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01/11 11:04
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates positive sentiment due to several factors: strong financial performance driven by DoD contracts, expansion in AWS and Azure marketplaces, and promising partnerships like PortNexus. Despite some margin decline, the company shows potential for growth with new revenue opportunities like OT Defender. The Q&A reveals optimism about future projects and market expansion, although there is some uncertainty in specific revenue projections. Overall, the strategic initiatives and partnerships suggest a positive outlook for the stock price in the short term.
Total Revenue $2.0 million, representing a 5% increase compared to the previous quarter and a 31% increase year-over-year. This growth was largely driven by the contract expansion with the Department of Defense.
Consulting Revenue $1.5 million, up $0.1 million sequentially and $0.4 million year-over-year. Growth was driven by expansion of work performed under the contract with the U.S. Department of Defense.
Shield Revenue $0.5 million, relatively flat sequentially but up approximately $0.1 million year-over-year. The increase primarily reflects the work performed under the previously noted DoD contract work.
Gross Profit Margin 77%, down 58 basis points year-over-year. This decline is consistent with expected variability based on product and service mix.
Operating Expenses $3.6 million, an increase of $0.1 million sequentially and $0.4 million year-over-year. The sequential increase was largely driven by increased sales and marketing expenses related to trade shows and brand awareness programs. The year-over-year increase was due to higher share-based compensation, timing of merit increases, and minor staffing changes.
Net Loss $2.1 million or $0.10 per share, unchanged compared to the net loss for the third quarter of 2024.
Cash and Cash Equivalents $2.5 million as of September 30, 2025, with an additional $3 million received post-quarter related to the DoD contract extension, increasing the total cash position to $7.5 million.
Launch of Shield Cloud on AWS Marketplace: Shield Cloud was launched on the AWS marketplace, expanding customer access to Shield technology and positioning the cybersecurity engine in an innovative space. Early traction with potential customers is expected to contribute positively to financial results in Q4 2025 and FY 2026.
Upcoming launch of Shield Cloud on Azure: Shield Cloud is set to launch on Microsoft's Azure Cloud platform later in Q4 2025 or early Q1 2026, further expanding customer reach.
Expansion in critical infrastructure solutions: Over 230 units of Shield critical infrastructure devices were shipped under a Department of Defense contract. The company is pursuing additional contracts in the private sector and at federal, state, and local government levels.
Partnership with PortNexus: Strong demand for Shield endpoint embedded in PortNexus' MyFlare solution, particularly among school districts and law enforcement, is driving adoption.
Revenue growth: Q3 2025 revenue was $2 million, a 5% sequential increase and 31% year-over-year growth, driven by the Department of Defense contract expansion.
Gross profit margin: Gross profit margin was 77%, down slightly year-over-year due to product and service mix variability.
Operating expenses: Operating expenses increased to $3.6 million, reflecting higher sales and marketing expenses and share-based compensation.
Government and non-government opportunities: Despite a government shutdown, the company has not seen significant impact and continues to expand its pipeline of non-government opportunities.
Investment in growth: The company is increasing investments in product development and marketing to accelerate customer base growth.
Government Shutdown Impact: The ongoing government shutdown has the potential to delay or disrupt government contracts, which are a significant part of the company's revenue stream. Although no immediate impact has been observed, the situation remains uncertain.
Operating Expenses: Operating expenses have increased due to strategic investments in product development, sales, and marketing. This could pressure profitability if revenue growth does not keep pace with these expenses.
Customer Mix Variability: The company anticipates changes in its customer mix as it seeks deeper penetration in both governmental and commercial sectors. This could introduce variability and risks in revenue predictability.
Gross Profit Margin Variability: Gross profit margin decreased slightly due to variability in product and service mix. This could impact overall profitability if the trend continues.
Cash Position and Liquidity: While the company has sufficient cash to fund operations through early 2026, its reliance on contract extensions and cash inflows from specific projects like the DoD contract could pose liquidity risks if these are delayed or do not materialize as expected.
Launch of Shield Cloud on AWS Marketplace: The company expects this launch to drive long-term growth by expanding customer access to Shield technology and positioning the cybersecurity engine in innovative spaces. Early traction with new customers is anticipated to positively impact financial results in Q4 2025 and throughout fiscal year 2026.
Launch of Shield Cloud on Microsoft Azure: The company plans to launch Shield Cloud on Microsoft's Azure Cloud platform later this quarter or early Q1 2026, further expanding customer reach.
Shield Critical Infrastructure Offering: The company shipped over 230 units as part of a Department of Defense contract and is pursuing additional contracts in the private sector and at various government levels. This is seen as a promising opportunity due to the growing need to protect critical infrastructure from cyber threats.
Partnership with PortNexus: Strong demand for Shield endpoint embedded in the MyFlare solution is expected to drive further adoption in coming quarters, particularly among school districts.
Government and Non-Government Contracts: The company expects additional government contracts once the current government shutdown is resolved and is seeing an expanding pipeline of non-government opportunities.
Increased Investment in Product Development and Marketing: The company plans to continue increasing investments in product development and sales and marketing to accelerate customer base growth, which will result in higher operating expenses.
The selected topic was not discussed during the call.
The earnings call indicates positive sentiment due to several factors: strong financial performance driven by DoD contracts, expansion in AWS and Azure marketplaces, and promising partnerships like PortNexus. Despite some margin decline, the company shows potential for growth with new revenue opportunities like OT Defender. The Q&A reveals optimism about future projects and market expansion, although there is some uncertainty in specific revenue projections. Overall, the strategic initiatives and partnerships suggest a positive outlook for the stock price in the short term.
The earnings call indicates positive financial performance with a 28% revenue increase year-over-year, driven by a significant DoD contract. Despite a slight increase in operating expenses, the company is managing losses effectively. The partnership with PortNexus and AWS Marketplace availability are strategic positives. The Q&A reveals optimism about future contracts and market opportunities, particularly in defense and critical infrastructure. However, concerns about customer mix and long sales cycles are noted. Overall, the sentiment is positive, with potential for stock price appreciation, especially if new contracts materialize.
The earnings call reveals a mixed outlook. Financially, there is a positive revenue increase, but gross margins have declined, and net loss has widened. The Q&A section highlighted competitive pressures and regulatory uncertainties, with management providing unclear responses on growth potential. The entrance into the AWS marketplace and potential DoD expansion are positive, but the lack of specific guidance on break-even points and revenue from new partnerships tempers optimism. Without a clear market cap, the prediction remains neutral due to the offsetting factors.
The earnings call presents a mixed picture. Positive aspects include revenue growth and improved net loss, but concerns arise from declining gross margins and customer retention issues. The Q&A reveals some uncertainty in management's responses, especially regarding strategic focus and promotional efforts. The registered direct offering could dilute stock value. Overall, with no strong catalysts or clear guidance shifts, the stock price is likely to remain stable.
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