Intrusion Inc. (INTZ) research, news, and more from GeoInvesting

Company description

Mon, 01 Jul 2013 04:00:00 GMT

Intrusion Inc. develops, markets, and supports various entity identification, high speed data mining, regulated information compliance, data privacy protection, and network intrusion prevention/detection products primarily in the United States. Its product portfolio comprises TraceCop, which includes a database of worldwide IP addresses that aid in the identification and location of individuals involved in cyber crime, and analysis software and a GUI interface to assist analysts in locating the bad guys; and Savant, a high-speed network data mining product that organizes the data into networks of relationships. The company also offers Compliance Commander, a software product which operates on a standard computer or server and connects in-line to the customers’ network for regulated information and data privacy protection; and SecureNet, a software product for network intrusion prevention and detection. In addition, it provides design and configuration, project planning, training, installation, and maintenance services; and resells computers and servers for the implementation of its software. The company’s customers primarily include the United States federal government, foreign government, and local government entities; banks, credit unions, and other financial institutions; and hospitals and other healthcare providers. Intrusion Inc. markets and distributes its products through direct sales force to end-users, value-added resellers, system integrators, managed service providers, and distributors. The company was formerly known as Intrusion.com, Inc. and changed its name to Intrusion Inc. in November 2001. Intrusion Inc. was founded in 1983 and is headquartered in Richardson, Texas.

Research

Wed, 05 May 2021 14:50:42 GMT

Closing Out INTZ From All Model Portfolios and Long Disclosures

Revenue cycle from the new product launch is going to take more time than anticipated (not in line with previous hype), so we are moving on from Intrusion Inc (OOTC:INTZ) from all model portfolios and long disclosures after a really strong run. From our initial long disclosure at $1.35 to highs of $29.90. The stock is trading at around $11 in premarket trading. Timeline of events:

May 22 2018 - Disclosed long position (swing trade) when stock was trading at $1.35, eventually making it a core position and adding more shares on November 3, 2018.
November 16, 2018 - Added the stock to our Favorite Model portfolio at $3.10
January 2, 2019 - Added the stock to our top 5 favorite at $3.81
December 7, 2020 - Disclosed we locked in the majority of our long position and removed stock from the Top 5 Favorite list when stock was trading at $17.80. We were somewhat skeptical about the pedigree of the new CEO and hypish flare over their new cybersecurity product. We mentioned that we would retain a small position just in case the hype lived up to expectations. We also mentioned that INTZ is probably prime to attract a short report, which it recently did.
In our recent April 30, 2021 Open Forum Discussion with GeoInvesting premium Members, Maj addressed INTZ (See Chapter 11, 50:20) reiterating his various concerns regarding the direction of the company. He also critiqued the way the company handled its response to a critical report.
Today - Removing from Select Long and Model Takeover Portfolios.

Intrusion Inc (OOTC:INTZ) ($14.40; $253.6M market cap; marked down 23% pre-market), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, announced Q1 2021 results:

Sales of $1.9 million vs $1.8 million in the prior year
Loss per share of $0.22 vs loss of $0.04 in the prior year

“First quarter revenue grew quarter-over-quarter and year-over-year,” said Jack Blount, President and CEO of INTRUSION. “We continue to make excellent progress with the rollout of INTRUSION Shield in terms of new customers and adding channel partners. As is typical for newly launched SaaS products, it will take time for INTRUSION Shield to materially contribute to our quarterly results. We remain very encouraged by the exceptional feedback we’ve received from existing customers and the increasing interest from potential customers. We’re gaining strong momentum in our opportunity pipeline both in the U.S. as well as with our new international resellers.”

The CEO's comments on the conference call regarding the timeline regarding when the company will begin generating revenue from its new cybersecurity product were vague.

Research

Thu, 01 Apr 2021 17:31:06 GMT

Intrusion Inc (OOTC:INTZ) ($23.37; $409.8M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, announced it has signed a new agreement with leading global consumer products company Kimberly-Clark (NYSE:KMB).

“Kimberly-Clark is a great example of how multi-national corporations require a new way to protect their critical information. By integrating our best-in-class solution into their network in a matter of minutes, we provide Kimberly-Clark with a simpler, optimal means to automate network security at scale and afford them a level of protection that safeguards them against constantly evolving threats. We couldn't be more excited about having Kimberly-Clark as a Shield customer."

Research

Fri, 26 Feb 2021 19:32:20 GMT

Intrusion Inc (OOTC:INTZ) ($18.77; $326.4M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced Q4 2020 results:

Sales of $1.6 million vs $2.6 million in the prior year
Loss of $0.17 vs EPS of $0.02

As has been the case with INTZ, the current financials do not tell the story. The strength in the stock has been based on the potential of its new cyber security Shield product. Comments from management:

“Since releasing INTRUSION’s revolutionary Shield solution only 6 weeks ago, we have received an unprecedented amount of interest and a growing pipeline of customers that is nothing short of extraordinary,” said Jack B. Blount, President and CEO of INTRUSION. “Shield is the first platform that uses real-time artificial intelligence to not just block intruders, but to kill cyberattacks including zero-days.

Also during the quarter, we continued to expand our executive team with highly experienced individuals that offer deep domain expertise across the cybersecurity and software industries as well as channel sales. I firmly believe we have the right team in place to drive our company to the next level of growth, and I am very pleased with the progress we have made. I’m also encouraged by the early signs of recovery in our government business that should contribute to our growth this year as it returns to historical levels. Overall, the strong momentum we have generated in such a short period of time is indicative of the market need for our Shield family of solutions, for which we expect to see increasing traction and growth throughout the coming year.”

