Allot Communications (ALLT) Stock Forecast & Price Target

Allot Ltd demonstrated a robust performance in 2QCY25, with total revenue rising 8.5% year-over-year to $24.1 million, driven by a significant 73.0% year-over-year increase in SECaaS revenue, which reached $6.4 million and composed 26.6% of the overall revenue mix. The company achieved a notable 43.3% growth in SECaaS Annual Recurring Revenue (ARR) for CY24, with expectations of an even stronger growth rate of 55%-60% for CY25, reflecting strong customer demand and effective market penetration strategies. Furthermore, Allot's revenue guidance was raised to a range of $100.0 million to $103.0 million, surpassing previous estimates, and the increase in remaining performance obligations (RPO) by 6.8% year-over-year to $63 million underscores continued solid demand for its services.

Allot Ltd has experienced a significant decline in Product Revenue, with an 18.7% year-over-year drop to $7.6 million in the second quarter of CY25, which raises concerns about the firm's ability to sustain current revenue levels. The company's difficulties in expanding its customer base and long sales cycles, especially with medium to large service providers, pose additional challenges, which may lead to a reduction in the number of signed SECaaS deals and limit revenue potential. Furthermore, a weak economic environment is likely to increase pressure on organizations' IT budgets, adding to demand and pricing challenges for Allot, which could negatively affect financial performance.