What happened
Allot (NASDAQ: ALLT) stock fell hard on Tuesday, dropping 16% by 11:30 a.m. EST. The cybersecurity specialist announced third-quarter results that missed Wall Street's high expectations.
So what
Sales rose 10% to $38 million, which marked a slight acceleration compared to the prior quarter, when revenue rose 8%. Allot benefited from strong demand for cybersecurity services and won a large deal with a U.S. wireless internet provider. "We continued to execute on our plan and grow [in the third quarter]," CEO Erez Antebi said in a press release.
Image source: Getty Images.
Management highlighted several new service-based contracts, including with Dish Networks, that demonstrate the strength of its portfolio. Net losses continued as the company invested in its growth initiatives. However, Wall Street was more interested in the company's reduced short-term sales expectations.
Now what
Executives said they are delaying the launch of a few new security services so that they will occur about six months later than originally planned. That shift means sales in 2021 will land slightly lower than the company projected back in early August. The delay will also pressure revenue in early 2022.
The good news is that Allot has strong momentum despite the service delays. Yet investors still chose more caution about the business while the company works to scale up its development process. Meanwhile, shareholders can now expect to see significant new security-services revenue starting in the second half of 2022.
10 stocks we like better than Allot Communications
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Allot Communications wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of October 20, 2021
Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
