Allot Communications Ltd. reports 16.9% revenue growth in 2018 and 10.1 pp EBITDA Margin growth from -16.8% to -6.6%
02/05/2019 • About Allot Communications Ltd. (
$ALLT) • By InTwits
Allot Communications Ltd. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -6.6%
- Allot Communications Ltd. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -6.4%
- Allot Communications Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $178m in FY2018, $47m in FY2017, $22m in FY2016, $21m in FY2015, $9m in FY2014
- The company has unprofitable business model: ROIC is -7.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 16.9%. Revenue growth showed small slowdown in 18Q4 - it was 15.9% YoY. During 2014-2018 Revenue growth bottomed in 2015 at -14.7% and was accelerating since that time. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 0.95 pp from 5.6% to 6.5% in 2018.
Gross Margin increased on 4.2 pp from 65.2% to 69.4% in 2018. SG&A as a % of Revenue decreased on 6.3 pp from 59.8% to 53.5% in 2018.
Net Income margin surged on 11.2 pp from -22.0% to -10.9% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.6% in 2018. The company showed small growth in CAPEX/Revenue of 1.4 pp from 2.2% in 2015 to 3.6% in 2018. It's average CAPEX/Revenue for the last three years was 2.9%. During the last 5 years CAPEX as a % of Revenue bottomed in 2016 at 1.8% and was growing since that time.
Return on investment
The company operates at negative ROIC (-7.3%) and ROE (-7.5%). ROIC increased on 4.2 pp from -11.5% to -7.3% in 2018. ROE increased on 4.6 pp from -12.0% to -7.5% in 2018.
Leverage (Debt)
The company has no debt. Cash increased on 6.5%.
Financial and operational results
FY ended 12/31/2018
Allot Communications Ltd. ($ALLT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 117.2 | 100.0 | 90.4 | 82.0 | 95.8 | 16.9% |
| Gross Profit | 82.4 | 66.5 | 62.5 | 53.5 | 66.5 | 24.4% |
| SG&A | 56.5 | 56.0 | 45.1 | 49.0 | 51.3 | 4.6% |
| EBITDA | 2.1 | -10.2 | -2.8 | -13.7 | -6.4 | |
| Net Income | -2.5 | -19.8 | -8.0 | -18.1 | -10.4 | |
Balance Sheet
|
|---|
| Cash | 19.2 | 15.5 | 23.3 | 15.3 | 16.3 | 6.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 3.4 | 2.2 | 1.6 | 2.8 | 3.5 | 23.0% |
Ratios
|
|---|
| Revenue growth | 21.4% | -14.7% | -9.6% | -9.3% | 16.9% | |
| EBITDA growth | -383.6% | -595.1% | -72.5% | 389.5% | -53.7% | |
|
|---|
| Gross Margin | 70.4% | 66.6% | 69.1% | 65.2% | 69.4% | 4.2% |
| EBITDA Margin | 1.8% | -10.2% | -3.1% | -16.8% | -6.6% | 10.1% |
| SG&A, % of revenue | 48.2% | 56.0% | 49.9% | 59.8% | 53.5% | -6.3% |
| Net Income Margin | -2.1% | -19.8% | -8.8% | -22.0% | -10.9% | 11.2% |
| CAPEX, % of revenue | 2.9% | 2.2% | 1.8% | 3.5% | 3.6% | 0.2% |
|
|---|
| ROIC | -1.8% | -9.4% | -4.3% | -11.5% | -7.3% | 4.2% |
| ROE | -1.4% | -11.7% | -5.0% | -12.0% | -7.5% | 4.6% |
| Net Debt/EBITDA | -9.3x | | | | |
Allot Communications Ltd. ($ALLT) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 22 | 23 | 24 | 27 | | 17.9% | 18.0% | 16.1% | 15.9% |
| EBITDA | -3 | -2 | -2 | -0 | | | | | |
| Net Income | -4 | -2 | -2 | -2 | | | | | |
Balance Sheet
|
|---|
| Cash | 23 | 20 | 16 | 16 | | 14.1% | -13.2% | -35.4% | 6.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 68.1% | 70.8% | 69.4% | 69.1% | | 2.4% | 5.0% | 7.0% | 2.4% |
| EBITDA Margin | -11.9% | -7.9% | -6.5% | -1.5% | | 10.1% | 6.9% | 10.5% | 12.6% |
| Net Income Margin | -17.0% | -10.5% | -10.3% | -6.8% | | 10.6% | 10.2% | 11.9% | 12.0% |
Peers in Systems Software
Below you can find Allot Communications Ltd. benchmarking vs. other companies in Systems Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Advantego Corp ($ADGO) | | | | | 973.8% |
| Solbright Group Inc ($SBRT) | | | 286.4% | 25.4% | 414.0% |
| Duos Technologies Group Inc ($DUOT) | | 61.0% | -9.8% | -36.4% | 210.2% |
| Dell Technologies Inc. ($DVMT) | | | | | 145.7% |
| Finjan Holdings, Inc. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 20.6% | 14.7% | 16.6% | 20.4% |
|---|
| Allot Communications Ltd. ($ALLT) | | -14.7% | -9.6% | -9.3% | 16.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 97.0% | 96.9% | 98.3% | 95.4% | 94.0% |
| Varonis Systems, Inc. ($VRNS) | 90.2% | 90.6% | 90.5% | 90.4% | 89.8% |
| Check Point Software Technologies Ltd. ($CHKP) | 88.2% | 88.5% | 88.5% | 88.6% | 89.6% |
| Tableau Software, Inc. ($DATA) | 91.0% | 88.7% | 88.0% | 87.1% | 87.7% |
| Attunity Ltd. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 77.0% | 75.4% | 73.6% | 74.1% | 75.0% |
|---|
| Allot Communications Ltd. ($ALLT) | 70.4% | 66.6% | 69.1% | 65.2% | 69.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 54.3% | 52.4% | 49.8% | 50.7% | 48.8% |
| SolarWinds Corporation ($SWI) | | | -8.0% | 44.0% | 44.8% |
| Finjan Holdings, Inc. ($FNJN) | -192.1% | -295.2% | 2.2% | 30.2% | 42.0% |
| Oracle Corporation ($ORCL) | 46.2% | 43.8% | 40.8% | 40.2% | 40.8% |
| CA Inc. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | -2.4% | -5.0% | -9.8% | -3.6% | -3.9% |
|---|
| Allot Communications Ltd. ($ALLT) | 1.8% | -10.2% | -3.1% | -16.8% | -6.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
| CYREN Ltd. ($CYRN) | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% |
| ServiceNow, Inc. ($NOW) | 8.0% | 8.7% | 7.6% | 7.8% | 8.6% |
| Qualys, Inc. ($QLYS) | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% |
| Zscaler, Inc. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| |
|---|
| Median (48 companies) | 2.7% | 2.1% | 2.1% | 2.2% | 2.5% |
|---|
| Allot Communications Ltd. ($ALLT) | 2.9% | 2.2% | 1.8% | 3.5% | 3.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -42.6% | -113.5% | 3.4% | 46.6% | 64.1% |
| Fortinet, Inc. ($FTNT) | 9.2% | 2.1% | 5.3% | 15.0% | 28.0% |
| Check Point Software Technologies Ltd. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | 0.0% | -2.7% | -0.9% |
|---|
| Allot Communications Ltd. ($ALLT) | -1.8% | -9.4% | -4.3% | -11.5% | -7.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| |
|---|
| Median (23 companies) | -2.1x | -1.4x | -1.2x | -0.6x | -0.4x |
|---|
