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II

INTRUSION INC (INTZ)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $1.775M (+6% q/q, +57% y/y) and gross margin was 76%; net loss was $2.098M and diluted EPS was -$0.11. Management reported the fourth consecutive quarter of sequential revenue growth and near-zero churn.
  • Results beat Wall Street consensus: revenue $1.775M vs $1.652M estimate (+7.4%), EPS -$0.11 vs -$0.175 estimate; EBITDA slightly below consensus. Bold beat on revenue and EPS reflects improving execution. Values retrieved from S&P Global.*
  • Balance sheet de-risking: eliminated remaining debt via equity exchange, retired $10.1M notional Series A preferred, and ended Q1 with $10.7M cash; management guides cash runway through 2025 into early 2026, with no planned capital raises in 2025.
  • Catalysts: AWS Marketplace listing for Shield Cloud in Q2 (expected revenue contributions in H2 2025), PortNexus partnership embedding Shield Endpoint (initial revenue expected late Q2), and potential DoD relationship expansion.

What Went Well and What Went Wrong

What Went Well

  • Fourth consecutive quarter of sequential revenue growth; Q1 revenue +6% q/q and +57% y/y, driven by new logos and a DoD award using Shield and consulting. “Another step in the right direction…positions us well to achieve our goal of generating sustainable growth and profitability.”
  • Balance sheet cleanup and liquidity: debt eliminated; $10.7M cash; management confident in funding operations through 2025 into early 2026. “Fully eliminating our outstanding debt and removing the need for additional capital in 2025.”
  • Go-to-market progress: Shield Cloud to AWS Marketplace in Q2 with H2 contribution; revamp of channel program and pricing mechanics for MSPs/MSSPs; near-zero churn maintained.

What Went Wrong

  • Gross margin down to 76% from 80% y/y due to product mix; Shield revenue still small ($0.4M), with mix heavily skewed to consulting ($1.4M).
  • Net loss widened y/y to -$2.098M (vs -$1.716M), driven by an interest credit in Q1 2024 that did not recur; operating expenses rose sequentially to $3.4M.
  • Growth pacing and sales cadence: management acknowledged deals slipping quarter-to-quarter and onboarding delays; government concentration remains high (92% of revenue), creating exposure to federal-budget timing.

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$1.131 $1.504 $1.676 $1.775
Gross Profit Margin %80% 77% 75% 76%
Operating Expenses ($USD Millions)$3.400 $3.200 $3.200 $3.400
Operating Loss ($USD Millions)$(2.472) $(2.038) $(1.903) $(2.093)
Net Loss ($USD Millions)$(1.716) $(2.050) $(1.957) $(2.098)
Diluted EPS ($USD)$(0.94) $(0.35) $(0.36) $(0.11)
Cash And Equivalents ($USD Millions)$0.122 $1.051 $4.851 $10.744

Segment breakdown:

Segment RevenueQ1 2024Q4 2024Q1 2025
Consulting ($USD Millions)$0.700 $1.300 $1.400
Shield ($USD Millions)$0.400 $0.400 $0.400

Q1 2025 KPIs:

KPIQ1 2025
Government Revenue Mix (%)92%
Sequential Revenue Growth (%)6%
Gross Margin (%)76%
Cash And Equivalents ($USD Millions)$10.744

Actual vs Wall Street Consensus (Q1 2025):

MetricActualConsensusSurprise# of Estimates
Revenue ($USD Millions)$1.775 $1.6525*+$0.1225 (+7.4%)2*
Primary EPS ($USD)$(0.11) $(0.175)*+$0.0652*
EBITDA ($USD Millions)$(1.553) $(1.5365)*$(0.0165) miss2*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueH2 2025NoneAWS Marketplace expected to contribute to revenue in H2 2025Updated qualitative outlook
Shield Cloud AvailabilityQ2 2025NoneLaunch on AWS Marketplace in Q2 2025New timing disclosed
Operating ExpensesFY 2025NoneMay increase to accelerate sales/marketing and product development; spending vigilance maintainedUpdated qualitative outlook
Capital RaisesCY 2025Avoid raises if possibleNo plans to raise capital in 2025; $100M S-3 effective; baby shelf limitations removedMaintained “no raise” stance; added flexibility
Cash RunwayThrough early 2026Not specifiedSufficient capital to fund operations through 2025 and into early 2026New qualitative guidance
Government Contracts2025Budget uncertainty notedNo current impact to revenues; potential to expand DoD relationshipMaintained; cautiously constructive
Pricing ApproachOngoingStandard annual/multi-yearMSP-friendly monthly pricing displays; AWS bundles; continued govt annual increasesRefined mechanics, competitive stance unchanged

No formal numerical guidance (revenue, margin, EPS, tax, dividends) was provided.

