Intelligent Protection Management Corp. (IPM) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings report shows strong revenue growth due to the NTS acquisition, improved financial performance with reduced losses, and positive cash flow. The stock repurchase plan adds a positive sentiment. Despite risks in integration and cybersecurity, management's clear communication in the Q&A and optimistic guidance for future growth and margin improvement contribute positively. The market is likely to react positively in the short term, with a potential stock price increase between 2% to 8%.

Key Financial Performance

Revenue for Q2 2025 $5.7 million, compared to $0.3 million in Q2 2024, representing a significant increase. The increase is attributed to the acquisition of NTS and the rebranding of the company.

Revenue for the first 6 months of 2025 $11.2 million, compared to $0.5 million in the prior year period, showing a substantial increase due to the acquisition of NTS.

Managed Information Technology revenue for Q2 2025 $3.5 million, contributing significantly to the total revenue.

Procurement revenue for Q2 2025 $1.2 million, contributing to the overall revenue growth.

Professional services revenue for Q2 2025 $0.7 million, part of the diversified revenue streams.

Subscription revenue for Q2 2025 $0.3 million, adding to the total revenue.

Net loss from continuing operations for Q2 2025 $1.1 million, compared to $1.3 million in Q2 2024, showing a reduction in losses due to an income tax benefit recorded in Q1 2025.

Net loss for the first 6 months of 2025 $0.2 million, compared to $1.1 million in the prior year period, reflecting improved financial performance.

Adjusted EBITDA for Q2 2025 Negative $0.4 million, compared to negative $0.9 million in Q2 2024, indicating an improvement in operational efficiency.

Adjusted EBITDA for the first 6 months of 2025 Negative $0.9 million, compared to negative $1.4 million in the prior year period, showing progress in reducing operational losses.

Cash provided by operations for the first 6 months of 2025 $0.9 million, compared to cash used of $0.1 million in the prior year period, demonstrating improved cash flow management.

Deferred revenue as of June 30, 2025 $3.9 million, to be recognized as revenue in future quarters.

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Operating Highlights

HPE Private Cloud AI Solution Partnership: IPM was selected by Hewlett Packard Enterprise as an accredited partner for its HPE Private Cloud AI solution.

Aura Online Safety Solution: IPM commenced offering Aura, an AI-powered online safety solution for individuals and families to minimize the impact of data breaches, scams, and online threats.

Collaboration with IT Ally: IPM initiated a collaboration with IT Ally, targeting lower middle market private equity firms and their portfolio companies.

Revenue Growth: Revenue for Q2 2025 was $5.7 million, a significant increase from $0.3 million in Q2 2024, and a 4% sequential increase from Q1 2025.

Net Loss Reduction: Net loss from continuing operations for the first half of 2025 was $0.2 million, compared to $1.6 million in the same period in 2024.

Adjusted EBITDA Improvement: Adjusted EBITDA for Q2 2025 was negative $0.4 million, an improvement from negative $0.9 million in Q2 2024.

Acquisition and Rebranding: IPM acquired Newtek Technology Solutions (NTS) and rebranded itself to focus on managed technology services, particularly in cybersecurity and cloud infrastructure.

Stock Repurchase Plan: The Board approved a stock repurchase plan for up to $400,000 of outstanding common stock.

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Risk or Challenges

Integration of NTS operations: The transition of NTS assets from a division of a larger banking company to a standalone technology-focused company may pose operational challenges, including maintaining service quality and ensuring seamless integration.

Cybersecurity threats: The company operates in a sector highly vulnerable to cyber threats, including attacks from hackers, criminal organizations, and hostile governments, which could compromise sensitive data and client trust.

Patent litigation uncertainty: The outcome of the $65.7 million jury award against Cisco is uncertain due to potential post-trial motions or appeals, and the company expects to receive no more than one-third of the gross proceeds after significant litigation-related expenses.

Financial performance: Despite revenue growth, the company reported a net loss of $1.1 million for Q2 2025 and negative adjusted EBITDA, indicating ongoing financial challenges.

Dependence on key partnerships: The company's growth strategy relies on partnerships, such as with Hewlett Packard Enterprise and IT Ally, which may pose risks if these collaborations do not yield expected results or are disrupted.

