Q2 2026 Allot Communications Ltd Earnings Call

August 12, 2026

Speaker #1: I would like to thank Allot Ltd. for hosting this conference call. All participants are in listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session.

Speaker #1: As a reminder, this conference call is being recorded. If you have all received by now the company's press release, if you have not, please check the company website at www.allot.com.

Speaker #1: With me today on the call are Mr. Eyal Harari, CEO, and Mrs. Liat Nahum, CFO. Following the prepared remarks, we will open the call for the question-and-answer session.

Speaker #1: All the highlights of the quarter are in today's earnings press release. Before we start, 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.

David Brown: Before we start, I would 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. 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, delay in the launch of services by Allot customers, reduced demand, and the competitive nature of the security service industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. Also, the financial results in this call will be presented mainly on a non-GAAP basis.

Operator: Before we start, I would 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. 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, delay in the launch of services by Allot customers, reduced demand, and the competitive nature of the security service industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. Also, the financial results in this call will be presented mainly on a non-GAAP basis.

Speaker #1: Those statements are only predictions and Allot cannot guarantee that they will, in fact, occur. Allot does not assume any obligation to update that information.

Speaker #1: Actual events or results may differ materially from those projected including as a result of changing market trends, delay in the launch of services by Allot customers, reduced demand, and the competitive nature of the security service industry.

Speaker #1: As well as other risks identified in the documents filed by the company with the securities and exchange commission. Also, the financial results in this call will be presented mainly on a non-GAAP basis.

David Brown: 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. For all the data, please refer to the financial tables published in the results press release issued earlier today, which will also include the GAAP to non-GAAP reconciliation tables. With that, I would now like to hand over the call to Eyal Harari, Allot CEO. Eyal, please go ahead.

Operator: 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. For all the data, please refer to the financial tables published in the results press release issued earlier today, which will also include the GAAP to non-GAAP reconciliation tables. With that, I would now like to hand over the call to Eyal Harari, Allot CEO. Eyal, please go ahead.

Speaker #1: 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. For all the data please refer to the financial tables published in the results press release issued earlier today.

Speaker #1: We should also include the GAAP to non-GAAP reconciliation tables. And with that, I would now like to hand over the call to Eyal Harari, Allot CEO.

Speaker #1: Eyal, please go ahead.

Eyal Harari: Thank you. We are pleased to report another strong quarter, with growth in revenue, profitability, and cash flow. Our fourth consecutive quarter of double-digit year-over-year growth and an acceleration over recent quarters. We were particularly pleased with North America, where strong execution drove a solid increase in sales and backlog, underpinning our confidence in the growth we expect in the H2. Our Cybersecurity-as-a-Service business, CaaS, continues to power our growth, with CaaS revenue growing 47% year-over-year to account for over a third of our revenues, and CaaS ARR up 44%. This continues to scale our recurring revenue base, which represented two-thirds of total revenue in the quarter, giving us greater visibility into the quarters ahead and improving the predictability of our revenues. Overall, our business is executing well and performing ahead of our expectations. Let me focus on North America, one of the highlights of the quarter.

Speaker #2: Thank you. We are pleased to report another strong quarter with growth in revenue, profitability, and cash flow. Our fourth consecutive quarter of double-digit year-over-year growth quarters.

Speaker #2: We were particularly pleased with North America where strong execution drove a solid increase in sales and backlog underpinning our confidence in the growth we expect in the second half.

Speaker #2: Our cybersecurity as a service business, CICAS, continues to power our growth with CICAS revenue growing 47% year over year to account for over a third of our revenues and CICAS ARR up 44%.

Speaker #2: This continues to scale our recurring revenue base which represented two-thirds of total revenue in the quarter giving us greater visibility into the quarters ahead and improving the predictability of our revenues.

Speaker #2: Overall, our business is executing well and performing ahead of our expectations. Let me focus on North America one of the highlights of the quarter.

Eyal Harari: The region made up 31% of the revenues versus 17% in the Q2 of last year and 14% last quarter. This was driven by very solid product sales, with particularly strong interest in our new Allot Service Gateway Tera III platform and by continued demand for our Allot Smart product line, reflecting the value operators see in the network visibility and control our platform delivers. In addition, our major US CaaS customer continues to perform very well, in line with our strong expectations. Beyond that, we entered the H2 with a strong backlog and healthy demand, giving us added confidence for the rest of the year. North America is a strategic priority for us, and it is very encouraging to see that focus translating into revenue backlog and pipeline. Turning to our Cybersecurity-as-a-Service business. This continues to perform strongly and in line with our expectations.

Speaker #2: The region made up 31% of the revenues versus 17% in the second quarter of last year and 14% last quarter. This was driven by very solid product sales with particularly strong interest in our new terrace re platform and by continued demand for our smart product line reflecting the value operators see in the network visibility and control our platform delivers.

Speaker #2: In addition, our major US CICAS customer continues to perform very well in line with our strong expectations. Beyond that, we entered the second half with a strong backlog and healthy demand giving us added confidence for the rest of the year.

Speaker #2: North America is a strategic priority for us and it is very encouraging to see that focus translating into revenue backlog and pipeline. Turning to our cybersecurity as a service business.

Speaker #2: This continues to perform strongly and in line with our expectations. We had several wins during the quarter each demonstrating a different way in which we are growing the business and all classic example of our land and expense strategy.

Eyal Harari: We had several wins during the quarter, each demonstrating a different way in which we are growing the business and all classic examples of our land and expand strategy. We secured 4 new CaaS deals in the quarter, all of them in the EMEA region. First, we won an upsell deal in Europe, selling a new service to an existing CaaS customer, the first sale of our identity monitoring service. This telco will be offering our identity monitoring service to its SMB customers. This is a domain-level identity theft monitoring service. It continues monitoring for exposure of the business' digital identities, and it is designed to alert the customers when credentials or other identity data have been compromised, so that they can act before that exposure is exploited. It is designed to do so for every user across the organization.

Speaker #2: We secured four new CICAS deals in the quarter all of them in the EMEA region. First, we won an upsell deal in Europe selling a new service to an existing CICAS customer the first sale of our identity monitoring service.

Speaker #2: This telco will be offering our identity monitoring service to its SMB customers this is a domain-level identity theft monitoring service it continues monitoring for exposure of the business digital identities and it's designed to alert the customers when credential or other identity data have been compromised.

