EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1


Exhibit 99.1
 
 
Allot Announces
Fourth Quarter and Full Year 2018 Financial Results
 
17% Year-Over-Year Growth in Revenue and 24% Growth in Backlog

Hod Hasharon, Israel – February 5, 2019 - Allot Ltd. (NASDAQ: ALLT, TASE: ALLT), a global provider of leading innovative network intelligence and security solutions for service providers worldwide, today announced its fourth quarter and full year 2018 financial results.
 
 Fourth Quarter 2018 – Financial Highlights
 
·
Revenues were $26.9 million, up 16% year-over-year;
 
·
GAAP gross margin improved to 69.1% up from 66.8% in Q4 2017;
 
·
Non-GAAP gross margin improved to 70.3% up from 68.4% in Q4 2017;
 
·
GAAP operating loss narrowed to $1.4 million compared to $4.3 million in Q4 2017;
 
·
Non-GAAP operating loss at $99 thousand compared to a loss of $1.3 million in Q4 2017;
 
·
Book-to-bill above one;
 
2018 – Financial Highlights
 
·
Revenues were $95.8 million, up 17% year-over-year;
 
·
GAAP gross margin improved to 69.4% up from 65.2% in 2017; Non-GAAP gross margin improved to 70.7% up from 68.0% in 2017;
 
·
GAAP operating loss reduced to $10.2 million compared to a loss of $17.4 million in 2017; Non-GAAP operating loss reduced to $4.8 million compared to $8.6 million in 2017;
 
·
Full year book-to-bill above one;
 
·
Backlog grew by $13.3 million to $68.9 million at year-end 2018 compared to $55.6 million at year-end 2017;
 
·
Year-end cash and investments totaled to $103.9 million;
 
Financial Outlook
 
·
Management expects 2019 revenues to grow to between $106-110 million, representing continued double-digit year-over-year growth;
 
·
Full year 2019 book to bill ratio is expected to be above 1;
 
·
Management expects to close several security subscription-based deals in 2019 in addition to the Tier-1 European deal recently announced
 


 
Management Comment
 
Erez Antebi, President & CEO of Allot, commented: “We are very pleased with our performance in 2018, with revenues growing at a faster pace than we had originally expected. Our DPI business performed well in 2018, resulting from much improved execution of our teams across the globe. We are also satisfied with our performance in the security space: our pipeline of “security opex deals” is strong and we expect to close several such deals that can bring impact on our future growth beyond 2019.”
 
Continued Mr. Antebi, “As we enter into 2019, I have increased confidence in our long-term potential. Following our restructuring and changes, we are now executing better in sales, support and R&D and we look forward to continue to leverage these strengths to create continuing growth in 2019 and beyond.”
 
 Q4 2018 Financial Results Summary
 
Total revenues for the fourth quarter of 2018 were $26.9 million, up 16% compared to $23.2 million in the fourth quarter of 2017.
 
Gross profit on a GAAP basis for the fourth quarter of 2018 was $18.6 million (gross margin of 69.1%), a 20% improvement compared with $15.5 million (gross margin of 66.8%) in the fourth quarter of 2017.
 
Gross profit on a non-GAAP basis for the fourth quarter of 2018 was $18.9 million (gross margin of 70.3%), a 19% improvement compared with $15.9 million (gross margin of 68.4%) in the fourth quarter of 2017.
 
Net loss on a GAAP basis for the fourth quarter of 2018 was $1.8 million, or $0.05 per basic share, an improvement compared with a net loss of $4.3 million, or $0.13 per basic share, in the fourth quarter of 2017.
 
Non-GAAP net loss for the fourth quarter of 2018 was $455 thousand, or $0.01 per basic share, an improvement compared with a non-GAAP net loss of $1.5 million, or $0.04 per basic share, in the fourth quarter of 2017.
 
2018 Financial Results Summary
 
Total revenues for 2018 were $95.8 million, up 17% compared to $82.0 million in 2017.
 
Gross profit on a GAAP basis for 2018 was $66.5 million (gross margin of 69.4%), a 24% improvement compared with $53.5 million (gross margin of 65.2%) in 2017.
 
