Allot (ALLT -0.76%) shareholders lost ground to the market on Tuesday as the stock plunged 19% by 11 a.m. ET compared to a 1.2% increase in the S&P 500.
The cybersecurity specialist announced surprisingly weak operating results for the selling period that ended in late December.
Allot revealed in an early-morning press release that sales rose just 5% in the fourth quarter, marking a slowdown from the prior quarter's 10% increase. Allot has now posted two consecutive quarters of weak revenue, mainly thanks to delays launching several new security services.
Still, management said it was encouraged by the success it saw in growing the customer base for cloud-based network security services. "We see this as a testament to the accelerated growth in the ... market, as well as our leadership and strength in the market," CEO Erez Antebi said in a press release.
Investors weren't happy to hear Allot's official 2022 outlook that calls for sales to remain roughly flat, landing between $147 million and $153 million. Those sluggish gains won't provide much financial heft for management to direct toward growth initiatives, either.
That's why the company announced a new private financing deal providing Allot with $40 million in exchange for a significant share of the company. Lynrock Lake Master Fund, a major investor, loaned the cash and has secured the right to buy Allot shares for $10.30 per share at any time over the next three years.
The deal will give Allot more flexibility as it works to bolster its portfolio, especially through the slow-growth period ahead. But investors understandably cringed at the prospect of a rising share count combined with flat sales in 2022.