ALAR Alarum Technologies Ltd

Exhibit 99.1

 

 

Alarum Technologies Announces Second Quarter 2024 Results

 

Concludes strong first half of 2024 with record revenues of $17.3 million, progressing profitability metrics,
solid cash generation and $21.6 million in cash and equivalents

 

TEL AVIV, Israel, Aug. 26, 2024 (GLOBE NEWSWIRE) -- Alarum Technologies Ltd. (Nasdaq, TASE: ALAR) (“Alarum” or the “Company”), a global provider of internet access and web data collection solutions, today announced financial results for the second quarter ended June 30, 2024. 

 

“Today we announced the results of yet another strong record-breaking quarter, marking the first year since we announced our shift to focusing on Enterprise Internet Access through our NetNut data collection product line,” said Mr. Shachar Daniel, Chief Executive Officer of Alarum. “As we intend to establish the broadest data collection and insights offering in the market, we continued to increase our market share in the IP Proxy Network (IPPN) segment, won initial sales in the data collection and labelling market with our new Web-Unblocker and continued to make progress towards providing our customers with artificial intelligence (AI) and analysis capabilities. Our cash balance positions us well to invest in prospects that will provide the foundation for sustained growth.”

 

Mr. Daniel concluded: “Looking into the third quarter of 2024, I am extremely proud that NetNut revenues are expected to surpass the full year 2023 revenue-bar within the first three quarters of 2024. The market we operate in is an ever evolving and nascent market and as we continue to expand our customer base, enhance our offerings and grow the business we may experience some short-term variances. In the third quarter of 2024, we estimate continued year-over-year growth. While third quarter revenues are assumed to be impacted by market dynamics that some of our customers have been experiencing since June, our main growth KPIs are positive: consistent growth in the monthly revenue rates from June to July and into August. We evaluate the value created by new customers over their lifecycle. Our new customer-indicator shows enhanced growth in the second quarter compared to the first quarter, and to the last four quarters’ average. Furthermore, we will maintain strong net customer retention rates in the third quarter, in line with our growth strategy and strong balance sheet. These are all clear indicators of the strength and resilience of our business, as Alarum is in it for the long run.”

 

Recent Business Highlights

 

As the Company focuses on expanding its presence in the Data Collection Market, it:

 

-	Added major and highly regarded brand names to the NetNut customer base, including a Fortune 100 customer in Q3 2024

 

-	Onboarded in Q2 2024 dozens of new customers who generated approximately $400,000 in the first month of activity, 60% higher than the revenue generated from those that onboarded in Q1 2024 and about 35% higher than the last four quarters’ average

 

-	To date, NetNut customers have been generating revenues at an average rate of about 15-18 times higher than their initial month’s activity over a period of approximately three years

 

-	Net Retention Rate (“NRR”)1 reached 1.59 as of June 30, 2024

 

-	Continued to expand and further the Company’s network ; its infrastructure is now capable of handling significantly higher traffic, supporting larger and a growing number of customers that can drive scalable and profitable growth

 

-	Continued to invest in and make substantial progress into the Data Collection and Labelling Market with the new Web-Unblocker and the AI Data Collection products

 

-	Generated initial revenues from new customers who placed orders for the Web-Unblocker in Q2 2024

 

-	Continued to advance towards adding AI and analysis capabilities to the Company’s Data Products

 

1	NRR represents the average growth rate for the preceding four quarters compared to the equivalent period in the prior year, of current customers only, while excluding revenues generated from new customers but including up-sales and cross-sales as well as churn.

 

 

Summary of Financial Results²

(in millions of U.S. dollars, rounded, except per share amounts and margins)

 

		For the Six Months Ended June 30,								For the Three Months Ended June 30,
		2024				2023				2024				2023
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Total Revenue			17.3				12.7				8.9				7.0
of which, NetNut Revenue was			16.7				8.4				8.7				5.0
Gross profit			13.4				8.3				6.8				4.5
Gross margin (in percentage)			77.7	%			65.3	%			76.9	%			64.7	%
Non-IFRS gross margin (in percentage)			79.9	%			69.9	%			78.5	%			71.0	%
Total operating expenses			8.1				17.0				4.2				12.8
Finance income (expense), net			(3.3	)			0.1				(2.5	)			0.3
Tax benefit (expense)			(0.8	)			0.2				(0.5	)			0.2
Net profit (loss) for the period			1.1				(8.4	)			(0.4	)			(7.7	)
Adjusted EBITDA			6.6				1.2				3.4				1.1
Basic earnings (loss) per ADS (in U.S. Dollars)		$	0.16			$	(2.51	)		$	(0.05	)		$	(2.26	)
Non-IFRS basic earnings per ADS (in U.S. Dollars)		$	0.86			$	0.42			$	0.41			$	0.45
Cash, cash equivalents3			21.6				3.8				21.6				3.8
Shareholders’ equity4			20.4				6.1				20.4				6.1

 

Second Quarter and First Half 2024 Financial Analysis

 

●

Revenues grew 27% year-over-year to a Company record $8.9 million in Q2 2024 (Q2 2023: $7.0 million). The increase is attributed to the growth of the enterprise internet access business, NetNut, which increased to $8.7 million in Q2 2024, up from $5.0 million in Q2 2023. H1 2024 revenues increased to a record $17.3 million (H1 2023: $12.7 million). NetNut’s revenues reached a record $16.7 million in H1 2024, achieving 99% year-over-year growth (H1 2023: $8.4 million).

 

●

Operating expenses totaled $4.2 million (Q2 2023: $12.8 million), and H1 2024 operating expenses totaled $8.1 million (H1 2023: $17.0 million). The quarterly and six-month year-over-year decrease resulted mainly from impairment of goodwill and intangible assets following the Company’s shift to enterprise internet access (NetNut) from consumer internet access (CyberKick). In addition, CyberKick’s operation expenses were reduced, while NetNut’s operation expenses increased in line with its growth.

 

●

Finance expenses in Q2 2024 were $2.5 million (Q2 2023: finance income of $0.3 million), and approximately $3.4 million in H1 2024 (H1 2023: financial income of $0.1 million). The year-over-year differences were mainly from expenses resulting from the fair value increase of derivative financial instruments (warrants issued in 2019 to 2020) due to the increase in the Company’s share price. The increase was partially offset by interest income on short-term bank deposits.

 

2

The table below contains certain non-IFRS financial measures. See “Use of non-IFRS Financial Results” for additional information regarding these measures and reconciliations to the most comparable IFRS measures.

3

As of the last day of the period.

4

As of the last day of the quarter.

 

 

●	Income tax expenses totaled $0.8 million in H1 2024 (H1 2023: tax benefit of $0.2 million), following the first-time NetNut was profitable for tax purposes.

 

●	H1 2024 cash flow from operating activities reached $6.3 million (H1 2023: $(0.1) million)

 

●	As of June 30, 2024, shareholders’ equity totaled $20.4 million, compared to $6.1 million as of June 30, 2023, and $13.2 million as of December 31, 2023. The increase was driven by the H1 2024 net profit as well as warrants and options exercises.

 

●	Outstanding ordinary share count as of June 30, 2024, was approximately 68.4 million, or 6.8 million in ADSs.

 

Financial Outlook

 

“Alarum ended Q2 2024 with growing revenues, enhanced profitability, strong cash generation and a solid balance sheet, which provides the flexibility and resources to invest in the areas that will drive future growth,” said Mr. Shai Avnit, Chief Financial Officer of Alarum. “Today, for the first time, we are providing quarterly guidance, as we aim to enhance transparency. We anticipate Q3 2024 revenue to demonstrate year-over-year growth, and in fact, NetNut revenues are expected to cross the full-year 2023 revenue-bar of $21.2 million within the first nine months of 2024. Q3 2024 revenues are estimated at $7 million ±3% and Adjusted EBITDA for Q3 2024 is expected to range from $0.8 to $1.0 million.”

