Allot Ltd. (ALLT) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates strong financial performance with 14% revenue growth, significant SECaaS revenue increase, and positive cash flow. New contracts and strategic partnerships, including a major telco deal, bolster future prospects. However, management's vague responses on certain topics in the Q&A could raise some concerns. Overall, the positive financial metrics and strategic developments suggest a likely positive stock price movement, despite some uncertainties.
Key Financial Performance
Revenue $26.4 million, up 14% year-over-year. The increase was driven by growth in both SECaaS and smart businesses.
SECaaS Revenue $7.3 million, up 60% year-over-year, comprising 28% of total revenue. Growth attributed to increased traction among major telcos and end customers.
SECaaS Annual Recurring Revenue (ARR) $27.6 million as of September 2025, up 60% year-over-year. Growth driven by strong traction and customer launches.
Recurring Revenue 63% of total revenue in Q3 2025, up from 58% in Q3 2024. Increase due to higher contributions from SECaaS and smart businesses.
Non-GAAP Gross Margin 72.2%, compared to 71.7% in Q3 2024. Improvement due to revenue growth and operational efficiency.
Non-GAAP Operating Income $3.7 million, compared to $1.1 million in Q3 2024. Growth driven by increased revenue and improved gross margin on a stable expense base.
Non-GAAP Net Income $4.6 million, or $0.10 per diluted share, compared to $1.3 million, or $0.03 per diluted share, in Q3 2024. Increase due to higher operating income.
Operating Cash Flow $4 million positive in Q3 2025, marking the third consecutive quarter of positive cash flow. Growth attributed to improved profitability and operational performance.
Cash Balance $81 million as of September 30, 2025, up from $59 million as of December 31, 2024. Increase due to positive cash flow and share offering proceeds.
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Operating Highlights
OffNetSecure solution: Launched the OffNetSecure solution, which extends network-based cybersecurity protection beyond the operator's infrastructure to subscribers using any network or Wi-Fi connection. It enhances customer loyalty, increases subscription-based revenue opportunities, and reinforces the operator's role as a trusted provider of digital security.
Increased U.S. market contribution: Recognized revenue from a large smart order and growing SECaaS contributions in the U.S., aligning with the strategy to expand business in the Americas.
Revenue growth: Achieved $26.4 million in revenue for Q3 2025, a 14% year-over-year increase, driven by growth in SECaaS and smart businesses.
Profitability improvement: Reported non-GAAP operating income of $3.7 million, up from $1.1 million in Q3 2024, and non-GAAP net income of $4.6 million, up from $1.3 million in Q3 2024.
Cash position: Ended Q3 2025 with $81 million in cash, up from $59 million at the end of 2024, with no debt.
Cybersecurity-first strategy: Continued focus on cybersecurity solutions, with SECaaS becoming a significant revenue driver, comprising 28% of Q3 2025 revenue and showing 60% year-over-year growth in ARR.
Guidance increase: Raised full-year 2025 revenue guidance to $100-$103 million and projected SECaaS ARR growth to surpass 60% year-over-year.
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Risk or Challenges
Market Trends and Delays: Changing market trends and delays in the launch of services by Allot customers could adversely impact the company's performance.
Demand Reduction: Reduced demand for services poses a risk to revenue growth and operational stability.
Competitive Pressures: The competitive nature of the security services industry could challenge Allot's market position and profitability.
Regulatory Risks: Potential regulatory hurdles could impact operations and strategic execution.
Customer Launch Challenges: Challenges in supporting customer launches and ensuring successful rollouts of new services could affect growth momentum.
Economic Uncertainties: Broader economic uncertainties could influence customer spending and demand for Allot's services.
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Guidance & Outlook
SECaaS Annual Recurring Revenue (ARR) Growth: The company expects 2025 year-end SECaaS ARR to show exceptionally strong year-over-year growth, surpassing 60%.
Full Year 2025 Revenue Guidance: The company has raised its full year 2025 revenue guidance to between $100 million and $103 million.
2026 Outlook: The company is well-positioned for 2026 and anticipates being at the inflection point of a longer-term trend of ongoing profitable growth.
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Shareholder Return Plan
Share Offering: During the quarter, we completed a $46 million follow-on share offering, of which $40 million in gross proceeds were received during the second quarter and the remaining $6 million in gross proceeds received this quarter. Our shares issued and outstanding as of the end of September were 48.4 million shares.
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Key Q&A
Q:Can you outline whether the increased traction with the major telecom customer is coming from higher attach rates or more at-bats due to bundling?
A:The increased traction is due to both higher attach rates and progress with new services launched with customers. Más Móvil in Panama launched the SECaaS service, expanding the customer base and contributing to significant growth in SECaaS revenue and ARR.
Q:Can you provide details about the first customer for OffNetSecure?
