Allot（ALLT）2026年第2四半期決算説明会：SECaaSの成長と売上高ガイダンスの上方修正

主要なポイント

• Allotの2026年第2四半期の売上高は2,770万ドルで、前年同期比15%増となり、4四半期連続で前年同期比2桁成長を記録しました。
• Security-as-a-Service（SECaaS）の売上高は47%増の940万ドルとなり、全売上高の34%を占めました。SECaaSの年間経常収益（ARR）は3,610万ドルに達し、44%増加しました。
• 四半期売上高の67%をリカーリングレベニューが占め、繰延収益の増加により、2026年残りの期間および2027年の業績に対する経営陣の可視性が向上しました。
• Non-GAAP営業利益は120万ドルから270万ドルに増加し、営業利益率は5.0%から9.9%へ拡大しました。
• 営業キャッシュフローは2倍以上に増加して850万ドルとなりました。Allotの6月末時点の現金および関連投資残高は1億700万ドルで、無負債経営を維持しています。
• 経営陣は2026年通期の売上高見通しを1億1,500万ドル〜1億1,800万ドルに引き上げ、SECaaS売上高は少なくとも40%の成長を見込んでいます。

主要財務データ

GAAP当期純利益には、リース負債の再測定に関連する120万ドルの一時的な金融利益が含まれています。経営陣はこの利益の再発を見込んでいません。

事業および業績の動向

SECaaSが引き続き主たる成長エンジン

Allotは当四半期中に4件のSECaaS案件を獲得し、すべてEMEA地域でのものでした。これらには、同社のアイデンティティモニタリングサービスの初受注、既存顧客におけるSMBセグメントへの拡張、グローバル通信グループ内の別国におけるHomeSecureの展開、およびすでにAllotのSmart製品を使用していたアフリカの新規SECaaS顧客が含まれます。

経営陣は、これらの案件獲得が2027年のSECaaS売上成長に貢献すると見込んでいます。同社は自社の拡大モデルについて、共通プラットフォーム上に顧客、地理的市場、エンドユーザーセグメント、アプリケーションを追加していく手法であると説明しました。

北米の売上貢献度が急増

北米が占める割合は売上高の31%となり、2025年第2四半期の17%や前四半期の14%から上昇しました。経営陣はこの増加について、米国の主要SECaaS顧客からの継続的な貢献に加え、好調なSmart製品の販売、特にTera IIIプラットフォームに対する需要によるものとしています。

同社は、経営陣が力強い受注残高と健全な需要と説明する状況のもとで下半期に入りました。ただし、製品売上は単発的であり、四半期ごとに大幅に変動する可能性があります。

Tera IIIがより大規模な通信事業者プロジェクトを支援

Tera IIIはAllotの大容量マルチサービスゲートウェイであり、最大3テラビットの容量に加え、400ギガビットリンクおよび複数の100ギガビットポートをサポートします。このプラットフォームは、ネットワークの可視性、トラフィック管理、サイバーセキュリティワークロードを統合します。

経営陣によると、一般的なTera III案件は7桁（数百万ドル規模）の取引です。過去12か月間に約6件のTera III案件が発表され、受注残高の積み上げに寄与しました。また、Allotは新しいサイト拡張に向けた追加のアップグレードプロジェクトも獲得しており、2027年の受注残高を支えると見込まれています。

ティア1通信事業者の事例研究において、Allotのゼロレーティング不正検知・対策サービスは不正トラフィックを87%削減しました。経営陣はこの機能を、単独の市場ではなくSmartプラットフォームの追加ユースケースとして位置づけています。

資本配分

Allotの取締役会は、最大4,000万ドルの自社株買いプログラムを承認しました。経営陣は、実施は市場状況、株価、流動性その他の要因に依存すると述べました。同社は自社株買いの実施と有機的な投資および潜在的な非有機的成長の機会とのバランスを取る意向です。

業績予想（ガイダンス）

経営陣は売上高見通しの背景として、北米での受注の勢い、受注残高、SECaaSの継続的成長を挙げています。四半期ごとの売上総利益率は製品ミックスによって変動する可能性があります。

