20-F: Alarum Technologies Reports 28% Revenue Growth, Profit Plunge

Alarum Technologies Ltd. reported a 28% revenue increase to $40.7 million in 2025, driven by AI vertical demand and new data collection solutions, despite a significant drop in net profit to $1.0 million from $5.8 million in 2024.

Summary

• Total revenues increased by 28% to $40.7 million in 2025, up from $31.8 million in 2024.
• Growth was primarily driven by strong demand from a large-scale customer building foundational AI models and increased sales of new data collection solutions.
• Data collection solutions and datasets together generated $11.1 million in revenues in 2025, a significant increase from $0.6 million in 2024.
• Net profit for 2025 was $1.0 million, a substantial decrease from $5.8 million in 2024.
• Operating profit decreased to $0.2 million in 2025 from $6.7 million in 2024.
• Cost of revenues sharply increased by 114% to $16.9 million in 2025, primarily due to higher network and server costs and third-party services for data collection solutions.
• Research and development expenses rose by 67% to $7.5 million, reflecting increased investments in new product development and headcount expansion.
• Sales and marketing expenses increased by 30% to $9.1 million, driven by revenue growth and additional resources.
• General and administrative expenses increased by 23% to $7.0 million, due to payroll costs and higher share-based compensation.
• The Net Dollar-Based Retention Rate (NRR) declined significantly over the last seven quarters, reaching 0.83 as of December 31, 2025, indicating reduced spending from existing customers.
• Cash and cash equivalents decreased by $2.3 million in 2025, ending the year at $12.3 million.
• The company completed final payments for its strategic funding loan with O.R.B. in October 2025.
• Legal proceedings (class action lawsuits in Israel and the U.S.) were voluntarily dismissed by the applicants in July and December 2025, without settlement or payment.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report. While revenue growth is strong, particularly in new AI-related data solutions, the significant decline in net profit, operating profit, and gross margin, coupled with negative operating cash flow and a falling NRR, indicates underlying operational challenges and increased costs that outweigh the top-line growth.

Positives

• Total revenues increased by 28% to $40.7 million in 2025.
• Experienced strong demand from a large-scale customer building foundational AI models.
• Achieved significant growth in new data collection solutions and datasets, generating $11.1 million in 2025 compared to $0.6 million in 2024.
• Successfully completed final repayment of the strategic funding loan with O.R.B. in October 2025.
• Class action litigation in both U.S. and Israeli courts was voluntarily dismissed by the applicants without settlement or payment.
• NetNut subsidiary obtained a tax ruling from the Israel Tax Authority regarding its status as a Preferred Technological Enterprise (PTE), eligible for a reduced tax rate of 12% for 2024-2028.
• Combined cash and cash equivalents and high-rated long-term debt investments totaled approximately $22.5 million as of December 31, 2025, expected to be sufficient for at least the next 12 months.

Negatives

• Net profit decreased significantly to $1.0 million in 2025 from $5.8 million in 2024.
• Operating profit decreased to $0.2 million in 2025 from $6.7 million in 2024.
• Cost of revenues increased sharply by 114% to $16.9 million, outpacing revenue growth and leading to a decline in gross margin.
• Gross profit decreased by $0.1 million (0.3%) in 2025.
• Net Dollar-Based Retention Rate (NRR) declined significantly over the last seven quarters, reaching 0.83 as of December 31, 2025, indicating reduced spending from existing customers.
• Net cash used in operating activities was $2.0 million in 2025, a decrease of $10.9 million compared to cash provided in 2024.
• IPPN solutions revenues decreased by $1.1 million in 2025.
• The consumer internet access business (CyberKick) operations were scaled down in July 2023, resulting in reduced 'other revenue'.

