Alarum Technologies Delivers Record Revenue and Accelerates AI Data Expansion Amid Margin Pressures

AI Customer Demand Powers 81% Surge in Q3 Revenue—New Products Fueling Growth

Alarum Technologies (Nasdaq, TASE: ALAR) posted a striking 81% year-over-year increase in third-quarter revenue, reaching $13 million, driven by explosive demand from major AI model developers. This rapid growth highlights Alarum’s pivotal role in providing the training data infrastructure that leading artificial intelligence labs now depend on to develop and refine large-scale AI models.

Strategic Investments Expand Capacity but Temporarily Compress Margins

The company’s growth story comes with an important strategic shift: management is deliberately prioritizing long-term leadership and market-share capture in the surging AI training-data market over immediate profitability. Recent expansions—such as premium endpoints, dedicated high-throughput pipelines, and next-gen data products—are creating upfront pressure on gross margins and EBITDA, a move leadership describes as essential to ‘locking in’ critical customer relationships and supporting massive, ongoing AI training runs.

Repeat Customers and Premium Offerings Lead to Higher Revenue per Client

During the third quarter, Alarum achieved:

• 26% increase in paying customers
• 17% higher average revenue per customer
• 48% sequential revenue growth quarter-over-quarter

Repeat orders and a widening customer base—particularly from a global e-commerce leader in Asia—accounted for much of the revenue growth, as the AI sector’s demand for large-scale, high-quality data collection continues to expand.

Key Q3 2025 Financial Highlights: Rapid Revenue Growth, Lower Margins, Resilient Balance Sheet

Margins tightened as expected: Q3 2025 gross margin fell to 55.6% (from 71.8% a year ago) due to investment in server infrastructure and higher third-party costs tied to premium data product sales. Still, the company remains debt-free, ending the quarter with $24.6 million in cash, cash equivalents, and investments.

AI-Centric Product Adoption and Revenue Expansion Trends Remain Strong

Alarum’s strategic bet on the AI sector is already delivering visible traction. Newly launched offerings such as DataSets, Website Unblocker, and custom Scrapers posted high double- to triple-digit sequential growth rates, indicating not just customer expansion but also deeper engagement from existing enterprise clients. Management emphasizes that these newer AI-focused products are rapidly becoming a significant share of total revenue, while the legacy proxy business remains stable to growing.

Guidance Signals Confidence in Revenue Stability and Margin Rebound

Looking ahead, Alarum expects Q4 revenue around $12 million (+/-7%), a projected 63% jump from last year, and adjusted EBITDA near $1 million (+/-$0.5 million). As large customers transition to production-scale AI model deployment, management sees the business entering a more predictable and profitable phase, with the upfront investment laying the groundwork for accelerated margin improvement as utilization climbs.

Investor Takeaway: Market-Share Over Margins as Alarum Bets Big on AI Data Demand

Alarum’s results highlight the classic tradeoff for technology providers at the frontier of a transformative trend. Management’s focus on aggressive infrastructure buildout and market capture, even at the expense of near-term profitability, is aimed at anchoring the company as an indispensable partner to the world’s largest AI model developers. While this approach compresses margins for now, Alarum’s recurring customer growth and robust cash reserves put it in a strong position as demand for high-quality, hard-to-reach AI training data accelerates globally. Investors may want to watch closely as Alarum aims for a step-change in both revenue and profitability beginning in 2026.

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