Alarum Technologies .(ALAR) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported second quarter revenue of $8,800,000, a slight decrease from $8,900,000 in the previous year, attributed to a different mix of customers, particularly the growth in the AI segment [6][18] - Net profit for the quarter was $300,000, compared to a net loss of $400,000 in the same period last year [21] - Adjusted EBITDA was $1,000,000, down from $3,400,000 in the previous year [21] - Non-IFRS gross margin decreased to 63% from 78% year-over-year [19] Business Line Data and Key Metrics Changes - The company is experiencing a shift in customer base, with significant growth in the AI segment, which is replacing customers from other segments [18] - The net retention rate (NRR) was reported at 0.98, reflecting the transition in customer mix [18] Market Data and Key Metrics Changes - The company is seeing increased demand from major AI players and e-commerce companies, leading to larger deal sizes [8] - A new large-scale AI data project is expected to contribute approximately $3,000,000 in revenue per quarter, although initial profitability margins will be low [19][23] Company Strategy and Development Direction - The company is focused on investing in infrastructure and expanding its IP proxy network to capture long-term value from major AI-driven customers [18][15] - The strategy includes sacrificing short-term profitability for long-term revenue growth and higher profits [15] - The company aims to position itself as a central player in the evolving AI landscape by enhancing its product offerings and capabilities [12][14] Management's Comments on Operating Environment and Future Outlook - Management highlighted the dynamic and unpredictable nature of the AI market, urging investors to evaluate performance over multiple quarters rather than on a quarterly basis [13] - The company is optimistic about the long-term opportunities presented by the increasing value of data and the demand for data collection solutions [10][12] - The guidance for 2025 anticipates revenue of $12,800,000, representing a 78% year-over-year increase [23] Other Important Information - The company's cash and liquid investments stood at approximately $25,000,000, providing a solid foundation for strategic investments [22] - The company is actively recruiting talent to support its R&D efforts and meet growing customer demands [42] Q&A Session Summary Question: Clarification on the large customer ramp in Q3 - Management explained that lower margins are due to the new product's infrastructure costs and the scale of the project, which is currently more expensive [28][29] Question: What is the product and how is it different? - The product involves a significant amount of bandwidth and data volume, requiring advanced technology infrastructure [38] Question: Broader customer base usage trends - Management noted a significant increase in demand from AI and data intelligence customers, with a strong pipeline of new logos [41] Question: Customer lifetime value and stability - Management indicated that the current customer base is expected to provide significant growth, with a focus on long-term retention and value [50] Question: Expected contribution from the new project - Management expressed confidence in the projected $3,000,000 revenue for Q3, while noting the unpredictability of future demand [59]