ALAR

Ladies and gentlemen, thank you for standing by. Welcome to the Alarum Technologies first quarter 2026 earnings results conference call. During today's presentation, all parties will be in a listen-only mode. Following management's presentation, the conference will be open to questions. This conference is being recorded. I'll now turn the call over to Ehud Helft, Investor Relations at Alarum. Ehud, please go ahead.

Thank you, operator. Good day, everyone, welcome to Alarum Technologies conference call to discuss the results of the first quarter ending March 31st, 2026. Joining us today are Mr. Shachar Daniel, Chief Executive Officer, and Mr. Shai Avnit, Chief Financial Officer. Shachar will begin with an overview of the quarter and recent business developments, followed by Shai, who will review the financial results and guidance. We will open the call for the questions. Before we begin, I would like to remind listeners that today's discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements involve known and unknown risks and uncertainties that may cause actual results or performance to differ materially from those expressed or implied by such statements.

Forward-looking statements include, among other things, statements regarding expected market demand, future growth, opportunities, infrastructure investments, profitability trends, customer demand patterns, product expansion, future financial guidance, and long-term strategic positioning. For a discussion of these risks and uncertainties, please refer to the company's filing with the SEC, including the company's annual report on Form 20-F and subsequent filings. In addition, during this call, the company will discuss certain non-IFRS financial measures, including adjusted EBITDA and non-IFRS gross margin. Definitions and reconciliation to the most directly comparable IFRS measures are available in the earnings press release issued earlier today. With that, I will turn the call over to Shachar Daniel, Chief Executive Officer of Alarum Technologies. Shachar, please go ahead.

Thank you, Ehud. Thank you everyone for joining us today. Alarum continued scaling its data infrastructure platform during the first quarter of 2026, supported by strong demand from AI and enterprise data workloads. First quarter revenues reached $11.7 million, representing 64% year-over-year growth. We also delivered positive IFRS net income of $0.6 million, adjusted EBITDA of $2.1 million while continuing investing in infrastructure scale and platform expansion. Importantly, we believe the first quarter demonstrated the operating leverage potential of the AI data infrastructure platform we built throughout 2025. At the same time, we continue viewing the current market environment as highly dynamic and still in relatively early stages. The AI infrastructure ecosystem is evolving rapidly, demand patterns remain volatile at times, and we continue prioritizing long-term infrastructure leadership and strategic positioning over short-term profitability optimizations.

As a result, investment levels, infrastructure expansion, and profitability may continue fluctuating as we scale the platform and pursue what we believe is a very large long-term opportunity. The AI infrastructure market. Demand for large-scale public web data infrastructure continues to expand rapidly, particularly around AI and agentic training, fine-tuning, retrieval systems, inference optimization, and continuous model updating. At the same time, public web environments continue becoming more dynamic and operationally complex, increasing the technological barriers required to reliably collect data at scale. We believe this trend increasingly favors companies with large-scale infrastructure, operational know-how, routing optimization capabilities, global IP scale, and the ability to maintain reliability under increasingly sophisticated anti-bot protections.

During the first quarter of 2026, our infrastructure handled an average of more than 50 petabytes of monthly data traffic and tens of billions of requests across a global network supported by more than 80 million IP addresses worldwide while maintaining success rates exceeding 85%. This compares with a baseline of approximately only five petabytes of monthly traffic in the end of 2024, reflecting the rapid scaling of our infrastructure to support growing AI workloads. We believe this combination of scale, infrastructure depth, operational experience, and ongoing investment is becoming an increasingly important competitive differentiator. Platform evolution. Over the past year, Alarum continued evolving from a traditional proxy-focused provider into a broader AI data infrastructure platform.

Our platform today includes global proxy infrastructure, Website Unblocker self-solutions, AI-ready datasets, and planning agentic workflow capabilities, which we expect to gradually introduce to customers during the second half of 2026. This broader product mix expands our addressable market, and over time, we believe it should support stronger customer relationships, improved unit economics, and stronger long-term platform economics. We are also seeing encouraging diversification trends across both customers and verticals. While AI-related workloads remain a major growth driver, we continue expanding across additional enterprise use cases, including e-commerce, sales intelligence, digital monitoring, data enrichment, and broader enterprise workloads. Operating leverage and infrastructure. Throughout 2025, we invested heavily in infrastructure, network expansion, platform capabilities, and organizational scaling. In the first quarter of 2026, we began seeing encouraging early benefits from those investments through improved infrastructure utilization, routing efficiency improvements from infrastructure scale, operating leverage, and an improved product mix.

