IRNT - Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greeting and welcome to the IronNet, Inc., Fiscal 2023 Q1 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to your host Nancy Fazioli, Investor Relations. ahead. go Please

Nancy Fazioli

announced Hello conference operator. the you joining that for first Thank will and address Today's were XXXX XX, call ended for afternoon. IronNet's us. quarter you, April thank this financial fiscal results

the included Relations in of And refer information over the results Before turn Gerber. will in our Co-CEO, factors statements filings. also is from to by risk These Bill Supplemental call joined involve and differ Co-CEO, be our that latest Jamie that you uncertainties website projected forward-looking. we SEC Welch; General risks are provided materially on the and is we these CFO, today Alexander, to could note therefore, the now Investor our begin, Founder time-to-time. who matters from please to statements. I’ll and some We, making cause those our

of All of before move portion to some question-and-answer you. the General to remarks whom have over call. we the brief Alexander,

Keith Alexander

Good afternoon annual recurring thank optimistic million We transactional new you, I you added quarter. about ARR our Thank of quite first today. us to in revenue $X.X am Nancy. joining progress. for and the everyone,

ARR non-renewal expectation rather our delays. a ARR Two ARR, sector quarter-over-quarter. these in would in our we certain noted release, the with these the approximately resulted impacted $X.X see renewing their our to revenue for representing that as or ARR in of a transactional of that in than by reiterate customers quarter, opportunities million signing of leading like in our significant to one in and lost. decline were decline delayed budget public As customers transactions, million business and pending earnings We would net pending consistent delayed net $X $X.X majority our results ARR be opportunities Those million contract. of

is an ATO Operate we deployed the This only been not a opportunity the achieved. This fully contract, one Authority being in ARR. that loss due would or is to $X structural not approximately this million has issue. non-renewed categorize to Another represents FedRAMP

as Status, is have We opportunities see sales today. making has achieved well. it this to result ATO when year. We ATO. believe status this fiscal of in potential progress, customer we Once hope to come the expect majority that an this uplift FedRAMP not also back our impediment have area but we achieved, FedRAMP in the closing an This do are are We pipeline and sector to the strategic not as Ready to where public our complete. we is momentum

largely, important value be back. confidence and to highlight not a continues And issue Our our lack bring timing to this customers. our this is for reason our perceived a and to as bureaucracy, business high ability by of

for that represent customers healthcare, provide color agencies, win sectors wins this last discussed in quarters. which as to opportunities customers, exceeding see these We the as quarter. as those space, wins value customer finding. areas the from remind strategic define on of Bill confident of Our will remain to and couple opportunities energy state will $X we in quarter and million us ARR we additional growth next insights Pipeline important into feel give public are these utility. that you close robust start

at with CIOs, the of San the our present event Francisco a we team holistic of targeted to Association brand Gartner our importance strong on at a Summit the From our and security. to partnered to at AWS show awareness. approach As continue increase Management we and leadership presence Risk thought to where to National RSA in to resurrected Security presentation engagement cyber customer State

cyber that rather, there the must judiciary is the for defense amount highlighted and cyber simply us. from He are There critical IronNet’s proposition. and York eloquently April we evolve teams. increasingly approach alone been presentation have Pugh, value further and collective that my legacy cyber no a way gaps these that to leaders. out virtual from Inglis our individually validated in boards as accomplish to of be that collectively. our be to sophisticated was two that to discipline supply us the National What perspective our our us the and of a I've show to and particularly, like Company, addressing own positive cyber prove own us webinar in security our momentum from through just our and none working us attended is also can IT collective and Cyber An the Stock noteworthy to Tom being through hosted will marketing. insights. defense management proposition, the offense investment defense. space and to the not In uncollected are New and even is nation. perspective can. noted Fanning I speak have for this chain hard Southern leading frictionless, defenses short-sighted are would we talent security for maintain enable technology illuminate environments for where our set comments responsibility sales all while point approach Director that and partnership approach. of by work to of for value company you continuing Bill believe will customer must among highlighting We Fanning it CEO, and Exchange adequately a yet transforming to It one my I comes support Chris experience, has CEO that well is in to we our cautioned also with as in in remarks a of will unique isolated Director, most you organizations security approach Steve Company's add CISO, to infrastructure Southern Tom dangerous energy Inglis a executives This

turn Bill for confident we and With let remarks. that opportunity are it on our me to path. right about encouraged are over the his We now that,

