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Allot Ltd.

ALLT
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Business Summary

Allot Ltd. is a provider of innovative security and network intelligence solutions for mobile, fixed, and cloud service providers, as well as enterprises globally. The company's solutions, deployed for over 25 years, encompass network-based security, including mobile security, distributed denial of service (DDoS) protection, Internet of Things (IoT) security, network and application analytics, and traffic control and shaping. Allot has recently emphasized a strategic focus on expanding its Security-as-a-Service (SECaaS) product offerings . The company serves a diverse customer base, including mobile and fixed broadband service providers, cable operators, satellite service providers, private networks, data centers, governments, and financial and educational institutions .

The core business model involves generating revenue from two primary sources: sales of network traffic management systems, network management application solutions and platforms, and security solutions to telecom providers; and the provision of maintenance, support, and professional services, including installation and training . A significant and growing portion of revenue is derived from direct sales to large mobile and fixed-line service providers, as well as government and law enforcement entities, with the remainder generated through a network of channel partners such as distributors, resellers, OEMs, and system integrators . The SECaaS solutions are offered to Communication Service Providers (CSPs) on a recurring revenue basis, either through a revenue share model with the operator's subscribers or a fixed yearly fee up to an agreed number of subscribers .

Allot's product and service lines are segmented into Security Solutions and Integrated Network Visibility and Traffic Management Solutions (AllotSmart). Security Solutions include the Allot Secure 360 suite, which provides end-to-end protection against cyber threats for consumers and SMBs. Key components are Allot Secure Management (ASM), Allot NetworkSecure, Allot HomeSecure, Allot DNSecure, Allot IoTSecure, Allot BusinessSecure, OffnetSecure, Allot Secure Cloud, and AllotDDoS BusinessSecure . For carriers, security offerings include DDoS Secure and Smart NetProtect . Integrated Network Visibility and Traffic Management Solutions, collectively known as AllotSmart, provide network visibility and control, enabling CSPs to manage 5G networks, access usage data and analytics (SmartVisibility), optimize Quality of Experience (SmartTraffic QoE), offer personalized service plans (SmartPCC), and comply with regulatory requirements (SmartSentinel) . The Allot NetXplorer serves as a centralized management platform for all devices, platforms, and solutions .

For the fiscal year ended December 31, 2025, Allot reported total revenues of $101,993 thousand . Gross profit stood at $72,552 thousand , resulting in a gross margin of 71.1% . Operating income was $3,604 thousand , yielding an operating margin of 3.5% . Net income for the period was $3,705 thousand , with basic and diluted EPS both at $0.08 . Net cash provided by operating activities was $17,791 thousand . As of December 31, 2025, cash and cash equivalents totaled $17,107 thousand , available-for-sale marketable securities were $48,663 thousand , and short-term bank deposits were $15,100 thousand . Total current liabilities were $47,159 thousand , and long-term liabilities were $12,190 thousand . The company had no convertible debt outstanding as of December 31, 2025 .

Comparing 2025 to 2024, total revenues increased by 11% from $92,195 thousand to $101,993 thousand . Product revenues increased by $0.9 million , or 3% , to $31,012 thousand in 2025 from $30,068 thousand in 2024. Service revenues increased by $8.9 million , or 14% , to $70,981 thousand in 2025 from $62,127 thousand in 2024. Product revenues comprised 30.4% of total revenues in 2025, a decrease of 2.2% from 2024, while service revenues increased by 2.2% to 69.6% . Gross margin improved from 69.1% in 2024 to 71.1% in 2025, driven by a higher percentage of SECaaS solution recurring revenue and lower cost of services . Research and development expenses decreased by $1.6 million , or 6% , to $24,496 thousand in 2025 from $26,112 thousand in 2024, mainly due to workforce reduction and cost structure alignment . Sales and marketing expenses decreased by $0.1 million to $30,819 thousand . General and administrative expenses increased by $0.9 million , or 7% , to $13,633 thousand , primarily due to legal and other general expenses .

