Allot Announces Third Quarter 2020 Financial Results

HOD HASHARON, Israel, Nov. 4, 2020 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for communication service providers and enterprises worldwide, today announced its unaudited third quarter 2020 financial results.

Allot Logo (PRNewsfoto/Allot Communications Ltd.)

Highlights of the third quarter

  • Third quarter revenues were $34.8 million, up 26% year-over-year;
  • Non-GAAP operating loss reduced to $1.0 million compared with operating loss of $2.2 million in the third quarter of last year;  GAAP operating loss of $2.5 million compared with $2.2 million in the third quarter of last year;
  • Non-GAAP net loss reduced to $1.2 million compared with non-GAAP net loss of $1.9 million in the third quarter of last year; GAAP net loss of $2.4 million compared with $2.1 million in the third quarter of last year.

Financial Outlook

  • Management reiterates its prior-issued guidance, with expectations for full year 2020 revenues to be between $135 - $140 million, representing accelerated double-digit growth over those of 2019.  
  • Management continues to expect to be profitable in the fourth quarter this year;
  • Management continues to expect to close additional Recurring Security Revenue deals in 2020 and reiterates that the MAR* (maximum annual revenue potential of concluded transactions) of new deals expected to be signed in 2020 should exceed $140 million.

Management Comment

Erez Antebi, President & CEO of Allot, commented: "We are very happy with the strong continued growth and solid performance we have shown throughout 2020. While the challenging business environment caused by COVID-19 continues to result in some delays in signing new contracts,  we expect our revenues to continue to grow in the fourth quarter as well.  In addition, we are very encouraged by the growing number of operators who see the need to provide consumers and SMBs with the zero touch clientless security solutions that Allot offers."

Third quarter 2020 Financial Results Summary

Total revenues for the third quarter of 2020 were $34.8 million, an increase of 26% compared to $27.6 million in the third quarter of 2019.

Gross profit on a GAAP basis for the third quarter of 2020 was $23.7 million (gross margin of 68.3%), compared with $19.2 million (gross margin of 69.4%) in the third quarter of 2019, representing a 24% improvement.

Gross profit on a non-GAAP basis for the third quarter of 2020 was $24.0 million (gross margin of 69.0%), a 24% improvement compared with $19.4 million (gross margin of 70.2%) in the third quarter of 2019.

Net loss on a GAAP basis for the third quarter of 2020 was $2.4 million, or $0.07 per basic share, compared with a net loss of $2.1 million, or $0.06 per basic share, in the third quarter of 2019.

Non-GAAP net loss for the third quarter of 2020 was $1.2 million, or $0.03 per basic share, compared with a non-GAAP net loss of $1.9 million, or $0.05 per basic share, in the third quarter of 2019.

Cash and investments as of September 30, 2020 totaled $107.2 million, compared with $109.2 million, as of June 30, 2020.

Conference Call & Webcast

The Allot management team will host a conference call to discuss third quarter 2020 earnings results today, November 4, 2020 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  

Additional Resources

Allot Blog: https://www.allot.com/blog
Follow us on Twitter: @allot_ltd
Follow us on LinkedIn: https://www.linkedin.com/company/allot-communications

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 1000 enterprises. Our industry leading network-based security as a service solution has achieved over 50% penetration with some service providers and is already used by over 20 million subscribers globally.

Allot. See. Control. Secure.

For more information, visit www.allot.com

*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 customer's subscribers, as estimated by Allot, signed up for the service.

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, tax related items, exchange rate differences related to revaluation of assets and liabilities denominated in non-dollar currencies and other acquisition-related expenses.

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: those related to the COVID-19 pandemic, 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

GK Investor Relations

Ehud Helft

+1 646 201 9246

allot@gkir.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



Nine Months Ended


September 30,



September 30,


2020


2019



2020


2019


(Unaudited)


(Unaudited)



(Unaudited)


(Unaudited)










Revenues

$       34,752


$       27,637



$       96,831


$       79,533

Cost of revenues

11,007


8,456



28,455


24,050

Gross profit  

23,745


19,181



68,376


55,483










Operating expenses:









Research and development costs, net

11,741


8,091



30,836


22,898

Sales and marketing

11,439


12,233



34,741


34,919

General and administrative

3,076


1,096



10,671


4,724

Total operating expenses

26,256


21,420



76,248


62,541

Operating loss

(2,511)


(2,239)



(7,872)


(7,058)

Financial and other income, net

646


257



1,514


1,360

Loss before income tax expenses

(1,865)