Speaker #2: So that they can act before that exposed is exploit. And it is designed to do so for every user across the organization. It is a good example of how are we extending our SMB security suite beyond the network alongside off-net net secure firewall as a service and DDoS protection.

Eyal Harari: It is a good example of how we are extending our SMB security suite beyond the network alongside OffNetSecure, Firewall-as-a-Service, and DDoS Protection. Second, we won an expansion to the SMB segment within an existing European-based customer. Third, we secured a new win within one of our large global telco groups, adding our HomeSecure service in another country. The HomeSecure solution enhances threat protection across the telco's mobile and broadband networks. It integrates into the existing home router and provides zero-touch home network visibility, cybersecurity, and parental controls. Finally, we won a new CaaS deal in Africa with a telco that is already a Smart customer. Together, these wins reflect the breadth of our CaaS growth, new customers, geographies, end-user segments, and applications all on the same platform. We expect these deals to contribute to our future CaaS revenue growth in 2027.

Speaker #2: Second, we won an expansion to the SMB segment within an existing European-based customer. Third, we secured a new win within one of our large global telco groups, adding our Home Secure service in another country.

Speaker #2: The home secure solution enhances threat protection across the telcos mobile and broadband networks it integrates into the existing home router and provides zero-touch home network visibility cybersecurity and parental controls.

Speaker #2: Finally, we won a new CICAS deal in Africa with a telco that is already a smart customer. Together these wins reflect the breadth of our CICAS growth new customers geographies end-user segments and applications all on the same platform.

Speaker #2: We expect these deals to contribute to our future CICAS revenue growth in 2027. Our smart product line remains a highly complementary part of our unified cybersecurity-first platform built on decades of Allot innovation and delivering best-in-class network intelligence.

Eyal Harari: Our Smart product line remains a highly complementary part of our unified cybersecurity-first platform, built on decades of Allot innovation and delivering best-in-class network intelligence. We continue to execute well on the multimillion-dollar projects won in recent quarters, including deployments and upgrades of our Allot Service Gateway Tera III platform with Tier 1 operators. As a reminder, Allot Service Gateway Tera III is our next-generation, ultra-high-capacity multiservice gateway. It is among the highest capacity platforms of its kind in the market, and it consolidates deep network visibility, traffic management, and cybersecurity services onto a single platform. Customer feedback has been excellent. Operators are running both cybersecurity and traffic intelligence workloads on the same gateways, and they value its carrier-grade stability and reliability, its ability to scale cost efficiently with 5G and fiber traffic growth without expanding their footprint.

Speaker #2: We continue to execute well on the multi-million dollar projects won in recent upgrades of our terrace re platform with tier one operators. As a reminder terrace re is our next generation ultra-high capacity multi-service gateway.

Speaker #2: It is among the highest capacity platforms of its kind in the in the market and it is consolidates deep network visibility traffic management and cybersecurity services onto a single platform.

Speaker #2: Customer feedback has been excellent. Operators are running both cybersecurities and traffic intelligence workloads on the same gateways and they value its carrier-grade stability and reliability.

Speaker #2: Its ability to scale cost efficiently with 5G and fiber traffic growth without expanding their footprint. We also provide a smooth upgrade path from our earlier service gateway generations which protects the investment that they have already made.

Eyal Harari: We also provide a smooth upgrade path from our earlier service gateway generations, which protects the investment that they have already made. This quarter, demand for our Allot Smart product was particularly strong in North America. As part of the Allot Smart product innovation, we recently ran a case study with a Tier 1 operator to demonstrate Allot's new zero-rating fraud detection and mitigation service. Zero-rated applications and app-based charging plans create value for subscribers, but they also open the door to fraud. Attackers are increasingly exploiting vulnerabilities to bypass charging systems and consume data without payment. Our solution helps CSPs identify fraud, and a case study showed that we reduced fraudulent traffic by 87%. This shows how operators can recover lost revenue while protecting the integrity of their zero-rating offers.

Speaker #2: This was particularly strong in North America. As part of the smart product innovation we recently ran a case study with tier one operator to demonstrate Allot's new zero rating fraud detection and mitigation service.

Speaker #2: Zero rated applications and app-based charging plans creates value for subscribers but they are also open the door for to fraud. Attackers are increasingly exploiting vulnerabilities to bypass charging system and consume data without payment.

Speaker #2: Our solution helps CSP identify fraud and a case study showed that we reduce fraud and traffic by 87%. This show our operators can recover lost revenue while protecting the integrity of their zero rating offers.

Eyal Harari: We are already building our backlog for 2027 with an additional win of an important Allot Service Gateway Tera III upgrade project with a customer for a new site expansion. Our pipeline remains healthy with existing customers planning their Allot Service Gateway Tera III platform upgrade and new engagement advancing through our sales process. These multi-year projects are expected to provide good revenue visibility into 2027 and beyond. During the Q2, we presented and met customers at a number of key industry conferences. This included DTW in Copenhagen, FutureNet World in London, Interop Tokyo, Network X Americas in Dallas, and CommsDay in Sydney. Feedback was very positive with customers and prospects continuing to respond well to our converged cybersecurity and network intelligence positioning. Events like these continue to build our pipeline, and it is clear that our cybersecurity first strategy resonates well with operators globally.

Speaker #2: We are already building our backlog for 2027 with an additional win of an important TERRACE RE upgrade project with a customer for a new site expansion.

Speaker #2: Our pipeline remained healthy with existing customers planning their terrace re platform upgrade and new engagement advancing through our sales process and these multi-year projects are expected to provide good revenue visibility into 2027 and beyond.

Speaker #2: During the second quarter, we presented and met customers at a number of key industry conferences. This included DTW in Copenhagen, FutureNet World in London, Interop in Tokyo, Network X America in Dallas, and CommsDay in Sydney.

Speaker #2: Feedback was very positive, with customers and prospects continuing to respond well to our converged cybersecurity and network intelligence positioning. Events like these continue to build our pipeline, and it is clear that our cybersecurity-first strategy resonates well with operators globally.

