Q1 2021 Allot Ltd Earnings Call

We will describe the huge business opportunity for bulk csp's and for allot.

We will then share with you and discussion our CEO recently had with Mark <unk> Executive Vice President and Chief Network Officer at dish, Although recently signed a deal with dish to provide end to end user plane protection against Ddos and botnet attacks on this is cloud native op and run based <unk> network as well as to provide cyber security threat.

<unk> for dish consumer and <unk> and SMB customers. We will then move on to Dr. Yale Villa our SVP for cyber security, we will give an overview on the technology that makes it all happen.

Following <unk> presentation, we will share a couple of additional short testimonials from our customers, who will discuss how our lot solutions help them achieve significant growth.

And finally, ziv leitman, our CFO will discuss our loss revenue sharing business model we.

We will have plenty of time to answer your questions. During the Q&A session. If you have any questions feel free to send them via the questions tab on the platform at any time, and we will answer them during the Q&A.

Okay, I think we're ready to get started I'm pleased to hand, it over to our CEO Erez Entebbe Arris.

Thank you Barry Good day, everyone welcome to Allot Investor day, Thank you very much for joining us.

And I want to talk today about a lot and how we are revolutionizing consumer cyber security.

So a lot in general as a company, we're a software company and we are selling software to communication service providers or Csp's globally, we have hundreds of customers operators around the world. Many of them are tier one operators.

A lot has been growing nicely, we've been growing with a CAGR of 18%.

And the last few years.

And last year.

$23 million out of our $136 million of revenue or cyber security revenues, we have a strong management team with a proven.

The experience and the areas of both.

Service providers and cyber security later today, you will hear from Ziv Leitman, who is our CFO and from <unk> Who's our senior Vice President for cyber security.

Yeah.

The technology.

A lot of users.

The heritage of the company. If you will is extremely mature.

Our technology is deployed with operators around the world with Vodafone in Europe, Telefonica, and both Europe, and Latin America, and with Rakuten in Japan, with Geo and India, Optus in Australia, and many many others.

We have.

As the company, we have a telco grade.

Software.

This is different than enterprise software this technology heritage coming from the telco world and extremely significant barriers to entry for many competitors.

From around the enterprise software World.

It's because we have come from the telco World. Our software is capable of handling extremely high school kids.

<unk> tendency, having millions of customers that can each have different.

Profiles different logics, joining the service coming off the service and with extremely high quality.

We operate and five G networks, we operate and the cloud native environments, and where base to a large degree on.

<unk> AI technology and.

We will see later today and during this presentation and and and the presentation from you and this is an extremely important factor.

When we look at the allot secure.

A platform, which is our cyber security platform that too is deployed worldwide.

With many customers.

Many tier one and tier two operators both in Europe, Latin America, United States Asia customers like Vodafone Hutchison Telefonica rocker and many others more than 20 million subscribers globally are protected by allot secure tier.

Tier one operators really do trust us.

Okay.

We believe today there is a big challenge.

And and protecting the consumer and small business environment.

Most cybersecurity companies today focus on protecting large enterprises, they built their technology and solutions with the enterprises in mind.

We are taking a look at consumers and small businesses really the small businesses the guys without an it department. If you like the small lawyers office or the restaurants and small businesses that don't have.

Tenths of I T knowledge.

We're looking at families.

Really each and every one of us as an individual at home with our family with our kids.

Who is responsible to protect us as individuals as a family from the threats on the Internet.

Well the answer is surprisingly that we are individually each and every one of us.

And as you will see here.

This is a very very big challenge.

When we look at the.

When we look at the threats on the Internet we are seeing the threats.

And that are attacking consumers and small businesses are growing and actually they are growing exponentially.

Look at these graphs.

Start from the right hand side graph.

The number of new malware apps that are detected worldwide is growing dramatically year over year and it's expected to continue to grow at these rates.

If you look at the left hand side graph.

This is a graph showing some of the results of what we and a lot are catching and protecting consumers against in Europe, you can see that both the AD ware and phishing attacks are growing very significantly.

Why is this happening first of all because unfortunately cyber crime is a business and it's a growing business, but not only that what's happening. These days is all accelerating the <unk>.

Border between office and work has blurred.

And we work out from our home, we will work using our broadband connections at home.

And we're using our own devices or personal devices to do our work.

COVID-19 is accelerating this change.

<unk> are looking for example for information.

It's very easy to to send somebody and message and tell them. You know just click on this and I'll give you information on what's happening with COVID-19 and your neighborhood and you click on it or somebody clicks on it and boom, that's a phishing attempt.

This is happening today and it's accelerating.

<unk> G networks or accelerated even further because there's five G networks, they come with much much higher bandwidth and.

And many many more unprotected Iot devices. So the attack surface is growing.

So overall and we look at the threat and consumers and small businesses that threat on the Internet is growing and it's growing worldwide.

So what is really the solution today, how are we expected to protect ourselves from this well the answer is that what we're expected to do is to go online.

Drew some security and pay for it downloaded and then start installing it on all our devices on our phones on our computers on our smart TV and figure out a way to install some app on our Iot devices.

And solid also on our kids devices, and so on and it's a big task.

At the end of the day.

Customers don't want to do this they.

They don't download these apps they don't either because they are they are may be a bit technically shy of deciding which after day is may be they are not up to the big task of doing this repetitively on many different devices and at the end of the day, when we talked to operators worldwide and we ask okay. How many occur.

Customers actually download security apps, the answer is that less than 5% typically do it and if they do reach 5% that downloaded it's considered a huge huge number.

So what we're saying really is.

Is that while consumers are expected to be their own T cells and protect themselves consumers and small businesses cannot be their own T cells and somebody else needs to protect them now.

And now operators today worldwide are reselling and point apps, but they are doing this with very limited success.

And if consumers and small businesses cannot be their own and see so someone else can be and someone else should be.

And that's where I believe the opportunity lies.

This is a big opportunity, it's an opportunity really to change the way.

Families and communities.

Small businesses are being protected from the threats on the internet.

We ask consumers and businesses if they are aware of the threats.

And the answer is that overwhelmingly they are.

Look at the numbers and Gallup polls, we see that 72% of U S consumers.

Do worry.

About personal and financial financial data being hacked, 66% of U S consumers worry about being a victim of identity theft. So there is definitely awareness from consumers and businesses that they are under attack and who do consumers think that should provide them This service and.

Or is that they think overwhelmingly 90% of consumers polled think that the operator, the communication service provider should be the one providing them a security solution.

Why is it is the operator.

Because what we basically ask the operator to do is don't just deliver us a transparent pipe that brings all the threats from the internet to US and then expect us to clean it up ourselves provide.

Provide us a clean pipe.

Or.

All of this bad stuff the malware threats filter it out and the network before you bring us the answer and that access itself. The data that we're actually looking for.

So there's a clear expectation from consumers and businesses that the operator will be the one delivering.

The security for for the connection.

Are customers willing to pay for it.

Well, we pulled customers around the world, we're showing here the results for our polling and the U S market.

And we asked them are you willing to pay for it could be protected and how much are you willing to pay for it and.

And the answer is that roughly two out of three customers are willing to pay for and a significant amount.

They are willing to pay either $3 or more per month for security on the mobile phone and you want to pay $6 or more per month for security and their home broadband connection.

These are extremely interesting numbers.

So we can see that right.

Right now so that's are growing.

Current solutions of downloading apps do not work.

People are aware, they're willing to pay and they expect the operator to deliver a clean pipe.

Are the operators at all position to provide the security services.

And it turns out that they are extremely well positioned to do this.

Because the communication service provider is the sole provider of access Tuesday and network.

Anytime we accessed the internet no matter by which device how we do it.

There is a communication service provider and operator, that's providing the stack connection.

As a result of that.

That means that the operator sees all the traffic and therefore, the operator is capable of blocking all these attacks and threats before they reach us.

And not only that but we all interact with the operator and now operator interacts with us with smoke with multiple touch points.

They are a trusted brand.

They have it.

They have a billing relationship with us or us with him.

We have frequent interactions with them, whether we change the plan or we decided to buy something else or and we decided to buy another phone or whatever.

So this is some one that we know that we trust and can really provide us a security service. So it turns out that they're really extremely well positioned to do this for us.

Now is it worth their while.

They're expected to do it they can should it turns out that cyber security.

And really bees and next big thing for operators around the world.

Today, when you look at operators worldwide, they are being relegated really to a dump pipe.

Their revenues are stagnated at best and many cases the revenues of operators are declining.

And they're fighting for any kind of differentiation any kind of new service that will add to their revenues.

Security can be exactly that next big thing.

