INTRUSION INC Q4 FY2024 earnings call

• Closed 2024 with sequential growth, third consecutive quarter of revenue improvement, 20 new Shield logos, near zero churn with Shield customers, and expanded pipeline.
• Virtually debt-free, eliminated Series A preferred stock, enough cash to fund operations through fiscal 2025 and beyond, eliminating need for further capital raise in 2025 unless compelling inorganic opportunity.
• Sales and marketing measures: making Shield Cloud available in AWS marketplace, increasing digital marketing on social media, revamping channel program.
• Product updates: launch of Intrusion Shield Command Hub with AI-driven insights, Shield Sentinel appliance, new product for critical infrastructure.
• Financials: Q4 2024 revenue $1.7M (+11% QoQ, +23% YoY), full year 2024 revenue $5.8M (+3% YoY); gross profit margin Q4 2024 75%, down from 79% YoY; operating expenses Q4 2024 $3.2M, flat QoQ, down YoY; net loss improved YoY.

In the fourth quarter of 2024, consulting revenue totaled $1.3 million, an increase of $0.3 million sequentially and $0.4 million year-over-year. Shield revenue in the fourth quarter was $0.4 million, a decrease of $0.1 million both sequentially and year-over-year. For the full year ended December 31, 2024, consulting revenues totaled $4.2 million, an increase of $0.2 million from the prior year, while Shield revenue was $1.6 million, a decrease of $0.1 million or 5% from 2023 full year revenue. Consulting revenue contributed significantly to the annual increase, and Shield revenue decline was offset by new customers and a DoD contract.

• No intention to raise capital in 2025 unless compelling inorganic opportunity exists.
• Filed $100 million replacement S-3 shelf registration, providing financial flexibility for responding to opportunities.
• Plan to accelerate growth via sales and marketing initiatives, with potential increase in sales/marketing investment as revenue grows.

• Uncertainty around market conditions affecting sales.
• Dependence on successful execution of sales and marketing programs.
• Uncertainty regarding inorganic opportunities and their impact on the business.

Q: Scott Buck from H.C. Wainwright asked about what would be compelling for an inorganic opportunity, typical Shield contract size, and new promotional programs.

A: Tony Scott responded that a compelling inorganic opportunity would be an acquisition or arrangement adding to product portfolio; Shield contracts vary widely from small to a couple hundred thousand annually; there will be increased marketing on social media and with influencers.

Q: Ed Woo from Ascendiant Capital inquired about sales cycle for cybersecurity software, especially federal side and enterprise customers.

A: Tony Scott said federal side is a fluid environment with potential elongated cycle for new stuff but steady for existing; enterprise concerns about cyberattacks are increasing, portending well for the industry.

Q: Harold Zirkin from HZ Investments asked about cash deployment, hiring salespeople, and Shield client participation increase.

A: Tony Scott said cash will be invested wisely, budget has positions for sales hires, and roughly a third of 20 Shield clients have increased their commitment.

Q: Howard Brous from Wellington Shields asked about size and geographic areas of opportunities.

A: Tony Scott stated focus on deals $100,000 or more, active in Asia-Pac and U.S., pipeline has multiples of $100,000 deals.