Allot(ALLT) - 2025 Q2 - Quarterly Report

Q2 2025 Earnings Announcement Allot announced strong Q2 2025 financial results driven by exceptional SECaaS performance, leading to an upward revision of full-year guidance Headline and Overview Allot reported strong Q2 2025 financial results, primarily driven by outstanding SECaaS performance with a 73% year-over-year increase in SECaaS ARR, leading to an upward revision of full-year guidance - SECaaS ARR increased by 73% year-over-year[2] - Overall company revenue grew by 9% year-over-year[4] - SECaaS revenue constituted over 25% of total revenue[4] - Full-year 2025 revenue guidance was raised to $98-102 million[5] - The 2025 SECaaS ARR year-over-year growth expectation was increased to 55-60%[5] Management Commentary CEO Eyal Harari highlighted strong Q2 performance, attributing it to SECaaS growth, significant traction with Verizon Business mobile, and a multi-million dollar landmark agreement with a Tier-1 EMEA telecom operator, expressing confidence in 2025 profitability - “Exceptional SECaaS performance” drove strong Q2 financial results[4] - Verizon Business's new mobile offering, including Allot's SECaaS services, gained significant end-customer traction, contributing to SECaaS revenue growth[4] - Secured a multi-million dollar landmark agreement with a Tier-1 EMEA telecom operator, showcasing the company's unique technological advantages and core expertise in cybersecurity and network intelligence[5] Key Financial Highlights (Q2 2025) Allot reported Q2 2025 revenue of $24.1 million, a 9% year-over-year increase, with SECaaS comprising 27% of total revenue and SECaaS ARR reaching $25.2 million, up 73% year-over-year, alongside significant improvements in GAAP and non-GAAP operating results and strong operating cash flow | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :-------- | :-------- | :--------- | | Revenue (million USD) | 24.1 | 22.2 | +9% | | SECaaS as % of Total Revenue | 27% | N/A | N/A | | SECaaS ARR (June 2025, million USD) | 25.2 | N/A | +73% | | GAAP Operating Loss (million USD) | (0.4) | (3.4) | Improved | | Non-GAAP Operating Income (Loss) (million USD) | 1.2 | (1.0) | Improved | | Operating Cash Flow (million USD) | 4.4 | 1.2 | +267% | Detailed Financial Performance This section provides a detailed overview of Allot's Q2 2025 financial results, including revenue, profitability, cash flow, and financing activities Second Quarter 2025 Financial Results Summary Allot's Q2 2025 GAAP revenue grew 9% to $24.1 million, with GAAP gross profit increasing 14% to $17.3 million (72.1% margin) and non-GAAP gross profit up 13% to $17.6 million (73.4% margin), significantly reducing GAAP operating loss and achieving non-GAAP operating income | Metric | Q2 2025 (GAAP) | Q2 2024 (GAAP) | YoY Change | | :-------------------------- | :------------- | :------------- | :--------- | | Total Revenue (million USD) | 24.1 | 22.2 | +9% | | Gross Profit (million USD) | 17.3 | 15.2 | +14% | | Gross Margin | 72.1% | 68.5% | +3.6 pp | | Operating Loss (million USD) | (0.4) | (3.4) | Improved | | Net Loss (million USD) | (1.7) | (3.4) | Improved | | Basic Net Loss Per Share (USD) | (0.04) | (0.09) | Improved | | | | | | | Metric | Q2 2025 (Non-GAAP) | Q2 2024 (Non-GAAP) | YoY Change | | :-------------------------- | :----------------- | :----------------- | :--------- | | Gross Profit (million USD) | 17.6 | 15.7 | +13% | | Gross Margin | 73.4% | 70.6% | +2.8 pp | | Operating Income (Loss) (million USD) | 1.2 | (1.0) | Improved | | Net Income (Loss) (million USD) | 1.5 | (0.8) | Improved | | Diluted Net Income (Loss) Per Share (USD) | 0.03 | (0.02) | Improved | Cash Flow and Liquidity Allot generated $4.4 million in strong operating cash flow during Q2 2025, with net cash and equivalents, bank deposits, restricted deposits, and investments totaling $72 million as of June 30, 2025, an increase of $13 million from