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NEW YORK, Oct. 7, 2019 /PRNewswire/ — Allot (NASDAQ: ALLT) (TASE: ALLT) allows Telecom Providers to Leverage Their Networks for Increased Revenues; We view Allot’s Mobile Network Security operations as a growth engine for the company’s revenues in the coming years; we initiate coverage on Allot at a share price target of $12.0.

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Summary of Highlights (read the full report here)

Today’s forms of communication have made the world into a very small place. We can easily communicate with our families, friends, and colleagues, on the other side of the world, via our cellular network, to message them about the latest episode of our favorite show, streamed via our home WiFi network. Because these networks have become such a vital part of our lives they have become a vital asset for communication service providers (CSPs) that supply us with cellular, internet, and other services.

Allot Ltd. (NASDAQ : ALLT) (TASE: ALLT) is a B2B2C software company with over 20 years of experience that focuses on Network Security and Network Intelligence Solutions. These solutions enable entities such as telecom service providers to secure and optimize the digital experience of their users. Allot’s motto is “See. Control. Secure.” and it is a precise definition of the company’s value proposition. The company allows its customers to see what is going on in their network, control their network to give the best experience to end users on all connected devices, and secure all of these devices against threats. It does this while providing network insights that save its customers significant capital and while creating new revenue streams for them. In essence, Allot empowers its customers to get more out of their networks.

The Company’s solutions are deployed globally for network analytics, traffic control and shaping, and networkbased security including mobile security, DDoS protection, IoT security, and more. Allot’s multi-service platforms are deployed by over 500 mobile, fixed, and cloud service providers and over 1000 enterprises. Their network-based security as a service solution has achieved over 50% penetration with some service providers and is already used by over 21 million subscribers in Europe.

Allot generates revenues from two sources: (1) sales of Network Intelligence Solutions which show network operators what is happening on their networks at the highest resolution and (2) sales of Network Security solutions, such as security as a value added service that telecom service providers can offer to subscribers in order to protect them from cyber threats. The Company additionally provides support and maintenance services.

In 2018 Allot’s non-GAAP revenues amounted to $96 million, an increase from 2017 ($82 million) and from 2016 ($91 million). Total revenues for the second quarter of 2019 were $26.6 million, an increase of 15% compared to $23.0 million in the second quarter of 2018.

Allot has introduced a new management team that is highly experienced and focused on implementing their offering.

Allot has made a strategic decision to focus its marketing and sales efforts on mobile Network Security reaching out to what seems like the blue ocean of cyber security. This offering enables telecom providers to offer security as a service (SECaaS) as a value added service to their subscirbers. As more subscribers protect their devices both telecom providers and Allot experience increased monthly revenue. We expect Allot to show a significant increase in revenues over the next 5 years due to the high growth expected in this sector and importantly due to the company’s transition from a CAPEX to a Rev-Share business model.

Allot can be characterized by its two offerings. The Network Intelligence solution brings in a constant and steady stream of revenues which according to our evaluation will show low two digit growth in the next two years and then transition to high one digit growth. The second offering, mobile Network Security, is a relatively new and growing business which we expect to have significant high double digit CAGRs in the next five years based on Allot’s reputation, deep know how on a global scale, and the high potential of the RevShare model. Allot’s main customer segment is telecom service providers which can leverage both of Allot’s solutions due to the synergy between them (one allows customers to see and control their networks and the other to secure them).

We evaluate Allot’s equity value at $411.8 million/1.43 billion NIS; price target is in the range of 41.7 NIS to 42.0 NIS with a mean of 41.8 NIS / $12

Read the full report here

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Tiran Rothman
Head of Frost Israel
Frost & Sullivan
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equity.research@frost.com

SOURCE Frost & Sullivan

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