Allot(ALLT) - 2025 Q1 - Quarterly Report

ALLOT LTD. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets Allot Ltd.'s total assets marginally increased to $140.3 million by March 31, 2025, with liabilities decreasing and equity rising Consolidated Balance Sheet Summary (in thousands USD) | Balance Sheet Item | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $94,127 | $90,176 | +$3,951 | | Cash and cash equivalents | $10,061 | $16,142 | -$6,081 | | Available-for-sale marketable securities | $33,372 | $26,470 | +$6,902 | | Trade receivables, net | $19,234 | $16,482 | +$2,752 | | Total Non-Current Assets | $46,218 | $49,465 | -$3,247 | | Total Assets | $140,345 | $139,641 | +$704 | | Total Current Liabilities | $37,877 | $35,970 | +$1,907 | | Deferred revenues (Current) | $20,013 | $17,054 | +$2,959 | | Total Long-Term Liabilities | $52,467 | $53,862 | -$1,395 | | Convertible debt | $40,000 | $39,973 | +$27 | | Total Liabilities | $90,344 | $89,832 | +$512 | | Total Shareholders' Equity | $50,001 | $49,809 | +$192 | Condensed Consolidated Statements of Comprehensive Loss Allot Ltd. significantly improved Q1 2025 financial performance, with revenues up 5.8% and net loss narrowing to $0.33 million Statement of Comprehensive Loss (in thousands USD, except per share data) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenues | $23,150 | $21,890 | +5.8% | | - Products | $6,465 | $7,400 | -12.6% | | - Services | $16,685 | $14,490 | +15.1% | | Gross Profit | $16,047 | $15,098 | +6.3% | | Total Operating Expenses | $16,756 | $17,841 | -6.1% | | - Research and development | $5,991 | $7,149 | -16.2% | | - Sales and marketing | $7,338 | $7,790 | -5.8% | | Operating Loss | ($709) | ($2,743) | +74.2% | | Net Loss | ($332) | ($2,510) | +86.8% | | Net Loss Per Share (Basic & Diluted) | ($0.01) | ($0.07) | +85.7% | | Total Comprehensive Loss | ($1,027) | ($2,879) | +64.3% | Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholders' equity increased by $0.2 million in Q1 2025 to $50.0 million, primarily due to share-based compensation and option exercises Reconciliation of Shareholders' Equity for Q1 2025 (in thousands USD) | Description | Amount | | :--- | :--- | | Balance as of January 1, 2025 | $49,809 | | Exercise of share options and RSUs | $238 | | Share-based compensation | $981 | | Other comprehensive loss | ($695) | | Net loss | ($332) | | Balance as of March 31, 2025 | $50,001 | Condensed Consolidated Statements of Cash Flows Allot generated $1.7 million in operating cash flow in Q1 2025, a significant turnaround, resulting in a $6.1 million decrease in cash and equivalents Cash Flow Summary (in thousands USD) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,685 | ($2,309) | | Net cash provided by (used in) investing activities | ($8,004) | $10,835 | | Net cash provided by financing activities | $238 | $0 | | Increase (decrease) in cash and cash equivalents | ($6,081) | $8,526 | | Cash and cash equivalents at end of period | $10,061 | $22,718 | Notes to Condensed Consolidated Financial Statements Detailed notes explain Allot's accounting policies, financial instruments, and key financial figures, including a $40 million convertible note Note 1: Organization and Business Description Allot Ltd. specializes in developing and marketing network intelligence and security solutions for service providers and enterprises globally - The company's core business is providing innovative network intelligence and security solutions for mobile/fixed service providers and enterprises[15] Note 2: Summary of Significant Accounting Policies The company recognized $7.125 million in deferred revenue in Q1 2025 and has $64.84 million in remaining performance obligations - In Q1 2025, the company recognized $7.125 million in revenue that was included in the deferred revenue balance at the beginning of the period[20] - As of March 31, 2025, the company has $64.84 million in remaining performance obligations, with approximately $48.56 million expected to be recognized as revenue within the next 12 months[21] - The company is currently evaluating the impact of new accounting standards ASU 2024-03 (Expense Disaggregation) and ASU 2023-09 (Income Tax Disclosures)[22][23] Note 5: Derivative Instruments Allot uses derivative instruments, primarily forward contracts and options, to hedge foreign currency risks for up to two years - The company hedges future foreign currency exposures (primarily salaries and related expenses) for up to two years using forward contracts and options[30][31] - As of March 31, 2025, the company had outstanding hedge transactions with a net notional amount of $28.5 million[33] - The company also uses non-designated forward contracts to mitigate currency variability on monetary assets and liabilities, with $11.4 million in outstanding transactions as of March 31, 2025[38][39] Note 9: Commitments and Contingent Liabilities Allot has provided $880,000 in bank guarantees and is involved in an ongoing legal proceeding with former Netonomy Ltd. employees - The company has provided bank guarantees of approximately $463,000 for customer performance obligations and $417,000 for lease agreements[44] - A civil claim from former employees of Netonomy Ltd. is ongoing, and the potential outcome cannot be estimated[44][45] Note 10: Shareholders' Equity Shareholders' equity details include RSU and option plans, with $10.05 million in unrecognized RSU compensation cost RSU Activity for Q1 2025 | RSU Activity | Number of Shares | | :--- | :--- | | Outstanding at beginning of year | 3,047,441 | | Granted | 922,688 | | Vested | (173,398) | | Forfeited | (92,670) | | Unvested at end of year | 3,704,061 | - As of March 31, 2025, unrecognized compensation cost related to RSUs is $10.05 million, to be recognized over a weighted average of 2.09 years[52] - In Q1 2025, 40,000 share options were exercised, reducing the outstanding options to 20,000[48] Note 12: Geographic and Segment Information Allot operates as a single segment, with Europe as its largest market (52.7% of Q1 2025 revenues), and two customers contributing 25% of total revenues Revenues by Geographic Region (in thousands USD) | Region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Europe | $12,213 | $10,206 | | Asia and Oceania | $3,740 | $5,128 | | Americas | $2,639 | $4,286 | | Middle East and Africa | $4,558 | $2,270 | | Total | $23,150 | $21,890 | - In Q1 2025, two customers accounted for 14% and 11% of total revenues, respectively[58] - For Q1 2025, revenues were split between network intelligence solutions (60%) and security solutions (40%)[58] Note 14: Convertible Notes The company has a $40 million senior unsecured convertible note with Lynrock Lake Master Fund LP, extended to February 2026 - On February 14, 2022, the company issued a $40,000 thousand convertible note to Lynrock Lake Master Fund LP[62] - The note has an initial conversion price of $10.30 per share, and its maturity was extended to February 14, 2026[62] - Amortization expenses related to the note's issuance costs were $27 thousand for Q1 2025, compared to $50 thousand for Q1 2024[65]