Alarum Technologies Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 26, 2024

There are 7 speakers on the call.

Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Allergan Technologies Second Quarter 20 24 Corporate Update Conference Call. During today's presentation, all parties will be in listen only mode. Following management's presentation, the conference will be open to This conference is being recorded today, August 26, 2024.

Speaker 1

Before we get started, I

Operator

will read a 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, 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 heading Risk Factors in LRM's Annual Report on Form 20F filed with the Securities and Exchange Commission on March 14, 2024, 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 undue reliance on these. 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 of these non IFRS key business metrics are described in the company's Q2 of 2024 financial results press release. I'll now turn the call over to Shakhar Daniel, Alarm Technologies' CEO.

Operator

Mr. Daniel, the floor is now yours. Mr. Daniels, the floor is now yours.

Speaker 1

Thank you very much and welcome everyone to Alarm Technologies Q2 2024 results conference call. With me here is Shayravnid, our Chief Financial Officer. I will be covering Alarm's performance, recent developments, the trends we are seeing in the market, our strategy for long term vision. Today, for the first time, we provided quarterly guidance and are providing additional KPIs as we constantly strive to enhance transparency. Shay will review the financials and our Q3 2024 guidance.

Speaker 1

I will then conclude the prepared remarks part with a short summary before opening the call for your questions. Starting with a review of our Q2 2024 key achievements. The end of Q2 marked the 1st full year since we announced our shift to focusing on enterprise Internet access. Total revenues for Q2 increased to $8,900,000 of which $8,700,000 were attributed to NetNat, our enterprise Internet access arm. Adjusted EBITDA in Q2 reached to a record of $3,400,000 more than 3 times higher than in the same quarter last year.

Speaker 1

Revenues for the 1st 6 months of 2024 increased to $17,300,000

Speaker 2

of which $16,800,000

Speaker 1

was attributed to Net Net, a 98% year over year increase from the $8,400,000 net net revenues in the 1st 6 months of 2023. I'm also very pleased with our continued progress in cash flow generation. Q2 marked our 4th consecutive quarter of positive cash flow, a significant achievement for a company of our size and stage. We ended the quarter with more than $21,000,000 in cash and cash equivalents. Our cash balance well positions us to invest in opportunities that will drive long term success and provide a foundation for sustained growth.

Speaker 1

In line with our strategy and long term vision, we are on track with our 3 growth engines. 1st, increasing our market share in the IP proxy network, the IPPN segment 2nd, penetrating the data collection and labeling market and third, providing our customers with data insights. We continue to make progress in each of these growth engines during the past quarter. We added major and highly regarded brand names of our customers base as we continue to expand and further our network. We made substantial progress into the data collection and labeling market with our new and innovative products, the Web and Blocker and the AI Data Collector.

Speaker 1

And we continue to make progress towards adding ADIs adding AI and the Nanonys capabilities to our data products. Advancing of these funds, establishing the broadest data collection and insight offering is the foundation on Alarm's future growth. As to the first pillar, our ITPN customer base. I'm excited to share that during Q2, we have added to our customer base some of the world's largest and most recognized brands. The significance of these new customers of leaders in their respective fields speaks to itself, highlighting the power and robustness of our offerings.

Speaker 1

We are extremely proud of these additions to our evolving and diversified customer base and look forward to seeing them enhance the usage of NetNat's offer over the time. While I cannot share their specific names, I would like to provide some color about them. This new high caliber customers include one of the largest social media platforms with over 1,000,000,000 active users as well as a leading B2B sales intelligence and sales engagement software marketplace company with a database of more than 250,000,000 contracts. A third new Q2 noteworthy customer was one of the world's leading screening and background check providers for identity verification, employment and health screening. This customer, which conducts over 100,000,000 background checks annually, will be able to reduce the number of manual processor attendance today, thereby improving its operational efficiency.

Speaker 1

As you may recall, towards the end of 2023, we stated that our growth strategy include engaging with and attracting Fortune 500 and leading global companies. I am excited to share that in history, we won a Fortune 100 customer, a leading merchandise retailer. Before selecting NetNut, they have all evaluated our capabilities, verifying their compliance with very strict performance, scalability and reliability standards. These wins are a clear testament to our robustness of our products, the innovations driving our development and our growing reputation as an industry leader. As part of our strategy to increase our market share in the IPPN segment, we continue to invest and expand and better our network, which has now become one of the leading networks in the industry.