William Welch

General. defense of collective platform. like what outlook as the you, echo I'd Thank General’s IronNet see the share the customers and to long-term our value

value that Speaking IronNet to is what to market. brings the

of Here's perspectives A sophisticated and that posture. highly this from and indicated start every a at day space with evaluating security for This a environment as customer their that quarter. by alert. in they investment IronDome customer cyber customer our logging IronNet snapshot

getting So this information vulnerabilities source that is valuable and any vendors. they're of customer the other IronNet from a on tax not

for visibility. of a gaps perspective highly of is level to sophistication financial in Europe, and their is IronNet still that our Ours differentiated similar specific Eastern stack. of level whom technology in customers one Their

NDR us against support large intrusion of are they A attack. a they sophisticated for personal relying when and scale. our consortium concerned mature unknown, with investment ransomware result, an potential and health resulting information systems second looking a under to of and ability customer, for have about a calling They unknowns. and and level for payers on detection unique attacks that and fit the IDSs IronNet and As set frequently their been the potential HIPAA behavioral needs could analytics was healthcare detect they solution consequences. because choose They posture

center to mid-sized was college cyber so Our eliminate against cyber-attacks. a IronNet IDS. operation its customer, a third security attack disruptive own without high-value platform and a A insurance as and costly low-cost, the them victim of policy enables

New institutions of from the team for to collaboration, A by a is is institution proof ecosystem to on competitive via fourth public has a overall selection about of Power cyber build is of now automated a the result IronNet peer. get it's information solution for seeking sophistication customer, approach new a Coast institutions was us, referral NDR value utility defense. powerful York this collective time sharing with dome customer become the and its of its IronNet defense the introduction. our institution of came a a to prior short size. transforming in As Authority, to In evangelists to its already order was impressed approach West and The and

fifth IronNet following leverage program highly power to part optimistic pilot validation identified energizing awareness first the an as previously defending detected. were customer resources. healthcare enable also highly value clinic for the sophisticated Their and Our of a our collaboration is our of posture. be of recognize to to market to seeing on their a more environment believe the a larger community a strong size what secure. solutions. early They that going adopter and of based This step team healthcare was feel on-ramp transformational not project cyber security pilot decision to the being as in to customer, we buy drive for saw providers an and and vulnerabilities A adoption customer's of in as cyber compliance are beyond we us

and guidance turn it some now take to cash questions. we Jamie on over Jamie? your Let before comments for me

James Gerber

and good afternoon. Bill Thanks,

pending and prior and fiscal reaffirmed ARR well and on visibility exit guidance have of certain revenue have based We on side strategic around renewal the as the opportunities. new as transactional the business, our confidence opportunities XXXX year we

Our to the in build expect position record sound. our think liquidity year. we quarters we to believe revenue with we more fiscal With half strongly grown. ongoing and second financial revenue pipeline to has fiscal careful third year. and of could our and management, into this remains us, achieve opportunities in able and we healthy of the the We remain also we're we have and cash front fourth ARR still regard believe of can the execute If on

not We for company. continue being from drawn have on and Stone yet a having we Capital, will to liquidity with from equity benefit line Tumim options public our

mindful believe preservation to and as take a possible. customers of being goal neutral management continue via enabling will the a effect as to this enable tight expense to our and We us cash will bring get to in model, deals balanced to We with of us strategic network cash approach strike growth a disciplined community business close potential single balance. coupled with to of

drive forward that growing are the our we longer addition, and for ready investment We as remain more Operator, cyber being effectively cost a efficiencies encouraged providing market human question. for a in IT our solution and also first navigate security depends not from business term. quite sectors customers. capital only this and across we benefit year we in you. Thank significant for the In for

