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Allot Communications Reports Non-GAAP 17.2% Revenue Growth for First Quarter of 2014

Companies mentioned in this article: Allot Communications Ltd.

HOD HASHARON, Israel, April 30, 2014 /PRNewswire/ -- Allot Communications Ltd. (NASDAQ: ALLT), a leading supplier of service optimization and revenue generation solutions for fixed and mobile broadband service providers worldwide, today announced its first quarter 2014 results, with non-GAAP revenues reaching $28.3 million.

Other First Quarter Highlights:

    --  Non-GAAP revenues grew 17.2% year on year and 3.5% sequentially.
    --  Non-GAAP gross margin was 73% (71% on a GAAP basis).
    --  Non-GAAP operating margin was 7% (2% operating loss on a GAAP basis).
    --  Book-to-bill above one.
    --  Generated $3.4 million of operating cash flow. Net cash as of March
        31(st) 2014 totals $122.2 million.

Financial Results:

On a non-GAAP basis, total revenues for the first quarter of 2014 reached $28.3 million, compared with $24.1 million of revenue reported for the first quarter of 2013 and $27.3 million of revenue reported for the fourth quarter of 2013. On a non-GAAP basis, net profit for the first quarter of 2014 was $2.1 million, or $0.06 per basic and diluted share. This compares with non-GAAP net profit of $3.2 million, or $0.10 per basic and $0.09 per diluted share, in the fourth quarter of 2013 and a non-GAAP net profit of $0.6 million, or $0.02 per basic and diluted share, in the first quarter of 2013.

Total GAAP revenues for the first quarter of 2014 reached $28.3 million compared to $24.1 million of revenue reported for the first quarter of 2013 and $27.3 million of revenue reported for the fourth quarter of 2013. On a GAAP basis, the net loss for the first quarter of 2014 was $0.4 million, or of $0.01 per basic and diluted share. This compares with a net profit of $1.2 million, or $0.04 per basic and diluted share, in the fourth quarter of 2013 and a net loss of $1.8 million, or $0.06 per basic and diluted share, in the first quarter of 2013.

Key Quarterly Achievements:

    --  During the quarter, large orders were received from 25 service
        providers, five of which are new customers.
    --  14 of the large orders came from mobile-service providers and 11 were
        from fixed-line service providers.
    --  Introduced the new Allot Service Gateway Tera platform which has already
        received $9 million orders from four different mobile and fixed line
        operators worldwide.
    --  Won a new video optimization contract from an Asian Tier-1 mobile
        operator.
    --  Received its first $1 million, ClearSee Big-Data Analytics Solution,
        purchase order from a Tier-1 mobile and fixed operator.

"During the first quarter 2014 we continued to execute well on all fronts and produced a strong inflow of large orders, as well as expanded our customer base, an achievement, which we believe, should be beneficial for Allot in the mid as well as the long-term horizon. We reached a record revenues level for a first quarter and book to bill was above one for a fifth time in a row," said Rami Hadar, Allot Communications' President and CEO. "Our well-diversified, differentiated VAS offering is one of the key catalysts for the demand that we experience from service providers and we look forward to continuing to address the needs of our Tier-1 customers with our innovative service generating VAS suite."

Conference Call & Webcast

The Allot management team will host a conference call to discuss first quarter 2014 earnings results today at 8:30 AM ET, 3:30 p.m. Israel time.

To access the conference call, please dial one of the following numbers: US: +1646 254 3368, UK: +44(0)203 4271933, Israel: +97237217906, participant code 9702862.

A replay of the conference call will be available from 12:00 AM ET on April 30, 2014 for 30 days. To access the replay, please dial: US: +1 347 366 9565; UK: +44 (0)20 3427 0598, access code: 9702862. A live webcast of the conference call can be accessed on the Allot Communications website at www.allot.com. The webcast also will 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 broadband solutions that put mobile, fixed and enterprise networks at the center of the digital lifestyle and work style. Allot's DPI-based solutions identify and leverage the business intelligence in data networks, empowering operators to analyze, protect, improve and enrich the digital lifestyle services they deliver. Allot's unique blend of innovative technology, proven know-how, collaborative approach to industry standards and partnerships enables service providers worldwide to elevate their role in the digital lifestyle ecosystem and to open the door to a wealth of new business opportunities. For more information, please visit www.allot.com.

