Allot Communications Announces First Quarter 2007 Results

HOD HASHARON, Israel, May 9 /PRNewswire-FirstCall/ -- Allot Communications Ltd. (NASDAQ:ALLT), a leader in IP service optimization solutions based on deep packet inspection (DPI) technology, today announced financial results for the first quarter ended March 31, 2007.

Revenues for the first quarter of 2007 totaled $8.3 million, a 9% increase from the $7.6 million of revenues reported in the first quarter of 2006. On a GAAP basis, net loss for the first quarter of 2007 was $434 thousand, or $0.02 per share, as compared with net income of $5 thousand, or $0.00 per share, in the first quarter of 2006.

Included in the GAAP net income is the impact of share-based compensation expense. On a pro-forma, non-GAAP basis, excluding the impact of share-based compensation expense in both periods, non-GAAP net loss for the first quarter of 2007 totaled $112 thousand, or $0.00 per share, as compared with a non-GAAP net profit of $87 thousand, or $0.01 per diluted share, for the first quarter of 2006.

These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. A full reconciliation between GAAP and non-GAAP measures is provided in the accompanying Table 3.

"As we previously reported, revenues for the first quarter were below our expectation," stated Rami Hadar, Allot Communications' President and Chief Executive Officer. "This weakness was due primarily to a slowdown in sales through some of our distribution channels, principally in the Americas, which are focused on sales to enterprise, education and smaller ISPs. However, we were pleased with the success Allot had during the quarter in terms of securing larger scale DPI projects within a variety of customer verticals and geographic regions. We are encouraged by our continued progress in the Tier 1 and Tier 2 service provider accounts worldwide, which is our strategic objective. Our larger customers this quarter included 5 large service providers in Asia, EMEA and Latin America, two mobile operators and one incumbent telecom operator in Asia, and several government accounts in EMEA and Latin America.

"Our high-end carrier class NetEnforcer products continue to address the needs of service providers looking to introduce intelligent IP service optimization solutions to improve their network efficiency, minimize operating costs and increase levels of customer satisfaction. In addition, our next generation 20 GB/s platform, which is tailored to meet the scalability and multi-Gigabit throughput needs of the Tier 1 carrier market, remains on track," concluded Mr. Hadar.

As of March 31, 2007, Allot's cash and cash equivalents, including short and long-term deposits and investments in marketable securities, totaled $80.5 million.

Financial Guidance

The Company reaffirms its previous guidance for the year 2007, and anticipates that net revenues will total approximately $40 million.

Conference Call & Webcast

The Company's management team plans to host a live conference call and webcast today at 8:30 AM EDT to discuss the financial results as well as management's outlook for the business.

To access the conference call, please dial one of the following numbers: US: 1-866-966-9446, International: +44-1452-567-098, Israel: 1-809-213-849.

A replay of the conference call will be available from 12:01 am EDT on May 10, 2007 through May 16, 2007, at 11:59 pm EDT.

To access the replay, please dial: US: 1-866-247-4222, International: +44- 1452-55-0000. Access code for both: 6819658#.

A live webcast of the conference call can be accessed on the Allot Communications website at The webcast will also be archived on our website following the conference call.

About Allot Communications

Allot Communications Ltd. (NASDAQ:ALLT) is a leading provider of intelligent IP service optimization solutions. Designed for carriers, service providers and enterprises, Allot solutions apply deep packet inspection (DPI) technology to transform broadband pipes into smart networks. This creates the visibility and control vital to manage applications, services and subscribers, guarantee quality of service (QoS), contain operating costs and maximize revenue. Allot believes in listening to customers and provides them access to its global network of visionaries, innovators and support engineers. For more information, please visit

Safe Harbor Statement Information provided in this press release contains statements relating to current expectations, estimates, forecasts and projections about future financial performance, timing of product introductions and events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to our plans, objectives and expectations for future operations and are based upon management's current estimates and projections of future results or trends. Actual future results may differ materially from those which may be expressed or implied by the forward-looking statements that we make as a result of certain risks and uncertainties, including, among others, changes in general economic and business conditions and specifically, a decline in demand for our products, our inability to timely develop and introduce new technologies, products and applications and loss of market. These factors include, but are not limited to, our inability to successfully defend ourselves against certain complaints filed against us and certain of our directors and officers in the United States District Court for the Southern District of New York, as well as risks discussed under the heading "Risk Factors" in our final prospectus for our IPO filed with the Securities and Exchange Commission on November 16, 2006 and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. This press release also is available at our Web site.