Speaker 1

According to the 2024 proxy way market research, which is a comprehensive public report on the ITPN industry, NetNat Network is recognized as a top performer, which is a significant endorsement of our technology capabilities and potential scale. What really sets us apart in the size of our network is stability and robust functionality coupled with our ongoing global expansion. Our infrastructure now is capable of handling significantly more traffic. This is a remarkable achievement as it will allow us to scale our revenue significantly while improving our gross margin. This highlights both the robustness of our network and our strategy of building an infrastructure that can drive scalable and profitable growth.

Speaker 1

Moving on to the 2nd pillar, product innovation in the data collection and labeling market. We continue to focus on and invest in broadening the scope of our data collection offerings. Over the past quarter, we made a significant progress with our new products targeting this market, the web unblocker and the AI data collector. The web and broker and the AI data collector are key components in facilitating our long term growth and accomplishments in a huge multi $1,000,000,000 perspective market. According to both market research charter and our internal assessments, the data collection and labeling market is expected to continue and grow rapidly over the next years.

Speaker 1

I'm happy to share that in Q2, we started generating initial revenues from new customers who placed order for the web and broker. We see a growing pipeline of opportunities for the web and broker, which has been tested and rated as the best on the market by industry experts. The robust web and broker is also a key to the success of our AI data collector. Data data collector will enable enterprises to easily generate a collector within minutes, thanks to its intuitive no code interface. It's advanced AI will enable it to automatically adapt to website changes while ensuring continuous data collection with minimal downtime.

Speaker 1

With these innovations, we continue to push the boundaries of what's possible in our industry. We also continue to make inroads in our 3rd long term growth pillar, data insights. In Q2, we continued working intensively on bringing to life our vision of adding AI and analysis capabilities to our data products, aiming to create the most comprehensive solution in the market. The significant investment we have made in NetNut in the recent years is the gateway to our penetration into the data world. The metallurgize of the artificial intelligence threatens the underlying principle behind this investment.

Speaker 1

We all acknowledge the importance of data in every aspect of our lives. The conflict between AI and traditional website as it relates to access to transparent high quality information is at the core of how data consumption and analysis is evolving. AI relies on data sources and on products that generate insights from existing processes, provide recommendations and forecasts. I would like to touch upon what we are seeing in the market and specifically in our Q3 business so far. The market we operate in is an ever evolving and nascent market.

Speaker 1

Therefore, as we continue to expand our customer base, enhance our offerings and grow the business, we may experience some short term variances. Q3 2024 projected revenues assume a year over year increase, but are also expected to be lower than Q2 due to the market dynamics that some of our customers are experiencing, which have impacted revenues since June. However, as we approach the end of August, we are now observing a positive trend with consistent growth in the monthly revenues rate from June to July continuing into August. This positive trend is driven primarily by the strong performance and retention of our existing customer and complemented by new customers. This represents an excellent opportunity to share some KPIs we use internally to measure our performance and projected midterm revenue growth.

Speaker 1

Analyzing data from the past 3 years shows that on average, our net loss customers have been generating approximately 15 to 18 times the revenues compared to their initial mass activity. In Q2 2024, we generated total revenues of nearly $400,000 from dozens of new customers in their 1st month of activity. This was approximately 60% higher than the revenues generated from new customers that onboarded in the prior quarter Q1 2024 and was also approximately 35% higher than the average of the last four prior quarters. According to our model, these new Q2 customers are expected to generate revenues of about $6,000,000 to $7,200,000 over the next few years alone. This is a clear indicator of the resilience of our business model.

Speaker 1

In Q3, in line with the projected year over year growth, we expect to continue to enjoy strong solid customer retention rates across most verticals. In fact, net net is expected to surface the full year 2020 sales revenue bar within the 1st 3 quarters of 2024. Our ongoing growth trend will be driven by continued investment in our record, The success of our new products, expansion of the markets which we anticipate will lead to increasing demand for our solutions, allowing us in need for the long run, focus on maintaining a steady focus on sustained growth and profitability. I will now turn the call over to Shay for a review of the financials. Shay, go ahead.

