Allot (ALLT) TD Cowen's 54th Annual Technology, Media & Telecom Conference summary

Strategic focus and business transformation

• Shifted to a 'security first' strategy, leveraging unique network and cybersecurity capabilities to serve communication service providers (CSPs) and their customers, with a growing emphasis on Security as a Service (SECaaS).

• SECaaS product line has driven over 50% year-over-year growth for two years, now accounting for more than one-third of total revenue and fueling double-digit overall revenue growth.

• Network intelligence solutions continue to see single-digit growth and provide stability, with both product lines contributing to improved company performance.

• Strategic restructuring and focus on recurring revenue have led to increased visibility and predictability, with recurring revenue now exceeding 67%.

• Regional go-to-market approach and strong relationships with European CSPs have been key to growth, with expansion into new geographies and customer segments.

Financial performance and outlook

• Achieved double-digit total revenue growth for three consecutive quarters, with Q1 showing 40% growth and significant improvements in profitability metrics.

• EBIT margin improved to 7%-10% from breakeven a year ago, with over $10 million in free cash flow generated in the latest quarter, exceeding expectations.

• Provided 2026 guidance with a midpoint of 13% revenue growth, expecting to reach the upper end of guidance due to strong execution and high recurring revenue.

• High correlation between ARR and revenue, with strict definitions ensuring visibility and reliability for investors.

• Large, multi-million dollar projects and milestone achievements are contributing to cash flow and long-term growth.

Market trends and customer insights

• Identified a significant untapped opportunity in the underprotected consumer and small business (SOHO) segments, where cyber awareness is rising but solutions are lacking.

• AI-driven threats, such as impersonation, phishing, and token hijacking, are increasing, driving demand for always-on, network-based protection.

• CSPs are investing more in marketing cybersecurity to their customers, resulting in higher attach rates and better conversion for SECaaS offerings.

• Cybersecurity is becoming a top priority for consumers, especially with the proliferation of AI and increased sharing of personal information.

• Global demand for cybersecurity is expanding, with growing interest in developing regions and across both consumer and business markets.