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These forward looking statements are based on current management expectations and are subject to risks and uncertainties, that may result in expectations not being realized and may cause actual outcomes to differ materially from reflected in these forward looking statements. Potential risks and uncertainties, including those discussed under the heading risk factors in Alarum's annual report on Form 20 f filed with the Securities and Exchange Commission, SEC, on 03/20/2025. And any subsequent filings with the SEC. All such forward looking statements whether written or oral, made on behalf of the company are expressly qualified by these cautionary statements and such forward looking statements are subject to risks and uncertainties, and we caution you to not play undue reliance on these. On the call, the company will also present non IFRS key business metrics. The non IFRS key business metrics the company uses are EBITDA and adjusted EBITDA. Non IFRS gross margin, and non IFRS net profit or loss, and non IFRS basic earnings or loss per share or ADS. The exact definitions and reconciliations of these non IFRS key business metrics are described in the company's first quarter twenty twenty five financial results press release which is available on the investor lobby of our website alarm.i0/investor/lobby, I'll now turn the call over to Saqar Daniel, Alarum Technologies' Chief Executive Officer.
13m 4s
Mister Daniel, the floor is yours.
13m 10s
Thank you very much, operator. Hi, everyone, and welcome to Alarm Technologies q one twenty five results conference call. I'm joined today by Shay Avnit, our Chief Financial Officer. I will kick off today's call by reviewing our recent achievements the main market trends, we see shaping the data collection space, and how our strategic vision and outlook are coming to life. Shay will then walk through the detailed financials and provide our Q2 twenty twenty five guidance. I will come back with a summary before we will open the call for the Q and A session. To highlight the top and bottom line results, first quarter twenty twenty five revenue came in as guided. At $7,100,000. Net profit was $400,000 and adjusted EBITDA exceeded the high end of guidance at $1,300,000 The beginning of twenty twenty five, marks a turning point one that we anticipated and prepared for. FDA evolution is reshaping every industry at an unmatched rate Alarum's data collection offering is increasingly becoming a key enabler a backbone, helping to power the global AI boom. The need for reliable, scalable, and the most accurate data is rising steeply. Models must be trained, retrained, and fine tuned daily.
14m 38s
And to do that, they need infrastructure like ours. We intend to grasp this momentum and opportunity. At the same time, it's important to acknowledge that the market we are operating in is still taking shape. And at this point, continues to be highly dynamic and unpredictable. Volatility may remain high and we are planning accordingly. With focused execution, the forward thinking innovative approach and growing interest from AI driven customers, our goal is not just to participate in their evolution, but to power lead and accelerate it. I would like to share that both major tech giants and emerging startups are turning us to help them overcome the growing barriers to data access. From compliance to geographical distribution and traffic unblocking. In fact, the momentum we have identified early on has carried into the beginning of 2025. Our offerings from our flagship data collector and website unblocker to our robust proxy network are quickly becoming foundational to how companies collect public web data. As AI use cases expand, so does the demand for fast, reliable, and high quality data in a scale. As we are seeing this shift starting to play out with the more top tier global companies, new logos are turning up to support a training and real world data collection considering the tremendous opportunity we see ahead of us we made a strategic decision to increase our investments by leveraging our profitable operation reinvesting earnings back into the company.
16m 27s
We are building the operation foundation to meet this unique moment. While investing in scale we stay focused on efficiency, profitability, and disciplined execution, being backed by strong balance sheet, for sustained growth. We are moving forward and expanding our network and establishing infrastructure to serve the growing demand stemming from AI related products. We are also growing our high quality talent pool developing a comprehensive suite of data collection products designed for the AI era. As we are seeing strong momentum, not just in volume, but in the depth and scale of customer engagements, we are accelerating the development of new products capabilities for large scale customer projects. We believe that first mover advantage in this space will create significant long term value. That said, we remain sharply focused on operational excellence. While gross margins are currently lower due to our ongoing investments in scale and capability, we are actively optimizing our network infrastructure and product delivery with a clear roadmap to drive efficiency and maintain high emergence and long term profitability. One of the most important milestones we recently achieved is the several large scale AI and ecommerce platforms including one of the world's largest online marketplace in Asia and a leading global consumer electronics brand, as well as a fast growing European analytics company have expanded their collaboration with us over the past quarter.