However, we do not currently manage the business for short-term margin maximization. We continue prioritizing infrastructure scale, strategic positioning, customer expansion, and long-term market leadership during what we believe remains an early phase of the AI infrastructure build-out scale. We believe the AI data infrastructure market is still in the relatively early stages. We expect customer demand patterns and deployment scales to continue evolving rapidly. Market dynamics. Data infrastructure market remains dynamic and, at times, volatile. Large AI customers may adjust consumption patterns based on training cycles, model releases, data set refreshes, inference optimization, or internal infrastructure decisions. As a result, quarter-to-quarter variability may continue. At the same time, we believe long-term secular trend remains very strong. Importantly, as our platform broadens across products, workloads, customers, and enterprise verticals, we believe the business should gradually become more diversified and resilient over time.

Looking ahead, we remain focused on scaling infrastructure, improving operational efficiency, expanding higher value products, deepening enterprise customers' relationships, and strengthening our long-term leadership position in the AI data infrastructure. We believe we are still in the early stage of a very large market opportunity. With that, I will turn the call over to Shai for the financial review and guidance. Shai?

Thank you, Shachar, and hello, everyone. I will briefly review our financial performance for the first quarter of 2026. Unless otherwise stated, all comparisons are against the same period last year. Revenue. Revenues for the first quarter of 2026 were $11.7 million, compared with $7.1 million in the first quarter of 2025, representing growth of approximately 64% year-over-year. The increase was primarily driven by continued demand from large-scale AI-related customers, alongside growth across additional enterprise workloads and products. Gross profit and margins. Gross margin for the first quarter of 2026 was 61.7%, compared with 67.5% in the first quarter of 2025 and 53.8% in the prior quarter. The sequential improvement reflects improved infrastructure utilization, operating leverage, and continued efficiency initiatives implemented throughout the business. This improvement is even more notable given the depreciation of the U.S. dollar against the NIS during the quarter.

While most of our operating expenses are NIS-denominated, creating an additional foreign exchange headwind. The operating expenses in the first quarter of 2026 were $6.4 million, compared with $4.5 million in the first quarter of 2025. The increase resulted mainly from payroll and other employee-related costs, primarily research and development. This increase is a key part of Alarum's strategy to invest in innovation and improve the quality of its infrastructure and capacity. At the same time, we remain disciplined regarding operational efficiency and capital allocation. Net income and EBITDA. IFRS net income for the first quarter of 2026 was approximately $0.6 million, compared with $0.4 million in the first quarter of 2025 and $0.2 million in the prior quarter. Adjusted EBITDA for the quarter was approximately $2.1 million, compared with $1.3 million in the first quarter of 2025 and $1 million in the prior quarter.

These results demonstrate improving operating leverage characteristics as the platform continues to scale. Balance sheet. We end the quarter with a strong balance sheet and no financial debt. Cash, cash equivalents, and debt investments as of March 31st, 2026 totaled $24.2 million, compared with $22.5 million as of December 31st, 2025. Shareholders' equity increased to $33.4 million as of March 31st, 2026, compared with $32.1 million as of December 31st, 2025, primarily reflecting the company's net profit for the quarter. Outstanding ordinary share count as of March 31st, 2026 was approximately 72.6 million shares, representing 7.3 million Nasdaq listed ADSs. Our financial position continues to support ongoing investment in infrastructure, platform development, and long-term growth opportunities. Guidance.

For the second quarter of 2026, based on current visibility, we currently expect revenues of approximately $12.2 million, ±5%, representing approximately 39% year-over-year growth at the midpoint and adjusted EBITDA of approximately $1.8 million ±$1.5 million. Our guidance reflects current visibility based on customer activity, existing workloads, and current consumption patterns. At the same time, we continue prioritizing long-term infrastructure leadership and strategic positioning within AI data infrastructure market. We remain focused on maintaining operational discipline while continuing to invest strategically in infrastructure, platform capabilities, and long-term positioning within the AI data infrastructure market. I will now turn the call back to the operator for questions.

