Alarum Technologies Ltd. Q1 FY2025 earnings call

• AI revolution is driving high demand for reliable data collection infrastructure, and Alarum is positioned to capitalize on this. - The company is making strategic investments in infrastructure, talent, and product development to meet growing customer needs. - Collaborations with major tech giants and startups are expanding, with new tool logos supporting data collection for AI training. - Focus remains on efficiency and long-term profitability despite current investments in scale and capability.

In the first quarter of 2025, revenue was $7.1 million, with $7 million attributed to data collection. This compared to $8.4 million in Q1 2024, where $8.1 million was from data collection. Non-IFRS gross margin for Q1 2025 was 69.4% versus 80.4% in Q1 2024. Operating expenses in Q1 2025 were $4.5 million vs $4 million in Q1 2024, driven by increased employee salary costs. Non-IFRS net profit in Q1 2025 was $1.1 million vs $2.8 million in Q1 2024. Adjusted EBITDA in Q1 2025 was $1.3 million vs $3.2 million in Q1 2024.

• Second quarter 2025 revenue is expected to range at $7.9 million plus minus 3%. - Second quarter 2025 adjusted EBITDA is projected to range from $0.5 million to $0.8 million. - The guidance considers favorable market movements and continued execution focus.

• Market is highly dynamic and unpredictable, with potential for high volatility. - Forward-looking statements are subject to risks and uncertainties as outlined in Alarum's SEC filings.

Q: The second quarter revenue guidance suggests a sequential pickup. Is it from one or two customers or broad based?

A: More or less same diversity, not from one untypical customer, but from new customers, upselling current customers.

Q: Is increased guidance from data scraping or unblocker product?

A: Revenue increase from both data collection (IP proxy network) and unblocker, with data collection showing stronger growth.

Q: Thoughts on unblocker competitive landscape?

A: Competitors exist, but Alarum's product is well-regarded by customers, including a Fortune 200 company.

Q: Second quarter has lower adjusted EBITDA. Why?

A: Strategic investments in network and talent to prepare for large customer growth, prioritizing long-term value over short-term profitability.

Q: Progress with larger customers' AI model training trials?

A: Conversations converted to partnerships and increased usage, with investments in infrastructure to meet customer requirements.

Q: Network and infrastructure investment pace?

A: Invest based on current demand and market projection, adjusting day-by-day to meet needs.

Q: Talent hiring geographies and roles?

A: Majority of current employees in Israel, hiring for professional services, solution architects, and R&D to support customers and product development