Allot Communications Ltd. reports 14.9% revenue growth in 2019 and 5.3 pp EBITDA Margin growth from -6.6% to -1.4%
02/04/2020 • About Allot Communications Ltd. (
$ALLT) • By InTwits
Allot Communications Ltd. reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -1.4%
- Allot Communications Ltd. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2015-2019 is 0.7%. Average EBITDA Margin for the same period was -7.2%. In 2019 SBC/Revenue was even higher: 3.1%
- Allot Communications Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.9%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $3m in 2019, $1m in 2018, $5m in 2017, $14m in 2016, $5m in 2015
- The company has unprofitable business model: ROIC is -6.4%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Allot Communications Ltd.'s Revenue surged on 14.9%. Revenue growth showed acceleration in 19Q4 - it increased 15.3% YoY. Revenue decline was slowing down on average by 8.6 pp per annum in the last 5 years. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 5.3 pp from -6.6% to -1.4% in 2019.
Gross Margin showed almost no change in 2019. SG&A as a % of Revenue decreased on 4.6 pp from 53.5% to 48.8% in 2019.
Net Income margin increased on 3.0 pp from -10.9% to -7.9% in 2019.
Investments (CAPEX, working capital and M&A)
In 2019 the company had CAPEX/Revenue of 3.4%. Allot Communications Ltd. showed small growth in CAPEX/Revenue of 1.6 pp from 1.8% in 2016 to 3.4% in 2019. It's average CAPEX/Revenue for the last three years was 3.5%.
Return on investment
The company operates at negative ROIC (-6.4%) and ROE (-6.5%). ROIC increased slightly on 0.89 pp from -7.3% to -6.4% in 2019. ROE increased slightly on 1.00 pp from -7.5% to -6.5% in 2019.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.5x and Debt / EBITDA is . Debt surged while cash increased on 3.6%.
Allot Communications Ltd. has no short term refinancing risk: cash is higher than short term debt (537.3%).
Management team
1.3% of the company is owned by insiders.
The company has 478 employees. Average revenue per employee in 2019 was
$230,335.
Financial and operational results
FY ended 12/31/2019
Allot Communications Ltd. ($ALLT) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 100.0 | 90.4 | 82.0 | 95.8 | 110.1 | 14.9% |
| Gross Profit | 66.5 | 62.5 | 53.5 | 66.5 | 76.3 | 14.7% |
| SG&A | 56.0 | 45.1 | 49.0 | 51.3 | 53.8 | 4.9% |
| EBITDA | -10.2 | -2.8 | -13.7 | -6.4 | -1.5 | |
| EBIT | | | | | -5.8 | |
| Net Income | -19.8 | -8.0 | -18.1 | -10.4 | -8.7 | |
| Stock Based Compensation | | | | | 3.4 | |
Balance Sheet
|
|---|
| Cash | 15.5 | 23.3 | 15.3 | 16.3 | 16.9 | 3.6% |
| Accounts Receivable | | | | | 29.0 | |
| Inventory | | | | | 10.7 | |
| Accounts Payable | | | | | 11.7 | |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 3.2 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 3.8 | |
Cash flow
|
|---|
| Capex | 2.2 | 1.6 | 2.8 | 3.5 | 3.7 | 6.4% |
Ratios
|
|---|
| Revenue growth | -14.7% | -9.6% | -9.3% | 16.9% | 14.9% | |
| EBITDA growth | -595.1% | -72.5% | 389.5% | -53.7% | -76.6% | |
|
|---|
| Gross Margin | 66.6% | 69.1% | 65.2% | 69.4% | 69.3% | -0.1% |
| EBITDA Margin | -10.2% | -3.1% | -16.8% | -6.6% | -1.4% | 5.3% |
| EBIT Margin | | | | | -5.3% |
| SG&A, % of revenue | 56.0% | 49.9% | 59.8% | 53.5% | 48.8% | -4.6% |
| SBC, % of revenue | | | | | 3.1% |
| Net Income Margin | -19.8% | -8.8% | -22.0% | -10.9% | -7.9% | 3.0% |
| CAPEX, % of revenue | 2.2% | 1.8% | 3.5% | 3.6% | 3.4% | -0.3% |
|
|---|
| ROIC | -9.4% | -4.3% | -11.5% | -7.3% | -6.4% | 0.9% |
| ROE | -11.7% | -5.0% | -12.0% | -7.5% | -6.5% | 1.0% |
