Alarum Technologies Ltd.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Alarm Technologies' fourth quarter and full year of 2023 Corporate Update Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. If you have a question, please press the star followed by the 1 on your touchtone phone. If you would like to withdraw your question, please press the star followed by 2. If you're using a speaker equipment, please lift the handset before making your selection. This conference is being recorded today, March 14, 2024. 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 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 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 and Alarms Annual Report on Form 20-F filed with the Securities and Exchange Commission on March 14, 2024, and 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 we caution you to not play any undue reliance on these. At this time, I would like to turn the call over to Shahar Daniel, the company's CEO. The floor is yours.

Thank you very much and welcome everyone to Alarm Technologies' 2023 Fourth Quarter Earnings Results Conference Call. As is customary, it's me, Shahar Daniel, our Chief Financial Officer. In this call, I would like to provide a brief review of our business operations, summarize our accomplishments, and then I will turn the call over to Shai, who will briefly discuss the financial results of the first quarter and full year of 2023. Before, we will open the call to questions. We are extremely pleased with our first quarter results, showing growth and successful execution in every aspect of our business. Before going into more detail about the first quarter of 2023, I would like to look back at how we started this year. In the first quarter of 2023, we had two business lines, NetNut, our internet access for enterprises, and CyberKick, our internet access solution for consumers. We finished the first quarter with revenues of $5.7 million from both business segments. net loss of $700,000, and positive adjusted EBITDA of $60,000. The first quarter was also the first time we announced positive cash flow for operating activities. When we started 2023, we began our path to profitability strategy. By the end of the second quarter, following consideration of the current market environment, we made a decision to downside our investment in the consumer business. a measure that we believed to bear a positive impact to the company. During the third quarter, we focused all our efforts in supporting NetNut and our data collection solution business. We passed all investments in customer acquisition in the consumer business and sold our cybersecurity business. As a result, the third quarter marked a historic moment in the company's journey, as we became profitable with $1.1 million in net profits. From being on the path to profitability, we became profitable and proven our strategy to be the right one for the company. We announced today that we finished fourth quarter with revenues of $7.1 million and a record net profit that continues to grow, reaching to a record of $1.7 million. The revenues for the fourth quarter represent not only a record quarter, but a quota that surpassed the revenues generated from both business lines at the beginning of 2023 and demonstrated the strength of NetNut and our business. In the last two years, NetNut has experienced considerable expansion, concluding 2021 with revenues of $6.3 million and soaring all the way to $21.3 million by 2023. We are delighted with these outcomes, which reflect our intense effort and commitment to the prosperity of our business. Moreover, we began the year 2024 witnessing high growth and setting new monthly revenue records in January and February. We are proud of our current strong financial stability, the fact that we are profitable and we don't have to rely on raising funds to support and sustain our operations going forward. 2023 was a turning point for Allowal that now focused only in NetNut and the expansion of our product offerings. Today, NetNut is one of the strongest brands in the world of the IPPN, known for its fast, advanced, and secure network. NetNut platform is based on our proprietary reflection technology. Our hybrid network infrastructure comprises of more than 1,000 servers and over 7,000 700 proxy servers deployed around the globe connected to 52 million IPs of various types, including ISPSPs and data center IPs in leading data centers, all together providing full global coverage. During 2023, we entered new market segments, including AI-powered sales intelligence, fintech, and AI recruiting markets in winning new leading customers across the board. Building on our network success, we began to expand our product offering in 2023, hiring new talents for our research and development with the goal of delivering innovative and disruptive products to the data collection market. The first product we introduced during 2023 is the Google SERP Scraper API, our first data collector providing enterprises innovative suite analysis tools on-demand data access. The SERP Scraper API delivers real-time structured data from global search engines tailored to enterprise needs. Our second product release is the innovative Website Unblocker. It's designed to allow automated data collection tools access to public-facing web data without being tagged by anti-bot and bot management solutions. Our