During 2025, Allot continued its strategic focus on expanding and advancing its SECaaS product offerings . The company repaid $31.41 million of its outstanding principal amount under a senior unsecured convertible promissory note with Lynrock Lake Master Fund LP, with the remaining $8.59 million principal converted into 1,249,995 ordinary shares . This resulted in a loss from extinguishment of $1,410 thousand . The company also issued $42,308 thousand in ordinary shares during 2025 .

Business Outlook

Management explicitly states that the growth of its SECaaS recurring revenue model has been slower than originally anticipated and that the company will need to expand the number of recurring security revenue deals and end-user penetration within existing customers to achieve its business goals . The company faces significant challenges in growing its security business, and failure to do so would adversely impact future growth and prospects . Allot's primary sales strategy is to target large, strategic accounts while implementing minimum revenue thresholds or customer assurances for small to medium-sized accounts, a shift believed to generate greater revenue and accelerate profitability, though it may decrease market share .

A major growth area for Allot is its AI-enhanced, network-native security architecture, which is positioned to detect and mitigate dynamic, machine-driven threats at scale . This evolution in cyber threats, driven by generative AI, creates a significant strategic opportunity for Allot to enable CSPs to protect subscribers and drive new recurring revenue models through differentiated security offerings . The company is also investing resources in the development and introduction of new products designed for deployment in public cloud environments .

Regarding operational outlook, Allot has implemented operational improvements and cost efficiency measures that have stabilized its cost structure, but there is no guarantee these improvements can be sustained or additional efficiencies realized . The company's cost of revenues as a percentage of total revenues was 28.9% for 2025, a decrease from 30.9% in 2024, attributed to revenue mix, efficiency, and cost structure alignment . Research and development expenses decreased by 6% to $24,496 thousand in 2025, mainly due to workforce reduction and cost structure alignment . The company expects to continue making capital expenditures to meet the expected growth of its business .

Planned capital allocation includes continued investment in research and development, which management believes is essential for future success . Capital expenditures were $2.3 million in 2025, and the company expects to continue making such expenditures to support business growth . As of December 31, 2025, Allot had $0.3 million in outstanding non-cancelable inventory purchase obligations with a remaining term of 12 months . The company intends to fund its existing and future material cash requirements with its existing cash balance .

Structural headwinds include the commoditization of consumer security services in some geographies, which could pressure pricing and negatively impact margins and revenue . The market for consumer-focused cybersecurity services is becoming increasingly crowded, with large platform providers and mobile/fixed broadband operators bundling security features at little or no incremental cost . Additionally, large enterprise cybersecurity vendors may expand into the consumer and SMB segments, potentially reducing differentiation for Allot's network-based security solutions . The company's DNI technology-enabled offerings face significant competition from router and switch infrastructure companies that integrate functionalities into their platforms, a trend expected to intensify with 5G network expansion . The DNI market has lower long-term visibility, impacting growth prospects in this segment for 2026 .

