Allot Communications Announces Fourth Quarter and Full Year 2015 Financial Results

Feb 09, 2016, 02:45 ET from Allot Communications Ltd.

HOD HASHARON, Israel, Feb. 9, 2016 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ, TASE: ALLT), a leading global provider of security and monetization solutions that enable service providers to protect and personalize the digital experience, today announced its fourth quarter and year end 2015 results.

Q4 2015 – Financial Highlights:

  • Non-GAAP revenues were $25.7 million, up 9% sequentially and down 16% year over year
  • Non-GAAP gross margin reached 74%
  • Non-GAAP operating profit was 4%
  • Book-to-bill was above one. Record booking level per quarter.
  • The Company recorded positive operating cash flow of $1.7 million
  • Net cash and cash equivalents as of December 31 2015 totaled $123.3 million

2015 – Financial Highlights:

  • Non-GAAP Revenues were $100.3 million, down 14% year over year
  • Non-GAAP Gross Margin reached  75%
  • Non-GAAP Operating Margin was 1%
  • Book-to-bill above one
  • The Company generated $4.4 million of Operating Cash Flow

Q4 Financial results:

On a GAAP basis, total revenues for the fourth quarter of 2015 were $25.4 million compared to $23.5 million of revenue reported for the third quarter of 2015 and $30.6 million of revenue reported for the fourth quarter of 2014. Gross margin was 48% compared to 74% reported for the third quarter of 2015 and 66% during the fourth quarter of 2014. Cost of revenues includes impairment charge of $5.8 resulting from intangible assets write offs in the quarter.  GAAP tax expenses amounted to $3.0 include $2.7 million of deferred tax asset and pre-paid tax expenses write-off. Net loss for the fourth quarter of 2015 was $10.4 million, or $0.31 per basic and diluted share. This compares with a net loss of $3.4 million, or $0.10 per basic and diluted share, in the third quarter of 2015 and a net loss of $2.3 million, or $0.07 per basic and diluted share, in the fourth quarter of 2014.

On a non-GAAP basis, total revenues for the fourth quarter of 2015 were $25.7 million, compared with $23.5 million of revenue reported for the third quarter of 2015 and $30.6 million of revenue reported for the fourth quarter of 2014.  On a non-GAAP basis, net income for the fourth quarter of 2015 was $0.7 million, or $0.02 per basic and diluted share. This compares with non-GAAP net loss of $0.7 million, or $0.02 per basic and diluted share, in the third quarter of 2015 and non-GAAP net income of $3.4 million, or $0.10 per basic and diluted share, in the fourth quarter of 2014.

Q4 2015 - Key Achievements:

  • During Q4 2015, 22 large orders were received, 3 of which were from new customers
  • 13 of the large orders came from mobile-service providers.
  •  9 of the large orders were from fixed-line service providers
  • During Q4 2015, Allot received six, over $1 million deals, compared to four in the previous quarter and five during Q4, 2014.
  • Received an expansion order of over $10 million from a tier-1 mobile operator.
  • Introduction of the Allot Service Gateway-Virtual Edition. This version provides a virtualized framework for seamless integration and interoperability of VNF (Virtual Network Function).
  • Allot's Security as a Service solutions surpassed the 10 million subscribers mark.

2016 Outlook

Based on current backlog and the Company's funnel of opportunities, the Company expects non-GAAP revenues to be in the range of $102-$108 million in 2016. In addition the Company expects operating margin improvement on a year over year basis, on a non-GAAP basis. Revenues for the second half of 2016 are expected to be higher than in the first half.

2015 financial results

On a GAAP basis total revenues for the full year 2015 reached $100.0 million, compared to $117.2 million in 2014. Net loss for the year 2015 was $19.8 million, or $0.59 per basic and diluted share, as compared with net loss of $2.5 million, or $0.08 per basic and diluted share, in 2014.

On a non-GAAP basis total revenues for the full year 2015 reached $100.3 million, compared with $117.2 million of revenue reported for the full year 2014. Net income for the full year 2015 reached $0 million, or $0.0 per basic and diluted share. This compares with non-GAAP net income of $10.5 million, or $0.31 per basic and diluted share, reported for the full year 2014.

