Breaking Down Allot Ltd. (ALLT) Financial Health: Key Insights for Investors

You're looking at Allot Ltd. (ALLT) and seeing a stock that's been on a rollercoaster, but the 2025 financials show a clear inflection point that you can't ignore. The company is finally delivering on its pivot to recurring revenue, projecting a full-year 2025 revenue guidance of between $98 million and $102 million, with analysts expecting an Earnings Per Share (EPS) of around $0.16. This shift is powered by their Security as a Service (SECaaS)-network-based security subscriptions-which is set to grow its Annual Recurring Revenue (ARR) by an impressive 55% to 60% year-over-year, a massive driver for earnings stability. The proof is in the quarterly results: Q2 2025 non-GAAP net profit hit $1.5 million, a defintely decisive move into the black. Honestly, that's a real turnaround. With the Street's average price target sitting around $12.75, implying over a 40% upside from the current price, we need to dig into what's driving this momentum and what risks still exist in this new phase of profitable growth.

Revenue Analysis

You're looking for a clear picture of where Allot Ltd. (ALLT) is making its money, and the story for 2025 is one of transition: the company is deliberately shifting its revenue mix toward high-growth, recurring services. The overall revenue for the second quarter of 2025 (Q2 2025) was $24.1 million, marking a solid 9% year-over-year (YoY) increase, but the real action is in the Security as a Service (SECaaS) segment.

For the full fiscal year 2025, Allot Ltd. is guiding for total revenues between $98 million and $102 million, which positions them for a year of profitable growth after a period of volatility. This growth is largely underpinned by their 'security-first' strategy, which is showing significant traction with major telecom operators like Verizon Business, whose new mobile offerings include Allot Ltd.'s SECaaS service.

The Shift to Security as a Service (SECaaS)

The primary revenue streams for Allot Ltd. generally fall into four categories: Products, Professional Services, Support & Maintenance, and the increasingly dominant SECaaS. The SECaaS segment, which is essentially network-based cybersecurity sold as a subscription, is the company's new growth engine. In Q2 2025 alone, SECaaS revenue hit $6.4 million, contributing 27% of the total quarterly revenue.

That's a massive change. The Annual Recurring Revenue (ARR) for SECaaS as of June 2025 was $25.2 million, which is an exceptional 73% increase from the previous year. This is a critical metric for investors, as recurring revenue provides financial stability and predictability. Management is so confident in this trend that they raised their 2025 SECaaS ARR growth expectations to a range of 55% to 60%.

Here's the quick math on the Q2 2025 revenue breakdown:

Geographic Exposure and Future Catalysts

While Allot Ltd. is a global provider, its revenue is geographically concentrated. Based on 2024 data, the company's largest exposures are in Europe and Asia, accounting for 38% and 26% of total revenue, respectively. This concentration means regional economic shifts or regulatory changes in those markets can have an outsized impact on the top line. Still, the company is landing significant new business, like a multi-year deal valued in the tens of millions of dollars with a Tier-1 EMEA telecom operator, which will start contributing meaningfully to revenue in 2026 and 2027.

If you want to dig deeper into who is betting on this SECaaS pivot, you should check out Exploring Allot Ltd. (ALLT) Investor Profile: Who's Buying and Why?. The bottom line is that the SECaaS segment is defintely the future of the company's revenue profile, driving both top-line growth and a path toward sustained profitability.

Profitability Metrics

You're looking for a clear picture of Allot Ltd. (ALLT)'s financial health, and the first half of 2025 shows a decisive pivot toward profitability, largely driven by their Security as a Service (SECaaS) model. The key takeaway is that while the company is still reporting a GAAP (Generally Accepted Accounting Principles) operating loss, the Non-GAAP figures-which strip out non-cash items like stock-based compensation-indicate a positive turn, signaling better operational efficiency. This shift is defintely one to watch.