Gross profit on a non-GAAP basis for 2018 was $67.8 million (gross margin of 70.7%), a 22% improvement compared with $55.7 million (gross margin of 68.0%) in 2017.
 
Net loss on a GAAP basis for 2018 was $10.4 million, or $0.31 per basic share, an improvement compared with a net loss of $18.1 million, or $0.54 per basic share, in 2017.
 
Non-GAAP net loss for 2018 was $5.1 million, or $0.15 per basic share, an improvement compared with a non-GAAP net loss of $8.7 million, or $0.26 per basic share, in 2017.
 
Cash and investments as of December 31, 2018 totaled $103.9 million, compared to $104.7 million as of September 30, 2018 and $110.0 million as of December 31, 2017.
 

 
Conference Call & Webcast:
 
The Allot management team will host a conference call to discuss fourth quarter and full year 2018 earnings results today, February 5, 2019 at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:
 
US:  1-888-668-9141, 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
 
About Allot

Allot Ltd. (NASDAQ: ALLT, TASE: ALLT) is a provider of leading innovative network intelligence and security solutions for service providers 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 21 million subscribers in Europe. Allot. See. Control. Secure.
 
For more information, visit www.allot.com
 

GAAP to Non-GAAP Reconciliation:
 
The difference between GAAP and non-GAAP revenues is related to the acquisitions made by the Company and represents revenues adjusted for the impact of the fair value adjustment to acquired deferred revenue related to purchase accounting. Non-GAAP net income is defined as GAAP net income after including deferred revenues related to the fair value adjustment resulting from purchase accounting and excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustment, restructuring expenses, changes in taxes related items 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:
GK Investor Relations
Ehud Helft/Gavriel Frohwein
+1 646 688 3559
allot@gkir.com
Public Relations Contact:
Jodi Joseph Asiag
Director of Corporate Communications
jasiag@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
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2018
   
2017
   
2018
   
2017
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Audited)
 
                         
Revenues
 
$
26,885
   
$
23,198
   
$
95,837
   
$
81,992
 
Cost of revenues
   
8,296
     
7,710
     
29,349
     
28,530
 
                                 
Gross profit
   
18,589
     
15,488
     
66,488
     
53,462
 
                                 
Operating expenses:
                               
Research and development costs, net
   
6,632
     
5,753
     
25,418
     
21,852
 
Sales and marketing
   
10,754
     
10,810
     
40,849
     
38,316
 
General and administrative
   
2,616
     
3,187
     
10,416
     
10,696
 
Total operating expenses
   
20,002
     
19,750
     
76,683
     
70,864
 
Operating loss
   
(1,413
)
   
(4,262
)
   
(10,195
)
   
(17,402
)
Financial and other income, net
   
601
     
338
     
2,208
     
894
 
Loss before income tax expenses
   
(812
)
   
(3,924
)
   
(7,987
)
   
(16,508
)
                                 
Tax expenses
   
1,005
     
416
     
2,428
     
1,564
 
Net Loss
   
(1,817
)
   
(4,340
)
   
(10,415
)
   
(18,072
)
                                 
 Basic net loss per share
 
$
(0.05
)
 
$
(0.13
)
 
$
(0.31
)
 
$
(0.54
)
                                 
 Diluted net loss per share
 
$
(0.05
)
 
$
(0.13
)
 
$
(0.31
)
 
$
(0.54
)
                                 
Weighted average number of shares used in computing basic net loss per share
   
33,860,114
     
33,412,701
     
33,710,507
     
33,253,158
 
                                 
Weighted average number of shares used in computing diluted net loss per share
   
33,860,114
     
33,412,701
     
33,710,507
     
33,253,158
 
 

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
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2018
   
2017
   
2018
   
2017
 
   
(Unaudited)
   
(Unaudited)
 
                         
 GAAP Revenues
 
$
26,885
   
$
23,198
   
$
95,837
   
$
81,992
 
 Fair value adjustment for acquired deferred revenues write down
   
-
     
-
     
-
     
37
 
 Non-GAAP Revenues
 
$
26,885
   
$
23,198
   
$
95,837
   
$
82,029
 
                                 
GAAP cost of revenues
 
$
8,296
   
$
7,710
   
$
29,349
   
$
28,530
 
 Share-based compensation (1)
   
