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

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Overview

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.

Key Financial Performance

Revenue for Q3 2025 $6.2 million, compared to $0.3 million for the prior year period. This represents a significant increase due to the acquisition of NTS and rebranding to IPM.

Revenue for 9 months ended September 30, 2025 $17.5 million, compared to $0.8 million in the prior year period. The increase is attributed to the acquisition of NTS and expanded operations.

Operating loss for Q3 2025 $1.4 million, compared to $1.5 million for Q3 2024. The slight improvement is due to operational efficiencies post-acquisition.

Operating loss for 9 months ended September 30, 2025 $3.9 million, compared to $3.5 million for the prior year period. The increase is due to integration costs and operational adjustments post-acquisition.

Net loss for Q3 2025 $1.1 million, compared to $1.5 million for Q3 2024. The improvement is attributed to operational efficiencies and cost management.

Net loss for 9 months ended September 30, 2025 $1.3 million, compared to $2.9 million for the prior year period. The reduction is due to an income tax benefit of approximately $2.1 million recorded in Q1 2025.

Adjusted EBITDA for Q3 2025 Negative $0.3 million, compared to negative $1.5 million for Q3 2024. The improvement is due to better cost management and operational efficiencies.

Adjusted EBITDA for 9 months ended September 30, 2025 Negative $1.1 million, compared to negative $2.9 million for the prior year period. The improvement is due to better cost management and operational efficiencies.

Cash and cash equivalents as of September 30, 2025 $8.3 million, including $1.0 million of restricted cash. This reflects improved cash management and operational performance.

Cash provided by continuing operations for 9 months ended September 30, 2025 $1.0 million, compared to cash used of $0.9 million for the prior year period. The improvement is due to better operational performance and cash flow management.

Deferred revenue for Q3 2025 $3.5 million, which will be recognized as revenue in future quarters as products and/or services are installed.

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Operating Highlights

Newtek Technology Solutions acquisition: IPM completed the acquisition of Newtek Technology Solutions on January 2, 2025, and successfully integrated operations.

Aura AI-powered online safety tool: Launched a tool designed to minimize the impact of data breaches, scams, and online threats for individuals and families.

Heroes program: Introduced a 10% discount on all products and services for military, first responders, healthcare, teachers, and veterinary business owners.

Reseller agreement with MindsDB: Entered into a partnership to provide sophisticated AI capabilities to current and future customers.

Collaboration with IT Ally: Partnered with IT Ally to target lower middle market private equity firms and their portfolio companies.

Operational integration: Integrated operations post-acquisition without interruptions, optimizing expenses and advancing efficiencies.

Customer service model: Implemented a high-touch service model with dedicated U.S.-based account teams for clients.

Focus on cybersecurity and cloud infrastructure: Positioned as a leading managed technology solutions provider in these critical areas.

Stock repurchase plan: Approved a plan to repurchase up to 400,000 shares of common stock, with 151,258 shares repurchased to date.

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Risk or Challenges

Integration of Newtek Technology Solutions: While the integration of Newtek Technology Solutions has been successful so far, there is a risk of operational inefficiencies or disruptions as the company continues to align its processes and systems.

Cybersecurity Threats: The company operates in the cybersecurity and cloud infrastructure space, which is highly vulnerable to increasing cyber threats from hackers, organizations, and even governments. This poses a significant risk to its operations and reputation.

Patent Litigation Proceeds: The company has not recorded any gain contingency from the $65.7 million jury award in its lawsuit against Cisco. The final proceeds are uncertain and subject to significant litigation-related expenses and potential appeals, which could impact financial expectations.

Financial Losses: Despite revenue growth, the company reported a net loss of $1.1 million for Q3 2025 and $1.3 million for the 9 months ended September 30, 2025. This indicates ongoing financial challenges.

Dependence on Key Markets: The company’s focus on legal, healthcare, and finance markets, while providing a competitive advantage, also creates dependency on these sectors. Any downturn or regulatory changes in these industries could adversely affect the company.

Deferred Revenue: The company reported $3.5 million in deferred revenue, which will only be recognized in future quarters. This could delay immediate financial benefits and impact cash flow.

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Guidance & Outlook

Future growth through service expansion: IPM plans to grow by expanding service offerings to existing legacy MTS customers and cross-selling ManyCam software and new services to its historical web hosting customer base.

Operational efficiencies and expense optimization: The company is advancing operational efficiencies and optimizing expenses to drive value for stakeholders.

Focus on cybersecurity and cloud infrastructure: IPM aims to become a leading managed technology solutions provider, emphasizing cybersecurity and cloud infrastructure to protect sensitive data and ensure business continuity.

AI capabilities and collaborations: IPM entered a reseller agreement with MindsDB to provide sophisticated AI capabilities to current and future customers. Additionally, it initiated a collaboration with IT Ally to target lower middle market private equity firms and their portfolio companies.

Stock repurchase plan: The company has a stock repurchase plan for up to 400,000 shares, with 151,258 shares already repurchased at an average price of $1.99.

New product offerings: IPM launched Aura, an AI-powered online safety tool for individuals and families, to minimize the impact of data breaches and scams.

Heroes program: The company introduced a 10% discount program for military personnel, first responders, healthcare workers, teachers, and veterinary business owners.

Deferred revenue and device management: IPM reported $3.5 million in deferred revenue for Q3 2025, which will be recognized in future quarters. The company manages over 9,000 devices under service agreements.

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Shareholder Return Plan

Stock Repurchase Plan: In May 2025, the Board of Directors approved a stock repurchase plan for up to 400,000 shares of common stock, expiring on the one-year anniversary of the approval date. During Q3 2025, the company repurchased 46,658 shares for $88,250. Since inception, 151,258 shares have been repurchased at an average price of $1.99.

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Key Q&A

Q: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?

A:Acquiring sole proprietor or lifestyle-type managed service provider businesses with attractive EBITDA multiples would be strategic. This would involve acquiring customer contracts with term agreements, potentially adding devices under management and monthly recurring revenue. The short-term focus is on growing the existing customer base with similar services to leverage the current infrastructure.

Q:Can you comment briefly on the recent AWS outages? What does IPM bring to the table that others can't?

A:IPM offers solutions that mitigate public cloud outages. The use of private data centers and private cloud ensures that IPM's customers were generally unaffected by the recent AWS outages, which impacted many public cloud users. IPM emphasizes smarter protection.

Q: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 '27 going forward?

A:The company has a clean capital structure and sufficient cash to operate for at least the next 12 months. If an accretive acquisition requiring financing arises, it would be considered.

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

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

Positive8-12

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%.

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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