Intrusion Q1 Earnings Call Highlights

Intrusion (NASDAQ:INTZ) reported sharply lower first-quarter 2026 revenue as delays tied to an expected Department of Defense contract extension weighed on results, but management said it expects improving performance through the remainder of the year as new contracts and partnership activity begin contributing to sales.

President and Chief Executive Officer Tony Scott said the company’s first-quarter results “reflect the negative impact of the previously disclosed delay” in the anticipated Department of Defense contract extension. He said the delay has affected revenue over the past two quarters, but added that Intrusion remains optimistic that financial results will improve during the rest of fiscal 2026.

“This is supported by strengthening sales momentum that’s already visible in the second quarter,” Scott said, citing broader adoption of the P.O.S.S.E. program through the company’s partnership with PortNexus and growth in Intrusion’s Shield installed base.

Revenue Falls Amid Government Contract Delay

Chief Financial Officer Kimberly Pinson said first-quarter revenue was $0.9 million, down 40% sequentially and 50% from the prior-year period. She said the results were affected by delays in the award of a key U.S. government contract, contributing to what she called “an unusually low reported revenue level.”

Consulting revenue totaled $0.8 million in the quarter, compared with $1.1 million in the prior quarter and $1.4 million in the year-ago quarter. Shield revenue was $0.1 million, down from $0.4 million in both the prior quarter and the first quarter of 2025.

Gross profit margin for the quarter was 74%, down slightly from the prior-year period. Operating expenses were $4.2 million, up $0.3 million sequentially and $0.8 million year over year. Pinson said the increase reflected stepped-up investment in commercial activities, including expanded trade show participation and enhanced brand and product marketing initiatives.

Intrusion reported a net loss of $3.6 million, or $0.18 per share, compared with a net loss of $2.1 million in the first quarter of 2025. Pinson attributed the wider loss to lower revenue, primarily from the government funding delay, as well as higher operating expenses.

As of March 31, 2026, Intrusion had $1.4 million in cash and cash equivalents. Pinson said the company entered into a $3 million secured financing agreement in early April, which she said strengthened liquidity and supported near-term operating priorities.

Department of Defense Extension Still Pending

Scott said the Department of Defense delay stemmed from operational and administrative constraints associated with a U.S. government shutdown, as well as geopolitical developments related to the conflict with Iran. Despite the delay in funding, he said Intrusion has continued supporting already deployed critical infrastructure technology, which has been reflected in operating expenses.

“We expect to recognize revenue from this effort in a future quarter and remain confident in expanding our solution across additional regions with the Department of Defense throughout 2026,” Scott said.

During the question-and-answer portion of the call, Ascendiant Capital analyst Ed Woo asked whether the company was still providing services and whether revenue would be recognized retroactively once the contract is approved. Scott said the company is still providing services, but added that the government “can’t retroactively pay for things that weren’t contracted for.” He said Intrusion would bill forward once the contract is in place.

“The customer there is very happy with the solution and we look forward to getting this resolved,” Scott said.

New Texas Contract and Sales Pipeline

Scott highlighted a new customer contract with the state of Texas, describing it as a $4 million annual contract to deliver cyber threat intelligence and critical infrastructure protection. He said the 12-month contract was awarded in recognition of Intrusion’s capabilities and reflects growing demand for its intelligence-driven cybersecurity approach.

“Importantly, we believe that this engagement establishes a strong framework that can be replicated across other U.S. states and territories,” Scott said.

The company also said its ShieldCloud solution on the AWS Marketplace and Microsoft Azure platform is beginning to show promise in expanding the customer pipeline. Scott said those efforts remain in early stages, but management expects increased revenue contribution from the two platforms over the next several quarters.

Pinson said the company expects results to improve through the rest of 2026, driven by additional sales of its OT Defender solution to U.S. government departments and commercial customers, further growth through PortNexus and recognition of revenue from the new cyber threat intelligence and critical infrastructure protection contract.

PortNexus Partnership Gains Traction

Scott said Intrusion’s expanded partnership with PortNexus, launched in February through the P.O.S.S.E. program, continues to progress. The program uses Intrusion’s Shield on-premise technology to help protect law enforcement from cyber threats. Scott said deployments and engagement are ongoing across Texas, Missouri, Oklahoma and Iowa.

In response to questions from Wellington Shields analyst Howard Brous, Scott said Intrusion and PortNexus had demonstrated the MyFlare Alert offering to the majority of counties in Iowa about two months ago and now have four active deployments in Iowa, with several more scheduled over the next few months. He said the company is replicating that sales approach in other states.

Scott said adoption depends in part on local budget cycles, particularly for counties and school districts. He said schools and counties have expressed interest in the solution, but budget approval can vary by locality. The company is also working at the state and federal levels to identify potential grant funding, he said.

Scott described deployments as quick, saying installations typically take one or two days in most cases. He also said Intrusion’s licensing arrangement with PortNexus carries nearly 100% margin for the company because PortNexus handles installation. When Intrusion places a Shield appliance at a sheriff’s office, he said margins are in the mid-70% range.

Management Reiterates Profitability Goal

Scott said artificial intelligence is reshaping cybersecurity by lowering the cost, technical expertise and time required to develop and launch sophisticated attacks. He said customers are seeking solutions that can keep pace with evolving threats and that Intrusion’s AI-assisted platform can help identify malicious actors before they cause harm.

Asked by Woo about cybersecurity spending trends, Scott said spending appears to be “still going up slightly,” adding that AI has increased concern about how easily attacks can be conceived and launched.

Scott reiterated that the company remains on track to transition to profitability by the end of fiscal 2026. In response to Brous, he said the PortNexus opportunity should contribute to improving sequential performance, but would not be “the whole answer” to reaching cash-flow positivity.

“As we move beyond the headwinds of the past 2 quarters, we’re very optimistic that our financial performance will begin to improve through the remainder of fiscal year 2026,” Scott said.

About Intrusion (NASDAQ:INTZ)

Intrusion Inc, a cybersecurity company in the United States. The company offers its customers access to threat intelligence database, which contains the historical data, known associations, and reputational behavior of Internet Protocol addresses. It offers INTRUSION Shield, a zero trust reputation-based Software as a Service solution that inspects and kills dangerous network connections. The company also provides INTRUSION TraceCop, a big data tool that contains an inventory of network selectors and enrichments to support forensic investigations; and INTRUSION Savant, a network monitoring solution that uses the data available in TraceCop to identify suspicious traffic in real-time.