PR Newswire | Nov 4, 2020 05:05AM EST

11/04 05:00 CDT

Allot Announces Third Quarter 2020 Financial ResultsQ3 2020 revenue grew by 26% year-over-yearReconfirms 2020 revenue guidance between $135-140 million HOD HASHARON, Israel, Nov. 4, 2020

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.

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 pmIsrael 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/blogFollow us on Twitter: @allot_ltdFollow 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 Public Relations ContactGK Investor Relations Seth Greenberg, Allot Ltd.Ehud Helft +972 54 922 2294+1 646 201 9246 sgreenberg@allot.comallot@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, 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 11,741 8,091 30,836 22,898 costs, net 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, 646 257 1,514 1,360 net Loss before income tax (1,865) (1,982) (6,358) (5,698) expenses 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 35,163,221 34,348,200 34,903,109 34,183,272 per share Weighted average number of shares used in computing diluted net loss 35,163,221 34,348,200 34,903,109 34,183,272 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 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 118 95 346 336securities

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 453 (3,474) 970 (9,504)liabilities

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.