Alarum Technologies' Q3 2025: Contradictions Emerge on Product Predictability, Partner Dependency, and Infrastructure Investment

Date of Call: November 26, 2025

Financials Results

• Revenue: $13.0M, up ~84% YOY (Q3 2025 vs $7.2M in Q3 2024) and up 48% sequentially
• EPS: Basic EPS $0.01 (Q3 2025) vs $0.60 (Q3 2024); non-IFRS basic EPS $0.18 (Q3 2025) vs $0.20 (Q3 2024)
• Gross Margin: 56% (non-IFRS) in Q3 2025, compared to 74% in Q3 2024 — decline driven by higher share of large-scale AI projects and third-party delivery costs

Guidance:

• Q4 2025 revenue expected around $12 million, +/- ~7% (management cites ~63% YOY growth).
• Q4 2025 adjusted EBITDA expected around $1.0 million, range +/- $0.5 million.
• Full-year revenue expected to finish near $41 million, ~30% YOY growth.
• Management expects margins to recover over time via in-house solutions, network optimizations and a shift to higher-value products.

Business Commentary:

* Revenue Growth and AI Demand: - Alarum Technologies reported $13 million in revenues for Q3 2025, up 81% year-over-year and 48% sequentially. - Growth was driven by increased consumption from major AI customers and strong adoption of AI-centric products.

• Large-scale AI Projects:
• The company saw a significant contribution from one large-scale AI customer, accounting for $3.5 million in revenue in the quarter.

• This is attributed to the demand for data at native scale and the strength of Alarum's technology.

• Gross Margin Pressure and Strategic Investments:

• The non-IFRS gross margin for Q3 2025 was 56%, due to increased investments and lower unit pricing for large-scale projects.
• 

• The temporary pressure on margins is a result of strategic decisions to expand capacity and build high-throughput pipelines.

• Product Suite Diversification:

• Alarum's revenue mix is shifting from a single product proxy business to a diversified multi-product data infrastructure platform.

• This is driven by the growth of products like Dataset and Material, Website Unblocker, and Custom Scrapers.

• Outlook and Market Potential:

• The company expects revenues of approximately $12 million for Q4 2025, with a year-over-year growth of 62%.
• This outlook reflects continued strong demand from AI customers and Alarum's strategic positioning in the data infrastructure market.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • "Q3 was a breakout quarter, $13 million in revenues..." and management: "we remain confident"; guidance for Q4 revenue ~$12M and full-year ~$41M; management frames gross-margin pressure as "short-term planned" with active initiatives to improve margins.

Q&A:

• Question from Brian Kinstlinger (Alliance Global Partners): Can you talk about the large project for data set delivery? How is the program going? What's customer satisfaction like? And how should we think about the consistency from this customer in terms of revenue contribution over the next 12 to 18 months?
  Response: The customer consumption is very large and satisfaction/retention are high, but future demand is unpredictable because the customer is in an R&D phase with volatile month-to-month needs.

• Question from Brian Kinstlinger (Alliance Global Partners): Do you see once R&D customers have developed their models that usage is higher or lower or just more predictable?
  Response: Usage tends to spike during model training (large short-term volumes) and become more sustainable and predictable in production, though new training cycles and verticals can trigger fresh spikes.

• Question from Brian Kinstlinger (Alliance Global Partners): And then as you've had this announcement and success here, can you talk about what the pipeline to sell this new dataset delivery solution is to other customers?
  Response: They already have other customers using the dataset capability and several additional prospects in the pipeline; current adopters are smaller now but can scale quickly.

• Question from Brian Kinstlinger (Alliance Global Partners): How should we think about the gross margin recovering as you've used the word temporary pressure on gross margins? And as part of that, what volume would you need that would trigger more investments in infrastructure and capacity, and how do you think about the recovery long term in pricing or unit economics?
  Response: If all delivery were in-house this quarter, gross margins could be ~70%; using third‑party vendors temporarily reduces margins — the plan is to validate demand with partners then internalize or acquire capabilities to restore higher margins once demand is proven.

• Question from Brian Kinstlinger (Alliance Global Partners): When is unit economics/pricing improving and are you going to be using a heavy load of third party in the fourth quarter?
  Response: They are testing internal solutions (some in production) that could materially improve unit economics as early as Q4; they expect some price recovery as weaker competitors exit and by optimizing infrastructure to lower COGS.

Contradiction Point 1

Product Usage and Predictability

It involves the stability and predictability of product usage, which directly impacts revenue forecasting and operational planning.

