ALLT

Image source: The Motley Fool. Wednesday, Aug. 12, 2026 at 8:30 a.m. ET Chief Executive Officer - Eyal Harari Chief Financial Officer - Liat Nahum Operator: Good day to all of you, and welcome to Allot's conference call to discuss its financial results for the Second Quarter 2026. I would like to thank Allot's management for hosting this conference call. [Operator Instructions] As a reminder, this conference call is being recorded. You should have all received by now the company's press release. If you have not, please check the company website at www.allot.com. With me today on the call are Mr. Eyal Harari, CEO; Mrs. Liat Nahum, CFO. Following the prepared remarks, we will open the call for the question-and-answer session. All the highlights of the quarter are in today's earnings press release. Before we start, I'd like to point out that the following safe harbor statement. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of the company. Those statements are only predictions, and Allot cannot guarantee that they will, in fact, occur. Allot does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, delay in the launch of services by Allot customers, reduced demand and the competitive nature of the security service industry as well as other risk identified in the documents filed by the company with the Securities and Exchange Commission. Also, the financial results of this call will be presented mainly on a non-GAAP basis. Allot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand Allot's operating performance in the quarter. For all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP reconciliation table. And with that, I would now like to hand over the call to Eyal Harari, Allot's CEO. Eyal, please go ahead. Eyal Harari: Thank you. We are pleased to report another strong quarter with growth in revenue, profitability and cash flow, our fourth consecutive quarter of double-digit year-over-year growth and an acceleration over recent quarters. We were particularly pleased with North America where strong execution drove a solid increase in sales and backlog, underpinning our confidence in the growth we expect in the second half. Our Cybersecurity as a Service business, SECaaS, continues to power our growth with SECaaS revenue growing 47% year-over-year to account for over 1/3 of our revenues and SECaaS ARR up 44%. This continues to scale our recurring revenue base, which represented 2/3 of total revenue in the quarter, giving us greater visibility into the quarters ahead and improving the predictability of our revenues. Overall, our business is executing well and performing ahead of our expectations. Let me focus on North America, one of the highlights of the quarter. The region made up 31% of the revenues versus 17% in the second quarter of last year and 14% last quarter. This was driven by very solid product sales with particularly strong interest in our new Tera III platform and by continued demand for our smart product line, reflecting the value operators see in the network visibility and control our platform delivers. In addition, our major U.S. SECaaS customer continues to perform very well, in line with our strong expectations. Beyond that, we entered the second half with a strong backlog and healthy demand, giving us added confidence for the rest of the year. North America is a strategic priority for us, and it is very encouraging to see the focus translating into revenue, backlog and pipeline. Turning to our Cybersecurity as a service business. This continues to perform strongly and in line with our expectations. We had several wins during the quarter, each demonstrating a different way in which we are growing the business and all classic example of our land and expand strategy. We secured 4 new SECaaS deals in the quarter, all of them in the EMEA region. First, we won an upsell deal in Europe, selling a new service to an existing SECaaS customer, the first sale of our identity monitoring service. This telco will be offering our identity monitoring service to its SMB customers. This is a domain level identity theft monitoring service. It continues monitoring for exposure of the business digital identities and it's designed to alert the customers when credential or other identity data has been compromised, so that they can act before that expose is exploit. And it is designed to do so for every user across the organization. It is a good example of how are we expanding our SMB security suite beyond the network alongside off-net Secure, Firewall as a Service and DDoS protection. Second, we won an expansion to the SMB segment within an existing European-based customer. Third, we secured a new win within our -- one of our large global telco groups, adding our HomeSecure service in another country. The HomeSecure solution enhances threat protection across the Telstra's mobile and broadband networks. It integrates into the existing home router and provides zero-touch home network visibility, cybersecurity and parental controls. Finally, we won a new SECaaS deal in Africa with a telco that is already a smart customer. Together, these wins reflect the breadth of our SECaaS growth, new customers, geographies, end user segments and applications all on the same platform. We expect these deals to contribute to our future SECaaS revenue growth in 2027. Our smart product line remains a highly complementary part of our unified cybersecurity first platform, built on decades of Allot innovation and delivering best-in-class network intelligence. We continue to execute well on the multimillion dollar projects won in recent quarters, including deployments and upgrades of our Tera III platform with Tier 1 operators. As a reminder, Tera III is our next-generation ultra-high capacity multiservice gateway. It is among the highest capacity platforms of its kind in the market, and it consolidates deep network visibility, traffic management and cybersecurity services onto a single platform. Customer feedback has been excellent. Operators are running both cybersecurity and traffic intelligence workloads on the same gateways, and they value its carrier great stability and reliability, its ability to scale cost efficiently with 5G and fiber traffic growth without expanding their footprint. We also provide a smooth upgrade path from our earlier service gateway generations, which protects the investment that they have already made. This quarter, demand for our smart product was particularly strong in North America. As part of the smart product innovation, we recently ran a case study with Tier 1 operator to demonstrate Allot's new zero rating fraud detection and mitigation service. Zero-rated applications and app-based charging plans creates value for subscribers, but they are also open the door to fraud. Attackers are increasingly exploiting vulnerabilities to bypass charging system and consume data without payment. Our solution, ACSP identified fraud and a case study showed that we reduced fraud and traffic by 87%. This show our operators can recover lost revenue, while protecting the integrity of their zero rating offers. We are already building our backlog for 2027 with an additional win of an important Tera III upgrade project with a customer for a new site expansion. Our pipeline remains healthy with existing customers planning their Tera III platform upgrade and new engagement advancing through our sales process, and these multiyear projects are expected to provide good revenue visibility into 2027 and beyond. During the second quarter, we presented and met customers at a number of key industry conferences. This included DTW in Copenhagen, FutureNetworld in London, Interop in Tokyo, NetworkX America in Dallas and Coms Day in Sydney. Feedback was very positive with customers and prospects continue to respond well to our converged cybersecurity and network intelligence positioning. Events like these continue to build our pipeline, and it is clear that our cybersecurity first strategy resonates well with the operators globally. At the end of the second quarter, our Board of Director approved a share purchase program of up to $40 million. This reflects our confidence in Allot's strategy and financial strength. With more than $100 million in cash and no debt, we are well positioned to increase value to shareholders, while continuing to invest in the long-term growth of the business. In summary, we are very pleased with our second quarter performance, our fourth consecutive quarter of solid improvement with accelerating growth, continued momentum in SECaaS, standout performance in North America and further gains in margin, profitability and cash flow. As we are performing ahead of our expectations, we are raising and narrowing our 2026 revenue guidance to between $115 million and $118 million from the previous range of $130 million to $170 million with ongoing improvement in profitability. This is driven by accelerating order momentum from our North American customers, our backlog and the continued high growth of SECaaS. Allot is in its strongest position in over a decade, and it is well positioned to build on its profitable cash generation recurring revenue-led growth in the quarters and years ahead. And now I would like to hand it over to our CFO, Liat Nahum, for the financial summary. Liat, please go ahead. Liat Nahum: Thanks, Eyal. We reported revenue of $27.7 million in the quarter, up 15% year-over-year. Revenue from our growth engine, Security-as-a-Service were $9.4 million in the quarter, up 47% year-over-year, comprising 34% of our total revenue. Our Security-as-a-Service annual recurring revenue as of June 30, 2026, were $36.1 million, up 44% year-over-year. Deferred revenue, which includes recurring maintenance and support continued to grow both year-over-year and quarter-over-quarter, increasing the strong visibility we have into remaining 2026 and 2027 revenue. 67% of our overall revenue this quarter was recurring in nature. I will now discuss the non-GAAP financial measure. For all our financial results, including the GAAP financial measure and the other various breakdowns of our revenue, please refer to the table in our results press release. Our non-GAAP gross margin in the quarter was 71.8% compared with 73.4% in the second quarter of last year. The year-over-year decline mainly reflect the product mix in the quarter. That said, gross margin remained strong and consistent with our expectation of around 70% for 2026. Non-GAAP operating expense for the quarter was $17.2 million compared with $16.4 million in the second quarter of last year. The increase reflects our continued investment in sales and marketing to support our pipeline build. General and administrative expenses in the quarter increased compared with the second quarter of last year, mainly due to onetime costs associated with the modification of one of our office lease agreement following change we made in this office. While making this selective investment in sales and marketing, we remain disciplined and operationally efficient with operating expenses as a percentage of revenue declining to 62% from 68% a year ago. We reported non-GAAP operating income of $2.7 million with an operating margin of 9.9% compared with a non-GAAP operating income of $1.2 million or an operating margin of 5% in the second quarter of last year. Allot has 501 full-time employees as of June 30, 2026. In term of non-GAAP net profit, we reported $4.6 million in the quarter or a profit of $0.09 per diluted share compared with a non-GAAP net income of $1.5 million or a profit of $0.03 per diluted share in the second quarter of last year. On a GAAP basis, net income for the quarter was $2.6 million or $0.05 per diluted share compared with a net loss of $1.7 million or a loss of $0.04 per diluted share in the second quarter of last year. GAAP net income for the quarter includes a onetime $1.2 million financial gain related to our office lease modification, reflecting the remeasurement of our lease liability. We do not expect this to reoccur. We generated particularly strong operating cash flow of $8.5 million in the second quarter compared with $4 million in the second quarter of last year, reflecting robust profitability and strong cash collection. On June 23rd, our Board of Directors approved a share repurchase program of up to $40 million, which we will execute in line with market conditions. Repurchase may be made at management discretion in the open market. The timing and the amount of the repurchase will depend on market conditions, share price, liquidity and other factors. According to the company regulation in Israel, we are obliged to give 30 days notice during which any creditor may object to the buyback. The 30 days has now passed, and there were no objections. Allot has a robust balance sheet with no debt. Cash and cash equivalent, bank deposit, restricted deposit and investment as of June 30, 2026, totaled $107 million versus $88 million as of December 31, 2025. Looking ahead to the rest of 2026. Given our performance in the first half of the year and the strength of our backlog, as Eyal mentioned, we are raising our full year 2026 revenue guidance to between $115 million to $118 million. For the full year, we expect Security-as-a-Service revenue growth of 40% or more. Our gross margin expectation for the full year remains in the range of 70%, with a specific gross margin in any given quarter depends on our product mix. On the operating expense side, we expect to continue at a similar run rate to the current quarter, excluding the onetime expense. Overall, we continue to expect profitability improvement over the coming quarters of 2026. That ends my summary. Eyal and I are now happy to take your question. Operator: [Operator Instructions] The first question is from Shaul Eyal from TD Cowen. Shaul Eyal: Congrats on yet another very solid set of results and guidance. Liat, actually, I want to start with you and ask about operating cash flow, still more than doubling year-over-year this quarter, but slightly below last quarter, which, if I recall correctly, had some cash advancement. So, just asking if there are any unusual items this quarter we should be mindful of? And I have a follow-up. Liat Nahum: Yes. So, as we shared last quarter, we had a very strong operating cash flow in Q1 related to the major deal that we reported a year ago, and we started collecting. And last