リスクと注目点

• Smart製品の売上には数百万ドル規模のプロジェクトが含まれており、計上時期によって地域や顧客ごとの四半期業績に変動が生じる可能性があります。
• Tera III案件は一般的に大型ですが件数が比較的限られているため、個別プロジェクトのタイミングが与える影響が大きくなる可能性があります。
• SECaaS加入者数の成長は、パートナー通信事業者のマーケティングキャンペーン、実行力、および顧客のオンボーディングペースに一部依存します。
• Non-GAAP売上総利益率は製品ミックスの影響で前年同期比低下したものの、経営陣の通期予想である約70%を上回る水準を維持しました。
• 同社の将来予測に関する記述では、市場トレンドの変化、顧客によるサービス開始の遅延、需要の減退、およびセキュリティサービス業界における競争を潜在的なリスクとして挙げています。

アナリストQ&Aの要点

• キャッシュフロー：経営陣によると、第2四半期の営業キャッシュフローには大規模な一時項目は含まれていません。850万ドルという結果は、リカーリング型のSECaaSモデル、収益性、および回収を反映したものです。第1四半期は、以前発表された大型案件に関連する回収の恩恵を受けていました。
• 受注残高の可視性：経営陣は、過去12か月間に発表された案件に支えられ、受注高および受注残高が高水準を維持していると述べました。繰延収益も増加し、2026年および2027年に向けたさらなる可視性をもたらしています。
• 繰延収益の時期：短期繰延収益は、製品のタイミングに従い12か月以内に収益認識される見込みです。また、Allotは750万ドルの長期繰延収益を報告しており、これは2027年下半期から具体化し始める予定です。
• 北米事業の持続性：SECaaSは地域売上高の中で、よりリカーリング性が高く予測可能な部分を提供しています。第2四半期のさらなる強みはSmart製品の売上によるものでしたが、経営陣はこれが毎四半期同じように推移するわけではないと注意を促しました。
• SECaaSの成長要因：経営陣は、顧客のオンボーディング、追加のネットワークドメインやユーザーセグメントへの拡張、アイデンティティモニタリングなどのサービスの追加、および新規の通信事業者パートナーシップを主な成長要因として挙げました。
• Tera IIIの競争力：経営陣は、ネットワークインテリジェンスと収益化可能なサイバーセキュリティサービスを統合することで、通信事業者の技術、運用、セキュリティ、製品の各チームがインフラ投資を共有できるようになり、資金制約のある環境においてプラットフォームの価値提案が強化されると述べました。

決算説明会全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day to all of you, and welcome to Allot's conference call to discuss its financial results for the Second Quarter 2026. I would like to thank Allot's management for hosting this conference call. [Operator Instructions] As a reminder, this conference call is being recorded. You should have all received by now the company's press release. If you have not, please check the company website at www.allot.com. With me today on the call are Mr. Eyal Harari, CEO; Mrs. Liat Nahum, CFO. Following the prepared remarks, we will open the call for the question-and-answer session.

All the highlights of the quarter are in today's earnings press release. Before we start, I'd like to point out that the following safe harbor statement. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of the company. Those statements are only predictions, and Allot cannot guarantee that they will, in fact, occur. Allot does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, delay in the launch of services by Allot customers, reduced demand and the competitive nature of the security service industry as well as other risk identified in the documents filed by the company with the Securities and Exchange Commission.

Also, the financial results of this call will be presented mainly on a non-GAAP basis. Allot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand Allot's operating performance in the quarter. For all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP reconciliation table.

And with that, I would now like to hand over the call to Eyal Harari, Allot's CEO. Eyal, please go ahead.

Eyal Harari

Thank you. We are pleased to report another strong quarter with growth in revenue, profitability and cash flow, our fourth consecutive quarter of double-digit year-over-year growth and an acceleration over recent quarters. We were particularly pleased with North America where strong execution drove a solid increase in sales and backlog, underpinning our confidence in the growth we expect in the second half. Our Cybersecurity as a Service business, SECaaS, continues to power our growth with SECaaS revenue growing 47% year-over-year to account for over 1/3 of our revenues and SECaaS ARR up 44%. This continues to scale our recurring revenue base, which represented 2/3 of total revenue in the quarter, giving us greater visibility into the quarters ahead and improving the predictability of our revenues. Overall, our business is executing well and performing ahead of our expectations.

