Safe-T Group Ltd. has been busy on the business stage. And to better reflect its mission, the company announced a corporate rebranding to better reflect its position in a surging cybersecurity sector. Effective today, Safe-T Group Ltd. (NASDAQ: SFET) and its trading symbol will be identified as Alarum Technologies Ltd. (NASDAQ, TASE: ALAR) with the word "alarum" derived from the Latin word for "warning," which the company notes better reflects its corporate vision, core values, and commitment to providing advanced privacy and cybersecurity solutions.
That commitment is already a mission in progress. Over the past 18 months, ALAR has laid the foundation to anchor its position as a market leader in cybersecurity and privacy solutions, leading to significant growth resulting from the increasing recognition by private and enterprise customers that choose the value-added benefits of its innovative client-specific solutions. While the name has changed, the focus hasn't, with ALAR intensifying its asset-supported mission to enable a secure network environment and protect organizations and individuals from privacy breaches and cyber-attacks.
Cumulatively speaking, ALAR has achieved impressive milestones that set them up for what could be a breakout in 2023 as their enhanced privacy and cybersecurity provider solutions serve a growing number of enterprises and consumers worldwide. That optimistic presumption is warranted, supported by a string of quarterly revenue growth and strengthened bottom-line results that are outpacing peer competition and even several major players. Investors are taking notice.
A Bullish Rally Intact
Since the start of the year, ALAR shares have been higher by over 20%, with trading momentum over the past few sessions set up to assault levels not seen since December of 2022. In fact, a short consolidation period in the middle of January appears to have strengthened bullish sentiment, with higher-than-normal volume helping drive share prices 12% higher over the past six trading sessions. Still, those gains may be the precursor for better things, noting that ALAR's Q3 financials were more than impressive; they were record-setting. Better still, for those investing in growth, the momentum generated during the second half of 2022 shows no signs of slowing.
Alarum management is bullish. They noted that business is strengthening across the board, recently announcing that its wholly-owned subsidiary and enterprise privacy network unit, NetNut, is ideally positioned to capitalize on potentially enormous revenue-generating opportunities from current and prospective clients in the price comparison website (PCW) market. That sector presented an estimated $2.8 billion opportunity in 2019, according to a report published by DataINTELO research.
But the better news for ALAR, and investors, is that analysts expect the PCW market to become a more than $6 billion rev-gen opportunity by 2030. And with ALAR having the right assets to meet demand, tapping into the expected 8% CAGR along the way could yield considerable topline growth in the current and coming quarters.
Although revenue increases can drive valuations higher, the even better news is that because of intense cost-cutting over the previous quarters, those revenues can fall faster to the bottom line, which could be why industry analysts model for ALAR shares to reach a median 12-month price target of $5.50 - more than 103% higher than current levels. With its Q4 results near and only about 3.26 million shares outstanding, ALAR shares may get the fuel needed from that report to extend the recent rally. Remember, while investors may respond well to another batch of expected record-setting results, the stock could get an additional punch from guidance into 2023, which is also likely to be bullish. More to the point, trading ahead of Q4 results may be a wise and timely consideration.
Again, not an overly ambitious statement. Company updates indicate that ALAR hasn’t only been targeting opportunities; they are actively seizing them.
Subsidiary Strength Expediting Growth
That's evidenced in Q3 with ALAR saying that wholly-owned subsidiary NetNut doubled its usage volume and processed over 36 billion customer requests over a comparative monthly period. That growth is attributed to the onboarding of several strategic customers that enhanced NetNut's network ability to process billions of requests compared to prior periods. While current run rates are impressive, additional growth to volume is likely in the queue, resulting from further client acquisitions expected after they become better acquainted with NetNut's ability to improve price comparison capabilities, provide users with seamless and competitive business analysis, and, most importantly, increase productivity.
