluted) 

$           (0.17)


$          (0.11)


$         (0.34)


$         (0.22)

 Share-based compensation 

0.06


0.06


0.13


0.10

 Amortization of intangible assets 

0.0


0.01


0.00


0.02

 Exchange rate differences* 

(0.0)


0.00


(0.00)


-

 Tax expense in respect of net deferred tax asset recorded 

-


0.00


-


-

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

$           (0.11)


$          (0.04)


$         (0.21)


$         (0.10)



















Weighted average number of shares used in 








computing GAAP diluted net loss per share

36,827,197


35,941,378


36,684,017


35,739,556



















Weighted average number of shares used in 








computing non-GAAP diluted net loss per share

36,827,197


35,941,378


36,684,017


35,739,556










* 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


Six Months Ended



June 30,


June 30,



2022


2021


2022


2021



(Unaudited)


(Unaudited)










(1) Share-based compensation:









Cost of revenues

$             338


$            164


$            519


$            283


Research and development costs, net

844


699


1,689


1,094


Sales and marketing

619


930


1,532


1,512


General and administrative

368


468


966


816



$          2,169


$          2,261


$         4,706


$         3,705










 (2) Amortization of intangible assets 









Cost of revenues

$             152


$            152


$            304


$            304



$             152


$            152


$            304


$            304

 

 

TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)













June 30,


December 31,



2022


2021



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$                   15,461


$                11,717

Short-term bank deposits


85,900


60,720

Restricted deposits


1,100


1,480

Available-for-sale marketable securities


5,319


11,531

Trade receivables, net


36,288


30,829

Other receivables and prepaid expenses


8,629


8,490

Inventories


12,256


11,092

Total current assets


164,953


135,859






LONG-TERM ASSETS:





Long-term bank deposits


215


215

Severance pay fund


369


407

Operating lease right-of-use assets


7,134


8,513

Trade receivables, net


5,991


6,643

Other assets 


1,203


1,639

Total long-term assets


14,912


17,417






PROPERTY AND EQUIPMENT, NET


14,809


15,000

GOODWILL AND INTANGIBLE ASSETS, NET


34,668


35,138






Total assets


$                 229,342


$              203,414






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$                     3,003


$                  3,940

Deferred revenues


26,765


22,138

Short-term operating lease liabilities


2,722


2,785

Other payables and accrued expenses


26,073


26,250

Total current liabilities


58,563


55,113






LONG-TERM LIABILITIES:





Deferred revenues


12,444


15,942

Long-term operating lease liabilities


3,588


5,467

Accrued severance pay


866


884

Convertible debt


39,475


-

Total long-term liabilities


56,373


22,293






SHAREHOLDERS' EQUITY


114,406


126,008






Total liabilities and shareholders' equity


$                 229,342


$              203,414

 

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)










Three Months Ended


Six Months Ended


June 30,


June 30,


2022


2021


2022


2021


(Unaudited)


(Unaudited)









Cash flows from operating activities:
















Net Loss

$        (6,233)


$      (3,979)


$      (12,360)


$          (7,937)

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








Depreciation

1,332


1,141


2,746


2,229

Stock-based compensation

2,169


2,261


4,706


3,705

Amortization of intangible assets

235


234


470


471

Increase (Decrease) in accrued severance pay, net

26


12


20


(60)

Decrease (Increase) in other assets

19


(458)


436


1,041

Decrease in accrued interest and  amortization of premium on marketable securities 

16


32


48


107

Changes in operating leases, net

(191)


(479)


(563)


(711)

Increase in trade receivables

(4,082)


(3,113)


(4,807)


(10,256)

Decrease (Increase) in other receivables and prepaid expenses

141


3,094


(893)


3,522

Decrease (Increase) in inventories

591


4,246


(1,164)


3,289

Decrease in long-term deferred taxes, net

-


103


-


175

Increase (Decrease) in trade payables

(1,433)


334


(937)


(536)

Increase (Decrease) in employees and payroll accruals

523


1,286


(1,963)


(623)

Increase in deferred revenues

287


1,640


1,129


16,612

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

(1,252)


(2,761)


(1,523)


(3,364)

Amortization of issuance costs of Convertible debt

49


-


71


-

Net cash provided by (used in) operating activities

(7,803)


3,593


(14,584)


7,664









Cash flows from investing activities:








Decrease (Increase) in restricted deposit

260


(2,440)


380


(2,874)

Redemption of (Investment in) short-term deposits

520


100


(25,180)


(24,200)

Purchase of property and equipment

(1,281)


(1,934)


(2,556)


(3,629)

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

2,872


3,231


6,030


7,579

Net cash provided by (used in) investing activities

2,371


(1,043)


(21,326)


(23,124)









Cash flows from financing activities:








Proceeds from exercise of stock options

15


908


250


2,467

Issuance of convertible debt

-


-


39,404


-

Net cash provided by financing activities

15


908


39,654


2,467

















Increase (Decrease) in cash and cash equivalents

(5,417)


3,458


3,744


(12,993)

Cash and cash equivalents at the beginning of the period

20,878


7,148


11,717


23,599









Cash and cash equivalents at the end of the period

$        15,461


$     10,606


$        15,461


$          10,606

 

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




Q2-2022


YTD 2022


FY 2021


Revenues geographic breakdown








Americas


9.4

29 %

13.1

20 %

19.4

14 %


EMEA


16.0

49 %

34.7

54 %

82.0

56 %


Asia Pacific


7.4

22 %

16.9

26 %

44.2

30 %




32.8

100 %

64.7

100 %

145.6

100 %










Revenue breakdown by type








Products


17.0

52 %

34.2

53 %

88.1

60 %


Professional Services

3.1

10 %

5.7

9 %

15.2

11 %


SECaaS (Security as a Service)

1.7

5 %

3.2

5 %

4.1

3 %


Support & Maintenance

11.0

33 %

21.6

33 %

38.2

26 %




32.8

100 %

64.7

100 %

145.6

100 %










Revenues per customer type








CSP


26.1

79 %

51.9

80 %

116.9

80 %


Enterprise


6.7

21 %

12.8

20 %

28.7

20 %




32.8

100 %

64.7

100 %

145.6

100 %










% of top-10 end-customers out of revenues

59 %


54 %


51 %











Total number of full time employees (end of period)

749


749


741











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

36.8


36.7


36.1








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

38.9


39.2


38.4


 

 

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



Q2-2022:

1.7

Q1-2022:

1.5

Q4-2021:

1.3

Q3-2021:

1.2



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



Jun. 2022:

6.9

Dec. 2021:

5.2

Dec. 2020:

2.7

Dec. 2019:

0.5



*ARR: annualized recurring SECaaSrevenues, 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


9


93 %


73 %

Total ARR

33.9


47.2


 50-52


39 %


 6%-10%

* 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.

 

 

Cision View original content:https://www.prnewswire.com/news-releases/allot-announces-second-quarter-2022-financial-results-301606368.html

SOURCE Allot Ltd.