20-F/A: Allot Ltd. Amends 20-F, Reports 2025 Net Income Growth

Allot Ltd. filed an amended annual report for 2025, correcting auditor report dates and disclosing a return to net income profitability and significant capital raise.

Summary

• The filing is an Amendment No. 1 to the annual report on Form 20-F for the fiscal year ended December 31, 2025.
• The amendment corrects an inadvertent error in the auditor's opinion on financial statements, changing the internal control over financial reporting audit date from December 31, 2024, to December 31, 2025.
• It also corrects the audit report date from March 25, 2026, to March 26, 2026.
• Allot Ltd. reported a net income of $3,705 thousand for the year ended December 31, 2025, a significant improvement from a net loss of $5,869 thousand in 2024 and $62,804 thousand in 2023.
• Total revenues increased to $101,993 thousand in 2025 from $92,195 thousand in 2024.
• Operating income was $3,604 thousand in 2025, compared to an operating loss of $6,014 thousand in 2024.
• The company successfully raised capital through a private placement in June 2025, issuing 5,000,000 Ordinary shares for $37,691 thousand net proceeds and an additional 750,000 shares for $5,670 thousand in July 2025.
• Convertible debt of $39,973 thousand was fully redeemed in June 2025, partly through share issuance to Lynrock Lake Master Fund LP.
• Cash and cash equivalents increased to $17,107 thousand in 2025 from $16,142 thousand in 2024.
• Net cash provided by operating activities significantly increased to $17,791 thousand in 2025 from $4,826 thousand in 2024.
• The allowance for credit losses decreased substantially from $25,306 thousand in 2024 to $9,611 thousand in 2025.
• Security solutions revenue contribution increased to 37% in 2025 from 23% in 2023.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing positively due to the company's return to net income and operating profitability, strong revenue growth, and successful capital raise, which significantly improved its financial position and liquidity. The reduction in credit loss allowance and increased security solutions revenue are also favorable indicators.

Positives

• Return to net income profitability of $3,705 thousand in 2025, reversing losses of $5,869 thousand in 2024 and $62,804 thousand in 2023.
• Significant increase in total revenues to $101,993 thousand in 2025 from $92,195 thousand in 2024.
• Positive operating income of $3,604 thousand in 2025, compared to operating losses in prior years.
• Strong cash flow from operating activities, increasing to $17,791 thousand in 2025 from $4,826 thousand in 2024.
• Successful private placement financing in June and July 2025, raising over $43 million in net proceeds.
• Full redemption of convertible debt in June 2025, reducing long-term liabilities.
• Substantial reduction in allowance for credit losses from $25,306 thousand in 2024 to $9,611 thousand in 2025, indicating improved collectability or risk assessment.
• Increased contribution of security solutions to total revenues, reaching 37% in 2025, up from 23% in 2023, suggesting growth in a strategic area.
• Maintained effective internal control over financial reporting as of December 31, 2025.

Negatives

• Incurred a loss from extinguishment of convertible debt amounting to $1,410 thousand in 2025.
• Net cash used in investing activities increased to $28,527 thousand in 2025 from $2,877 thousand in 2024, primarily due to increased investments in marketable securities and short-term bank deposits.
• Inventories increased by $4,569 thousand in 2025, which could indicate slower sales or increased stock holding.
• Accumulated deficit remains substantial at $261,995 thousand as of December 31, 2025, despite the net income for the year.
• The company has accumulated net operating losses for Israeli tax purposes of approximately $152,427 thousand as of December 31, 2025, and recorded a full valuation allowance, indicating uncertainty about future utilization.

Risks

• Customer concentration risk: The company's trade receivables are derived from sales to customers located in EMEA, APAC, Jako, and Americas. A significant portion of the 2023 revenue (15%) was from a single major customer.
• Credit risk: The company makes estimates of expected credit losses based on various factors, including the credit quality of its customers and economic conditions. A significant increase in credit loss provision in 2023 was due to deterioration in economic conditions of four customers, mainly in Africa.
• Foreign currency exchange rate risk: The company utilizes foreign currency forward contracts to protect against overall changes in exchange rates for some of its currency exposure, but there is no assurance these hedges will offset more than a portion of the financial impact.
• Impairment of long-lived assets: Property and equipment, right-of-use assets, and intangible assets are reviewed for impairment, and recoverability is measured by comparing carrying amount to future undiscounted cash flows.
• Taxation risk: The company has accumulated net operating losses and capital losses for tax purposes, and the utilization of these losses is subject to future taxable income and potential limitations (e.g., Internal Revenue Code, Section 382 for the U.S. subsidiary). A full valuation allowance was recorded for deferred tax assets.
• Litigation risk: While a previous civil claim was settled, the potential liability exists that remaining minority former Netonomy shareholders may file similar claims.