Some conference call highlights:

Product accuracy

"I can tell you that the product continues to perform near perfect. As one of my prospects, as I was quoting in some of our data actually quoted back to me in a call earlier today, our numbers show that we are 99.999% accurate every time we make a decision about whether we kill a connection or not. There is no product on the planet that can get close to 3 9s, much less 5 9s. Most firewalls, most cybersecurity products actually tell you they have a 30% error ratio. So we are orders of magnitude on the other side of this equation compared to any other technology."

Pipeline

"...2 months, we have seen the pipeline go from 0 to Fortune 100 companies that have our product in trial right now in their labs; Fortune 500 companies that have our Shield installed in their network, testing it; mom-and-pop companies that have Shield installed in their network in testing it; government agencies, both federal and state who have Shield, installed and are evaluating it.

So our pipeline has gone from 0, January 4, to very large with very significant customers in all markets of all sizes in just 2 months. I have 42 years of selling technology in this industry, I have never seen the launch of a product generate a pipeline this dramatic this quickly. "

While we have locked in the majority of our position, we still maintain a small position in the stock, just in case the cybersecurity business plays out nicely.. Recall, we first disclosed our long position in the stock on May 22, 2018 at $1.25.

Research

Mon, 07 Dec 2020 17:25:54 GMT

**Call To Action & Model Portfolio Updates

We are closing out Intrusion Inc. (OOTC:INTZ) from Geoinvesting’s Favorite Model Portfolio and from the Top 5 Favorites. INTZ has easily surpassed our return expectations since we first disclosed our ownership position in the stock on May 22, 2018 at $1.25.
So, we have locked in the majority of our INTZ long position. We also added the stock to our Favorite Model Portfolio on November 15, 2018 at $3.10 and to our Top 5 Favorites Model Portfolio on January 2, 202 at $3.81. For the time being, we are maintaining a small position in case the company’s new cyber security product gains traction which is expected to occur in 2021. We think it could be a game changer for the company. We have also not formed an opinion on the qualifications of Jack Blunt, who was appointed CEO on May 27, 2020.

On the heels of strong Q3 financial results announced on November 27, we are also adding Intouch Insight Ltd (OOTC:INXSF) to the Top 5 Favorites to replace the spot vacated by INTZ.

Research

Fri, 13 Nov 2020 18:21:37 GMT

Intrusion Inc (OOTC:INTZ) ($11.04; $186.8M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced Q3 2020 results:

Sales of $1.6 million vs $3.9 million in the prior year
Net loss of $0.10 vs EPS of $0.09 in the prior year

“While extended government shutdowns associated with the pandemic continued to impact our legacy subscription and reporting businesses during the third quarter, the growing trend of sophisticated cybersecurity attacks underscores the crucial need for more advanced, innovative solutions,” stated Jack B. Blount, President and CEO of INTRUSION. “We are capitalizing on this need through the recent introduction and aggressive ramp of our new Shield family of disruptive cybersecurity solutions.

Recent feedback from enterprise customers that are beta testing Shield has been extraordinarily positive, which is why we made the decision to take pre-orders ahead of general availability. Leveraging our unique proprietary database of threat indicators and advanced AI, Shield detects and neutralizes threats that are actively inside customers’ networks, effectively tackling the problem of vulnerability from the inside out. Shield will disrupt the cybersecurity industry beginning with the enterprise market, which represents more than a $7 billion opportunity in the U.S. alone. Moreover, the launch of subsequent solutions within the Shield family will also increase our addressable market, further fueling our growth.”

It’s worth noting that the company expects its new cybersecurity business to generate at least $15 million in revenues. This information was shared in the Q3 conference call transcript.

Research

Fri, 09 Oct 2020 15:56:11 GMT

Intrusion Inc (OOTC:INTZ) ($11.00; $151.7M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced its uplisting to the NASDAQ and the pricing of its public offering.

The company announced the successful uplisting to the NASDAQ market and it will continue to trade under the symbol “INTZ”. The secondary offering is at $8.00 per share, with 2 million newly issued shares and 1 million from selling shareholders.

We are extremely disappointed in the company for accepting the pricing at 50% under recent levels. With this pricing, we are concerned that B. Riley has been "negotiating" on behalf of microcap companies that have retained them to get to their retail and institutional clients. We had just recently experienced the same pricing issue with CXDO. As a matter of fact, KRMD is trading under the price as part of a secondary led by B. Riley.

Now, to be fair, at its highs, INTZ's share price had gotten well ahead of itself, trading at price to sales of well over 25. This is an opinion we had previously expressed when we disclosed that we lightened up our position in the stock.

However, the lofty valuation is partly due to the temporary loss of government revenue as a consequence ot COVID-19.

But life goes on!

Research

Mon, 05 Oct 2020 17:09:35 GMT

Intrusion Inc (OOTC:INTZ) ($14.32; $204.8M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced a proposed stock offering and that it has applied for uplist to the NASDAQ. A total of 3.1 million shares will be offered, 2 million new shares from the company and 1.1 million from a group of selling shareholders

In our August 25, 2020 email we mentioned that the company had filed a mixed S-1 filing, in which the company intended to offer new shares and that existing shareholders will be selling some shares as well..

