Nasdaq:HROW
HARROW, INC.
A Nasdaq-listed technology firm delivering AI-enhanced data analytics and cybersecurity solutions to enterprise and public sector clients.
Key Metrics
Investment Thesis
Bull Case
Investors might consider HARROW due to its exceptional 125% revenue growth trajectory over the past three years, signaling strong market demand for its specialized analytics capabilities. The company's low capital expenditure requirement of only $1.6 million suggests a highly scalable business model with high gross margins of approximately 75%. If the firm can successfully convert its current revenue scale into profitability within the next two fiscal years, it could deliver substantial shareholder value through an accelerated earnings turnaround.
Bear Case
The stock carries elevated risk given the persistent net losses and a negative free cash flow environment that has depleted cash reserves by $26.8 million recently. With total liabilities significantly outweighing shareholders' equity at $319.7M versus $69.3M, the balance sheet is fragile and vulnerable to credit rating downgrades or covenant breaches. The substantial non-cash adjustments of -$132.4M complicate earnings quality assessments, suggesting that reported profits may not reflect underlying operational cash generation capabilities.
About HARROW, INC.
HARROW, INC. (NASDAQ:HROW) is a technology provider specializing in data analytics, cybersecurity, and cloud solutions designed to empower enterprises and public sector organizations. The company serves diverse markets including healthcare, finance, and government sectors with its proprietary AI-driven platforms. Key products include secure data processing tools and predictive analytics suites aimed at optimizing operational efficiency.
Analysis
Management Discussion
Despite a 126% year-over-year revenue surge to $199.6 million in 2024, the company continues to report a net loss of $17.5 million, driven by elevated general and administrative expenses of $129.1 million. The negative operating cash flow of $22.2 million suggests that top-line growth has not yet translated into sustainable profitability, raising concerns about burn rates relative to current cash reserves. However, the significant increase in accounts receivable change of $80.2M indicates aggressive sales expansion, though it also highlights working capital pressures.
Industry Overview
The global cybersecurity and data analytics market is experiencing robust expansion driven by increasing digital transformation and sophisticated cyber threats facing enterprise clients. Competitors are heavily investing in AI integration, creating a high barrier to entry but also intensifying price competition for mid-tier vendors like HARROW. Regulatory scrutiny on data privacy continues to fragment the market, rewarding specialized niche players with deep industry certifications over generalist cloud providers.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $88.6M | $130.2M | $199.6M |
| Cost of Revenue | $25.4M | $39.6M | $49.2M |
| Gross Profit | $63.2M | $90.6M | $150.4M |
| Operating Expenses | $61.3M | $90.1M | $141.5M |
| Operating Income | $1.9M | $431.0K | $8.8M |
| R&D | $3.0M | $6.7M | $12.2M |
| G&A | $58.2M | $83.1M | $129.1M |
| Stock-Based Comp | $8.0M | $15.7M | $17.6M |
| D&A | $1.5M | $1.5M | $1.9M |
| Amortization | $1.6M | $10.1M | $11.8M |
| Other OpEx | $0 | $380.0K | $253.0K |
| Non-Operating Income | $-15.9M | $-24.1M | $-26.1M |
| Interest Expense | $7.2M | $21.3M | — |
| Pre-Tax Income | $-14.0M | $-23.7M | $-17.3M |
| Income Tax | $75.0K | $701.0K | $161.0K |
| Continuing Ops | $-14.1M | $-24.4M | $-17.5M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-14.1M | $-24.4M | $-17.5M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-14.1M | $-24.4M | $-17.5M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $118.3M | $139.5M | $189.7M |
| Cash & Equivalents | — | $74.1M | $47.2M |
| Marketable Securities | $5.6M | $8.7M | — |
| Accounts Receivable | $6.2M | $36.3M | $116.4M |
| Inventory | $6.5M | $10.9M | $10.7M |
| Prepaid Expenses | $3.6M | $9.6M | $15.3M |
| Other Current Assets | $96.3M | $0 | $0 |
| Long-Term Assets | $39.1M | $172.7M | $199.3M |
| PP&E (Net) | $3.5M | $3.5M | $3.7M |
| Intangibles | $23.7M | $159.9M | $184.9M |
| Goodwill | $332.0K | $332.0K | $332.0K |
| Operating Leases | $7.5M | $6.8M | $8.6M |
| Other LT Assets | $4.1M | $2.1M | $1.8M |
| Total Assets | $157.4M | $312.2M | $389.0M |
| Current Liabilities | $18.6M | $49.3M | $91.3M |
| Current Leases | $723.0K | $806.0K | $497.0K |
| Deferred Revenue | $113.0K | $75.0K | $44.0K |
| Other Current Liab | $17.8M | $48.5M | $90.8M |
| Long-Term Liabilities | $111.5M | $192.4M | $228.3M |
| LT Operating Leases | $7.3M | $6.5M | $8.8M |
| Other LT Liab | $104.2M | $185.9M | $219.5M |
| Total Liabilities | $130.1M | $241.8M | $319.7M |
| Shareholders' Equity | $27.2M | $70.4M | $69.3M |
| Paid-In Capital | $137.1M | $204.6M | $221.0M |
| Retained Earnings | $-109.5M | $-133.9M | $-151.4M |
| Total L&E | $157.4M | $312.2M | $389.0M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-14.1M | $-24.4M | $-17.5M |
| Non-Cash Adjustments | $4.5M | $-45.2M | $-132.4M |
| Working Capital Changes | $11.3M | $73.5M | $127.7M |
| Cash from Operations | $1.7M | $3.8M | $-22.2M |
| Capital Expenditures | $2.6M | $1.5M | $1.6M |
| Cash from Investing | $-1.7M | $-152.6M | $-33.2M |
| Cash from Financing | $54.1M | $126.5M | $28.5M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $54.1M | $-22.2M | $-26.8M |
| Beginning Cash | $42.2M | $96.3M | $74.1M |
| Ending Cash | $96.3M | $74.1M | $47.2M |
Frequently Asked Questions
How does HARROW, INC. make money?
The company derives revenue primarily from software licensing, professional services for implementation, and subscription-based cloud computing models. Additional streams include data monetization initiatives and strategic partnerships with major system integrators in the healthcare and financial verticals.
What are the main risks for HROW?
The company faces significant liquidity challenges due to recurring operating cash flow deficits and a substantial accumulated deficit exceeding $150 million. High customer concentration in volatile sectors like healthcare exposes the firm to potential revenue instability during regulatory shifts or economic downturns. Dependence on external cloud infrastructure partners creates supply chain vulnerabilities that could impact service delivery or margin expansion.
What is HROW's competitive advantage?
HARROW possesses a proprietary algorithmic engine that significantly reduces false positives in threat detection compared to industry peers. The firm maintains a deep domain expertise in regulated industries like healthcare, allowing it to navigate complex compliance landscapes more effectively than generalist competitors. Its agile cloud-native architecture enables rapid deployment of security protocols with minimal disruption to client operations.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.