Let me focus on North America, one of the highlights of the quarter. The region made up 31% of the revenues versus 17% in the second quarter of last year and 14% last quarter. This was driven by very solid product sales with particularly strong interest in our new Tera III platform and by continued demand for our smart product line, reflecting the value operators see in the network visibility and control our platform delivers. In addition, our major U.S. SECaaS customer continues to perform very well, in line with our strong expectations. Beyond that, we entered the second half with a strong backlog and healthy demand, giving us added confidence for the rest of the year. North America is a strategic priority for us, and it is very encouraging to see the focus translating into revenue, backlog and pipeline.

Turning to our Cybersecurity as a service business. This continues to perform strongly and in line with our expectations. We had several wins during the quarter, each demonstrating a different way in which we are growing the business and all classic example of our land and expand strategy. We secured 4 new SECaaS deals in the quarter, all of them in the EMEA region. First, we won an upsell deal in Europe, selling a new service to an existing SECaaS customer, the first sale of our identity monitoring service. This telco will be offering our identity monitoring service to its SMB customers. This is a domain level identity theft monitoring service. It continues monitoring for exposure of the business digital identities and it's designed to alert the customers when credential or other identity data has been compromised, so that they can act before that expose is exploit. And it is designed to do so for every user across the organization.

It is a good example of how are we expanding our SMB security suite beyond the network alongside off-net Secure, Firewall as a Service and DDoS protection. Second, we won an expansion to the SMB segment within an existing European-based customer. Third, we secured a new win within our -- one of our large global telco groups, adding our HomeSecure service in another country. The HomeSecure solution enhances threat protection across the Telstra's mobile and broadband networks. It integrates into the existing home router and provides zero-touch home network visibility, cybersecurity and parental controls.

Finally, we won a new SECaaS deal in Africa with a telco that is already a smart customer. Together, these wins reflect the breadth of our SECaaS growth, new customers, geographies, end user segments and applications all on the same platform. We expect these deals to contribute to our future SECaaS revenue growth in 2027. Our smart product line remains a highly complementary part of our unified cybersecurity first platform, built on decades of Allot innovation and delivering best-in-class network intelligence. We continue to execute well on the multimillion dollar projects won in recent quarters, including deployments and upgrades of our Tera III platform with Tier 1 operators.

As a reminder, Tera III is our next-generation ultra-high capacity multiservice gateway. It is among the highest capacity platforms of its kind in the market, and it consolidates deep network visibility, traffic management and cybersecurity services onto a single platform. Customer feedback has been excellent. Operators are running both cybersecurity and traffic intelligence workloads on the same gateways, and they value its carrier great stability and reliability, its ability to scale cost efficiently with 5G and fiber traffic growth without expanding their footprint.

We also provide a smooth upgrade path from our earlier service gateway generations, which protects the investment that they have already made. This quarter, demand for our smart product was particularly strong in North America. As part of the smart product innovation, we recently ran a case study with Tier 1 operator to demonstrate Allot's new zero rating fraud detection and mitigation service. Zero-rated applications and app-based charging plans creates value for subscribers, but they are also open the door to fraud. Attackers are increasingly exploiting vulnerabilities to bypass charging system and consume data without payment.

Our solution, ACSP identified fraud and a case study showed that we reduced fraud and traffic by 87%. This show our operators can recover lost revenue, while protecting the integrity of their zero rating offers. We are already building our backlog for 2027 with an additional win of an important Tera III upgrade project with a customer for a new site expansion. Our pipeline remains healthy with existing customers planning their Tera III platform upgrade and new engagement advancing through our sales process, and these multiyear projects are expected to provide good revenue visibility into 2027 and beyond.

During the second quarter, we presented and met customers at a number of key industry conferences. This included DTW in Copenhagen, FutureNetworld in London, Interop in Tokyo, NetworkX America in Dallas and Coms Day in Sydney. Feedback was very positive with customers and prospects continue to respond well to our converged cybersecurity and network intelligence positioning. Events like these continue to build our pipeline, and it is clear that our cybersecurity first strategy resonates well with the operators globally.

At the end of the second quarter, our Board of Director approved a share purchase program of up to $40 million. This reflects our confidence in Allot's strategy and financial strength. With more than $100 million in cash and no debt, we are well positioned to increase value to shareholders, while continuing to invest in the long-term growth of the business. In summary, we are very pleased with our second quarter performance, our fourth consecutive quarter of solid improvement with accelerating growth, continued momentum in SECaaS, standout performance in North America and further gains in margin, profitability and cash flow. As we are performing ahead of our expectations, we are raising and narrowing our 2026 revenue guidance to between $115 million and $118 million from the previous range of $130 million to $170 million with ongoing improvement in profitability. This is driven by accelerating order momentum from our North American customers, our backlog and the continued high growth of SECaaS.

