Q1 2025 Allot Ltd Earnings Call
You may begin.
Thank you.
[music].
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Allot's first quarter 2025 results conference call. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded. You should have all received by now the company's press release.
Ladies and gentlemen, thank you for standing by and welcome to our first quarter 2025 results Conference call. All participants are present in listen only mode. Following management's formal presentation instructions will be given for the question and answer session as well.
Mind you. This conference is being recorded you should have all received by now the Companys press release, if you have not received it please contact <unk> Investor Relations team at U K Global Investor Relations at one to one to $3 78040 or view it in the news section of the company's website at Www Dot a low dot com.
Operator: If you have not received it, please contact Allot's investor relations team at EK Global Investor Relations at 1-212-378-8040. Or view it in the news section of the company's website at www.allot.com.
Kenny Green: I would now like to hand over the call to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin, please? Thank you. Good day to all of you and welcome to Allot's conference call to discuss its financial results for the quarter. I would like to thank Allot's management for hosting this. With me today on the call are Mr. Eyal Harari, CEO, and Ms. Liat Nahum, CFO. Following Eyal's prepared remarks, we will open the call for the question and answer session, and both Eyal and Liat will be available to answer those questions.
Speaker Change: I would now like to hand over the call to Mr. Kenny Green of Ek Global Investor Relations. Mr. Green would you like to begin please.
Kenny Green: Good day to all of you and welcome to the last conference call to discuss its financial results for the quarter.
Speaker Change: I would like to thank allots management for hosting this conference call.
Speaker Change: With me today on the call, obviously, Youll, Harare, CEO and Mr. <unk> <unk> CFO.
Speaker Change: Alright.
Speaker Change: Remarks, we will open the call for the question and answer session.
Speaker Change: All will be available to answer those questions.
Kenny Green: You can all find the highlights of the quarter, including the financial highlights and metrics, including those we typically discuss on the conference call, in today's earnings report.
Speaker Change: You can all find the highlights of the quarter, including financial highlights and metrics, including those we typically discussed on the conference call in today's earnings release.
Kenny Green: Before we start, I'd like to point out the following Safe Harbor Statements. This conference call may contain projections of other forward-looking statements regarding future events or the future performance of the company. Those statements are early predictions and Allot cannot guarantee that they will in fact occur. Allot does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, delays in the launch of services by Allot customers, reduced demands, and the competitive nature of the securities services industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.
Speaker Change: Always thought I'd like to point out the following Safe Harbor statement. This conference call may contain projections or other forward looking statements regarding future events or the future performance of the company. Those statements are only predictions and allot cannot guarantee that they will in fact occur.
Speaker Change: It does not assume any obligation to update that information actual events or results may differ materially from those projected including as a result of changing market trends.
Speaker Change: And the launch of services by the customers reduced demands and the competitive nature of securities services industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.
Kenny Green: Also, the financial results in this call will be presented mainly on a non-GAAP basis. Allot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand Allot's operating performance in the quarter.
Also the financial results in this call will be presented mainly on a non-GAAP basis lot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand the operating performance in the quarter for all the data. Please refer to the financial tables published in the results press release issued earlier today, which both.
Kenny Green: For all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP financial reconciliation.
Speaker Change: They include the GAAP to non-GAAP financial reconciliation tables.
Eyal Harari: And with that I would now like to hand the call over to Eyal Harari, CEO. Eyal, please go ahead. Thank you, Kenny. Let me begin by saying that we are very pleased to report a strong set of first quarter 2025 results with top and bottom line growth as well as continuing momentum in our SICAS growth century. Our results demonstrate that we are successfully and consistently executing on our security first strategy, bringing renewed growth and profitability to Allot. Our first quarter revenues increased year-over-year by 6%, while in 2024 our focus was bringing the business to financial stabilization, 2025 remarks a return to growth.
El Harare: And with that I would now like to hand, the call over to El Harare CEO. Please go ahead. Thank you Kenny.
Speaker Change: We begin by saying that we are very pleased to report a strong set of first quarter 2024 rigs that we.
Speaker Change: We've talked in bottom line growth as well as continued momentum.
El Harare: Cecos growth engine.
El Harare: Our results demonstrate that we have successfully and consistently executing and our security strategy.
El Harare: The new grocery profitability dwindle.
El Harare: Our first quarter revenues increased year over year.
El Harare: 6%.
El Harare: In 2024 hour focus was bringing in the business and financials utilization.
El Harare: 25 remarks, a return to growth the primary contributor to this revenue increase was our growth engine the security as a service solution CCAR.
Eyal Harari: The primary contributor to that revenue increase was our growth engine, the security-as-a-service solution, SICAS. Over the quarter, SINC has contributed over a fifth of our revenues, with SINC-ASERRAL at $21.2 million, up 55% year-over-year. This growth, combined with the steps we took over the past two years to reduce expenses considerably, has translated into a profitable Q1 on a non-gap basis. Our non-gap net income was $0.8 million over the quarter versus a loss in the first quarter of last year. We reported positive operating cash flow of 1.7 million in the quarter and as a result our cash position at the quarter end increased to over 60 million.
For the quarter <unk> contributed over a fifth of our revenues, we seek a stay at home.
El Harare: 1.2 million up 55% year over year.
El Harare: This growth combined with the steps we took over the past two years to reduce expenses considerably is translated into a profitable Q1 on a non-GAAP basis.
El Harare: non-GAAP net income was 0.8 million for the quarter versus a loss in the first quarter of last year.
El Harare: We reported positive operating cash flow of $1 7 million in the quarter and as a result, our cash position.
El Harare: And increased to over $60 million.
Eyal Harari: This great performance is being driven by our motivated and experienced workforce. I want to thank our employees for their continued focus on execution, their steadfast passion for keeping our customers happy, and their ongoing commitment to achieving our business goals. The growing traction of our security-as-a-service solution demonstrates our increased success in convincing telcos about the importance of providing seamless cybersecurity threat protection to their end customers. We are working closely with our customers to help them market cyber security solutions and drive increased adoption among their end customers. We are especially excited about our growing partnership with Vodafone and Verizon, which I will elaborate on further in a few minutes.
