ALLT - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Allot Second Quarter 2022 Results Conference Call. All participants are present in listen-only mode.

Following management's formal presentation, instructions will be given for the question-and-answer session.

As a reminder, this conference is being recorded.

received the all press have should by company's now release. You

view to please have Global Investor Green, Investor or I new would not over at you EK to call company's contact begin, of Relations in you the section would received XXXX-XXX-XXXX now Global If of www.allot.com. EK to Mr. it, Allot Mr. Investor website Green, the please? Relations. at Relations at like hand like it the team Kenny

Kenny Green

quarter Ziv call second this like Allot Allot's results like to conference of line would Welcome operator. for call. you, thank I opening XXXX questions. to the answer on you provide Erez today Erez highlights call. where Thank Mr. hosting to Leitman, us management to and the to and the are then all With key welcome session will Mr. Antebi, CFO. the statement conference to the I'd summarize for be Erez President an those quarter. We'll call both Ziv of open CEO; will and question-and-answer and the and available

metrics find today's press and the financial highlights conference we earnings those can all discuss You call typically the in including release. on

call the go hand nature does differ industry, launch of please Securities to and changing call out market reduced occur. events of forward-looking the start, Allot fact result, the update to ahead. that Erez. guarantee the And to as like that, any delays we are by Commission. with predictions This Actual services demand or identified statements of in the only as company as the Safe information. performance assume that or the results will risks Allot statements well and the with customers, systems Erez, including in future materially documents the cannot projections in projected, a Exchange point obligation those Before statement. like security Harbor conference by regarding I'd may our I'd competitive filed over future or they contains other the and trends, not events to from company. These

Erez Antebi

Kenny. you call like you, for and I'd Thank welcome our all joining to us thank conference to today. you of

quarter second we million, this revenues our year. than that not the expected, straight our first am quarters up last growth XX After ARR X% this. million, revenue XX, comparable reached lower XX% of XXXX, I Our this is XXXX. grown. while not June In was revenues $XX.X what is revenues March year-over-year, $X.X pleased with quarter And SECaas from have

term and charging to like are quality despite I the our management, product would forecast headwinds use these and our in our video, have year. progress from discussing would overall facing to main us confidence control CSPs by I will you to as in this traffic our in forecast I start in our discuss especially by for our cases of Allot seen have policy later Smart congestion digital more for traffic and line. experience, see are release, today and detail call. management we in user addressed headwinds management, lower earnings As further long analytics vision, be enforcement. continuing that led impact address and their business we The

solution several During capability installed is deals a will such provide no before. that there the months, were or we few awarded where direct replace product last VPI competitor's where either was we a

exist Ethio deal capability before. CSP did a with Telecom, the not where we will Allot announced example, For be installation Smart new Ethiopian such the

won before. other using multiple We CSPs that with and product competitors' other are expanding our such deals discussing opportunities are on currently working we

either CSPs of providing in increasing new that continuously by we competition with, are capabilities. by work replacing DPI We number the or

activities illegal well. globally our interest and area to interest terrorism. fight as to look trafficking, in growing such products pornography as child terrorism, to in drug we see growing governments a be this crime We're block As or able seeing

quarters third are and of we will be expansion. fourth believe to to save to deliver now them are not sizable fourth of operators the ways and be investing and able expected Several deals quarter, In their delayed cost that. addition, and in expected by help we quarter. assured of and cannot new not lose to book the wireless manage that their on we the we close We partially did in but on were second they before any congestion networks close

when will delay assured and be we Given that them the close required deal, the XXXX recognized from we we terms in deal to exact the in the closing recognize year. revenues regarding this all time the will exact revenue, be the uncertainty and expected cannot

result are forecast above, of year. revenue the quarter for of and we third the a reducing As for the our the remainder

see opportunities. replacement opportunities are or we Looking customers significant either many new of DPI DPI see at Many competitor the an in and the more market general, overall we market. opportunities solid

the revenues However, concentrated and lumpier. this makes the opportunities more

We see continue a win rate to Allot. for good

we to and our not to have the attention the it this cybersecurity than a our how this DPI see and accurate stress continuing of to want and this fully the it we pipeline are forecasts. In is challenging of am I large would I addition, challenges the it what timing to more developing. to I turn continuing related we and is. deals, of we we to economic aware us taking facing see like it, general market is deals see I to In past. part, environment are that may that be market due DPI business be to will We in deals larger is the that estimate out took as solid, provide many again don't in as becoming our competition. opportunities win against in also is and do trend. longer sizes the know may to we it close know be why

a our future from. we of most coming Allot said growth is in revenue previous cybersecurity into I've where and As is see transforming this calls, company

