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, up 70% year-over-year; $26.8 million for the full year, representing 26% of total revenue.
• Annual Recurring Revenue (ARR): $30.8 million for SECaaS, a 69% increase year-over-year; recurring revenue constituted over 60% of total revenue.
• 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, no debt, and positive operating cash flow of $8.1 million in Q4 and $17.8 million for the year.

2. Strategic Updates and Business Highlights

• Cybersecurity Strategy: Allot continues to focus on a cybersecurity-first approach, integrating cybersecurity with network intelligence to enhance service provider offerings.
• Partnerships: Notable partnerships include Compax Venture, which will enable MVNOs to offer built-in cybersecurity, expanding Allot's addressable market.
• Product Innovations: Introduction of OffNet solutions and Firewall as a Service aimed at enhancing security offerings for SMBs and consumers.
• Market Positioning: Allot aims to provide comprehensive protection for digital life, expanding beyond traditional network security to include identity protection and AI-driven security services.

3. Forward Guidance and Outlook

• 2026 Revenue Forecast: Expected to grow to between $113 million and $117 million, driven by continued strong demand for SECaaS and a robust pipeline.
• Profitability Expectations: Anticipated improvement in profitability alongside revenue growth, with non-GAAP gross margins expected to remain around 70%.
• ARR Growth: SECaaS is projected to continue delivering robust double-digit growth, significantly contributing to overall revenue.

4. Bad News, Challenges, or Points of Concern

• Supply Chain Pressures: Anticipated cost pressures due to increased demand for AI infrastructure impacting hardware costs, particularly DRAM shortages.
• Currency Fluctuations: A weaker U.S. dollar against the Israeli shekel may negatively impact profitability due to increased operating expenses in local currency.
• Market Competition: While Allot is performing well, the competitive landscape remains challenging, particularly against other cybersecurity-focused companies.

5. Notable Q&A Insights

• SECaaS Growth Drivers: Management highlighted strong adoption rates and new customer wins as key factors driving SECaaS growth, with expectations for continued robust performance in 2026.
• MVNO Opportunities: The partnership with Compax is seen as a significant growth opportunity, although revenue realization may take time as it depends on the success of the MVNOs.
• Customer Demand: Increased awareness of cybersecurity threats, particularly from AI-generated fraud, is driving demand for Allot's services, especially among underserved SMBs and consumers.
• Book-to-Bill Ratio: Management indicated a positive book-to-bill ratio, suggesting strong demand and backlog for future revenue recognition.

Overall, Allot's Q4 2025 results reflect a strong performance with significant growth in recurring revenue and strategic positioning in the cybersecurity market, despite facing some supply chain challenges and competitive pressures.