El Harare: This great performance is being driven by our well motivated and experienced workforce.
El Harare: I wanted to thank all employees for their continued focus on execution.
El Harare: Today's presentation, so keeping the customer happy and their ongoing commitment to achieving our business goals.
El Harare: The growing traction of our security as a service solution demonstrates our increased success in convincing telcos and about the importance of providing seamless service security strip addiction to their end customers.
El Harare: We are working closely with our customers to help them market cyber security solutions and drive increased adoption among.
El Harare: Your end customers.
El Harare: We are especially excited about our growing partnership with Vodafone and horizon, which I will elaborate on further in few minutes.
El Harare: Okay.
Eyal Harari: We also have made solid progress growing a deep and broad pipeline of potential opportunities for both ICAS and smart products. We are focused on converting this strong pipeline into new partnerships and agreements. We are very proud of our team's solid execution in securing a significant expansion of our partnership with Verizon Business, a division of one of the largest and most prestiged wireless providers in the United States and in the world. We have been providing network-based cybersecurity protection to Verizon Business Fixed Wireless Access customers, giving their 1.5 million subscribers the option to use our service. Our success here led to a new agreement to make our solution available to the full Verizon Business Mobile customer base of over 30 million subscribers.
We also have made solid progress growing a deep and broad pipeline of potential opportunities for both <unk> and small projects.
El Harare: We are focused on converting these strong pipeline into new partnerships and agreements.
El Harare: We are very proud of our team's solid execution in securing a significant expansion of our partnership with Verizon business.
El Harare: A division of one of the largest and most prestigious wireless providers you the United States and the world.
El Harare: We have been providing network be cyber security protection to Verizon business fixed wireless access customers.
El Harare: In the $1 5 million subscribers.
El Harare: <unk> to use our service.
El Harare: Our success year led to a new agreement to make all the solutions available to the food Verizon business mobile customer base of over 30 million subscribers.
Eyal Harari: as well as any new subscribers that they gain. This exciting, let-them-expand win represents a significant, targeted adversarial market and long-term growth opportunity for Allot. A few weeks ago, Verizon Business launched a new mobile service called MyBizPlan, an attractive mobile plan geared towards small and mid-sized businesses that offers a scalable and fully customizable mobile service plan. Usually, Verizon business includes mobile internet security as part of the base package, rather than an add-on, meaning customers are automatically opt-in at the start, and we get paid by Verizon for each account that is connected. The potential for us from just this deal is substantial.
As well as any new subscribers did the game.
El Harare: This exciting led to an extent will represent a significant targeted addressable market and long term growth opportunity for allot.
El Harare: A few weeks ago, Verizon business launched a new mobile service called might be planned.
El Harare: Mobile has been geared towards small and medium sized businesses that offers scalable and fully customizable mobile service plan.
El Harare: We will surely Verizon business includes mobile Internet security as part of the base package render Dennis Angela meaning customers settled dramatically opt in at the start.
Speaker Change: And we get paid but he's horizon well each account that is connected.
The potential for lots of them just this deal is substantial there.
Eyal Harari: Verizon recently started actively marketing the new offering to both their existing customer base, as well as new customers. It has only been a few weeks since launch and we are very pleased by the initial traction. Given the success of the launch, together with a fixed wireless access customer already using our service, Verizon has become the largest contributor to CCAS revenues in the first quarter, and we expect it to only grow further from here. We have built a solid working relationship with Verizon Business and we hope to further extend our collaboration with them in the coming years.
Speaker Change: Ryzen recently started actively marketing the new offerings to both our existing customer base as well as new customers.
Speaker Change: It has only been a few weeks since launch and we are very pleased by the initial traction.
Speaker Change: Given the success of the launch together with a fixed wireless access customer always using Goldman service Verizon has become the largest contributor to <unk> revenues in the first quarter and we expected to only go further from here.
Speaker Change: We have built a solid working relationship with RASM business and we hope to further extend our collaboration with them in the coming years.
Eyal Harari: Together with other customers that have launched cybersecurity services based on our SICAS offering, including Vodafone, O2, NEO, and others, which all are progressing nicely, we feel comfortable with our goals estimates, and we expect that for the full year 2025, SICAS revenues and ARR will achieve strong year-over-year increase at around 50% or more. Last month, we launched our off-net-secure solution at RSA in San Francisco. This new cyber security solution allows operators to protect their customers against cyber threats when they are off-network, meaning they are connected to the internet through means other than the operator's own network.
Speaker Change: Together with other customers that they've launched cyber security services based on our <unk> offerings, including Vodafone old to new and others, which all are progressing nicely, we feel comfortable with our <unk> and we expect this for the full year 2025, because revenues and he will achieve.
Speaker Change: Strong diesel year increase at around 50% or more.
Speaker Change: Last month, we launched our will often execute solution at RSA in San Francisco.
Speaker Change: New cyber security solution allows the operator to protect the customer against cyber threats Wednesday of off network, meaning they are connected to the internet through means other than to Oprah <unk> own network.
Eyal Harari: This type of broad connectivity gives the service providers an additional branded channel for staying in touch with their subscriber. Previously off-network was a blind spot for the service provider. Our Ofnic Secure solution is an extension of the Allot Secure cybersecurity platform. The service is activated as part of the provider's branded customer app already running on the customer's device. This offering completes the circle of protection provided by our Unified Allot Secure Suite and offers telecom providers a new potential premium add-on, Revenue Stream.
Speaker Change: This type of Roseland activity used to service providers and additional branded channels for staying in touch with subscriber previously off Nicole was blind spot for the service providers.
Speaker Change: And we're often ex fuel solution is an extension of the allot secure cyber security platform.
Speaker Change: The service is activated as part of the providers branded customer app already running on the customers device.
Speaker Change: This offering complete circle of protection provided by our unified Allot secure suite and offers telecom providers and new potential believe you add on the revenue stream.