We are to based provide worldwide that with are with SECaas. network their engaged CSPs looking customers

momentum direction results operators positive. rate, rate launch continues level see engagements, market, and request all Allot -- from customers of these As the size win networks based more all deals acceptance stronger. are see consumers evidence we win by are of to and of of we We very to SMB, in SECaas and to look that are number products additional services deals of at of and be This getting along continuing the to close commercially engagements, that security have and the see to the our with rate the service platform the getting the interested we awarded of we and integrate more in vendors scope management network the We improving in operators. and launched.

using During to we launch quarter, customers fix to broadband European additional with security to deal HomeSecure the signed different the SECaas several deals. countries. second SECaas seven intention deploy services Vodafone, products a With signed Allot we in

CSP also launching in Central addition, APAC and with Network launch the on our to CSP offerings few plans European that DNS mobile signed In who countries. plans in we group mobile our the and security agreements Secure a Eastern with

to we North North American in APAC are on have signed negotiations that we a contracts where few the were not yet. several addition, Latin awarded say words operators in other EMEA market. the America, would deals America, contract In with like and I

already launched three deals signed in announced, of of we have these Allot SECaas As previously is with which North one DISH. has operators None America, operators yet.

As by them. in mentioned, a operator contract engaged discussions and with I we are were previously awarded American fourth North

North know American to a you a like would in their process base. that I segment initially addition, operator the targeting closing of In with we contract specific fifth of are customer SECaas

optimistic. represent of dozens we an the of While cannot will be These contracts potential millions contracts of MAR you we are assure signed, very dollars.

are market much key America to SECaas with the additional serious the we significant -- Allot, other will in in addition, American with be change generating and represent traditionally and regions operators. with advancements globally. North In we other and telecom beyond. revenues making Allot is for a largest XXXX stronger are discussions operators in North was

into contracts challenge Our translate main revenues. to is the

launch integration is is our technical with marketing, other different challenge This multiple required. the systems many IT service. internal first involves and purchasing process of all to have products tasks Often The priorities. more. They operational stakeholders, and

increased assist have and processes cases, these help. efforts can't in in we some We our to

up the months, impact we seven launches we Unfortunately, last of speed date significant with. operator our launch limited. to the signed to During we some the positively up every ability spent we while and is cases speed and in efforts things, overall to managed that very try concentrated concluded

in more differently. focus we run believe a can mainly about change and revenue. that the As I our we efforts are changes our larger a making will focus significantly to bit contribute speeding future how will other approach talk business we opportunities launches and result, and on this we up of

During services. quarter, launched CSPs two the second additional SECaas

a another of One in them is our APAC predominantly and region. Tango prepaid is in Luxembourg DSP

As XX relatively June to only of commercially. portion XX, most their them only operators of XX subscriber base. XXXX, are launched the small service customers of them signed of a Most launched the and of

of targets services expectations typically perceived not be we be the level result is in the will or etcetera. have the primarily to bundling service. low the If launch include, be given Aggressive in the market strong the be by the security the which to of the a approaches added for perceived rates, The proactively in is CSP with. This not the The their we value CSP another it prioritizing added customers, results when among degree CSP and low. enough interaction, value the as working seem service every that multiple CSP have learned second the of offering to CSP service. all the have a can customer be security have others, merely CSPs these is service. the in market Unfortunately, is will aggressive of low to and plan challenge aggressiveness go launching content service, of motivation. the will the approach marketing price will revenues low, the determined can value SECaas to penetration and the CSPs offering to also some go which adding

On market. differentiation all service tariff approach at CSPs perception Bringing competitors, to with very to market potential, go provider presenting to push legacy focus another, motivation a include a change transition the the when strategic a an how into and contract them. One, more the we to the strategic value, this strategic indication to a low of brand in as decided contractually we transition elements XG motivation we a secure from of other others. the approach can a a change Two, operator service to of of from to that have as What one account, willingness above and go sees market to is share. service, certain from compared hand, CSP a will as expense to even our and you going a to of one will the such will secured on engage operator is commit customer XG The operator aggressive to to plan motivation to customer we with an to to is market broadband this CSPs the an in overall expensive elements aggressive of an have results degree change. market. commit hard revenue forward, significant to the

operators, be that able to major to plan will we small commit dependent will major market and such of agree and if regardless with approach, our to approach small terms to is commitment, size have we will go to practical offered approach of CSPs, CSPs not go Three, to X marketing a of to and their an operator are get success. always commercial approach. not a market go especially to not may course, plan aggressive Tier medium CSPs market CSP where on such revenues the their Of a their be to regardless

may CSPs on We expect of we changes impact will sign some not. the these have this some eventually of to I agree will an CSPs up. number these and expect

