Allot Announces Third Quarter 2022 Financial Results

Hod Hasharon, Israel – November 15, 2022 – 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 third quarter 2022 financial results.

 Third Quarter 2022 Financial Highlights

• Third quarter revenues were $25.0 million compared with $38.2 million in the third quarter of last year;
• Gross margin on a non-GAAP basis was 67%;
• GAAP operating loss was $13.1 million and non-GAAP operating loss was $10.8 million;
• GAAP net loss was $12.9 million and non-GAAP net loss was $10.6 million.

Financial Outlook

For the fourth quarter and full year of 2022, management reiterates its guidance expectations as follows: 

• Maintaining guidance for full year revenues of $125 million to $130 million, with expectations that full year revenues will trend toward the lower end of the range; 
• Additional recurring security deals to be executed, providing incremental MAR** of about $180 million for the full year;
• Continues to expect December 2022 total ARR* including SECaaS ARR* and Support & Maintenance ARR* to be between $50-52 million, 
• Continues to expect December 2022 SECaaS ARR* to be approximately $9 million; 
• Continues to expect recurring security revenue to be approximately $7 million for 2022.

Management Comment

Erez Antebi, President & CEO of Allot, commented, “While our third quarter ended as we had expected, we are obviously striving to achieve much more in the future.  I am very proud that Verizon selected Allot to enable network-based security services for their SMB customers.   I believe that this decision by Verizon proves that network-based security is becoming a significant part of the offering for operators.”

Continued Mr. Antebi, “We remain committed to reach profitability for the full year 2024.  This will be achieved via revenue growth, mainly through the SECaaS business, but also through tight expense control. We also expect our loss in 2023 to be significantly lower than in 2022. I continue to strongly believe in the potential for our SECaaS solution for protecting consumers as well as its ability to bring Allot into a new era of growth and profitability.”

Q3 2022 Financial Results Summary

Total revenues for the third quarter of 2022 were $25.0 million, a decrease of 34% compared to $38.2 million in the third quarter of 2021. 

Gross profit on a GAAP basis for the third quarter of 2022 was $16.4 million (gross margin of 65.4%), a 38% decline compared with $26.5 million (gross margin of 69.5%) in the third quarter of 2021. 

Gross profit on a non-GAAP basis for the third quarter of 2022 was $16.8 million (gross margin of 67.2%), a 37% decline compared with $26.8 million (gross margin of 70.4%) in the third quarter of 2021. The lower level of revenue in the third quarter was impacted the gross margin level. 

Net loss on a GAAP basis for the third quarter of 2022 was $12.9 million, or $0.35 per basic share, compared with a net loss of $3.1 million, or $0.08 per basic share, in the third quarter of 2021.

Net loss on a non-GAAP for the third quarter of 2022 was $10.6 million, or $0.28 per basic share compared with a non-GAAP net loss of $0.2 million, or $0.00 per basic share, in the third quarter of 2021.

Cash, short-term bank deposits and investments as of September 30, 2022 totaled $98.1 million, compared to $85.7 million as of December 31, 2021. 

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Conference Call & Webcast:

The Allot management team will host a conference call to discuss its third quarter 2022 earnings results today, November 15, 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 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.