Market Overview

Allot Communications Reports Non-GAAP 40% Revenue Rise and 50% Net Profit Growth for Third Quarter of 2012

HOD HASHARON, Israel, October 30, 2012 /PRNewswire/ --

Key highlights:

- Third quarter non-GAAP revenues increased to $28.0 million, a 40% increase over the third quarter of 2011 and 6% increase over the previous quarter

- Third quarter non-GAAP net profit reaches $5.1 million, a 50% increase over the third quarter of 2011; non-GAAP EPS of $0.15

- Cash, cash equivalents and marketable securities totaled $144.1 million after Oversi acquisition closing; positive cash flow from operations in the third quarter

Allot Communications Ltd. (NASDAQ: ALLT), a leading supplier of service optimization and revenue generation solutions for fixed and mobile data worldwide, today announced continued growth in sales during the third quarter of 2012.

On a non-GAAP basis, total revenues for the third quarter of 2012 reached $28.0 million, a 40% increase from the $20.1 million of revenues reported for the third quarter of 2011, and a 6% increase from the $26.4 million of revenues reported for the second quarter of 2012.  On a GAAP basis, net profit for the third quarter of 2012 was $2.4 million, or $0.07 per basic and diluted share. This compares with net profit of $2.1 million, or $0.09 per basic share and $0.08 per diluted share, in the third quarter of 2011, and net profit of $2.7 million, or $0.08 per basic and diluted share, in the second quarter of 2012.  

On a non-GAAP basis, net profit for the third quarter of 2012 totaled $5.1 million, or $0.16 per basic share and $0.15 per diluted share, compared with non-GAAP net profit of $3.4 million, or $0.14 per basic share and $0.13 per diluted share, for the third quarter of 2011, and non-GAAP net profit $5.0 million, or $0.16 per basic share and $0.15 per diluted share, for the second quarter of 2012.  The results also reflect operating expenses resulting from the Oversi acquisition, which closed on September 4, 2012.  

Non-GAAP revenues are defined as GAAP revenues adjusted for impact of the fair value adjustment to acquired deferred revenue related to purchase accounting. Management believes the adjustment is useful to investors as a measure of our operating performance following the acquisition.

Non-GAAP net profit is defined as GAAP net profit 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, regulatory matters, acquisition related expenses and compensation expenses related to the acquisitions.

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 Tables 2 and 3.  The Company provides these non-GAAP financial measures because it believes that 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 that they are useful to investors in enhancing an understanding of the Company's operating performance.

"Our continued growth is being driven by strong market fundamentals, namely the continued dramatic growth in data over mobile and fixed line networks," commented Rami Hadar, Allot Communications' President and Chief Executive Officer.  "The Allot Service Gateway offers service providers superior performance along with the broadest range of value-added services available on the market today, and services, particularly our video suite, have been a significant differentiator for our customers.  During the quarter we recognized revenue from a new Tier 1 mobile operator, as we predicted earlier in the year."

Recently, the Company achieved the following significant goals:

  • During the quarter, received large orders from 12 service providers, 2 of which represented new customers;  
  • 8 of the large orders came from mobile service providers, 2 of which were new customers;
  • Recognized revenue from a new Tier 1 mobile operator during the quarter, one of two 10% customers for the quarter;
  • Announced closing the acquisition of Oversi on September 4, which provides Allot with a best-of-breed video caching solution; and
  • Announced the receipt of a large order for the new Allot MediaSwift-E caching solution, which incorporates the caching technology from Oversi, from an existing multi-million dollar APAC fixed operator customer.

As of September 30, 2012, cash, cash equivalents, short term deposits and marketable securities totaled $144.1 million, post-closing the Oversi acquisition, with no debt. The preliminary allocation of the purchase price for Oversi is based upon estimates and assumptions that are subject to change within the purchase price allocation period, which is generally one year from the acquisition date.  The primary areas of the purchase price allocation that are not yet finalized relate to the measurement of certain assets and liabilities.

Conference Call & Webcast

The Allot management team will host a conference call to discuss its third quarter 2012 earnings results today at 8:30 AM ET, 2:30 PM Israel time. To access the conference call, please dial one of the following numbers: US: +1212 444 0412, UK: +44(0)20 7136 2055, Israel: +9723763 0146, participant code 1477641.

A replay of the conference call will be available from 12:01 am ET on October 31, 2012 through November 29, 2012 at 11:59 pm UK time.  To access the replay, please dial: US: +347 366 9565 or toll free, 1866 932 5017; UK: +44 (0)20 3427 0598 or toll free, 0800 358 7735, access code: 1477641.