CSPs of will will ultimately it focus revenues. on strategic service number that to resources drive our more However, we SECaas the value see that our in, the us allow smaller

I the at and done deals As are look remains of in those huge. that that the the the market pipeline, am convinced have size we I

in with remain term at disappointed materializing, goals. are confident achieve I'm long to revenues current ability While I the which our our our pace

composed of I ahead, expectations in and projected performance for of we our to yet launched, new XXXX. launched. Looking SECaas ARR plus revenue revenues are projected The the of XX networks to want XXXX summarize be the networks the

so far year a reliably. predict dates to operators. we number us only delay three give to of As first the this I noted, months during unfortunately hard launch of Launches for disappointing are launched and continues six

dates variety launch see of to a CSPs the for continue reasons. by delayed We

those for the are budget between in mentioned I reasons IT the maturity and DNS despite the the resource of and and additional HomeSecure. calls, issues but operating will and allocation the to previous would expect prioritization expected that within was internal what of also allocation, Some the product XXXX to in with Secure as and than delayed, the department, national group especially our XXXX headquarters we number beginning team the like launch CSP, lower during total be integration SECaas launches issues networks delays, note in above of I year. in entities

our we to also to closer don't contribution getting few As the there on XX% revenues. we free the fell has a till to and U.S. This significant and From time, usually revenues Most dollars. them expect tied ramp service to euro. the are months today, that effect a negative XXXX. up end of compared euro January SECaas are have to of are about year our given

XXXX. would Despite delayed short like not to a is revenue. We we explained new to to to opportunity, $X I a be between of change $XXX XXXX XXXX revenues It now $X as December future our to indicator now words important is for be Bringing MAR are predictor the for for approach our market in account expect the good while now revenues to due SECaas few in earlier, described million I term MAR long ARR total additional forecast launches is say on as in around that continue SECaas $XXX XXXX. million, revenues million. company reduced into good achieve performance to XXXX we to be the overall term whole of but it our expect CapEx primarily expectations still we forecasting to million million. our note deals, to $XXX a before, for for

quarter We quarter. lower fourth substantially a around revenues stronger million, be expect to expected with previously and $XX third than much

support for remains and $XX forecast million. million revenues Our to maintenance at $XX

We remain margin near headwinds. to for gross around despite expect year our term our XX% the

already than implemented our to from costs. some earlier in continue cost I XXXX contract can the our OpEx cutting we seen be guidance help us discussed as closely previous have expenses. control will to approach will SECaas measures lower changes the We upfront and for The also reduce

As for $XXX the our expenses, OpEx be between to million to our we we adjust continue $XXX year expect million. and

$XX and result, guided will full a $XX XXXX As we between expect dollars the our million of believe same to cash at year loss to as for reduction we previously the between Likewise, net also year. expected as our million, beginning the year $XX for the $XX we million million. be the be

full reduce our Our XXXX. and to further goal year loss is profitability for XXXX in the reach of

of am such. in profitable by SECaas continue to fully our We and believe our I controlling aware expenses. we face. our is solid I goal our have will closely business and challenges the as DPI be revenues set XXXX growing that

is significant SECaas see future Our business our we growth. where

are revenues the we taking open products. make and to While And of I convinced happening Ziv in for our take questions. I the very I company, call we full would faith achievable. this would like now, our our to are myself very your business available our like, and expected, large and goals we than I will believe And Q&A. I'm that actions later and potential be team remain years. in these than Operator? the coming confident of have it the will significantly grow SECaas later

Operator

at Eric ahead. is go begin Lake from of Instructions] [Operator Please time The this Ladies the Street. question question-and-answer. and we Martinuzzi first you. gentlemen, will Thank

Eric Martinuzzi

and your that profitable is based that quarterly Yes, start maybe be I on know, is big I with in picture that that commentary was is XXXX. around wanted to off XXXX assumption expense expectation there operating to number that or revenue on? the we'll based an a curious

Erez Antebi

we're Look, I expenses forward. our going said, very control going closely like to

we we assumptions other what for certain us very end, didn't we made do But it's to that made in do profitability order lower SECaas even -- what for afford Now at on I XXXX assumptions and very, and XXXX, be certain a internally, hard the realistic we we achieving say, consider to would right? can revenues of think that believe to get to would revenues in XXXX. target we And spend over for is achievable. we these budget

Eric Martinuzzi

or well, The made that already? cost let was that made me cuts in Okay. in the you QX QX -- layoffs QX ask,

Erez Antebi

I'm sorry, I question. understand didn't the

Eric Martinuzzi

in in The they already, cost were made or you've cuts QX? these were that QX

Erez Antebi

-- in overall made in to year. we and we've control, the had an at cuts our QX. of than lower that's of or made I some going QX expenses for We've OpEx cost budgeted our had We've Look, ongoing -- expected what made the why be beginning good we think, is It's process.