Speaker 2

Thank you, Shahar, and hello, everyone. Over the past quarter, the company has achieved impressive growth, improved its margins and has become a profitable cash generating company. This gives us the flexibility and resources to invest in the areas that will drive our future growth. I will summarize the main financial results of the Q2 and first half of twenty twenty four, comparing them to our Q2 and first half twenty twenty three results, respectively, unless otherwise stated. All figures were rounded for simplicity.

Speaker 2

Also, today is the first time that we are providing quarterly guidance in parallel to the quarterly results announcement. I will provide guidance for Q3 2024 as we aim to enhance transparency for investors. Let's move on to the numbers. Revenue for the Q2 of 2024 increased to $8,900,000 up 27.2 percent from $7,000,000 in the Q2 of 2023. The net net portion rose to $8,700,000 in Q2 2024, up 72% from $5,000,000 in Q2 2023, while reaching a 6 month record of $16,800,000 almost double the $8,400,000 net net revenues recorded in the first half of twenty twenty three.

Speaker 2

Non IFRS gross margin for the Q2 of 2024 increased to 78.5%, up from 71% in Q2 2023. The year over year increase in gross profit and gross margins was primarily driven by the increase in revenues. We've structured our network in a way that allows us to generate higher revenues while maintaining essentially the same level of fixed costs. This enables us to achieve higher gross margins as revenues increase. Operating expenses in Q2 2024 were down to $4,200,000 from $12,800,000 in Q2 2023.

Speaker 2

The Q2 2023 operating expenses included $8,500,000 attributed to Goodwill and intouchable assets impairment from CyberKick, our consumer Internet access business, which we have been scaling down since Q3 last year. In Q2 2024, we recorded noncash finance expenses of $2,500,000 resulting from fair value increase of warrants issued in 2019 to 2020 related to the increase in the company's share price. The vast majority of the warrants are due to expire in 2025. As a result, we recorded a 400,000 dollars IFRS net loss for the Q2 of 2024 compared to a net loss of $7,700,000 in Q2 2023. Excluding these financial finance expenses and other non cash costs, our adjusted EBITDA for the Q2 of 2024 was $3,400,000 3 times higher than the $1,100,000 adjusted EBITDA in the Q1 of 2023.

Speaker 2

Q2 2024 non IFRS basic earnings per share was $0.04 per share or $0.41 per ADS compared to $0.04 basic earnings per share or $0.45 per ADS in Q2 2023. As of June 30, 2024, the company's shareholders' equity totaled $20,400,000 up from $13,200,000 on December 31, 2023. The increase in net profit combined with warrants and options exercises contributed to this $6,800,000 increase. The company's cash and cash equivalents balance at the end of Q2 2024 was $21,600,000 up from $10,900,000 as of December 31, 2023, as we have successfully been generating cash flow from operations. Moving on to the guidance.

Speaker 2

We are expecting Q3 2024 revenue to demonstrate year over year growth with an estimated revenue range of $7,000,000 plusminus3%. As a reminder, the net out portion of our revenues in Q3 2023 was $6,100,000 Q3 2024 adjusted EBITDA is expected to range between $800,000 to $1,000,000 To summarize my part before I turn the call back to Shahar. Operating results and cash generations achieved over the past quarter have resulted in improved profitability metrics and a positive adjusted EBITDA as well as a solid cash balance, all of which are outstanding for a company of our size. And they provide us with the flexibility and resources to invest in the areas that will drive the company's future growth. With that, I'll turn the call back over to Shahab.

Speaker 1

Thank you, Shay. In Q2 2024, Alarm has once again delivered solid results. As a long runner, Alarm is focused on expanding its customer base and investing in technological innovation. We are confident that this investment will yield benefits for the company and its various stakeholders. The expansion of our network enabled us to serve more and more customers, drive scalable and profitable growth across various verticals today and in the future.

