Allot Communications (ALLT) Stock Forecast & Price Target

Allot Ltd demonstrated solid financial performance with a total revenue increase of 8.5% year-over-year to $24.1 million in 2QCY25, driven significantly by a 73.0% year-over-year surge in SECaaS revenue, which reached $6.4 million and accounted for 26.6% of the overall revenue mix. The company reported a remarkable 43.3% growth in SECaaS annual recurring revenue (ARR) in CY24, with expectations of a further 55%-60% increase in CY25, highlighting robust demand for its services. Additionally, the company's revised revenue guidance for the year reflects an optimistic outlook, increasing expectations to between $100 million and $103 million, alongside a 6.8% year-over-year rise in remaining performance obligations (RPO) to $63 million, indicating strong future revenue visibility.

Allot Ltd has experienced a significant decline in Product Revenue over the past four years, with an 18.7% year-on-year drop to $7.6 million in the latest quarter, indicating ongoing challenges in its revenue generation. The company's difficulties in expanding its customer base with existing communications service providers (CSPs) and the pressure on capital expenditures (CapEx) budgets further exacerbate its negative outlook. Additionally, longer sales cycles for medium to large service providers may lead to a decline in signed SECaaS deals, while a weaker economic environment could compound these issues by straining IT budgets and increasing pricing pressures.