People
|
|---|
| Insider ownership | | | | | 1.3% | |
| Employees | | | | | 478 | |
| Revenue/Employee, th. $ | | | | | 230 | |
Allot Communications Ltd. ($ALLT) key quoterly financial indicators
| mln. $ | 19Q1 | 19Q2 | 19Q3 | 19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 25 | 27 | 28 | 31 | | 15.0% | 17.4% | 15.6% | 15.3% |
| EBITDA | -2 | 0 | -1 | -1 | | | | | |
| Net Income | -3 | -2 | -2 | -2 | | | | | |
Balance Sheet
|
|---|
| Cash | 17 | 18 | 21 | 17 | | -25.6% | -11.6% | 33.6% | 4.1% |
| Short Term Debt | 2 | 2 | 3 | 3 | | | | | |
| Long Term Debt | 4 | 4 | 4 | 4 | | | | | |
Ratios
|
|---|
| Gross Margin | 71.0% | 69.0% | 69.0% | 68.0% | | 2.9% | -1.8% | -0.4% | -1.1% |
| EBITDA Margin | -8.0% | 0.0% | -3.6% | -3.2% | | 3.9% | 7.9% | 2.9% | -1.7% |
| Net Income Margin | -12.0% | -7.4% | -7.1% | -6.5% | | 5.0% | 3.1% | 3.2% | 0.3% |
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 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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. ($FNJN) | -6.2% | 292.3% | 174.6% | 63.0% | |
| |
|---|
| Median (48 companies) | 20.6% | 14.7% | 16.6% | 20.4% | 59.2% |
|---|
| Allot Communications Ltd. ($ALLT) | | -9.6% | -9.3% | 16.9% | 14.9% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 96.9% | 98.3% | 95.4% | 94.0% | |
| Varonis Systems, Inc. ($VRNS) | 90.6% | 90.5% | 90.4% | 89.8% | |
| Check Point Software Technologies Ltd. ($CHKP) | 88.5% | 88.5% | 88.6% | 89.6% | |
| Tableau Software, Inc. ($DATA) | 88.7% | 88.0% | 87.1% | 87.7% | |
| Attunity Ltd. ($ATTU) | 84.9% | 83.9% | 84.1% | 87.5% | |
| |
|---|
| Median (53 companies) | 75.5% | 73.6% | 74.1% | 75.0% | 80.3% |
|---|
| Allot Communications Ltd. ($ALLT) | 66.6% | 69.1% | 65.2% | 69.4% | 69.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 52.4% | 49.8% | 50.7% | 48.8% | |
| SolarWinds Corporation ($SWI) | | -8.0% | 44.0% | 44.8% | |
| Finjan Holdings, Inc. ($FNJN) | -295.2% | 2.2% | 30.2% | 42.0% | |
| Oracle Corporation ($ORCL) | 43.8% | 40.8% | 40.2% | 40.8% | |
| CA Inc. ($CA) | 36.7% | 37.2% | 36.1% | 35.3% | |
| |
|---|
| Median (47 companies) | -4.3% | -9.8% | -3.6% | -3.9% | -7.9% |
|---|
| Allot Communications Ltd. ($ALLT) | -10.2% | -3.1% | -16.8% | -6.6% | -1.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 11.4% | 12.0% | 26.0% | 16.0% | |
| CYREN Ltd. ($CYRN) | 4.4% | 3.2% | 5.8% | 9.2% | |
| ServiceNow, Inc. ($NOW) | 8.7% | 7.6% | 7.8% | 8.6% | |
| Qualys, Inc. ($QLYS) | 12.2% | 11.7% | 16.4% | 8.2% | |
| Zscaler, Inc. ($ZS) | | 7.8% | 6.5% | 8.0% | 9.5% |
| |
|---|
| Median (48 companies) | 2.0% | 2.1% | 2.2% | 2.5% | 9.5% |
|---|
| Allot Communications Ltd. ($ALLT) | 2.2% | 1.8% | 3.5% | 3.6% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -113.5% | 3.4% | 46.6% | 64.1% | |
| Fortinet, Inc. ($FTNT) | 2.1% | 5.3% | 15.0% | 28.0% | |
| Check Point Software Technologies Ltd. ($CHKP) | 23.7% | 24.7% | 26.8% | 25.5% | |
| MAM Software Group, Inc. ($MAMS) | 19.3% | 21.1% | 24.2% | 25.2% | |
| Red Hat, Inc. ($RHT) | 14.1% | 14.2% | 16.4% | 22.4% | |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | -2.7% | -0.9% | -12.9% |
|---|
| Allot Communications Ltd. ($ALLT) | -9.4% | -4.3% | -11.5% | -7.3% | -6.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| NXT-ID Inc. ($NXTD) | | | | 9.7x | |
| Symantec Corporation ($SYMC) | -1.5x | -5.0x | 10.0x | 4.7x | |
| SolarWinds Corporation ($SWI) | | | 6.2x | 4.1x | |
| Oracle Corporation ($ORCL) | 1.2x | 1.6x | 2.4x | 2.4x | |
| ServiceNow, Inc. ($NOW) | | | 9.0x | 0.9x | |
| |
|---|
| Median (23 companies) | -1.4x | -1.2x | -0.6x | -0.4x | |
|---|