A:OffNetSecure enhances security for customers even when they are not connected to the operator network. The first customer values 24/7 protection and combines network security with OffNet. Specific details about the customer were not disclosed, but there are multiple sales opportunities with new and existing customers.
Q:Is the first OffNetSecure customer material to Allot?
A:The customer is important, but specific details were not disclosed. There are additional opportunities with new and existing customers to enhance cybersecurity services with OffNet.
Q:Do you continue to see a strong smart pipeline?
A:Yes, the company has won several multimillion-dollar deals and sees strong demand for the Tera III product. There is a good mix of new and existing customers in the pipeline, and the company expects the positive trend to continue.
Q:What are the drivers of SECaaS growth?
A:Growth is driven by large Tier 1 contracts, new customer launches like Más Móvil in Panama, and strategic accounts adding new subscriptions. Short-term growth is mainly from new customers joining existing services.
Q:Can you discuss the competitive landscape and pricing environment for network intelligence offerings?
A:The competitive landscape is less challenging due to market dynamics. Telco CapEx spend remains tight, but the Tera III product offers a competitive edge with best price performance. The company expects continued growth in this area.
Q:What are the drivers of growth in larger SECaaS contracts, and have ad campaigns impacted adoption?
A:Growth drivers include new customer additions, upselling additional services, marketing support for partners, and innovation like OffNet. Ad campaigns and consultancy efforts help partners reach customers. Growth is sustainable with double-digit attach rates and innovations.
Q:How is Verizon Live's penetration trending versus expectations?
A:Specific customer details were not disclosed, but overall progress with the customer base is positive, reflected in raised expectations for 60% year-over-year growth.
Q:Is SECaaS revenue expected to reach 30% of the business by the end of the year?
A:Yes, if the current trend continues and the company achieves 60% year-over-year growth, SECaaS revenue is expected to reach 30% of the business by year-end.
Q:How is Tera III contributing to product revenue strength and customer conversations?
A:Tera III is contributing to a mix of new opportunities and discussions with existing customers. The company focuses on customer success and long-term growth, with new logos joining both product lines each quarter.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details about the first OffNetSecure customer and Verizon Live's penetration trends, using vague language and not disclosing materiality or customer-specific information.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ARR inflection
ARR traction
Conference Instructions
Cybersecurity Service
Cybersecurity service
EK Global
Global Investor
III deployment
Instructions reminder
OffNet Secure
OffNetSecure extending
Relations news
Secure customer
Service engine
backlog end
backlog month
capability functionality
cash debt
configuration OffNet
connection security
contributor revenue
customer OffNetSecure
customer launch
customer loyalty
customer partner
cyber security
debt position
decade strength
deployment upgrade
device level
digit year
effort product
end pie
intelligence solution
network intelligence
offering traction
platform
telco
visibility
ALLT Transcript
Allot Ltd. (ALLT) Q1 2026 Earnings Call Transcript
Positive5-12
The earnings call reveals strong financial performance, including robust SECaaS growth and strategic investments in AI and cybersecurity. The Q&A section highlights management's confidence in sustaining revenue growth and improving profitability, despite challenges. The company is leveraging AI for product differentiation and operational efficiency, with a focus on expanding in the SMB market. While specific guidance on backlog levels and SECaaS ARR was not provided, the overall sentiment is positive due to optimistic guidance, customer wins, and strategic product launches.
Allot Ltd. (ALLT) Q4 2025 Earnings Call Transcript
Positive2-25
The earnings call summary and Q&A indicate strong financial metrics, raised revenue guidance, and optimistic outlooks for 2025 and 2026. New product launches and AI integration are set to drive growth, despite DRAM shortages. The positive sentiment is reinforced by a strong book-to-bill ratio and the modular cybersecurity approach. However, some uncertainty exists around specific ARR growth figures and DRAM impact. Overall, the sentiment remains positive, likely resulting in a 2%-8% stock price increase.
Allot Ltd. (ALLT) Q3 2025 Earnings Call Transcript
Positive11-20
The earnings call indicates strong financial performance with 14% revenue growth, significant SECaaS revenue increase, and positive cash flow. New contracts and strategic partnerships, including a major telco deal, bolster future prospects. However, management's vague responses on certain topics in the Q&A could raise some concerns. Overall, the positive financial metrics and strategic developments suggest a likely positive stock price movement, despite some uncertainties.
Allot Ltd. (ALLT) Q2 2025 Earnings Call Transcript
Positive8-14
The earnings call highlights strong financial performance, with a 9% revenue increase and a 73% SECaaS revenue growth. Improved margins and positive operating cash flow further support the positive sentiment. The Q&A section reveals high attach rates for Verizon's My Biz plan and a strong pipeline, despite some lack of clarity in management responses. The overall sentiment is positive, driven by strong financial metrics, optimistic guidance, and strategic partnerships.
ALLT Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