 

Second Quarter 2024 Financial Results Conference Call

 

Mr. Shachar Daniel, Chief Executive Officer of Alarum, and Mr. Shai Avnit, Chief Financial Officer of Alarum, will host a conference call today, August 26, 2024, at 8:30 a.m. ET, 5:30 a.m. Pacific time to discuss the second quarter 2024 results and the third quarter 2024 outlook, followed by a Q&A session. To attend, please dial one of the following numbers, at least five minutes before the call starts: 1-877-407-0789 or 1-201-689-8562. If you are unable to connect using the toll-free number, please try the international dial-in number. An Israeli toll-free number is: 1 809 406 247.

 

Participants will be required to state their name and company upon dialing in. If you have any difficulty connecting, please contact Michal Efraty on behalf of Alarum at +972-(0)-52-3044404. Replay: The conference call will be broadcast live and available for replay here, after 11:30 a.m. ET on August 26, 2024, through September 24, 2024. Toll-free replay numbers: 1-844-512-2921 or 1-412-317-6671, ID: 13748415.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the “safe harbor” words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements. For example, Alarum is using forward-looking statements in this press release when it discusses its guidance regarding revenue and Adjusted EBITDA, potential due to its cash position and resources, growth, profitability, AI and analysis capabilities, customer retention, prospect, flexibility, market expansion and 2024 NetNut revenues, as well as the expected benefits and impacts of its existing and future products and services. Because such statements deal with future events and are based on Alarum’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of Alarum could differ materially from those described in or implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties, including those discussed under the heading “Risk Factors” in Alarum’s annual report on Form 20-F filed with the Securities and Exchange Commission (“SEC”) on March 14, 2024, and in any subsequent filings with the SEC. Except as otherwise required by law, Alarum undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. Alarum is not responsible for the contents of third-party websites.

 

 

Condensed Consolidated Statements of Financial Position

(in thousands of U.S. dollars)

 

		June 30,								December 31,
		2024				2023				2023
		(Unaudited)								(Audited)
Assets
Current assets:
Cash and cash equivalents			21,626				3,813				10,872
Short-term restricted deposits			-				500				-
Trade receivables, net			2,471				2,279				1,994
Other receivables			961				481				399
			25,058				7,073				13,265
Non-current assets:
Long-term restricted deposits			-				111				-
Long-term deposit			102				119				104
Other non-current assets			94				111				145
Property and equipment, net			119				92				88
Right-of-use assets			638				605				779
Deferred tax assets			298				-				181
Goodwill			4,118				4,118				4,118
Intangible assets, net			1,082				1,901				1,386
Total non-current assets			6,451				7,057				6,801
Total assets			31,509				14,130				20,066
Liabilities and equity
Current liabilities:
Trade payables			570				963				369
Other payables			3,058				2,312				2,439
Current maturities of long-term loan			564				497				290
Short-term bank loans			-				1,601				-
Contract liabilities			2,285				1,289				1,983
Derivative financial instruments			3,409				2				109
Short-term lease liabilities			362				227				370
Total current liabilities			10,248				6,891				5,560
Non-current liabilities:
Long-term loans			398				647				802
Long-term lease liabilities			439				405				523
Deferred tax liabilities			-				63				-
Total non-current liabilities			837				1,115				1,325
Total liabilities			11,085				8,006				6,885
Equity:
Ordinary shares			-				-				-
Share premium			108,963				95,754				100,576
Other equity reserves			12,705				15,567				14,938
Accumulated deficit			(101,244	)			(105,197	)			(102,333	)
Total equity			20,424				6,124				13,181
Total liabilities and equity			31,509				14,130				20,066

 

 

Condensed Consolidated Statements of Profit or Loss

(in thousands of U.S. dollars, except per share amounts)

 

		For the Six Months Ended June 30,								For the Three Months Ended June 30,								For the Year Ended December 31,
		2024				2023				2024				2023				2023
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)				(Audited)
Continuing operations
Revenue			17,260				12,664				8,884				6,985				26,521
Cost of revenue			3,854				4,390				2,051				2,463				7,711
Gross profit			13,406				8,274				6,833				4,522				18,810
Operating expenses:
Research and development			2,143				1,948				1,121				886				3,557
Sales and marketing			3,372				6,472				1,647				4,289				10,035
General and administrative			2,626				2,286				1,386				1,291				4,406
Impairment of goodwill			-				6,311				-				6,311				6,311
Total operating expenses			8,141				17,017				4,154				12,777				24,309
Operating profit (loss)			5,265				(8,743	)			2,679				(8,255	)			(5,499	)
Finance income (expense), net			(3,345	)			116				(2,497	)			313				(590	)
Profit (loss) from continuing operations before income tax			1,920				(8,627	)			182				(7,942	)			(6,089	)
Tax benefit (expense)			(831	)			238				(533	)			242				482
Profit (loss) from continuing operations, net of income tax			1,089				(8,389	)			(351	)			(7,700	)			(5,607	)
Profit from discontinued operations, net of income tax			-				-				-				-				82
Net profit (loss) for the period			1,089				(8,389	)			(351	)			(7,700	)			(5,525	)
Basic and diluted profit (loss) per share:
Continuing operations		$	0.02			$	(0.25	)		$	(0.01	)		$	(0.23	)		$	(0.14	)
Discontinued operations			-				-				-				-				*
		$	0.02			$	(0.25	)		$	(0.01	)		$	(0.23	)		$	(0.14	)
Basic profit (loss) per ADS:
Continuing operations		$	0.16			$	(2.51	)		$	(0.05	)		$	(2.26	)		$	(1.35	)
Discontinued operations			-				-				-				-				*
		$	0.16			$	(2.51	)		$	(0.05	)		$	(2.26	)		$	(1.35	)

 

*	Less than $0.01

 

 

Use of non-IFRS Financial Results

 

In addition to disclosing financial results calculated in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, this press release contains non-IFRS financial measures of EBITDA (EBITDA loss), Adjusted EBITDA (Adjusted EBITDA loss), non-IFRS net profit (loss), non-IFRS gross profit, non-IFRS gross margin and non-IFRS basic earnings (loss) per share or ADS for the periods presented. The Company defines EBITDA (EBITDA loss) as net profit (loss) from continuing operations before depreciation, amortization and impairment of intangible assets, finance income (expense) and income tax; defines Adjusted EBITDA (Adjusted EBITDA loss) as EBITDA (EBITDA loss) as further adjusted to remove the impact of (i) impairment of goodwill (if any); and (ii) share-based compensation; defines non-IFRS net profit (loss) as net profit (loss) from continuing operations before depreciation, amortization and impairment of intangible assets, impairment of goodwill, finance income (expense) effects primarily related to derivative financial instruments as well as long-term loan, deferred tax effects and share-based compensation; defines non-IFRS gross profit as gross profit from continuing operations adjusted to remove the impact of depreciation, amortization and impairment of intangible assets and share-based compensation recorded under cost of revenues; defines non-IFRS gross margin as the percentage of the non-IFRS gross profit out of revenues; and defines non-IFRS basic earnings (loss) per share or ADS as non-IFRS net profit (loss) divided by the weighted average number of ordinary shares or ADSs. The Company’s management believes the non-IFRS financial information provided in this press release is useful to investors’ understanding and assessment of the Company’s ongoing operations. Management also uses both IFRS and non-IFRS information in evaluating and operating its business internally, and as such deemed it important to provide this information to investors. The non-IFRS financial measures disclosed by the Company should not be considered in isolation, or as a substitute for, or superior to, financial measures calculated in accordance with IFRS, and the financial results calculated in accordance with IFRS and reconciliations to those financial statements should be carefully evaluated. Investors are encouraged to review the reconciliations of these non-IFRS measures to their most directly comparable IFRS financial measures provided in the financial statement tables herein.

 

Other Metrics

 

Net retention rate (NRR) represents the average growth rates for the preceding four quarters compared to the equivalent period a year earlier, of current customers only, without the revenues generated from new customers, but including up-sales and cross-sales on one hand and churn on the other hand. NRR greater than 1.00 indicates that the Company experiences revenue growth from its existing customer base in the specific period even after accounting for lost revenue due to customers’ churn. Conversely, an NRR lower than 1.00 suggests that the Company loses revenue from existing customers in the specific period due to churn which is higher than revenue gain through up-sells or cross-sells.