Operator

with you. Company. question. session. we'll question-and-answer Instructions] conducting proceed a your Mike Needham At from with Cikos comes & Please first this be question time, [Operator Thank Your

Mike Cikos

guys, to on in went Hey I that I'm just the clear taking want up the here. you that questions the did to this. first so opening know want sure ARR. remarks, for I make thanks through guys circle on

So transactional that about about spoke we comment customers is $X.X there decline ARR million were was and thinking I the you from non-renewal -- of ARR that the the $X.X that properly? in and lead combination million in one added new that that am

William Welch

and government Jamie delayed new the me. General ask due Yes, I'll was a offset and to ARR in to renewal come the the the our alongside business delays renewals, Mike. of to of Bill some side result strong lost This is not deals. and then But QX on transactional

of So key contracts deals not of we better to renewal and earnings area been as is QX call the about to saw this leading in impediments We new structural shortening get have QX, timelines for what resolution indicated on the be with us, to at our the like we've happened. we've finalize the great that selling recognize some improvement we've been that there that government sponsors referenced we customers able value realized continuing we before, have for been resolved as with for then there's these is contractors an and couple might with the a first our And delivering it, as opportunity top also government is and us well. to effectively an funding our through management is has the of with on resolving value push work to as value them. some public help sector which level, more but

Mike Cikos

can decline were I conceptualize funding. talking bulk transactions by -- you that Okay, million as we delayed that -- were million, from that $X.X us okay. the about impacted the earlier phrases, those sector Speakers] the $X.X that help are customers or well And guess of [Multiple like or what those that two Is two public that

William Welch

majority that but accurate. as lost. a the churn is the Yes, have paused been the accurate, them Mike, that take or have we mechanically, had that paused But of we have is statement been That lost delayed, loss. opportunities to that and of ones not is is that Yes. inaccurate not

Mike Cikos

and and understood yes -- I’m sorry. then Understood,

Keith Alexander

we're soon that quarter. million those think million, we and pause another [Multiples Speakers] $X finalized, $X deals two waiting there's we that's APO $X those as on are that be back. as one to the APO in the And count in couldn't deal we then on there will we million them had a that until this get

clear be lost the wanted continuing part that's of government. we are because federal why So of that deals resolution two deals. and been the Those on those delayed. large have that aren't them In transparent and the impacts to

Mike Cikos

two more ARR, colleagues. my if could to then over And follow-ups Okay. the it I before on turn I

The in help the deals guidance there still increase the strategic excluded certain reaffirm weeds, like, we reaffirmed confidence first expect us strategic reading into the are -- Maybe guidance levels? I guys XQ starting you opportunities. have that remain here the or deals QX from guide guys guidance revenue. should a both ARR the ARR the know but to ARR was topic while and year I the include guess you around with on can Is from question, commentaries no about to -- much you here today? respect and think And you that we're strategic I'm the second to too on for visibility

William Welch

Yes.

play jump one, this key So I still a of do think that have on the in opportunities quarter. for number number I'll so We focus number remains annual in the here. on to

to I guidance transactions that hold, to any along. is said giving as going So for we're important keep will come of I most that important think announcements that terms make on think the we've an updated eye in thing

Mike Cikos

Okay, okay.

ahead. So go -- yes,

Keith Alexander

released guy And I that, add remember, to this. who I'm yes, the knows about

and we appropriate So raised count what had announce deals them accordingly. weren't in said that going but we strategic is quarter our if would last guidance to in, we the that

So but they promising, the guide, but because want government, what we're don't to dealing optimistic. see we look still remain is with we we

Mike Cikos

you much see, I’ll Thank I it very okay. turn you, to colleagues. Thank guys. over my

Operator

Joseph from comes your question with with Jefferies. next Please question. Your Gallo proceed