Before operator, Shai, I think you were a little bit cut. Please repeat again the projection for the adjusted EBITDA and the plus minus. Okay?

Okay. The total guidance for the second quarter of 2026, based on current visibility, we currently expect revenues of approximately $12.2 million plus minus 5%. That represents approximately 39% year-over-year growth at the midpoint, and adjusted EBITDA of approximately $1.8 million, ±$500,000.

Thank you very much.

Operator.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Kingsley Crane with Canaccord Genuity. Please proceed with your question.

Hi. Congrats on a nice quarter, and thanks for taking the questions.

Thank you very much.

A couple from me. Just wanted to dive in a little bit more into the agentic workflow product that is coming online in the back half of the year. Just want to hear more about the vision, the monetization model, what you're hearing from customers and what they want out of that product, how quickly that could affect the revenue model.

Okay. First of all, hi, Kingsley. Nice to hear from you, and thanks for joining us and for your questions. Regarding the product, you will forgive me in advance because from commercial aspects, I cannot expose too much because I prefer not to. In high level, all the world is moving basically to agentic mode, meaning the customer that is hitting our platform, he needs to take his own decisions. For example, which products he needs. For example, which geographic he needs, what's the main domains that he's going to hit. What's exactly the data and how he needs the data, and which structure.

The agentic means that you will come in, and it will be much more simple, and then as a customer, you can just, for example, hitting your use case and your need, and the model can take you directly to the relevant product, relevant geographic, relevant sub-product. For example, the IP proxy, but the IP proxy is relatively under this title. There are many sub-products related to it can be ISPs, it can be others, it can be this geographic, it can be sticky or not sticky. Many elements that basically will provide you the best or the optimum result.

Agentic is just a layer above the product in order to make the life of our customers much more simple. Of course, for us, it's an opportunity for upsell or attracting new customers, et cetera. It's not supposed to be buying, sell a product that will generate its own revenues. It's a layer that is wrapping all our products.

Okay. Yeah, that's helpful and looking forward to seeing that roll out. Just another question. I just want to take a step back on the vision around scraping and I know that web environments are increasingly dynamic and difficult to access, and that is a big reason why you have a moat there, because you're more able to successfully circumvent those.

Yeah

blockages. You also have things like Cloudflare, Pay per crawl, robots.txt enforcement, and just they're doing their best to fight fire with fire. Just curious on your renewed thoughts on the moat there and the challenges you're facing on the scraping side?

Okay. Basically, as I mentioned also, in my part of this call, I say that as time is running, it become more and more challenging to collect data in scale due to the reasons that you mentioned and due to many other reasons that make the life of those that want to collect data more challenging. To answer your question, nothing changed significantly. We are in this game for years, and it's a game that we need to find the best way, of course, everything related to public data, everything according to all the policies, where we need to find the way and it all around the size, if you ask our opinion here. It starts from the size of your network. As you will have, let's say, the size of your network, you will have a diversified IPs. You will have much more geographics.

You will have a bigger amount of endpoints, and IPs from all kinds. In this way, you can demonstrate better the experience of what our customers need from us and to increase the success rate. In special cases, we have Website Unblocker and our very successful scraper, which calls SERP Scraper API, that knows how to bypass this kind of anti-bots or anti others, the names that you mentioned, not specifically them, but in general, as you know, they develop their technologies and they are progressing, but we are progressing also, and it looks like that if you will review our main KPIs, which is success rate, downtime, and of course, the size of our network went dramatically higher and still, the KPIs looks great and our customers basically downloading or collecting petas of data on a monthly or on a daily basis, basically.

Okay. Yeah, really appreciate that. Then just a couple quick ones on financials. Gross margins performed really well in the quarter. Revenue roughly flat from Q4, of course, better than expected, but COGS down about $1 million. Could you just help us unpack what's going on underneath there and then just expectations for COGS or gross margins through the rest of the year?

Okay. I talked about it in general, but I want to be more specifically now. As I mentioned, and I will say it again, our main purpose now in these days, in the previous quarters, and it looks like that in the coming quarters, is the penetration, is to become more and more significant and leader part of this AI revolution. You know, the data collection is a layer in this funnel. This is our main purpose, and if we will need to invest more or to decrease our margins in order to penetrate to additional customer or to additional vertical, we will do it. In this quarter, also, I mentioned it's a demonstration for our capabilities, for the leverages we can get from our platform because we invested more in the previous quarter in our infrastructure. In this quarter, basically, we bear fruits from this.

