Alarum Technologies Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 28, 2023

There are 6 speakers on the call.

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Alarm Technologies Corporate Update Conference Call for the 3 9 Months Ended September 30, 2023. During today's presentation, all parties will be in a listen only mode. Following the This conference is being recorded today, November 28, 2023.

Operator

Before we get started, I will read a disclaimer about forward looking statements. This conference call may contain, in addition to historical information, forward looking statements within the meaning of 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 fact. These forward looking statements are based on 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 Risk Factors in Alarm's annual report from 20F filed with the Securities and Exchange Commission, SEC, on March 31, 2023, and in any subsequent filings with the SEC.

Operator

All such forward looking statements, whether written or oral, made on behalf of the company are expressly qualified by these cautionary statements, and such forward looking statements are subject to risks and uncertainties and we caution you not to place all undue reliance on these. At this time, I'd like to turn the call over to Shachar Daniel, the company's CEO. The floor is yours.

Speaker 1

Thank you very much, and welcome everyone to Alarm Technologies' Q1 2023 earnings results conference call. As is customary, with me is Shay Avnet, our Chief Financial Officer. I am pleased to highlight some key achievements and strategic directions that have shaped our recent performance and our vision for the future. Before we begin, I want to quickly note that reconciliation tables for any non GAAP or non IFRS metric reference on this call are available in the press release we published earlier today. We are thrilled to announce that we have achieved our first ever profitable quarter.

Speaker 1

This significant milestone is a testament to the dedication and hard work of our team and demonstrate our commitment to delivering value to our shareholders. At the end of 2022, we made it our leading goal to set our past 3rd profitability. We are excited that in the Q3, we have managed to achieve our goal and announced on a net profit of $1,100,000 As mentioned, our success can be attributed to the strategic decision we have made in the recent years. We have successfully executed acquisitions that have boosted our capabilities in line with our vision and direction. We have also been agile in making decisions like scaling down low profitable revenues, allowing us to allocate resources more efficiently towards growth and profitability.

Speaker 1

Most importantly, we are focused on our successful business NetNat, our enterprise data collection business. When we took this strategic decision, we know it might have impact on our revenue stream. We are happy to present a positive trajectory with minimal impact due to our directional decision. $6,700,000 of revenues for the quarter represent a significant growth in our enterprise business and excellent performance quarter after quarter. Our accumulated revenues from the beginning of 2023 amounted to a stunning 19 point $4,000,000 and exceeding revenues for the whole year of 2022.

Speaker 1

In a short period of time, we have managed to generate record revenues and net profit for the first time. Additional highlights for the Q3 include the attractive gross margin of 77% and record adjusted EBITDA of $1,900,000 In July 2023, we announced the closing of $4,250,000 private placement, a private placement in which senior management, including MICEF, took part due to a strong belief in its promising prospects. The investment further strengthened our balance sheet. We are well funded with approximately $8,000,000 in cash as of September 30, 2023, no debt and a low amount of warrants. I would like now to elaborate on our enterprise data collection business, NetNat.

Speaker 1

NetNat was acquired in 2019 with annual revenues of approximately $3,000,000 Over the past few years, we have transformed NetNat from a small company with minimal revenues into a market leader in the IP proxy network segment. This achievement has positioned us at the forefront of the data industry infrastructure layer. Over the last 2 years, we have invested significant resources to build one of the fastest, most reliable and advanced network. In the past few quarters, we have expanded our product offering and expanded our footprint to the data collection market estimated by $17,100,000,000 by Forst and Suribank. This market is driven by the growing importance of data based decisions for businesses necessitates of a constant flow of data.

Speaker 1

It is supported also by the AI based product inspection, in which data collection and labeling play a critical role in model development, accuracy and functioning of AI systems and products. In addition, the social media segment in which monitoring and understanding of social media activity enabling more effective marketing and improving user experience for digital marketing growth. NetNut is a well known brand in its field, enabling us to constantly identify and penetrate new market segments. Among our recently entered customer segments are the artificial intelligence, powered sales intelligence market, filter markets, AR recruitment markets and more. In each field, NetNat has already won multiple new customers and continue to do so.

Speaker 1

Our vision is to continue our growth in the IP proxy network vertical, building on strength and success we have achieved thus far. As the data collection market rapidly grows, it is our mission to introduce new innovative products to meet new emerging needs. In this regard, we took our first step this quarter by releasing our inaugural product in this vertical, the self API scraper. Our overarching goal for the future is to leverage our success in the infrastructure layer of the data collection industry with dozens of satisfied successful customers already on board, we aspire to become the one stop vendor for all the chain and needs of our customers. This means providing comprehensive solutions that span the entire data collection process from infrastructure to data extraction and beyond.