But it's not only the revenues really it's three different values.

First one I would say as brand recognition.

Brand recognition means that the operator is transitioning from being a broadband provider to being a secure broadband provider. This is better.

And providing something to the customer that the customer is actually wants.

Not only that it brings new revenues and we saw that customers are willing to pay for it and so this is new revenues for the operator.

And not only that we will talk about it.

And it later.

There is and increased customer loyalty.

Customers, who are signing up for security services from the operator.

Or less or less.

Scepter, both the churn and increased loyalty and it shows with net promoter scores.

Becoming much higher.

Now.

And the chairs to the cake.

<unk> Facebook.

Facebook Amazon, Google and so on cannot do this.

While they are taking away a lot of the operators.

Perceived value and relegating them to a dump pipe they cannot we cannot take away securing the axis because the operators the only one who owns the axis and the operators the only one who sees all the traffic.

Once the communication service provider launches this service.

They will become their customers heroes.

We are told this by operators, who launched the service.

That the net promoter score of the customers signing up for this is significantly higher.

And the customers really really value.

And what the operators are doing for them.

Yeah.

And this in this ecosystem.

And what.

Our vision is to be the technology company that will enable this resolution to happen.

Changing the way, we protect consumers and small businesses, taking the onus from protecting.

Protecting ourselves from each and every one of us placing it on the operator, allowing the operator to provide that protection to us as individuals provide that to us as a service from the network.

This is something that we believe and a lot and we will not only happened, but we will be the technology company that will enable this to happen. We will provide the technology that enables the communication service providers to become a secure broadband and connector instead of just a broadband.

And really protect the family and small business.

How do we do this.

To do this we have developed what we call the allot secure solution.

Okay.

Yeah lots secure solution is a solution intended and protecting consumers and businesses from the network.

Meaning from the protection is done at the network level itself without the need for the end users to download anything you don't need to download and after you don't need to configure anything you don't need to do anything it's all in the network itself that's owned by the operator.

And our vision is to protect families and businesses are.

Against many many different threats against on all their devices wherever we are.

And our home and our car visiting friends and protect all members of the family parents and kids whomever.

We need to see the family and the business not just as a collection of devices now protections vary right. There are there are differences between how we protect ourselves and how we protect our kids for example, we want to prevent our kids from accessing harmful content that we may wish to have access to by ourselves.

We want the video camera and the kids room.

Not to stream to a site say in a foreign country, but we do want to be able to access sites worldwide with our own computer so profiles matter and.

And we need to understand the concept of a family and it's not every device being the same we have to differentiate between devices protect them differently.

See who is responsible for what who has to be protected how and provide this over and encompassing digital security for the family and for the business as a whole.

A lot to build a solution that enables this to.

And to happen.

We call this solution and like I mentioned, the allot secure.

It's we believe that this is a 360 degree security solution and.

And it's a it's made really of I would call it three different layers.

First of all we have at the bottom of the slide you see the various enforcement points.

We have security enforcement points and the home router or is the business router for two to protect the broadband connection we're protecting and the network itself and the core network.

And for Iot devices, and mobile devices, and we're protecting them and the DNS axis, Italy. All of these are built into the network. This is software that we provide that resides in the network of the operator, so it's a zero touch onboarding theres no need to download or install anything.

All of these enforcement points are connected to a single unified management system that provides a seamless security experience. It doesn't matter on which device you are it doesn't matter what's the access means it doesn't matter if you're at home or in your car. It's the same security profile. It's the same.

The same.

If protection.

Now to make sure that it's 100% updated all the time the management system connects continuously to our cloud to the allot cloud provides.

Outdated information and threat intelligence categorizing websites device fingerprinting.

And it's constantly updated every few minutes to make sure that we have the best protection online all the time.

This solution such a comprehensive view.

Of this solution is something that I believe is unique to allot I'm not familiar today with any other company that is offering such a fully unified security blanket for consumers and small businesses.

Now to do all of this inside the operator's network looking at all the traffic real time without adding delay and with extremely high resilience requires technology foundations that I talked about earlier and yet and will expand on later later today.

Yeah.

Now how big is this opportunity.

We understand that it's important we understand that that can that can bring tremendous value, but how big is and how big is it for the whole ecosystem and how big is it for allot.

Let's take a look at the numbers.

We start with what are the connectivity revenues worldwide well worldwide. According to the OECD studies.

And activity revenues of mobile and fixed the net.

<unk> networks.

Our $200 billion per year.

Now, we believe that the potential revenues coming from security.

And operator can charge their customers and incremental five or 8%.

Of the connectivity charges that they charge them today, we'll talk about why we believe that these are the right numbers and.

And a couple of minutes.

So that means that if these numbers are correct that means that the operators looking at somewhere.

With total addressable market of somewhere between $60 billion to $100 billion annually now.

Now to be truthful, not all customers will sign up for it.

We believe that realistically.

25% to 40%.

Of customers will really sign up for these kind of it.

And this service and we will show you why we think that those are realistic numbers, which means that the realistic.

Addressable market for operators is between 15% to $40 billion annually, that's a very large number.

How much of this can allot.

Compete for well, we believe that by providing with technology solutions service operators are willing to share revenue with technology companies such as a lot around 30% to 50% of these revenues, which means that we and a lot are looking at a potential multibillion.

<unk> dollar market anywhere from 5% to $20 billion.

<unk> annual revenues.

And once once this growth two to encompass the operators worldwide.

Let's look at how we reached this these kinds of numbers.

These are examples of operators, who actually launched and cyber security service and how much they're charging consumers and small businesses.

Looking at the AR at the left side, we see that the Vodafone that launched this in 10 different markets across Europe are charging on average around 99 euros sensor one euro cent per month. In addition to the app to their regular access charges for the security. This is around 5% of the avid.

Yeah.

Price plan that Vodafone charges.

Hutchison that launched the service and in Austria.

Charging one and a half euros per months, making it from for consumers, making it roughly an 8% of the average price plan.

And now looking at the at the right hand side is also charging roughly one euro per months, and Portugal, which means around 6% of the average price point.

When we're talking about Smbs, we're looking at for example, Telefonica and the launch this in Spain, and discharging tenures per month.

Which brings us to about 20% of their average price price plan to Smbs.

So overall, we see that it is realistic.

To expect operators.

To charge customers and for customers to actually pay roughly a 5% to 8% premium over their price plan.

Cyber security protection from the operator.

Are customers willing to really pay down and how many of them are willing to pay that.

These graphs.

Show the percentage of customers that are actually signing up to services over time as these services are getting launched I'll start with the top left graph that shows that.

It shows the take up rate and.

And several European countries of consumers and signing up to the surface and you can see each each line here and the graph represents a different market a different country and.

And the with the axis.

Horizontal axis presenting the time from launch of the service. So it's overall over a period of three years and.

And we can see that is that the numbers vary but within a few years, we can see that the most successful countries and up and getting 50, and even 55% of their customers to really sign up for the service.

Less successful countries, we will get to around 10%. This.

It depends a lot on the go to market.

But and average of 25, even 30% of take up rate for consumers and Europe. I think is a reasonable number based on what we are seeing today from operators that have actually launched this service. This is a tremendously.

Accessible value added service.

If we go to the.

Bottom left graph doesn't.

And this is an interesting one showing what happens specifically and spores.

This is an operator that launched the service and selling it primarily and the stores so when people walk into the stores.

And they want to do something they want to buy a plan and they want to sign up for the service they want to buy a new phone or whatever it is that they want to do they are also offered by the person and the stores are also offered to sign up for a security service in addition, and pay extra.

This is in Europe.

And you can see here.

Net new customers that are walking into a store and signing up with this operator for the first time.

Take up rates.

Are around 80%, 80% of customers that come in and join the service are also signing up for the security at the same time with existing customers that walk in and buy something whether it's a new phone or they change the plan or they do anything take up rates are between 50% to 60%.

These are extremely extremely high numbers.

Once people sign up on net and I will share with you that invariably with almost all operators that we work with.

Customers can opt out and leave the service it anytime they want.

Once they've signed up for it do customers stay with the service look at the bottom right graph.

This shows in months from from when a customer signed up.

What percentage of customers actually keep the service.

And it shows that 18 months from one period when customers sign up a year and a half after they signed up.

64% of customers still keep the service itself.

It's a very very sticky service people do not give it up and they want to be secured this is an extremely successful service.

We talked until now about consumers what about businesses.

So at the top right graph shows and actual penetration in Europe for and SMB service and you can see that within.

A year and several months 16 months from the launch of the service you can see that 34, 35% of all the Smbs that that operator is serving a signed up for the service.