December 31, 2024, and reported no debt - Operating cash flow generated in Q2 2025 was $4.4 million[11] - As of June 30, 2025, net cash and cash equivalents, bank deposits, restricted deposits, and investments totaled $72 million[11] - The company reported no debt as of June 30, 2025[11] Financing Activities In Q2 2025, Allot completed a $46 million public offering, with $40 million gross proceeds received during the quarter, primarily used to repay $31.4 million in convertible debt, with the remainder for general corporate purposes - Completed a $46 million public offering[12] - Gross proceeds of $40 million were received during the second quarter[12] - Net proceeds were used to repay $31.4 million of convertible debt[12] Company Information and Disclosures This section provides essential company information, including conference call details, a company overview, definitions of key performance metrics, GAAP to non-GAAP reconciliation principles, a safe harbor statement, and investor contacts Conference Call & Webcast Information Allot's management team held a conference call on August 14, 2025, to discuss Q2 2025 earnings, with details provided for accessing the call and archived webcast - The conference call was held on August 14, 2025, at 9:00 AM ET[14] - An archived webcast is accessible at http://investors.allot.com/index.cfm[14](index=14&type=chunk) About Allot Ltd. Allot Ltd. is a global provider of network intelligence and security solutions for service providers and enterprises, offering network and application analytics, traffic control, and network-based security services, with its multi-service platform deployed by over 500 service providers and 1,000 enterprises - Allot Ltd. is a leading global provider of network intelligence and security solutions for service providers and enterprises[15] - Solutions include network and application analytics, traffic control and shaping, and network-based security services[15] - Its multi-service platform has been deployed by over 500 mobile, fixed, and cloud service providers and 1,000 enterprises worldwide[15] - Its industry-leading network-based Security-as-a-Service solutions are used by millions of users globally[15] Performance Metrics Definition The report defines SECaaS ARR (Security-as-a-Service Annual Recurring Revenue) as a key performance indicator, calculated by multiplying estimated June 2025 revenue by 12 - SECaaS ARR measures the current annual recurring SECaaS revenue[16] - It is calculated by multiplying the estimated June 2025 revenue by 12[16] GAAP to Non-GAAP Reconciliation Principles This document explains that non-GAAP measures are provided to better illustrate Allot's core business and ongoing performance by adjusting for fair value adjustments of acquired deferred revenue, share-based compensation, amortization of acquisition-related intangible assets, deferred tax asset adjustments, and tax-related items, serving as a supplement to GAAP - Non-GAAP revenue adjusts for the impact of fair value adjustments to acquired deferred revenue related to purchase accounting[17] - Non-GAAP net income excludes share-based compensation expenses, amortization of acquisition-related intangible assets, deferred tax asset adjustments, and tax-related items[17] - The company provides these non-GAAP financial measures as they better measure the company's core business, and management uses non-GAAP measures to assess the company's ongoing performance[18] Safe Harbor Statement This section contains a standard safe harbor statement indicating that forward-looking statements in this press release are subject to known and unknown risks and uncertainties, listing various factors that could cause actual results to differ, and the company undertakes no obligation to update these statements - This press release contains forward-looking statements subject to known and unknown risks and uncertainties[19] - Significant