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Allot Communications Announces Fourth Quarter and Full Year 2016 Financial Results

HOD HASHARON, Israel, Feb. 7, 2017 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT, TASE: ALLT), a leading global provider of security and monetization solutions that enables service providers and enterprises to protect and personalize the digital experience, today announced its fourth quarter and year end 2016 financial results.

 Q4 2016 – Financial Highlights

  • GAAP and non-GAAP Revenues were $23.5M;
  • GAAP gross margin was 69%, Non-GAAP gross margin was 71%;
  • GAAP operating profit of $1.3M, Non-GAAP operating profit of $1.8M;

Book-to-bill below one;

2016 – Financial Highlights

  • GAAP Revenues were $90.4M, Non-GAAP Revenues were $90.5M;
  • GAAP gross margin was 69%, Non-GAAP gross margin was 71%;
  • GAAP operating loss of $6.8M, Non-GAAP operating profit of $0.4M;
  • Book-to-bill below one;

Management Comment

Erez Antebi, President & CEO of Allot Communications, commented, "In my first days with Allot, I am impressed with much of what I see, most notably the quality and professionalism of the people. I believe the combination Allot has of the right products and technology, the right people and the large customer base is a strong foundation on which we can build Allot's growth."

Mr. Antebi, continued, "A significant part of the role of the new management team will be to improve on the company's execution and to realize its full potential, and I look forward to working with the team and taking the company to the next level."

Q4 2016 Financial results

On a GAAP basis, total revenues for the fourth quarter of 2016 were $23.5 million compared to $25.4 million reported for the fourth quarter of 2015. Net profit for the fourth quarter of 2016 was $0.9 million, or $0.03 per basic and diluted share. This compares with a net loss of $10.4 million, or $0.31 per basic and diluted share, in the fourth quarter of 2015.

On a non-GAAP basis, total revenues for the fourth quarter of 2016 were $23.5 million compared to $25.7 million reported for the fourth quarter of 2015. On a non-GAAP basis, net profit for the fourth quarter of 2016 was $1.2 million, or $0.03 per basic and diluted share. This compares with non-GAAP net profit of $0.7 million, or $0.02 per basic and diluted share, in the fourth quarter of 2015.

Net cash and cash equivalents as of December 31, 2016 totaled $113.7 million. The Company recorded positive operating cash flow of $4.2 million during the quarter. During the fourth quarter of 2016, cash used for the repurchase of the Company's shares in the market totaled $0.5 million.

2016 Financial results

On a GAAP basis, total revenues for the full year of 2016 were $90.4 million compared to $100.0 million in 2015. Net loss for the full year of 2016 was $8.0 million, or $0.24 per basic and diluted share. This compares with a net loss of $19.8 million, or $0.59 per basic and diluted share, in 2015.

On a non-GAAP basis, total revenues for the full year of 2016 were $90.5 million compared to $100.3 million in 2015. On a non-GAAP basis, net loss for the full year of 2016 was $0.7 million, or $0.02 per basic and diluted share. This compares with non-GAAP net loss of $0.1 million, or $0.00 per basic and diluted share, in 2015.

During the year of 2016, the Company recorded negative operating cash flow of $3.4 million and cash used for the repurchase of the Company's shares in the market totaled $3.8 million.

2017 Outlook

Management expects 2017 revenues in the range of $80 - $84 million.  The second half of 2017 is expected to be better than the first half and 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 fourth quarter and year end 2016 earnings results today, February 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: +1-347-293-1926, UK: +44(0) 20-3514-1906, Israel: +972-3-918-0609.

A recording of the conference call will be available from 12:00PM ET on February 7, 2017 for 30 days. To access the recording, please dial: +1-888-269-0005; UK: +44(0) 800-917-1246.

A live webcast of the conference call can be accessed on the Allot Communications website at: http://www.allot.com.  

The webcast will also be archived on the website following the conference call.

About Allot Communications

Allot Communications (NASDAQ: ALLT, TASE: ALLT) is a leading provider of security and monetization solutions that enables service providers and enterprises to protect and personalize the digital experience. Allot's flexible and highly scalable service delivery framework leverages the intelligence in data networks, enabling service providers to get closer to their customers, safeguard network assets and users, and accelerate time-to-revenue for value-added services. We employ innovative technology, proven know-how and a collaborative approach to provide the right solution for every network environment. Allot solutions are currently deployed at 5 of the top 10 global mobile operators and in thousands of CSP and enterprise networks worldwide. 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.

