ALLT - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Allot's results conference call. [Operator Instructions] As a reminder, this conference is being recorded.

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

If you have not, please check the company's website at www.allot.com, or call EK Global Investor Relations.

over to hand Officer, Investor now Mr. would the Allot call Relations I EK Investor Green Global Kenny of Relations. Mr. you would Green, like to begin?

Kenny Green

Thank you, and conference call. to to thank Allot's all Allot like hosting I day results call this for quarter. financial discuss you. conference its to the would management welcome Good to for of

With on are call Mrs. the me and CFO. Nahum, Mr. Liat today Eyal Harari, CEO;

be Eyar available call Following answer for open a and remarks, Liat And session. prepared will Eyal's questions. the both to those we question-and-answer will

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

statements I'd of harbor to call projections conference company. regarding we out the or forward-looking contain like the future future statements. start, the events performance This following safe may Before other point and

statements predictions Those of those any Actual will, materially may guarantee in not that changing to differ occur. cannot events the update they in Allot assume Securities a market Allot result documents launch well that by including demands reduced information. as as does results obligation early fact, and or projected, are from customers, industry nature of risks securities the the and competitive other Exchange identified trends, Commission. Allot and of by as the services filed the delays company in with services the

provide the on results Also, quarter. measures will and basis. consistent non-GAAP a mainly operating believes measures this performance Allot understand the these to presented Allot's in in financial more financial be help comparable that non-GAAP call investors

tables. also non-GAAP release data, results financial issued today, For includes tables which please reconciliation all published press the to to GAAP financial the the the earlier refer in

CEO. to go to would over call Eyal, with like now Eyal I hand And please the ahead. that, Harari,

Eyal Harari

of flow operating and clearly cash net would and increase Allot you results time happy position good you, like generated our pleased Most first second conference its of for joining cash results I'm focus. that welcome quarter call to with for as years. we us notably, the thank overall made have the I'm the to positive Kenny. all today. X you I in Thank

year. We was margins. starting the quarters, This and a engine. expenses, cash about the profitability position. gross to expenses, a to past drove want by spend significant couple undertook actions our In and Secure, while these our XX% decrease have of to to bring with operating the stabilizing which also which significantly optimized revenue lower growth parts grow main of sale last the in approximately we are than sustainable operational driven moments I business, few our Allot business talking various efforts

invest gain to traction. the SECaaS continue and to growth continued We business engine our in

In revenue increased the second SECaaS XX% year-over-year. by quarter,

for X enable high-quality provide while Our attract as Allot look us our end with extensive Tier revenue X to large expansion expansion SECaaS year, growth with start of list in customers The we customer provision of guidance base. our XXXX. to this representing further customer to one agreement these recently potential also its the to accounts, of within logos. contributing new of We CSP expansions should at Tier an SECaaS European agreement additional the pursue references for signed

protecting customer And opportunities with the year SECaaS expansion engagement partners Verizons in Allot's customers. XXXX potential segments. security result, business. to with last several Our as discussing Verizon of Allot to validating to recent mutually be most contribution I Verizon are their launch Report, solution exciting continues The Security trusted we the Mobile in their as the beneficial. highlighted end network the that want was out point different one published a Index

and insurance is the turn of on protection, processes sufficient tech will require matching and which computing growth exponentially policies mobile their IoT a the in need focus noted, expanding surface, investments. mobile report the security Specifically, that

Overall, SECaaS space. long-term is solution key I driver the a in for believe security the growth a lot

rolling our some well is converting as provide with in network of contracts. operator network network second crossed Rakuten Rakuten Rakuten sales increasing announced to base smart been infrastructure. an subscriber an Rakuten the customers. strong XXXX is pipeline closely expansion saw Rakuten they with an to of out trusted to as Smart, support highlighted they This working network. with Mobile. solutions as Allot virtualized current base. fully we of traction, fourth quarter, is the For We their by a Allot long-term with into recently when Allot the to that customers a grow relationship level a supplier achieved continues mobile in subscriber X to customer has sales Allot Japan base. products were of since new cloud-native improved their its million. our expanding

serve earlier we growth our and reignite to our am Since I within a customers innovation, our a goal on globally. base. customers our year, top-tier a joining of installed I has Allot this better focused to technology been with by meeting technology base. ways tradition have differentiate partners with and we can our key customer Allot expanding leverage long identifying global

employees. spent with have I time

at the We professional now at the and TIT and of security space, I'm currently team individuals, our a and technology talented share of growth including to Liat Board thoughts. who priorities. strong long-term many profitability. I know beginning new deep to the renewed and Nahum, To capabilities plan a management, strategic joined the networking us epicenter which revenue my working initial in have closely [indiscernible]. with spending and want stands and with of drive the formulate CFO,