"During the fourth quarter, value added services represented more than 50% of overall bookings while security and monetization continue to be the prime drivers for our business. The improvement in VAS is the reason for the bookings strength and in addition, helped us to reach record booking level on a quarterly basis," said Andrei Elefant, President & CEO of Allot Communications. "We continue to witness longer conversion cycles of bookings into revenues, mainly with new customers. Our book to bill is above 1 and we are starting the year with higher backlog than a year ago. This supports our expectations to achieve top line growth during 2016 as well as improved profitability."

The Company also announced today that its Board of Directors had approved offering certain employees, including certain executive officers, who hold options the opportunity to exchange their "underwater" options that have an exercise price in excess of $7.00.  Employees will be offered one restricted share unit for every three options.  Executive officers will be offered 0.8 new stock options for every stock option exchanged at an exercise price of the higher of the fair market value of the Company's shares on the date of grant of the new options or $6.00.  Restricted share units and options will each vest over a two year period beginning on the date of grant.  Up to approximately 870,000 underwater options may be exchanged in the program. All other terms and conditions of the restricted share unit and options will be subject to the Company's Incentive Compensation Plan.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss fourth quarter 2015 earnings results today at 8:30 AM ET, 3:30 p.m. Israel time. To access the conference call, please dial one of the following numbers: US: +1-646-254-3362, UK: +44(0)2034271907, Israel: +97237219510, participant code 3528304.

A replay of the conference call will be available from 12:00 AM ET on February 10 2016 for 30 days. To access the replay, please dial: US: National free number +1-866-932-5017, or +1-347-366-9565; UK: National free number 08003587735, or +44(0)2034270598, access code: 3528304#. A live webcast of the conference call can be accessed on the Allot Communications website at www.allot.com. The webcast also will be archived on the website following the conference call.

About Allot Communications

Allot Communications (NASDAQ, TASE: ALLT) is a leading provider of security and monetization solutions that enable service providers 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, inventory write-off expenses, changes in deferred tax asset and prepaid income tax expenses write-off, 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,


2015


2014



2015


2014


(Unaudited)


(Unaudited)



(Unaudited)


(Audited)










Revenues

$      25,382


$      30,635



$      99,967


$   117,186

Cost of revenues

13,185


10,428



33,427


34,739

Gross profit  

12,197


20,207



66,540


82,447










Operating expenses:









Research and development costs, net

6,476


7,365



26,422


29,014

Sales and marketing

10,142


12,055



43,318


44,599

General and administrative

3,209


3,325



12,702


11,941

Total operating expenses

19,827


22,745



82,442


85,554

Operating Loss

(7,630)


(2,538)



(15,902)


(3,107)

Financial and other income (loss), net

232


200



(584)


660

Loss before income tax benefit

(7,398)


(2,338)



(16,486)


(2,447)










Tax expenses (benefit)

2,982


(84)



3,356


50

Net Loss

$    (10,380)


$      (2,254)



$    (19,842)


$      (2,497)










 Basic net Loss per share

$        (0.31)


$        (0.07)



$        (0.59)


$        (0.08)



















 Diluted net Loss per share

$        (0.31)


$        (0.07)



$        (0.59)


$        (0.08)










Weighted average number of shares









used in computing basic  net









earnings per share

33,559,698


33,282,942



33,419,917


33,143,168










Weighted average number of shares









used in computing diluted net









earnings per share

33,559,698


33,282,942



33,419,917


33,143,168





































  


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


Three Months Ended



December 31, 2015


December 31, 2014



(Unaudited)


(Unaudited)



$

% of Revenues


$

% of Revenues















 GAAP operating  Loss 

$ (7,630)

-30%


$ (2,538)

-8%

 Share-based compensation (1) 

1,624



2,223


 Impairment and amortization of intangible assets (2) 

6,658



471


 Expenses related to M&A activities (3) 

-



65


 Inventory write off - cost of revenues 

-



2,868


 Fair value adjustment for acquired deferred revenues write down 

271



11


 Non-GAAP Operating income  

$       923

4%


$   3,100

10%







 GAAP net Loss 

$(10,380)

-41%


$ (2,254)

-7%

 Share-based compensation (1) 

1,624



2,223


 Impairment and amortization of intangible assets (2) 

6,658



471


 Expenses related to M&A activities (3) 

-89



65


 Inventory write off - cost of revenues 

-



2,868


 Changes in deferred tax and prepaid tax assets 

2,628



-


 Fair value adjustment for acquired deferred revenues write down 

271



11


 Non-GAAP net income  

$       712

3%


$   3,384

11%







 GAAP Loss per share (diluted) 