Phenomenally high acceptance rate.

So what we're seeing here is that once operator launched this service.

Customers really buy it.

Take up rates are high and they really want this.

How do we do the deals with the operators.

Well, we believe and this service and you can see from these numbers. There's a good reason to believe and this surface and and and.

And in the future of it.

So we come to the operators with the easiest deal that we can for them and I think honestly the best one for both sides.

We're willing to provide the operators everything that they need hardware software professional service marketing support we have a dedicated marketing team that works with the operators marketing team to show them how to market. This service and the best way and achieved the highest penetration numbers.

We provide all of that we do not ask for anything upfront no charge upfront no financial commitment all we ask for is the revenue share once customers come online and they start and they start paying for the service. That's when we expect to get a share of those new revenues.

Now because we are doing this and such and open fashion with no minimum commitments requested from the operators operators really see us as a partner.

And today, they are willing to share with us up to even 50% of the security revenues that they are expecting to see from their customers. This is a true partnership model and a very very interesting recurring revenue model for us.

And when we talk to customers.

About this and we will hear testimonies from customers later on today, but I did want and give you a few.

A few quotes from them to share with you what customers who have launched the service what they think of it and here's what some of them are saying.

Hutchison and saying look up to 80% of new customers sign up for tremendous number.

Telenor is telling us.

And that's simple onboarding is driving customer take up and it's driving a higher net promoter score. So it helps boost their brand.

Vodafone.

When public and earnings result couple of years ago sharing with the world how much new revenues. They are making from this and telefonica is telling everyone. What a huge potential. It is so operators who launched this service are very very happy with the results.

Yeah.

Now I'm very excited about this transformational opportunity you can tell that.

And I think it's a huge opportunity for us, but I think that theres, even more than this.

We are seeing today five G networks, starting to become a real.

Our reality and starting to be able to go online and starting to grow.

And now five <unk> networks are much more vulnerable to attacks than LTE networks, where until now and that's been for three main reasons.

One is that they are much higher and bandwidth.

High bandwidth means that it's a lot easier to provide massive attacks or to tack massively if you like the network.

There are many connections to the Internet this is not a centralized.

This is not a centralized network like <unk> was with everything coming to a centralized core but this really and distribute it core with many internet connections and the vision of five G is to have many many iot devices on it.

Billions and billions of Iot devices are expected to be connected to the two five <unk> network and they are much much harder to protect and other devices.

So we have a lot we've developed.

A product we call five G net protect.

That is intended to provide to protect the service provider network itself.

From malicious and.

Attacks on the network itself.

Our first customer that we signed up for this product and dish and the U S dish as I'm sure. You know is is.

Building now a completely new five G cloud native network across the U S and they have selected allot to be part of.

Across the whole platform.

Now this is not just for dish and we'll be hearing from the.

And from the this Chief Network Officer later today, but it's not just dish. This is an example of what we expect to have things to come.

Five G network protection protecting them protecting and network itself is actually and additional cyber security growth engine for allot.

Not only that.

But all of that together, we can build on and on beyond that.

Why.

Because a lot of technology is placed in an extremely strategic location.

We have a technology that sits inside the operator's network.

We see and read all the traffic all the internet traffic, that's going to and from the customers. We see all of it and we know how to do things with it we can decide to two clean attacks, we can decide to block malware.

But we can do more than that and as we are working and so the future. We will work to provide more value both to the operators and to cut to their customers. We will do this by providing data driven security, which is now and development phase we will do this by.

By enhancing the ability to protect consumer privacy and we will do this with other ideas that we have and that we will have going forward. We are situated and exactly the place that enables us to do this year and will expand a lot more on this later on today.

As we look to allot.

You can see that we really have to day four growth vectors to the future.

First one is we want to sign up as many operators as we can that will launch soon.

<unk>.

Customer security from the network.

And we are continuously signing up more and more operators that will that will launch this service.

Each and every customer as it launches.

We will work with them to increase the number of customers, both consumers and small businesses that actually sign up to the service.

And then we will work to increase the value that we provide to those customers.

Some customers start with only protecting mobile phones, some customers start with only protecting the home broadband.

As we can as we see with the allot secure platform that we have built you can start with mobile only then expanded to two home broadband and then add the DNS security and expand and provide more and more value all the time.

And last but not least.

Protecting the network itself protecting the operator network itself, specifically on five gene networks, which is a growing business today, starting with dish, but with many more hopefully operators to come.

As a company we are also going undergoing a transformation.

A lot up to 2018 was focused mainly on DPI technology, we were selling software to operators, but it was for DPI applications and the type of deals that we were doing where capex deals.

That was until 2018 by 2019, we started signing up security revenue share deals.

Last year 'twenty and this year, we are starting to see the initial security as a service revenues.

Come to a lot and a meaningful way.

And by 2020, two and beyond we expect security as a service revenues for our look to grow could be very significant and fast growing numbers.

Jim will discuss the timeline of how signing these deals turns into security revenues for us and what we expect on the future revenues.

A lot to look like.

Yeah.

To summarize.

And most cyber security companies focus on securing the enterprise.

There is a huge opportunity to secure consumers and small businesses.

We believe that we are positioned to seize that opportunity.

The threats to consumers and businesses are growing.

Consumers and small businesses are unprotected the existing solutions downloading apps don't really work to protect the massive the mass market.

Customers are aware of this they understand that they are under threat and they understand that they are not well protected and they look for the operators to the communication service operators for solutions to protect them and they are willing to pay the operators to do that for them.

A lot is revolutionizing the mass market cyber security with a network based security service offering because we are the ones and enabling the operator to deliver on this promise.

And this overall is a huge revenue generation opportunity both for communication service providers and for allot.

I believe that this revolution and how consumers.

<unk> businesses are being protected from the Internet is happening it is happening because it is an absolute necessity and my mind.

And I believe that we and our look our best positioned today to.

To be the technology company that drives this revolution and really makes it happen.

Thank you very very much.

Thank you Erez now, let's join our conversation areas recently had with Mark <unk> Executive Vice President and Chief Network Officer and dish. Following the announcement of the recent deal between our two companies.

[music].

Yeah.

I'm happy to be here today with Mark one.

She's network officer.

EVP and dish network.

Taking the time.

There's no question.

State and ultimately that security is very important.

Can you share with us and little bit.

Yeah actually it is important because our customers are prospects enterprise customers are putting it as a temporary.

Every time, we talk to them and about five G to understand and five G offers much more capabilities, but then to your question are they feeling that if there are more capabilities, it's more open and your feet.

Addresses more devices and what.

About security right and so it's really at the top of their concern and so we have two left.

Moving to security and the next level.

It's really the demand out of that if it's just a <unk> type of security of five G. As we know it today and the U S hips knees and.

And second thing you're asking is that they want to control part of that ticket sales.

And once we have visibility they want to be able to master a programming defined it so it's a demand from our customers.

Net.

And for US why dish once day to invest and security because natively five D offers much more possibilities because we have access to much more data, we see what's happening and a network real time, we can we can change we can secure isolate transform.

And will react much faster and <unk>, so why not leveraging it right what do we have seen is that.

And really at the beginning of discussions we get we feel when people are.

Understood.

And Dan just and this cloud and Achy began stand.

The opportunity it brings.

And if day really master.

And the capability to deploy this software defined network so.

That's what we saw we saw the capability to really protect and do and which is what you want and five G. If you have a network of networks. Each sub network has to be protected and to then you can't just have a point and at the center or it yet. So that's that's one thing and we wanted to see if we wanted to see as well the capability to react very fast field.

Time with the data, so being data and a deep and understand that.

If you can observe a lot you can react fast and that's what we wanted to see and and we also wanted to have as I said a win win corporation, where we could offer security as a service to our customers because that's what he was right and if we just held and trust us and network secure it's not enough.

That's the basic but then they say okay. It's secured what else can I do on top of <unk> and security like when you're at your and device you want domestic <unk> and Bachelor and Securities yourself right, but that's the same here they won't be to master that will change that's what he asked us and we are we selected out of because of this capability to offer security as a share.

Service.

Net net there's some network when it comes to consumers I think.

Cause of the pandemic because of the way people are working net we need to be able to expand our security across mobility right before people that different zone, where they where they were at work and we're at home, where they were and to move but this has kind of disappeared people who can work from anywhere they are it change places where they leave.

Spending on their on their constraints now.

A remote so we need to give them access to Aero and management of security.

Wherever they are for the different use cases, if they are working for a day a company for their job and you have a certain level of security that is separated from their consumer needs and people are becoming very sensitive about what data they wanted to exports right. So.