The projected market to that opportunities $X increase for express capabilities. sophistication. over next in by security service market decade. growth market to continue long-term looking The mobile compound emerge We core average the are is as be XX% to rapid growth and with cybersecurity an continues threats growth over leverage analysts Allot's profitable billion

better cyber Allot's to protection even we and considering our to are and one SECaaS and our additional is of bring customers. Cybersecurity to growth value improvements Solution engines, innovations

our at looking are We market. for to expand and addressable base SECaaS also additional strategies customer go-to-market

trend we evolution. are at is looking XG Another

As annual the excess compound growth with new to is demand next continue XX% in X out, over security XG the growing solution years. analysts for rate be expecting rolled networks advanced significantly of

indicates of a small A to service remote for that costs solution, and transformation have at recent With driven businesses X the digital around business XX% and to adopted to date. increasing XX% and cloud cloud enhance desire is of agility. need large the least movement the report optimize companies by being work initiatives

the these potential markets. our further XG the exploring address to penetrate additional value strive and and products are for We and we cloud provide to of markets,

market. in its global strategy our is are While go-to-market America in underpenetrated outlook, we North

in recent and years, strong have in references seen initial including Verizon. success the we has region Allot

it is We many success are and Allot We our in this of CSPs, that large are trends. our to installed deepen many and a deepening security works growth early is which opportunity North within our clear the potentially in ways customer enterprises exploring leading key we in which significant business base. for leverage today engagement region, see can leading America. relationships drivers to and Allot with expanding our success

the looking to at and as enabling and plan customer customer-centric goals closely to relationships, are cement services. organizations allow for a penetrate this we structure our our Board to to the into to strive business revenue would A further products from growth as business long-term We I'm more be customers. strategic us goal Allot organization customers' with on further increase will and existing our ways to renewed us believe we support with profitability. management better working make

significantly new We will a at returned chapter expenses. and reduced for In summary, Allot with generation. we the we many believe execute the the I'm and start positioned In are optimistic we of profitable that to positive provide we will details the quarter, second on operating we more as progress. management, with breakeven the growth, profit well business ahead. revenues range We refresh are stabilized I long-term sustainable, drive opportunities to cash believe Allot.

over I CFO, Liat like our Now summary. financial to it the Nahum for Liat, hand please. would to

Liat Nahum

million quarter. Thanks, quarter, prior a in year-over-year million the Revenue our decline revenue XX% $XX.X but comprising XX% reported the SECaaS, revenue up were $X.X of year-over-year growth XX%, in Eyal. versus We our X% quarter, up the from of in the engine, quarter. of and representing

SECaaS $XX.X revenue Our XXXX recurring June million. annual as was of

full ARR expected XX% at continue our SECaaS are to experiencing growth in discussed release, around SECaaS year we As revenue year-over-year. and accelerated press

can breakdown find revenue in [ table of release. ] our various press You the in our

was the quarter In in our XX.X%. was last XX.X%, second gross quarter, Our margin the the in it was quarter prior gross year, margin and XX.X%.

for the of return the product margin are XXXX. average to on the first the the and margin sold the in While target gross the long-term an is of in XX% we with depends level half pleased specific XX%, quarter, mix gross

and quarter The loss a second expect profit $X.X operating non-GAAP non-GAAP last Eyan of showed QX million, down non-GAAP year $X the of ] For As from past 'XX. the reduction in million last quarter had a over employees and in XX% in half similar a significant to QX second over OpEx with XXXX, basis last million from of at Allot improvement year, non-GAAP as we [ a $XX.X quarter on mentioned, $XX.X XXX debt XXXX. XX% to June last of expenses reduced we with million around operating breakeven. full-time by of year. at the considerably

in a net the of in million quarter, previous $X.XX In loss as of in loss compared non-GAAP $X.X per and of loss million $X.XX a $X.X the net loss, net share per second quarter terms $X.XX $XX.X non-GAAP of per year, we a loss a of or or million loss or of quarter. share reported the with share last of

was $X.X the million stability end XXXX, XX, as June million, million in Operating the investments the of cash Cash, of in at deposits increase second $XX.X cash demonstrating short-term totaled quarter, versus level. and bank prior flow of quarter $XX.X million. $X.X an

expect and cash point. the below as we bank Cash, ahead, year-end investments to XXXX position were Looking $XX.X short-term current deposits million. net not our of decrease

and be Eyan would now summary. to myself my ends questions. That your take happy

Operator

Nehal Northland The Chokshi Instructions] Markets. Capital first from question of [Operator is

Nehal Chokshi

ARR the at end to $XX.X that quarter? on of around especially focus of guidance. guidance, SECaaS like growth, translates Versus When an $XX year-over-year to same XX% you XX million, June I'd the ARR around say -- the million the correct?

