SDCH - Earnings call 1 2024 | SideChannel, Inc.

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Operator

Greetings. Welcome to the SideChannel Fiscal Year 2024 Q1 Financial Results Update Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Brian Haugli.

You may begin.

Brian Haugli

John. Thanks, Haugli, Brian of CEO everyone, SideChannel. Hello,

QX, us SDCH. line. I'm find and and just cover some online our we comments CFO, questions at symbol ticker we from our briefly to go under numbers, or wanted have joined go-forward Polk, some on sidechannel.com Ryan You I will today to and our with phone the

respond. and and it will So that in, ask on take you over you John then your question, will dial and can we

overall, our we activity the our lulls. see this So under working calendar if has, year an fiscal Traditionally, in out quarter we closed you're anybody is you another belt, XXXX. time. then year XXXX, start time of see and you When IT, bit interesting quite but of year a

not an quarter uncommon and for IT. for a this So was lot SideChannel

ramp getting working of the kind on up -- doing mostly seeing scheduling You're reset year, the for where at the down a done budgets to X. end year January calendar work things up of coming set are be they people or because

some that over and ourselves the were of year. this clients up to our we numbers. with, hit those Ryan go building highlights. pleased But that we'll So able working pipeline for start with we will started overall, relationships pretty those in setting

lot are leading is to lead delivering. lot ] and happiness focusing saw that on Ergatele that press recently, [ as release a operations On customer the due [ Obviously, a customer roles [ services now, Klein delivery. folks and side, and it's to been new ], managing we're our to great. the success, team as we David -- and Delhi how the you operations and the and Matt of ] promoted and

need ourselves elsewhere. our able So we for place leadership as to about teams client growth setting we're and up the delivery be to there expand very support meet demand. the what new in We and excited to

new growth under setting just a X more in direction folks these the success. David's is and step So having for in right up leadership us

So that the very side. services happy on with

new looking figure that put That's On our see that, lot regulatory the to are to out -- to growing work identifying, rules big that something impacting positioning meeting we that clients to new looking with for those like constantly it's cyber effort be we're able meet the requirements requirements. engineering out of clients, in the sure and expand needs that make we're companies landscape, we're asking are new looking a change and public kind in our expansion, figure base ways clients into new a trying into in. ourselves to where for opportunities. SEC opportunities, Also, about. trying CSOs current public and current discussion, of and companies for to big client a to traded We been things

excited And very about it. we're

we might look If at the that actually you how a disclosure good got standard on feedback read language a that have is. XX-K. new we're publish of first set -- We've some about -- at that and way statements the our least to XX-K, ones see the a we what in a really to good completed or that bit you'll

forward. that. customers that customers. just see to we're need the type that type stepping we And that move of of for and of in in is kind And of All fulfilling looking is expand are think we're I that work of work more as SideChannel really for going

where very happy we are and doing. I'm with what we're overall, So

the on product seen side, On movement some good Enclave. we've adoption and

team to phase, look is it whole concepts, generally got building but out and Zero industry a solid a is establishing The a whole. adoptions adoption clients as are the interest technology. any still zero in of adopting just have we to are showcasing We discussions. an market beta Kudos of enterprises Don we're at pipeline standpoint kind we're in from and in viewing the Nick, note proof trust feel concept CTO, very at and and traditionally built. the XX,XXX-plus by number kind that of that XX,XXX, we're You'll our had press employee Overall, demos the we've release, you forefront really new with tech or what across that person bringing Enclave. new. for of confident what to the and that this trust organizations, they've done development and on and in

know experience, got having positive about talking new meets our as product. that clients security interest starting noncurrent uptake from been see folks to that solution as net the very good the need well we're we've from get clients, professionals. we're cyber feel just we about. a again, of an We So use that And

continue of of we've we've So we're to recap on, again, overall, what forward. been on XXXX and track a same and the kind just through going been looking at, working what

that, Ryan, aspects, with So who'll financial Ryan? we'll to some on [ ] -- get the it so hand to touch try questions. I'll Sim over and

Ryan Polk

Yes. Thanks, Brian.

