Alarum Technologies Inc (NASDAQ:ALAR) recently announced its quarterly results, marking the end of a successful year for the Israeli software company. The decision to focus on its “NetNut” web data collection platform by exiting the cybersecurity business and other non-core segments in 2023 has led to increased sales and profitability. The introduction of new artificial intelligence-based tools has also contributed to the company’s growth.
Despite its market cap of just $120 million, ALAR has shown significant value with impressive operating trends and solid fundamentals. The company’s shares have surged over 1,100% in the past year, indicating strong potential for investors.
In the latest quarter, ALAR reported a net profit of $1.7 million, a significant improvement from the previous year. Revenue increased by 38% year-over-year to $7.1 million, with full-year revenue reaching $26.5 million, up 43% from the previous year.
The company achieved profitability for the second consecutive quarter, with adjusted EBITDA reaching $5.2 million in 2023. NetNut, the primary focus of ALAR, saw a 150% increase in revenue, driven by the launch of new products and gaining new customers in the fintech market. The net retention ratio also increased to 153%, indicating strong customer loyalty and increased spending on ALAR’s tools.
ALAR ended the year with $11 million in cash and no debt, highlighting its strong financial position. While not providing official guidance for 2024, the company’s management expressed confidence in continuing the positive trends in the year ahead.
With a market cap of around $110 million, ALAR is considered a micro-cap stock but has shown significant growth potential. The company’s valuation multiples are attractive, considering its recent revenue growth and potential for further expansion in 2024.
While there are risks associated with the competitive environment in the online tools segment, ALAR’s patents and established relationships provide some barriers to entry. The company’s limited number of large customers driving significant revenue is a potential weakness that investors should consider.
Overall, we rate ALAR as a buy, with expectations for continued financial momentum and potential for increased valuation multiples. Investors should monitor key metrics such as gross margin, net retention ratio, cash flow, and adjusted EBITDA to assess the company’s performance. Despite potential volatility in the market, ALAR’s strong fundamentals and growth prospects make it an attractive investment opportunity.
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