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Classified in: Science and technology, Business
Subjects: EARNINGS, Award, Conference Call, Webcast

IronNet Reports Fiscal First Quarter 2023 Financial Results


IronNet, Inc. (NYSE: IRNT) ("IronNet"), a leading provider of solutions Transforming Cybersecurity Through Collective Defense?, announced today its financial results for the fiscal first quarter ended April 30, 2022.

"In the past several months, President Biden and his cyber leaders have urged the market to embrace the concept of Collective Defense ? that ?you have to beat all of us to beat one of us.' We firmly believe this is the future of cybersecurity," said General (Ret.) Keith Alexander, Chairman and co-CEO of IronNet. "IronNet Collective Defense is the only anonymized threat detection collaboration solution available, giving our customers the advantage of higher efficiency in their cyber defense as they leverage the significant talent of organizations across the community."

William Welch, co-CEO of IronNet, commented: "I am proud of our team which delivered new transactional Annual Recurring Revenue (ARR) of $5.5 million in the quarter. Our topline results were consistent with our expectation that certain customers in our transactional business would be delayed in signing or renewing their contracts, resulting in reduced ARR and revenue from the prior quarter. We would like to reiterate that we see these opportunities as pending rather than lost. In addition to our transactional business, we believe that our strategic business pipeline of deals larger than $5 million in ARR remains strong, and our conviction is high that a number of these opportunities will materialize to support our growth for the year."

Fiscal First Quarter 2023 Financial & Operating Highlights

Business Highlights

Outlook

James Gerber, CFO of IronNet, stated: "We reaffirm our revenue and ARR guidance for the fiscal year based on the visibility we have today into the transactional side of the business as well as the continued health of our strategic pipeline of opportunities. With execution and a balanced approach to expense management, we expect to maintain the operational and strategic flexibility needed to continue to advance our market strategy."

For the fiscal year 2023, IronNet still expects:

Conference Call & Webcast Information

IronNet will host a conference call to discuss these results today, Tuesday, June 14, 2022, at 5:00 p.m. ET. A live webcast of the conference call and additional materials can be accessed on IronNet's Investor Relations website at https://www.ir.ironnet.com. A replay of the webcast will be available through the same link following the conference call.

Date: Tuesday, June 14, 2022
Time: 5:00 p.m. ET
Webcast: https://www.ir.ironnet.com
Dial-in number: 201-689-7807

About IronNet

Founded in 2014 by GEN (Ret.) Keith Alexander, IronNet, Inc. (NYSE: "IRNT") is a global cybersecurity leader that is transforming how organizations secure their networks by delivering the first-ever Collective Defense platform operating at scale. Employing a number of former NSA cybersecurity operators with offensive and defensive cyber experience, IronNet integrates deep tradecraft knowledge into its industry-leading products to solve the most challenging cyber problems facing the world today. For more information, visit www.ironnet.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding IronNet's fiscal 2023 revenue and ARR outlook, its ability to transform cybersecurity, execute on its business strategy and increase market share, and the expansion of the cybersecurity market and demand for IronNet's products and services. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside IronNet's management's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Important factors, among others, that may affect actual results or outcomes include: IronNet's ability to execute on its plans to develop and market new products and the timing of these development programs; IronNet's estimates of the size of the markets for its products; the rate and degree of market acceptance of IronNet's products; the success of other competing technologies that may become available; IronNet's ability to identify and integrate acquisitions; the performance of IronNet's products; potential litigation; and general economic and market conditions impacting demand for IronNet's products. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described under the heading "Risk Factors" in IronNet's Annual Report on Form 10-K for the year ended January 31, 2022, filed with the SEC on May 2, 2022, as updated by IronNet's Quarterly Report on Form 10-Q for the quarter ended April 30, 2022, to be filed with the SEC on June 14, 2022, and subsequent filings with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward looking statements, and IronNet does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Certain Definitions

Annual Recurring Revenue (ARR) -- Calculated at a particular measurement date as the annualized value of our then existing customer subscription contracts and the portions of other software and product contracts that are to be recognized over the course of the contracts and that are designed to renew, assuming any contract that expires during the 12 months following the measurement date is renewed on its existing terms.

Dollar-based average contract length: Calculated by multiplying the average total length of our customer contracts, measured in years or fractions thereof, by the respective revenue recognized for the last three months of each reporting period, and then dividing by the revenue attributable to software and product customers for the same three-month period used in the numerator. Because many of our customers have similar buying patterns and the average term of our contracts is more than 12 months, this metric provides a means of assessing the degree of built-in revenue repetition that exists across our customer base. Declines in average contract length are not reflective of the average lifetime of a customer.

IronNet Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share amounts, Unaudited)

 

 

 

Three Months Ended April 30,

 

 

2022

 

 

2021

Product, subscription and support revenue

$

6,443

 

 

$

6,137

 

Professional services revenue

 

245

 

 

 

240

 

Total revenue

 

6,688

 

 

 

6,377

 

Cost of product, subscription and support revenue

 

2,330

 

 

 

1,754

 

Cost of professional services revenue

 

165

 

 

 

184

 

Total cost of revenue

 

2,495

 

 

 

1,938

 

Gross profit

 

4,193

 

 

 

4,439

 

Operating expenses

 

 

 

 

 

Research and development

 

10,727

 

 

 

6,891

 

Sales and marketing

 

10,667

 

 

 

7,149

 

General and administrative

 

15,586

 

 

 

5,720

 

Total operating expenses

 

36,980

 

 

 

19,760

 

Operating loss

 

(32,787

)

 

 

(15,321

)

Other income

 

10

 

 

 

8

 

Other expense

 