Allot is in its strongest position in over a decade, and it is well positioned to build on its profitable cash generation recurring revenue-led growth in the quarters and years ahead.

And now I would like to hand it over to our CFO, Liat Nahum, for the financial summary. Liat, please go ahead.

Liat Nahum

Thanks, Eyal. We reported revenue of $27.7 million in the quarter, up 15% year-over-year. Revenue from our growth engine, Security-as-a-Service were $9.4 million in the quarter, up 47% year-over-year, comprising 34% of our total revenue. Our Security-as-a-Service annual recurring revenue as of June 30, 2026, were $36.1 million, up 44% year-over-year. Deferred revenue, which includes recurring maintenance and support continued to grow both year-over-year and quarter-over-quarter, increasing the strong visibility we have into remaining 2026 and 2027 revenue. 67% of our overall revenue this quarter was recurring in nature.

I will now discuss the non-GAAP financial measure. For all our financial results, including the GAAP financial measure and the other various breakdowns of our revenue, please refer to the table in our results press release. Our non-GAAP gross margin in the quarter was 71.8% compared with 73.4% in the second quarter of last year. The year-over-year decline mainly reflect the product mix in the quarter. That said, gross margin remained strong and consistent with our expectation of around 70% for 2026.

Non-GAAP operating expense for the quarter was $17.2 million compared with $16.4 million in the second quarter of last year. The increase reflects our continued investment in sales and marketing to support our pipeline build. General and administrative expenses in the quarter increased compared with the second quarter of last year, mainly due to onetime costs associated with the modification of one of our office lease agreement following change we made in this office. While making this selective investment in sales and marketing, we remain disciplined and operationally efficient with operating expenses as a percentage of revenue declining to 62% from 68% a year ago.

We reported non-GAAP operating income of $2.7 million with an operating margin of 9.9% compared with a non-GAAP operating income of $1.2 million or an operating margin of 5% in the second quarter of last year. Allot has 501 full-time employees as of June 30, 2026. In term of non-GAAP net profit, we reported $4.6 million in the quarter or a profit of $0.09 per diluted share compared with a non-GAAP net income of $1.5 million or a profit of $0.03 per diluted share in the second quarter of last year.

On a GAAP basis, net income for the quarter was $2.6 million or $0.05 per diluted share compared with a net loss of $1.7 million or a loss of $0.04 per diluted share in the second quarter of last year. GAAP net income for the quarter includes a onetime $1.2 million financial gain related to our office lease modification, reflecting the remeasurement of our lease liability. We do not expect this to reoccur. We generated particularly strong operating cash flow of $8.5 million in the second quarter compared with $4 million in the second quarter of last year, reflecting robust profitability and strong cash collection.

On June 23rd, our Board of Directors approved a share repurchase program of up to $40 million, which we will execute in line with market conditions. Repurchase may be made at management discretion in the open market. The timing and the amount of the repurchase will depend on market conditions, share price, liquidity and other factors. According to the company regulation in Israel, we are obliged to give 30 days notice during which any creditor may object to the buyback. The 30 days has now passed, and there were no objections. Allot has a robust balance sheet with no debt. Cash and cash equivalent, bank deposit, restricted deposit and investment as of June 30, 2026, totaled $107 million versus $88 million as of December 31, 2025.

Looking ahead to the rest of 2026. Given our performance in the first half of the year and the strength of our backlog, as Eyal mentioned, we are raising our full year 2026 revenue guidance to between $115 million to $118 million. For the full year, we expect Security-as-a-Service revenue growth of 40% or more. Our gross margin expectation for the full year remains in the range of 70%, with a specific gross margin in any given quarter depends on our product mix.

On the operating expense side, we expect to continue at a similar run rate to the current quarter, excluding the onetime expense. Overall, we continue to expect profitability improvement over the coming quarters of 2026. That ends my summary. Eyal and I are now happy to take your question.

Operator

[Operator Instructions] The first question is from Shaul Eyal from TD Cowen.