Most of the verticals and the use cases were not new for us. We didn't need to build something new or to use a new third-party company in order to win the opportunity. I can tell you that our R&D, I think the major part of his KPIs and his day-to-day is to adjust and to improve the efficiency of our IP, the routing, everything behind, which translate to money at the end of the day. This and the current use cases that we improved ourselves because we just learned them in the previous two quarters, make this quarter to be better or great, even not comparing to the previous quarter.

I will answer you like this, the purpose is to be as much as efficient as we can. If all goes according to this quarter from verticals, from other no new surprises, we can be here and even better. If we take a decision to invest or to penetrate new customers, or the market will change and will come with new use cases, we will allow ourselves to go back in order to go back after, but to allow ourselves to go back to penetrate, because as you can see now, the penetration that we did in Q, in the third quarter of 2025, is greater ROI in this quarter. Hopefully that's how we'll react in the future.

Okay, just last one from me. NRR continues to be a lumpy metric. In some ways, it's not the best way to judge the business in any given quarter. You did call out that the trends in the AI customer segment are more positive, curious if there's just any more quantification to that, and then just an update on the durability of those customers in that segment. Is it shaping up to be that customers in the AI and LLM infrastructure-related segment are going to be multi-year customers and then have significant expansion opportunities? I know they can come in and spend a lot in the first year as well, that can create a tough comp.

First of all, let's discuss about the NRR. If you remember, you can see it in our documents. The way we are measuring our NRR is basically based on big data, okay. We are measuring four times, four quarters versus four quarters. The shift, basically, it's a huge shift of our customers that just, let's say, one year ago, the AI training and all these AI verticals were zero from our customers' portion. This shift, it basically takes the NRR a little bit back because we are not measuring quarter versus the previous quarter. That's the way we chose to measure. We can discuss about it and maybe we will show something that is more related to the last quarters in order to answer your second question about the retention level of the AI customer.

In general, before we talk about our customers, data, it's like in cars, yes. You need fuel or electric, whatever, all the time, otherwise you cannot drive. Data is the fuel of all the AI in the training stage and later on in the production stage, because everything is related to data. The data is coming back from the internet. Nobody generates data by himself. In general, yes, it's here to stay forever. As we see in the last three or four quarters, as these AI customers, AI training use cases came in, we see that we have a great retention. From logo perspective, it's an amazing retention.

From revenue perspective, because that it's volatile, so you can see quarter, they consumed amazing amount of data, and then in the next quarter, they consume less, and then they will go to the next use case, and they consume more because it's quite volatile. As a retention, for this point of time, it looks a very good retention.

I really appreciate the comments. Thanks again. Congrats.

Thank you very much.

Thank you. We have no further questions at this time. Mr. Daniel, I'd like to turn the floor back over to you for closing comments.

Okay. Thank you very much, ladies and gentlemen, and we appreciate your time. We believe the quarter reflects important progress in the evolution of Alarum into a scaled AI data infrastructure platform and remain focused on long-term execution, operational discipline, and sustainable growth within what we believe remains an early stage of the biggest evolution of the AI infrastructure. We look forward to updating you again next quarter. Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Ladies and gentlemen, thank you for standing by. Welcome to the Alarum Technologies fourth quarter 2025 earnings results conference call. During today's presentation, all parties will be in a listen-only mode. Following management's presentation, the conference will be open to questions. If you have a question, please press the star key followed by the number one on your touchtone phone. If you would like to withdraw your question, please press the star key followed by the number two. If you're using a speaker, please lift the handset before making your selections. This conference is being recorded. I will now turn the call over to Kenny Green, Investor Relations at Alarum Technologies. Kenny, please go ahead.

Thank you. Good day to all of you, and welcome to Alarum's conference call to discuss the results of the fourth quarter and full year 2025. I would like to thank management for hosting this call. Today, we are joined by Shachar Daniel, Alarum's CEO, and Shai Avnit, CFO. Shachar will begin the call with an overview of the fourth quarter, followed by Shai, who will review key elements of the financials. Finally, we will open the call for the question and answer session. Before we get started, I want to highlight the forward-looking statements disclaimer. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.

