ALLT — Allot Ltd.

Summary of Allot's Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 Revenue: $28.4 million, up 14% year-over-year.
• Full Year Revenue: $102 million, an 11% increase from $92.2 million in 2024.
• Cybersecurity as a Service (SECaaS) Revenue: $8.1 million in Q4, a 70% increase year-over-year, comprising 28% of total revenue.
• Annual Recurring Revenue (ARR): SECaaS ARR reached $30.8 million, up 69% year-over-year.
• Recurring Revenue: 62% of total revenue for the full year, with 28% in Q4.
• Non-GAAP Operating Income: $3.6 million in Q4, up 101% from Q4 2024; $8.9 million for the full year, compared to $0.6 million in 2024.
• Cash Position: $88 million in cash and no debt, with positive operating cash flow of $8.1 million in Q4 and $17.8 million for the full year.

2. Strategic Updates and Business Highlights

• Allot's transition to a cybersecurity-first strategy is yielding results, with significant growth in cybersecurity offerings.
• Partnerships with new customers, including Compax Venture for MVNOs, are expected to enhance service differentiation and expand market reach.
• New product launches, such as OffNetSecure and Firewall as a Service, aim to provide comprehensive security solutions for SMBs and consumers.
• The company is focusing on integrating AI into its cybersecurity solutions to address evolving threats and enhance service offerings.

3. Forward Guidance and Outlook

• For 2026, Allot expects revenue growth between $113 million and $117 million, driven by continued strong demand for SECaaS.
• Anticipated double-digit growth in SECaaS ARR, significantly outpacing overall revenue growth.
• Continued investment in sales and marketing to support growth initiatives and product launches.

4. Bad News, Challenges, or Points of Concern

• Industry-wide supply chain pressures, particularly related to DRAM shortages, may impact gross margins, although the company maintains a forecast of around 70%.
• The recent weakening of the U.S. dollar against the Israeli shekel could negatively affect profitability, despite hedging efforts.
• Competitive pressures in the cybersecurity market remain, with ongoing challenges in customer acquisition and retention.

5. Notable Q&A Insights

• Management emphasized strong demand for SECaaS, with expectations for robust growth driven by existing customer campaigns and new service launches.
• The partnership with MVNOs is seen as a long-term growth opportunity, although immediate revenue impact may be limited.
• Discussions highlighted the importance of AI in shaping customer perceptions of cybersecurity threats and the need for enhanced protection measures.
• The company is optimistic about its ability to upsell new products to existing customers, leveraging established relationships for additional revenue streams.

Overall, Allot's strong financial performance and strategic initiatives position it well for continued growth, despite facing some external challenges and competitive pressures.