PR Newswire | Aug 10, 2021 05:00AM EDT

08/10 04:00 CDT

Allot Announces Second Quarter 2021 Financial ResultsContinued revenue growth and signing of new security deals HOD HASHARON, Israel, Aug. 10, 2021

HOD HASHARON, Israel, Aug. 10, 2021 /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 results for the second quarter of 2021, ended June 30, 2021.

Second Quarter 2021Highlights

* Revenue growth of 8% YoY to $35.3 million * Operating loss and net loss reduced by almost 40% YoY * Cash and investments increased to $105.6 million * 5G Netprotect product gaining momentum with another win with a Tier-1 in APAC * Signed additional SECaas contracts with multiple operators in APAC, EMEA and Latam * Signed a SECaas deal with a Tier-1 Communications Group with operating units in the EU and North America

Financial Outlook

* Management continues to expect: - 2021 revenues to grow to between $145-150 million; - Recurring security deals to be closed in 2021 with an MAR* of at least $180 million; - Recurring security revenues in 2021 of around $5 million and approximately $25 million in 2022;

Management Comment

Erez Antebi, President & CEO of Allot, commented: "We are very pleased with our performance in the second quarter and are confident we are on our way to achieve the goals we set for 2021. The revolution of shifting cybersecurity responsibility from the individual to the CSP is growing worldwide and gaining momentum. This is evidenced by growth in several directions: In the number of CSPs that are engaging with us; in the number of operators that contract with us; and in the number of consumers signing up for cybersecurity protection once the operator launches the service. I am very proud that Allot is the technology company leading this revolution."

Q2 2021 Financial Results Summary

Total revenues for the second quarter of 2021 were $35.3 million, an increase of 8% compared to $32.8 million in the second quarter of 2020.

Gross profit on a GAAP basis for the second quarter of 2021 was $24.5 million (gross margin of 69%), compared with $23.0 million (gross margin of 70%) in the second quarter of 2020.

Gross profit on a non-GAAP basis for the second quarter of 2021 was $24.8 million (gross margin of 70.2%), compared with $23.2 million (gross margin of 70.7%) in the second quarter of 2020.

Net loss on a GAAP basis for the second quarter of 2021 was $4.0 million, or $0.11 loss per basic share, compared with a net loss of $3.6 million, or $0.10 loss per basic share, in the second quarter of 2020.

Net loss on a non-GAAP basis for the second quarter of 2021 was $1.5 million, or $0.04 loss per basic share compared with a non-GAAP net loss of $2.4 million, or $0.07 loss per basic share, in the second quarter of 2020.

Cash and investments as of June 30, 2021 totaled $105.6 million, compared with $99.4 million, as of December 31, 2020.

Conference Call & Webcast

The Allot management team will host a conference call to discuss the second quarter results today, August 10, 2021 at 8:30 am ET, 3:30 pmIsrael time.

To access the conference call, please dial one of the following numbers: US: 1-888-668-5032, Israel: +972-3-918-0609, UK: 0 800 917 5108

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 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, 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: 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: Public Relations Contact:GK Investor Relations Seth Greenberg, Allot Ltd.Ehud Helft +972 54 922 2294 sgreenberg@allot.com+1 646 201 9246 allot@gkir.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,

2021 2020 2021 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenues $ 35,288 $ 32,790 $ 66,471 $ 62,079

Cost of revenues 10,822 9,838 20,413 17,448

Gross profit 24,466 22,952 46,058 44,631

Operating expenses:

Research and development costs, net 11,373 10,396 21,940 19,095

Sales and marketing 12,818 11,780 24,411 23,302

General and administrative 4,080 4,554 7,280 7,595

Total operating expenses 28,271 26,730 53,631 49,992

Operating loss (3,805) (3,778) (7,573) (5,361)

Financial and other income, net 194 717 309 868

Loss before income tax expenses (3,611) (3,061) (7,264) (4,493)

Tax expenses 368 553 673 781

Net Loss (3,979) (3,614) (7,937) (5,274)

Basic net loss per share $ (0.11) $ (0.10) $ (0.22) $ (0.15)

Diluted net loss per share $ (0.11) $ (0.10) $ (0.22) $ (0.15)

