Intelligent Protection Management - Earnings Call - Q3 2025

Executive Summary

• Q3 revenue was $6.24M, up 9% sequentially and far above Q3 2024’s $0.28M; gross margin was ~50.7% and operating loss was $1.44M as integration continues.
• IPM delivered a revenue beat versus S&P Global consensus ($6.24M vs $5.84M*) and Primary EPS beat on normalized basis (actual -$0.048* vs -$0.07*), while GAAP diluted EPS was -$0.08.
• Adjusted EBITDA loss improved materially to -$0.26M from -$0.38M in Q2 and -$1.45M in the prior-year quarter; beginning Q3, litigation expenses related to Cisco ManyCam are excluded from Adjusted EBITDA (methodology change).
• Cash and equivalents were $7.32M ($8.35M including restricted cash), with no long-term debt; deferred revenue was $3.50M and devices under management exceeded 9,000—supporting near-term visibility.
• Management emphasized private-cloud resilience amid AWS outages, a high-touch service model, and AI partnerships (MindsDB, Aura); potential bolt-on MSP acquisitions could expand recurring revenue, a likely stock narrative catalyst.

Note: Estimates marked with * are Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• Sequential revenue growth of 9% to $6.24M, with strong contribution from Managed IT ($3.79M) and Procurement ($1.70M).
• Adjusted EBITDA improved to -$0.26M, with a 31% sequential improvement in Adjusted EBITDA loss; new methodology excluding litigation expenses enhances visibility into core operations.
• Private-cloud and private data center architecture mitigated customer impact from recent AWS outages; “we don’t just try harder, we protect smarter” (CEO).

What Went Wrong

• GAAP diluted EPS was -$0.08, as operating loss remained elevated at -$1.44M, reflecting integration costs and higher G&A.
• Costs and expenses totaled $7.67M, including $0.51M litigation expenses; operating margin remained negative (-23.0%) despite improving revenue.
• YoY comparisons remain distorted by the business transition; management noted GAAP comparability will normalize starting Q1 2026, limiting clean trend analysis in the interim.

Transcript

Operator (participant)

Good afternoon. Welcome to the Q3 2025 financial results conference call for Intelligent Protection Management Corporation, better known as IPM, for the quarter ended on September 30th, 2025. At this time, all participants have been placed on a listen-only mode. Let me turn the floor over to Joe Diaz of Lytham Partners. Joe, please proceed.

Joe Diaz (Managing Partner)

Good afternoon and welcome to all participating on today's call to review the financial and operating results of IPM for the third quarter ended September 30, 2025. As the operator indicated, my name is Joe Diaz. I'm with Lytham Partners. We are the investor relations representative for IPM. By now, everyone should have access to the earnings results press release, which was issued after the close of market today. This call is being webcast and will be available for replay. During the course of this call, management will include statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements about future results of operations, business strategies and plans, IPM's relationship with its customers, as well as market and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions.

Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks, uncertainties, and assumptions related to factors that may cause actual results to differ materially from those anticipated in the forward-looking statements. These expectations and beliefs may not ultimately prove to be correct. A detailed discussion of such risks and uncertainties is contained in IPM's filings with the SEC, including its annual report on Form 10-K for the year ended December 31, 2024. You should refer to and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

On this call, management will refer to adjusted EBITDA, a non-GAAP measure when used in combination with GAAP results, which provides investors with additional analytical tools to understand the company's operations. For adjusted EBITDA, management has provided a reconciliation to the most directly comparable GAAP financial measure in the earnings press release, which has been posted on the investor relations section of the company's website at www.ipm.com. As previously disclosed on January 2, 2025, IPM completed its acquisition of New Tech Technology Solutions from New Tech One. The company also divested its Pale Talk, Camfrog, and Vumber applications and certain assets and liabilities related to such applications to Meteor Mobile Holdings, which are referred to as the transferred assets. At this time, I'd like to turn the call over to IPM's Chief Executive Officer, Jason Katz.

After Jason's remarks, we'll hear from IPM's CFO, Karen Jenny, and we'll conclude with investor questions that were sent via email. Jason, take it away.