For the first two quarters of the 2025 fiscal year, Allot Ltd. has demonstrated a strong ability to manage its Cost of Goods Sold (COGS), resulting in impressive gross margins. The strategic shift to a subscription-based model is clearly paying off here. Here's the quick math on the first half of 2025:

• Q1 2025 Non-GAAP Gross Margin: 70.4% on $16.3 million in gross profit.
• Q2 2025 Non-GAAP Gross Margin: 73.4% on $17.6 million in gross profit.
• The gross margin is increasing, which is exactly what you want to see.

Gross, Operating, and Net Profit Margins

When you look at the Trailing Twelve Months (TTM) data through September 30, 2025, Allot Ltd.'s gross margin is a standout metric, but the operating and net margins tell the story of a company still in a transition phase. The difference between GAAP and Non-GAAP figures is crucial here, as Non-GAAP often reflects management's view of the core business performance by excluding significant non-cash expenses.

The TTM Gross Margin for Allot Ltd. is roughly 70.06%. This is a massive competitive advantage when compared to the industry TTM Gross Margin average of approximately 42.32%. The company excels at turning revenue into gross profit, but the operating expenses (OpEx) are what have traditionally kept the bottom line negative.

The good news is the operating and net profit picture is improving significantly in 2025. In Q2 2025, Allot Ltd. reported a Non-GAAP operating profit of $1.2 million, a huge turnaround from the $1.0 million operating loss in Q2 2024. This translated to a Non-GAAP net income of $1.5 million in Q2 2025, or $0.03 profit per diluted share. The goal for the full year 2025 is profitable growth, with revenue guidance set between $98 million and $102 million.

Operational Efficiency and Margin Trends

The trend in profitability is clearly moving in the right direction. The operational efficiency story for Allot Ltd. is tied directly to the success of their Security as a Service (SECaaS) offering. SECaaS revenue grew 49% year-over-year in Q1 2025 to $5.1 million and continued its acceleration, with Annual Recurring Revenue (ARR) reaching $25.2 million by June 2025, a 73% year-over-year increase.

This shift drives margin expansion because the SECaaS model is inherently higher-margin than their traditional product sales. The gross margin increase from 70.4% in Q1 to 73.4% in Q2 2025 is a direct result of SECaaS revenue growing to represent 27% of overall revenue. Management expects the gross margin to continue increasing as SECaaS becomes a larger percentage of total revenue. The move from a GAAP operating loss of $3.4 million in Q2 2024 to a loss of just $0.4 million in Q2 2025 shows a significant improvement in cost management and operational leverage. This is the core engine for future sustained profitability.

For a complete breakdown of all the financial metrics, including valuation and liquidity, you should check out the full analysis: Breaking Down Allot Ltd. (ALLT) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You're looking for a clean balance sheet, especially in a volatile tech market, and Allot Ltd. (ALLT) just delivered a significant deleveraging event. The company has essentially wiped its debt slate clean, shifting its financial foundation heavily toward equity funding in the first half of 2025.

As of June 30, 2025, Allot Ltd. reports having no debt for borrowed money. This is a critical change from its prior structure, which included a convertible note. This move dramatically reduces financial risk and interest expense, giving the company more operational flexibility. It's a strong, clean signal.

Here's the quick math on their capital structure change:

• Total Debt (as of June 30, 2025): $0
• Shareholders' Equity (as of June 30, 2025): Approximately $99.7 million
• Debt-to-Equity Ratio (MRQ): 0.06 (or 6.11%)

The company's debt-to-equity (D/E) ratio-a key financial leverage metric that measures how much a company is funded by debt versus shareholder money-now stands at a very conservative 0.06. This is exceptionally low, especially when you compare it to the Information Technology sector average, which typically runs around 0.48. A D/E ratio this low means Allot is relying almost entirely on shareholder capital and retained earnings, not external borrowing. This is defintely a low-risk profile.

