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    ALLT
    Earnings call· Jun 2026(Q2 FY26)

    Allot Q2 FY26 earnings call ALLT

    Aug 12, 2026 Source

    Executive summary

    Allot Ltd. Q2 FY26 — Strong Growth in Revenue, Profitability, and Cash Flow

    Allot delivered a strong Q2 FY26, marking its fourth consecutive quarter of double-digit growth, driven by robust SECaaS performance and significant North American sales. The company raised its full-year revenue guidance, reflecting increased order momentum and a healthy backlog, while maintaining a strong balance sheet and initiating a share repurchase program.

    Highlights

    5

    • Revenue grew 15% year-over-year to $27.7 million.

    • SECaaS revenue grew 47% year-over-year, comprising 34% of total revenue.

    • SECaaS ARR increased 44% year-over-year to $36.1 million.

    • Non-GAAP operating income increased to $2.7 million (9.9% margin) from $1.2 million (5% margin) year-over-year.

    • Operating cash flow was $8.5 million, up from $4 million year-over-year.

    Concerns

    2

    • Non-GAAP gross margin declined to 71.8% from 73.4% year-over-year, mainly reflecting product mix.

    • General and administrative expenses increased due to one-time costs associated with an office lease modification.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 revenue
    $115 million to $118 million
    high materiality
    High
    Full-year 2026 Security-as-a-Service revenue growth
    40% or more
    high materiality
    High
    Full-year 2026 gross margin
    in the range of 70%
    medium materiality
    Medium
    Operating expense run rate
    similar run rate to the current quarter, excluding the onetime expense
    medium materiality
    Medium
    Profitability improvement
    continue to expect profitability improvement
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    North America
    Increased from 17% in Q2 last year and 14% last quarter, driven by strong product sales (Tera III, Smart product line) and SECaaS performance.
    Revenue as % of total: 31%
    		————
    EMEA
    Revenue declined sequentially, attributed to normal fluctuations in product revenue recognition timing for large deals.
    		——declined sequentially—
    APAC
    Revenue declined sequentially, attributed to normal fluctuations in product revenue recognition timing for large deals.
    		——declined sequentially—

    Operational metrics

    15
    Non-GAAP gross margin
    71.8%vs 73.4% in Q2 FY25
    Q2 FY26

    Remained strong and consistent with full-year expectation of around 70%.

    Non-GAAP operating expense
    $17.2 millionvs $16.4 million in Q2 FY25
    Q2 FY26

    Increased to support pipeline build.

    Operating expenses as percentage of revenue
    62%vs 68% a year ago
    Q2 FY26

    Reflects disciplined and operationally efficient management.

    Non-GAAP operating income
    $2.7 millionvs $1.2 million in Q2 FY25
    Q2 FY26

    Resulted in a 9.9% operating margin.

    Non-GAAP operating margin
    9.9%vs 5% in Q2 FY25
    Q2 FY26

    Improved significantly year-over-year.

    Non-GAAP net profit
    $4.6 millionvs $1.5 million in Q2 FY25
    Q2 FY26

    Strong increase year-over-year.

    Non-GAAP EPS
    $0.09vs $0.03 in Q2 FY25
    Q2 FY26

    Diluted earnings per share.

    GAAP net income
    $2.6 millionvs -$1.7 million in Q2 FY25
    Q2 FY26

    Includes a one-time financial gain not expected to reoccur.

    GAAP EPS
    $0.05vs -$0.04 in Q2 FY25
    Q2 FY26

    Diluted earnings per share.

    Cash and investments balance
    $107 millionvs $88 million as of December 31, 2025
    as of June 30, 2026

    Robust balance sheet with no debt.

    Share purchase program
    $40 million
    authorized

    Reflects confidence in strategy and financial strength, to be executed in line with market conditions.

    Full-time employees
    501
    as of June 30, 2026

    Headcount at the end of the quarter.

    SECaaS revenue
    $9.4 millionup 47% year-over-year
    Q2 FY26

    Key growth engine for the company.

    Recurring revenue percentage
    67%
    Q2 FY26

    Provides greater visibility and predictability for future revenues.

    Deferred revenue
    increasedyear-over-year and quarter-over-quarter
    Q2 FY26

    Includes recurring maintenance and support, increasing visibility into remaining 2026 and 2027 revenue. Short-term deferred revenue expected to be recognized in the next 12 months, with additional long-term deferred revenue materializing starting H2 2027.

    Industry KPIs

    7
    MetricValueDetails
    Revenue growth$27.7 millionUSD
    Arr net new arr$36.1 millionUSD
    Rpo current rpovery high level
    Bookings billingsstrong
    Large deal new logo metricsfewdeals
    Multi product platform attachnew service
    Operating FCF margin rule of 409.9%%

    Orderbook & backlog

    2
    BacklogstrongQ2 FY26

    Entered the second half with a strong backlog and healthy demand, giving added confidence for the rest of the year. Building backlog for 2027 with additional Tera III upgrade projects.