In conjunction with the offering, the company has applied to uplist to the NASDAQ and intends to continue to trade under the symbol INTZ upon completion of the uplist process.

Research

Wed, 09 Sep 2020 04:00:00 GMT

Intrusion Inc (OOTC:INTZ) ($13.18; $181.7M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced it has begun beta testing of INTRUSION Shield™ the company’s first in a family of new cybersecurity and intrusion protection solutions for the enterprise. The company successfully completed alpha testing of its initial offering, and beta testing will be conducted for approximately 90 days with over a dozen companies ranging in size and industry.

Shield™ is a combination of plug-and-play hardware, software, global data and services that utilizes artificial intelligence (AI) to deliver a completely new approach to cybersecurity. Shield is a cybersecurity solution that real-time analyzes and quarantines threats from incoming and outgoing traffic, stopping ransomware, viruses, malware, data theft and more. While other solutions aim to keep malicious behavior out of a company’s network, Shield is designed to work on the premise that cyber criminals have bypassed those protections and are already on your corporate network.

Research

Tue, 25 Aug 2020 16:39:58 GMT

The company filed a mixed S-1 filing, in which the company will offer new shares of common stock and an existing stockholder will be selling some shares (exact details not yet released).

It looks like the company will be using proceeds it raises to aggressively market its new cybersecurity product that we have discussed extensively in past research:

“The Company intends to use the net proceeds from the proposed offering to fund several growth initiatives, including the commercialization of its new INTRUSION Shield, the Company’s plug-and-play, AI-enabled threat detection and neutralization solution designed for the worldwide enterprise market.”

The proceeds from the offering will enable the company to meet all of the NASDAQ requirements, including the equity standard which is the only one INTZ did not satisfy.

“I believe that we not only have the most valuable cybersecurity threat enriched big data Cloud in the world, but also one of the most sophisticated network appliance technologies I’ve seen in my 40+ years in the industry. This proposed capital raise will provide the means to accelerate our product roadmap as we bring to market unprecedented new solutions designed to protect American enterprises of all sizes against the constant threat of cyberattacks.

This is an exciting time for INTRUSION,” said Joe Head, Co-Founder and SVP of Strategic Programs. “We expect an uplisting to Nasdaq will help broaden our institutional shareholder base, increase trading liquidity, improve our visibility and, ultimately, increase shareholder value as we execute against our commercial growth initiatives.”

It appears that the company will be offering around 1 million new shares, which would only work out to about 7% dilution. Current Directors of the company may be selling about 1 million shares of their existing holdings, but will still hold a significant amount of stock.

"Upon completion of the offering, we anticipate that the amount of our common stock held by the selling stockholders as a group will decrease from 50.1% to 40.6."

It appears that the selling shareholders may be just selling stock they just received from the conversion of preferred stock into common shares.

Research

Fri, 14 Aug 2020 19:19:17 GMT

Intrusion Inc (OOTC:INTZ) ($9.46; $130.3M market cap) is a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced Q2 2020 results:

Sales of $1.7 million vs $4.0 million in the prior year
Loss of $0.05 vs EPS of $0.11 in the prior year

“Order delays have continued into the second quarter of 2020 due to COVID-19. We continue to have positive customer response and look forward to future opportunities. With reduced government staffing, reporting tasks have been greatly reduced. Government renewal business has experienced some delays; however, contract starts have experienced more significant delays due to the pandemic’s effect on government operations. We anticipate customer orders will pick up in the second half of 2020 provided that government employees continue to return to work,” stated Jack B. Blount, President and CEO of Intrusion. “Thankfully, the commercial cybersecurity market is expected to grow in 2020. This has escalated an already impressive response to our newest solution offering, INTRUSION Shield.”

Research

Fri, 31 Jul 2020 19:13:54 GMT

**Calls To Action - Locked in Some RVP and INTZ Gains

Retractable Technologies, Inc. (NYSE:RVP) ($13.10; $428m market cap) (medical device) has had a phenomenal run since we disclosed our long position and bullish article back on March 11, 2020 at $1.50. Shares began to tick up when we highlighted a contract award from a government site showing the company had been awarded an $83 million dollar contract. With shares up over 700+% we locked in some of our position’s gains.

Intrusion Inc (OOTC:INTZ) ($9.95; $137M market cap) (cyber security) has also had a strong run recently, doubling from early June 2020 when it traded atf $4.60. In May 2018, we initiated our long position in INTZ when the stock was trading at $1.35 based on a possible contract win and information arbitrage (InfoArb) from past conference calls. On April 6, 2020, we also published a video where Maj went over the INTZ bullish thesis detailing more InfoArb. The stock was also added to our Favorite Model Portfolio and eventually earned a top 5 spot in it. You can see our original note here.

With the recent surge in price on the heels of strength in many cyber security names, we have decided to lock some of our position’s gains.

Research

Fri, 15 May 2020 19:24:54 GMT

Intrusion Inc (OOTC:INTZ) ($4.33; $59.6M market cap) is a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced Q1 2020 results:

Sales of $1.8 million vs $3.2 million in the prior year
Net loss of $0.04 vs EPS of $0.06

Order delays in the fourth quarter 2019 have continued in the first quarter 2020. The global pause in business due to Covid-19 has contributed to the delays. We continue to have positive customer response and look forward to future opportunities. The state of Texas is allowing companies to reopen during the month of May, and we look forward to our government customers doing the same,” stated Michael L. Paxton, Interim President of Intrusion.

