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01/11 11:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong revenue growth driven by AI projects, but declining margins and increased expenses. The Q&A indicates high customer satisfaction and potential for margin recovery, yet management's lack of guidance on revenue consistency and infrastructure investment dampens sentiment. The mixed signals, with strong revenue but weak margins and cautious guidance, suggest a neutral outlook for stock movement.
Revenue $13 million in Q3 2025, up 84% year-over-year from $7.2 million in Q3 2024. The increase was driven mainly by artificial intelligence customers, with a significant contribution from one large-scale AI customer accounting for about $3.5 million in revenue.
Gross Margin 56% in Q3 2025, down from 74% in Q3 2024. The decline was due to increased investments, higher share of large-scale projects with AI customers, upfront costs for infrastructure, and lower unit price charges.
Operating Expenses $7.4 million in Q3 2025, up from $4.1 million in Q3 2024. The increase was driven by planned investments in R&D, sales-related compensation, and overall operational scale.
Net Profit $0.1 million in Q3 2025, down from $4.2 million in Q3 2024. The decline was due to the absence of a one-time financial income of $3.5 million from Q3 2024 related to fair value decreases of investors' warrants.
Adjusted EBITDA $1.2 million in Q3 2025, down from $1.4 million in Q3 2024. The decrease reflects the impact of increased operating expenses and lower gross margins.
Basic Earnings per ADS $0.01 in Q3 2025, down from $0.60 in Q3 2024. The high Q3 2024 figure was due to a one-time financial income.
Non-IFRS Basic Earnings per ADS $0.18 in Q3 2025, down from $0.20 in Q3 2024. The decrease reflects the impact of increased operating expenses and lower gross margins.
Shareholders' Equity $31.1 million as of September 30, 2025, up from $26.4 million on December 31, 2024. The increase reflects the company's solid financial position.
Cash, Cash Equivalents, and Debt Investment Balance $24.6 million as of September 30, 2025, compared to $25 million at the end of 2024. The slight decrease reflects ongoing investments.
AI-centric products: Strong adoption and scaling of AI-centric products, including dataset and material, website unblocker, and custom scrapers. Triple-digit sequential growth in website unblocker and high double-digit growth in custom scrapers.
AI market expansion: Significant traction from global e-commerce platforms in Asia and increased consumption from major AI customers. AI is expected to be a core long-term growth engine.
Revenue growth: Q3 2025 revenue reached $13 million, up 81% year-over-year and 48% sequentially. Driven by AI customers and enterprise account expansion.
Gross margin impact: Non-IFRS gross margin decreased to 56% from 74% in Q3 2024 due to upfront costs for large-scale AI projects and lower unit pricing for major customers.
Operating expenses: Increased to $7.4 million in Q3 2025 from $4.1 million in Q3 2024, driven by R&D and sales-related compensation.
Strategic investments: Aggressive expansion of premium residential infrastructure and high-throughput pipelines to capture market share and secure relationships in the AI segment.
Margin improvement initiatives: Plans to develop in-house solutions, optimize network architecture, and shift towards higher-value products to improve margins.
Gross Margin Pressure: The company's gross margin has decreased significantly from 74% in Q3 2024 to 56% in Q3 2025. This is due to upfront costs associated with large-scale AI projects, including higher infrastructure costs and lower unit pricing for major customers. This margin pressure is expected to persist in the short term.
Customer Concentration Risk: A significant portion of revenue is derived from a small number of large customers, with the top two customers contributing over 40% of revenue. This creates dependency on a few clients, increasing vulnerability to changes in their demand or business conditions.
Volatility in AI Market Demand: The AI market is in a hyper-growth phase with natural volatility. Demand from leading AI labs can fluctuate sharply quarter-to-quarter, making revenue patterns unpredictable in the short term.
High Operating Expenses: Operating expenses have increased significantly, from $4.1 million in Q3 2024 to $7.4 million in Q3 2025, driven by higher employee-related costs and expanded operations. This could pressure profitability if revenue growth slows.
Short-Term Profitability Sacrifice: The company is prioritizing long-term market share and strategic relationships over short-term profitability, which could pose risks if anticipated long-term benefits do not materialize as expected.
Dependence on Third-Party Partners: Initial stages of delivery for large customers rely on third-party partners, adding costs and potential risks related to external dependencies.
Economic Uncertainty: Broader economic uncertainties could impact customer spending and demand for the company's services, particularly in the volatile AI and technology sectors.
Revenue Expectations: The company expects Q4 2025 revenue to be approximately $12 million, with a range of plus/minus 7%, representing about 63% year-over-year growth. Full-year 2025 revenue is projected to reach around $41 million, up almost 30% year-over-year.
Margin Projections: Short-term margin pressure is expected due to upfront investments and lower unit pricing for large-scale AI customers. However, margins are anticipated to improve over time through in-house solutions, network optimization, and a shift toward higher-value products.
AI Market Trends: The company anticipates continued growth in the AI market, with demand broadening and becoming a core long-term growth engine. Revenue patterns are expected to become smoother and more predictable as AI models transition from research to production.
Product Mix and Strategic Plans: The company is shifting from a single-product proxy business to a diversified multiproduct data infrastructure platform. This includes scaling AI-centric products like dataset scrapers, website unblockers, and custom scrapers, which are expected to drive stronger long-term margins and healthier unit economics.
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The earnings call reveals strong revenue growth driven by AI projects, but declining margins and increased expenses. The Q&A indicates high customer satisfaction and potential for margin recovery, yet management's lack of guidance on revenue consistency and infrastructure investment dampens sentiment. The mixed signals, with strong revenue but weak margins and cautious guidance, suggest a neutral outlook for stock movement.
Alarum Technologies shows mixed signals: slight revenue decrease but a shift towards AI customers, and improved net profit. Investments in R&D and infrastructure are raising expenses, affecting margins negatively. The Q&A reveals concerns about low margins and unpredictable demand but highlights potential growth from AI trends. Overall, the company's strategic focus on AI and infrastructure investments could lead to future growth, but short-term profitability and margin recovery are uncertain. Given these mixed factors, the stock price is likely to remain stable in the short term, resulting in a neutral sentiment.
The earnings report indicates a significant decline in revenue, net profit, and EBITDA due to strategic reinvestments, impacting short-term profitability. The competitive landscape is challenging, with regulatory and talent acquisition risks. Despite a strong balance sheet and cash position, the absence of immediate shareholder returns and lower margins are concerning. The Q&A reveals broad-based demand but highlights competitive pressures and unclear market leadership. Overall, the financial performance and strategic focus on long-term growth suggest a negative short-term stock price reaction.
The earnings call presents a mixed outlook: a 15.5% revenue decline and lower margins raise concerns, but strong cash flow and increased shareholder equity are positives. Q&A insights suggest broad-based demand growth and strategic investments, but lack of clarity on market leadership is a downside. The overall sentiment is balanced by optimistic revenue guidance for Q2 2025 and ongoing customer growth, resulting in a neutral stock price prediction.
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