Exhibit 99.1
Allot Communications Announces
Third Quarter 2017 Financial Results
Revenues rose and non-GAAP loss narrowed compared to prior quarter
Hod Hasharon, Israel – November 7, 2017 - Allot Communications Ltd. (NASDAQ: ALLT, TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for service providers worldwide, today announced its third quarter 2017 financial results, ended September 30, 2017.
Q3 2017 – Financial Highlights
| · | Revenues were $20.9 million, up 7% from the previous quarter; |
| · | GAAP gross margin was 62%, Non-GAAP gross margin was 68%; |
| · | GAAP operating loss of $4.4 million, Non-GAAP operating loss of $1.3 million; |
| · | Book-to-bill above one for the third consecutive quarter; |
Management Comment
Erez Antebi, President & CEO of Allot Communications, commented, "I am particularly encouraged by the fact that in Q3 we continued to see an increase in revenues compared to all previous quarters this year, and it was the third consecutive quarter with a Book-to-Bill ratio above 1. We also focused our effort during the quarter on the reorganization of our Customer Facing Units and other internal areas to better serve our customers and align our efforts to our business strategy. Looking ahead into Q4, we see significant interest in the market for our offerings and our pipeline continues to strengthen. I expect continued growth as we approach the end of the current year and I believe we are now well positioned as a company for next year. I see Allot with much growth potential and I believe Allot will establish itself as an important player in the security market over the coming years."
Financial Results Summary
Total revenues for the third quarter of 2017 were $20.9 million, up 7% compared to $19.5 million in the second quarter of 2017.
Net loss on a GAAP basis for the third quarter of 2017 was $4.6 million, or $0.14 per basic and diluted share, compared with a net loss of $4.0 million, or $0.12 per basic and diluted share, in the prior quarter. During the third quarter of 2017 the Company incurred a one-time cost related to its restructuring activities of $2.2 million.
On a non-GAAP basis, net loss for the third quarter of 2017 was $1.3 million, or $0.04 per basic and diluted share, a reduction from a non-GAAP net loss of $2.3 million, or $0.07 per basic and diluted share, in the prior quarter.
Cash and investments as of September 30, 2017 totaled $109.9 million. The Company recorded a negative operating cash flow of $1.0 million during the third quarter of 2017.
2017 Outlook
Management reiterates its guidance for full year revenue issued earlier in the year. Expectations remain for revenues to come in between $80 - $84 million and better fourth quarter revenues compared with the third quarter of 2017.
The book to bill ratio for the year is expected to be above 1.
# # #
Conference Call & Webcast:
The Allot management team will host a conference call to discuss third quarter 2017 earnings results today, November 7, 2017 at 8:30 AM ET, 3:30 p.m. Israel time. To access the conference call, please dial one of the following numbers:
US: +1-888-668-9141, UK: +44(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 Communications website at: http://investors.allot.com/index.cfm
About Allot Communications
Allot Communications Ltd. (NASDAQ: ALLT, TASE: ALLT) is a leading global provider of innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers. For more information, please 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 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 are 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 third 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: Sigalit Orr Director Corporate Communications International dialing +972-54-268-1500 sorr@allot.com |
