Allot Announces Second Quarter 2022 Financial Results

Rhea-AI Summary

Allot Ltd. (NASDAQ: ALLT) reported second quarter 2022 revenues of $32.8 million, a 7% decline from $35.3 million in Q2 2021. The company faced a GAAP operating loss of $6.5 million and a net loss of $6.2 million. For the full year, it adjusted its revenue guidance to $125 - 130 million, expecting Q3 revenues around $25 million. Despite challenges in closing CAPEX deals, management anticipates 15% year-over-year growth in ARR by December 2022, with a goal of profitability by 2024.

Positive

• Q2 2022 recurring security revenue projected at approximately $7 million.
• Total ARR expected between $50-52 million by December 2022.
• Incremental MAR exceeding $180 million for the full year 2022.

Negative

• Q2 2022 revenues decreased by 7% compared to Q2 2021.
• GAAP net loss increased to $6.2 million from $4 million in Q2 2021.
• Delay in sizeable CAPEX deals affecting revenue forecast.

HOD HASHARON, Israel, Aug. 16, 2022 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for service providers and enterprises worldwide, today announced its unaudited second quarter 2022 financial results.

 Second Quarter 2022 Financial Highlights

• Second quarter revenues were $32.8 million compared with $35.3 million in the second quarter of last year;
• Gross margin on a non-GAAP basis was 70%;
• GAAP operating loss was $6.5 million and non-GAAP operating loss was $4.2 million;
• GAAP net loss was $6.2 million and non-GAAP net loss was $4.2 million.

Financial Outlook

For 2022, management adjusts its previously announced guidance as follows:

• Revenues to be between $125 - 130 million; (the third quarter of 2022 is expected to be approximately $25 million);
• Additional recurring security deals to be executed, providing incremental MAR** of more than $180 million for the full year 2022;
• December 2022 total ARR* including SECaas ARR* and Support & Maintenance ARR* to be between $50-52 million, representing approximately 15% year-over-year growth versus 2021 at the midpoint;
• December 2022 SECaas ARR* to be approximately $9 million;
• Recurring security revenue to be approximately $7 million.

Management Comment

Erez Antebi, President & CEO of Allot, commented, "Several sizeable CAPEX deals that we expected to conclude and be able to at least partially deliver in the second and third quarters, are now not expected to close before the fourth quarter. As a result, we are modifying our revenue forecast for the remainder of this year."

Continued Mr. Antebi, "Looking at the DPI market in general, we continue to see many opportunities and an overall solid DPI market. In the SECaas business, we closed several new deals this quarter and 2 additional operators launched the security service."

"We are fully aware of the challenges we face. We have set a goal to be profitable in 2024 by growing our SECaas revenues and closely controlling our expenses.  We have full faith in our company, our team, our products and in our ability to meet these goals, " concluded Antebi.

Q2 2022 Financial Results Summary

Total revenues for the second quarter of 2022 were $32.8 million, a decrease of 7% compared to $35.3 million in the second quarter of 2021.

Gross profit on a GAAP basis for the second quarter of 2022 was $22.5 million (gross margin of 68.7%), an 8% decline compared with $24.5 million (gross margin of 69.3%) in the second quarter of 2021.

Gross profit on a non-GAAP basis for the second quarter of 2022 was $23.0 million (gross margin of 70.2%), a 7% decline compared with $24.8 million (gross margin of 70.2%) in the second quarter of 2021.

Net loss on a GAAP basis for the second quarter of 2022 was $6.2 million, or $0.17 per basic share, compared with a net loss of $4.0 million, or $0.11 per basic share, in the second quarter of 2021.

Net loss on a non-GAAP for the second quarter of 2022 was $4.2 million, or $0.11 per basic share compared with a non-GAAP net loss of $1.5 million, or $0.04 per basic share, in the second quarter of 2021.

Cash and investments as of June 30,2022 totaled $108.0 million, compared to $85.7 million as of December 31, 2021.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss its second quarter 2022 earnings results today, August 16, 2022 at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:

US:  1-888-642-5032, UK: 0-800-917-5108, Israel: +972-3-918-0609

A live webcast and, following the end of the call, an archive of the conference call, will be accessible on the Allot website at: http://investors.allot.com/index.cfm 

About Allot

Allot Ltd. (NASDAQ: ALLT, TASE: ALLT) is a provider of leading innovative network intelligence and security solutions for service providers and enterprises worldwide, enhancing value to their customers. Our solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more. Allot's multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1,000 enterprises. Our industry leading network-based security as a service solution is already used by over 20 million subscribers in Europe. Allot. See. Control. Secure.

