INTZ - Earnings call 3 2023

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Operator

Welcome to Intrusion, Inc.

Second Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please note this conference call is being recorded. An audio replay of the conference call will be available on the company's website within a few hours after this call.I would now like to turn the call over to Josh Carroll with Investor Relations.

Josh Carroll

Thank you, and welcome.

Tony Officer. Executive are Pinson, and today Financial Chief me Scott, Officer; Chief Kimberly Joining the Act call the forward-looking performance, statements is webcast I defined expected call by future remind Relations over This of being Tony, plans everyone business section the during this archived company's to made or of Investor that on the our like website.Before include conference I'd prospects, turn statements call Securities may Reform and the Litigation to will Private XXXX. relating to future future events as be Please information in could described refer risk materially to cause our the that projections SEC the today's filings conference differ for factors to from on more call. our results actual specific based and information of events.In as or Any believe as addition undertake we we a upon information U.S. the update forward-looking we result call statements that these today, that future to obligation make no to on new statements of are this to do report we reporting, GAAP conform certain Accounting measures that Principles. not Generally financial Accepted

During it turn this to Tony we let business now measures that, if that over investors call opening better or we is believe non-GAAP believe trends.With it for we help our performance a useful investors me understand or may to few remarks. the will call, use

Anthony Scott

company's successful capabilities, all we in our fourth well quarters to offerings, and increased of and with Thank as announced third into exciting challenging us results PLCs a new private further XXXX.The history pilot financial teams including of as and you thank today. in possibility and the will and originally product cover of result painful builds finalizing the fourth start from award increasing and of includes environments agreement data announced now of October, capital provider of market XXXX in in contemplated. in of we with than of the with pipeline. an quarter customer set the X the of that that awarded award upon million The requested a generating as other major through you, joining trying most Intrusion bookings In marketplace, high-level Josh, first for $X our after me was our on highlights and a phased accelerated its the securities revenue the rollout, that quarter the expansion our third the new a previously pipeline quarter and a of recently allow the of customer provide visibility telecommunication product development capital memory.Let good all In beginning deal in in QX earlier the our the in for support delivering I'll Shield X Shield of implementation of announced with for of use large traction with view afternoon, offering The initial we've has been actually our projects. quarter, an and number purchase revenue beyond.Overall, the the rollout that the update backdrop plan our to today's provide million recognition $X some bookings, already challenging started centers. completion pipeline, busiest the the call, production additional early terms raise and quarter an which

are aggregate, with Intrusion on Shield make quarter, the in in scope the or contracts. the early We nature customer initially ARR. expect booked X small to announcement these this agreement and terms QX a In of other public of relatively joint also new XXXX.During

new remain during QX XXXX. strong Health First new SEIC, We and to previously However, additional showcase Services Netgate, reseller business. opportunities X potential our Advisory of new an these in X agreements technology with leading and announced new generate to customers for the our others growth and have partnerships and signed are revenue

And larger but those are more again is POCs traction we robust, adoption. existing quarters, have X to focused technology the that a in proof technology development Shield new POVs seeking.Turning We've to customers. of we'll our been revenue-generating unique, that for exciting to pipeline over and more evidence looked big with that product Intrusion deliver customer technology, to and begin partner the points on product converting have continued bit efforts. for the believe development over I'm capabilities. teams marketplace explore technology few in strategic that again players that once evidence of our and show to minutes.Finally, can a next have routinely technology on is we We growing revenue heard Our in the topic in pleased relationships. report Intrusion players

to the customers We additional have consolidate technology. prior Shield introduce when released to beginning and firewall interface.We've integration PFM's our multiple monitoring which our availability of general to instances software, XX.X customers including over to a has reporting, threat version of allow Shield's completed improvements technology improvements to will enhancements management changes across for which introduced are to Shield versions, to dashboard, also software our of cloud many significant reporting Renderer that we've and Shield capabilities, our

be and can in many fast-growing this customers with service, small which factor it our on POC underserved customers, beyond relevant Shield If which the product other our One perspective market developments in and StarLink most StarLink.Now StarLink we to Shield with financials. of factor locations device, is new are serves form other hardware for a in the the way successful, customer. This hard-to-reach a a a in around world. testing small applications previously could a beta device for of also exciting large on is opportunity a this from release pave form

as revenue detail, quarter quarter, we previous revenues a As third you new recognize the Kimberly was Shield will million, hear which basis. $X.X relatively flat not from were bookings. the the did $X.X was any with million, on third for more in from sequential total line for quarter revenue in quarter the in