(1,982)



(6,358)


(5,698)










Tax expenses

528


129



1,309


1,279

Net Loss

(2,393)


(2,111)



(7,667)


(6,977)










 Basic net loss per share

$          (0.07)


$          (0.06)



$          (0.22)


$          (0.20)



















 Diluted net loss per share

$          (0.07)


$          (0.06)



$          (0.22)


$          (0.20)










Weighted average number of shares used in 









computing basic net loss per share

35,163,221


34,348,200



34,903,109


34,183,272










Weighted average number of shares used in 









computing diluted net loss per share

35,163,221


34,348,200



34,903,109


34,183,272

 

 

 

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


Nine Months Ended



Septemer 30,


Septemer 30,



2020


2019


2020


2019



(Unaudited)


(Unaudited)

GAAP cost of revenues

$     11,007


$        8,456


$     28,455


$     24,050

 Share-based compensation (1) 

(89)


(67)


(242)


(188)

 Amortization of intangible assets (2) 

(152)


(237)


(456)


(701)

 Changes in taxes and headcount related items (4)

-


75


-


75

Non-GAAP cost of revenues

$     10,766


$        8,227


$     27,757


$     23,236










 GAAP gross profit 

$     23,745


$     19,181


$     68,376


$     55,483

 Gross profit adjustments 

241


229


698


814

 Non-GAAP gross profit 

$     23,986


$     19,410


$     69,074


$     56,297










 GAAP operating expenses 

$     26,256


$     21,420


$     76,248


$     62,541

 Share-based compensation (1) 

(1,177)


(747)


(3,180)


(2,214)

 Amortization of intangible assets (2) 

-


(188)


-


(565)

 Income (Expenses) related to M&A activities (3) 

(48)


1,198


(82)


2,735

 Changes in taxes and headcount related items (4)

-


(31)


-


(31)

 Non-GAAP operating expenses 

$     25,031


$     21,652


$     72,986


$     62,466










 GAAP financial and other income 

$           646


$           257


$        1,514


$        1,360

 Exchange rate differences* 

(370)


235


(468)


202

 Non-GAAP Financial and other income 

$           276


$           492


$        1,046


$        1,562










 GAAP taxes on income 

$           528


$           129


$        1,309


$        1,279

 Tax expenses in respect of net deferred tax asset recorded 

(112)


(16)


(187)


(49)

 Non-GAAP taxes on income 

$           416


$           113


$        1,122


$        1,230










 GAAP Net Loss 

$      (2,393)


$      (2,111)


$      (7,667)


$      (6,977)

 Share-based compensation (1) 

1,266


814


3,422


2,402

 Amortization of intangible assets (2) 

152


425


456


1,266

 Expenses (Income) related to M&A activities (3) 

48


(1,198)


82


(2,735)

 Changes in taxes and headcount related items (4)

-


(44)


-


(44)

 Exchange rate differences* 

(370)


235


(468)


202

 Tax expenses in respect of net deferred tax asset recorded 

112


16


187


49

 Non-GAAP Net Loss 

$      (1,185)


$      (1,863)


$      (3,988)


$      (5,837)










 GAAP Loss per share (diluted) 

$        (0.07)


$        (0.06)


$        (0.22)


$        (0.20)

 Share-based compensation 

0.04


0.02


0.10


0.07

 Amortization of intangible assets 

0.00


0.01


0.01


0.03

 Expenses (Income) related to M&A activities 

0.01


(0.03)


0.01


(0.08)

 Exchange rate differences* 

(0.01)


0.01


(0.01)


0.01

 Non-GAAP Net loss per share (diluted) 

$        (0.03)


$        (0.05)


$        (0.11)


$        (0.17)



















Weighted average number of shares used in 








computing GAAP diluted net loss per share

35,163,221


34,348,200


34,903,109


34,183,272



















Weighted average number of shares used in 








computing non-GAAP diluted net loss per share

35,163,221


34,348,200


34,903,109


34,183,272


* 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



Septemer 30,


September 30,



2020


2019


2020


2019



(Unaudited)


(Unaudited)










(1) Share-based compensation:









Cost of revenues

$             89


$             67


$           242


$           188


Research and development costs, net

353


234


956


617


Sales and marketing

551


297


1,462


907


General and administrative

273


216


762


690



$        1,266


$           814


$        3,422


$        2,402










 (2) Amortization of intangible assets









Cost of revenues

$           152


$           237


$           456


$           701


Sales and marketing

-


188


-


565



$           152


$           425


$           456


$        1,266










 (3) Expenses (Income) related to M&A activities









General and administrative

$              -


$      (1,561)