Eyal Harari

is this correct. Yes,

continue see demand We quarter, increased for as And quarters. trend continue we coming to SECaaS reported growth, this reported, our the in service. we XX% expect we this to a

Nehal Chokshi

Okay.

the incremental about this think December and be Are in quarter? do ARR about you you are more subscriptions to you're over terms build what likely year-over-year really thinking guidance, are of, when can So September that the you up guidance? is the going . Or SECaaS that thinking see growth you how your sustained?

Eyal Harari

So multiple growth is the things. comprised SECaaS from

TAM additional winning that able revenue. expand existing customers, the But revenue by are and to The SECaaS This we and accounts and new expand within we adds that from our provide see are our and to additional our installed existing our services is, implementing address obviously, base SECaaS business first that, additional our service. partners. also to

will I within it of the there starting to new specific service also launch offer and mention is to to time for operator is some and the even takes service therefore, some a customers, business potential service, of the nature is this and And that the to uptake. market as win its service, a after the grow.

existing [ overall, built we XX% we our a we base out And services, some with already is that use of that service dimensions mix progressing launch foresee, the both winning the we that accounts launched. new can growth that where X X So the and generate. what and of and revenue ] been are and them. reached can Launching max level [indiscernible] of services new in has reach to services see of starting the to operator Obviously, those to it with grow. global

Nehal Chokshi

helpful. really That's Okay.

you quarters third of X in that distributed million are and is actual to thinking million which guiding that you're incremental -- most about the ARR or between would quarter? the opposed the as fourth rest now incremental quarter most $X like million that the this for to expecting $X SECaaS the fourth of the come here, a to $X terms $X in the million going to being year, in row, SECaaS So of represent basically for to ARR

Eyal Harari

It on QX. in the foresee but also gradually, would say, more increase we will I last will come quarter,

Some in in QX. of come the higher growth QX and will a growth

Nehal Chokshi

at the calendar you And of mentioned going that driver end that's there that 'XX? is the of Okay. something driver end to be what happening is calendar a there that's SECaaS 'XX ARR, to at the

Eyal Harari

going of customers, we couple its of expand the agreement an This SECaaS quarters. our by existing is services one our implemented to And got in to So be into customers. to coming this looking end of to be After see in our we the new are looking this expand from year, in SECaaS XXXX growth are service. EMEA to it we service launched, will customer.

to we was and This moving in very our perpetual our onetime it's encouraging going a as forward. service and to customer SECaaS a got now agreement fee, a way is that revenue this using SECaaS contribute

Nehal Chokshi

Got it.

Okay.

a customer relatively with perpetual I of So ] guys think Geos one SECaaS well-known [ had you and the Vodafone. Vodafone,

the that's to? that presumably, So one referring you're

Eyal Harari

of didn't us print But and are one name, SECaaS that in going to our the contribute with We customers to NDAs. is we working the subject revenue.

important but and ability service and of us, SECaaS I the is customer importance they for the is providing think the in exist them security are to the most as relationship looking continue long-term a with protections. customer, not that are critical the

Nehal Chokshi

to value had set the Right. of value another And point of the key I because of revenue customer sharing? point. good Sure. they get to But for And that would this a that, prefer perpetual here an the customers. now Very license. is SECaaS the that they existing that guess agreed strong is they've presumably, see perpetual a lessons

Eyal Harari

Yes.

Nehal Chokshi

Okay. Great.

And risk calendar 'XX. the And so what's to out additional as level to this within that your guidance opposed the then? customer's next 'XX launching flips to -- that occur, potential . your if impact to customers what's level roll -- of out does set into what's calendar to of intention

Eyal Harari

terms We have of and agreement the already SECaaS place. visibility based in on very good this is in revenue, our

and projects as that integration some time. within some as of we some always the implementation is require take may the might telco course, time that and we Of implementing are have fluctuate environment things work

and feeling with very this the this But why is indicate we progress, confident are guidance. we overall,

Now it's projects agreement. based quarter, on the our some a already but move, of move nice secured might

say it you might So quite defused.

