Allot Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

Allot (NASDAQ: ALLT) announced its Q2 2024 financial results, showing stable revenues of $22.2 million compared to the previous quarter. Key highlights include:

- SECaaS revenues grew 54% year-over-year to $3.7 million
- Operating loss improved significantly, declining 84% to $3.4 million (GAAP) and 95% to $1 million (non-GAAP)
- Positive operating cash flow of $1.2 million, first time in three years
- Net cash increased by $0.6 million during the quarter

For H2 2024, Allot expects non-GAAP operating profit around breakeven and stable net cash position. Full-year SECaaS revenue and ARR are projected to grow around 50% year-over-year. CEO Eyal Harari highlighted progress in operational efficiency and continued investment in SECaaS as a long-term growth engine.

Positive

• SECaaS revenues grew 54% year-over-year to $3.7 million
• Operating loss improved significantly, declining 84% to $3.4 million (GAAP) and 95% to $1 million (non-GAAP)
• Positive operating cash flow of $1.2 million, first time in three years
• Net cash increased by $0.6 million during the quarter
• Non-GAAP gross margin was 70.6%
• Full-year SECaaS revenue and ARR expected to grow around 50% year-over-year

Negative

• Total revenues decreased 12% year-over-year to $22.2 million
• GAAP gross profit declined 12% year-over-year to $15.2 million
• Non-GAAP gross profit declined 12% year-over-year to $15.7 million
• Net loss of $3.4 million on a GAAP basis, or $0.09 per basic share

Insights

Financial Analyst

Allot's Q2 2024 results show a mixed picture. While revenues declined 12% year-over-year to $22.2 million, there are positive signs of operational improvement. The company significantly reduced its operating loss by 84% on a GAAP basis and 95% on a non-GAAP basis. Notably, Allot achieved positive operating cash flow of $1.2 million for the first time in three years.

The company's focus on Security as a Service (SECaaS) is paying off, with revenues in this segment growing 54% year-over-year to $3.7 million. The June 2024 SECaaS ARR of $14.6 million indicates strong potential for recurring revenue growth. Management's outlook for breakeven non-GAAP operating profit in H2 2024 and continued SECaaS growth of around 50% year-over-year is encouraging.

However, investors should monitor the overall revenue decline and assess whether the SECaaS growth can offset the decrease in other segments. The stabilization of the net cash position is positive, but continued improvement in cash flow will be important for long-term sustainability.

Tech Expert

Allot's strategic shift towards Security as a Service (SECaaS) is a smart move in the evolving network security landscape. The 54% year-over-year growth in SECaaS revenues demonstrates market validation for their offerings. As cyber threats become more sophisticated, the demand for integrated network intelligence and security solutions is likely to increase.

The company's ability to win new customers and secure expansion contracts with existing ones in both Allot Smart and Allot Secure product lines indicates a strong product-market fit. However, the overall revenue decline suggests challenges in other segments, possibly due to market saturation or increased competition.

Allot's focus on operational efficiency is evident in the significant reduction of operating losses. This, combined with their technological capabilities, positions them well for potential growth. The key will be successfully executing their strategic plan to leverage their assets and drive long-term profitable growth in the competitive network security market.

HOD HASHARON, Israel, Aug. 27, 2024 /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 financial results for the second quarter of 2024.

Financial Highlights for the Second Quarter

• Revenues were $22.2 million, stable compared with that of the prior quarter;
• Non-GAAP gross margin was 70.6%;
• Security as a Service (SECaaS) revenues continued to grow, increasing 54% year-over-year to $3.7 million;
• June 2024 SECaaS ARR* was $14.6 million;
• Operating loss improved significantly year over year: declining 84% to $3.4 million on a GAAP basis and 95% to $1 million on a non-GAAP basis;
• Operating cash flow was positive for the first time in three years, coming in at $1.2 million;
• Net cash** increased by $0.6 million during the quarter;

Financial Outlook

For the second half of 2024, management expects non-GAAP operating profit at around breakeven and the net cash position to not decrease.

Full year SECaaS revenue and SECaaS ARR* are expected to continue experiencing accelerated growth at around 50% year-over-year.

Management Comment

Eyal Harari, CEO of Allot commented, "We have made significant progress improving our operational efficiency and stabilizing the business, and we are very pleased to have returned to positive operating cash flow for the first time in three years. At the same time, we continue investing in our long-term growth engine, SECaaS.

"During the quarter, we demonstrated solid execution. We won new customers in both Allot Smart and Allot Secure, and we closed expansion contracts with existing customers. We have a strong and broad pipeline of opportunities, and we are making progress in converting that pipeline into orders.