While there is no denying the results for this quarter are poor, like many times with INTZ, the press release and current quarter financials don't always provide a clear picture of the story.

INTZ Conference call Information Arbitrage was a topic we discussed in a video we published not too long ago. You can see that here.

We want to highlight some details from the conference call which we believe will ultimately drive shares higher. These highlights center around:

Developing new partnerships to drive commercial revenue
Possibly doubling revenue over the next 12 months
Hosting a special conference call next Friday you go over some bullush developments that the company could not address on the current call.

New hire sales momentum

I'm happy to report through his efforts we developed relationships with 6 new customers. 3 are in the process of putting a new contract in place with us and the other 3 are still awaiting to restart of their respective parts of the government.

I'll talk the details of the [indiscernible] procurement in a minute. But 2 of those that haven't really started through the process yet, add up to $2 million to $3 million. So we've got 1 that's fairly large between 2 of those new ones. Our sales team has remained active during the play. And we've been having conversations with potential customers weekly.

New commercial market offerings (Will host follow-up call to discuss in further detail on May 22, 2020)

During the shutdown, we've had our team work to create some new offerings, primarily in the commercial market. I wanted to dive down into the details today, but we realize the changes in patent law require us to get some provisional filings done before we can talk about the products outside of an NDA for beta. Since investor calls can't be under an NDA, we're scheduling a follow-up call for next Friday, May 22, at 3.15 Central, 4:15 Eastern. As you know, our mix of commercial to government business has drifted toward too much dependence on government funding cycles over the past few years.

Orders for Q3

We expect renewals from existing customers to auto renew, even with partial staffing with the next flurry of renewals hitting us in quarter 3. There are the 3 new orders in procurement, along with normal renewals, and we've engaged with a partner to bid on a few opportunities during the break. We submitted 3 since January. As sometime in the near future, we expect the government to return normal operations. So our pipeline of new DoD opportunities generated by our new salesmen will get procurement schedules. This is the other 3, which didn't get started on the securing funds or procurement documents before the shutdown.

Exchanges from the Q&A

Analyst:

...as you've hired an investment bank and to maximize shareholder value, is that a fair comment? Let me clear that up.

Michael L. Paxton, Intrusion Inc. - Chairman, Interim President, Interim CEO, CFO, Treasurer & Corporate Secretary [6]

We'll fill in more of the details on what we see the outlook. So we'll talk more about that in the future. It may not take exact shape of what you're expecting on the answer, but I think you'll like it. So we'll talk more about that next Friday.

Unknown Analyst [22]

Well I suppose the government will open up. Just in putting a bow on the last quarter conference call, you talked about 4 orders representing $6 million to $8 million of potential orders that were not try in the [ sky ]. You mentioned the first 2 were proceeding the contracts on the first few items. Was that delayed because of the government shutdown of those 2 orders or 4 orders, excuse me? Still expected to be signed and go into procurement?

Joe Head, Intrusion Inc. - Co-Founder, Vice Chairman & Senior VP [23]

Yes. Everything I talked about before is still there. And I guess, to be truthful, the $6 million I talk about is actually $7 million and the seventh one has been idle. They're shut down and not even going to work. So I was expecting that originally for a June order of a couple of million. And so that's where the delta is. So about $2 million to $3 million in that next batch of $3 million. And then that other 1 was about $2 million as well. So yes, sorry, I left one out on the list. I apologize.

Unknown Analyst [33]

This new guy alone can double your revenue base this year.

Joe Head, Intrusion Inc. - Co-Founder, Vice Chairman & Senior VP [34]

I'd say so. And that's -- and we'll certainly be doing more because we've been talking about partnerships as well. So I think how do you get more people than you can hire in terms of partnering well and we'll certainly be -- that will be a place for you to judge our progress over the next year.

Unknown Analyst [35]

Okay. So kind of in summary, you're going to give us feedback on next possible, hopefully, next Friday, about where we stand with the Pentagon and other initiatives. You'll also address probably the commercial opportunities at that point in time.

Joe Head, Intrusion Inc. - Co-Founder, Vice Chairman & Senior VP [36]

Correct.

Unknown Analyst [37]

And then you have this new salesman alone can double your revenue base over the next 12 months. And it's introducing you guys. And I would assume that once that you start to break the ice, things should -- as more people get to know what you have that should make you very attractive to a commercial partner who will respect you this time.

Joe Head, Intrusion Inc. - Co-Founder, Vice Chairman & Senior VP [38]

Correct. Correct.

Yes. I think you're all pleased with what you hear there. So we'll give you a little more detail and clarity there.

Research

Wed, 26 Feb 2020 16:32:14 GMT

Added Shares of INTZ

In yesterday’s morning email we stated we would look to add shares if Intrusion Inc (OOTC:INTZ) pulled back on its weak Q4 results. We issued the following tweet shortly after the open:

Research

Tue, 25 Feb 2020 20:37:03 GMT

Intrusion Inc (OOTC:INTZ) ($5.75; $76.5M market cap) is a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, announced Q4 2019 results.

If investors sell off the stock on the quarterly headline press release results to around the $5 level or lower, we may look to add to our long position.
Information arbitrage opportunities exist in the related conference call, such as new contract wins and expectations to double revenues over the next 2 or 3 years.