Risk Factors

Allot faces several material risks, including fluctuations in currency exchange rates, particularly the U.S. dollar against the Israeli shekel and Euro, which can negatively impact results of operations and financial condition . The company's future growth depends significantly on its ability to grow recurring revenues from SECaaS and other "as a Service" offerings, which has been slower than anticipated . Competition is intense from larger companies with greater resources, and new market entrants leveraging AI technologies may disrupt existing use cases and customer segments . Failure to keep pace with rapid technological changes, including 5G network adaptation and increased network encryption, could adversely affect revenues . The company has a history of losses and may not achieve or maintain profitability, with operational efficiency and cost discipline being critical . Customer concentration is a risk, as the ten largest customers accounted for 40.7% of total revenues in 2025 , and the loss of any significant customer could harm results . Sales to large service providers involve lengthy cycles, increasing unpredictability and resource expenditure without guaranteed sales . Product failures or undetected software/hardware errors could adversely affect customer networks, reputation, and financial condition . Demand for DNI products depends on the adoption of bandwidth-intensive applications, while demand for security products relies on the continued evolution of online threats and operators' interest in providing security services . Issues with AI integration in products, including flaws, bias, or regulatory scrutiny, could result in reputational harm or legal liability . Dependence on third-party channel partners for marketing, sales, and support, and on limited sources for hardware and software components, poses supply chain and operational risks . Non-compliance with international regulatory regimes, including export control laws (e.g., potential violations related to Russia and Belarus disclosed in June 2025 ) and data privacy laws like GDPR and CCPA, could lead to penalties and increased costs . The company's location in Israel exposes it to geopolitical risks, including ongoing security concerns and military conflicts, which could disrupt operations and supply chains . Obligations of Israeli personnel to perform military service could also disrupt operations . The tax benefits available under Israeli law require specific conditions to be met and may be terminated or reduced, increasing tax liabilities . Government grants for R&D also impose conditions, such as local manufacturing obligations and restrictions on know-how transfer, with potential penalties for non-compliance .

