Allot Ltd (ALLT) 2023 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Allot's third quarter 2023 results conference call. All participants are at present in listen-only mode. Following managements formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded.

女士們先生們，謝謝你們的支持。歡迎參加 Allot 2023 年第三季業績電話會議。所有參與者目前均處於僅監聽模式。管理層正式介紹後，將為問答環節提供指示。提醒一下，本次會議正在錄製中。

You should have all received by now, the company's press release. If you have not received it, please contact Allot's Investor Relations team at EK Global Investor Relations at 1-212-378-8040 or view it in the news section of the company's website at www.allot.com.

你們現在應該已經收到該公司的新聞稿了。如果您尚未收到，請致電 1-212-378-8040 聯絡 EK Global 投資者關係部的 Allot 投資者關係團隊，或在公司網站 www.allot.com 的新聞部分查看。

I would now like to hand over the call to Mr. Kenny Green of EK Global Investor Relations. Mr. Green, would you like to begin?

現在我想將電話轉交給 EK 全球投資者關係部的 Kenny Green 先生。格林先生，您想開始嗎？

Welcome to Allot's third quarter 2023 conference call. I would like to welcome all of you to the conference call, and I�d like to thank Allot's management for hosting this call. With us on the line today are Mr. Erez Antebi, President and CEO; and Mr. Ziv Leitman, CFO. Erez will provide an opening statement and summarize the key highlights of the quarter. We will then open the call for the question-and-answer session and both Erez and Ziv will be available to answer those questions.

歡迎參加 Allot 2023 年第三季電話會議。我歡迎大家參加電話會議，並感謝 Allot 的管理層主持這次電話會議。今天與我們通話的是總裁兼執行長 Erez Antebi 先生；和財務長 Ziv Leitman 先生。埃雷茲將發表開幕詞並總結本季的主要亮點。然後我們將開始問答環節，Erez 和 Ziv 都可以回答這些問題。

You can all find the financial highlights and metrics, including those we discussed on the conference call, in the earnings release issued last week.

您都可以在上週發布的收益報告中找到財務亮點和指標，包括我們在電話會議上討論的內容。

Before we start, I'd like to point out the following safe harbor statements. This conference call contains projections or other forward-looking statements regarding future events or the future performance of the company. These 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, delays in the launch of services by customers, reduced demands and the competitive nature of the security services industry, as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission.

在開始之前，我想指出以下安全港聲明。本次電話會議包含有關未來事件或公司未來績效的預測或其他前瞻性陳述。這些陳述只是預測，Allot 不能保證它們實際上會發生。 Allot 不承擔更新資訊的任何義務。實際事件或結果可能與預測有重大差異，包括由於市場趨勢變化、客戶推出服務的延遲、需求減少和安全服務行業的競爭性質，以及文件中確定的其他風險該公司向美國證券交易委員會備案。

And with that, I would now like to hand the call over to Erez. Erez, please go ahead.

現在，我想將電話轉交給埃雷茲。埃雷茲，請繼續。

Thank you, Kenny. I'd like to welcome all of you to our conference call. Thank you for joining us today. Our third quarter revenues were $22.6 million, 10% lower than the comparable quarter last year. In September 2023, our SECaaS ARR was $10.6 million, 9% higher than our SECaaS ARR in June 2023, and 52% higher than our SECaaS ARR for September 2022.

謝謝你，肯尼。歡迎大家參加我們的電話會議。感謝您今天加入我們。我們第三季的營收為 2,260 萬美元，比去年同期下降 10%。 2023 年 9 月，我們的 SECaaS ARR 為 1,060 萬美元，比 2023 年 6 月的 SECaaS ARR 高 9%，比 2022 年 9 月的 SECaaS ARR 高 52%。

2023 continues to be very challenging for us. The transition of the business into SECaaS recurring revenue model has proved to be slower than we originally anticipated. In addition, our core DPI business is experiencing macro-related headwinds. While we don't expect these challenges to disappear in the near-term, given the challenging economic backdrop, we continue to make progress with the aspects of the business that we can control.

2023 年對我們來說仍然充滿挑戰。事實證明，業務向 SECaaS 經常性收入模式的轉變比我們最初預期的要慢。此外，我們的核心 DPI 業務正面臨宏觀相關的不利因素。儘管我們預計這些挑戰不會在短期內消失，但考慮到充滿挑戰的經濟背景，我們將繼續在我們可以控制的業務方面取得進展。

During the third quarter, our cash balance fell by $5.5 million, mostly as a result of the operating loss and decrease in account payable. Cash burn continues to be a major area of focus for us. As our cost-cutting efforts come into effect partially in the fourth quarter and in full in 2024, we expect to improve our cash flow. While our visibility remains challenged, we remain committed to reaching profitability in 2024.

第三季度，我們的現金餘額減少了 550 萬美元，主要是因為經營虧損和應付帳款減少所致。現金消耗仍然是我們關注的主要領域。隨著我們的成本削減措施在第四季度部分生效並在 2024 年全面生效，我們預計現金流將得到改善。儘管我們的知名度仍然面臨挑戰，但我們仍然致力於在 2024 年實現盈利。

Our gross margin in the second quarter was 48% due to our deal mix. We continue to target 70% gross margins for 2024, consistent with our historical performance. As we announced in July, given the challenges facing our business, the Board formed an executive committee that has worked with management to identify and recommend opportunities for further improvement with focus on driving sustainable profitability and enhancing shareholder value. The executive committee and management continue to work together to prepare the budget and operating plan for 2024.