Sales and EPS results:

Sales of $2.6 million vs $3.0 million in the prior year
EPS of $0.02 vs $0.05

“Revenue in the fourth quarter was lower compared to last year primarily due to delays in orders expected but not received. Order delays were primarily due to customer funding not aligned with anticipated renewals, a trend we anticipate will continue through the first quarter 2020. Orders booked in the fourth quarter 2019 totaled $4.4 million consisting primarily from renewals of existing projects,” stated Michael L. Paxton, Interim President of Intrusion.

While contract renewals were delayed a bit, the conference call offers insights on the renewals and new contracts the company has landed. Notable conference call highlights included:

New hire progressing on sales front. Lands 4 new customers with $6 to $8 million in potential sales orders this year.
Large renewal contracts from last year soon to be back under contract, 1 at full rate and the other partial to start.
19 new prospects in the works with sales pipeline continuing to grow
Large contract ration continues to improve
Doubling sales over next 2 to 3 years a possibility

Below our some comments from call supporting the highlights:

"I'm happy to report that via his efforts, we develop relationships with four new customers who are in the process of putting new contracts in place for us. These four represent $6 million to $8 million of potential orders this year...

...But my count, we took the 16 we were working on in Q4 and turn four into the forecasted orders in 2020. In addition to those four, we're now working on 19 new prospects, and expect that pipeline to grow throughout the year. The ratio of larger projects continues to improve. "

From the Q&A:

Unidentified Analyst

"...And the other side is it looks to me that you're probably sitting in a situation where it's not unrealistic to see you, potentially doubling your top line over the next two to three years with I mean, it just seems that's probably fairly achievable."

CEO Michael Paxton

Yes.

Research

Tue, 12 Nov 2019 15:44:29 GMT

Intrusion Inc (OOTC:INTZ) ($4.53; $61.2M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, announced Q3 2019 results:

Sales of $3.8 million vs $2.6 million in the prior year
EPS of $0.09 vs $0.04 in the prior year

The company did not have any meaningful comments in the press release. However, the conference call echoed the bullish sentiment of the last call with renewals expected by year’s end and the potential 2020 sales pipeline remaining robust. Conference call highlights:

The company is very excited about a new sales hire who is a top cybersecurity industry veteran.
All revenue is still coming primarily from defense business (Tracecop Product).
Regarding their defense business, most contracts are of the "no bid, automatic renewal" type.
"Inflection point" moment still largely hanging on the company landing its first commercial customer (Savant Product).
At this juncture, it appears that 2020 sales are tracking to be at least $5.0 million higher than where we expect full 2019 sales will be.

We believe that the recent passing of Ward Paxton, CEO and co-founder, increases the chances that the current INTZ management team will be motivated to sell the company. We already formed this opinion due to some of the company’s moat-like characteristics. Accordingly, we are adding the stock to our "Take Over Model" Portfolio.

Research

Tue, 13 Aug 2019 18:08:20 GMT

Intrusion Inc (OOTC:INTZ) ($4.46; $60.2M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced Q2 2019 results:

Sales of $4.0 million vs $2.4 million in the prior year
EPS of $0.11 vs $0.03

“Intrusion's second quarter 2019 operating expenses were $0.7 million compared to $0.9 million in the second quarter 2018 and $0.9 million in the first quarter 2019. Operating expenses benefited from a $200 thousand reduction in second quarter sales and marketing expense due to a reimbursement of a prior period expense from a customer. Operating expenses also benefited from reduced sales and marketing expenses associated with shifting expenses to cost of sales for current projects. It is expected that sales and marketing expense will return to more traditional levels in the third quarter 2019.”

Adjusting for the $200K in reduced expenses would still yield close to $0.10 EPS for the quarter. The unknown is the dollar amount of the expenses to which cost of sales were shifted.

Some takeaways from the conference call:

Orders for the quarter of $2.9 million were all renewals
Q3 is expected to only possibly have some renewal contracts with many of the renewals coming in Q4.
Company is currently working on renewals with its large customer wins from 2018, and does not believe there will be any issues for renewals of current customers.
The Company has a number of new customers in its sights for next year as well, with several of them offering notably large prospects. The new customer wins are expected to materialize in 2020, with orders commencing in the March to June period. However, INTZ did leave a small door open to the possibility that some of these orders could materialize before the end of the year.
14 new prospects in the works with 4 being large clients in the $2.5 to $6 million per year range (mainly from its Savant commercial product)
Order history has been lumpy and INTZ expects that trend to continue
Hiring of investor relations firm is still a work in progress
Looking to hire additional senior level staff to help with expansion

Our main takeaway here is that even though the quarter might have been an anomaly in terms of sales, it does show you what the company is capable of achieving if it is able to start closing customer prospects.

Research

Tue, 30 Jul 2019 15:49:26 GMT

Intrusion Inc (OOTC:INTZ) ($4.58; $61.9M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products will be reporting Q2 2019 results around the second week of August (no “to announce” date has been issued yet). The keys we are looking for from the upcoming quarter are:

Contract backlog growth. While the company has always stated the second half of the year is stronger for bookings, we would like to see some Q2 improvement on a year over year basis.
We would like to see some traction with the Company’s Savant product, which we feel is a key to help diversify the company’s customer base.
We would like to hear an update on the company’s investor relations initiatives. We feel they will likely only hire an IR team when they feel the long term story is extremely strong. The hiring of an IR firm would be viewed as a big positive for us.

