Rami Rozen – AVP Corporate Development Andrei Elefant – President & CEO Nachum Falek – Chief Financial Officer Shmuel Arvatz – Chief Financial Officer.

Ittai Kidron – Oppenheimer & Co. Matt Robinson – Wunderlich Securities Joseph Wolf – Barclays Alex Henderson – Needham & Co..

Operator:.

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Thank you all for joining us on our third quarter 2014 conference call. My name id Rami Rozen, and joining me today are Allot’s President and CEO, Andrei Elefant, as well as our Chief Financial Officer, Nachum Falek, and our new CFO, Mr. Shmuel Arvatz.

The press release announcing our third quarter results, is available on the investor relations’ section of our website at www.Allot.com. All results and expectations we review on the call are on a non-GAAP basis.

Unless otherwise described as GAAP, non-GAAP net income, and non-GAAP net income per share excludes stock based compensation, expense revenue adjustment due to acquisitions, expenses related to M&A activity, deferred tax assets, and amortization of certain intangibles. Please note that all earnings per share amounts are on a fully diluted basis.

A reconciliation of each non-GAAP measure to its nearest GAAP equivalent is available in the press release containing our third quarter results.

Before we begin, let me remind you that certain statement made on the call today may be considered forward-looking statements, which reflect managements’ best judgment based on currently available information. I refer specifically to the discussion of our expectations and beliefs regarding our pipeline and funnel of potential future business.

Our actual results may differ materially from those projected in these forward-looking statements.

I direct your attention to the risk factors contained in the annual report on Form 20F, filed by Allot with the US Securities & Exchange Commission and those referenced in today’s press release, both of which detail factors which could cause of our actual results to be materially different from those projected in the forward-looking statements.

Allot’s ClearSee and WebSafe are trademarks of Allot Communications. All other trademarks are the property of the respective owners. With that, I would now like to turn the call over to Andrei..

In today’s call I will highlight Allot’s results and share with you some of Allot’s achievements for the third quarter of fiscal year 2014, and then I will hand over the call to our CFO Nachum Falek for a short overview of our financial performance for this quarter.

Our third quarter results came in at $30.1 million, up 25% year-over-year and 7% sequentially. We continued to execute well on all fronts. In addition to revenue growth, gross margin has improved to 75%, up two percentage points compared with the second and the first quarter. Cash balance by the end of the quarter was $125 million and no debt.

We generate $3 million of operating cash flow during the third quarter. Our funnel continues to be strong and the healthy business environment was once again reflected through the strength of our booking, as we reached book-to-bill above one, once again.

Our booking during the third quarter were at record level, further supported by our largest ever $50 million [follow] order recorded during the quarter. We continue to execute well. We sell the [inaudible] Tera platform, launched at the beginning of the year.

This platform carries the highest capabilities and is the fastest DPI engine in the industry to date. The integration of the Tera platform with our valued added services portfolio support the Allot vision of selling the fully integrated solution, which creates a multitude of up-selling opportunities.

Valued added services during the quarter represented 34% of our booking, and we continue to view this business segment as a key catalyst of our future growth and we’ll invest a significant part of our strategic thinking, as well as marketing efforts, in this direction.

The leading value added services sold during the quarter were the service protector, Allot’s solution for protecting against an out of service attack, charging and policy control licenses, and the WebSafe product line that includes parental control and [inaudible].

Two of the three most sellable services belong to the revenue generating category, and we sense that this part is a general trend within the service provider’s demand. We continue to make good progress with our security offering, and we experienced growth demand from service providers for security solutions.

During the third quarter we had a total of 10 large deals, two of which are new customers. Two of the large deals were mobile service providers, and four from fixed-line operators. In addition, we had three large deals in the Cloud segment.

Cloud deals continue to be an area of focus for Allot and we are pleased with the progress we have made in this field so far. During the third quarter, we made further progress our [inaudible] offering.

A few weeks ago, we introduced some collaboration with MRV and under the Orange umbrella, a Virtual CPE solution enabling application-aware [inaudible] management at the customer premises and network edges.

During the quarter, we continued to work and develop new use cases and formed new collaborations with leading operators to enhance our position within this category, leveraging our bridge out [inaudible] solution. Moving to geographical revenue breakdown, EMEA accounted for 33%, APAC 51%, and the Americas 16%.

On the year-to-date basis, the split is EMEA 50%, APAC 33%, and the Americas, 17%. We believe that year-to-date analysis of our geographical performance reflects our situation in these regions more accurately. We continue to support many business opportunities in the EMEA region, with new and existing customers.

Before I conclude my part, I would wish to say a few words about the press release that we published this morning in addition to the earnings. As I’m sure you all read, we have appointed Mr. Shmuel Arvatz as the company’s new CFO, replacing Mr. Nachum Falek who was recently nominated as new CFO of a privately held company in the security segment.

