SDCH - Earnings call transcript Q1 2025

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Operator

Greetings. Welcome to the SideChannel Fiscal Year 2025 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, Chief Executive Officer.

You may begin.

Brian Haugli

Thank you, and good afternoon, everyone. SideChannel. of CEO Haugli, Brian

some December. some So I view of everything a we've obviously, kind treat differences of touch it's and quarter, quarter our of -- on start those an our so undoubtedly X. in a governments cover there's November Polk. seasonality in From X, in our their about bit so are can but so want kind people the October, how a them, Ryan January lot end QX to QX have we fiscal will of with at of I'm you and October off-calendar rehash that's queue, services bit. as quickly a about went. other it, the some how we lot companies of talked but year, answer the ending just we're questions on of We that's government, by standpoint, financials. Really, joined and CFO, the also He'll U.S. there's highlights start us, align The looking previously, year. they for a won't than

and So good it's bad.

Thanksgiving. cut last-minute not spends to a pop year. up, until of looking start that are budget. like and cycle it hey, in Companies to after We've they're saying, some this budget to new extra companies spend Some X when quarter, also got we spending, kind see last waiting they're we've get and costs January they start. got right But especially

purchases. especially way natural with of goes, definitely business seeing all that the we're just So It's services and software the that.

and want on areas We've XXXX already we're February say into and going it's we'll from strategy. out X really focus newsletter. some in I'm to monthly us in A QX. I it's I'm transcript the be just debuted just also to this, obviously overall, excited hit working points. this instilled think for but company, high one to I'll well. business touch will on So our the of IR our but very have major and this in QX, of what that kind the goes socialized at Board, internally we aspects kind off here, looking a what I go-forward of started version in being company.

receive If on you don't that, shame you.

people work get and receiving If to out newsletter, not and our that this then up and personally, page that send I list, sign you're our and happening will that that highlight really couple you're my try QA go through keep some on a added push whole, call things other we Investor on there, doing then and IR to and out monthly. Ryan from that the you informed. investors the to of to the desk, are company to as Ryan's everyone, just we like desk, for just some trying

a want So growth engagements, and with the first service emerging mid-size you'll really support to way make sit businesses on increasing two, for at across needle in Why and space, revenue everything the planning obviously on this, its Growing and looking Enclave, current to reoccurring stability. order: industries It larger are product us proportional these markets. one. into scalable It's increase to adoption vCISO on strategic expanding they to penetrate clients. I'll an in a we've costs. including software without It's hitting in operational going it, touch to and our allows markets a Enclave? we briefly and three, proprietary company our the with push see where at is agreed program is do newsletter. We a version of aligned now on monthly revenue X say X resource areas what objectives, have go-forward. I'm upcoming We've about our

you know sustainable keen significantly costs story, our initiatives, a Proprietary profit on growth. control keeping really a software intellectual enhancing are to for higher good our strategic got it's These services managed. Selling software you've have that following our in especially to with compared higher overall under really as software to all margins R&D, margin rounds. If profitability. some great things operational a we're company, been has has us services, enabling reinvest software, offers if while and very been company, other product property. The access own as making to

some focus at added the looking new on you Pacific, see additional America. salespeople, Asia and even from can As announcements, Middle we've East, Latin a

months So business and you're priority looking the XX Enclave. and focus team, the our new of and on going software to at at on next our kind again, #X looking sectors, growing markets, through sales objective, revenue really really marketing proprietary growing now our on focusing, spend see new

Our points not love services. with We are what's second We're today. business anything and ourselves from third our on going releasing on services. our

clients services. Our love our

team, doing side. those, our the focus really of You going that's any able the product. that And really types what we again, a the vCISO still growing. around again, costs marketing or do too. downstream, from initiatives, you'll spend can this increasing But we see not are vCISO. support it's expenses to want Enclave the and services sales and see engagements to with top-level It's But you'll see just what we're

and all-around do architecture to and wedges leadership. increasing start great is assessments phenomenal are So security working engineering market for per new for our work points strategic well new we're risk as with broadening entry which advisory, services us? us logos. Why practice, and a engagements to we've important cloud Well, our meeting vCISO assessments, fractional clients, at as demand really capability, some been through able just

client are segment. industries, still budgets, at although making an a strategic we strengthening leadership vCISO often build believe competition, services and seeing take With seeking we or cost-effective leading position our as increasing like Enclave. market increase additional off. seeing it we're lead. We're vCISO, this limited solutions our and in believe because Other product are adoption, we a threats we seeing other trust alone stand engagements clients. this how to long-term high-growth cybersecurity that the Organizations We're relationships. do that's partner, and such as critical and matters, we quality on experience SideChannel