由於我們的交易組合，我們第二季的毛利率為 48%。我們繼續將 2024 年毛利率目標定為 70%，這與我們的歷史表現一致。正如我們在 7 月宣布的那樣，鑑於我們業務面臨的挑戰，董事會成立了一個執行委員會，與管理層合作，確定並建議進一步改進的機會，重點關注推動可持續盈利能力和提高股東價值。執行委員會和管理層繼續共同努力製定2024年的預算和營運計畫。

As we discussed in the previous call, in order to conserve cash, reach break-even profitability in 2024, and ensure that we have staying power even as SECaaS takes longer to ramp up, we implemented a cost reduction plan towards the end of the third quarter. We reduced approximately 30% from our employee headcount, from the end of the third quarter of 2022 to the end of 2023, while also implementing other cost reductions. Our third quarter numbers include a one-time lift cost of approximately $1.5 million.

As we discussed in the previous call, in order to conserve cash, reach break-even profitability in 2024, and ensure that we have staying power even as SECaaS takes longer to ramp up, we implemented a cost reduction plan towards the end of the third四分之一.從 2022 年第三季末到 2023 年底，我們減少了約 30% 的員工人數，同時也實施了其他成本削減措施。我們第三季的數據包括約 150 萬美元的一次性電梯成本。

As you know, Allot operates in two business lines: Allot Smart and Allot Secure. On the Allot Smart front, while we continue to see growing interest globally from governments as they look to block illegal activities such as drug trafficking, child pornography, and terrorism, our CSP and enterprise businesses remain soft. While some of the weakness is due to cutbacks in spending, we also recognize the need to continue shifting our resources and focus to developing countries and governments as developed countries and enterprises embrace the cloud.

如您所知，Allot 經營兩條業務線：Allot Smart 和 Allot Secure。在智慧分配方面，雖然我們繼續看到全球各國政府對阻止販毒、兒童色情和恐怖主義等非法活動的興趣日益濃厚，但我們的 CSP 和企業業務仍然疲軟。雖然部分疲軟是由於支出削減造成的，但我們也認識到，隨著已開發國家和企業擁抱雲端運算，有必要繼續將我們的資源和重點轉向發展中國家和政府。

On the Allot Secure front, while spending by CSPs remains challenging, our SECaaS revenues are growing steadily. While we are not seeing the pace of growth we had expected given a slower deployment, there are quite a few positives worth highlighting. I would like to start with the North American market. Verizon business has successfully launched their network native security service which incorporates Allot NetworkSecure.

在分配安全性方面，雖然 CSP 的支出仍然具有挑戰性，但我們的 SECaaS 收入正在穩步增長。雖然由於部署速度較慢，我們沒有看到預期的成長速度，但有許多正面因素值得強調。我想從北美市場開始。 Verizon Business 已成功推出其網路本機安全服務，其中包含 Allot NetworkSecure。

The launch is going well, the number of customers is growing, and we are discussing with Verizon several expansion opportunities to different customer segments.

發布進展順利，客戶數量不斷增長，我們正在與 Verizon 討論針對不同客戶群的幾個擴展機會。

While we cannot be assured of our success in adding additional customer segments, I believe Verizon is the largest signed SECaaS opportunity for Allot. Furthermore, as other CSPs see Verizon's success, I believe some will follow suit. We are already getting enhanced interest from other operators to better understand what Verizon is doing and how they might do the same.

雖然我們不能保證在增加額外客戶群方面能夠成功，但我相信 Verizon 是 Allot 簽署的最大的 SECaaS 機會。此外，隨著其他 CSP 看到 Verizon 的成功，我相信有些人也會跟著做。其他運營商已經對我們產生了更大的興趣，希望更好地了解 Verizon 正在做什麼以及他們將如何做同樣的事情。

In APAC, we recently launched another SECaaS service in Tonga. As this is a small deal, we guaranteed the revenue for a lot regardless of penetration as per the revised direction we have previously explained. We remain excited about our SECaaS opportunities as operators continue to be interested in launching network-based security services, and we have a differentiated scalable solution for CSPs.

在亞太地區，我們最近在東加推出了另一項 SECaaS 服務。由於這是一筆小交易，因此根據我們先前解釋的修訂方向，無論滲透率如何，我們都保證了很多收入。由於營運商繼續對推出基於網路的安全服務感興趣，我們對 SECaaS 機會仍然感到興奮，並且我們為 CSP 提供了差異化的可擴展解決方案。

Looking ahead, I want to summarize our expectations for 2023. We expect SECaaS revenues for 2023 to be around $10.5 million to $11 million. We expect the SECaaS ARR for December 2023 to be between $12 million and $13 million, and our total ARR including support and maintenance to be between $51 million and $53 million.

展望未來，我想總結我們對 2023 年的預期。我們預計 2023 年 SECaaS 的收入約為 1050 萬美元至 1100 萬美元。我們預計 2023 年 12 月的 SECaaS ARR 將在 1,200 萬美元至 1,300 萬美元之間，包括支援和維護在內的總 ARR 將在 5,100 萬美元至 5,300 萬美元之間。

Regarding our total revenue, operating loss, and cash flow guidance, we are providing a wide range because of a specific large expansion deal we expect to close this year. We expect our total revenues for the full year 2023 to be between $89 million and $94 million. Non-GAAP operating loss to be between $42 million and $44 million, including the $14 million doubtful debt reserve and cash burn for the whole year to be between $31 million and $38 million.

關於我們的總收入、營業虧損和現金流量指導，我們提供了廣泛的指導，因為我們預計今年將完成一項特定的大型擴張交易。我們預計 2023 年全年的總收入將在 8,900 萬美元至 9,400 萬美元之間。非 GAAP 營運虧損將在 4,200 萬美元至 4,400 萬美元之間，其中包括 1,400 萬美元的可疑債務準備金，全年現金消耗將在 3,100 萬美元至 3,800 萬美元之間。

As I stated, we remain committed to reaching profitability in 2024. We expect the fourth quarter revenues to be $20 million to $25 million.

