Alarum Technologies Announces Third Quarter 2024 Results

Achieves quarterly revenues of $7.2 million at top-end of guidance, record net profit of $4.2 million and Adjusted EBITDA outperformed guidance at $1.4 million; strong cash generation and $24.0 million in cash and equivalents at quarter end

NetNut(1) revenues in first nine months of 2024 grew 63% year-over-year and surpassed full year 2023 revenues

TEL AVIV, Israel, Nov. 25, 2024 (GLOBE NEWSWIRE) -- Alarum Technologies Ltd. (Nasdaq, TASE: ALAR) ("Alarum" or the "Company"), a global provider of internet access and web data collection solutions, today announced financial results for the third quarter ended September 30, 2024.

"In the third quarter of 2024, we continued to bear the fruits of our strategic shift to focusing on NetNut, our data collection business unit. Our profitable business model, with strong cash generation and a solid balance sheet, supports our long-term value creation strategy," said Mr. Shachar Daniel, Chief Executive Officer of Alarum.

"Consistent with our strategy and long-term vision, we significantly advanced our main growth engines. We increased our footprint in the IP Proxy Network ("IPPN") segment and further penetrated the Data Collection and Labelling market. Notably, we recently reached a major milestone with our Website Unblocker product, a key enabler for our entry into the multi-billion-dollar Data Collection and Labeling Market. A Fortune 200 company that began using our IPPN product in the third quarter expanded its subscription by adopting our unique Website Unblocker, in less than three months, following an extensive larger-scale evaluation.

By focusing on building the most comprehensive data collection and insights offering, we are well-positioned to address evolving market needs and drive long-term value for our stakeholders," Mr. Daniel concluded.

Recent Business Highlights

   -- IP Proxy Network: The Company has significantly enhanced its 
      infrastructure, coverage, and endpoints. Additionally, the launch of a 
      new dashboard, which significantly improves customer experience, is 
      receiving excellent feedback from existing and potential customers 
 
   -- Data Collection and Labeling: The Company achieved an important milestone 
      in executing its strategy, with a cross-sell IPPN and Website Unblocker 
      win. A growing pipeline of opportunities has emerged for the Website 
      Unblocker, which has been tested and rated by industry experts as the 
      best on the market 
 
   -- Net Retention Rate ("NRR")2 reached 1.42 as of September 30, 2024 
 
                            Summary of Financial Results(3) 
                   (in millions of U.S. dollars, rounded, except per 
                               share amounts and margins) 
 
                                For the                            For the 
                            Nine Months Ended                 Three Months Ended 
                              September 30,                      September 30, 
                   ----------------------------------  -------------------------------- 
                       2024                2023             2024             2023 
                   -------------      ---------------  ---------------  --------------- 
                    (Unaudited)         (Unaudited)      (Unaudited)      (Unaudited) 
                   -------------      ---------------  ---------------  --------------- 
 
Total Revenue               24.5            19.4              7.2             6.7 
  of which, 
   NetNut Revenue 
   was                      23.7            14.5              7.0             6.1 
Gross profit                18.6            13.5              5.2             5.2 
Gross margin (in 
 percentage)                75.9%           69.4    %        71.8    %       77.1     % 
Non-IFRS gross 
 margin (in 
 percentage)                77.7%           73.2    %        73.6    %       79.4     % 
Total operating 
 expenses                   12.2            20.7              4.1             3.7 
Finance income 
 (expense), net              0.1            (0.5)             3.5            (0.7) 
Tax benefit 
 (expense)                  (1.1)            0.5             (0.3)            0.3 
Net profit (loss) 
 from continuing 
 operations                  5.3            (7.3)             4.2             1.1 
Adjusted EBITDA 
 from continuing 
 operations                  7.9             3.0              1.4             1.9 
Basic earnings 
 (loss) per ADS 
 from continuing 
 operations (in 
 U.S. dollars)        $     0.80       $   (2.05)        $   0.60        $   0.28 
Non-IFRS basic 
 earnings per ADS 
 from continuing 
 operations (in 
 U.S. dollars)        $     1.05       $    0.69         $   0.20        $   0.25 
 
Cash, cash 
 equivalents(4)             24.0             7.7             24.0             7.7 
Shareholders' 
 equity(4)                  25.0            10.9             25.0            10.9 
 
 

Third Quarter and First Nine Months 2024 Financial Analysis

   -- Q3 2024 revenues grew 7% year-over-year to $7.2 million (Q3 2023: $6.7 
      million). The increase is attributed to the enterprise internet access 
      business, NetNut, which grew to $7.0 million in Q3 2024, up from $6.1 
      million in Q3 2023. Revenues for the first nine months of 2024 grew 26.0%, 
      increasing to a Company record $24.5 million (first nine months of 2023: 
      $19.4 million). NetNut's revenues reached a record $23.7 million in the 
      first nine months of 2024, achieving 63% year-over-year growth (first 
      nine months of 2023: $14.5 million). 
 