質疑応答

Shaul Eyal

Congrats on yet another very solid set of results and guidance. Liat, actually, I want to start with you and ask about operating cash flow, still more than doubling year-over-year this quarter, but slightly below last quarter, which, if I recall correctly, had some cash advancement. So, just asking if there are any unusual items this quarter we should be mindful of? And I have a follow-up.

Liat Nahum

Yes. So, as we shared last quarter, we had a very strong operating cash flow in Q1 related to the major deal that we reported a year ago, and we started collecting. And last quarter, indeed, it was a one-time event. We continue to see a very positive momentum in our cash flow. We finished the quarter at $8.5 million. And I think that this represents also our business model and our, let's say, future expectations around the deals that we are signing. Overall, no major onetime event this quarter around the operating cash flow, just continue the momentum around our business model of the Security-as-a-Service, which is generating a very good cash flow.

Shaul Eyal

Understood. Understood. Eyal or Liat, I know you don't disclose backlog or RPO metrics on a quarterly basis. But given your improved profitability and visibility, what kind of qualitative commentary can you offer us as we think about backlog or RPO? Is it fair to assume it's pretty much at all-time highs right now?

Eyal Harari

So, we reported in our yearly report RPO and as you could see, I believe, end of March, it is really in a very high level of backlog. We are going to issue media reports as we do every year, and the KPI will be available there. Overall, our performance and booking is strong and following the announcements we made in the last 12 months, it's fairly assume that this is -- continues to be very high.

Operator

The next question is from Matt Calitri from Needham.

Matthew Calitri

This is Matt Calitri over at Needham. Is there any more color you can provide on the strength you saw in North America? Maybe just anything on like how much of the strength you would attribute to product versus SECaaS? And then where are you getting the confidence that this is a sustainable long-term opportunity?

Eyal Harari

Thank you, Matt. As we commented on the prepared remarks, we see strength both on the SECaaS and the smart product line. The SECaaS is obviously more recurring and consistent as a quarter-over-quarter subscription fees and therefore, more sustainable and predictable. But as we noted this quarter, we had also very strong smart product sales, which increased the share of North America in the region. Product sales are obviously nonrecurring. And therefore, it's not every quarter is going to be the same. But we do continue to invest in the region as we see this as strategic region to support our long-term growth. So, we are very pleased with our performance with both product lines. And specific to this quarter, the strength came from the -- the extra strength came from the smart product line on top of the large contribution to the SECaaS.

Matthew Calitri

Got it. That's clear. Are you able to dive into it and all like was a lot of the strength associated with the top 10 customer? Or what drove the large increase in top 10 customers as a percentage of revenue in the quarter?

Eyal Harari

Yes. We have some large deals. And as noted, on the product side, we see a demand for the Tera III platform. Tera III platform is sizable deals. Usually, it's 7-digit opportunities. And we had a few of them in the last few quarters that we announced, and they are now translating into revenue. And therefore, it's -- on the quarterly level, it's increased the share of those top customers. Usually, the Tera III is purchased by the larger carriers because it's high-capacity high-end platform. And on a quarterly basis, it's usually get them into the top 10 accounts. We still see that the company is very healthy with relatively low concentration. As of last year, we didn't have any 10% account, and we continue to see demand coming from all regions and from multiple accounts.

Matthew Calitri

Great. Awesome. And then maybe just one more on those other regions. So, revenue in EMEA and APAC actually declined sequentially. What do you see there during the quarter? And how did that compare to expectation?

Eyal Harari

So as noted, the fluctuations are usually around the product side that is depends when the revenue land because we have deals that are in the multimillion dollar range. Therefore, it depends on the timing of the exact revenue recognition. We -- this is very normal for Allot, and this was always the case, and this is part of the plan. And we have and expect to see different balance between regions between quarters, depends on the specific timing of the larger deals that we recognize.

Operator

The next question is from Nehal Chokshi from Northland.

Nehal Chokshi

Sorry, I had myself on mute there. Congrats on another strong quarter. Two questions, if I may. First one is current portion of deferred revenue is up $7.5 million Q-over-Q, which is on top of another $13.4 million from Q1. So, the driver of these big increases presumably is Tera product revenue and associated maintenance. Is that correct?

