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II

INTRUSION INC (INTZ)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered sixth consecutive sequential revenue increase to $1.97M (+31% YoY; +5% QoQ), driven primarily by Department of Defense contract expansion and continued Shield adoption .
  • Gross margin held at 77% (down 58 bps YoY), while operating expenses rose to $3.6M (+$0.4M YoY) as management invested in sales/marketing and product development to drive growth .
  • Liquidity strengthened post-quarter: cash and equivalents $2.5M, ST investments $2.0M at 9/30; +$3.0M collected Oct 1, bringing combined cash/ST investments to ~$7.5M, which management expects to fund operations through 2025 into early 2026 .
  • Consensus comparison: revenue modestly beat, EPS modestly missed, EBITDA missed; revenue upside tied to DoD rollouts and early Shield Cloud traction; EPS/EBITDA pressured by higher OpEx to support growth . See Estimates Context table below (values from S&P Global).

What Went Well and What Went Wrong

What Went Well

  • Momentum in critical infrastructure: shipped over 230 units as part of DoD contract; pipeline expanding to additional government and private-sector locations .
  • Cloud expansion: Shield Cloud listed on AWS Marketplace with planned Azure launch; initial customer feedback prompting usability updates and expected adoption acceleration .
  • Resilient demand and near-zero churn underpin recurring trajectory; consulting revenue $1.5M and Shield revenue $0.5M in Q3, reflecting growing customer engagement and mix stability .

Selected quotes:

  • “We shipped over 230 units… as part of our previously announced contract with the Department of Defense… we remain optimistic about closing new agreements” — Tony Scott, CEO .
  • “Third quarter 2025 revenue was $2 million, up 5% sequentially and 31% year over year” — Kimberly Pinson, CFO .
  • “Shield Cloud… on the AWS Marketplace… we’re already seeing encouraging traction… Azure… later this quarter or early in the first quarter of 2026” — Tony Scott .

What Went Wrong

  • Profitability remains a challenge: net loss of $2.1M; operating loss of $2.14M; gross margin down 58 bps YoY due to product/service mix .
  • Operating expenses increased to support marketing and product development, raising near-term cost base and constraining margin progress .
  • EBITDA lagged consensus, reflecting higher OpEx and mix; management flagged potential for continued investment, implying limited near-term operating leverage .

Financial Results

Quarterly Trend (actuals)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$1.504 $1.775 $1.873 $1.966
Gross Profit ($USD Millions)$1.160 $1.343 $1.431 $1.505
Gross Margin %—76% 76% 77%
Operating Expenses ($USD Millions)—$3.4 $3.5 $3.6
Operating Loss ($USD Millions)$(2.038) $(2.093) $(2.086) $(2.136)
Net Loss ($USD Millions)$(2.050) $(2.098) $(2.042) $(2.094)
Diluted EPS ($)$(0.35) $(0.11) $(0.10) $(0.10)
Cash & Equivalents ($USD Millions, period-end)—$10.744 $4.689 $2.527
Short-term Investments ($USD Millions, period-end)——$3.749 $2.000

Notes:

  • Subsequent cash collection: $3.0M received Oct 1; combined cash + ST investments ~$7.5M post quarter .

Q3 2025 Actual vs S&P Global Consensus

MetricActualConsensusSurprise
Revenue ($USD)$1,966,000 $1,907,500*+$58,500 (+3.1%) — bold revenue beat
Diluted EPS ($)$(0.10) $(0.095)*$(0.005) — slight miss
EBITDA ($USD)$(1,711,000)*$(1,310,000)*$(401,000) — miss

Values with asterisk retrieved from S&P Global.

Segment/Revenue Mix (Q3 2025)

SegmentQ3 2025 Revenue ($USD Millions)
Consulting$1.5
Shield (Products)$0.5

KPIs and Operating Metrics

KPIQ3 2025Context
Critical Infrastructure Devices Shipped>230 units DoD deployment; pipeline expanding
Customer ChurnNear zero Supports recurring base and upsell motion
Gross Margin %77% Variability due to product/service mix
Cash & ST Investments (post 10/1)~$7.5M Runway through 2025 into early 2026

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quantitative Revenue/EPS/EBITDA GuidanceFY/Q4 2025Not provided Not provided Maintained (no formal guidance)
Liquidity RunwayFY 2025–2026“Sufficient cash to fund operations into 2026; no need to raise capital in 2025” (Q1) “Sufficient to fund operations through remainder of 2025 and into early 2026” (Q3) Narrowed timing window