Management Priorities

Management's overall tone emphasizes a strategic shift towards becoming a "cyber security-first" company, leveraging deep expertise in cybersecurity and network intelligence to deliver differentiated, integrated solutions . A key strategic priority is the expansion and advancement of SECaaS product offerings, despite slower-than-anticipated growth, by increasing the number of recurring security revenue deals and end-user penetration . Management also highlights the importance of continued investment in research and development to keep pace with rapid technological changes, including adapting to 5G networks and addressing emerging AI-powered cyber threats . The company has implemented operational improvements and cost efficiency measures, such as workforce reduction and cost structure alignment, which contributed to an increased gross margin of 71.1% in 2025 . Management aims to achieve profitability sooner by focusing on large, strategic accounts with minimum revenue thresholds .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 4, Business Overview — Overview
  2. [2] Item 4, Business Overview — Customers
  3. [3] Item 5, Operating Results — Revenues
  4. [4] Item 4, Business Overview — Customers
  5. [5] Item 4, Business Overview — Our Security Solutions — Our Security-as-a-Service Market Opportunity
  6. [6] Item 4, Business Overview — Our Products — Protection for Consumers and SMBs - 360-Degree Security
  7. [7] Item 4, Business Overview — Our Products — Protection for the Carriers
  8. [8] Item 4, Business Overview — Integrated Network Visibility and Traffic Management Solutions
  9. [9] Item 4, Business Overview — Centralized Management
  10. [10] Item 5, Operating Results — Revenues
  11. [11] Item 5, Operating Results — Gross profit
  12. [12] Item 5, Operating Results — Total gross margin
  13. [13] Item 5, Operating Results — Operating income (loss)
  14. [14] Item 5, Operating Results — Results of Operations
  15. [15] Item 5, Operating Results — Net income (loss)
  16. [16] Item 5, Operating Results — Basic net income (loss) per share
  17. [17] Item 5, Liquidity and Capital Resources — Operating Activities
  18. [18] Item 5, Liquidity and Capital Resources
  19. [19] Item 5, Liquidity and Capital Resources
  20. [20] Item 5, Liquidity and Capital Resources
  21. [21] Item 5, Consolidated Balance Sheets — Total current liabilities
  22. [22] Item 5, Consolidated Balance Sheets — Total long-term liabilities
  23. [23] Item 5, Consolidated Balance Sheets — Convertible debt
  24. [24] Item 4, Business Overview — Overview
  25. [25] Item 4, Business Overview — Customers — Total Revenues
  26. [26] Item 4, Business Overview — Customers — Total Revenues
  27. [27] Item 5, Operating Results — Revenues — Products
  28. [28] Item 5, Operating Results — Revenues — Products
  29. [29] Item 5, Operating Results — Revenues — Products
  30. [30] Item 5, Operating Results — Revenues — Products
  31. [31] Item 5, Operating Results — Revenues — Services
  32. [32] Item 5, Operating Results — Revenues — Services
  33. [33] Item 5, Operating Results — Revenues — Services
  34. [34] Item 5, Operating Results — Revenues — Services
  35. [35] Item 5, Operating Results — Revenues
  36. [36] Item 5, Operating Results — Revenues
  37. [37] Item 5, Operating Results — Revenues
  38. [38] Item 5, Operating Results — Revenues
  39. [39] Item 5, Operating Results — Total gross margin
  40. [40] Item 5, Operating Results — Total gross margin
  41. [41] Item 5, Operating Results — Services — Cost of revenues and gross margin
  42. [42] Item 5, Operating Results — Research and development
  43. [43] Item 5, Operating Results — Research and development
  44. [44] Item 5, Operating Results — Research and development
  45. [45] Item 5, Operating Results — Research and development
  46. [46] Item 5, Operating Results — Research and development
  47. [47] Item 5, Operating Results — Sales and marketing
  48. [48] Item 5, Operating Results — Sales and marketing
  49. [49] Item 5, Operating Results — General and administrative
  50. [50] Item 5, Operating Results — General and administrative
  51. [51] Item 5, Operating Results — General and administrative
  52. [52] Item 5, Operating Results — General and administrative
  53. [53] Item 4, Business Overview — Overview
  54. [54] Item 7, Related Party Transactions — Repayment of Lynrock Note
  55. [55] Item 7, Related Party Transactions — Repayment of Lynrock Note
  56. [56] Item 7, Related Party Transactions — Repayment of Lynrock Note
  57. [57] Item 5, Operating Results — Loss from extinguishment
  58. [58] Item 5, Liquidity and Capital Resources — Financing Activities
  59. [59] Item 5, Liquidity and Capital Resources — Financing Activities
  60. [60] Item 3, Risk Factors — Our future growth and prospects depend significantly on our ability to grow revenues from the recurring revenue deals such as “Security-as-a-service” (SECaaS) and other “as a Service” offerings.
  61. [61] Item 3, Risk Factors — Our future growth and prospects depend significantly on our ability to grow revenues from the recurring revenue deals such as “Security-as-a-service” (SECaaS) and other “as a Service” offerings.
  62. [62] Item 4, Business Overview — Sales and Marketing
  63. [63] Item 4, Business Overview — Industry — Overview Security Solutions
  64. [64] Item 4, Business Overview — Industry — Overview Security Solutions
  65. [65] Item 3, Risk Factors — Our revenues and business from the enterprise market may be adversely affected by new market and technology trends, including public cloud adoption and the transition to 5G networks.
  66. [66] Item 3, Risk Factors — We have a history of losses and may not be able to achieve or maintain profitability in the future.
  67. [67] Item 5, Operating Results — Cost of revenues and cost reductions
  68. [68] Item 5, Operating Results — Cost of revenues and cost reductions