Joseph Gallo

deals in slipped, Hey, of up confidence have guess, but in guys, $X.X the million I questions. lost fiscal line on appreciate the coming ’XX. that What's following question. that not

think I fiscal in ‘XX. that verbiage you it closes like, was had I hope

not why And full-year so by guide kind it's the the of million. $X just lower

So just visibility that? get I'm trying to into your

William Welch

confident every still on sure wanted we that answered Yes. but them, technical get confident and we're thing the as is very is in only Mike's values We announce done, in in executive the confident the I very said to will as the had we is we are question transactions, very make very that that General of accurate the the we those timing confident we that in sponsorship, value that proof delivering, confidence we seen. have results very have secure

a of So budget award it the is matter the the of process, then funding contract. just getting the through and

Joseph Gallo

part rate I gross problem a we're slip I last as should the appears in about going that XQ we we year guess, guess we the model decline that because in or decline that in of should this forward, going last forward? renewal think think or the be like trend the you each should ARR how I be but a two sequentially is can models going hinted the this years again, to confidence what's I to B our -- question, forward, and won't modeling

William Welch

we would implications for No, not but don't future I model quarters. see that, no

Joseph Gallo

an like right, of I'm sure cycle level Bill, for that or is environment, Are Okay. I is mentioned and but you guidance approvals and General you And level were strong, elongating up then cognizant us just or POVs certainly any that? of approvals an through maybe times just seeing I scrutiny are your think demand maybe RSA, reflect the the extra extra you you does XXX% pipeline but walk people think last at macro quarter, are worsening. seeing of you the

Keith Alexander

are budgets, very reviewing very, first viability business. is continues long-term their cyber that very, of we the active I and believe of very believe still customers are I but Yes, that all, a cyber to important absolutely, seeing, be

that group, where know, be indicator, uniquely in and provide think the have environments the we of collaboration We even concern you threat across anonymized We to you element viruses. with mummy being what given the cyber whether, become you're seen and to spot positive spiders analytics world continues our rationale and dangerous, on the community. is also national in existence you're the power seeing more the threat reasons see for Ukraine what across the world, landscape stronger and we the more the wiper over Russia, seeing IronNet’s because threat proved positioned we're an of

we're So a are detection is right cyber one of human plus but growth with saw of the as also the leadership you the thought collective in ability for announcements X great then really element very saw labs many reset defense. market, and the around and challenged Cyber really with and early or continue the DC that with to of and now one rating I Committee JC, really phases the Mandiant SE three equals bring of XG then by a our strategic efficiency AAA collaboration, of think with network you still win a others. the recognition multiple and to Joint going and And cannot the times industry some partnerships,

William Welch

just going our I’d the is network information strong one detection of I that. there, to of add also to actually here. particularly RSA was Joe, Yes, which course Joe foundation CISOs security, just of in And cyber quite technologies sub-segment that the we from like were seeing added add

have remained terms certainly that the here CISO out ones those quarter very good the are part economic to think signals paused demand strong in So I have environment, But contracts think see of from focused terms we cyber, continuing too. in the And overall buyers is there, particularly that. in terms that are obviously that our these cognizant the we're some reaction of of signals out are of of that there. the very I in in first

Keith Alexander

Yes.

know, on and After focused that were shifted started in, the we the commercial the governments. starting sector, we to So, Joe, company the we you support want government I public solo wins, when to add state federal sector. to

on the given good markets move for think has us. going I in what's that now a really been

the company. they the significant are do come to for our Now were we we the public-private those is, downside contracts in build but do defending be harder or significant commercial also we a what a us together those our long-term going -- to and is when And helps could upside said federal nation. government bring predict for us that think partnership, will are I it

So I for it, a we're think when look you in position that. good at

resolution the resolved, money government federal their is it's has the getting that through been Now continuing and process. working

that, we about optimistic So are Joe.

Joseph Gallo

Awesome. Really appreciate the color. Thanks guys.

Operator

Your next Gray comes with BTIG. your Powell with from proceed Please question question.