Weighted average number of shares used in

computing basic net loss per share 35,941,378 34,917,617 35,739,556 34,771,624

Weighted average number of shares used in

computing diluted net loss per share 35,941,378 34,917,617 35,739,556 34,771,624

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,

2021 2020 2021 2020

(Unaudited) (Unaudited)

GAAP cost of revenues $ 10,822 $ 9,838 $ 20,413 $ 17,448

Share-based compensation (1) (164) (86) (283) (153)

Amortization of intangible assets (2) (152) (152) (304) (304)

Non-GAAP cost of revenues $ 10,506 $ 9,600 $ 19,826 $ 16,991

GAAP gross profit $ 24,466 $ 22,952 $ 46,058 $ 44,631

Gross profit adjustments 316 238 587 457

Non-GAAP gross profit $ 24,782 $ 23,190 $ 46,645 $ 45,088

GAAP operating expenses $ 28,271 $ 26,730 $ 53,631 $ 49,992

Share-based compensation (1) (2,097) (1,146) (3,422) (2,003)

Income related to M&A activities (3) - (137) - (34)

Non-GAAP operating expenses $ 26,174 $ 25,447 $ 50,209 $ 47,955

GAAP financial and other income $ 194 $ 717 $ 309 $ 868

Exchange rate differences* 14 (316) 90 (98)

Non-GAAP Financial and other income $ 208 $ 401 $ 399 $ 770

GAAP taxes on income $ 368 $ 553 $ 673 $ 781

Tax expenses in respect of net deferred tax asset recorded (102) (15) (169) (75)

Non-GAAP taxes on income $ 266 $ 538 $ 504 $ 706

GAAP Net Loss $ (3,979) $ (3,614) $ (7,937) $ (5,274)

Share-based compensation (1) 2,261 1,232 3,705 2,156

Amortization of intangible assets (2) 152 152 304 304

Income related to M&A activities (3) - 137 - 34

Exchange rate differences* 14 (316) 90 (98)

Tax expenses in respect of net deferred tax asset recorded 102 15 169 75

Non-GAAP Net loss $ (1,450) $ (2,394) $ (3,669) $ (2,803)

GAAP Loss per share (diluted) $ (0.11) $ (0.10) $ (0.22) $ (0.15)

Share-based compensation 0.06 0.04 0.10 0.06

Amortization of intangible assets 0.01 0.00 0.02 0.01

Income related to M&A activities 0.00 (0.00) - -

Exchange rate differences* 0.00 (0.01) - 0.00

Tax expense in respect of net deferred tax asset recorded 0.00 0.00 - 0.00

Non-GAAP Net loss per share (diluted) $ (0.04) $ (0.07) $ (0.10) $ (0.08)

Weighted average number of shares used in

computing GAAP diluted net loss per share 35,941,378 34,917,617 35,739,556 34,771,624

Weighted average number of shares used in

computing non-GAAP diluted net loss per share 35,941,378 34,917,617 35,739,556 34,771,624

* Financial income or expenses related to exchange rate differences inconnection with revaluation of assets and liabilities in non-dollar denominatedcurrencies.

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,

2021 2020 2021 2020

(Unaudited) (Unaudited)

(1) Share-based compensation:

Cost of revenues $ 164 $ 86 $ 283 $ 153

Research and development costs, net 699 361 1,094 603

Sales and marketing 930 533 1,512 911

General and administrative 468 252 816 489

$ 2,261 $ 1,232 $ 3,705 $ 2,156

(2) Amortization of intangible assets

Cost of revenues $ 152 $ 152 $ 304 $ 304

$ 152 $ 152 $ 304 $ 304

(3) Income related to M&A activities

Research and development costs, net $ $ 137 - 34 -

$ $ 137 $ $ - - 34

TABLE - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

June 30, December 31,

2021 2020

(Unaudited) (Audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 10,606 $ 23,599

Short-term bank deposits 71,425 47,225

Restricted deposits 4,074 1,200

Available-for-sale marketable 19,308 27,178securities

Trade receivables, net 30,941 20,685

Other receivables and prepaid 8,862 14,205expenses

Inventories 9,297 12,586

Total current assets 154,513 146,678

LONG-TERM ASSETS:

Long-term bank deposits 215 215

Severance pay fund 469 434

Operating lease right-of-use assets 2,974 4,458

Deferred taxes 246 420

Other assets 1,603 2,975

Total long-term assets 5,507 8,502

PROPERTY AND EQUIPMENT, NET 13,394 11,993

GOODWILL AND INTANGIBLE ASSETS, NET 35,608 34,427

Total assets $ 209,022 $ 201,600

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables $ $ 1,556 2,092

Deferred revenues 32,852 26,658

Short-term operating lease 1,573 2,813liabilities

Other payables and accrued expenses 23,569 27,299

Total current liabilities 59,550 58,862

LONG-TERM LIABILITIES:

Deferred revenues 20,200 9,782

Long-term operating lease liabilities 880 1,835

Accrued severance pay 944 969

Total long-term liabilities 22,024 12,586

SHAREHOLDERS' EQUITY 127,448 130,152

Total liabilities and shareholders' $ 209,022 $ 201,600equity

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,

2021 2020 2021 2020

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Cash flows from operating activities:

Net Loss $ (3,979) $ $ $ (3,614) (7,937) (5,274)

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

Depreciation 1,141 897 2,229 1,685

Stock-based compensation 2,261 1,232 3,705 2,156

Amortization of intangible assets 234 152 471 304

Increase (Decrease) in accrued severance pay, net 12 (1) (60) -

Decrease (Increase) in other assets (458) (1) 1,041 159

Decrease in accrued interest and amortization of premium on marketable 32 57 107 228securities

Changes in operating leases, net (479) 544 (711) (167)

Decrease (Increase) in trade receivables (3,113) 1,616 (10,256) 7,484

Decrease (Increase) in other receivables and prepaid expenses 3,094 (518) 3,522 (919)

Decrease (Increase) in inventories 4,246 (2,113) 3,289 (6,598)

Decrease in long-term deferred taxes, net 103 20 175 104

Increase (Decrease) in trade payables 334 (6,468) (536) (4,200)

Increase (Decrease) in employees and payroll accruals 1,286 1,024 (623) (301)

Increase (Decrease) in deferred revenues 1,640 4,169 16,612 (1,457)

Increase (Decrease) in other payables, accrued expenses and other long term (2,761) 2,235 (3,364) 517liabilities

Net cash provided by (used in) operating activities 3,593 (769) 7,664 (6,279)

Cash flows from investing activities:

Decrease (Increase) in restricted deposit (2,440) 9,002 (2,874) 10,502

Redemption of (Investment in) short-term deposits 100 (14,200) (24,200) (9,443)

Purchase of property and equipment (1,934) (2,345) (3,629) (3,696)

Investment in available-for sale marketable securities - - - (375)

Proceeds from sales and maturity of available-for sale marketable securities 3,231 8,523 7,579 21,446

Net cash provided by (used in) investing activities (1,043) 980 (23,124) 18,434

Cash flows from financing activities:

Proceeds from exercise of stock options 908 837 2,467 1,457

Net cash provided by financing activities 908 837 2,467 1,457

Increase (Decrease) in cash and cash equivalents 3,458 1,048 (12,993) 13,612

Cash and cash equivalents at the beginning of the period 7,148 29,494 23,599 16,930

Cash and cash equivalents at the end of the period $ 10,606 $ 30,542 $ 10,606 $ 30,542

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

Q2-2021 YTD 2021 FY 2020

Revenues geographic breakdown

Americas 2.5 7% 7.7 12% 8.1 6%

EMEA 21.8 62% 41.9 63% 104.3 77%

Asia Pacific 11.0 31% 16.9 25% 23.5 17%

35.3 100% 66.5 100% 135.9 100%

Breakdown between products & services revenues

Products 23.0 65% 40.8 62% 92.5 68%

Professional Services 3.4 10% 7.5 11% 13.3 10%

Support & Maintenance 8.9 25% 18.2 27% 30.1 22%

35.3 100% 66.5 100% 135.9 100%

Revenues per customer type

CSP 28.1 80% 50.9 76% 114.8 84%

Enterprise 7.2 20% 15.6 24% 21.1 16%

35.3 100% 66.5 100% 135.9 100%

% of top-10 end-customers out of revenues 64% 60% 71%

Total number of full time employees 695 695 676

(end of period)

Number of basic shares (in millions) 35.9 35.7 35.0

Non-GAAP weighted average number of 38.3 38.1 37.2fully diluted shares (in millions)

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SOURCE Allot Ltd.