Future Outlook

The filing does not provide explicit forward-looking guidance on future revenues, profits, or specific strategic initiatives beyond the general business description. It mentions the adoption of new accounting standards in future fiscal years, with ASU 2025-09 and ASU 2025-12 effective for fiscal years beginning after December 15, 2026, and ASU 2025-11 effective for fiscal years beginning after December 15, 2027. The company intends to retain future earnings to finance the development of its business.

Management Comments

• "Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report." (Eyal Harari, Principal Executive Officer)
• "Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report." (Eyal Harari, Principal Executive Officer and Liat Nahum, Principal Financial Officer)
• "The Company's management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made."
• "Management currently believes that since the Company has a history of losses, and uncertainty with respect to future taxable income, it is more likely than not that the deferred tax assets regarding the loss carry forwards will not be utilized in the foreseeable future."
• "The Company currently has no plans to distribute dividends and intends to retain future earnings to finance the development of its business."

Industry Context

StockSavvy.ai notes that Allot Ltd.'s return to profitability and increased revenue, particularly in security solutions, aligns with the growing demand for network intelligence and cybersecurity services in the telecommunications sector. The shift towards Security-as-a-Service (SECaaS) models, as indicated by Allot's revenue share approach, reflects a broader industry trend where service providers seek recurring revenue streams and integrated security offerings. The significant reduction in credit loss allowance suggests improved risk management or a healthier customer base compared to previous years, which is a positive indicator in a competitive and evolving market.

Comparison to Industry Standards

• The filing does not provide specific comparisons to industry benchmarks or competitors.

Legal Proceedings

• On November 2, 2021, two founders of Netonomy Ltd. filed a civil claim against Allot, alleging breach of a share acquisition agreement and claiming damages of approximately $834 thousand.
• On March 6, 2023, the company settled this claim by agreeing to pay the plaintiffs a total of $260 thousand, with the plaintiffs waiving all claims.
• A potential liability exists that remaining minority former Netonomy shareholders may file similar claims, though there are currently no ongoing legal proceedings with them.

Related Party Transactions

• In February 2022, the company issued a $40,000 thousand senior unsecured promissory note to Lynrock Lake Master Fund LP, the company's largest shareholder.
• In June 2025, 1,249,995 Ordinary shares were issued to Lynrock Lake Master Fund LP in consideration for the extinguishment of $8,590 thousand of debt.

Stakeholder Impact

• Shareholders: Benefited from the return to net income profitability, increased shareholders' equity, and a successful capital raise. Dilution from the private placement and debt conversion occurred.
• Creditors: The full redemption of convertible debt reduces the company's debt obligations.
• Employees: Severance expenses decreased significantly in 2025 and 2024 compared to 2023, following a cost reduction plan in 2023, indicating a period of workforce adjustments.
• Customers: Improved allowance for credit losses suggests better customer payment behavior or more stringent credit management. The growth in security solutions indicates an expanding service offering.

Next Steps

• The company will continue to evaluate the impact of ASU 2025-09 (Derivatives and Hedging), ASU 2025-11 (Interim Reporting), and ASU 2025-12 (Codification Improvements) on its financial statement disclosures, with effective dates in fiscal years beginning after December 15, 2026, and December 15, 2027.
• The company intends to retain future earnings to finance the development of its business.

Key Dates

Recommendation

The company's strong turnaround to net income profitability in 2025, coupled with robust revenue growth and a significant increase in cash flow from operations, indicates a positive shift in financial performance. The successful private placement and full redemption of convertible debt have substantially strengthened the balance sheet and reduced financial risk. The increasing contribution of security solutions to revenue suggests successful strategic execution in a high-growth market. While accumulated losses and valuation allowances on deferred tax assets remain, the current trajectory points to improved financial health and future potential, making it an attractive investment.

Keywords

Allot Ltd., ALLT, SEC Filing, 20-F/A, Annual Report, Financial Results, Net Income, Revenue Growth, Operating Income, Cash Flow, Private Placement, Convertible Debt Redemption, Security Solutions, Network Intelligence, Credit Risk, Tax Losses, Corporate Governance, Financial Reporting, SECaaS