Allot's Q2 revenue rose 15% to $27.7M as security-as-a-service sales jumped 47%, giving a GAAP operating profit; 2026 guidance was raised to $115–118M.
Revenue
$28M
+15.3% YoY
Net income
$2.6M
Diluted EPS
$0.05
Operating margin
4.0%
This period vs a year ago
Same period last year
This period
Revenue▲+15.3%
≈$24M
$28M
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Allot's second-quarter revenue rose 15% to $27.7 million, and it was a profitable quarter on a standard accounting basis: $1.1 million of operating income against a $0.4 million loss a year earlier. Almost all of the growth came from one business, Security-as-a-Service (SECaaS). Allot sells this cybersecurity service through telecom carriers, which offer it to their own mobile and broadband subscribers and share the monthly fees with Allot. SECaaS revenue rose 47% to $9.4 million. The older business, which sells traffic-management equipment and support contracts to carriers, grew only about 4%. Management raised its full-year revenue guidance to $115–$118 million, from $113–$117 million.
At a glance
SECaaS was 34% of revenue, up from 26% for full-year 2025. It supplied about $3.0 million of the quarter's $3.7 million revenue increase, so the growth story now rests on this one line.
Operating cash flow was $8.5 million, versus $2.6 million of net income. Almost all of the gap is customers paying in advance: deferred revenue (cash collected for services not yet delivered) rose $8.4 million in the quarter.
The ten largest customers made up 57% of revenue, up from 41% in 2025. Americas revenue nearly doubled from Q1's level to $8.5 million. That growth is welcome, but it also means more revenue depends on a few accounts.
Q2 2026 in numbers
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$27.7M
$24.1M
+15.3%
SECaaS revenue
$9.4M
$6.4M
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+47%
SECaaS ARR (June)
$36.1M
—
+44%
Gross margin (GAAP)
71.3%
72.1%
-0.8 pts
Operating income (GAAP)
$1.1M
-$0.4M
loss to profit
Operating margin (GAAP)
4.0%
-1.7%
+5.7 pts
Operating margin (non-GAAP)
9.9%
5.0%
+4.9 pts
Net income (GAAP)
$2.6M
-$1.7M
loss to profit
Diluted EPS (GAAP)
$0.05
-$0.04
loss to profit
Non-GAAP diluted EPS
$0.09
$0.03
+$0.06
Operating cash flow
$8.5M
$4.0M
+112%
ARR (annual recurring revenue) is Allot's estimate of June 2026 SECaaS revenue multiplied by 12. It shows what the service would bring in over a year at the June rate. "Non-GAAP" figures are management's adjusted numbers. Here they mainly add back share-based pay (employee stock awards), which is a real cost but not a cash one.
Takeaway: Allot now makes a small operating profit because SECaaS is growing faster than costs. Revenue rose 15% while total operating expenses rose only 5%. The flip side is that the company has become a SECaaS story. The rest of the business is roughly flat, and SECaaS growth slowed from 71% in Q1 to 47% in Q2.
What drove the quarter
Revenue mix. In the earnings release, Q2 revenue splits into three nearly equal parts:
Revenue type
Q2 2026
Share of Q2 revenue
Share of FY2025 revenue
SECaaS
$9.4M
34%
26%
Products & professional services
$9.1M
33%
38%
Support & maintenance
$9.2M
33%
36%
Remove SECaaS and revenue went from about $17.7 million to about $18.3 million, a rise of roughly 4%. The traffic-management and network-analytics business is steady but no longer the growth engine. The six-month MD&A, filed separately in September, shows the same picture. First-half product revenue rose just 1% to $14.2 million, which management puts down to "the timing of AllotSmart projects deployments". Service revenue, which includes SECaaS, rose 20.5% to $40.0 million, "primarily attributable to growth in SECaaS revenue, reflecting expansion of the subscriber base."
SECaaS growth is slowing as the base gets bigger. Quarterly SECaaS revenue has risen steadily: $6.4M → $7.3M → $8.1M → $8.7M → $9.4M over the last five quarters. The year-over-year rate fell from 71% in Q1 to 47% in Q2, and ARR growth fell from 59% (March) to 44% (June). The dollar gain from Q1 to Q2 was $0.7 million, about the same as in earlier quarters. So the slower percentage reflects a larger base, not weaker demand.
Geography. Americas revenue was $8.5 million (31% of the quarter), against $19.1 million (19%) for all of 2025. First-half Americas revenue rose 81% to $12.3 million, "primarily driven by higher SECaaS revenues and growth in recurring service revenue". The CEO singled out North America. EMEA (Europe, Middle East and Africa) fell 7.7% in the first half to $30.1 million, which the MD&A attributes to the "timing of AllotSmart project completion in the region". Asia Pacific rose 49% to $11.8 million.