Eyal Harari: Our smart product is a significant and important part of the overall Allot business. Built on decades of Allot experience, offering top-notch technology and innovation, the solution continues to be a market-leading offering. As a reminder, following our decision to combine our two business units into a single division, our smart product is being sold as part of our unified security first platform. We recently signed several multi-million dollar agreements with new customers for our smart product, which will contribute to our overall future goals. These orders were received from multiple different countries. Start to 2025 for smart, give us confidence in the ongoing demand for these products and services.
Speaker Change: Our smart product is a significant and important part of the overall business.
Speaker Change: Built on decades of Ocelot experience offering topnotch technology and innovation. This solution continues to be a market leading offerings.
Speaker Change: As a reminder, following our decision to combine our two business units into a single division our smartphone is being sold as part of our unified security platform.
Speaker Change: We recently signed several multimillion dollar agreements with new customers for our smart product, which will contribute to our overall future goals.
Speaker Change: These orders were received from multiple different countries about 2025 full smart.
Speaker Change: Give us confidence in the ongoing demand for these products and services.
Eyal Harari: At the end of last year, we launched our new service gateway, the Terra 3 Multi-Service Platform, geared toward top-tier telecom operators. The product is a highly attractive solution for tier 1 networks, offering strong visibility into network traffic, all in one unified platform. We are seeing a lot of interest in this new product and it has contributed to our strong pipeline of opportunities. During the recent quarters, we have grown our pipeline nicely. We have added both existing customers that may want to upgrade to our new platform, as well as new customers that appreciate the value added that this new product can bring to them.
Speaker Change: At the end of last year, we launched our new service Gateway three multi service platform beautiful or talk to your telephone operators deploy.
Speaker Change: <unk> is a highly attractive solution for tier one networks offering strong visibility into network traffic all in one unified platform.
Speaker Change: We have seen a lot of interest in this new product and it has contributed to our strong pipeline of opportunities.
Speaker Change: During the recent quarters, we have grown our pipeline nicely.
Speaker Change: We have added both existing customers that may want to upgrade to our new platform as well as new customers that appreciate the value added that this new product can bring to them.
Eyal Harari: The pipeline includes multi-million dollar opportunities, including a few 8-figure deals. Our current pipeline therefore represents a significant future upside potential. A few weeks ago, we attended the RSA conference, which was held in San Francisco. It was a highly productive event for Allot's marketing team, with multiple meetings and excellent feedback from both existing and potential customers. Customers are clearly supportive of our security-first strategy with strong interest in our combined offering, especially given our recent top-tier customer wins. Key themes emerged at RSA that reinforce why our security-first strategy is so well-timed. Protecting home and small office networks has moved from nice-to-have to a must-have service, and the rise of AI has added a new dimension of risk, as well as new solutions which need protection.
Speaker Change: The pipeline includes multimillion dollar opportunities, including a few eight figure deals.
Speaker Change: Our current pipeline, therefore represent significant future upside potential.
Speaker Change: A few weeks ago, we attended the RSA conference, which was held in San Francisco. It was highly productive and eventful alerts marketing students with multiple meetings and excellent feedback from both existing and potential customers.
Speaker Change: Customers are clearly supportive of our security first strategy with strong interest in our combined offering, especially given our recent talk to your customer wins.
Speaker Change: D teams in marriage, if I ever say that reinforce why all of a security first strategy you saw well timed well.
Speaker Change: <unk> home, a small dose east Nichols has moved from nice to have to a must have service.
Speaker Change: And there is I'll say I has added a new dimension of risk as well as new solutions, which need protection.
Eyal Harari: At our booth, Prospect highlighted the value of an in-the-cloud service that delivers real-time visibility and enforcement. These conversations underscore the power of our Allot Secure Suite, and especially our new Off-Net Secure product. Our solutions address market needs, positioning us to capitalize on the accelerating demand for cybersecurity solutions geared toward consumers and SMB segments. In summary, we are very pleased with our first quarter 2025 performance and our return to year-over-year growth in revenue and profit. We are especially excited about the strong growth in both FICA's revenue and ARR. Our offerings across the board continue to gain momentum and has been demonstrated by recent new contract wins and service launches at leading customers.
Speaker Change: Booths prospect highlighted the value of it in the cloud service that delivers real time visibility and enforcement.
Speaker Change: These conversations I'm, just going to follow our allot secure suite and.
Speaker Change: Especially our new often insecure product.
Speaker Change: Our solutions address market needs positioning us to capitalize on the accelerating demand for cyber security solutions.
Speaker Change: Consumers and SMB segments.
Speaker Change: In summary, we are very pleased with our first quarter 2025 performance and now we returned to year over year growth in revenue and profit.
We are especially excited about the strong growth in both <unk> revenue and <unk>.
Speaker Change: <unk>.
Speaker Change: Our offerings across the board continues to gain momentum.
Speaker Change: It has been demonstrated by recent new contract wins and service launches at leading customers.
Eyal Harari: Looking ahead over the remainder of 2025, given our recent successes, we expect that for full year 2025 we will achieve profitable growth with CICAS revenue and ARR achieving strong year-over-year increases at around 50% or more. I am increasingly optimistic about our future.
Speaker Change: Looking ahead over the remainder of 'twenty to 'twenty five.
Speaker Change: Given our recent successes, we expect that for full year 2025, we will achieve both of them will close we seek us revenue and they are achieving strong year over year increases at around 50% or more.
Speaker Change: Increasingly optimistic about the future.
Liat Nahum: And now, I would like to hand it over to our CFO, Liat Mukum, for the financial summary. Liat, please go ahead. Thanks Eyal. We reported revenue of $23.2 million in the quarter up 6% year-over-year. Revenue from our gross engine, CCAS, was $5.1 million in the quarter in line with our expectations and up 49% year-over-year, comprising 22% of our revenue in the quarter.
Speaker Change: And now I would like to Andy it over to our CFO, Jeff Macoun for the financial summary.
Speaker Change: Please go ahead.
Speaker Change: <unk> reported revenue of $23.2 million.
