Allot(US:ALLT)2024-02-15 20:59Financial Data and Key Metrics Changes - Q4 2023 revenues were $24.3 million, a decrease of 26% compared to the same quarter last year [5] - Total revenues for the full year 2023 were $93.1 million, down 24% from 2022 [5] - Cash and equivalents as of December 31, 2023, were $54.9 million, down from $86.4 million at the end of 2022 [6] - Backlog as of December 31, 2023, was $58.8 million, down from $87.7 million at the end of 2022 [6] - Non-GAAP operating loss for 2023 was $55.2 million compared to a loss of $23.1 million in 2022 [6] Business Line Data and Key Metrics Changes - SECaaS ARR was $12.7 million as of December 2023, up 20% from September 2023 and 38% higher than December 2022 [5] - The transition to the SECaaS recurring revenue model has been slower than anticipated, with cancellations from two large operators impacting revenues [7] - The core DPI business faced macro-related headwinds, leading to lower bookings and revenues than expected [8] Market Data and Key Metrics Changes - In 2023, approximately 60% of revenues came from EMEA, 18% from America, and 22% from Asia [31] - The company is shifting focus towards developing countries and lower ARPU markets due to more significant growth opportunities [24][29] Company Strategy and Development Direction - The company aims to reach breakeven in 2024 while investing in profitable multiyear growth [12][19] - A conservative approach is being taken for planned bookings and revenues, focusing on a larger pipeline of large deals in government and emerging markets [15] - The company is reallocating resources to target specific market segments, including fixed wireless access and small Tier 3 or 4 CSPs [16] Management's Comments on Operating Environment and Future Outlook - Management expressed commitment to turning the situation around and stopping losses in 2024 [9] - The SECaaS business is expected to continue growing, with a focus on existing customers and expanding service offerings [17][40] - The company anticipates cash levels to stabilize around $50 million before increasing by the end of 2024 [20] Other Important Information - The company underwent significant cost-cutting measures, reducing full-time employees from 749 at the end of 2022 to 559 by the end of 2023 [6][12] - An executive committee was formed to identify opportunities for improvement and enhance shareholder value [11] Q&A Session Summary Question: Shift in focus towards CSPs and emerging markets - Management noted that CSPs in developed countries are embracing the cloud, leading to fewer opportunities, while developing countries present more significant growth potential [24] Question: Refresh opportunities within mature markets - There are some refresh opportunities, but they are less than in the past, with new use cases emerging in fixed wireless access [26][27] Question: DPI revenue from emerging markets - Approximately 60% of revenues derived from EMEA, with established sales in emerging markets expected to grow in 2024 [31][33] Question: Improvement in DPI pipeline and deal closures - Management indicated a larger pipeline of large deals but cautioned that it is premature to say the market is healthier or that close rates have improved [36] Question: Performance of Verizon deal - The Verizon launch is performing according to plan, with discussions for expanding market segments ongoing [38] Question: Trends in SECaaS business - Most launched SECaaS services are performing well, and the company is focusing on a smaller number of new customers to ensure successful conversions [40]