Forward-looking statements include statements about plans, objectives, goals, strategies, future events of performance, and underlying assumptions and other statements that are different than historical facts. For example, when we discuss a strategy of prioritizing long-term leadership and market share capture over short-term margins and profitability, expected trends in market demand and AI-driven growth, our business momentum and pipeline, our expectations regarding future revenue patterns and margin improvement, the anticipated impact of our strategic investments and product mix, and our estimates regarding fourth quarter 2025 revenues and adjusted EBITDA, we are using forward-looking statements. These forward-looking statements are based on the current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements.

Potential risks and uncertainties include those discussed under the headings Risk Factors in Alarum's annual report on Form 20-F filed with the Securities and Exchange Commission on March 20, 2025, and in any subsequent filings with the SEC. All such forward-looking statements, whether written or oral, made on behalf of the company, are expressly qualified by these cautionary statements. As such, forward-looking statements are subject to risks and uncertainties, and we caution you not to place undue reliance on them. On the call, the company will also present non-IFRS key business metrics. The non-IFRS key business metrics the company uses are EBITDA and adjusted EBITDA, non-IFRS gross margin, non-IFRS net profit or loss, and non-IFRS basic earnings or loss per share or ADS.

The exact definitions and reconciliations of these non-IFRS key business metrics are described in the company's financial press release, which is available in the investor's lobby of Alarum's website. These non-IFRS measures may differ materially from similarly titled measures used by other companies and should not be considered in isolation from or as a substitute for financial information prepared in accordance with IFRS. Now I'd like to turn the call over to Shachar Daniel, Alarum Technologies CEO. Shachar, please go ahead.

Thank you very much, Kenny. Good morning, everyone. Thank you all for joining us today. We saw our 2025, which was a key year for us, for Alarum, and Q4 capped it with another strong quarter. Fourth quarter revenue were $11.8 million, up 60% year-over-year, while full year revenues reached nearly $41 million, up 28%. Even as we invested a lot in increasing our capabilities throughout the year, we remain profitable. We reported fourth quarter net profit of $0.2 million and adjusted EBITDA of $1 million. For the full year, we reported net profit of $1 million and adjusted EBITDA of $4.4 million. This strong growth reflects the shift we saw during the year as demand from AI-focused customers become a key growth driver.

In 2025, our new AI-focused products, which are our growth engines, accounted for about 30% of revenues, growing from around 4% only last year. As AI systems becomes more complex, demand for large scale, high quality public web data continues to grow. At the same time, collecting reliable data at scale becomes more difficult, raising barriers to entry and increasing the value of our infrastructure, technology and execution. During 2025, we significantly expanded our work with several major global technology companies developing AI systems. These relationships involve large scale data collection for model training, data set creation and ongoing refinement. We also saw a dramatic increase in workloads across our platform, with volume rising from between 3 PB-4 PB per month at the beginning of the year to up to 70 PB at the end of this year.

This sharp increase created greater operational complexity, and our ability to perform at this scale become an important competitive advantage for Alarum. Strategic investment and profitability. Alarum invested significantly in its capabilities and scaled the business during 2025. We doubled our headcount, expanded our offices, and strengthened our organization across R&D, products, support, customer success, and account management. From a technical standpoint, we strengthened our global proxy network, increased platform capacity, and enhanced our data collection abilities to support massive AI workloads and the growing complexity of enterprise-scale deployments. This investment now allow us to better support customers operating at massive scale, including both existing major customers and new target customers. The higher investment levels have led to lower short-term margins, although we remain profitable. These margin pressures were planned and are addressable.

As I noted last quarter and even before, we have several initiatives underway to improve margins over the coming quarters. These strategic investments have positioned Alarum at the center of the AI ecosystem as we move through 2026. The global AI market is still in its early stages, and that naturally creates some near-term variability in demand. Large AI developers shift spending sharply based on where they are in their model development cycles and the timing of dataset refreshes. While the year-over-year growth trend in spending on data is clear, revenue from major customers may vary from quarter to quarter. At the same time, we believe this remains the early stages of a much larger opportunity for Alarum.