TABLE  - 1

ALLOT COMMUNICATIONS 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,


2016


2015



2016


2015


(Unaudited)


(Unaudited)



(Unaudited)


(Audited)










Revenues

$       23,487


$       25,382



$       90,369


$       99,967

Cost of revenues

7,348


13,185



27,895


33,427

Gross profit  

16,139


12,197



62,474


66,540










Operating expenses:









Research and development costs, net

5,461


6,476



24,221


26,422

Sales and marketing

7,476


10,142



35,290


43,318

General and administrative

1,910


3,209



9,812


12,702

Total operating expenses

14,847


19,827



69,323


82,442

Operating profit (loss)

1,292


(7,630)



(6,849)


(15,902)

Financial and other income (loss), net

423


232



1,059


(584)

Profit (loss) before income tax expenses

1,715


(7,398)



(5,790)


(16,486)










Tax expenses

773


2,982



2,204


3,356

Net profit (loss)

942


(10,380)



(7,994)


(19,842)










 Basic net profit (loss) per share

$            0.03


$          (0.31)



$          (0.24)


$          (0.59)



















 Diluted net profit (loss) per share

$            0.03


$          (0.31)



$          (0.24)


$          (0.59)










Weighted average number of shares









used in computing basic  net









earnings per share

33,090,708


33,559,698



33,202,309


33,419,917










Weighted average number of shares









used in computing diluted net









earnings per share

33,415,193


33,559,698



33,202,309


33,419,917










 

 

TABLE  - 2

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,



2016


2015


2016


2015



(Unaudited)


(Unaudited)


(Unaudited)


(Audited)










 GAAP Revenues 

$     23,487


$     25,382


$     90,369


$     99,967

 Fair value adjustment for acquired deferred revenues write down 

31


271


165


304

 Non-GAAP Revenues 

$     23,518


$     25,653


$     90,534


$   100,271










GAAP cost of revenue

$       7,348


$     13,185


$     27,895


$     33,427

 Share-based compensation (1) 

(109)


(79)


(345)


(324)

 Amortization of intangible assets (2) 

(367)


(6,373)


(1,173)


(8,075)

 Restructuring expenses (4) 

-


-


(127)


-

Non-GAAP cost of revenue

$       6,872


$       6,733


$     26,250


$     25,028










 GAAP gross profit 

$     16,139


$     12,197


$     62,474


$     66,540

 Gross profit adjustments 

507


6,723


1,810


8,703

 Non-GAAP gross profit 

$     16,646


$     18,920


$     64,284


$     75,243










 GAAP operating expenses 

$     14,847


$     19,827


$     69,323


$     82,442

 Share-based compensation (1) 

(845)


(1,545)


(4,667)


(6,846)

 Amortization of intangible assets (2) 

(132)


(284)


(535)


(658)

 Expenses related to M&A activities (3) 

962


-


962


(678)

 Restructuring expenses (4) 

-


-


(1,163)


-

 Non-GAAP operating expenses 

$     14,832


$     17,998


$     63,920


$     74,260










 GAAP financial and other income (loss) 

$           423


$           232


$       1,059


$         (584)

 Expenses related to M&A activities (3) 

(348)


(89)


(179)


193

 Non-GAAP Financial and other income (loss) 

$             75


$           143


$           880


$         (391)










 GAAP taxes on income 

$           773


$       2,982


$       2,204


$       3,356

 Tax expenses (in respect of net deferred tax asset recorded) 

(36)


(2,628)


(230)


(2,628)

 Non-GAAP taxes on income 

$           737


$           354


$       1,974


$           728










 GAAP Net income (loss) 

$           942


$   (10,380)


$     (7,994)


$   (19,842)

 Share-based compensation (1) 

954


1,624


5,012


7,170

 Amortization of intangible assets (2) 

499


6,657


1,708


8,733

 Expenses related to M&A activities (3) 

(1,310)


(89)


(1,141)


871

 Restructuring expenses (4) 

-


-


1,290


-

 Fair value adjustment for acquired deferred revenues write down 

31


271


165


304

 Tax expenses (in respect of net deferred tax asset recorded) 

36


2,628


230


2,628

 Non-GAAP Net income (loss) 

$       1,152


$           711


$         (730)


$         (136)










 GAAP Loss per share (diluted) 

$          0.03


$        (0.31)


$        (0.24)


$        (0.59)

 Share-based compensation 

0.03


0.05


0.15


0.21

 Amortization of intangible assets 

0.01


0.20


0.05


0.26

 Expenses related to M&A activities 

(0.04)


0.00


(0.03)


0.03

 Restructuring expenses 

-


-


0.04


-

 Fair value adjustment for acquired deferred revenues write down 

0.00


0.01


0.00


0.02

 Tax expenses (in respect of net deferred tax asset recorded) 

0.00


0.07


0.01


0.07

 Non-GAAP Net income (Loss) per share (diluted) 

$          0.03


$          0.02


$        (0.02)


$        (0.00)



















Weighted average number of shares used in 








computing GAAP diluted net earnings per share

33,415,193


33,559,698


33,202,309


33,419,917



















Weighted average number of shares used in 








computing non-GAAP diluted net earnings per share

33,697,889


33,829,088


33,202,309


34,013,721










 

 

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,




2016


2015


2016


2015




(Unaudited)


(Unaudited)


(Unaudited)


(Audited)












(1) Share-based compensation (*):