18m 10s
These collaborations cover use cases such as large scale data labeling, and models fine tuning, with fresh public data. I would like to highlight that we will continue to expand our infrastructure to support these growing opportunities. To sum up, before I turn the call over to Shay to review our financial performance, and Q2 twenty twenty five guidance. Alarum is integral building the backbone modern data collection for AI applications. We see the demand We feel the urgency. And we are executing on our long term vision one that just now is starting to real fruits. We kicked off 2025 with growing demand. We are very proud of the business we have built, and even more excited about what's ahead. Now, I'm handing it over to you now to you Shai, please. Thank you, Shahal. And hello, everyone. I will start by reviewing our key financial results for the first quarter of twenty twenty five comparing them to the same period last year, unless otherwise stated.
19m 23s
Following that, I will provide you guidance for the second quarter of twenty twenty five. These are definitions and reconciliations of our non IFRS key business metrics can be found in our Q1 twenty twenty five financial results press release. And one final note before we begin, The figures I will be discussing are rounded for clarity and ease of reference. Turning now to our financial performance. In line with our guidance, revenues in the first quarter of twenty twenty five reached $7,100,000 of which $7,000,000 was attributed to data collection. This compared to $8,400,000 in the first quarter of twenty twenty four, of which $8,100,000 was from data collection. We made a strategic decision to reinvest earnings into scaling operations, expanding infrastructure, and strengthening our IP network. To meet customer stability, responsiveness, and speed expectations thereby positioning Alarum to capture long term value and meet the demand from AI driven customer. During this phase of transition, we are dedicated to managing our operations efficiently while ensuring we progress toward our long term goals. As a result of this move, our non IFRS gross margin for the first quarter of twenty twenty five reached 69.4% compared to 80.4% in the first quarter of twenty twenty four.
21m 1s
Operating expenses in the first quarter of twenty twenty five were $4,500,000 compared to $4,000,000 in the first quarter of twenty twenty four. The change was driven mainly by the increase in employee salary related costs.
21m 16s
Primarily as we diligently grew the team to accelerate product development, laying the foundation towards the new AI era.
21m 28s
In the first quarter of twenty twenty five, we recorded a financial income of $200,000 compared to an expense of $800,000 in the same period last year. The shift to financial income was mainly driven by the fair value decrease of warrants issued in 2019 and 2020. Most of those warrants will expire during 2025. Bottom line, non IFRS net profit was $1,100,000 for the first quarter of twenty twenty five compared to a net profit of $2,800,000 in the first quarter of twenty twenty four. Adjusted EBITDA in the first quarter of twenty twenty five topped out guidance, reaching $1,300,000 compared to $3,200,000 in the first quarter of twenty twenty four. Our current share count is 70,000,000 ordinary shares. Or 7,000,000 ADSs.
22m 29s
On a fully diluted basis, the count is 79,300,000 ordinary shares or 7,900,000 ADSs. The first quarter of twenty twenty five basic earnings per share were 16¢ per ADS on non IFRS basis compared to $0.45 in the first quarter of twenty twenty four. As of 03/31/2025, the company's shareholders' equity increased substantially to a record of $27,600,000 up from $17,100,000 on 03/31/2024. The company's cash, cash equivalents and long term investments balance including interest, at the March 2025, were $24,000,000 up nearly 60% from $15,100,000 on 03/31/2024. Allowing solid cash balance ensures we can invest strategically while maintaining a focus on sustainable value creation. Let's move on to our outlook for the second quarter of twenty twenty five. Our guidance considers favorable market movements we have seen recently along with our continued focus on execution. We anticipate that in the second quarter of twenty twenty five, revenue will range at $7,900,000 plus minus 3%. The second quarter of twenty twenty five adjusted EBITDA is expected to range from $500,000 to $800,000 We started 2025 with strong momentum. A solid balance sheet, and growing market interest. In this unique period, with some uncertainty as the market continues to reshape, the early impact of our vision, investments, and pipeline visibility support the confidence guidance we are providing today.