mentioned you count, cash initiatives. as results, -- focus in we growing Brian of cash on of couple working we there. from our success was our revenue revenue, is can in May, positive a client on And our growing achieving flow on. through One continue So to through see been our May different XXXX our that increase diligently operations. touched that We've obviously

we for activities that at was expenses -- for focused level or for level our just had really that optimizing and thing expenses that our our underway second current maturity rationalizing we on time. the the maturity that The really

equal our meaning up lower -- slightly quarter, year-over-year operating noted fiscal saw than going -- our be maybe quarter. quarter by $X.X another million. ended X our expect we ended second expect or to in had in year to over expense we've last over so we our expenses that sequential or And quarter release up we operating annual We're the that reducing had the results months, the press you expenses in $XXX,XXX. quarter. a first this operating second operating reduction X our of we to that there expenses And to be of in we reduction, We

have realized is I'm we full extent fully not our expense saying So the -- from have what of realized reductions. we yet operating the yet fully not takeaway

so we think boost And cash fiscal flow and that we'll have quarter. our further in to earnings our second

top We see line. the in continued strength

And to so we're growing. line expecting continue our top

you've gross the in so then, And got middle profit.

clients and had question on question in team on the got excess some had got revenue. decreasing our increasing line. what's I come profit delivery remaining online the Those serve were expenses those in capacity We QX. thinking going year. some happening I'm to during into pushed the engagements engagements carrying is got new sorry, We -- -- that calendar You've QX, was only of were We've indications some since QX. QX. We to capacity gross QX

thought in fiscal into start in that some Those had our got fiscal fiscal going quarter we were terms of our speak We in our first second -- quarter pushed year. engagements year. year. me Let to the first of

goods we so quarter a we lower than had And in of a anticipating. had were X gross sold We higher year fiscal margin. cost

do the line that not type so did margin of We were continue. the on we for. looking expect And not that to performance we have

QX. in the We increase utilization to expect

OpEx. and to our as to And line so margin line growing the going well revenue we're add decreasing improving as

on on in cash -- inching believe quarterly going to like flow towards continue this during operations basis. positive cash Brian accomplish press fiscal release, we being flow we're a year. from we closer will our positive So And indicated that

to we exchange. in by first strategic a a present presented X are of sight last take we be We the our opportunities. really we securities up And quarter to roadblocks strategy while those warrant and these the had to that -- over XX-plus that during shareholders, investors that to of during boost the supporting XX how X some convert we bit this a all to to investors both months. make advantage need road believe a we and of that during to are strategic able us to it's warrants big the progress into XX say we held of X able with have weren't The did the are the friendly next I partnerships. quite objectives boost that warrants of down were big those over our to company, that form having might to the because line work flexibility things finish constantly stockholders of

expressing really their strategy we strategy what support each this appreciate that and these our know time trying listening element exercise, exchanging through getting to So of our spent that for the excuse us create do of to to value warrants. we me, or -- are investors to during

We that's because project-driven our What that relationship-driven we be activity XX-month really not not us, financial our retention that sure that a -- in are everyone that other things as we're recognized this increase. service, XX%. We're And get an of I a revenue is review means lost, company. of But great we revenue continuing revenue want year, a in don't the to engagements. it's great We're show under want something few is a project important understands engagements. in And mentioned for of that customer X this to up, X a make real company. deliver recognizing customer statements. may measures may is year not revenue retention. nonfinancial some do a every that few revenue why Just we have We fiscal as XX% have ago. prevalent And we year, retention, is for that's of sure we mentioned, are, a $X.XX have of make -- enduring experience. dollar our to to reporting just most retention Brian that

X clients, we're ARR. business everyone further So Especially size. make a with to is ARR. our place but us services increase for -- by also of those we're our not to revenue, think industry. on the really pretty not needs is leadership the growing thing to we think -- to similar we that that And that's And clients. continue good it that our having leadership leadership initiatives allows the We with of but clients what that adoption to that's tighter that, cybersecurity understand strategic to a to another another and create relationship to a I services accomplishment we're and not call lot true to our we call at in because that sure software in It's of -- services software of call about our have of addition a kind in offer that stickiness company also revenue don't the that's obviously that XX% the our retention. have it a going surrounding

work the -- to most make a to all for the of that And best delivering we're important the down sure profile effort great is are key from possible sure to the And for we meeting provide risk clients. that exposure. our experience probably the on services a all that risk clients and our our cybersecurity management is happens leadership into software -- that and making have

that some think to we're Q&A. see that And you happy with the So now I of Most this filed SEC you're information highlights. interested was we've go morning. in, XX-Q covered the Form can the through to