And we think it's going to be at the center of the discussion from <unk>.

<unk>, the real <unk> as I said and I'll do it.

Greater <unk> networks.

And so you see this as a major and as a major offering major importance to consumers as they go into the five day, yeah, I hate to beat to be honest as she'd more important and speeds or five G or a lot of people think of how your speech I think.

For other people and <unk> is a very fast rate and I'm not sure. Many people want to pay for additional speed day want to buy flood insurance securities.

Thank you very much for taking the time. Thank you for answering our questions. Thank you.

[music].

We are pleased to share with you know a few of our customer testimonials.

[music].

So thank you Victor for being here today with that and and Stella.

What is the interest savings from California campus and a sense of what.

And pressure from Telefonica and presses.

Cybersecurity services, which offers protection.

Protection against viruses malware and phishing, our day fixed network connection.

F N b presenting and process is.

And at guest service and bundle for a day from my T and telecoms for the SMB segment and in Spain.

How is that instead of it being commercialized today.

It is being marketed as a revenue share model with Ballard and Mcafee went and what the funding is responsible for sales and marketing post sales support and operations and and Mcafee and allot responsible for the hardware and software solution and with Telefonica network. When it was like when he says that without sort of a clouds and how it is quarterly and responding to your expectations.

It wasn't officially in May 2019, after some pilot and time the market has been responding quite quickly and far beyond our expectations and and they found really we achieved the resets and tender for a four year plan.

Can you please share with us some kpis about customer satisfaction and penetration.

And yeah, let 70% of customer and what they said this solution on a period of 30 days and finally contracted day, the solution and and customer satisfaction survey that we develop over there and the customer base and did the satisfaction for customer and eight points of it and amazing Wow.

I don't want and accounting says that you were facing and the SMB market and widely telephony that decided to lunch.

And it gives me services for Smbs.

And a year tariff and it compresses and develops SRV OLED and the 18th on the SMB segment, So and in the last the service we realized that want a five SME and companies and in Spain had and cybersecurity incident.

So the market was there and they they had they need to solve the problem, but really they do not have enough flow. It solutions. So our approach was to develop and and analyst Raceway and solutions that can be anywhere from there and they weren't in order to mitigate the threats and.

And but this having in an affordable way. So how did you first and country our company and.

Did you select allot to meet your customers as well.

And I finally got a lot had a long relationship over the last decade and.

And we selected a lot because of and the flexibility it's got bromine capacity to adapt their brand product, though and it's and finally, we after dropping out of solutions work with them to find a solution with a lot of specifically in the network back and F and with Mcafee for the important part of the solution and finally, what are the net is telling tests from the service and how do you expect.

Moving to evolve in the future.

We're expecting growth in filtration and functionality of our platform like application control and threats and in addition, with extended their protection from them and work for more and network and and even to extend the links when you say I work and abroad are connected to extend and our networks and gifts.

And at the very much and and we look forward to working with Telefonica and Michael.

And that's it was a pleasure to work with you and this project and and especially to half day, your marketing and support for developing a solution and what this month.

[music].

And.

I want to now introduce Dr. Yale Villa, our senior Vice President for Cyber security.

And also has the company's cyber security and business unit Yale.

Thank you and betting hi.

Hi, everyone. My name is he and I joined the allot six months ago to lead to the sales I think your income boom.

I would like to share with you and deep dive into the technological backdrop of allot kind of feeling like cyber security offering.

When we start with another view of other consumer procuring from concept, which is unique in the amount of cash.

And next well will briefly describe our security assets and now with a bad for tomorrow challenging.

Besides that the world is very dynamic and so forth.

And we need always to be ahead of their growth Guy.

The main difference between existence, and Louis and mainly for enterprises and financial and input.

And then lots of Nielsen is that the existing solutions and extremely hard to manage different day, lessee and coming from the different applications and letting them love and basically enterprises and finance and he was.

And so to manage the security of their wounds organization.

And.

And what kind of hitting a wall and it doesn't have to happen and nobody is expecting the consumer will tell them from.

Therefore, the solution to be seamless and easy for yours other life sales did not work.

And so I'm not actually done and somehow anything about procuring from winter that beautiful day guests want perfected.

Some of you've got and ask if I lets kind of NAFTA comprehensive from Nielsen why kind of the mixed server company, if they're willing to live assay and in all its Tim.

Well, it's not that easy and.

And we will discuss why.

Finally, we did talk a little about the growth ahead.

And we need to start thinking today, otherwise and I hate the follower concept and stuff and constantly bringing value and sell a bathroom.

I Love from Neuroscience is based on the three other than fixed income securities.

Turning to cash.

What if you haven't done and 60 with liver function.

Consumer and looking to laugh and complete Enzo and perfection anyway, and the network and at home and offices.

Parcel that and the vast station everywhere.

Yeah, and looking at the live but they didn't buy any threat fishing throw and Jan van somewhat everything.

Yeah, and looking for with the Texas and any device that is moving forward.

Don and laptops I think they want the same protection and always does devices. This well.

Well see understand and safety security and protection.

And we have all of this to be evil. We don't that's deals that are basically nothing from after.

After a delay anything.

And glass and sales management is the one cause of something they need to be everything for billings by themselves.

Our research shows that 90% of the consumers believe there's a sea of special provide benefits total pool, so that they fit the WAF the CSP and the.

And the thing that provide that security Henderson.

Henderson.

So what is the let's say Q3 understand and fix the concept all about.

This solution is built around the E F and I love to procure and management.

And I loved the few minutes man.

And to provide a unified seamless and sort of books and not only for the and you're there, but so far the CSP.

And even for Veeva and local care.

And can provide that.

We have different and first line volume and thank you both and I think your Iot secure network procure yeah, and I think you and anything from your net.

And so secure is that network based security firms and seamless and SMB that includes threat protection and if that didn't happen from wood.

Since then and less onboard wing lots activation after 50% penetration in line, that's the line endorsement and fillers and everything basically.

Thank you.

Is that simply ebay security perfecting all devices, including Iot devices, and flagged on line offices and warehouses that protection.

And healthy net level of stability.

The recent and firsthand and bonds and get them and they import from what I loved flowers.

Or is it absolute day, so that didnt any patents.

What is very sound and device seamless data assets.

And of course, obviously other debt and no.

And what I love clouds.

The design of day is seven west and and then the unification concept and the same capabilities and the same look and feel for ours and far flung volume. Therefore, we develop all our work apparatus WAF and now need to develop again and again from each and fun.

And from client funds.

And I'm, saying if were once a lot and you honestly boarding I agree with them, we develop with what I need to really work for all of them for selling points.

We have the same reporting system, so all the different products.

Yeah, and so the flexible it architecture, if I love the sizes, so into sales and you said with like privacy protection and it does sound like last day, you listen to own and unfortunately falling like net therefore, this ambition and solutions can easily and safely.

And our management system, and they know where the poor thing that dislocation and kind of.

Management without the need to develop anything.

The same look and feel for that and he was that and for the operator.

This deal that I loved and then tell you and 300 and single threat protection solution. He can do block within the net well if it's at home audio VSAT and stuff of that.

And the same protection and God bless wedding, and the same block and stage, one seamless security and one policy unified the faulting and unified event handling, regardless, which enforcement point is that fish.

They use it and we can get that reporting summarizing all the malicious activities like and this is something that it's something more than three and the 6000 blocks most of them phishing malware and spyware.

Okay.

And robust security is the core of our NAV.

And then.

Our comprehensive security force comprises you out and they think that in four H E B and nitrogen.

And as traffic I haven't seen malware and phishing antiviral and anti bot and.

Two or three and convey to assist and you just got five downloads and Penske lead. This and then and herself force. We have a dedicated threat intelligence research team one of life, and you Fred and body and Av access and fit.

We developed and machine learning algorithms and towards the Liberal learning anomaly detection and classify as never had and that it takes and class setting.

And my thought was infection performance, meaning higher detection rate with Delphi spot and pool.

In addition, we developed and machine learning and I'll go and intense emphasis from lot of challenges for.

For example, phishing detection when all the traffic improvement.

I love, the deployments and and how does it the fifth piece worldwide and transplant of a different market. We developed a global information sharing platform. The set of patents between different Gilles and different type of customers, allowing us to fix newspaper from my list is active.

It is at and yet.

In our part and it sounds good interest solution, we have more than 100 and threat and thank you I didn't that day body.

He has been typically explosives and macro got they've already sort of subscribers I pick up and still able to compete and https traffic.

We have the ability to completely shut down and internet access for a device and giving a specific amount of time.

