Allot (NASDAQ:ALLT) executives said the company’s shift from network intelligence toward cybersecurity is continuing to drive growth, with Security-as-a-Service emerging as the company’s primary growth engine, during a fireside discussion at the Needham Tech, Media and Consumer Conference.
Chief Executive Officer Eyal Harari said Allot historically focused on network intelligence tools designed to help communications service providers optimize and monetize their network assets. Over time, he said, the company identified an opportunity to use the same technology base to deliver cybersecurity protections through telecom partners, particularly for consumers and small businesses that he said remain underserved by traditional cybersecurity products.
Security-as-a-Service Drives Growth
Harari said SECaaS has grown more than 50% year over year for the past three years and is supported by four growth pillars. Those include signing new communications service provider partners, expanding within existing customers across mobile, fixed, consumer and business services, increasing subscriber adoption over time, and adding new cybersecurity products for upsell and cross-sell opportunities.
He pointed to OffNetSecure, launched last year, as an example of a new product that extends protection beyond a carrier’s network to Wi-Fi environments such as homes or public locations.
Chief Financial Officer Liat Nahum said Allot reported first-quarter revenue of $26.4 million, up 14% year over year, marking the company’s third consecutive quarter of double-digit revenue growth. SECaaS annual recurring revenue was $33.7 million, up 59% year over year, while operating margin was 9.9%.
Nahum said Allot reiterated its annual revenue guidance of $113 million to $117 million and is “increasingly optimistic” about reaching the higher end of that range. She also said the company expects SECaaS revenue to grow 40% or more year over year in 2025.
Network Intelligence Business Stabilizes
Harari said Allot remains strategically focused on SECaaS but is seeing stable demand in its Smart Network Intelligence business. He cited the company’s Tera III platform, released last year, as a driver of demand from larger customers, including seven-figure deals.
He said the Smart business, which had been shrinking in prior years, is now more stable and may provide multi-year revenue opportunities. However, he said Allot is counting primarily on cybersecurity for long-term growth.
Nahum also discussed Allot’s first-quarter operating cash flow of $10.6 million. She said the performance was related to previously announced network intelligence deals, where execution milestones led to advance payments. Those payments are reflected in deferred revenue and are expected to be recognized as revenue mainly in the second half of the year.
Executives Address AI Risks and Opportunities
Asked about artificial intelligence and potential disruption to software companies, Harari said Allot views AI as more of a tailwind than a headwind. He said AI is increasing awareness of fraud, impersonation and cyberattack risks among consumers, which could support demand for automated cybersecurity protections.
Harari said Allot is also using AI internally across three areas: identifying new AI-related attack surfaces and product opportunities, improving research and development productivity, and automating operational processes such as customer ticketing, financial reporting and contract reviews.
He said communications service providers are conservative and highly regulated, making their infrastructure difficult to disrupt. “No one is going to let AI agent manage the critical infrastructure of a CSP,” Harari said.
Compax Partnership and Consumer Protection
Harari also discussed Allot’s previously announced agreement with Compax Ventures, which he described as an MVNO enabler. He said Compax is launching mobile virtual network operator brands that use cybersecurity as a core differentiator, including an early launch aimed at religious communities seeking a more protected internet environment.
Harari said the first brand is using T-Mobile’s network as an MVNO while embedding Allot’s cybersecurity protection into the offering. Unlike optional cybersecurity add-ons sold through some tier-one carriers, he said Compax’s model requires subscribers to receive Allot protection, creating a 100% attach rate if the service scales.
He added that concerns about protecting families, children and elderly relatives are increasing as fraud schemes become more realistic and AI-enabled.
Company Says Transformation Is Still Underway
Asked what investors may misunderstand about Allot, Harari said some still view the company mainly as a network infrastructure provider. He said the company is in the middle of a transformation toward cybersecurity, even though network intelligence still accounts for the majority of revenue today.
“Only those that follow the story see how in very high pace we grow in the cybersecurity,” Harari said. “If all goes well, in two years, this should be the majority of our business.”
About Allot (NASDAQ:ALLT)
Allot Ltd. is a provider of network intelligence and security solutions designed for service providers and enterprises worldwide. The company delivers software and cloud-based services that enable customers to gain real-time visibility into network traffic, enforce security policies and optimize bandwidth usage. Its platforms support a wide range of applications, from DDoS protection and threat prevention to subscriber experience management and network analytics.
Allot’s product portfolio includes managed solutions for mobile and fixed-line operators, as well as cloud-native services that can be deployed across private, public and hybrid environments.