(60
)
   
(83
)
   
(316
)
   
(362
)
 Amortization of intangible assets (2)
   
(233
)
   
(232
)
   
(930
)
   
(938
)
 Restructuring expenses (4)
   
-
     
-
     
-
     
(887
)
 Changes in tax related items (5)
   
(17
)
   
(56
)
   
(17
)
   
(56
)
Non-GAAP cost of revenues
 
$
7,986
   
$
7,339
   
$
28,086
   
$
26,287
 
                                 
 GAAP gross profit
 
$
18,589
   
$
15,488
   
$
66,488
   
$
53,462
 
 Gross profit adjustments
   
310
     
372
     
1,263
     
2,280
 
 Non-GAAP gross profit
 
$
18,899
   
$
15,860
   
$
67,751
   
$
55,742
 
                                 
 GAAP operating expenses
 
$
20,002
   
$
19,750
   
$
76,683
   
$
70,864
 
 Share-based compensation (1)
   
(634
)
   
(706
)
   
(2,546
)
   
(2,813
)
 Amortization of intangible assets (2)
   
(175
)
   
(135
)
   
(700
)
   
(539
)
 Expenses related to M&A activities (3)
   
(93
)
   
(178
)
   
(394
)
   
(267
)
 Restructuring expenses (4)
   
(62
)
   
(200
)
   
(62
)
   
(1,464
)
 Changes in tax related items (5)
   
(40
)
   
(1,416
)
   
(420
)
   
(1,416
)
 Non-GAAP operating expenses
 
$
18,998
   
$
17,115
   
$
72,561
   
$
64,365
 
                                 
 GAAP financial and other income
 
$
601
   
$
338
   
$
2,208
   
$
894
 
 Expenses related to M&A activities (3)
   
(75
)
   
84
     
(224
)
   
625
 
 Non-GAAP Financial and other income
 
$
526
   
$
422
   
$
1,984
   
$
1,519
 
                                 
 GAAP taxes on income
 
$
1,005
   
$
416
   
$
2,428
   
$
1,564
 
 Tax expenses (benefits) in respect of net deferred tax asset recorded
   
(123
)
   
214
     
(116
)
   
17
 
 Non-GAAP taxes on income
 
$
882
   
$
630
   
$
2,312
   
$
1,581
 
                                 
 GAAP Net Loss
 
$
(1,817
)
 
$
(4,340
)
 
$
(10,415
)
 
$
(18,072
)
 Share-based compensation (1)
   
694
     
789
     
2,862
     
3,175
 
 Amortization of intangible assets (2)
   
408
     
367
     
1,630
     
1,477
 
 Expenses related to M&A activities (3)
   
18
     
262
     
170
     
892
 
 Restructuring expenses (4)
   
62
     
200
     
62
     
2,351
 
 Changes in tax related items (5)
   
57
     
1,472
     
437
     
1,472
 
 Fair value adjustment for acquired deferred revenues write down
   
-
     
-
     
-
     
37
 
 Tax benefits (expenses) in respect of net deferred tax asset recorded
   
123
     
(214
)
   
116
     
(17
)
 Non-GAAP Net Loss
 
$
(455
)
 
$
(1,464
)
 
$
(5,138
)
 
$
(8,685
)
                                 
 GAAP Loss per share (diluted)
 
$
(0.05
)
 
$
(0.13
)
 
$
(0.31
)
 
$
(0.54
)
 Share-based compensation
   
0.02
     
0.02
     
0.08
     
0.10
 
 Amortization of intangible assets
   
0.01
     
0.01
     
0.05
     
0.04
 
 Expenses related to M&A activities
   
(0.00
)
   
0.01
     
0.01
     
0.03
 
 Restructuring expenses
   
0.00
     
0.01
     
0.00
     
0.07
 
 Fair value adjustment for acquired deferred revenues write down
   
-
     
0.05
     
-
     
0.04
 
 Changes in taxes and headcount related items
   
0.00
     
0.00
     
0.01
     
0.00
 
 Tax benefits (expenses) in respect of net deferred tax asset recorded
   
0.01
     
(0.01
)
   