Eyal Harari: At the end of the Q2, our board of directors approved a share purchase program of up to $40 million. This reflects our confidence in Allot's strategy and financial strength. With more than $100 million in cash and no debt, we are well positioned to increase value to shareholders while continuing to invest in the long-term growth of the business. In summary, we are very pleased with our Q2 performance, our fourth consecutive quarter of solid improvement with accelerating growth, continued momentum in CaaS, standout performance in North America, and further gains in margin, profitability, and cash flow. As we are performing ahead of our expectations, we are raising and narrowing our 2026 revenue guidance to between $115 million and $118 million from the previous range of $113 million to $117 million with ongoing improvement in profitability.

Speaker #2: At the end of the second quarter, our Board of Directors approved a share purchase program of up to $40 million. This reflects our confidence in Allot's strategy and financial strength.

Speaker #2: With more than $100 million in cash and no debt, we are well positioned to increase value to shareholders while continuing to invest in the long-term growth of the business.

Speaker #2: In summary we are very pleased with our second quarter performance. Our fourth consecutive quarter of solid improvement with accelerating growth continued momentum in CCAS standout performance in North America and further gains in margin profitability and cash flow.

Speaker #2: As we are performing ahead of our expectations we are raising and narrowing our 2026 revenue guidance to between 115 million and 118 million from the previous range of 113 million to 117 million with ongoing improvement in profitability.

Eyal Harari: This is driven by accelerating order momentum from our North American customers, our backlog, and the continued high growth of CaaS. Allot is in its strongest position in over a decade, and it is well-positioned to build on its profitable cash generation recurring revenue-led growth in the quarters and years ahead. Now, I would like to hand it over to our CFO, Liat Nahum, for the financial summary. Liat, please go ahead.

Speaker #2: This is driven by accelerating order momentum from our North American customers our backlog and the continued high growth of CCAS. Allot is in its strongest position in over a decade and it is well positioned to build on its profitable cash generation recurring revenue-led growth in the quarters and years ahead.

Speaker #2: And now I would like to hand it over to our CFO Liat Nahum for the financial summary. Liat please go ahead.

Liat Nahum: Thanks, Eyal. We reported revenue of $27.7 million in the quarter, up 15% year-over-year. Revenue from our growth engine, Security-as-a-Service, was $9.4 million in the quarter, up 47% year-over-year, comprising 34% of our total revenue. Our Security-as-a-Service annual recurring revenue as of 30 June 2026, was $36.1 million, up 44% year-over-year. Deferred revenue, which includes recurring maintenance and support, continued to grow both year-over-year and quarter-over-quarter, increasing the strong visibility we have into remaining 2026 and 2027 revenue. 67% of our overall revenue this quarter was recurring in nature. I will now discuss the non-GAAP financial measures. For all our financial results, including the GAAP financial measure and the other various breakdowns of our revenue, please refer to the table in our results press release.

Speaker #1: Thanks Eyal. We reported revenue of 27.7 million in the quarter. Up 15% year over year. Revenue from our growth engine security as a service were 9.4 million in the quarter up 47% year over year comprising 34% of our total revenue.

Speaker #1: Our security as a service annual recurring revenue as of June 30 2026 were 36.1 million up 44% year over year. Deferred revenue which includes recurring maintenance and support continue to grow both year over year and quarter over quarter.

Speaker #1: We are increasing the strong visibility we have into remaining 2026 and 2027 revenue. Sixty-seven percent of our overall revenue this quarter was recurring in nature. I will now discuss the non-GAAP financial measures.

Speaker #1: For all our financial results, including the GAAP financial measure and the other various breakdowns of our revenue, please refer to the table in our results press release.

Liat Nahum: Our non-GAAP gross margin in the quarter was 71.8% compared with 73.4% in Q2 of last year. The year-over-year decline mainly reflected the product mix in the quarter. That said, gross margin remains strong and consistent with our expectation of around 70% for 2026. Non-GAAP operating expense for the quarter was $17.2 million, compared with $16.4 million in Q2 of last year. The increase reflected our continued investment in sales and marketing to support our pipeline build. General and administrative expenses in the quarter increased compared with Q2 of last year, mainly due to one-time cost associated with the modification of one of our office lease agreement following change we made in this office.

Speaker #1: Our non-gap gross margin in the quarter was 71.8% compared with the 73.4% in the second quarter of last year. The year over year decline mainly reflect the product mix in the quarter.

Speaker #1: That said, gross margin remained strong and consistent with our expectation of around 70% for 2026. Non-GAAP operating expenses for the quarter were $17.2 million, compared with $16.4 million in the second quarter of last year.

Speaker #1: The increase reflect our continuing investment in sales and marketing to support our pipeline build. General and administrative expenses in the quarter increased compare with the second quarter of last year mainly due to one-time cost associated with the modification of one of our office lease agreement following change we made in this office.

Liat Nahum: While making this selective investment in sales and marketing, we remained disciplined and operationally efficient with operating expenses as a percentage of revenue declining to 62% from 68% a year ago. We reported non-GAAP operating income of $2.7 million, with an operating margin of 9.9%, compared with the non-GAAP operating income of $1.2 million, or an operating margin of 5% in Q2 of last year. Allot had 501 full-time employees as of 30 June 2026. In terms of non-GAAP net profit, we reported $4.6 million in the quarter, or a profit of $0.09 per diluted share, compared with the non-GAAP net income of $1.5 million, or a profit of $0.03 per diluted share in Q2 of last year.

Speaker #1: While making this selective investment in sales and marketing we remain disciplined and operationally efficient with operating expenses as a percentage of revenue declining to 62% from 68% a year ago.

Speaker #1: We reported non-gap operating income of 2.7 million with an operating margin of 9.9%. Compared with the non-gap operating income of 1.2 million or an operating margin of 5% in the second quarter of last year.

Speaker #1: Allot had 501 full-time employees as of June 30 2026. In term of non-gap net profit we reported 4.6 million in the quarter or a profit of 9 cent per diluted share compared with the non-gap net income of 1.5 million or a profit of 3 cents per diluted share in the second quarter of last year.

Liat Nahum: On a GAAP basis, net income for the quarter was $2.6 million, or $0.05 per diluted share, compared with the net loss of $1.7 million, or loss of $0.04 per diluted share in Q2 of last year. GAAP net income for the quarter included a one-time $1.2 million financial gain related to our office lease modification, reflecting the re-measurement of our lease liability. We do not expect this to reoccur. We generated particularly strong operating cash flow of $8.5 million in Q2, compared with $4 million in Q2 of last year, reflecting robust profitability and strong cash collection. On 23 June, our board of directors approved a share repurchase program of up to $40 million, which we will execute in line with market conditions.

