Alarum Technologies Ltd (ALAR) 2022 Q4 法說會逐字稿

Greetings, and welcome to Alarum Technologies Fourth Quarter and Full Year 2022 Earnings Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Shachar Daniel, Co-Founder and CEO. Thank you, sir. You may begin.

Thank you very much, and welcome, everyone, to Alarum Technologies 2022 Fourth Quarter Earnings Results Conference Call. (inaudible) with me is Shai Avnit, our Chief Financial Officer. I would like to provide a brief review of our business operations, summarize our accomplishments and then turn the call over to Shai who will briefly discuss the financial results of the fourth quarter and full year of 2022 before we will open the call to questions.

Before going into more detail about 2022, I would like to emphasize the first quarter of 2023 continues and even further the revenue growth and drastic reduction in burn rate trend, which we have achieved to date. With respect to the period ending December 31, 2022, we are excited to present 8 consecutive quarters of revenue growth. Allowing today is a much different company than it was 2 years ago and the right where we planned it to be. Our main goal in the past 2 years was to increase revenues with high growth rates, and I'm happy to present the results to reflect success in doing so.

Moving forward to 2023, our main goal is to further reduce our burn rate and pave our path to profitability while maintaining revenue growth, expanding our customer base and tender improving our product and brand awareness. Allowing finished 2022 with record revenues of $18.8 million, an impressive increase of 82% in revenues compared to 2021. We witnessed the growth in both our business. In NetNut, our inter part Internet access arm and in cyber-attacks, our consumer Internet access arm. We increased our revenue from $1.4 million in 2018 to $18.8 million in 2022, representing an impressive compound annual growth rate of 91%. Our adjusted EBITDA loss dropped by 55% in the fourth quarter of 2022.

We are working hard to continue this trend and accelerate the reduction in the coming quarters. Reduction in our burn rate together with our current financial resources, including available cash, the credit line from a commercial bank and an ongoing strategic investment to support our consumer solutions keep us very optimistic regarding our ability to achieve our goal for 2022 and even after. We believe that our ability to successfully manage our resources while maintaining growth -- us on the right path to begin our journey to profitability.

We recognize that reaching profitability is a critical milestone for our company and remain focused on achieving this goal while continuing to invest in our products and services.

From a business perspective, I would like to provide a short summary about our enterprise privacy arm. NetNut operates in the fast-growing market of data access has achieved an ambitious milestones this year by turning profitable on cash flow basis. This become possible due to the increase in our customer base and our customer spending. I am proud to say that NetNut today is one of the strongest and well familiar brands in this field.

With each year experienced higher demand for stable white solutions. During 2022, we significantly scaled up our infrastructure and network, allowing us to support an enormous number of requests from our customers in billions. In addition, we improved our products and reinforce our sales and marketing team. This actions resulted in improved retention of existing customers and increase on borrowing of new customers. Our ability to identify into a true leadership in the new market segments that can benefit from our products such as advertising, e-commerce, cybersecurity and more added to our ongoing growth.

While NetNut revenues related mainly to marketing and products, the business model for our solutions for consumer is different and flexible. Our consumer Internet access business offers privacy and cybersecurity solutions to end users. This solution are designed to allow users to take charge of their online privacy with powerful secured and encrypted connection. These solutions are installed in the consumer computers or mobile phones and are available through various browser and mobile application stores.

By investing in acquiring new users the consumer Internet access business model allow us to build revenue-generating assets, which are expected with future revenue streams. This business model enabled us to create a real asset for the company while maintaining flexibility of spending. In addition, we managed to secure external financing to support and fund our user acquisition program. We believe that our efforts to optimize our testers have contributed to our financial position and will facilitate our sustainable growth in the future.

We are committed to delivering exceptional value to our customers while balancing our work with financial stability. 2022 was a very challenging year in the financial market. I'm happy that we have successfully managed our cash position for this year and without compromise -- recognize that this period has been difficult for many businesses, and we are grateful for the dedication and hard work of our team that does enable us to navigate to these times.