latest announcement was the revolutionary AI Data Collector product line. This product line will be one of our growth engines for the upcoming years. It's an important milestone in NetNut's roadmap towards securing its share of the data collection market and will disrupt current web data collection methods and allow users to scrape the Internet data tailored to their specific requirements. With an intuitive no-code interface, the new AI data collector will enable users to effortlessly generate data collection within minutes The product's advanced AI will automatically adapt to website changes, ensuring continuous data collection without any downtime. Furthermore, NetNuts for Parity unblocking technology will provide seamless access to web data, which will allow uninterrupted data exception at any scale. Users will simply be required to input the target URL, select desired data subjects, set the range of timing, and choose their preferred download format. We are excited about our new data collection product offering and have started to market the two first products to our existing and new customers while beginning great positive feedbacks. Starting today, we plan to update on a quarterly basis our customer retention rate, NRR. NetNut NRR were 153% as of December 31, 2023, and 144% as of September 30, 2023. We sum up the recurring revenues from existing customers for a period of four consecutive quarters and add any expansion revenue, upsells, cross-sells from those same customers during the period. Then we subtract any contraction revenue, downgrade, churn from those same customers during the same period. We then calculate the revenue from these customers during the preceding four quarters and divide this total by the recurring revenues for the first period. A positive NRR indicates that existing customers are spending more over time through either expansion or add-ons, offsetting any losses due to churn or downgrades. Conversely, a negative NRR indicates suggests that the company is losing more revenues for existing customers than it is gaining through upselling or cross-selling. Before going further, I would like to turn the call over to Shai to discuss the financials for the quarter in more detail. Shai, the stage is yours.

Thank you, Shachar. I will begin with a summary of our fourth quarter and year-end 2023 financial results which are compared to our fourth quarter and year-end 2022 results, unless otherwise stated. Revenue for the full year of 2023 totaled $26.5 million, of which $7.1 million were earned in the fourth quarter. This represents a 39% increase compared to the revenues from continuing operations of $18.5 million for the full year of 2022 of which $5.1 million were earned in the fourth quarter. This sharp growth in revenues is attributed to the increase in NetNuts business. Gross profit for the full year of 2023 increased to $18.8 million, of which the fourth quarter contributed $5.3 million. This, compared to gross profit for the full year of 2022, of $10.1 million, of which the fourth quarter contributed $2.8 million, representing increases of 85% and 89%, respectively. These significant increases in the gross profit were primarily driven by the increase in revenues, while increasing the gross margin to more than 75%. Operating expenses totaled $24.3 million for the full year 2023. Excluding goodwill and intangible assets impairments related to the consumer Internet access activity scale down announced by the company on July 6, 2023, operating expenses amounted to $15.8 million only. This compared to operating expenses of $22.9 million in 2022. IFRS net loss from continuing operations for the full year of 2023 totaled $5.6 million, or $0.14 basic loss per ordinary share. The loss is attributed to the consumer internet access goodwill and intangible assets impairment. This, compared to IFRS net loss from continuing operations of $12.5 million, or $0.39 basic loss per ordinary share in 2022. IFRS net profit from continuing operations in the fourth quarter of 2023 reached $1.7 million, or $0.03 basic profit per ordinary share, compared to a net loss of $3 million or 0.09 basic loss per ordinary share in the fourth quarter of 2022. Adjusted EBITDA for the full year of 2023 was $5.2 million compared to adjusted EBITDA loss of $8.5 million in 2022. Adjusted EBITDA for the fourth quarter of 2023 was $2.2 million, compared to adjusted EBITDA loss of $2 million in the fourth quarter of 2022. As of December 31, 2023, shareholders' equity totaled $13.2 million, or approximately $2.20 per outstanding American depository share. compared to shareholders' equity of $13.3 million as of December 31, 2022. The minor change is due mainly to the goodwill and intangible assets impairment recorded in the second quarter of 2023, on one hand, offset by the September 2023 private placement and the non-IFRS earnings on the other hand. As of December 31, 2023, the company's cash and cash equivalents balance totaled $10.9 million, compared to $3.3 million only as of December 31st, 2022. And lastly, I wanted to touch base on our share count as it stands today. On an outstanding basis, we have around 62.8 million ordinary shares, representing approximately 6.3 million ADSs. On a fully diluted basis, we currently have around 78 million shells or 7.8 million ADSs outstanding. With that, I'll turn the call back over to Shachar.