when position the at is should I've like. this a as that. looking your way, a for are listen, client, of then solutions work should to By So what hey, the catalog say, vCISO know you. This got look able in program a to adopt clients you're And works. I you're

number gaps, our in objective, address to better as here number Enclave in position place having proprietary really software the By to we're So solution revenue. our a two in one able at services engagements clients, to be supports growing whatever. vulnerabilities, risks, much

the number client three, expand multiple at doing we points framework. our our and a current can ability client program the overall it What are integrates touch program to broaden our adoption. value. penetration? have adoption focus, also cybersecurity Expanding It We How increases deeper we within creates relationships, clients? client and

ability cross-sell to have We opportunities. the

program in comprehensive a thing. and Unlock trust introduce have complementary products client. a us. client. total to approach supporting Boost initiatives We We're adoption. X. to X services. and doing per right They We're opportunities Again, revenue the

to we and from. And We our can have solutions retaining driving for Enclave overall lastly, is goal like them. ultimate maturity then benefit position for their clients that them

cybersecurity the and pathways the growth longer-term scalable the So programs, this by create structured as our to revenue, for and retention cybersecurity immediate needs back of brand, clients their implement Again, value all and address we to helping shareholders. their partner. can leads

highlight to just these going kind really to a I forward. we're everything wanted looking we're standpoint And to doing strategic going So what is for X. from of at you're SideChannel see aligning

how to good you if of fact, if initiatives? supporting need and to cadence really we're kind the -- on of something, is And if a about one internally, we why now as In these working it it's on is not, reason have supporting to you're working is it. it need X think

where understanding leadership anyone the this on the on everyone. we this really team. to one is I'll is substantial like, us There's makes clear. aligns else, SideChannel's this company-wide this It It for about week talked behalf and speak of going It's with. And all team, It go-forward. our be We So we around we've sense. of excitement all-staffs. did executive our and at centered that believe growth. my gives this. a nice even Board, previous benefit of an ELT,

to So to back go I'll out. it over to I'll Ryan. with come close Q&A, We'll and then this turn that,

Ryan Polk

Appreciate you, Thank that. Brian.

want -- Just next want into remind yet not before Time. anyone I XX to has the meeting, February a.m. still Wednesday, Eastern who is we voting meeting to held for on which get call our quarter, at that open the annual around our annual the is in X:XX first comments participated

us, revenue you our increase, it's our of cash fifth me say, equivalents, help year-over-year will increased So by cash think a just Cash basis. of $X.X need fourth cash you XX% and annual cash should kind on fourth I under please casting I site, consecutive reach our if quarter million -- voting quarter in accessing I investments. the of consecutive and a short-term quarter, end same-story-type and quarter for -- quarter our to been assist ballot in We with your out meeting. We this growth some operations. provided

deposit. noted investments, in deposits, certificates short-term Our another Q, as the are of saying way of time

like, are interest-bearing interest of some into bit to of putting accounts a cash income. certificates little our deposit We generate

so not our or investments. funds And mutual other that's We're forms securities. nature with of anything doing the really short-term of

place line that that things is to cash likely some that -- to looking likely support would and allow Brian ahead, increase X -- cash by us that being plans are so in in strategy use there's are the plenty our we And our that from saying things provided mentioned just we've operations. operations. of strategy some that to of developed cash been

on do think the having seen it's cash going I we're our services we in that think to quarters, grow of don't And some with people we generate last -- -- quarters. about cash intent guidance products the financial things really to investments as X be we to out that the if just future more word -- of keep any mind increases in you've measures. and that making revenue are using not our for So get us give

the summary this from our for statements questions phone the financial conclude those quarter. John, take line. So now we'll comments on

Operator

[Operator coming Luke ], from private Wheatley Our Instructions] question first [ is investor.

