Intrusion(US:INTZ)2020-11-13 05:22Financial Data and Key Metrics Changes - Revenue for Q3 2020 was $1.6 million, down from $1.7 million in the prior quarter and $3.9 million in the same quarter a year ago, impacted by government shutdowns due to the pandemic [9][10] - Gross margin decreased to 58.9% from 60.7% in the prior quarter and 62.1% in Q3 2019 [10] - Operating expenses increased to $2.3 million from $1.7 million in the prior quarter and $0.9 million in the same quarter a year ago [10] - Net loss for Q3 2020 was $1.4 million, compared to a net loss of $0.7 million in the prior quarter and net income of $1.5 million in Q3 2019 [10][11] - Cash equivalents at the end of Q3 2020 were $1.5 million, down from $2.9 million in the prior quarter [12] - Working capital decreased to $1 million from $2.4 million in the prior quarter [12] Business Line Data and Key Metrics Changes - The legacy business continued to be affected by pandemic-related government shutdowns, delaying renewals [9] - The company expects recovery in the legacy business once conditions normalize [9] Market Data and Key Metrics Changes - The company is experiencing a mixed state with government customers, with many still working from home and procurement departments not processing new contracts [19] - A $1.2 million renewal and an additional $1.7 million renewal were secured, with expectations for more small commercial orders [20] Company Strategy and Development Direction - The company is focused on the Shield product, which is in beta testing and has shown promising results in blocking malware attacks [25][29] - The sales team is being built to target both government and commercial markets, with a significant focus on the SMB space [22][30] - The company plans to grow its traditional business while selling Shield across all markets [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the traditional business post-pandemic and post-election [55] - The company is preparing for a significant rollout of the Shield product in early 2021, with expectations of converting beta customers to paying customers [66] Other Important Information - The company raised $18.1 million in net proceeds from a follow-on offering of 3.6 million shares priced at $8 per share [12] - The company is actively hiring to build a sales force and has made several key hires in recent weeks [31][32] Q&A Session Summary Question: What is the strategy for the reseller program? - The company is initially focusing on technology resellers who are aware of the cybersecurity problem, with plans to expand to integrators and consulting firms later [42][43] Question: What is the typical ramp time for reseller partners? - The learning curve for resellers is expected to be very short, with initial productivity within 30 days [44][45] Question: What types of customers will the direct sales force target? - The direct sales force will focus on high-end complex accounts, particularly Fortune 500 companies [46] Question: What feedback has been received from beta testing? - Management expects all beta customers to sign contracts, with positive feedback indicating a desire to roll out the product across multiple subsidiaries [48] Question: How is the company addressing ransomware threats? - The Shield product effectively neutralizes ransomware by preventing it from calling home, thus stopping potential attacks [57][59] Question: When will beta customers convert to paying customers? - Most beta customers are expected to convert to paying customers starting January 4, 2021 [65]