 

 

Non-IFRS Financial Measures

(in millions of U.S. dollars, rounded)

 

The following tables present the reconciled effect of the above on the Company’s Adjusted EBITDA (EBITDA loss); non-IFRS net profit (loss); and non-IFRS gross profit for the six and three months ended June 30, 2024 and 2023, and for the year ended December 31, 2023:

 

		For the Six Months Ended June 30,								For the Three Months Ended June 30,								For the Year Ended December 31,
		2024				2023				2024				2023				2023
Net profit (loss) from continuing operations			1.1				(8.4	)			(0.3	)			(7.7	)			(5.6	)
Adjustments:
Depreciation, amortization and impairment of intangible assets			0.3				3.0				0.1				2.7				3.5
Finance expense (income), net			3.4				(0.1	)			2.5				(0.3	)			0.6
Tax expense (tax benefit)			0.8				(0.2	)			0.5				(0.2	)			(0.5	)
EBITDA (EBITDA loss)			5.6				(5.7	)			2.8				(5.5	)			(2.0	)
Adjustments:
Impairment of goodwill			-				6.3				-				6.3				6.3
Share-based compensation			1.0				0.6				0.6				0.3				0.9
Adjusted EBITDA for the period			6.6				1.2				3.4				1.1				5.2

 

		For the Six Months Ended June 30,								For the Three Months Ended June 30,								For the Year Ended December 31,
		2024				2023				2024				2023				2023
Net profit (loss) from continuing operations			1.1				(8.4	)			(0.3	)			(7.7	)			(5.6	)
Adjustments:
Depreciation, amortization and impairment of intangible assets			0.3				3.0				*				2.7				3.5
Finance expense, net effects			3.3				0.1				2.5				0.1				0.1
Deferred tax effects			(0.1	)			(0.2	)			*				(0.2	)			(0.5	)
Impairment of goodwill			-				6.3				-				6.3				6.3
Share-based compensation			1.0				0.6				0.6				0.3				0.9
Non-IFRS net profit for the period			5.6				1.4				2.8				1.5				4.7

 

*	Less than $0.1 million

 

		For the Six Months Ended June 30,								For the Three Months Ended June 30,								For the Year Ended December 31,
		2024				2023				2024				2023				2023
Gross profit from continuing operations			13.4				8.3				6.8				4.5				18.8
Adjustments:
Depreciation, amortization and impairment of intangible assets			0.3				0.6				0.1				0.4				0.9
Share-based compensation			*				*				*				*				*
Non-IFRS gross profit for the period			13.7				8.9				6.9				4.9				19.7

 

*	Less than $0.1 million

 

 

About Alarum Technologies Ltd.

 

Alarum Technologies Ltd. (Nasdaq, TASE: ALAR) is a global provider of internet access and web data collection solutions. The solutions by NetNut, our enterprise internet access and web data collection arm, are based on our world’s fastest and most advanced and secured hybrid proxy network, enabling our customers to collect data anonymously at any scale from any public sources over the web. Our network comprises both exit points based on our proprietary reflection technology and hundreds of servers located at our ISP partners around the world. The infrastructure is optimally designed to guarantee privacy, quality, stability, and the speed of the service.

 

For more information about Alarum and its internet access and web data collection solutions, please visit www.alarum.io.

 

Follow us on Twitter

 

Subscribe to our YouTube channel

 

Investor Relations Contacts:

 

Michal Efraty

+972-(0)52-3044404
investors@alarum.io

 

 

Exhibit 99.3

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

As of June 30, 2024, and for the Six Months then Ended

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain information included in this analysis may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “plans,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “project” or other similar words, but are not the only way these statements are identified.

 

These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.

 

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

 

Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:

 

	●	our planned level of revenues and capital expenditures;
	●	our ability to market and sell our products;
	●	the ability of our clients to continue utilize our products at their current levels;
	●	our ability to expand the number and the diversification of customers in order to avoid a material effect on our operating margins, our profitability, our sales and our results of operations as a result of a loss of a significant customer, or a material reduction in sales to a significant customer;
	●	our plans to continue to invest in research and development to develop technology for both existing and new products;
	●	our ability to maintain our relationships with partners and customers;
	●	our ability to maintain or protect the validity of our European, U.S. and other patents and other intellectual property;
	●	our ability to engage in future strategic opportunities, including, but not limited to, strategic acquisitions, and achieve any expected benefits there from;
	●	our ability to launch and penetrate markets in new locations, including taking steps to expand our worldwide activities and to enter into engagements with new business partners in those markets;
	●	our intention to increase marketing and sales activities;
	●	our intention to establish partnerships with industry leaders;

 

 

	●	our ability to locate additional funding available to us on acceptable terms;
	●	our ability to retain professional employees and executive members;
	●	our ability to internally develop new inventions and intellectual property;
	●	our expectations regarding future changes in our cost of revenues and our operating expenses;
	●	our expectations regarding our tax classifications;
	●	interpretations of current laws and the passages of future laws and/or regulations;
	●	our ability to continue to effectively comply with the requirements of Nasdaq;
	●	the impact of potential litigation;
	●	acceptance of our business model and performance by investors; and
	●	general market, political, and economic conditions in the countries in which we operate including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East, such as the Israel-Hamas war.

 

The foregoing list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting our company, reference is made to our Annual Report on Form 20-F for the year ended December 31, 2023, or our Annual Report, which is on file with the Securities and Exchange Commission, or the SEC, and the other risk factors discussed from time to time by our company in reports filed or furnished to the SEC.

 

Except as otherwise required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

General

 

Introduction

 

Unless indicated otherwise by the context, all references in this report to “Alarum”, the “Company”, “we”, “us” or “our” are to Alarum Technologies Ltd. and its subsidiaries. All references in this report to “dollars” or “$” means United States dollars.

 

You should read the following discussion and analysis in conjunction with our unaudited condensed consolidated financial statements for the six months ended June 30, 2024 and notes thereto, and together with our audited consolidated financial statements for the year ended December 31, 2023 and notes thereto filed with the SEC as part of our Annual Report.

 

Overview

 

Alarum is a global provider of internet access and web data collection solutions.

 

We currently operate in two segments: enterprise internet access and consumer internet access.

 

Our enterprise internet access and web data collection solutions are provided through our wholly owned subsidiary NetNut Ltd., or NetNut, and offer secured, fast, and anonymous IP Proxy Network Solutions, or IPPN solutions, to our business customers which, in turn, enables them to anonymously and securely browse the internet as well as to collect data from any publicly available source on the web, for their own business purposes. Our IPPN solutions allow organizations to collect vast amounts of accurate, transparent web data from public online sources by simultaneously connecting to the Internet from different IP addresses. Our customers can choose from various types of IPs from our IP pool which contains millions of IPs, including ISP IPs, data center IPs, and residential service provider IPs.

 

 

With our solutions, customers gain data-driven information that provides valuable insights with respect to predictive capabilities or behaviors, thereby assisting ongoing business management operation and decision making. An added benefit to our customers is the fact that utilizing our network completely conceals enterprises from the internet by modifying IP addresses, thus ensuring high levels of privacy for their online presence. Our solutions enable access to the internet through millions of end points globally, thus ensuring multiple business use cases, including large-scale data collection and analysis, cyber security, price comparison, ad verification, search engine optimization validations, web data extraction, collection of data for financial analysis, and more.

 

Our consumer internet access solutions are provided through our wholly-owned subsidiary CyberKick Ltd., or CyberKick, and offer a powerful, secured and encrypted connection, masking consumers’ online activity and keeping them safe from hackers. The solutions are designed for advanced and basic users, ensuring complete protection for all personal and digital information. As part of our focus on generating profitable revenues, we decided in July 2023 to downscale our investment in the consumer internet access segment of our business. We continue to maintain our products and the service only to current paying users, which allows us to generate revenue from past investments in acquiring such users, with minimal costs.

