Allot Announces Fourth Quarter & Full Year 2023

Financial Results

 

Hod Hasharon, Israel – February 15, 2024 - 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 2023 financial results.

 

 

 

 

 

 

 

Looking ahead to 2024, management expectations are as follows:

 

 

 

 

Erez Antebi, President & CEO of Allot, commented, “2023 represented a year with significant challenges on multiple fronts. While the macro economic environment and service provider spending remain challenging, we are controlling what we can control. As we announced in prior quarters, we have taken aggressive actions to align our expense footprint with the expected revenue level going ahead. Our goal is to bring the business back to profitability  while investing in our long-term growth engine, Security as a Service (SECaaS).”

 

The Company also announces that Mr. Manuel Echanove is stepping down from the Board to focus on other opportunities.

 

 

Total revenues for the fourth quarter of 2023 were $24.3 million, a decrease of 26.3% compared to $33.0 million in the fourth quarter of 2022.

 

Gross profit on a GAAP basis for the fourth quarter of 2023 was $11.4 million (gross margin of 46.8%), a 47.9% decline compared with $21.9 million (gross margin of 66.3%) in the fourth quarter of 2022.

 

Gross profit on a non-GAAP basis for the fourth quarter of 2023 was $12.6 million (gross margin of 51.7%), a 43.7% decline compared with $22.4 million (gross margin of 67.7%) in the fourth quarter of 2022. The fourth quarter gross margin level was negatively impacted by a one-time write-off.

 

Net loss on a GAAP basis for the fourth quarter of 2023 was $18.3 million, or $0.48 per basic share, compared with a net loss of $6.7 million, or $0.18 per basic share, in the fourth quarter of 2022.

 

Net loss on a non-GAAP for the fourth quarter of 2023 was $16.4 million, or $0.43 per basic share compared with a non-GAAP net loss of $4.9 million, or $0.13 per basic share, in the fourth quarter of 2022. A credit loss provision for 2 specific customers of approximately $9 million increased the fourth quarter expenses.

 

 Total revenues for 2023 were $93.2 million, a 24.1% decrease compared to $122.7 million in 2022.

 

Gross profit on a GAAP basis for 2023 was $52.7 million (gross margin of 56.6%), a 36.5% decline compared with $82.9 million (gross margin of 67.5%) in 2022.

 

Gross profit on a non-GAAP basis for 2023 was $55.5 million (gross margin of 59.6%), a 34.4% decline compared with $84.7 million (gross margin of 69%) in 2022.

 

Net loss on a GAAP basis for 2023 was $62.8 million, or $1.66 per basic share, compared with a net loss of $32.0 million, or $0.87 per basic share, in 2022.

 

Net loss on a non-GAAP basis for 2023 was $53.3 million, or $1.41 per basic share, compared with a net loss of $23.2 million, or $0.63 per basic share, in 2022. A credit loss provision of approximately $23 million increased the 2023 expenses.

 

Cash, short-term bank deposits, and investments as of December 31, 2023, totaled $54.9 million, compared to $86.4 million as of December 31, 2022.

 

 

 Conference Call & Webcast:

 

The Allot management team will host a conference call to discuss its fourth quarter and full year 2023 earnings results today, February 15, 2024, at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:

 

 

 

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 many millions of subscribers globally. Allot. See. Control. Secure.

 

For more information, visit www.allot.com

 

 

* Total ARR - Support & Maintenance ARR (measures the current annual run rate of support & maintenance revenues, which is calculated based on the expected revenues for the fourth quarter of 2023, excluding one-time items, and multiplied by 4) and SECaaS ARR (measures the current annual run rate of SECaaS revenues, which is calculated based on estimated revenues for the month of Dec. 2023 and multiplied by 12).

 

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 accounts receivables, including our ability to collect outstanding accounts and assess their collectability on a quarterly basis; our ability to meet expectations with respect to our financial guidance and outlook; 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; 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								Year Ended
		December 31,								December 31,
		2023				2022				2023				2022
		(Unaudited)								(Unaudited)				(Audited)
Revenues		$	24,342			$	33,029			$	93,150			$	122,737
Cost of revenues			12,941				11,134				40,464				39,831
Gross profit			11,401				21,895				52,686				82,906
Operating expenses:
Research and development costs, net			7,942				12,371				39,115				49,800
Sales and marketing			12,057				12,881				43,850				49,393
General and administrative			10,316				3,703				34,656				15,982
Total operating expenses			30,315				28,955				117,621				115,175
Operating loss			(18,914	)			(7,060	)			(64,935	)			(32,269	)
Financial and other income, net			661				796				3,215				2,134
Loss before income tax expenses			(18,253	)			(6,264	)			(61,720	)			(30,135	)
Tax expenses			96				474				1,084				1,895
Net Loss			(18,349	)			(6,738	)			(62,804	)			(32,030	)
Basic net loss per share		$	(0.48	)		$	(0.18	)		$	(1.66	)		$	(0.87	)
Diluted net loss per share		$	(0.48	)		$	(0.18	)		$	(1.66	)		$	(0.87	)
Weighted average number of shares used in
computing basic net loss per share			38,293,808				37,325,971				37,911,214				36,975,424
Weighted average number of shares used in
computing diluted net loss per share			38,293,808				37,325,971				37,911,214				36,975,424

 

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,
		2023				2022				2023				2022
		(Unaudited)								(Unaudited)
GAAP cost of revenues		$	12,941			$	11,134			$	40,464			$	39,831
Share-based compensation (1)			(162	)			(323	)			(1,219	)			(1,133	)
Amortization of intangible assets (2)**			(1,024	)			(157	)			(1,606	)			(613	)
Non-GAAP cost of revenues		$	11,755			$	10,654			$	37,639			$	38,085
GAAP gross profit		$	11,401			$	21,895			$	52,686			$	82,906
Gross profit adjustments			1,186				480				2,825				1,746
Non-GAAP gross profit		$	12,587			$	22,375			$	55,511			$	84,652
GAAP operating expenses		$	30,315			$	28,955			$	117,621			$	115,175
Share-based compensation (1)			(1,449	)			(1,966	)			(7,626	)			(8,032	)
Amortization of intangible assets (2)**			-				-				-				-
Income related to M&A activities (3)			699				274				699				274
Changes in taxes and headcount related items (4)			-				325				-				325
Non-GAAP operating expenses		$	29,565			$	27,588			$	110,694			$	107,742
GAAP financial and other income		$	661			$	796			$	3,215			$	2,134
Exchange rate differences*			(50	)			(85	)			(378	)			(442	)
Expenses related to M&A activities (3)			-				4				43				4
Non-GAAP Financial and other income		$	611			$	715			$	2,880			$	1,696
GAAP taxes on income		$	96			$	474			$	1,084			$	1,895
Changes in tax related items			(25	)			(25	)			(100	)			(100	)
Non-GAAP taxes on income		$	71			$	449			$	984			$	1,795
GAAP Net Loss		$	(18,349	)		$	(6,738	)		$	(62,804	)		$	(32,030	)
Share-based compensation (1)			1,611				2,289				8,845				9,165
Amortization of intangible assets (2)**			1,024				157				1,606				613
Income related to M&A activities (3)			(699	)			(270	)			(656	)			(270	)
Changes in taxes and headcount related items (4)			-				(325	)			-				(325	)
Exchange rate differences*			(50	)			(85	)			(378	)			(442	)
Changes in tax related items			25				25				100				100
Non-GAAP Net income (loss)		$	(16,438	)		$	(4,947	)		$	(53,287	)		$	(23,189	)
GAAP Loss per share (diluted)		$	(0.48	)		$	(0.18	)		$	(1.66	)		$	(0.87	)
Share-based compensation			0.04				0.06				0.23				0.25
Amortization of intangible assets**			0.03				0.01				0.05				0.02
Income related to M&A activities			(0.02	)			(0.01	)			(0.02	)			(0.01	)
Changes in taxes and headcount related items			-				(0.01	)			-				(0.01	)
Exchange rate differences*			(0.00	)			(0.00	)			(0.01	)			(0.01	)
Non-GAAP Net income (loss) per share (diluted)		$	(0.43	)		$	(0.13	)		$	(1.41	)		$	(0.63	)
Weighted average number of shares used in
computing GAAP diluted net loss per share			38,293,808				37,325,971				37,911,214				36,975,424
Weighted average number of shares used in
computing non-GAAP diluted net loss per share			38,293,808				37,325,971				37,911,214				36,975,424

 

TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)

		December 31,				December 31,
		2023				2022
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	14,192			$	12,295
Short-term bank deposits			10,000				68,765
Restricted deposits			1,728				1,050
Available-for-sale marketable securities			28,853				4,293
Trade receivables, net (net of allowance for credit losses of $25,253 and $2,908 on December 31, 2023 and December 31, 2022, respectively)			14,828				44,167
Other receivables and prepaid expenses			8,422				7,985
Inventories			11,874				13,262
Total current assets			89,897				151,817
LONG-TERM ASSETS:
Restricted deposit			158				-
Severance pay fund			395				371
Operating lease right-of-use assets			3,057				5,387
Trade receivables, net			-				4,934
Other assets			562				864
Total long-term assets			4,172				11,556
PROPERTY AND EQUIPMENT, NET			11,189				14,236
GOODWILL AND INTANGIBLE ASSETS, NET			32,748				35,344
Total assets		$	138,006			$	212,953
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	969			$	11,661
Deferred revenues			14,892				20,825
Short-term operating lease liabilities			1,453				2,542
Other payables and accrued expenses			21,937				25,573
Total current liabilities			39,251				60,601
LONG-TERM LIABILITIES:
Deferred revenues			7,437				7,285
Long-term operating lease liabilities			702				2,579
Accrued severance pay			1,080				940
Convertible debt			39,773				39,575
Total long-term liabilities			48,992				50,379
SHAREHOLDERS' EQUITY			49,763				101,973
Total liabilities and shareholders' equity		$	138,006			$	212,953

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