24m 38s
We remain focused on our commitment to generating long term sustainable value for our stakeholders. With that, I will hand the call back over to Shaharum.
24m 51s
Thanks, To summarize, 2025 began with major shifts in the AI landscape. We are closely tracking these trends, which are driving increased demand for data and advanced solutions. Data is the engine behind it all. And this is precisely why we fully committed to investing and pushing forward to capitalize on the momentum. We aim to create impact and long term strategic advantages by strengthening and expanding our product portfolio investing in innovation, growing our customer base, and deepening collaborations with some of the world's largest and most influential companies. 2025 has begun with growing demand and increasing recognition of allowance for empowering the AI data infrastructure. We are seeing strong momentum deepening relationships with top tier companies, and are expanding our operational capacity to meet this moment. While we continue to invest in scale, we remain committed to efficiency. Long term profitability, and disciplined execution. All supported by a strong balance sheet that positions us well for sustained growth. We are proud of what we've built and even more excited about what lies ahead.
26m 14s
With that, we'll now open the call for the Q and A session Operator, please.
26m 20s
Thank you. The floor is now open for questions. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Our first question today is coming from Brian Kinstlinger of Alliance Global Partners. Please go ahead.
26m 47s
Hi. Good morning. Thanks for taking my questions. I'm curious, the second quarter revenue guidance suggest a more meaningful sequential pickup from usage from your customer base after what we saw was about three quarters of slower flatline demand trends. Is the stronger second quarter revenue guidance the result of one or two customers? Or is it a more broad based pickup in demand?
27m 14s
Hi, Brian.
27m 16s
So Sure. Basically, more or less same diversity, meaning it's not coming from one antipodal customer or bigger than the the than our current big customers. It's just growing its new customers. It's current customers that are upselling and usual business. Not something unique.
27m 45s
Got it. [indiscernible] I guess my follow-up is we've discussed and you've been clear about the challenges that are becoming more difficult to scrape data [indiscernible] Is the increased guidance scraping from data, or is it more, the unblocker product? And then I guess follow-up to that is can you speak to the competitive landscape of website unblocking?
28m 16s
Okay. So basically, first of all, let's start on this. [indiscernible] and the revenues that have been generated in the last period. And looking ahead, from the new products, which are the data collectors and the unblocker, are growing. So [indiscernible] one second here. Okay. So they are growing, and and even growing dramatically from two quarters ago. The increase in revenues is coming from both although the ratio is still much stronger, much higher. So for the proxy, so according to this ratio, also the ratio of the growth is coming most of it, from the data collection, meaning from the IP proxy network, and this infrastructure, but we see a demand that is growing for our data collectors, and the unblocker. Now for your second question, sorry, about the unbrokered competitive landscape, [indiscernible] So I think, I think that the the more or less, it's the same competitive landscape.
29m 38s
As I said a few times in the past, this is, let's say, this is almost technology product a lot of technology inside We build it with a dedicated team. That came, you know, from the special unit of the from the Israeli army. And, we see from one side, as the trend of the data coming into our life, of course, it makes the life of those that want to collect data more challenging, because WebSA's sorry.
30m 11s
Are trying to block more and more this traffic. So the the demand for unblocking for a scraper that knows how to bypass this technology of the website is growing. From the other side, it's a product that needs to be maintained and revised on a permanent basis, because, you know, it's like at the end of the day, it's like a cat and a mouse. [indiscernible] that, is playing on a daily no. It can be on a weekly, sometimes on a daily basis. We don't have the accurate data about feature versus feature, with our competitors, but I can tell you that the feedback that we are getting from our customers, especially one of them that is the biggest customer at this point of time, for this broker, which is Fortune 200, [indiscernible] is that we have if not the best, but one of the best products in the market, And that's why this customer is growing, absolutely, and very satisfied for this point of time.
31m 21s
Sorry. Let me just make sure I understand ask a follow-up on that piece. There are companies several companies that are doing web scraping that also have unblocking products or there's only a couple? I just didn't understand.
