EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1
Exhibit 99.1



Allot Announces Q1 2023 Financial Results

Hod Hasharon, Israel – May 16, 2023 - 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 first quarter 2023 financial results.
 
Q1 Financial Highlights
 

 •
First quarter revenues were $21.1 million;
 

 •
SECaaS revenues were $2.3 million; March 2023 SECaaS ARR* was $9.3 million;
 

 •
First quarter GAAP operating loss was $11.9 million, and non-GAAP operating loss was $8.2 million;
 

 •
Q1 GAAP net loss was $11.4 million, and non-GAAP net loss was $7.7 million;
 
Financial Outlook
 
Looking ahead, management reiterates its financial expectations as follows:
 

 •
Full year 2023 revenues of $110 million to $120 million (of which SECaaS revenues are expected to be between $11 million and $13 million);
 

 •
Full year 2023 operating loss and net negative cash flow of between $15 million and $20 million;
 

 •
December 2023 total ARR*, including SECaaS ARR* and Support & Maintenance ARR*, is expected to be between $56 million and $63 million;
 

 •
Reiterates expectations to be profitable in 2024;
 
Management Comment
 
Erez Antebi, President & CEO of Allot, commented, “In light of continued challenging economic conditions and our lower revenues, we have been continuously working to reduce our expenses.  We remain committed to our target of reaching profitability in 2024 through the growth of the SECaaS business, combined with tight expense control. We believe that our strategy of transforming our business towards a recurring SECaaS revenue model will drive sustainable profitable growth and long-term shareholder value."
 
Q1 2023 Financial Results Summary
 
Total revenues for the first quarter of 2023 were $21.1 million, a decrease of 34% compared to $31.9 million in the first quarter of 2022.
 
Gross profit on a GAAP basis for the first quarter of 2023 was $13.5 million (gross margin of 63.8%), a 39% decline compared with $22.1 million (gross margin of 69.3%) in the first quarter of 2022.
 
Gross profit on a non-GAAP basis for the first quarter of 2023 was $14.2 million (gross margin of 67.2%), a 37% decline compared with $22.4 million (gross margin of 70.3%) in the first quarter of 2022. The gross margin level in the current quarter was impacted by product mix and the lower revenue level.
 
Net loss on a GAAP basis for the first quarter of 2023 was $11.4 million, or $0.30 per basic share, compared with a net loss of $6.1 million, or $0.17 per basic share, in the first quarter of 2022.
 
Net loss on a non-GAAP for the first quarter of 2023 was $7.7 million, or $0.21 per basic share compared with a non-GAAP net loss of $3.5 million, or $0.10 per basic share, in the first quarter of 2022.
 
Cash, short-term bank deposits and investments as of March 31, 2023 totaled $77.3 million, compared to $86.4 million as of December 31, 2022.
 
ARR - U.S. dollars in millions (Unaudited)
 
   
Dec. 2021
    
Dec. 2022
    
Dec. 2023 target
    
2022 vs. 2021
    
2023 (target) vs. 2022
  
Support & maintenance ARR *
    
42.0
      
42.5
      
41-43
      
1
%
    
(4)%-1
%
                                         
SECaaS ARR **
    
5.2
      
9.2
      
15-20
      
77
%
    
63%-117
%
                                         
Total ARR
    
47.2
      
51.7
      
56-63
      
10
%
    
8%-22
%
                                         
* 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 month of December and multiplied by 12.
 
# # #
 
Conference Call & Webcast:
 
The Allot management team will host a conference call to discuss its first quarter 2023 earnings results today, May 16, 2023 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: +972-3-918-0610
 
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 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 first 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).
 
