Alarum Technologies (NASDAQ: ALAR) (TASE: ALAR) proves that challenging market conditions can do little to stop best-in-breed companies from scoring market-leading growth. In ALAR's case, they are putting an exclamation point on that measure, posting preliminary YTD revenues of $19.3 million, a tally that, when formally published, will eclipse the income generated in all of 2022. As it should, that growth has led to an impressive rally in ALAR stock, which is trading higher by over 34% since the start of the year. The potentially better news is that the trend higher is likely to continue. (*share price change calculated from the opening price on 01/03/23 – 10/30/23, $2.41 - $3.25, Yahoo! Finance, 1:03 PM EST)
That bullish speculation is warranted, especially when considering that contributions from NetNut, part of its Enterprise Internet Access arm, are helping shift ALAR's growth pace from hyper-speed to warp as current and new clients embrace its abilities to provide some of the most advanced, fastest, and secured hybrid proxy networks. Offering that value is just a part of what's attracting attention. An equally significant contributor to growing user adoption is that NetNut is one of the few comprehensive solutions that enable customers to collect data anonymously at any scale from public sources over the web. It does so by leveraging the strength of hundreds of servers at ISP partners worldwide to unleash value inherent to its proprietary reflection technology that provides differences that are more than advantages to client users; from an investor's perspective, they're value drivers.
And they could be robust enough to put ALAR stock on track to re-claiming its 52-week high of $6.00, over 84% higher than its current price. That expectation isn't overly ambitious, either. As revenues show, ALAR appears to be firing on all revenue-generating cylinders. That does more than allow ALAR to invest in its growth initiatives; it puts them in the best-ever position to do so.
Maximizing Value From An Impressive Product Arsenal
Scoring that position is no coincidence. Instead, 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 contributing value from other portfolio assets, are doing what they should- distinguish ALAR in the competitive landscape and support the presumption that the path of least resistance for ALAR shares, based on performance, not hype, is higher.
Keep in mind that ALAR stock is no stranger to higher prices. ALAR stock traded as high as $6.00 during the past 52 weeks, 84% higher than its current $3.25 price, despite being a much stronger company today from the value inherent to and accruing from revenue-generating acquisitions that are being met with significantly lower cash burn. Couple that with ALAR selling the right products at the right time; maximizing its target market opportunities is more than ambition; it's in progress.
ALAR is proving that point. Earlier this month, the company provided preliminary financials and guidance for the nine months ended September 30, 2023. In that update, ALAR expects accumulated revenues from the beginning of 2023 until the end of Q3 to reach $19.3 million. As noted, that figure exceeds the entire revenues of 2022. But equally as important, that increase represents 45% growth compared to the same nine-month period last year. On a quarter-over-quarter basis, revenue growth is also noteworthy, 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 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.
Strengthened Balance Sheet And Cash On Hand To Expedite Growth
With the capital on hand, that's more than likely; it's probable. Entering Q4 with cash and cash equivalents of roughly $7.7 million, ALAR is well-positioned to achieve significant improvement in its positive cash flow, resulting from cost-cutting initiatives that should help revenues to fall faster toward its bottom line. The company's shifted operational focus contributes as well. In that respect, ALAR implemented a scale-down of investments into the consumer segment to optimize revenues and concentrate instead on its enterprise business. That decision is proving a good one, evidenced by NetNut continuing to earn more excellent revenue-generating traction and, more importantly, from a company and investor's perspective, accelerating its pace toward profitability.
Again, that's no coincidence. Instead, it results 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 asset that continues to get 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. That's not all.
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, putting ALAR in a potentially lucrative space at the right time to target revenue-generating potential from an estimated $2.22 billion market opportunity 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 through SERP Scraper's ability to provide clients a next-generation data collection solution serving the increasing and complex needs of enterprise customers worldwide. Remember, while search engines are a valuable resource to virtually any situation for their obvious capabilities, it's also critical 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 gives clients a competitive and, sometimes, an invaluable advantage.
The Technology Revolution Waits For No One
Those following technology evolution already understand why. For those that don't, it's simple enough to comprehend NetNut benefits. It 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 and fits seamlessly into the company's commitment to providing cutting-edge solutions to data market clients. Moreover, 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.
And that's increasing demand for what ALAR provides, which can simultaneously drive revenues higher. More simply said, with 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, it offers a win-win-win proposition. For ALAR, its clients, and investors.
A Sum Of Its Parts Bullish Proposition
In other words, the 34% YTD gains are the likely precursor to higher highs. On a sum of ALAR's parts consideration, share price increases are more than warranted, a steepening share price trajectory is justified, supported by revenue growth, reduced overhead, best-in-class products, and a management team that is streamlining its operations to capitalize on and maximize refined target market opportunities. Combining the values associated with each, re-claiming its 52-week high of $6.00 may be a closer conquest than many think.
It's an appreciable increase for sure. But, comparing ALAR in 2022 to what it's grown into in 2023, reaching that level could also be a short rest stop to a more appropriate higher valuation. With a revenue update expected after the new year and many expecting another topline beat, it could fuel that leg higher and add further supporting evidence to an already compelling and bullish case for ALAR stock. Considering ALAR's history of over-delivering, trading ahead of that precedent may be wise.
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