They've got some now and then and are the engines that are done and create at least have a loud and gloves the lands and your line.

And in growth strength, but that sounds from newest zone is based on that diversity of data and immense and worth antibody and tenants that can classify and inspect all sources of information in our cloud based threats and thinking that the base, we aggregated data coming.

For our multiple data sources.

We have regular classification and analysis and stuff web safely.

And classifieds view and as they see from existing the plane lands categorization that class somehow Augusta last extend and I'll see carefully selected and the concept of termination.

And we're like I said vacation and exercise by CSP.

And the latest doing to find new U S and get them classified.

Threat research team dedicated to investigate and you said.

And I'm content and analysis and zoom for dynamic and then it's time analysis of malicious and.

And more than 100 and trying to get the body for detection and from my went detection and parent telephones.

Italian.

Consolidation effect and Pelican from many different sources and doesn't matter and its seven months to allot is.

It is imperative for HIV infection rates with no force pardon me this is unique to allot.

Aggregator of threat intelligence, even from competing vendors.

For our consumer cyber security solutions and succeed in total.

To be seamless and easy for you or is it from.

Further and use that as well as easy for us for the operator.

They killed this simplicity is the a S M and less secure and management.

The S and provides unification of all that loves procure from that's under a single management same profile same perfection same control access to all of those different enforcement points, a unified they see and they stay.

IP is football tests and applications single integration and find unified provisioning not subscribers to API from not employing from subscribers. All of this then very very easily.

In addition, the E S and provides a framework to integrate our vision of security products and that allow us all customized products.

Therefore, this new unified management flats, and the platform and that was the CSP and the thing that provide that offer music visits and security solutions from concealment.

Yeah.

On top of the functionality needed to maintain our from notion there is significant additional value I love is given for this year.

Flex civil and power from the management and monitoring toys like full integration with from Mcdonalds, or just and monitoring and alerting and filling it and we have and I would just I mean that I've seen from validation for Korlym.

Collection and escape the eyes and system sales that activity and all of a threat and many more.

And last report providing visibility into subscribers and usage of the internet behavior that that's devices, but then that's kind of allows that of its product offering and marketing as a source of validation and I was living and for them for the CSP.

The solution will be and really easy for us by the end user and the average kind of feeling like that's and understand anything about security and.

And our goal is still gave and Haim worth protection without the consent of Onboarding and understanding insecurity Henderson.

So first and for that there's no need for any application and dial it up if you want to use the system and if you can use it from day one.

The Onboarding and seamless.

Is it if the consumer wants to do and minimal configuration, and it's very easy and intuitive.

Yields are in line with them.

And then that architecture of the solution and they usually have a since that's my life reported a full security status and.

And you can appreciate the value of the Henry.

What day, they consume that experienced unification.

Unified reporting on electrification block threats.

Across our eastern enforcement points surface, and we I shouldn't say the Arctic reported what we did for your support from us.

Yourself and your family plans.

The management and value is linked to prove the value of the survey, including security lighting in this case.

Very high security level.

And overall this one like.

Like here in the last 24, and I was there were three threats with that debt and.

Total five infected.

Another aspect of the consumer experience and application ease of use and centric management from.

Good day about the complexity of managing devices, but all of that's on technology, and so forth and you'll see.

And so now.

Sales reporting toys, as an original and mechanisms and show value this and support coming from actively and provisions et cetera.

And the unified policy.

Activate the activate and malware protection allowed blockly activate and deactivate categories assign devices to you and says you can chose we've got to take what is too low you can easily choose the quietest time you went for you okay.

I lay and management approach simple configuration and wildly.

And usually we would as how long it will take for one competitor so linked and solution like ours, which is unique per day in the market.

And the answer would be quite a long time line.

And that really sounds can be divided and still get their body.

And because we have a very rich technical background.

And because we have a quite broad security experience.

So what I said, that's our circle back Alan gave us scale.

And that really team we.

And to process more than 50 terabytes per second and 16 terabytes per second survey.

Yes, so interest rates to loosen income.

Conflicts CSP network and vision.

If anything it.

Existing in line in line allowed deployment in that and then just yesterday worldwide gives a lot of privilege understanding on internet and which can drive product evolution to stay ahead of the market.

What I've said, that's our securities experienced move as.

Unified into and security for the consumer market.

And I think Tennessee.

That's my lifetime subordination and reported for unlimited number of users that.

Existing deployments and with more than 7 million up and subscribers when each one as it's uncomfortable with Asia and personalize their parts.

Both of them and get support we partner with the CSP succeed in as of Sunday, I Love the experience and the tools to create the right from a marketing campaign.

And our proven categorization and set and Pennington.

Rich data component that that.

A long long time to quantify.

And I'll, let them stay need this and the consumer cyber security and market, we need to constantly think what's next.

We should continue adding value to our existing offering.

Our privacy protection solution, which is a measure of clients that day.

And.

Broaden our offering and the SMB market.

Witnesses non stuff and I think the parkman and at the ARIA and.

And some of them I have a life and the parkman, but not the right skills to manage security and fraud.

And many of them will be happy to web security services from the Ses team.

The five hanging award together with the increase of Iot devices, and they owe for new use cases like security and connected vehicles.

And I shouldn't physical applications to be secure and much more.

From that and that and we got a lot we've seen and the net flow and we see the and that's what that traffic.

Therefore, we can offer that vision and that doesn't leave and security services like encrypted traffic analysis, and say that says that that Shannon.

And we can identify it and your trends, allowing a lot to be fast and like it with him for that offering.

In semi day, our governance and notion is strong and mature and with topnotch technology.

And six physical security any place any threat and in the line.

The threat intelligence and sophisticated machine learning algorithms and automation and nobody's share the shedding of bad debt.

Our unified minutes man and they don't that personalization and gets it and liked and Tennessee and conviction.

It will not be easy for other companies to cloud and so that's our wives experience from the telecom market, including scalability and understanding of this network and our extensive experience and security to include the Mesothelin and I think also a lot of it.

Give us a great advantage.

And finally, we have a significant expansion opportunity privacy protection and Smbs cyber security and see ever done and 65, new use cases that doesn't have and securities services and much more.

Thank you very much for your time, and hope Hill, and I listened with one and I'll, let Ben about our cyber security offering.

Thank you Yale and we're pleased to share with you know a few of our customer testimonials.

[music] welcome this thing a team at Twilio.

Vice President and thank you for joining me today is the third largest mobile operator and the world.

And places great importance on providing cyber security protections and consumer.

Why is that.

It's been multiple global and regional customers, Okay, and you highlighted one thing.

Customers look forward to a secure and reliable network.

On the Telecom service related day.

<unk> is a new oil and has been and anti aided by our chairman and hence it needs to be protected and Keith Cargill.

And next have been increasing dramatically and it becomes important and it wasn't a day.

And then index is offered by the Telecom company is deep ethical.

With this and mine.

And especially with the increased emphasis on working from home and pulling from pool connect.

Connection and who will take you from X and that's it.

And become Panama, and the litho requirements of our income.

Estimate.

Also for the hand piece was maybe we have to ensure that access to be and Dennis. Thank you is it is in keeping with this was to that use of the country.

Absolutely.

What do you look for when selecting and technology.

When silicon technology partners.

Oh really diligent and trusted.

Consider the founding team.

And a technology partner rather than as the next generation technology that is cutting edge, whether the technology relative.

And as highly scalable to meet existing and growing needs of India and five.

And this would be nimble and execute anybody who can assist and efficient manner.

With a strong technical team.

And until we deliver it to a large scale projects such as us.

And then.

And this round of business and if you really invest now and didn't replace aged.

Got it.

And a lot was chosen to secure the home access for channel customer can you. Please share with us why he chose allot.

And our technology and cutting edge and highly scalable and it really meet the demand of the Indian customers.

The engineering team at <unk>.

Hungry.

They're being new ticket and scaling the technology for large scale implementations.

And a large profit management was always accessible to us and gives any decision need to be day two.

Finally execution, it boils down to address and the passion of the team, which I know it is.

And once you did an absolutely.

Okay, Fantastic and finally, and what's next for the <unk> and a lot of partnership.

The upcoming launches of geopolitics, and Ben and I Love technology and looked at it.

And they promised they deal.

We hope to see them be architectures continues its the robustness and scalability and.

And installation feature development, and then ongoing from support and put all our requirement.

[music] right now.

The average home has seven eight and smart devices connected to their home Internet connection and importantly that number is expected to double by 2022 and the consideration there around home security.

Every.

And what good security camera air conditioning system gaming console lifeblood baby mode and that is now.

It'll doorway, India and the thing that we like about the Oh.