Unknown Attendee

not a questions. thought And expand you before it's internationally things So how to getting know [ excellent. all growth that's I about really XX%, number, home. you just a ] want [Technical wanting at home couple but excellent. saw that Difficulty] good I

So about internationally at sales that how before adding out you home? building sales team people more think did

Brian Haugli

Yes.

to cut my your little question want get I cut it out, I sure I apologize. because a it's phone, out bit. you So just maybe make right

is beneficial really for asking it. X but now team We've team. name us added just because he sales on his we real recently about like it's the you're we're DT, Tran, because So DT the David have by as Davids building sales goes

know deep I in other with and the then regarded. got from very and he's I It Nick and so APEC. engineering, around Korea, well doing in kind also was network a on is about him the just Japan, he Middle what to entire the our kind skill started focus he's sales East. just And Asia He do intrigued. He's from DT's of So Enclave, China, was was of Kuala industry, background at this. we're Lumpur, Pacific, his talking in network standpoint very and and working honestly. is to opportunistic, South CTO Australia, products got and Nick, a set Malaysia, looking

hey, listen, get love just really was would involved. like, to he So I

really I like So Enclave.

really it I do well. could think

out these Let me this bring markets. into

are some he's markets insights You product of for. guys roadmap. into It's looking what actually out aren't got these really our kind And informing there.

of So was honestly, opportunistic. kind it

it Enclave like I U.S. markets. and specifically And U.S. like look, started we federal markets, network. one. the the seemed does cred. came days. just elsewhere, and a this think and very, him He have he trying just on action. I DoD early up, know him opportunity very focus And in good we've we've and obviously And the does seen to Nick out I Also, Canada. it's -- But from said, have

still... get opportunity of your So markets. Hopefully these there I'm to question, we're that just and capitalize kind some other an answers on kind out looking of of to because

Unknown Attendee

question. that okay. do that's if a yes, just I follow-up, answer appreciate really quick to helps definitely that. No, the And you... How

Brian Haugli

Yes. Well, hey, we're...

Unknown Attendee

think All about yes. --

Brian Haugli

And I of right? the here. quick. team, what real are Just missed, with core we kind team doing the U.S.

she's Very, on you notice, space. understands just we development. business individual, really CrowdStrike. would've just We really And motivated stole personable. the from So brought her doing And very just Rachel.

Christmas. qualified we promise, on So kind leads. mean, she's pipeline. the before think already right of us funnel, she's and showing a top she's us, I those getting already her hired that she's actually getting things of building of into And -- lot And I sales

obviously Dave and to going going managed VARs And via like, meetings, support people security And of Rachel service of deals that that is the focus you're manage and going direct see of And the on that's to growing front of accounts, there partnerships what we type you're then providers, getting accounts, kind us see important building is right XX, with that kind the role, each and had XX, that going grow with of is to because take on those with And from to see types us channel the them are So rest Barton and providers, of managed get doing. But of providers. more other now filled outbound, success in under this a that getting be sales the accounts. have hundreds those able is And Menichello. obviously into of sales to team what clients. are Dave focusing approach those then who service service the have getting into Enclave team where we're to to strategy channel bring channel specific also, close channel. you're lot and of opportunities. we've going Enclave

effectively we're stack these replace of technologies sell to using to So providers and their clients. all any one service sell they able Enclave start tech get to many. Ideally, able and -- have we're very into they and with that to current

start a that You're on going seeing as to focus well.

nailing didn't we're to but sales want still you U.S. from standpoint. to discount if things growing kind what how where want a execution, like just really from that's will, I are of also, locally, of locally we if So kind you down a say

Unknown Attendee

with mix I what sort had, you all revenue think Department we some wondering how the the to from And on hear also love Defense is your then could a you how of last give just all you just about that. about two of -- incentive couldn't call and is what contract. are What sort then you of just give ton mix sales with background And going more and salary. if background straight more was I'd based associate. of seeing sort compensating pieces. that's of then you

Brian Haugli

Sure.

comp standpoint, commissions. of tiered the kind a plus on It's So it's commissions. do try variety. We to base

and look, So you kind of these be want unlock girls different to because different you commission hungry. levels at guys levels

of we're structures. to see. because of we're junior fit join what doing you following trying anything that's and come structure we're But to senior incentivized going command outside we're people. commission some senior for by more are level do commissions Pretty to who's able norm Anybody obviously I more want doing align better structures kind I You at pretty people think is structures And and I where standard them to towards. to stuff. more that's their be industry than they're And for at sales. think what tiered you'd how yes, kind when folks. again, it's don't level what look want compensation standard what us, mean, doing to built we're understood standard the