(380

)

 

 

(129

)

Loss before income taxes

 

(33,157

)

 

 

(15,442

)

Benefit (provision) for income taxes

 

(11

)

 

 

(58

)

Net loss

$

(33,168

)

 

$

(15,500

)

Basic and diluted net loss per common share

 

(0.33

)

 

 

(0.23

)

Weighted average shares outstanding, basic and diluted

 

99,305

 

 

 

67,182

 

IronNet Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share amounts, Unaudited)

 

 

 

April 30,

 

January 31,

 

 

2022

 

2022

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$

31,390

 

$

47,673

 

Accounts receivable

 

10,213

 

 

1,991

 

Unbilled receivables

 

1,198

 

 

4,637

 

Related party receivables and loan receivables

 

3,233

 

 

3,233

 

Account and loan receivables

 

14,644

 

 

9,861

 

Inventory

 

5,416

 

 

4,581

 

Deferred costs

 

2,349

 

 

2,599

 

Prepaid warranty

 

1,138

 

 

829

 

Prepaid expenses

 

3,130

 

 

3,660

 

Other current assets

 

2,081

 

 

1,458

 

Total current assets

$

60,148

 

$

70,661

 

Deferred costs

 

3,838

 

 

3,243

 

Property and equipment, net

 

6,077

 

 

5,606

 

Prepaid warranty

 

1,294

 

 

1,229

 

Deposits and other assets

 

2,811

 

 

493

 

Total assets

$

74,168

 

$

81,232

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

$

1,687

 

$

2,348

 

Accrued expenses

 

12,633

 

 

4,709

 

Deferred revenue

 

16,680

 

 

16,049

 

Deferred rent

 

-

 

 

159

 

Income tax payable

 

523

 

 

542

 

Other current liabilities

 

1,651

 

 

689

 

Total current liabilities

 

36,174

 

 

24,496

 

Deferred rent

 

-

 

 

769

 

Deferred revenue

 

18,851

 

 

17,517

 

Warrants

 

7

 

 

7

 

Other long-term liabilities

 

2,505

 

 

-

 

Total liabilities

$

57,537

 

$

42,789

 

Commitments and contingencies

 

 

 

 

Stockholders' equity

 

 

 

 

Preferred stock, $0.0001 par value; 100,000 shares authorized; none issued or outstanding

 

-

 

 

-

 

Common stock; $0.0001 par value; 500,000 shares authorized; 100,426 and 88,876 shares issued and outstanding at April 30, 2022 and January 31, 2022, respectively

 

10

 

 

9

 

Additional paid-in capital

 

467,296

 

 

455,849

 

Accumulated other comprehensive income

 

179

 

 

271

 

Accumulated deficit

 

(450,854

)

 

(417,686

)

Total stockholders' equity

 

16,631

 

 

38,443

 

Total liabilities and stockholders' equity

$

74,168

 

$

81,232

 

IronNet Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands, Unaudited)

 

 

 

Three Months Ended April 30,

 

2022

2021

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(33,168

)

 

$

(15,500

)

Adjustments to reconcile net loss to net cash (used in) operating activities:

 

 

 

 

 

Depreciation and amortization

 

628

 

 

 

224

 

(Gain) on sale of fixed assets

 

(3

)

 

 

-

 

Employee stock based compensation

 

11,446

 

 

 

17

 

Non-cash interest expense

 

90

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(4,783

)

 

 

231

 

Deferred costs

 

(346

)

 

 

(929

)

Inventories

 

(835

)

 

 

83

 

Prepaid expenses

 

529

 

 

 

(687

)

Other current assets

 

265

 

 

 

-

 

Prepaid warranty

 

(373

)

 

 

201

 

Deposits and other assets

 

382

 

 

 

(44

)

Accounts payable

 

(661

)

 

 

1,355

 

Accrued expenses

 

(50

)

 

 

728

 

Income tax payable

 

(19

)

 

 

58

 

Other current liabilities

 

(99

)

 

 

-

 

Deferred rent

 

-

 

 

 

(33

)

Deferred revenue

 

4,965

 

 

 

2,184

 

Other long-term liabilities

 

(350

)

 

 

-

 

Net cash used in operating activities

 

(22,184

)

 

 

(12,112

)

Cash flows from investing activities

 

 

 

 

 

Purchases of property and equipment

 

(912

)

 

 

(741

)

Proceeds from the sale of fixed assets

 

2

 

 

 

-

 

Net cash used in investing activities

 

(910

)

 

 

(741

)

Cash flows from financing activities

 

 

 

 

 

Exercise of stock options and vesting of restricted stock units

 

93

 

 

 

209

 

Statutory tax withholding related to net-share settlement of restricted stock units

 

(91

)

 

 

-

 

Cash received to fund employee's tax obligation for vested RSUs

 

17,909

 

 

 

-

 

Cash remitted to fund employee's tax obligation for vested RSUs

 

(9,066

)

 

 

-

 

Payment of commitment fee

 

(1,750

)

 

 

-

 

Payment of common stock issuance costs

 

(96

)

 

 

-

 

Payment of finance lease obligations

 

(96

)

 

 

-

 

Proceeds from stock subscriptions

 

-

 

 

 

62

 

Net cash (used in) provided by financing activities

 

6,903

 

 

 

271

 

Effect of exchange rate changes on cash and cash equivalents

 

(92

)

 

 

11

 

Net change in cash and cash equivalents

 

(16,283

)

 

 

(12,570

)

Cash and cash equivalents

 

 

 

 

 

Beginning of the period

$

47,673

 

 

$

31,543

 

End of the period

$

31,390

 

 

$

18,973

 

 


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