Speaker Change: <unk> up 6% year over year.
Speaker Change: Revenue from our glass Amgen staff cost was $5 1 million daus in the quarter.
Speaker Change: Expectations and up 49% year over year.
Speaker Change: Rising 22% of our revenue in the quarter.
Liat Nahum: Our thickest annual recurring revenue as of March 2025 was $21.2 million.
Speaker Change: Seacrest earn a lot of recurring revenue as a smart 2025 was $21 2 million.
Liat Nahum: I will now discuss the non-GAAP financial measure. For all our financial results, including the GAAP financial measures and the various other breakdowns of our revenue, please refer to the table in our results press release. Our non-debt gross margin in the quarter was 70.4%. The same as first quarter of last. While the non-GAAP gross margin depends on the specific product mix sold in the quarter, our expectation for gross margin in the coming year is in the range of 70%. As CCAS revenue continues growing as a percentage of overall revenue, we expect our growth margin to continue increasing.
Speaker Change: I will now discuss the non-GAAP financial measures.
Speaker Change: All our financial results, including the GAAP financial measures and the various other breakdowns of our revenue. Please refer to the table in our results press release.
Speaker Change: Our non-GAAP gross margin in the quarter was 74% the same as first quarter of last year.
Speaker Change: While the non-GAAP gross margin depends on the specific product mix sold in the quarter, our expectation for gross margin in the coming year is in the range of 70%.
Speaker Change: I think us revenue continuous growing as a person.
Speaker Change: Although our revenue we expect our gross margin to continue increasing.
Liat Nahum: Non-GAAP operating expense for the quarter were $15.9 million, 5% below $16.6 million in the first quarter of last year.
Speaker Change: non-GAAP operating expense for the quarter was $15 $9 million, 5% below $16 $6 million in the first quarter of last year.
Liat Nahum: at 483 full-time employees as of March 2026. We expect this to gradually increase toward 500 by year-end. We reported a non-GAAP operating income of $0.4 million compared with a non-GAAP operating loss of $1.2 million in the first quarter of last year. In terms of non-GAAP net profit, we reported $0.8 million in the quarter or a profit of $0.02 per share as compared with a non-GAAP net loss of $0.9 million or a loss of $0.03 per share in the first quarter of last year. We reported positive operating cash flow in the first quarter of $1.7 million.
Speaker Change: I look at 483 full time employees as of March 2020.
Speaker Change: We expect this to gradually increase so it's 500 by year end.
Speaker Change: We reported non-GAAP operating income of zero point $4 million.
Speaker Change: Ted we the non-GAAP operating loss of $1.2 million in the first quarter of last year.
Speaker Change: In parallel to non-GAAP net profit reported zero point $8 million in the quarter or a profit of two cents per share as compared with a non-GAAP net loss also zero point $9 million or a loss of three cents per share in the first quarter of last year.
Speaker Change: We reported positive operating cash flow in the first quarter of $1 7 million.
Liat Nahum: Cash, short-term bank deposit, and investment as of March 31, 2025 totaled $60.7 million versus $58.8 million as of year-end 2021.
Cash short term bank deposits and investments as of March 31st 2025, plus $67 million versus $58.8 million as of year end 2024.
Liat Nahum: That ends my summary.
Speaker Change: That ends my summary, and I are now happy to take your questions.
Liat Nahum: Eyal and I are now happy to take your questions. Thank you.
Speaker Change: Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two if you are using speaker equipment handling lift the handset before pressing the numbers. Please.
Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the number. Please stand by while we poll for your questions.
Speaker Change: Please standby, while we poll for your questions.
Nehal Chokshi: The first question is from Nehal Chokshi of Northland Capital Markets, please go ahead. Thank you. Congratulations. Fantastic results here.
Speaker Change: The first question is from me how chalk she of Northland capital markets. Please go ahead.
Speaker Change: Thank you congratulations fantastic results there.
Eyal Harari: You probably said this in your prepared remarks, Eyal, but just to be clear, did Verizon, Business Mobile, Internet Security actually contribute to your 1QC CAS AR results? Thank you, first of all, for the congratulations, as mentioned in the prepared remark, the official launch of the service happened only in mid-April. We have very minimal contribution for the Q1. numbers for this service only from the pre-launch and most of it would come in the current quarter Q2 and it will accelerate as we proceed as Q2 also was only a partial quarter and we are seeing good growth and good traction for the service so we expect this to be significant contributing to our seekers over the years.
Speaker Change: You probably said this in your prepared remarks, I, all but just to be clear that Verizon business mobile.
Speaker Change: Internet security actually contribute to <unk> because they are our results.
Speaker Change: Thank you first of all Oh, good political musicians.
Speaker Change: As mentioned in the prepared remarks, the official launch of the service and only in mid April.
Speaker Change: We have really a meaningful contribution for the Q1.
Speaker Change: Because the numbers will be serviced the only from the relaunch.
Speaker Change: And most of it would come in.
Speaker Change: The current quarters Q2, and it will accelerate as we proceed as Q2 also was only a partial quarter.
Speaker Change: And we will see good growth and good traction for the service. So we expect this to be.
Speaker Change: Significant.
Speaker Change: Contributing to all of us because over the year.
Eyal Harari: So then, what was the big driver for, I believe, your biggest CKAS ARR, incremental CKAS ARR quarter ever by a far margin? So we start to see the new agreement, the new service launchers that can now... Last quarter and the quarter before starts to kick in and contribute to our revenue. Part of them are related to the Vodafone agreements, part of them to the Mio, to the OTEC, all the announcements we had in previous quarters. showing the numbers. Some of them are still not in full effect and we are expecting to have further growth for those that count into the year and this is why we feel comfortable that our yearly CICAS revenue in Eyal Harari are going to be in around 50% growth year over year as indicated in our Chris Rennie.
Speaker Change: Got it. So then what was the big driver for Ah I believe your biggest CCAR. They are our incrementals because they are a quarter ever by far margin.
Speaker Change: So oh are.
Speaker Change: We start to see the new agreement the new service launches that they announced.
