When markets are volatile, it may be best to follow the lead of Wall Street winners and put money in companies showing consistent top and bottom-line growth. Those who found Alarum Technologies (NASDAQ: ALAR) (TASE: ALAR) in 2022 prove that point. Year-to-date, ALAR stock is higher by over 35%*, and that's against a smallcap backdrop that has been decidedly bearish for much of the year. That metric may be getting overlooked by investors paying sole attention to the broader NASDAQ 100 index, a measure that excludes top smallcap performers like ALAR. (*share price change calculated from 01/03/23 – 10/20/23, $2.40 - $3.24, Yahoo! Finance)
While that index can exclude winners based on market cap size, the excellent news for value-searching investors is that it can't hide them. In fact, ALAR has done plenty to keep its name in the spotlight by building an asset arsenal to provide internet access and web data collection solutions worldwide. And through its NetNut solutions, included in its Enterprise Internet Access arm, ALAR's growth pace is shifting into overdrive as it offers some of the most advanced, fastest, and secured hybrid proxy networks. Its value extends further as one of the few comprehensive solutions enabling customers to collect data anonymously at any scale from any public sources over the web, leveraging the strength inherent to its network supported by its proprietary reflection technology and hundreds of servers at ISP partners worldwide. That's not all.
ALAR is unique in that it provides a robust solution through an infrastructure optimally designed to guarantee the service's privacy, quality, stability, and speed. That totality and value from other compelling assets do more than distinguish ALAR in the competitive landscape; it supports the thesis that the path of least resistance for ALAR shares is higher.
Compelling Asset Portfolio Drives Impressive YoY Growth
Keep in mind that ALAR is no stranger to having its shares trend in that direction. ALAR stock traded as high as $6.00 during the past 52 weeks, 85% higher than its current price. Here's the interesting part of that equation: ALAR is better positioned for growth today than when it scored that high. In fact, with the value expected from accretive revenue-generating acquisitions and a balance sheet strengthened by matching higher revenues to a significantly lower cash burn, ALAR is in the right place at the right time to maximize its target market opportunities.
They prove that point. Earlier this month, ALAR provided preliminary financials and guidance for the nine months ended September 30, 2023. Highlighted in the preview, ALAR said it expects accumulated revenues from the beginning of 2023 until the end of Q3 to reach $19.3 million. Not only does that figure exceed the entire revenues of 2022, but it also represents an impressive 45% growth compared to the same period last year. The quarterly breakout is also noteworthy, with ALAR expecting to post Q3 revenues of approximately $6.6 million, a 37% increase over the $4.8 million in the same period in 2022. Also notable is that ALAR achieved over $1.5 million in positive cash flow from operating activities during Q3, compared to negative cash flow of $1.4 million in Q3/2022. Going forward, ALAR expects to provide more of the same.
Entering Q4 with cash and cash equivalents of roughly $7.7 million, ALAR guided investors to expect a substantial improvement in its positive cash flow, resulting from cost-cutting initiatives facilitating revenues to fall faster toward its bottom line. The company's shifted operational focus contributes as well, noting ALAR implemented a scale-down of investments into the consumer segment to optimize revenues and concentrate instead on its enterprise business. That decision was a good one, evidenced by NetNut continuing to earn greater revenue-generating traction, accelerating its path toward profitability.
Targeting Enterprise and Consumer Markets
That trend is expected to continue, driven by NetNut’s ability to provide a global web data collection cloud service based on proprietary traffic optimization, routing, and network technology. ALAR has doubled its network's infrastructure since 2022, enabling it to support and process billions of client requests. The scaleup in capabilities resulted from onboarding several strategic customers and expanding NetNut's network by partnering with other Internet Service Providers. NetNut continues to earn its place in key markets.
Earlier this month, ALAR announced that NetNut launched its most advanced product to date, a Search Engine Results Page ("SERP") and Scraper Application Programming Interface ("API"). The product debut marks NetNut's entrance into the data collection and labeling market. SERP Scaper also puts ALAR in the right space at the right time by putting revenue-generating potential from an estimated $2.22 billion market opportunity in play. And that was 2022 numbers - the opportunity is forecast to compound at an annual growth rate of 28.9%, increasing the market potential to $17.1 billion by 2030.
ALAR intends to earn its share of that figure. Its unique portfolio can help make that happen, introducing the power within SERP Scraper to clients as a next-generation data collection solution that serves the growing needs of enterprise customers worldwide. While it's common knowledge that search engines are a valuable resource to virtually any situation for their obvious capabilities, it's also essential to point toward their value for data extraction and how that data gets used relative to SERP. It's here where ALAR's new product can shine, providing users with a means to overcome the tedious task of manually extracting massive amounts of data through its SERP Scraper API that allows businesses to obtain SERP data from search engines automatically in real-time from global search engines tailored to enterprises' needs.
Leading the Technology Revolution
Those following technology evolution already understand the benefits. NetNut's product offers users the advantage of automated retrieval and analysis of SERP data for search engine optimization and market research. It's also scalable with unparalleled speeds that seamlessly access all search engines to gather real-time SERP data and keyword rankings. Perhaps its most significant advantage is that it's compatible with multiple devices, with an emphasis on compliance that provides search results from any location, language, and device. Best of all, web scraping opens a massive market of opportunity for ALAR's subsidiary to capitalize on.
While web scraping is just part of the company's ongoing commitment to providing cutting-edge solutions to data market clients, it can play a substantial role. SERP Scraper is one of the company's most innovative developments. Through its API-led approach to data delivery, the solution empowers businesses with seamless access to Search Engine Results Page data, enabling them to enhance their products with reliable, accurate, and real-time data. That capability is drawing interest from clients wanting to enhance their data spread and volumes, leading to new deals for ALAR with its existing and potential clients.
The growing adoption of ALAR’s offerings is well-deserved. NetNut's robust network allows customers to efficiently handle vast amounts of information and facilitate cross-referencing data from many databases without the need to develop complex data collection solutions. This enables the vendor to focus on running its core business operations. In other words, it offers a win-win-win proposition for ALAR, NetNut, and its clients.
A Bullish Thesis Supported by Tangibles
Investors are winning as well. In fact, ALAR stock’s over 35% YTD increase could be the precursor to more appreciable gains. That bullish presumption is supported by consecutive quarterly growth that often surpasses guided expectations. As importantly, ALAR is earning its recognition as it enters Q4 with a fortified products arsenal, a strengthening subsidiary, and a growing client list. Better still, it's scoring new business, blowing past 2022 revenues with three months to spare.
Thus, in challenging markets, resilient companies should be the investments of choice. Alarum Technologies checks all the right boxes to be on that list. In fact, considering its soaring revenues, commitment to enhancing profitability, excellent and innovative products, and a management team that knows how to cross finish lines, they have earned a spot high on it. Even after its bullish run, the sum of ALAR’s parts indicates the stock may still present a valuation disconnect too compelling to ignore.
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