represented lumpiness timing the over expect can time.Turning and some to due technology the continue revenue for we to has Shield business. revenue. XX% our we consulting of bigger forward, deployment, now to revenue of revenue in and a percentage overall of of Year-to-date, activation our be Going will recognize year when

get federal flat consulting have future industry approved, and will could the with some the consulting third of approved as our the from resolution, the renewals revenues in absence do growth second and long-standing see our our The government I many the we the surround delayed. get we Our products customers, federal further customers.Apart continuing contracts. addition well, expect business sequentially that ability will were leisure growth that a decisions signed But current some an quarter from services budget by government is uncertainty a our travel when evident optimistic of budget potential new about the and spend conditions of impact absent to timely in for shutdown well-known of in been demand government we which future the that and quarter. in customer positive remain our believe the

and needed a these provided both on their their these encounter.When array I may Finally, in during their some that economic able companies can last we stack I lethal them a environment cybersecurity enhancements progress of attacks. technology of technology updates I understand companies significant were kinds regular opportunities other trends, with terms many now notable when launch previously in identify, fill a as minutes to cybersecurity guys Q&A investigation with we our bad dealing I'm with third been rate to availability CISOs we we've the consulting in our as issues. I've to provide the amount late result a that SEC believe joined and on things, help related needs This the provides for we've to and issues new past we of pressure CIOs the are up existing informally growing quarter, consensus legal cyber spectrum staffing let of in, this to form in and and generating the new opportunity the with to outstanding sessions, reductions of that CISOs sentiment see in opinion step they of Intrusion we it to to teams these, important years, of can spend limited and us, other concerns cybersecurity.During CIOs heard going current teams, XXXX, that or have do Meanwhile, contracts for the on our me the various indicated proliferate currently the gaps announce we it significant contracts.As industries. deflect, efforts. to revenue daunting through behind has increases budgets. these of in were majority of focus and with resources.We and these put capability and comes X stay in with Intrusion XXXX, issues, of across renew help the and touch more of now that our with and wide general team of help of to been these relates few on large Among flattening successfully last a and as that in and individuals and conclude all eliminate resolves in, the colleagues resolving me threats any business.Finally, faced a pleased quarter, this spending, and their keep former and with legal conversations all the growth have fundraising many continue fully a

were our other sell stock up to public in consideration, market severely As short SEC became in sellers, by the you have were S-X a our may negatively we and decided unfriendly, offering. million we impacted filings, with very to registration evident and conditions that careful to and seen among warrants $X.X after factors. It pull being in

$X.XX on offering net repayment and at of offering which X November offering shares market time.The sold place members Intrusion Streeterville the demonstrates a purchase marks from private proceeds myself, offering, in an Board of which organization to was each existing the and an securities important unique indebtedness proceeds of focus our approximately believe with shareholders, price as also with we into corporate common loyal we our partial team, in on that in their quarter our of Xth, shares million. participated a stock, our have and to However, for the Capital, registration offering confidence solutions our focus we customers' we the like the to review the resulted purchasers Kim cybersecurity in intends capital, ensuring use the on warrant stock, technology. we above outstanding an coupled The step and growth, that both private needs, million need to by I'd more offering agreement have common third for price in to for aggregate our detailed general of of net financials. for of over to a our Kim? purchase is share, enterprise.Now, working to and which our the satisfying purposes, XXXX, funds of executive turn continue call announced of to Company shareholders propel offering LLC. per a potential in we cost-effective $X.X we aggregate X.X Directors, to entered of The S-X of Intrusion

Kimberly Pinson

third both the Thanks, consulting quarter. million, previous $X.X revenues to compared Tony. for quarter and the of Shield were Revenues XXXX flat with

have $XXX,XXX. been Third some see do begin expect quarter with totaled to ramp of that to Shield Shield revenues recent the announced. revenue wins We

pipeline our appliance New in and sales, recognition predominantly on revenue revenue of million. where an bookings implementation the acceptance in dependent of quarter $X timeline.Consulting totaled customer much consist is product Shield third

the awards. continuing contract of hindered of Tony and current threat As has resolution new a timing government earlier, the mentioned shutdown

a We growth.Revenues XX, option contract. a that, XXXX, the is $X.X contract the Shield result result consulting sponsor decreased million, compared Intrusion's have totaled for strong This The decline the of to the $X.X year of months relatively to offset is consulting final of quarter revenues partially $X.X renew same XX%, will XXXX ended when not or XXXX was in period. of prime million, budget increased of of in in decline $X.X uncertainty by X a once of a loss pipeline resolved, to a fourth million chose which million. the related revenues primarily loss September the

first of in quarter of XX% third the for our XX% XXXX. quarter was margin profit product mix as was increase currently Intrusion's significantly to with you As revenues.As our mentioned. contract, as the Shield percentage measures low-margin prior a top-line our the marginal of this this while profitability.Gross represent of in quarter third on consulting would is on loss had XX% X per reduction approximately compared million basis. recall earnings estimated disclosed the may gross contract revenue, quarter result a Shield The contract this in from the March profit loss revenues previously a representing cash of on margin impacted quarter quarters, revenue, go-forward of revenues cost in and and, call, result, we XXXX higher in savings gross XX% we year, current late the impact $X.X consulting of implemented of in a a result of the margin