Costs. Total operating expenses rose 5.3% to $18.7 million while revenue rose 15%. Research and development fell 3.7% to $7.0 million. Sales and marketing rose 10.8% to $8.0 million, which the MD&A ties to added headcount. General and administrative rose 13% to $3.6 million. This gap between revenue growth and cost growth, called operating leverage, explains the whole move from a loss to a profit. Gross margin did not help: it slipped to 71.3% from 72.1%. In the first half, product gross margin was 55.6% and service gross margin was 76.8%.
What the headline numbers hide
Part of net income is a one-off accounting gain. Q2 financial income was $2.0 million, versus $0.4 million a year ago. Of that, $1.16 million was a non-cash gain from changing an office lease ("financial income from lease modification" in the cash flow statement). Without it, pre-tax income would have been about $1.9 million instead of $3.1 million. Allot's non-GAAP net income ($4.6 million) does not remove this gain. It adds back share-based pay ($1.6M), currency effects and tax items, so the adjusted $0.09 EPS includes the one-off. The year-ago quarter had one-offs of its own: a $1.4 million loss on retiring convertible debt and a $0.1 million gain from selling a patent.
Cash flow depends on customer prepayments. First-half operating cash flow was $19.0 million against $4.5 million of net income. Deferred revenue rose $23.3 million in six months, from $30.6 million to $53.9 million (current plus long-term). That increase is larger than the entire operating cash flow. Without the prepayments, the business would have used cash in the first half. Prepayments are a good sign for future revenue, since they are cash in hand for work Allot has still to deliver. But this level of cash generation will not repeat every half-year.
Receivables and inventory grew faster than sales. Net trade receivables (money customers owe) rose 44% since December to $25.2 million. Inventory rose 33% to $17.5 million. Revenue grew 15%. Part of the receivables jump is likely bills sent in advance, which sit as deferred revenue until earned. Allot also still holds a $9.1 million allowance for credit losses, money it does not expect to collect, against those receivables. That is roughly a quarter of the gross amount and a legacy of past collection problems. It is down from $9.6 million in December.
EPS is spread across more shares. Diluted weighted shares rose 24% to 49.8 million after a share sale in the second quarter of 2025 ($37.7 million raised). The board approved a $40 million buyback in June 2026. The cash flow statement shows no repurchases through June 30, so the buyback has not yet affected the share count.
The June ARR is below the quarter's own pace. SECaaS revenue of $9.4 million times four is $37.6 million a year. June ARR is $36.1 million. The gap is small, but it suggests the quarter included some revenue that June's monthly rate does not repeat. If so, Q3 SECaaS growth over Q2 could be smaller than the recent ~$0.7 million per quarter.
Guidance went up modestly. The 2026 range moved from $113–$117M (reaffirmed in May) to $115–$118M. The 40%-or-more SECaaS growth target is unchanged.
Outlook
Management expects 2026 revenue of $115–$118 million, 13–16% above 2025's $102.0 million, plus "continued improvement in profitability" and SECaaS growth of 40% or more. First-half revenue was $54.2 million, so the second half has to deliver $60.8–$63.8 million. That is about $30–32 million a quarter, against $27.7 million in Q2. The SECaaS target is the easier part. Growth of 40% on 2025's $26.8 million means about $37.5 million for the year. With $18.1 million booked in the first half, Allot needs about $9.7 million a quarter, close to the current pace. The rest of the step-up has to come from product projects such as AllotSmart. That revenue arrives in lumps whenever a project is completed, and EMEA's first-half decline was blamed on exactly that timing.
Our read: The $53.9 million of deferred revenue and the stable dollar gains in SECaaS make the guidance believable. The remaining risk is mostly timing: whether big carrier projects are booked by December. Signs of a healthy business in Q3 would be:
SECaaS ARR still rising by about $2–3 million a quarter
top-10 customer concentration falling back from 57%
operating income holding up once the one-off lease gain is no longer in the comparison
Allot has $107 million in cash and investments and no debt after redeeming its convertible notes in 2025. A bad quarter would not threaten its finances. The open question is whether profitability keeps improving.
Source: Allot Q2 2026 earnings release (Form 6-K, Exhibit 99.1, filed August 12, 2026). First-half MD&A detail is from the Form 6-K filed September 9, 2026 (Exhibit 99.2). Prior guidance is from the Q1 2026 release (May 12, 2026).