We feel privileged to have a professional like Shmuel joining our senior management team, and I’m sure that his vast industry experience, as well as skills and business leadership will serve us well, and will benefit our shareholders in the future.

I wish to thank Nachum for five years of outstanding service directing our finance and investor relations team and being a vital component of the Allot success story. I wish him luck in his future opportunities. I would now like to turn the call to Shmuel for a short statement..

I am honored to have been appointed by the board of Directors to become Allot communications new CFO. I look forward to meeting all of you soon, and I am confident that we have all the resources needed to make a smooth transition going forward..

In summary, we are pleased with our performance during the third quarter. Revenues grew 20% year-over-year, and 7% sequentially. We have recorded a significant improvement in gross margin, generated more than $3 million of operating cash flow, and book-to-bill was once again higher than one.

Going forward, our funnel continues to be strong, and we are entering the last quarter of 2014 with positive momentum. I will now hand the call over to Nachum for a short financial review. Nachum, please go ahead..

Let me take a few minutes to review the results we published earlier today. I will be discussing non-GAAP numbers which [inaudible] share based compensation, revenue adjustment due to acquisitions, expenses related to M&A activity, deferred tax assets, and amortization of certain intangibles.

Full reconciliation of the pro forma results discussed on this call, to GAAP results, is currently available for review on our website and in the press release issued today. Now let me walk you through the results for the quarter.

Revenues for the third quarter, on a non-GAAP basis were $30.1 million, up 7% versus the previous quarter, and up 25% versus last year. The percentage of our revenues, sales in America accounted 16%, EMEA 33%, and Asia Pacific 51%. During the quarter, we had two 10% customers.

Out of [quota] revenues during the quarter products were 69% and services 31%. Gross margin for third quarter was 75% versus the 73% we had in the second quarter of 2014. Our operating expenses were $19.6 million versus $18.8 million in the second quarter. For the quarter we reported earnings per share of $0.09.

On the balance sheet side, cash balances were $125 million. As for our cash flow, we were cash positive and during the third quarter we generated $3 million from operating activities. Our DSO was 76 days, similar to last quarter. Deferred revenues went up by $1 million during the quarter to $16.6 million.

Before I conclude my remarks, I wish to make a personal note. After serving as Allot’s CFO for more than four years, I decided to move on to my next challenge, as I’m positive that I am handing over the CFO role to an experienced and skillful professional, such as Shmuel and I wish him good luck in his new role.

I am a firm believer in Allot’s future and prospect. I enjoyed working with the analysts and investors that followed us over the years, and wish to thank all of you for your support in the Allot story. That concludes my remarks, and we will now open the call for questions..

(Operator Instructions) Your first question comes from Ittai Kidron – Oppenheimer & Co..

Ittai Kidron – Oppenheimer & Co.:.

I wanted to ask about value added services.

Can you tell us how much of revenue was value added services, and how much of the bookings? I’m just trying to get a gauge, a leading indicator as to gross margin direction?.

As we mentioned earlier, 34% of our bookings were value added services during this quarter..

The large transaction that you had, $15 million in the quarter, can you give us some color on how you expect that to flow into the P&L from a timing standpoint? The concern there would be that that’s a very big order and how can you maintain sustainability revenue growth wise, after recognizing such a big order in your P&L?.

I think as we’ve said in the past, while we can see some lumpiness in booking, usually revenues are more linear, because it takes time to recognize an order, and it takes time to go to deployment, get acceptance, etc.

Specifically, to the order that you’re mentioning, it will take us probably more than one quarter in order to recognize the product parts, and obviously, much more than that if we are thinking about maintenance warranty, etc. It’s not a one-time deal, definitely not in terms of recognition..

You’ve talked about Europe is an area where you see a lot of opportunity, at the same time we’re hearing a lot about negative GDP revisions in the region, and some countries have actually fallen back into recession level.

What’s the level of confidence and visibility you really have in that region, and how do you get confidence that despite the macro background backdrop, you can still execute in that region?.

From what we see in our funnel now, we have opportunities both with existing and new customers from the region. So, we do see that business at this point continues as usual, at least for us in the last year. We haven’t noticed any change recently, we continue to see a healthy funnel.

If we talk specifically about the EMEA region, we see there also opportunities both from existing key customers, and new customers. We haven’t seen any impact in that sense, in this region..

Then lastly on the FX, the dollar is finally moving in your way, can you discuss the impact of the FX on your operating expenses?.

Yes, as we are part of [inaudible] obviously, we are edging near, especially the exposure that we have of shekels versus dollar, the improvement that we are seeing lately into our side, I think that will see probably toward next year..

Your next question comes from Matt Robinson – Wunderlich Securities..