Speaker Change: Last quarter and the quarter before starts to kick in and contribute to our revenue both of them are related to the Vodafone agreements both of them to the view to the old Jack All day.
Speaker Change: Announcements, whereas in previous quarters.
Speaker Change: They're starting to.
Speaker Change: Go into numbers some of them always still not in full effect and we are expecting to have further goals.
Speaker Change: If all goes account into the year and this is why we feel comfortable that that.
Speaker Change: With yearly seek us revenue in their home.
Speaker Change: Go into being around 50% goes you over the year.
Speaker Change: As indicated in our.
Speaker Change: This release.
Eyal Harari: Okay, great, fantastic. Yes, indeed, noted the big change in language from just simply a year double-digit CCAS revenue and ARR growth to around 50 percent or more. Just double-clicking on the wording of around 50% or more. Are you trying to indicate that there is... a decent probability that CKAS ARR grows less than 50%. You know, we are we are talking about services that are under the marketing and full control of the service provider. So we are relied on their campaigns and their focused numbers. We feel comfortable to say around 50%, but you know, there are still lots of moving parts and we are getting contributions from multiple services, some of them like Verizon just launched, and we want to be, we are trying to give the best estimate.
Speaker Change: Okay, Great Fantastic, Yes, indeed, those are the big change in language from just simply a year double digits seek as revenue and are our growth to around 50% or more.
Speaker Change: Just.
Speaker Change: Double clicking on the wording of around 50% or more.
Speaker Change: Are you trying to indicate that there is.
Speaker Change: A decent probability that CCAR, they are rose less than 50%.
Speaker Change: You know we are we are talking about Uh huh.
Speaker Change: Services that are under the marketing and a full control of the service providers. So we have relied on their campaigns and their focus and the numbers we.
Speaker Change: We feel comfortable to say, 50%, but you know there are still lots of moving parts and we are getting a contribution from <unk>.
Speaker Change: The multiple services some of them like Verizon just launched and we want to be we are trying to give the best estimate it might be a bit lower than the 50%, but as indicated it can goes also might go.
Eyal Harari: It might be a bit lower than the 50%, but as indicated, it can also might go above 50%. So it's the best we have now is that it should be around this number. But we are not anticipating, for example, it will be at the 30% level. But if you're asking whether it can go to 45%, maybe, as there are still some uncertainties for us as we are relied on the different service providers, their marketing plans, and we are still very early in the year.
Speaker Change: Above 50% so it's the best.
Speaker Change: And we have now is that are you should be around this number that we are not anticipating for example, it will be at the 30% level, but if you ask me where it can go to 45% maybe they'll still some.
Speaker Change: The uncertainties philosophy is we always relied on the different service providers their marketing plans then.
Speaker Change: We are still very early do you.
Eyal Harari: You also mentioned that within the quarter, Verizon became the largest consumer of CKAS revenue. Did I hear that correctly? Correct. Verizon with the initial launch of the Verizon mobile service as well as the good traction of the Verizon fixed wireless access became our number one account for the CICAS revenue and it's still in the early days for the VMIS or the Verizon mobile security service, so we are expecting it to be even Larger and more strategic as we go.
Speaker Change: Got it and then you also mentioned that within the quarter Horizon became the largest considers sika has revenue did I hear that correctly.
Speaker Change: Correct me if a rifle we the initial launch of the <unk>.
Speaker Change: On the mobile service as well as the good traction of the Verizon on fixed wireless access.
Speaker Change: Yeah.
Speaker Change: Became or.
Speaker Change: Number one account for the seacoast revenue and it's still early days for Davita. These devices mobile security service. So we are expecting it to be then.
Speaker Change: Larger and more strategic because we go.
Nehal Chokshi: Okay, great. Just a couple more questions for me here.
Speaker Change: Okay great.
Speaker Change: A couple more questions for me here.
Speaker Change:
Nehal Chokshi: In your April slide deck, I believe you introduced a lot of new slides, but slide 21 is particularly very interesting, where you're showing increasing penetration rates, I think, across multiple different vendors. I guess, you know... Just want to make sure that this is indeed a lot specific telecom data, and then maybe just walk us through the narrative that you're trying to tell us with this chart here as well. So the company mentioned before, and the audience and myself don't have specifically the slide in front of us, but in general, we are seeing that the adoption of the security service, based on our experience with different launches with other carriers, is picking up between two to three years.
Speaker Change: And your April slide deck, I believe you introduced a lot of new slides slide 21 is particularly very interesting where you're showing.
Speaker Change: Increasing penetration rates I think across multiple different vendors.
Speaker Change: I guess you know.
Speaker Change: <unk>.
Speaker Change: Just want to make sure that this is indeed a lot specific.
Speaker Change: Telecom data and then maybe just walk us through the narrative that you're trying to tell us what this chart here as well.
Speaker Change: So the company mentioned before.
The Otas and we said it well.
Speaker Change: The slides in front of us, but in general we are seeing that the adoption of the <unk>.
Speaker Change: Alrighty service based on our experience with different launches with other carriers is that.
Speaker Change: Not between two to three years.
Eyal Harari: The rate of adoption is typically between 15% in the lower end up to 50%, 5-0, on the upper end, with most carriers reaching 20 to 30% adoption. And I think this gives some... important clarity for our investors to see what is the potential you can expect from any new service launch based on the customer addressable market. Of course, this actual. base of adoption, as well as the actual performance of specific carriers. It really, really depends on their marketing approach. It depends on.
Speaker Change: Their age of adoption is typically between.
Speaker Change: 15% in the lower end up to 50% five zero on the upper end with most goodyear's, reaching 20% to 30% adoption and I think this gives them.
Speaker Change: Bolton clarity for Oh investments, you'll see what is the potential that you can expect.
Speaker Change: Any new service launch based on day.
Speaker Change: After merit.
Speaker Change: Addressable market of course these extra whoa.
Speaker Change: Pace of adoption as well as.
Speaker Change: Actual performance of specific carriers.
Speaker Change: It really really depends on their marketing.
Speaker Change: Approach.