Risks

• Inability to sell additional solutions and products to existing customers and/or acquire new customers could harm future revenues and operating results.
• Reliance on a limited number of significant customers (top 6 customers accounted for approximately 49% of 2025 revenue) may materially affect operating margins, profitability, and sales if these customers reduce purchases or are lost.
• Key customers reducing consumption of solutions and products due to technological, regulatory, market, or business changes may negatively impact revenue and financial performance.
• Intense competition from Software as a Service (SaaS) data collection vendors, some of which are larger and better known, may lead to insufficient financial or other resources to maintain or improve competitive position.
• Market forces, including increased supply or price reductions by competitors, may lead to declines in the prices charged for products, adversely affecting revenues and margins.
• Quarterly results may fluctuate significantly due to changes in customer demand, pricing dynamics, competitive activity, and other factors, making period-to-period performance unpredictable.
• Revenues may fluctuate from period to period due to variability in customer usage of solutions and products.
• Compromise of internal network systems by cyber attackers or other malicious cyber activity, or failure of hosting and infrastructure, could harm public perception of solutions and products.
• Failure of products to ensure customer compliance with government regulations and industry standards could materially impact business and results.
• Disruptions in, or termination of, relationships with partners, vendors, or third-party providers could adversely affect operations.
• Inability to obtain and maintain effective patent and trademark rights for products may hinder effective competition.
• Third-party claims of intellectual property infringement may prevent or delay development and commercialization efforts, as well as apply financial burdens.
• Involvement in lawsuits to protect or enforce intellectual property could be expensive, time-consuming, and unsuccessful.
• Intellectual property rights may not adequately protect technology, and unauthorized use of products may not be preventable.
• Issuance of a significant amount of additional Ordinary Shares due to exercise or conversion of outstanding warrants and/or substantial future sales of Ordinary Shares may depress share price.
• Inability to continue to comply with Nasdaq requirements could lead to delisting, negatively impacting liquidity and ability to raise capital.
• Political, economic, and military instability due to conflicts in Israel and the Middle East (Israel-Hamas, Israel-Iran, Israel-Hezbollah) may adversely affect results of operations.
• Provisions of Israeli law and articles of association may delay, prevent, or otherwise impede a merger with, or acquisition of, the company.
• Operations may be disrupted due to mandatory military service requirements or emergency call-ups affecting Israeli employees.
• Raising additional capital would cause dilution to holders of equity securities and may affect the rights of existing holders.
• Increasing use of social media platforms and new technologies (e.g., AI) presents risks and challenges for business and reputation.
• Unsuccessful management of environmental, social, and governance (ESG) matters could adversely affect reputation and ability to meet stakeholder expectations.
• Exposure to a number of risks associated with global sales and operations, including contract enforcement, higher costs, currency fluctuations, and trade restrictions.
• The price of the ADSs may be volatile.
• Potential for securities litigation, which is expensive and could divert management attention.
• Geopolitical events and resulting macroeconomic consequences.
• Changes in macroeconomic conditions, including inflation, interest rates, or foreign currency fluctuations, may affect results of operations.
• Loss of key personnel or difficulties in hiring skilled employees may adversely affect operations.
• Use of third-party software and other intellectual property may expose the company to risks.
• Use of open-source software could negatively affect ability to sell software and subject the company to possible litigation.
• Under applicable employment laws, the company may not be able to enforce covenants not to compete, potentially benefiting competitors from former employees' expertise.
• Maintenance of cash balances at financial institutions that may exceed federally insured limits, posing a risk of loss if institutions fail.
• Potential classification as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes, leading to negative tax consequences for U.S. taxpayers.
• ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement.
• Difficulty enforcing a judgment of a U.S. court against the company and its officers and directors in Israel.
• Restrictions on doing business with Israel by certain countries and increased efforts by activists to boycott Israeli goods may adversely impact ability to collaborate with third parties.
• Public debate regarding potential changes to Israel's judicial system could affect investor confidence, foreign investment levels, currency stability, or Israel's broader macroeconomic conditions.