Speaker #1: On a GAAP basis, net income for the quarter was $2.6 million, or $0.05 per diluted share, compared with a net loss of $1.7 million, or a loss of $0.04 per diluted share, in the second quarter of last year.

Speaker #1: Gap net income for the quarter includes a one-time $1.2 million financial gain related to our office lease modification, reflecting the remeasurement of our lease liability. We do not expect this to reoccur.

Speaker #1: We generated particularly strong operating cash flow of $8.5 million in the second quarter, compared with $4 million in the second quarter of last year, reflecting robust profitability and strong cash collection.

Speaker #1: On June 23rd, our Board of Directors approved a share repurchase program of up to $40 million, which we will execute in line with market conditions.

Liat Nahum: Repurchase may be made at management discretion in the open market. The timing and the amount of the repurchase will depend on market conditions, share price, liquidity, and other factors. According to the company regulation in Israel, we are obliged to give 30 days notice during which any creditor may object to the buyback. The 30 days have now passed, and there were no objections. Allot has a robust balance sheet with no debt. Cash and cash equivalent, bank deposits, restricted deposits, and investment as of 30 June 2026 totaled $107 million versus $88 million as of 31 December 2025. Looking ahead to the rest of 2026.

Speaker #1: Repurchase may be made at management discretion in the open market. The timing and the amount of the repurchase will depend on market conditions share price liquidity and other factors.

Speaker #1: According to the company regulation in Israel we are obliged to give 30 days notice during which any creditor may object to the buyback. The 30 days has now passed and there were no objections.

Speaker #1: Allot has a robust balance sheet with no debt. Cash and cash equivalents, bank deposits, restricted deposits, and investments as of June 30, 2026 totaled $107 million, versus $88 million as of December 31, 2025.

Speaker #1: Looking ahead to the rest of 2026. Given our performance in the first half of the year and the strength of our backlog as Eyal mentioned we are raising our full year 2026 revenue guidance to between 115 to 118 million.

Liat Nahum: Given our performance in the H1 of the year and the strength of our backlog, as Eyal mentioned, we are raising our full year 2026 revenue guidance to between USD 115 to USD 118 million. For the full year, we expect Security-as-a-Service revenue growth of 40% or more. Our gross margin expectation for the full year remains in the range of 70%, with the specific gross margin in any given quarter dependent on our product mix. On the operating expense side, we expect to continue at a similar run rate to the current quarter, excluding the one-time expense. Overall, we continue to expect profitability improvement over the current quarters of 2026. That ends my summary. Eyal and I are now happy to take your questions.

Speaker #1: For the full year we expect security as a service revenue growth of 40% or more. Our gross margin expectation for the full year remains in the range of 70% with the specific gross margin in any given quarter depend on our product mix.

Speaker #1: On the operating expense side, we expect to continue at a similar run rate to the current quarter, excluding the one-time expense. Overall, we continue to expect profitability improvement over the coming quarters of 2026.

Speaker #1: That ends my summary. Eyal and I are now happy to take your questions.

Operator: 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, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we poll for your question. The first question is from Shaul Eyal from TD Cowen.

Speaker #2: 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.

Speaker #2: If you wish to cancel your request please press star two. If you are using speaker equipment kindly lift the handset before pressing the numbers.

Speaker #2: Your questions will be polled in the order they are received. Please stand by while we poll for your question. The first question is from Shaul Eyal from DT and Cohen.

Shaul Eyal: Thank you. Good morning, good afternoon, everybody. Congrats on yet another very solid set of results and guidance. Liat, actually, I want to start with you, and ask about operating cash flow. Still more than doubling year-over-year, this quarter, but slightly below last quarter, which, if I recall correctly, had some cash advancement. So just asking if there were any unusual items this quarter we should be mindful of. And I have a follow-up.

Speaker #3: Thank you. Thank you. Good morning, good afternoon, everybody. Congrats on yet another very solid set of results and guidance. Liat, I want to start with you.

Speaker #3: and and ask about operating cash flow still more than doubling year over year. this quarter but slightly below last quarter which if I recall correctly had some cash advancement.

Speaker #3: So just just asking if there were any if there are any unusual items this quarter we should be mindful of. And I have a follow-up.

Liat Nahum: Yes. As we shared last quarter, we had a very strong operating cash flow in Q1, related to the major deal that we reported a year ago, and we started collecting. Last quarter, indeed, it was a one-time event. We continue to see a very positive momentum in our cash flow. We finished the quarter at USD 8.5 million, and, I think this represents also our business model and our, let's say, our future expectations around the deals that we are signing. Overall, no major one-time event this quarter around the operating cash flow. Just continue the momentum around our business model of the Security-as-a-Service, which is generating a very good cash flow.

Speaker #1: Yes. So as we shared last quarter, we had very strong operating cash flow in Q1, related to the major deal that we reported a year ago.

Speaker #1: And we started collecting and last quarter indeed it was a one-time event. We continue to see a very positive momentum in our cash flow.

Speaker #1: We finished the quarter at $8.5 million. And I think this represents also our business model and our, let's say, our future expectations around the deals that we are signing.

Speaker #1: overall no major one-time event this quarter around the operating cash flow. just continue the the the momentum around our business model of the security as a service which is generating a very good cash flow.

Shaul Eyal: Understood. Thank you for this color. Eyal, I know you don't disclose backlog or RPO metrics on a quarterly basis, but given your improved profitability and visibility, what kind of qualitative commentary can you offer us as we think about backlog or RPO? Is it fair to assume it's pretty much at all-time highs right now?

Speaker #3: Understood. Understood. Thank you for this color. Eyal or Liat I know you don't disclose backlog or or RPO metrics on on a quarterly basis but given your improved pro profitability and visibility what kind of qualitative commentary can you offer us as we think about backlog or or RPO is is is it fair to assume it's pretty much that you know all-time highs right now?

Eyal Harari: We reported in our yearly report, RPO, and as you could see, it was, I believe, end of March. It is really in a very high level of backlog. We are going to issue media reports as we do every year, and the KPI will be available there. Overall, our performance and booking is strong, and following the announcements we made in the last 12 months, it's fairly assumed that this continues to be very high.

Speaker #4: So, we reported in our yearly report RPO, and as you could see—it was, I believe, end of March—it is really at a very high level of backlog.

