Allot (ALLT) Q2 2024 earnings summary

Executive summary

• Achieved positive operating cash flow and increased net cash position for the first time in three years, driven by reduced operating expenses and stabilized revenue and gross margins.

• SECaaS revenue grew 54% year-over-year to $3.7M, now comprising 17% of total revenue, with annual recurring revenue (ARR) at $14.6 million as of June 2024.

• Signed an expansion agreement with a Tier 1 European CSP for SECaaS, expected to contribute to revenue by year-end and drive growth in 2025.

• Strengthened relationships with key customers such as Verizon and Rakuten, supporting growth in both SECaaS and Smart product lines.

• Net loss (GAAP) was $3.4M ($0.09/share), a significant improvement from $20.7M ($0.55/share) a year ago.

Financial highlights

• Q2 revenue was $22.2 million, down 12% year-over-year but up 1% sequentially.

• Gross margin was 70.6% (non-GAAP) and 68.5% (GAAP), compared to 71.4% a year ago.

• Non-GAAP operating loss improved 95% year-over-year to $1 million, with non-GAAP net loss at $0.8 million ($0.02 per share).

• Operating cash flow was $1.2 million; cash, short-term deposits, and investments totaled $53.2 million as of June 30, 2024.

• Top 10 customers accounted for 50% of revenues; 500 full-time employees at period end.

Outlook and guidance

• SECaaS revenue and ARR expected to grow around 50% year-over-year, reaching approximately $19 million ARR by year-end.

• Non-GAAP operating profit expected to be around breakeven for the second half of 2024.

• Net cash position is expected to remain stable and not decrease below current levels.