$              -


$      (3,508)


Research and development costs, net

48


363


82


773



$             48


$      (1,198)


$             82


$      (2,735)










 (4) Changes in taxes and headcount related items 









Sales and marketing

$              -


$             16


$              -


$             16


Cost of revenues

-


(75)


-


(75)


General and administrative

-


15


-


15



$              -


$           (44)


$              -


$           (44)

 

 

TABLE  - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)













September 30,


December 31,



2020


2019



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            18,191


$            16,930

Short-term bank deposits


55,376


5,557

Restricted deposit


1,279


23,183

Available-for-sale marketable securities


31,912


61,012

Trade receivables, net


18,945


29,008

Other receivables and prepaid expenses


7,237


6,528

Inventories


15,536


10,668

Total current assets


148,476


152,886






LONG-TERM ASSETS:





Restricted deposit


440


10,913

Severance pay fund


403


387

Operating lease right-of-use assets


5,173


6,368

Deferred taxes


345


517

Other assets


659


926

Total long-term assets


7,020


19,111






PROPERTY AND EQUIPMENT, NET


11,019


8,135

GOODWILL AND INTANGIBLE ASSETS, NET


34,580


35,037






Total assets


$          201,095


$          215,169






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$            10,899


$            11,676

Deferred revenues


22,833


36,360

Short-term operating lease liabilities


3,168


3,151

Other payables and accrued expenses


22,917


22,255

Total current liabilities


59,817


73,442






LONG-TERM LIABILITIES:





Deferred revenues


9,392


5,262

Long-term operating lease liabilities


1,997


3,820

Accrued severance pay


846


794

Total long-term liabilities


12,235


9,876






SHAREHOLDERS' EQUITY


129,043


131,851






Total liabilities and shareholders' equity


$          201,095


$          215,169

 

 

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,


2020


2019


2020


2019


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)









Cash flows from operating activities:
















Net Loss

$        (2,393)


$     (2,111)


$      (7,667)


$     (6,977)

Adjustments to reconcile net income  to net cash provided by (used in) operating activities:







Depreciation

978


682


2,663


1,915

Stock-based compensation related to options granted to employees

1,266


814


3,422


2,402

Amortization of intangible assets

152


425


456


1,266

Increase (Decrease) in accrued severance pay, net

36


17


36


(33)

Decrease (Increase) in other assets

108


111


267


(166)

Decrease in accrued interest and  amortization of premium on marketable securities

118


95


346


336

Changes in operating leases, net

(444)


(235)


(611)


147

Decrease in trade receivables

2,579


889


10,063


5,119

Increase in other receivables and prepaid expenses

(227)


(315)


(1,146)


(689)

Decrease (Increase) in inventories

1,730


1,483


(4,868)


1,249

Decrease (Increase) in long-term deferred taxes, net

68


(87)


172


(269)

Increase (Decrease) in trade payables

3,423


686


(777)


(526)

Increase (Decrease) in employees and payroll accruals

(47)


(953)


(348)


587

Increase (Decrease) in deferred revenues

(7,940)


16,437


(9,397)


17,760

Increase (Decrease) in other payables, accrued expenses and other long term liabilities

453


(3,474)


970


(9,504)

Net cash provided by (used in) operating activities

(140)


14,464


(6,419)


12,617









Cash flows from investing activities:








Decrease (Increase) in restricted deposit

21,875


(10,002)


32,377


(10,043)

Redemption of (Investment in) short-term deposits

(40,376)


9,067


(49,819)


13,986

Purchase of property and equipment

(1,851)


(1,313)


(5,547)


(2,790)

Investment in available-for sale marketable securities

-


(7,192)


(375)


(31,796)

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

7,918


8,813


29,364


32,382

Net cash provided by (used in) investing activities

(12,434)


(627)


6,000


1,739









Cash flows from financing activities:
















Exercise of employee stock options

223


111


1,680


773

Net cash provided by financing activities

223


111


1,680


773

















Increase (Decrease) in cash and cash equivalents

(12,351)


13,948


1,261


15,129

Cash and cash equivalents at the beginning of the period

30,542


17,517


16,930


16,336









Cash and cash equivalents at the end of the period

$        18,191


$     31,465


$     18,191


$     31,465

 

 

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SOURCE Allot Ltd.

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