Is Cybersecurity as a Service Becoming Allot's Core Growth Engine?

Allot Ltd. ALLT is witnessing strong growth in its Cybersecurity as a Service (SECaaS) business, which is becoming the main driver for the company's revenue growth. In the third quarter of 2025, SECaaS annual recurring revenues (ARR) increased 60% on a year-over-year basis. In the third quarter, the SECaaS business made up around 28% of Allot's total revenues, which is a whopping increase from 21% in the year-ago quarter. Management expects this share to move closer to 30% by the end of 2025.

Management explained that SECaaS growth is coming mainly from Tier-1 telecom customers that have already launched the service. These are large telecom customers that went live in recent quarters and are now adding more subscribers. Growth is being driven by new subscribers joining these services and driving higher attach rates over time. SECaaS adoption and attach rates usually improve over two to three years after launch, which supports steady and repeatable ARR growth.

In January 2026, Allot entered into a partnership agreement with Compax Venture to use Allot’s NetworkSecure and OffNetSecure platforms to enable Mobile Virtual Network Operators (MVNO) to offer cybersecurity services. These MVNOs will be the first to include Allot’s network-based security as part of their mobile offerings. This expands Allot’s SECaaS distribution beyond traditional mobile operators and supports recurring subscription revenues.

The higher SECaaS contribution is improving revenue quality. In the third quarter of 2025, recurring revenues rose to 63%, up from 58% in the year-ago quarter. Overall, the above-mentioned factors show how the SECaaS business is becoming central to Allot’s revenue model, which should support the company’s growth in the upcoming quarters. The Zacks Consensus Estimate for 2025 and 2026 indicates revenue growth of around 10.3% and 13.3%, respectively.

How Competitors Fare Against ALLT

Allot competes with well-established companies in network traffic management and cybersecurity space, such as Check Point Software CHKP and Palo Alto Networks PANW.

Check Point Software's Quantum Firewall Software, R82.10, focuses on improving hybrid network security for its customers. CHKP's R82.10 provides consistent protection across offices, cloud environments and remote users. This includes centralized Internet access management, easier connections between firewalls and SASE services, and better checks on user identity and device security to support Zero Trust.

Palo Alto Networks has partnered with IBM to launch a joint solution to help companies prepare for quantum-safe security. The joint solution combines IBM Consulting’s expertise in quantum-safe security with Palo Alto Networks’ network security platform. Together, they aim to give customers a clear view of how encryption is used across their hybrid environments, including on-premise systems, cloud and networks.

ALLT’s Price Performance, Valuation and Estimates

Shares of Allot have gained 14.1% in the past six months against the Zacks Internet - Software industry’s decline of 20.7%.

ALLT 6-Month Price Return Performance

From a valuation standpoint, Allot trades at a forward price-to-sales ratio of 4.53, lower than the industry’s average of 5.03.

ALLT Forward 12-Month P/S Ratio

The Zacks Consensus Estimate for Allot’s 2026 earnings implies a year-over-year increase of 24.3%. The estimates for 2026 have been revised upward by 3 cents over the past 60 days.

Allot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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