Core Insights - Allot Ltd. (ALLT) is experiencing significant growth in its Cybersecurity as a Service (SECaaS) business, which is now the primary driver of revenue growth for the company [1][10] - In Q3 2025, SECaaS annual recurring revenues (ARR) increased by 60% year-over-year, contributing approximately 28% to Allot's total revenues, up from 21% in the same quarter last year [1][10] - Management anticipates that the SECaaS revenue share will approach 30% by the end of 2025 [1] SECaaS Growth Drivers - The growth in SECaaS is primarily attributed to Tier-1 telecom customers who have recently launched the service and are adding more subscribers [2] - New subscriber additions and increasing attach rates are driving this growth, with adoption rates expected to improve over two to three years post-launch, supporting steady ARR growth [2] Strategic Partnerships - In January 2026, Allot entered a partnership with Compax Venture to utilize its NetworkSecure and OffNetSecure platforms, enabling Mobile Virtual Network Operators (MVNOs) to offer cybersecurity services [3] - This partnership expands Allot's SECaaS distribution beyond traditional mobile operators, enhancing recurring subscription revenues [3] Revenue Quality Improvement - The increased contribution from SECaaS is enhancing revenue quality, with recurring revenues rising to 63% in Q3 2025, compared to 58% in the same quarter last year [4] - The SECaaS business is becoming central to Allot's revenue model, which is expected to support growth in upcoming quarters [4] Competitive Landscape - Allot competes with established companies in the network traffic management and cybersecurity sectors, including Check Point Software (CHKP) and Palo Alto Networks (PANW) [5] - Check Point Software focuses on hybrid network security with its Quantum Firewall Software, while Palo Alto Networks has partnered with IBM to enhance quantum-safe security solutions [6][7] Stock Performance and Valuation - Allot's shares have increased by 14.1% over the past six months, contrasting with a 20.7% decline in the Zacks Internet - Software industry [8] - The company trades at a forward price-to-sales ratio of 4.53, which is lower than the industry average of 5.03 [12] - The Zacks Consensus Estimate for Allot's 2026 earnings indicates a year-over-year increase of 24.3%, with estimates revised upward by 3 cents in the past 60 days [15]

Core Insights - Allot Inc. (ALLT) is set to report its fourth-quarter 2025 results on February 25, with expected revenues of $27.93 million, reflecting a 12.2% year-over-year growth and non-GAAP earnings of 7 cents per share, indicating a 40% increase from the previous year [1][2]. Financial Performance - The consensus estimate for Allot's fourth-quarter 2025 revenues is $27.93 million, which implies a growth of 12.2% from the year-ago figure [1]. - The non-GAAP earnings estimate for the fourth quarter has remained stable at 7 cents per share over the past 60 days, representing a 40% increase from the same quarter last year [1][2]. - In the third quarter of 2025, Allot reported earnings per share of 10 cents, surpassing the Zacks Consensus Estimate of 4 cents [2]. Earnings Expectations - Allot currently has an Earnings ESP of 0.00% and holds a Zacks Rank 3, indicating a neutral outlook for earnings performance [3][4]. Business Growth Factors - Allot's performance in the fourth quarter is expected to benefit from significant growth in its Cybersecurity-as-a-Service (SECaaS) business, which saw a 60% year-over-year increase in Annual Recurring Revenue (ARR) in Q3 2025 [5][6]. - SECaaS accounted for approximately 28% of Allot's total revenues in Q3, with expectations to rise to 30% in the near future, enhancing revenue predictability [6][8]. - The growth in SECaaS is driven by increased adoption from telecom partners and new end users, with existing customers also expanding their service usage [7][8]. Market Performance - Allot's shares have increased by 50.8% over the past year, outperforming the Zacks Computer and Technology Sector, which grew by 22.3% [9]. - The stock has outperformed major competitors, including Check Point Software, Fortinet, and Palo Alto Networks, which have seen declines in their stock prices over the same period [9]. Valuation Metrics - Allot is currently trading at a forward price-to-sales (P/S) ratio of 4.21X, which is lower than the sector average of 6.41X, indicating a potentially attractive valuation for investors [13][16]. - Compared to its peers, Allot's P/S multiple is also lower, enhancing its appeal for long-term investors [16]. Strategic Considerations - The rapid scaling of Allot's SECaaS business across telecom customers is a key driver of revenue growth, with expectations that continued user adoption will support future performance [17]. - However, the company faces significant competition from established players in the network traffic management and cybersecurity sectors, which could impact its market position [18][21].

Core Insights - Allot Ltd. (ALLT) shares have increased by 15.2% over the past three months, significantly outperforming the Zacks Computer and Technology Sector, which saw a mere 0.5% appreciation [1] - The stock has outperformed competitors such as Check Point Software (CHKP), Fortinet (FTNT), and Palo Alto Networks (PANW), with Fortinet gaining 4.1%, while CHKP and PANW lost 10.6% and 20.4%, respectively [1] SECaaS Growth - Allot's SECaaS (Security as a Service) business is becoming the primary growth driver, with annual recurring revenue (ARR) increasing by 60% year-over-year in Q3 2025 [5] - SECaaS accounted for approximately 28% of Allot's total revenues in Q3, with expectations to rise to 30% if current trends persist [6] - The increase in SECaaS revenue is attributed to higher adoption rates from telecom partners and an increase in end users signing up for security services [5][6] Revenue and Guidance - Allot raised its revenue guidance for 2025 to a range of $100-$103 million, up from the previous estimate of $98-$102 million [8] - The company also expects SECaaS ARR growth to exceed 60% year-over-year, an increase from the prior guidance of 55-60% [9] - The Zacks Consensus Estimate for 2026 indicates a revenue growth of 13.3% [9] Valuation Metrics - Allot's stock is currently trading at a forward price-to-sales (P/S) ratio of 4.27X, which is lower than the sector average of 6.54X and its peers, including CHKP (6.85X), FTNT (8.4X), and PANW (10.27X) [11][15] - This valuation discount may appeal to long-term investors despite the competitive landscape [15] Competitive Landscape - Allot faces significant competition from established players in the network traffic management and security sectors, including Check Point Software, Fortinet, and Palo Alto Networks [16] - Competitors are continuously innovating their offerings, which could impact Allot's market position [16][20][19] Conclusion - Allot is experiencing robust growth in its SECaaS business, leading to increased revenues and improved earnings visibility [21] - The rising interest in new cybersecurity offerings presents opportunities for upselling to existing customers, enhancing the company's growth prospects [21]