Business Context and Reporting Period
Company: Alarum Technologies Ltd. (Nasdaq: ALAR)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Accounting Basis: International Financial Reporting Standards (IFRS)
Alarum is a global provider of web data collection solutions, primarily through its subsidiary NetNut. The company offers Internet Protocol Proxy Network (IPPN) solutions and data collection tools that enable customers to anonymously collect structured data from public online sources. In July 2023, the company scaled down its consumer internet access business (CyberKick) to focus on profitable enterprise revenue. As of December 31, 2025, the company operates as a single reportable segment: Web Data Collection.
Key Financial Metrics
| Metric (USD in millions) | 2025 | 2024 |
|---|---|---|
| Total Revenue | 40.8 | 31.8 |
| Cost of Revenues | 16.9 | 7.9 |
| Gross Profit | 23.8 | 23.9 |
| Gross Margin | 58.5% | 75.1% |
| Operating Profit | 0.2 | 6.7 |
| Net Profit | 1.0 | 5.8 |
| Adjusted EBITDA | 4.4 | 9.4 |
| Cash and Cash Equivalents | 12.3 | 15.1 |
| Long-term Debt Investments | 10.2 | 9.8 |
| Outstanding Ordinary Shares | 71.8 million | 69.1 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 28% to $40.8 million, driven by strong demand for data collection solutions ($6.1M) and new dataset sales ($5.0M), offset by a decline in IPPN solutions revenue.
- Margin Compression: Gross margin decreased from 75% to 58.5%. Cost of revenues surged 114% to $16.9 million due to higher network/server costs and subcontractor fees associated with increased data traffic and new product lines.
- Profitability Decline: Operating profit dropped 97% to $0.2 million, and Net Profit fell to $1.0 million from $5.8 million. This was primarily due to increased operating expenses (R&D up 67%, Sales & Marketing up 30%) and higher cost of revenues.
- Cash Flow: Operating cash flow turned negative at -$2.0 million (compared to +$8.9 million in 2024), driven by an $8.6 million increase in trade receivables and higher tax payments.
- Customer Concentration: The top 6 customers accounted for approximately 49% of total revenue in 2025. Two specific customers represented 15% and 12% of total revenue, respectively.
Outlook, Risks, and Management Commentary
Outlook and Strategy: Management expects current resources ($22.5 million in cash and investments) to be sufficient for the next 12 months. The company is pivoting toward the Automated Data Collection & Labeling (ADCL) market, aiming to bundle IPPN solutions with data processing and analysis tools to improve margins and cross-sell to existing customers.
Key Risks:
- Geopolitical Instability: The company is headquartered in Israel. Ongoing conflicts involving Hamas, Hezbollah, and Iran pose risks to operations, employee availability (military call-ups), and infrastructure. While no material adverse impact was reported as of the filing date, the situation remains fluid.
- Customer Concentration: Heavy reliance on a small number of large customers creates vulnerability to revenue volatility if key clients reduce spending or switch providers.
- Regulatory Environment: Increasing scrutiny on web scraping, data privacy (GDPR, CCPA), and anti-bot technologies by major platforms and regulators could limit the feasibility of the company's core business model.
- Cybersecurity: As a proxy provider, the company faces inherent risks of cyber-attacks. A breach could damage reputation and disrupt service.
Legal Proceedings: Class action lawsuits filed in the U.S. and Israel in early 2025 regarding alleged misstatements were voluntarily dismissed by plaintiffs in July and December 2025, respectively, without settlement or payment.
Investor Verification Checklist
- Customer Concentration: Verify the stability of the top 6 customers (49% of revenue) and the specific drivers behind the 28% revenue growth.
- Margin Sustainability: Assess whether the 58.5% gross margin is sustainable given the 114% increase in cost of revenues and the shift toward lower-margin data collection services.
- Working Capital: Investigate the $8.6 million increase in trade receivables and the resulting negative operating cash flow to ensure collection risks are managed.
- Geopolitical Exposure: Monitor the impact of the Israel-Hamas/Hezbollah/Iran conflicts on employee availability, operational continuity, and insurance coverage.
- Regulatory Compliance: Review the company's compliance strategies regarding evolving data scraping laws and anti-bot enforcement by major web platforms.