The home secure solution.

Is that it works and particularly and execute a component of it is sort of what the level of your internet connection so that kind of talks to that yeah lots and lots of devices being connected to the internet or you don't have to work day and connect you don't have to deal with them all on an individual basis, there was a catch old network level.

And homesick curious with brand and at that.

And that can.

To be able to differentiate ourselves and something that we've been lucky.

And hard to do and particularly in terms of not only differentiate and but to actually adding value driving value in terms of revenue.

Here's our revenue per customer.

So we like the fact that has a proven track record in Europe, and whatnot and 20 million subscribers on our platform.

And that's been tried and tried and tested.

The fact that net securities a disruptive players as I've mentioned that is that it.

And the Internet level security.

Connection and security product.

And that makes it ideal to be supplied by and ice peaks and we own.

So I like the intelligence of the platform itself.

And that it is.

Driven by machine learning.

But it's also a product that supplements, but but but by human input.

And just the overall product design and the law is the redundancy and the database that little lock draws from the.

And the breadth of that thought if they'd like.

The depth of the.

The company's understanding around a matter.

Matter of Sabic, cyber security and and content control and.

And just talking with the with the team and should've researching and that we felt more and more comfortable about the decision to partner.

And then with the with a lot.

And this on this journey and it is a journey and it is a partnership we are putting a price product into.

And to our network that fits between the.

The delivery of the internet content, and they'll be internet and the user itself and that's that's yeah. That's a that's a fairly significant relationship to enter into so you want to make sure that that relationship and so it is built on strong foundations and.

We found that with the both the product and.

And the entertainment allot and been working with the Oh, I Love and marketing consultants.

Super valuable.

For me personally there is a lot of time effort and energy spent from me and my team and.

And the customer experience and the product design and.

And having that resource there in terms of marketing.

Marketing just kind of.

And that capacity to think.

Around the marketing and position positioning side of it and also.

Interest and valuable when you come to and your product to have somebody thinking from a marketing perspective, that's got a depth of understanding.

Understanding and information about the products.

[music].

At this time I would like to hand, it over to Ziv Leitman, our chief financial officer to discuss the revenue sharing business model, which has created a win win situation for both Csp's and a lot and a significant opportunity.

And <unk>.

Thank you Barry I everybody. Thank you for attending go event.

I would like to share with you a few slides, which will better explain our business model.

Security is already and integral part of our offering and we have security revenues from our current installed base.

In 2020, the total security revenues were $23 million.

Which were 17% out of total revenues.

And $2 million all out of these well seek us revenues.

The balance of 'twenty.

And $1 million came from three sources.

Security Opex deals.

Security and maintenance of Capex of deals from previous years and.

Capex deal of distributed denial of service or Ddos for short, which is a security product for protecting the CSP and network itself.

Our 'twenty four 2020 five goal and it's.

More than 50% of allot total revenue.

Will be derived from security and are all peas, and it's almost all of the security revenues will come from CCAR type deals.

In the coming slides I will walk you through and example of how we are going after these very large total addressable market, which we presented before.

So we can understand the process and the time it will take COVID-19 and the ramp up the revenues.

Yeah.

For internal and external purposes, we use a metric by the name of M. L would stand for maximum annual revenues.

And they all represent.

It'll potential revenue from security as a service all sika.

And the other assumption.

For 100% and customer penetration rate, which of course.

And we never likely happen.

And based on our past experience.

And the penetration rate after fewer U can vary from anything from single digit percentages to more than 50%.

We find that this mainly depends on the go to market strategy executed by the CSP.

In order to make sure that everybody understand the and meow mix and event.

And we'll use a simple example, let's assume it's we're engaging with the mobile operator, which is <unk> 5 billion subscriber and <unk>.

CSP intends to offer all the security service for an additional one dollar per month, which is 5% of our pool of about 20 total.

As part of the revenue share agreement, let's assume there's a lot of and receive one sale of the CSP revenues, which is a thing of the $12 yearly fee.

Mounting to fold all of the sub.

So if we multiply day.

Italy feet off a lot of forego along by the 5 million subscribers, we get two and M. L.

D C S P of $20 million.

Which means.

And if eventually the penetration rate will be 25%, we would get easily recurring revenues of $5 million.

Want to stress this enough.

Sales cycle of this deal is rather long and can take up to two years.

After signing the contract the implementation period can take even up to one year.

After the commercial launch.

Should see ramp up independent station right.

So if you look at the graph, we see we see and average penetration rate of.

Approximately 4% and the first here.

12% and the second year and about 20% and the failure.

And accelerated growth and revenues.

Well generally continue until we get to the 5 billion Golar, which represent and this simplistic example, steady states penetration rate of 25%.

The accumulated.

M a R.

Of all these <unk>.

Signed by the end of 'twenty 'twenty.

Was too good and $80 million.

More than 50% out of it.

We'll start generating revenues and the beginning of 2020 two.

Due to the long implementation pulses S. I just explained.

I would like also to remind you that we provided guidance for additional anyhow in 2020 one of $180 million.

Perhaps.

We can also look at it from a different angle.

If we take the expected community and they all are for longer than 60 at the end of 2021 and assume steady states penetration rate of 25% then in a few you can expect just from this and May offer you go easily see cause revenues.

Of $150 million.

Which is the 25% out of the full longer than $60 million.

The actual and seacoast revenues in 'twenty, and 'twenty well $2 million.

The surprising last wave of COVID-19 and the associated Lockdowns around the world.

Might push a little the timetable of some project implementation.

However, we believe that despite these delays.

We can still achieve and you'll see cost revenues of at least.

6 million all of which most should come in the second half of the year.

When applying.

Project cycle mechanism as described previously.

Keep adding each of you and.

And me all of one anchor than 80, which identical to the guidance for 2020, one and reach and penetration rate of.

25% after three years.

We get the following simulation.

So for instance, in 2020 four we should already come close to the magic number thresholds.

And usually recurring security revenues of 100 million.

Okay.

Most of our carbon and recurring revenue for the entire company are coming from support and maintenance.

So in 2020 two.

And we are expecting more than 60 million due at all and recurring revenues.

Due to the expected accelerated growth figure for revenues.

We anticipate lithium and fewer U the recurring revenues of the entire company will be more than 50% of total revenue.

Of course.

The proportion of the Sika revenues out of total recurring revenue will increase dramatically to more than two said in a few years from now.

I have just one slide regarding the entire company's revenue.

As in the last few quarters, we can see the perfect chalk a forever and news steady growth.

Q1, 2021 revenues were $71 million or law.

And the growth margin of 70% both in line with our expectation please.

Please remember that traditionally Q1 is the weakest quarter and the year, while Q4 is the phone growth.

The Q1, Opex was 24 million, which was loyal than our plan due to all of them day open positions.

Which we haven't reported for yet.

And we hope to fill them in the near future.

And we would like to reiterate that all of 2021 non-GAAP guidance and for revenues between 145 to one angle and 50 million at all.

Gross margin of 70% and operating loss.

$6 million to $8 million.

Let me remind you.

Even though we were able to grow DPI revenues in the last three years with a CAGR of 19% we expect there.

And the future growth of our DPI revenues would be just in the single digits.

As explained.

And the accelerated growth of the company is expected to come from the Sika business.

So now in order to sum up there is a huge addressable market for all FICO business in the magnitude of billions of dollars as Arab presented.

And we feel comfortable that we can overcome the challenges of the long sales and deployment cycle and choosing the right go to market strategy.

We are very excited about the opportunity to show accelerated growth and the recurring revenue starting next year and really turn and are locked into a large cyber security company with a strong seek us margin.

That's my last slide.

And would like to share with you regression and simulation of allot secure devaluation versus other security companies and.

And this graph.

The X axis represents projected revenue growth from 'twenty to 'twenty, one 2020, two which is the independent viable.

And the Y axis represents the ratio of the Collins enterprise value to projected 2022, and revenues, which is the dependent vibe.

We placed on the graph the data.

Faulting selected cyber security companies and clear.

Note that we took the total revenue even though for some of the companies a portion of the revenues are not considered recurring revenues.

In addition, these revenue projection for 2022, well not issued by the company, but by and estimates from third party sources.

As a comparison, we placed a lot of total projected revenue and the cargo and enterprise value as you can see and the lower left side of the graph.

When you we use just the projected.

<unk> revenue growth awful lot.

On the regression line.

Which you mean calculating the dependent and viable.

We get and much all your theoretical valuation of allot as you can see on the up and right side.

The slide.

By the way the R square of decent regression is 81% which is relatively high.

However, the simulation is just one metric and <unk>.