Future Outlook

The company expects its current cash and cash equivalents, combined with high-rated long-term debt investments totaling approximately $22.5 million as of December 31, 2025, to be sufficient to meet anticipated cash needs for at least the next 12 months. Future capital requirements will depend on growth rate, R&D spending, sales and marketing expansion, new product offerings, market acceptance, and potential acquisitions. The company aims to leverage its IPPN solutions to enter the Automated Data Collection & Labeling (ADCL) Market, projected to reach over $17.1 billion by 2030, by offering a full end-to-end solution including Data Communication System (DCS), Data Set Library (DSL), and DSL Insight and Analysis services.

Management Comments

• We continue to maintain our service only to current paying users, which allows us to generate revenue from past investments in acquiring such users, with minimal costs.
• We continually strive to improve our products performance, marketing efforts efficiency and our support team professionalism and response, while monitoring the evolving market conditions, aiming to adapt to both regulatory shifts and technological advancements to support stable and enduring customer relationships.
• We believe that existing and new customers seek this end-to-end solution because it provides them with: a more complete Data Set, a more accurate Data Set, a faster and more efficient data gathering and analysis experience, and a more central management/dashboard.
• We believe that once we have completed development of our ADCL Service Package (i.e., our DCS, our DSL and our DSL Insights and Analysis solutions and service offerings), we will be uniquely positioned as one of the only vendors offering a full end-to-end solution, combining IPPN and ADCL and grow into a market leader in the ADCL Market.
• We believe that the key to our historical and future business success is based on: Our Fast, Secure and Automated IPPN Solutions, Our Extensive Global IP Network, and Our Strong Industry Recognition and First Mover Advantage.
• We are committed to fostering innovation and dedicated to pushing the boundaries of what is possible in our industry to continue and deliver exceptional value to our customers.
• We are constantly taking proactive measures to enhance our cybersecurity resilience in response to persistent cybersecurity breach attempts.

Industry Context

StockSavvy.ai notes that Alarum Technologies' strategic pivot towards the Automated Data Collection & Labeling (ADCL) Market, particularly its focus on AI-driven data solutions and datasets, aligns with the broader industry trend of increasing demand for real-time, structured data for AI model training and business intelligence. The significant revenue growth from new data collection solutions and a large AI customer indicates successful penetration into this high-growth segment. However, the decline in Net Dollar-Based Retention Rate (NRR) suggests challenges in retaining and expanding business with existing customers in a highly competitive market characterized by intense innovation and evolving anti-bot technologies. The company's emphasis on end-to-end solutions and proprietary technologies like reflection and reverse access aims to differentiate it from competitors like Bright Data and Oxylabs Networks, who also operate in this rapidly evolving space.

Comparison to Industry Standards

• The data collection and labeling market size was valued at $2.39 billion in 2026 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 18.2% to $6.15 billion by 2035 (Business Research Insights).
• The Automated Data Collection & Labeling (ADCL) Market is projected to reach more than $17.1 billion by 2030 (Grand View Research).
• NetNut's web data collection service is designed to handle massive amounts of traffic, processing hundreds of terabytes per second, and has been rigorously tested and validated by independent research firms such as Proxyway and Absolute Reports, and experts like G2 and Trustpilot, showing outperformance in terms of speed, security, success rates, and reliability compared to competitors.
• The company's Website Unblocker delivers consistently higher success rates when collecting data from websites protected by anti-bot systems, thanks to adaptive technology and multiple strategies.
• Competitors mentioned in the filing include Bright Data Ltd., Oxylabs Networks Pvt. Ltd., BiScience Inc., Similarweb Ltd., and SmartProxy.