正如我所說，我們仍然致力於在 2024 年實現盈利。我們預計第四季度收入為 2000 萬至 2500 萬美元。

Our strategy remains the same. While we believe that our DPI business has limited growth potential and the lumpiness of the business makes it difficult to forecast over short time frames, we think we can maintain a stable level of revenues through new use cases and market share gains, and we are using DPI's profitability and cash flow generation to invest in our SECaaS business because our SECaaS business is where we see significant future growth opportunities.

我們的策略保持不變。雖然我們認為我們的DPI 業務成長潛力有限，而且業務的塊狀性使其難以在短時間內進行預測，但我們認為我們可以透過新的用例和市場份額的成長來保持穩定的收入水平，並且我們正在使用DPI 的獲利能力和現金流產生投資於我們的 SECaaS 業務，因為我們的 SECaaS 業務是我們看到未來巨大成長機會的領域。

While our SECaaS revenues are being recognized later than we would have liked and later than we expected, I remain convinced of the large potential of this business and I'm confident that it will grow significantly in the coming years. I have full faith in our company, our team, and our products. And I believe the actions we are taking make our goals achievable.

雖然我們的 SECaaS 收入的確認晚於我們的預期和預期，但我仍然相信這項業務的巨大潛力，我相信它將在未來幾年顯著增長。我對我們的公司、我們的團隊和我們的產品充滿信心。我相信我們正在採取的行動可以實現我們的目標。

And now, I would like to open the call for questions-and-answers. Ziv and myself will be available to take your questions. Operator?

現在，我想開始問答徵集。 Ziv 和我本人將隨時回答您的問題。操作員？

(Operator Instructions) Max Michaelis, Lake Street.

（操作員指示）Max Michaelis，湖街。

Sorry, I was on mute. My fault. When we look at -- my first question is, looking at our 2024, just with the visibility being fairly cloudy, are you comfortable that you guys will be able to guide (technical difficulty)? Thank you.

抱歉，我當時處於靜音狀態。我的錯。當我們看到——我的第一個問題是，看看我們的 2024 年，只是在能見度相當陰暗的情況下，你們對你們能夠指導（技術難度）感到滿意嗎？謝謝。

I'm sorry, can you repeat the -- your last -- the last sentence? Are we comfortable we're able to guide?

抱歉，您能重複您的最後一句話嗎？我們能夠輕鬆地進行指導嗎？

Yeah. Just given visibility just kind of like something we're seeing market (technical difficulty) giving 2024 guide?

是的。只是給予可見性就像我們看到的市場（技術難度）給出 2024 年指南一樣？

At this point, we're not giving a 2024 guide. We will be giving guidance once we finish our AOP and budget for '24 which will be towards the end of this year. In the next earnings call, I expect we'll be able to provide guidance on '24. The challenge you stated is correct. The visibility is tough, and yet we are going to guide to the best of our ability and we're going to focus very hard to turn profitable in '24.

目前，我們還沒有提供 2024 年指南。我們將在今年年底完成 24 年的 AOP 和預算後提供指導。在下一次財報電話會議中，我預計我們將能夠提供有關「24」的指導。你所說的挑戰是正確的。可見度很困難，但我們將盡我們最大的能力進行指導，我們將非常努力地集中精力在 24 年實現盈利。

And then the next question here is just on gross margin. A little bit of a down-tick here in Q3, I think this adjusted gross margin is around 48%. What's giving you guys confidence you there, you can get back up to that 70% level in Q4 and then into 2024? And then maybe go into what caused that down tick in Q3?

下一個問題就是毛利率。第三季略有下降，我認為調整後的毛利率約為 48%。是什麼讓你們對你們有信心，你們可以在第四季度恢復到 70% 的水平，然後進入 2024 年？然後也許可以探討是什麼導致了第三季的下滑？

Hi, Max. As we said in our previous conference call, we were expecting around gross margin around 50% this quarter. So 48% is in the same range. And the reason was few deals with a very low growth margin. As we explained, sometimes we decide to take deals with a very low gross margin when it's a competitive replacement, when it's a strategic deal for us, when we expect future expansion.

嗨，馬克斯。正如我們在先前的電話會議中所說，我們預計本季的毛利率約為 50% 左右。所以 48% 處於同一範圍內。原因是很少交易的成長率非常低。正如我們所解釋的，有時，當它是有競爭力的替代品時，當它對我們來說是一項戰略交易時，當我們預計未來的擴張時，我們會決定以非常低的毛利率進行交易。

And also bear in mind that we can get a larger deal, but the amount that we recognize in the first quarter is much lower than the total deal, because it includes also support and maintenance for future years. So we carried out the amount of support and maintenance, which will be recognized later at the higher margin.

請記住，我們可以獲得更大的交易，但我們在第一季確認的金額遠低於交易總額，因為它還包括未來幾年的支援和維護。因此，我們進行了一定數量的支援和維護，稍後將以更高的利潤率確認。

Now, till Q3, for the last many years, our gross margin was around 70%, also in the first half of 2023, and we do believe that in spite of the low gross margin in the second half of 2023, we will be able to come back to the 70% gross margin next year.

現在，直到第三季度，過去很多年，我們的毛利率都在70%左右，2023年上半年也是如此，我們確實相信，儘管2023年下半年毛利率較低，但我們能夠明年毛利率回到70%。

All right. Thanks for taking my questions.

好的。感謝您回答我的問題。

Nehal Chokshi, Northland Capital Markets.

Nehal Chokshi，北國資本市場。

Yeah. Thank you. And Erez, good to hear that there are some (technical difficulty). It sounds like, given that you have limited visibility, the buildup of how your guiding has changed, A, is that correct, and B, if so, how has it changed?