The shift was driven by a major refinancing activity in the second quarter of 2025. Allot completed a public equity offering, raising gross proceeds of $46 million. The company used the net proceeds to repay $31.4 million of its outstanding convertible debt, with the remaining $8.6 million of the note being converted into ordinary shares by its largest shareholder, Lynrock Lake.

This action marks a decisive pivot to equity funding. By converting debt to equity and raising new capital through a share offering, Allot prioritized strengthening its balance sheet over managing debt service payments. This strategy frees up cash flow, which is crucial as the company focuses on accelerating its Security-as-a-Service (SECaaS) revenue growth, which is expected to show a year-over-year increase in the range of 55% to 60% for the full year 2025. This clean balance sheet gives them a lot of dry powder for future growth initiatives. For a deeper dive into who is backing this new equity-heavy strategy, you should check out Exploring Allot Ltd. (ALLT) Investor Profile: Who's Buying and Why?

To summarize Allot Ltd.'s capital structure for investors:

Liquidity and Solvency

You need to know if Allot Ltd. (ALLT) has the cash to cover its near-term obligations, and the answer is a clear yes. The company's liquidity position is strong, particularly after a strategic capital raise and debt repayment in the first half of 2025, giving them a significant cash cushion and no debt.

As of the end of the second quarter, June 30, 2025, Allot Ltd. showed a robust liquidity profile, which is defintely a green flag for investors. Their ability to meet short-term liabilities is excellent, and they have essentially eliminated long-term debt, which is a massive solvency boost.

Assessing Allot Ltd.'s Liquidity: Ratios and Working Capital

We look at two key ratios to judge immediate financial health: the Current Ratio and the Quick Ratio. Both tell us how easily Allot Ltd. can convert assets to cash to pay bills due in the next twelve months. Here's the quick math based on the Q2 2025 balance sheet (amounts in thousands of U.S. dollars):

A Current Ratio of 2.09 is excellent; it means Allot Ltd. has over two dollars in current assets for every dollar of current liabilities. The Quick Ratio of 1.68 is also very healthy, showing they can cover their immediate obligations even if they couldn't sell a single piece of their inventory, which stood at $8.51 million in Q2 2025. This is a business built on liquid assets, not on slow-moving stock.

The company's working capital (Current Assets minus Current Liabilities) is a robust $45.46 million as of June 30, 2025. This positive and substantial working capital trend shows the company has ample buffer to fund its day-to-day operations and growth initiatives, especially the push into Security-as-a-Service (SECaaS).

Cash Flow Statements Overview: The Engine of Liquidity

The real story of liquidity often lies in the cash flow statement, and Allot Ltd. shows a powerful trend of self-sufficiency. They are consistently generating cash from their core business operations, which is the most sustainable source of liquidity.

• Operating Cash Flow (OCF): This is the most crucial number. OCF was positive $1.7 million in Q1 2025 and accelerated to a strong $4.4 million in Q2 2025. This positive and improving trend signals that the business model is maturing and becoming cash-generative.
• Financing Cash Flow (CFF): This was a major event in Q2 2025. Allot Ltd. raised $46 million in a public offering and used a significant portion to repay $31.4 million in convertible debt. This action dramatically cleaned up the balance sheet, leaving the company with no debt as of June 30, 2025.
• Investing Cash Flow (CFI): While not explicitly detailed as a single number, the overall cash, deposits, and investments position jumped from $59 million at the end of 2024 to $72 million by Q2 2025, indicating a net cash inflow after all activities.

The company is now sitting on a net cash and equivalents balance of over $72 million as of mid-2025. That's a lot of dry powder. This strong cash position, coupled with positive operating cash flow, means Allot Ltd. has no immediate liquidity concerns and is well-positioned to fund its strategic growth, including its Mission Statement, Vision, & Core Values of Allot Ltd. (ALLT).

Valuation Analysis

You want to know if Allot Ltd. (ALLT) is overvalued or undervalued right now, and the answer is complicated-as it often is with growth-focused, non-GAAP profitable tech companies. The direct takeaway is this: traditional valuation metrics scream overpriced, but the analyst consensus sees a clear path to significant upside, suggesting it is currently undervalued based on future growth expectations.