risk factors include accounts receivable, ability to achieve financial guidance, competition, loss of key customers, government regulation, timing of key project milestones, decreased demand for value-added services, ability to keep pace with technological advancements, managing long sales cycles, operational risks associated with large projects, and reliance on third-party channel partners[19] - These forward-looking statements are made only as of the date of this release, and the company undertakes no obligation to update or revise them[19] Investor and Public Relations Contacts Contact information is provided for Investor Relations (EK Global Investor Relations) and Public Relations (Seth Greenberg of Allot Ltd.) - Investor Relations contact: Ehud Helft, EK Global Investor Relations, Phone: +1 212 378 8040, Email: allot@ekgir.com[20] - Public Relations contact: Seth Greenberg, Allot Ltd., Phone: +972 54 922 2294, Email: sgreenberg@allot.com[20] Consolidated Financial Statements This section presents Allot's consolidated GAAP statements of operations, reconciliation of GAAP to non-GAAP results, balance sheets, and cash flow statements for the reported periods Consolidated Statements of Operations (GAAP) The GAAP consolidated statements of operations present Allot's financial performance for the three and six months ended June 30, 2025, compared to the same periods in 2024, detailing key metrics including revenue, gross profit, operating expenses, operating loss, and net loss | Metric (thousand USD) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | 24,051 | 22,164 | 47,201 | 44,054 | | Gross Profit | 17,330 | 15,175 | 33,378 | 30,273 | | Total Operating Expenses | 17,737 | 18,541 | 34,494 | 36,382 | | Operating Loss | (407) | (3,366) | (1,116) | (6,109) | | Net Loss | (1,690) | (3,356) | (2,021) | (5,866) | | Basic Net Loss Per Share | (0.04) | (0.09) | (0.05) | (0.16) | | Diluted Net Loss Per Share | (0.04) | (0.09) | (0.05) | (0.16) | Reconciliation of GAAP to Non-GAAP Consolidated Statements of Operations This table details the reconciliation of Allot's GAAP to non-GAAP financial results for the three and six months ended June 30, 2025 and 2024, with key adjustments including share-based compensation, intangible asset amortization, loss on debt extinguishment, exchange rate differences, and tax-related items, resulting in Q2 2025 non-GAAP net income of $1.45 million versus a Q2 2024 non-GAAP net loss of $0.774 million | Metric (thousand USD) | Three Months Ended June 30, 2025 (GAAP) | Adjustments | Three Months Ended June 30, 2025 (Non-GAAP) | Three Months Ended June 30, 2024 (GAAP) | Adjustments | Three Months Ended June 30, 2024 (Non-GAAP) | | :------------------------------------ | :---------------------------------- | :---------- | :----------------------------------- | :---------------------------------- | :---------- | :----------------------------------- | | Cost of Revenue | 6,721 | (312) | 6,409 | 6,989 | (476) | 6,513 | | Gross Profit | 17,330 | 312 | 17,642 | 15,175 | 476 | 15,651 | | Operating Expenses | 17,737 | (1,289) | 16,448 | 18,541 | (1,863) | 16,678 | | Loss on Debt Extinguishment | (1,410) | 1,410 | - | - | - | - | | Finance and Other Income | 359 | 104 | 463 | 489 | 110 | 599 | | Income Tax Expense | 332 | (25) | 307 | 479 | (133) | 346 | | Net Income (Loss) | (1,690) | 3,139 | 1,450 | (3,356) | 2,582 | (774) | | Loss Per Share (Diluted) | (0.04) | 0.07 | 0.03 | (0.09) | 0.07 | (0.02) | - Share-based compensation expense for Q2 2025 was $1,449 thousand[26] - Amortization of intangible assets for Q2 2025 was $152 thousand[26] Consolidated Balance Sheets Allot's consolidated balance sheets show total assets increased to $154.05 million as of June 30, 2025, from $139.64 million on December 31, 2024, driven by higher cash and marketable securities, while total liabilities significantly decreased due to convertible debt