| ALLOT COMMUNICATIONS 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, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenues | $ | 20,857 | $ | 20,985 | $ | 58,794 | $ | 66,882 | ||||||||
| Cost of revenues | 7,840 | 6,880 | 20,820 | 20,547 | ||||||||||||
| Gross profit | 13,017 | 14,105 | 37,974 | 46,335 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development costs, net | 5,202 | 5,942 | 16,099 | 18,760 | ||||||||||||
| Sales and marketing | 9,779 | 8,697 | 27,506 | 27,814 | ||||||||||||
| General and administrative | 2,449 | 2,635 | 7,509 | 7,902 | ||||||||||||
| Total operating expenses | 17,430 | 17,274 | 51,114 | 54,476 | ||||||||||||
| Operating loss | (4,413 | ) | (3,169 | ) | (13,140 | ) | (8,141 | ) | ||||||||
| Financial and other income, net | 82 | 309 | 556 | 637 | ||||||||||||
| Loss before income tax expenses | (4,331 | ) | (2,860 | ) | (12,584 | ) | (7,504 | ) | ||||||||
| Tax expenses | 294 | 561 | 1,148 | 1,431 | ||||||||||||
| Net loss | (4,625 | ) | (3,421 | ) | (13,732 | ) | (8,935 | ) | ||||||||
| Basic net loss per share | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.41 | ) | $ | (0.27 | ) | ||||
| Diluted net loss per share | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.41 | ) | $ | (0.27 | ) | ||||
| Weighted average number of shares used in | ||||||||||||||||
| computing basic net loss per share | 33,303,744 | 33,012,229 | 33,199,633 | 33,241,185 | ||||||||||||
| Weighted average number of shares used in | ||||||||||||||||
| computing diluted net loss per share | 33,303,744 | 33,012,229 | 33,199,633 | 33,241,185 | ||||||||||||
| ALLOT COMMUNICATIONS LTD. |
| AND ITS SUBSIDIARIES |
| RECONCILATION 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, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| GAAP Revenues | $ | 20,857 | $ | 20,985 | $ | 58,794 | $ | 66,882 | ||||||||
| Fair value adjustment for acquired deferred revenues write down | - | 33 | 37 | 134 | ||||||||||||
| Non-GAAP Revenues | $ | 20,857 | $ | 21,018 | $ | 58,831 | $ | 67,016 | ||||||||
| GAAP cost of revenues | $ | 7,840 | $ | 6,880 | $ | 20,820 | $ | 20,547 | ||||||||
| Share-based compensation (1) | (87 | ) | (62 | ) | (279 | ) | (236 | ) | ||||||||
| Amortization of intangible assets (2) | (232 | ) | (326 | ) | (706 | ) | (807 | ) | ||||||||
| Restructuring expenses (4) | (887 | ) | (127 | ) | (887 | ) | (127 | ) | ||||||||
| Non-GAAP cost of revenues | $ | 6,634 | $ | 6,365 | $ | 18,948 | $ | 19,377 | ||||||||
| GAAP gross profit | $ | 13,017 | $ | 14,105 | $ | 37,974 | $ | 46,335 | ||||||||
| Gross profit adjustments | 1,206 | 548 | 1,908 | 1,304 | ||||||||||||
| Non-GAAP gross profit | $ | 14,223 | $ | 14,653 | $ | 39,882 | $ | 47,639 | ||||||||
| GAAP operating expenses | $ | 17,430 | $ | 17,274 | $ | 51,114 | $ | 54,476 | ||||||||
| Share-based compensation (1) | (489 | ) | (1,015 | ) | (2,107 | ) | (3,820 | ) | ||||||||
| Amortization of intangible assets (2) | (135 | ) | (133 | ) | (404 | ) | (403 | ) | ||||||||
| Expenses related to M&A activities (3) | - | - | (89 | ) | - | |||||||||||
| Restructuring expenses (4) | (1,264 | ) | (1,163 | ) | (1,264 | ) | (1,163 | ) | ||||||||
| Non-GAAP operating expenses | $ | 15,542 | $ | 14,963 | $ | 47,250 | $ | 49,090 | ||||||||
| GAAP financial and other income | $ | 82 | $ | 309 | $ | 556 | $ | 637 | ||||||||
| Expenses related to M&A activities (3) | 162 | 26 | 541 | 169 | ||||||||||||
| Non-GAAP Financial and other income | $ | 244 | $ | 335 | $ | 1,097 | $ | 806 | ||||||||
| GAAP taxes on income | $ | 294 | $ | 561 | $ | 1,148 | $ | 1,431 | ||||||||
| Tax expenses (in respect of net deferred tax asset recorded) | (67 | ) | (62 | ) | (197 | ) | (194 | ) | ||||||||
| Non-GAAP taxes on income | $ | 227 | $ | 499 | $ | 951 | $ | 1,237 | ||||||||
| GAAP Net Loss | $ | (4,625 | ) | $ | (3,421 | ) | $ | (13,732 | ) | $ | (8,935 | ) | ||||
| Share-based compensation (1) | 576 | 1,077 | 2,386 | 4,056 | ||||||||||||