Liat Nahum

Yes. So, as you mentioned, indeed, Q2 versus Q1, our deferred revenue increased. And if you look at the entire 6 months, also, you see the big increase in our deferred revenue. Deferred revenue usually for us represents those product deals that have not yet been recognized. As we shared last quarter, we had a large deferred revenue related to the big deal that we announced last year. And in addition, deferred revenue represents the support and the maintenance recurring revenue. Overall, for us, it's a very good positive sign because when we look at our deferred revenue growing quarter-over-quarter, it gives us a very good visibility for the remaining of 2026 and 2027.

Nehal Chokshi

So, given that this is deferred revenue, you expect to roll off, obviously, within the next 12 months. But can you give us a sense within which of the quarters in the next 12 months we can expect this to roll off in the income statement?

Liat Nahum

So, it really depends if it's product, as Eyal mentioned, product can fluctuate between quarters. But if you look at our support and maintenance, this is more or less on the same run rate. As you can see, we have short-term deferred revenue, but we have also long-term deferred revenue. So short-term deferred revenue, if you look -- should be recognized in the next 12 months. And then we have additional $7.5 million of long-term deferred revenue, which will materialize only starting in the second half of 2027.

Nehal Chokshi

Okay. All right. And then in order to hit the guidance SECaaS ARR growth of at least 40%, incremental SECaaS ARR for 2H '26 will need to be $7 million. How should we think about the sequencing of that incremental SECaaS ARR in Q3 and Q4?

Eyal Harari

So, it's very hard to predict the exact number, but you could see from the past performance, the run rate is relatively in a similar level, and it's quite stable. We are always relied on the performance of our partners on the CSPs that are marketing the service and depends on their marketing campaigns and marketing activities, this could go a bit faster or slower in a specific quarter. But overall, on the full year, we see that we are in a quite sustainable growth rate.

Nehal Chokshi

Okay. And just to be clear, this does imply a step-up in the SECaaS ARR in 2H '26 relative to 1H '26. What do you expect to be the driver of that step-up?

Eyal Harari

So, ARR is driven by 4 vector of growth, as we always mentioned. The first and most short term is additional customers that are onboarding to the SECaaS service with our existing customers that already market the service. The second one, as we announced this quarter, it's about existing partners that add additional solutions either into new network domains, like one customer that we used to work with them only on consumer, and now they are expanding it into the SMB segment or customers that already offer to a segment like the SMB and now add another application like the identity test monitoring, which create an accelerated growth potential.

Last is, of course, new partnerships, new logos. We had one of those today this quarter as well. In this quarter, it was an existing smart customer that is now offering -- going to start offering the SECaaS. And those 4 vectors are driving growth over time. In the short, more quarter-by-quarter changes, it's really relied on how many end customers are onboarding to the services already available in the market. And this is what we need to -- our partner to execute well in order to achieve growth.

Operator

The next question is from Jonathan Ruykhaver from Cantor.

Jonathan Ruykhaver

So, Eyal, I wanted to dig down a little bit more in terms of the Tera III adoption you're seeing and the correlation to the opportunity around the Smart platform. What I understand is that some of those carriers that are on an older version of the hardware infrastructure needs to migrate to Tera III first. So, maybe you can talk to that dynamic as it relates to demand you see for the Smart platform.

Eyal Harari

Sure. So, the new Tera III platform that we launched during 2025 is high-end capacity that can reach up to 3 terabit of capacity, but it also provide high-density communication like 400-gig links and many 100-gig ports for traffic management. We see a demand both from new customers that are now going into RFPs and definitely also from existing customers that's using our previous generations that the networks are growing. They are refreshing their data centers, their sites to support more capacity. And this creates a demand for expansion. I would note that these Tera 3, as mentioned before, is for the -- typically for the larger opportunities, which usually ends with 7-digit deals. And therefore, we are talking about relatively, I would say, a small number of opportunities, but with very large impact.

The larger amount of our customers are not requiring many terabits in different site, obviously, and they can use different products that we have that are designed for the, let's say, the mid-market and the smaller carriers. So, we do see a very good feedback from customers. They really love the product. They like the ability to see both network intelligence and cybersecurity use case over the same platform. They really like the future-proof of this architecture that is build cloud native to allow us to support and scale capacity. And this is what creates the demand. I think in the last 12 months, we announced about half a dozen of Tera III deals, and this is what was building our backlog, and we still have many more opportunities like that in our pipeline. And we expect this refresh cycle to continue in the next few years as different carriers are upgrading and need this capacity earlier, but some probably will be those 400-gig capabilities and so on a bit later down the road.