Speaker 1

I want to mention one more recent remarkable achievement by NetNat, the granting of our U. S. Patent that further strengthened the company assets and innovation. I would like now to turn the call over to Shay to discuss the financials for the quarter in more details. Shay?

Speaker 2

Thank you, Shahar, and hello, everyone. I will summarize our Q3 2023 financial results from continuing activity, which are compared to our Q3 of 2022 results from continuing activity unless otherwise stated. All figures in this summary were rounded up for simplicity. Revenue for the Q3 of 2023 totaled 6.7 $1,000,000 and revenue for the 1st 9 months ended September 30, 2023 was $19,400,000 This compared to revenues of $4,800,000 $13,400,000 respectively for the equivalent periods in 2022. The increase is attributed to the organic growth in the enterprise access business revenues despite a reduction in the consumer excess business revenues.

Speaker 2

Gross profit for the Q3 of 2023 was $5,200,000 compared to a gross profit for the corresponding period in 2022 of $2,600,000 only. The increase in gross profit was primarily driven by the increased revenues. Gross profit for the 9 months of 2023 was $13,500,000 compared to a gross profit for the corresponding period in 2022 of $7,300,000 Our Q3 2023 operating expenses decreased 25% year over year to $3,700,000 from $5,000,000 in the Q3 of 2022. This decrease is mainly due to operations, strategy scaled down in the consumer Internet access business. Operating expenses in the 1st 9 months of 2023 some to $20,800,000 an increase of 22% from the $17,000,000 in the 1st 9 months of 2022.

Speaker 2

The increase reflects recording a one time goodwill and intangible assets impairment loss of $8,500,000 in the Q2 of this year, which is related to the CyberKreek cash generating unit due to the decrease in its forecasted operating results. This increase was partially offset by the company's success in minimizing the actual operating expenses in this segment as well as reducing the general and administrative expenses from $5,300,000 to $3,200,000 due to lower professional fees. As a result and after the impact of finance expenses and tax benefits, IFRS net profit for the Q3 of 2023 reached $1,100,000 or $0.03 basic profit per ordinary share compared to a net loss of $2,300,000 or $0.07 basic loss per ordinary share for the Q3 of 2023. For the 1st 9 months of 2023, IFRS net loss totaled $7,300,000 mainly due to the CyberKirk impairment losses or $0.20 basic loss per ordinary share compared to a net loss of $9,400,000 or $0.30 basic loss per ordinary share in the 1st 9 months of 2022. The company monitors key business metrics to help it evaluate and establish budgets, measure the effectiveness of the sales and marketing efforts and assess operational efficiencies.

Speaker 2

The non IFRS key business metrics the company uses are EBITDA and adjusted EBITDA. EBITDA or EBITDA loss is a non IFRS financial measure that we define as a net profit or loss before depreciation, amortization sorry, amortization and impairment of intangible assets, interest and tax. Adjusted EBITDA or adjusted EBITDA loss is a non IFRS financial measure that we define as EBITDA or EBITDA loss is further adjusted to remove the impact of impairment of goodwill, if any, and share based compensation. Adjusted EBITDA for the Q3 of 2023 was positive at $1,900,000 compared to adjusted EBITDA loss of $1,600,000 in the same period of 2022. For the 1st 9 months of 2023, adjusted EBITDA totaled positive $3,000,000 compared to an adjusted EBITDA loss of $6,500,000 in the 9 1st months of 2022.

Speaker 2

Company's cash and cash equivalents as of September 30, 2023 totaled $7,700,000 compared to $3,300,000 as of December 31, 2022. As of September 30, 2023, shareholders' equity totaled $10,900,000 or approximately $1.87 per outstanding American depository share compared to shareholders' equity of $13,300,000 on December 31, 2022. The reduction is due mainly to the goodwill and intangible assets impairment recorded in the Q2 of 2023, offset by September 2023 private placement. Lastly, I wanted to touch base upon our share count as it stands today. On an outstanding basis, we have around 58,600,000 ordinary shares or 5,860,000 ADSs.

Speaker 2

On a fully diluted basis, we currently have around 81,400,000 shares or 8,140,000 ADSs outstanding. With that, I'll turn the call back over to Shahar.