 

Our Business Model

 

We generate Software as a Service, or SaaS, revenues when customers subscribe to our enterprise and consumer access platforms and pay for the packages they choose. The packages are usually for the earlier of one to twelve months, or maximum bandwidth usage in the enterprise access segment, and for a month or a year in the consumer access segment. Our revenue is recognized on a straight-line basis over the package period.

 

Results of Operations

 

The following discussion of our results of operations for the six months ended June 30, 2024 and 2023, included in the following table, which presents selected financial information data, is based upon our consolidated statements of profit or loss contained in our unaudited condensed consolidated financial statements for those periods, and the related notes.

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Revenue			17.3				12.7
Cost of revenue			3.9				4.4
Gross profit			13.4				8.3
Operating expenses:
Research and development			2.1				1.9
Selling and marketing			3.4				6.5
General and administrative			2.6				2.3
Impairment of goodwill			-				6.3
Total operating expenses			8.1				17.0
Operating profit (loss)			5.3				(8.7	)
Finance income (expense), net			(3.4	)			0.1
Profit (loss) before income tax			1.9				(8.6	)
Tax benefit (expense)			(0.8	)			0.2
Net profit (loss) for the period			1.1				(8.4	)

 

 

Key Business Metrics

 

In addition to our results, determined in accordance with International Financial Reporting Standards, or IFRS, we believe the following non-IFRS financial measures are useful in evaluating our operating performance.

 

EBITDA (EBITDA loss). We define EBITDA (EBITDA loss) as net profit (loss) before depreciation, amortization and impairment of intangible assets, finance income (expense) and income tax.

 

Adjusted EBITDA. We define Adjusted EBITDA as EBITDA (EBITDA loss) as further adjusted to remove the impact of (i) impairment of goodwill (if any); and (ii) share-based compensation.

 

Non-IFRS net profit (loss). We define non-IFRS net profit (loss) as net profit (loss) before depreciation, amortization and impairment of intangible assets, impairment of goodwill, finance income (expense) effects primarily related to derivative financial instruments as well as long-term loan, deferred tax effects and share-based compensation.

 

In accordance with IFRS, we are required to record non-cash expenses and non-core expenses, which have a material effect on our profitability. We believe that these non-IFRS financial measures are useful in evaluating our business because of varying available valuation methodologies, subjective assumptions and the variety of financial instruments that can impact a company’s non-cash expenses, and because they exclude non-cash expenditures such as the expenses mentioned above, that do not reflect the performance of our core business. By excluding non-cash items that have been expensed in accordance with IFRS, we believe that the Company’s non-IFRS results provide information to both management and investors that is useful in assessing the Company’s core operating performance and in evaluating and comparing the Company’s results of ongoing operations on a consistent basis from period to period. Our management also uses both IFRS and non-IFRS information in evaluating and operating our business internally. 

 

The following tables present the reconciled effect of the above on the Company’s Adjusted EBITDA and non-IFRS net profit for the six months ended June 30, 2024, and 2023:

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Net profit (loss) for the period			1.1				(8.4	)
Adjustments:
Depreciation, amortization and impairment of intangible assets			0.3				3.0
Finance expense (income), net			3.4				(0.1	)
Tax expense (benefit)			0.8				(0.2	)
EBITDA (EBITDA loss)			5.6				(5.7	)
Adjustments:
Impairment of goodwill			-				6.3
Share-based compensation			1.0				0.6
Adjusted EBITDA			6.6				1.2

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Net profit (loss) for the period			1.1				(8.4	)
Adjustments:
Depreciation, amortization and impairment of intangible assets			0.3				3.0
Finance expense, net effects			3.3				0.1
Impairment of goodwill			-				6.3
Deferred tax effects			(0.1	)			(0.2	)
Share-based compensation			1.0				0.6
Non-IFRS net profit			5.6				1.4

 

 

Factors Affecting our Performance

 

We rely on businesses requiring gathering data over the Internet using residential and Data Center IP addresses from various geographies. Also, our revenues from consumer access tools rely on consumers’ willingness to spend money to increase their safety and privacy while using the internet.

 

Our prospective customers in the enterprise access segment often do not have a specific portion of their information technology budgets allocated for products that address the next generation of privacy solutions. We invest in sales and marketing efforts to increase market awareness, educate prospective customers, and drive the adoption of our offerings. We believe that we will need to invest additional resources in targeted global markets to drive awareness and market adoption. The degree to which prospective customers recognize the mission critical need for collecting valuable information from internet sites will drive our ability to acquire new customers, increase renewals and follow-on sales opportunities, which, in turn, will affect our future financial performance.

 

Reliance on Large Customers

 

We work continuously to increase our customer base, in order to reduce reliance on large customers. During the first half of 2024, 44% of our enterprise internet access revenue came from 38 customers who purchased services in amounts ranging between $50,000 and $500,000, and 13% of our revenue was generated from 128 customers who purchased services at amounts ranging between $5,000 and $50,000. As of June 30, 2024, we had 5 customers that purchased services in amounts greater than $500,000, who generated together approximately 42% of the total enterprise internet access business revenues. To the extent any of the Company’s significant customers reduce their purchases of services, our revenues would be adversely impacted; however, an alteration in customer composition could strengthen the Company’s market position and support more sustainable growth.

 

Expansion from Existing Customers

 

Our large customer base represents a significant opportunity for further sales expansion. When customers have purchased subscriptions from us, we have achieved significant expansion with them over time as they add additional features, geographic coverage, users, and digital intelligence solutions. We believe the increased spending from our customers is an indication of the value we provide them over time.

 

An indication of our success to increase spending from existing customers in the enterprise internet access business is our Net dollar-based Retention Rate, or NRR, which compares our Annual Recurring Revenue, or ARR, from the same set of customers as of a certain point in time, relative to the same point in time in the previous year ago period. We calculate our NRR as of a period-end by starting with the ARR from the cohort of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers as of the current period-end, or the Current Period ARR. Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the Current Period ARR by the Prior Period ARR to arrive at the point-in-time NRR. We then calculate the average of the trailing four quarter point-in-time NRR to arrive at the NRR. As of June 30, 2024, our NRR was 1.59.

 

Our NRR may fluctuate due to a number of major factors, such as: material changes in our customers’ businesses; our customers’ satisfaction with our solutions; pricing; support; and the competition which may impact the revenues from significant customers due to changes in our customers’ spending levels.

 

 

Comparison of the six months ended June 30, 2024 to the six months ended June 30, 2023

 

Revenue

 

The following table summarizes our revenues by source for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Revenue by source:
Software as a Service			17.3				10.0
Advertising services			*				2.7
Total revenue			17.3				12.7

 

*

Less than $0.1 million

 

Our revenue for the six months ended June 30, 2024, totaled $17.3 million, compared to $12.7 million generated in the six months ended June 30, 2023. The increase in revenue is mainly due to an increase in SaaS revenue in the enterprise internet access segment generated by NetNut, which doubled its revenues from $8.4 million to $16.8 million, primarily due to higher transactions volumes from our customers during the six months ended June 30, 2024. Our decision to scale down our consumer internet access business, drove a partial offset in revenue growth, of which $2.7 million is attributed to advertising revenue and $1.1 million to a drop in the SaaS revenues in this segment from $1.6 million in the first half of 2023 to $0.5 million in the equivalent period in 2024.

 

Cost of Revenue and Gross Profit

 

The following table summarizes our cost of revenue for the periods presented, as well as presenting the gross profit as a percentage of total revenue. The period-to-period comparison of results is not necessarily indicative of results for future periods. 

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Internet protocol addresses costs			2.7				1.7
Traffic acquisition costs			-				1.1
Networks and servers			0.4				0.3
Depreciation, amortization and impairment of intangible assets			0.3				0.6
Clearing fees			0.1				0.5
Payroll, related expenses and share-based payment			0.3				0.2
Other			0.1				*
Total cost of revenue			3.9				4.4
Gross profit			13.4				8.3
Gross profit %			78	%			65	%

 

*

Less than $0.1 million

 

Our cost of revenue for the six months ended June 30, 2024, totaled $3.9 million, compared to $4.4 million in the six months ended June 30, 2023. The decrease is primarily attributed to the operational scale down in the consumer internet access segment of $1.5 million, mainly in traffic acquisition costs, partially offset by an increase of $1.1 million in the enterprise internet access segment costs of addresses and networks and servers, to support the increase in revenue.