  69. [69] Item 5, Operating Results — Cost of revenues and cost reductions
  70. [70] Item 5, Operating Results — Research and development
  71. [71] Item 5, Operating Results — Research and development
  72. [72] Item 5, Operating Results — Research and development
  73. [73] Item 5, Liquidity and Capital Resources — Material Cash Requirements
  74. [74] Item 5, Operating Results — Research and development
  75. [75] Item 5, Liquidity and Capital Resources — Material Cash Requirements
  76. [76] Item 5, Liquidity and Capital Resources — Material Cash Requirements
  77. [77] Item 5, Liquidity and Capital Resources — Material Cash Requirements
  78. [78] Item 5, Liquidity and Capital Resources — Material Cash Requirements
  79. [79] Item 5, Liquidity and Capital Resources — Material Cash Requirements
  80. [80] Item 3, Risk Factors — Our business and revenues may be adversely affected if consumer security services provided through CSP become commoditized and market pricing declines.
  81. [81] Item 3, Risk Factors — Our business and revenues may be adversely affected if consumer security services provided through CSP become commoditized and market pricing declines.
  82. [82] Item 3, Risk Factors — Our business and revenues may be adversely affected if large enterprise security providers expand into the consumer and SMB segments.
  83. [83] Item 4, Business Overview — Competition
  84. [84] Item 4, Business Overview — Competition
  85. [85] Item 3, Risk Factors — Our international operations expose us to the risk of fluctuations in currency exchange rates.
  86. [86] Item 3, Risk Factors — Our future growth and prospects depend significantly on our ability to grow revenues from the recurring revenue deals such as “Security-as-a-service” (SECaaS) and other “as a Service” offerings.
  87. [87] Item 3, Risk Factors — Our revenues and business may be adversely affected if we do not effectively compete in the markets in which we operate, or expand into new markets.
  88. [88] Item 3, Risk Factors — Our revenues and business will be harmed if we do not keep pace with changes in broadband applications, network security threats and with advances in technology, or if we do not achieve widespread market acceptance, including through significant investments.
  89. [89] Item 3, Risk Factors — We have a history of losses and may not be able to achieve or maintain profitability in the future.
  90. [90] Item 5, Operating Results — Customer concentration
  91. [91] Item 3, Risk Factors — We depend on one or more significant customers and the loss of any such significant customer or a significant decrease in business from any such customer could harm our results of operations.
  92. [92] Item 3, Risk Factors — Sales of our products to large service providers can involve a lengthy sales cycle, which may impact the timing of our revenues and result in us expending significant resources without making any sales.
  93. [93] Item 3, Risk Factors — A failure of our products may adversely affect the operation of our customers’ live networks or the quality and scope of service to our customers and their end users, including, specifically with regard to security protection which could materially harm our reputation, brand position, and financial condition.
  94. [94] Item 3, Risk Factors — Demand for our DNI technology enabled products depends, in part, on the rate of adoption of bandwidth-intensive broadband applications, and the impact multiple applications may have on network speed.
  95. [95] Item 3, Risk Factors — Issues in the use of artificial intelligence (“AI”) (including machine learning) in our products may result in reputational harm, liability or impact our financial results.
  96. [96] Item 3, Risk Factors — We depend on third parties to market, sell, and install our products and to provide initial technical support for our products for a material portion of our business.
  97. [97] Item 3, Risk Factors — We are subject to certain regulatory regimes that may affect the way that we conduct business internationally, and our failure to comply with applicable laws and regulations could materially adversely affect our reputation and result in penalties and increased costs.
  98. [98] Item 3, Risk Factors — Our failure to comply with data privacy laws may expose us to reputational harm and potential regulatory actions and fines.
  99. [99] Item 3, Risk Factors — Conditions in Israel, including the current tensions with Iran and in the Gaza Strip, could adversely affect our business.
  100. [100] Item 3, Risk Factors — Our operations may be disrupted by the obligations of personnel to perform military service.
  101. [101] Item 3, Risk Factors — The tax benefits that are available to us require us to meet several conditions and may be terminated or reduced in the future, which would increase our costs and taxes.
  102. [102] Item 3, Risk Factors — The government grants we have received for research and development expenditures require us to satisfy specified conditions and restrict our ability to manufacture products and transfer certain know-how outside of Israel.
  103. [103] Item 4, Business Overview — Overview
  104. [104] Item 3, Risk Factors — Our future growth and prospects depend significantly on our ability to grow revenues from the recurring revenue deals such as “Security-as-a-service” (SECaaS) and other “as a Service” offerings.
  105. [105] Item 3, Risk Factors — Our revenues and business will be harmed if we do not keep pace with changes in broadband applications, network security threats and with advances in technology, or if we do not achieve widespread market acceptance, including through significant investments.
  106. [106] Item 5, Operating Results — Total gross margin
  107. [107] Item 5, Operating Results — Cost of revenues and gross margins
  108. [108] Item 4, Business Overview — Sales and Marketing

Analysis on 5/22/2026