Eric Martinuzzi

Okay.

in $XX.X -- the then the trough assumption be to of a the will or as that that at would QX? operating So we non-GAAP QX, that the assumption that million be then is expenses look

Erez Antebi

As we $XXX be will million said, be the to -- between expenses $XXX million. will

you which are have So year, take going half second the we was the it’s for year $XXX half of million, the $XX to OpEx the million. first the midpoint, the OpEx of million. if of And for means it $XX total

the quarter. average So it's million each of an $XX for of

Eric Martinuzzi

I'll from that question step Okay. away expense and the take offline.

in to likelihood those is here, at pushed As May? here, these you're you several CapEx now conservative the guidance have transactions this of the probability more are gotten guidance CapEx have in Has your about -- that you concerned you out versus that probability -- transactions closing? that of look the and transactions thinking

Erez Antebi

will confident will issue I'm into timing or on parts. And close. I'll deals don't just is And my dramatically. of two that timing that they not whether is changed close on several One before. unfortunately other that, think assessment question I of The as -- was has they it's now divide the rather the the that. issue of an them

I hope answers question. that so And your

Eric Martinuzzi

Okay. carriers projects about are prioritization of think the reason And way to and assuming then this they right about -- earlier I'm are other change, Is that that implementing? that these for back these your comments to projects versus it? for type particular the DPI

Erez Antebi

a customer be it's for sure the of priority I issue think XXX% can't on side, each one I them. but

Eric Martinuzzi

size for pipeline the DPI the does pipeline last -- Okay. now versus for overall asking business, the versus question side, year for And the I'm and and then DPI how ago? last just The me. maybe of compare now again, quarter the a

Erez Antebi

Look, year my think last it's quarter, to compared year probably intuition, quarter. it of were than think if similar you a look, ago, to last go what have And I think it's I was I'd at have larger than looking larger we but and or I back ago. today as a

Eric Martinuzzi

Thanks Okay. question. taking my for

Erez Antebi

irrespective on pipeline they of total deals The working closed. we the the timing of of when are were

Eric Martinuzzi

Got it.

Operator

Please next ahead. from is Chokshi. Nehal The go question

Nehal Chokshi

Yes, the North thank Congratulations markets SECaas largest incremental your believe you. ARR in are was and quarter. on what positives. American incremental Those I traction

With find about, talking you're work especially a when Is [indiscernible] carriers, with you're now independent does commercial that the marketing. that effectively mechanics out? smaller the there? deal these agreements market How go CapEx that changes to becoming or about talking

Erez Antebi

think a service we an like not enterprise deal, wide as something -- license. it's of No, it CapEx wanted but

had and until offer will start want now today sorry, state been SECaas they was you we'll what We'll service. offering So what place we small -- service, a some okay. in the come launch help them a to we operator we would --

-- you customers, you on, double, as grow -- to anything, anything. additional you pay customers your you when don't so more operator more the etcetera, an us of us month. will you as number us per double don't pay pay revenues get You your operator, And commit and

get be to market resources, don't lot spend look, going rates. a is, say, go and on. going small you we to you We'll it to for more will us telling the dealing nicer. how But with confident to we're phrase want answer than --you're We're and penetration I'm Now too not not we're but you we now. to be teaching nicer so helping

make we'll more you finally pay and If you a launch want make, customer. SECaas regardless if a deal. are, of the package you the amount money very, same a And but That's the the us same money, that of everything need month. you amount work you successful make we also money provide different to we one you with us, more very will X of to you service don't still the have dollars

it's So [indiscernible]. still

Ziv Leitman

a with maybe you Nehal, there but a cap. maybe or regular And deal hand, And should the on is like minimum also this the think about a other other, amount. ticket

it's same service the the minimum [indiscernible] a that cash. It's same providing. So, with service, feature, we lighter, speaking, of amount but security not are same the

Nehal Chokshi

than the minimum success And and so some in is of agreements then? these the there the with between the commercial cap, case scaling of carrier

Erez Antebi

optimize we're to not to not these don't our -- spend on results. we're spend operators, I going the to going resources

Nehal Chokshi

Okay.