 

As a result of a higher increase in revenue compared to cost of revenue, gross profit for the six months ended June 30, 2024, totaled $13.4 million, compared to $8.3 million in the six months ended June 30, 2023, representing an increase of 61%.

 

 

Research and Development Expenses

 

The following table summarizes our research and development expenses for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Payroll, related expenses and share-based payment			1.7				1.7
Subcontractors			0.1				*
Other			0.3				0.2
Total research and development expenses			2.1				1.9

   

*

Less than $0.1 million

 

Research and development expenses for the six months ended June 30, 2024, totaled $2.1 million, compared to $1.9 million for the six months ended June 30, 2023. The increase is attributed to higher payroll and subcontractors’ costs in the enterprise internet access segment, partially offset by the stoppage of development operations in the consumer internet access segment, mainly payroll and related expenses.

 

Selling and Marketing Expenses

 

The following table summarizes our sales and marketing expenses for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Payroll, related expenses and share-based payment			2.2				2.0
Media costs			-				1.4
Marketing			0.5				0.3
Professional fees			0.1				0.1
Depreciation, amortization and impairment of intangible assets			0.1				2.5
Other			0.5				0.2
Total selling and marketing expenses			3.4				6.5

  

Sales and marketing expenses for the six months ended June 30, 2024, totaled $3.4 million, compared to $6.5 million in the six months ended June 30, 2023. The decrease resulted from CyberKick’s (the consumer internet access solutions) intangible assets impairment loss of $2.2 million during the six months ended June 30, 2023, as well as the scale down in its selling and marketing operations, mainly media costs at the amount of $1.4 million, partially offset by a $0.9 million increase in the enterprise internet access segment costs, especially payroll and related expenses.

 

General and Administrative Expenses

 

The following table summarizes our general and administrative expenses for the periods presented. The period-to-period comparison of results is not necessarily indicative of results for future periods.

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Payroll and related expenses and share-based payment			1.5				1.0
Professional fees			0.9				1.1
Other			0.2				0.2
Total general and administration expenses			2.6				2.3

 

General and administrative expenses for the six months ended June 30, 2024, totaled $2.6 million, compared to $2.3 million in the six months ended June 30, 2023. The change is primarily due to higher payroll and share-based compensation expenses, partially offset by lower professional fees costs.

 

 

Impairment of Goodwill

 

For the six months ended June 30, 2024, no goodwill impairment loss was recorded, compared to $6.3 million in the six months ended June 30, 2023, related to the CyberKick cash-generating-unit.

 

Operating Profit (Loss)

 

As a result of the foregoing, our operating profit for the six months ended June 30, 2024, totaled $5.3 million, compared to an operating loss of $8.7 million in the six months ended June 30, 2023.

 

Finance income (expenses), net

 

Finance expense, net, for the six months ended June 30, 2024, totaled $3.4 million, compared to financial income, net of $0.1 million in the six months ended June 30, 2023. This change is primarily due to an increase in the fair value of derivative financial instruments, as a result of the sharp rise in the Company’s share price as of June 30, 2024, compared to December 31, 2023.

 

Tax Benefit (Expense)

 

Tax expense for the six months ended June 30, 2024, totaled $0.8 million, compared to tax benefit of $0.2 million in the six months ended June 30, 2023. The switch to tax expense is due to the profit before income tax generated by NetNut in the first half of 2024, after utilizing all of its carryforward tax losses.

 

Net Profit (Loss) for the Period

 

As a result of the foregoing, our net profit for the six months ended June 30, 2024, totaled $1.1 million, compared to an $8.4 million net loss in the six months ended June 30, 2023.

 

 

Liquidity and Capital Resources

 

Overview

 

As of June 30, 2024, our cash and cash equivalents of approximately $21.6 million were intended for working capital, capital expenditures, investment in technology and business acquisition purposes.

 

We believe that our cash and cash equivalents will be sufficient to meet our anticipated cash needs for the foreseeable future and at least for the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product and service offerings, the continuing market acceptance of our products and our pursuit of strategic opportunities, including, but not limited to, strategic acquisitions. If we are unable to raise additional capital when desired or if we cannot generate profit from operating activities, our business, operating results, and financial condition would be adversely affected. 

 

		For the Six Months Ended June 30,
U.S. dollars in millions		2024				2023
Net cash provided by (used in) operating activities			6.3				(0.2	)
Net cash provided by investing activities			0.2				-
Net cash provided by financing activities			4.3				0.7
Net increase in cash and cash equivalents			10.8				0.5

 

Operating Activities

 

During the six months ended June 30, 2024, net cash provided by operating activities was $6.3 million, primarily attributable to an increase in the Company’s operating profit from the enterprise internet access segment. This increase in cash provided by operating activities represents a $6.5 improvement compared to the $0.2 million used in operating activities during the six months period ended June 30, 2023.

 

Investing Activities

 

During the six months ended June 30, 2024, net cash provided by investing activities totaled $0.2 million, compared to no change during the six months ended June 30, 2023, primarily due to interest received on short-term bank deposits.

 

Financing Activities

 

During the six months ended June 30, 2024, net cash provided by financing activities totaled $4.3 million, mainly due to warrants and options exercises, compared to $0.7 million which stemmed from funds received mainly from our at-the-market offering of $0.5 million, net of issuance costs, during the six months ended June 30, 2023.

 

Net increase in Cash and Cash Equivalents

 

As a result of the foregoing, our cash and cash equivalents increased by $10.8 million during the six months ended June 30, 2024, compared to an increase of $0.5 million during the six months ended June 30, 2023.

 

 

Strategic Funding

 

On August 8, 2022, we signed a strategic funding agreement with O.R.B. Spring Ltd., or O.R.B., as further amended, of up to $4.0 million to support the growth of our consumer access solutions and its customer acquisition program. The repayment of the funding was based on a revenue share model in connection with sales generated from new customers acquired with each funding installment.

 

As of June 30, 2024, we received aggregate funding of approximately $2.6 million and repaid to O.R.B. an amount of approximately $1.4 million from the revenues that were generated as a result of the funding, and approximately $1.2 million is outstanding.

 

Private Placement 

 

On September 14, 2023, we completed a private placement offering of an aggregate of 187,225 units, or the Units, at a purchase price of $22.70 per Unit. Each Unit consists of 10 American Depositary Shares, or ADSs, and one non-tradeable warrant, or the Private Placement Warrants (the “PP Warrants”), each exercisable into three ADSs. Net proceeds totaled $3.82 million, after deducting offering costs of approximately $0.4 million.

 

The PP Warrants are exercisable at any time for a period of 30 months from the offering date upon payment of an exercise price of $2.72 per ADS. In addition, we issued an aggregate amount of 91,851 warrants to purchase 91,851 ADSs to placement agents, or the Agent Warrants, which can be exercised at an exercise price of $2.27 per ADS within 30 months from the offering date.

 

During the six months ended June 30, 2024, 466,452 PP Warrants were exercised to 466,452 ADSs in exchange for $1.27 million and 61,234 Agents Warrants were exercised to 61,234 ADSs in exchange for $0.14 million. As of June 30, 2024, all PP Warrants and Agent Warrants were exercised.

 

Current Outlook

 

As of June 30, 2024, our cash and cash equivalents were approximately $21.6 million. We expect that our current resources will be sufficient to meet our anticipated cash needs for the foreseeable future and at least for the next 12 months. Our operating plans may change as a result of many factors that may currently be unknown to us, which may impact our funding plans. Our future capital requirements will depend on many factors, including:

 

	●	the progress and costs of our research and development activities;
	●	the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally;
	●	the scope of our general and administrative expenses; and

 

●

potential future acquisitions.

