Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Intrusion Inc (INTZ, Financial) reported a 29% sequential increase in total revenue for the second quarter, reaching $1.5 million.
- The company signed five new logos, bringing the total new logo count to 14 for the year, indicating strong sales momentum.
- Intrusion Inc (INTZ) has seen zero churn for the quarter, suggesting high customer satisfaction and retention.
- The company has been awarded two new government contracts for its Shield technology, marking significant milestones.
- Intrusion Inc (INTZ) opened a wholly-owned subsidiary in the Philippines to meet growing demand and better serve its expanding customer base in the region.
Negative Points
- Despite the revenue increase, Intrusion Inc (INTZ) reported a net loss of $2.1 million for the second quarter, up from a net loss of $1.7 million in the first quarter.
- Gross profit margin decreased to 76% from 80% in the previous quarter, primarily due to a higher percentage of lower-margin consulting revenue.
- The company experienced a loss of a large early Shield customer, which impacted Shield revenue negatively.
- Operating expenses totaled $3.1 million, although this was a decrease, it still represents a significant portion of the company's costs.
- The sales cycle has been longer than expected, attributed to the complexity of the cybersecurity space, which could delay revenue realization.
Q & A Highlights
Q: Can you provide more color on where you're seeing strength in the pipeline, particularly on the government side?
A: Tony Scott, CEO: We see strength in new capabilities we've developed, which have led to new opportunities and customers. The excitement level remains high, and we expect additional customers in both government and other sectors. Some customers start small but expand significantly once they see the efficacy of our products.
Q: Do you have a date for your annual meeting regarding the potential capital raise?
A: Tony Scott, CEO: Yes, it is scheduled for August 27. The capital from the raise will be used for general corporate purposes and product development, providing us with flexibility.
Q: Are you comfortable with your current operating expenses, and do you expect better operating leverage as Shield scales?
A: Kimberly Pinson, CFO: Yes, we are comfortable with our current operating expenses. We may increase spending on product development and marketing, but we believe we can leverage our current expenses as we grow the top line.
Q: How many of the 14 new logos are from the Philippines, and when will we see revenue from these contracts?
A: Tony Scott, CEO: Slightly more than half of the new logos are from the Philippines. We expect to see revenue from these contracts, including the election contract, starting in Q3.
Q: Can you provide metrics on the size of new government contracts for Shield?
A: Tony Scott, CEO: Our metric for Shield is recurring revenue from subscription models. Consulting contracts are typically task orders on a yearly or monthly basis. We aim to report recurring revenue on an annualized basis soon.
Q: Have you noticed any lengthening of sales cycles due to competition or the economy?
A: Tony Scott, CEO: Sales cycles have taken longer, but not due to competition or the economy. The complexity of the cybersecurity space and the need to educate customers on our unique offerings contribute to longer cycles. Once customers understand the efficacy of our products, they tend to expedite implementation.
Q: Do you expect to be at a multiple of your current run rate by the end of the year with new contracts kicking in?
A: Tony Scott, CEO: Yes, we expect a ramp in the second half of the year as new contracts are implemented, leading to a multiple of our current run rate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
