Financial Highlights
Q3 2025 revenues of $13.0 million, up 81% year-over-year; net profit of $0.1 million, and Adjusted EBITDA of $1.2 million
It is noted that the Company is deliberately prioritizing its long-term leadership and market-share capture in the fast-growing artificial intelligence ("AI") training-data market over short-term margin and profitability priorities. At this early stage of the global AI build-out, demand from leading labs can vary sharply as they iterate on new model architectures and refresh massive datasets - a typical and temporary characteristic of this high-growth infrastructure phase. Alarum's strategic investments in premium infrastructure and capacity are expected to pressure gross margins and EBITDA in the near term but are targeted at positioning Alarum for a significant potential growth and margin improvement trend.
Management Commentary
"The third quarter performance was further proof that Alarum's platform has become critical infrastructure for the world's leading AI labs," commented Shachar Daniel, Chief Executive Officer of Alarum. "Demand for high-quality, hard-to-reach web data used for training and fine-tuning foundation models is exploding, and we are seeing repeat orders and widening scope from AI customers.
"The numbers speak for themselves: 26% more paying customers, 17% higher average revenue per customer, and 48% sequential revenue growth in the third quarter, all while we intentionally front-load infrastructure to support the fast-growing demand for AI training runs.
"To capture this massive opportunity, we made the deliberate decision earlier in 2025 to aggressively expand capacity, add premium endpoints, and build dedicated high-throughput pipelines, well ahead of the expected revenue. These upfront investments are the primary reason for the current temporary gross and operating margin contraction.
"We believe this is the right long-term strategy: sacrifice some near-term profitability and invest to lock in market share and multi-year relationships in a segment that is growing exponentially. As utilization of our new infrastructure ramps, we are positioned and look forward to both revenue acceleration and rapid expansion of margins," concluded Mr. Daniel.
Selected Third Quarter 2025 Operating Trends
Significant double-digit sequential growth in total paying customers
Meaningful increase in average revenue per customer
Vast majority of Q3 2025 revenue growth driven by expansion of existing customers
Newer AI-focused products (DataSets, Website Unblocker, custom Scrapers) now represent a material and rapidly increasing portion of total revenue, while legacy proxy revenue remains stable-to-growing
Business Highlights
Explosive adoption of AI-centric products, DataSets have become a material and fast-growing revenue contributor in the third quarter; Website Unblocker and custom Scraper solutions delivered triple-digit and high-double-digit quarter-over-quarter growth, respectively, driven by large-scale model-training workloads.
Broad-based customer expansion, Strong double-digit sequential growth in paying customers combined with a meaningful increase in average revenue per customer, reflecting successful land-and-expand dynamics with AI labs and enterprises.
Significant contribution from large-scale AI customers, including repeat and expanding orders from a major global e-commerce platform in Asia.
Robust balance sheet with $24.6 million in cash, cash equivalents and investments and no debt as of September 30, 2025.
Financial Outlook
"In the fourth quarter, we expect a continued high level of revenue of approximately $12 million (±7%), up 63% year-over-year, and Adjusted EBITDA of approximately $1 million (±$0.5 million)," said Mr. Shai Avnit, Chief Financial Officer of Alarum. "As the current generation of models moves into more structured production and fine-tuning cycles, we expect revenue growth patterns to become smoother and more predictable."
The Company is unable to present a reconciliation of estimated Adjusted EBITDA to net profit as it is unable to predict with reasonable certainty, and without unreasonable effort, the impact and timing of certain expenses on net profit. The financial impact of these expenses is uncertain and is dependent on various factors, including timing, and could be material to consolidated statements of profit or loss and other comprehensive income (loss).
Summary of Financial Results1
(in millions of U.S. dollars, rounded, except per share amounts and margins)
For theNine Months EndedSeptember 30,
For theThree Months EndedSeptember 30,
For theYear EndedDecember 31,
2025
2024
2025
2024
2024
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenue
28.9
24.5
13.0
7.2
31.8
Gross profit
17.5
18.6
7.2
5.2
23.9
Gross margin (in percentage)
60.4%
75.9%
55.6%
71.8%
75.1%
Non-IFRS gross margin (in percentage)
61.7%
77.7%
56.4%
73.6%
77.0%2
Total operating expenses
17.3
12.2
7.4
4.1
17.2
Financial income
1.0
0.1
0.3
3.5
0.3
Tax expense
0.4
1.1
0.1
0.3
1.2
Net profit for the period
0.7
5.3
0.1
4.2
5.8
Adjusted EBITDA
3.4
7.9
1.2
1.4
9.42
Basic earnings (loss) per American Depository Share ("ADS") (in U.S. dollars)
$0.11
$0.80
$0.01
$0.60
$0.87
Non-IFRS basic earnings per ADS (in U.S. dollars)
$0.50
$1.05
$0.18
$0.20
$1.262
Cash, cash equivalents and debt investments (including accrued interest)3
24.6
24.0
24.6
24.0
25.0
Shareholders' equity3
31.1
25.0
31.1
25.0
26.4
Third Quarter and First Nine Months of 2025 Financial Analysis
Revenue in Q3 2025 totalled $13.0 million (an increase of 81% compared to Q3 2024 at $7.2 million) and $28.9 million for the first nine months of 2025 (an increase of 18% versus Q1-Q3 2024 at $24.5 million). The increase was driven mainly by a large-scale AI customer, as well as an increase in new products sales.
