Allot Leaps on Nasdaq Debut
The company, which announced its IPO less than three weeks ago, priced its shares at $12 each, above its original range of $9 to $11. (See Allot Prices Shares.) Allot Plans IPO as Sandvine Profits.)
The issue of 6.5 million shares raised $78 million, and Allot will net about $70.5 million after costs and underwriter discounts. The underwriters have a 30-day option to buy a further 975,000 shares to cover any over-Allot-ments, the company said.
Allot's stock is hot likely because the vendor's market -- deep packet inspection (DPI), bandwidth management, and QOS control -- is set for dramatic growth, and the company is already profitable. According to a recent Light Reading Insider report, carriers are on course to spend more than $580 million on DPI technology in 2010, compared with less than $100 million in 2005. (See Insider: P2P Drives Use of DPI.)
And Allot's profits, while small at present, are growing fast. Its revenues in the first nine months of this year were nearly $25 million, while net income was almost $0.6 million. But nearly all of that came in the most recent quarter.
In the first three months of this year, Allot generated just $5,000 profit from revenues of $7.6 million, while in the third quarter it generated $505,000 in net income from revenues of $8.9 million.
Being a listed company will add to Allot's costs, though, so its fourth quarter's numbers may see that trend reversed.
One of Allot's main rivals, Sandvine Inc. , also joined the public markets this year, listing on London's Alternative Investment Market (AIM) in March and on the Toronto exchange in October. It also recently broke into profitable territory. (See Sandvine Leaps on London Listing, Sandvine Revenues Up 99%, and Sandvine Closes Offering.)
Other vendors playing in the deep packet inspection and bandwidth management market include CacheLogic , Cisco Systems Inc. (Nasdaq: CSCO), Ellacoya Networks Inc. , Narus Inc. , and Procera Networks . (See More Cash for CacheLogic , Cisco Plucks P-Cube for $200M, Ellacoya Bolsters DPI Tech, Narus Nails $30M for DPI, and Procera Intros 10-GigE Gear.)
Billing specialist Redknee Inc. (Toronto TSX: RKN) also deploys DPI techniques in its technology. (See Redknee Bends Toward IPO.)
— Ray Le Maistre, International News Editor, Light Reading