Allot Announces Third Quarter 2024 Financial Results

 

Reports non-GAAP operating profit for the first time in three years

 

Hod Hasharon, Israel – November 19, 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 financial results for the third quarter of 2024.

 

 

 

 

 

 

 

 

 

Management expects a double-digit growth year over year for full year SECaaS revenue and SECaaS ARR*.

 

 

Eyal Harari, CEO of Allot commented, “We are pleased with the continued progress made this quarter in strengthening Allot’s financial position through our cash generation, and we are particularly pleased with our first positive non-GAAP operating income in three years. Revenue grew both sequentially and year over year, and revenue from our security growth engine continues to grow very strongly.

 

“Our security as a service solution continues to gain traction. We recently expanded our business and launched new services with Vodafone and MEO. These newly announced customer-wins further broaden the potential subscriber base which can benefit from our security solutions and strengthen our recurring revenue base over the long term.”

 

“As we finalize our strategy for long-term growth and profitability, we are positioning ourselves as a security-first company by unifying our network intelligence and security offerings. We believe that this integrated approach will enhance our value proposition and lay a new foundation for long-term profitable growth. I am increasingly optimistic about Allot’s future,” concluded Harari.

 

 

Total revenues for the third quarter of 2024 were $23.2 million, a 3% increase compared to $22.6 million in the third quarter of 2023. It was also a sequential improvement of 5% compared with $22.2 million reported in the prior quarter.

 

Gross profit on a GAAP basis for the third quarter of 2024 was $16.4 million (gross margin of 70.4%), a 56% increase compared with $10.5 million (gross margin of 46.3%) in the third quarter of 2023.

 

Gross profit on a non-GAAP basis for the third quarter of 2024 was $16.7 million (gross margin of 71.7%), a 54% increase compared with $10.8 million (gross margin of 47.9%) in the third quarter of 2023.

 

Operating loss on a GAAP basis for the third quarter of 2024 was $0.2 million, compared with an operating loss of $12.7 million in the third quarter of 2023.

 

Operating income on a non-GAAP basis for the third quarter of 2024 was $1.1 million,   compared with an $11.1 million loss in the third quarter of 2023.

 

Net loss on a GAAP basis for the third quarter of 2024 was $0.2 million, or $0.01 per diluted share, an improvement compared to the net loss of $12.4 million, or $0.32 per basic share, in the third quarter of 2023.

 

Net income on a non-GAAP basis for the third quarter of 2024 was $1.3 million, or $0.03 income per basic share, an improvement compared to the non-GAAP net loss of $10.8 million, or $0.28 loss per basic share, in the third quarter of 2023.

 

Operating cash flow generated in the quarter was $1.9 million.  

 

Cash and cash equivalents, short-term bank deposits, short-term restricted deposits, and investments as of September 30, 2024, totaled $54.5 million, versus $53.2 million at the end of the prior quarter and $54.8 million as of December 31, 2023.

 

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Conference Call & Webcast:

 

The Allot management team will host a conference call to discuss its third quarter 2024 earnings results today, November 19, 2024, at 9:00 am ET, 4:00 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

 

 

* SECaaS ARR –  measures the current annual recurring of SECaaS revenues, which is calculated based on estimated revenues for the month of September 2024 and multiplied by 12.

 

** Net Cash – Cash and cash equivalents, short-term bank deposits and investments net of convertible debt.

 

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.

 

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  - 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)

* 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								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
		(Unaudited)								(Unaudited)
(1) Share-based compensation:
Cost of revenues		$	153			$	178			$	631			$	1,057
Research and development costs, net			402				457				1,687				2,413
Sales and marketing			310				408				1,545				2,178
General and administrative			304				298				853				1,586
		$	1,169			$	1,341			$	4,716			$	7,234
(2) Amortization of intangible assets
Cost of revenues		$	152			$	195			$	456			$	582
		$	152			$	195			$	456			$	582
(3) Expenses related to M&A activities
Financial income		$	-			$	15			$	-			$	43
		$	-			$	15			$	-			$	43

 

TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)