Speaker 1

Thanks, Shay. We undertook ambitious growth in recent years and Alarm's current position is definitely a testament of the remarkable journey and the milestones we have achieved to date. These achievements underscore our ability to adapt and stream in dynamic business landscape. Our CREE growth engines have been realized and our significant competitive advantages have been crystallized. Both our financials and non financials key metrics are moving in the right direction and align perfectly with our strategic vision.

Speaker 1

In conclusion, we are extremely proud of our recent achievements, especially our 1st profitable quarter and the growth we have experienced in our core business segment. We are excited about the future as we continue to expand our footprint in the data industry, delivering value to our customers and shareholders alike. Now, I would like to open the call for any questions. Operator, please go ahead.

Operator

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from Brian Kinstlinger from Alliance Global Partners. Please proceed.

Speaker 3

Great, thanks. I've got several questions. First, I wanted to talk about the expense base of the business. It's the first time we're seeing results excluding CyberKick. So

Speaker 1

would you like to send me Fine. Fine. Fine. Fine. Can you change your I hear you.

Speaker 1

I barely hear you. Okay. Hold on. Can you hear me now? Yes, it's better.

Speaker 3

Great. So first I wanted to talk about the expenses. It's the first time we're seeing the results excluding CyberKick. So, the gross margin of 77%, is it sustainable and what would drive that to increase or decrease from here? And then I'm curious on the OpEx side, are there any significant investments you need to make?

Speaker 3

And are there any significant variable cost to sales?

Speaker 1

Okay. First of all, hi. 2nd, so for your first question, so basically, as you know, we scaled down the CyberKick business. Due to this, some of the cost of goods, major part of the cost of goods are not we are not spending they are not in our expenses anymore. In addition, as we discussed in the past about our data business, about the enterprise business, so basically we succeeded to improve our cost of goods in addition to the growth in the revenues made us to achieve this 77%.

Speaker 1

Regarding the future, and let's talk about, I don't know, next year, for example, we think that the current OpEx structure or expenses structure, more or less, not significantly, if you ask people, we need to significantly invest in order to keep the growth. So at this point of time, we don't see a significant invest in order to keep the trend of our growth in the IPPN market, including releasing, as I mentioned in my pitch, this year, one of our targets we start here and next year is to expand to the next level to the next layer of the data business, which is the products layer of the scrapers and others. So basically, also in order to expand to these markets, we will need to invest, but we don't see a significant change from our current expenses structure.

Speaker 3

Great, great. And then on the Internet access piece that's driving growth, how are you differentiating from the competition? Why are enterprises choosing your solution? And what does the competitive landscape look like?

Speaker 1

Okay. So I'll do it very simply. It's a question of brand and performance. And maybe brand is driven by the performance. So as I mentioned also in the last 2 years, and by the way, we are going to do it all the time, but we invested a lot in our product, in our network, in the stability of our network, in the geographical coverage.

Speaker 1

And in our space customers are very sensitive, sorry, to the performance, to the speed, to the downtime, etcetera. So the size of our network, the stability of our network allowing us now to work with big customers with huge demand. And that's what made us to be a leader in this space together with additional 2 or 3 companies. But basically, if I'm looking back for 2.5 years ago, I think that we went all the way from being, I don't know, in the 8th place, 7th place in this space to be in the first three leading vendors in this space. And again, it's due to the stability, to the performance, to the support, to the sales teams, etcetera, etcetera.

Speaker 1

But regarding the competitive advantage, these are the main topics.

Speaker 3

Great. And then you mentioned some new customer wins in the AI intelligence market and also entering the FinTech market. Can you just maybe tell us where these customers are generally located? And can you also describe how they're using your technology?

Speaker 1

Yes, of course. It's all about data. So in these spaces, I think 80% of our customers are based in the U. S. And the rest, I think we have 1 in the Far East, maybe 1 or 2 in Europe, but basically, most of them are in the U.

Speaker 1

S. In these spaces. And as I mentioned, Brian, it's all about data. So imagine yourself that you have a kind of pricing intelligence, so recruitment intelligence or others that when you say intelligence, so they have their own algorithm that knows how to analyze data for many, many web and Internet sources. In order to be able to scrape and to collect this data in scale, they must use, sorry, our kind of products behind.