Jason Katz (CEO)

Thanks, Joe, and good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call. We are pleased with the sequential progress made during our first three operational quarters after the acquisition of New Tech Technology Solutions and our successful rebranding to Intelligent Protection Management Solutions or IPM. We continue to advance all components of the company from sales, marketing, accounting, and human capital. We have clearly stated that our focus is to position IPM to be a consistently performing company for the benefit of our customers, employees, and shareholders. Since the January 2rd transactions, we have successfully integrated our operations and serviced our existing customers without interruption or downtime.

Looking ahead, we are well positioned to grow the company through the expansion of our service offerings to existing legacy NTS customers while cross-selling our many CAM software and varying new services to our historical web hosting customer base. Operational efficiencies continue to be advanced and expenses optimized with the goal of driving value for all our stakeholders. Cybersecurity and cloud infrastructure are even more critical to protecting sensitive data, ensuring business continuity, and securing a digital economy in an era of growing cyber threats. We are dedicated to becoming one of the leading managed technology solutions providers with a focus on cybersecurity and cloud infrastructure. As we see it, our job is to protect the heart and soul, as it were, of virtually all businesses today: their data, client information, intellectual property, and financial data, among other things.

There are a load of bad players out there: individual hackers, organizations, and even governments looking to attack corporations as well as American citizens. I've spent the better part of my career in the technology services business and so have the rest of the IPM senior management team. That deep industry experience has led us to provide a white-glove, high-touch service to our clients. Every one of our clients has a dedicated technology manager as a single point of contact. We do not use voice response, telephonic menus, or handoff service calls to agents and call centers in foreign countries. Our clients speak directly to their IPM account team in the United States, people that are familiar with their needs, their business, and the history of their account. This is an important IPM advantage.

We have significant technological expertise, and we operate in large and growing markets where IPM is industry certified in critically important markets, including legal, healthcare, and finance, giving us another significant competitive advantage versus our peers. Those advantages will become more apparent in the quarters and years to come. For the nine months, IPM entered into a reseller agreement with MindDB, a leading open-source AI platform to provide to its current and future customers sophisticated AI capabilities. We initiated a collaboration with IT Ally, a trusted business and technology services provider focused on lower-middle market private equity firms and their portfolio companies. In May 2025, our board of directors approved a stock repurchase plan for up to 400,000 of our existing common stock, which plan expires on the one-year anniversary of such date.

Pursuant to the repurchase plan, we purchased 46,658 shares of common stock during the third quarter of 2025 for an aggregate amount of $88,250. From inception, we have purchased 151,258 shares at an average price of $1.99. We also commenced offering Aura, a leading AI-powered online safety tool for individuals and families designed to help minimize the impact of data breaches, scams, and other online threats to consumers. Subsequent to the end of the quarter, we initiated our Heroes program to provide a 10% discount on all IPM products and services to all existing and future military, first responder, healthcare, teachers, and veterinary business owners. Regarding our patent litigation, on August 29th, 2024, a jury awarded the company $65.7 million in a jury verdict in connection with the lawsuit against WebEx Communications, Cisco WebEx, and Cisco Systems in the U.S. District Court for the Western District of Texas.

On October 8th, 2024, an order granting a motion for final judgment was entered into by the court in connection with the lawsuit. The final judgment was entered in our favor in the amount of the award and started the time for filing any post-trial motions or appeals. The exact amount of the award proceeds to be received by us will be determined based on a number of factors and will reflect the deduction of significant litigation-related expenses, including legal fees. As we previously indicated, we estimate that we would receive no more than one-third of the gross proceeds in connection with the awards, subject to post-trial proceedings, including any potential appellate proceedings by Cisco. We have not recorded any gain contingency in connection with the award.

Having our NTS assets transition from being a division of a larger banking company to an independent publicly traded managed services technology company over the course of the first nine months of 2025 has been gratifying. We look forward to many opportunities to dramatically expand our business in the coming years. With that, let me turn the call over to Kara Jenny, our CFO, for a summary of our financial results for the third quarter and the nine months. Following Kara's remarks, we'll move into the Q&A portion and answer questions that were submitted by email prior to this call. Kara?