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Guidance & Outlook

Future growth strategy: IPM plans to grow through the expansion of service offerings to existing legacy NTS customers and cross-selling ManyCam software and new services to its historical web hosting customer base. This strategy is expected to enhance operational efficiencies and drive stockholder value.

Market positioning: The company aims to become a leading managed technology solutions provider with a focus on cybersecurity and cloud infrastructure, leveraging its industry certifications in legal, healthcare, and finance.

Partnerships and collaborations: IPM was selected by Hewlett Packard Enterprise as an accredited partner for its HPE Private Cloud AI solution and initiated a collaboration with IT Ally, targeting lower middle market private equity firms and their portfolio companies.

Product offerings: The company commenced offering Aura, an AI-powered online safety solution for individuals and families, designed to mitigate the impact of data breaches, scams, and other online threats.

Stock repurchase plan: The Board approved a stock repurchase plan for up to $400,000 of outstanding common stock.

Deferred revenue: IPM reported $3.9 million in deferred revenue to be recognized in future quarters as products and services are installed.

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Shareholder Return Plan

Stock Repurchase Plan: The Board approved a stock repurchase plan for up to $400,000 of our outstanding common stock.

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Key Q&A

Q:Help us understand the $1.0 million in restricted cash. Are the funds prepayments by customers or tied to any specific obligations or covenants? Why is it classified as restricted cash?

A:The $1 million in restricted cash is collateralized by a CD as part of a secured revolving line of credit agreement with an affiliate of NewtekOne, Inc. It is classified as restricted cash as of June 30, 2025, and no amounts have been borrowed on the line of credit.

Q:Can you discuss which activity you might expect to generate the most traction for the remainder of the year among cross-selling existing clients, NewtekOne referrals, free security evaluations, and potential M&A transactions?

A:The referral program is expected to generate the most traction. Even in its early stages, introductions have started to cultivate, and the company believes word of mouth is a cost-effective way to promote its products and services.

Q:How should we think about growth and margin improvement over the next 6 to 12 months? What do you think provides the best way for an outsider to judge the company's progress?

A:The company aims to increase top-line consecutive growth and improve adjusted EBITDA with the goal of being adjusted EBITDA positive by early 2026. They are also looking to reduce expenses and implement marketing initiatives. Revenue can be lumpy due to revenue recognition.

Q:What effect, if any, could the current proposed tariff increases have on IPM's business?

A:The company does not anticipate that an increase in tariffs will have a material impact on its business in fiscal 2025. They will continue to monitor the issue and reassess based on the changing landscape.

Q:Review of Unclear Management Responses

A:None of the questions were avoided or lacked clarity. All responses were direct and provided sufficient detail.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

IPM Transcript

Intelligent Protection Management Corp. (IPM) Q3 2025 Earnings Call Transcript

Positive11-12

The earnings call reveals strong revenue growth and improved operational efficiencies, resulting in better EBITDA and reduced net losses. The strategic expansion and new partnerships, particularly with Hewlett Packard Enterprise, are positive indicators. The stock repurchase plan and deferred revenue also suggest confidence in future performance. The Q&A section further supports a positive outlook, with management addressing concerns effectively and highlighting strengths like private cloud solutions. Despite ongoing losses, the optimistic guidance and strategic initiatives suggest a positive stock price movement in the short term.

Intelligent Protection Management Corp. (IPM) Q2 2025 Earnings Call Transcript

Positive8-12

Intelligent Protection Management Corp. (NASDAQ:IPM) Q1 2025 Earnings Call Transcript

Positive5-16

The acquisition of Newtek Technologies Solutions and focus on cloud and cybersecurity are strategic positives, with EPS surpassing expectations. Despite risks in integration and competition, management's expansion efforts and improved operational efficiencies are promising. Lack of specific guidance and unclear cross-selling metrics are concerns, but overall sentiment is positive.

Intelligent Protection Management Corp. (IPM) Q1 2025 Earnings Call Transcript

Positive5-14

The earnings call summary reveals strong revenue growth, a successful acquisition, and a new stock repurchase plan, all of which are positive indicators. Despite ongoing litigation risks and competitive pressures, the company's strategic shift towards cloud infrastructure and cybersecurity, along with potential M&A opportunities, bodes well for future growth. The Q&A section indicates proactive marketing strategies and cross-selling efforts. Overall, the combination of revenue increase, optimistic strategic initiatives, and shareholder return plans suggests a positive stock price movement in the short term.

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