quarter, indeed, it was a one-time event. We continue to see a very positive momentum in our cash flow. We finished the quarter at $8.5 million. And I think that this represents also our business model and our, let's say, future expectations around the deals that we are signing. Overall, no major onetime event this quarter around the operating cash flow, just continue the momentum around our business model of the Security-as-a-Service, which is generating a very good cash flow. Shaul Eyal: Understood. Understood. Eyal or Liat, I know you don't disclose backlog or RPO metrics on a quarterly basis. But given your improved profitability and visibility, what kind of qualitative commentary can you offer us as we think about backlog or RPO? Is it fair to assume it's pretty much at all-time highs right now? Eyal Harari: So, we reported in our yearly report RPO and as you could see, I believe, end of March, it is really in a very high level of backlog. We are going to issue media reports as we do every year, and the KPI will be available there. Overall, our performance and booking is strong and following the announcements we made in the last 12 months, it's fairly assume that this is -- continues to be very high. Operator: The next question is from Matt Calitri from Needham. Matthew Calitri: This is Matt Calitri over at Needham. Is there any more color you can provide on the strength you saw in North America? Maybe just anything on like how much of the strength you would attribute to product versus SECaaS? And then where are you getting the confidence that this is a sustainable long-term opportunity? Eyal Harari: Thank you, Matt. As we commented on the prepared remarks, we see strength both on the SECaaS and the smart product line. The SECaaS is obviously more recurring and consistent as a quarter-over-quarter subscription fees and therefore, more sustainable and predictable. But as we noted this quarter, we had also very strong smart product sales, which increased the share of North America in the region. Product sales are obviously nonrecurring. And therefore, it's not every quarter is going to be the same. But we do continue to invest in the region as we see this as strategic region to support our long-term growth. So, we are very pleased with our performance with both product lines. And specific to this quarter, the strength came from the -- the extra strength came from the smart product line on top of the large contribution to the SECaaS. Matthew Calitri: Got it. That's clear. Are you able to dive into it and all like was a lot of the strength associated with the top 10 customer? Or what drove the large increase in top 10 customers as a percentage of revenue in the quarter? Eyal Harari: Yes. We have some large deals. And as noted, on the product side, we see a demand for the Tera III platform. Tera III platform is sizable deals. Usually, it's 7-digit opportunities. And we had a few of them in the last few quarters that we announced, and they are now translating into revenue. And therefore, it's -- on the quarterly level, it's increased the share of those top customers. Usually, the Tera III is purchased by the larger carriers because it's high-capacity high-end platform. And on a quarterly basis, it's usually get them into the top 10 accounts. We still see that the company is very healthy with relatively low concentration. As of last year, we didn't have any 10% account, and we continue to see demand coming from all regions and from multiple accounts. Matthew Calitri: Great. Awesome. And then maybe just one more on those other regions. So, revenue in EMEA and APAC actually declined sequentially. What do you see there during the quarter? And how did that compare to expectation? Eyal Harari: So as noted, the fluctuations are usually around the product side that is depends when the revenue land because we have deals that are in the multimillion dollar range. Therefore, it depends on the timing of the exact revenue recognition. We -- this is very normal for Allot, and this was always the case, and this is part of the plan. And we have and expect to see different balance between regions between quarters, depends on the specific timing of the larger deals that we recognize. Operator: The next question is from Nehal Chokshi from Northland. Nehal Chokshi: Sorry, I had myself on mute there. Congrats on another strong quarter. Two questions, if I may. First one is current portion of deferred revenue is up $7.5 million Q-over-Q, which is on top of another $13.4 million from Q1. So, the driver of these big increases presumably is Tera product revenue and associated maintenance. Is that correct? Liat Nahum: Yes. So, as you mentioned, indeed, Q2 versus Q1, our deferred revenue increased. And if you look at the entire 6 months, also, you see the big increase in our deferred revenue. Deferred revenue usually for us represents those product deals that have not yet been recognized. As we shared last quarter, we had a large deferred revenue related to the big deal that we announced last year. And in addition, deferred revenue represents the support and the maintenance recurring revenue. Overall, for us, it's a very good positive sign because when we look at our deferred revenue growing quarter-over-quarter, it gives us a very good visibility for the remaining of 2026 and 2027. Nehal Chokshi: So, given that this is deferred revenue, you expect to roll off, obviously, within the next 12 months. But can you give us a sense within which of the quarters in the next 12 months we can expect this to roll off in the income statement? Liat Nahum: So, it really depends if it's product, as Eyal mentioned, product can fluctuate between quarters. But if you look at our support and maintenance, this is more or less on the same run rate. As you can see, we have short-term deferred revenue, but we have also long-term deferred revenue. So short-term deferred revenue, if you look -- should be recognized in the next 12 months. And then we have additional $7.5 million of long-term deferred revenue, which will materialize only starting in the second half of 2027. Nehal Chokshi: Okay. All right. And then in order to hit the guidance SECaaS ARR growth of at least 40%, incremental SECaaS ARR for 2H '26 will need to be $7 million. How should we think about the sequencing of that incremental SECaaS ARR in Q3 and Q4? Eyal Harari: So, it's very hard to predict the exact number, but you could see from the past performance, the run rate is relatively in a similar level, and it's quite stable. We are always relied on the performance of our partners on the CSPs that are marketing the service and depends on their marketing campaigns and marketing activities, this could go a bit faster or slower in a specific quarter. But overall, on the full year, we see that we are in a quite sustainable growth rate. Nehal Chokshi: Okay. And just to be clear, this does imply a step-up in the SECaaS ARR in 2H '26 relative to 1H '26. What do you expect to be the driver of that step-up? Eyal Harari: So, ARR is driven by 4 vector of growth, as we always mentioned. The first and most short term is additional customers that are onboarding to the SECaaS service with our existing customers that already market the service. The second one, as we announced this quarter, it's about existing partners that add additional solutions either into new network domains, like one customer that we used to work with them only on consumer, and now they are expanding it into the SMB segment or customers that already offer to a segment like the SMB and now add another application like the identity test monitoring, which create an accelerated growth potential. Last is, of course, new partnerships, new logos. We had one of those today this quarter as well. In this quarter, it was an existing smart customer that is now offering -- going to start offering the SECaaS. And those 4 vectors are driving growth over time. In the short, more quarter-by-quarter changes, it's really relied on how many end customers are onboarding to the services already available in the market. And this is what we need to -- our partner to execute well in order to achieve growth. Operator: The next question is from Jonathan Ruykhaver from Cantor. Jonathan Ruykhaver: So, Eyal, I wanted to dig down a little bit more in terms of the Tera III adoption you're seeing and the correlation to the opportunity around the Smart platform. What I understand is that some of those carriers that are on an older version of the hardware infrastructure needs to migrate to Tera III first. So, maybe you can talk to that dynamic as it relates to demand you see for the Smart platform. Eyal Harari: Sure. So, the new Tera III platform that we launched during 2025 is high-end capacity that can reach up to 3 terabit of capacity, but it also provide high-density communication like 400-gig links and many 100-gig ports for traffic management. We see a demand both from new customers that are now going into RFPs and definitely also from existing customers that's using our previous generations that the networks are growing. They are refreshing their data centers, their sites to support more capacity. And this creates a demand for expansion. I would note that these Tera 3, as mentioned before, is for the -- typically for the larger opportunities, which usually ends with 7-digit deals. And therefore, we are talking about relatively, I would say, a small number of opportunities, but with very large impact. The larger amount of our customers are not requiring many terabits in different site, obviously, and they can use different products that we have that are designed for the, let's say, the mid-market and the smaller carriers. So, we do see a very good feedback from customers. They really love the product. They like the ability to see both network intelligence and cybersecurity use case over the same platform. They really like the future-proof of this architecture that is build cloud native to allow us to support and scale capacity. And this is what creates the demand. I think in the last 12 months, we announced about half a dozen of Tera III deals, and this is what was building our backlog, and we still have many more opportunities like that in our pipeline. And we expect this refresh cycle to continue in the next few years as different carriers are upgrading and need this capacity earlier, but some probably will be those 400-gig capabilities and so on a bit later down the road. Jonathan Ruykhaver: Eyal, that's very helpful. How important is the integration of some of the SECaaS offerings into that platform to competitiveness in winning deals? Is that something you're seeing attach rates for? Or is it mostly the high-performance requirement that's driving that growth? Eyal Harari: We believe it's both, but the beauty about the ability to run the SECaaS service on this platform is that discrete change that from being the investment in the network infrastructure that is always important, but budgets are tight to a product that can help you to monetize and make money. So, what our customer really love is that now multiple organizations from the [ CTO ] organization, operation, the CISO, but now also the product can share the infrastructure investment. And therefore, in a very CapEx tight environment for the CSP that they are under pressure to improve profitability and show ways to maintain and hopefully increase their ARPU for their customers. This is a very appealing proposition. So, it's really position us different when we are competing with just network infrastructure providers. And I believe this is a great value proposition for our customers. And this is why we are seeing success in this area. Operator: The next question is from Jonathan Ho from William Blair. Jonathan Ho: I just wanted to maybe start with your identity services. Can you talk a little bit about sort of the initial reception from customers and pipeline build opportunity around some of these SECaaS services? And what does that look like from an uplift standpoint? Eyal Harari: So, Jonathan, we just started to market this in the market, and we are seeing the demand coming from 2 direction. One is existing customers that are looking to add more value to their customers. We see some customers that are looking on this as an opportunity to increase their monthly fee, but they want to show more value to their customers. In some other cases, they see it as a need because of competitive pressure, maybe their operator -- competitor operator in the country is already offering a similar service. And therefore, they need to add it to their cybersecurity package they offer. So, it really depends on the specific market conditions. We don't see it as a core offering for our product. We still focus on the network security. This is where our strength, but I think the beauty of this application is the ability to complement and provide 360 degrees protection for our customers. In addition, with new customers now that we are going into new opportunities, we have a more robust product offering. Not all of the solutions for cybersecurity can offer you like one platform with all the cyber protections you need. And we believe that eventually people are looking for simplicity. And this is why we continue to add more and more applications into the portfolio. So, I wouldn't view it as a one application that is going to be a game changer, but more of a holistic view that the platform is being able to provide multiple additional values and really comprehensive protection is what's going to create the biggest effect over time. Jonathan Ho: Got it. Got it. And then maybe a little bit more color on the zero rating fraud prevention that you talked about. How big of a market opportunity could that be? And is this similar in terms of maybe improving the competitiveness of your product, but not necessarily a stand-alone market on its own? I just want to get a sense for how you think about that zero rating product as well. Eyal Harari: Yes. The Zero product is not a market by its own. It's more of another use case on the Tera III platform and network intelligence. People that implement our smart product lines, they want to see how they can better manage and optimize the network. And as mentioned in previous question, this is a cost. This is an infrastructure investment to improve quality, manage platform mix and so on. Identifying use cases like that, that actually create real monetization for the operator because we unblock even revenue leakage. And by that, we can recover them data packages that they are being ripped off and they can recover and get more money. This is more in an indirect way for them to justify the reason for the platform. So, this is the way we view it, and this is the way we position it, and it's mainly relevant for customers in regions that fraud is popular. We know that in some regions, you can just get all you can in package like in North America. In these cases, it's people spend less to do those fraud. But in some regions, more in developing countries, this is a big issue because they still pay per gigabit, and we are helping our customers to avoid the revenue leakage. Jonathan Ho: That makes sense. Just one last one for me. How do you think about your capital allocation priorities? I'm just wondering why the share buyback now? And how do you sort of balance returning value to customers with continued investments? Eyal Harari: So, we reason and timing is really because of the strength we see in the business. We see that we have 4 consecutive quarters of double-digit growth. We see that we are cash flow positive, I believe, for 7 quarters, if I'm not wrong. And we see that we have enough cash today to have the balance both on investing in our product growth and investing in organic growth, have the option to explore inorganic growth opportunities, as well as we wanted to keep the optionality to have buyback in case we see the market terms are suitable. So, I think this is, in general, a vote of confidence of the Board in the company's strength, and it shows our maturity. And like many other companies, this is, I would say, normal course of business to have a buyback plan in place, so we can leverage in case of the relevant market conditions allow that. Operator: This concludes Allot's Second Quarter 2026 Conference Call. Thank you for your participation. You may go ahead and disconnect. 