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Cloud delivery (AWS/Azure)Focus on strengthening balance sheet to fund growth; early product momentum . Q2: Shield expansion; revenue improvement .AWS listing live; customer feedback driving updates; Azure targeted for late Q4 2025/early Q1 2026 .Positive adoption trajectory; platform readiness improving.
Critical Infrastructure / OT DefenderQ2: $3.0M additional DoD funding; operational deployment of monitoring tools .230+ devices shipped; broader gov/enterprise opportunities; “big-dollar” deal potential ($100k–$200k+) .Expanding pipeline; high-revenue deal profile.
Partner ecosystem (PortNexus)Building pipeline and customer base .Embedded Shield Endpoint in MyFlare; short sales cycles; school districts adopting .Growing channel traction; faster sales cycles.
Macro/government backdropQ1: Contracts unaffected by policy changes .Gov’t shutdown impact minimal to date; expects contracts to proceed post-resolution .Stable; watch for timing effects.
Cost discipline and OpExQ1: OpEx flat YoY . Q2: OpEx $3.5M .OpEx $3.6M; higher S&M for trade shows/brand; potential further investments to scale .Upward investment bias to drive growth.

Management Commentary

  • “Sixth consecutive quarter of sequential top-line growth… expanding Shield Technology through the launch of Shield Cloud on the AWS Marketplace” — Tony Scott, CEO .
  • “Consulting revenue of $1.5 million… Shield revenues totaled $0.5 million… Gross profit margin was 77%… Operating expenses totaled $3.6 million… We may continue to further increase our investment in both product development and sales and marketing” — Kimberly Pinson, CFO .
  • “We shipped over 230 units… opened doors for deployment in other locations… big area, big opportunity… most successful product at this point” — Tony Scott .
  • “Azure Marketplace… we created a built-from-scratch variant of Shield for cloud… standalone Shield broadens customer choice” — Tony Scott .

Q&A Highlights

  • DoD/critical infrastructure: Management sees expanded deployments beyond initial Pacific location; large ticket sizes ($100k–$200k+) and broader commercial applicability; minimal incremental headcount needs .
  • Cloud marketplaces: AWS traction with usability updates; Azure targeted imminently; standalone Shield option to broaden firewall choice; pricing largely unaffected by pfSense coupling .
  • PortNexus/MyFlare: Short sales cycles; school district demand; potential to extend to other endpoint partners .
  • Disclosure thresholds: Will announce significant (>~$100k) deals when contractual terms permit; some Q3 wins will show up as Q4 revenue without prior disclosure .
  • IP and strategic fit: Management affirmed IP value and potential integration with larger cybersecurity suites .

Estimates Context

MetricQ3 2025 ActualQ3 2025 ConsensusBeat/Miss
Revenue ($USD)$1,966,000 $1,907,500*+$58,500 (+3.1%) — bold beat
EPS (Primary/Diluted, $)$(0.10) $(0.095)*$(0.005) — slight miss
EBITDA ($USD)$(1,711,000)*$(1,310,000)*$(401,000) — miss

Forward (Q4 2025, consensus):

  • Revenue: $2,011,000*; EPS: $(0.09)*; estimates reflect continued growth assumptions and early Shield Cloud contribution, while OpEx investments may temper near-term earnings leverage .

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue momentum intact: sixth consecutive sequential increase; DoD and consulting drove Q3; Shield product revenue stable; trajectory supports continued top-line growth into Q4 .
  • Mix and OpEx limit near-term profit: 77% gross margin with variability from mix; OpEx up for demand generation and product; expect continued investment to build pipeline .
  • Cloud marketplace is a strategic catalyst: AWS listing live, Azure imminent; standalone Shield broadens TAM and reduces deployment friction; watch for incremental ARR ramps .
  • Critical infrastructure offers “big-dollar” wins: >230 devices shipped; expanded opportunities across gov’t and private sector; potential for lumpy but material revenue recognition .
  • Liquidity improved: ~$7.5M combined post-quarter cash/ST investments; runway through 2025 into early 2026 reduces near-term financing risk .
  • Disclosure cadence: Some larger wins may only be visible in subsequent revenue due to contractual constraints; monitor 8-Ks and Q4 call for deal updates .
  • Near-term trading lens: Modest revenue beats vs consensus and visible pipeline catalysts (DoD deployments, AWS/Azure expansion) are supportive; watch OpEx/EBITDA trajectory and mix shifts for margin inflection .

Values with asterisk retrieved from S&P Global.