PR Newswire | Aug 4, 2020 05:03AM EDT

08/04 04:00 CDT

Allot Announces Second Quarter 2020 Financial ResultsQ2 2020 revenue grew by 23% year-over-yearReconfirms 2020 revenue guidance between $135-140 million HOD HASHARON, Israel, Aug. 4, 2020

HOD HASHARON, Israel, Aug. 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 second quarter 2020 financial results.

Highlights of the Second Quarter

* Second quarter revenues were $32.8 million, up 23% year-over-year; * Non-GAAP gross margin increased to 70.7%, up from 69.8% in the second quarter of 2019; * GAAP gross margin increased to 70.0%, up from 68.7% in the second quarter of 2019; * Non-GAAP net loss of $2.4 million and GAAP net loss $3.6 million; Net loss includes a $1.5 million doubtful debt expense from a system integrator in Latin America experiencing financial difficulties; * Since the May 2020 first quarter earnings call, two recurring security revenue expansion deals were signed with existing customers

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. In addition, management expects that third quarter revenue will exceed those reported for the second quarter of 2020; * 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 pleased with our performance in the second quarter. We grew revenues 23% year-over-year, while improving gross margins and continuing our advance to profitability."

Continued Mr. Antebi, "COVID-19 continues to present Allot with both challenges and opportunities. While it is taking longer to close deals and the absence of travel is challenging business development activities, we are continuing to work towards meeting our goals and are on track to achieving our original 2020 plan. I believe that in the long-term, the growing need for successful connectivity and the increased amount of threats consumers face on the internet, will further increase demand for Allot's solutions."

Second Quarter 2020 Financial Results Summary

Total revenues for the second quarter of 2020 were $32.8 million, an increase of 23% compared to $26.6 million in the second quarter of 2019.

Gross profit on a GAAP basis for the second quarter of 2020 was $23.0 million (gross margin of 70.0%), compared with $18.3 million (gross margin of 68.7%) in the second quarter of 2019, representing a 26% improvement.

Gross profit on a non-GAAP basis for the second quarter of 2020 was $23.2 million (gross margin of 70.7%), a 25% improvement compared with $18.5 million (gross margin of 69.8%) in the second quarter of 2019.

Net loss on a GAAP basis for the second quarter of 2020 was $3.6 million, or $0.10 per basic share, compared with a net loss of $1.5 million, or $0.04 per basic share, in the second quarter of 2019.

Non-GAAP net loss for the second quarter of 2020 was $2.4 million, or $0.07 per basic share, compared with a non-GAAP net loss of $2.1 million, or $0.06 per basic share, in the second quarter of 2019.

It is noted that the operating expenses for the second quarter of 2020 include a doubtful debt expense of $1.5 million.

Cash and investments as of June 30, 2020 totaled $109.2 million, compared with $110.7 million, as of March 31, 2020.

Conference Call & Webcast

The Allot management team will host a conference call to discuss second quarter 2020 earnings results today, August 4, 2020 at 8:30 am ET, 3:30 pmIsrael time. To access the conference call, please dial one of the following numbers:

US: 1-888-407-2553, UK: 0-800-917-5108, Israel: +972-3-918-0610

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 23 million subscribers in Europe.

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: 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 Contact

GK Investor Relations Seth Greenberg, Allot Ltd.

Ehud Helft +972 54 922 2294

+1 646 201 9246 sgreenberg@allot.com

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,

2020 2019 2020 2019

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

Revenues $ 32,790 $ 26,554 $ 62,079 $ 51,896

Cost of revenues 9,838 8,301 17,448 15,594

Gross profit 22,952 18,253 44,631 36,302

Operating expenses:

Research and development costs, net 10,396 7,633 19,095 14,807

Sales and marketing 11,780 11,209 23,302 22,686

General and administrative 4,554 923 7,595 3,628

Total operating expenses 26,730 19,765 49,992 41,121

Operating loss (3,778) (1,512) (5,361) (4,819)

