Q3 2022 Intrusion Inc Earnings Call
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We apologize for the technical difficulties in getting started before today's meeting we would like to welcome you to intrusion incorporated third quarter 2022 earnings conference call and webcast. At this time all participant lines are in a listen only mode for those of you participating in the conference call there will be an.
The opportunity for you to ask questions at the end of today's prepared comments. Please note. This conference is being recorded and audio replay of the conference call will be available on the company's website within a few hours. After this call I would now like to turn the call over to Sam Cullen with Alpha Investor Relations. Thank you and welcome joining me today are Tony Scott.
Executive Officer, and Kimberly Tencent, Chief Financial Officer, the call is being webcast and will be archived on the Investor Relations section of our website.
Before I turn the call over to Tony I'd like to remind everyone that statements made during this conference call relating to the company's expected future performance future business prospects future events or plans may include.
Forward looking statements.
Find under the private securities.
Negation Reform Act 1995, please refer to our SEC filings for more information on the specific risk factors that could cause our actual results to differ materially from the projections described in todays conference call.
Any forward looking statements that we make on this call are based upon information that we believe as of today and undertake no obligation to update these statements as a result of our.
Or future events.
In addition to U S. GAAP reporting we report certain financial measures that do not conform to generally accepted accounting principles. During the call. We may use non-GAAP measures. We believe it is useful to investors or if we believe it will help investors better understand our performance business trends with that let me now turn the call over to Tony for a few opening remarks.
Thank you Sam.
Good afternoon, and thank you all for joining us today I'd like to follow our usual cadence and provide you with some updates on our strategic priorities that are positioning intrusion for long term growth.
These priorities include expanding and strengthening our product offerings.
Realigning, our sales and marketing resources and focusing on channel enabled sales model as well as strengthening our strategic partnerships and improving our financial discipline.
We announced at the end of September we've achieved the commercial release verse shield cloud and endpoint products.
The addition of the cloud and endpoint solutions improve the attractiveness of our advanced threat intelligence dataset with products positioned to serve the growing hybrid and cloud world.
Notably as we release these new products, we identified some important patent diebold characteristics on our path to general availability.
Now that we have patent coverage in place these product additions strengthen our strategic vision for intrusion as we continue to serve the growing demands of customers seeking advanced and highly effective cyber security solutions globally.
So first let me talk about our shield cloud product shield cloud extends the effectiveness of the intrusion global threat engender and serves as a protective gateway between a customer's virtual private cloud and the public Internet.
It's an important addition to our product line.
Let me talk about our intrusion shield endpoint solution.
The endpoint enable safe web browsing outside of the corporate enclave and datacenter, allowing users to work remotely with confidence that authorized device connections are known monitored and protected.
With this product users can safely view content on sites that would otherwise be blocked through our shield renderer, which transparently redirects users to a safe cloud based browsing environment.
The indications of interest in the pipeline expansion as a result of our shield cloud and endpoint projects are highly encouraging.
We've received positive feedback from customers emphasizing the effectiveness of our solution and the overall value. It brings to our dedicated users a couple of data points to help you understand what I'm, saying.
Our qualified leads of more than double we've doubled our proof of concepts and proof of values.
Our quotes are tenex in terms of the quotes that we have outstanding in all of those give me confidence in the future for these new products.
Finally, we continue to invest in our shield on Prem appliance.
<unk> and.
And enhancements to this product theyre, continuing with new functionality and the ability to address increasingly higher network bandwidth over time the demand remains strong for this hardware and we had several deals that didn't close in this quarter, but are in our qualified pipeline.
So I continue to believe that the release of these new products will pave the way for intrusion shield in all forms to become the largest source of revenue growth in the future on the sales and marketing front, we've revamped our messaging around shiel with the launch of our New company website.
New product branding and a new company logo as a part of this makeover effort.
The revamping of the messaging around shiel and the launch of our new website will help us better communicate our unique value proposition and our competitive position in the marketplace last quarter, we announced an agreement with supermicro as our primary global supplier of hardware.
I am pleased to announce we've deepened our relationship with supermicro by signing an agreement to also act as a reseller of intrusion technology.
This agreement will add extrusion technology to the cyber security portfolio that supermicro can sell to its customers globally.
I'm delighted with this arrangement and know that the combination of supermicro and intrusion offer excellent value to our joint customers.
Finally, as we announced in October we are partnering with <unk> solutions and it services firm based in Washington D. C that provides end to end managed solutions for its customers.
We see a large opportunity to work with <unk> due to its experience working with state and local governments.
<unk> currently operates in 40 U S states and three additional countries.