"In my first few months at Allot, I have been meeting our customers and employees, looking for ways to leverage our strong assets and deep technological capabilities to better serve all our stakeholders. We are formulating a strategic plan to drive long-term profitable growth, and I look forward to realizing Allot's strong potential."

Q2 2024 Financial Results Summary

Total revenues for the second quarter of 2024 were $22.2 million, a 12% decrease compared to $25 million in the second quarter of 2023.

Gross profit on a GAAP basis for the second quarter of 2024 was $15.2 million (gross margin of 68.5%), a 12% decline compared with $17.3 million (gross margin of 69.2%) in the second quarter of 2023.

Gross profit on a non-GAAP basis for the second quarter of 2024 was $15.7 million (gross margin of 70.6%), a 12% decline compared with $17.9 million (gross margin of 71.4%) in the second quarter of 2023.   

Operating loss on a GAAP basis for the second quarter of 2024 was $3.4 million, an 84% improvement compared with an operating loss of $21.5 million in the second quarter of 2023.

Operating loss on a non-GAAP basis for the second quarter of 2024 was $1 million, a 95% improvement compared with an $18.9 million loss in the second quarter of 2023.   

Net loss on a GAAP basis for the second quarter of 2024 was $3.4 million, or $0.09 per basic share, an improvement compared to the net loss of $20.7 million, or $0.55 per basic share, in the second quarter of 2023.

Net loss on a non-GAAP basis for the second quarter of 2024 was $0.8 million, or $0.02 per basic share, an improvement compared to the non-GAAP net loss of $18.3 million, or $0.49 per basic share, in the second quarter of 2023.

Operating cash flow in the quarter was $1.2 million.    

Cash and cash equivalents, short-term bank deposits, and investments as of June 30, 2024, totaled $53.2 million, an increase of $0.6 million versus $52.6 million at the end of the prior quarter and $54.8 million as of December 31, 2023.

Conference Call & Webcast:

The Allot management team will host a conference call to discuss its Second quarter 2024 earnings results today, August 27, 2024, at 9:00 am ET, 4:00 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: +972-3-918-0610

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 many millions of subscribers globally. Allot. See. Control. Secure.

For more information, visit www.allot.com 

Performance Metrics

* SECaaS ARR –  measures the current annual recurring of SECaaS revenues, which is calculated based on estimated revenues for the month of June 2024 and multiplied by 12.

** Net Cash – Cash and cash equivalents, short-term bank deposits, and investments net of convertible debt.

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 accounts receivables, including our ability to collect outstanding accounts and assess their collectability on a quarterly basis; our ability to meet expectations with respect to our financial guidance and outlook; 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; 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
	Jun 30,					Jun 30,
	2024		2023			2024		2023
	(Unaudited)					(Unaudited)
Revenues	$       22,164		$       25,047			$       44,054		$       46,173
Cost of revenues	6,989		7,707			13,781		15,358
Gross profit	15,175		17,340			30,273		30,815
Operating expenses:
Research and development costs, net	7,326		10,752			14,475		21,246
Sales and marketing	7,911		10,522			15,701		21,409
General and administrative	3,304		17,558			6,206		21,518
Total operating expenses	18,541		38,832			36,382		64,173
Operating loss	(3,366)		(21,492)			(6,109)		(33,358)
Financial and other income, net	489		985			1,029		1,779
Loss before income tax expenses	(2,877)		(20,507)			(5,080)		(31,579)
Tax expenses	479		225			786		515
Net Loss	(3,356)		(20,732)			(5,866)		(32,094)
Basic net loss per share	$         (0.09)		$         (0.55)			$         (0.16)		$         (0.85)
Diluted net loss per share	$         (0.09)		$         (0.55)			$         (0.16)		$         (0.85)
Weighted average number of shares used in
computing basic net loss per share	38,712,407		37,743,328			38,562,065		37,583,412
Weighted average number of shares used in
computing diluted net loss per share	38,712,407		37,743,328			38,562,065		37,583,412

 