Cost of revenue in Q3 2025 was $5.8 million (Q3 2024: $2.0 million) and $11.5 million for the first nine months of 2025 (Q1-Q3 2024 $5.9 million). The increase in the third quarter was primarily due to the Company's work with the large-scale AI customer, which requires data gathering at significantly higher scales, in turn necessitating a larger volume of servers as well as a stronger and higher-quality infrastructure. Also, cost of revenues were impacted due to first material products sales which triggered third party related costs.
Gross profit in Q3 2025 amounted to $7.2 million (Q3 2024: $5.2 million), and for the first nine months of 2025 amounted to $17.5 million (Q1-Q3 2024: $18.6 million).
Operating expenses in Q3 2025 totalled $7.4 million (Q3 2024: $4.1 million), and $17.3 million in the first nine months of 2025 (Q1-Q3 2024: $12.2 million). The increase is a result of the increased revenues and operations, primarily attributed to research and development expenses and in a lesser amount to sales and marketing expenses.
Financial income, net, in Q3 2025 was $0.3 million (Q3 2024: financial income, net, of $3.5 million), $1.0 million in the first 9 months of 2025 (Q1-Q3 2024: $0.1 million). The variance between the quarterly periods was mainly due to the fair value decrease of derivative financial instruments in the third quarter of 2024, resulting from the decline in the share price over that period. Excluding this impact, during the nine-month period, the Company generated more interest income and financial income from its cash, cash equivalents and debt investments, and paid less interest expenses, due to the Company's lower balance of its long-term loan.
Net profit in Q3 2025 was $0.1 million (Q3 2024: net profit of $4.2 million), and net profit of $0.7 million in the first nine months of 2025 (Q1-Q3 2024: $5.3 million).
As of September 30, 2025, shareholders' equity increased to $31.1 million, up from $26.4 million as of December 31, 2024. The increase is mainly due to share-based compensation during the first nine months of 2025, as well as to the equity repayments of a strategic loan and the Company's net profit.
Outstanding ordinary share count as of September 30, 2025, was approximately 71.2 million shares, or 7.1 million in US-listed ADSs.
Third Quarter and Nine Month 2025 Financial Results Conference Call
Mr. Shachar Daniel, Chief Executive Officer of Alarum, and Mr. Shai Avnit, Chief Financial Officer of Alarum, will host a conference call today, November 26, 2025, at 08:30 a.m. ET, 05:30 a.m. Pacific time, 15:30 p.m. Israel, to discuss the third quarter of 2025 results and financial outlook, followed by a Q&A session.
To attend, log in here or dial one of the following numbers, a few minutes before the call starts: 1-877-407-0789 or 1-201-689-8562. If you are unable to connect using the toll-free number, please try the international dial-in number. An Israeli toll-free number is: 1 809 406 247. Participants will be required to state their name and company upon dialling in.
Replay: The conference call will be broadcast live and available for replay here, the day following the call.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the "safe harbor" words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements. For example, Alarum is using forward-looking statements in this press release when it discusses its prioritization of long-term leadership and market-share capture in the AI training-data market over short-term margins and profitability, unstable demand from large labs, the expectation that strategic investments in premium infrastructure and capacity will potentially position Alarum for significantly higher revenue growth and rapid margin expansion beginning in 2026, increasing demand for high-quality, hard-to-reach web data used for training and fine-tuning foundation models, its right long-term strategy, expected growth of the AI training-data segment, its expectation of both revenue acceleration and a rapid expansion of margins, and its estimates regarding fourth quarter 2025 revenues and Adjusted EBITDA. Because such statements deal with future events and are based on Alarum's current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of Alarum could differ materially from those described in or implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties, including those discussed under the heading "Risk Factors" in Alarum's annual report on Form 20-F filed with the Securities and Exchange Commission ("SEC") on March 20, 2025, and in any subsequent filings with the SEC. Except as otherwise required by law, Alarum undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. Alarum is not responsible for the contents of third-party websites.
Condensed Consolidated Statements of Financial Position
(in thousands of U.S. dollars)
September30,
December 31,
2025
2024
2024
(Unaudited)
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
14,366
24,011
15,081
Trade receivables, net
8,490
2,474
3,231
Other receivables
1,290
498
503
24,146
26,983
18,815
Non-current assets:
Long-term deposits
24
103
121
Other non-current assets
428
85
85
Property and equipment, net
193
129
130
Right-of-use assets
2,941
568
498
Deferred tax assets
802
339
422
Debt investments at fair value through other comprehensive income
9,500
-
9,256
Debt investments at fair value through profit or loss
586
-
555
Intangible assets, net
704
946
811
Goodwill
4,118
4,118
4,118
Total non-current assets
19,296
6,288
15,996
Total assets
43,442
