Allot Ltd. Q4 FY2025 earnings call

Delivered strong Q4, 2025 had accelerated revenue growth, significant expansion in cybersecurity ARR, improved profitability and operating cash flow. Focused on cybersecurity-first strategy, expanding CSP/telco partnerships for cybersecurity protection, expanding services to new end user segments, growing penetration among end users, and upselling new applications. Participating in major industry events like Mobile World Congress and RSA Conference. Smart product line had new project wins, including a multiyear deal with an Asian Tier 1 telecom provider and a tens of millions of dollar agreement with an EMEA Tier 1 operator.

2025 full-year revenue was $102 million, up 11% y-o-y. Cybersecurity as a Service (SECaaS) revenue in Q4 was $8.1 million, up 70% y-o-y, comprising 28% of Q4 revenue; full-year SECaaS revenue was $26.8 million, 26% of total revenue. Recurring revenue was over 60% of total revenue in 2025. Non-GAAP gross margin in Q4 was 71.9%, full-year 72%; non-GAAP operating expenses in Q4 were $16.8 million, full-year $64.5 million; non-GAAP operating income in Q4 was $3.6 million, full-year $8.9 million; non-GAAP net income in Q4 was $4.1 million, full-year $10.9 million. Cash, bank deposits and investments as of Dec 31, 2025, totaled $88 million with no debt.

Expect 2026 revenue to be between $113 million and $117 million, with SECaaS continuing double-digit ARR growth. Non-GAAP gross margin expected in range of 70%. Significant spending on AI data centers creates cost of goods pressure in near term. Sales and marketing expenses to increase as investing in sales and pipeline. R&D expenses to modestly increase. Weakness of U.S. dollar vs Israeli shekel impacts profitability projections.

Market trend changes, delays in service launch by customers, reduced demand, competitive nature of security services industry; supply constraints and cost pressure of key components like memory and servers; negative effect of weaker U.S. dollar vs Israeli shekel on profitability.

Q: Jonathan Ho asked about strength in SECaaS business and ARR growth in 2026, and MVNO partnership.

A: Eyal Harari said strong SECaaS ARR growth due to good adoption rates, MVNO partnership to add cybersecurity as differentiator but hard to assess exact revenue impact in short term.

Q: Nehal Chokshi asked about SECaaS ARR growth characterization and ARR growth profile in 2026.

A: Eyal Harari said good demand continues, growth depends on customer go-to-market campaigns.

Q: Shaul Eyal asked about AI impact on cybersecurity demand and Verizon progress.

A: Eyal Harari said AI increases cybersecurity awareness, Verizon expansion has shorter sales cycle for upsells.

Q: Jonathan Ruykhaver asked about Sandvine competition and AI impact on network traffic.

A: Eyal Harari said focus on cybersecurity, Smart product line performing well.

Q: Jonathan Ruykhaver asked about fraud protection and pipeline progression.

A: Eyal Harari said increased cybersecurity awareness, SMBs demanding more protection.

Q: Rory Donald Wallace asked about Smart business book-to-bill and product launches modularity.

A: Eyal Harari said book-to-bill over 1, new products modularly add to offerings.

Q: Rory Donald Wallace asked about consumer vision and DRAM impact on gross margin.

A: Eyal Harari and Liat Nahum said consumer vision on digital life protection, DRAM cost a factor but profitability expected to improve with growth.