GAAP to Non-GAAP Reconciliation:
 
Non-GAAP net income is defined as GAAP net income after excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustment, exchange rate differences related to revaluation of assets and liabilities denominated in non-dollar currencies, other acquisition-related expenses 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
March 31,
  
     
   
2023
    
2022
  
   
(Unaudited)
  
             
Revenues
  
$
21,126
    
$
31,896
  
Cost of revenues
    
7,651
      
9,792
  
Gross profit
    
13,475
      
22,104
  
                 
Operating expenses:
                
Research and development costs, net
    
10,494
      
12,030
  
Sales and marketing
    
10,887
      
11,689
  
General and administrative
    
3,960
      
4,037
  
Total operating expenses
    
25,341
      
27,756
  
Operating loss
    
(11,866
)
    
(5,652
)
Financial and other income, net
    
794
      
247
  
Loss before income tax expenses
    
(11,072
)
    
(5,405
)
                 
Tax expenses
    
290
      
722
  
Net Loss
    
(11,362
)
    
(6,127
)
                 
 Basic net loss per share
  
$
(0.30
)
  
$
(0.17
)
                 
 Diluted net loss per share
  
$
(0.30
)
  
$
(0.17
)
                 
Weighted average number of shares used in computing basic net loss per share
    
37,421,720
      
36,539,247
  
                 
Weighted average number of shares used in computing diluted net loss per share
    
37,421,720
      
36,539,247
  
 
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
  
   
March 31,
  
   
2023
    
2022
  
   
(Unaudited)
  
GAAP cost of revenues
  
$
7,651
    
$
9,792
  
 Share-based compensation (1)
    
(531
)
    
(181
)
 Amortization of intangible assets (2)
    
(193
)
    
(152
)
Non-GAAP cost of revenues
  
$
6,927
    
$
9,459
  
                 
 GAAP gross profit
  
$
13,475
    
$
22,104
  
 Gross profit adjustments
    
724
      
333
  
 Non-GAAP gross profit
  
$
14,199
    
$
22,437
  
                 
 GAAP operating expenses
  
$
25,341
    
$
27,756
  
 Share-based compensation (1)
    
(2,937
)
    
(2,356
)
 Non-GAAP operating expenses
  
$
22,404
    
$
25,400
  
                 
 GAAP financial and other income
  
$
794
    
$
247
  
 Expenses related to M&A activities (3)
    
14
      
-
  
 Exchange rate differences*
    
(43
)
    
(73
)
 Non-GAAP Financial and other income
  
$
765
    
$
174
  
                 
 GAAP taxes on income
  
$
290
    
$
722
  
 Changes in tax related items
    
(25
)
    
-
  
 Non-GAAP taxes on income
  
$
265
    
$
722
  
                 
 GAAP Net Loss
  
$
(11,362
)
  
$
(6,127
)
 Share-based compensation (1)
    
3,468
      
2,537
  
 Amortization of intangible assets (2)
    
193
      
152
  
 Expenses related to M&A activities (3)
    
14
      
-
  
 Exchange rate differences*
    
(43
)
    
(73
)
 Changes in tax related items
    
25
      
-
  
 Non-GAAP Net income (loss)
  
$
(7,705
)
  
$
(3,511
)
                 
 GAAP Loss per share (diluted)
  
$
(0.30
)
  
$
(0.17
)
 Share-based compensation
    
0.09
      
0.07
  
 Amortization of intangible assets
    
0.00
      
0.00
  
 Expenses related to M&A activities
    
0.00
      
-
  
Changes in taxes and headcount related items
    
-
      
-
  
 Exchange rate differences*
    
(0.00
)
    
0.00
  
 Non-GAAP Net income (loss) per share (diluted)
  
$
(0.21
)
  
$
(0.10
)
                 
Weighted average number of shares used in computing GAAP diluted net loss per share
    
37,421,720
      
36,539,247
  
                 
Weighted average number of shares used in computing non-GAAP diluted net loss per share
    
37,421,720
      
36,539,247
  

* 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
  
   
March 31,
  
   
2023
    
2022
  
   
(Unaudited)
  
             
(1) Share-based compensation:
            