Speaker 1

We intend to continue and release new products designed to meet evolving market requirements. We will continue to embark on our strategy by adding data insight and AI capability to our existing products, ensuring that we stay at the forefront of the industry. We have a clear vision of where we want to go and we are executing our plan with discipline and focus. We are laying the foundation for future success as a leader in the global data collection market through innovation, strategic investments and a determined focus on execution. We will now open the call for Q and A session.

Speaker 1

Operator?

Operator

Thank you, sir. We'll now be conducting the question and answer session. Our first question is from the line of Brian Kinstlinger with Alliance Global Partners. Please proceed with your questions.

Speaker 3

Thanks so much for taking my questions. With your revenue being all subscriptions for the most part and therefore recurring, the net retention revenue was 1.66% in the Q1 and 1.59% in the Q2. Reconcile those if you could with the major drop in revenue sequentially?

Speaker 1

Hello, Brian. Can you repeat the last part of your question? Yes.

Speaker 3

I'm curious with revenues recurring and your retention rate has been suggesting your existing customers' usage is much higher. Why in the Q3 would revenue drop so steeply? What's causing that?

Speaker 1

Okay. Okay. So just to refresh the audience and our annual memory. So the NRR indicator that you that we are using and not only us, it's an industry standard is basically makes 4 measurements. It compares 4 quarters to the previous 4 quarters, then moving 1 quarter back doing the same and another 2 times, meaning it takes the big data into the calculations.

Speaker 1

So till now you remember it, Brian? Yes. Okay. So even if you see a drop or a dip of sequential quarters or quarter over quarter, it doesn't say that you will see the impact directly in the NRR because the NRR is, as I mentioned, measuring 4 times 4 quarters versus 4 quarters, 4 times. Now for the second part of your question, So as I mentioned in my pitch just a few minutes ago, in the Q3, we experienced a kind of a slowdown for some of our customers, which basically made as we just mentioned, made the revenues to go a little bit back from Q2 to Q3.

Speaker 1

But from the other side, after we saw this slowdown in May, so in June, we started to see the positive growth trends of the company going back directly on track. And in July, we see a growth versus June and we projected August. We see that August is going and we're about to finish August in few days. It's going to show also a growth comparing to July. But it didn't come back to the same point that May was.

Speaker 1

Hope it answered your question.

Speaker 3

A little bit. So I want to make sure I understand. First, have you lost any customers? And second, if I'm understanding what you're saying is several of your existing customers are expecting to have significantly less usage, so they're going to be paying less. Is that what you're saying?

Speaker 1

No, no, no. Okay. So for your question, we lost customers. So I cannot formally I cannot say that we lost customers because losing a customer meaning he announced or we let you know that he's terminating the agreement, stop the usage, going back leaving you for a competitor or something like this. It's not the case here.

Speaker 1

If you remember, our model is based on duration and consumption. So in the middle of Q3, some of our customers slowed down their usage and that's what we call a drop or a kind of a dip that made them to renew or not to renew in the next month, meaning in June, for example, or in July. And even if they renewed, they bought a much smaller packages from bandwidth perspective. And this is why you see these revenues are going back. From the other side, the other customer, which is the major portion of our customers, continue to show consistency, growth and that's why we see a growth from July to June and then from August to July.

Speaker 3

Okay. I'm wondering if you could share any customer concentration metrics. For example, what percentage of the total revenue in the first half of the year came from the top 5, 10 or 20 customers?

Speaker 1

Okay. So basically, by and large, I don't have this data now, these calculations in front of my eyes, but I want to be more specific. So if we will talk about May versus June, so in May versus June, you can see that it's not MRR, it's MR, let's call it the monthly revenues. Due to this slowdown or scale down of their usage, you can see around 20% of the monthly revenues decreased from May to June or sorry, from in June comparing to May. And then we start to go back from this 20% level going back to go up and to grow again to July August.

Speaker 3

Okay. Just a follow-up. Is your top 20 customers more than half of your revenue?

Speaker 1

Top 20 customers?

Speaker 3

Top 20, are they more than half of your monthly revenue or quarterly revenue?