Speaker 1

The same regarding the AI tools. At the end of the day, everybody, all these industries are based on data that they need to collect from the web. They need to get it transparent data. They need not to be blocked. They need to assimilate themselves like they are coming from all over the world in order to get the relevant data in the relevant geographical zone.

Speaker 1

So without our products behind just from their domain or from their premise, they cannot do it. They must have an automatic tools behind and our IP proxy is mandatory for them to have and to get the data and to analyze it.

Speaker 3

Got it. So you're enabling AI to do their analytics? Exactly. Enabling the data

Speaker 1

data to collect the data, the analytics is from their side.

Speaker 3

Yes, yes. Okay. I'm going to ask one more question and then I'm going to get back in the queue. If no one asks questions, I have a couple more. I'm just curious with the recent offering, what the fully diluted share count is today?

Speaker 3

Again, I'll get back in the queue and ask some more.

Speaker 1

Fully dilute? Okay. So

Speaker 3

The poly dilution.

Speaker 2

Yes. It's about 8,100,000 ADSs.

Speaker 3

Great. I got a few more. I'll get back in the queue and hit star 1 again.

Speaker 1

Okay.

Operator

Our next question comes from George Moore from Carter Terry. Please proceed.

Speaker 4

Hi guys. Congratulations. What a very good quarter. My question is real quick. It goes twofold.

Speaker 4

Is the impact of scaling down on the consumer segment, right? With that, are you still deriving revenue from there? When will that ultimately end? And then going along with Brian's question on the growth of Alarm's vision for the next couple of years, how do you expand and grow off of that?

Speaker 1

Okay. So thanks for your question. Thanks for the compliment. I will merge your 2 questions to one answer from my side. So as I mentioned, yes, we took a decision to scale down the consumer business.

Speaker 1

When I'm saying scale down, we're not investing anymore, not in R and D at this point of time and not in consumer acquisition. And we are just maintaining our current product and currently bearing fruit from our current customers that are paying on a monthly basis. And when we took this decision, we took into account that we are going to kind of losing maybe significant revenues, but for the future, it's the right strategy for the company. We are very happy that even from revenues perspective, the impact is minimal, almost 0. And from profitability and strategy and focus of the company, the impact is huge.

Speaker 1

So at this point of time, the revenues from our consumer business is not material comparing to the enterprise business. And basically, it's going to stay like this for the coming future. Regarding the question for regarding your question, sorry, for the vision, so we have the vision is basically to expand our products penetration in current markets, to continue to develop innovative products in addition segments of the data collection market and leverage them with our current customer base, meaning the data collection market and space, like many other spaces, are built from layers. Now we took a step and the leadership in our layer of the infrastructure, which is the IP proxy network. We have hundreds of satisfied customers.

Speaker 1

The next stage is to offer them also the product, the scraper, the datasets, the AI tools, the insights or the analytics of the data, in which direction that we split your infrastructure and your solutions for few vendors and now let's cross sell these customers with our new and innovative products. This is our strategy how to take the market, and we see that it currently works quite well. We released the first product just in the middle of 2023, and the future look very bright from this perspective. Hope it answers your question.

Speaker 4

Yes, thank you. I'll go back in the queue.

Speaker 1

Thank you.

Operator

Our next question comes from Emily Patterson from UBS, a Private Investor. Please proceed.

Speaker 4

Good morning. My question is pretty quick and simple. Does the path to profitability come at expense of growth?

Speaker 1

Sorry, but I didn't hear you well.

Speaker 4

Yes. Can you hear me now?

Speaker 3

Yes, yes. Now it's better.

Speaker 4

Okay. My question is pretty quick and simple. Does the path to profitability come at expense of growth?

Speaker 1

Okay. So it's a very, very good question. So basically, our transition to profitability was made possible, thanks to a calculated balance that we made between growth and profit. It is our intention to continue keeping this balance that will allow the company to continue growing alongside sustain itself. As we did it before, management will consider and we will consider the 2 aspects all the way.

Speaker 1

For example, if we will decide to invest in development of a new product or a new demand or new market, investing more in marketing to enter new segments, all of these actions will be taken in order to save future growth and profitability. Meaning, we proved the world and more important to ourselves that our talent business can be profitable and can fund itself. And our intention is to stay profitable and to stay efficient. Of course, that you will see an amazing opportunity of expanding, developing, investing in R and D or in new markets. And maybe we will take a decision to change a little bit this balance, but the direction is this direction.

Speaker 1

I hope it answers your question.

Speaker 4

It does. Thank you so much.

