Alarum Technologies (NASDAQ: ALAR) (TASE: ALAR) stock continues its 2023 rally, evidenced by investors bidding ALAR shares over 41% YTD. And keep in mind that those gains are accruing despite what has been a challenging period for smallcaps, a measure getting overlooked by investors paying sole attention to the broader NASDAQ 100 index, excluding top smallcap performers like ALAR. However, those who found ALAR early aren't complaining. Nor are they expected to in the coming weeks, especially after ALAR published that 2023 revenues to date, $19.3 million through Q3, already exceed the entire 2022 total. (*share price change calculated from the opening price on 01/03/23 – 10/24/23, $2.41 - $3.42, Yahoo! Finance, 12:31 PM EST)
That beat could fuel another leg higher to an already impressive rally. Considering that the company is better positioned to capitalize on revenue-generating opportunities than when shares reached their 52-week high of $6.00, that presumption is not an overzealous expectation. In fact, bullish sentiment is warranted. And ALAR is helping make that case by maximizing an asset arsenal to provide internet access and web data collection solutions worldwide.
That includes the growing contributions from NetNut, part of its Enterprise Internet Access arm, helping to shift ALAR's growth pace from warp speed to hyper by offering some of the most advanced, fastest, and secured hybrid proxy networks. More than that, NetNut is one of the few comprehensive solutions enabling customers to collect data anonymously at any scale from any public sources over the web by leveraging the strength of its network supported by proprietary reflection technology and hundreds of servers at ISP partners worldwide. Those differences are advantages. More importantly, from an investor's perspective, they're value drivers.
Maximizing Value From Best-In-Class Solutions
The surge in 2023 revenues proves that point. Moreover, it shows that ALAR is attracting new client interest. It should. ALAR demonstrates its value in providing customers robust network solutions through an infrastructure optimally designed to protect the service's privacy, quality, stability, and speed. That totality and the contributing 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.
As noted, 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, 75% higher than its current price, despite being a much stronger company today. In fact, with the value accruing 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, with the right services at the right time, to maximize its target market opportunities.
They are wasting no time proving that point. In an October update, 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. That figure exceeds the entire revenues of 2022 and, equally important, 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 a negative cash flow of $1.4 million in Q3/2022. Going forward, ALAR expects to provide more of the same.
And they have the capital on hand to accelerate that intent. 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 Increasing Demand From Enterprise and Consumer Markets
That trend is also expected to continue, resulting from NetNut's ability to provide a global web data collection cloud service based on proprietary traffic optimization, routing, and network technology. And it's an impressive asset that keeps getting better. ALAR has said it's doubled its network's infrastructure since 2022, enabling it to support and process billions of client requests. The scaleup in capabilities comes 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.
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 a potentially lucrative 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 wants its share of that potential. And its innovative asset 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 more than shine; it can outperform competing products by providing users with a means to overcome the tedious task of manually extracting massive amounts of data. Moreover, its SERP Scraper API allows businesses to automatically obtain SERP data from search engines in real-time from global search engines tailored to enterprises' needs. That distinction is a massive competitive advantage.
A Technology Revolution That Waits For No One
For companies, it's invaluable. 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, emphasizing 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.
Web scraping is part of the company's commitment to providing cutting-edge solutions to data market clients. Still, it's a significant contributor. In fact, SERP Scraper is one of the company's most innovative developments that, through its API-led approach to data delivery, 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 draws interest from clients wanting to improve their data spread and volumes, leading to published and expected topline growth. The better news for ALAR and its investors is that demand for what ALAR provides is surging. In a competitive and demanding space, that matters.
And so does earning client and industry respect, two boxes ALAR checks. That's from NetNut's robust network, allowing 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. Put more simply, it offers a win-win-win proposition for ALAR, NetNut, and its clients.
A Bullish Case For Alarum
That typically translates to a win for investors as well. So far, in 2023, that's indeed the case. An investment at the start of 2023 has generated an impressive 41% gain, easily eclipsing broader market averages. Still, with assets attracting interest and a strong capital war chest, that increase is a likely precursor to more appreciable gains. That bullish assumption is supported by consecutive quarterly growth, often surpassing expectations.
As importantly, ALAR is earning recognition and new business as it enters Q4 with a fortified products arsenal, a strengthening subsidiary, and a growing client list, which has facilitated it to blow past 2022 revenues with three months to spare. Don't expect a slowdown. Instead, considering its soaring revenues, commitment to enhancing profitability, excellent and innovative products, and a results-driven management team, even with 41% YTD gains, the path of least resistance may still be higher.
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