Shouldn't be considered as a comprehensive comparison or a formal recommendation regarding allot valuation.

Thank you.

Thank you Steve So now we move on to the final part of our program that Q&A session. We already have a few questions that were sent in please continue to send and your questions via the question tab on the web and our platform.

Thank you Barry thank.

Thank you everyone welcome from our Q&A session.

Just to remind you that if you have questions from these types of men and women.

Yes.

Okay, we have a few questions already.

Read the questions out loud and and we will try to answer it.

And what caused the big rise and deferred revenue this quarter.

Total revenue this quarter and for 51 million and throwing off compared to 36 and the <unk>.

Nice quarter.

Increases are due to payments and if we go from customer growth.

This.

Which will not recognized yet.

Traditionally in the past.

If you will and the deferred revenue well between $30 million to $40 million all of the current level is a rather high and we expect this in the future it will be a little bit low oil as it was in the previous year.

Okay.

Does your mobile security product screen Robo calls.

No it does not.

And the product.

Provide liquor and explained is doing anti malware and phishing and anti virus.

But it does not provide at this stage at least we do not provide growth.

Okay.

Yeah.

Yeah.

Okay.

Can you elaborate on the impact of COVID-19 to lots of business and has it changed and the last few months.

Yes, I can there's been as you know there's been the last few months, there's been a rise in COVID-19.

And the COVID-19 I would say crisis actually and this Ralph.

And throughout Europe.

Pacific and and.

And Latin America, Israel, and a really good situation from COVID-19 and the United States.

Gladly getting there, but there were many lockdowns and the rest of the world during the last few months.

And so to some extent its also the day.

Some of the some of the launches that were planned by a bit more.

And probably as a result of that where they may have some impact, but we still believe it will make our $6 million up there.

And of recurring security revenue for 2020, one like like Steve explained earlier.

And okay worst day.

Colonial pipeline Hawk is there an opportunity for you to partner with a neither another cyber security provider to capture this market.

Yeah.

Yeah.

So that's definitely where we are partnering with gas and like we don't believe and having an organic solution for every type of and.

Malicious activity.

And this is not something that we are considering right now, but we are going to occur in the future.

Okay. Thank you.

And before developing this us moderate and unit perpetual software license deals with some large carriers are they eventually candidates for the SaaS model.

I think by and large the answer is no.

May be some exceptions, but.

Customers, who have bought perpetual license really have very little incentive.

To move to another model, where they would actually pay us more money.

I think there's a fundamental of the SaaS model and stuff is.

Is there.

We look like a very significant part of the risk upfront and therefore.

Yes.

Operator does not have to take.

Yeah.

Any risk or it takes a very very low risk and.

And therefore, if the service succeeds we get paid a lot more and over time.

And those who have bought perpetual licenses and.

I've already taken that risk so the switch between goes is not.

I do not expect that there may be specific cases, but in general I do not.

We expect that profit.

Yeah.

When was the dish deal and start to hit your revenue line.

Look this is planning to launch their <unk> network this year.

And I do not expect them to have too many customers. This year, so yeah I do.

Don't expect.

And there to be too much.

During 2021.

It's yet to be seen we'll see how the launch goes we'll see the exact timing and this will depend on that.

And.

Since signing the deal with dish has there been more interest and your <unk> business and if so can you enlighten us.

Well I'm glad to say that there has been there is ongoing interest and our five businesses that started before we signed the deal with this and this is continuing and is actually growing after that.

I think there are several accounts that we are currently and active engagement and I hope to be able to to share some news one.

We hopefully close that's an account and we will share that with you, but I think.

And in General I think the outlook is positive.

What is the what do you think is the size or potential size for our for the five G net protect market.

Look it's occurred continue what I said before.

<unk> networks are getting launched.

Around the world.

And like we've talked about during the presentation.

And there is a need to secure five G networks and that is larger than was the Navy's and unfortunate network. So I think there's there's a growing interest and our ability to protect and.

And as the <unk> network data plane I believe that this is potentially a business.

Hundreds of millions of dollars not necessarily for a lot of it as a market.

It is not that size today, because <unk> networks are very small still but the assets will grow and the need to protect them would be large we look at the size though.

The protection for current and <unk> networks, and Weird and we look at where this will end up being for five G and several years I think there's a.

Total addressable market that should be and a few hundreds of millions of dollars for that for that business.

And.

You talked about security for SMB and consumer why doesn't that look provides security and also for enterprises.

Well I think like we are we try to explain.

It's a totally different market okay.

And as the enterprise market.

Is one where the buying those so and.

And IP Department and in enterprise.

They are and they are trying to protect the company is that the enterprise itself from.

And from many times not just generic attack.

Direct attacks on the enterprise trial focused on them trying to get a to get information or other things out of the company.

Now there are many there are many security companies that are dealing with us.

Check point, Palo Alto crowd strike many security companies that are developing technology to exactly focused on and protecting enterprises from those kinds of areas.

Very very significant non tax.

Comparable to that consumers Smbs are also under attack, but not so much under individuals' targeted attacks, it's more sort of a blanket attacks across the board work and where the Packers going sort of think of it as a as a fishing net and trying to practical never whomever they come.

And that is where we accept we know how to take that technology.

And and Massify, it and a way that protects the mass market of consumers and Smbs.

And it's a different capabilities and is required to protect the enterprise market. So we are trying to focus on what we are good at it.

The other companies and the security market and the vast majority of them are less good day.

They're good at targeted attacks for enterprise, we are good at massive attacks from consumer and SMB and we're focusing on that area.

Yeah.

And how much they can seize as your security solution and to subscribers traffic.

And.

Alright.

Yeah Phil.

Mhm and film and almost non ticketing.

Basically doesn't stay safe and a low density Asia.

And who do you compete with on five G net protect.

And protecting the network itself.

Five G and network itself, we're competing and I think with the company and stuff are providing.

Providing ddos protection for the forging and networks.

This will be companies like <unk> like our Bowl for example.

Hardware et cetera, I would expect to find them.

With respect I am finding.

Okay.

Creditors and this area there and makeover.

And there may end up having more competitors and the future, but those are the main ones.

And can you discuss any progress you are making with the Broadcom relationship what are you for future expectations for these products and.

And.

I'll remind everyone that the.

And that's the.

Broadcom relationship. It's a deal that we signed approximately one year ago with Broadcom, where broadcom had.

A product line credit bucket deal, which is a DPI traffic management product line for enterprises, and we were and our DPI business, we were competing with them with our DPI product and we signed a deal a year ago, with Broadcom and where the where broadcom basically.

The end of life for the packet to your platform and.

And agreed to.

Yeah.

And two where sphere of customers and distributors and so on and that we're interested and continuing with.

Was there an onsite traffic management like Buckhead theater and though.

And to bring them to a lot and or sorry refer them to allot and.

For and recommend that day by the CLO product.

And I can say that it's going very well.

We are signing up more and more value added resellers and distributors that were formerly distributes and broadcom product.

We are gaining market share and we are growing our bookings and revenues and that business and Barry and I believe that this year and Wuxi.

Should be growing significantly the enterprise and the enterprise portion of all of our business.

So a very large extent due to the broadcom and ideas that we did.

Okay, a bit of a long question.

Thank you for providing very helpful.

Our analysis and revenue growth for future years as the.

Assumption of $180 million and they are for your conservative.

It seems possible that single large operator could represent 300 or even $500 million of MAA argues and even the low end of your assumptions connection was this could you elaborate on trucks and North American market outside of our recent win with dish.

And.

Look I think it's a I would like the $119 million to be conservative, but I honestly don't know I think we're taking a realistic target.

For for this year.

And if all I hope that we'll be able to exceed it but I don't know.

And the water and supports a busy and they are any individual customer depends to a large degree on exactly what does the deal that was signed and we will sign with them.

Is it possible that a single large operator could present, a larger and they are several hundred millions of dollars it could very well be.

But also remember that the larger of the operator, there is also a larger leverage and the and.

And from their parts and striking the deal with us, including the possibility to put some sort of cap but.

And very very high and very high penetration numbers GAAP in terms of what they will pay us.

So I think we're taking a realistic number was 119 and we hope to be able to do better than that but we don't want to from Korea to create sort of illusions on this.

And our attraction and North American market.

I think is is now very good.

And I think I talked about this and the previous earnings call and what we are seeing now is that we did not see a year ago and use them.

Significant interest from.

Several north American operators to provide security as a service to their customer base.

Provide network based security as a service to their customer base. This was not the case and a.

Year on year, and a half ago. They were engaged with several operators in North America.

The first one we signed the deal with funding and protecting the network itself was this like we announced.

