Allot (ALLT) Q3 2024 earnings summary

Executive summary

• Achieved first non-GAAP operating net profit in three years, with positive operating cash flow and increased net cash for two consecutive quarters.

• Security as a Service (SECaaS) revenues grew 69% year-over-year, reaching $4.7 million in Q3 2024 and now comprising 20.1% of total revenue.

• Strategic focus on security-first, unified business unit to drive long-term profitable growth and customer-centric operations.

• Expanded partnerships with major telecom providers, including Vodafone UK and MEO Portugal, launching new cybersecurity services and expanding the addressable subscriber base.

Financial highlights

• Q3 2024 revenue was $23.2 million, up 3% year-over-year and 5% sequentially.

• SECaaS revenue reached $4.7 million, up 69% year-over-year.

• Non-GAAP gross margin was 71.7%, up from 47.9% a year ago and 70.6% last quarter; GAAP gross margin was 70.4%.

• Non-GAAP operating income was $1.1 million, a turnaround from a $11.1 million loss last year and $1 million loss last quarter.

• Non-GAAP net profit was $1.3 million ($0.033 per diluted share), compared to a $10.8 million loss last year; GAAP net loss was $0.2 million ($0.01 per share).

• Operating cash flow was $1.9 million; cash and investments totaled $54.5 million at quarter end, up $2.0 million from June 30, 2024.

Outlook and guidance

• Expect to remain around break-even on non-GAAP operating profit in Q4 and generate positive operating cash flow.

• Management reiterates double-digit year-over-year growth for full-year SECaaS revenue and ARR.

• SECaaS ARR expected to continue growing in Q4, driven by increased usage and new customer launches.