| Amortization of intangible assets (2) | 367 | 459 | 1,110 | 1,210 | ||||||||||||
| Expenses related to M&A activities (3) | 162 | 26 | 630 | 169 | ||||||||||||
| Restructuring expenses (4) | 2,151 | 1,290 | 2,151 | 1,290 | ||||||||||||
| Fair value adjustment for acquired deferred revenues write down | - | 33 | 37 | 134 | ||||||||||||
| Tax expenses (in respect of net deferred tax asset recorded) | 67 | 62 | 197 | 194 | ||||||||||||
| Non-GAAP Net income (Loss) | $ | (1,302 | ) | $ | (474 | ) | $ | (7,221 | ) | $ | (1,882 | ) | ||||
| GAAP Loss per share (diluted) | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.41 | ) | $ | (0.27 | ) | ||||
| Share-based compensation | 0.02 | 0.03 | 0.07 | 0.12 | ||||||||||||
| Amortization of intangible assets | 0.01 | 0.02 | 0.03 | 0.03 | ||||||||||||
| Expenses related to M&A activities | 0.01 | 0.00 | 0.02 | 0.01 | ||||||||||||
| Restructuring expenses | 0.06 | 0.04 | 0.06 | 0.04 | ||||||||||||
| Fair value adjustment for acquired deferred revenues write down | - | 0.00 | 0.00 | 0.00 | ||||||||||||
| Tax expenses (in respect of net deferred tax asset recorded) | 0.00 | 0.00 | 0.01 | 0.01 | ||||||||||||
| Non-GAAP Net loss per share (diluted) | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.22 | ) | $ | (0.06 | ) | ||||
| Weighted average number of shares used in | ||||||||||||||||
| computing GAAP diluted net earnings per share | 33,303,744 | 33,012,229 | 33,199,633 | 33,241,185 | ||||||||||||
| Weighted average number of shares used in | ||||||||||||||||
| computing non-GAAP diluted net earnings per share | 33,303,744 | 33,012,229 | 33,199,633 | 33,241,185 | ||||||||||||
| ALLOT COMMUNICATIONS LTD. |
| AND ITS SUBSIDIARIES |
| RECONCILATION 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, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| (1) Share-based compensation (*): | ||||||||||||||||
| Cost of revenues | $ | 87 | $ | 62 | $ | 279 | $ | 236 | ||||||||
| Research and development costs, net | 7 | 273 | 453 | 978 | ||||||||||||
| Sales and marketing | 221 | 333 | 708 | 1,422 | ||||||||||||
| General and administrative | 261 | 409 | 946 | 1,420 | ||||||||||||
| $ | 576 | $ | 1,077 | $ | 2,386 | $ | 4,056 | |||||||||
| (2) Amortization of intangible assets | ||||||||||||||||
| Cost of revenues | $ | 232 | $ | 326 | $ | 706 | $ | 807 | ||||||||
| Sales and marketing | 135 | 133 | 404 | 403 | ||||||||||||
| $ | 367 | $ | 459 | $ | 1,110 | $ | 1,210 | |||||||||
| (3) Expenses related to M&A activities | ||||||||||||||||
| General and administrative | $ | - | $ | - | $ | 89 | $ | - | ||||||||
| Finanacial expensees | 162 | 26 | 541 | 169 | ||||||||||||
| $ | 162 | $ | 26 | $ | 630 | $ | 169 | |||||||||
| (4) Restructuring expenses | ||||||||||||||||
| Cost of revenues | $ | 887 | $ | 127 | $ | 887 | $ | 127 | ||||||||
| Research and development costs, net | 154 | 370 | 154 | 370 | ||||||||||||
| Sales and marketing | 976 | 720 | 976 | 720 | ||||||||||||
| General and administrative | 134 | 73 | 134 | 73 | ||||||||||||
| $ | 2,151 | $ | 1,290 | $ | 2,151 | $ | 1,290 | |||||||||
| (*) Excluding share-based compensation related to the restructuring plan, which was already included under restructuring expenses. | ||||||||
| ALLOT COMMUNICATIONS LTD. |
| AND ITS SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
| (U.S. dollars in thousands) |
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 24,328 | $ | 23,326 | ||||
| Short term deposits | 21,743 | 29,821 | ||||||
| Marketable securities | 63,851 | 60,507 | ||||||
| Trade receivables, net | 22,651 | 24,158 | ||||||
| Other receivables and prepaid expenses | 4,432 | 3,879 | ||||||
| Inventories | 9,111 | 7,235 | ||||||
| Total current assets | 146,116 | 148,926 | ||||||
| LONG-TERM ASSETS: | ||||||||
| Severance pay fund | 290 | 252 | ||||||
| Deferred taxes | 67 | 267 | ||||||
| Other assets | 528 | 1,136 | ||||||