As demand broadens, our customer base expands and becomes more diversified, and model development moves into more structured training cycles, we expect Alarum's revenue pattern to become smoother and more predictable. Product platform expansion. Our business continues to evolve from a proxy-focused company into a diversified multi-product data infrastructure platform. During 2025, this evolution progressed across websites and blockers, self-service solutions, datasets, and our core proxy infrastructure. This shift from a single product proxy model to a broader platform is expected to support stronger long-term margins and healthier unit economics. Strategically, it also reflects move from a traditional zero-touch online model to a deeper enterprise relationships that requires dedicated support, performance monitoring, documentation, and long-term infrastructure and collaboration. While this increases operational complexity, it also creates stronger customer relationships and a more strategic role in customers' operations.

We believe this evolution is expanding our value proposition and improving the quality of our revenue base over time. In summary, 2025 was a transformational year for Alarum. We observed growth, expanded customer relationships, scaled our infrastructure, broadened our product platform, and further positions the company to serve the rapidly growing AI data infrastructure market. At this stage, we view Alarum as being in a company and a platform building phase. Our primary focus is on strengthening leadership, expanding infrastructure and product capabilities, and deepening enterprise customers' relationships. We believe this positions us well for the larger market opportunity ahead. I believe Alarum is on a path to achieving a revenue run rate exceeding $100 million as the market continues to develop. I will now hand it over to Shai for the financial details and guidance for the current quarter. Shai.

Thank you, Shachar, and hello, everyone. I will start by reviewing our key financial results for the fourth quarter and full year 2025, comparing them to the same periods last year, unless otherwise noted. Following that, I will provide our guidance for the first quarter of 2026. Detailed definitions and reconciliations of our non-IFRS key business metrics can be found in our fourth quarter and full year 2025 financial results press release. One final note before I begin, the figures I will be discussing are rounded for clarity and ease of reference. Turning now to our financial performance. Revenues. Revenues in the fourth quarter of 2025 reached $11.8 million, compared with $7.4 million in the fourth quarter of 2024, an increase of approximately 60% year-over-year.

For the full year of 2025, revenues reached $40.7 million, compared with $31.8 million in 2024, an increase of approximately 28%. As Shachar mentioned, the growth was driven mainly by strong demand from large-scale customers building foundational AI models, as well as increased sales of our new AI-focused products. Gross profit and gross margins. Gross profit in the fourth quarter of 2025 amounted to $6.4 million, compared with $5.3 million in the fourth quarter of 2024. For the full year, gross profit was $23.8 million, compared with $23.9 million in 2024.

Gross margin in the fourth quarter of 2025 was 53.8%, compared with 72.4% in the fourth quarter of 2024. For the full year, gross margin was 58.5% compared with 75.1% in 2024. The decline in gross margin reflects our work with large scale AI customers, which require data gathering at significantly greater scale and involve higher initial infrastructure costs, including a larger volume of servers and stronger, higher quality infrastructure. In addition, the new product sales have triggered related third-party costs, which we expect to decrease in the coming quarters. Overall, this is consistent with our strategy to pursue large scale, highly strategic opportunities that we believe can drive meaningful long-term growth and profitability, even at the cost of lower short-term margins.

I note that as our revenue continues to grow, the company will increasingly benefit from margin increases due to the operating leverage inherent to our business model. Operating expenses. Operating expenses in the fourth quarter of 2025 were $6.4 million, compared with $5 million in the fourth quarter of 2024. For the full year, operating expenses were $23.6 million compared with $17.2 million in 2024. The increase was driven by higher revenues and broader operations, primarily attributable to research and development expenses and to a lesser extent, sales and marketing expenses. Again, this increase is the key part of our strategy to invest in our infrastructure and capacity in order to position the company to capture the significant long-term growth opportunities we see ahead of us. Net profit.

Net profit in the fourth quarter of 2025 was $0.2 million, compared with $0.4 million in the fourth quarter of 2024. For the full year, net profit was $1 million, compared with $5.8 million in 2024. While we still maintained our profitability, the decline in profit reflects the increased strategic costs. Adjusted EBITDA. Adjusted EBITDA in the fourth quarter of 2025 was $1 million, compared with $1.5 million in the fourth quarter of 2024. For the full year, adjusted EBITDA was $4.4 million, compared with $9.4 million in 2024. Earnings per share. Basic earnings per ADS in the fourth quarter of 2025 were $0.03, compared with $0.06 in the fourth quarter of 2024.

