ALLT Allot Ltd

HOD HASHARON, Israel, Nov. 7 /PRNewswire-FirstCall/ -- Allot Communications Ltd. (NASDAQ:ALLT), a leader in IP service optimization solutions based on deep packet inspection (DPI) technology, today announced financial results for the third quarter ended September 30, 2007. Revenues for the third quarter of 2007 totaled $7.0 million, representing a 19% decrease from the $8.6 million in revenues reported for the second quarter of 2007 and a 21% decrease from the $8.9 million of revenues reported in the third quarter of 2006. On a GAAP basis, net loss for the third quarter of 2007 was $2.2 million, or $0.10 per share, as compared with a net loss of $592 thousand, or $0.03 per share, for the second quarter of 2007 and net income of $505 thousand, or $0.03 per diluted share, in the third quarter of 2006. For the first nine months of 2007, revenues reached $23.8 million, representing a 3% decrease from the $24.6 million in revenues for the first nine months of 2006. On a GAAP basis, net loss for the first nine months of 2007 totaled $3.2 million, or $0.15 per share, as compared with net income of $563 thousand, or $0.04 per diluted share, for the first nine months of 2006. On a non-GAAP basis, excluding the impact of share-based compensation expense and the impact of expenses related to a law suit, non-GAAP net loss for the third quarter of 2007 totaled $1.7 million, or $0.08 per share, as compared with a non-GAAP net loss of $299 thousand, or $0.01 per share, for the second quarter of 2007 and non-GAAP net income of $845 thousand, or $0.05 per diluted share, for the third quarter of 2006. For the first nine months of 2007, non-GAAP net loss, excluding the impact of the share-based compensation and the impact of the legal expenses, totaled $2.1 million or $0.10 per share, as compared with net income of $1.2 million or $0.08 per diluted share for the first nine months of 2006. These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. Reconciliation between GAAP and non-GAAP measures is provided in the accompanying Table 2 of this press release. Allot provides these non-GAAP financial measures because 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 that they are useful to investors in enhancing an understanding of Allot's operating performance. "While our revenues were lower than expected this quarter, Allot did achieve two major milestones," commented Rami Hadar, Allot Communications' President and Chief Executive Officer. "The first milestone was the $2 million purchase order we received from a Tier 1 operator in Latin America. Revenues from this order may be recognized over an extended period of time, most likely commencing during 2008. The second milestone was the commencement of trials and the first commercial installation of our new Service Gateway- Omega 20G product line with large service providers and Tier 1 Carriers. "We believe that Allot's new platform opens up near term opportunities for Allot, as we expect that our current customer base will begin to migrate from 1G products to 10G products, and longer term opportunities from Tier 1 operators seeking carrier class DPI solutions for their networks," concluded Hadar. As of September 30, 2007, Allot's cash and cash equivalents, including short and long-term deposits and investments in marketable securities, totaled $77.8 million. Financial Guidance The Company maintains its previous guidance for the year 2007, and anticipates that net revenues will total approximately $32-35 million. Conference Call & Webcast The Company's management team plans to host its quarterly conference call and webcast on November 7, 2007 at 8:30 AM EST to discuss the quarterly results. To access the conference call, please dial one of the following numbers: US: 1-866-966-9446, International: +44-1452-567-098, conference ID 20246146. A replay of the conference call will be available from 1:00 pm EST on November 8, 2007 through December 7, 2007 at 11:59 pm EST. To access the replay, please dial in the US: 1-866-247-4222, International: +44-1452-550000. Access code for both is 20246146#. A live webcast of the conference call can be accessed on the Allot Communications website at http://www.allot.com/. The webcast will also be archived on Allot's website following the conference call. About Allot Communications Allot Communications Ltd. (NASDAQ:ALLT) is a leading provider of intelligent IP service optimization solutions. Designed for carriers, service providers and enterprises, Allot solutions apply deep packet inspection (DPI) technology to transform broadband pipes into smart networks. This creates the visibility and control vital to manage applications, services and subscribers, guarantee quality of service (QoS), contain operating costs and maximize