Speaker #4: We are going to issue midyear reports as we do every year and the KPI will be available there. Overall our performance and and booking is strong and following the announcements we made in the last 12 months it's fairly assumed that this is continues to be very high.

Shaul Eyal: Loud and clear. Thank you so much. Good luck. Congrats.

Speaker #3: Loud and clear. Thank you so much. Good luck. Congrats.

Eyal Harari: Thank you very much, Ohud.

Speaker #4: Thank you very much Shaul.

Operator: The next question is from Matt Calitri from Needham. Please go ahead.

Speaker #2: The next question is from Matt Calitri from Needham. Please go ahead.

Matt Calitri: Hey, guys. This is Matt Calitri over at Needham. Thank you for taking our questions. Is there any more color you can provide on the strength you saw in North America? Maybe just anything on how much of the strength you would attribute to product versus CaaS, and then where are you getting the confidence that this is a sustainable long-term opportunity?

Speaker #5: Hey guys this is Matt Calitri over at Needham. Thank you for for taking our questions. is there any more color you can provide on the on the strength you saw in in North America maybe just anything on like how much of the strength you would attribute to product versus CCAS and then where are you getting the confidence that that this is a sustainable long-term opportunity?

Eyal Harari: Thank you, Matt. As we commented on the prepared remark, we see strengths both on the CaaS and the Smart product line. The CaaS is obviously more recurring and consistent as it is quarter-over-quarter subscription fees, and therefore more sustainable and predictable. But as we noted this quarter, we had also very strong Smart product sales, which increased the share of North America in the region. Product sales are obviously non-recurring, and therefore it is not every quarter is going to be the same. But we do continue to invest in the region as we see this as strategic region to support our long-term growth. So we are very pleased with our performance with both product lines. In specific to this quarter, the extra strengths came from the Smart product line on top of the large contribution to the CaaS.

Speaker #4: Thank you Matt. As we commented on the prepared remark we see strength both on the CCAS and the smart product line. The CCAS is obviously more recurring and consistent as it's a quarter over quarter subscription fees.

Speaker #4: And therefore more sustainable and predictable. But as we note this quarter we had also very strong smart product sales which increased the share of North America in the region.

Speaker #4: Product sales are obviously non-recurring and therefore it's not every quarter is going to be the same. But we do continue to invest in the region as we see this is strategic region to support our long-term growth.

Speaker #4: So we are very pleased with our performance with both product lines. In specific to this quarter, the strengths came from—the extra strengths came from—the smart product line, on top of the large contribution to the CCAS.

Matt Calitri: Got it. That is clear. Thank you. Are you able to dive into at all, was a lot of the strength associated with the top 10 customer, or what drove the large increase in top 10 customers as a percentage of revenue in the quarter?

Speaker #5: Got it. That's clear. Thank you. are are you able to to dive into it all like what was a lot of the strength associated with the top 10 customer or or what drove the large increase in top 10 customers as a percentage of revenue in the quarter?

Eyal Harari: Yeah. We have some large deals and as noted, on the product side, we see a demand for the Allot Service Gateway Tera III platform. Allot Service Gateway Tera III platform is sizable deals. Usually, it is a seven-digit opportunities, and we had a few of them in the last few quarters that we announced, and they are now translating into revenue. Therefore, on the quarterly level, it increased the share of those top customers. Usually, the Allot Service Gateway Tera III is purchased by the larger carriers because it is high-capacity IN platform, and on a quarterly basis, it usually gets them into the top 10 accounts. We still see that the company is very healthy with relatively low concentration. As of last year, we did not have any 10% account, and we continue to see demand coming from all regions and from multiple accounts.

Speaker #4: Yeah we we have some large deals and as noted on the product side we we see a demand for the terrace re platform terrace re platform is sizable deals usually it's a seven digit opportunities and we had a few of them in the last few quarters that we announced and they are now translating into revenue.

Speaker #4: And therefore it's on the quarterly level it's increased the the share of those top customers. Usually the terrace re is purchased by the larger carriers because it's high capacity high-end platform and on on a quarterly basis it's usually get them into the top 10 accounts.

Speaker #4: We still see that companies very healthy with relatively low con concentration. As of last year we didn't have any 10% account. And we continue to see demand coming from all regions and from multiple accounts.

Matt Calitri: Great. Awesome. Then maybe just one more on those other regions. So revenue in EMEA and APAC actually declined sequentially. What did you see there during the quarter, and how did that compare to expectation?

Speaker #5: Great, awesome. And then maybe just one more on those other regions. So, revenue in EMEA and APAC actually declined sequentially. What did you see there during the quarter, and how did that compare to expectations?

Eyal Harari: As noted, the fluctuations are usually around the product side. That depends when the revenue land. Because we have deals that are in the multimillion-dollar range, therefore, it depends on the timing of the exact revenue recognition. This is very normal for Allot, and this was always the case, and this is part of the plan, and we have an expectancy different balance between regions, between quarters. Depends on the specific timing of the larger deals that we recognize.

Speaker #4: So as as noted the fluctuations are usually around the the product side that is depends when the revenue land. Because we have deals that are in the multi-million dollar range therefore it depends on the timing of the exact revenue recognition.

Speaker #4: we this is very normal for a lot and this was always the case. And this is part of the plan. And we have an expect to see different balance between regions between quarters depends on the specific timing of the larger deals that we recognize.

Matt Calitri: Very clear. Thanks so much.

Speaker #5: Very clear. Thanks so much.

Eyal Harari: Thank you, Matt.

Speaker #4: Thank you Matt.

Operator: The next question is from Nehal Chokshi from Northland. Please go ahead. Nehal Choksi from Northland. Please go ahead.

Speaker #2: The next question is from Nihal Chotsky from Northland. Please go ahead. Nihal Chotsky from Northland please go ahead.

Nehal Chokshi: Sorry, I had myself on mute there. Thank you, and congrats on another strong quarter. Two questions, if I may. First one is, current portion of deferred revenue is up 7.5 million Q over Q, which is on top of another 13.4 million from Q1. The driver of these big increases presumably is Tera product revenue and associated maintenance. Is that correct?

Speaker #5: Sorry I had myself unmute there. Thank you. And congrats on a strong quarter. two questions if I may. First one is current portion of deferred revenue is up seven and a half million QQQ which is on top of another 13.4 13.4 million from Q1.

Speaker #5: So the driver of these big increases presumably is terrace product revenue and associated maintenance. Is that correct?