For more information, visit www.allot.com

Performance Metrics

* Total ARR - Support & Maintenance ARR (measures the current annual run rate of support & maintenance revenues, which is calculated based on these expected revenues in the fourth quarter and multiplied by 4) and SECaaS ARR (measures the current annual run rate of the SECaaS revenues, which is calculated based on these expected revenues in the current month of December and multiplied by 12).

** MAR (maximum annual revenue potential of concluded transactions) was estimated by Allot upon transaction signature and constitutes an approximation of the theoretical annual revenues Allot would receive if 100% of the applicable customer segments only subscribers, as estimated by Allot, signed up for the service.

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 and changes in taxes related items.

These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. The non-GAAP results and a full reconciliation between GAAP and non-GAAP results is provided in the accompanying Table 2. The Company provides these non-GAAP financial measures because it believes they present a better measure of the Company's core business and management uses the non-GAAP measures internally to evaluate the Company's ongoing performance. Accordingly, the Company believes they are useful to investors in enhancing an understanding of the Company's operating performance.

Safe Harbor Statement

This release contains forward-looking statements, which express the current beliefs and expectations of Company management. Such statements involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements set forth in such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: our ability to compete successfully with other companies offering competing technologies; the loss of one or more significant customers; consolidation of, and strategic alliances by, our competitors, government regulation; the timing of completion of key project milestones which impact the timing of our revenue recognition; lower demand for key value-added services; our ability to keep pace with advances in technology and to add new features and value-added services; managing lengthy sales cycles; operational risks associated with large projects; our dependence on fourth party channel partners for a material portion of our revenues; court approval of the Company's proposed share buy-back program; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

 

 

Investor Relations Contact: EK Global Investor Relations Ehud Helft +1 212 378 8040 allot@ekgir.com

Public Relations Contact: Seth Greenberg, Allot Ltd. +972 54 922 2294 sgreenberg@allot.com

 

 

 

TABLE  - 1
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022		2021			2022		2021
	(Unaudited)					(Unaudited)
Revenues	$       32,772		$       35,288			$       64,668		$       66,471
Cost of revenues	10,242		10,822			20,034		20,413
Gross profit	22,530		24,466			44,634		46,058
Operating expenses:
Research and development costs, net	12,480		11,373			24,510		21,940
Sales and marketing	12,220		12,818			23,909		24,411
General and administrative	4,303		4,080			8,340		7,280
Total operating expenses	29,003		28,271			56,759		53,631
Operating loss	(6,473)		(3,805)			(12,125)		(7,573)
Financial and other income, net	620		194			867		309
Loss before income tax expenses	(5,853)		(3,611)			(11,258)		(7,264)
Tax expenses	380		368			1,102		673
Net Loss	(6,233)		(3,979)			(12,360)		(7,937)
Basic net loss per share	$         (0.17)		$         (0.11)			$         (0.34)		$         (0.22)
Diluted net loss per share	$         (0.17)		$         (0.11)			$         (0.34)		$         (0.22)
Weighted average number of shares used in
computing basic net loss per share	36,827,197		35,941,378			36,684,017		35,739,556
Weighted average number of shares used in
computing diluted net loss per share	36,827,197		35,941,378			36,684,017		35,739,556

 

 

TABLE  - 2
ALLOT LTD.
AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
(U.S. dollars in thousands, except per share data)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2022		2021		2022		2021
		(Unaudited)				(Unaudited)
GAAP cost of revenues		$        10,242		$        10,822		$       20,034		$       20,413
Share-based compensation (1)		(338)		(164)		(519)		(283)
Amortization of intangible assets (2)		(152)		(152)		(304)		(304)
Non-GAAP cost of revenues		$          9,752		$        10,506		$       19,211		$       19,826
GAAP gross profit		$        22,530		$        24,466		$       44,634		$       46,058
Gross profit adjustments		490		316		823		587
Non-GAAP gross profit		$        23,020		$        24,782		$       45,457		$       46,645
GAAP operating expenses		$        29,003		$        28,271		$       56,759		$       53,631
Share-based compensation (1)		(1,831)		(2,097)		(4,187)		(3,422)
Non-GAAP operating expenses		$        27,172		$        26,174		$       52,572		$       50,209
GAAP financial and other income		$             620		$            194		$            867		$            309
Exchange rate differences*		(316)		14		(389)		90
Non-GAAP Financial and other income		$             304		$            208		$            478		$            399
GAAP taxes on income		$             380		$            368		$         1,102		$            673
Tax expenses in respect of net deferred tax asset recorded		-		(102)		-		(169)
Changes in tax related items		(50)		-		(50)		-
Non-GAAP taxes on income		$             330		$            266		$         1,052		$            504
GAAP Net Loss		$         (6,233)		$        (3,979)		$      (12,360)		$        (7,937)
Share-based compensation (1)		2,169		2,261		4,706		3,705
Amortization of intangible assets (2)		152		152		304		304
Exchange rate differences*		(316)		14		(389)		90
Tax expenses in respect of net deferred tax asset recorded		-		102		-		169
Changes in tax related items		50		-		50		-
Non-GAAP Net income (loss)		$         (4,178)		$        (1,450)		$        (7,689)		$        (3,669)
GAAP Loss per share (diluted)		$           (0.17)		$          (0.11)		$         (0.34)		$         (0.22)
Share-based compensation		0.06		0.06		0.13		0.10
Amortization of intangible assets		0.0		0.01		0.00		0.02
Exchange rate differences*		(0.0)		0.00		(0.00)		-
Tax expense in respect of net deferred tax asset recorded		-		0.00		-		-
Non-GAAP Net income (loss) per share (diluted)		$           (0.11)		$          (0.04)		$         (0.21)		$         (0.10)
Weighted average number of shares used in
computing GAAP diluted net loss per share		36,827,197		35,941,378		36,684,017		35,739,556
Weighted average number of shares used in
computing non-GAAP diluted net loss per share		36,827,197		35,941,378		36,684,017		35,739,556
* Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.

