Alarum Technologies Ltd. reported third‑quarter 2025 revenue of $13.0 million, an 81% year‑over‑year increase that marked the company’s fastest top‑line growth to date. The surge was driven by a 26% rise in paying customers and a 17% lift in average revenue per customer, reflecting expanding demand from leading AI model developers for high‑quality, hard‑to‑reach web data.
Net profit fell sharply to $0.1 million from $4.2 million in Q3 2024, while Adjusted EBITDA dropped to $1.2 million from $3.4 million in Q2 2024. Gross margin contracted from 74% in Q3 2024 to 56% in Q3 2025, a 18‑percentage‑point decline. Management attributed the margin compression to aggressive investment in AI‑data infrastructure—expanding capacity in its IP proxy network and launching the Website Unblocker—to capture market share in the rapidly growing AI training‑data market.
The company’s customer base grew to 1,200 paying accounts, up 26% from the prior quarter, and the average revenue per customer rose 17% to $10,833. This mix shift toward higher‑margin AI‑centric products offset the decline in legacy proxy revenue, but the upfront capital expenditures required for new high‑throughput pipelines have temporarily eroded profitability.
Alarum guided for fourth‑quarter revenue of $12 million (±7%) and Adjusted EBITDA of $1 million (±$0.5 million). The guidance signals confidence that demand for AI training data will remain strong, while management expects margin improvement as infrastructure costs are amortized and in‑house solutions scale. CEO Shachar Daniel emphasized that the current margin squeeze is a deliberate, short‑term trade‑off to secure long‑term market share: “We are front‑loading infrastructure to support the fast‑growing demand for AI training runs, which is why we see temporary gross and operating margin contraction.”
Market reaction was muted by margin concerns. Investors focused on the sharp decline in net profit and gross margin, which outweighed the impressive revenue growth. The drop in profitability underscored the cost of scaling the AI data platform and highlighted the risk of sustaining high growth without immediate margin recovery.
Alarum’s shift from cybersecurity to data‑collection services positions it in a $17.1 billion market, but a few large AI customers now account for over 40% of revenue. The company is diversifying its product mix beyond legacy proxies, adding DataSets, Website Unblocker, and custom scrapers, which should help mitigate concentration risk and support future margin expansion as the AI training‑data market matures.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.