On or federal mean, would the that into be and a just, different of on clients because the costs dig the whole I subcontracts and to nature this clients, for longer costs through the direct disclose length a really We're we DoD we're to it. build able be but DoD we just not clients. have just that model, lot the us doing seeing yes, the completely sales do is again, side, X can't department defense now, department defense on

which client new actually -- than is be our an but actually able partner been is to resale do So, our a integration it's not a actually, implementation, significantly to and an looks they there. DoD that to able the partnerships, through first second solution just position client, into larger this. And we're now has that

it's the So case. our from very use standpoint, exciting

capability. I that's where managed have looking everything to tell computer this to be the actually to to notice that We had that that called commercial and Actually, this is to but you e-mail itself on we've be You'll into account and able we machine DoD. there it feature certificate. log you, type of capability are just our because able Enclave. and managed and in a computers, new nonperson the the expose will were sector We for identity, or needs management it an the has And the learned of account believe actually Nick actually identity as from to win already through from client a not, appealing dashboard heard we had is solutions the user that aren't Enclave solution. or out

once X up paid second in the So, product. we got or one beginning and check of of just tick concept, boxes, with sure and yes, they enterprise implement basically proof all those of does to we say Once second initial they it they it the concept, week roll works, technical, all we're look on their January, the of first does. does, with to That boxes clients which of now the make proof to it what -- it the but environments. federal started out January intention to

see will year So, are, us. more we yes, this but able on or to share the those of be has as been think is who the big able progresses. to share this I determine how We won't be where hopefully, opportunity that come for exactly through and to solution to able on probably revenue Enclave you then be a numbers will

Unknown Attendee

even or implemented Just So it up? still that's still mostly stuck getting deferred in and yet? set your not

Brian Haugli

I Ryan, [ indiscernible that don't know. ] Is actually,

Ryan Polk

Enclave annual for been invoicing to true. has that's an Yes, Yes. basis. at our license -- that's yes, We, date, done

account X/XX and we of as as balance each fee goes when And revenue month a sheet that then that on deferred recognize the license into invoice so our liability, revenue.

Unknown Attendee

question, -- me. you'll Digital you final you're then, the appreciate I that all that and And selling to Is here. Carolina that the here. give Is with me back if DoD? Advanced really allow when working second one these forth products are

Brian Haugli

on have really X NASA people, on get the deals John We they principals and with but opportunities in those a work not and partner CAD, we at vehicles. these with them, But, did opportunities. the also them Jabbusch, X other we've Susan partnership them. We our Enclave our phenomenal X -- to love to have yes, GSA partners the now. are But federal with that SEWP -- working these

focused state southeast. in on really they're the So level

I really state level, think a some bit in headquartered they're down North college, federal, but quite more there because they southeastern universities, do Carolina. state

So the not have southeast familiar Because has really focus states you no, are really are great been But opportunities been. folks. through their these them? with them. But, where they're

Unknown Attendee

I know personally, was about that learn just thing. sort them that more And do into contracts access your and -- you them. of I not can the to ran but trying GSA to with I

So them, but not name. familiar into with ran the

Operator

to if questions questions no have in the back We your Instructions] any you [Operator have to it Ryan, from you, lines. phone queue. further turn see I'd like

Ryan Polk

in to visible questions No the webcast console. me

closing think, for So, I comments. ready Brian,

Brian Haugli

just the we boards sure. anything and Yes. checked see online Sure, I I cover. didn't other that all didn't else my messages.

think have that There covered a went over we plans contracts. overseas, but I ask hopefully, about was we So nice for government new and everything just around.

we're excited the well look, again, already here. yes, quarter within books. another QX We're about So in working

thinking just looking kind of we're kind forward. honest, be when and back doing what right month we're kind half a about and honestly I'll of weird a a it's little So it's now to of, going ago

is, any is if or just reach grow was we're this strategy is an address what follow-up, can if contact hopefully, obviously you with There going please that IR to, about of we're way. Check that out questions what So to get any free out. everyone have e-mail learn That you can out ir@sidechannel.com. have reach want hear us to you questions, sidechannel.com. what in and Feel our you and set now towards. Obviously, for kind to valuable to. you

relations, Please up parties. as really just stay monthly you on newsletter, mentioned. trying like tailor our or shareholders and investor can yourself list date I that newsletter weekly, get We with interested added you have to the towards to to so sorry,

keep that, of Thank with months speaking So to you. in look let's going. forward you on things for to couple XXXX. a moving and I yes,

Operator

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

Ryan Polk

you. Thank John. right, All

Brian Haugli

Good Thanks, Yes. John. stuff.

Operator

Thank Thank you. gentlemen. you,

Brian Haugli

Take care.

Operator

Take care.

Ryan Polk

Bye.

SideChannel (SDCH) 5 Feb 252025 Q1 Earnings call transcript