Management Changes

Corporate Governance

Legal Proceedings

• On February 16, 2025, the company, CEO, and CFO were served with a motion to certify a class action in the Economic Department of the District Court in Tel Aviv, Israel, alleging misstatements in public disclosures between March 14, 2024, and August 26, 2024.
• A similar U.S. class action complaint was filed against the company, CEO, CFO, and Chairman in the United States District Court for the District of New Jersey.
• The U.S. complaint was voluntarily dismissed by the lead plaintiff on July 7, 2025, and such dismissal was approved by the U.S. court on July 8, 2025, without settlement or consideration.
• Following the dismissal of the U.S. complaint, the applicant in the Israeli motion submitted, with the company's consent, a motion to voluntarily dismiss the Israeli proceedings on December 10, 2025, without costs or compensation.
• The Israeli court approved the dismissal of the Israeli motion on December 11, 2025, noting that the voluntary dismissal of the parallel U.S. proceedings indicated a lack of prospects on the merits for the Israeli proceedings.

Related Party Transactions

• Entered into written employment or services agreements with each executive officer, containing customary provisions regarding noncompetition, confidentiality of information, and intellectual property assignment.
• Indemnification agreements with all directors and senior management, providing indemnification up to a certain amount and to the extent not covered by directors and officers insurance.
• Senior management is eligible for annual bonuses based on company revenues and profitability, and discretionary decisions, in accordance with the compensation policy.
• Granted options to purchase Ordinary Shares and Restricted Share Units (RSUs) to officers and directors, with equity incentive award agreements potentially containing acceleration provisions upon certain merger, acquisition, or change of control transactions.
• Compensation to directors employed by the company amounted to $1,227 thousand in 2025.
• Compensation to other key management personnel amounted to $485 thousand in 2025.
• Compensation to directors who are not employed by the company amounted to $950 thousand in 2025.
• Employees payable to related parties totaled $537 thousand as of December 31, 2025.
• Accounts payable to related parties totaled $163 thousand as of December 31, 2025.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances and volatility in ADS price, with the declining NRR indicating challenges in customer retention that could impact long-term value. The dismissal of class action lawsuits removes a significant legal overhang.
• Customers benefit from new data collection solutions and AI models, but the declining NRR suggests some existing customers may be reducing their usage. Cybersecurity risks could affect customer confidence and trust.
• Employees benefit from increased headcount in R&D and sales/marketing, but mandatory military service requirements in Israel pose a potential disruption risk. Share-based compensation remains an important part of their remuneration.
• Creditors benefit from the full repayment of the strategic funding loan, reducing the company's debt obligations.
• Suppliers and partners face potential adverse effects on operations if relationships with IP providers and other third-party vendors are disrupted or terminated.

Next Steps

• Continue to invest in research and development to enhance product capabilities, address new threat vectors, and access new customer markets.
• Expand sales and marketing activities, including international operations.
• Complete development of the Automated Data Collection & Labeling (ADCL) Service Package (DCS, DSL, and DSL Insights and Analysis solutions).
• Achieve rapid market traction in the ADCL market with small and medium enterprises.
• Improve margin growth through the re-sale of off-the-shelf DSL solutions.
• Monitor political and military developments in Israel and the Middle East and examine consequences for operations and assets.
• Continuously refine incident response procedures and enhance cybersecurity resilience.

Key Dates

Recommendation

Alarum Technologies demonstrates strong top-line revenue growth, particularly in the high-demand AI data collection sector, and has successfully resolved prior litigation. However, the substantial decline in net profit, operating profit, and gross margin, coupled with a negative operating cash flow and a concerning drop in the Net Dollar-Based Retention Rate (NRR), indicates significant challenges in profitability and customer retention. While the long-term strategic focus on the ADCL market is promising, the current financial performance suggests operational inefficiencies and cost pressures. A 'hold' recommendation is appropriate as investors should monitor whether the company can translate its revenue growth into sustainable profitability and improve customer retention in the coming quarters, especially given the geopolitical risks and intense competition.

Keywords

web data collection, IP proxy network, SaaS, AI models, cybersecurity, data extraction, SERP data, anti-bot technology, Israel, Nasdaq, financial technology, digital marketing, intellectual property, cloud services, corporate governance