Speaker Change: Hands on.
Nehal Chokshi: how much they invest in their marketing budgets and how committed the leadership is to this service. Got it. Makes a lot of sense.
Speaker Change: How much do you invest their marketing budgets and how committed the leader she used to be serviced.
Got it makes all sense okay.
Nehal Chokshi: Okay, um, and then looking at the Smart business here You talked about the increased pipeline is the Polycom customers that are in this smart business, are you seeing increased opportunity to also cross sell your CCAS solutions?
Speaker Change: And then looking at the.
Speaker Change: Smart business sure.
Speaker Change: You talked about the increased pipeline.
Speaker Change: It is the.
Speaker Change: Telecom customers that are in the spot business are you seeing increased opportunity to also cross sell you'll see cash solutions.
Eyal Harari: And if so, how big of an opportunity do you see that being, outside of the, you know, sort of big elephants that you're already seeing good success with, that being Vodafone and Verizon? So definitely part of our security first strategy, we are looking into creating synergies and value-added by combining our two business units and running under one team, one business, and creating a synergetic product. We are well-known in the telecom space. We have a lot of relationships with many service providers around the globe from the 20 years and more of a lot of success in the space.
Speaker Change: And if so how big of an opportunity do you see that being.
Speaker Change: Outside of the.
Speaker Change: Yeah observed big elephants out you're already seeing good success with that being in Vodafone and Verizon.
Speaker Change: So definitely part of our security first strategy, we are looking into creating synergies and.
Speaker Change: Uh huh.
Speaker Change: Value added.
Speaker Change: By combining our two business units and running under one team one business and creating.
Speaker Change: Synergetic product, we are well known in the telecom space, we have a lot of relationships with many service providers around the globe.
Speaker Change: For the 20 years of in more of a lot of success in the space and go out of our advantages that we are providing the security service.
Eyal Harari: And part of our advantage is that we are providing the security service. leveraging partnership with the service providers. So we definitely see synergy and potential in any existing smart customer and any new smart customer is a potential for expansion into CCAS and vice versa. We are especially excited to see our pipeline growing also on the smart side.
Speaker Change: Leveraging partnerships with the service providers, so we definitely see synergy potential in any existing small customer and then the new small customer and the potential for expansion into CCAR and vice versa.
Speaker Change: We are especially excited.
Speaker Change: To see our pipeline growing also on the small side and.
Eyal Harari: This is something we talked over the last few quarters that demand was softer in the last few years and we saw less revenues coming from the smart and we were asked a lot of questions about what is our view. Last quarter we discussed that we are expecting to have similar revenues on the smart as of previous year and with the potential upside and our pipeline. and seeing some large deals advancing give us more optimism that the demand for our product and specifically for the newly launched Terra3 platform is high and we're really excited with the market reaction to this new product launch and the potential that it creates.
Speaker Change: This is something we've talked over the last few quarters that demand was softer in the last few years and we so.
Speaker Change: Less revenues coming from the smoke and we were asked a lot of questions about what is our view.
Speaker Change: Last quarter, we discussed that we are expecting to have seemingly.
Speaker Change: Do you mean there.
Speaker Change: Revenues on the smoke and of the previous year.
Speaker Change: And with the potential upside in our pipeline.
Speaker Change: And seeing some.
Speaker Change: Large deals advancing gave us small the optimism that.
Speaker Change: The demand for our product specifically for the new newly launched the Everest re platform is high and Oh.
Speaker Change: Really excited with the market reaction to do say, a new product launch and the potential that it creates so we see both.
Speaker Change: Specific opportunities in our pipeline, we see new pipeline for news because some of them can materialize stealing went through 25 some of building pipelines in 2026 Bill cycles.
Eyal Harari: for a long and take some time, but we are. working full force in order to invest in our future growth.
Speaker Change: Long and take some time, but we all.
Speaker Change: Walking full force you know those to invest in our future growth.
Nehal Chokshi: The Great Indian, just quickly, in terms of a competitive space on the smart side of the business. Is that contributing to the improved pipeline that you're seeing, i.e. The troubles at Sandvine seem to still be going through. So we are focused on our technology and offering. We are seeing, as I said, good traction to our technology. People really like the Terra3 platform, the highest capacity and most scalable platform in the market, really appealing for large tier 1 carriers. And overall, we are continuing to focus on both product lines with our Ghost engine in our strategic focus.
Speaker Change: Okay, Great and then just quickly in terms of a competitive space and on the right side of the business.
Speaker Change: Is that contributing to the improved.
Speaker Change: Improve the pipeline that you're seeing I E.
Speaker Change: The troubles that sand line seem to still be going through so so so we are focused on our technology.
Speaker Change: Technology and offering.
Speaker Change: We all see as I said, good traction to our technology people really likes the tariffs we platform.
Speaker Change: The highest capacity with most scale, but it's not for me the market really appealing pool allows tier one carriers.
Speaker Change: And.
Speaker Change: Overall, we will continue to focus on both product lines with the all goes to engines and our strategic focus.
Nehal Chokshi: But as I said, also the smart product line shows increasing pipeline in the recent quarter.
Speaker Change: But they said also this muscle declines shows increasing pipeline.
Speaker Change: In the recent quarters.
Nehal Chokshi: Great, thank you very much for taking all my questions. Thank you.
Great. Thank you very much for taking all my questions.
Speaker Change: Okay.
Rory Wallace: The next question is from Rory Wallace of Outbridge Capital, please go ahead. Hey, thanks for taking my questions. I was wondering on the decision by Verizon to include Allot as the base security feature in its flagship business mobile plan.
Speaker Change: The next question is from Rory Wallace of outbreaks capital. Please go ahead.
Rory Wallace: Hey, Thanks for taking my questions.
Rory Wallace: I was wondering on the decision by Horizon two.
Rory Wallace: Include a lot is the base security feature and its flagship business Mobile plan do you think this is something that will cause other operators to consider following the same playbook as far as bundling and including a lot as more of a default option.