 

Research and development, patents and licenses, etc.

 

A comprehensive discussion of our research and development, patents and licenses, etc., is included in “Item 5. Operating and Financial Review and Prospects - Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report. 

 

Critical Accounting Estimates

 

The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. A comprehensive discussion of our critical accounting estimates is included in “Item 5. Operating and Financial Review and Prospects – Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report, as well as our unaudited condensed consolidated financial statements and the related notes thereto for the six months ended June 30, 2024, included elsewhere in this Report Form 6-K. 

 

 

10

v3.24.2.u1

Document And Entity Information	6 Months Ended
	Jun. 30, 2024
Document Information Line Items
Entity Registrant Name	ALARUM TECHNOLOGIES LTD.
Document Type	6-K
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Central Index Key	0001725332
Document Period End Date	Jun. 30, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Entity File Number	001-38610

v3.24.2.u1

Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 21,626	$ 10,872
Trade, net	2,471	1,994
Other	961	399
Current assets	25,058	13,265
Non-current assets:
Long-term deposits	102	104
Property and equipment, net	119	88
Right-of-use assets	638	779
Deferred tax assets	298	181
Intangible assets, net	1,082	1,386
Goodwill	4,118	4,118
Other non-current assets	94	145
Non-current assets	6,451	6,801
Total assets	31,509	20,066
Current liabilities:
Trade	570	369
Other	3,058	2,439
Current maturities of long-term loans	564	290
Contract liabilities	2,285	1,983
Derivative financial instruments	3,409	109
Short-term lease liabilities	362	370
Current liabilities	10,248	5,560
Non-current liabilities:
Long-term lease liabilities	398	523
Long-term loans, net of current maturities	439	802
Non-current liabilities	837	1,325
Total liabilities	11,085	6,885
Equity:
Ordinary shares
Share premium	108,963	100,576
Other equity reserves	12,705	14,938
Accumulated deficit	(101,244)	(102,333)
Total equity	20,424	13,181
Total liabilities and equity	$ 31,509	$ 20,066

v3.24.2.u1

Condensed Consolidated Statements of Profit or Loss (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Profit or loss [Abstract]
Revenue	$ 17,260	$ 12,664
Cost of revenue	3,854	4,390
Gross profit	13,406	8,274
Operating expenses:
Research and development	2,143	1,948
Selling and marketing	3,372	6,472
General and administrative	2,626	2,286
Impairment of goodwill		6,311
Total operating expenses	8,141	17,017
Operating profit (loss)	5,265	(8,743)
Finance expense	3,612	177
Finance income	(267)	(293)
Finance expense (income), net	3,345	(116)
Profit (loss) before income tax	1,920	(8,627)
Tax benefit (expense)	(831)	238
Net profit (loss) for the period	$ 1,089	$ (8,389)
Basic and diluted profit (loss) per share:
Basic profit (loss) per share (in Dollars per share)	$ 0.02	$ (0.25)
Diluted profit (loss) per share (in Dollars per share)	$ 0.02	$ (0.25)

v3.24.2.u1

Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands	Ordinary shares	Share premium	Other equity reserves	Accumulated deficit	Total
Balance at Dec. 31, 2022		$ 95,077	$ 15,042	$ (96,808)	$ 13,311
Balance (in Shares) at Dec. 31, 2022	32,628,044
Issuance of ordinary shares upon exercise of options		111	(91)		20
Issuance of ordinary shares upon exercise of options (in Shares)	165,046
Expiration of options		21	(21)
Share-based payments			637		637
At-the-market offering, net of issuance costs		545			545
At-the-market offering, net of issuance costs (in Shares)	2,076,140
Net profit (loss) for the period				(8,389)	(8,389)
Balance at Jun. 30, 2023		95,754	15,567	(105,197)	6,124
Balance (in Shares) at Jun. 30, 2023	34,869,230
Balance at Dec. 31, 2023		100,576	14,938	(102,333)	13,181
Balance (in Shares) at Dec. 31, 2023	59,681,632
Issuance of ordinary shares upon exercise of options and vesting of RSUs		4,740	(1,795)		2,945
Issuance of ordinary shares upon exercise of options and vesting of RSUs (in Shares)	2,638,521
Issuance of ordinary shares upon exercise of warrants		3,636	(1,383)		2,253
Issuance of ordinary shares upon exercise of warrants (in Shares)	6,035,860
Expiration of options		11	(11)
Share-based payments			956		956
Net profit (loss) for the period				1,089	1,089
Balance at Jun. 30, 2024		$ 108,963	$ 12,705	$ (101,244)	$ 20,424
Balance (in Shares) at Jun. 30, 2024	68,356,013

v3.24.2.u1

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities
Net profit (loss) for the period	$ 1,089	$ (8,389)
Adjustments for:
Effect of exchange rate differences on cash and cash equivalents and restricted deposits balances	68	26
Change in fair value of derivative financial instruments	3,300	(24)
Impairment of goodwill and intangible assets		8,806
Depreciation and amortization	474	617
Interest income related to short-term bank deposits	(267)
Interest portion of lease payments	68	7
Interest and other finance expense )income( related to long-term loan	161	(250)
Interest expense related to short-term bank loans		83
Share-based payments	956	599
Total adjustments	4,760	9,864
Changes in asset and liability items:
Trade receivables	(477)	(489)
Other receivables	(127)	268
Trade payables	201	(1,226)
Other payables	653	(50)
Deferred taxes	(117)	(238)
Contract liabilities	302	119
Changes in operating asset and liability, total	435	(1,616)
Net cash provided by (used in) operating activities	6,284	(141)
Cash flows from investing activities
Withdrawn of short-term restricted deposits		60
Withdrawn of long-term deposits	2
Interest related to short-term bank deposits	267
Investment in long-term deposits		(48)
Investment in long-term restricted deposits		(21)
Repayment of long-term restricted deposits		33
Purchase of property and equipment	(60)	(24)
Net cash provided by investing activities	209
Cash flows from financing activities
Long-term loans received		888
Long-term loans interest payments	(110)	(230)
Long-term loans principal payments	(89)	(329)
Short-term bank loans received		4,800
Repayment of short-term bank loans		(4,800)
Short-term bank loans interest payments		(88)
Principal portion of lease payments	(133)	(107)
Interest portion of lease payments	(68)	(7)
Proceeds from exercise of options and warrants	4,763	20
Proceeds from at-the-market offering		688
Issuance costs in connection with offerings	(34)	(151)
Net cash provided by financing activities	4,329	684
Changes in cash and cash equivalents	10,822	543
Cash and cash equivalents at beginning of the period	10,872	3,290
Effect of exchange rate changes on cash and cash equivalents	(68)	(20)
Cash and cash equivalents at end of the period	21,626	3,813
Supplemental disclosure of non-cash investing and financing activities:
Receivables due to exercise of options	435
Addition of right-of-use assets		$ 541

v3.24.2.u1

General	6 Months Ended
	Jun. 30, 2024
General [Abstract]
GENERAL	NOTE 1 - GENERAL:   Background   Alarum Technologies Ltd. (“Alarum”, and collectively referred to with its wholly-owned subsidiaries as the “Company”) is a global provider of internet access and web data collection solutions.   The Company’s ordinary shares are listed on the Tel Aviv Stock Exchange (“TASE”) and the Company’s American Depositary Shares (“ADSs”) are listed on the Nasdaq Capital Market.   The Company currently operates in two segments - enterprise internet access and consumer internet access. The enterprise internet access solutions are provided through the Company’s wholly owned subsidiary NetNut Ltd. (“NetNut”) and enable customers to collect data anonymously at any scale from any public sources over the web using a unique hybrid network. The consumer internet access solutions are provided through the Company’s wholly-owned subsidiary CyberKick Ltd. (“CyberKick”), and provide a powerful, secured and encrypted connection, masking the customers online activity and keeping them safe from hackers.   The Company currently funds its operations primarily through cash generated from operating activities. Accordingly, cash and cash equivalents as of June 30, 2024, were $21,626 thousand and cash provided by operating activities was $6,284 thousand for the six months ended June 30, 2024. Based on the Company’s cash position, the Company believes that it has sufficient resources to fund its operations for at least the next twelve months from the date on which the condensed consolidated financial statements are authorized for issue.   War in Israel   In October 2023, Israel was attacked by the Hamas terrorist organization and entered a state of war. To date, there is no material adverse impact on the Company’s operations and financial results as a result of this war. However, at this time, it is not possible to predict the intensity or duration of the war, nor can the Company predict how this war will ultimately affect Israel’s economy in general. The Company continues to monitor the situation closely and examine the potential disruptions that could adversely affect its operations.

