ALLT — Allot Ltd.

Summary of Allot's Q1 2026 Earnings Call

1. Key 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.