Release Date: November 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Allot Ltd (NASDAQ:ALLT) achieved its first non-GAAP operating net profit in three years, indicating a return to financial stability.

• The company reported a positive operating cash flow and an increase in net cash levels for two consecutive quarters.

• Security as a Service revenues increased by 69% year over year, driven by top-tier customers and expanded security solutions.

• Allot Ltd (NASDAQ:ALLT) is focusing on a unified business unit strategy to leverage core strengths in security and network intelligence.

• The company is reorganizing to be more customer-centric, aiming to open new opportunities for expansion and gain new customers.

Negative Points

• Allot Ltd (NASDAQ:ALLT) still relies heavily on CapEx deals and non-recurring revenue, which are harder to predict.

• The company's guidance for the next quarter remains conservative due to the unpredictability of non-recurring revenue.

• There is a potential for flat or declining operating profit on a quarter-to-quarter basis due to non-recurring revenue.

• The company is undergoing a strategic reorganization, which may involve reducing headcount in specific areas.

• Allot Ltd (NASDAQ:ALLT) faces challenges in achieving growth in non-security-related revenues due to competitive pressures.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with ALLT.

Q: Can you confirm if the ARR growth is expected to be up quarter-over-quarter, given the 62% year-over-year increase in the September quarter? A: Yes, we expect ARR to grow next quarter. The higher revenue this quarter was due to some catch-up revenue from a customer, which is not recurring. We anticipate further ARR growth as existing customers increase usage and new customers are added. - Eyal Harari, CEO

Q: Why do you expect flat or declining operating profit on a quarter-to-quarter basis? A: This is related to the non-recurring revenue recognized this quarter. We are focused on transitioning to a more recurring revenue model, which will provide more stability and predictability. However, we remain conservative with our guidance due to the timing of certain deals. - Eyal Harari, CEO

Q: What drove the record increase in CCAS ARR this quarter? A: The increase is due to a mix of new service launches by existing customers, increased penetration, and new customer acquisitions. We are pleased with the progress and plan to continue investing to maintain high growth rates. - Eyal Harari, CEO