Alarum Technologies Ltd.

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Alarm Technologies third quarter 2024 corporate update conference call. During today's presentation, all parties will be in a listen-only mode. Following management's presentation, the conference will be open to questions. If you have a question, please press star followed by the number one on your touchtone phone. If you would like to withdraw your question, please press star followed by the number two. If you're using speakerphone, please lift the headset before making your selections. This conference is being recorded today, November 25th, 2024. Before we get started, I would like to read a forward-looking statements disclaimer. 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 or formats, 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 an alarms annual report on Form 20F filed with the Securities and Exchange Commission on March 14, 2024, 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 we caution you not to place undue reliance on these. On the call, the company will also present non-IFRS key business metrics. The non-IFRS key business metrics the company uses are EBITDA and adjusted EBITDA, non-IFRS gross margin, non-IFRS net profit or loss, and non-IFRS basic earnings or loss per share or ADS. The exact definitions of these non-IFRS key business metrics are described in the company's third quarter of 2024 financial results press release. I'll now turn the call over to Sachar Daniel, Alarm Technologies CEO. Mr. Daniel, the floor is yours.

Thank you and welcome everyone to Alarm Technology's third quarter 2024 results conference call. Join me on today's call with Shai Avnit, our CFO. I will discuss with the development, the progress of our strategic initiatives, and our longer-term vision. Shai will read the financials and provide our Q4 2024 and full year 2024 guidance. I will conclude the prepared remarks with a summary and will then open the call for your questions. I am pleased to share that in Q3 2024, we continue to bear the fruits of our strategic shift to focusing on NetNet, our data collection business unit. NetNet contributed nearly 100% on both a quarterly and accumulated business. We topped the full year 2023 revenues during the first three quarters of 2024. Total Q3 2024 revenues hit the high end of our guidance as revenues came in at $7.2 million, of which $7 million were attributed to NETMAC. We exceeded our Q3 2024 adjusted EBITDA guidance, recording an adjusted EBITDA of $1.4 million. We demonstrated once again continuing success in cash flow generation. Testament to our profitable business model, our cash and cash equivalents at the end of the quarter increased to $24 million. Our strength cash balance position us to invest in opportunities that will drive a long-term success, allowing us to focus on expanding our business and laying the groundwork for sustained growth. Consistent with our strategy and long-term vision, in Q3, we significantly adverse our main growth engines. We increased our market share in the IP proxy network, the IPPN segment, and further, penetrated to the data collection and labeling market. Our focus on forming the broadest data collection and insights offering positions us to effectively address evolving market needs while driving long-term value for our stakeholders. I will start with the IPPN. Our expanding IP network is a key asset to serve diverse industries and companies relying on our IP proxy network for their critical data needs. We have significantly enhanced its infrastructure coverage and endpoints. At the same time, we prioritize improving our capacity to handle larger traffic volumes, aligning with a strategy to build a scalable and profitable infrastructure for future growth. One of our main product enhancements introduced this quarter was a new dashboard, which significantly improved our customers' experience and already received excellent feedback from Forbes users and potential customers. Through our YPPN, organizations can access public online sources with data regularly updated based on IP, location, and other demographic attributes. We enable them to securely and anonymously capture reliable data while protecting their sensitive research and online activities. What clearly sets us apart in the scale of our network is stability, strong performance, and our ongoing global expansion. Building on the strength of our IP network, let's move to the second pillar of our growth strategy, the data collection and labeling market. On our Q2 call, I shared with you that we had started generating initial engagements with new customers for our website unblocker products, and that we are seeing a growing pipeline of opportunities for these products, which has been tested and rated as a market leader by industry experts. We recently reached an important milestone in executing our strategy. The Fortune 200 company that began using our IPPN product in the third quarter expanded its subscription by adopting our unique website and blocker in less than three months. Two impactful factors make this win stand out. First, wholesale, the fact that they added the website and blocker shortly after subscribing for our IPPN. Second, the significance of this win lies in the extensive, large-scale evaluation conducted. The new customer, operating a multi-million cross-region network, and the multi-billion US dollar business chose our solution to enhance automation and its own customer spending while gaining a competitive edge. The website unblocker is a crucial enabler for our entry into the multi-billion dollar data collection and labeling market. It provides our customers with enhanced data access and improved operational efficiency, allowing them to penetrate to new markets gain deeper insights into customer behavior and optimize their strategies. One notable market trend we are seeing in the increasing demand for datasets. As companies face growing challenges in accessing reliable and up-to-date data, our planned AI data collector solution will offer a major advantage by providing continuous access to how to find data, giving our customers a competitive edge. The AI data collector will enable companies to quickly create a collector in just minutes. Thanks to its initiative, no-code interface, its advanced AI will automatically adapt to website changes, ensuring continuous data collection with minimal downtime. We all value the importance of data in every aspect of our lives. The considerable investment we have made in NetNet in the recent years serve us as the key to our entry into the data world. The rapid growth of artificial intelligence further validates the core principle behind this investment, highlighting its potential to drive innovation and unlock new opportunities. At this point, I would like to highlight the key trends we are seeing and share the metrics you consider most important and insightful in evaluating our most recent progress. First, the website and broker. It's clear that the market recognizes the value of this solution and we are addressing a real and pressing need. Alongside the success we have already shared, we are seeing a significant demand in the market reflected in an expanding pipeline. While it's early to project immediate revenues impact, it's clear that our innovative, high-quality solution is in demand. In Q4, in line with the projected year-over-year growth, we expect to continue to enjoy strong, solid customer retention rates across most verticals. Our growth strategy in the dynamic data collection market emphasizes the importance of consistent investment in our network serving as the foundation for expanding our customer base and driving success and adoption of our innovative new products. At Alarum, we put clear emphasis on achieving sustained growth and profitability. I will now turn the call over to Shai for a review of the financial. Shai, go ahead.