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This article first appeared on GuruFocus. Revenue: $27.7 million, up 15% year-over-year. Security as a Service Revenue: $9.4 million, up 47% year-over-year, comprising 34% of total revenue. Security as a Service ARR: $36.1 million as of June 30, 2026, up 44% year-over-year. Recurring Revenue: Represented 67% of total revenue in the quarter. Gross Margin (non-GAAP): 71.8%, compared with 73.4% in the second quarter of last year. Operating Expenses (non-GAAP): $17.2 million, compared with $16.4 million in the second quarter of last year. Operating Income (non-GAAP): $2.7 million, with an operating margin of 9.9%, compared with $1.2 million or 5% margin in the prior-year quarter. Net Income (non-GAAP): $4.6 million, or $0.09 per diluted share, compared with $1.5 million or $0.03 per diluted share in the second quarter of last year. Net Income (GAAP): $2.6 million, or $0.05 per diluted share, compared with a net loss of $1.7 million or $0.04 loss per diluted share in the prior-year quarter. Operating Cash Flow: $8.5 million in the second quarter, compared with $4 million in the second quarter of last year. Cash and Investments: Totaled $107 million as of June 30, 2026, versus $88 million as of December 31, 2025. 2026 Revenue Guidance: Raised to between $115 million and $118 million. Warning! GuruFocus has detected 3 Warning Sign with ALLT. Is ALLT fairly valued? Test your thesis with our free DCF calculator. Release Date: August 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Allot Ltd (NASDAQ:ALLT) reported its fourth consecutive quarter of double-digit year-over-year revenue growth, with Q2 2026 revenue up 15% to $27.7 million. Cybersecurity as a Service (CCaaS) revenue grew 47% year-over-year, and CCaaS ARR increased 44% to $36.1 million, driving recurring revenue to 67% of total revenue. North America emerged as a standout region, contributing 31% of revenue (up from 17% a year ago), driven by strong Tier 3 platform sales and the major USC customer. Non-GAAP operating income more than doubled to $2.7 million (9.9% margin), and non-GAAP net income rose to $4.6 million ($0.09 per diluted share), up from $1.5 million a year ago. Operating cash flow was robust at $8.5 million in Q2, and the company raised its full-year 2026 revenue guidance to $115-$118 million, reflecting strong backlog and demand. Non-GAAP gross margin declined to 71.8% from 73.4% in the prior year quarter, due to product mix, though still within the expected ~70% range. Revenue in EMEA and APAC declined sequentially, reflecting timing of large product deals, which can cause quarterly volatility. Operating expenses increased to $17.2 million from $16.4 million, partly due to one-time costs from an office lease modification and continued investment in sales and marketing. The company's growth is increasingly reliant on a few large Tier 3 deals, which can lead to lumpy revenue recognition and concentration risk in certain quarters. CCaaS ARR growth requires a step-up in the second half of 2026 to meet the 40%+ full-year target, which depends on partner execution and customer onboarding. Q: Can you provide more color on the strength seen in North America, specifically how much is attributed to product versus CCaaS, and where does the confidence come from that this is a sustainable long-term opportunity?A: Eyal Harari, CEO, explained that strength was seen in both CCaaS and the smart product line. CCaaS is more recurring and predictable, while the quarter's extra strength came from smart product sales, which are non-recurring. The company continues to invest in North America as a strategic region for long-term growth, with strong execution driving a solid increase in sales and backlog. Q: Given the improved profitability and visibility, can you offer qualitative commentary on backlog or RPO, and is it fair to assume it's at all-time highs?A: Eyal Harari, CEO, confirmed that the company's performance and booking are strong. Following announcements made in the last 12 months, it's fair to assume the backlog continues to be at a very high level. The company will issue its annual report with detailed KPIs, including RPO, as it does every year. Q: The current portion of deferred revenue is up to $7.5 million Q-over-Q, on top of another $13.4 million from Q1. Is this driven by Terra product revenue and associated maintenance, and in which quarters will this roll off?A: Liat Nahum, CFO, confirmed that deferred revenue represents product deals not yet recognized and support/maintenance recurring revenue. The increase provides good visibility for the remainder of 2026 and 2027. Short-term deferred revenue will be recognized in the next 12 months, while an additional $7.5 million of long-term deferred revenue will materialize starting in the second half of 2027. Q: To hit the CCaaS ARR growth of at least 40%, incremental ARR for 2H26 will need to be $7 million. How should we think about the sequencing of that incremental ARR in Q3 and Q4?A: Liat Nahum, CFO, noted that while it's hard to predict exact numbers, the run rate is relatively stable. Growth is driven by four vectors: additional customers onboarding with existing partners, existing partners adding new solutions or expanding into new segments, and new partnerships/logos. Quarter-by-quarter changes depend on how many end customers onboard to services already available in the market. Q: Can you dig deeper into Terra3 adoption and the correlation to the smart platform opportunity, particularly regarding carriers on older hardware needing to migrate first?A: Eyal Harari, CEO, explained that the new Tier 3 platform, launched during 2025, offers high-end capacity up to three terabits. Demand comes from both new customers in RFPs and existing customers upgrading as their networks grow. These are typically larger, seven-digit deals with a small number of opportunities but very large impact. The company announced about half a dozen Tier 3 deals in the last 12 months, building backlog, and expects this refresh cycle to continue over the next few years. Q: How important is the integration of CCaaS offerings into the Terra3 platform for competitiveness, and is it the high-performance requirement or the integration driving growth?A: Eyal Harari, CEO, stated that both are important. The ability to run security services on the platform transforms it from a network infrastructure investment into a product that helps monetize and generate revenue. This appeals to CSPs under CapEx pressure, as multiple organizations (CTO, operations, CISO, product) can share the infrastructure investment, positioning Allot differently from competitors offering just network infrastructure. Q: Can you talk about the initial reception and pipeline build opportunity around the new identity monitoring service, and what does the uplift look like?A: Eyal Harari, CEO, said the service is just starting to be marketed, with demand coming from existing customers looking to add value or respond to competitive pressure, as well as new customers. It's not viewed as a core offering but complements the network security portfolio, providing 360-degree protection. The platform's ability to provide multiple additional values and comprehensive protection will create the biggest effect over time. Q: How big of a market opportunity could the zero-rating fraud prevention be, and is it a standalone market or does it improve product competitiveness?A: Eyal Harari, CEO, clarified that the zero-rating fraud product is not a standalone market but another use case on the Terra3 platform. It helps operators identify revenue leakage and recover lost revenue, indirectly justifying the platform investment. It's mainly relevant in regions where fraud is popular, particularly developing countries where users pay per gigabit, unlike regions with all-you-can-eat packages like North America. Q: How do you think about capital allocation priorities, and why initiate the share buyback now?A: Eyal Harari, CEO, explained the timing reflects the company's strength: four consecutive quarters of double-digit growth, seven quarters of positive cash flow, and a robust balance sheet with over $100 million in cash and no debt. The buyback provides optionality to return value to shareholders while continuing to invest in organic and inorganic growth opportunities, representing a vote of confidence from the board. Q: Were there any unusual items in operating cash flow this quarter, given it more than doubled year-over-year but was slightly below last quarter?A: Liat Nahum, CFO, noted that Q1's strong cash flow was related to a one-time collection from a major deal reported a year ago. This quarter had no major one-time events, with the $8.5 million in operating cash flow reflecting the positive momentum of the business model, particularly the Security as a Service segment, which generates very good cash flow. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved fourth consecutive quarter of double-digit growth, driven by strong execution in North America and continued scaling of the Cybersecurity as a Service (SECaaS) business. North America revenue share increased to 31% from 17% year-over-year, fueled by high-capacity Tera III platform sales and steady demand for smart network intelligence products. SECaaS revenue grew 47% year-over-year, now accounting for over one-third of total revenue and significantly improving long-term predictability through recurring subscription fees. Successfully executed a 'land and expand' strategy in EMEA, securing four new SECaaS deals including the first sale of a new identity monitoring service to an existing customer. The Tera III platform is driving a multi-year refresh cycle as Tier 1 operators consolidate network visibility, traffic management, and cybersecurity onto a single high-capacity gateway. Operational efficiency improved as operating expenses as a percentage of revenue declined to 62% from 68%, despite increased investments in sales and marketing. Raised 2026 revenue guidance to $115 million–$118 million based on accelerating order momentum in North America and a robust existing backlog. Expect SECaaS revenue growth of 40% or more for the full year 2026, supported by four distinct growth vectors: user onboarding, segment expansion, new applications, and new logos. Anticipate continued profitability and cash flow improvements through the remainder of 2026, maintaining a target gross margin of approximately 70%. Visibility into 2027 is bolstered by long-term deferred revenue and multi-year Tera III upgrade projects that are currently advancing through the sales pipeline. Capital allocation strategy now includes a $40 million share repurchase program, reflecting confidence in the company's $107 million cash position and debt-free balance sheet. Recorded a one-time $1.2 million GAAP financial gain related to an office lease modification, which management explicitly stated is not expected to recur. Gross margin of 71.8% reflected a slight year-over-year decline due to product mix, specifically the higher concentration of hardware-heavy smart product sales in the quarter. Operating cash flow of $8.5 million was driven by robust profitability and strong collections, though it normalized following a one-time cash advancement in the prior quarter. Identified a significant opportunity in 'zero rating' fraud mitigation, with a case study showing an 87% reduction in fraudulent traffic for a Tier 1 operator. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management attributed the regional surge to both predictable SECaaS subscriptions and large, non-recurring Tera III platform sales. While product sales fluctuate quarterly, the high-capacity requirements of 5G and fiber upgrades provide a sustainable long-term pipeline for the Tera III platform. Growth is expected to step up due to existing partners expanding services into new domains (like SMB) and adding new applications like identity theft monitoring. Management noted that while the run rate is stable, timing depends on the execution of marketing campaigns by communication service provider (CSP) partners. The program was initiated due to seven consecutive quarters of positive cash flow and a strong balance sheet that allows for simultaneous investment in organic growth and M&A. Management views the buyback as a 'vote of confidence' and a tool to be used opportunistically based on market conditions.