Eyal Harari: Do you think this is something that will cause other operators to consider following the same playbook as far as bundling and including Allot as more of a default option and security as a core service? So, we see that Verizon are taking cyber security very seriously. I think they show a lot of vote of confidence with their FWA service, the fixed wireless service cyber security launch in the last 15 months. They show good result and good customer feedback that they want to make it pivotal to their newly launched MyBiz. new service plan for their business customers.
Rory Wallace: Security is a core service.
Rory Wallace: And so we see that number rise on the pecking cyber security very seriously.
Rory Wallace: They show a lot of vote of confidence whether F. W. A seventh to fixed wireless services cyber security launch.
Rory Wallace: Yeah.
Rory Wallace: The last 15 months to show good results and good customer feedback that they wanted to make people started to their newly launch might be.
Rory Wallace: New service plans will do these discuss tumors definitely once a county areas, introducing reducing services as part of their offering it's a very competitive in small market and I'm sure that Verizon competitor also considering do most of them in general telco use of smiles.
Eyal Harari: Definitely, once Carrier is introducing services as part of their offering, it's a very competitive and small market, and I'm sure that Verizon competitors are considering the moves. And in general, Telco is a small village, and operators are looking what's successful for others around the globe and trying to imitate it. So I would believe that people are aware of what we are doing and what Verizon are doing, and their success will be probably something that others will want to replicate. Got it.
Rory Wallace: Religion operate all of looking what's successful full address around the globe and trying to imitate it. So I would believe that our people are well aware of what we're doing.
Rory Wallace: And what Verizon is doing there and.
Rory Wallace: The success will be probably something that others will want to replicate.
Rory Wallace: Got it. Thank you and you spoke a little bit about the launch of off net secure and your experience at RSA.
Rory Wallace: Thank you.
Eyal Harari: And you spoke a little bit about the launch of OffNet Secure and your experience at RSA, and giving a snapshot of the different drivers of the security market. I was wondering if you could talk a bit about some of the other product offerings that you have sort of soft launched here, like the NetProtect as a service, and how your product strategy and roadmap is converging now, as you look into 2025 and beyond. And so we, when we announced our new security first strategy What we shared is that we are looking to see how we can take assets that we have currently under the smart product line and offer them and leverage them into our the QLIPPY offering.
Rory Wallace: And giving a snapshot of the different drivers of the security market.
Rory Wallace: I was wondering if you could talk a bit about some of the other product offerings that you had sort of soft launched here like the net protector as a service and how.
Rory Wallace: Your product strategy and roadmap is converging now as you look into 2025 and beyond.
Rory Wallace: And so we when we announced several new security first strategy.
Rory Wallace: What we are sure of is that we are looking to see how we can take assets that we have currently onto the small product line.
And.
Rory Wallace: Oh for them and leverage them into our.
Rory Wallace: The fuel with the offering.
Rory Wallace: Yeah.
Eyal Harari: Part of those solutions we are looking to create new innovations like the off-net secure just announced this quarter and some of them are trying to leverage existing products like the Net Protect that is a product we already offer for a few years into network infrastructure protection and come and offer them as part of our security as a service and offering it what's mentioned network protection as a service to potential customers so we are seeing that this concept and this synergy makes a lot of sense and customers we talk to are really excited with the opportunity to further protect and further enhance their protection layer with us and these are just initial work.
Rory Wallace: Part of those solutions, we are looking to create new innovations like the openness. If you will just announced this quarter and some of them are Brian to leverage existing products like the netbook Tech that is a product we already offer.
Rory Wallace: For few years, even to network infrastructure protection and common offer them as part of our security as a service and offering it whats mentioned nipple protection as a service to our potential customers. So.
Rory Wallace: We are seeing that this concept is the soonest you makes a lot of sense in customers. We talked to are really excited we do opportunity to further protect and further enhance there.
Rory Wallace: Yeah.
Rory Wallace: Protection, there with us and these are just initial.
Eyal Harari: We are having, as you mentioned, some soft launches and early introductions of those technologies, and we are starting to get traction. I'm sure that with the progress and our R&D guys and product guys are working day in and day out to think about additional innovations and working closely with customers to provide more value as part of our growth strategy into becoming a security-first company.
Rory Wallace: Well, we all everything is you mentioned some soft launches and early introductions of those technology and we are starting to get.
Speaker Change: Correction I'm sure that.
Speaker Change: With the progress in our R&D guys and all the guys are working day in and day out to think about additional innovation and working closely with customers.
Speaker Change: We provide more value added.
Speaker Change: Part of our growth strategy.
Into becoming a security company.
Rory Wallace: Thanks.
Eyal Harari: And then... With the smart product line, very encouraging commentary around the pipeline and recent deal flow. Did I hear correct that you called out several eight-figure deals in the pipeline? Because I think that's the first time in several years that that level of business has been visible as a potential upside for the company. And if you could just talk a little bit more about are those large deals related to expansion opportunities with existing customers or are these actually greenfield or government projects? Any more color you can share on that. So, I think first and foremost is that we are investing and increasing our go-to-market efforts.
Speaker Change: Thanks, and then.
Speaker Change: With the smart product line very encouraging commentary around the pipeline and recent deal flow did I hear correct that you called out several eight figure deals in the pipeline because I think that's the first time in several years that that level of business has been.
Speaker Change: As a board as a potential upside for the company and if you could just talk a little bit more about are those large deals related to expansion opportunities with existing customers or are these actually greenfield or government projects and any more color you can share on that.
So I think first and foremost is that Oh, we're investing and increasing our go to market I felt most of the changes we need for the company we have organized our.
Eyal Harari: Part of the changes we did for the company, we organized our sales team into regional organization, and we start to see the value of having our teams closer to the customers and more focused, offer all of our product lines. This helps us drive more pipeline, both for our C-Class, as we are offering it now with larger teams into more carriers, as well as we have more focus into our smart products. What we see, as mentioned, as opposed to what we saw before, is increasing some of the pipeline. For the smart entities driven by stable and good demand from existing customers, but some new projects, as mentioned in our press release earlier today.
