Summary of Allot's Q1 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $26.4 million, up 14% year-over-year.

SECaaS Revenue: $8.7 million, up 71% year-over-year, comprising 33% of total revenue.

SECaaS ARR: $33.7 million, up 59% year-over-year.

Recurring Revenue: 67% of total revenue.

Non-GAAP Gross Margin: 71.3%, improved from 70.4% year-over-year.

Non-GAAP Operating Income: $2.6 million (operating margin of 9.9%), compared to $0.4 million (1.8% margin) in Q1 2025.

Net Profit: $3.1 million ($0.06 per diluted share), up from $0.8 million ($0.02 per diluted share) year-over-year.

Operating Cash Flow: Record $10.6 million, attributed to strong profitability and milestone-related prepayments.

Cash Position: $98 million with no debt.

2Strategic Updates and Business Highlights

Continued execution of a "cybersecurity first" strategy, with significant growth in SECaaS driving recurring revenue.

Investment in R&D and sales/marketing to support product innovation and customer engagement.

Successful deployment of the Tera III platform with Tier 1 operators, enhancing network intelligence and cybersecurity offerings.

Participation in major industry events (Mobile World Congress, RSA Conference) yielded positive feedback and expanded pipeline opportunities.

Focus on addressing evolving cyber threats, particularly from AI-driven risks.

3Forward Guidance and Outlook

Reiterated 2026 revenue guidance of $130 million to $170 million, with increased confidence towards the upper end of the range.

Projected SECaaS revenue growth of 40% or more for 2026.

Gross margin expectations remain around 70% for the year.

Anticipated increase in operating expenses due to ongoing investments in sales and R&D.

4Bad News, Challenges, or Points of Concern

While the company is experiencing strong growth, reliance on customer service launches and marketing efforts introduces uncertainty in revenue projections.

Backlog levels were not disclosed, which may raise concerns about visibility into future revenue.

The competitive landscape in cybersecurity remains intense, with evolving threats necessitating continuous innovation and adaptation.

5Notable Q&A Insights

Management expressed optimism about pipeline growth, particularly in SECaaS and Smart product lines, with a focus on expanding partnerships with existing and new customers.

AI adoption among customers is seen as both a risk and an opportunity, with plans to enhance product offerings to address new threats.

The company is hedged against currency fluctuations, particularly between the U.S. dollar and the Israeli shekel, which supports profitability expectations for 2026.

Questions highlighted the balance between product and service revenue growth, with management indicating that SECaaS will be the primary growth driver moving forward. Overall, Allot reported a strong start to 2026 with significant growth in cybersecurity revenues, a robust cash position, and a clear strategy for continued expansion, despite facing challenges related to market dynamics and customer dependencies.