0.01
     
-
 
 Non-GAAP Net loss per share (diluted)
 
$
(0.01
)
 
$
(0.04
)
 
$
(0.15
)
 
$
(0.26
)
                                 
Weighted average number of shares used in computing GAAP diluted net loss per share
   
33,860,114
     
33,412,701
     
33,710,507
     
33,253,158
 
                                 
Weighted average number of shares used in computing non-GAAP diluted net loss per share
   
33,860,114
     
33,412,701
     
33,710,507
     
33,253,158
 
 

TABLE  - 2 cont.
ALLOT COMMUNICATIONS 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
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2018
   
2017
   
2018
   
2017
 
   
(Unaudited)
   
(Unaudited)
 
                         
(1) Share-based compensation:
                       
Cost of revenues
 
$
60
   
$
83
   
$
316
   
$
362
 
Research and development costs, net
   
174
     
155
     
678
     
608
 
Sales and marketing
   
227
     
307
     
928
     
1,015
 
General and administrative
   
233
     
244
     
940
     
1,190
 
   
$
694
   
$
789
   
$
2,862
   
$
3,175
 
                                 
 (2) Amortization of intangible assets
                               
Cost of revenues
 
$
233
   
$
232
   
$
930
   
$
938
 
Sales and marketing
   
175
     
135
     
700
     
539
 
   
$
408
   
$
367
   
$
1,630
   
$
1,477
 
                                 
 (3) Expenses related to M&A activities
                               
General and administrative
 
$
-
   
$
178
   
$
69
   
$
267
 
Research and development costs, net
   
93
     
-
     
325
     
-
 
Financial expenses (income)
   
(75
)
   
84
     
(224
)
   
625
 
   
$
18
   
$
262
   
$
170
   
$
892
 
                                 
 (4) Restructuring expenses
                               
Cost of revenues
 
$
-
   
$
-
   
$
-
   
$
887
 
Research and development costs, net
   
-
     
-
     
-
     
154
 
Sales and marketing
   
-
     
-
     
-
     
976
 
General and administrative
   
62
     
200
     
62
     
334
 
   
$
62
   
$
200
   
$
62
   
$
2,351
 
                                 
 (5) Changes in tax related items
                               
Research and development costs, net
 
$
-
   
$
201
   
$
-
   
$
201
 
Sales and marketing
   
40
     
1,045
     
262
     
1,045
 
Cost of revenues
   
17
     
56
     
17
     
56
 
General and administrative
   
-
     
170
     
158
     
170
 
   
$
57
   
$
1,472
   
$
437
   
$
1,472
 
 

TABLE  - 3
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED  BALANCE  SHEETS
(U.S. dollars in thousands)
 
 
 
December 31,
   
December 31,
 
 
 
2018
   
2017
 
 
 
(Unaudited)
   
(Audited)
 
 
     
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
16,336
   
$
15,342
 
Short term deposits
   
22,543
     
31,043
 
Restricted deposit
   
465
     
428
 
Marketable securities
   
64,290
     
63,194
 
Trade receivables, net
   
26,093
     
22,737
 
Other receivables and prepaid expenses
   
3,647
     
2,649
 
Inventories
   
11,345
     
7,897
 
Total current assets
   
144,719
     
143,290
 
 
               
LONG-TERM ASSETS:
               
Restricted deposit
   
257
     
-
 
Severance pay fund
   
345
     
302
 
Deferred taxes
   
281
     
301
 
Other assets
   
600
     
1,135
 
Total long-term assets
   
1,483
     
1,738
 
 
               
PROPERTY AND EQUIPMENT, NET
   
6,249
     
5,002
 
GOODWILL AND INTANGIBLE ASSETS, NET
   
37,393
     
34,495
 
 
               
Total assets
 
$
189,844
   
$
184,525
 
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY
               
CURRENT LIABILITIES:
               
