Alarum Technologies’ Earnings Call: Mixed Sentiments and Strategic Investments

Alarum Technologies Ltd Sponsored Adr ((ALAR)) has held its Q1 earnings call. Read on for the main highlights of the call.

Alarum Technologies Ltd’s recent earnings call highlighted a mixed sentiment, with the company showing strong momentum in AI-related data collection and a robust financial position. However, challenges such as decreased year-over-year revenues and margins, increased operating expenses, and lower net profit were also evident. The company’s strategic investments in infrastructure to leverage AI trends indicate a forward-looking approach, albeit at the cost of short-term profitability.

Revenue and Profit Achievement

Alarum Technologies reported first-quarter 2025 revenue of $7.1 million, achieving a net profit of $0.4 million. The adjusted EBITDA surpassed expectations, reaching $1.3 million, indicating a strong financial performance despite the challenges faced.

Strategic Investments in AI Data Collection

The company is significantly increasing its investments in data collection infrastructure, aiming to meet the growing demand in the AI market. This strategic move includes expanding its product suite to cater to AI applications, positioning Alarum as a key player in this sector.

Major Collaborations and Customer Growth

Alarum has successfully expanded its collaborations with several large-scale platforms, including a major online marketplace in Asia and a global consumer electronics brand. This growth in customer base underscores the company’s expanding influence and market reach.

Strong Financial Position

The company’s financial health remains robust, with shareholders’ equity rising to $27.6 million and cash balances increasing nearly 60% to $24 million as of March 31, 2025. This strong financial footing provides a solid foundation for future growth initiatives.

Positive Market Outlook for Q2 2025

Looking ahead, Alarum projects a positive market outlook for the second quarter of 2025, with anticipated revenue of $7.9 million. This forecast reflects confidence in the company’s ability to navigate market volatility and continue its growth trajectory.

Decline in Year-Over-Year Revenues

Despite the positive aspects, the company faced a decline in year-over-year revenues, with Q1 2025 revenues dropping to $7.1 million from $8.4 million in Q1 2024. This decrease was primarily due to a reduction in data collection revenue.

Decreased Gross Margin

The non-IFRS gross margin fell to 69.4% in Q1 2025 from 80.4% in the previous year. This decline was mainly attributed to increased investments in infrastructure, reflecting the company’s strategic focus on long-term growth.

Lower Net Profit and EBITDA

Alarum reported a decrease in non-IFRS net profit to $1.1 million in Q1 2025 from $2.8 million in Q1 2024, with adjusted EBITDA also dropping from $3.2 million to $1.3 million. These figures highlight the financial challenges the company is currently facing.

Increased Operating Expenses

Operating expenses rose to $4.5 million in Q1 2025, up from $4 million in Q1 2024. This increase was driven by higher employee salary costs and team expansion, reflecting the company’s investment in its workforce to support growth.

Guidance for Future Growth

Alarum Technologies has provided forward-looking guidance for the second quarter of 2025, anticipating revenue between $7.9 million (±3%) and adjusted EBITDA projected from $0.5 million to $0.8 million. This guidance underscores the company’s optimism about its future prospects despite current challenges.

In summary, Alarum Technologies’ earnings call presented a mixed picture, with strong investments in AI and a solid financial position counterbalanced by declining revenues and increased expenses. The company’s strategic focus on AI infrastructure positions it well for future growth, although it comes at the expense of short-term profitability. Investors will be keenly watching how these strategies unfold in the coming quarters.