Could you guys talk a little bit about year-to-date VAS bookings and if you’ve seen, maybe as a following to Ittai’s question, if you’ve seen any backlog cancellations that might relate to macro? Also, the other income went up a bit, was that a reflection of for ex? I’ve got a couple other housekeeping questions too, but I guess start with the VAS bookings number for year-to-date..

VAS bookings from the beginning of the year, during Q3 we had a little bit higher than what we saw in Q1 and Q2, in terms of the portion of the value added services. But in general, it’s more or less in this range. We normally see around 30% of our bookings coming from value added services..

On the for ex stuff and if you’ve got any booking cancellations?.

In terms of for ex, no most of what you are seeing in financial and other income, is really interest that we are getting on our cash balances. $200,000 is the average that we are seeing on let’s say that should be the average run rate at this time..

What about the backlog question?.

You guys have booked-to-bill steadily above one for I think, seven quarters now, have you had any – is that net of any backlog cancellations and have you had any customers reverse course?.

At least from what I know recently, we didn’t have any significant cancellation of orders during this year, so we don’t have any experience of such events..

Why were sales and marketing up so much sequentially?.

Yes, mostly we are talking about book-to-bill ratio and you asked about the backlog, so book-to-bill ratio is about one, the backlog is increasing, and part of what we are paying in terms of the commission is based on booking, which is mostly in advance not a final payments to our sales team.

The reason why you’re seeing an increase in sales and marketing expenses, part of it is due to commission payments, agents and our sales force, part of it is due to recruitment of new people..

Is that why accrued expenses were up so much as well?.

That’s not a [inaudible] issue, that’s not necessarily only due to that, but you’re absolutely correct, part of it are those payments yes..

Your next question comes from Joseph Wolf – Barclays..

A quick questions for incoming CFO, Shmuel could you tell us about the recruitment process, and what convinced you to join Allot, coming from the Internet software sector?.

I came not from the Internet sector, but from the enterprise software. I served as the CFO of Quick Software for 12 years, and motivation was mostly to make a change.

I like the management, the board members that I met, and also the opportunity, which is a node area of telecom and the value added services, which I think is a very important growth driver. Allot also has a large amount of cash in the bank so we will be able to also use the cash for non-organic opportunities, and I’m going to focus on this area.

[Inaudible] I think I’m excited about the opportunity, and looking forward to work with the management..

A couple more questions.

I guess some of the questions have touched on this, but if you think about what’s going into the bookings and the backlog these days, and the deployment timings larger orders, and specifically, you had a couple – you talked about three wins in large Cloud deals, could you just talk about how we should think about revenues flowing through that in term of booking backings and what that means for deployment and then the scale of these Cloud wins versus some of your more traditional customers, putting the really large orders on the side?.

Yes, I think just in terms of time it takes the order to become revenues, obviously there is a big difference if we are selling to an enterprise, or Cloud, or whether we’re going to Telco. I think it didn’t change dramatically, three to six months is probably the right timing for an order to become revenues.

As you can see book-to-bill is above one, and revenue is growing. We are talking about 7% quarter-over-quarter and 25% that we did year-over-year, and that’s exactly, and the growth is coming from the book-to-bill ratio, which is above one..

For the second part of your question, about the size of the Clouds deal, typically they are smaller in terms of the size of the deal compared to the Telco deals. However, their deployment is usually quicker and usually also it contributes to our gross margin, so usually they are more profitable projects..

Them I guess, just on this VAS, on the bookings on the VAS business, has the breadth of the product offering that you’re calling VAS changed a whole lot over the course of the first nine months over the year? Is it still primarily a couple of offerings, is there a focus from your customers, are they centralized from one or two of your offerings, or is there some good breadth there across the platform?.

What we are experiencing is that in most cases, the operators will buy into one or two value added services in the first phase, or in the first project. Then, they will add on top of that additional services.

The services where we see more success over the last nine months are services related to revenue generating services, that have operated to create and generate more revenue for the customers, and we see more interest in services around the security space.

So, as I mentioned in the last quarter, the Service Protector, which is our [inaudible] service protection product line, and the WebSafe product line, which is the parental control and [inaudible] filtering. These were two of the top three selling services, and these are around the security state..

Your next question comes from Catharine Trebnick – Dougherty & Company, LLC..

I have three questions.

One, percentage revenue from the existing customer base?.

You mean existing versus new, or?.

Yes, yes..

We don’t have the exact figure for this quarter, but in general and I think this quarter should be on the same level, it’s about 80% of our revenue is coming from existing customers and then 20% from new customers. What we experienced over the last few quarters is a similar trend, that we follow for the last few years..

My other questions is, the competitive landscape, some of the value added services that you’re getting good success with DDos, Parental Control, and URL filtering.

There are some pretty tough competitors out there, who do you compete against in the bake offs, and then why would they select you over one of the competitors?.