revenue. Allot believes in listening to customers and provides them access to its global network of visionaries, innovators and support engineers. For more information, please visit http://www.allot.com/. Safe Harbor Statement Information provided in this press release may contain statements relating to current expectations, estimates, forecasts and projections about future events that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the Allot's plans, objectives and expectations for future operations, including revenue guidance for the fiscal year; recognition of revenue for the Latin America order referred to above; and the performance characteristics of our Service Gateway, as well as the level of revenues to be generated there from. These forward-looking statements are based upon management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. These factors include, but are not limited to: the impact of the introduction of 10GB products by us and by our competitors on the sale of our existing products; whether the commercial availability of our Service Gateway remains on schedule; the market's acceptance of our Service Gateway; the length of sales cycles for the Service Gateway; the audit of our annual results; changes in general economic and business conditions and, specifically, a decline in demand for our products; our inability to timely develop and introduce new technologies, products and applications; loss of market; and those factors discussed under the heading "Risk Factors" in Allot's annual report on Form 20-F filed with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. 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 Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (Unaudited) (Unaudited) Revenues $6,952 $8,854 $23,829 $24,577 Cost of revenues 1,813 1,961 5,823 5,407 Gross profit 5,139 6,893 18,006 19,170 Operating expenses: Research and development, net 2,275 1,807 6,893 5,642 Sales and marketing 4,311 3,617 13,071 10,859 General and administrative 1,496 941 3,977 2,260 Total operating expenses 8,082 6,365 23,941 18,761 Operating income (loss) (2,943) 528 (5,935) 409 Financial and other income, net 1,158 46 2,940 229 Income (loss) before income tax expenses (1,785) 574 (2,995) 638 Income tax expenses 389 69 205 75 Net income (loss) (2,174) 505 (3,200) 563 Basic net earnings (loss) per share $(0.10) $0.04 $(0.15) $0.04 Diluted net earnings (loss) per share $(0.10) $0.03 $(0.15) $0.04 Weighted average number of shares used in computing basic net earnings (loss) per share 21,879,844 13,849,547 21,384,358 13,310,355 Weighted average number of shares used in computing diluted net earnings (loss) per share 21,879,844 15,832,971 21,384,358 15,501,698 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 Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (Unaudited) (Unaudited) GAAP net income (loss) as reported $(2,174) $505 $(3,200) $563 Non-GAAP adjustments Expenses recorded for stock-based compensation Cost of revenues 12 5 35 8 Research and development costs, net 65 58 161 97 Sales and marketing 91 138 200 330 General and administrative 205 139 524 247 Expenses related to a law suit General and administrative 66 - 134 - Total adjustments 439 340 1,054 682 Non-GAAP net income (loss) $(1,735) $845 $(2,146) $ 1,245 Non- GAAP basic net earnings (loss) per share $(0.08) $0.06 $(0.10) $0.09 Non-GAAP diluted net earnings (loss) per share $(0.08) $0.05 $(0.10) $0.08 TABLE - 3 ALLOT COMMUNICATIONS LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands) September 30, December 31, 2007 2006 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $21,442 $7,117 Marketable securities and short term deposit 47,924 70,423 Trade receivables 7,912 5,856 Other receivables and prepaid expenses 3,694 1,961 Inventories 4,455 3,337 Total current assets 85,427 88,694 LONG-TERM ASSETS: Marketable securities 8,350 5,750 Severence pay fund 3,039 2,648 Other assets 1,228 1,054 Total long-term assets 12,617 9,452 PROPERTY AND EQUIPMENT, NET 4,846 2,939 GOODWILL 246 99 Total assets $103,136 $101,184 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term bank credit and current maturities, net $- $6 Trade payables 3,359 4,415 Deferred revenues 4,721 3,788 Other payables and accrued expenses 5,869 4,833 Total current liabilities 13,949 13,042 LONG-TERM LIABILITIES: Deferred revenues 2,822 1,578 Accrued severance pay 2,932 2,377 Total long-term liabilities 5,754 3,955 SHAREHOLDERS' EQUITY 83,433 84,187 Total liabilities and shareholders' equity $103,136 $101,184 DATASOURCE: Allot Communications Ltd. CONTACT: Investor Relations, Jay Kalish, Executive Director Investor Relations of Allot Communications Ltd., +972-9-761-9365, Web site: http://www.allot.com/

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