Erez Antebi

going that's take us. to And a off significant of burden

Nehal Chokshi

you're motion. Okay. just prior (ph) far, that Q&A you of from be go going business? to DPI the savings speaker, been that sounds And this clear, But SECaas haven’t also on what that the thus from is just have well on All in or right. business defined has [lifts] the executed market OpEx yet it to don't the new like based have kind the to

Erez Antebi

and we're expenses be our lay be mean expenses a like across other say we having total for could our whole company. to year we variety at of the we we're a the course, necessarily and is the are, we looking whole control What good things. it many reducing expense from subcontractors off, able of expect When factors doesn't And to reducing of costs share did. what which our expenses

Nehal Chokshi

Okay.

be a SG&A revenue term, to go So to long term. is Is ratio to a presumably effectively assumption? mid-term and lower that short this with correct motion new SECaas respect going market to

Erez Antebi

I understand. question, repeat please you didn't Could your

Nehal Chokshi

to and that CSPs, looking a to as this the percent to mid SECaas market revenue term, be of a at Yes, percent focus basis. you're of of lower on spend the that on about, talking SG&A a not with success correct? going you're Is motion long mid-term short small go as term revenue SG&A going new you're where

Ziv Leitman

revenues. of it take we out don't it is for total of figures We split the the out portion don't -- revenues. SG&A the out of

So, altogether, shouldn't total revenue, expect changes. we the major

Nehal Chokshi

right. All

Erez Antebi

But be will lower. revenue

Nehal Chokshi

Sure.

might go you the to deal? a sounds Can like Okay. about Understood. about six have be Vodafone if And talk market? meaningful That then they little that quest what a that bit?

Erez Antebi

did it's CapEx discuss markets. have very discussing secure launch I Vodafone, of us, But how the -- go already We important I I'm they will already you -- really But are was service the is. with and think we the to historic in our countries difference into if they're service market to take to really things details not this which of that going it deal. free this. add a a know, course, still unfortunately, that with they plan deal close to a their network

this security, So is type Vodafone at an contracting a additional us of is with this SECaas contract that for. time, type

Erez Antebi

operators. is deployed was over plan operators and network initial the unsecure over stage. This deal we now seven for historical security the XX deployed the And

Nehal Chokshi

Perfect. Got it. Thank you.

Operator

next Liani is of Tal The ahead. go of Bank America. from Please question

Tal Liani

on a I'm and weakness. number, own of right it of of sources you internal projects. for etcetera. trying much understanding spending looking push the looking And customers, the And for is to to question out that whether guys. market, not customers go attribute it's you I'm to the first I the much service for -- I’m related the how to focus ARR. right the want see not is to things, Hi, is, of not weakness your to how not revenues

Erez Antebi

way the if them, added my of then things it. become of If is operators lot think lot that the when look problems if we I don't and source is, then they is how SECaas them the so don't value this some of mind the another service, main to services, important it I'd this see simpler. the and of it's see value key they it's they have we operator successful say, service with interesting it a necessarily And quickly as happen just to attached and -- perceive aggressively. of at and factor they it the in a and lot service. is strategic and then they -- revenues of With what the other really one brings even a operators, many as it's strategic same that

strategic this revenue challenge them on a has we In mindset not yet of successful. them, successful. at service have just your we value if there as generating that another have sure more them answered is change In to been value of our Now to added it. show I with that few not the most operators I'm been signed question. that looked we've been of

Tal Liani

spending recovery in or else something it's do with my recovery internal the -- the But Erez, is issue have is right don't issue? a have That taking trying you cater this just a portfolio. the -- so or the if market, you understand is of you spending don't needs to an lot meaning, a was this don't or meaning, issue, this -- the solution products you your solution to need issue? to question, whether is your answer, external right I'm the right or is

Erez Antebi

enough. They operators issue. apps. The services to Fair a it's product whole consumers a network few were offering I didn't don't ago reselling years concept of They think security Look, do was based that. non-existent.

related would all this is about changing this on, that. and So something -- It's a change. a so product we in operators. that issue a for different sense It's then a the different develop feature had is or mindset not will we something product if is set that

we kind the operator It's really product. that the about but have of price, not good have Of etcetera, course, service. they It's the about of -- notwithstanding realization to that's high or level. a [indiscernible] very very, must not provide

network with most as it services. happened none something operators in see security change based to A few American were in dramatic the interested didn't offering years of Now, the North market. the the ago, value. me, didn't They we're The as North many interacting what mentioned at of strategic. we're changed. in mindset They closing. anything This has I operators America and it And the how look has changed. of

see and this, mindset in revenue haven't don't because want anything three change I we they to of in put North numbers SECaas which didn't though on the this they see years So ago. operators any they do the America. why from even and the we two, do on to it, launched want important

change places sometimes Now in not. world, the that sometimes in and is happening other

secure seeing in know they to mindset and that provide that, operator countries with “dump connection as difference from It’s changing, from the in some understand it's calls to Speakers] this really product success their can the I'm and XX issue, it’s from with use the overall, away products become some secure years. that such. understanding [Multiple pipe” to as That's big need And shift -- customers. a don't. okay, few get they a over operator's product -- thinking they last Vodafone broadband Vodafone a a as make our a related operating not to just operators not the but But a have the to --

So the solved product the really match or already problem.