是的。謝謝。埃雷茲，很高興聽到有一些（技術困難）。聽起來，鑑於你的可見性有限，你的指導如何變化的積累，A，這是正確的，B，如果是這樣，它是如何改變的？

I'm not sure I follow the question now, sorry. How?

我不確定我現在是否明白這個問題，抱歉。如何？

Yeah. Let me try to clarify. So for example, in prior quarters, your guidance may consist of some sort of bottoms-up basis where you're looking at your pipeline and assuming some sort of close rate. Going forward, have you changed that process or changed the parameters that you utilized that process?

是的。讓我試著澄清一下。例如，在前幾個季度，您的指導可能包括某種自下而上的基礎，您會在其中查看您的管道並假設某種關閉率。展望未來，您是否更改了該流程或更改了您使用該流程的參數？

No. I think we're still building it bottom up from what we see. And we're trying to accurately forecast what the results are going to be and we do that in a very detailed bottom up process that we do internally and follow up on basically weekly. And it's true that over the past couple of years, our ability to forecast the probability and timing of closing deals has diminished, so our forecast has become less accurate, but the process itself has not changed. It's simply become harder for us to narrow the numbers correctly.

不，我認為我們仍在根據我們所看到的情況自下而上地構建它。我們正在嘗試準確預測結果，我們在內部進行非常詳細的自下而上的流程，並基本上每週進行跟進。確實，在過去的幾年裡，我們預測完成交易的機率和時間的能力已經減弱，因此我們的預測變得不太準確，但過程本身並沒有改變。對我們來說，正確縮小數字變得更加困難。

Nehal, please remember that in previous years, like two years ago, we had a much larger backlog. So it was easier to focus the quarterly revenues. Now when the backlog is much lower, we are dependent on the same quarter booking. So we have a challenge to focus the revenues. So that degree of accuracy.

Nehal，請記住，前幾年，例如兩年前，我們的積壓量要大得多。因此更容易集中季度營收。現在，當積壓訂單少得多時，我們依賴同季度的預訂。因此，我們面臨著集中收入的挑戰。這樣的準確度。

That's helpful. And just to be clear, given the commentary around limited visibility, are you using lower probabilities to compensate for that lower visibility and lower probabilities of closing, rather?

這很有幫助。需要明確的是，鑑於有關可見性有限的評論，您是否正在使用較低的機率來補償較低的可見性和較低的關閉機率？

We believe that our forecast is realistic and achievable, but it's not conservative and it's not aggressive. We think it's realistic and achievable.

我們相信我們的預測是現實的、可以實現的，但並不保守，也不激進。我們認為這是現實且可以實現的。

And to directly answer your question, then yes, we're assuming lower probabilities on things because it's become harder to forecast.

為了直接回答你的問題，是的，我們假設事情發生的機率較低，因為它變得更難預測。

Okay. Thank you. And then, I think, you mentioned that you're looking to drive profitability, and it sounds like the main driver of drive-out profitability�s to continue to right-size the OpEx portion of the overall business. And while most of your OpEx is commingled between the SECaaS and the DPI, is there some amount of minimal investment that you're going to want to maintain strategically on the SECaaS portion?

好的。謝謝。然後，我認為，您提到您正在尋求提高盈利能力，這聽起來像是推動盈利能力的主要驅動力，即繼續調整整體業務的營運支出部分的規模。雖然您的大部分營運支出混合在 SECaaS 和 DPI 之間，但您是否希望在 SECaaS 部分上策略性地維持一定程度的最低投資？

We will definitely maintain what we -- I don't know if the word minimal is the right, we will maintain a balance between our investment on the SECaaS portion and our drive to reach profitability. And it will limit the amount that we're able to invest. So no doubt, we will be investing less than we have this year and definitely less than we invested in the year before.

我們肯定會保持我們的——我不知道「最小化」這個詞是否正確，我們將在對 SECaaS 部分的投資和我們實現盈利的動力之間保持平衡。這將限制我們能夠投資的金額。因此，毫無疑問，我們的投資將比今年少，而且肯定比前一年少。

You are correct that a significant part of our drive to reach profitability had and continues to be expense control. There is -- because when we look at the top line then I would expect SECaaS revenues like we've been showing over quite a few last quarters, it's still consistently growing.

你是對的，我們實現盈利的一個重要部分過去和現在都是費用控制。是這樣的——因為當我們查看營收時，我預計 SECaaS 收入就像我們在過去幾季中所顯示的那樣，它仍然在持續成長。

So I would expect them to continue to grow into next year, which will help us. But the absolute numbers themselves are not very high. So we remain with trying to forecast and see how much can we count on the DPI or Allot Smart segment for revenues. That area, which relies heavily on operator spending is still affected by significant headwinds and cost reductions in operator's budgets.

因此，我預計他們明年將繼續成長，這將對我們有所幫助。但絕對數字本身並不是很高。因此，我們仍在嘗試預測並看看我們可以依靠 DPI 或智慧分配細分市場獲得多少收入。該領域嚴重依賴營運商支出，但仍受到營運商預算的重大阻力和成本削減的影響。

So while I think we're roughly around the -- in a general sense without stating any numbers, I think we've roughly reached the bottom of the curve here. I don't think we can rely on the significant growth in our DPI or Allot Smart segment. So the combination of that leads us to reach profitability by reducing the OpEx, which is what we have been doing so far.

因此，雖然我認為我們大致處於一般意義上，沒有說明任何數字，但我認為我們已經大致到達曲線的底部。我認為我們不能依賴 DPI 或智慧分配領域的顯著成長。因此，這一切使我們能夠透過降低營運支出來實現盈利，這也是我們迄今為止一直在做的事情。

Just to be clear, would you be able to cut your OpEx further if you believe you needed to in the case that DPI does not stabilize here?