Interested in Allot Ltd.? Here are five stocks we like better. Revenue rose 15% year over year to $27.7 million, marking Allot’s fourth consecutive quarter of double-digit growth. SECaaS revenue increased 47% to $9.4 million, while recurring revenue represented 67% of total quarterly revenue. Profitability and cash generation improved significantly: non-GAAP operating margin reached 9.9%, non-GAAP net income rose to $4.6 million, and operating cash flow increased to $8.5 million. Allot ended the quarter with $107 million in cash and no debt. Management raised its 2026 revenue outlook to $115 million–$118 million and expects SECaaS growth of at least 40%. The board also approved a share repurchase program of up to $40 million. Falling Fast, Rising Soon? 3 Stocks With Upside Ahead Allot (NASDAQ:ALLT) reported second-quarter 2026 revenue growth, improved profitability and stronger operating cash flow, supported by continued expansion of its Security-as-a-Service, or SECaaS, business and a sharp increase in North American sales. Revenue for the quarter totaled $27.7 million, up 15% from a year earlier. CEO Eyal Harari said the company recorded its fourth consecutive quarter of double-digit year-over-year growth and that growth had accelerated in recent quarters. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat Top 3 High-Momentum Companies Analysts Are Still Bullish On “Our business is executing well and performing ahead of our expectations,” Harari said, pointing to order momentum in North America, backlog and growth in SECaaS. SECaaS revenue rose 47% year over year to $9.4 million, representing 34% of total quarterly revenue. SECaaS annual recurring revenue was $36.1 million as of June 30, up 44% from the prior year. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be 4 Golden Crosses With Double-Digit Upside Ahead CFO Liat Nahum said 67% of Allot’s total revenue in the quarter was recurring in nature. Deferred revenue also increased both sequentially and year over year, adding visibility into revenue for the remainder of 2026 and into 2027, she said. During the quarter, Allot secured four SECaaS deals, all in the Europe, Middle East and Africa region. The wins included an upsell involving the company’s first sale of an identity monitoring service to an existing European customer, an expansion into the small- and medium-sized business segment with another European customer, a HomeSecure deployment in an additional country for a global telecommunications group, and a new African SECaaS customer that already used Allot Smart products. → First Solar’s Profit Engine Faces a New Policy Test in Washington Harari said the identity monitoring offering is intended to complement Allot’s network-security products by monitoring for compromised credentials and other digital identity information. He characterized the service as an addition to the company’s broader cybersecurity platform rather than a standalone “game changer.” The company expects the newly announced SECaaS wins to contribute to revenue growth in 2027. North America accounted for 31% of quarterly revenue, compared with 17% in the second quarter of 2025 and 14% in the prior quarter. Harari attributed the increase to strong product sales, including demand for the company’s Tera III platform, as well as continued SECaaS demand from a major U.S. customer. Allot Smart product sales provided the additional strength in North America during the quarter, management said. Tera III is the company’s high-capacity multiservice gateway platform, designed to support network visibility, traffic management and cybersecurity services. Harari said Tera III opportunities are generally seven-digit deals and are typically pursued by larger carriers. He said Allot had announced about half a dozen Tera III deals over the past 12 months, which have contributed to backlog and revenue recognition. The company also reported an additional Tera III upgrade win for a new customer site expansion, which it said is helping build its 2027 backlog. Management said the platform’s ability to support network intelligence and cybersecurity workloads on the same infrastructure is a key part of its value proposition for communications service providers. Allot also cited a case study with a Tier 1 operator in which its zero-rating fraud detection and mitigation service reduced fraudulent traffic by 87%. Harari said the fraud-prevention capability is primarily another use case for the Allot Smart and Tera III platform rather than a separate market. It is particularly relevant in regions where consumers pay per gigabyte and may seek to exploit zero-rated application offers, he said. On a non-GAAP basis, Allot reported gross margin of 71.8%, compared with 73.4% a year earlier. Nahum said the decline reflected product mix, while the company maintained its expectation for approximately 70% gross margin for the full year. Non-GAAP operating income was $2.7 million, compared with $1.2 million a year earlier. Non-GAAP operating margin rose to 9.9% from 5%. Non-GAAP net income was $4.6 million, or $0.09 per diluted share, compared with $1.5 million, or $0.03 per diluted share. GAAP net income was $2.6 million, or $0.05 per diluted share, compared with a GAAP net loss of $1.7 million, or $0.04 per diluted share. Operating cash flow was $8.5 million, compared with $4 million in the prior-year quarter. GAAP net income included a one-time $1.2 million financial gain related to the modification of an office lease agreement, which Nahum said is not expected to recur. Non-GAAP operating expenses increased to $17.2 million from $16.4 million, reflecting sales and marketing investment and one-time general and administrative costs associated with the lease modification. Operating expenses as a percentage of revenue declined to 62% from 68%. Allot ended the quarter with $107 million in cash, cash equivalents, deposits and investments, up from $88 million at the end of 2025, and no debt. The company had 501 full-time employees as of June 30. Management raised and narrowed its 2026 revenue outlook to a range of $115 million to $118 million, from a previous range of $113 million to $117 million. The company expects SECaaS revenue to grow by 40% or more during 2026 and said it expects continued profitability improvement through the year. Allot’s board also approved a share repurchase program of up to $40 million on June 23. Nahum said the required 30-day creditor-objection period under Israeli regulations had passed without objections. Repurchases may be made in the open market at management’s discretion, depending on market conditions, share price, liquidity and other factors. Allot Ltd. is a provider of network intelligence and security solutions designed for service providers and enterprises worldwide. The company delivers software and cloud-based services that enable customers to gain real-time visibility into network traffic, enforce security policies and optimize bandwidth usage. Its platforms support a wide range of applications, from DDoS protection and threat prevention to subscriber experience management and network analytics. Allot's product portfolio includes managed solutions for mobile and fixed-line operators, as well as cloud-native services that can be deployed across private, public and hybrid environments. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Allot Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Raising 2026 revenue guidance to $115–$118 million HOD HASHARON, Israel, Aug. 12, 2026 /PRNewswire/ -- Allot Ltd. (NASDAQ: ALLT) (TASE: ALLT), a leading global provider of innovative Security-as-a-Service (SECaaS) and network intelligence solutions for communications service providers and enterprises, today announced its unaudited financial results for the second quarter of 2026. Financial Highlights for the Second Quarter of 2026 Strong revenue growth to $27.7 million, up 15% year-over-year; Security-as-a-Service (SECaaS) revenues of $9.4 million, increasing 47% year-over-year; June 2026 SECaaS ARR* of $36.1 million, up 44% year-over-year; GAAP operating income of $1.1 million, compared with a GAAP operating loss of $0.4 million in the second quarter of 2025; Non-GAAP operating income of $2.7 million, a significant increase compared with $1.2 million in the second quarter of 2025; Operating cash flow of $8.5 million, more than double compared with $4.0 million in the second quarter of 2025; On June 23, 2026, the Board of Directors approved a share repurchase program of up to $40 million. Management Comment Eyal Harari, CEO of Allot, commented, "We are excited to report our fourth consecutive quarter of double-digit growth. I am particularly encouraged by the revenue strength of the North American region this quarter, as I believe that this region has many opportunities to provide us with sustainable long-term growth." Mr. Harari added, "Following our solid execution and visibility for the remainder of the year, we are raising our 2026 revenue guidance to between $115 million and $118 million, with continued improvement in profitability. We expect our SECaaS revenue growth for 2026 to be 40% or more. We see many growth opportunities ahead of us and with over $100 million in cash, we believe we are well positioned to capitalize on these opportunities while maximizing shareholder value." Mr. Harari concluded, "At the end of the second quarter, our Board of Directors approved a $40 million share repurchase program, reflecting our confidence in Allot's strategy and financial strength." Second Quarter 2026 Financial Results Summary Total revenues for the second quarter of 2026 were $27.7 million, a 15% increase year-over-year compared with $24.1 million in the second quarter of 2025. Gross profit on a GAAP basis for the second quarter of 2026 was $19.8 million (gross margin of 71.3%), a 14% increase compared with $17.3 million (gross margin of 72.1%) in the second quarter of 2025. Gross profit on a non-GAAP basis for the second quarter of 2026 was $19.9 million (gross margin of 71.8%), a 13% increase compared with $17.6 million (gross margin of 73.4%) in the second quarter of 2025. Operating income on a GAAP basis for the second quarter of 2026 was $1.1 million (operating margin of 4.0%), compared with an operating loss of $0.4 million in the second quarter of 2025. Operating income on a non-GAAP basis for the second quarter of 2026 was $2.7 million (operating margin of 9.9%), compared with $1.2 million (operating margin of 5.0%) in the second quarter of 2025. Net income on a GAAP basis for the second quarter of 2026 was $2.6 million, or $0.05 per diluted share, compared with a net loss of $1.7 million, or $0.04 per diluted share, in the second quarter of 2025. Net income on a non-GAAP basis for the second quarter of 2026 was $4.6 million, or $0.09 per diluted share, compared with $1.5 million, or $0.03 per diluted share, in the second quarter of 2025. Operating cash flow generated in the quarter was $8.5 million, compared with $4.0 million in the second quarter of 2025. Cash and cash equivalents, bank deposits, restricted deposits and investments as of June 30, 2026, totaled $107 million, compared with $88 million as of December 31, 2025. Conference Call & Webcast: The Allot management team will host a conference call to discuss its second quarter 2026 earnings results today, August 12, 2026, at 8:30 am ET, 1:30 pm UK, 3:30 pm Israel time. To access the conference call, please dial one of the following numbers: US: 1-888-668-9141, UK: 0-800-917-5108, Israel: +972-3-918-0644 A live webcast and, following the end of the call, an archive of the conference call, will be accessible on the Allot website at: https://investors.allot.com/ About Allot Allot Ltd. (NASDAQ: ALLT, TASE: ALLT) is a leading provider of innovative converged cybersecurity solutions and network intelligence offerings for service providers and enterprises worldwide. Allot enhances value to its customers' customers through its solutions, which are deployed globally for network-native cybersecurity services, network and application analytics, traffic control and shaping, and more. Allot's multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1,000 enterprises. Allot's industry-leading network-native security-as-a-service solution is already used by many millions of subscribers globally. For more information, visit www.allot.com Performance Metrics * SECaaS ARR – measures the current annual recurring SECaaS revenues, calculated as estimated SECaaS revenues for the month of June 2026, multiplied by 12. GAAP to Non-GAAP Reconciliation: The Company presents non–GAAP financial measures that adjust GAAP results to exclude items that management considers not reflective of the Company's ongoing operational performance. Non-GAAP gross profit is defined as GAAP gross profit excluding share-based compensation expenses, amortization of intangible assets and acquisition–related expenses. Non-GAAP operating income is defined as GAAP operating income excluding primarily share-based compensation expenses, amortization of intangible assets and acquisition–related expenses. Non-GAAP net income is defined as GAAP net income excluding primarily share-based compensation expenses, amortization of intangible assets, loss from extinguishment, acquisition–related and other non–recurring expenses, financial income or expenses related to exchange rate differences and changes in tax-related items. 