Before going further, I would like to turn the call over to Shai to discuss the financials for the quarter in more detail. Shai?

Thank you, Shachar. I will begin with a summary of our fourth quarter and year-end 2022 financial results, which are compared to our fourth quarter and year-end 2021 results unless otherwise stated. Revenue for the full year of 2022 totaled $18.8 million, of which $5.1 million were earned in the fourth quarter. This represents an 83% increase compared to the revenues of $10.3 million for the full year of 2021, of which $3.7 million were earned in the fourth quarter.

This sharp growth in revenues is attributed to the increase in both our Enterprise and Consumer Access businesses revenues. Gross profit for the full year of 2022 increased to $10.1 million, of which the fourth quarter contributed $2.8 million. This compared to gross profit for the full year of 2021 of $5.1 million, of which the fourth quarter contributed $2.1 million, representing increases of 97% and 144%, respectively.

These significant increases in the gross profit were primarily driven by the increase in revenues. Operating expenses totaled $23.6 million for the full year of 2022, an increase from $20.1 million in 2021. The increase is primarily attributed to the full consolidation of cyber-attacks operations, mainly in media costs in 2022 compared to partial consolidation in equivalent period in 2021. As well as increases in salary costs due to the company's increased operations.

The increases were partially offset by a reduction in the operation expenses of the Enterprise Security segment, which was outsourced to terms on a global provider in this field. As a result of the above changes in revenues and expenses, net loss for the full year of 2022 was $13.15 million or $0.42 per share as compared to a net loss of $13.12 million or $0.48 per share in 2021. Net loss in the fourth quarter of 2022 totaled $2.9 million or $0.09 per share compared to a net loss of $4.5 million or $0.15 per share in the fourth quarter of 2021.

Adjusted EBITDA loss for the full year of 2022 totaled to $9 million compared to an adjusted EBITDA loss of $11.1 million in 2021. As of December 31, 2022, shareholders' equity totaled $13.3 million or approximately $4.08 per outstanding American depository share compared to shareholders' equity of $24.2 million on December 31, 2021. The reduction is mainly due to the company's net loss during the year. As of December 31, 2022, the company's cash and cash equivalents balance aggregated to $3.3 million compared to $3.8 million on December 31, 2021. The company's cash balance does not account for up to an additional $2.7 million in funds under its recently secured credit facility and investment financing.

And lastly, I wanted to touch base on our share count as it stands today. On an outstanding basis, we have around 33 million ordinary shares, representing 3.3 million ADSs. On a fully diluted basis, we currently have around 50 million shares or 5 million ADS outstanding.

With that, I'll turn the call back over to Shachar.

Thank you very much, Shai. In summary, allowing to date everything we aimed for in the last few years, while realizing our key growth engines and commercializing our significant competitive advantages. Despite general in financial market conditions, 2022 was an exceptional year for us, adding 4 more quarters of revenue growth that resulted in 8 consecutive quarters of revenue growth and $18.8 million in annual revenues, all while significantly reducing our expenditure. We remain agile and committed to paving our way to profitability and maximize our long-term business potential by growing expensively and further reducing our burn. Reflecting our share price, we believe that there is a gap between the company's through and actual performance and how the market conceives of our business and achievements.

We have said the bridging of this gap is yet another goal for 2023, and we are committed to raise the awareness with respect to our sustainable growth and development in the U.S. and beyond. I would like to take this opportunity to take our trusting shareholders and convey our appreciation of their confidence to us and continued support. Looking ahead, we have a well-defined strategic road map and that includes technology innovation, continuous growth and achieving profitability in the near term. We are optimistic regarding the future of the company and are building our business trends to support our efforts for improved financial results.

With that, I would like to open the call for any questions. Operator, please go ahead.

(Operator Instructions) There are no questions in queue. I would like to turn the call back to management for closing comments.

Thanks for joining us today. We look forward to continuing to update you on our progress.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.