The stock has had a wild ride, which is defintely a risk. Over the last 52 weeks, Allot Ltd. has seen its stock price surge by an impressive +135.77%, moving from a 52-week low of $3.47 to a high of $11.41. As of mid-November 2025, the price sits at $8.86. That kind of volatility means you need a strong conviction on the fundamentals, not just momentum.

Here's the quick math on the core valuation ratios for the 2025 fiscal year, which show the current premium investors are paying:

• Price-to-Earnings (P/E): The estimated 2025 P/E ratio is extremely high, cited as 1,772x. This is a classic red flag, but what this estimate hides is that Allot Ltd. is just barely expected to turn a profit, with an estimated Earnings Per Share (EPS) of only $0.005 for 2025. A cleaner, forward P/E based on a more optimistic consensus EPS of $0.16 is still a steep 56.08.
• Price-to-Book (P/B): The estimated 2025 P/B ratio is 4.59x. This is well above the general benchmark of 3.0x for a technology company, indicating investors value the company's future earnings power-specifically its Security-as-a-Service (SECaaS) model-much higher than its current book value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The estimated 2025 EV/EBITDA stands at a high 48.3x. This is a better metric to use when a company is transitioning to profitability, but a multiple this high suggests a significant growth rate is already priced in. For context, the estimated Enterprise Value-to-Sales (EV/Sales) for 2025 is 3.65x.

When you see ratios like this, it tells you the market is betting on the future. Allot Ltd. does not pay a dividend, so you won't see a dividend yield or payout ratio to analyze; all capital is being reinvested into growth, particularly in their cybersecurity offerings.

To be fair, Wall Street analysts are overwhelmingly bullish, which is why the stock trades at such a premium. The consensus rating from analysts is a Strong Buy, with an average price target of $12.75, representing a potential upside of over 40% from the current price. Still, some independent analysts have a 'Sell' conclusion, pointing to the high valuation and recent volatility, which is why you need to dig deeper into its business model and competitive position. Exploring Allot Ltd. (ALLT) Investor Profile: Who's Buying and Why?

The table below summarizes the key 2025 valuation metrics, showing the high price tag on this growth story.

Risk Factors

You're looking at Allot Ltd. (ALLT) and seeing the promising growth in their Security as a Service (SECaaS) business-and you're right to be optimistic. But as a seasoned analyst, I always map the near-term risks alongside the opportunities. The company is in a transition, and that shift brings both internal and external pressures. The biggest risk right now is execution against their ambitious SECaaS targets.

The core of their strategy is moving from one-time software sales to recurring revenue, which is healthier long-term. Still, the path is bumpy. For the full year 2025, Allot is guiding for total revenue between $98 million and $102 million, with SECaaS Annual Recurring Revenue (ARR) expected to grow an exceptionally strong 55% to 60% year-over-year. The risk is simple: if the sales cycle for new SECaaS deals lengthens, or if the Verizon Business partnership traction slows, those targets become a stretch.

Operational and Financial Headwinds

The financial statements, even with the positive turn to a non-GAAP operating profit of $1.2 million in Q2 2025, still highlight classic operational risks for a business selling to large telecom operators. Here's the quick math on what to watch:

• Accounts Receivable: The ability to collect outstanding accounts is a persistent risk. This isn't a new problem, but it directly impacts cash flow, even with Q2 2025 showing strong positive operating cash flow of $4.4 million.
• Revenue Recognition Timing: For large projects outside of SECaaS, revenue is often tied to the completion of key project milestones. This creates volatility. If a customer delays acceptance by a few weeks, it can flip a quarter's revenue and profitability outlook.
• Dependence on Partners: A material portion of revenue relies on third-party channel partners. If those partnerships weaken, or if a key partner's strategy changes, Allot's sales pipeline takes a direct hit.