repayment, and shareholders' equity doubled to $99.72 million | Metric (thousand USD) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | Change | | :------------------------ | :-------------------------- | :-------------------------- | :----- | | Total Current Assets | 87,293 | 90,176 | (2,883) | | Total Non-Current Assets | 66,759 | 49,465 | 17,294 | | Total Assets | 154,052 | 139,641 | 14,411 | | Total Current Liabilities | 41,831 | 35,970 | 5,861 | | Total Long-Term Liabilities | 12,504 | 53,862 | (41,358) | | Shareholders' Equity | 99,717 | 49,809 | 49,908 | - Cash and cash equivalents increased from $16,142 thousand on December 31, 2024, to $26,943 thousand on June 30, 2025[28] - Convertible debt decreased from $39,973 thousand on December 31, 2024, to $0 on June 30, 2025[28] Consolidated Statements of Cash Flows Allot's cash flow statement shows significantly improved cash flow from operating activities, generating $4.38 million in Q2 2025, while investing activities provided $6.22 million, reversing a Q2 2024 outflow, and financing activities provided $6.28 million, primarily from equity issuance and convertible debt redemption, leading to a total $16.88 million increase in cash and cash equivalents for Q2 2025 | Metric (thousand USD) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by (Used in) Operating Activities | 4,384 | 1,174 | 6,069 | (1,135) | | Net Cash Provided by (Used in) Investing Activities | 6,217 | (8,010) | (1,787) | 2,825 | | Net Cash Provided by Financing Activities | 6,281 | 1 | 6,519 | 1 | | Increase (Decrease) in Cash and Cash Equivalents | 16,882 | (6,835) | 10,801 | 1,691 | | Cash and Cash Equivalents at End of Period | 26,943 | 15,883 | 26,943 | 15,883 | - Equity issued in Q2 2025 totaled $37,691 thousand[30] - Convertible debt redeemed in Q2 2025 amounted to ($31,410) thousand[30] Supplemental Financial Data This section provides additional financial data, including revenue breakdown by geography and type, detailed SECaaS performance metrics, and share information Revenue Geographic and Type Breakdown In Q2 2025, EMEA was Allot's largest revenue contributor at 66%, followed by Americas and APAC at 17% each, with support and maintenance at 35%, SECaaS at 27%, products at 31%, and professional services at 7%, showing a significant increase in SECaaS revenue share from prior years | Revenue Geographic Breakdown | Q2 2025 | FY 2024 | FY 2023 | | :-------------------------- | :---- | :------ | :------ | | Americas | 17% | 15% | 18% | | EMEA | 66% | 59% | 60% | | APAC | 17% | 26% | 22% | | | | | | | Revenue Type Breakdown | Q2 2025 | FY 2024 | FY 2023 | | :------------------------ | :---- | :------ | :------ | | Products | 31% | 33% | 40% | | Professional Services | 7% | 9% | 7% | | SECaaS (Security-as-a-Service) | 27% | 18% | 11% | | Support & Maintenance | 35% | 40% | 42% | SECaaS Performance Allot's SECaaS revenue showed consistent quarter-over-quarter growth, reaching $6.4 million in Q2 2025, up from $3.7 million in Q2 2024, with SECaaS ARR also demonstrating strong growth to $25.2 million by June 2025 | SECaaS Revenue (million USD) | | | :-------------------------------- | :-- | | Q2 2025 | 6.4 | | Q1 2025 | 5.1 | | Q4 2024 | 4.8 | | Q3 2024 | 4.7 | | Q2 2024 | 3.7 | | | | | SECaaS ARR (million USD) | | | :-------------------------- | :-- | | June 2025 | 25.2 | | December 2024 | 18.2 | | December 2023 | 12.7 | | December 2022 | 9.2 | Share Information Non-GAAP weighted average basic shares outstanding for Q2 2025 were 40.1 million, with fully diluted shares at 43.8 million | Metric (million shares) | Q2 2025 | FY 2024 | FY 2023 | | :------------------------------------ | :---- | :------ | :------ | | Non-GAAP Weighted Average Basic Shares | 40.1 | 38.9 | 37.9 | | Non-GAAP Weighted Average Fully Diluted Shares | 43.8 | 42.3 | 40.3 | - Revenue from the top ten customers accounted for 55% in Q2 2025, up from 43% in FY 2024[31]