Liat Nahum: Yes. Hey, Nihal. As you mentioned, indeed, Q2 versus Q1, our deferred revenue increased, and if you look at the entire six months, also you see the big increase in our deferred revenue. Deferred revenue usually, for us, represent those product deals that have not yet been recognized. As we shared last quarter, we had a large deferred revenue related to the big deal that we announced last year. In addition, deferred revenue represent the support and the maintenance recurring revenue. Overall for us, it is a very good positive sign because when we look at our deferred revenue growing quarter over quarter, it gives us a very good visibility for the remaining of 2026 and 2027.

Speaker #6: Yes. So hey Nia. so as you mentioned indeed Q Q2 versus Q1 our deferred revenue increased. And if you look at the entire six months also you see the big increase in our deferred revenue.

Speaker #6: Deferred revenue usually, for us, represents those product deals that have not yet been recognized. As we shared last quarter, we had a large deferred revenue related to the big deal that we announced last year.

Speaker #6: And in addition, deferred revenue represents the support and the maintenance recurring revenue. Overall, for us, it's a very good, positive sign because when we look at our deferred revenue growing quarter over quarter, it gives us very good visibility for the remainder of 2026 and 2027.

Nehal Chokshi: Given that this is deferred revenue, you expect it to roll off obviously within the next 12 months. Can you give us a sense within which of the quarters of the next 12 months we can expect this to roll off and hit the income statement?

Speaker #5: So given that this is deferred revenue, you expect it to roll off obviously within the next 12 months. But can you give us a sense within which of the quarters of the next 12 months we can expect this to roll off and hit the income statement?

Liat Nahum: It really depends if it is product, as Eyal mentioned, product can fluctuate between quarters. If you look at our support and maintenance, this is more or less on the same runway. As you can see, we have short-term deferred revenue, but we have also long-term deferred revenue. Short-term deferred revenue, if you look, should be recognized in the next 12 months. Then we have additional 7.5 million of long-term deferred revenue, which will materialize only starting the H2 of 2027.

Speaker #6: So, it really depends. If it's product, as Eyal mentioned, product can fluctuate between quarters. But if you look at our support and maintenance, this is more or less on the same runway.

Speaker #6: as you can see we have short-term deferred revenue but we have also long-term deferred revenue. So short-term deferred revenue if you look should be recognized in the next 12 months and then we have additional 7.5 million of long-term deferred revenue which will materialize only starting the second half of 2027.

Nehal Chokshi: Okay. All right. Then in order to hit the guided CaaS ARR growth of at least 40%, incremental CaaS ARR for H2 2026 will need to be 7 million. How should we think about the sequencing of that incremental CaaS ARR in Q3 and Q4?

Speaker #5: Okay, all right. And then, in order to hit the guided CCAS ARR growth of at least 40%, incremental CCAS ARR for Q2 '26 will need to be $7 million.

Speaker #5: How should we think about the sequencing of that incremental CCAS AR in Q3 and Q4?

Eyal Harari: It is very hard to predict the exact number, but you could see from the past performance, the run rate is relatively in a similar level, and it is quite stable. We are always relied on the performance of our partners on the CSPs that are marketing the service, and depends on their marketing campaigns and marketing activities, this would go a bit faster or slower in a specific quarter. Overall, on the full year, we see that we are in a quite sustainable growth rate.

Speaker #4: So it's very hard to predict the exact number, but you could see from the past performance the run rate is relatively at a similar level and it's quite stable.

Speaker #4: We are always relied on the performance of our partners on the CSPs that are marketing the the service. And depends on their marketing campaigns and marketing activities this would go a bit faster or or slower in a specific quarter.

Speaker #4: But overall on the on the full year we see that we are in a quite sustainable growth rate.

Nehal Chokshi: Okay. Just to be clear, this does imply a step-up in the CaaS ARR in H2 2026 relative to H1 2026. What do you expect to be the driver of that step up?

Speaker #5: Okay. A a and just to be clear this does imply a a step up in the CCAS ARR in QH26 relative to 1H26. What do you expect to be the driver of that step up?

Eyal Harari: ARR is driven by a full vector of growth, as we always mention. The first and most short-term is additional customers that are onboarding to the CaaS service with our existing customers that already market the service. The second one, as we announced this quarter, it is about existing partners that add additional solutions, either into new network domains, like one customer that we used to work with them only on consumer, and now they are expanding it into the SMB segment. All customers that already offer to a segment like the SMB and now add another application, like the identity monitoring, which create and accelerated the growth potential. Last is, of course, new partnerships, new logos. We had one of those this quarter as well. In this quarter, it was an existing Allot Smart customer that is now going to start offering the CaaS.

Speaker #4: So, ARR is driven by four vectors of growth, as we always mention. The first and most short-term is additional customers that are onboarding to the CCaaS service, with our existing customers that already market the service.

Speaker #4: The second one as we announced this quarter it's about existing partners that add additional solutions either into new network domains like one customer that we used to work with them only on consumer and now they are expanded it into the the SMB segment or customers that already offer to a segment like the SMB and now add another application like the identity test monitoring which incre create an accelerated growth potential.

Speaker #4: Last is of course new partnerships new logos we had one of those today this quarter as well in in this quarter it was an existing smart customer that is now offering going to start offer the CCAS and those four vectors are driving growth over time.

Eyal Harari: Those four vectors are driving growth over time. In the short, more quarter-by-quarter changes, it is really relied on how many end customers are onboarding to the services already available in the market. This is what we need our partner to execute well in order to achieve growth.

Speaker #4: In the shorter, more quarter-by-quarter changes, it's really reliant on how many end customers are onboarding to the services already available in the market, and this is what we need our partner to execute well in order to achieve growth.

Nehal Chokshi: All right. Thank you.

Speaker #5: All right. Thank you.

Eyal Harari: Thank you, Nihal.

Speaker #4: Thank you Nia.

Operator: The next question is from Jonathan Roueché from Cantor. Please go ahead.

Speaker #2: The next question is from Jonathan Roy Haver from Canter. Please go ahead.

Jonathan Ruykhaver: Yeah, thank you. Eyal, I wanted to dig down a little bit more in terms of the Tera III adoption you are seeing and the correlation to the opportunity around the Smart platform. What I understand is that some of those carriers that are on an older version of the hardware infrastructure need to migrate to Tera III first. Maybe you can talk to that dynamic as it relates to demand you see for the Smart platform.