| Total long-term assets | 885 | 1,655 | ||||||
| PROPERTY AND EQUIPMENT, NET | 4,870 | 4,387 | ||||||
| GOODWILL AND INTANGIBLE ASSETS, NET | 34,862 | 35,972 | ||||||
| Total assets | $ | 186,733 | $ | 190,940 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Trade payables | $ | 6,468 | $ | 3,275 | ||||
| Deferred revenues | 12,116 | 11,133 | ||||||
| Other payables and accrued expenses | 12,247 | 10,538 | ||||||
| Total current liabilities | 30,831 | 24,946 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Deferred revenues | 3,650 | 3,597 | ||||||
| Accrued severance pay | 743 | 592 | ||||||
| Other long term liabilities | 5,045 | 4,502 | ||||||
| Total long-term liabilities | 9,438 | 8,691 | ||||||
| SHAREHOLDERS' EQUITY | 146,464 | 157,303 | ||||||
| Total liabilities and shareholders' equity | $ | 186,733 | $ | 190,940 | ||||
| ALLOT COMMUNICATIONS LTD. |
| AND ITS SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (U.S. dollars in thousands) |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Cash flows from operating activities: | ||||||||||||||||
| Net Loss | $ | (4,625 | ) | $ | (3,421 | ) | $ | (13,732 | ) | $ | (8,935 | ) | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation | 494 | 570 | 1,559 | 1,765 | ||||||||||||
| Stock-based compensation related to options granted to employees | 770 | 1,197 | 2,579 | 4,176 | ||||||||||||
| Amortization of intangible assets | 367 | 459 | 1,110 | 1,210 | ||||||||||||
| Capital loss | 7 | - | 14 | 20 | ||||||||||||
| Decrease (Increase) in accrued severance pay, net | 29 | (52 | ) | 113 | (25 | ) | ||||||||||
| Decrease in other assets | 42 | 375 | 608 | 747 | ||||||||||||
| Decrease in accrued interest and amortization of premium on marketable securities | 92 | 283 | 594 | 1,023 | ||||||||||||
| Decrease (Increase) in trade receivables | 1,716 | (3,621 | ) | 1,507 | (3,079 | ) | ||||||||||
| Decrease (Increase) in other receivables and prepaid expenses | (897 | ) | 251 | (491 | ) | 493 | ||||||||||
| Decrease (Increase) in inventories | 973 | 1,663 | (1,876 | ) | 1,524 | |||||||||||
| Decrease in long-term deferred taxes, net | 67 | 62 | 201 | 185 | ||||||||||||
| Increase (Decrease) in trade payables | (2,943 | ) | (1,229 | ) | 3,193 | (4,134 | ) | |||||||||
| Increase (Decrease) in employees and payroll accruals | 489 | (13 | ) | 1,105 | (610 | ) | ||||||||||
| Increase (Decrease) in deferred revenues | 1,997 | (1,520 | ) | 1,036 | (1,584 | ) | ||||||||||
| Increase (Decrease) in other payables and accrued expenses | 401 | (34 | ) | 1,161 | (438 | ) | ||||||||||
| Net cash used in operating activities | (1,021 | ) | (5,030 | ) | (1,319 | ) | (7,662 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
| Decrease in restricted cash | - | 203 | - | 203 | ||||||||||||
| Redemption of short-term deposits | 2,800 | 5,648 | 8,078 | 15,381 | ||||||||||||
| Purchase of property and equipment | (297 | ) | (448 | ) | (2,057 | ) | (1,184 | ) | ||||||||
| Investment in marketable securities | (3,672 | ) | (4,117 | ) | (19,210 | ) | (21,097 | ) | ||||||||
| Proceeds from redemption or sale of marketable securities | 3,002 | 3,215 | 15,413 | 21,805 | ||||||||||||
| Net cash provided by investing activities | 1,833 | 4,501 | 2,224 | 15,108 | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||
| Exercise of employee stock options | 56 | 69 | 97 | 95 | ||||||||||||
| Purchase of treasury stocks | - | - | - | (3,326 | ) | |||||||||||
| Net cash provided by (used in) financing activities | 56 | 69 | 97 | (3,231 | ) | |||||||||||
| Increase (Decrease) in cash and cash equivalents | 868 | (460 | ) | 1,002 | 4,215 | |||||||||||
| Cash and cash equivalents at the beginning of the period | 23,460 | 20,145 | 23,326 | 15,470 | ||||||||||||
| Cash and cash equivalents at the end of the period | $ | 24,328 | $ | 19,685 | $ | 24,328 | $ | 19,685 | ||||||||