Nehal Chokshi

Okay. for new believe June any quarter. $X.X the don't within And I launched June close looking -- at CSPs Q had results March million SECaaS incremental ARR, reported All the $X you then right. the SECaaS very ARR million of to quarter. doesn't you And that that

in can So million $X of what about quarter? ARR you sustaining basically the incremental was talk driver of June the

Eyal Harari

deeper out pointed customers usage increase as existing see our before, the base. of installed into we penetrate some to did Yes, of that managed

So the launched now some of as more additional protections. using well of their are customer service our as customers

one of do from -- our the the couple customers from not of HomeSecure, protect launched only but some protect For the them customer the network a example, router. also and side cover home

customers we the and this have SECaaS revenue those and within continue we customers our is that are base as base. the these potential their expecting installed to and in that So to growth existing maximize single contribute ] expansions incremental still to -- continue didn't expect even growth, why trend penetration, of are fully we installed revenue this [

Nehal Chokshi

Okay.

to think from Verizon the started the is look? to of And the does that it SMB. a availability Is within come launched? rate I within you quarter steady trajectory here? -- so stay has How third to Verizon when attach rates Or continuing started has attach down this

Eyal Harari

No.

increase. to big potential We installed and business of continue should customers adoption base So address. trend to have grow still of overall, is the that we feel to a

closely ability see market to my solutions best out into to to services, our we to with optimistic is Verizon on we relationship within I long expansion in very customers. enroll Verizon pointed the our strategically, are Verizon. the into Also, We to believe are additional as something comments, further previous ways need working and look term looking

Nehal Chokshi

Okay.

get attached talking that point was it's had I clear, at subscriber likely occurs. SECaaS CSP to Is existing up the about when the my is, Just what usually impression incremental a be attach most of that subscriber. because is CSP, has sale new you that signed that rate, through

given rate the new to I'm subscribers that So rate a attach CSP... talking for that's attach about, the

Eyal Harari

yes. Yes,

new growth both a the see reporting rise in business we we subscribers, fixed wireless attached the service, the and on growth. on are customers this So enjoying

much to We possible installed to capture leveraging also use as the of subscribers bigger as as new And and well base customers service, base the on installed not both is as are existing potential already ways base. share only have our installed our we that. the with from looking

see So there. grow more potential . overall, in we to

Nehal Chokshi

Got it.

Okay.

wireless rate to Q? the of the June that for the Verizon steady line from March fixed attach subscribers new stayed has to relatively is So bottom the customers

Eyal Harari

that. You say could

Nehal Chokshi

of All in CSP most contrast right. to Okay. launches? Great. that your is And prior

Eyal Harari

No. operator model. the the on depends We see to business service. The -- promote that it decides

as as Some of included them part might offer and of bundle it the package.

time. then we So and some if over to it's to upsell. increase some operate And you like as everyone incremental and operators opportunity offer service, it as upsell, operators Verizon an an

It new service you also a you the the growing. right timing network market, the need of that the opposed a are attached has foreseen North future. a separated find with of wireless expecting the phone for and it's And depends different customer growth consumer as service a one And mobile that already by to do It's know in that to are growth the the part factor, it's everyone to And engines fixed growing to are that, are connected we grow still operator, is America. we upsell service many the service. on of to the -- we it's to we carriers this natural protecting from engaging as and to. if of

Nehal Chokshi

pipeline then, DPI I the that part talking And believe reported shifting of competitors layoffs. you're key over Sandvine significant Great. about? of portion Is business. the this the to increased

Eyal Harari

competitors customers. for management we and we are the what that know that focused market We have are customer we that legacy can that product Overall, posed DPI. for specific with many very know this requirements and smart with the what the mainly a our not fulfill. traffic is market on we that we We competitive so do know there

we to deliver. to But don't know necessarily -- if ability still, requests focus still on customers previous to from our than situation, we see happy from more is demand we more and we our come that there competitor -- mainly And lower the years. is are see

increase see area We well pipeline be ways are short-term can already can due in we leverage this as to we to how looking dynamics. market opportunities that our how and might

Nehal Chokshi

Okay.

some pipeline up is the you that is And in much quantification so can seeing? of give showing bookings improved how you're already? And there

Eyal Harari

So being potential. something looking the it's maturing that to it's business pipeline too we are way we now I say to best would -- it's and are say, the information. not early and under for analysis, it's our leverage not

Nehal Chokshi

that $X to Okay. Great. notice particular quarters. to relative . quarter you in million a about after prior Any large I reason the did CapEx And then relatively had call that?

Eyal Harari

customers CapEx SECaaS mix CapEx The own environment. invest Liat, some to want is of into a that investment we add. and maybe our you

Liat Nahum

No.

special. Basically usual additional nothing as the SECaaS. and business just mentioned, investments Eyan as around So

Operator

[Operator are time. Instructions] Second you further -- no This Allot There the calling this for call. questions thank XXXX concludes in. Please at Quarter

Allot (ALLT) 27 Aug 242024 Q2 Earnings call transcript