Operator

you. Thank Instructions] [Operator

Ryan Polk

I John, question we've queue. X got in think the

Operator

Absolutely.

question from Jack, [ private please Jack Depepi first Your investor. comes proceed. ],

Unknown Attendee

the the that you revenue are second third were to the it we last anticipate in going realizing push or in the quarter to Or The you do realized quarter quarter? XXXX, anticipating of being quarter? it first Yes. down --

Ryan Polk

on, that I those new the in Jack, all have second during quarter, we happening first of to scheduled current our the in to So our the quarter. start We engagements are that all that we're had -- we quarter quarter. happen mentioned those expected reporting of the in engaged currently deals

Unknown Attendee

Okay. Cool.

Ryan Polk

Nothing being is those of deferred a being quarter third deferred. engagements into start. are None

Brian Haugli

to kind in own is what whether they is services. the sometimes sign then that company you them is December budget year, every be giving want November, to sure want to they're the see know are this their of Jack, go -- for trigger, they pull to Generally, or contract able companies or procure not the Brian. hesitant of if

So [indiscernible]. they'll wait start they'll -- till

Unknown Attendee

Correct. Yes.

Brian Haugli

week internally we of with couple Because -- business last the thing. to much a the January? We -- much in December... it's actually clients of November, going for that same joke first -- year, how sign how are talk every had we We've years the

Unknown Attendee

like, Their do but... they're and this, budget, we by that got I'll December, to use

Brian Haugli

Yes. Right.

So It's to unknown it's thing. a natural not us.

But and And healthy yes, this. January a get we start So date. of we that expecting expect everything we've kind begin did and and to February to we've -- see signed pretty I in we seen think were seen January.

the just is from of fiscal is year quarter services that a budget year. calendar nature -- happens it's It just of and cycles. off So this the our nature so

that's seeing differently, come it I So out. what think little a and we report you're

Unknown Attendee

Yes.

Okay.

Brian Haugli

Thanks for question. the

Operator

are [Operator the management call closing like turn There any questions Instructions] Okay. I'd no to remarks. in to queue. currently back for

Brian Haugli

And you. you, everybody, for Thank thank Yes. again, joining.

will format the we're are state that's key but all that is calls happen. seeing Ryan can need you going going to earnings the things hit releases. really to read here. brief going, heard and forward just realize that I'll think it going going to to to the some I'm we take you We what I filings how for points, be that. of and read these all try press on what don't keep

on either whoever interested for these and up current have we really want of analysts, with a more calls. investors, start -- open So really discussion investors, to questions really this

press that be year. notice for and release schedule our what last earnings published, release a You'll this week, think, will I our we

anticipate you setting and So commitment on this want when transparency to expectations about that on calls. around you to some lines want going our talk we time earnings We is can we're That's when that. to discuss start filings in this. to

and So questions. work just let's get it, of that -- And just then don't going set a that stick let's all we it's forward. just just schedule, off we those can really to

And about overall, taken we feel we're it's down, in position great logos journey. in all they mean, deep of believe very what the that really a need we another the and cost-effective excited doing to that out level clients helping -- lot really been SideChannel. company. a North of a This new not -- look, level with what this it we're I originally very So to that. much we're really able organizations. I We've able we proud have has or it's And services out just do and are are where them. anybody that not to be that magnitude -- figured And seeing market. there in seeing virtual out that at provider the CISO we kind at probably in America. else now vCISO we're bring to very and scale service the We're and we're the elsewhere largest we just delivering, the have of we've the deliver we're thought.

Kudos from everything that Ryan delivery, very proud to and on the worked team team. I'm administration, And to of accounting. his everybody who's for everything done. to they've

pay I just And the whether just -- join, blog to to just team, really them is just really able something another to think of I it's you This and like who's or So us to it's the think just have closing getting as we're beginning you the you any releases, -- through special why or the it's Ryan, joining on on feel press I going. attention we're do. reason just LinkedIn comments? do what me. see follow something that just

Ryan Polk

No, for Brian. though. No. Thank you asking

Brian Haugli

No it. you, All crushing Thank right. worries, everybody. keep

Ryan Polk

Thank you.

Operator

your disconnect you your for at participation. you conference, this and today's may concludes lines Thank This time.

SideChannel (SDCH) 7 Feb 242024 Q1 Earnings call transcript