Cost of revenues

$           109


$             79


$           345


$          324



Research and development costs, net

244


366


1,223


1,637



Sales and marketing

322


631


1,745


2,802



General and administrative

279


548


1,699


2,407




$           954


$       1,624


$       5,012


$       7,170












 (2) Amortization of intangible assets 










Cost of revenues

$           367


$       6,373


$       1,173


$       8,075



Sales and marketing

132


284


535


658




$           499


$       6,657


$       1,708


$       8,733












 (3) Expenses related to M&A activities 










General and administrative 

$         (962)


$                -


$         (962)


$           452



Research and development costs, net

-


-


-


45



Sales and marketing

-


-


-


181



Financial expenses

(348)


(89)


(179)


193




$     (1,310)


$              (89)


$     (1,141)


$           871












 (4) Restructuring expenses 










Cost of revenues

$                -


$                   -


$           127


$              -



Research and development costs, net

-


-


370


-



Sales and marketing

-


-


720


-



General and administrative

-


-


73


-




$                -


$                   -


$       1,290


$              -































































(*) Excluding share-based compensation related to the restructuring plan, which was already included under restructuring expenses.











 

 

TABLE  - 3

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)













December 31,


December 31,



2016


2015



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            23,326


$            15,470

Short term deposits


29,821


42,700

Restricted cash


0


203

Marketable securities 


60,507


64,921

Trade receivables, net


24,158


23,874

Other receivables and prepaid expenses


3,750


4,513

Inventories


7,235


10,169

Total current assets


148,797


161,850






LONG-TERM ASSETS:





Severance pay fund


252


282

Deferred taxes


267


501

Other assets 


1,136


2,712

Total long-term assets


1,655


3,495






PROPERTY AND EQUIPMENT, NET


4,387


5,189

GOODWILL AND INTANGIBLE ASSETS, NET


35,972


37,681






Total assets


$          190,811


$          208,215






LIABILITIES AND SHAREHOLDERS' EQUITY





CURRENT LIABILITIES:





Trade payables


$               3,275


$               7,107

Deferred revenues


11,133


14,066

Other payables and accrued expenses


10,538


13,921

Total current liabilities


24,946


35,094






LONG-TERM LIABILITIES:





Deferred revenues


3,597


4,912

Accrued severance pay


592


651

Other long term liabilities


4,502


4,153

Total long-term liabilities


8,691


9,716






SHAREHOLDERS' EQUITY


157,174


163,405






Total liabilities and shareholders' equity


$          190,811


$          208,215






 

TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)










Three Months Ended


Year ended Ended


December 31,


December 31,


2016


2015


2016


2015


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)









Cash flows from operating activities:
















Net income (Loss)

$             942


$             (10,380)


$        (7,994)


$          (19,842)

Adjustments to reconcile net income  to net cash provided by  operating activities:








Depreciation

569


631


2,334


2,752

Stock-based compensation related to options granted to employees

1,005


1,628


5,181


7,170

Amortization of intangible assets

499


6,658


1,709


8,733

Capital loss 

4


190


24


328

Decrease (Increase) in accrued severance pay, net

(4)


197


(29)


349

Decrease in other assets

828


1,237


1,575


1,205

Decrease in accrued interest and  amortization of premium on marketable securities 

215


253


1,238


967

Decrease (Increase) in trade receivables

2,795


(872)


(284)


(847)

Decrease (Increase) in other receivables and prepaid expenses

206


(2,092)


699


(2,623)

Decrease (Increase) in inventories

1,410


(120)


2,934


(60)

Decrease in long-term deferred taxes, net

49


1,543


234


1,403

Increase (Decrease) in trade payables

302


1,532


(3,832)


2,218

Increase (Decrease) in employees and payroll accruals

(241)


1,819


(851)


901

Increase (Decrease) in deferred revenues

(2,664)


313


(4,248)


1,961

Decrease in other payables and accrued expenses

(1,719)


(1,000)


(2,156)


(429)









Net cash provided by (used in) operating activities

4,196


1,537


(3,466)


4,186









Cash flows from investing activities:
















Redemption of (Investment in) restricted cash

-


(203)


203


(203)

Redemption of (Investment in) short-term deposits 

(2,502)


(5,950)


12,879


16,300

Purchase of property and equipment

(398)


(617)


(1,582)


(2,223)

Proceeds from sale of property and equipment

26


-


26


-

Investment in marketable securities

(7,598)


(13,286)


(28,695)


(34,098)

Proceeds from redemption or sale of marketable securities

10,403


5,822


32,208


22,221

Acquisitions

-


193


-


(9,859)









Net cash provided by (used in) investing activities

(69)


(14,041)


15,039


(7,862)









Cash flows from financing activities:
















Exercise of employee stock options 

20


28


115


132

Purchase of treasury stocks

(506)


(166)


(3,832)


(166)









Net cash provided by financing activities

(486)


(138)


(3,717)


(34)

















Increase (Decrease) in cash and cash equivalents

3,641


(12,642)


7,856


(3,710)

Cash and cash equivalents at the beginning of the period

19,685


28,112


15,470


19,180









Cash and cash equivalents at the end of the period

$        23,326


$               15,470


$        23,326


$            15,470

















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

SOURCE Allot Communications Ltd.



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