Alarum Technologies .(ALAR) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2023 totaled $7 million, compared to $4.8 million in Q2 2022, marking a 45.8% increase. For the first half of 2023, revenue was $12.7 million, up from $8.8 million in the same period last year [14][11] - Adjusted EBITDA for Q2 2023 was $1.1 million, a significant improvement from an adjusted EBITDA loss of $2.4 million in Q2 2022 [18][11] - IFRS net loss for Q2 2023 was $7.7 million, compared to a net loss of $3.4 million in Q2 2022 [16] Business Line Data and Key Metrics Changes - The Consumer Internet Access segment, operated by CyberKick, was scaled down due to high user acquisition costs leading to operational losses. This decision aims to focus on profitable revenue generation [6][7] - The Enterprise Internet Access segment, NetNut, has shown ongoing revenue growth and profitability, contributing significantly to overall company growth [8][11] Market Data and Key Metrics Changes - The market for NetNut was valued at $2.2 billion in 2022 and is projected to grow at a compound annual growth rate of 28.9% from 2023 to 2030, reaching $17.1 billion [8] Company Strategy and Development Direction - The company is focused on achieving profitability by scaling down non-profitable segments and enhancing its core business operations [6][12] - A strategic roadmap includes technological innovations, continued growth, and a commitment to near-term profitability [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth despite challenging economic conditions, noting that demand remains strong [40] - The company aims to improve gross margins and overall profitability in the upcoming quarters [27][29] Other Important Information - The company repaid a loan of $1.6 million, reducing total debt and liabilities, which was primarily used for user acquisition in the Consumer Internet Access segment [10][12] - Shareholders' equity decreased to $6.1 million as of June 30, 2023, primarily due to goodwill and intangible assets impairment [18] Q&A Session Summary Question: What percentage of the second quarter's revenue was from TerraZone? - Management confirmed that TerraZone contributed 0% to the second quarter's revenue [25] Question: What is the expected revenue for the third quarter? - Management indicated that a good starting point for the third quarter's revenue would be about 80% of the second quarter, given the scaling down of CyberKick [26] Question: What is the gross margin of the continuing operation? - Management expects the gross margin to improve from the current 65% to around 70% or better [29] Question: Can you provide details on the AI recruitment market customer? - Management explained that their platform allows AI companies to collect data from the web anonymously and at scale [32] Question: What is the retention rate of customers? - Management stated that the retention rate is strong but did not provide specific figures, indicating it would be disclosed in the future [42]