Alarum Technologies Ltd.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Alarm Technologies Corporate Update Conference Call for the three and six month ended June 30, 2023. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star followed by one on your touchtone phone. If you would like to withdraw your question, please press the star followed by two. If you're using speaker equipment, please lift the handset before making your selections. This conference is being recorded today, August 24, 2023. Before we get started, I will read a disclaimer about four looking statements. This conference call may contain, in addition to historical information, four looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. 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 facts. 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 and Alarms Annual Report on Form 20-F filed with the Securities and Exchange Commission, or SEC, on March 31, 2023, and in any subsequent filings with the SEC. All such forward-looking statements, 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 and uncertainties and caution you. not to place undue reliance on these. At this time, I'd like to turn the call over to Shikhar Daniel, the company's CEO.

The floor is yours.

Thank you very much, operator, and welcome everyone to Alarm Technology's second quarter 2023 Earnings Results Conference Call. As is customary, with me is Shai Avnit, our Chief Financial Officer. Today, I will provide a brief review of our business operations and summarize our accomplishments. Before we begin, I want to quickly note that the conciliation tables for any NANGAP or non-IFRS metrics reference of this course are available in the post-release we published earlier today. At the end of 2022, we marked as our leading goal to set our path toward profitability. We are excited that the second quarter this year is validating our persistence with impressive achievements, including the achieved of $1.1 million in adjusted EBITDA. As part of our focus on profitable revenue generation, we decided, commencing July 2023, to scale down our investment in the consumer Internet access segments operating under our all-your-own subsidiary, CyberKick. I would like to take this opportunity to elaborate on this decision and its future effects. As you may know, CyberKick's business model is based on acquiring new users to download and use our solutions. Following an analysis of recent market conditions, including the cost of acquiring such users, we identified that while the business model provides a potential to generate future revenues in consumed resources and investments that result in current operational losses, resulting in unprofitable revenues for the short term. We therefore decided to recalculate our focus, mainly to allow for the acceleration of our plans to become profitable. We believe that this decision will have several effects on the company. On the business side, we continue to maintain our products and the service to our current plane users, and this allows us to bear fruits from past investments by generating revenues with minimal costs. On the financial side, we are able now to focus on profitable activities and to generate positive cash flow. Although this segment might experience a reduction to its sales in the short term, we trust that our enterprise internal infrastructure solution unit, NetNap, will continue to grow and gain new leading partners and customers. We believe that this strategic decision to scale down the consumer internal infrastructure segment will allow us to keep a lean economy and sustainable operations for CyberKick and improve our overall bottom line. I would like now to refer to recent progress of our enterprise in the inductor segment, NetNut. NetNut was acquired by us in 2019 with annual revenues of approximately $3 million. Today, it is driving our overall growth, achieving ongoing growth in revenues and becoming profitable for two quarters a grow. NetNut is one of the top five notable players in its field and its reputation precedes it as a strong brand with a robust and reliable network. NetNet Markets was valued at $2.2 billion in 2022 and is expected to expand to a compound annual growth rate of 28.9% from 2023 to 2030 to reach $17.1 billion. We believe that continuing positioning The company, as a leader, will contribute to establish a fair market share in the future. During the past year, we took many actions to provide our customers with a scalable and advanced network that answers all their needs. Our capabilities today allow our users to access massive amounts of data in a high-speed and user-friendly interface. Our customer base continues to expand, and we are witnessing growing demand for new segments. For example, we recently announced on onboarding of new customers operating in the artificial intelligence AI recruitment market. In addition, we have partnered with a team of elite intelligence researchers for the development of our innovative web data collection solution. In the second quarter of 2023, we also signed an agreement with Terrazone, which was the exclusive reseller for our legacy cybersecurity solutions for the sale of our enterprise cybersecurity business. Allowance consideration for this transaction is 70% of the fully diluted share capital of TerraZone. With our growing ability to generate income and by diligently managing our resources and optimizing our operational processes, we have also been able to pay off the loan to the United Mizrahi Pahot Bank Ltd. and close the revolving line of credit which was previously reported to have been extended through May 25, 2024. This credit was predominantly spent as part of the user acquisition program of our consumer internet access segment, which, as I explained earlier, we have decided to scale down. By repaying this loan, we have reduced the company's total debt and liabilities by $1.6 million. All the actions detailed thus far followed an amazing record quarter. First, our continued growth, representing the 10th consecutive quarters of growth in revenue, amounting to $7 million in the second quarter of 2023 and $12.7 million for the first six months of 2023. Following our first ever quarter of positive cash flow from our operating activities, and positive adjusted EBITDA in Q1 2023, our adjusted EBITDA in the second quarter of 2023 climbed to an impressive $1.1 million high, compared to an adjusted EBITDA loss of $2.4 million just in the same period last year. Our IFRS net loss amounted to $7.7 million, which includes the implication of goodwill and intangible assets impairments in the amount of $8.8 million from the consumer segment, as I explained. We believe that our ability to successfully manage our resources while increasing our profitable revenues positions us on the right path to accelerate our journey to net profitability. We recognize that reaching profitability is a critical milestone for our company and to remain focused in achieving this goal while continuing to invest in our products and services. We also believe that our efforts to optimize our resources have contributed to our financial position and will facilitate our sustainable growth in the future as we continue to deliver exceptional value for our customer while balancing our worth with financial stability. I would like now to turn the call over to Shai to discuss the financial for the quarter in more detail.