需要明確的是，如果您認為在 DPI 不穩定的情況下需要進一步削減營運支出，您是否能夠進一步削減營運支出？

We didn't prepare our '24 budget yet, so we don't know. And as I said, it will be a combination between the revenues which we think will be achievable and the right level of OpEx and we keep our goal to be breakeven next year.

我們還沒有準備 24 年的預算，所以我們不知道。正如我所說，這將是我們認為可以實現的收入與適當水平的營運支出之間的結合，我們的目標是明年實現收支平衡。

Last question for me. So as you mentioned, you had announced a special committee to explore options for Allot and subsequently you announced your founder retiring from the Chairman position and a new Chairman. Does that represent the conclusion of that social committee or is that still ongoing? And then what do you expect the new Chairman to bring?

對我來說最後一個問題。正如您所提到的，您宣布成立一個特別委員會來探索 Allot 的選擇，隨後您宣布您的創辦人從董事長職位上退休並任命了新董事長。這是否代表該社會委員會的結論還是仍在進行中？那麼您對新任主席有何期待呢？

So I'll say a couple of things. One is that the committee was formed, and I'll reiterate what I said, the committee was formed to work with management to identify and recommend opportunities for improvement, for further improvement, with a focus on driving sustained profitability and enhancing shareholder value. The work between the executive committee and management, one of the results was that, that was the OpEx reduction and cost cutting that we implemented during the third quarter in late August.

所以我要說幾件事。一是委員會的成立，我要重申我所說的，委員會的成立是為了與管理層合作，識別和建議改進的機會，進一步改進，重點是推動持續盈利和提高股東價值。執行委員會和管理階層之間的工作，結果之一就是我們在八月底第三季實施的營運支出削減和成本削減。

And that work continues, like I said earlier in this call, continues to work together with management to figure out what is the right operating plan, goals, and expense levels and budget for 2024. Now Yigal, who was our Chairman until recently, decided to resign for his own reasons, has nothing to do with the executive committee and he�s not a derivative of that in any way, shape, or form.

正如我之前在本次電話會議中所說，這項工作仍在繼續，繼續與管理層合作，找出2024 年正確的營運計劃、目標、費用水平和預算。現在，直到最近擔任我們董事長的伊格爾(Yigal) 決定因自己的原因辭職，與執行委員會無關，他也不是以任何方式、形式或形式衍生的。

And do you expect a new Chairman to bring anything different here?

您認為新任主席會帶來什麼不同嗎？

I think the new Chairman, you feel free to ask him yourself, if and when you meet him, but I think anybody that has a different leader or new Chairman, David Reis has, vast industry and operational experience. I think anybody that brings with them a fresh flow, different perspective, can bring significant value to the company and that's what I believe they're using for their needs.

我認為新任董事長，你可以隨意問他自己，如果你見到他，或者當你見到他時，但我認為任何擁有不同領導者或新董事長的人，大衛·里斯都擁有豐富的行業和營運經驗。我認為任何帶來新鮮血液和不同視角的人都可以為公司帶來巨大的價值，我相信他們正在利用這些來滿足自己的需求。

Thank you for taking my questions.

感謝您回答我的問題。

Marc Silk, Silk Investment Advisors.

Marc Silk，絲綢投資顧問公司。

Thank you. So, earlier in the process of SECaaS deals a few years ago, you would basically lay out your capital with no commitment. So, can you explain how going forward that's going to be? Like, are you going to, before you spend penny number one, you're going to get a commitment if you hit benchmarks? It's just trying to clarify, you're kind of spending in this reward in regards to obtaining more SECaaS customers?

謝謝。因此，在幾年前的 SECaaS 交易過程的早期，您基本上會在沒有承諾的情況下投入資金。那麼，您能解釋一下接下來會怎樣嗎？就像，在你花第一分錢之前，如果你達到基準，你會得到一個承諾嗎？我只是想澄清一下，您在這個獎勵上的花費是為了獲得更多的 SECaaS 客戶嗎？

Okay. So I'll give you a bit more detailed answer maybe. You're right that that's how we were doing with our network security product in the past. Now when we look at it -- we looked at it again about a year and a half or so ago, and we said that okay, the fact that we are outlining capital without getting a firm commitment from the operators and then they take a long time to launch and they take a long time to wrap up and generate revenue and so on, it's not a good way to go forward.

好的。所以我也許會給你更詳細的答案。你說得對，這就是我們過去使用網路安全產品的方式。現在，當我們審視它時，我們大約一年半前再次審視它，我們說，好吧，事實上，我們在沒有運營商堅定承諾的情況下概述了資本，然後他們花了很長時間啟動時間長，需要很長時間才能完成並產生收入等等，這不是一個好的前進方式。

So for most new deals, definitely for the smaller ones, we're looking for a firm commitment for revenue before we take upon ourselves any commitment to invest capital or deploy the network and so on. And investing capital is not just hardware, right? It can be hardware, professional services, things like that. Now it's not all operators are created equal. I can tell you, I don't think it's any secret, Verizon was not willing to give us a firm upfront commitment for revenue.

因此，對於大多數新交易，尤其是較小的交易，我們在做出任何投資資本或部署網路等承諾之前，都會尋求對收入的堅定承諾。投資資本不僅僅是硬件，對吧？它可以是硬體、專業服務等等。現在並不是所有的運營商都是生而平等的。我可以告訴你，我認為這不是什麼秘密，Verizon 不願意給我們一個堅定的預先承諾的收入。

But I think the opportunity has proven itself and it was right of us to sign this deal and launch with them even though they didn't make an upfront minimum revenue commitment to us. So I would expect that there could be other such operators in the future, but we will strive 100% with the small and medium-sized operators. With the large ones, we may need to be more pragmatic, but we will strive with the other ones to get the minimum commitment.