Jonathan Ruykhaver

Eyal, that's very helpful. How important is the integration of some of the SECaaS offerings into that platform to competitiveness in winning deals? Is that something you're seeing attach rates for? Or is it mostly the high-performance requirement that's driving that growth?

Eyal Harari

We believe it's both, but the beauty about the ability to run the SECaaS service on this platform is that discrete change that from being the investment in the network infrastructure that is always important, but budgets are tight to a product that can help you to monetize and make money. So, what our customer really love is that now multiple organizations from the [ CTO ] organization, operation, the CISO, but now also the product can share the infrastructure investment. And therefore, in a very CapEx tight environment for the CSP that they are under pressure to improve profitability and show ways to maintain and hopefully increase their ARPU for their customers. This is a very appealing proposition. So, it's really position us different when we are competing with just network infrastructure providers. And I believe this is a great value proposition for our customers. And this is why we are seeing success in this area.

Operator

The next question is from Jonathan Ho from William Blair.

Jonathan Ho

I just wanted to maybe start with your identity services. Can you talk a little bit about sort of the initial reception from customers and pipeline build opportunity around some of these SECaaS services? And what does that look like from an uplift standpoint?

Eyal Harari

So, Jonathan, we just started to market this in the market, and we are seeing the demand coming from 2 direction. One is existing customers that are looking to add more value to their customers. We see some customers that are looking on this as an opportunity to increase their monthly fee, but they want to show more value to their customers. In some other cases, they see it as a need because of competitive pressure, maybe their operator -- competitor operator in the country is already offering a similar service. And therefore, they need to add it to their cybersecurity package they offer. So, it really depends on the specific market conditions. We don't see it as a core offering for our product. We still focus on the network security. This is where our strength, but I think the beauty of this application is the ability to complement and provide 360 degrees protection for our customers.

In addition, with new customers now that we are going into new opportunities, we have a more robust product offering. Not all of the solutions for cybersecurity can offer you like one platform with all the cyber protections you need. And we believe that eventually people are looking for simplicity. And this is why we continue to add more and more applications into the portfolio. So, I wouldn't view it as a one application that is going to be a game changer, but more of a holistic view that the platform is being able to provide multiple additional values and really comprehensive protection is what's going to create the biggest effect over time.

Jonathan Ho

Got it. Got it. And then maybe a little bit more color on the zero rating fraud prevention that you talked about. How big of a market opportunity could that be? And is this similar in terms of maybe improving the competitiveness of your product, but not necessarily a stand-alone market on its own? I just want to get a sense for how you think about that zero rating product as well.

Eyal Harari

Yes. The Zero product is not a market by its own. It's more of another use case on the Tera III platform and network intelligence. People that implement our smart product lines, they want to see how they can better manage and optimize the network. And as mentioned in previous question, this is a cost. This is an infrastructure investment to improve quality, manage platform mix and so on. Identifying use cases like that, that actually create real monetization for the operator because we unblock even revenue leakage. And by that, we can recover them data packages that they are being ripped off and they can recover and get more money. This is more in an indirect way for them to justify the reason for the platform. So, this is the way we view it, and this is the way we position it, and it's mainly relevant for customers in regions that fraud is popular. We know that in some regions, you can just get all you can in package like in North America. In these cases, it's people spend less to do those fraud. But in some regions, more in developing countries, this is a big issue because they still pay per gigabit, and we are helping our customers to avoid the revenue leakage.

Jonathan Ho

That makes sense. Just one last one for me. How do you think about your capital allocation priorities? I'm just wondering why the share buyback now? And how do you sort of balance returning value to customers with continued investments?

Eyal Harari

So, we reason and timing is really because of the strength we see in the business. We see that we have 4 consecutive quarters of double-digit growth. We see that we are cash flow positive, I believe, for 7 quarters, if I'm not wrong. And we see that we have enough cash today to have the balance both on investing in our product growth and investing in organic growth, have the option to explore inorganic growth opportunities, as well as we wanted to keep the optionality to have buyback in case we see the market terms are suitable. So, I think this is, in general, a vote of confidence of the Board in the company's strength, and it shows our maturity. And like many other companies, this is, I would say, normal course of business to have a buyback plan in place, so we can leverage in case of the relevant market conditions allow that.

Operator

This concludes Allot's Second Quarter 2026 Conference Call. Thank you for your participation. You may go ahead and disconnect.