To be fair, the company is managing this better. The shift to SECaaS, which hit an ARR of $25.2 million by June 2025, is the defintely the mitigation strategy for the revenue recognition problem, as it smooths out the lumpiness of traditional license sales.

External and Competitive Pressures

The network intelligence and security market is brutal. Allot is a niche player competing against much larger entities, and that dynamic presents a constant threat. Their success is tied to their ability to keep pace with rapid technological advances and add new features.

The biggest external risks are:

The company is fighting back by focusing on its unique network-native position and launching products like OffNetSecure in April 2025, which protects users even when they are off the provider's network. This product innovation is crucial; it's what keeps them ahead of the commoditization curve.

For a deeper dive into the financial metrics that underpin these risks, you can read the full post: Breaking Down Allot Ltd. (ALLT) Financial Health: Key Insights for Investors. Your next step should be to model the impact of a 15% delay in the collection of accounts receivable on their Q4 2025 cash balance.

Growth Opportunities

Allot Ltd. (ALLT)'s future growth is defintely anchored in its accelerating shift to a Security-as-a-Service (SECaaS) model, which is fundamentally changing the quality of its revenue. The company is at an inflection point, moving from lumpy, capital expenditure-driven sales to more predictable, recurring subscription revenue, and the numbers from the 2025 fiscal year prove this is working.

The direct takeaway is that the SECaaS engine is firing on all cylinders, backed by a strong cash position and major telecom wins. This transformation is the single most important factor for investors to watch right now. You can dive deeper into the full picture in Breaking Down Allot Ltd. (ALLT) Financial Health: Key Insights for Investors.

SECaaS and Strategic Wins Drive Revenue

The primary growth driver is the Cybersecurity-as-a-Service (SECaaS) segment, where Allot partners with Communication Service Providers (CSPs) to offer network-based security to their subscribers. This revenue-sharing model aligns incentives and creates a powerful flywheel effect. The company has raised its 2025 SECaaS Annual Recurring Revenue (ARR) growth expectation to between 55% and 60% year-over-year.

For context, the second quarter of 2025 saw SECaaS ARR jump by an exceptional 73% year-over-year, ending the quarter at $25.2 million. That's a huge acceleration. Strategic partnerships are key here:

• Verizon My Biz Plan: A highly successful launch of this new mobile offering is contributing meaningfully to results.
• Tier-One EMEA Deal: A landmark agreement with a major EMEA telecom operator, valued in the tens of millions of dollars, is set to be executed over 2026 and 2027, creating a long-term recurring revenue tail.
• New Market Penetration: Wins like Más Móvil in Panama selecting Allot NetworkSecure for mobile and fixed customers show market expansion.

This SECaaS momentum is what gives management the confidence to guide for a full-year 2025 total revenue between $98 million and $102 million.

Product Innovation and Competitive Edge

Beyond the SECaaS model, Allot is reinforcing its competitive advantage through core product innovation. The company's network intelligence and security solutions are deployed by over 500 mobile, fixed, and cloud service providers globally.

The launch of the Allot SG-Tera III platform is a significant technical leap, capable of handling an industry-leading 2.8 terabits per second of internet traffic. This kind of capacity is essential for large Tier-1 operators, positioning Allot strongly against competitors like Sandvine, whose decline is creating an opening for Allot's Smart products. New security products like ACTI, DDoS Business Secure, and OffNetSecure also expand the total addressable market.

2025 Financial Projections and Capital Structure

The company is focused on achieving profitability in 2025, a crucial milestone for a growth-stage security company. The strong balance sheet provides a solid foundation for this growth push. Following a public offering in June 2025, Allot ended the second quarter with over $72 million in net cash and equivalents and importantly, no outstanding debt.

Here's a quick look at the Wall Street consensus for the 2025 fiscal year:

The biggest risk is always execution. If onboarding new telecom customers takes 14+ days, subscriber adoption of the new security services could slow, which would hit that SECaaS ARR growth. Still, the current momentum suggests the business is performing well against its targets.