v3.24.2.u1

Accounting Policies	6 Months Ended
	Jun. 30, 2024
General [Abstract]
ACCOUNTING POLICIES	NOTE 2 - ACCOUNTING POLICIES:   Basis of presentation   The Company’s condensed consolidated financial statements for the six months ended June 30, 2024, have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. These condensed consolidated financial statements, which are unaudited, do not include all of the information and disclosures that would otherwise be required in a complete set of annual financial statements and should be read in conjunction with the annual financial statements for the year ended December 31, 2023 and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board.   The results of operations for the six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2024, or for any other interim period.   Estimates   The preparation of interim financial statements requires the Company’s management to exercise its judgment and to use significant accounting estimates and assumptions that affect the application of the Company’s accounting policies and the amounts of reported assets, liabilities, income and expenses. Actual results may materially differ from those estimates.   In preparation of these condensed consolidated financial statements, the significant judgments that were exercised by the management in applying the Company’s accounting policies and the key sources of estimation uncertainty were similar to those applied in the Company’s annual financial statements for the year ended December 31, 2023.   Accounting policies   The accounting policies applied in the preparation of these condensed consolidated financial statements are consistent with those applied in the preparation of the annual financial statements for the year ended December 31, 2023, except as described below.   Income tax   Income tax expense for interim periods is recognized at an amount determined by multiplying the profit before income tax for the interim period of each individual jurisdiction by management’s best estimate of the expected effective annual income tax rate of each jurisdiction, adjusted for the tax effects of certain items recognized in full in the interim period.   New standards and amendments adopted   Several new standards, amendments to standards and interpretations that are effective for annual periods beginning on January 1, 2024, have been applied in preparing these condensed consolidated financial statements. None of these had a material effect on the Company’s condensed consolidated financial statements.   New standards and amendments not yet adopted   IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”)   IFRS 18 replaces IAS 1, “Presentation of Financial Statements” (“IAS 1”). As part of the new disclosure requirements, companies will be required to present new defined subtotals in the statement of profit or loss, as follows: (i) operating profit and (ii) profit before financing and tax. In addition, items in the statement of profit or loss will be classified into three defined categories: operating, investment and financing. The standard also includes a requirement to provide a separate disclosure in the financial statements regarding the use of management-defined performance measures (“non-GAAP measures”), and specific instructions were added for the grouping and splitting of items in the financial statements and their accompanying notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with an option for early adoption. The Company is currently in a preliminary stage of assessing the expected effect of this new standard.

v3.24.2.u1

Significant Changes in the Current Reporting Period	6 Months Ended
	Jun. 30, 2024
Significant Changes in the Current Reporting Period [Abstract]
SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD	NOTE 3 - SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD:   Shares issuance   During the six months ended June 30, 2024, 527,686 warrants issued as a part of the Company’s September 14, 2023 private placement and 75,900 warrants issued as part of April 3, 2020 public offering, were exercised into 603,586 ADSs, or 6,035,860 ordinary shares, for a total consideration of $2,253 thousand.   During the six months ended June 30, 2024, 2,492,688 options were exercised into 2,492,688 ordinary shares for a total consideration of $2,945 thousand, and 145,833 vested restricted share units (“RSUs”) were issued into 145,833 ordinary shares.   Derivative financial instruments   Derivative financial instruments consist of certain warrants previously issued to investors which are accounted for as financial liabilities at fair value through profit or loss. Accordingly, these warrants are measured at fair value (level 3) and changes are recorded to profit or loss on a periodic basis.   During the six months ended June 30, 2024, there was a significant increase in the fair value of derivative financial instruments, mainly due to an increase in the Company’s share price, which resulted in an increase of $3,300 thousand recognized in finance expense in profit or loss.   The fair value of the warrants as of June 30, 2024, was estimated using the Black-Scholes model, with the following principal assumptions: risk-free interest rate of 4.99%-5.43%, expected term (in years) of 0.36-1.25 and volatility of 96.54%-109.20%.   As of June 30, 2024, derivative financial instruments totaled to $3,409 thousand.   O.R.B agreement   Further to the described in Note 10 to the Company’s annual financial statements for the year ended December 31, 2023, during the six months ended June 30, 2024, the Company repaid to O.R.B. Spring Ltd. an amount of $199 thousand, based on the actual customers’ payments according to the revenue share model.   For the six months ended June 30, 2024, interest expenses related to long-term loan totaled to $110 thousand.   As of June 30, 2024, long-term loan, including current maturities, totaled to $1,003 thousand.   Options and RSUs grants   During the six months ended June 30, 2024, the Company’s board of directors (“BOD”) approved grants of 240,044 RSUs and 145,012 options to purchase 145,012 ordinary shares. The options have exercise prices range of NIS 0-3.97 and they will vest over 1-3 years from the grant dates. The total fair value of these grants was $493 thousand.

v3.24.2.u1

Segment and Revenue Information	6 Months Ended
	Jun. 30, 2024
Segment and Revenue Information [Abstract]
SEGMENT AND REVENUE INFORMATION	NOTE 4 - SEGMENT AND REVENUE INFORMATION:   Disaggregation of revenue   The Company’s revenue is disaggregated by segments and source.   The following table presents the Company’s revenue disaggregated by source for the six months ended June 30, 2024 and 2023:       Six months ended June 30       2024     2023       U.S. dollars in thousands                 Software as a Service     17,257       9,983   Advertising services     3       2,681         17,260       12,664     Segments   Management has determined the Company’s operating segments based on the information reviewed by the Company’s chief operating decision maker for the purpose of allocating resources to the segments and assessing their performance.   The chief operating decision maker, who is the Company’s Chief Executive Officer (“CEO”), examines the performance of each operating segment based on revenue and segment adjusted EBITDA. The Company defines segment adjusted EBITDA as net profit (loss) before depreciation, amortization and impairment of intangible assets, finance income (expense) and income tax, as further adjusted for the effect of impairment of goodwill, share-based payments and other adjustments, as applicable.   The following table presents details of the Company’s operating segments and a reconciliation of the total segment adjusted EBITDA to profit (loss) before income tax for the six months ended June 30, 2024 and 2023:       Six months ended June 30       2024     2023       U.S. dollars in thousands   Revenue             Enterprise internet access     16,751       8,428   Consumer internet access     509       4,236         17,260       12,664   Segment adjusted EBITDA                 Enterprise internet access     7,610       2,219   Consumer internet access     260       73         7,870       2,292   Non-attributable corporate costs     (1,315 )     (1,123 ) Depreciation, amortization and impairment of intangible assets     (334 )     (3,002 ) Impairment of goodwill     -       (6,311 ) Share-based payments     (956 )     (599 ) Finance income (expense), net     (3,345 )     116   Profit (loss) before income tax     1,920       (8,627 )

v3.24.2.u1

Subsequent Events	6 Months Ended
	Jun. 30, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 5 - SUBSEQUENT EVENTS:   On July 16, 2024, the Company’s BOD approved a grant of 199,992 RSUs to the Company’s CEO. The grant is subject to the shareholders’ approval.   In addition, the Company’s BOD approved grants of 55,020 RSUs to employees and 100,000 options to purchase 100,000 ordinary shares to a consultant. The options have a zero-exercise price and they will vest over a period of 2 years from the grant date.

