Allot Ltd (ALLT) Q3 2024 Earnings: Return to Profitability and Strategic Expansion

Release Date: November 19, 2024

Allot Ltd (NASDAQ:ALLT) has announced its first non-GAAP operating net profit in three years, marking a significant milestone in its financial recovery. The company also reported positive operating cash flow and an increase in net cash levels for two consecutive quarters.

A key highlight was the 69% year-over-year increase in Security as a Service revenues, attributed to top-tier customer engagement and the expansion of security solutions. Allot Ltd is capitalizing on a unified business unit strategy to enhance its core competencies in security and network intelligence.

The company's reorganization efforts are aimed at becoming more customer-centric, which is expected to open new avenues for expansion and attract new customers. Despite these positive developments, Allot Ltd still faces challenges due to its reliance on CapEx deals and non-recurring revenue, which are unpredictable.

Guidance for the upcoming quarter remains cautious, with potential for flat or declining operating profit on a quarter-to-quarter basis, largely due to the nature of non-recurring revenue. The ongoing strategic reorganization may involve reducing headcount in certain areas to streamline operations.

Allot Ltd also faces competition in growing its non-security-related revenues. The company is transitioning towards a more stable recurring revenue model to ensure long-term financial stability.

In a Q&A session, CEO Eyal Harari confirmed expectations for ARR growth in the next quarter, driven by increased usage from existing customers and new customer acquisitions. The record increase in CCAS ARR was attributed to new service launches, deeper market penetration, and customer growth.

The CCAS agreement with Vodafone is set to expand beyond the UK, although specific details are not yet available. CFO Liat Nachum highlighted that improved gross margins were supported by a higher mix of CCAS revenue.

For more detailed insights, refer to the full earnings call transcript.