Tal Liani

is level what to So not something a Why ago? suddenly didn't of is times. see the related didn't more What I in your why XQ we mean, it preference a year current year-over-year? down is, pace XQ Why growth question slowing changed to the And now? about kind talking why see now? It's negative high we of customers? and this year that you're ago? and of

Erez Antebi

No, it's SECaas slowing not [Multiple Speakers] based on is on -- down. growth

Tal Liani

-- things. two I sorry. about not It's right. talked mixing right, I'm I'm

question still is now? You're why now? still It's correct. -- But the why

Erez Antebi

What is now? -- Why explained I

Tal Liani

thing and we're understand to of something we to the of etcetera? about customers growth. ongoing this talking This say, this me is it's it. more a deteriorated, a is issue you for is or and and okay, right there educating I'm application, not seen thing is And the an of at if kind ago. new. do, ago, things happened they waiting have how and year an the understand understanding told that spending convincing trying understanding something And what same sell now. recover. when you Why that problems products to happening about talk an you're we because you should level the it's high budgets match issues? But now now need year with issue strategic issue talking I you're why with why Why customer, about spoke there about to

Erez Antebi

sure it or seen have if not I'm not. we should

That if that that, after and more asked this as business. is ourselves revenues year the what would absolutely that market we've more has after learning -- additional ago, it's developing And not accurate operators, even more operators, other because go evolving. enough because no why think with we interacting revenues they how were more would A value security a as added more learned time us, it them about not proven would more will I service, provides you that looking with I make assumption. that's about and reason and services. operators proven than as are this we're any have me, see said has value an spending have at market added are telling them, been this we I

you the will I'm So operators, shift If not some happened sure why now? of find it. you're that in [indiscernible] looking

is that -- the strategic provider. think will find to a broadband to the I have make a they realization broadband what shift that secure be you

add but with hundreds enough operators whole rate services to I they're expected. and the looking it the are willing slow. of of I these that the looking at look set -- to launch go not happening though mindset aggressive is not it kinds They're would that opened that security globally of still to have at have at lots it. services, look slower whole operators Even of than the of is you As would

Tal Liani

last Erez, So question. sorry,

XX% you're break for a -- Can the legacy related for you break that's why decline. products? trying big almost such what -- understand guiding of and that’s big You're down? is next to to you I'm the related expecting Street What's was decline a to XX.X%, X.X% new XX%, guiding Can products? quarter. year-over-year it a – XX% XX% for

area. in to things understand more educate mean, a in, visibility products bigger revenues And every to because of are greater very they if for in you thing. have what into that can meaning, because are a new to you the or doing we the chance is in market XXX do what And than will I trying costly coming -- understand control, other some all they difficult company to when I'm about they areas. things assume at it you that they are in will is investing of how you're market, over go you're to And in it improve talking you, trying if that education, I'm do? see products. see is need some your it? other is or other doing control the them where times you customers confidence they're meaning, it your decline, end So are which they small I that that logical, recover, that a can day have If and revenues, see the and things do

and for down big higher revenues I'm hard of understand and what's have big the to trying me in to so the these on that from investing and are revenues. not a to it's to coming revenues, its areas what's And control that is understand. to area coming you understand higher I generate break customers? your That's decline can problem consumers. leads face difficulties your educate problem it's It's to from that [indiscernible] why need for simple leads things them a concept in So an consumers,

Erez Antebi

Tal, so. I think confusing if say may you're I

I confusing issues. two think you're

which would SECaas The our is there is quarter business in specific it's We third about what continue cybersecurity And we is talking it's grow partially I've in the to specifically business, forecasting several and was We -- we deliver the have and I a has -- and quarter-over-quarter business, CapEx close to revenues. QX. we few been any got bit that And call the answering of therefore for Allot expected delayed the quarter-over-quarter. in been slower we very and to do than discussed deals, to in decline SECaas we in reason right? that Smart. the we're that delayed recognize not grow. were that majority like, in two to deals business, a the cybersecurity to It's which It we're that. of decline third we have it's have We're forecast -- that's later and happening it and the areas nothing and business recurring it's questions the growing DPI traditional but DPI decline in minutes. second grow which deals the your to CapEx cybersecurity like, about the that's and for business, continuing have going last than would continues revenues revenues The the with a is few our quarter had were business. There that to QX. growing business

Tal Liani

deeper want why this I offline. about That's the we'll I Security asking it it legacy take take dig it. offline, Thanks. DPI, but was We'll and to Okay. because into

Ziv Leitman

And just this $X previous million for data, Tal, piece of the one for our maybe still year revenues was guidance and number. we this guiding SECaas are

So this quarter, change SECaas the for didn't XXXX. forecast we for

Tal Liani

it. Got Thank you.