 

TABLE  - 2 cont.
ALLOT LTD.
AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
(U.S. dollars in thousands, except per share data)
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2022		2021		2022		2021
		(Unaudited)				(Unaudited)
(1) Share-based compensation:
	Cost of revenues	$             338		$            164		$            519		$            283
	Research and development costs, net	844		699		1,689		1,094
	Sales and marketing	619		930		1,532		1,512
	General and administrative	368		468		966		816
		$          2,169		$          2,261		$         4,706		$         3,705
(2) Amortization of intangible assets
	Cost of revenues	$             152		$            152		$            304		$            304
		$             152		$            152		$            304		$            304

 

 

TABLE  - 3
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED  BALANCE  SHEETS
(U.S. dollars in thousands)
		June 30,		December 31,
		2022		2021
		(Unaudited)		(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$                   15,461		$                11,717
Short-term bank deposits		85,900		60,720
Restricted deposits		1,100		1,480
Available-for-sale marketable securities		5,319		11,531
Trade receivables, net		36,288		30,829
Other receivables and prepaid expenses		8,629		8,490
Inventories		12,256		11,092
Total current assets		164,953		135,859
LONG-TERM ASSETS:
Long-term bank deposits		215		215
Severance pay fund		369		407
Operating lease right-of-use assets		7,134		8,513
Trade receivables, net		5,991		6,643
Other assets		1,203		1,639
Total long-term assets		14,912		17,417
PROPERTY AND EQUIPMENT, NET		14,809		15,000
GOODWILL AND INTANGIBLE ASSETS, NET		34,668		35,138
Total assets		$                 229,342		$              203,414
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$                     3,003		$                  3,940
Deferred revenues		26,765		22,138
Short-term operating lease liabilities		2,722		2,785
Other payables and accrued expenses		26,073		26,250
Total current liabilities		58,563		55,113
LONG-TERM LIABILITIES:
Deferred revenues		12,444		15,942
Long-term operating lease liabilities		3,588		5,467
Accrued severance pay		866		884
Convertible debt		39,475		-
Total long-term liabilities		56,373		22,293
SHAREHOLDERS' EQUITY		114,406		126,008
Total liabilities and shareholders' equity		$                 229,342		$              203,414

 

TABLE  - 4
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	(Unaudited)				(Unaudited)
Cash flows from operating activities:
Net Loss	$        (6,233)		$      (3,979)		$      (12,360)		$          (7,937)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	1,332		1,141		2,746		2,229
Stock-based compensation	2,169		2,261		4,706		3,705
Amortization of intangible assets	235		234		470		471
Increase (Decrease) in accrued severance pay, net	26		12		20		(60)
Decrease (Increase) in other assets	19		(458)		436		1,041
Decrease in accrued interest and  amortization of premium on marketable securities	16		32		48		107
Changes in operating leases, net	(191)		(479)		(563)		(711)
Increase in trade receivables	(4,082)		(3,113)		(4,807)		(10,256)
Decrease (Increase) in other receivables and prepaid expenses	141		3,094		(893)		3,522
Decrease (Increase) in inventories	591		4,246		(1,164)		3,289
Decrease in long-term deferred taxes, net	-		103		-		175
Increase (Decrease) in trade payables	(1,433)		334		(937)		(536)
Increase (Decrease) in employees and payroll accruals	523		1,286		(1,963)		(623)
Increase in deferred revenues	287		1,640		1,129		16,612
Decrease in other payables, accrued expenses and other long term liabilities	(1,252)		(2,761)		(1,523)		(3,364)
Amortization of issuance costs of Convertible debt	49		-		71		-
Net cash provided by (used in) operating activities	(7,803)		3,593		(14,584)		7,664
Cash flows from investing activities:
Decrease (Increase) in restricted deposit	260		(2,440)		380		(2,874)
Redemption of (Investment in) short-term deposits	520		100		(25,180)		(24,200)
Purchase of property and equipment	(1,281)		(1,934)		(2,556)		(3,629)
Proceeds from redemption or sale of available-for sale marketable securities	2,872		3,231		6,030		7,579
Net cash provided by (used in) investing activities	2,371		(1,043)		(21,326)		(23,124)
Cash flows from financing activities:
Proceeds from exercise of stock options	15		908		250		2,467
Issuance of convertible debt	-		-		39,404		-
Net cash provided by financing activities	15		908		39,654		2,467
Increase (Decrease) in cash and cash equivalents	(5,417)		3,458		3,744		(12,993)
Cash and cash equivalents at the beginning of the period	20,878		7,148		11,717		23,599
Cash and cash equivalents at the end of the period	$        15,461		$     10,606		$        15,461		$          10,606