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 Ltd. (NASDAQ, TASE: ALLT)  is a leading global provider of intelligent solutions to optimize and monetize over-the-top Internet traffic in fixed and mobile broadband networks and large enterprises. Allot Service Gateway offers service providers a broad range of value-added services in a single platform, which include analytics, policy control, video optimization, video caching and charging that are vital to managing fixed and mobile data, enhancing user experience, containing operating costs, and enabling service providers to generate revenues from their broadband networks. Allot's rich portfolio of solutions leverages dynamic actionable recognition technology (DART) to transform broadband pipes into smart networks that can rapidly and efficiently deploy value added Internet services. For more information, please visit http://www.allot.com.

Safe Harbor Statement

Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the Company's plans, objectives and expectations for future operations. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These factors include, but are not limited to: our ability to increase the breadth and functionality of the Service Gateway platform, changes in general economic and business conditions; the Company's inability to develop and introduce new technologies, products and applications; loss of market; 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. 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             Nine Months Ended
                          September 30,                  September 30,
                      -------------------------      -------------------------
                         2012              2011         2012              2011
                      -------           -------      -------           -------
                           (Unaudited)                    (Unaudited)
                      -------------------------      -------------------------
 
    Revenues         $ 27,768          $ 20,088     $ 78,390          $ 55,725
    Cost of
    revenues            8,464             5,728       23,119            15,885
                      -------           -------      -------           -------
    Gross profit       19,304            14,360       55,271            39,840
                      -------           -------      -------           -------
 
    Operating
    expenses:
    Research and
    development
    costs, net          6,069             3,467       15,411             9,531
    Sales and
    marketing           8,539             6,575       24,420            19,276
    General and
    administrative      2,671             2,379        8,104             5,785
                      -------           -------      -------           -------
    Total
    operating
    expenses           17,279            12,421       47,935            34,592
    Operating
    profit              2,025             1,939        7,336             5,248
    Financial and
    other income,
    net                   382               149        1,030               178
                      -------           -------      -------           -------
    Profit before
    income tax
    expenses            2,407             2,088        8,366             5,426
 
    Tax expenses           19                13           43               114
                      -------           -------      -------           -------
    Net profit          2,388             2,075        8,323             5,312
                      -------           -------      -------           -------
                      -------           -------      -------           -------
 
    Basic net
    profit per
    share              $ 0.07            $ 0.09       $ 0.26            $ 0.22
                      -------           -------      -------           -------
                      -------           -------      -------           -------
 
    Diluted net
    profit per
    share              $ 0.07            $ 0.08       $ 0.25            $ 0.20
                      -------           -------      -------           -------
                      -------           -------      -------           -------
 
    Weighted
    average number
    of shares
    used in
    computing
    basic net
    earnings per
    share          32,260,061        24,296,038   31,787,646        24,159,643
                   ----------        ----------   ----------        ----------
                   ----------        ----------   ----------        ----------
 
    Weighted
    average number
    of shares
    used in
    computing
    diluted net
    earnings per
    share          33,471,098        26,184,244   33,086,932        26,072,423
                   ----------        ----------   ----------        ----------
                   ----------        ----------   ----------        ----------


                                   TABLE - 2
                           ALLOT COMMUNICATIONS LTD.
                             AND ITS SUBSIDIARIES
    RECONCILATION OF GAAP TO NON-GAAP 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,
                                 -------------------------       -------------------------
                                    2012              2011            2012            2011
                                 -------           -------         -------         -------
                                       (Unaudited)                      (Unaudited)
                                 -------------------------       -------------------------
 
    GAAP net
    profit as
    reported                     $ 2,388           $ 2,075         $ 8,323         $ 5,312
    --------------------------------------------------------------------------------------
 
    Non-GAAP adjustments
    Expenses recorded for stock-based compensation
                 Cost of
                 revenues             57                19             154              69
                 Research and
                 development
                 costs, net          329                99             757             287
                 Sales and
                 marketing           588               223           1,351             682
                 General and
                 administrative      342               165             796             532
    Expenses
    related to
    M&A
    activities
    and
    compliance
    with
    regulatory
    matters (*)
                 General and
                 administrative      354               798           2,065           1,336
                 Research and
                 development
                 costs, net           93                 -             343               -
                 Sales and
                 marketing            55                 -             148               -
    Intangible
    assets
    amortization
                 Cost of
                 revenues            641                30             934              90
                 S&M                  17                                17
    Fair value
    adjustment
    for acquired
    deferred
    revenues
    write down                       258                 -             258               -
                                 -------           -------         -------         -------
    Total
    adjustments
    to operating
    profit                         2,734             1,334           6,823           2,996
                                 -------           -------         -------         -------
 
    Total
    adjustments                    2,734             1,334           6,823           2,996
                                 -------           -------         -------         -------
 