Speaker #5: Yeah. Thank you. so Eyal I wanted to dig down a little bit more in in terms of the the terrace the terrace 3 adoption you're seeing and in in the you know the correlation to you know the opportunity around the the smart platform.

Speaker #5: What I understand is that some of those carriers that are on an older version of the hardware infrastructure need to migrate to Terrace 3 first.

Speaker #5: So maybe you can you know talk to that dynamic as it relates to demand you see for the smart platform.

Eyal Harari: Sure. The new Tera III platform that we launched during 2025 is high-end capacity that can reach up to 3 terabit of capacity, but it also provides high density communication, like 400 gig links and many 100 gig ports for traffic management. We see a demand both from new customers that are now going into RFPs, and definitely also from existing customers that are using our previous generations, that their networks are growing, they are refreshing their data centers, their sites to support more capacity, and this creates a demand for expansion. I will note that this Tera III, as mentioned before, is typically for the larger opportunities. It usually ends with seven-digit deals, and therefore, we are talking about relatively, I would say, small number of opportunities, but with very large impact.

Speaker #4: Sure. So the new terrace 3 platform that we launched in during 2025 is high-end capacity that can reach up to 3 terabit of capacity.

Speaker #4: But it also provide high density communication like 400 gig links and many 100 gig ports for traffic management. We see a demand both from new customers that are now going into our fees and definitely also from existing customers that using our previous generations that they net their networks are growing they are refresh refreshing their data centers their sites to to support more capacity and this creates a demand for expansion.

Speaker #4: I would know that these terrace 3 as as mentioned before is for the typically for the larger opportunities it's usually ends with the seven digit deals and therefore we are talking about relatively I would say small number of opportunities but with very large impact.

Eyal Harari: The larger amount of our customers are not requiring many terabits in different site, obviously, and they can use different products that we have that are designed for the, let's say, the mid-market and the smaller carriers. We do see very good feedback from customers. They really love the product. They like the ability to see both network intelligence and cybersecurity use case over the same platform. They really like the future-proof of this architecture that is built cloud native to allow us to support and scale capacity. This is what creates the demand. I think in the last 12 months, we announced about half a dozen of Allot Service Gateway Tera III deals, and this what was building our backlog, and we still have many more opportunities like that in our pipeline.

Speaker #4: The larger amount of our customers are not requiring many terabits in different sites, obviously, and they can use different products that we have that are designed for the, let's say, the mid-market and the smaller carriers.

Speaker #4: So we do see a very good feedback from customers. They really love the product. They like the ability to see both network intelligence and cyber security use case over the same platform.

Speaker #4: They really like the future proof of this architecture that is build cloud native to allow us to support and scale capacity. And and this is what creates the demand.

Speaker #4: I think in the last 12 months we announced about half a dozen of terrace 3 deals and this what was building our backlog and and we still have many more opportunities like that in our pipeline.

Eyal Harari: We expect this refresh cycle to continue in the next few years as different carriers are upgrading and need this capacity earlier, but some probably will need those 400 gig capabilities, and so on, a bit later down the road.

Speaker #4: And we expect this refresh cycle to continue in the next few years as different carriers are upgrading and and need this capacity earlier but some probably will need those 400 gig capabilities and so on a bit later down the road.

Jonathan Ruykhaver: Eyal, that's very helpful. How important is the integration of some of the CaaS offerings into that platform to competitiveness in winning deals? Is that something you're seeing attach rates for, or is it mostly the high performance requirement that's driving that growth?

Speaker #5: In in Eyal that's that's very helpful. how important is the the integration of some of the CCAS offerings into that that platform to to competitiveness in in winning deals?

Speaker #5: Is that something you're seeing attach rates for or or is it mostly the the high performance requirement that's driving that growth?

Eyal Harari: We believe it's both, but the beauty about the ability to run the CaaS service on this platform is that this could change that from being investment in the network infrastructure, that is always important, but budgets are tight, to a product that can help you to monetize and make money. What our customer really love is that now multiple organizations from the CTO organization, operation, the CISO, but now also the product, can share the infrastructure investment. Therefore, in a very CapEx-tight environment for the CSP, that they are under pressure to improve profitability and show ways to maintain and hopefully increase their output for their customers, this is a very appealing proposition. So it's really position us different when we are competing with just network infrastructure providers.

Speaker #4: We believe it's both but you know the the beauty about the the ability to run the CCAS service on this platform is that this creates change that from being investment in the network infrastructure that is always important but budgets are tight to product that can help you to monetize and make money.

Speaker #4: So what our customer really love is that now multiple organizations from the CTO organization operation the CISO but now also the product can share the infrastructure investment and therefore in in a very capex tight environment for the CSP that they are under pressure to improve profitability and show ways to maintain and hopefully increase their output for their customers.

Speaker #4: This is a very appealing proposition. So it's really position us different when we are competing with just network infrastructure providers and I believe this is a great value proposition for our customers and this is why we are being success in this area.

Eyal Harari: I believe this is a great value proposition for our customers, and this is why we are seeing success in this area.

Jonathan Ruykhaver: Yeah. Okay. It is very helpful. Thank you very much.

Speaker #5: Yeah. Yeah. Okay. It's very helpful. Thank you very much.

Eyal Harari: Thank you.

Jonathan Ruykhaver: Okay.

Speaker #4: Thank you.

Speaker #5: Okay.

Operator: The next question is from Jonathan Ho from William Blair. Please go ahead.

Speaker #2: The next question is from Jonathan Ho from William Blair. Please go ahead.

Jonathan Ho: Hi. Good morning. I just wanted to maybe start with your identity services. Can you talk a little bit about sort of the initial reception from customers and pipeline build opportunity around some of these CaaS services? What does that look like from an uplift standpoint?

Speaker #3: Hi. Good morning. I just wanted to maybe start with your identity services. You know can you talk a little bit about sort of the initial reception from customers and pipeline build opportunity around some of these CCAS services and you know what what does that look like from an uplift standpoint?

Eyal Harari: Jonathan, we just started to market this in the market, and we are seeing the demand coming from two direction. One is existing customers that are looking to add more value to their customers. We see some customers that are looking on this as an opportunity to increase their monthly fee, but they want to show more value to their customers. In some other cases, they see it as a need because of competitive pressure. Maybe their competitor operator in the country is already offering this similar service, and therefore, they need to add it to the cybersecurity package they offer. It really depends on the specific market conditions. We don't see it as a core offering for our product. We still focus on network security. This is where our strength is.