GAAP to Non-GAAP Reconciliation

The discrepancy between GAAP and non-GAAP revenues is related to the acquisitions made by the Company during the year and represents revenues adjusted for the impact of the fair value adjustment to acquired deferred revenue related to purchase accounting. 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 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 may contain 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 expressed or implied by 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; 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 third 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:

Rami Rozen
AVP Corporate Development
International access code +972-52-569-4441
rrozen@allot.com


                                           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

                                               March 31,
                                               ---------

                                                 2014                     2013
                                                 ----                     ----

                                              (Unaudited)
                                               ----------


    Revenues                                  $28,284                  $24,114

    Cost of revenues                            8,195                    6,740

    Gross profit                               20,089                   17,374
                                               ------                   ------


    Operating expenses:

    Research and development
     costs, net                                 7,221                    6,902

    Sales and marketing                        10,497                    9,827

    General and administrative                  2,887                    2,638
                                                -----                    -----

    Total operating expenses                   20,605                   19,367

    Operating loss                               (516)                  (1,993)

    Financial and other income,
     net                                          149                      187
                                                  ---                      ---

    Loss before income tax
     expenses                                    (367)                  (1,806)


    Tax expenses                                   21                       41
                                                  ---                      ---

    Net loss                                     (388)                  (1,847)
                                                 ====                   ======


     Basic net loss per share                  $(0.01)                  $(0.06)
                                               ======                   ======



     Diluted net loss per share                $(0.01)                  $(0.06)
                                               ======                   ======


    Weighted average number of shares

    used in computing basic  net

    earnings per share                     32,939,195               32,561,977
                                           ==========               ==========


    Weighted average number of shares

    used in computing diluted net

    earnings per share                     32,939,195               32,561,977
                                           ==========               ==========


                                                                                                                                 TABLE  - 2

                                                                                                                         ALLOT COMMUNICATIONS LTD.

                                                                                                                            AND ITS SUBSIDIARIES

                                                                                                  RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                             (U.S. dollars in thousands, except per share data)


                                                                                                                                                                                  Three Months Ended

                                                                                                                                                                                      March 31,
                                                                                                                                                                                      ---------

                                                                                                                                                                                        2014                   2013
                                                                                                                                                                                        ----                   ----

                                                                                                                                                                                     (Unaudited)
                                                                                                                                                                                      ----------


     GAAP net loss as reported                                                                                                                                             $(388)               $(1,847)
                                                                                                                                                                           -----                -------


    Non-GAAP adjustments

    Fair value adjustment for acquired deferred revenues write down                                                                                                                       12                     37

    Expenses recorded for stock-based compensation

                                                                                   Cost of revenues                                                                                       88                     86

                                                                                   Research and development costs, net                                                                   469                    411

                                                                                   Sales and marketing                                                                                   821                    746

                                                                                   General and administrative                                                                            614                    586

    Expenses related to M&A activities and compliance with regulatory matters (*)

                                                                                   General and administrative                                                                              8                     12

                                                                                   Research and development costs, net                                                                     -                      6

    Intangible assets amortization

                                                                                   Cost of revenues                                                                                      399                    504

                                                                                   Sales and marketing                                                                                    66                     58


    Total adjustments                                                                                                                                                                  2,477                  2,446
                                                                                                                                                                                       -----                  -----


     Non-GAAP net profit                                                                                                                                                  $2,089                   $599
                                                                                                                                                                          ======                   ====


    Non- GAAP basic net profit per share                                                                                                                                   $0.06                  $0.02
                                                                                                                                                                           =====                  =====


    Non- GAAP diluted net profit per share                                                                                                                                 $0.06                  $0.02
                                                                                                                                                                           =====                  =====



    Weighted average number of shares

    used in computing basic net

    earnings per share                                                                                                                                                            32,939,195             32,561,977
                                                                                                                                                                                  ==========             ==========


    Weighted average number of shares

    used in computing diluted net

    earnings per share                                                                                                                                                            33,895,273             33,506,441
                                                                                                                                                                                  ==========             ==========



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



                              TABLE  - 3

                      ALLOT COMMUNICATIONS LTD.

                         AND ITS SUBSIDIARIES

       RECONCILATION OF GAAP TO NON-GAAP CONSOLIDATED REVENUES

    (U.S. dollars in thousands, except share and per share data)


                                   Three Months Ended

                                       March 31,
                                       ---------

                                       2014                2013
                                       ----                ----

                                      (Unaudited)
                                      ----------


    GAAP Revenues                   $28,284             $24,114


    Fair value adjustment for
     acquired deferred revenues
     write down                          12                  37


    Non-GAAP Revenues               $28,296             $24,151
                                    =======             =======


                                                   TABLE  - 4

                                           ALLOT COMMUNICATIONS LTD.

