Allot Communications (ALLT) Stock Forecast & Price Target

Allot Ltd reported a strong financial performance with total revenue increasing by 8.5% year-over-year to $24.1 million in the second quarter of CY25, bolstered by a significant 73.0% year-over-year growth in Security as a Service (SECaaS) revenue, which constituted 26.6% of the overall revenue mix. The company has demonstrated compelling growth in recurring revenue, evidenced by a 43.3% increase in SECaaS Annual Recurring Revenue (ARR) in CY24, alongside expectations for a further growth of 55%-60% in CY25. Additionally, Allot raised its revenue guidance for the full year to a range of $100.0 million to $103.0 million, reflecting strong demand and an increase of 6.8% year-over-year in Remaining Performance Obligations (RPO) to $63 million.

Allot Ltd has experienced a significant decline in Product Revenue, with an 18.7% year-over-year decrease reported in the second quarter of FY2025, illustrating ongoing challenges in growth within its customer segments. The company faces difficulties in expanding its client base, particularly with established communication service providers (CSPs), compounded by prolonged sales cycles that may limit the signing of new deals in their Security as a Service (SECaaS) sector. Furthermore, the broader economic environment poses additional risks, as reduced IT budgets across organizations could exacerbate demand and pricing pressures on Allot's offerings, potentially leading to further revenue contraction.