Research

Tue, 14 May 2019 14:39:49 GMT

Intrusion Inc (OOTC:INTZ) ($4.44; $60.0M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, announced Q1 2019 results:

$3.2 million vs $2.3 million in the prior year period and up sequentially from $3.0 million in Q4 2018
EPS of $0.06 vs $0.02 in the prior year and up sequentially from $0.05 in Q4 2018

Conference call commentary:

“In the fourth - third quarter of 2018, we booked $6.3 million, which $5.5 million was a single order for a new project. Then in Q4, we booked and additional $5.2 million which is mostly renewals, except for one $2.4 million we will talk about a new one.

And as I reported last time, one of our $1.2 million a year customers issued us to renewal covering the next five years, so we expect this long term customer continue for quite a while. Because the annual nature of many of our contracts, the good news is that we booked ourselves full of business in the last half of 2018 and we spent the first few months in 2019 hiring people and settling in to making deliveries for our newest contracts.

The large majority of our orders are for the 12 months of business at a time. So the big up uptick in new orders in Q3 and Q4 won't be up for renewal until Q3 and Q4 of 2019. So as usual, our new orders for the first half of 2019, is expected to be down quite a bit from this year in highs and bookings. But the increased revenue will ensure our profitability for 2019, as we continue the deliveries for these new orders.

As we anticipated in our Q4 call, our Q1 bookings were zero since we had no contracts up for renewal. And all of our big new projects were booked at the end of 2018. But already in Q2, we have booked $2.3 million in renewals as the first ones have come up for renewal.”

While management had warned that bookings are typically slower in the first half of the year versus the second half, having zero bookings in Q1 will likely spook some short term investors out of the stock. The ability of management to renew its large contract wins from last year is a positive sign, and now it will be up to management to build off of these contracts and gain new customer wins as it works through the remainder of 2019.

After 7 straight quarters of sequential and year over year revenue growth, we would like to see how management executes on its pipeline of 13 new customers they're working on closing. They're also expected to close a partnership deal this year to help them increase potential sales to government, as well as finally attract commercial customers

Research

Tue, 12 Feb 2019 19:05:51 GMT

Intrusion Inc (OOTC:INTZ) ($4.34; $56.9M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, announced Q4 2018 results:

Sales of $3.0 million vs $2.1 million in the prior year
EPS of $0.05 vs $0.01 in the prior year

Quotes from conference call:

Our revenue and profit had – both had sequential growth again and we expect this trend to continue in the future... Revenue in 2018 reached $10.3 million, up 50% from 2017. As the new projects come up to full speed, we expect that this will drive continued growth in revenue and profits.

By my count I'm working nine new prospects currently and expect that pipeline to grow by a few in the next few months. But count alone doesn't tell the story because of the mix of large and extra large prospects compared to small and medium ones. I'm not ignoring customers with small or medium size money presently, we’re working hard to ensure that our extra large opportunities, which I'm defining as 2.4 to 6 million a year get more attention, both the renewal of the current ones and also the pursuit of new opportunities that are larger than our historical order size.

We're currently adding people, both sales and engineering. Additional engineers are required to attain the current expected revenue levels. Also additional salespeople are desired to further drive our orders growth.

From the Q&A discussing operating leverage:

Howard Brous; Analyst with Wunderlich Securities

Fair comment to say that every million dollars of incremental revenue translates to about $0.05, $0.06 bottom line, is that a fair comment? But if you talk about 60%, 65% gross margins?

Mike Paxton; CFO

Yes.

One point that management discussed was that new orders are typically slower in Q1 and Q2 before ramping up in Q3 and Q4. Management said they expect this trend to continue for 2019. The overall tone of the call was positive, but we believe that management is trying to be a little more conservative until they close some new orders, something shareholders have been waiting for. At the moment, a lot of the company’s growth is coming from reorders and bigger orders from current customers.

In May 2018, we initiated our long position in INTZ when the stock was trading at $1.35 based on a possible contract win and information arbitrage from past conference calls. You can see our original note here.

Research

Wed, 21 Nov 2018 15:55:46 GMT

Intrusion Inc (OOTC:INTZ) ($3.33; $43.6M market cap) is a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products. Our bullishness on INTZ has increased over the last two quarters as the Company’s financial results and commentary has turned out to be extremely encouraging. We recently highlighted some information arbitrage from the last conference call which can be seen here and subsequently added the stock to the “Maj’s Favorites” stock portfolio last week.

Today, we wanted to share another investor’s perspective on the story. A Seeking Alpha article titled, “Intrusion: The Big Data Security Company You've Never Heard Off” was published yesterday during the trading day. The author has several articles on INTZ and has been tracking the stock for years. Below are the bullets from the article, echoing our bullish outlook on the Company’s products/opportunities:

The company emerged from the doldrums and this year alone, shares have quadrupled with revenue growth, profitability and cash generation all up significantly.
They have pretty unique databases which are now starting to interest bigger clients and more complex queries.
They are continuously improving on these databases and this could very well bolster their position as there doesn't seem to be anything comparable on the market.
Even their other product, Savant, started to gather interest again from customers and the combination of the two products could be a winner.
We think it's not too late to get on board.

Research

Fri, 16 Nov 2018 16:50:57 GMT

Adding INTZ to Favorite Stock Portfolio

For those of you that are new, and as a reminder to those who’ve been with us for years, we thought it would be helpful for you to visit our August 20, 2018 showcase of the top 4 stocks from Maj’s Favorites Model Portfolio - Tss Inc (OOTC:TSSI), Cas Medical Systems, Inc. (NASDAQ:CASM), Repro Medsystems I (OOTC:REPR) and Altigen Comms Inc(OOTC:ATGN). You can see the full email here.