Will usage be higher, lower, or more predictable after R&D customers develop their models? - Brian Kinstlinger (Alliance Global Partners)

2025Q3: Upon model completion, data needs become more sustainable and predictable. - Shachar Daniel(CEO)

Who is the target customer for your Zero Trust technology? - Brian Kinstlinger (Alliance Global Partners)

2020Q4: We offer two types of solutions: ZoneZero VPN for enterprises with existing VPNs, and an SVP and cloud solution for SMBs through our partner's MSSP service. Our SVP solution is aimed at SMBs and legacy VPNs at enterprises. - Shachar Daniel(CEO)

Contradiction Point 2

Revenue Stability and Dependency on Partners

It highlights differing perspectives on revenue stability and dependency on partners, which impact financial performance and strategic direction.

How should we expect gross margins to recover from the temporary pressures you mentioned? What revenue levels would trigger increased infrastructure and capacity investments? How do you anticipate long-term recovery in pricing or unit economics? - Brian Kinstlinger (Alliance Global Partners)

2025Q3: If all solutions were in-house, gross margin could reach nearly 70%. The company mitigates risks by leveraging third-party solutions before developing in-house. - Shachar Daniel(CEO)

How many sales partners are there, and in which countries are they located? - Brian Kinstlinger (Alliance Global Partners)

2020Q4: We have more than 60 sales partners globally, covering Australia, Africa, Asia Pacific, Europe, and America. Our partners are particularly active in the Asia Pacific. - Shachar Daniel(CEO)

Contradiction Point 3

Sales and Marketing Strategy

It demonstrates a shift in sales and marketing strategy, which affects revenue growth and market positioning.

What is the pipeline for selling the new dataset delivery solution to other customers? - Brian Kinstlinger (Alliance Global Partners)

2025Q3: There's no pipeline like a traditional sales pipeline. Other customers are already leveraging similar capabilities, and there are more in the pipeline for various data sets and products. The need can ramp up quickly, making it difficult to predict future demand. - Shachar Daniel(CEO)

What is the target customer segment for your Zero Trust technology? - Brian Kinstlinger (Alliance Global Partners)

2020Q4: We offer two types of solutions: ZoneZero VPN for enterprises with existing VPNs, and an SVP and cloud solution for SMBs through our partner's MSSP service. Our SVP solution is aimed at SMBs and legacy VPNs at enterprises. - Shachar Daniel(CEO)

Contradiction Point 4

Investment Strategy and Infrastructure Development

It involves the company's strategy for investing in infrastructure and capacity expansion, which impacts operational efficiency and future growth potential.

How should we think about gross margin recovery as revenue scales and partner reliance decreases? What volume threshold would trigger infrastructure investments, and how do you see long-term pricing or unit economics recovery? - Brian Kinstlinger (Alliance Global Partners)

2025Q3: We are investing in R&D and new products and infrastructure to support new growth areas. This is reflected in our growth outlook for the year. - Shachar Daniel(CEO)

Q2 revenue was higher than Q1 but adjusted EBITDA was lower. Does this reflect increased investments impacting gross margins? Or are there other factors driving the EBITDA decline between Q1 and Q2? - Brian Kinstlinger (Alliance Global Partners)

2025Q1: So we are investing and growing our network sometimes even not without proportion to the revenues but much more than current revenues in order to be ready for each and every big or medium, it can be, but especially for these giants that they want to come in now and start to scale up with you. We don't want to be in a point that we are losing one or two or maybe more customers, because we saved some few dollars in the bank. So we are profitable for many quarters. Our balance sheet is strong enough. - Shachar Daniel(CEO)

Contradiction Point 5

Customer Satisfaction and Predictability of Demand

It involves the company's expectations and experiences regarding customer satisfaction and the predictability of demand from a large customer, which are critical for revenue forecasting and strategic planning.

What is the status of the major data delivery project, customer satisfaction, and expected revenue consistency from this client over the next 12-18 months? - Brian Kinstlinger (Alliance Global Partners)

2025Q3: The world of data needs can be divided into production and R&D stages. R&D stage customers like this can change needs weekly or monthly due to model development. Satisfaction and retention are high, but future demand prediction is difficult. - Shachar Daniel(CEO & Director)

What product is the large customer scaling up, and how does it differ from existing products? - Brian David Kinstlinger (Alliance Global Partners)

2025Q2: The new infrastructure is in place and ready to scale. We're excited by the demand we're seeing from our customer. And I think you've heard this before, but it's a fantastic strategic customer. And so we have a lot to do to support them with cross-selling and other things. But this is what I meant by, they're the traditional way of like a customer.' - Shachar Daniel(CEO)