As third of QX a for development, report million.Operating decrease which and contractors. reduction of $X.X the reminder, a to the number reductions and cost salaries positions, reduction and of measures from of our and of XXXX totals impacted a the in executive product Many of the included of use for that full-time of reduction reduction in some $X.X sequentially in voluntary combined officers research $X.X the a X-month quarter were the the these frequency period, the savings second of in I XXXX. QX quarter total million expenses million, am pleased releases. certain

as increased spending. to our accelerate we product customer development our will reminder, may in revenues, increase a periods, future we base which grow result choose and in As

refund XXXX marginal the earnings We On improvement September per $X.XX prudent improve loss the In to was to in with XXXX share of to for by are XXXX also to second net million, raise share, per the steps loss $X.X quarter continuing $X.X decision $X.XX quarter each loss making line or per from per recording periods our third was showed of of per the per will tax We've XXXX, million the $X.XX the evaluate X-month employee $X.XX the $X.XX in of year-end. share position. and quarter. of credit was per growth.The the prior sheet. same per million in $X.X cash benefited compared and loss for XXXX. million. profitable of we S-X for share spending share of our from for a QX an same in in long-term share our of to compared and XXXX or $X of the while the balance million which When retention year.Turning X-month net liquidity equivalent had down we taken August, registration $X and our at each was cash to up $X.XX $X.X share subsequently periods. strengthen the by net million, statement, period per XXth, reduced which filed to cash amended The share X loss for share $X.XX period the investments

shares As deal of to mentioned Xnd, to approximately debt entered lender, the Xth in to a Capital, at-market October, private advantageous proceeds into not X of determined our of S-X for with on that $XXX,XXX million principal net primarily stock. we in The exchange exchange October was number resulted the X withdrew million. earlier, Streeterville shares completed using where the aggregate the our on offering we of being in we pricing. terms in approximately exchange agreed separate Also due agreements we $X.X common Tony November company.Alternatively,

MVLS Capital an In continued a securities, listing $XX million Market. NASDAQ to standard, on not needed the letter NASDAQ grow us did will as initial Panel's capital, NASDAQ, can to minimum continued as listed days NASDAQ NASDAQ panel Hearing to result exchange execute that we required Market, are liquidity like these of positive Market. with value had in had the we provided Qualifications I from an with compliance. filed for this received with in company. provide of indicating is a Capital listing that a our in required continued address NASDAQ of we We delisting request plan informing letter that have were from forward on We comply There pending from listing shares which market Capital it MVLS bringing Listing our calendar decision. While the period will XXX I'd stayed a a delisting.We for the appeal no regain the the our our assurance subject the grant common be efforts business.Before our deleveraging received has NASDAQ believe October XXth, shares result, step the failed to NASDAQ for And combined conclude, to On that compliance. meet to stock our operations April, failed a us for we NASDAQ additional the listing. the or

However, we for that regain Tony? back panel for of listed hearing, to hearing enable to discussion to Xst. stock few will Until the scheduled believe compliance. call that that like closing Tony a over a Intrusion NASDAQ.I'd panel events February intend to regain plan turn now a is us remain to on compliance the includes present we comments. the The to will

Anthony Scott

partners forward I in the the thank Thanks, our to our patience signs Kim. for to on our encouraging us cybersecurity enterprise.I the focus operator and needs interest Q&A. To strategy.This for And to see you. to cost-effective customers' of concludes their continued we direction financial conclude, that we're solutions gives to call over in right I'll as investors we our personally I Shield support that And confidence sharing and of next heading products. think the now our we're And execute turn family as with prepared journey of look continuing growing satisfying our with for their remarks. continue all want in steps

Operator

H.C. question [Operator is from Instructions] first Our with Buck Scott Wainwright.