On a related note we are adding Intrusion Inc (OOTC:INTZ) to our Favorite Mock Portfolio on the heels of strong Q3 2018 results and substantial InfoArb on the conference call that we covered extensively in a prior email.

Keep in mind that we are making a big exception here with INTZ. We usually do not like to add stocks to this portfolio until we’ve had a chance to comprehensively interview management. Unfortunately, our repeated attempts to secure a call with management have been unsuccessful. However, we feel we’ve garnered enough confidence with the details the last few earnings conference calls gave us to make this exception, at least in the short-term. Of course, we will continue to reach out to management for an interview.

Our valuation on INTZ is not based on trailing numbers. Instead, we are basing it on the potential for considerable revenue growth in the next 3 to 4 quarters.

Research

Wed, 14 Nov 2018 15:25:58 GMT

Intrusion Inc (OOTC:INTZ) ($3.05; $39.7M market cap) - Yesterday, shares of this provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products hit new 52 week highs on the heels of strong Q3 2018 results. We covered the results here. Highlights of some of the bullish remarks made on the conference call are provided below:

On continued sequential improvements:

“Our revenue and profit have both had sequential growth over the past four quarters, and we expect this trend to continue in the future.”

The third quarter was a continuation of a solid growth in sales and profits that we have experienced over the last four quarters. This growth has been primarily in our TraceCop family the products and services. We expect this growth to continue in the future.

New business driving top and bottom line improvements:

“As the new business revenue kicks-in, we expect a significant increase in revenue and profits.”

New order flow:

In the third quarter we booked $6.5 million, of which $5.5 million was a single order for a new project. And then in October, we've booked an additional $3.6 million, which was a $2.4 million renewal and $1.2 million of additional renewals.

I'm glad to report that the one customer we were eyeing as a possible loss has issued a renewal covering the next five years. And so expect this long-term customer to continue for quite a while.

Reaching new levels of revenues:

“So our base level of business has moved up a step based on several new large projects. The driver for this new business is entirely based on our customers being pleased with our performance on many projects over the past years. I've hired an additional large account specialist who will join us in January, because we have a number of new opportunities we want to capitalize on in 2019 and beyond.”

We're now starting to apply our knowledge on how to build, use and deploy our big data expertise at a higher level with our customers, instead of just being a boutique firm with more narrow focus. We are now working on solving larger customer challenges with custom engineering and systems, which expand on our in-house successes.

TraceCop opportunity:

“As a company, we have a number of datasets in our TraceCop family, which we used all the time in our analytic efforts to meet customer needs, but this represents - these large datasets represent part of our pipeline a fuel from new projects as well.”

The company has several different data sets under the TraceCop program. The subscription fees seem to range from $600k to $1.8m per year per contract. When we speak with management, we hope to learn a little more about their subscription offerings..

Now that the stock has increased in price, we will be more cognizant of the boilerplate comments in the “liquidity and capital resources” section, although they’ve historically shown to be largely the same for some time:

“We expect to fund our operations through anticipated Company profits and borrowings from the Company’s CEO, and possibly additional investments of private equity and debt, which, if we are able to obtain, will have the effect of diluting our existing common stockholders, perhaps significantly. Any equity or debt financings, if available at all, may be on terms which are not favorable to us and, in the case of equity financings, may result in dilution to our stockholders. If our operations do not generate positive cash flow in the upcoming year, or if we are not able to obtain additional debt or equity financing on terms and conditions acceptable to us, if at all, we may be unable to implement our business plan, fund our liquidity needs or even continue our operations.”

Another topic we plan to address when we get management’s attention is the company's capital needs. We added to our long position.

Research

Tue, 13 Nov 2018 15:59:14 GMT

Intrusion Inc (OOTC:INTZ) ($2.67; $34.7M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products. On May 22, 2018 we initiated a swing trade position on conference call information arbitrage about possible contract wins. In August we moved INTZ from a swing trade to a select long position. Today, the Company announced Q3 2018 results, which along with some InfoArb on the related conference call has us excited about the company’s near-term prospects:

Sales of $2.7 million vs $1.7 million in the prior year
EPS of $0.04 vs an adjusted loss of $0.02 in the prior year

“Orders booked in the third quarter 2018 totaled $6.5 million which included $5.5 million of new projects and $1.0 million of continuing projects. The new project orders are expected to generate quarterly revenue of approximately $1.4 million over the next four quarters. In addition, since October 1, 2018, orders booked from continuing projects totaled $3.6 million,” stated G. Ward Paxton, President and CEO of Intrusion.

We have been unsuccessful in our attempts to interview management since the stock entered our radar after posting strong Q2 2018 results. Our co-Founder, Maj Soueidan, expressed his displeasure with this on the conference call and was assured to get a call back to schedule an interview.

We like the company’s Tracecop database progress and update that management provided on the call. GeoInvesting member Andrew Garner first brought this extra revenue source to our attention when we highlighted it in our October 3, 2018 email. TraceCop is a database of worldwide IP addresses that aid in the identification and location of individuals involved in cybercrime, and analysis software and a GUI interface to assist analysts in locating cybercriminals and other “bad actors.”

On the conference call, management stated that each customer that joins the database could add an additional $1.2 million to annual revenues. It appears that they signed their first customer.

The company also hinted that it is close to a $4 million quarterly run rate which would be a strong sequential improvement over the $2.7m just reported. Lastly, we encourage you to read the transcript of the call as management did an excellent job in explaining what the company actually does.

