Allot Communications (ALLT) Stock Forecast & Price Target

Allot Ltd demonstrated robust financial performance in 2QCY25, with total revenue increasing by 8.5% year-over-year to $24.1 million, driven by a significant 73.0% year-over-year growth in SECaaS revenue, which reached $6.4 million and accounted for 26.6% of the overall revenue mix. The company also reported a noteworthy 43.3% growth in SECaaS ARR for CY24, with expectations of an additional 55%-60% increase for CY25, reflecting strong demand and a strong customer acquisition strategy. Furthermore, the rise in revenue guidance—from $98.0 million to a new range of $100.0 million to $103.0 million—along with a 6.8% increase in RPO to $63 million, underscores Allot's positive outlook driven by enhanced backlog and recurring revenue visibility into future fiscal years.

Allot Ltd has experienced a significant decline in Product Revenue, with an 18.7% year-on-year decrease to $7.6 million in Q2 CY25, and management indicates challenges in maintaining current levels. The company struggles to expand its customer base among existing Communication Service Providers (CSPs) and has faced difficulties in closing large deals, further exacerbating the decline in revenue amidst constrained capital expenditure budgets. Additionally, prolonged sales cycles for medium to large service providers are expected to result in fewer signed Security as a Service (SECaaS) deals, potentially impacting overall sales potential and leading to negative market sentiment if quarterly results continue to underperform.