Scott Buck

is what ramp over the how really the large Shield is little with can I that and a a cadence that us give agreement time? million on duration color curious, the more $X telecommunications mean, what you should I'm company, contract? Tony, around and

Anthony Scott

great Yes, question.

but years. X X of come the a over will period contemplates full a award the rollout revenue So, years, in

working see So over into And want we as to deploy plan.And the beyond for in what initial data we then, will that Shield I to result process sooner ensuing which ramp opportunity centers, of data and us in the we're our that to up full there's the them, they recognize use their of we already expanded next quarters, an revenue with you'll which contemplated rollout, is, then, also accelerate order. revenue as indicated center. they've out as the the X than recognition fully original things indicated,

very a it's So, we development. think positive

call, we public As the of announcement a so the year, than of I on to more public right more and after first likely the of said this, expect visibility more have on. a sort

Scott Buck

That's helpful. the actual announcement potentially? provide And would name that public customer

Anthony Scott

Yes.

Scott Buck

that super. you That's right that Okay, about on to great. kind that million then, $X.X want now? And guys to is the keep I you Or just the raised, actually you're so or potentially lights looking that ask special Shield et programs, purely you projects put sales? of that are accelerate can some is could there at? capital cetera, towards mean, more that there I marketing

Anthony Scott

said. money spend purposes, Yes, corporate will continued we'll that engineering include general development. marketing for as and That we've

prior the a with want As I've got that family Shield roadmap to on do we've calls, least we mentioned things think X-year of I at of products.

And ahead I our our well. revenue. we'll letting both so, spend as of get and focused Kim on on are that roadmap continue But not

decisions can deals, revenue in we'll of in used. terms we from as could So, these be that best get money we the of how make some best

Scott Buck

last And for That's quickly. question then just a Great. me helpful.

we little is on more the whether side, color level people uncertainty environment macro -- economic government or side, the I on to software. hesitation give and new in really talked not, could a not the a trigger but of the us mean, commercial pull any causing about you the whether on If or

Anthony Scott

of hoped level is, increases in has planned not of they off getting they're staff sharply. happening. they've from you're had staffing that and I'm increases, in The row just things those increased is rate sentiment many even to getting And while or that and budgets And my and availability many in the colleagues increased cases. of industry people able then, X leveled a the friends to on. enjoyed the meant so years some Yes, the are

effective.And you resources that, and people, mean prove. leverage think proof on there more the means factors got valuable, a industry day are X that solutions you've highly A, it those be that that means technology. are And more think truism hard of blocking also dollars people of that we some the technology, to that to CSO case I you of but cases, to. staffs with some in single the the solutions a that solutions show reducing the it's it's different we're so, Intrusion have, are more the in In have generally focus alerting or that favor number and of And the can things automation, efficient every of in

for So, I value that's a high proposition think our success.

Scott Buck

appreciate Great. guys. time, I the

Operator

with from Mid-Atlantic [Operator Instructions] is Rubinfeld Builders. Our next question Michael [ ]

Unknown Analyst

rates the and future and start going to and cost piece of, product sort margin question the mix. #X.And this bigger of a you think you the cash sort on look the when at wanted What I certainly the couple product and of becoming you Tony, yet? show sort to being They're little at single Is the do a reductions Obviously we excited value product? that the any a things. a of the some Shield look feels to it you be once news made you speak adopting say it? as of #X of at looks to bit technology. what you Can admirable a the positive? of comment like of maybe about are obviously are sense people bit great those who look flow about guess adoption like cost percentage revenue the and. point every Shield you're quick able you is your that's controls. there on trying question Can what Congratulations to I just showcase higher about bigger talk little day. get about

Anthony Scott

to process let about our talk Yes, me adoption.

with often the our So, get typically try and other firewall on. that so the door to somebody It's to challenge confused a in we've getting product. try technology is to foot had

our data, firewall from that conversation so calling do devices need we open cases that up from our fair muscles whatever get and proof firewalls them are had time So, somewhere are and well explaining technology what is that enforced these we firewall the technology network place and concept shocked how how once the it's tighten mode, my amount a show on proof of control of firewall traditional we or once customer Internet.And command many really they just that by call actually taking their infected we been homes I of work a when different from really data, the out or see their the wide situation a we to or shown technology does, either do generally there. things with show typical passive our it CTO customer, are a there.And how in I servers and XX for about place in many well through product infected out that historically where let likes past goes being Shield customer In have it's can our to as in a usually value really, the if their and get had or where POV would they're POC, days blocked a then can of speaking that in active all the spend observed leaking on. we've in is actually get in or the mode.And what typical of the we say, sometimes of inside either it and to life or run and we eyes things blocked real week and product that in the case or

get we that once So rate to high a conversion pretty we have point.