Research

Wed, 03 Oct 2018 15:11:38 GMT

Intrusion Inc (OOTC:INTZ) ($2.01; $26.1M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, entered our radar after posting strong Q2 results in May. We have left several messages for management in our attempts to set up an interview. Since we have yet to receive a response, Maj may make a visit to their headquarters at the end of October.

We’d like to thank GeoMember Andrew Garner for sharing some intel from the 10-K regarding the company’s TraceCop product and the possible value of its database. Verbiage from the 10K:

At this time, we have limited competitors for TraceCop; however, we expect competitors to emerge in the future. These competitors perform only a portion of the functions that we currently perform with TraceCop. Also, we have been collecting the TraceCop data continuously for more than ten years. We believe that none of our current or future competitors have the ability to provide this historical data.

TraceCop is a database of worldwide IP addresses that aid in the identification and location of individuals involved in cybercrime, and analysis software and a GUI interface to assist analysts in locating cybercriminals and other “bad actors.”

Andrew also helped us with our Otelco Inc. (NASDAQ:OTEL) DD and provides steady doses of intel to our team. You can follow him on Twitter at @btmfdrandrew.

Despite our lack of success in getting management to return our invitation to speak with them, we are moving INTZ to our select long portfolio from a swing trade as we continue our due diligence.

Research

Fri, 17 Aug 2018 15:00:03 GMT

Intrusion Inc (OOTC:INTZ) ($2.01; $26.1M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, was initiated as a GeoInvesting swing trade on May 22, 2018 when the stock was trading at $1.58. We are looking to interview management and, depending on how our interview goes, we may move this swing trade to our select long positions due to the strong Q2 results and bullish commentary.

Research

Wed, 15 Aug 2018 14:48:15 GMT

Intrusion Inc (OOTC:INTZ) ($1.45; $18.8M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products announced, Q2 2018 results:

Sales of $2.4 million vs $1.5 million in the prior year
EPS of $0.03 vs a loss of $0.04 in the prior year

“We were able to reduce our debt to $1.9 million at the end of second quarter 2018 compared to $3.0 million at the end of second quarter 2017 and $3.0 million at end of first quarter 2018. Orders for the second quarter 2018 totaled $2.0 million. Also, we are announcing today the receipt of a $5.5 million order within the last several days,” stated G. Ward Paxton, President and CEO of Intrusion.

The conference call transcript is full of information arbitrage that we will be digging into:

“This trend continues as we have just booked a $5.5 million order for TraceCop related products and services. This new order is scheduled over the next 15 months and should result in quarterly revenue of nearly a $1 million. When it reaches full throttle we will be able to experience that. Doesn't take too long but it takes a little while to get to that.

Our business pipeline includes approximately 25 customers, which we expect to do business with over the next 12-months and in addition additional 10 to 15 new customers that we are now developing a relationship with future business.

As the new business kicks-in, we expect revenue do continue to increase then with the increase in revenue net profit should also increase.”

On the sales front the $5.5 million orders the largest we've received in over a decade, our other large customers were all stable and we don't have any we are worried about renewing. So, as promised I'll start having some limited time to move my efforts back to Savant now but 90% of my efforts will be on launching these new projects well and doing more than our customers expect every week, plus working on a number of new business opportunities and growth on a few old ones.

Analyst: Howard Brous

I can appreciate that. I mean, this order alone at 60% gross margin it’s almost $0.30 a share going forward besides your regular business. So I would say it’s a major wins for you and I really…

Company: Ward Paxton

Absolutely.

Research

Thu, 19 Jul 2018 17:16:08 GMT

On May 22, 2018, we initiated a swing trade in Intrusion Inc (OOTC:INTZ) ($1.58; $20.5M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products based on a possible contract announcement.

With no contract announcement yet, and as we near the Company’s Q2 earnings release, there is some added risk on the trade. We should note that our swing trades don’t normally last longer than 14 days, but we were willing to forego this criteria/discipline as we waited for the news.

You can see our original note here.

Research

Tue, 22 May 2018 15:50:25 GMT

**Call to Action - Initiating Swing Trade In INTZ On Possible Contract Win and Information Arbitrage

Intrusion Inc (OOTC:INTZ) ($1.35; $17.5M market cap), a provider of entity identification, high speed data mining, cybercrime and advanced persistent threat detection products, is seeing shares hit new highs on the heels of strong Q1 2018 results highlighted in our May 8, 2018 email. In November 2017, after reporting Q3 2017 results, we tweeted that shares inched up 220% as the Q3 conference call offered some InfoArb that a new level of revenue will solidly move the company into profit.

Similar to Q3, the recent conference call had some more InfoArb nuggets, including:

“We've been watching two large orders work their way through procurement for months and have indications that these will soon turn to purchase orders. The most important one I'm tracking is over twice the size of our previous largest order and represents a new class of opportunities for us.”

Regarding the timing of the large orders, from the Q&A in conference call:

Howard Brous

Joe, in terms of booking one or two of those large orders what's your best guess and I'm using the word guess as to timing on that.

Joe Head

I've been thinking it is about two weeks away since January of 14th, but as I understand the funds have been transferred to a procurement group and all the paperwork will be done at the end of this week so they can start the procurement with us so historically that's about a three week cycle from the end of this week so that's my best guess at this point but it's been months of waiting.

Caveats:

Bookings can be very lumpy.
Company has a low cash position, even while they reported back to back quarters of profitability