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,
		2024		2023		2024		2023
		(Unaudited)				(Unaudited)
GAAP cost of revenues		$           6,989		$          7,707		$       13,781		$       15,358
Share-based compensation (1)		(324)		(348)		(478)		(879)
Amortization of intangible assets (2)		(152)		(194)		(304)		(387)
Non-GAAP cost of revenues		$           6,513		$          7,165		$       12,999		$       14,092
GAAP gross profit		$        15,175		$        17,340		$       30,273		$       30,815
Gross profit adjustments		476		542		782		1,266
Non-GAAP gross profit		$        15,651		$        17,882		$       31,055		$       32,081
GAAP operating expenses		$        18,541		$        38,832		$       36,382		$       64,173
Share-based compensation (1)		(1,863)		(2,077)		(3,069)		(5,014)
Non-GAAP operating expenses		$        16,678		$        36,755		$       33,313		$       59,159
GAAP financial and other income		$              489		$             985		$         1,029		$         1,779
Exchange rate differences*		110		(238)		204		(281)
Expenses related to M&A activities (3)		-		14		-		28
Non-GAAP Financial and other income		$              599		$             761		$         1,233		$         1,526
GAAP taxes on income		$              479		$             225		$            786		$            515
Changes in tax related items		(133)		(25)		(177)		(50)
Non-GAAP taxes on income		$              346		$             200		$            609		$            465
GAAP Net Loss		$         (3,356)		$      (20,732)		$       (5,866)		$     (32,094)
Share-based compensation (1)		2,187		2,425		3,547		5,893
Amortization of intangible assets (2)		152		194		304		387
Expenses related to M&A activities (3)		-		14		-		28
Exchange rate differences*		110		(238)		204		(281)
Changes in tax related items		133		25		177		50
Non-GAAP Net loss		$            (774)		$      (18,312)		$       (1,634)		$     (26,017)
GAAP Loss per share (diluted)		$           (0.09)		$          (0.55)		$         (0.16)		$         (0.85)
Share-based compensation		0.06		0.06		0.10		0.16
Amortization of intangible assets		0.01		0.01		0.01		0.01
Expenses related to M&A activities		-		0.00		-		0.00
Exchange rate differences*		0.00		(0.01)		-		(0.01)
Changes in tax related items		-		-		-		-
Non-GAAP Net loss per share (diluted)		$           (0.02)		$          (0.49)		$         (0.05)		$         (0.69)
Weighted average number of shares used in
computing GAAP diluted net loss per share		38,712,407		37,743,328		38,562,065		37,583,412
Weighted average number of shares used in
computing non-GAAP diluted net loss per share		38,712,407		37,743,328		38,562,065		37,583,412
* 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,
		2024		2023		2024		2023
		(Unaudited)				(Unaudited)
(1) Share-based compensation:
	Cost of revenues	$              324		$             348		$            478		$            879
	Research and development costs, net	787		754		1,285		1,956
	Sales and marketing	792		733		1,235		1,770
	General and administrative	284		590		549		1,288
		$           2,187		$          2,425		$         3,547		$         5,893
(2) Amortization of intangible assets
	Cost of revenues	$              152		$             194		$            304		$            387
		$              152		$             194		$            304		$            387
(3) Expenses related to M&A activities
	Financial income	$                 -		$               14		$                -		$               28
		$                 -		$               14		$                -		$               28

 

TABLE  - 3
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED  BALANCE  SHEETS
(U.S. dollars in thousands)
		June 30,		December 31,
		2024		2023
		(Unaudited)		(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$                     15,883		$                 14,192
Short-term bank deposits		3,800		10,000
Restricted deposits		1,183		1,728
Available-for-sale marketable securities		32,313		28,853
Trade receivables, net (net of allowance for credit losses of $25,341 and $25,253 on June 30, 2024 and December 31, 2023, respectively)		17,808		14,828
Other receivables and prepaid expenses		5,933		8,437
Inventories		9,606		11,874
Total current assets		86,526		89,912
LONG-TERM ASSETS:
Severance pay fund		409		395
Restricted deposit		-		158
Operating lease right-of-use assets		1,883		3,057
Other assets		1,025		704
Property and equipment, net		10,203		11,189
Intangible assets, net		610		915
Goodwill		31,833		31,833
Total non-current assets		45,963		48,251
Total assets		$                  132,489		$               138,163
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$                          985		$                       969
Deferred revenues		15,565		14,892
Short-term operating lease liabilities		1,405		1,453
Other payables and accrued expenses		18,128		22,094
Total current liabilities		36,083		39,408
LONG-TERM LIABILITIES:
Deferred revenues		8,729		7,437
Long-term operating lease liabilities		132		702
Accrued severance pay		929		1,080
Convertible debt		39,873		39,773
Total long-term liabilities		49,663		48,992
SHAREHOLDERS' EQUITY		46,743		49,763
Total liabilities and shareholders' equity		$                  132,489		$               138,163

 