Speaker 1

Thank you.

Operator

Our next question comes from Robert Smith from The Center Performance Investing. Please proceed.

Speaker 5

Thanks for taking my questions. Congratulations on the steps to profitability. You mentioned that the particular area that you've been addressing that you leap from 8th or 9th to about 3rd. Can you give me some ideas to the first two companies that are basically ahead of you at this point? And what kind of volume of business do they do?

Speaker 1

Okay. So these are 2 companies. Again, it's not according they are private companies. So what I can mention is also only for my knowledge and understanding the business, not from any formal numbers or statistics or data that we have about these companies. And the leading company in this space, according to my knowledge, is an Israeli based also company.

Speaker 1

The name is BiData. And the 2nd company in the 2nd place, again, according to our knowledge, is a European company. The name is Oxylabs, which is basically a sister company of the biggest maybe consumer VPN in the world, which is NordVPN. These 2 leaders are leading the market. They are more mature than us, and they started few years before we started.

Speaker 1

Regarding the numbers, I don't want to mislead you, but I can tell you in high level that as far as we know, both of them are doing more than $100,000,000 a year and they are profitable and they are growing.

Operator

Our next question comes from Brian Kinstlinger from Alliance Global Partners. Please proceed.

Speaker 3

Great. I want to follow-up on one of the questions that was just asked. I'm curious of the KPIs that you look at in order to give you confidence that you can continue this growth path for the next 12 to 18 months. And is that growth path similar to the growth that you are seeing currently in the business? Is it a little bit slower?

Speaker 3

Is it a little bit faster? Just trying to understand that piece.

Speaker 1

Okay. First of all, it's not only in our company or space, the major KPI in order to maintain growth and sustainable business is the retention of the current customers. The purpose of course is to have a minimal amount of churn. And of course, the second target is to have new customers or upsells that will be higher than the churn month after month. And by this, we can maintain the current customers' current stream of revenues and to grow.

Speaker 1

From this perspective, I can tell you that in the last, let's say, one and a half years, 6, 8, 7 quarters, since we invested a lot, as I mentioned before, in our network and the stability of our product and the performance of our product, we see an amazing retention for most of our customers that some of them are in annual mode, some of them in half 6 months subscriptions, some basically most of them are in monthly recurring revenue basis. This is our space and this is also the competition. So we are trusting the level of satisfaction of our customers and the professionalism of our business development and sales team that will maintain them in addition to bring new customers up sales and cross sales for our new products. Regarding the growth, this year, we grew in amazing numbers, to be honest with you, even much even more than I expected, which was an amazing surprise. Hope I will be surprised all my life from this kind of growth.

Speaker 1

The target is to keep the growth all the time. We are a growth company by bringing new customers, by releasing new products, by cross sells, by upsells. Now to tell you if we would have the same rate of growth, The target is yes, is to grow. Of course, we have our target numbers. We have our budget, and we know what we want.

Speaker 1

But I don't want at this point to talk about numbers just to tell you that we are trusting our team, trusting by the way, the industry, the market that is growing, the AI that came in, the data based decisions that many huge organizations announced themselves, the fact that everybody needs data and need and understand that data is the blood life of everything, also providing us level of trust that we will grow together with the market and the fact that we are one of the leading brands in this space.

Speaker 3

So just a follow-up, can you share what churn is today and maybe what it was 3 years ago? And then in addition, is there any pipeline metrics that measures your potential new customer wins over the next 12 to 18 months? Is there any way to track that?

Speaker 1

Yes. The churn is very it's not a one number, okay, because you can measure churn in many ways. And we have our formulas, but it's a very complicated explanation. I can tell you that the churn is around 2, 2.5 times better than the churn that we had 2 years ago. And we didn't we are planning, I guess, in the next quarters also to release KPIs for our retention, churn, lifetime value of our customers.

Speaker 1

And then we would explain, as I need to be much easier for me also to elaborate about it in the investors' call. So basically, at this point of time, I prefer not to mislead and starting to explain about our churn formula, LTV formulas, etcetera.

Speaker 3

And can you discuss in any way pipeline to evaluate the new customer side of the equation?

Speaker 1

We have now basically pipeline of 1,000,000 of dollars that we are discussing, negotiating. We are in trial, proof of concept, we call it trial, but it's the same like proof of concept in our pipeline. Some of them, it's a very short sales process that can take 1 to 2 weeks. By the way, most of our customers are in a very short sales process. And some of them, it will take time because they are big organizations.