Thank you, Shachar, and hello, everyone. I will start today with a summary of the key financial results of the third quarter and first nine months of 2024, comparing them to the same period in 2023 results, respectively, unless otherwise stated. I will then provide guidance for Q4. All figures have been rounded for simplicity. Let's move on to the results. Revenues in Q3 2024 were at the high end of our guidance, reaching $7.2 million, up 6.6% from $6.8 million in Q3, 2023. The net apportion represented 97% of the total revenues, increasing to $7 million in Q3, 2024, and up 13.7% from $6.1 million in Q3, 2023. Non-IFRS gross margin for the third quarter of 2024 was 73.6% compared to 79.4% in Q3 2023. The change in gross margins is correlated to our strategic decision to invest in expanding and broadening our IP network, enabling us to serve our customers' requirements for stability, responsiveness, and speed. we can now support much higher customer demand and revenues with only marginal costs. Operating expenses in Q3 2024 were $4.1 million compared to $3.7 million in Q3 2023. In Q3 2024, we recorded non-cash finance income of $3.5 million compared to a non-cash finance expense of $700,000 in the corresponding quarter in 2023. The difference is mainly due to a fair value decrease of warrants issued between 2019 and 2020 related to the lower share price from June 30, 2024 to September 30, 2024. The vast majority of the warrants are due to expire in 2025. IFRS net profit increased to $4.2 million for the third quarter of 2024, up from a net profit of $1.1 million in Q3 2023, mainly as a result of the higher finance income. We exceeded our adjusted EBITDA guidance for the third quarter of 2024. We reached $1.4 million. This is compared to the $1.9 million adjusted EBITDA in the third quarter of 2023. While revenues increased year over year, they were offset by the higher cost of sales and operating expenses. Our current share count is 68.9 million ordinary shares or 6.9 million ADSs on a fully diluted basis The count is 80 million ordinary shares or 8 million ADSs. Q3 2024 non-IFRS basic earnings per share was 2 cents per share or 20 cents per ADS compared to 3 cents basic earnings per share or 25 cents per ADS in Q3 2023. As of September 30, 2024, The company's shareholders' equity rose to a record of $25 million, up from $13.2 million on December 31, 2023. The increase in net profit, combined with the warrant and option exercises, contributed to this $11.8 million increase. Q3 2024 marked the fifth consecutive quarter of generating cash flow from operations. The company's cash and cash equivalents balance at the end of Q3 2024 was to $24 million, up from $10.9 million as of December 31st, 2023. Our cash position enabled us to continue investing in our strategy and grow our business responsibly. Turning to guidance, we anticipate Q4 2024 revenues to continue the year-over-year growth trend and estimate revenues of $7.5 million plus minus 3%. As a reminder, the net net portion of our revenues in Q4 2023 was $6.8 million. Q4 2024 adjusted EBITDA is expected to range from $1.3 million to $1.7 million. To summarize my part, Our Q3 2024 results and guidance for the remainder of the year 2024 reflects solid performance, which is supported by a robust balance sheet. With that, I'll hand the call back over to Shahar.