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
AI/Technology initiativesIntroduced Shield Sentinel (100Gb monitoring) and Command Hub with AI insights Continued portfolio investment; refocus to larger deals AWS Marketplace launch; pilots in critical infrastructure; endpoint integration via PortNexus Accelerating productization
Supply chain/onboarding cadenceNoted variability; sequential growth +3% revenue Deals slipping; onboarding delays; process revamp Acknowledged continued slippage; channel/pricing revamp to stabilize cadence Improving process, execution risk persists
Tariffs/macro/federal budget—Fluid federal environment; cyber protected priority; possible elongated cycles No impact to existing gov contracts; awaiting budget clarity Neutral to positive
Product performance (Shield)Shield revenue +49% q/q Shield rev $0.4M; 20 new logos in 2024 Shield rev $0.4M; near-zero churn; consulting $1.4M Stable base; growth to come via channels/marketplaces
Regional trendsAsia Pac opportunities growing Focus on U.S. larger deals; Asia Pac strong Demand in U.S. and Asia Pac; RSA interest strong Broadening
Regulatory/legal—SEC matter reimbursement; resolving legacy issues Baby shelf limitation lifted; S-3 effective; debt eliminated Cleaned up; flexibility up
R&D executionSentinel and Command Hub enhancements Continued R&D; roadmap for endpoint/cloud Ongoing investment; critical infrastructure pilots expanding Sustained investment

Management Commentary

  • “The first quarter of 2025 marked another meaningful milestone…fourth consecutive quarter of sequential revenue growth…a new commercial go-to-market partnership…accelerating awareness” (Tony Scott, CEO).
  • “We were able to take meaningful steps…to strengthen our balance sheet…fully eliminating our outstanding debt and removing the need for additional capital in 2025.”
  • “We’re progressing…to make our Shield Cloud product available on the AWS marketplace…we will begin to see some positive contributions from this initiative…during the second half of fiscal year 2025.”
  • “Sales to U.S. government entities represented 92% of revenues in the first quarter of 2025.” (CFO)
  • “We now have sufficient capital to fund our operations through the remainder of calendar year 2025 and into early 2026.” (CFO)

Q&A Highlights

  • Pricing mechanics evolving to suit MSP/MSSP monthly pricing and AWS bundle expectations; not cutting price levels, aiming to ease adoption and partner economics.
  • AWS Marketplace go-to-market: plan to utilize Amazon’s tiered awareness programs and best practices; expected launch Q2 with H2 revenue contribution.
  • DoD relationship expansion: active conversations and meetings (RSA week); management sees opportunity to broaden engagement.
  • Shield revenue detail: $0.4M in Q1 (up vs Q4), fully backfilled loss of large early adopter; near-zero churn maintained.
  • Market tone: RSA attendance robust; CIO budgets for cybersecurity remain strong; AI pervasive in the sector.
  • Growth acceleration: management targets bookings and revenue acceleration in H2, via AWS, channels, and critical infrastructure offerings.

Estimates Context

  • Revenue and EPS beat consensus (revenue +7.4% above, EPS +$0.065), while EBITDA modestly missed; estimate depth thin (two estimates). Values retrieved from S&P Global.*
  • Implication: Consensus likely to inch higher on revenue trajectory and EPS loss narrowing; visibility remains limited given small coverage and consulting-heavy mix.

Key Takeaways for Investors

  • Strong beat on revenue and EPS and fourth straight sequential growth quarter underscore improving execution; watch for sustained momentum beyond consulting.
  • Balance sheet cleanup and $10.7M cash provide runway into early 2026 with no planned 2025 raises—reduces dilution risk; S-3 shelf adds opportunistic flexibility.
  • Near-term catalysts: AWS Marketplace listing (Q2) with expected H2 contributions, PortNexus endpoint integration (initial late-Q2 revenue), and potential DoD expansion.
  • Mix risk: 92% government revenue concentration and product mix driving margin variability; any federal budget disruptions could affect cadence.
  • Execution focus: Channel revamp and pricing mechanics are intended to reduce deal slippage and onboarding delays—monitor bookings trajectory in Q2/Q3.
  • Medium-term thesis: Expanding product set (Sentinel, Command Hub, critical infrastructure) plus marketplace distribution could shift mix toward higher-margin Shield revenue.
  • Trading setup: Positive estimate surprises and balance sheet de-risking are stock-supportive; incremental proof points will be AWS traction, larger commercial wins, and sustained y/y growth in Shield.