Allot Announces Third Quarter 2020 Financial Results

Q3 2020 revenue grew by 26% year-over-year

Reconfirms 2020 revenue guidance between \$135-140 million

Hod Hasharon, Israel – November 4, 2020 - Allot Ltd. (NASDAQ: ALLT, TASE: ALLT), a leading global provider of innovative network intelligence and security solutions for communication service providers and enterprises worldwide, today announced its unaudited third quarter 2020 financial results.

Highlights of the third quarter

Third quarter revenues were \$34.8 million, up 26% year-over-year;
Non-GAAP operating loss reduced to \$1.0 million compared with operating loss of \$2.2 million in the third quarter of last year; GAAP operating loss of \$2.5 million compared with \$2.2 million in the third quarter of last year;
Non-GAAP net loss reduced to \$1.2 million compared with non-GAAP net loss of \$1.9 million in the third quarter of last year; GAAP net loss of \$2.4 million compared with \$2.1 million in the third quarter of last year;

Financial Outlook

Management reiterates its prior-issued guidance, with expectations for full year 2020 revenues to be between \$135 - \$140 million, representing accelerated double-digit growth over those of 2019.
Management continues to expect to be profitable in the fourth quarter this year;
Management continues to expect to close additional Recurring Security Revenue deals in 2020 and reiterates that the MAR* (maximum annual revenue potential of concluded transactions) of new deals expected to be signed in 2020 should exceed \$140 million.

Management Comment

Erez Antebi, President & CEO of Allot, commented: "We are very happy with the strong continued growth and solid performance we have shown throughout 2020. While the challenging business environment caused by COVID-19 continues to result in some delays in signing new contracts, we expect our revenues to continue to grow in the fourth quarter as well. In addition, we are very encouraged by the growing number of operators who see the need to provide consumers and SMBs with the zero touch clientless security solutions that Allot offers."

Third quarter 2020 Financial Results Summary

Total revenues for the third quarter of 2020 were \$34.8 million, an increase of 26% compared to \$27.6 million in the third quarter of 2019.

Gross profit on a GAAP basis for the third quarter of 2020 was \$23.7 million (gross margin of 68.3%), compared with \$19.2 million (gross margin of 69.4%) in the third quarter of 2019, representing a 24% improvement.

Gross profit on a non-GAAP basis for the third quarter of 2020 was \$24.0 million (gross margin of 69.0%), a 24% improvement compared with \$19.4 million (gross margin of 70.2%) in the third quarter of 2019.

Net loss on a GAAP basis for the third quarter of 2020 was \$2.4 million, or \$0.07 per basic share, compared with a net loss of \$2.1 million, or \$0.06 per basic share, in the third quarter of 2019.

Non-GAAP net loss for the third quarter of 2020 was \$1.2 million, or \$0.03 per basic share, compared with a non-GAAP net loss of \$1.9 million, or \$0.05 per basic share, in the third quarter of 2019.

Cash and investments as of September 30, 2020 totaled \$107.2 million, compared with \$109.2 million, as of June 30, 2020.

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Conference Call & Webcast

The Allot management team will host a conference call to discuss third quarter 2020 earnings results today, November 4, 2020 at 8:30 am ET, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers:

US: 1-888-642-5032, UK: 0-800-917-5108, Israel: +972-3-918-0609

A live webcast and, following the end of the call, an archive of the conference call, will be accessible on the Allot website at: http://investors.allot.com/index.cfm

Additional Resources

Allot Blog: https://www.allot.com/blog Follow us on Twitter: @allot\_ltd Follow us on LinkedIn: https://www.linkedin.com/company/allot-communications

About Allot

Allot Ltd. (NASDAQ: ALLT, TASE: ALLT) is a provider of leading innovative network intelligence and security solutions for service providers and enterprises worldwide, enhancing value to their customers. Our solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more. Allot's multi-service platforms are deployed by over 500

mobile, fixed and cloud service providers and over 1000 enterprises. Our industry leading networkbased security as a service solution has achieved over 50% penetration with some service providers and is already used by over 20 million subscribers globally.

Allot. See. Control. Secure.

For more information, visit www.allot.com

*MAR (maximum annual revenue potential of concluded transactions) was estimated by Allot upon transaction signature and constitutes an approximation of the theoretical annual revenues Allot would receive if 100% of the customer's subscribers, as estimated by Allot, signed up for the service.

GAAP to Non-GAAP Reconciliation

Non-GAAP net income is defined as GAAP net income after excluding stock-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustment, tax related items, exchange rate differences related to revaluation of assets and liabilities denominated in non-dollar currencies and other acquisition-related expenses.

These non-GAAP measures should be considered in addition to, and not as a substitute for, comparable GAAP measures. The non-GAAP results and a full reconciliation between GAAP and non-GAAP results is provided in the accompanying Table 2. The Company provides these non-GAAP financial measures because it believes 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 they are useful to investors in enhancing an understanding of the Company's operating performance.

Safe Harbor Statement

This release contains forward-looking statements, which express the current beliefs and expectations of Company management. Such statements involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements set forth in such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: those related to the COVID-19 pandemic, our ability to compete successfully with other companies offering competing technologies; the loss of one or more significant customers; consolidation of, and strategic alliances by, our competitors, government regulation; the timing of completion of key project milestones which impact the timing of our revenue recognition; lower demand for key value-added services; our ability to keep pace with advances in technology and to add new features and value-added services; managing lengthy sales cycles; operational risks associated with large projects; our dependence on fourth party channel partners for a material portion of our revenues; court approval of the Company's proposed share buy-back program; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date

hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contact GK Investor Relations Ehud Helft +1 646 201 9246 [email protected]

Public Relations Contact

Seth Greenberg, Allot Ltd. +972 54 922 2294 [email protected]

TABLE - 1

ALLOT LTD.

AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except share and per share data)

	Three Months September	30,	Ended	Nine Months Ended September 30,
	2020		2019		2020	2019
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenues	\$ 34,752	\$	27,637	\$	96,831	\$	79,533
Cost of revenues	11,007		8,456		28,455		24,050
Gross profit	23,745		19,181		68,376		55,483
Operating expenses:
Research and development costs, net	11,741		8,091		30,836		22,898
Sales and marketing	11,439		12,233		34,741		34,919
General and administrative	3,076		1,096		10,671		4,724
Total operating expenses	26,256		21,420		76,248		62,541
Operating loss	(2,511)		(2,239)		(7,872)		(7,058)
Financial and other income, net	646		257		1,514		1,360
Loss before income tax expenses	(1,865)		(1,982)		(6,358)		(5,698)
Tax expenses	528		129		1,309		1,279
Net Loss	(2,393)		(2,111)		(7,667)		(6,977)
Basic net loss per share	\$ (0.07)	\$ ₪	(0.06) -	\$	(0.22)	\$	(0.20)
Diluted net loss per share	\$ (0.07)	\$	(0.06)	\$	(0.22)	\$	(0.20)
Weighted average number of shares used in computing basic net loss per share	35,163,221		34,348,200		34,903,109		34,183,272
Weighted average number of shares used in computing diluted net loss per share	35,163,221		34,348,200		34,903,109		34,183,272

TABLE -2 ALLOT LTD. AND ITS SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data)

	Three Months Ended Septemer 30,				Nine Months Ended Septemer 30,
		2020		2019	2020		2019
			(Unaudited)			(Unaudited)
GAAP cost of revenues	\$	11,007	\$	8,456	\$ 28,455	\$	24,050
Share-based compensation (1)		(89)		(67)	(242)		(188)
Amortization of intangible assets (2)		(152)		(237)	(456)		(701)
Changes in taxes and headcount related items (4)		-		75	-		75
Non-GAAP cost of revenues	\$	10,766	\$	8,227	\$ 27,757	\$	23,236
GAAP gross profit	\$	23,745	\$	19,181	\$ 68,376	\$	55,483
Gross profit adjustments		241		229	698		814
Non-GAAP gross profit	\$	23,986	\$	19,410	\$ 69,074	\$	56,297
GAAP operating expenses	\$	26,256	\$	21,420	\$ 76,248	\$	62,541
Share-based compensation (1)		(1,177)		(747)	(3,180)		(2,214)
Amortization of intangible assets (2)		-		(188)	-		(565)
Income (Expenses) related to M&A activities (3)		(48)		1,198	(82)		2,735
Changes in taxes and headcount related items (4)		-		(31)	-		(31)
Non-GAAP operating expenses	\$	25,031	\$	21,652	\$ 72,986	\$	62,466
GAAP financial and other income	\$	646	\$	257	\$ 1,514	\$	1,360
Exchange rate differences*		(370)		235	(468)		202
Non-GAAP Financial and other income	\$	276	\$	492	\$ 1,046	\$	1,562
GAAP taxes on income	\$	528	\$	129	\$ 1,309	\$	1,279
Tax expenses in respect of net deferred tax asset recorded		(112)		(16)	(187)		(49)
Non-GAAP taxes on income	\$	416	\$	113	\$ 1,122	\$	1,230
GAAP Net Loss	\$	(2,393)	\$	(2,111)	\$ (7,667)	\$	(6,977)
Share-based compensation (1)		1,266		814	3,422		2,402
Amortization of intangible assets (2)		152		425	456		1,266
Expenses (Income) related to M&A activities (3)		48		(1,198)	82		(2,735)
Changes in taxes and headcount related items (4)		-		(44)	-		(44)
Exchange rate differences*		(370)		235	(468)		202
Tax expenses in respect of net deferred tax asset recorded		112		16	187		49
Non-GAAP Net Loss	\$	(1,185)	\$	(1,863)	\$ (3,988)	\$	(5,837)
GAAP Loss per share (diluted)	\$	(0.07)	\$	(0.06)	\$ (0.22)	\$	(0.20)
Share-based compensation		0.04		0.02	0.10		0.07
Amortization of intangible assets		0.00		0.01	0.01		0.03
Expenses (Income) related to M&A activities		0.01		(0.03)	0.01		(0.08)
Exchange rate differences*		(0.01)		0.01	(0.01)		0.01
Non-GAAP Net loss per share (diluted)	\$	(0.03)	\$	(0.05)	\$ (0.11)	\$	(0.17)

Weighted average number of shares used in
computing GAAP diluted net loss per share		35,163,221		34,348,200	34,903,109		34,183,272
Weighted average number of shares used in
computing non-GAAP diluted net loss per share		35,163,221		34,348,200	34,903,109		34,183,272

* Financial income or expenses related to exchange rate differences in connection with revaluation of assets and liabilities in non-dollar denominated currencies.

ALLOT LTD. TABLE - 2 cont.

AND ITS SUBSIDIARIES RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS