Group 1 - Allot Limited (NASDAQ:ALLT) is identified as one of the 9 small-cap software infrastructure stocks with significant upside potential, with Cantor Fitzgerald assigning an Overweight rating and a $15 price target, indicating an upside potential of over 49% [1] - The company is transitioning towards a security-centric consumer model, benefiting from the growing contribution of Security as a Service and improving financial metrics, while its valuation remains below comparable companies, suggesting room for potential upside and multiple re-rating [2] - On January 13, Allot Limited announced that Compax Venture will deploy its NetworkSecure and OffNetSecure solutions to support the launch of MVNOs, providing integrated cyber protection services, which will enhance cybersecurity and content filtering for subscribers [3] Group 2 - Allot Limited develops and sells network intelligence and security solutions for communication service providers and enterprises, offering a comprehensive suite of end-to-end security management services through its Allot Secure Management platform, including Allot NetworkSecure, Allot HomeSecure, Allot DNSecure, Allot BusinessSecure, and Allot Secure Cloud [4]

Core Viewpoint - Cantor Fitzgerald initiated coverage of Allot Ltd. (ALLT) with an Overweight rating and a price target of $15, highlighting the company's transition to a security-first consumer company with Security as a Service (SECaaS) as the main growth driver [1] Group 1: Company Transition and Growth - Allot is moving from being a mature network intelligence vendor to focusing on security services, indicating a strategic shift in its business model [1] - The primary growth driver for Allot is identified as SECaaS, which is expected to enhance the company's fundamentals and recurring revenue [1] Group 2: Market Position and Valuation - Despite the strong momentum and carrier-led wins, Allot's shares are trading at a significant discount compared to its peers, suggesting potential for growth and a re-rating of its market multiple [1] - The analyst notes that the combination of improving fundamentals and rising recurring revenue positions Allot for renewed growth [1]

Financial Data and Key Metrics Changes - The company reported revenues of $23.2 million for the quarter, representing a 6% year-over-year increase [19] - Non-GAAP net income was $800,000, compared to a net loss of $900,000 in the same quarter last year [21] - Positive operating cash flow of $1.7 million was achieved, with cash and short-term investments totaling $60.7 million at the end of the quarter [21] Business Line Data and Key Metrics Changes - Revenue from the CCaaS segment was $5.1 million, up 49% year-over-year, comprising 22% of total revenue [19] - CCaaS's annual recurring revenue (ARR) reached $21.2 million, reflecting a 55% increase year-over-year [6][19] - Non-GAAP gross margin remained stable at 70.4%, with expectations for continued growth as CCaaS revenue increases [20] Market Data and Key Metrics Changes - Verizon became the largest contributor to CCaaS revenues in Q1, with significant growth expected from their new mobile service [30] - The company is experiencing strong traction in partnerships with major telecom operators like Vodafone and Verizon, which are expected to drive future growth [11][52] Company Strategy and Development Direction - The company is focused on a "Security First" strategy, aiming to enhance cybersecurity offerings and expand partnerships with telecom providers [5][8] - There is a strong emphasis on converting a growing pipeline of opportunities into new partnerships and agreements, particularly in the CCaaS and smart product segments [9][15] - The launch of new products, such as the OfNet Secure solution, is part of the strategy to provide comprehensive cybersecurity services [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving profitable growth in 2025, with expectations for CCaaS revenue and ARR to increase by around 50% or more year-over-year [18] - The rise of AI and increasing demand for cybersecurity solutions are seen as key drivers for future growth [17] - Management acknowledged the competitive nature of the market but remains confident in the company's ability to capitalize on emerging opportunities [41] Other Important Information - The company has made significant progress in expanding its partnership with Verizon Business, which now includes a broader customer base [9][10] - The Terra III multi-service platform has generated interest among Tier 1 telecom operators, contributing to a robust pipeline of opportunities [14][15] Q&A Session Summary Question: Did Verizon Business Mobile Internet Security contribute to Q1 CCaaS ARR results? - Management indicated that the official launch occurred in mid-April, so minimal contribution was expected in Q1, with significant growth anticipated in Q2 [25][26] Question: What was the big driver for CCaaS ARR growth? - The growth was attributed to new agreements and service launches, particularly with Vodafone and other carriers [27][28] Question: Is there a probability that CCaaS ARR grows less than 50%? - Management stated that while they are comfortable with the 50% estimate, various factors could influence the final outcome [29] Question: Did Verizon become the largest contributor to CCaaS revenue? - Yes, Verizon's initial launch of mobile services and traction from fixed wireless access made it the top contributor [30] Question: Are there opportunities to cross-sell CCaaS solutions to smart business customers? - Management confirmed that synergies exist between the two business units, allowing for potential cross-selling opportunities [34] Question: Are there large deals in the pipeline? - Management noted several 8-figure deals in the pipeline, driven by both existing and new projects [45][48] Question: How is the partnership with Vodafone progressing? - Some revenues have already been recognized, with expectations for continued growth from the partnership [52][53]

Financial Data and Key Metrics Changes - The company reported a revenue of $23.2 million for Q1 2025, representing a 6% year-over-year increase [22] - Non-GAAP net income was $800,000, compared to a net loss of $900,000 in Q1 2024 [24] - Positive operating cash flow of $1.7 million was reported for the quarter, with cash and short-term deposits totaling $60.7 million at the end of Q1 2025 [24] Business Line Data and Key Metrics Changes - Revenue from the CCaaS segment was $5.1 million, up 49% year-over-year, comprising 22% of total revenue [22] - CCaaS annual recurring revenue (ARR) reached $21.2 million, reflecting a 55% increase year-over-year [7][22] - Non-GAAP gross margin remained stable at 70.4%, with expectations for continued growth as CCaaS revenue increases [23] Market Data and Key Metrics Changes - Verizon became the largest contributor to CCaaS revenues in Q1 2025, driven by the launch of their mobile service and existing fixed wireless access customers [12][32] - The company is experiencing strong traction in partnerships with major telecom operators, including Vodafone and Verizon, which are expected to drive future growth [10][12] Company Strategy and Development Direction - The company is focused on a "Security First" strategy, aiming to enhance cybersecurity offerings and expand partnerships with telecom operators [6][19] - There is a strong emphasis on converting a growing pipeline of opportunities into new partnerships and agreements, particularly in the CCaaS and smart product segments [10][16] - The launch of new products, such as the OfNet Secure solution, is part of the strategy to provide comprehensive cybersecurity services [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving profitable growth in 2025, with expectations for CCaaS revenue and ARR to grow by around 50% or more year-over-year [20] - The company is confident in its ability to capitalize on the increasing demand for cybersecurity solutions, particularly in the consumer and SMB segments [19] - Management highlighted the importance of execution in translating the growing pipeline into actual business [50] Other Important Information - The company has made significant progress in expanding its partnership with Verizon Business, which now includes a broader customer base for its cybersecurity solutions [10][12] - The Terra III multi-service platform has generated interest among Tier 1 telecom operators, contributing to a robust pipeline of opportunities [15][16] Q&A Session Summary Question: Did Verizon Business Mobile Internet Security contribute to Q1 CCaaS ARR results? - Management indicated that the official launch occurred in mid-April, resulting in minimal contribution for Q1, with expectations for significant growth in Q2 [27][28] Question: What was the driver for the significant CCaaS ARR growth? - The growth was attributed to new agreements and service launches, particularly with Vodafone and other carriers, which are starting to contribute to revenue [29] Question: Is there a possibility that CCaaS ARR growth could be less than 50%? - Management acknowledged potential variability due to reliance on service providers' marketing efforts but expressed confidence in achieving around 50% growth [30][31] Question: Did Verizon become the largest contributor to CCaaS revenue? - Yes, Verizon's initial launch of mobile services and traction from fixed wireless access made it the number one account for CCaaS revenue [32] Question: Are there opportunities to cross-sell CCaaS solutions to smart business customers? - Management confirmed that there are synergies and potential for cross-selling between smart products and CCaaS solutions [36] Question: Will Verizon's bundling of security services influence other operators? - Management believes that Verizon's success will likely prompt competitors to consider similar bundling strategies [43][44] Question: Can you provide updates on the partnership with Vodafone? - Management confirmed that revenues from Vodafone agreements are already contributing, with expectations for further growth as the agreements are fully realized [54][55]