但我認為這個機會已經證明了自己，即使他們沒有向我們做出預先的最低收入承諾，我們簽署這項協議並與他們一起推出是正確的。所以我預計未來可能會有其他這樣的電信商，但我們會100%與中小型業者合作。對於大型企業，我們可能需要更加務實，但我們將與其他企業一起努力獲得最低限度的承諾。

All right. Thank you for taking my questions.

好的。感謝您回答我的問題。

Todd Felter, [88] Management LLC.

托德·費爾特，[88] 管理有限責任公司。

Todd, are you on the line? Todd, would you like to ask a question? The questioner is not asking his question.

托德，你在線嗎？托德，你想問一個問題嗎？提問者沒有問他的問題。

Rory Wallace, Outerbridge Capital.

羅裡·華萊士，Outerbridge Capital。

Hi, Erez. Good to hear you're feeling better. I was wondering if you could elaborate at all on the launch at Verizon, how they're thinking about the offering in terms of their strategy around cybersecurity, maybe how they would view potentially expanding the deal. It's obvious that for a lot, it would be wonderful to expand outside FWA since the opportunity there's an order of magnitude larger outside that footprint. And do you think that Verizon is viewing this solution as something that's very additive both to revenue to turn or in other strategic ways that would give them a real impetus to expand the deal?

嗨，埃雷茲。很高興聽到你感覺好多了。我想知道您是否可以詳細說明 Verizon 的推出，他們如何從網路安全戰略角度考慮該產品，也許他們如何看待擴大交易的可能性。顯然，對許多人來說，在 FWA 之外擴張是件好事，因為在該足跡之外還有更大的機會。您是否認為 Verizon 認為該解決方案對於增加收入或以其他戰略方式具有非常大的附加作用，從而真正推動他們擴大交易？

Okay, I'll try to respond and I'll tread lightly here. First of all, Verizon is a very, very large corporate, right? There are many, many people at Verizon and they have to use. But I'll try and state what I believe from my interaction with many people at Verizon, what I believe the general consensus could be.

好吧，我會盡力回應，並且在這裡我會小心行事。首先，Verizon 是一家非常非常大的公司，對吧？ Verizon 有很多很多人，他們必須使用。但我會嘗試透過與 Verizon 的許多人的互動來闡述我所相信的，以及我認為普遍共識可能是什麼。

First of all, the launch is perceived to -- the security services launch is perceived to be going very well. They believe it is something that their customers value and that their salespeople find are comfortable in selling it because the customers perceive value and it's good for them.

首先，安全服務的推出被認為進展順利。他們相信這是客戶重視的東西，而且銷售人員覺得銷售它很舒服，因為客戶感知到價值並且這對他們有好處。

Second, I would say that yes, it's definitely showing nice revenues for Verizon and I think that they are overall happy with the way it's going, not just technically but also commercially. I would add to that, that we're hearing sentences from people on Verizon which say things like, okay, they understand that they as an operator are losing more and more the grip on the end user devices, as people bring a wide range of devices doing different things from different sources and so on.

其次，我想說，是的，這確實為 Verizon 帶來了可觀的收入，我認為他們總體上對它的發展方式感到滿意，不僅在技術上而且在商業上。我想補充一點，我們聽到 Verizon 的人說，好吧，他們明白，作為運營商，他們越來越失去對最終用戶設備的控制，因為人們帶來了各種各樣的設備。來自不同來源的設備執行不同的操作等等。

And here's a value that is from the network, it's network native, it's on the network, it's a value of the Verizon network, which is and the network itself is their pride, so this fits very well along with that.

這是來自網路的價值，它是網路原生的，它在網路上，它是 Verizon 網路的價值，網路本身就是他們的驕傲，所以這非常適合。

And we're discussing with quite a few people in Verizon options of where to take this further because it's considered something that is inherent to the Verizon, an inherent value that can be added to the Verizon network. It's valued by customers and there are many different segments that can enjoy this. So, without getting too much into details, I think the opportunities there are large.

我們正在與 Verizon 的相當多的人討論如何進一步推進這一點，因為它被認為是 Verizon 固有的東西，是可以添加到 Verizon 網路的固有價值。它受到客戶的重視，並且有許多不同的細分市場可以享受這一點。因此，無需過多討論細節，我認為那裡的機會很大。

But like I said in the call, we cannot guarantee that they will eventually expand this to other segments. But we are in serious discussions on it, and I think it's a big potential.

但正如我在電話中所說，我們不能保證他們最終會將其擴展到其他細分市場。但我們正在認真討論它，我認為它有很大的潛力。

Thanks. And with Far EastTone, they've announced they've hit 550,000 subs, which I think is 10% or so, of their post-paid base within one year. Seems like a great curve of growth. Are they doing anything really unique as far as how they're approaching the service? I think the answer is probably, yes, but cannot be replicated elsewhere with future launches or where do you see them taking it next?

謝謝。他們宣布遠東通的訂閱人數已達 55 萬名，我認為這一數字佔其後付費用戶數的 10% 左右。看起來像是一條巨大的成長曲線。就他們提供服務的方式而言，他們是否做了一些真正獨特的事情？我認為答案可能是肯定的，但不能在未來的發布中在其他地方複製，或者您認為他們下一步會在哪裡進行？

I know they're merging with another telecom carrier, they're acquiring another Taiwanese telecom carrier, do you think there's an opportunity to continue to grow that at a rapid rate within FET?

我知道他們正在與另一家電信營運商合併，他們正在收購另一家台灣電信營運商，您認為 FET 有機會繼續快速發展嗎？

What FET is doing, I think that is different from other operators is -- I would say, the attitude of the executive management. The person who took with -- in FET, the initiative on this -- is their CEO. And she decided that FET should be viewed -- she wants to make FET considered as the most secure operator within Taiwan, which is her market of course.

