PR Newswire | Nov 9, 2021 05:01AM EST

11/09 04:00 CST

Allot Announces Third Quarter 2021 Financial ResultsContinued revenue growth and signing of new security deals HOD HASHARON, Israel, Nov. 9, 2021

HOD HASHARON, Israel, Nov. 9, 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 third quarter of 2021, ended September 30, 2021.

Third Quarter 2021Highlights

* Revenue growth of 10% YoY to $38.2 million * Operating profit on a non-GAAP basis of $0.3 million compared to a loss of $1 million in Q3 2020 * Net loss on a non-GAAP basis reduced by 86% YoY to $0.2 million * Signed Security as a Service deal with DISH in the US to deliver cybersecurity to their 5G customers

Financial Outlook

Management expects 2021 revenues to be between $145- 146 million and continues to expect to sign recurring security deals to be closed in 2021 with an MAR* of at least $180 million.

Management expectations of Security as a Service (SECaaS) revenues have been delayed due to delays in service launches. Formerly forecasted SECaaS revenues levels are expected to be reached with a delay of approximately two quarters. Considering the above, management is providing the following updates to the SECaaS revenue guidance:

* For 2021, SECaaS revenues are expected to be between $4.1-4.3 million. * SECaaS revenues in 2022 are expected to be between $10-15 million. * SECaaS revenues for the 12 months between July 2022 and June 2023 are expected to be between $20 - $30 million. * ARR* in December of 2021 is expected to be between $5-6 million and in December 2022 between $20-30 million. ARR measures the current annual run rate of the SECaaS revenues, which is calculated based on these expected revenues in the current month of December and multiplied by 12.

Management Comment

Erez Antebi, President & CEO of Allot, commented "In the third quarter of 2021, we continued to execute on our plan and grow. This is our 15th straight quarter of year over year growth, and I am very pleased with the results we achieved. Our DPI business is showing solid results as we continue to sign up new customers and grow our market share. In our cybersecurity business, we are executing on our strategy to revolutionize consumer cybersecurity, by enabling CSPs to offer consumer cybersecurity as a network service. To date, we have signed Security as a Service (SECaaS) deals with 18 different operators globally. This is a testimony that our service is proving to be highly in demand by both mobile and fixed operators throughout the world."

Continued Mr. Antebi, "In North America we are seeing very strong traction. As announced earlier this year, DISH Network Corporation (NASDAQ: DISH) selected Allot to provide end-to-end User Plane Protection (UPP) and Deep Packet Inspection (DPI) services for the company's cloud-native 5G network, and has since expanded the partnership to include cybersecurity services for DISH customers. This deal is in addition to previously announced Security as a Service wins with mobile and fixed line operators in EMEA and APAC."

"Looking at the Security as a Service network-based cybersecurity market, I am very encouraged by what we see: our pipeline is growing and we are seeing more operator interest than ever; adoption rates of operators that launched the service with the right go-to-market are high; and the North American market is very interested in delivering consumers network-based security. By our count, Allot is winning most of the "network-based Security as a Service" deals. Our high win ratio is, in our opinion, because of our high value product, commercial model, marketing support and track record. I firmly believe our strategic and financial goals with this significant growth engine are very tangible and I am confident that despite the lengthened launch process, we will meet them."

Q3 2021 Financial Results Summary

Total revenues for the third quarter of 2021 were $38.2 million, an increase of 10% compared to $34.8 million in the third quarter of 2020.

Gross profit on a GAAP basis for the third quarter of 2021 was $26.5 million (gross margin of 69.5%), compared with $23.7 million (gross margin of 68.3%) in the third quarter of 2020.

Gross profit on a non-GAAP basis for the third quarter of 2021 was $26.8 million (gross margin of 70.4%), compared with $24 million (gross margin of 69%) in the third quarter of 2020.

Net loss on a GAAP basis for the third quarter of 2021 was $3.1 million, or $0.08 loss per basic share, compared with a net loss of $2.4 million, or $0.07 loss per basic share, in the third quarter of 2020.

Net loss on a non-GAAP basis for the third quarter of 2021 was $0.2 million, or $0.00 loss per basic share compared with a non-GAAP net loss of $1.2 million, or $0.03 loss per basic share, in the third quarter of 2020.

Cash and investments as of September 30, 2021 totaled $99.2 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 third quarter results today, November 9, 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.

