Allot still burning cash, posts poor Q3 results

Andrei Elefant
Andrei Elefant

Allot Communications CEO Andrei Elefant sees profits being restored but admits business has been slower than expected.

Allot Communications Ltd. (Nasdaq:ALLT; TASE: ALLT), which facilitates more efficient use of communications equipment, today reported a $3.4 million net loss ($0.10 per share) in the third quarter of the year. Managed by president and CEO Andrei Elefant, the company's third quarter revenue totaled $21 million, down 10.6%, compared with the corresponding quarter last year, and 8.7%, compared with the preceding quarter.

The analysts covering the company expected a profit of $0.02 per share on $22.7 million in revenue, meaning that its results did not measure up to expectations. The company share price responded today to the news by falling 3.3%, completing a 10% drop over the past year.

The company's net loss excluding one-time items (non-GAAP) totaled $500,000 - $0.01 per share, compared with a $700,000 loss in the corresponding quarter in 2015 and a $400,000 profit in the second quarter this year.

Allot's revenue in the first nine months of the year fell 10.3% to $66.9 million, and its net loss totaled $9 million, compared with $9.5 million in the corresponding period last year. Company management cut its 2016 revenue forecast to $87-90 million, compared with the $90-94 million forecast its gave three months ago and an earlier $102-108 million forecast.

"Our core markets have remained challenging, and 2016 continues to feature slower business than we expected," Elefant said when the company results were published. "As of now, our orders are smaller than in previous years. In view of the weak market in our traditional field of activity, we are continuing the development of our strategy of shifting to new and growing markets, with a focus on sales of security and monetization solutions. At the same time, we have taken measures to cut our base costs, and we expect this to enable us to restore our profitability in the coming quarters."

Based in Hod Hasharon, Allot's market cap is $170 million. The company has struggled in recent quarters to recover from difficulties in its core deep packet inspection (DPI) business - the monitoring and management of Internet applications traffic, while its activity in added value areas and security are not sufficient compensation for this. As of September 30, 2016, the company had $110.9 million in cash. Allot generated a negative $5 million cash flow from activity in the third quarter.

Allot held its first offering on Nasdaq 10 years ago at a company value of $250 million. It was traded at an $875 million market cap, but the share has since lost 80% of its value. It is believed that Allot is considering a sale of the company, and initial contacts have been made with parties likely to be interested in this.

Published by Globes [online], Israel business news - www.globes-online.com - on November 1, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Andrei Elefant
Andrei Elefant
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018