Speaker 1

They have their chain of approvals. They need to go through due diligence procurement, due diligence course, etcetera. But we have pipe of from new money perspective of 1,000,000 for 2024 that according to our formulas, and you know where probability some of them are in 70%, some of them are in 90%, some of them are in 50%, and we have our formulas that we generate from these formulas our projections for new customersnew upsells, process for the next 4 quarters of 2024.

Speaker 3

Okay. The last question I have is, I believe from your when you pre announced the numbers, I think you said you generated operating cash flow. Can you share what your Q3 operating cash flow is? And as we think about going forward, should adjusted EBITDA somewhat track cash flow or will it be lumpy?

Speaker 1

So as we announced, Shay, correct me if I'm wrong, our operating cash flow was around $1,500,000 for the quarter.

Speaker 2

Yes, we said more than $1,500,000,000 more than a bit more than this, yes.

Speaker 1

A bit more. The adjusted EBITDA as you saw is 1.9 percent. Your question, Brian, is what is how do we see this gap in the next quarter?

Speaker 3

Is that a similar ratio we should think about going forward of cash flow to adjusted EBITDA?

Speaker 1

I want to explain.

Speaker 2

As we see it, there shouldn't be any huge differentiation going forward, at least for the foreseen future between the EBITDA and the generation of cash from operating activities.

Speaker 3

Great. All right. Thank you so much. Certainly a 20% operating margin on a smaller business, although it's not even smaller, is much better than a breakeven operating results. So congratulations.

Speaker 1

Thank you very much, Brian. Appreciate it. Thank you.

Operator

Our next question comes from Robert Smith from Performance Investing. Please proceed.

Speaker 5

Yes. Just a couple more questions. First, do you feel that you have the financial resources to proceed without raising additional capital in the foreseeable future, say, in the next 12, 18 months?

Speaker 1

Yes.

Speaker 5

Okay. And Fatui, are you

Speaker 1

planning And again, just to add more comments, besides of maybe we will take a decision in the future to have special events like M and A or something like this. But for our current operation, our current cash in the bank and of course, the fact that we are not burning money, the opposite is the correct. We are generating cash, so we don't need to waste money.

Speaker 5

Okay. And are you hiring people now?

Speaker 1

Of course, all the time.

Speaker 5

And what how would you characterize the availability of talent out there?

Speaker 1

In Israel?

Speaker 5

Well, whoever is possibly to help you in growing the business.

Speaker 1

No, you asked the availability of talents globally or specifically in our region, in our country, which is this one?

Speaker 5

Just ask your question. Yes.

Speaker 1

Where are you concerned? So I'm saying it proudly. Israel is full of talents, but full of great companies. But I can say by the way, I didn't discuss about it because it's not measurable, but I can say also proudly that due to the fact that due to these numbers and the success demonstrates a success and like a winner place, okay? So we see a trend that a lot of CVs of employees are sending to us.

Speaker 1

A lot of employees wants to work here. We can sometimes even do a hunting, and we're doing it for talents from other companies. So at this point of time, with the help of Guard, it will stay like this. We are an attractive place for employees. Of course, in Israel, the talent is a very expensive resource, but we are managing it.

Speaker 5

Are you impacted by what's happening in geopolitical and everything that's happening in the Middle East there?

Speaker 1

You are asking if we see any impact on our business?

Speaker 5

Well, I mean through personnel.

Speaker 1

From personnel perspective?

Speaker 5

No, personnel.

Speaker 1

Personnel, yes, of course. We have some employees that are in the Army now. By the way, most of them in the intelligence units, so they are sitting in front of computers, but they are still in the Army. So first of all, our country is more important than everything, so we are supporting them. And second, our employees and myself knows that one of the targets of our enemies is to kill our economy.

Speaker 1

So even if someone is not in the army now, we feel that our donation and value to the country is to work harder to maintain the economic of this country and to show our enemies that nothing will break us. So we are starting succeeding to recover from this. And by the way, to do it even better because the motivation and the spirit of everybody now in Israel is something that is in regular days, it's much higher.

Speaker 5

Best wishes for your future prosperity.

Speaker 1

Thank you very

Operator

much. This concludes our question and answer session. I would like to turn the floor back over to Shahar Daniel for closing comments.

Speaker 1

Thank you, operator. Thank you all of you for joining us today. Thank you for your continued support and we look forward to continue providing positive updates on our PUSA's progress.

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