Speaker 1

Okay. So we also discussed about it. I can tell you what we see now, okay, for the first half of twenty twenty four, okay? So what we see now, this is the one second, okay. So for the first half of twenty twenty four, we have the pyramid, okay?

Speaker 1

That in this pyramid, we have around a little bit more than 400 customers that we took as we are measuring only the customers that are performing more than $100 And from this pyramid, you can see that 5 customers generated more than $500,000 in the first half of twenty twenty four, an aggregate number of $6,800,000 meaning an average of 8.3 percent per each customer for these 5 customers. The next level I will give you just the next level is 38 customers that generated between $50,000 to $500,000 aggregate number of $7,200,000 and each customer generated in average 1.15 percent of the revenues of the company in the 1st 2 quarters of 2024. So an aggregate number of $14,000,000 in the first half of twenty twenty four generated by total amount of 43 customers of the company. Hope it gives you some light on the

Speaker 3

Very helpful. Last question for me. That's very helpful. Last question for me. You mentioned you made a comment, I didn't quite get it.

Speaker 3

What would be over $2,000,000 of expenses on other expenses? You said something about finance. And are those cash costs to all of it?

Speaker 2

Brian, you mean the finance expenses?

Speaker 3

Yes, yes, below the line, you have over $2,000,000 of expenses.

Speaker 2

Yes, dollars 2,500,000 of finance expenses. These are actually we discussed it, probably you will remember on the Q1. These are expenses that are related to the evaluation of old warrants from 2019 2020 that according to accounting standards are classified as a liability. And therefore, we need to evaluate them each quarter end and it is based on the

Speaker 3

share price. The higher the share price They're non cash. It's not a cash expense.

Speaker 2

Now it's only non cash expenses. It has nothing to do to our operating cash flow. It's all the company and it goes both ways. And because the share price was up, this would be okay.

Speaker 3

Yes, not material. Thank you so much.

Speaker 1

Thank you, Brian.

Operator

Our next question is from the line of Kingsley Crane with Canaccord Genuity. Please proceed with your questions.

Speaker 4

Hi, and congrats on the strong results. So, I would like to dive just a bit deeper into the ADCL market opportunity. I'm curious how you're thinking about your data collection capabilities and feature set outside of text based web scraping and just more on the product roadmap in that regard? Thank you.

Speaker 1

Okay. Just to clarify your question, you're talking about outside of data scraping. What do you mean outside of data scraping?

Speaker 4

Rather, just the total picture of data collection, whether that includes text or images or video or other forms of alternative data as well.

Speaker 1

Okay, okay, okay. So I'll do it in a very short clip. So the market the stake of the market is basically assembled from 3 pillars. 1 is the infrastructure for data collection, which is the IV proxy network, which basically is our product. And it allows you to collect data not to be blocked, to get a transparent will and accurate data.

Speaker 1

This is our major product. This is the IP proxy network. The next stage in the stack is the data collection and labeling, meaning data collectors, scrapers and other products that allows you basically to collect data and basically to convert data from unstructured to structured data. And we are working now, as I mentioned, we are progressing tremendously in our AI collector, which according to now and according to our best knowledge, should be 1 or 4, maybe the most innovative product in the market. The second product that will be released even before the AI data collector is our Web Unblocker.

Speaker 1

As I mentioned, this product basically is fighting against websites that are trying to block you, of course, trying to block you technology perspective, trying to block you from coming in and transparent the public available data. So this product, is tested by few experts. They found it as the most innovative and progress product in the market. And as we see now, the demand is amazing because companies and customers cannot find a suitable solution. And hopefully, as it goes out, we are now in the scale stage of this product.

Speaker 1

Hopefully, as it goes out in production mode, it can be a huge success. The next stage, which also I mentioned is the stage you know. So I know you came in, now you collect the data, now you have the data structured, but now you want the insights and the recommendations and the projections. So basically, this is which some of our customers basically AI companies that with their AI algorithms knows how to analyze to get a data in a JSON file, for example, and it is the input and the output is the analyzing and provide recommendations in each and every space. It can be in e commerce, it can be in many, many other states in many, many other verticals.