For the full year, basic earnings per ADS were $0.14 compared with $0.87 in 2024. Balance sheet. As of December 31, 2025, the company's shareholders' equity increased to $32.1 million, up from $26.4 million as of December 31, 2024. Our cash equivalent, and debt investments, including accrued interest as of December 31, 2025, was approximately $22.5 million, compared with $25 million at the end of 2024. We ended the year with zero debt, and our strong balance sheet continues to support our ability to invest strategically while maintaining a focus on sustainable value creation. The outstanding ordinary share count as of today is approximately 72.5 million shares, representing approximately 7.25 million U.S.-listed ADSs. Guidance. Moving on to our outlook for the first quarter of 2026.

Our guidance reflects what we see today based on customer orders, backlog, and current consumption trends, and is given as of today's date. We currently expect that in the first quarter of 2026, revenue will be around $11 million with a range of ±7%, representing approximately 46% year-over-year growth. Adjusted EBITDA for the first quarter of 2026 is expected to be approximately $1.4 million, with a range of ±$0.5 million. To summarize, 2025 was a year of significant transformation, strong growth, and continued strategic investment. We remain focused on building long-term leadership in the AI data infrastructure market and on generating sustainable value for our shareholders. With that, we'll now open the call for questions. Operator?

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. Again, for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Kingsley Crane with Canaccord Genuity.

Hi. Thanks for taking the questions. Shachar, any update on the state of modern website data collection prevention techniques? I know that the goalposts are always moving. How do you feel like you're keeping up, and what kind of investment do you feel like is needed to keep up specifically on that front? Thanks.

Yes. First of all, hi, thanks for joining. Yes, as I mentioned, just very shortly, just a few minutes ago. As data become really the oxygen of the AI and the LLMs products, and we need to scale and everybody needs data at scale, it become more and more challenging to collect data which we see today and maybe forever as an opportunity and not a threat because it basically you know it become a barrier for small players to come in. Of course, the results for this is positive.

Yes, websites, not all of them, yes, but some of them are okay with the scraping because it's bringing traffic and ranking, but it becomes challenging from you know products that are trying to prevent those players from coming in, sometimes false alarms because those products are looking for cyber attacks and not on scraping because some of them are not so sensitive for scraping. Our target basically with our product is to come and say, "Hello, we are collecting only publicly available data. We are not a threat.

We are not here for a cyber attack." If we cross this, let's say, shaking hands in the beginning of the website as we are doing today, we can come in and collect available public data. Sorry.

Okay. Yep, that's helpful. Just a couple more. I mean, you've highlighted last quarter and this quarter the benefits of the long-term infrastructure partnerships with enterprise customers. You know, revenue has declined, this quarter, you know, guiding to a decline in Q1. Can you just help us get a better sense of that improving visibility that you have in the business as a result of these longer term partnerships? I mean, do you see clear seasonalities that are emerging? Do you think that like the back half could be stronger just based on the timing of when these models, could need to be trained or fine-tuned? Thanks.

Okay. Kingsley, something that is very important for me to say, I think I said it over the last quarters, and I want to mention it again. If you take a look on 2025, you will see that suddenly, let's say it like this, suddenly in the middle of the year, we jumped. You know, over the time, we jumped slowly, a digit after digit, meaning we were in $6 million for quarter, then we jumped to the class of seven, then to the class of eight. In the middle of the year, we jumped three numbers, yes, from quarter two, from the second quarter to the third quarter, from around eight to 11, and then 10, and then 11 again.

Meaning this exponential growth took us to a totally different place, and it comes significantly, this growth from this great achievements of us to penetrate with this large LLM that are consuming data in huge scales. The only thing is that if you will measure it quarter after quarter, you will still see that the numbers are not sustainable because they are working on data loss. Meaning for example, they are now in the stage in the development and now the demand is for data or for video data for this kind. They have a huge demand. They are getting most of their, we are the suppliers, and we provided most of the demand.

They slow down a little bit and then come the next stage, and then the next stage. These workloads, because it's not something in production that is sustainable, also, of course, has an impact on our revenues. Then you can see a quarter of $11.8, $11, then you can see $13, then you can see $12. But this, as we see it, is by nature. We don't see it as a decline. We see this is the nature of the market now. We are going with the market. The opportunity is here, is endless and unbelievable. Nothing more that I can explain because it's not a decline that comes from something, let's say, something behind that we can explain and elaborate, and there is a trend here or trend there.