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,
	2024		2023		2024		2023
	(Unaudited)				(Unaudited)
Cash flows from operating activities:
Net Loss	$        (3,356)		$   (20,732)		$        (5,866)		$        (32,094)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	1,156		1,327		2,371		2,647
Stock-based compensation	2,187		2,425		3,547		5,893
Amortization of intangible assets	153		277		305		553
Increase (Decrease) in accrued severance pay, net	(107)		13		(165)		73
Decrease in other assets, other receivables and prepaid expenses	955		468		1,672		967
Increase in accrued interest and  amortization of premium/discount on marketable securities	(405)		(166)		(777)		(147)
Decrease in operating leases liability	(159)		(438)		(618)		(1,543)
Decrease in operating lease right-of-use asset	622		728		1,174		1,450
Decrease (Increase) in trade receivables	(2,789)		10,403		(2,980)		14,889
Decrease (Increase) in inventories	2,101		(1,645)		2,268		(5,098)
Increase (Decrease) in trade payables	278		(2,941)		16		(2,202)
Decrease in employees and payroll accruals	(649)		(1,042)		(4,135)		(2,494)
Increase (Decrease) in deferred revenues	595		870		1,965		(1,299)
Increase (Decrease) in other payables, accrued expenses and other long term liabilities	542		(923)		(12)		(1,824)
Amortization of issuance costs of Convertible debt	50		49		100		98
Net cash provided by (used in) operating activities	1,174		(11,327)		(1,135)		(20,131)
Cash flows from investing activities:
Decrease (Increase) in restricted deposit	(1)		(224)		703		(224)
Investment in short-term bank deposits	(3,800)		-		(3,800)		(15,900)
Withdrawal of short-term bank deposits	-		21,700		10,000		54,600
Purchase of property and equipment	(957)		(290)		(1,386)		(560)
Investment in marketable securities	(10,477)		(9,584)		(34,752)		(18,567)
Proceeds from redemption or sale of marketable securities	7,225		590		32,060		3,960
Net cash provided by (used in) investing activities	(8,010)		12,192		2,825		23,309
Cash flows from financing activities:
Proceeds from exercise of stock options	1		-		1		-
Net cash provided by financing activities	1		-		1		-
Increase (Decrease) in cash and cash equivalents	(6,835)		865		1,691		3,178
Cash and cash equivalents at the beginning of the period	22,718		14,608		14,192		12,295
Cash and cash equivalents at the end of the period	$        15,883		$     15,473		$        15,883		$          15,473

 

Other financial metrics (Unaudited)
U.S. dollars in millions, except number of full time employees, top 10 customers as a % of revenues and number of shares
			Q2-2024		YTD 2024		FY 2023
Revenues geographic breakdown
	Americas		2.1	10 %	6.4	15 %	16.6	18 %
	EMEA		11.1	50 %	23.6	53 %	56.1	60 %
	Asia Pacific		9.0	40 %	14.1	32 %	20.5	22 %
			22.2	100 %	44.1	100 %	93.2	100 %
Revenues breakdown by type
	Products		9.4	42 %	16.8	38 %	37.6	40 %
	Professional Services		1.2	5 %	4.2	10 %	6.1	7 %
	SECaaS (Security as a Service)		3.7	17 %	7.1	16 %	10.6	11 %
	Support & Maintenance		7.9	36 %	16.0	36 %	38.9	42 %
			22.2	100 %	44.1	100 %	93.2	100 %
Revenues per customer type
	CSP		18.7	84 %	36.0	82 %	75.1	81 %
	Enterprise		3.5	16 %	8.1	18 %	18.1	19 %
			22.2	100 %	44.1	100 %	93.2	100 %
Top 10 customers as a % of revenues			50 %		45 %		47 %
Total number of full time employees			500		500		559
(end of period)
Non-GAAP Weighted average number of basic shares  (in millions)			38.7		38.6		37.9
Non-GAAP weighted average number of fully diluted shares  (in millions)			42.3		41.7		40.3

 

SECaaS (Security as a Service) revenues- U.S. dollars in millions (Unaudited)
Q2-2024:	3.7
Q1-2024:	3.4
Q4-2023:	3.2
Q3-2023:	2.8
Q2-2023:	2.4
SECaaS ARR* - U.S. dollars in millions (Unaudited)
Jun. 2024:	14.6
Dec. 2023:	12.7
Dec. 2022:	9.2
Dec. 2021:	5.2

 

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FAQ

What were Allot's (ALLT) Q2 2024 revenue figures?

Allot reported revenues of $22.2 million for Q2 2024, which was stable compared to the previous quarter but represented a 12% decrease year-over-year.

How did Allot's (ALLT) SECaaS revenues perform in Q2 2024?

Allot's SECaaS revenues grew 54% year-over-year to $3.7 million in Q2 2024, with June 2024 SECaaS ARR reaching $14.6 million.

What is Allot's (ALLT) financial outlook for the second half of 2024?

For H2 2024, Allot expects non-GAAP operating profit around breakeven, stable net cash position, and full-year SECaaS revenue and ARR growth of around 50% year-over-year.

Did Allot (ALLT) achieve positive cash flow in Q2 2024?

Yes, Allot reported positive operating cash flow of $1.2 million in Q2 2024, marking the first time in three years the company achieved positive operating cash flow.