Speaker 1

And this basically is closing the loop. I will let you come in, you will collect the data, you will get the insights, sorry, and you close the loop. So this is how we see the market. As I mentioned, we are just now in the stage of data collection and labeling. We established an internal committee and we are now investigating deep the next stage of the insight and AI stage.

Speaker 1

And hopefully, in 2025, it will be our major task and innovative solution.

Speaker 4

Okay. Thank you, Shahriar. That was really helpful. And so this one is probably more for Shay, but and again, I really appreciate some of the additional metrics you provided, and also understand that this is the first quarter that you provided quarterly guidance. So I think the market is still figuring out some of that philosophy.

Speaker 4

But with respect to that, I'm curious on the $7,000,000 target with plus or minus 3%. Should we think of that as something like a 95% conference interval? Or how much certainty would you say is around that range of guidance? And just kind of curious how much revenue could come in, in the final months of the quarter? Just trying to get a sense of the upside here.

Speaker 4

Thank you.

Speaker 2

Well, we quoted the number of $7,000,000 because we feel this is the most likely number we are aiming for. And the plusminus3% give you the range that we are positive that will be in probably 90% or more.

Speaker 4

Okay. That's simple. That's helpful. Okay. That's it for me.

Speaker 4

Thank you.

Speaker 1

Thank you very much.

Operator

Our next question is from the line of Yi Fu Lee with Cantor Fitzgerald. Please proceed with your question.

Speaker 5

Thank you for taking my question. Good morning, Shi Chai and Shai. Great solid set of results. In terms of like moving up market, we see some wins on a Fortune 100 and you guys landing larger with customers spending $400,000 or more. I was wondering if you could discuss any changes in the go to market sales strategy to help Alerium penetrate the upper market and in landing larger?

Speaker 1

Yes. Okay. Hi. So it was part if you would go back and you will see in our presentations and the statements in the last one here. As we felt that we built the network, it's all about performance and network.

Speaker 1

As we felt that we have we built, we built a network that can serve the quality level and the scalability level of these customers, we target our team and ourselves that it's going to be one of our especially strategic vision or targets for this year and for the future to start and scale up for this huge customer fortune or other huge customers because we have the level of confidence that we will go into a POC, a proof of concept, and we will meet all their requirements also from financial perspective, not only technology wise. So yes, now we are aiming some of our sales reps that basically have more skills or experience in enterprise sales, which is a little bit different skills than online sales, and we're starting to target these customers. And I can say very proud and happy to say that some of them even and we won them by inbound, meaning they approached us. So it shows us the level of awareness and the level of awareness of our brand and the place that we are now. Okay.

Speaker 5

And then a follow-up to Charlie or your Shay, like on the AI data collection from the last question is, I understand it's probably more of a next year opportunity. Was wondering what are some of the enhancements you're thinking of making here? And what are the M and A targets do you guys have an interest in?

Speaker 1

Okay. So M and A target is, as you know, is something that as you get into the process, you are starting to be more specific in M and A. But I will tell you exactly what I told last time and it will not change, but basically it will stay the same. M and A, yes, for sure, it's something positive for each and every company and also for Alarm. It's a great way to scale.

Speaker 1

We can leverage the fact that we are generating cash and we can leverage our brand and we can go into the panel very fast and basically to accelerate our progress. On the other side, so what we are in case we will go deep and we found ourselves looking specifically for M and A targets here. So yes, it should be the next stages in our stack, as I mentioned before. It's going to the data collection and labeling or jumping to the next stage, which is data insight, which is basically AI companies, ventures that are analyzing data. It's all your own data, yes, analyzing data and provide insights, recommendations and projections.

Speaker 1

So in high level, as we will start to be more aggressive about M and A, we will take the decision that M and A is really the next stage, that will be our target. For now, we established a committee, as I mentioned we mentioned to the market few quarters ago. We brought one of the leaders in Israel to lead our committee, and we are investigating all the opportunities, including internal developments, potential M and As, potential combination of M and A and internal development. Everything is on the table. Everything looks

Speaker 2

good, but

Speaker 1

we would like to make the best decision for the company.