$    (0.31)



$   (0.07)


 Share-based compensation 

0.05



0.07


 Impairment and amortization of intangible assets 

0.20



0.02


 Expenses related to M&A activities 

-0.00



0.00


 Inventory write off - cost of revenues 

-



0.08


 Changes in deferred tax and prepaid tax assets 

0.07



-


 Fair value adjustment for acquired deferred revenues write down 

0.01



0.00


 Non-GAAP Net income per share (diluted) 

$    0.02



$    0.10








(1) Share-based compensation:







Cost of revenues

$      79



$       85



Research and development costs, net

366



487



Sales and marketing

631



860



General and administrative

548



791



$1,624



$   2,223








 (2) Impairment and amortization of intangible assets 







Cost of revenues

$  6,374



$     397



Sales and marketing

284



74




$   6,658



$     471
















 (3) Expenses related to M&A activities 







General and administrative 

$          -



$       65



Research and development costs, net

-



-



Sales and marketing

-



-



Financial expenses

-89



-




$                              (89)



$       65










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)









Year Ended


Year Ended



December 31, 2015


December 31, 2014



(Unaudited)


(Audited)



$

% of Revenues


$

% of Revenues















 GAAP operating loss 

$ (15,902)

-16%


$ (3,107)

-3%

 Share-based compensation (1) 

7,170



8,094


 Impairment and amortization of intangible assets (2) 

8,733



1,859


 Expenses related to M&A activities (3) 

678



98


 Inventory write off - cost of revenues 

-



2,868


 Fair value adjustment for acquired deferred revenues write down 

304



45


 Non-GAAP Operating income  

$     983

1%


$   9,857

8%







 GAAP Net Loss 

$  (19,842)

-20%


$ (2,497)

-2%

 Share-based compensation (1) 

7,170



8,094


 Impairment and amortization of intangible assets (2) 

8,733



1,859


 Expenses related to M&A activities (3) 

871



98


 Inventory write off - cost of revenues 

-



2,868


 Changes in deferred tax and prepaid tax assets 

2,628



-


 Fair value adjustment for acquired deferred revenues write down 

304



45


 Non-GAAP net income (loss) 

$    (136)

0%


$ 10,467

9%







 GAAP loss per share (diluted) 

$   (0.59)



$   (0.08)


 Share-based compensation 

0.21



0.24


 Impairment and amortization of intangible assets 

0.26



0.05


 Expenses related to M&A activities 

0.03



0.00


 Inventory write off - cost of revenues 

-



0.08


 Changes in deferred tax and prepaid tax assets 

0.07



-


 Fair value adjustment for acquired deferred revenues write down 

0.02



0.00


 Non-GAAP Net income  per share (diluted) 

$  (0.00)



$    0.31









(1) Share-based compensation:







Cost of revenues

$  324



$     353



Research and development costs, net

1,637



1,919



Sales and marketing

2,802



3,321



General and administrative

2,407



2,501



$      7,170



$   8,094








 (2) Impairment and amortization of intangible assets 







Cost of revenues

$ 8,075



$   1,596



Sales and marketing

658



263



$     8,733



$   1,859








 (3) Expenses related to M&A activities 







General and administrative 

$       452



$       98



Research and development costs, net

45



-



Sales and marketing

181



-



Financial expenses

193



-



$       871



$       98














 

 

  










TABLE  - 3

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP  CONSOLIDATED  REVENUES

(U.S. dollars in thousands, except share and per share data)











Three Months Ended


Year Ended



December 31,


December 31,



2015


2014


2015


2014



(Unaudited)


(Unaudited)


(Unaudited)


(Audited)











GAAP Revenues

$      25,382


$     30,635


$      99,967


$ 117,186











Fair value adjustment for
acquired deferred revenues
write down

271


11


$            304


$           45











Non-GAAP Revenues

$      25,653


$      30,646


$    100,271


$ 117,231



















































































  






TABLE  - 4

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED  BALANCE  SHEETS

(U.S. dollars in thousands)





December 31,


December 31,



2015


2014



(Unaudited)


(Audited)




ASSETS





CURRENT ASSETS:





Cash and cash equivalents


$            15,470


$            19,180

Short term deposits


42,700


59,000

Restricted cash


203



Marketable securities 


64,921


54,271

Trade receivables, net


23,874


23,759

Other receivables and prepaid expenses


4,513


5,383

Inventories


10,169


10,109

Total current assets


161,850


171,702






LONG-TERM ASSETS:





Severance pay fund


282


262

Deferred taxes


501


1,716

Other assets 


2,712


4,948

Total long-term assets


3,495


6,926






PROPERTY AND EQUIPMENT, NET


5,189


5,957

GOODWILL AND INTANGIBLE ASSETS, NET


38,109


28,363






Total assets


$          208,643


$          212,948






LIABILITIES AND SHAREHOLDERS'
EQUITY





CURRENT LIABILITIES:





Trade payables


$               7,107


$               6,300

Deferred revenues


14,066


12,704

Other payables and accrued expenses


14,349


14,524

Total current liabilities


35,522


33,528






LONG-TERM LIABILITIES:





Deferred revenues


4,912


4,158

Accrued severance pay


651


282

Other long term liabilities


4,153


0

Total long-term liabilities


9,716


4,440






SHAREHOLDERS' EQUITY


163,405


174,980






Total liabilities and shareholders' equity


$          208,643


$          212,948





















 

  







TABLE  - 5

ALLOT COMMUNICATIONS LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(U.S. dollars in thousands)








Three Months Ended


Year Ended


December 31,


December 31,


2015

2014


2015

2014


(Unaudited)

(Unaudited)


(Unaudited)

(Audited)







Cash flows from operating activities:












Net Loss

$      (10,380)

$        (2,254)


$      (19,842)

$   (2,497)

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






Depreciation

695

982


2,817

3,308

Stock-based compensation related to options granted to employees

1,609

2,222


7,151

8,095

Amortization of intangible assets

6,322

471


8,335

1,858

Capital loss 

15

-


153

-

Decrease (Increase) in accrued severance pay, net

197

(1)


349

(8)

Decrease  in other assets

496

40


464

100

Decrease  in accrued interest and  amortization of premium on marketable securities 

254

273


967

793

Increase (Decrease) in trade receivables

(872)

1,566


(847)

(6,851)

Decrease (Increase) in other receivables and prepaid expenses

270

(52)


(199)

(1,321)

Decrease (Increase) in inventories

(1,010)

2,933


(950)

3,689

Increase (Decrease) in long-term deferred taxes, net

1,355

(280)


1,215

(224)

Increase in trade payables

1,532

928


2,218

3,109

Increase in employees and payroll accruals

1,838

665


920

1,073

Increase in deferred revenues

313

234


1,961

1,911

Increase (Decrease) in other payables and accrued expenses

(900)

342


(329)

2,800







Net cash provided by operating activities

1,734

8,069


4,383

15,835







Cash flows from investing activities:












Redemption of short-term deposits 

-

-


38,000

29,500

Investment in short-term deposit

(5,950)

(20,500)


(21,700)

(50,500)

Investment in restricted cash

(203)



(203)


Purchase of property and equipment

(612)

(878)


(2,218)

(3,391)

Investment in marketable securities

(13,286)

(2,870)


(34,098)

(22,736)

Proceeds from redemption or sale of marketable securities

5,822

3,502


22,221

8,266

Acquisitions

-

-


(10,052)

-

Loan provided to third party, net

-

152


-

(2,083)







Net cash used in investing activities

(14,229)

(20,594)


(8,050)

(40,944)







Cash flows from financing activities:












Exercise of employee stock options 

19

74


123

1,476

Purchase of treasury stocks

(166)



(166)








Net cash provided by (used in) by financing activities

(147)

74


(43)

1,476













Increase (Decrease) in cash and cash equivalents

(12,642)

(12,451)


(3,710)

(23,633)

Cash and cash equivalents at the beginning of the period

28,112

31,631


19,180

42,813







Cash and cash equivalents at the end of the period

$        15,470

$        19,180


$        15,470

$   19,180



















 

Investor Relations Contact:

Rami Rozen
AVP Corporate Development
International access code +972-52-569-4441
rrozen@allot.com  

Public Relations Contact:

Sigalit Orr
Director Corporate Communications
International access code +972-54-268-1500
sorr@allot.com

 


 

SOURCE Allot Communications Ltd.



RELATED LINKS

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