v3.24.2.u1

Accounting Policies, by Policy (Policies)	6 Months Ended
	Jun. 30, 2024
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The Company’s condensed consolidated financial statements for the six months ended June 30, 2024, have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. These condensed consolidated financial statements, which are unaudited, do not include all of the information and disclosures that would otherwise be required in a complete set of annual financial statements and should be read in conjunction with the annual financial statements for the year ended December 31, 2023 and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting Standards Board. The results of operations for the six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2024, or for any other interim period.
Estimates	Estimates The preparation of interim financial statements requires the Company’s management to exercise its judgment and to use significant accounting estimates and assumptions that affect the application of the Company’s accounting policies and the amounts of reported assets, liabilities, income and expenses. Actual results may materially differ from those estimates.   In preparation of these condensed consolidated financial statements, the significant judgments that were exercised by the management in applying the Company’s accounting policies and the key sources of estimation uncertainty were similar to those applied in the Company’s annual financial statements for the year ended December 31, 2023.
Accounting policies	Accounting policies The accounting policies applied in the preparation of these condensed consolidated financial statements are consistent with those applied in the preparation of the annual financial statements for the year ended December 31, 2023, except as described below.
Income tax	Income tax Income tax expense for interim periods is recognized at an amount determined by multiplying the profit before income tax for the interim period of each individual jurisdiction by management’s best estimate of the expected effective annual income tax rate of each jurisdiction, adjusted for the tax effects of certain items recognized in full in the interim period.
New standards and amendments adopted	New standards and amendments adopted Several new standards, amendments to standards and interpretations that are effective for annual periods beginning on January 1, 2024, have been applied in preparing these condensed consolidated financial statements. None of these had a material effect on the Company’s condensed consolidated financial statements.
New standards and amendments not yet adopted	New standards and amendments not yet adopted IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”) IFRS 18 replaces IAS 1, “Presentation of Financial Statements” (“IAS 1”). As part of the new disclosure requirements, companies will be required to present new defined subtotals in the statement of profit or loss, as follows: (i) operating profit and (ii) profit before financing and tax. In addition, items in the statement of profit or loss will be classified into three defined categories: operating, investment and financing. The standard also includes a requirement to provide a separate disclosure in the financial statements regarding the use of management-defined performance measures (“non-GAAP measures”), and specific instructions were added for the grouping and splitting of items in the financial statements and their accompanying notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with an option for early adoption. The Company is currently in a preliminary stage of assessing the expected effect of this new standard.

v3.24.2.u1

Segment and Revenue Information (Tables)	6 Months Ended
	Jun. 30, 2024
Segment and Revenue Information [Abstract]
Schedule of Company’s Revenue Disaggregated	The following table presents the Company’s revenue disaggregated by source for the six months ended June 30, 2024 and 2023:     Six months ended June 30       2024     2023       U.S. dollars in thousands                 Software as a Service     17,257       9,983   Advertising services     3       2,681         17,260       12,664
Schedule of Operating Segments and a Reconciliation of the Total Segment	The following table presents details of the Company’s operating segments and a reconciliation of the total segment adjusted EBITDA to profit (loss) before income tax for the six months ended June 30, 2024 and 2023:     Six months ended June 30       2024     2023       U.S. dollars in thousands   Revenue             Enterprise internet access     16,751       8,428   Consumer internet access     509       4,236         17,260       12,664   Segment adjusted EBITDA                 Enterprise internet access     7,610       2,219   Consumer internet access     260       73         7,870       2,292   Non-attributable corporate costs     (1,315 )     (1,123 ) Depreciation, amortization and impairment of intangible assets     (334 )     (3,002 ) Impairment of goodwill     -       (6,311 ) Share-based payments     (956 )     (599 ) Finance income (expense), net     (3,345 )     116   Profit (loss) before income tax     1,920       (8,627 )

v3.24.2.u1

General (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
General [Line Items]
Operating segments	2
Cash and cash equivalents	$ 21,626	$ 3,813	$ 10,872	$ 3,290
Cash provided by operating activities	$ 6,284	$ (141)

v3.24.2.u1

Significant Changes in the Current Reporting Period (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2024 USD ($) Years $ / shares shares	Jun. 30, 2024 USD ($) ₪ / shares shares	Dec. 31, 2023 USD ($)	Sep. 14, 2023 shares
Significant Changes in the Current Reporting Period [Line Items]
Warrants issued | shares	527,686	527,686		75,900
Exercised (in Dollars per share) | $ / shares	$ 603,586
Exercise of warrants | shares	6,035,860
Total consideration (in Dollars) | $	$ 2,253	$ 2,253
Options exercised | shares	2,492,688
Shares issued | shares	2,492,688	2,492,688
Vested restricted share units | shares	145,833
Fair value of derivative financial instruments (in Dollars) | $	$ 3,300	$ 3,300
Derivative financial instruments (in Dollars) | $	3,409	3,409	$ 109
Actual customers payments (in Dollars) | $	199
Interest expenses (in Dollars) | $	110
Current maturities (in Dollars) | $	$ 1,003	$ 1,003
Purchase options | shares	145,012
Ordinary shares | shares	145,012
Bottom of range [member]
Significant Changes in the Current Reporting Period [Line Items]
Risk-free interest rate	4.99%
Expected term (in Years) | Years	0.36
Volatility	96.54%
Exercise prices range (in New Shekels per share) | ₪ / shares		$ 0
Vest over	1 year
Top of range [member]
Significant Changes in the Current Reporting Period [Line Items]
Risk-free interest rate	5.43%
Volatility	109.20%
Exercise prices range (in New Shekels per share) | ₪ / shares		$ 3.97
Vest over	3 years
RSUs [Member]
Significant Changes in the Current Reporting Period [Line Items]
Total consideration (in Dollars) | $	$ 2,945	$ 2,945
Shares issued | shares	145,833	145,833
Options and RSUs grants [Member]
Significant Changes in the Current Reporting Period [Line Items]
Total consideration (in Dollars) | $	$ 493	$ 493
Number of options granted	240,044

v3.24.2.u1

Segment and Revenue Information (Details) - Schedule of Company’s Revenue Disaggregated - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Schedule of Company’s Revenue Disaggregated [Line Items]
Revenue	$ 17,260	$ 12,664
Software as a Service [Member]
Schedule of Company’s Revenue Disaggregated [Line Items]
Revenue	17,257	9,983
Advertising Services [Member]
Schedule of Company’s Revenue Disaggregated [Line Items]
Revenue	$ 3	$ 2,681

v3.24.2.u1

Segment and Revenue Information (Details) - Schedule of Operating Segments and a Reconciliation of the Total Segment - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Revenue
Revenue	$ 17,260	$ 12,664
Segment adjusted EBITDA
Segment adjusted EBITDA	7,870	2,292
Non-attributable corporate costs	(1,315)	(1,123)
Depreciation, amortization and impairment of intangible assets	(334)	(3,002)
Impairment of goodwill		(6,311)
Share-based payments	(956)	(599)
Finance income (expense), net	(3,345)	116
Profit (loss) before income tax	1,920	(8,627)
Enterprise internet access [Member] | Operating segments [member]
Revenue
Revenue	16,751	8,428
Enterprise internet access [Member] | Reconciliation total segment adjusted EBITDA [Member]
Segment adjusted EBITDA
Segment adjusted EBITDA	7,610	2,219
Consumer internet access [Member] | Operating segments [member]
Revenue
Revenue	509	4,236
Consumer internet access [Member] | Reconciliation total segment adjusted EBITDA [Member]
Segment adjusted EBITDA
Segment adjusted EBITDA	$ 260	$ 73

v3.24.2.u1

Subsequent Events (Details) - Non-adjusting events after reporting period [Member]	Jul. 16, 2024 shares
Subsequent Events [Line Items]
Vest over a period	2 years
Restricted share units [member]
Subsequent Events [Line Items]
Number of option grant	100,000
Chief Executive Officer [Member] | Restricted share units [member]
Subsequent Events [Line Items]
Number of option grant	199,992
Consultant [Member]
Subsequent Events [Line Items]
Ordinary shares (in Shares)	100,000
Employees [Member] | Restricted share units [member]
Subsequent Events [Line Items]
Number of option grant	55,020

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