Cost of revenues
  
$
531
    
$
181
  
Research and development costs, net
    
1,202
      
845
  
Sales and marketing
    
1,037
      
913
  
General and administrative
    
698
      
598
  
   
$
3,468
    
$
2,537
  
                 
 (2) Amortization of intangible assets
                
Cost of revenues
  
$
193
    
$
152
  
   
$
193
    
$
152
  
                 
 (3) Expenses related to M&A activities
                
Financial income
  
$
14
    
$
-
  
   
$
14
    
$
-
  
 
TABLE  - 3
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED  BALANCE  SHEETS
(U.S. dollars in thousands)

   
March 31,
    
December 31,
  
   
2023
    
2022
  
   
(Unaudited)
    
(Audited)
  
             
ASSETS
            
CURRENT ASSETS:
            
Cash and cash equivalents
  
$
14,608
    
$
12,295
  
Short-term bank deposits
    
51,765
      
68,765
  
Restricted deposits
    
1,050
      
1,050
  
Available-for-sale marketable securities
    
9,909
      
4,293
  
Trade receivables, net
    
39,610
      
44,167
  
Other receivables and prepaid expenses
    
7,223
      
7,985
  
Inventories
    
16,715
      
13,262
  
Total current assets
    
140,880
      
151,817
  
                 
LONG-TERM ASSETS:
                
Severance pay fund
    
361
      
371
  
Operating lease right-of-use assets
    
4,665
      
5,387
  
Trade receivables, net
    
5,005
      
4,934
  
Other assets
    
1,226
      
864
  
Total long-term assets
    
11,257
      
11,556
  
                 
PROPERTY AND EQUIPMENT, NET
    
13,186
      
14,236
  
GOODWILL AND INTANGIBLE ASSETS, NET
    
35,068
      
35,344
  
                 
Total assets
  
$
200,391
    
$
212,953
  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
CURRENT LIABILITIES:
                
Trade payables
  
$
12,400
    
$
11,661
  
Deferred revenues
    
18,977
      
20,825
  
Short-term operating lease liabilities
    
2,361
      
2,542
  
Other payables and accrued expenses
    
23,388
      
25,573
  
Total current liabilities
    
57,126
      
60,601
  
                 
LONG-TERM LIABILITIES:
                
Deferred revenues
    
6,964
      
7,285
  
Long-term operating lease liabilities
    
1,655
      
2,579
  
Accrued severance pay
    
990
      
940
  
Convertible debt
    
39,624
      
39,575
  
Total long-term liabilities
    
49,233
      
50,379
  
                 
SHAREHOLDERS' EQUITY
    
94,032
      
101,973
  
                 
Total liabilities and shareholders' equity
  
$
200,391
    
$
212,953
  
 
TABLE  - 4
ALLOT LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)

   
Three Months Ended
  
   
March 31,
  
   
2023
    
2022
  
   
(Unaudited)
  
             
Cash flows from operating activities:
            
             
Net Loss
  
$
(11,362
)
  
$
(6,127
)
Adjustments to reconcile net income to net cash used in operating activities:
                
Depreciation
    
1,320
      
1,414
  
Stock-based compensation
    
3,468
      
2,537
  
Amortization of intangible assets
    
276
      
235
  
Increase (Decrease) in accrued severance pay, net
    
60
      
(6
)
Decrease (Increase) in other assets
    
(362
)
    
417
  
Decrease in accrued interest and  amortization of premium on marketable securities
    
19
      
32
  
Changes in operating leases, net
    
(383
)
    
(372
)
Decrease (Increase) in trade receivables
    
4,486
      
(725
)
Decrease (Increase) in other receivables and prepaid expenses
    
861
      
(1,034
)
Increase in inventories
    
(3,453
)
    
(1,755
)
Increase in trade payables
    
739
      
496
  
Decrease in employees and payroll accruals
    
(1,452
)
    