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 are presented below. 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 within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance including revenue, profitability growth, long-term growth opportunities, our ability to execute our strategy, capital allocation, share repurchase programs, maximizing shareholder value, and future opportunities, as well as statements that include the words "expect," "intend," "plan," "believe," "project," "forecast," "estimate," "may," "should," "anticipate" and similar statements of a future or forward-looking nature. These forward-looking statements 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: our accounts receivable, including our ability to collect outstanding accounts and assess their collectability on a quarterly basis; our ability to meet expectations with respect to our financial guidance and outlook; 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 third party channel partners for a material portion of our revenues; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F for the fiscal year 2025, filed with the Securities and Exchange Commission as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, you should not rely upon forward-looking statements as predictions of future events. Additionally, the 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. Logo: https://mma.prnewswire.com/media/703889/Allot_Logo.jpg View original content:https://www.prnewswire.com/news-releases/allot-announces-second-quarter-2026-financial-results-302849512.html

Allot Communications (ALLT) came out with quarterly earnings of $0.09 per share, beating the Zacks Consensus Estimate of $0.06 per share. This compares to earnings of $0.03 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +50.00%. A quarter ago, it was expected that this internet protocol services company would post earnings of $0.05 per share when it actually produced earnings of $0.06, delivering a surprise of +20%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Allot Communications, which belongs to the Zacks Internet - Software industry, posted revenues of $27.74 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.8%. This compares to year-ago revenues of $24.05 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Allot Communications shares have lost about 18.4% since the beginning of the year versus the S&P 500's gain of 12.9%. While Allot Communications has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Allot Communications was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.09 on $30.09 million in revenues for the coming quarter and $0.29 on $116.32 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 39% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. SailPoint, Inc. (SAIL), another stock in the same industry, has yet to report results for the quarter ended July 2026. This company is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of +14.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. SailPoint, Inc. 's revenues are expected to be $310.4 million, up 17.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allot Ltd. (ALLT) : Free Stock Analysis Report SailPoint, Inc. (SAIL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Even though Allot Ltd. (NASDAQ:ALLT ) posted strong earnings, investors appeared to be underwhelmed. We did some digging and actually think they are being unnecessarily pessimistic. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. One key financial ratio used to measure how well a company converts its profit to free cash flow (FCF) is the accrual ratio. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. This ratio tells us how much of a company's profit is not backed by free cashflow. As a result, a negative accrual ratio is a positive for the company, and a positive accrual ratio is a negative. While it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future". Over the twelve months to March 2026, Allot recorded an accrual ratio of -0.72. Therefore, its statutory earnings were very significantly less than its free cashflow. Indeed, in the last twelve months it reported free cash flow of US$24m, well over the US$5.98m it reported in profit. Allot shareholders are no doubt pleased that free cash flow improved over the last twelve months. Unfortunately for shareholders, the company has also been issuing new shares, diluting their share of future earnings. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. One essential aspect of assessing earnings quality is to look at how much a company is diluting shareholders. As it happens, Allot issued 23% more new shares over the last year. As a result, its net income is now split between a greater number of shares. To celebrate net income while ignoring dilution is like rejoicing because you have a single slice of a larger pizza, but ignoring the fact that the pizza is now cut into many more slices. You can see a chart of Allot's EPS by clicking here. Three years ago, Allot lost money. Zooming in to the last year, we still can't talk about growth rates coherently, since it made a loss last year. What we do know is that while it's great to see a profit over the last twelve months, that profit would have been better, on a per share basis, if the company hadn't needed to issue shares. So you can see that the dilution has had a fairly significant impact on shareholders. If Allot's EPS can grow over time then that drastically improves the chances of the share price moving in the same direction. However, if its profit increases while its earnings per share stay flat (or even fall) then shareholders might not see much benefit. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow. In conclusion, Allot has a strong cashflow relative to earnings, which indicates good quality earnings, but the dilution means its earnings per share are dropping faster than its profit. Considering all the aforementioned, we'd venture that Allot's profit result is a pretty good guide to its true profitability, albeit a bit on the conservative side. So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of Allot. In this article we've looked at a number of factors that can impair the utility of profit numbers, as a guide to a business. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

This article first appeared on GuruFocus. Release Date: May 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Allot Ltd (NASDAQ:ALLT) reported a 14% year-over-year increase in first-quarter revenues, marking the third consecutive quarter of double-digit growth. The company's Cybersecurity First strategy has been successful, with CCAS ARR growing nearly 60% year-over-year. Recurring revenue now represents 67% of total revenue, providing strong visibility into future quarters. Allot Ltd (NASDAQ:ALLT) generated its strongest-ever quarterly operating cash flow, exceeding $10 million. The company ended the quarter with almost $100 million in cash and no debt, strengthening its balance sheet. The competitive nature of the security services industry poses ongoing challenges. There are risks associated with changing market trends and delays in the launch of services by customers. Operating expenses increased slightly due to investments in sales, marketing, and R&D. The company's growth is heavily reliant on CSP customers' marketing efforts and service adoption. The fluctuation in product revenue due to project maturity and execution milestones can impact quarterly results. Warning! GuruFocus has detected 3 Warning Sign with ALLT. Is ALLT fairly valued? Test your thesis with our free DCF calculator. Q: Can you elaborate on the opportunities you see ahead, particularly regarding your pipeline and the adoption of AI within your customer base? A: Eyal Harari, CEO: We see solid improvement in both SMART and CCAS opportunities. For CCAS, we are expanding efforts to reach more CSPs and build new partnerships, which is leading to increased opportunities. On the SMART side, there's strong demand for our Terra 3 platform from both existing and new customers. Regarding AI, we are focusing on protecting consumers and SMBs from new threats posed by AI tools, as awareness of these risks is increasing. Q: Where do you see the most opportunities for investment in sales and R&D, and how do you balance this with operating leverage? A: Eyal Harari, CEO: Our main R&D focus is on adding more cybersecurity engines to our portfolio, which provides upsell and cross-sell opportunities. Geographically, demand for cybersecurity is maturing in developing markets. We leverage our global presence to build relationships with carriers worldwide. Operational leverage is improved by upselling security solutions to our existing smart customer base, enhancing efficiency and profitability. Q: Is the strong cash flow from operations due to outsized bookings in the March quarter? A: Eyal Harari, CEO: The strong cash flow results from overall profitability expansion and milestone achievements from orders received in 2025. As we progress with project milestones for large customers, we receive repayments, contributing to cash flow. Q: Can you provide more details on the CCAS revenue growth and its drivers? A: Eyal Harari, CEO: CCAS revenue is growing sequentially and is expected to continue linearly over the year. Growth is driven by existing customers' organic growth and new wins within existing and new customers. The majority of revenue growth comes from increased service traction, with upselling and new customers supporting long-term growth. Q: Why not provide formal CCAS ARR guidance, given its strategic importance? A: Eyal Harari, CEO: Our CCAS growth depends on CSP customers' service launches and marketing campaigns. We rely on their success, which becomes our success. As we progress through the year, we gain better visibility into new wins and launches, allowing us to evolve our CCAS growth strategy. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Tuesday, May 12, 2026 at 8 a.m. ET Chief Executive Officer — Eyal Harari Chief Financial Officer — Liat Nahum Moderator — Kenny Green Need a quote from a Motley Fool analyst? Email [email protected] Kenny Green: Good day to all of you, and welcome to Allot's Conference Call to discuss its financial results for the quarter. I would like to thank Allot's management for hosting this conference call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have not received the company's press release, please check the company's website at www.allot.com. With me today on the line are Mr. Eyal Harari, CEO; and Ms. Liat Nahum, CFO. Following Eyal's prepared remarks, we will open the call for the question-and-answer session, both Eyal and Liat will be available to answer those questions. You can all find the highlights of the quarter, including the financial highlights and metrics, including those we typically discuss on the conference call in today's earnings press release. Before we start, I'd like to point out the following safe harbor statement. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of the company. Those statements are early predictions and Allot cannot guarantee that they will, in fact, occur. Allot does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, delays in the launch of services by Allot customers, reduced demand and the competitive nature of the security services industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. Also, the financial results in this call will be presented mainly on a non-GAAP basis. Allot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand Allot's operating performance in quarter. For all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP reconciliation tables. And with that, I would now like to hand the call over to Eyal Harari, CEO of Allot. Eyal, please go ahead. Eyal Harari: Thank you, Kenny. We are pleased to report a very strong start to 2026. Our first quarter revenues were up 14% year-over-year, representing a meaningful acceleration over last year and marking our third consecutive quarter of double-digit year-over-year growth. Our results reflect the continued successful execution of our cybersecurity first strategy, both with SECaaS ARR growing nearly 60% year-over-year in the quarter. SECaaS revenue rose to approximately 1/3 of the total revenues in the quarter, up from approximately 1/5 a year ago. SECaaS growth is driving the continued scaling up of our recurring revenue base, which now represents 67% of total revenue and provide us with strong visibility into the quarters ahead. We clearly have transformed a lot into a profitable growth company. These solid results, combined with the strong visibility gives us increased confidence that we are well positioned to continue our revenue growth trajectory at a mid-teens rate over the coming year. In terms of profitability, we are benefiting from the significant operating leverage inherent in Allot's business model. Improving gross margin, along with significant operating leverage led to substantial improvement in profitability. This operating leverage and enhanced profitability contributed to Allot generating its strongest ever quarterly operating cash flow. Other contributors of this strong cash flow generation of over $10 million in the quarter include the large multimillion dollar Smart projects we have won in the recent quarters as we began to execute on the backlog and the increased contribution from our SECaaS business. This strong cash flow enabled us to end the quarter with almost $100 million in cash and no debt. Further strengthening our increasingly healthy balance sheet. This gives us significant flexibility to continue investing in our long-term business growth. The Board regularly reviews its capital allocation strategy. Our 3 main considerations are investment in organic growth, pursuing strategic compelling acquisitions and returning capital to shareholders. The goal of our capital allocation strategy is to maximize long-term shareholder value. We are very pleased with the continued growth in the SECaaS business. Given the significant long-term potential we continue to see in this market, we have increased our investment in R&D, where we are innovating and bringing new products, services and capabilities to the market. We have also invested in increased sales and marketing efforts where we are expanding our reach further into existing customers and reaching new potential customers. These investments are translating into the strongly growing pipeline we see today. The pipeline expands across all of our regions, and we are gaining more prospects all the time. At the same time, we are supporting our existing customers to successfully market more of the cybersecurity services we power, leading to strong end user adoption while upselling new potential services, which would be attractive to their user base. Our Smart product line remains an important and highly complementary part of the unified cybersecurity first platform. These products are built on decades of Allot innovation and deliver best-in-class network intelligence. We are executing well on the multimillion-dollar projects we have won in the recent quarters, including the deployment and upgrades of our Tera III platform with Tier 1 operators. As a reminder, the Tera III platform is our highly strategic next-generation ultra-high-capacity multiservice gateway, offering deep visibility and control over network traffic and providing a scalable foundation for our advanced cybersecurity and value-added services. During the quarter, we secured a significant Tera III win, a multimillion dollar upgrade deal with an existing Tier 1 customer. This win further underscores the strong customer interest and growing demand we are seeing for the Tera III. Looking beyond this last win, our Smart pipeline remains very healthy with strong opportunities at multiple stages, both from existing customers planning their upgrades to Tera III and for new customer engagements that are advancing well through our sales process. Our multiyear Smart projects continue to provide good revenue visibility into 2026, 2027 and beyond and add an additional layer of long-term revenue stability. During March, we participated in Mobile World Congress in Barcelona, where we held a large number of meetings with both existing and potential customers and partners and showcased our latest cybersecurity and network intelligence offering. The feedback was very positive, particularly around the converged cybersecurity and network intelligence positioning and our road map for AI-enabled security. At the end of March, we also attended the RSA Conference in San Francisco, one of the leading global cybersecurity event. RSA was again a highly productive event for us with strong interest in our offering. Both events help us further build our pipeline of opportunities for the rest of the year. It is clear that our broad suite of products and services driven by our cybersecurity first strategy is increasingly resonate with the operators globally, leading to new revenue streams from new customers and from upselling and cross-selling to existing customers. As I discussed last quarter, but I think it's important to stress again, the cyber threat landscape continues to evolve quickly, particularly with the TKI, which together are dramatically expanding the cyber-attack service for consumers, small businesses and enterprises. Allot plays an important role in protecting businesses and consumers from ever-increasing cyber threats, and we strongly believe that today's environment has never been more conducive to our embedded network native, always-on cybersecurity offering. Allot solution offers a highly differentiated and convenient experience for end consumers who cannot easily protect themselves. Our SECaaS platform delivers real-time zero-effort protection that scales seamlessly with the operator subscriber base with no end-user configuration required, exactly what is needed to defend against fast-moving AI-powered cyber threats. We continue to invest in extending our platform with new capabilities, many of them significantly enhanced by AI, both to address current risk and to anticipate the next generation of threats. These investments reinforce our competitive position and support our long-term differentiation in the consumer and SMB segments, segments which are underserved by traditional security solutions. In summary, we are proud of our first quarter performance. Our success was driven by strong growth in our cybersecurity revenues following strong uptake by end users adopting the telco-provided cybersecurity services that we power. This strength led directly to substantial improvement in revenue, margins, profitability, and cash flow generation for the third consecutive quarter. With 67% of total revenues recurring, we have strong visibility. We believe that we can maintain and build on our positive momentum in the quarters ahead. Looking ahead, we are reiterating our 2026 revenue guidance of between $130 million and $170 million with continued profitability improvements for the year. Following the strong first quarter, we feel increasingly confident towards the upper end of that range. Furthermore, we now have strong visibility ahead to predict 40% or more SECaaS revenue growth in 2026. And now I would like to hand it over to our CFO, Liat Nahum, for the financial summary. Liat, please go ahead. Liat Nahum: Thanks, Eyal. We reported revenue of $26.4 million in the quarter, up 14% year-over-year. Revenue from our growth engine, Security-as-a-Service, were $8.7 million in the quarter, up 71% year-over-year, comprising 33% of our total revenue. Our Security-as-a-Service annual recurring revenue as of March 31, 2026, were $33.7 million, up 59% year-over-year. 67% of our overall revenue this quarter was recurring revenue. I will now discuss the non-GAAP financial measures. For all our financial results, including the GAAP financial measures and the other various breakdowns of our revenue, please refer to the table in our results press release. Our non-GAAP gross margin in the quarter was 71.3% compared with 70.4% in the first quarter of last year. The improvement reflects the high contribution of SECaaS to our overall revenue mix. As mentioned in previous quarters, our non-GAAP gross margin depends on the specific product mix sold in the quarter. Our expectation for gross margin in 2026 remains in the range of 70%, as it has been in previous years. As SECaaS revenue continues growing as a percentage of overall revenue, we expect our gross margin to continue trending higher over time. Non-GAAP operating expenses for the quarter were $16.2 million compared with $15.9 million in the first quarter of last year. The slight increase in OpEx reflects our increased investment in sales and marketing to support our pipeline build, as well as investment in R&D to support our product development road map and innovation, in particular, our cybersecurity offering, which we discussed last quarter. While we are making select investments in sales and marketing and R&D, we remain disciplined and are working at a high operational efficiency. We reported a non-GAAP operating income of $2.6 million with an operating margin of 9.9% compared with a non-GAAP operating income of $0.4 million or an operating margin of 1.8% in the first quarter of last year. Allot had 499 full-time employees as of March 2026. In terms of non-GAAP net profit, we reported $3.1 million in the quarter, or a profit of $0.06 per diluted share, compared with a non-GAAP net income of $0.8 million, or a profit of $0.02 per diluted share in the first quarter of last year. We generated record operating cash flow in the first quarter of $10.6 million, reflecting robust profitability and strong cash collection. The strong operating cash flow was partially attributable to one-time advance payments after reaching milestones from a few of our major Smart deals that we reported in recent quarters. This is also reflected in our increase in deferred revenue. This is a positive sign that we progress executing those projects and related revenue will materialize this year. Allot has a robust balance sheet with no debt. Cash, short-term bank deposits, restricted deposits, and investments as of March 31, 2026, totaled $98 million versus $88 million as of December 31, 2025. Looking ahead to the rest of 2026, we are reaffirming our full-year 2026 revenue guidelines of between $113 million to $117 million. Following the strong first quarter, we feel increasingly confident towards the upper end of that range. And furthermore, we now have the strong visibility ahead to predict 40% or more SECaaS revenue growth in 2026. Our gross margin expectation for the year remains in the range of 70%, with a specific gross margin in any given quarter depending on our product mix. On the operating expense side, we expect to increase our sales and marketing as we continue to build our pipeline for the next several years. We also expect a modest increase in R&D expenses as we continue to invest in developing our products. Overall, we continue to expect profitability improvement for 2026 as the operating leverage inherent in Allot's financial model shines through. That ends my summary. Eyal and I are now happy to take your questions. Operator: [Operator Instructions] The first question is from Jonathan Ho of William Blair. Jonathan Ho: I wanted to better understand what opportunities you see ahead, particularly with your pipeline commentary. And also, just a broader question in terms of how you think about the adoption of AI within your customer bases, and particularly the autonomous agents. And what could that also bring in terms of opportunities for a lot ahead? Eyal Harari: Good morning, Jonathan. So, as for the pipeline, we see a solid improvement both in both the Smart and SECaaS opportunities. I would start with SECaaS. As we pointed out in previous quarters, we expanded our sales efforts into reaching more CSPs and trying to build new partnerships, as well as working closely with our existing CSP base in order to continue and evolve the current partnerships. We see an increased number of opportunities in different stages, both with new and existing customers and we believe this will continue and evolve and mature along the year. On the Smart side, as I pointed out earlier, we see a good demand for our newly released platform, the Tera III, which we launched last year, which is coming both from existing customers looking to upgrade their current solution as they need more capacity as their network grow as well as interest from new customers looking to -- on this platform with its advanced capabilities with a mix of networking and cybersecurity protection as a platform of choice. So overall, we see good demand, and we expect this to materialize over the next quarters. As for AI, as we focus on consumer and SMBs, we mainly see a lot of initial adoption of like we all hear and like the ChatGPT, the cloud, we are not focusing on -- when we are talking about our end customers, we are not focusing on the enterprise customers, but more on the lower end. And there, the current usage is really unprotected. Many people are experiencing those tools without the awareness in many cases of the risk that it's encountered. We are looking in our product road map and our innovation to see how we can add using