*ARR: annual recurring SECaaS revenues, calculated based on revenues expected in the current month and multiplied by 12;

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+1 212 378 8040 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 Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

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

Revenues $ 38,155 $ 34,752 $ 104,626 $ 96,831

Cost of revenues 11,624 11,007 32,037 28,455

Gross profit 26,531 23,745 72,589 68,376

Operating expenses:

Research and development costs, net 12,148 11,741 34,088 30,836

Sales and marketing 12,901 11,439 37,312 34,741

General and administrative 3,720 3,076 11,000 10,671

Total operating expenses 28,769 26,256 82,400 76,248

Operating loss (2,238) (2,511) (9,811) (7,872)

Financial and other income, net (146) 646 163 1,514

Loss before income tax expenses (2,384) (1,865) (9,648) (6,358)

Tax expenses 689 528 1,362 1,309

Net Loss (3,073) (2,393) (11,010) (7,667)

Basic net loss per share $ (0.08) $ (0.07) $ (0.31) $ (0.22)

Diluted net loss per share $ (0.08) $ (0.07) $ (0.31) $ (0.22)

Weighted average number of shares used in

computing basic net loss per share 36,286,436 35,163,221 35,923,853 34,903,109

Weighted average number of shares used in 36,286,436 35,163,221 35,923,853 34,903,109computing diluted net loss per share

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

September 30, September 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

GAAP cost of revenues $ 11,624 $ 11,007 $ 32,037 $ 28,455

Share-based compensation (1) (161) (89) (444) (242)

Amortization of intangible assets (2) (152) (152) (456) (456)

Non-GAAP cost of revenues $ 11,311 $ 10,766 $ 31,137 $ 27,757

GAAP gross profit $ 26,531 $ 23,745 $ 72,589 $ 68,376

Gross profit adjustments 313 241 900 698

Non-GAAP gross profit $ 26,844 $ 23,986 $ 73,489 $ 69,074

GAAP operating expenses $ 28,769 $ 26,256 $ 82,400 $ 76,248

Share-based compensation (1) (2,248) (1,177) (5,670) (3,180)

Income related to M&A activities (3) - (48) - (82)

Non-GAAP operating expenses $ 26,521 $ 25,031 $ 76,730 $ 72,986

GAAP financial and other income $ (146) $ 646 $ 163 $ 1,514

Exchange rate differences* 352 (370) 442 (468)

Non-GAAP Financial and other income $ 206 $ 276 $ 605 $ 1,046

GAAP taxes on income $ 689 $ 528 $ 1,362 $ 1,309

Tax expenses in respect of net deferred tax asset recorded 5 (112) (164) (187)

Non-GAAP taxes on income $ 694 $ 416 $ 1,198 $ 1,122

GAAP Net Loss $ (3,073) $ (2,393) $ (11,010) $ (7,667)

Share-based compensation (1) 2,409 1,266 6,114 3,422

Amortization of intangible assets (2) 152 152 456 456

Income related to M&A activities (3) - 48 - 82

Exchange rate differences* 352 (370) 442 (468)

Tax expenses in respect of net deferred tax asset recorded (5) 112 164 187

Non-GAAP Net loss $ (165) $ (1,185) $ (3,834) $ (3,988)

GAAP Loss per share (diluted) $ (0.08) $ (0.07) $ (0.31) $ (0.22)

Share-based compensation 0.07 0.04 0.17 0.10

Amortization of intangible assets 0.00 0.00 0.02 0.01

Income related to M&A activities - 0.01 - 0.01

Exchange rate differences* 0.01 (0.01) 0.01 (0.01)

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

Non-GAAP Net loss per share (diluted) $ (0.00) $ (0.03) $ (0.11) $ (0.11)

Weighted average number of shares used in

computing GAAP diluted net loss per share 36,286,436 35,163,221 35,923,853 34,903,109

Weighted average number of shares used in

computing non-GAAP diluted net loss per share 36,286,436 35,163,221 35,923,853 34,903,109

* 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 Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(Unaudited) (Unaudited)

(1) Share-based compensation:

Cost of revenues $ 161 $ 89 $ 444 $ 242

Research and development costs, net 759 353 1,853 956

Sales and marketing 960 551 2,472 1,462

General and administrative 529 273 1,345 762

$ 2,409 $ 1,266 $ 6,114 $ 3,422

(2) Amortization of intangible assets

Cost of revenues $ 152 $ 152 $ 456 $ 456

$ 152 $ 152 $ 456 $ 456

(3) Income related to M&A activities

Research and development costs, net $ - $ 48 - 82

$ - $ 48 $ - $ 82

TABLE - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

September 30, December 31,

2021 2020

(Unaudited) (Audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 5,659 $ 23,599

Short-term bank deposits 74,925 47,225

Restricted deposits 1,600 1,200

Available-for-sale marketable securities 16,813 27,178

Trade receivables, net 31,222 20,685

Other receivables and prepaid expenses 8,743 14,205

Inventories 8,898 12,586

Total current assets 147,860 146,678

LONG-TERM ASSETS:

Long-term bank deposits 215 215

Severance pay fund 474 434

Operating lease right-of-use assets 2,699 4,458

Deferred taxes 255 420

Other assets 1,501 2,975

Total long-term assets 5,144 8,502

PROPERTY AND EQUIPMENT, NET 13,205 11,993

GOODWILL AND INTANGIBLE ASSETS, NET 35,373 34,427

Total assets $ 201,582 $ 201,600

LIABILITIES AND SHAREHOLDERS'EQUITY

CURRENT LIABILITIES:

Trade payables $ 1,388 $ 2,092

Deferred revenues 28,907 26,658

Short-term operating lease liabilities 1,663 2,813

Other payables and accrued expenses 21,889 27,299

Total current liabilities 53,847 58,862

LONG-TERM LIABILITIES:

Deferred revenues 18,857 9,782

Long-term operating lease liabilities 859 1,835

Accrued severance pay 965 969

Total long-term liabilities 20,681 12,586

SHAREHOLDERS' EQUITY 127,054 130,152

Total liabilities and shareholders' equity $ 201,582 $ 201,600

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,

2021 2020 2021 2020

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

Cash flows from operating activities:

Net Loss $ (3,073) $ (2,393) $ (11,010) $ (7,667)

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

Depreciation 1,151 978 3,380 2,663

Stock-based compensation 2,409 1,266 6,114 3,422

Amortization of intangible assets 235 152 706 456

Increase (Decrease) in accrued severance pay, net 16 36 (44) 36

Decrease in other assets 103 108 1,144 267

Decrease in accrued interest and amortization of premium on marketable 58 118 165 346securities

Changes in operating leases, net 344 (444) (367) (611)

Decrease (Increase) in trade receivables (281) 2,579 (10,537) 10,063

Decrease (Increase) in other receivables and prepaid expenses 183 (227) 3,705 (1,146)

Decrease (Increase) in inventories 399 1,730 3,688 (4,868)

Decrease (Increase) in long-term deferred taxes, net (10) 68 165 172

Increase (Decrease) in trade payables (168) 3,423 (704) (777)

Decrease in employees and payroll accruals (1,450) (47) (2,073) (348)

Increase (Decrease) in deferred revenues (5,288) (7,940) 11,324 (9,397)

Increase (Decrease) in other payables, accrued expenses and other long term (133) 453 (3,497) 970liabilities

Net cash provided by (used in) operating activities (5,505) (140) 2,159 (6,419)

Cash flows from investing activities:

Decrease (Increase) in restricted deposit 2,474 21,875 (400) 32,377

Investment in short-term deposits (3,500) (40,376) (27,700) (49,819)

Purchase of property and equipment (962) (1,851) (4,591) (5,547)

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

Proceeds from sales and maturity of available-for sale marketable securities 2,353 7,918 9,932 29,364

Net cash provided by (used in) investing activities 365 (12,434) (22,759) 6,000

Cash flows from financing activities:

Proceeds from exercise of stock options 193 223 2,660 1,680

Net cash provided by financing activities 193 223 2,660 1,680

Increase (Decrease) in cash and cash equivalents (4,947) (12,351) (17,940) 1,261

Cash and cash equivalents at the beginning of the period 10,606 30,542 23,599 16,930

Cash and cash equivalents at the end of the period $ 5,659 $ 18,191 $ 5,659 $ 18,191

Other financial metrics (Unaudited)

U.S. dollars in millions, except number of full time employees, % of top-10end-customers out of revenues and number of shares

Q3-2021 YTD 2021 FY 2020

Revenues geographic breakdown

Americas 1.9 5% 9.6 9% 8.1 6%

EMEA 23.7 62% 65.6 63% 104.3 77%

Asia Pacific 12.6 33% 29.4 28% 23.5 17%

38.2 100% 104.6 100% 135.9 100%

Breakdown between products & services revenues

Products 24.1 63% 64.9 62% 92.5 68%

Professional Services 4.5 12% 12.0 12% 13.3 10%

Support & Maintenance 9.6 25% 27.7 26% 30.1 22%

38.2 100% 104.6 100% 135.9 100%

Revenues per customer type

CSP 31.6 83% 82.5 79% 114.8 84%

Enterprise 6.6 17% 22.1 21% 21.1 16%

38.2 100% 104.6 100% 135.9 100%

% of top-10 end-customers out of revenues 60% 49% 71%

Total number of full time employees 735 735 676

(end of period)

Weighted average number of basic shares (in millions) 36.3 35.9 35.0

Non-GAAP weighted average number of fully diluted 38.6 38.3 37.2shares (in millions)

SECaaS (Security as a Service) revenues- U.S. dollars in millions

Q3-2021: 1.2

Q2-2021: 0.9

Q1-2021: 0.8

Q4-2020: 0.7

ARR * (annual recurring revenues)- U.S. dollars in millions

Sep. 2021: 4.6

Dec. 2020: 2.7

Dec. 2019: 0.5

*ARR: annual recurring SECaas revenues, calculated based on the monthlyrevenues multiplied by 12

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SOURCE Allot Ltd.