Freedom Broker analysts raise target for Allot after a strong quarter

Freedom Broker experts believe that shares of Allot Ltd. (ALLT) still have significant upside potential amid accelerating growth in the cybersecurity business and improving profitability. Following a strong Q2 2026, they raised their price target from $12.0 to $13.90, reaffirming a “Buy” rating. At the current price of $7.87, the upside potential is about 76.6%.

Allot is betting on cybersecurity

Allot Ltd. (ALLT) is an Israeli provider of network analytics and cybersecurity solutions. The company works with telecom operators and enterprises, offering, among other things, Security-as-a-Service (SECaaS, subscription-based cloud cybersecurity services), network protection, traffic analysis, and network infrastructure management. Allot’s solutions are used by more than 500 mobile, fixed, and cloud operators and over 1,000 enterprises.

The main driver of the business transformation is the SECaaS subscription model. According to Freedom Broker analysts, its rapid scaling, together with shipments of the new Tera III hardware, enables Allot to both expand recurring revenue and improve operating leverage.

Revenue up 15%, profit up severalfold

In Q2 2026, Allot increased revenue by 15% y/y to $27.7 million, versus $24.1 million a year earlier. The result was above Freedom Broker’s forecast of $27.0 million.

Adjusted EPS rose from $0.03 to $0.09 and exceeded analysts’ forecast of $0.04. GAAP net income totaled $2.6 million, or $0.05 per diluted share, versus a net loss of $1.7 million, or $0.04 per share, a year earlier.

GAAP operating income amounted to $1.1 million versus a loss of $0.4 million a year earlier. Adjusted operating income rose to $2.7 million from $1.2 million, and Non-GAAP operating margin nearly doubled—from 5.0% to 9.9%. Operating cash flow more than doubled, from $4.0 million to $8.5 million.

SECaaS grows 47%

The key source of growth remains Security-as-a-Service—Allot’s ready-to-use cloud and network security platform that telecom operators and internet providers offer their subscribers (home users and businesses) as a paid or bundled service to protect against cyber threats directly at the network level. Segment revenue in Q2 increased 47% y/y to $9.4 million and exceeded Freedom Broker’s forecast of $9.1 million.

SECaaS annual recurring revenue (ARR) as of end-June reached $36.1 million, up 44% y/y. SECaaS’s share of the company’s total revenue rose to 34%.

Analysts note that growth is driven not only by acquiring new customers, but also by expanding cooperation with existing operators under a land-and-expand strategy—a business strategy in which a company begins with a customer via a small, low-cost, or free sale, and then gradually sells more products and increases the scale of cooperation. In Q2, Allot signed four new agreements in the EMEA region (Europe, the Middle East, and Africa), including the first contract for small and mid-sized business customers in Europe and the migration of an existing African customer to SECaaS.

Tera III strengthens positions in North America

The second important factor of the quarter was shipments of the new generation of Tera III gateways with throughput of up to 3 Tbps and support for 400G interfaces. The platform enables operators to combine network analytics and security functions on a single infrastructure.

Seven-figure contracts with tier-1 operators helped increase North America’s share of Allot’s quarterly revenue to 31%, or $8.5 million, versus 17% a year earlier. Analysts expect the resulting order backlog to provide additional revenue visibility in the second half of 2026 and in 2027. The product segment and professional services generated $9.1 million and declined 1% y/y. 

The company raised its 2026 outlook

After a strong first half, management raised its 2026 revenue guidance to $115–118 million versus the previous range of $113–117 million. The company also maintains its expectation of SECaaS revenue growth of 40% or more for the full year.

First-quarter figures

For Q1 2026, Allot increased revenue 14% y/y to $26.4 million, marking the third consecutive quarter of double-digit growth. The main driver was the cybersecurity business: SECaaS revenue rose 71% y/y to $8.7 million. The share of recurring revenue exceeded 67% of the company’s total revenue.

Against the backdrop of business growth, Allot markedly improved profitability metrics. GAAP operating income was $1.5 million versus an operating loss of $0.7 million a year earlier, while Non-GAAP operating income rose to $2.6 million from $0.4 million. GAAP net income reached $1.9 million versus a loss of $0.3 million a year earlier. Operating cash flow hit a record $10.6 million versus $1.7 million in Q1 2025. After a strong start to the year, management reaffirmed 2026 revenue guidance in the range of $113–117 million and noted growing confidence in reaching the upper end. 

This is not an individual investment recommendation.