Stefan Schwarz

Hi, this off, start were is questioning, talk pattern? on buying linearity my Stefan of quarter, I line for taking in similar any question. to in Gray. the changes to for guess you could customer previous Thanks about there

Keith Alexander

Yes.

large just as the think, transactions. was first referring I were fairly in two changes that quarter Bill in saw to ARR really we

don't should think into I that seasonality So one read that.

Now news and our primary of two in had quite that of you've the quarter quarters we lumpy. month quarter. first is a -- last are very again good one certainly and asked orders, signed the good linearity about -- The the transactions first really largest within large the within

-- all deals we're too, So demand a where little to very, linearity that. to for patterns. But call it's very too through pleased some of, identify and good really few and we're kind see some see we quarters still the

Stefan Schwarz

Got it.

anything switching called the gross some you then press saw margins? was charges, gross in margins, else And just inventory release it out impacting there Okay, helpful. that's to sensor

Keith Alexander

as by new there think and Well, effects quarter, our fair margins compute about inventory couple for we where continue optimistic orders taking from marketplace charges the lowering the deploy margin that -- one a amount fact that on. drive very did of just getting technical on really while our we're we But our effect of that. now some warranty just new this new standing we've we're the right deployed X% some just right actually improving and it's I on we're note into those now continue are you that to that these of got is technology But configurations upcoming version. optimistic very to hold the still a margins the on of gross our some the about

Stefan Schwarz

it. Got very Thank you much.

Operator

question from with your comes question. with next Your Please Anja proceed Soderstrom Sidoti.

Anja Soderstrom

anticipating taking you few those in strategic deployments, for the just that deals question. Hi, you the follow-ups I that the yes. a are onto that inventory or have have Thanks transaction future their those you holding for -- my already for -- for are

Keith Alexander

have to but larger able to both, positioned needless for opportunities quickly. are -- ones, noticeably the these to it's properly we Well, say, strategic respond ourselves and be

Anja Soderstrom

Okay.

you So the -- when announcements from then very like might seems other you guidance are you and the should but have transactional transactional, announcing accordingly those So you and are deal, that guidance the they're just on if will adjust full-year strategic wonder guidance guidance the soon, year? strategic I to -- a it have -- for for are have you add right? you

Keith Alexander

Yes.

William Welch

correct. That's correct. That’s

Anja Soderstrom

And you. for last think I of quarter. in just the little I one for thank a it to around the then bit the alluded talk of terms a Okay, but was just you in commentary me, addition dynamics count, in customer that? already, new light your Can the -- to customers for it

William Welch

On and both serve in revenue your and Yes. strategic count, ability grow impact to public customer cash the have opportunities flow. potential that we sector count as ARR to customer certain that are there think and our

these mentioned, deals. pause are deals lost we As not

growth five position we deals already six pause have had of the in pause expect net we're the them back, in see We see good mechanically to were either the what the now to come we reaffirmation are potential. what in these come to back year by QX of and a out and through on and return year or and achieve to encouraged able we we

Anja Soderstrom

me. from all was That you. Thank great. Okay,

Operator

Imtiaz proceed your Guggenheim question. comes Securities. Koujalgi question next with Please from Your with

Imtiaz Koujalgi

more take? for a up does taking that General you is Was came subscription, on did of and thanks not I mentioned timeline to there to FedRAMP, that the secondly guys question. question simple was what think renew that then that you for I And give on kind customer? that it Hey have some guys, of that color get you my a And the [Multiple deal for the on new certification. new that? guys because how eye requirement any Speakers] a that Can

Keith Alexander

Thanks, Imtiaz. Yes.

yes, FedRAMP the to the we they issue customer, started be is when So their that out from an didn't perspective. going with realize

they and FedRAMP So the like be go IPO doing certified to really process we'd and through process. actually were hey, said, anyhow. brought in We the that that of

once for deal come we was we we that it or in, and that as do that ready back. got portion get weeks, we Once a loss, partner several are departments the we've CISO we back will now process get -- IPO, that can The talked we through an of all think we IPO, working to as you So everybody. think good to know paused that we we'll certified as -- you us process their We've and come over certifications, to FedRAMP as is, us they a it said, next was leaders, five but with one have one considered probably they be that back which companies, both also four will more and is the give CEO months. to with long and of think get well. we're will what FedRAMP the done take with the FedRAMP work to

just but with the this industrial company that government. see impacting impacted base works the with defense one deals, we and the this any So federal don't