31m 36s
Yeah. Of course. Of course. Our competitors some of them, [indiscernible] Okay.
31m 44s
There a clear leader in the market? In terms of revenue? Might be.
31m 51s
In the in the market of the unblocker or or Germany? In Blocker. Yeah. Blocker. I don't have formal and accurate data, so I don't want to miss with Okay. My last question is, you've got the second quarter that's stronger revenue than the first quarter. But lower adjusted EBITDA Does that reflect further investments compared to the first quarter that drive pressure on the gross margin? Maybe if not, you can speak to the any more investments or incremental driving down EBITDA for two q compared to one q.
32m 29s
So as I mentioned, now in my part in the call, so we took a strategic decision A few months ago as we started to see the boom. Meaning, the demand by the way, it's [indiscernible] And the fact that it's maybe once in a lifetime opportunity for a company to be part of a revolution and to be maybe a major part, because if you will now generate your leadership and become a significant player, it might stay for years, as in other revolutions in the past. So, we are investing and growing our network sometimes even not without proportion, proportion to the revenues, but much more than current revenues, in order to be ready for each and every big or medium it can be. But for these giants. [indiscernible] they want to come in now and start to scale up with you. We don't want to to be in a point that we are losing one or two or maybe more customers because we saved some few dollars in the bank. So, you know, we are profitable for many quarters. Our balance sheet is strong enough as we think that for the best of the company and for the best of our investors that are expected from us to invest our money in the company, in order to build the future, because there is a promising future for this industry, And that's why you can see that the projection for the EBITDA for this quarter, meaning the second quarter, and maybe others in the future, But the other side, I can tell you that if we would take a decision, or we took a decision [indiscernible] is the main thing for allowing so this EBITDA can change even significantly with a decision.
34m 45s
But it's not the place now that we want to be. Not only the COGS. We, hire talents We invest in our employees in trainings, in in in AI trainings, in meeting our customers' growth, meaning we are growing, and we take the company a few levels up.
35m 8s
Great. Thank you.
35m 11s
Thank you very much, Juan.
35m 15s
Thank you The next question is coming from Kingsley Crane of Canaccord Genuity. Please go ahead.
35m 21s
Just a couple from my side. So I believe last quarter, you were talking about you were in active discussions with a handful of larger customers that we're looking at some AI model training trial projects. Just curious how those conversations progressed. In q one, and maybe that's related to your plans to to try to increase capacity for some of these larger customers. Thanks.
35m 49s
Hi.
35m 50s
Thank you. So, yes, I mentioned it. And I will say it now again. Yes, it's not just discussions, Some of them are current customers, but not just customers. There are customers that are growing and upselling, over this quarter, last quarter, So these discussions converted for customers, and even for partnerships, which is more strategic than just being a customer, but a partner that together we will sell data maybe to other companies, or we will embed ourselves in the infrastructure of these customers in order to be their only or major data enabler. That allows them to collect data in scale, and basically, to provide insights and AI outcomes for their customers. So for your second question, so not just for this because we have many other customers, but the answer is absolutely yes. We are investing in our infrastructure in our network, and in bringing more and more employees and talents in order to support the requirements. Did these customers they have their own requirements, They expect to get a level of service a level of professionalism, and we want to fulfill all their requirements because we believe it's a major milestone for our future. So we have this is one of the major reasons why we are investing more.
37m 40s
That makes perfect sense. And so specifically on the the network and the infrastructure, I mean, where do you think you are in terms of capacity today versus where do you wanna go? I mean, is this you know, it could be a quarter by quarter conversation, or is this something where you think you need to double, triple over you know, a couple of years? Just kinda curious your thoughts on that part.
38m 4s
Sorry. And The line was broken for one second, Jujada. We were to to make sure I understand your question. So you are asking from the aspect of the investment our investment in the network, So what was the question again? Can you repeat?
38m 22s
Yes. So specifically on the network, just thinking about the pace and then the total scope of the investments that you're aiming to make. Is this something where, you know, this is something, like, you'd like to double or triple in a couple of years? Or you just know that you'd like to add capacity now and you were taking it on a quarter by quarter basis?
