Alarum Technologies (NASDAQ: ALAR) (TASE: ALAR) growth pace is shifting from hyper to warp. And that's no exaggeration. In fact, in ALAR's case, they are putting an exclamation point on that assessment, posting preliminary YTD revenues of $19.3 million, a total that, when formally published, will eclipse the income generated in all of 2022. Rightfully, that growth has led to an impressive rally in ALAR stock, which is over 39% higher since the start of the year. The potentially better news is that the bullish trend higher is likely to continue. (*share price change calculated from the opening price on 01/03/23 – 11/01/23, $2.41 - $3.36, Yahoo! Finance, 2:40 PM EST)
That speculative assessment is warranted. Actually, it's justified when factoring the increasing revenue contributions from NetNut, part of its Enterprise Internet Access arm, that is earning user traction among current and new clients for its abilities to provide some of the most advanced, fastest, and secured hybrid proxy networks. And that's just part of its value. An equally significant contributor to growing user adoption is that NetNut enables customers to collect data anonymously at any scale from public sources over the web by leveraging the strength of hundreds of servers at ISP partners worldwide to exploit the value inherent to its proprietary reflection technology. NetNut is a standout in offering that list of comprehensive solutions. Providing those differences are indeed an attraction on the user side. From an investor's perspective, they're value drivers.
And they could help ALAR stock to re-claim its 52-week high of $6.00, over 78% higher than its current price, sooner rather than later.
A Product Arsenal Being Monetized
That assumption aligns with performance, with revenue growth doing more than supporting that thesis, they show ALAR firing on all revenue-generating cylinders and, better still, better positioned than ever to accelerate strategic initiatives that could expedite reaching additional near-term milestones. Being in that position is no coincidence; it results from ALAR proving its products and services value to customers through a robust network solutions infrastructure optimally designed to protect privacy, quality, stability, and speed.
Those differences, combined with the contributions from other portfolio assets, are doing what they should- distinguish ALAR in the competitive landscape, and, importantly from an investors perspective, support the presumption that the path of least resistance for ALAR shares, based on performance, is higher. Know this: ALAR stock is no stranger to higher prices. The stock traded as high as $6.00 during the past 52 weeks, 78% higher than its current $3.18 price. Ironically, ALAR is a much stronger company today compared to when it scored that high, fortified by revenue-generating acquisitions that are being met with significantly lower cash burn. Add that to ALAR selling the right products at the right time; maximizing market opportunities is more than ambition; it's in progress.
Earlier this month, ALAR provided preliminary financials and guidance for the nine months ended September 30, 2023, expecting accumulated revenues from the beginning of 2023 until the end of Q3 to reach $19.3 million. That figure would exceed the entire revenues of 2022. But equally as important, that increase represents 45% growth compared to the same nine-month period last year. It's impressive on a Q over Q basis as well, with ALAR guiding for Q3 revenues to reach $6.6 million, a 37% increase over the $4.8 million in the same period last year.
Another standout item 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. Heading into Q4, ALAR has guided investors to expect the good news to continue. And they have the capital on hand to support the optimism.
Capitalized To Fuel 2023-24 Growth
ALAR started Q4 with cash and cash equivalents of roughly $7.7 million, positioning them well to capitalize on market opportunities and, as importantly, increase positive cash flow from cost-cutting initiatives intended to facilitate revenues to fall faster toward its bottom line. That should result from ALAR shifting operational focus to scale-down of investments into the consumer segment and instead optimize opportunities in play through its enterprise business.
That decision is proving a good one, evidenced by the pace of NetNut earning increasing revenue-generating traction. That, too, is no coincidence. It results from NetNut uniquely providing a global web data collection cloud service based on proprietary traffic optimization, routing, and network technology. Moreover, it's an asset that continues to get better, demonstrated by it's doubling its network's infrastructure since 2022, enabling it to support and process billions of client requests. That scaleup in capabilities and function results from onboarding several strategic customers and network by partnerships with other Internet Service Providers. More contributes to the ALAR value proposition.
Last month, ALAR launched its most advanced NetNut 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, putting ALAR in a potentially lucrative space at the right time to target revenue-generating potential from an estimated $2.22 billion market opportunity. That market is growing, forecast to compound at an annual growth rate of 28.9%, increasing the market potential to $17.1 billion by 2030. Of course, ALAR wants its share of that potential. And they are likely to earn an appreciable piece, particularly through SERP Scraper's ability to provide clients a next-generation data collection solution serving the complex needs of enterprise customers worldwide.
Keep in mind that while search engines are a valuable resource to virtually any situation for their obvious capabilities, it's also critical to point toward their enormous value related to data extraction and how that data gets used relative to SERP. It's in that area that NetNut's new product can generate significant client interest, and new revenue streams, from outperforming competing products by providing users a way 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.
ALAR At The Forefront Of Technology Revolution
Those differences matter. For platform users they help embed competitive advantages by offering 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. Those are excellent value-adding features. But perhaps its most significant advantage and value to users is that it's compatible with multiple devices, emphasizing compliance that provides search results from any location, language, and device. Good for clients is good for ALAR as well.
ALAR's subsidiary's foray into web scraping can help it capitalize on a massive market opportunity, an intent fitting seamlessly into ALAR's commitment to providing cutting-edge solutions to data market clients. Don't under-appreciate the potential in play. SERP Scraper is at the forefront of shifting technology, leveraging an API-led approach to data delivery that empowers businesses with seamless access to Search Engine Results Page data, enabling them to enhance their products with reliable, accurate, and real-time data.
As they should, those distinctions are generating increasing demand for the product, which as revenue growth shows, can lead to accelerating topline growth and a strengthened bottom line. More simply said, NetNut's robust network provides a win-win-win proposition, 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, and generating value for ALAR, and, likely, its investors.
A Sum Of Its Parts Bullish Proposition
Combining intrinsic and inherent value with potential, an excellent case is made to support the premise that the over 39% YTD gain in ALAR stock could be the precursor to higher highs. In fact, summing ALAR's parts justifies a steepening share price trajectory. Remember, appraising ALAR consists of more than valuing its products portfolio. Surging revenues, reduced overhead, and a management team that is able to capitalize on and maximize refined target market opportunities matters too. ALAR checks all those boxes.
Hence, re-claiming its 52-week high of $6.00 may be a target already in the crosshairs. It's an appreciable increase, however, comparing ALAR in 2022 to what it's grown into in 2023, reaching that level could happen faster than many expect. Keep in mind that a revenue update is expected after the new year and many expect another dose of appreciable growth. If so, it could add momentum to an already impressive 2023 rally. Considering ALAR's precedent of over-delivering, that expectation is more than likely; it's probable.
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