我認為 FET 正在做的事情與其他運營商的不同之處在於——我想說的是執行管理層的態度。在 FET 中，採取這項措施的人是他們的執行長。她決定應該關注遠傳——她想讓遠傳被視為台灣境內最安全的運營商，這當然是她的市場。

Now by doing that, then she has decided to go-to-market to be very aggressive. So they are selling security at almost every touchpoint, think on every touch point I'll say cautiously almost every touch point they have with customers whether it's stores, advertisement, the call centers et cetera., which is pushing the results and that's what creates -- what generates at the end the sales and the uptake in the service.

現在，透過這樣做，她決定進軍市場。因此，他們在幾乎每個接觸點上銷售安全性，思考每個接觸點，我會謹慎地說，他們與客戶的幾乎每個接觸點，無論是商店、廣告、呼叫中心等，都在推動結果，這就是創造的結果——最終產生銷售和服務吸收的因素。

Can this be replicated? I would certainly hope so. I think we discussed this in previous calls. I think that when there is an alignment of the strategic interests of the operator with security or I'll rephrase that, when the operator sees security as aligned with their strategic interest, that drives many things internally in the operator and the way they go-to-market and the priority they put on this, et cetera., and that then drives adoption of revenue.

這可以複製嗎？我當然希望如此。我想我們在之前的電話會議中討論過這個問題。我認為，當運營商的戰略利益與安全性保持一致時，或者我會重新表述一下，當運營商認為安全性與其戰略利益一致時，就會推動運營商內部的許多事情以及他們的發展方式— —上市以及他們對此的優先事項等等，然後推動收入的採用。

I mentioned just as a -- just to put some color on it that we initiated -- actually last few weeks ago, several weeks ago, we initiated a marketing conference in Europe, where we had marketing people from various operators using our product meet with each other, and compare notes on what exactly they're doing, what they should do, how somebody else is doing something better what, their takeaways are and so on and so forth.

我剛才提到，只是為了為我們發起的事情增添一些色彩，實際上，幾週前，幾週前，我們在歐洲發起了一次行銷會議，來自不同運營商的營銷人員使用我們的產品與他們會面.互相交流，並就他們到底在做什麼、應該做什麼、其他人如何做得更好、他們的收穫等等交換意見。

That's a role that our marketing department has been doing, sharing the information as best possible between them, but this time we gave them a platform to do it with each other directly, I think was very encouraging. And we had quite a few operators walk away and come to us, not just spouting the value, but saying, okay, we learned that this other operator is doing this and that.

這是我們的行銷部門一直在做的一個角色，在他們之間盡可能地分享訊息，但這次我們給了他們一個直接相互交流的平台，我認為這是非常令人鼓舞的。我們有相當多的運營商走開並來到我們這裡，不僅僅是大肆宣揚價值，而是說，好吧，我們了解到另一個運營商正在做這做那。

And we think that's a good idea, so we're going to see how we can implement it and drive higher adoption and revenues in our market. And we have quite a few of those, so we're trying definitely to get that to happen.

我們認為這是一個好主意，因此我們將看看如何實施它並推動市場更高的採用率和收入。我們有很多這樣的東西，所以我們一定會努力實現這一點。

Thanks. Yeah. That sounds positive. And thinking about the SECaaS revenue going into next year, it's clearly going to grow. I think you can't control the adoption curve, but Verizon is going to be almost all incremental next year. And then, FET should generate decent growth, I would say, if you just model out what they've been doing. So is there anything you should think about on the flip side with SECaaS, why it wouldn't grow at a rapid rate next year?

謝謝。是的。這聽起來很正面。考慮到明年的 SECaaS 收入，它顯然會成長。我認為你無法控制採用曲線，但 Verizon 明年將幾乎全部增量。然後，我想說，如果你只是模擬他們一直在做的事情，那麼 FET 應該會產生可觀的成長。那麼，對於 SECaaS，您是否應該考慮另一方面的問題，為什麼它明年不會快速成長？

And taking it to the next level, when does that business really reach a profitable scale in your opinion? And obviously subject to change, but I think it's important to consider when that business might become cash generative and what it would take to get there if it's Verizon expanding a deal or if it's winning several new operators and how you see that evolving over the next year or two?

更進一步，您認為這項業務什麼時候才能真正達到獲利規模？顯然可能會發生變化，但我認為重要的是要考慮該業務何時可以產生現金，以及如果 Verizon 擴大交易或贏得幾家新運營商，需要什麼才能實現這一目標，以及您如何看待未來的發展一兩年？

I think you've asked, Rory -- I think you're asking the right questions and I think that those are the answers we need to answer ourselves as we're building our plan and budget for next year. And with -- I would like to be a bit more cautious and I prefer to address those questions in more detail after we have our plan, budget and numbers for next year and I feel more confident and can give you more detail on that.

我認為你已經問過，羅裡 - 我認為你問的是正確的問題，我認為這些是我們在製定明年的計劃和預算時需要自己回答的答案。我想更加謹慎一點，我更願意在我們制定明年的計劃、預算和數字後更詳細地解決這些問題，我感到更有信心，可以向您提供更多詳細信息。

That's fair. Thanks. And then just a couple of questions on the model. One is on product revenue. This year, it looks like it'll probably be the lowest product revenue you've had in 10 years or more. And I guess versus the expectations you had coming into the year, what does your gut feel about how much of the miss was driven by macro?