(2,486
)
Increase (Decrease) in deferred revenues
    
(2,169
)
    
842
  
Decrease in other payables, accrued expenses and other long term liabilities
    
(901
)
    
(271
)
Amortization of issuance costs of Convertible debt
    
49
      
-
  
Net cash used in operating activities
    
(8,804
)
    
(6,803
)
                 
Cash flows from investing activities:
                
Decrease in restricted deposit
    
-
      
120
  
Redemption of (Investment in) short-term deposits
    
17,000
      
(25,700
)
Purchase of property and equipment
    
(270
)
    
(1,275
)
Investment in available-for sale marketable securities
    
(8,983
)
    
-
  
Proceeds from redemption or sale of available-for sale marketable securities
    
3,370
      
3,158
  
Net cash provided by (used in) investing activities
    
11,117
      
(23,697
)
                 
Cash flows from financing activities:
                
Proceeds from exercise of stock options
    
-
      
235
  
Issuance of convertible debt
    
-
      
39,426
  
Net cash provided by financing activities
    
-
      
39,661
  
                 
Increase in cash and cash equivalents
    
2,313
      
9,161
  
Cash and cash equivalents at the beginning of the period
    
12,295
      
11,717
  
                 
Cash and cash equivalents at the end of the period
  
$
14,608
    
$
20,878
  

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
                 
      Q1-2023
            FY 2022             FY 2021        
Revenues geographic breakdown
                                      
Americas
    
2.3
      
11
%
    
21.8
      
18
%
    
19.4
      
14
%
EMEA
    
13.4
      
63
%
    
71.2
      
58
%
    
82.0
      
56
%
Asia Pacific
    
5.4
      
26
%
    
29.7
      
24
%
    
44.2
      
30
%
     
21.1
      
100
%
    
122.7
      
100
%
    
145.6
      
100
%
                                                 
Revenue breakdown by type
                                                
Products
    
6.7
      
32
%
    
61.1
      
50
%
    
88.1
      
60
%
Professional Services
    
1.9
      
9
%
    
11.6
      
9
%
    
15.2
      
11
%
SECaaS (Security as a Service)
    
2.3
      
11
%
    
7.2
      
6
%
    
4.1
      
3
%
Support & Maintenance
    
10.2
      
48
%
    
42.8
      
35
%
    
38.2
      
26
%
     
21.1
      
100
%
    
122.7
      
100
%
    
145.6
      
100
%
                                                 
Revenues per customer type
                                                
CSP
    
17.0
      
81
%
    
98.3
      
80
%
    
116.9
      
80
%
Enterprise
    
4.1
      
19
%
    
24.4
      
20
%
    
28.7
      
20
%
     
21.1
      
100
%
    
122.7
      
100
%
    
145.6
      
100
%
                                                 
% of top-10 end-customers out of revenues
    
52
%
            
44
%
            
51
%
        
                                                 
Total number of full time employees
    
730
              
749
              
741
          
(end of period)
                                                
                                                 
Non-GAAP Weighted average number of basic shares  (in millions)
    
37.4
              
37.0
              
36.1
          
                                                 
Non-GAAP weighted average number of fully diluted shares  (in millions)
    
39.6
              
39.5
              
38.4
          
                                                 
 
SECaaS (Security as a Service) revenues- U.S. dollars in millions (Unaudited)
                   
Q1-2023:
2.3
                
Q4-2022:
2.2
                
Q3-2022:
1.7
                
Q2-2022:
1.7
                
Q1-2022:
1.5
                
                   
SECaaS ARR* (annualized recurring revenues)- U.S. dollars in millions (Unaudited)
      
                   
Mar. 2023:
9.3
                
Dec. 2022:
9.2
                
Dec. 2021:
5.2
                
Dec. 2020:
2.7
                
                   
*ARR: annualized recurring SECaaS revenues, calculated based on the monthly revenues multiplied by 12