Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Intrusion Inc (NASDAQ:INTZ) achieved its third consecutive quarter of revenue growth, indicating positive momentum in its business operations.
• The company signed 20 new Shield logos in 2024, with near-zero churn among existing Shield customers, showcasing strong customer retention.
• Intrusion Inc (NASDAQ:INTZ) is virtually debt-free and has eliminated Series A preferred stock, significantly improving its financial position.
• The company has enough cash to fund operations through fiscal year 2025, reducing the need for additional capital raises.
• Intrusion Inc (NASDAQ:INTZ) regained compliance with NASDAQ's $1 minimum bid price requirement, reflecting improved market confidence.

Negative Points

• Despite revenue growth, the rate of increase is not satisfactory, prompting the company to take additional measures to accelerate growth.
• Shield revenue decreased by 5% year-over-year due to the loss of a large early customer with a non-standard product configuration.
• Gross profit margin decreased to 75% in Q4 2024 from 79% in Q4 2023, primarily due to product mix variations.
• Operating expenses remain high, totaling $3.2 million in Q4 2024, although they have decreased year-over-year.
• The company continues to face challenges in increasing its visibility and market presence, necessitating increased marketing efforts.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with INTZ.

Q: Tony, you mentioned the potential to raise capital for an inorganic opportunity. What would be compelling for you? A: (Tony Scott, CEO) Primarily, it would be an acquisition or arrangement that significantly adds to our product portfolio, making us more attractive to potential customers. We don't have anything specific in mind currently, but we are open to opportunities that could fill gaps in our offerings.

Q: Could you provide more details on the new promotional programs and the expected increase in marketing spend? A: (Tony Scott, CEO) We plan to significantly increase our visibility through relevant social media platforms and engagement with influencers. This doesn't require a lot of money, but it's an area we hadn't invested in before. Now, with more flexibility, we can enhance our market presence.

Q: What is the typical size of a Shield contract, and how do the 20 new customers fit into this? A: (Tony Scott, CEO) The 20 new Shield logos were signed throughout 2024, not just in the last quarter. Contract sizes vary widely, from a few thousand dollars to a couple hundred thousand annually. We are now focusing on larger deals, which is reflected in our pipeline.

Q: How is the current sales cycle for cybersecurity software, especially on the federal side, given the new administration? A: (Tony Scott, CEO) It's a fluid environment, but cybersecurity remains a focus area. Most of our contracts are not in a renewal cycle, so we don't expect short-term impacts. However, new leadership might take time to prioritize spending, potentially elongating the cycle for new contracts.

Q: With $15 million in cash, how is it being utilized, and are there plans to hire additional salespeople? A: (Tony Scott, CEO) The cash is being used to pay off some accounts payable and manage our deficit. We plan to invest wisely, including hiring for a couple of sales positions. We're also focusing on refining our channel sales process to enhance our sales capabilities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.