Intrusion(US:INTZ)2019-11-12 02:20Financial Data and Key Metrics Changes - Revenue for Q3 2019 was $3.9 million, an increase from $2.7 million in Q3 2018 and a slight decrease from $4 million in Q2 2019 [6] - Gross profit margin was 62% in Q3 2019, down from 64% in Q3 2018 and up from 61% in Q2 2019 [6] - Operating expenses decreased to $0.9 million in Q3 2019 from $1 million in Q3 2018 and $0.7 million in Q2 2019 [6] - Net income for Q3 2019 was $1.5 million, compared to $0.62 million in Q3 2018 and $1.8 million in Q2 2019 [7] Business Line Data and Key Metrics Changes - The company has seen an uptick in orders and research projects, which has fully utilized staff and reduced overhead [9] - New capabilities have been built into three areas: improvements to Savant and STA, integration of machine learning capabilities into TraceCop, and development of a new security solution in the zero trust space [14] Market Data and Key Metrics Changes - The company is awaiting new government budgets, which typically start on October 1 each year, affecting order flow [11] - Renewal orders are expected to come in over the next month, with some large orders from late 2018 up for renewal [12] Company Strategy and Development Direction - The company plans to grow into new areas, particularly within the Department of Defense (DoD) market, leveraging new hires with strong backgrounds in cybersecurity [15][16] - There is a focus on expanding marketing and sales efforts, including potential partnerships to broaden the customer base [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about upcoming funding for new projects and the potential for additional orders in the next quarters [13] - The company is working on a list of compromised DoD networks to target for sales opportunities [16] - Management acknowledged the challenges posed by the continuing resolution in federal budgeting but remains hopeful for new contracts [95][100] Other Important Information - The company has built cash reserves, paid off debt, and hired new staff to support growth initiatives [15] - The passing of a key co-founder has impacted the company, but management is committed to maintaining operational continuity [10][23] Q&A Session Summary Question: Can you provide details on potential contracts for Savant? - Management indicated a potential contract in the range of $2 million to $5 million, still in the scoping phase [28] Question: What is the status of state contracts mentioned previously? - Two state contracts are expected to move into Q1 2020 [34] Question: Are renewals in the budget for Q4? - Most renewals are in budget, except for two large contracts from 2018 that are pending renewal [36][38] Question: What is the procurement status? - There are about $3.6 million in procurement for renewals, with additional hopeful contracts in the pipeline [39][42] Question: Will the company provide updates on new contracts? - Management agreed to provide updates on new contracts as they are realized, especially if they are material [101][107] Question: What is the company's approach to finding a commercial partner for Savant? - The company is exploring partnerships but acknowledges the challenges of working with larger, slower-moving organizations [96][98] Question: How does the company price its products? - Pricing varies by product, with Savant installations starting around $200,000 and TraceCop datasets averaging $1.2 million annually [116][119] Question: What is the impact of contract lapses on customers? - Customers may face increased cybersecurity risks if they do not renew contracts, as the services address new challenges [136]