Allot Stock Surges Over Six-Month Period as SECaaS Business Accelerates

Over the past six months from now, Allot Ltd. has emerged as a standout performer in the Internet-Software sector, with its stock climbing more than 20% while industry peers faltered. Cisco Systems, F5, and Palo Alto Networks have delivered more subdued returns, posting gains of just 10.3% for Cisco while F5 and Palo Alto Networks experienced declines of 8.1% and 1.1%, respectively. This outperformance reflects Allot’s ability to capitalize on surging demand for cybersecurity solutions, particularly through its high-margin Cybersecurity-as-a-Service platform.

SECaaS Business Accelerates, Driving Revenue Expansion

The main catalyst behind Allot’s impressive stock price trajectory lies in its rapidly scaling SECaaS offering. During the third quarter, Allot demonstrated robust operational momentum with net sales surging 14% year-over-year to $26.4 million, exceeding analyst expectations by $400,000. Non-GAAP earnings per share jumped dramatically to 10 cents from just 3 cents in the year-ago period, representing a substantial 150% beat on consensus estimates.

The company’s confidence in its growth prospects prompted management to raise its full-year guidance. Allot now expects 2025 revenues to land between $100-$103 million, up from the prior range of $98-$102 million. More importantly, SECaaS ARR growth guidance was elevated to surpass 60% year-over-year from the previous 55-60% range, signaling management’s strong conviction about the platform’s trajectory.

Subscription Model Bolsters Revenue Quality and Visibility

What distinguishes Allot’s growth profile is the company’s shift toward recurring revenue streams. SECaaS contributed roughly 28% of total revenues in the third quarter, with management expecting this proportion to approach 30% if current trends persist. This structural shift is significant because recurring revenues now account for 63% of total revenues compared with 58% in the prior-year quarter, materially improving revenue predictability and earnings visibility for investors.

Telecom operators continue to be the primary growth engine. Tier-1 customers who launched services in recent quarters are systematically expanding their subscriber bases, creating strong demand for Allot’s platform. Existing customers are progressively purchasing additional service tiers over time, supporting healthy upselling dynamics. The recent introduction of OffNetSecure, which extends protection beyond the operator’s network perimeter, broadens the addressable use case and creates opportunities to enhance revenue per user.

Valuation Presents Compelling Risk-Reward Profile

Despite its accelerating growth profile, Allot trades at an attractive valuation relative to both the broader sector and direct competitors. The company’s forward 12-month price-to-sales multiple stands at 4.54X, sitting below the Internet-Software industry average of 4.71X. More compelling still, Allot’s P/S ratio compares favorably to established peers: Cisco Systems trades at 4.74X, F5 at 4.93X, and Palo Alto Networks at a significantly higher 11.82X.

This valuation discount suggests that the market may not have fully priced in the margin expansion potential from SECaaS scaling. The combination of operational leverage and revenue mix improvement could drive multiple expansion as growth sustainability becomes more apparent to the investment community.

Forward Outlook: Consensus Sees Continued Momentum

Wall Street consensus expects Allot to maintain solid growth momentum heading into 2026, with revenue expected to expand 13.3%. Looking further ahead, 2026 earnings are forecast to grow 15.9% year-over-year, with recent analyst revisions trending upward. These positive estimate revisions over the past 60 days underscore growing confidence in the company’s near-term execution and longer-term SECaaS potential.

The combination of strong operational execution, margin expansion from subscription scaling, and reasonable valuation creates a compelling investment case. Allot’s transition toward a higher-margin, more predictable revenue model positions the company to deliver sustained earnings growth, making it an attractive consideration for investors seeking exposure to the cybersecurity sector at a reasonable valuation. For investors with a longer-term investment horizon, the current setup offers meaningful upside potential alongside reasonable downside protection through attractive valuation multiples.