                                    TABLE - 1
                            ALLOT COMMUNICATIONS LTD.
                               AND ITS SUBSIDIARIES
           (U.S. dollars in thousands, except share and per share data)

                                                  Three Months Ended
                                                       March 31,
                                               2007                   2006

    Revenues                                  $8,276                 $7,571
    Cost of revenues                           1,974                  1,700
    Gross profit                               6,302                  5,871

    Operating expenses:
    Research and development costs, net        2,453                  1,882
    Sales and marketing                        4,194                  3,493
    General and administrative                 1,043                    609
    Total operating expenses                   7,690                  5,984
    Operating loss                            (1,388)                  (113)
    Financial and other income, net              957                    121
    Income (loss) before income tax
     expenses                                   (431)                     8

    Income tax expenses                            3                      3
    Net income (loss)                           (434)                     5

    Basic net earnings (loss) per share       $(0.02)                 $0.00
    Diluted net earnings (loss) per share     $(0.02)                 $0.00

    Weighted average number of shares
     used in computing basic net
     earnings (loss) per share            21,009,705             12,783,114

    Weighted average number of shares
     used in computing diluted net
     earnings (loss) per share            23,467,686             14,298,882

                                    TABLE - 2
                            ALLOT COMMUNICATIONS LTD.
                               AND ITS SUBSIDIARIES
                          CONSOLIDATED  BALANCE  SHEETS
                           (U.S. dollars in thousands)

                                               March 31,        December 31,
                                                 2007               2006

    Cash and cash equivalents                    $9,081            $7,117
    Marketable securities and short term
     deposit                                     67,404            70,423
    Trade receivables                             6,409             5,856
    Other receivables and prepaid
     expenses                                     2,800             1,961
    Inventories                                   4,058             3,337
    Total current assets                         81,754            88,694

    Marketable securities                         4,001             5,750
    Severance pay fund                            2,851             2,648
    Other assets                                  1,017             1,054
    Total long-term assets                       15,867             9,452

    PROPERTY AND EQUIPMENT, NET                   3,681             2,939
    GOODWILL                                        125                99

    Total assets                               $101,427          $101,184


    Short-term bank credit and current
     maturities, net                                 $0                $6
    Trade payables                                4,219             4,415
    Deferred revenues                             4,303             3,788
    Other payables and accrued expenses           4,405             4,833
    Total current liabilities                    12,927            13,042

    Deferred revenues                             1,671             1,578
    Accrued severance pay                         2,719             2,377
    Total long-term liabilities                   4,390             3,955

    SHAREHOLDERS' EQUITY                         84,110            84,187

    Total liabilities and shareholders'
     equity                                    $101,427          $101,184

                                    TABLE - 3
                            ALLOT COMMUNICATIONS LTD.
                               AND ITS SUBSIDIARIES
                (U.S. dollars in thousands, except per share data)

                                Three months ended     Three months ended
                                  March 31, 2007          March 31, 2006

                          GAAP    Adjust-            GAAP     Adjust-
                        Reported  ments*  Non-GAAP  Reported  ments*  Non-GAAP

    Gross profit          6,302    (11)    6,313     5,871      -     5,871

    Total operating
     expenses             7,690   (311)    7,379     5,984    (82)    5,902
    Operating income
     (loss)              (1,388)   322    (1,066)     (113)    82       (31)

    Income (loss) before
     income tax expenses
     (benefit)             (431)   322      (109)        8                8

    Net income             (434)   322      (112)        5     82        87

    Basic net earnings
     (loss) per share    $(0.02) $0.02     $0.00     $0.00  $0.01     $0.01
    Diluted net earnings
     (loss) per share    $(0.02) $0.02     $0.00     $0.00  $0.01     $0.01

    (*) Adjustment excludes the expenses recorded for stock-based
    compensation of which: $11,000, $50,000, $119,000 and $142,000 resulted
    from cost of revenue, research and development expenses, sales and
    marketing expenses and general and administrative expenses, respectively.

Source: Allot Communications Ltd.

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