Key Summary: Between 2021 and 2024, Outerbridge Capital and QVT Financial supported Allot’s growth, particularly in cybersecurity and SECaaS, projecting strong revenue increases despite concerns over capital raises and shareholder value. They secured board representation in 2022 and praised the company's operational improvements by 2024. Meanwhile, Lynrock Lake Partners (21.8%) discussed board composition in March 2022 and was offered a board seat in November, pending shareholder approval.Market Cap: $128 million| Allot Ltd. provides network intelligence and security solutions to protect and personalize the digital experience in Europe, Asia, Oceania, the Middle East, Africa, and the Americas. .
Outerbridge Capital Management and QVT Financial
On August 23, 2021, Outerbridge Capital Management and QVT Financial (collectively, the “Investor Group” which holds 7.3%) stated that they were pleased with Allot’s increased efforts to highlight its cybersecurity business to investors. They noted that the company has forecasted 400% revenue growth, to $25 million, for its Allot Secure SECaaS product line in FY 2022; based on this and on developments in the cybersecurity market broadly, Outerbridge believes that $100 million or more of Allot Secure revenue is attainable in the company’s FY 2024. They believe that NetProtect may also generate $100 million or more of annual revenue in the coming years and that the present value of these opportunities, combined with the company’s healthy core business and cash balances, significantly exceeds $1 billion. Source
On November 15, 2021, the Investor Group stated that they remain encouraged by the rate and quality of new customer wins for the company’s burgeoning cybersecurity business, and they are pleased by the company's decision to showcase its security-as-a-service (SECaaS) annual recurring revenue (ARR) to investors on a quarterly basis. The Investor Group stated their belief that the share price remains deeply undervalued and, accordingly, they has held and plans to continue holding discussions with the management team and board on topics related to optimizing financial reporting, board composition, and enhancing value for all shareholders.. Source
On February 18, 2022, the Investor Group (10.3%) delivered a letter to the Board reiterating their belief in the company’s potential and their support of the CEO and management team, but also noting certain concerns with worrisome actions taken by the company recently, including its recent dilutive capital raise and the Board’s failure to deliver shareholder value over the course of the prior few years. The Investor Group believes that the company’s share price is dramatically undervalued, particularly given the leading market share in network-based security as a service (“SECaaS”) solutions, recent deal signings, strategic partnerships, and profitable core business in deep packet inspection (“DPI”) and network traffic management. Illustratively, and notwithstanding recent execution issues, the Investor Group believes the net present value of the company’s SECaaS business is between $10 and $20 per share, while the net present value of the company’s DPI business is between $10 and $15 per share, for a total sum of the parts valuation of between $20 and $35 per share, while the company’s closing share price today was just $7.62. They believe that this divergence between the current share price and the intrinsic value of the company signals the market’s significant lack of confidence in the Board and requires immediate attention. To this end, the Investor Group has proposed the appointment of a shareholder representative to the Board to strengthen the Board’s public markets acumen and shareholder alignment and to ensure that appropriate process and consideration are followed on important matters affecting all shareholders. Source
On May 11, 2022, , the Investor Group (7.5%) entered into a Cooperation Agreement with the company and pursuant to it, the company agreed to immediately appoint Raffi Kesten (the “Agreed Nominee”) as a director to fill the vacancy on the Board created by the departure of Miron (Ronnie) Kenneth, a Class II member of the Board.
On September 3, 2024, Outerbridge Capital (2.8%) acknowledged the company's cost reductions and operational improvements, resulting in positive free cash flow in Q2 2024 and a commitment to sustain it. They highlighted a recent SECaaS expansion with a Tier-1 European customer and expect more growth in traffic management and analytics due to favorable market trends. Source
Lynrock Lake Partners
On March 30, 2022, Lynrock Lake Partners (21.8%) stated that in light of a proposal by Outerbridge Capital to add a shareholder representative to the Board, a director of the company invited Ms. Cynthia Paul of Lynrock Lake Partners to have a discussion on March 28, 2022. The two parties discussed the composition of the Board in an effort to enhance value for all shareholders. Source
On November 14, 2022, Lynrock Lake Partners (23.4%) announced that it was offered a Board seat subject to shareholder approval at the upcoming AGM. Source
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