What caused ALLT's earnings to exceed forecasts?

Allot's (ALLT) earnings exceeded forecasts due to several key factors:

1. **Revenue Growth from Security as a Service (SECaaS)**: ALLT's SECaaS revenues experienced a significant year-over-year increase of 48.4% in FY 2023 and 56% in Q1 2024, reaching $10.6 million for the year and $3.4 million for the quarter, respectively. This growth was driven by the company's focus on this high-margin business, which contributed to improved gross margins and profitability.
2. **Gross Margin Improvement**: The company's gross margins improved year-over-year by 8.1% to 69.0% on a GAAP basis and by 4.7% to 70.4% on a non-GAAP basis in Q1 2024. This improvement was due to the growing contribution of SECaaS, which has higher profit margins than the company's traditional product revenue.
3. **Cost Control and Expense Management**: ALLT has taken aggressive actions to align its expense footprint with expected revenue levels, resulting in significant reductions in operating and net losses. The company's non-GAAP operating profit and free cash flow achieved breakeven in 2024, indicating improved financial efficiency.
4. **Positive Operating Cash Flow**: The company reported positive operating cash flow for the first time in several years, with an increase in net cash levels for two consecutive quarters. This reflects improved financial health and the ability to generate cash from operations.
5. **Strategic Reorganization**: ALLT is undergoing a strategic reorganization to become more customer-centric and to leverage its core strengths in security and network intelligence. This reorganization is expected to open new opportunities for expansion and customer acquisition, supporting future growth.

In summary, ALLT's earnings exceeded forecasts due to strong revenue growth from its SECaaS solution, improved gross margins, effective cost control, positive operating cash flow, and strategic reorganization. These factors collectively contributed to the company's return to profitability and improved financial performance.