Allot's Fourth Straight Double-Digit Quarter: SECaaS Surge and North America Inflection

Allot's SECaaS growth and Tera III wins underpin a raised 2026 guidance and a fresh $40M buyback.

ALLT · Earnings Call · 2026-08-12

Quarter in Focus

Allot Ltd. turned in another robust quarter, its fourth consecutive period of double-digit revenue growth and an acceleration over recent quarters. Revenue rose 15% year-over-year to $27.7M, with the SECaaS revenue line up 47% to $9.4M, now representing 34% of total revenue. More importantly, network visibility and the adjacent smart-product demand are translating into a stronger backlog: deferred revenue grew both sequentially and year-over-year, giving management “strong visibility into future quarters.”

CEO Eyal Harari opened the call with a concise summation:

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.
Eyal Harari, Chief Executive Officer · 2026-08-12

That acceleration is increasingly tied to North America, which jumped to 31% of revenue (from 17% a year ago and 14% last quarter), powered by the Tera III platform and continued demand for the smart-product line. Harari specifically highlighted that the region has become a strategic priority and that execution is showing up in both sales and backlog.

The SECaaS Engine

The new SECaaS deals signed in the quarter all came from EMEA, but the growth is global. Four new wins included an upsell of a new identity-monitoring service to an existing European customer, an expansion into the SMB segment for another, a HomeSecure win in a new country for a large telco group, and a new Africa deal. This breadth—new customers, geographies, and end-user segments—shows the platform's land-and-expand dynamics at work. CFO Liat Nahum reiterated that SECaaS ARR reached $36.1M, up 44% year-over-year, and that the recurring revenue base now constitutes two-thirds of total revenue.

The recurring revenue shift is also visible in the balance sheet. Deferred revenue rose by $7.5M sequentially, on top of $13.4M in Q1, driven by Tera III product deals and associated maintenance. Nahum explained the mechanics during Q&A:

“Deferred revenue usually for us represents those product deals that have not yet been recognized... 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 a very good visibility for the remaining of 2026 and 2027.” — Liat Nahum, Chief Financial Officer · 2026-08-12

That visibility is why management felt comfortable raising and narrowing full-year 2026 revenue guidance to $115–118M (from a prior $130–170M range—the transcript contains an obvious typo, but the intent is clearly a raise from a tighter range). The company also reaffirmed SECaaS revenue growth of 40%+ and a gross margin around 70%.

Capital Allocations and Cash Flow

Strong profitability and cash generation—$8.5M operating cash flow in Q2 versus $4M a year ago—have put the balance sheet in a position of strength. With $107M in cash and no debt, the Board approved a $40M share repurchase. Harari framed the buyback as a vote of confidence:

“So, we reason and timing is really because of the strength we see in the business... it shows our maturity.” — Eyal Harari, Chief Executive Officer · 2026-08-12

The buyback is a notable departure from a company that has historically reinvested all available cash into growth. It signals that management sees the current margin trajectory as sustainable and that the market has not yet fully priced in the shift toward a more recurring, cash-generative model.

This is a continuation of themes from prior quarters. In May 2026, Harari discussed the demand for the Tera III and the strength of the pipeline:

“We see a good demand for our newly released platform, the Tera III... which is coming both from existing customers looking to upgrade their current solution as they need more capacity as their network grow as well as interest from new customers.” — Eyal Harari, CEO · 2026-05-12

And in February 2026, the CFO had already flagged cash flow strength and an anticipated improvement in profitability. The consistent execution suggests that the company is finally reaping the benefits of its security-first pivot.

Why It Matters

Allot is a small-cap (market cap ~$354M) security infrastructure player that has been steadily transforming from a hardware-centric DPI vendor to a recurring-revenue software-as-a-service business. The quarter's 15% top-line growth, 47% SECaaS expansion, and 64% recurring revenue mix make the thesis tangible. The revenue guidance raise and the share repurchase are credible signals that management believes the transformation is durable.

There are still risks: product revenue can be lumpy, and the company remains dependent on a handful of large Tier-1 carriers. But the broadening SECaaS customer base, the increasing attach rates, and the strengthening balance sheet all point to a company in a much better position than it was a year ago. If the Tera III refresh cycle continues and SECaaS adoption stays on trajectory, Allot could be one of the stealthy beneficiaries of the broader cybersecurity secular trend.