Speaker Change: Sales team into a regional organization and we start to see the value of I think our teams closer to the customers and more focused offer all of our product lines. This helps us drive more parkland boastful hours three class as we are offering east now with larger teams into more carriers as well as well.
Speaker Change: We have all our focus into our smart products. What we see is as mentioned as opposed to what we saw before is increasing some of the pipeline.
Speaker Change: Oh the smoking this is driven by.
Speaker Change: Stable and good demand from existing customers, but from new projects.
Speaker Change: As mentioned in our press release earlier today.
Eyal Harari: Part of the good result this quarter was wins of multiple multi-million dollar deals that already secured. Some of them contributed into our Q1 numbers, and most of them are going to contribute into our visibility towards 2025. We still have some additional... multi-million opportunities. in the pipeline. Some of them are, as mentioned, eight figures, a mix of existing and new projects. So overall we are seeing good demand and it's driven a lot by our new platform, by Detailer 3, that we see customers existing anew, looking to leverage this technology as networks are becoming very sizable and they're looking for a high-end, scalable solution to fully support their growing network.
Speaker Change: Part of the good result, this quarter was.
Speaker Change: So multiple multimillion dollar deals that already secured some of them contribute it into our Q1 numbers some of them all and most of them are going to contribute in two hours.
Speaker Change: Visibility towards 2025, we still have some additional.
Speaker Change: Multimillion opportunities.
Speaker Change: In the pipeline some of them are as mentioned eight figures at mix of existing and new projects. So overall, we are seeing good demand in it.
Speaker Change: Driven a lot by all of the new platform like it.
Speaker Change: There are three that we see customers existing or new.
Speaker Change: Looking to leverage this technology is netbooks, all becoming very sizable and they are looking for the high end scalable solution to fully support their growing network.
Eyal Harari: So overall, it's definitely a positive. Indication that the pipeline is there. But of course, it's a lot about execution. We need our sales team to be focused on their opportunities and translate them into new business. And hopefully, we will continue to execute well in the remainder of the year and start to see the result and able to translate the pipeline into orders.
Speaker Change: So overall, it's a definitely a positive.
Speaker Change: Indication that the pipeline is there but of course, it's a lot about execution, we need over sales seem to be focused on there.
Speaker Change: Opportunities then.
Speaker Change: Translating into new business, and hopefully, we will continue to execute well and good.
Speaker Change: Reminder of the year and start to see the result in.
Speaker Change: Able to translate the pipelining to holders.
Rory Wallace: Understood.
Rory Wallace: And then just one more for me on, you discussed Verizon quite a bit on the call.
Speaker Change: Understood and then just one more for me on you you discussed Verizon quite a bit on the call and I was wondering you did mentioned vodafone, but unless detail.
Eyal Harari: And I was wondering, you did mention Vodafone, but in less detail, I think back in Q2 of 2024, you talked about expanding a partnership with a tier one European operator to transition to a CCAS revenue structure from a perpetual license deal. And I was wondering if you have any updates on how that's progressing, whether we've seen the bulk of that revenue contribution already flow through the results, or whether there might still be additional upside from that transition to come. And I know it's region by region too. So anything you're able to share about that would be helpful.
Speaker Change: Think back in Q2 of 2024, you talked about expanding a partnership with a tier one European operator to.
Speaker Change: Transition to a see Cas.
Speaker Change: Revenue structure from a perpetual license deal.
Speaker Change: And I was wondering if you have any updates on how that's progressing whether we've seen the bulk of that revenue contribution already flow through the results.
Speaker Change: Or whether there might still be additional upside from that transition to come and I know it's region by region too so any anything you're able to share about that would be helpful.
Eyal Harari: So we can share that part of Q1. We already have some revenues from the Seekers Forum. those agreements. We still have some of the agreements not yet fully, I would say, peaked, so we are expecting to see growth from those announced agreements at Vodafone Group, both the CICAS for their mobile customers and the CICAS for their own networks, and this is part of our trajectory to get the around 50% or more growth in the CICAS revenue in ARR. We are also, as mentioned in previous calls, working to see how we can further extend into more geographies, as Vodafone is a group built from multiple operations, multiple opcos, and each country will, it's a different cycle that we can leverage the group agreement, but we still need to execute in the different regions, so we have some countries already committed and part of the agreement, some are in the pipeline, and Vodafone will continue to be a very important customer for us in the coming years, definitely a lot more potential to grow with them over the years.
So we can share that part of the Q1, we already have some revenues for me the speaker phone.
Speaker Change: Those agreements, we still live demos.
Speaker Change: Some of the agreements not yet fully.
Speaker Change: I would say peaked so we're expecting to see growth boom and those announced agreement.
Speaker Change: Vodafone group, both there because for the mobile customers and if it goes further on that.
Speaker Change: It works and we all this is part of our trajectory to get there.
Speaker Change: Theyre wrong, 50% or more closely just because revenue and they all will also as mentioned in previous calls walking to see how we can further extend into more geographies.
Speaker Change: Vodafone is a group built from multiple operations multiple of course and each country will.
It's a different sales cycle that we can leverage the group agreement, but we still need to execute in the different regions. So we have some countries already.
Speaker Change: Committed and part of the agreement some of them in the pipeline and Vodafone will continue to be very important customer for us in the coming years definitely a lot more potential to grow we've been over the years.
Rory Wallace: Thanks a lot for sharing that. Well, congratulations. It's been a big first year for you and Liat. And I think everyone would agree that things appear to be on the right track. So thank you very much. Thank you very much, Rory. There are no further questions at this time.
Speaker Change: Thanks, a lot for sharing that well congratulations it's been a.
Speaker Change: A big first year for you and lay out and I think everyone would agree that things appear to be on the right track. So thank you very much.
Speaker Change: Thank you very much moving.
Speaker Change: There are no further questions at this time. This concludes the allot first quarter 'twenty twenty-five results conference call. Thank you for your participation you May go ahead and disconnect.
Operator: This concludes the Allot first quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
Speaker Change: Okay.
Speaker Change: [music].