Trade payables
 
$
7,813
   
$
5,857
 
Deferred revenues
   
13,855
     
11,370
 
Other payables and accrued expenses
   
21,052
     
14,277
 
Total current liabilities
   
42,720
     
31,504
 
 
               
LONG-TERM LIABILITIES:
               
Deferred revenues
   
4,247
     
3,878
 
Accrued severance pay
   
806
     
747
 
Other long term liabilities
   
6,168
     
5,267
 
Total long-term liabilities
   
11,221
     
9,892
 
 
               
SHAREHOLDERS' EQUITY
   
135,903
     
143,129
 
 
               
Total liabilities and shareholders' equity
 
$
189,844
   
$
184,525
 
 

TABLE  - 4
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
 
 
 
Three Months Ended
   
Year Ended
 
 
 
December 31,
   
December 31,
 
 
 
2018
   
2017
   
2018
   
2017
 
 
 
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Audited)
 
 
                       
Cash flows from operating activities:
                       
Net Loss
 
$
(1,817
)
 
$
(4,340
)
 
$
(10,415
)
 
$
(18,072
)
Adjustments to reconcile net income  to net cash used in operating activities:
                               
Depreciation
   
601
     
632
     
2,204
     
2,191
 
Stock-based compensation related to options granted to employees
   
694
     
787
     
2,862
     
3,366
 
Amortization of intangible assets
   
408
     
366
     
1,630
     
1,477
 
Capital loss
   
-
     
13
     
39
     
27
 
Decrease (Increase) in accrued severance pay, net
   
(18
)
   
(8
)
   
16
     
105
 
Decrease (Increase) in other assets
   
83
     
(607
)
   
535
     
1
 
Decrease in accrued interest and  amortization of premium on marketable securities
   
193
     
319
     
805
     
913
 
Decrease (Increase) in trade receivables
   
359
     
(86
)
   
(3,356
)
   
1,421
 
Decrease (Increase) in other receivables and prepaid expenses
   
184
     
1,841
     
(1,101
)
   
1,350
 
Decrease (Increase) in inventories
   
607
     
1,214
     
(3,448
)
   
(662
)
Decrease (Increase) in long-term deferred taxes, net
   
27
     
(234
)
   
20
     
(34
)
Increase (Decrease) in trade payables
   
(4,370
)
   
(611
)
   
1,945
     
2,582
 
Increase (Decrease) in employees and payroll accruals
   
(998
)
   
35
     
(1,178
)
   
1,140
 
Increase (Decrease) in deferred revenues
   
1,421
     
(518
)
   
3,566
     
518
 
Increase in other payables and accrued expenses
   
3,383
     
2,288
     
6,906
     
3,449
 
Net cash provided by (used in) operating activities
   
757
     
1,091
     
1,030
     
(228
)
 
                               
Cash flows from investing activities:
                               
Increase in restricted deposit
   
(32
)
   
(428
)
   
(294
)
   
(428
)
Redemption of (Investment in) short-term deposits
   
1,900
     
(9,300
)
   
8,500
     
(1,222
)
Purchase of property and equipment
   
(1,427
)
   
(776
)
   
(3,485
)
   
(2,833
)
Investment in marketable securities
   
(9,584
)
   
(10,913
)
   
(34,777
)
   
(30,123
)
Proceeds from redemption or sale of marketable securities
   
8,924
     
11,075
     
32,651
     
26,488
 
Acquisitions
   
-
     
-
     
(3,048
)
   
-
 
Net cash used in investing activities
   
(219
)
   
(10,342
)
   
(453
)
   
(8,118
)
 
                               
Cash flows from financing activities:
                               
Exercise of employee stock options
   
74
     
265
     
417
     
362
 
Net cash provided by financing activities
   
74
     
265
     
417
     
362
 
 
                               
Increase (Decrease) in cash and cash equivalents
   
612
     
(8,986
)
   
994
     
(7,984
)
Cash and cash equivalents at the beginning of the period
   
15,724
     
24,328
     
15,342
     
23,326
 
Cash and cash equivalents at the end of the period
 
$
16,336
   
$
15,342
   
$
16,336
   
$
15,342