 

Other financial metrics (Unaudited)
U.S. dollars in millions, except number of full time employees, % of top-10 end-customers out of revenues and number of shares
			Q2-2022		YTD 2022		FY 2021
Revenues geographic breakdown
	Americas		9.4	29 %	13.1	20 %	19.4	14 %
	EMEA		16.0	49 %	34.7	54 %	82.0	56 %
	Asia Pacific		7.4	22 %	16.9	26 %	44.2	30 %
			32.8	100 %	64.7	100 %	145.6	100 %
Revenue breakdown by type
	Products		17.0	52 %	34.2	53 %	88.1	60 %
	Professional Services		3.1	10 %	5.7	9 %	15.2	11 %
	SECaaS (Security as a Service)		1.7	5 %	3.2	5 %	4.1	3 %
	Support & Maintenance		11.0	33 %	21.6	33 %	38.2	26 %
			32.8	100 %	64.7	100 %	145.6	100 %
Revenues per customer type
	CSP		26.1	79 %	51.9	80 %	116.9	80 %
	Enterprise		6.7	21 %	12.8	20 %	28.7	20 %
			32.8	100 %	64.7	100 %	145.6	100 %
% of top-10 end-customers out of revenues			59 %		54 %		51 %
Total number of full time employees (end of period)			749		749		741
Non-GAAP Weighted average number of basic shares (in millions)			36.8		36.7		36.1
Non-GAAP weighted average number of fully diluted shares (in millions)			38.9		39.2		38.4

 

 

SECaaS (Security as a Service) revenues- U.S. dollars in millions (Unaudited)
Q2-2022:	1.7
Q1-2022:	1.5
Q4-2021:	1.3
Q3-2021:	1.2
SECaaS ARR* (annualized recurring revenues)- U.S. dollars in millions (Unaudited)
Jun. 2022:	6.9
Dec. 2021:	5.2
Dec. 2020:	2.7
Dec. 2019:	0.5
*ARR: annualized recurring SECaaSrevenues, calculated based on the monthly revenues multiplied by 12

 

 

ARR - U.S. dollars in millions (Unaudited)
		Dec. 2020		Dec. 2021		Dec. 2022 target		2021 vs. 2020		2022 (target) vs. 2021
Support & maintenance ARR *		31.2		42.0		41-43		35 %		(2%) -2%
SECaaS ARR **		2.7		5.2		9		93 %		73 %
Total ARR		33.9		47.2		50-52		39 %		6%-10%
* Support & Maintenance ARR measures the current annual run rate of the support & maintenance revenues, which is calculated based on these expected revenues in the fourth quarter and multiplied by 4. ** SECaaS ARR measures the current annual run rate of the SECaaS revenues, which is calculated based on these expected revenues in the current month of December and multiplied by 12.

 

 

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SOURCE Allot Ltd.

FAQ

What were Allot's Q2 2022 revenue results?

Allot reported revenues of $32.8 million for Q2 2022, a 7% decline from $35.3 million in Q2 2021.

What is Allot's guidance for 2022 revenues?

Allot adjusted its 2022 revenue guidance to between $125 million and $130 million.

What is the expected ARR growth for Allot by the end of 2022?

Allot anticipates its total ARR to be between $50 million and $52 million, indicating a 15% year-over-year growth.

What were the net loss figures for Allot in Q2 2022?

Allot reported a GAAP net loss of $6.2 million for Q2 2022, compared to a loss of $4 million in the same quarter last year.

What are Allot's future profitability goals?

Allot aims to achieve profitability by 2024, focusing on growing SECaaS revenues and controlling expenses.