這還算公平。謝謝。然後是關於模型的幾個問題。一是產品收入。今年，看起來可能是 10 年來最低的產品收入。我想，與你對今年的預期相比，你的直覺對有多少失誤是由宏觀因素造成的有何感受？

We know it's a very bad carrier spending backdrop, everyone has confirmed that outside of you versus some of these secular issues or even execution issues, frankly, that might have contributed to the revenues coming in lower?

我們知道這是一個非常糟糕的運營商支出背景，每個人都已經證實，除了您以外的一些長期問題，甚至執行問題，坦率地說，這可能導致收入下降？

I think the majority has to do with the macro. We did a loss analysis on the deals during this year. We went one by one and everything that we were working on and did not materialize into a deal and is not still in process. We haven't, or say most of the business that did not close, did not close because of macro-related issues budget issues, expense cuts on the operators, things like that.

我認為大部分與宏觀有關。我們對今年的交易進行了損失分析。我們一一進行了我們正在做的所有事情，但沒有落實為協議，也沒有仍在進行中。我們還沒有，或者說大多數沒有關閉的業務，沒有關閉是因為宏觀相關問題、預算問題、運營商費用削減等。

I think our competitive positioning is still strong and I think the number of execution related problems, they exist. I'm not saying they don't, we can always improve on execution, but I don't think it would have made a material with different results. Most of it is macro.

我認為我們的競爭定位仍然很強，而且我認為與執行相關的問題也存在。我並不是說他們不這樣做，我們總是可以改進執行力，但我不認為這會產生具有不同結果的材料。大部分都是宏觀的。

Got it. And then with the expense structure, you mentioned there's $1.5 million of OpEx related to the RIF. Where does that show up in operating expenses? I wasn't sure looking at the release.

知道了。關於費用結構，您提到有 150 萬美元的營運支出與 RIF 相關。這體現在營運費用的什麼地方？我不確定是否查看了發布版本。

This is part of the OpEx because it relates to the people that there were RIFs. It's like the one-time expense of the RIF. So if --

這是 OpEx 的一部分，因為它與 RIF 的人員有關。這就像 RIF 的一次性費用。因此，如果 -

But would that actually be shown on the press release? I'm not sure.

但這真的會在新聞稿中顯示嗎？我不知道。

Yeah. So for instance, if x people were RIFed from R&D, so the relevant one-time rate expenses is in R&D. If there are people from SG&A, so it will be shown in SG&A -- in the same place where we book the salaries.

是的。舉例來說，如果 x 人從研發部門獲得 RIF，那麼相關的一次性費率費用就屬於研發部門。如果有來自 SG&A 的人員，那麼它將顯示在 SG&A 中——與我們預訂工資的位置相同。

You didn't break it down to separate lines.

您沒有將其分解為單獨的行。

Yeah, you didn't break it down. Yeah.

是的，你沒有拆開它。是的。

It's a 1.5, no? No, the 1. 5, it's not in separate lines. It's embedded in the R&D, SG&A, COGS and so on.

這是1.5，不是嗎？不，1. 5，它不是在單獨的行中。它嵌入到研發、SG&A、COGS 等。

Understood. And it wasn't shown separately. That's just what I wanted to confirm. And then if I adjust for the 1.5, it gets me roughly $21 million or a little under $21 million of base recurring OpEx in Q3. And then we should expect that there's a $15 million expense reduction that will flow through the P&L over the coming quarters, which should reduce expenses by around a little shy of $4 million a quarter. Is that a reasonable way of looking at the model and where expenses should land?

明白了。而且它沒有單獨顯示。這正是我想確認的。然後，如果我調整為 1.5，則第三季的基本經常性營運支出約為 2,100 萬美元或略低於 2,100 萬美元。然後，我們預計未來幾季的損益表將減少 1,500 萬美元的費用，這將導致每季的費用減少約 400 萬美元。這是看待模型以及費用應該落在哪裡的合理方式嗎？

I'm not sure it's the right number, but we would like to refer to those numbers only in February, after we finalize the budget process and we will be ready with our 2024 guidance.

我不確定這個數字是否正確，但我們只想在 2 月參考這些數字，也就是在我們最終確定預算流程之後，我們將為 2024 年的指導做好準備。

Got it. And one last question. Thank you for being patient with my questions. So you mentioned a large deal that was potentially going to drive a variance in cash flow in Q4. Is that a revenue deal or is that a booking with a prepayment and the revenue ships outside of the quarter?

知道了。最後一個問題。感謝您對我的問題的耐心解答。所以你提到了一項可能會導致第四季現金流變動的大交易。這是收入交易還是預付款預訂且收入在季度外發貨？

I would say that it could go either way, so that tends to be a wide range. Let's see where we end up there. If we close it, then how we close it.

我想說的是，這兩種情況都可能發生，所以範圍往往很廣。讓我們看看最終結果如何。如果我們關閉它，那麼我們如何關閉它。

Okay. Thanks a lot for taking my questions.

好的。非常感謝您回答我的問題。

Thank you, Rory.

謝謝你，羅裡。

(Operator Instructions) There are no further questions at this time. Mr. Antebi, would you like to make your concluding statement?

（操作員說明） 目前沒有其他問題。安特比先生，您願意做總結發言嗎？

Yes. I want to thank everyone for joining us on the call today. Thank you for your support during these non-trivial times. For those of you in the US, I'd like to wish you a happy Thanksgiving weekend. And I look forward to seeing you either at latest in our next call, and if not before that, perhaps in person. Thank you very much.

是的。我要感謝大家今天加入我們的電話會議。感謝您在這些重要時刻的支持。對於在美國的你們，我祝你們感恩節週末快樂。我期待著最晚在我們的下一次通話中見到您，如果不是在那之前，也許可以親自見到您。非常感謝。

Thank you. This concludes the Allot third quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.

謝謝。 Allot 2023 年第三季業績電話會議至此結束。感謝您的參與。您可以繼續並斷開連線。