Operator

next Advisors. is Silk from Mark from Please The question Investment ahead. Silk go

Marc Silk

for taking Thanks question. my

So started stock position $X. XXXX, price around in this the building right when I was

was in better see, had can is the was your a anything even past, I than you as DPI more than your it customers. but no far SECaas As concept of

XX active. know, I XX, XX So -- don't but you have, now

really this to figure So as Street I'm your growth. in trying The far out. not as confident this area just is

you can So just -- explanation. more some I need

some is but get you're then a that of to you long I value you that model them a far So still I to going And to this commitment you're we'll big aggressively to these and thinking the up more? as zero again, this thing it. going to with the as market hoping okay, you've giving but some SECaas. of there's think you Because upfront, is the you're your agree, model saying for explain of of some pay exciting. you're revenue talked about sign for customer, you work guys upfront will as smaller recurring money costs pay as before Can very kind just Street players, try the

Erez Antebi

Okay.

So explain. and I'll try

in SECaas, was with model Sign has up business Our -- for operators far SECaas low. okay. proposition for us so our signed been contract

if you provide the you so depend don't on. launch need We guidance, [indiscernible] -- business, you will you you we provide will on need help you everything you our so network support upfront. you maybe We'll need maybe and provide press anything hardware, the need on. software, Don't and we'll you

that per And to in and As are of back be you launch and so grow SMBs X will service. and you customers, pay dollars us more consumers, as will each you we of customers, you accumulate -- number for per on, year growth. as and customers money service, more our making the the month when lot more a you those

to etcetera, discussion. reasonable to of different but to price ability -- to channels. are imagine their etcetera, give And can us willing commit operators. commit go Portal some market. -- of launch They commit it that to either will is They for that are areas proposition to maybe still sizable, all that in to kind of business very and will bundle plans, to are We their making maybe in it that will aggressively open go bunch be those same limited. large operators you our get large very very, a commitments operators of of size whole

operators and not Now not that from the to -- commit really are willing market, to go will view a them aggressive smaller any our the make are are that simple operators, willing we okay. [indiscernible] not to perspective huge

maximum and like not will the pay And of SECaas order have get day sure to you more not you So with make on that going amount per going to we customers number month you're the month. you and paying how minimum per per that the do service are energy -- month, of we're not regardless spend and so quickly, that. you to the you fixed number in sure so you out with quickly. have, because customers the you work Do on will going make resources, with to we to number and whatever in, us day and launch not to launch a and would maybe cap teach probably

operators. on dependent now? more we in the clear less be them will much that success and approach be on difference the the That's So for smaller reliant would it. more Was much, the

Marc Silk

Yes.

to up with and came you is just the talking is is that you something or about you're just are that, if that customers? something -- what smaller customers these is reaction how to So implementing that

Erez Antebi

that. to about are talking customers We

Some that. doing we're in customers of not smaller the tell interested us

So finally, we'll away. just walk

okay, are customers discussions those saying, about And of of talk some going the on. let's numbers. And the kinds are

Marc Silk

XX discussions, use -- as – of the up as are out XX, so you XX and that signed have you And far

Erez Antebi

None of this the contracts using that up are we model. signed

Marc Silk

by end the No, be a What of that, of many realistic more should online number, be the XX how XX? understand but year? I the would

Erez Antebi

to expected it many wrong. prove had I because year and customers have more cautious, little a will I'm launched this I

So to year. number, the expect additional ability to given number previous for really feel giving don't do uncomfortable but the remainder venture a a my lack launch, of of customers I to I want I I the behind number gave. stand

Marc Silk

when That's stocks it your to mean, write level, I this agrees profitability. fine. down everyone at And your I up getting agree. because I to fantastic. bring I that hate It's think technology $X is

some you're be [indiscernible] not you're big another talk $XX it's million, And discussed That's these company, two have something of a easy we'll but very So you've company -- things, the look support XXXX, that needs I on shareholder there. the profitable issue. you don't a SECaas maybe because some gave to so got a impacting in on there's more if lot say, you, activist the you also to shareholders, basically internally. people. be you loyal because can note, then bigger is at that's these put you that -- know it if when to of these shareholders, that of pressure