    Non-GAAP net profit          $ 5,122           $ 3,409        $ 15,146         $ 8,308
                                 -------           -------         -------         -------
                                 -------           -------         -------         -------
 
    Non- GAAP
    basic net
    profit per
    share                         $ 0.16            $ 0.14          $ 0.48          $ 0.34
                                 -------           -------         -------         -------
                                 -------           -------         -------         -------
 
    Non- GAAP
    diluted net
    profit per
    share                         $ 0.15            $ 0.13          $ 0.45          $ 0.32
                                 -------           -------         -------         -------
                                 -------           -------         -------         -------
 
    Weighted
    average
    number of
    shares
    used in
    computing
    basic net
    earnings per
    share                     32,260,061        24,296,038      31,787,646      24,159,643
                              ----------        ----------      ----------      ----------
                              ----------        ----------      ----------      ---------- 
    Weighted
    average
    number of
    shares
    used in
    computing
    diluted net
    earnings per
    share                     33,848,560        26,287,478      33,347,232      26,172,819
                              ----------        ----------      ----------      ----------
                              ----------        ----------      ----------      ----------


(*) Mostly legal, finance and compensation expenses related to the acquisition

                             TABLE - 3
                     ALLOT COMMUNICATIONS LTD.
                        AND ITS SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF OPERATIONS on a NON-GAAP BASIS
    (U.S. dollars in thousands, except share and per share data)
                        Three Months Ended             Nine Months Ended
                          September 30,                  September 30,
                      -------------------------      -------------------------
                         2012              2011        2012               2011
                      -------           -------      ------            -------
                           (Unaudited)                    (Unaudited)
                      -------------------------      -------------------------
 
    Revenues         $ 28,026          $ 20,088     $ 78,648          $ 55,725
    Cost of
    revenues            7,766             5,679       22,031            15,726
                      -------           -------      -------           -------
    Gross profit       20,260            14,409       56,617            39,999
                      -------           -------      -------           -------
 
    Operating
    expenses:
    Research and
    development
    costs, net          5,647             3,368       14,311             9,244
    Sales and
    marketing           7,879             6,352       22,904            18,594
    General and
    administrative      1,975             1,416        5,243             3,917
                      -------           -------      -------           -------
    Total
    operating
    expenses           15,501            11,136       42,458            31,755
    Operating
    profit              4,759             3,273       14,159             8,244
    Financial and
    other income,
    net                   382               149        1,030               178
                      -------           -------      -------           -------
    Profit before
    income tax
    expenses            5,141             3,422       15,189             8,422
 
    Tax expenses           19                13           43               114
                      -------           -------      -------           -------
    Net profit          5,122             3,409       15,146             8,308
                      -------           -------      -------           -------
                      -------           -------      -------           -------
 
    Basic net
    profit per
    share              $ 0.16            $ 0.14       $ 0.48            $ 0.34
                      -------           -------      -------           -------
                      -------           -------      -------           -------
 
    Diluted net
    profit per
    share              $ 0.15            $ 0.13       $ 0.45            $ 0.32
                      -------           -------      -------           -------
                      -------           -------      -------           -------
 
    Weighted
    average number
    of shares
    used in
    computing
    basic net
    earnings per
    share          32,260,061        24,296,038   31,787,646        24,159,643
                   ----------        ----------   ----------        ----------
                   ----------        ----------   ----------        ----------
 
    Weighted
    average number
    of shares
    used in
    computing
    diluted net
    earnings per
    share          33,848,560        26,287,478   33,347,232        26,172,819
                   ----------        ----------   ----------        ----------
                   ----------        ----------   ----------        ----------


                             TABLE - 4
                     ALLOT COMMUNICATIONS LTD.
                        AND ITS SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS
                    (U.S. dollars in thousands)
                                                              September 30,  December 31,
                                                                  2012           2011
                                                              ------------   -----------
                                                               (Unaudited)     (Audited)
                                                              ------------   -----------
 
                      ASSETS
    CURRENT ASSETS:
    Cash and cash equivalents                                   $ 25,668     $ 116,682
    Short term deposits                                           94,000        24,000
    Marketable securities and restricted cash                     24,427        18,718
    Trade receivables, net                                        21,739        11,926
    Other receivables and prepaid expenses                         4,946         5,950
    Inventories                                                   11,059        10,501
                                                              ----------     ---------
    Total current assets                                         181,839       187,777
                                                              ----------     ---------
 
    LONG-TERM ASSETS:
    Severance pay fund                                               182           178
    Other assets and deferred taxes                                  320           356
                                                              ----------     ---------
    Total long-term assets                                           502           534
                                                              ----------     ---------
 
    PROPERTY AND EQUIPMENT, NET                                    6,799         5,352
                                                              ----------     ---------
    GOODWILL AND INTANGIBLE ASSETS, NET                           34,541         3,395
                                                              ----------     ---------
 