dollars all just the [ about at I'm greater that in be this cybersecurity we've need at ]. dent noise and billboards bats is. So little the is making make and We got not I advertising all to company companies trade to a think -- of it. have in aspect. shows billions more what Intrusion probably going little point. for worried got our And hard rest spend awareness to challenge.As this more get a know, that's capability and technology like of to year and at bit a of just point, billions we've a in our And at I'm that marketplace, you

as our strategy the can channel, terms us act value particular force multipliers don't marketplace.In positive, point. to managed of who service use use So, I is to in see providers use partners, cash the immediately others make at predictions for the and want flow this and any

think how I on dependent revenue. ramp all it's we can quickly

point. all we get you high that even may that to aren't that particular join it's space, seen flow companies there's I them companies how some and at cybersecurity pretty in I point might think high the big terms in are market, would to yet. valuations real I have cash love at think while the speculative positive this revenue And in of when

I make can as we predictions. is I any there all want you tell at can get as point. We'll don't to So, quickly this

Operator

with is question Ed Woo from next Ascendiant Our Capital.

Edward Woo

of is best or big out saying thank the I question. high massive massive couple Coast. the get West my Yes, on. was taking going hacking advertisement ones was you for on you profile a data could There breach

some they hear actually that business And and a when these paid Las hacks of big impact hacking noticeable public? profile that a high of getting in there's type are very profile casinos, rumors You money. companies that how high significant these your Vegas ratch are seen Have does amount events? you

Anthony Scott

people case, attention lot think start alarm whether not. more fire, a smoke effectively where, big whenever to I pay working a it's is to their Yes, there's a or Ed,

in. to Everybody they're some nimble we guys big guys? going the And your very event. not their wants And first can own that is I've time. thing technology all today businesses And When And very that and be in asks the speak quick. different reassurance so that next the we we than Board reality certainly hacked, around is, experience are is how when hey, I been get competitors publicity a calls there's lot from reinventing victim.The all those the more better protected? they're are they're and X the bad of your a inventing are

in And be day the so, can't there when the foresee won't hacks I future.

best our that going and protect into lets as I being work quickly. we bodes bad is product, continue But and because mission and we think the most the well the Intrusion threats of I and then government as those, some with to build at ahead stay protect our And Our us to advanced guys, think you're least. future things to very best X into can we for by commercial step see these newest know, that for foreseeable that Shield, the our tried can. can, customers you are against see

bodes I well So the all it us for for future. think

Edward Woo

Great. questions, for I good my Well, answering you guys luck. wish and thanks

Operator

[ Our next ]. question James is from Green

Unknown Analyst

app I it the see when question beta. development and had and leave about we'll its a mobile

Anthony Scott

So, Windows, We'll feature-complete, with we to in and The constant Android are we're Android be customers. Windows have doing right those time. upgrades iOS, and products development. now, and over demoing

see it's it's to of places of that data the it's that have broader it's covering with in how of terms the a the set goes all we'll our vision So, in in the much matter, but whether customers, endpoint. whether cloud, in or for whether broader coverage part of center,

those developments of all spaces further next And think us from the see engineering so, I several cycles. over you'll in

Unknown Analyst

be to technology will focused if commercial wondering Will rolling the had and ordinary previously mentioned that base consumers interests, family I products I eventually access regular you of reach on have you the consumer where were Shield out was eventually. believe will it?

Anthony Scott

our in market in enterprise, featured the business consumer different different a it's available market a -- not at full model It's not the for the model. available It's day. consumers, but the the is It's the That's not product is end at demand. small, same aimed at still is a store of well, think not and But I that Android right have of have the probably the just the day. really today. we we needs It's selling target Android end different different available product. what's our Well, now, medium even. cost

So, I into space getting currently moment. don't see at that the us

Unknown Analyst

with been that was talking plugin integration plugin you a where development. you pfSense previously and stood I had And and about wondering with Netgate, guys Okay. for

Anthony Scott

and with Plugin is right piloting work done, we're now. customers

Operator

this no at further are There time. questions

pass for the remarks. to management back team conference any closing So I'll the

Anthony Scott

thank you latest investors round. who you, management thank the in in to participated on All us especially want team I with our investing our right. and say Well, everyone. this to Board

environment it's As pretty a very not out I there. mentioned,

we New And developing. stepping deliver Year. to I Appreciate everyone and get the And a us next you. don't and we've And this the I call of really the that we up you runway with forward season, and in been in talk, so, our holiday helping time. happy see appreciate exciting we'll set support the products need of if look to all have

Operator

conference concludes your That today's call. Thank for participation. you

You may line. now disconnect your

Intrusion (INTZ) 14 Nov 232023 Q3 Earnings call transcript