Allot Q4 Earnings Call Highlights

25 Feb 2026, 16:03 by Kim Johansen · The Markets Daily

Allot (NASDAQ:ALLT) management said the company closed 2025 with accelerated revenue growth, sharply higher cybersecurity recurring revenue and improved profitability, pointing to continued momentum heading into 2026. On the company’s fourth-quarter earnings call, CEO Eyal Harari and CFO Liat Nahum highlighted strong adoption of the firm’s Cybersecurity-as-a-Service (SECaaS) offerings with communications service providers (CSPs) and outlined a growth strategy centered on embedded, network-based protection for consumers and small and midsize businesses (SMBs).

Fourth-quarter and full-year performance

Allot reported fourth-quarter revenue of $28.4 million, up 14% year-over-year. Full-year 2025 revenue rose 11% to $102 million, which Harari said marked a return to double-digit year-over-year growth. The CEO also described 2025 as delivering the company’s “highest level of profit and cash flow in over a decade,” attributing the performance to operating leverage and a more scalable model driven by subscription revenue.

SECaaS was a key contributor in the quarter and the year. CFO Liat Nahum said SECaaS revenue was $8.1 million in the fourth quarter, up 70% year-over-year, and represented 28% of quarterly revenue. For the full year, SECaaS revenue totaled $26.8 million, representing 26% of total revenue.

Nahum said SECaaS annual recurring revenue (ARR) reached $30.8 million as of December 2025, up 69% year-over-year. Management emphasized the growing weight of recurring revenue in the business model, with the CEO noting recurring revenue represented 62% of total revenue for the full year and 28% of total revenue in the fourth quarter.

Profitability, cash flow and balance sheet

On a non-GAAP basis, Allot reported fourth-quarter gross margin of 71.9%, up from 69.7% a year earlier. Full-year 2025 non-GAAP gross margin was 72%, compared with 70.6% in 2024. Non-GAAP operating expenses were $16.8 million in the fourth quarter versus $15.6 million a year earlier; full-year non-GAAP operating expenses were essentially flat at $64.5 million.

Non-GAAP operating income more than doubled to $3.6 million in the fourth quarter from $1.8 million in the prior-year quarter. For the full year, non-GAAP operating income rose to $8.9 million from $0.6 million in 2024. Non-GAAP net income was $4.1 million, or $0.08 per diluted share, in the fourth quarter, and $10.9 million, or $0.23 per diluted share, for the full year.

Allot also reported strong cash generation. Nahum said the company produced $8.1 million in positive operating cash flow in the fourth quarter and $17.8 million for the full year. The balance sheet strengthened as well, with cash, bank deposits and investments rising to $88 million as of year-end 2025 from $59 million at the end of 2024. The company ended 2025 with no debt and 490 full-time employees.

What drove SECaaS growth and product expansion

In the Q&A session, management said fourth-quarter SECaaS ARR growth came in “above our expectations,” driven primarily by adoption rates at already-launched customers and by launches and expansions with both new and existing CSP partners. Harari cited recent wins and launches over the last four quarters, including work with Verizon and Vodafone, as well as wins at Más Móvil in Panama.

Harari described a four-part framework for growing the SECaaS business:

Adding new CSP and telecom partners to expand the addressable end-user base.
Expanding services to additional end-user segments after launch (for example, from broadband to mobile).
Partnering with CSPs on go-to-market efforts to increase subscriber adoption.
Upselling additional applications and products.

As an example of upsell, Harari pointed to the company’s Off-Net solution, designed to maintain protection when users are outside their carrier’s network, such as when switching from cellular to Wi-Fi. He said Allot has already upsold the Off-Net product to existing and new customers and framed it as a way for carriers to introduce higher-tier security plans and increase ARPU.

Management also discussed new product capabilities aimed at SMBs, including OffNetSecure, Firewall-as-a-Service (described as live and deployed), protection for inbound traffic, and domain-level identity theft monitoring. Harari added that the company is looking to add DDoS protection for SMBs by leveraging assets from the Smart product line.

Smart platform wins and backlog visibility

While Harari said SECaaS is the primary growth engine, he also emphasized the role of the Smart product line (network intelligence) in multi-year revenue visibility. He referenced ongoing projects including SG-Tera III deployments and upgrades and said interest remains supported by both existing-customer upgrades and new-customer pipeline.

Harari said Allot was selected by a tier-1 telecom provider in Asia in a multi-year deal “worth high single digit millions” to deploy its network intelligence solution. He also referenced a “tens of millions of dollar” agreement signed last year with a tier-1 operator in EMEA that includes long-term recurring maintenance and support. He said Smart product revenues from these deals are expected to be recognized in 2026 and 2027.

Asked about book-to-bill, management said it was “way over one” in 2025 and described backlog as being in “very good shape,” with visibility supported by both project backlog and a recurring revenue base that is now more than 60% of total revenue.

2026 outlook, AI focus and margin considerations

For 2026, management guided to revenue of $113 million to $117 million, implying continued double-digit growth. Harari said the company expects SECaaS to deliver “strong double-digit ARR growth” and to increase its contribution to total revenue, driving overall growth alongside continued profitability improvements. Management did not provide a specific SECaaS ARR growth percentage but said it is expected to be higher than the company’s midpoint revenue growth rate.

Nahum said non-GAAP gross margin is expected to be around 70% in 2026, noting that gross margin depends on product mix. She also flagged industry-wide supply constraints and cost pressure on components such as memory and servers, which she tied to heavy spending on AI data centers. Despite this, she reiterated the 70% gross margin expectation.

On spending, Nahum said Allot expects higher sales and marketing expenses as it invests in building the pipeline over the next three years, alongside a modest increase in R&D spending. She also noted the U.S. dollar has weakened significantly versus the Israeli shekel since the beginning of the third quarter, creating pressure given Allot’s Israel-based cost structure; she said the company is hedging part of the exposure and that the impact is included in 2026 profitability projections.

Harari repeatedly tied Allot’s strategy to the changing threat environment, arguing that AI is increasing both the scale of attacks and overall awareness of cybersecurity among consumers and SMBs. He said the company plans to launch additional AI-enabled capabilities during 2026, with some expected to contribute to revenue in 2026 and others in 2027, including efforts around identity protection, scam and fraud prevention, and using network visibility to identify phishing attempts and fraudulent domains.

About Allot (NASDAQ:ALLT)

Allot Ltd. is a provider of network intelligence and security solutions designed for service providers and enterprises worldwide. The company delivers software and cloud-based services that enable customers to gain real-time visibility into network traffic, enforce security policies and optimize bandwidth usage. Its platforms support a wide range of applications, from DDoS protection and threat prevention to subscriber experience management and network analytics.

Allot’s product portfolio includes managed solutions for mobile and fixed-line operators, as well as cloud-native services that can be deployed across private, public and hybrid environments.