Speaker #4: so Jonathan we just started to market this in the market and we are seeing the demand coming from two directions. One is existing customers that are looking to to add a more value to their customers.

Speaker #4: We see some customers that are looking on this as an opportunity to increase their fee their monthly fee but they want to show more value to their customers.

Speaker #4: In some other cases they see it as a need because of competitive pressure. Maybe their operator competitor operator in the country is already offering similar service and therefore they need to add it to the cyber security package they offer.

Speaker #4: So it's really depends on the specific market conditions we don't see it as a core offering for our product. We still focus on the network security.

Speaker #4: This is where our strength but I think the beauty of this application is the ability to complement and provide 360° protection for our customers.

Eyal Harari: But I think the beauty of this application is the ability to complement and provide 360-degree protection for our customers. In addition, with new customers, now that we are going into new opportunities, we have a more robust product offering. Not all of the solutions for cybersecurity can offer you one platform with all the cyber protections you need. We believe that eventually people are looking for simplicity, and this is why we continue to add more and more applications into the portfolio. I wouldn't view it as one application that is going to be a game-changer, but more of a holistic view that the platform is being able to provide multiple additional values, and really comprehensive protection is what's going to create the biggest effect over time.

Speaker #4: In addition with new customers now that we are going into new opportunities we have a more robust product offering not all of the solutions for cyber security can offer you like one platform with with all the cyber protections you need.

Speaker #4: And we believe that eventually people are looking for simplicity and this is why we continue to add more and more applications into the into the portfolio.

Speaker #4: So I wouldn't view it as a one application that is going to be a game changer but more of a holistic view that the platform has been able to provide multiple additional values and really comprehensive protection is what going to create a a biggest effect over time.

Jonathan Ho: Got it. Then, maybe a little bit more color on the zero-rating fraud prevention that you talked about. How big of a market opportunity could that be? Is this similar in terms of maybe improving the competitiveness of your product, but not necessarily standalone market on its own? I just want to get a sense for how you think about that zero-rating product as well.

Speaker #3: Got it. Got it. And then you know maybe a little bit more color on the zero rating fraud prevention that you talked about. You know how big of a market opportunity could that be and you know is this similar in terms of you know maybe improving the competitiveness of your product but not necessarily you know standalone market on its own you know just want to get a sense for how you think about you know that zero rating product as well.

Eyal Harari: Yeah. The zero-rate product is not a market by its own. It is more of another use case on the Allot Service Gateway Tera III platform and network intelligence. People that implement our Allot Smart product lines, they want to see how they can better manage and optimize the network. As mentioned in previous question, this is a cost. This is an infrastructure investment to improve quality, manage bottlenecks, and so on. Identifying use case like that actually creates re-monetization for the operator, because we unblock even revenue leakage, and by that we can recover their data packages that they are being ripped off, and they can recover and get more money. This is more in an indirect way for them to justify the reason for the platform.

Speaker #4: Yeah. The zero rate product is is not a market by its own. It's more of a another use case on the terrace 3 platform and network intelligence.

Speaker #4: People that implement our smart product lines they want to see how they can better manage and optimize the network and as mentioned in in previous question this is a cost.

Speaker #4: This is an infrastructure investment to improve quality manage bottlenecks and so on. Identifying use case like that that actually create real monetization for the operator because we we unblock hidden revenue leakage and by that we can recover them data packages that they are being ripped off and they can recover and get more money this is more in an indirect way for them to justify the reason for the platform.

Eyal Harari: This is the way we view it, and this is the way we position it, and it is mainly relevant for customers in regions that fraud is popular. We know that in some regions you can just get all-you-can-eat package, like in North America. In these cases, people tend less to do those frauds. But in some regions, more in developing countries, this is a big issue because they still pay per gigabit, and we are helping our customers to avoid the revenue leakage.

Speaker #4: So this is the way we view it and this is the way we position it and it's mainly relevant for customers in regions that fraud is is popular.

Speaker #4: We know that in some regions you can just get all you can eat package like in North America in these cases it's people tend less to to do those frauds but in some regions more in developing countries this is a big issue because they still pay per gigabit and we are helping our customers to avoid a revenue leakage.

Jonathan Ho: That makes sense. Just one last one for me. How do you think about your capital allocation priorities? I am just wondering why the share buyback now, and how do you sort of balance returning value to customers with continued investments? Thank you.

Speaker #3: That makes sense. just one last one for me. How do you think about your capital allocation priorities I just wondering why the share buyback now and you know how do you sort of balance returning value to customers with continued investments?

Speaker #3: Thank you.

Eyal Harari: The reason and timing is really because of the strength we see in the business. We see that we have four consecutive quarters of double-digit growth. We see that we are cash flow positive, I believe, for seven quarters, if I am not wrong. We see that we have enough cash today to have the balance both on investing in our product growth and investing in organic growth, have the option to explore inorganic growth opportunities, as well as we wanted to keep the optionality to have a buyback in case we see the market terms are suitable. I think this is in general a vote of confidence of the board in the company's strength, and it shows our maturity.

Speaker #4: So we do we reason and and timing is really because of the strengths we see in the business. We see that we have four consecutive quarters of double digit growth.

Speaker #4: We see that we are cash flow positive I believe for seven quarters if I'm not wrong. And we see that we have enough cash today to to have the balance both on investing in our product growth and investing in organic growth.

Speaker #4: We have the option to explore inorganic growth opportunities as well, and we wanted to keep the optionality to have a buyback in case we see that the market terms are suitable.

Speaker #4: So I think this is in general a vote of confidence of the board in the company's strength and it shows our maturity and like many other companies this is a I would say normal course of business to have a buyback plan in place so we can leverage in case of the relevant market conditions allow that.

Eyal Harari: And like many other companies, this is, I would say, normal course of business to have a buyback plan in place, so we can leverage in case the relevant market conditions allow that.

Jonathan Ho: Thank you.

Speaker #3: Thank you.

Eyal Harari: Thank you, Jonathan.

Speaker #4: Thank you Jonathan.

Operator: This concludes Allot Q2 2026 Conference Call. Thank you for your participation. You may go ahead and disconnect.