Intrusion(US:INTZ)2024-03-27 01:51Financial Data and Key Metrics Changes - Total revenues for Q4 2023 were $1.4 million, a 7% decline sequentially and a 25% decline year-over-year, primarily due to decreased consulting revenue linked to the federal government's continuing resolution [72] - The net loss for Q4 2023 was $2.8 million or $0.09 per share, an improvement from a loss of $3.2 million or $0.14 per share in Q3 2023, and a loss of $0.25 per share in Q4 2022 [45][72] - Full year revenues for 2023 were $5.6 million, a decrease of $1.9 million compared to 2022 [43] Business Line Data and Key Metrics Changes - Consulting revenue in Q4 2023 totaled $0.9 million, down $0.1 million sequentially and $0.2 million year-over-year, with a full year total of $4.0 million, a decrease of $2.3 million compared to 2022 [43][21] - Shield revenue for Q4 was $0.4 million, flat sequentially but up 37% year-over-year, with full year revenue of $1.6 million, a 36% increase compared to 2022 [44] Market Data and Key Metrics Changes - The company noted a trend of tapering cybersecurity budgets among clients, with many organizations reducing the rate of budget increases from previous years [52][53] - The loss of a significant low-margin consulting contract in Q4 2022 had a full impact on top line revenue in 2023 [33][72] Company Strategy and Development Direction - The company is focused on regaining compliance with NASDAQ listing requirements and has implemented measures to improve liquidity and strengthen the balance sheet [46][19] - Recent product developments include a cloud-based reporting and management platform for Shield, aimed at enhancing customer management capabilities [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2023, including legal issues and fundraising distractions, but expressed optimism about future growth opportunities, particularly in cybersecurity [4][10] - The company anticipates revenue growth from Shield in 2024, driven by new contracts and a strong consulting pipeline once federal budget clarity is achieved [13][21] Other Important Information - A private offering in November 2023 raised approximately $2.3 million for working capital and corporate purposes, with participation from the executive team and existing shareholders [16] - The company executed a 1-for-20 reverse stock split effective March 22, 2024, to help regain compliance with NASDAQ [41] Q&A Session Summary Question: Are there any patterns in the success of selling Shield? - Management noted that the introduction of consolidated reporting and management features for Shield has been well-received by larger clients, contributing to recent sales success [49] Question: What was the dollar amount contributed from the large nonrecurring Shield customer during 2023? - The CFO indicated that the contribution was significant, representing roughly 80% of Shield revenues for the year, but did not provide an exact figure [50] Question: How does the current pipeline look compared to previous periods? - Management clarified that while cybersecurity budgets are not being cut, the rate of increases has slowed, leading to a more cautious approach from CIOs regarding spending [52][53] Question: What are the plans for raising capital beyond the ATM? - The CEO mentioned plans for PIPE transactions similar to previous offerings, with personal investment from him and a small group of supportive investors [55] Question: Will consulting revenues increase following the passing of the federal budget? - Management expressed optimism about new contracts and renewals in the consulting area, anticipating growth once the budget impacts are fully understood [56][57]