our uniquely positioned network protection, and we can also protect them from the new threats that are arising due to those new tools. And what I can definitely say when we talk to our DSP partners and also when we do some surveys with customers, the awareness of the risk that is coming due to the AI agent is increasing and people are worried of fraud and impersonation that might come from those very powerful tools. Jonathan Ho: And then just in terms of a follow-up, where do you see the most opportunities to continue investing in sales and R&D? Can you provide a little bit more specific color around where those dollars are going? And how do you think about balancing that with showing operating leverage? Eyal Harari: So as described last quarter when we laid out the plan for 2026, our main R&D focus is to see how we can continue and add more cybersecurity engines to our portfolio. This allows us to have better protection for consumer and SMBs, but it also provides us an upsell and cross-sell opportunity to our existing base. So, we discussed last quarter about solutions like network firewall and DDoS protection. And also, part of the coming innovation is how we protect from the AI threats. How we add identity protection as people are worried of their credentials being stolen and shared in the dark web. Geographically, we see that most of the advanced market, mature markets are already aware of the need for cybersecurity, but we are starting to see that the demand for cyber protection is also starting to mature also in developing markets. As we have global partners and Allot with its decades of presence in the CSP space, we have a very global presence, and we try to leverage our good relationships with carriers around the globe. But definitely, the biggest worry today is in the developed market. And we believe over time, this will continue globally. In terms of operational leverage, the fact we have the installed base of Smart customers, which we have hundreds of customers around the globe that we can have the same sales team also upselling them the security solution and cross-selling them other tools improve our operational efficiency over time. We see that as we continue to grow the revenue, our gross margin strengthen and our profitability expands. Operator: The next question is from Nehal Chokshi of Northland Capital Markets. Nehal Chokshi: Congrats on the good results. I got 2 sets of questions. First one is on the cash from operations, very strong. Is that a result of some outsized bookings that you experienced within the March quarter? Eyal Harari: So, the cash expense is overall the profitability expand, and we saw this trend in the last few quarters. As pointed out in the prepared remarks, some of it is coming from new orders that we got through the Q1 quarter, but some of it is also a milestone we reached from orders we received during 2025 as we start to progress with the project milestone of some of our large customers. We start to get prepayments available as we progress well with the project. Nehal Chokshi: Could you describe backlog levels relative to a quarter ago and a year ago? Eyal Harari: Can you repeat the question, sorry? Nehal Chokshi: Could you give some characterization as to the backlog levels relative to a quarter ago and a year ago? Eyal Harari: So, we don't share on the quarterly level our backlog, and this is something that we focus on the revenues. Overall, we are seeing a good demand for our products, and this reflects by our increased visibility and our comment on our increased confidence that we can meet our highest range of the guidance and also our higher SECaaS projection for the revenue for the year. Nehal Chokshi: Great. And then the other question is around the SECaaS. Glad to see the formal raise from double-digit to at least 40% year-over-year growth, which then you could say roughly equates to about $12 million of incremental ARR for calendar '26. You did almost $3 million in the first quarter. How should we think about the linearity of that incremental ARR as we go through calendar '26? And is this being driven by incremental carriers being layered in, incremental SKUs from carriers or just the ongoing expansion within existing carriers? Eyal Harari: Okay. So overall, we see that the SECaaS revenue is growing sequentially, and it's quite stable growth. So, I think it's a safe assumption to assume it will grow about linearly over the year. We have strong growth coming from our base customers. This is what we call the organic growth of customers that already launched services. As we proceed along the year and mainly towards the end of the year, the growth is going to be supported by new wins within our existing customers and mostly new customers that we will win during the year will support our growth into 2027, because there is some time between the wins, the implementation of the solution and the ramp-up of the services. So majority is coming from the services that we see, and we see higher attach rates and traction for the service. This is the majority of the revenue and the growth. And then it goes with some upselling and new customer that comes mostly support our longer-term growth. Operator: The next question is from Matt Calitri of Needham and Company. Matthew Calitri: This is Matt Calitri from Needham here. The follow-up on the strong CCaaS strength seen here. Is there any color you can provide on any progress you made with new business wins or rollouts that occurred during the quarter? Eyal Harari: So again, the quarter is based on the customer we won last year like Más Móvil in Panama and our good success with other Tier 1 customers around the globe that continue to promote their services with the customer base. I think what we see is that CSP finds cybersecurity as a very important service, and they give more retention in order to promote the service with their customers. We see some customers doing promotions and offer our cybersecurity service as in higher priority, I would say, and use it in some of their promos, which support the growth from our existing base. We do see good progress with our pipeline, as asked before, and we see more areas in different stages of our pipeline. This goes with both our new models, as we mentioned, like the DDoS, the network firewall, the identity monitoring that are added capabilities that have more value to potential and existing customers as well as customers that we reach with our expanded sales effort as we continue to have more salespeople on the ground working with more CSPs to build new partnerships. Matthew Calitri: And so then as it relates specifically to the updated guidance for the 40% plus SECaaS revenue growth compared to the commentary for robust double-digit growth given last quarter. How did that change relative to your internal expectations? And what did you see over the quarter that informed this update to the outlook? Eyal Harari: So, we are overall aligned with what we plan. We are, let's say, somewhat more optimistic. And mainly once Q1 passed, our visibility is higher. We are relied on our customers to do their promotions and go to market. So, a lot of the growth is dependent on the CSP marketing activities. As we see that Q1 ARR growth was very high. This gives us -- this means that we have the visibility to sustain growth of 40% or more in our SECaaS for the year. So, we are 1 quarter further into the year, and we are more confident that this high robust double digit that we targeted for the year, we can give more color and we also heard our investors want to see a more accurate estimate. So, we try to give more exact number and we are now feeling more comfortable to commit on this 40% expectation. Matthew Calitri: Just one last one for me. Can you help walk us through the mechanics of the Smart deal that you called out? I think you said you saw some prepayments this quarter that led to the free cash flow strength. Will there be any more of those prepayments coming through? And how exactly is that expected to flush through the revenue line? Liat Nahum: So as we pointed, the high cash flow was generated from a few onetime advanced payments related to Smart deals that we started executing. The model of the Smart deals can fluctuate over quarter. So, payments are not necessarily related to revenue. And this is why we also remarked that you see also the increase in deferred revenue and this deferred revenue will be materialized over the year. Basically, the way that those deals are structured is that we are getting a lot of times prepayments that are related to executing milestones, and this is what happened this quarter. Operator: The next question is from Jonathan Ruykhaver of Cantor Fitzgerald. Please go ahead. Jonathan Ruykhaver: So Eyal, your prepared remarks, I thought were quite constructive just around everything you're doing, right, the investments in R&D, sales and marketing, you commented on strong pipeline broadly for new customers, also the expansion opportunity for SECaaS. And I appreciate the heightened confidence just given what we're seeing in the increased guidance for SECaaS revenue growth. But I'm just curious, philosophically, what keeps you from providing a formal SECaaS ARR guidance? It does seem like that is the leading indicator in terms of where you're focused strategically. Eyal Harari: So again, as I mentioned, our growth in SECaaS is dependent on our CSP customers, launch time of new services, their service adoption and their marketing campaigns. And therefore, we are relied on their efforts and their success, and their success becomes our success. Our ARR in the quarter give us the visibility to grow the revenue for the year. As we proceed over the year, and we see more and better visibility to the new wins and new launches and then we continue to evolve our SECaaS growth over the this year and next. We continue to see the cybersecurity strategy as our main focus, and we are focusing both on the short-term growth and long-term growth in order to sustain this high double-digit SECaaS as the main growth driver for the company. And I think that this is working well for us, as you see in the numbers. And we hope to continue to do well as we proceed along the year with the further adoption of the cybersecurity services by our existing customers as well as new services that are going to be offered. Jonathan Ruykhaver: So I'm just curious, product revenue seem to drive more upside than services. And that's the dynamic we saw last quarter as well. So, can you just talk about that outperformance? Obviously, the Smart portfolio is doing well. But how do you see that playing out as we go through the rest of the year? SECaaS adoption seem like it could reverse that trend. Maybe some clarity on how we should think about that going forward? Eyal Harari: No. So again, most of our growth is coming from the SECaaS. What we see that Smart is giving us good support with good stability in revenues and with some modest growth so far. As mentioned also in the previous quarter, in Smart, we have -- because this is less recurring, it's more it might fluctuate between the quarters, but so it also gives us the potential upside as it depends on project maturity and execution milestones. As we have some of our customers are in the millions of dollars, and this depends on meeting the milestone. It can move sometimes between quarters. And this includes potential to go even higher on the products if we execute faster and if we continue to see the good demand that we are seeing. Overall, most of the growth, as you saw in the quarter, and this is the plan for the year, should be supported by the very high growth we are seeing from the SECaaS. And the total revenue is supported and giving us the Smart --given us the scale as well as it's given us the upside opportunity working with existing Smart customers to upsell our security solutions. So, this was the model. This is the model, and we see it working well, and we continue to go in this approach. Jonathan Ruykhaver: Fair enough. And then the last question I have is, can you talk about the adoption trends you're seeing around the introduction of the new security capabilities you've been making available. And that's also just the strategy between monetization of your higher tier price packages relative to a goal of improving subscriber expansion and retention? How do you balance those 2 when you look at those new products? Eyal Harari: So overall, we got a very good market feedback about our new capabilities. Obviously, as we have some strategic partners, we work closely with them to share and adjust our road map and development to their strategy and direction. I would say that our customers really like the fact that they could offer very easily or relatively easily additional capabilities as they see this monetization opportunity, both directly as increased revenue. Some of them are looking to increase the cybersecurity