And we expect to sign a deal with dish also on there on the secure unsecured day as a service on network based security and service for their customers.

We are in active engagement and this I mean, and some of it and Trialed some of it and.

And even in commercial discussions with other operators, so I am optimistic, but yet to be seen.

We closed the third month I'm hopeful.

Yeah.

Yeah.

Hi.

Yeah.

And you offer a elaborates on the difference between your offering traditional Palo altos offering to them in terms of the <unk> solution by the Alto and not an expert on the Palo Alto so.

Brexit and the general and general terms, but also is basically offering a firewall that is protecting sort of the entry and exit from the from the network, mostly the entry into the network from various types of attacks, but this is a firewall what.

We provide us the ability to do real time analysis of the traffic that is going on on the network.

And identifying a tax advantaged fastest firewall they could have a faster because they were they were abrupt they call the fastest because it's an unknown source. There are various reasons why things do pass firewall.

To a large extent we are were also the main protection from.

From a tax that originates inside the network such as box that are connected to the network and are not trying to attack the network itself, where they're actually trying to use the network as a means to attract someone else, which is also very important. So it's really these are I would say is these are.

And from the oceans. So thank you for the compliment each other.

And what accounts for gross margin declining from 74% to 70% zone.

And the last during the last few years the average gross margin was around the 70%.

Specifically and the first quarter of last year.

And there was and extraordinary one time favorable mix.

Oh for a product.

But it was something unusual.

And so we can expect that the average would be around the 70% as it was and this quarter.

And is this or other U S provider seriously looking at your recurring revenue technology. The answer is absolutely, yes and Brian.

I think I answered a similar question, yes, there's a lot of interest today and in the North American market for this.

And it's very different and what we saw previously so I think.

I'm positive I have a positive outlook on what what do I expect to happen and North America on this.

Uh huh.

Security as a service seems like a no brainer for any operator, why don't all operators launch this service immediately okay.

We would license and tool.

They are taking their time and okay. I think it's a it's for her for a few reasons.

First of all let's face it.

And communication service providers operators.

And our relative and the I would call it slow and slow moving entities.

They have large networks to take care of their many millions of customers they are concerned.

And of disrupting the current business, but they have so things take time was operating.

Anybody who's worked with operators can appreciate it that's why it takes.

Between one to two years to close the deal and even after we close the deal of the implementation testing and integration et cetera et cetera.

And between nine to 12 months easily until the service is actually launched even though technically we could watch as much much faster. There is it's not that much work, but there's a lot of testing and making sure and so on and that's going into it.

I think that one of the things that day that operators are looking at today is the.

They have launched over the years many different value added services.

And when you talk to operators worldwide.

And typically saying that's the value added service.

And I'm, saying that there is.

It will provide.

And 234% penetration just like security apps that they are selling right and that's.

Alcoa and apparel penetration rates do you expect to see.

And here, we are coming with a different set.

<unk> solution and that says listen you can.

You can service the market as a value added service that you were you were able to get if you have the right and go to market, we're able to have much much higher penetration rates.

And so this is a relatively new concept.

And being a bit more conservative taking time to make such a decision.

And so.

To make their decisions a little more prolonged and a more delayed than we would like them.

However, having said that.

I think that there are more and more operators that are seeing today is that this is indeed a significant.

And as significant service they are seeing the success that other operators are enjoying.

Started off with a small number of other operators and it's growing slowly gradually but slow and then.

So more and more operators are starting to be convinced.

Yes indeed.

They should launch such a service so I talked earlier that course.

In answer to a different question, but we are seeing north American operators.

Interest in this and a way that we did not see a year a year year and a half ago and throughout Europe. For example, we are seeing rfps to launch.

And for.

Technology companies, such as ourselves to partner with the operator, and large security as a service to the consumer and SMB market.

And there are many more rfps and all of them. There were two years ago. So, it's taking time and seconds or more times and I would like but they are slowly, but surely I believe theyre getting there.

And.

Yeah.

This would talk about.

And.

Justifies a gene that protects revenue and depend on customers and no. It does not.

The net protect is a product that protects the five G network itself. So that is a that is a deal that we did with dish to protect and network itself and our revenues does not depend on customers, it's really protecting NAV to work itself.

The other day that we hope and believe we will sign with dish for launching security as a service to their consumer and this and small businesses.

Customers that will be a recurring revenue deal like we talked about today during the presentation that we'll defend our revenue will depend on the number of customers assigned and sign up on it.

Okay.

What type of indemnity agreements do you have in place with your CSP partner and the event. There is a network outage at the CSP partner Codell ought to be held liable.

And it varies but the.

And generally and we've been working with operators for many years.

Company.

And I'm working with them on and.

And putting in line technology.

And for many years and DPI and recently more and more for Air Force security.

We are of course, when you have the liability clauses and the and the contract. If we caused major disruptions and so and we have clauses of penalties and et cetera, but.

They are.

They are I would say they are the standard and the industry is not something that.

Of the revenues of the operator, we're liable for that that's not the kind of things that you normally sign a deal for a certain amount.

Where we stand behind our product there are penalties for failure.

And if we do not if we did not meet our obligations.

And I believe that.

And I wouldn't say never ever but.

It's nothing we don't we don't pay penalties.

As a general sector and so we're okay.

And.

How do you secure connectivity into the network via other means for example that laptop connecting over the Wi Fi at the coffee bar.

And not via the and home router.

So we have enforcement point day exactly for that use case in which are very small and Mumbai and Nick on National day of CPE and connection but.

Wi Fi connection that our endpoint and secure and seamless and it is.

And that effect.

And it's under the same umbrella and then Stanley S M and L. A similar campaign 10 minutes and system average.

And the same.

And I would add to that just to comment that.

And that's why we have the capability.

You know most people even when they buy a combined package of network based security and endpoint security and most people don't download the endpoint.

For the same reasons, we talked about today.

And they just don't bother to do it so they're technically we provide a full suite solution, but.

And the same inhibitor to actually download and rest here as well.

And what do you guys lose sleep over.

And.

Okay.

Personally I try to sleep well it helps me work and the next day.

I think look I think the.

And I think we explained what we're going after right we want to sign up more operators.

And you want these operators to go aggressively and to the market and sign up and.

And get more and more customers using the network.

And I'm not sure of losing sleep is the right the right price to us, but if you ask what are we focusing our efforts on that.

No.

I think we have as force presented we have a.

A huge addressable market there is a need for all four order for our solution.

And the challenges and the execution and the execution of the long sales cycle and the long implementation cycle.

And this is all challenges.

Our focus and.

But are willing and very optimistic.

We will overcome those challenges.

And you mentioned your hope is that our future revenues and security would be largely sekos.

Well five G and you'll be paying user claim protection capex deals fall and DPI or security revenues and given your view of a multi hundred million dollar Tam and five G could this represent upside to growth and non seekers.

And the Capex deals UPC is a security product so we count that does.

Security revenues and yes, this is and upside to growth and our cash.

Non seek us.

And our security revenues.

Is the revenue model for the deal with dish recurring also.

Is it for.

Again, the two deals with dish one that we signed and closed which is network that protect to protect it and network itself user playing protection.

It's a capex deal.

And not the recurring revenue and that is signed and done we have another deal pending with dish that we both announced together that we fully expect to sign up for it but we have not signed the tier four recurring revenue.

Sorry for a security as a service for their consumers and Smbs.

That will be a recurring revenue deal for us.

And.

And when will your company and sustainably EBITDA positive how much cost investments and you need going forward.

So according to our guidance. This year, we will have a negative EBITDA for a few millions of dollars.

Currently our main priority.

And to focus on growth.

But so in order to growth, it's just I mean in order to provide profitability.

For the.

Our goal is to provide profitability and positive EBITDA and positive cash flow.

But the main is to grow the company.

Hum, but we didn't give and we didnt provide guidance for next year.

They're definitely and the next few years and we will have Uh huh.

And we'd be EBITDA positive.

And kind of going through the questions here and thank the.

Many of them are repeating questions were already answered.

Yeah.

Okay.

Yeah.

Okay.

Thank you Vern and I want to thank everyone for participating in this day.

And I really appreciate the time and.

I appreciate everyone's a man, who stays who stayed on and on.

Sales now.

It's not a trivial.

And I've taken for granted so thank you for your interest and a lot and.

A rendering and hope to.

So it was you're definitely and the next earnings call, but hopefully with some of you before that and hopefully even face to face.

Thank you very much.

[noise].

Yeah.

Yes.

Yeah.

Yes.

[noise].

[noise] [noise].

[noise].

Yeah.