Allot : Q3 2020 IR Presentation

Allot Investor Presentation

(NASDAQ, TASE: ALLT)

November 2020

Forward Looking Statements

This presentation contains forward-looking statements, which express the current beliefs and expectations of Company management. Such statements involve a number of known and unknown risks and uncertainties that could cause our future results, performance or achievements to differ significantly from the results, performance or achievements set forth in such forward-looking statements. Important factors that could cause or contribute to such differences include risks relating to: our ability to compete successfully with other companies offering competing technologies; the loss of one or more significant customers; the impact of government regulation on demand for our products; our failure to increase the functionality and features of our products; our ability to keep pace with advances in technology and to add new features and value-added services; the failure of our products adversely impacting customers' networks; managing lengthy sales cycles; greater operational risk associated with large projects; our dependence on third party channel partners for a material portion of our revenues; our failure to comply with regulatory requirements; our dependence on traffic management systems and network management application suites for the substantial majority of our revenues; the loss of rights to use third-party solutions integrated into our products; undetected errors in our products; our dependence on a single third-party subcontractor for a significant portion of our products; and other factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F filed with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

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Allot is a provider of leading innovative network intelligence and security solutions for service providers and enterprises worldwide, enhancing value to their customers.

Markets	Installed Base	Company Highlights
• Communication	•	Hundreds of CSPs	• ALLT (NASDAQ, TASE)
Service Providers (CSPs)	•	Tier-1 operators	• 2019 revenue: $110M
• Mid - Large Enterprises
•	Global Presence	• 2020 Guidance: $135M-$140m

• Strong Balance Sheet: Cash and investments: $107M

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The
Market
Trends
CONNECTIVITY	VULNERABILITY	COMPLEXITY
		54% - 68%

The	top priority	The	care about privacy & security when
CSP	drive growth via digital media,	Consumer	accessing the internet via mobile phones2
IT services, IoT and security1	45%

will to pay for security services3

The

Opportunity

The next big thing for CSPs…

Not just broadband, Secured Broadband

1. Gartner: Market Trends: Top 10 Priorities for CSPs Worldwide, 2017-2020 2.KPMG, Deloitte 3.Consumer Survey, Deloitte

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The Allot Opportunity

OECD Connectivity

Revenue

Mobile and Fixed Broadband

CSP Potential Revenues from Security

Addressable Market

$600B* 1.7B

Consumers

$30B (5% incremental revenue)

$6B

(20%)

* OECD.org June 2017

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Allot Secure

anywhere, any device, any threat protection

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Protects all devices, including IoT, in smart homes

• Integrates with existing home router
• Full home network visibility

Protecting all device, including IoT, for SMBs

• Secure the business network
• Harden the CPE

Unified Customer Centric Experience

across all platforms

Network based security from Malware, Phishing, Ransomware, crypto mining, and harmful sites

• Frictionless Onboarding
• ~50% penetration
• Mass activation
• Customer engagement: Periodic personalized reports

Continuous Off-Net Security

• Protects when accessing public WI-FI
• Integrates 3rd party client

Network-based IoT Security

• Protects against malware, botnets and DDoS attacks
• Behavior profiling
• Behavior assurance

Inline mitigation of DDoS attacks

• Inbound and Outbound
• Detection and mitigation under a minute
• Protects network elements from overload

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Protecting Mobile Users

>23M	Up to 50%	€1	10	High NPS
Mobiles	Adoption	Monthly	Markets
			Globally

In the first nine months of 2016 Vodafone Secure Net blocked 154 million threats, 50,000 of them ransomware attacks"

Our Secure Net product is already €160 million in revenue...

we have been building quietly and we will leverage on"

Economia El Pais, Madrid Oct. 31, 2016

Vodafone CEO Vittorio Colao, May 15, 2018

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Touching the Subscriber

Security Icon	Touch Icon to access	Secure and Manage your Home Network
indicates protection	personal service portal

edition.cnn.com

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Penetration Rates by Markets

% Penetration

Months Since Implementation

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Security Traction

US OPERATOR

TIER2

LATAMOPERATOR

SECaaS

Recurring

Security

Revenues

CEE OPERATOR

EMPRESAS Austria

Hutchison Group

TIER2

APACOPERATOR

MAR* Total 2019: $85M 2020 Guidance: $140M

*MAR (maximum annual revenue potential of concluded transactions) was estimated by Allot upon

transaction signature and constitutes an approximation of the theoretical annual revenues Allot 11 would receive if 100% of the customer's subscribers, as estimated by Allot, signed up for the service.

Allot Smart

insightful, inline, intelligence

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Allot Smart

Core Technology

• DPI (Deep Packet Inspection) for very large pipes
• Leverages Machine Learning and Artificial Intelligence
• COTS hardware
• NFV compatible
• • VMware and OpenStack

Allot Solutions	Highlighted Products
Policy Control & Charging		SmartVisibility (ClearSee)
Network Intelligence		- Custom reports
	- Target customer segments
		- Facilitate real-time trouble shooting
		- Detailed data records
Intelligent Traffic Management
QoE (Encrypted)		SmartTraffic QoE
	- Reduce congestion
		- CAPEX savings of 5-15%
Regulatory Compliance

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Telecom Customers - Visibility & Control

Reliance Jio

216+ Million subscribers, 18 Tbps

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Partial customer list

Moving Forward

DPI	Security/Visibility & Control
CAPEX	Recurring Security Revenues
Preset	Machine Learning

• Artificial Intelligence
  Appliance Virtualization (NFV)

4G

5G

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Financials

Revenue($M)							110
										96
									82
						31		33	35
						29
			27		27	28
		24	25
22	23
				3		1	Q		4
	2018			2019		2020
	Cash and Investments (Sept. 30, 2020)	$107
									2017	2018	2019

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$M

Booking

Revenue Gross Margin

OPEX

Operating Profit (Loss)

MAR* (Yearly)

2019		2020YTD
179		Reported Annually
110		97
70%		71%
85		73
(8)		(4)
85		Reported Annually

2020 Guidance

>2019 Revenue <2020 Revenue

135 - 140

70%

Profitable in Q4

140

*MAR (maximum annual revenue potential of concluded transactions) was estimated by Allot upon transaction signature and constitutes an approximation of the theoretical annual revenues Allot would receive if 100% of the customer's subscribers, as estimated by Allot, signed up for the service.

Non-GAAP18

$M

Revenue

Gross Margin

Operating

Expenses

Operating Profit (Loss)

Q2 2020

Q3 2020

32.834.8

71%69%

25.425

(2.3)(1.0)

Non-GAAP19

20