   -- Cost of revenues in Q3 2024 totaled $2.0 million (Q3 2023: $1.5 million). 
      The year-over-year change is mainly due to the investments in NetNut's IP 
      network. In the first nine months of 2024, cost of revenues totaled $5.9 
      million, the same as in the same period in 2023. During this period, 
      NetNut's IP network costs increased, offset by the decrease in the 
      Company's consumer Internet access (CyberKick) cost of revenues, in line 
      with the Company's strategic decision in July 2023 to focus on its 
      enterprise internet access business and scale down its consumer internet 
      access business operations. 
 
   -- Operating expenses in Q3 2024 totaled $4.1 million (Q3 2023: $3.7 
      million). The quarterly change was driven mainly by the increase in 
      NetNut's operations, mainly research and development salary costs. First 
      nine months 2024 operating expenses totaled $12.2 million (first nine 
      months of 2023: $20.7 million). The nine-month year-over-year lower 
      expenses resulted mainly from last year's impairment costs of goodwill 
      and intangible assets and the strategic decision to scale down the 
      Company's consumer internet access business operations, partially offset 
      by the increase in NetNut's operation expenses. 
 
   -- Finance income, net, in Q3 2024 was $3.5 million (Q3 2023: finance 
      expense of $0.7 million). The increase is mainly due to a decrease in the 
      fair value of derivative financial instruments (warrants issued in 2019 
      and 2020), the decrease in the Company's share price during the third 
      quarter, an increase in interest income from cash deposits as well as a 
      decrease in finance expenses related to short- and long-term loans. 
      Finance income, net, for the first nine months of 2024 was $0.1 million 
      (first nine months of 2023: finance expense of $0.5 million). This switch 
      to finance income, net, from an expense, net, was mainly due to the 
      increase in interest income from cash deposits as well as lower finance 
      expenses related to short- and long-term loans. 
 
   -- First nine months 2024 cash flow from operating activities rose to 
      approximately $8.1 million (first nine months of 2023: approximately $1.4 
      million). 
 
   -- As of September 30, 2024, shareholders' equity totaled $25.0 million, 
      significantly higher than the $10.9 million as of September 30, 2023, and 
      $13.2 million as of December 31, 2023. The increase was driven by the 
      higher first nine months of 2024 net profit as well as warrants and 
      options exercises. 
 
   -- Outstanding ordinary share count as of September 30, 2024, was about 68.7 
      million, or 6.9 million in ADSs. 

Financial Outlook

"Total third quarter 2024 revenues hit the high-end of our guidance, as revenues came in at $7.2 million, of which $7.0 million were attributed to NetNut. We exceeded our third quarter 2024 Adjusted EBITDA guidance, recording an Adjusted EBITDA of $1.4 million, and demonstrated once again continued success in cashflow generation, testament to our profitable business model," said Mr. Shai Avnit, Chief Financial Officer of Alarum.

"Alarum's fourth quarter 2024 revenues are estimated at $7.5 million +/-3% and Adjusted EBITDA for the fourth quarter 2024 is expected to range from $1.3 million to $1.7 million."

"Our strong cash generation and cash balance position us to invest in opportunities that will drive Alarum's long-term success, allowing us to focus on expanding our business and laying the groundwork for sustained growth."

We are unable to present a reconciliation of our estimated Adjusted EBITDA to net profit (loss) from continuing operations as we are unable to predict with reasonable certainty, and without unreasonable effort, the impact and timing of certain expenses on our net profit (loss) from continuing operations. The financial impact of these expenses is uncertain and is dependent on various factors, including timing, and could be material to our Condensed Consolidated Statements of Income.

Third Quarter 2024 Financial Results Conference Call

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November 25, 2024 07:30 ET (12:30 GMT)