The main advantage that we have is that the solution is fully integrated. So, when an operator is looking for a combination of solutions, if we take for example the parental control solution, for him, deploying only the parental control solution can be very expensive.

When it is deployed on top of our service gateway platform that is already connected to the policy engine, and it is well integrated to the charging system, and so on, the cost of deployment is significantly lower, and the time to market of the new service is significantly faster. So, these are the main advantages that we have.

We want to compete in a project that is only about, for example, [inaudible] attack protection. We will add that as an additional services on top of our platform and this is the value of the service gateway platform, the fact that it brings together many services, and all of them are fully integrated..

Then, the other question I have is in the − North America has been down year-to-date, and any − what you see in general as far as your pipeline, and this coming back to being more of a substantial part of the revenue and growth strategy?.

We had better years in the Americas, and year-to-date the performance there is not in the level that we expected it to be. However, we continue to work with the Tier-1 operators there. We believe that once the FCC will get to a final resolution about [inaudible] neutrality it will open doors for large scale projects with our type of technology.

We’re starting to see over the last few months, more interest coming from them. We are in direct touch with them, doing trials, but nothing yet that has materialized to a project..

Your next question comes from Alex Henderson – Needham & Co..

I was hoping that you could give us a couple of data points.

First off, what the head count was?.

Yes, so headcount at the end of the quarter was 453 employees..

You mentioned new hires, can you give us some sense of what rate of new hiring you’re doing during the quarter, and what to expect for the upcoming quarter?.

Yes, I think that looking at what we recruited looking in the last, let’s say six months, most of the people are going to sales and marketing, whether it support, or salespeople in the [inaudible] putting more towards the EMEA and APAC..

I was just hoping you could give us some sense of how many you’ve hired?.

We recruited less than 10 people let’s say the last quarter and again, around 10 six months ago, etc., so that’s the rate. We are seeing the opportunities, we are seeing the momentum and demand for our product.

We want to give good service to our customers, and therefore, we’re recruiting more salespeople, and support people to support the equipment that is in the field..

Can you talk a little bit about the impact of the 8% to 10% in the decline of the shekel versus the dollar since July 20th or so, when it peaked at a three year high, and what the impact on the quarter was, and how that will impact you going forward? I was a little surprised to see better than expected top line and gross margin, given the swing in the shekel where your shekel based cost structure overage on the op ex line related to our forecast, which was not the mix I was expecting.

Can you talk a little bit about that?.

Most of the exposure that we have, shekel versus the dollar, is hedged by forward deals etc. So, you will not see the impact of this change immediately. As I mentioned, I do think that we will see an improvement going into next year in terms of our op ex, due to the reasons of exchange rate.

But to answer your question specifically, the increase that you saw in op ex in general, specifically into sales and marketing, is due to accruals that we offer commission, whether it’s employees, or whether it’s for agents, because part or in advance of what we are paying is based on booking, and not necessarily on collection.

Again, it’s an advance, that’s why when book-to-bill is above one, and you can imagine if we’ve booked more than you saw on the top line, it means that we are paying more in terms of commission. So most of the increase in our op ex was due to commission and new hires..

On the book-to-bill comment, you’ve made the comment that book-to-bill was around one several times in answer to questions, yet you said that your book-to-bill was above one, can you give us a little bit better qualification of what that is? Is slightly above one, and that’s why you keep calling it around one, or is it decently above one? Can you give us a little bit more color on that, because it’s a little confusing?.

Yes, so we’re not giving specific numbers into the bookings. We try to share as much information as we can. We mentioned book-to-bill above one, and you know, as Andrei mentioned on his comments that we had very nice booking this quarter, which was obviously on one end above one, but I don’t want to get into the specific numbers.

Sorry we cannot share more information about that..

But it is above one, it’s not one, right? Just to be clear..

Yes, above one..

It’s above one and then as I mentioned earlier, in terms of booking, it was a record quarter..

Then the two 10% customers, can you give us a sense of how much those combined to equal, in terms of revenues?.

We share this information only on an annual level, and we will probably can share it in the next quarter, and in our filing of the 20F. So far, I can just tell you we had only two above 10% customers..

And the services as a percentage of revenues?.

Services were 71%, and 69 were products..

Finally, can you give us some sense of what you think the tax rate may look like next year? I know it’s a little early, but we still have to forecast that out, and we don’t want any surprises..

Yes, historically we always say 5% to 10%. We try to be at the lower range. As you said, it’s a little bit too early next year, but I don’t think that we should have major change at this point..

(Operator Instructions) As there are no further questions, I would like to turn the call back to the presenters..

Thank you very much everyone and have a nice day..

That will conclude today’s conference call. Thank you for your participation ladies and gentlemen, you may now disconnect..