38m 43s
Ah, okay. So and so, you know, we are investing in our net based on two main factors. One is the current demand, our current customer base, the amount of traffic and the needs in order to, to meet these traffic requirements. And the second is the projection. Meaning, how do we see the market in one or two points? How can it's a projection at the end of the day. Maybe it will not come to reality, but we have analysts that are trying to project all the time the trends and market. So based on these two factors, we take a decision quarter by quarter It's not quarter, it's day by day. If we want for example, to increase our investment in geographical, more geographic coverage, more servers, more endpoints, etcetera. So, we don't have a, we cannot have this market now It's a market that, in these days, is defining self, and we are together in this market. So we don't have even, I think, we don't have even the the or nobody has accurate data to project where we've been one or two years from now. So we are doing this day by day, [indiscernible] That makes sense.
40m 13s
That's helpful. And so just on the other side of it, in terms of investing in the people and the processes, just just would be nice to hear a little bit more about what types of roles, what geographies you're hiring in, and then how you're thinking about the talent market. I mean, definitely, with some of the AI capabilities, there are only handful of people in the world that are able to that are that are well versed in at this time.
40m 38s
Okay. So for this point of time, most I'm not saying 100%, but more than 95% of our operations, basically our employees, are in Israel. In our headquarter. [indiscernible] in these days, if you would ask me, say, one quarter ago, I'd say 98 Why? Because now we are trying to scale. And to support the team to be in some different locations in the world.
41m 16s
Today, we are still in a place that we can support our customers, our operations, and even the big customers we can support them in an online mode. And, you know, to much more, flights. Yes. To visit them from time to time, to stay ahead, maybe in shift. And because our professional services guys, you know, the the the the the architect solutions, these guys that are basically supporting the customer in the proof of concept stage, and then after this, when he becomes a customer, support him on a daily basis, trying to meet his requirements, and of course, trying to offer him more solutions, and to maintain his retention. And of course, try to increase his usage in our system and ups and to upsell. So major part of the, let's say, bulky car of the employees that we are hiring now is this professional services pre sales solution architect, the know how to support. It's a combination between business and technical knowledge that support customers.
42m 34s
On-site. And of course, R and D. R and D is the bread and butter And we have many, many we have a very rich road map with so many, features and capabilities and products that we know that there is a demand, that there are customers that are waiting for these items from our side, So it's a combination between [indiscernible] vertical of professional services and architects to R and D. To develop products and innovative products.
43m 13s
Perfect. That's, really helpful context. Exciting to hear about all the the progress. That's it for me. Thanks.
43m 19s
Thanks.
43m 20s
Thank you very much. Appreciate your time.
43m 23s
Thank you. At this time, I would like to turn the floor back over to Mr. Daniel for closing comments.
43m 31s
Okay. So thank you very much, operator. So we thank you all for your time today. We look forward to hosting you on Alarum Technologies second quarter of twenty twenty five results call. Thanks. Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.
Key Insights
Q1 2025 revenue was $7.1M (in line with guidance), with net profit of $0.4M and adjusted EBITDA exceeding guidance at $1.3M; non-IFRS gross margin was 69.4% (down from 80.4% YoY) due to increased investment in scaling operations.
The company is experiencing strong demand for its data collection and unblocking products, driven by the AI boom, with both major tech giants and startups expanding collaborations, especially for large-scale data labeling and model fine-tuning.
Q2 2025 guidance: revenue expected at $7.9M (+/- 3%), with adjusted EBITDA projected between $0.5M and $0.8M, reflecting continued investment in infrastructure and talent to support anticipated growth.
Operating expenses rose to $4.5M in Q1 2025 (from $4.0M YoY), mainly due to increased hiring, particularly in R&D and professional services to support product development and customer requirements.
The company maintains a strong balance sheet with $24M in cash and investments (up nearly 60% YoY), and shareholders’ equity at a record $27.6M, enabling ongoing strategic investments for long-term growth in the evolving AI data infrastructure market.