		Septermber 30,				December 31,
		2024				2023
		(Unaudited)				(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	28,226			$	14,192
Short-term bank deposits			5,500				10,000
Restricted deposits			481				1,728
Available-for-sale marketable securities			20,276				28,853
Trade receivables, net (net of allowance for credit losses of $25,455 and $25,253 on September 30, 2024 and December 31, 2023, respectively)			17,370				14,828
Other receivables and prepaid expenses			6,710				8,437
Inventories			10,049				11,874
Total current assets			88,612				89,912
LONG-TERM ASSETS:
Severance pay fund			414				395
Restricted deposit			702				158
Operating lease right-of-use assets			7,003				3,057
Other assets			1,039				704
Property and equipment, net			9,393				11,189
Intangible assets, net			458				915
Goodwill			31,833				31,833
Total non-current assets			50,842				48,251
Total assets		$	139,454			$	138,163
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	3,124			$	969
Deferred revenues			13,895				14,892
Short-term operating lease liabilities			1,357				1,453
Other payables and accrued expenses			19,771				22,094
Total current liabilities			38,147				39,408
LONG-TERM LIABILITIES:
Deferred revenues			7,030				7,437
Long-term operating lease liabilities			5,494				702
Accrued severance pay			944				1,080
Convertible debt			39,923				39,773
Total long-term liabilities			53,391				48,992
SHAREHOLDERS' EQUITY			47,916				49,763
Total liabilities and shareholders' equity		$	139,454			$	138,163

 

TABLE  - 4

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2024				2023				2024				2023
		(Unaudited)								(Unaudited)
Cash flows from operating activities:
Net Loss		$	(244	)		$	(12,361	)		$	(6,110	)		$	(44,455	)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation			1,097				1,251				3,468				3,898
Stock-based compensation			1,169				1,341				4,716				7,234
Amortization of intangible assets			152				277				457				830
Increase (Decrease) in accrued severance pay, net			10				6				(155	)			79
Decrease (Increase) in other assets, other receivables and prepaid expenses			(696	)			(127	)			976				840
Increase in accrued interest and  amortization of premium/discount on marketable securities			(392	)			(260	)			(1,169	)			(407	)
Increase (Decrease) in operating leases liability			(481	)			555				(1,099	)			(2,477	)
Decrease (Increase) in operating lease right-of-use asset			675				(934	)			1,849				2,005
Decrease (Increase) in trade receivables			438				9,600				(2,542	)			24,489
Decrease (Increase) in inventories			(443	)			4,321				1,825				(777	)
Increase (Decrease) in trade payables			2,139				(5,633	)			2,155				(7,835	)
Increase (Decrease) in employees and payroll accruals			1,575				(2,751	)			(2,560	)			(5,245	)
Decrease in deferred revenues			(3,369	)			(1,676	)			(1,404	)			(2,975	)
Increase in other payables, accrued expenses and other long term liabilities			203				1,913				191				89
Amortization of issuance costs of Convertible debt			50				50				150				148
Net cash provided by (used in) operating activities			1,883				(4,428	)			748				(24,559	)
Cash flows from investing activities:
Decrease (Increase) in restricted deposit			-				192				703				(32	)
Investment in short-term bank deposits			(5,500	)			-				(9,300	)			(15,900	)
Withdrawal of short-term bank deposits			3,800				16,465				13,800				71,065
Purchase of property and equipment			(286	)			(1,308	)			(1,672	)			(1,868	)
Investment in marketable securities			(9,532	)			(16,111	)			(44,284	)			(34,678	)
Proceeds from redemption or sale of marketable securities			21,980				11,225				54,040				15,185
Net cash provided by investing activities			10,462				10,463				13,287				33,772
Cash flows from financing activities:
Proceeds from exercise of stock options			(2	)			1				(1	)			1
Net cash provided by (used in) financing activities			(2	)			1				(1	)			1
Increase in cash and cash equivalents			12,343				6,036				14,034				9,214
Cash and cash equivalents at the beginning of the period			15,883				15,473				14,192				12,295
Cash and cash equivalents at the end of the period		$	28,226			$	21,509			$	28,226			$	21,509
Non-cash activity:
Right-of-use assets obtained in the exchange for operating lease liabilities		$	5,795			$	77			$	5,795			$	77