    RPOvery high levelend of March (yearly report)

    Performance and booking remain strong, implying RPO continues to be very high.

    Product announcements

    3
    ProductTypeDetails
    Identity monitoring servicelaunch
    HomeSecure serviceexpansion
    Zero rating fraud detection and mitigation service (ACSP)launch

    Deals & partnerships

    4
    Existing European SECaaS customer (telco)Upsell deal for a new service, the first sale of Allot's identity monitoring service to SMB customers.

    This telco will offer the identity monitoring service to its SMB customers, expanding the SMB security suite beyond the network.

    Existing European-based customerExpansion of SECaaS service to the SMB segment.

    Secured an expansion within an existing customer to serve their SMB segment.

    Large global telco groupNew win adding HomeSecure service in another country.

    The HomeSecure solution enhances threat protection across the telco's mobile and broadband networks, integrating into existing home routers for zero-touch visibility, cybersecurity, and parental controls.

    Telco in Africa (existing Smart customer)New SECaaS deal.

    A new SECaaS deal with a telco that is already a Smart product customer.

    Risks & headwinds

    3
    Product mix impacting gross marginQ2 FY26

    Non-GAAP gross margin declined to 71.8% in Q2 FY26 from 73.4% in Q2 FY25.

    Mitigation: Gross margin remained strong and consistent with full-year expectation of around 70% for 2026.

    One-time general and administrative costsQ2 FY26

    G&A expenses increased compared with Q2 FY25 due to one-time costs associated with office lease modification.

    Mitigation: Not expected to reoccur.

    Fluctuations in regional revenue due to timing of large product dealsQ2 FY26

    Revenue in EMEA and APAC declined sequentially.

    Mitigation: This is normal for Allot and part of the plan; different regional balances are expected between quarters depending on the timing of larger deals.

    What to watch in Q3 FY26

    4

    SECaaS ARR growth

    Full year 2026
    Current44% YoY ($36.1M as of June 30, 2026)
    Target>40% YoY

    Why it matters

    This is a key driver of recurring revenue and overall growth, central to the company's strategy and future visibility.

    For the full year, we expect Security-as-a-Service revenue growth of 40% or more.

    Q&A highlights

    5

    Are there any unusual items impacting operating cash flow this quarter, given it's strong but slightly below last quarter?

    Liat Nahum clarified that Q1 had a one-time cash advancement related to a major deal, but Q2's strong $8.5 million operating cash flow reflects continued positive momentum from the SECaaS business model without major one-time events.

    “Overall, no major onetime event this quarter around the operating cash flow, just continue the momentum around our business model of the Security-as-a-Service, which is generating a very good cash flow.”

    asked by Shaul Eyal · answered by Liat Nahum

    2 min read5 chapters

    Detailed Narrative

    01

    North American Performance

    North America significantly contributed to revenue, making up 31% of total revenue compared to 17% in Q2 last year and 14% last quarter. This growth was fueled by strong product sales, particularly for the new Tera III platform and Smart product line, alongside continued strong performance from a major U.S. SECaaS customer. The region is a strategic priority, with focus translating into revenue, backlog, and pipeline.

    02

    Cybersecurity as a Service (SECaaS) Momentum

    SECaaS revenue grew 47% year-over-year, now accounting for over one-third of total revenues, with SECaaS ARR up 44%. The company secured four new SECaaS deals in EMEA, including an upsell for identity monitoring, an expansion in SMB, a HomeSecure addition in a new country for a global telco, and a new deal in Africa with an existing Smart customer. These wins reflect the breadth of SECaaS growth across new customers, geographies, and end-user segments.

    03

    Tera III Platform Adoption

    Demand for the Tera III platform remains strong, with ongoing deployments and upgrades with Tier 1 operators. This ultra-high capacity multiservice gateway consolidates deep network visibility, traffic management, and cybersecurity services onto a single platform. Customer feedback has been excellent, valuing its carrier-grade stability, reliability, and cost-efficient scaling for 5G and fiber traffic growth. The company is building backlog for 2027 with additional Tera III upgrade projects.

    04

    Zero-Rating Fraud Detection

    Allot demonstrated a new zero-rating fraud detection and mitigation service with a Tier 1 operator, showing an 87% reduction in fraud and traffic. This solution, ACSP, identifies fraud in zero-rated applications and app-based charging plans, helping operators recover lost revenue and protect the integrity of their zero-rating offers, particularly in regions where fraud is prevalent.

    05

    Capital Allocation and Financial Strength

    The Board approved a $40 million share purchase program, reflecting confidence in the company's strategy and financial position. Allot maintains a robust balance sheet with $107 million in cash and no debt, positioning it to invest in long-term growth while returning value to shareholders. This move signifies the company's maturity and financial strength after four consecutive quarters of double-digit growth and positive cash flow.

    AI-generated summary of the company’s earnings call. Not investment advice.