Alarum Technologies Ltd.

Greetings and welcome to the Safety Group LTD first quarter 2022 earnings results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Steve Gerson, Director of Investor Relations. Thank you. You may begin.

Thank you, Operator. Good morning, ladies and gentlemen. Welcome to Safety Group's first quarter of 2022 earnings results conference call. I'm Steve Gersten, Director of Investor Relations for Safety Group. Before we get started, I will read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the federal securities laws regarding Safety Group. Forward-looking statements include statements about plans, objectives, goals, strategies, future events of performance and underlying assumptions, and other statements that are different than historical fact. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include those discussed under the heading Risk Factors in Safety's Annual Report filled with the Security Exchange Commission, the SEC, on May 31st, 2022, and in any subsequent filings with the SEC. As such, forward-looking statements written, whether written or oral, made on behalf of the company are expressly qualified by these cautionary statements, and such forward-looking statements are subject to risks, uncertainties, and we caution you not to place undue reliance on these. At this time, I'd like to turn the call over to Shakar Daniel, the company's CEO. Go ahead, Shakar.

Thank you very much, Steve, and welcome everyone to today's 2022 First Quarter Corporate Update Conference Call of Safety Group. With me is Shai Avnit, our Chief Financial Officer. In the first quarter of 2022, we achieved important milestones in our past to become a leading cybersecurity and privacy company that serves consumers and enterprises. I will now review our operations, starting the enterprise side of the business, then focusing on our consumer business. We will provide updates and some insights to help investors better understand our roadmap. Our enterprise privacy business continued to grow in the first quarter of 2022, driven by continued momentum and interest in our products. For example, the company added over 75 new clients from the Asia-Pacific market, including e-commerce and NFT organizations, for a newly upgraded enterprise privacy product, which was introduced in the fourth quarter of 2021. We recently announced an important update regarding the dismissal of patent litigation. With the mutual settlement agreement in place, we expect this agreement will contribute to a significant reduction in the company's overall general and administration costs expressed fully in the third quarter of 2022. The significance of this agreement is that combined with the expected growth in revenues in our enterprise privacy business, we believe that this unit will be operating on the verge of break-even going forward. Now, turning to our cybersecurity for enterprise operations. In January, we entered a strategic collaboration with TerraZone on sales and development of our Zone Zero, Zero Trust Network Access software. We believe that these steps will allow us to maintain the value of our IP and partnering in sales, we are enjoying a reduction in expenses, which are just now starting to positively impact our operating results. Over the past few months, as you may have heard us say, we shifted our business from primarily focused on solutions for enterprise towards consumers as well. Because the consumer business operates a different business model and sales method, I want to take some time now to discuss this important part of our business. Currently, we offer consumers with two product lines, a privacy and a cybersecurity product, the most recent of which we launched last year. We are currently executing against a plan to not only increase the capabilities and features of our existing products, but to release a number of complementary solutions across mobile and desktop platforms throughout this year. Unlike marketing for enterprises, consumer marketing requires a more enthroned approach, engagement, and investment. However, costs related to consumers' marketing investments led to the creation of immediate revenue streams and predictable monthly recurring revenues. We refer to our marketing effort in the consumer segment as our customer acquisition program. The program is based upon a five-year business model that employs a user lifetime value, LTV metric. LTV is a calculation of the average dollar amount of revenues anticipated to be received from subscribers over their retention period. According to this model, the company can estimate future recurring revenue based upon the number of users at any given point of time multiplied by the relevant LTV. We started our investment in customer acquisition at the second half of last year and we're successfully generating a growing future revenue stream from subscribers, one which is and will be an important asset and a driver of value for safety and its shareholders. After several months of investing into sales and marketing to acquire a current customer base of our first consumer product, we are confident in the sales and marketing efficiency of our customer acquisition program and its ability to attract profitable subscribers. Although these efforts contribute significantly to the company's expenses, we see it as an investment for the long term that will generate for the company a valuable recurring revenue stream. With a solid business model, in the first quarter of 2022, we generated a record revenue of $4.02 million at 199% over the first quarter of 2021 results. Our gross profit for the three-month period ended March 31, 2022, amounted to $2.2 million, an increase of 378% compared to the corresponding period in 2021. We are proud of our continued revenue growth and our ability to rapidly identify opportunities and launch advanced products. I want to address questions I'm frequently asked by investors regarding our expenses structure, Our net loss for the first quarter of 2022, our non-IFRS net loss, which excludes non-cash expenses, amounted to $3.2 million. We are not indifferent to our overall cost in the past month, and in the past month, we initiated several directed actions that tackle our expenses structure, results of which will, in the near future, become visible in our results. First and foremost, we settled our patent litigation that had a significant impact on our expenses. As mentioned before, the saving of this legal cost will be reflected partially in the second quarter of 2022 and fully in the third quarter going forward. To demonstrate, this net loss for this quarter would have been cut at 50% if you take out from our current net loss the IP litigation expenses and the last payment for the transition of our cybersecurity for enterprises. In addition, we gained a vote of confidence from United Mizrahi Bank, which granted the company a non-dilutive 12-month line of credit for up to $2 million. The credit line represents a validation of our input financial profile and the potential of our consumer business, allowing us to invest in our continuous growth without having to consider dilutive fundings. With additional expected reductions from our enterprise cybersecurity operations, alongside with our continuous growth in revenues, I believe that we have the ability to fulfill our potential. But before going further, I would like to turn the call over to Shai to discuss the financials for the quarter. Shai.