Financial and other income, net 717 571 868 1,103

Loss before income tax expenses (3,061) (941) (4,493) (3,716)

Tax expenses 553 592 781 1,150

Net Loss (3,614) (1,533) (5,274) (4,866)

Basic net loss per share $ (0.10) $ (0.04) $ (0.15) $ (0.14)

? -

Diluted net loss per share $ (0.10) $ (0.04) $ (0.15) $ (0.14)

Weighted average number of shares used in

computing basic net loss per share 34,917,617 34,213,724 34,771,624 34,099,428

Weighted average number of shares used in

computing diluted net loss per share 34,917,617 34,213,724 34,771,624 34,099,428





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,

2020 2019 2020 2019

(Unaudited) (Unaudited)

GAAP cost of revenues $ $ $ $ 9,838 8,301 17,448 15,594

Share-based compensation (1) (86) (61) (153) (121)

Amortization of intangible (152) (232) (304) (464) assets (2)

Non-GAAP cost of revenues $ $ $ $ 9,600 8,008 16,991 15,009

GAAP gross profit $ $ $ $ 22,952 18,253 44,631 36,302

Gross profit adjustments 238 293 457 585

Non-GAAP gross profit $ $ $ $ 23,190 18,546 45,088 36,887

GAAP operating expenses $ $ $ $ 26,730 19,765 49,992 41,121

Share-based compensation (1) (1,146) (782) (2,003) (1,467)

Amortization of intangible - (189) - (377) assets (2)

Income (Expenses) related to (137) 1,832 (34) 1,537 M&A activities (3)

Non-GAAP operating expenses $ $ $ $ 25,447 20,626 47,955 40,814

GAAP financial and other $ $ $ $ income 717 571 868 1,103

Exchange rate differences* (316) (31) (98) (33)

Non-GAAP Financial and other $ $ $ $ income 401 540 770 1,070

GAAP taxes on income $ $ $ $ 553 592 781 1,150

Tax expenses in respect of net deferred tax asset (15) (17) (75) (33) recorded

Non-GAAP taxes on income $ $ $ $ 538 575 706 1,117

GAAP Net Loss $ $ $ $ (3,614) (1,533) (5,274) (4,866)

Share-based compensation (1) 1,232 843 2,156 1,588

Amortization of intangible 152 421 304 841 assets (2)

Income (Expenses) related to 137 (1,832) 34 (1,537) M&A activities (3)

Exchange rate differences (316) (31) (98) (33)

Tax expenses in respect of net deferred tax asset 15 17 75 33 recorded

Non-GAAP Net Loss $ $ $ $ (2,394) (2,115) (2,803) (3,974)

GAAP Loss per share (diluted) $ $ $ $ (0.10) (0.04) (0.15) (0.14)

Share-based compensation 0.04 0.02 0.06 0.05

Amortization of intangible 0.00 0.02 0.01 0.02 assets

Expenses (Income) related to 0.00 (0.06) 0.00 (0.05) M&A activities

Exchange rate differences (0.01) (0.00) (0.00) (0.00)

Non-GAAP Net loss per share $ $ $ $ (diluted) (0.07) (0.06) (0.08) (0.12)

Weighted average number of shares used in

computing GAAP diluted net 34,917,617 34,213,724 34,771,624 34,099,428 loss per share

Weighted average number of shares used in

computing non-GAAP diluted net 34,917,617 34,213,724 34,771,624 34,099,428 loss per share

* 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 Six Months Ended

June 30, June 30,

2020 2019 2020 2019

(Unaudited) (Unaudited)

(1) Share-based compensation:

Cost of revenues $ $ $ $ 86 61 153 121

Research and development 361 214 603 383 costs, net

Sales and marketing 533 327 911 610

General and administrative 252 241 489 474

$ $ $ $ 1,232 843 2,156 1,588

(2) Amortization of intangible assets

Cost of revenues $ $ $ $ 152 232 304 464

Sales and marketing - 189 - 377

$ $ $ $ 152 421 304 841

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

General and administrative $ $ $ $ - (1,947) - (1,947)