XXXX as obviously on in if I'm realistic promise XXXX. the be think that I to made, I to long path that stock is seeing I guide just seeing don't as holding think XXXX a as And profitability, need -- because but see there. to not the the XXXX need in disappointing, to we're in progression to decisions have we to you that path not the to mind tough the be seeing we're opposed

So can you to discuss those try issues things, important both comment there are I internally. think on but of to

Erez Antebi

agree and value with from our plan long term XXXX you use our will appreciate to really lots And I that we the yourself is getting be therefore, including I our in others. enough. all, we're not in And of shareholders, XXXX. profitable support First and is just saying

also So of will year will that next we path the that see first to as will see but you in on all, you be well. XXXX, profitability so --

Marc Silk

ridiculously mean to as again, if I don't adding but can the someone wants the mind Okay. And new a and strategy get a prices. most these the always, had It's profitability this I luck you point. the win last the consumer, It's think right at the more to it's wish low caller, But frustrating previous mean, for like you win forward. stock, dump telcos. that's a win issue, for hopefully and he -- And And for kind of it's it's works. part. I don't hopefully a also win-win-win. it's a product I guys going I you

Erez Antebi

much. you Thank very

Marc Silk

welcome. You're

Operator

Cowen. questions further are question at no this time. [Operator The from There ahead. Please Instructions] from Bernstein Jeff go is next

Jeff Bernstein

to SECaas the out Could the DPI. a the Ukraine, bit despite customers? change this big probably deployments. Is macroeconomic moving a commentary to like for confusing a deals in What's little from here of more seen Obviously, lot in DPI? The seems businesses guys. it here. closing business from on delays Hi, to numbers But is in just Europe. over you going we've your impact all opposed to little the it's there? and on year things big be give little a slowly related with issues delays your information seems legacy as a business as the Yes.

Just little DPI? more color bit on a

Erez Antebi

the at as the the as third the we most the probably -- see and during think had we DPI our several expect were quarter, then third second though don't the sizable, I expected in And were earliest. we pipeline, fourth closed be we there to deals we at they even and said, in pipeline. in close a that will decline in look mark that quarter Specifically quarter

because we and get today. in are larger It my delays not in I'm decline QX a happening? trend general the these said longer deals these revenues this of are XXX% a environment. take don't to It know really could could is I commentary, As circumstances know. guided be in sometimes or I sure Why because like don't larger time. I'm this see specific economic these combination if just will I know. We and very a be deals. -- just the of deals sure not is I

Jeff Bernstein

that. business something the XXXX the a position just built then like follow-up DPI risk fall to To was me, to on bigger off going And that. our or time. that also quick over we back Understand. going was When XXXX,

particularly job DPI. the business you've in that of good giving You there's fair routers. competition was of is was have business being who guys taken of have seems guys a it the a a being of were away But and like those value changing piece despite advantage away changes given done like the environment that legacy functionality that issue Huawei kind some routers, keeping It from a competitive that network bit DPI their and and in that increased a growing, the of consolidation. of core

four about this a big that we ago? little piece risk Just legacy risk? talk years risk it to you on a a a believe business? Is big still little bit talk in SECaas, is more we still it where Is DPI a bit that Just story? less Assuming all are was the to of that? about than now

Erez Antebi

our if at competitor do there is win solid. main market them. DPI growing now, growing the I don't down. we see really compete the anything We right I previous see see world DPI in times see actually, competitive the -- and weeks as Huawei DPI years, the think we've see I is pipeline like do that market in in many don't Sandvine. Huawei. I against I We And there was that with well. a said when look landscape, I

foreseeable as it's going I this And have been grow But -- is whatever be at think business can future see from over growing years significantly and DPI. the hard point. think few to the DPI solid solid the for I So market this in to it's I evidenced that not in the very we very, last that numbers. that is

Jeff Bernstein

that. appreciate I you. Thank Fantastic.

Operator

you Mr. no are your would this to at further questions Antebi, statement. time. There concluding like make

Erez Antebi

Yes. earnings either call thank for or you Thank you today you. us. you your look and I want forward much. the to in all privately listening for support. to Thank you I Thank to leaving And all joining next very quarter. us

Operator

This Allot call. the XXXX Thank you. concludes your for conference second participation. results you Thank quarter

ahead You may go and disconnect.

Allot (ALLT) 16 Aug 222022 Q2 Earnings call transcript