But when appraising ALAR, keep in mind that NetNut isn't the only performing value driver. Revenue contributions from other assets in its enterprise privacy solutions, consumer cyber-security and privacy solutions, and enterprise cyber-security solutions segments add to the company's steepening growth trajectory. Its first segment offers cybersecurity and privacy solutions for basic and advanced consumers, providing a substantial security blanket against ransomware, viruses, phishing, and other online threats. It also provides users with a robust, secure, and encrypted connection, masking their online activity and keeping them safe from hackers.
A second segment, privacy solutions for enterprises, is powered by the world's fastest and most highly secured proxy network that enables customers to anonymously collect data at any scale from any public source over the web using a unique hybrid network. In addition, the ALAR network comprises both entry and exit points based on its proprietary reflection technology, leveraging the power of hundreds of optimally designed servers located at ISP partners worldwide that help guarantee the service's privacy, quality, stability, and speed. There's more contributing to record-setting growth.
A third value-driving asset targets rev-gen initiatives from current and potential clients needing enterprise cybersecurity solutions. This revenue stream is accretive through its global information securities provider, TerraZone Ltd. Designed for cloud, on-premises, and hybrid networks, these tailored solutions mitigate attacks on enterprises' business-critical services and sensitive data. They also ensure uninterrupted business continuity by protecting data access and preventing threats from both within and outside the organization by utilizing a "validate first, access later" philosophy.
As mentioned earlier, the great news is that these assets aren't just targeting diversified opportunities; they are capitalizing on them. Better yet, they are delivering growth that larger and often less nimble industry players like Rapid7, Inc. (NASDAQ: RPD), Palo Alto Networks (NASDAQ: PANW), and Cisco (NASDAQ: CSCO) will find hard to keep pace with. Evidence supporting that assumption is again in published quarterly results.
Seven Consecutive Quarters Of Growth
Indeed, ALAR enjoyed record-setting growth in Q3, with comparative revenues surging by 42% to a record $4,812,000. ALAR revenues rose even more appreciably for the comparative nine months, surging by 109% to $13,610,000. Notably, results for both periods exceeded prior guidance, setting an excellent precedent for Q4 and EOY 2022 tallies. Still, while topline growth is attractive, how they impact the bottom line is also important. ALAR delivered in that respect as well.
Gross profit for the nine months surged by 143% to $7,360,000 over last year's comparable, and for the three months ending September 30, gross profit scored 47% higher than the previous year's period to reach $2,627,000. While impressive, ALAR enters Q4 showing no signs of slowing. Thus, from a forward-looking perspective, even better results could be in the queue. And when noting the aggressive reductions in non-accretive operating expenses, that bullish expectation isn’t just a presumption; it’s probable.
Being Proactive Instead Of Reactive
With that in mind, trading proactively instead of reactionary ahead of Q4 results may be wise. After all, using precedent as a guide, ALAR has delivered consecutive growth over the past seven quarters. Just as importantly, they've provided evidence of entering 2023 better positioned than ever to keep that winning streak alive as revenues continue to increase across all of its segment channels. What’s more, recent updates from ALAR point to further organic growth thanks to its ability to capitalize on strengthening market positions, which, by the way, is behind its enterprise privacy business turning profitable and scoring its own record-setting numbers.
There's still more to like. CyberKick, another subsidiary, is performing better than expected, giving optimism that income from that asset could contribute appreciably more to revenue streams this year. Thus, considering its asset portfolio and contributions, the prudent way to appraise ALAR is not singularly but instead as a sum of its parts calculation. The entirety of its assets, including having roughly $8.1 million in cash, which includes $4.3 million raised after Q3, are the tangibles supporting the value and investment proposition.
That proposition is more robust, noting strategic accretive initiatives, formidable assets, a strong balance sheet, and leveraging skills from expert management. And while that's plenty to support the bullish case, investors should keep in mind that record revenues and strengthened bottom-line performance are additional value drivers that can't and shouldn't be ignored. The rally in ALAR stock shows many investors aren't, which could prove that timing market moves may not be that difficult. Of course, seven consecutive quarters of revenue growth helps that proposition, a differentiation ALAR contributes to the consideration.
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