Speaker 5

Thanks for the color. And Sichai, just one last question. It's more macro in general. Understood like there were some slowdowns in consumption during the end of quarter, but it sounds like the commentary in July, it starts to pick up back again in terms of the consumption. Understand you guys don't have a crystal ball, but in terms of the rest of the year, how should we think about the, I guess, volatility in the consumption aspect of the usage in this market?

Speaker 5

And that's it for me. Thank you very much.

Speaker 1

Okay. Good. So just to make sure I understand your question, you are asking if you are looking a little bit more to the future for Q4, for example. Correct. For the rest of this year.

Speaker 5

For the rest of this year, it's like if there's any slowdowns you're expecting and like what would trigger the slowdown like what are you seeing in the pipe, I guess?

Speaker 1

Okay. So to be honest, we did not release guidance for Q4. We are growing and every time we are increasing the level of transparency, but we did not release guidance for Q4. But on the other side, by the way, that's what we do internally all the time, we are measuring indicators that are showing us the trend. Of course, it's not 100%.

Speaker 1

Everything is not 100% for the future, but it shows the trends. So as I mentioned in the call, few indicators are very positive. 1st and very important is after there was a kind of one time drop in May for June, then in June, we get back on track for growth, meaning the current customers plus new customers showed a great retention and new customers that came in and the growth went back and came back after he left us for 1 month and then he came back and then we kept the growth from June to July and then to August. 2nd is the indicator of new customers. Our business basically is based from the retention of current, but from new customers that are coming in and starting to generate revenue.

Speaker 1

So first of all, we see a very strong growth between Q2 to Q1. And this Q2 new customers that generate in their 1st month $400,000 support according to our model to generate in the next 2.5 years 15 times, winning around between $6,000,000 to $7,000,000 in the next quarter. So the combination of the retention and the growth that came back from June to July, July to August and the greater retention sorry, the growth of the current of the new customers from Q2 to Q1 increase us and give us the level of confidence that we are growing, we are in a growth trend. But and you can take a look by yourself and make your own calculations, but this is something that I can now talk free and expose. Oakwood gave you some light.

Speaker 5

Yes. Thank you very much for that.

Speaker 2

Very good color. Thank

Speaker 1

you. Thank you.

Operator

Our next question is from the line of Shahar Khon with Loop Capital. Please proceed with your question.

Speaker 6

Hi, guys.

Speaker 1

A few things. A,

Speaker 6

what was the main course to publish the focus right now? Why now? A. A.

Speaker 2

Some people

Speaker 6

say that you have some business related to the U. S. Election.

Speaker 1

Can you say loud and clear? Sorry, I didn't hear you. Can you repeat the second question, some people say?

Speaker 6

Yes. You have some revenue, maybe not measurable revenue from the U. S. Election, maybe they don't portray themselves as you know parties, they can come undercover. But can you say loud and clear that you have no business related to the U.

Speaker 6

S. Election?

Speaker 1

Who is talking?

Speaker 6

Sharjah from Lucid Capital.

Speaker 1

Okay. So for your first question, if you track our company in the last 2 years or one and a half years, we took a decision that as part of our maturity and growth, we will start to expose more and more indicators, KPIs and data to the market in order to increase transparency. So we did it in the last quarters. This time, we decided to release few more indicators. Few of them are the KPIs.

Speaker 1

One of them is the projection for the coming quarter. And with transparency, I think it's a good sign. And second, to the U. S. Election, to be honest, it's the first time I hear about it from someone.

Speaker 1

So the answer is no.

Speaker 6

So you don't have business related to the U. S. Election as far as you know?

Speaker 1

The answer is from my best knowledge, I don't have any business related to the U. S. Election. Maybe you can tell us.

Speaker 2

Okay. Thank you.

Operator

Thank you.

Speaker 1

At this time,

Operator

I will hand the call back to management for further remarks.

Speaker 1

Okay. Thank you, operator. Thank you all of you for your time today. We look forward to hosting you on Alarm Technologies Q3 2024 2024 results call. Thank you.

Operator

Thank you. This will conclude today's call. You may disconnect your lines at this time. Thank you for your participation.

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Earnings Conference Call
Alarum Technologies Q2 2024
00:00 / 00:00
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