Imtiaz Koujalgi

you bit of more, a I a purchase how impact looks we understood won't one can new that I a but little both that's have reasons all deployed continuing you new [indiscernible] budget Can process and more is renewals the you follow-ups impacts while continuing continued not purchases? stuff, when in whatever I the your how and helpful. -- mentioned renewals resolution, delayed, the case. guess the got on like that, resolution could few well, as already deals way these that have the buy you not resolution new renewed. impacts you're thought thought it. while I explain the Got Very have it the be just its renewals

Keith Alexander

Yes.

does a they POV, with those new on issue and a actually they start. So what can the that we're of POV delayed -- that's a a the considered continuing POV, resolution Proof customer, resolution, deals, for doing And for was POV got Value. a take happened continuing the in that

bringing So that two to of that, When on, had overcome that one have majority. they you was are delayed, customer other the we combined, that's those and million those in $X of the five look some that that's right there. internal back at issues with process the

Imtiaz Koujalgi

duration are And the average quarter that duration and last seeing last one the skew large Yes. one a bit quite that deal business quarter? duration up, Was this last from this one, year quarter. [indiscernible] that only or you average go

William Welch

Yes, so -- right.

that and into it's that, getting those sign to as two have longer two renewing So and the of that went coming have been this factor deals that good they're one one deals or news ready here is online; longer shorter a two, -- we actually things: one, pause deals. or deal longer

a this So but little the quarter, mix coming factor of bit a into both of better. it's things is longer

Imtiaz Koujalgi

you. Thank Thanks it. Got lot. Yes. a

Operator

question. Please Needham with Your from your a follow-up with Company. Mike next question Cikos is proceed &

Mike Cikos

just thinking I'm that just Hey about were I earlier. properly. we on make this margin sure gross about items talking to quick two the guys, follow-ups want

So margins gross the total X.X% we're gross the impact about on correct? impact margins, talking was that on

Keith Alexander

yes, effect really is say, small quite on from the was that. services I’d

on both. yes the effectively same So

Mike Cikos

charges that other the it way would for upcoming I then I this orders guess through you. incur to by But say, XQ? you is earlier. And is additional these know don't of that related the come a Is XQ, extent it's potential sensors the that let's to orders more we in second now in the freeze okay. question that had inventory you there for have half standing Okay, event. I

William Welch

Well, they are ongoing charges.

we're expect it, it's that warranty but standing but go quarter, without we if cost if just that's then see yes, we'll quarter the to same can of yes, -- of another amount here, you on a for revenue charge So ready. by be

Mike Cikos

Understood, you that. for understood. Thank

Operator

closing gentlemen, remarks. the the would answer-session. question-and back the end to Bill And call like to Co-CEO and I reached have Mr. for Ladies we turn of Welch,

William Welch

Speakers] Yes, would give wrap up. General, [Multiple the actually like you Yes, to

Keith Alexander

I think, Bill you there. are

So just of up for all you. let this wrap me

the are as First, about and stated, this we optimistic we quarter follow-on quarters.

and to As and We that and it you financial believe things. of the and is not in believe company. the we're all for company security, told important of we in this traction revenue we nation going with terms changing our and the comments is revenue Jaime to has very is a all our on lost, that we stays part. position but proud And our agree stated from you, that we're journey going future something tough to do believe it's it's of we're do, from Inglis. we some know, see culture growing that see like starting least sound the a for lost cyber Chris cash finally the people that’s delayed for been second We and half believe the we're we future this other at that.

Thanks the with are everything thanks time. So for all for that, Have that good you a evening. doing.

Operator

today's conference. concludes This

your your participation. time. you You for lines may all this at disconnect Thank

IronNet (IRNTQ) 14 Jun 222023 Q1 Earnings call transcript