Alarum Technologies: Selloff Could Be A Buy-The-Dip Opportunity

Core Viewpoint - Alarum Technologies Ltd. experienced a significant stock sell-off following preliminary Q2 results that fell slightly below consensus estimates, yet the company has shown remarkable growth over the past year, with shares up more than 1000% [2][4]. Financial Performance - Preliminary Q2 revenue is anticipated to be $8.8 million, reflecting a 25% year-over-year growth, slightly below Wall Street's estimate of $8.9 million [4]. - Estimated cash flow from operations for Q2 is $3.1 million, a slight decrease from $3.2 million in Q1, but an improvement from the cash bleed experienced in the same period last year [4]. - The Q2 growth rate of 25% represents a slowdown compared to the 47% growth rate in Q1, indicating a normalization of growth against tougher comparables [4]. Business Segments - The NetNut platform is a major focus for the company, accounting for 90% of total revenues, following the exit from the enterprise cybersecurity segment in 2023 [5]. - Q2 standalone revenue for NetNut is expected to be $7.6 million, marking a 70% year-over-year increase, suggesting that overall results are being impacted by smaller peripheral services [5]. Customer Metrics - The Net Retention Rate (NRR) for Q1 was 166%, up from 153% in the previous quarter, indicating successful expansion of existing customer relationships through cross-selling and up-selling [6]. - An NRR above 100% suggests that the company is retaining and expanding its customer base despite some churn [6]. Market Position and Outlook - Alarum Technologies has a market capitalization of approximately $220 million, characterized by strong growth, recurring profitability, and a leadership position in its niche software category [8]. - The company is expected to leverage its customer base and global footprint to explore new growth areas, including commercialized data sets and AI-integrated insights [8]. - Current trading at an EV to forward EBITDA multiple of 15 is favorable compared to peers, with an annual revenue growth consensus estimate of 38% for Alarum, significantly higher than competitors [8]. Future Expectations - The company is anticipated to continue its growth trajectory into 2025 and beyond, potentially accelerating EBITDA and making shares more attractively priced [8]. - Investors are looking forward to final Q2 figures, with margins and cash flow being key monitoring points [9].