Research and development $ $ 34 410 costs, net 137 115

$ $ $ $ 137 (1,832) 34 (1,537)

TABLE - 3

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

June 30, December 31,

2020 2019

(Unaudited) (Audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 30,542 $ 16,930

Short-term bank deposits 15,000 5,557

Restricted deposit 23,154 23,183

Available-for-sale marketable 40,038 61,012securities

Trade receivables, net 21,524 29,008

Other receivables and prepaid expenses 8,128 6,528

Inventories 17,266 10,668

Total current assets 155,652 152,886

LONG-TERM ASSETS:

Restricted deposit 440 10,913

Severance pay fund 390 387

Operating lease right-of-use assets 5,740 6,368

Deferred taxes 413 517

Other assets 767 926

Total long-term assets 7,750 19,111

PROPERTY AND EQUIPMENT, NET 10,146 8,135

GOODWILL AND INTANGIBLE ASSETS, NET 34,732 35,037

Total assets $ 208,280 $ 215,169

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables $ $ 7,476 11,676

Deferred revenues 31,387 36,360

Short-term operating lease liabilities 3,111 3,151

Other payables and accrued expenses 22,605 22,255

Total current liabilities 64,579 73,442

LONG-TERM LIABILITIES:

Deferred revenues 8,778 5,262

Long-term operating lease liabilities 3,065 3,820

Accrued severance pay 797 794

Total long-term liabilities 12,640 9,876

SHAREHOLDERS' EQUITY 131,061 131,851

Total liabilities and shareholders' $ 208,280 $ equity 215,169

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,

2020 2019 2020 2019

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

Cash flows from operatingactivities:

Net Loss $ $ $ $ (3,614) (1,533) (5,274) (4,866)

Adjustments to reconcile netincome to net cash used inoperating activities:

Depreciation 897 617 1,685 1,233

Stock-based compensationrelated to options granted 1,232 843 2,156 1,588to employees

Amortization of intangible 152 421 304 841assets

Increase (Decrease) in (1) 15 - (50)accrued severance pay, net

Decrease (Increase) in other (1) (344) 159 (277)assets

Decrease in accrued interestand amortization of premium 57 164 228 241on marketable securities

Changes in operating leases, 544 588 (167) 382net

Decrease in trade 1,616 6,823 7,484 4,230receivables

Decrease (Increase) in otherreceivables and prepaid (518) 773 (919) (374)expenses

Decrease (Increase) in (2,113) 1,676 (6,598) (234)inventories

Decrease (Increase) inlong-term deferred taxes, 20 (149) 104 (182)net

Decrease in trade payables (6,468) (3,769) (4,200) (1,212)

Increase (Decrease) inemployees and payroll 1,024 517 (301) 1,540accruals

Increase (Decrease) in 4,169 1,915 (1,457) 1,323deferred revenues

Increase (Decrease) in otherpayables, accrued expenses 2,235 (7,923) 517 (6,030)and other long termliabilities

- - -

Net cash provided by (used (769) 634 (6,279) (1,847)in) operating activities

Cash flows from investingactivities:

Decrease (Increase) in 9,002 42 10,502 (41)restricted deposit

Redemption of (Investment (14,200) 933 (9,443) 4,919in) short-term deposits

Purchase of property and (2,345) (748) (3,696) (1,477)equipment

Investment in available-for - (13,020) (375) (24,604)sale marketable securities

Proceeds from redemption orsale of available-for sale 8,523 12,190 21,446 23,569marketable securities

Net cash provided by (used 980 (603) 18,434 2,366in) investing activities

Cash flows from financingactivities:

Exercise of employee stock 837 56 1,457 662options

Net cash provided by 837 56 1,457 662financing activities

Increase in cash and cash 1,048 87 13,612 1,181equivalents

Cash and cash equivalents at 29,494 17,430 16,930 16,336the beginning of the period

Cash and cash equivalents at $ $ $ $ the end of the period 30,542 17,517 30,542 17,517

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SOURCE Allot Ltd.