The trend is positive, but the movements can be, you know, sometimes a movement of two weeks can have an impact on the full quarter, but not on our strategy and tactics and over time. Make sense?

No, it makes sense. Like the trend is broadly positive, particularly on the, you know, the annual trend. Just trying to get a better sense of that seasonality, and it's hard to predict. Last one for me, just, you know, by our math, nearly half of the revenue in Q4 came from customers that you didn't have one year ago, just based on backing into that number from NRR. I'm just curious how you think that might trend over the course of the next year and just the potential to sign new customers, anything you can share with other engagements that are in the works.

Okay. I will divide my answer into two parts. First of all, just to put some light on this part of the NRR. Of course, as we just mentioned all the time, this year was, you know, a really it changed our lives. Suddenly very fast, a new vertical came in and become the first place of most of all our other use cases and verticals. For this, even though you see that the NRR is less than one, you see that the company is growing because those old use cases, let's say, slowed down or dropped, but the new one came, and it's much bigger than the others.

You know, it looks like that the AI is not a trend, that the data demand for AI is not a trend. It's here to stay, it looks like forever. From this aspect, we think that this change, okay, took the NRR down, the new customers cohort went up significantly and will bear fruit from it. For your second question, yes, we are negotiating all the time. In the last two quarters, we have bids, negotiations, proposals, starting small with mid-level LLMs, the biggest LLMs of the world. We are, you know, we are one of the key players that they have. As I mentioned in the past, most of these customers are not as a strategy, yes, as a policy, they are not using one vendor.

Sometimes it's two, sometimes it's three vendors. Most of the times we will come in, sometimes we will get more demand, and we will get more data. Sometimes we'll be the first option from their supplier. Sometimes we'll be the third option, but it can change all the time. Yes, dramatically, we are investigating new opportunities, new engagements, new big customers, mid-level customers, and most of them are around AI and data collection for training models.

Thank you. Good to speak. Thank you.

Thank you very much. Appreciate it.

Our next question comes from Brian Kinstlinger with Alliance Global Partners.

Hi. Thanks for taking our questions.

Hi.

This is Kevin [with Brian Kinstlinger].

Hi, Bri.

You spoke last call about bringing in more infrastructure in-house, and optimizing the network to expand the gross margin. Can you explain a little deeper any progress on these initiatives over the last quarter? When should we expect to see those start to materially impact margins?

Just to make sure, I understand your question. You said that we mentioned last time and even before that we are investing in order to scale our infrastructure to support the huge scale and the huge demand that is coming especially from the AI use case. Yes, as I mentioned, most of our. You know, we are investing in both sides. First is to expand our network, in order to bring more endpoints, to improve our performance, and the infrastructure, which is costly.

From the other side, as it becomes a game now of huge scales, we are working around the clock, which one of our main missions all the time to make our infrastructure to be more efficient and to be in the optimum cost. Meaning, yes, we are not saving money now, but vice versa. Every time we see an opportunity, we are investing and buying more endpoints, more infrastructure, improving our infrastructure. From the other side, we have a team that is working around the clock with all our hosters and, you know, the cloud and the on-prem hosters, the servers and the endpoints suppliers in order to make our product to be more efficient and in the optimum price because we are scaling.

Both of them are working very well and we are progressing, and we would keep this progress at least in this all 2026.

Got it. Thanks. Are there any updates on your large anchor customer, the Asian online marketplace? How's that partnership going, and what have they indicated from a demand perspective?

Okay. It's going very well. It's stabilized. We are talking with these customers. We have more than one that are basically, let's call them, market leaders. We see that the demand is here to stay. They need this kind of data, and then they will need in a few months or quarters other kind of data. They are training this model, and then they are developing another model, and they need to train him. Then in production, they need to stay up to date, and they need to get refreshed datasets. It's going well. They are satisfied. We are working with them already for a few quarters. Thank God, it looks okay.

Great. Thanks.

This now concludes.

Thank you.

End our question and answer session. I would like to turn the floor back over to Shachar Daniel for closing comments.

Thank you, and thank you all for your time today. We look forward to hosting you on Alarum Technologies' next results call. Thank you very much.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.