package. For example, if I'm offering a package for $1, I can uplift it to $1.50 by adding more capabilities. Some are looking for those capabilities as a way to attract more users and increase their attach rates. And some are also using it defensive mode as they see competition from their other CSPs and they believe they want to stay more competitive in order to retain their growth rate. Overall, the market understands that the consumer and SMBs are underserved and are under-protected, and they really like the concept that we provide, turning a lot to a wider and more expensive platform with more cyber engines. It's really well received by our customers. Jonathan Ruykhaver: Yes. And just on the CSPs looking at the monetization aspect of those new capabilities, what is the lag before you would begin to see an uptick in ARPU? Eyal Harari: So, it really depends on the go-to-market. If they are to go and update the price for existing package, it could be faster. If they are going to launch it as a new package for new customers, therefore, it takes more time. So, it's very hard to give color in this stage, and it's vary between different customers. What we do see is that, and again, back to the previous remarks, we already have this visibility that we can grow at 40% or more in our SECaaS revenue. I think this gives you the most important part of the answer. Operator: The next question is from Shaul Eyal of TD Cowen. Shaul Eyal: Congrats on a strong start to the year. Eyal, I wanted to ask about how you are using AI internally within Allot on sales and marketing, on R&D. Can you share some thoughts with us? And also, how do you think about hiring into 2026? And I have a follow-up for Liat. Eyal Harari: Thank you, Shaul. So, AI is something that keeps us busy. I'm sure like any management in any company these days. We are looking on 3 dimensions. One is, first of all, what is the cyber threats for our customers that require us to enhance our product and road map. And our product team is busy now to identify the new threats and create new innovation to help consumer and SMB be more protected with the newly introduced threats coming from AI. For example, if we are able today to protect from fraud and sites, we see new categories of sites that are purely AI, either gold content that is purely generated by AI or malicious phishing attempts that are generated by AI. So, all of this is changes in the attack surface that we prioritize by our product team to see how we address. Second, of course, we are trying to see where AI can help us in the development cycle. We are looking on the most advanced tools that are integrated into our R&D cycles in order to see how we can get more efficiency. We are in this stage, mainly focused as we want to create more innovation and to expand our portfolio. We are mainly trying to see how we can accelerate the R&D and accelerate time to market and introduce more capabilities with our current teams. And third, we are looking how to create more operational efficiency across the organization. We are working on different initiatives trying to create automated processes that will make our team stronger. I would say that in general, what you could see that while our top line continue to grow, we are managing to keep the same operational expense. And again, it stays in similar level, which eventually increase our profitability. If we use AI smartly, we can continue to create more product differentiation and unique value proposition on one end, but also overall organization efficiency that continue to expand our profitability. So, this is very much across the organization. Shaul Eyal: And how should we be thinking about hedging the U.S. dollar versus the shekel or vice versa? Liat, can you help us in that respect? Liat Nahum: Yes, sure. So, as we mentioned also last quarter, we continue to see the shekel strengthening. And we have expenses in Israel since we have headquarters in Israel. However, we are hedged for 2026. And therefore, when we modeled our expectations for 2026, this is already taken into consideration, and we expect to drive continuous profitability improvement, and we feel very comfortable doing so with our hedging approach for 2026. Operator: There are no further questions at this time. I will now hand back the call to Eyal Harari, Allot's CEO, for concluding statement. Mr. Harari, please go ahead. Eyal Harari: So, thank you, everyone, for joining us on the call and hope to see you all in our next quarter results. Thank you. Before you buy stock in Allot, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Allot wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Allot (ALLT) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Allot Ltd.? Here are five stocks we like better. Revenue growth accelerated in Q1, with Allot reporting $26.4 million in revenue, up 14% year over year, marking its third straight quarter of double-digit growth. Management said strength in its cybersecurity-first strategy, especially SECaaS, is supporting a mid-teens growth outlook. SECaaS is becoming a bigger driver of the business, with revenue rising 71% to $8.7 million and reaching 33% of total revenue. SECaaS annual recurring revenue climbed to $33.7 million, and the company expects at least 40% growth in SECaaS revenue for 2026. Profitability and cash flow improved sharply, as non-GAAP operating income rose to $2.6 million and operating cash flow hit a quarterly record of $10.6 million. Allot ended the quarter with $98 million in cash and no debt, and it reaffirmed full-year 2026 revenue guidance of $113 million to $117 million. Falling Fast, Rising Soon? 3 Stocks With Upside Ahead Allot (NASDAQ:ALLT) reported a stronger start to 2026, with management pointing to accelerating revenue growth, expanding cybersecurity revenue and record operating cash flow during the company’s first-quarter earnings call. Chief Executive Officer Eyal Harari said first-quarter revenue rose 14% year over year, marking the company’s third consecutive quarter of double-digit revenue growth. He attributed the performance to Allot’s “cybersecurity-first strategy,” particularly growth in its Security as a Service, or SECaaS, business. → Beyond NVIDIA: Picks-and-Shovels AI Plays with Strong Momentum Top 3 High-Momentum Companies Analysts Are Still Bullish On “We clearly have transformed Allot into a profitable growth company,” Harari said, adding that stronger visibility into recurring revenue gives the company confidence in maintaining a mid-teens revenue growth trajectory over the coming year. Chief Financial Officer Liat Nahum said Allot generated $26.4 million in first-quarter revenue, up 14% from the prior-year period. SECaaS revenue totaled $8.7 million, up 71% year over year, and represented 33% of total revenue, compared with roughly one-fifth of revenue a year earlier. → MercadoLibre Boldly Invests in Growth: Discount Deepens 4 Golden Crosses With Double-Digit Upside Ahead Allot’s SECaaS annual recurring revenue reached $33.7 million as of March 31, 2026, an increase of 59% year over year. Overall, recurring revenue represented 67% of total first-quarter revenue. Harari said the growing SECaaS business is supported by stronger end-user adoption of cybersecurity services delivered through telecom operators. He said Allot is working with existing communications service provider customers to expand cybersecurity adoption while also pursuing new carrier partnerships. → 3 Ways to Target the Resources Powering AI and Data Centers In the question-and-answer session, Harari said SECaaS growth is expected to be relatively linear through the year, with most near-term growth coming from existing customers that have already launched services. New customer wins during 2026 are expected to contribute more meaningfully to 2027 results, given the time required for implementation and service ramp-up. Allot reported a non-GAAP gross margin of 71.3% in the quarter, up from 70.4% in the first quarter of last year. Nahum said the improvement reflected the higher contribution from SECaaS, though she noted that quarterly gross margin can vary depending on product mix. The company continues to expect gross margin for 2026 to remain in the range of 70%. Non-GAAP operating expenses were $16.2 million, compared with $15.9 million a year earlier. Nahum said the increase reflected selective investments in sales and marketing to support pipeline development and in research and development tied to Allot’s product roadmap, especially its cybersecurity offerings. Non-GAAP operating income rose to $2.6 million, representing a 9.9% operating margin, compared with $0.4 million and a 1.8% margin in the prior-year quarter. Non-GAAP net profit was $3.1 million, or $0.06 per diluted share, compared with $0.8 million, or $0.02 per diluted share, a year earlier. The company generated $10.6 million in operating cash flow, which management described as a quarterly record. Nahum said the result reflected profitability, strong collections and one-time advance payments tied to milestones in several major SMART deals. Those payments also contributed to an increase in deferred revenue, which she said is expected to materialize as revenue during the year. Allot ended the quarter with $98 million in cash, short-term bank deposits, restricted deposits and investments, up from $88 million at the end of 2025, and no debt. Harari said Allot’s SMART product line remains an important part of the company’s unified cybersecurity and network intelligence platform. The company is executing on multimillion-dollar projects won in recent quarters, including deployments and upgrades involving its SG-Tera III platform with tier 1 operators. During the quarter, Allot secured a significant SG-Tera III win, described by Harari as a multimillion-dollar upgrade deal with an existing tier 1 customer. He said the win underscored demand for the platform, which provides network traffic visibility and control and serves as a foundation for advanced cybersecurity and value-added services. Harari said the SMART pipeline remains healthy, with opportunities from existing customers planning upgrades to SG-Tera III and from new customer engagements. He said multi-year SMART projects provide revenue visibility into 2026, 2027 and beyond, although SMART revenue can fluctuate between quarters depending on project milestones. Management repeatedly highlighted artificial intelligence as both a cybersecurity risk and an area of internal operational focus. Harari said AI is expanding the cyberattack surface for consumers, small businesses and enterprises, and that Allot’s network-native cybersecurity offering is positioned to protect users without requiring end-user configuration. In response to analyst questions, Harari said Allot is investing in additional cybersecurity engines, including capabilities such as network firewall, DDoS protection and identity protection. He also said the company is examining how to protect consumers and small businesses from AI-related threats such as fraud, impersonation and phishing attempts generated by AI tools. Harari said Allot is also looking at AI tools internally to improve R&D efficiency, accelerate time to market and create more automated processes across the organization. He said the company’s goal is to use AI to support product differentiation while maintaining operating efficiency. Allot reaffirmed its full-year 2026 revenue guidance of $113 million to $117 million. Both Harari and Nahum said that after the strong first quarter, the company is increasingly confident toward the upper end of that range. The company also said it now has enough visibility to predict 40% or more SECaaS revenue growth in 2026. Nahum said Allot expects continued profitability improvement for the year, despite planned increases in sales and marketing and modest increases in R&D expenses. Harari said Allot’s board regularly reviews capital allocation, with three main priorities: investing in organic growth, pursuing strategic acquisitions and returning capital to shareholders. He said the company’s cash position and lack of debt provide flexibility to keep investing in long-term growth. Allot Ltd. is a provider of network intelligence and security solutions designed for service providers and enterprises worldwide. The company delivers software and cloud-based services that enable customers to gain real-time visibility into network traffic, enforce security policies and optimize bandwidth usage. Its platforms support a wide range of applications, from DDoS protection and threat prevention to subscriber experience management and network analytics. Allot's product portfolio includes managed solutions for mobile and fixed-line operators, as well as cloud-native services that can be deployed across private, public and hybrid environments. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Allot Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.