Canaccord Genuity adjusted its price target on shares of Alarum Technologies (NASDAQ:ALAR), reducing it to $28 from the previous $42, while maintaining a Buy rating on the stock. The firm's adjustment comes after Alarum reported its Q2 results, which saw a revenue of $8.9 million, in line with preliminary figures announced on July 10. The company's NetNut segment showed robust growth, with a 73% year-over-year increase in revenue to $8.7 million, constituting 98% of Alarum's total revenue.
The company's unit economics also indicated strength, with new customers in the second quarter generating 60% higher revenue in their first month than those in the first quarter.
Despite the positive performance in the second quarter, Alarum's stock experienced a significant intraday drop of approximately 31%. This was attributed to the company's first-ever quarterly guidance predicting about a $2 million sequential decline in third-quarter revenue, signaling its largest sequential revenue dip to date.
Alarum has been actively enhancing its product offerings, as evidenced by the launch of its Website-Unblocker and the addition of prominent global brands to its client list. The company was also recognized in the '2024 Proxy Service Awards' and has been working on expanding its data product capabilities, including API and analytical tools.
Canaccord Genuity has revised its estimates to align with the updated outlook and commentary from Alarum's management. The new price target of $28 is based on approximately 35 times the projected enterprise value to fiscal year 2025 free cash flow (EV/FY25E FCF). Despite the lowered estimates, Canaccord Genuity reiterates its confidence in Alarum's strategic focus and the company's potential for growth, particularly through its NetNut segment and upcoming AI initiatives.
Alarum Technologies has demonstrated a robust financial performance, with its Q1 2024 revenue soaring by 139% to $8.1 million compared to the same period last year. The company also reported a net profit of $1.4 million, a significant improvement from the previous year's net loss.
Moreover, Alarum's cash reserves have seen a positive trend, reaching $15.1 million. The company has managed to maintain a favorable tax rate of 12%, contingent on its ongoing R&D investments.
The firm also established a price target of $42.00 for Alarum Technologies. Canaccord Genuity further predicts that Alarum will exhibit one of the best growth and margin profiles in the software industry in 2024 and 2025.
InvestingPro Insights
As Alarum Technologies (NASDAQ:ALAR) navigates through its latest quarterly performance and revised revenue outlook, insights from InvestingPro provide additional context for investors. According to InvestingPro Tips, Alarum holds more cash than debt on its balance sheet, which could provide financial flexibility in implementing its strategic initiatives. Moreover, analysts are optimistic about the company's growth prospects, expecting net income and sales to increase in the current year. This aligns with Canaccord Genuity's continued Buy rating despite the revised price target.
InvestingPro Data further reveals that Alarum's market capitalization stands at approximately $99.91 million. The company has experienced significant revenue growth of nearly 43% in the last twelve months as of Q1 2024, emphasizing the robust performance of its NetNut segment. However, with a P/E ratio of -21.59 and an adjusted P/E for the same period at 22.77, the market may be factoring in the company's potential for future profitability against current earnings challenges. Additionally, Alarum's stock has seen a considerable one-year price total return of over 533%, which, despite recent price volatility, may interest investors looking for high-growth opportunities.
For those seeking more detailed analysis and additional InvestingPro Tips, there are 14 more tips available on the platform, providing a comprehensive overview of Alarum Technologies' financial health and market position. Visit https://www.investing.com/pro/ALAR for a deeper dive into the company's prospects and investment potential.
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