                                              AND ITS SUBSIDIARIES

                                          CONSOLIDATED BALANCE SHEETS

                                          (U.S. dollars in thousands)



                                                          March 31,           December 31,

                                                                         2014                2013
                                                                         ----                ----

                                                         (Unaudited)           (Audited)
                                                         ----------             --------


                           ASSETS

    CURRENT ASSETS:

    Cash and cash
     equivalents                                                      $51,036             $42,813

    Short term deposits                                                30,500              38,000

    Marketable securities
     and restricted cash                                               40,639              40,798

    Trade receivables,
     net                                                               21,414              16,908

    Other receivables and
     prepaid expenses                                                   8,906               8,218

    Inventories                                                        13,474              13,798

    Total current assets                                              165,969             160,535
                                                                      -------             -------


    LONG-TERM ASSETS:

    Severance pay fund                                                    260                 254

    Deferred taxes                                                      1,602               1,602

    Other assets                                                        2,726                 771
                                                                        -----                 ---

    Total long-term
     assets                                                             4,588               2,627
                                                                        -----               -----


    PROPERTY AND
     EQUIPMENT, NET                                                     5,990               5,874
                                                                        -----               -----

    GOODWILL AND
     INTANGIBLE ASSETS,
     NET                                                               29,756              30,221
                                                                       ------              ------


    Total assets                                                     $206,303            $199,257
                                                                     ========            ========


                       LIABILITIES AND
                     SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:

    Trade payables                                                     $4,887              $3,191

    Deferred revenues                                                  13,527              12,504

    Other payables and
     accrued expenses                                                  12,851              10,906

    Total current
     liabilities                                                       31,265              26,601
                                                                       ------              ------


    LONG-TERM
     LIABILITIES:

    Deferred revenues                                                   2,520               2,447

    Accrued severance pay                                                 292                 282

    Total long-term
     liabilities                                                        2,812               2,729
                                                                        -----               -----


    SHAREHOLDERS' EQUITY                                              172,226             169,927
                                                                      -------             -------


    Total liabilities and
     shareholders' equity                                            $206,303            $199,257
                                                                     ========            ========


                                                                                                  TABLE  - 5

                                                                                          ALLOT COMMUNICATIONS LTD.

                                                                                             AND ITS SUBSIDIARIES

                                                                                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                         (U.S. dollars in thousands)


                                                                                                                          Three Months Ended

                                                                                                                              March 31,
                                                                                                                              ---------

                                                                                                                               2014             2013
                                                                                                                               ----             ----

                                                                                                                             (Unaudited)


    Cash flows from operating activities:
    -------------------------------------


    Net Loss                                                                                                                  $(388)         $(1,847)

    Adjustments to reconcile net loss to net cash provided by  operating activities:

    Depreciation                                                                                                                800              880

    Stock-based compensation related to options granted to employees                                                          1,992            1,829

    Amortization of intangible assets                                                                                           465              562

    Decrease in accrued severance pay, net                                                                                        4               24

    Increase in other assets                                                                                                    (82)             (29)

    Decease in accrued interest and  amortization of premium on marketable securities                                           208               11

    Increase in trade receivables                                                                                            (4,506)          (5,351)

    Increase in other receivables and prepaid expenses                                                                         (102)             (44)

    Decrease in inventories                                                                                                     324              320

    Increase (decrease) in trade payables                                                                                     1,696           (1,381)

    Increase (decrease) in employees and payroll accruals                                                                     1,062             (722)

    Increase (decrease) in deferred revenues                                                                                  1,096           (2,988)

    Increase in other payables and accrued expenses                                                                             876            1,173


    Net cash provided by (used in) operating activities                                                                       3,445           (7,563)
                                                                                                                              -----           ------


    Cash flows from investing activities:
    -------------------------------------


    Decrease in restricted deposit                                                                                                -                4

    Redemption of short-term deposits                                                                                         7,500           61,042

    Purchase of property and equipment                                                                                         (916)            (856)

    Investment in marketable securities                                                                                        (900)         (15,662)

    Proceeds from redemption or sale of marketable securities                                                                   901            2,279

    Loan provided to third party, net                                                                                        (2,563)               -


    Net cash provided by investing activities                                                                                 4,022           46,807
                                                                                                                              -----           ------


    Cash flows from financing activities:
    -------------------------------------


    Exercise of employee stock options                                                                                          756              164


    Net cash provided by financing activities                                                                                   756              164
                                                                                                                                ---              ---



    Increase in cash and cash equivalents                                                                                     8,223           39,408

    Cash and cash equivalents at the beginning of the period                                                                 42,813           50,026


    Cash and cash equivalents at the end of the period                                                                      $51,036          $89,434
                                                                                                                            =======          =======

SOURCE Allot Communications Ltd.