Kara Jenny (CFO)

Thank you, Jason. As Jason indicated, we acquired the operations of New Tech Technology Solutions on January 2, 2025, and rebranded the operations to Intelligent Protection Management, or IPM. The quarterly financial comparisons of IPM and the former New Tech Technology Solutions as a division of New Tech One are not comparable from a GAAP perspective. IPM financials will become comparable on a GAAP basis as of the first quarter of 2026. For the three months ended September 30, 2025, revenue totaled $6.2 million, compared to $0.3 million for the prior year period. On a sequential basis, revenue increased 9% from the second quarter of 2025. Revenue for the nine months totaled $17.5 million, compared to $0.8 million in the prior year period. Revenue by product for the three and nine months period ended September 30, 2025, was as follows. Managed information technology revenue was $3.8 million and $10.9 million, respectively.

Procurement revenue was $1.7 million and $3.9 million, respectively. Professional services revenue was $0.5 million and $1.9 million, respectively. Subscription revenue was $0.3 million and $0.8 million, respectively. Operating loss from continuing operations for the three months ended September 30t, 2025, totaled $1.4 million, compared to an operating loss from continuing operations of $1.5 million for the three months ended September 30, 2024. Operating loss from continuing operations for the nine months ended September 30, 2025, totaled $3.9 million, compared to operating loss from continuing operations of $3.5 million for the prior nine months ended September 30th, 2024. Net loss for the three months ended September 30th, 2025, totaled $1.1 million, compared to a net loss of $1.5 million for the three months ended September 30, 2024.

Net loss for the nine months ended September 30th totaled $1.3 million, compared to a net loss of $2.9 million for the nine months ended September 30th, 2024. The reduction in net loss was attributed to IPM recording an income tax benefit during the first quarter of approximately $2.1 million in connection with transactions. Adjusted EBITDA for the three months ended September 30th, 2025, was -$0.3 million, compared to -$1.5 million for the three months ended September 30th, 2024. Adjusted EBITDA for the nine months ended September 30th, 2025, was -$1.1 million, compared to -$2.9 million for the nine months ended September 30th, 2024. As of September 30th, 2025, we had no long-term debt, and cash and cash equivalents totaled $8.3 million, which included $1.0 million of restricted cash.

Cash provided by continuing operations for the nine months ended September 30, 2025, was $1.0 million, compared to cash used in continuing operations for the nine months ended September 30, 2024, of $0.9 million. IPM reported deferred revenue of $3.5 million for Q3 2025, which will be recognized as revenue in future quarters as products and/or services are installed. The company had over 9,000 devices under management at September 30th, 2025, representing the number of endpoints, servers, and network devices that are outsourced to the company under managed service agreements. That completes my comments and will now move on to addressing online submitted questions.

Joe Diaz (Managing Partner)

Okay. Thank you, Kara. We will now move into the question and answer section. One question submitted by investors was, are there any bolt-on acquisitions that would make sense to expand the business or new service offerings that you would like to see added to IPM in the coming years?

Jason Katz (CEO)

Sure. Acquiring sole proprietor or lifestyle-type managed service provider businesses with attractive EBITDA multiples would be strategic in that we would be acquiring customer contracts with term agreements. This has the potential of immediately adding devices under management and monthly recurring revenue and would offer upside potential in other service lines. In the short term, our focus would be to grow our existing customer base with more of the same types of services so that we leverage our existing infrastructure.

Joe Diaz (Managing Partner)

Another question is, can you comment briefly on the recent AWS outages? What does IPM bring to the table that others can't?

Jason Katz (CEO)

That's a great question. We offer potential solutions that mitigate the recent public cloud outages. IPM's use of private data centers and private cloud means that our customers were generally not affected by the recent AWS outages, which impacted many public cloud users. We like to say that at IPM, we don't just try harder; we protect smarter.

Joe Diaz (Managing Partner)

Can you please comment on the capital structure of the company right now? Will there be a need to raise additional capital in the next couple of years, 2026 or 2027 going forward?

Jason Katz (CEO)

We have a very clean capital structure and sufficient cash to run our business for at least the next 12 months. If we found an acquisition that was accretive and required financing, we would definitely consider doing that.

Joe Diaz (Managing Partner)

All right. Thank you, Jason. That concludes the Q&A section. Let me turn the call back over to Jason for closing remarks. Jason?

Jason Katz (CEO)

Thanks, everyone, for your support and for joining us today. We are very grateful for your interest in our business. We look forward to updating the market on our progress, and we continue to execute on our business plan. We will talk with you again to review our fourth quarter and full-year financial results in the first quarter of 2026. Have a great day.

Operator (participant)

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your lines at this time and thank you for your participation.