    Total assets                                               $ 223,681     $ 197,058
                                                              ----------     ---------
                                                              ----------     ---------
 
       LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES:
    Trade payables                                               $ 7,603       $ 2,684
    Deferred revenues                                             15,936        16,694
    Other payables and accrued expenses                           15,326         9,462
                                                              ----------     ---------
    Total current liabilities                                     38,865        28,840
                                                              ----------     ---------
 
    LONG-TERM LIABILITIES:
    Deferred revenues                                              4,632         5,430
    Accrued severance pay                                            229           219
    Total long-term liabilities                                    4,861         5,649
                                                              ----------     ---------
 
    SHAREHOLDERS' EQUITY                                         179,955       162,569
                                                              ----------     ---------
 
    Total liabilities and shareholders' equity                 $ 223,681     $ 197,058
                                                              ----------     ---------
                                                              ----------     ---------


                        TABLE - 5
                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,
                               --------------------   --------------------
                                   2012        2011         2012      2011
                               --------------------   --------------------
                                  (Unaudited)            (Unaudited)
                               --------------------   --------------------
 
    Cash flows from
    operating activities:
 
    Net income                  $ 2,388     $ 2,075      $ 8,323   $ 5,312
    Adjustments to
    reconcile net income to
    net cash provided by
    operating activities:
    Depreciation                    890         712        2,253     2,048
    Stock-based
    compensation related to
    options granted to
    employees and
    non-employees                 1,316         506        3,058     1,570
    Amortization of
    intangible assets               658          30          951        91
    Capital loss                     10           -           14         9
    Decrease (Increase) in
    accrued severance pay,
    net                              (1)         (1)           6         5
    Decrease in other
    assets                           55          95           56        94
    Decease in accrued
    interest and
    amortization of premium
    on marketable
    securities                       96          19          144        66
    Increase in trade
    receivables                  (4,143)     (1,657)      (9,642)   (2,060)
    Decrease (Increase) in
    other receivables and
    prepaid expenses                (65)      2,129        1,561       795
    Decrease in inventories       1,816         676        2,137     1,782
    Increase (Decrease) in
    trade payables               (1,125)      1,735        1,367    (1,310)
    Increase (Decrease) in
    employees and payroll
    accruals                      1,789          95        2,167      (514)
    Decrease in deferred
    revenues                     (2,659)     (1,383)      (4,295)     (319)
    Increase (Decrease) in
    other payables and
    accrued expenses               (875)     (1,649)       1,242      (329)
                               --------------------   -------------------- 
    Net cash provided by
    operating activities            150       3,382        9,342     7,240
                               --------------------   --------------------
 
    Cash flows from
    investing activities:
 
    Increase in restricted
    deposit                       (147)           -        (126)      (487)
    Investment in
    short-term deposit         (23,000)     (18,000)    (70,000)   (18,000)
    Purchase of property
    and equipment               (1,528)        (740)     (2,997)    (2,039)
    Proceeds from sale of
    property and equipment           -            -           -         30
    Investment in
    marketable securities       (6,443)      (2,317)     (7,694)    (4,231)
    Proceeds from
    redemption or sale of
    marketable securities          800          803       2,000      2,403
    Investment in
    Subsidiary                 (13,493)           -     (23,892)         -
    Loan to purchased
    Subsidiary                       -            -      (1,000)         -
                               ---------------------   -------------------- 
    Net cash used in
    investing activities       (43,811)     (20,254)   (103,709)   (22,324)
                               ---------------------   --------------------
 
    Cash flows from
    financing activities:
 
    Exercise of warrants
    and employee stock
    options                      1,198          550       5,305      2,020
    Redemption of bank loan     (1,952)           -      (1,952)         -

                               --------------------   --------------------
    Net cash provided by
    (used in) financing
    activities                   (754)          550       3,353      2,020
                               --------------------   --------------------
 
    Increase in cash and
    cash equivalents          (44,415)      (16,322)    (91,014)   (13,064)
    Cash and cash
    equivalents at the
    beginning of the period    70,083        46,116     116,682     42,858
                               --------------------   -------------------- 
    Cash and cash
    equivalents at the end
    of the period            $ 25,668      $ 29,794    $ 25,668   $ 29,794
                             ----------------------   --------------------
                             ----------------------   --------------------


Investor Relations Contact:                
Jay Kalish
Executive Director Investor Relations
International access code +972-54-221-1365
jkalish@allot.com


Public Relations Contact:
Maya Lustig
Director of Corporate Communications
Tel: +972-9-7616851
Cell: +972-54-677-8100
mlustig@allot.com

SOURCE Allot Communications Ltd.

 

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