Which will help expand the reach of our shield products as they see greater penetration into those markets.
We have positive momentum, resulting from these new partnerships, which expands our reach as we provide intrusion shield protection to a greater number of customers.
Our discussions have continued with other major technology partners on the strategic partnerships, but we have nothing more to announce at this particular time.
Indicated last quarter I was hoping to have something further to announce during the third quarter, but theres been a bit of a slowdown in these discussions.
Ainley due to the macroeconomic environment that we're all currently experiencing.
That said no potential partners left the discussion and we detect genuine enthusiasm for our IP and I remain optimistic that we will have something to announce on this front in due time and our strategic direction remains on course.
Before wrapping up let me also address our legacy consulting business.
We were pleased to see this segment grow both sequentially and year over year.
As you know the federal government's fiscal year started on October one.
And protecting critical information assets, which was well received by those in attendance.
During the quarter. We also participated in <unk> archive and information technology security and hacking conference.
This conference brings together a number of industry leaders to discuss pertinent changes to the cyber security industry and how <unk> are countering attacks.
The participation at these two conferences allowed us to showcase our new and innovative products to a broader audience at significant industry events and we're continuing to evaluate additional ways to expand the awareness of our intrusion shield offering.
At a macro level there are both positives and negatives.
But I continue to hear and confirm is that while forecast for technology and software spending are projected to be markedly lower side.
Cyber security remains a top priority as we head into 2023.
For example in a recent Gartner study published in the Wall Street Journal, 66% of CIO has indicated that they plan to increase investment in cyber security.
Long term the demand backdrop for our solutions continues to grow specifically in the market sub segments, we serve.
Cyber criminals and ransomware attacks do not paused because of a slowing economy.
And we continue to operate in a segment that we will continue to see increased spending irrespective of what's happening in the global market.
While bad actors never cease I am excited about the ways in which our new and existing products can stand up to the most intelligent threats today and have remained steadfast in my belief that we are well on our way to sustainable intrusion growth in this high growth exciting space.
Before I turn the call over to Kim I would like to comment on our efforts to improve the company's financial discipline and stability as we continue to pursue our strategic initiatives. We further strengthened our balance sheet and overall financial flexibility to meet our operational and strategic needs.
In September we completed a registered direct offering of approximately $6 million, along our goal of $15 million to $20 million.
In the coming year.
We remain confident that the capital markets remain open to us as we gained traction with our new shield products and we plan to move forward with the same commitment to investing in our business in a responsible manner.
Commensurate with our prospects for profitable growth.
Overall I'm proud of how our teams executed during the quarter.
I'm happy with the positive trajectory in our new business wins paired with a strong sales pipeline as more companies look to leverage our advanced threat hunting capabilities.
With that said I'd now like to turn the call over to Kim for a detailed review of our third quarter financials Kim.
Thanks Carol.
We are encouraged by the ongoing progress being made within our business as we continue to strengthen our balance sheet and financial flexibility.
Our strategic critical assistance to capture of acquiring customers customer demand crash sophisticated cyber security solutions.
Revenues for the third quarter of 2022 were $2 2 million an increase.
<unk> 1 million or six 5% sequentially.
There are $4 million or 25% year over year.
Third quarter revenues for our consulting business of $1 $9 million increased 14, 6% year over year, and seven 9% sequentially due to an increased level of task orders during the quarter. This business has shown continued progress and we feel that we'll continue to see a consistent level of barrick as to federal.
Government works its way through the backlog of task orders for contracts that have already been awarded.
And eventually reach of a new budget for fiscal 2023.
As you know due to the CR no new contracts can be awarded until either efficacy or ads or a new budget is approved.
Third quarter results for our shield on premise.
There are $3 million was flat sequentially due to some minor churn we experienced in the business.
During the quarter, we signed a number of new customers, which was offset by a non renewal of a contract.
On a year over year basis shield third quarter revenues increased <unk> one.
$1 million or 73%.
We are still seeing strong demand for our shield on Prem solution with some opportunities that we did not close in Q3 expense expected to close in the fourth quarter.
As Tony stated, we are pleased with the launch and progress of our two new shelf products and are encouraged by the prospects in the pipeline, particularly for the endpoint solution that we expect to be a large contributor to revenues in the future.
The gross profit margin was 54, 6% for third quarter of 2022, which is significantly below the gross margin that has been reported in prior periods.
During the quarter, we identified amounts recorded in operating expense that should be included in cost of sales.
We included this expense in cost of sales in Q3.
And made a reclassification from operating expense to cost of sales and all prior periods for comparability.
This reclassification resulted in a reduced gross margin of approximately 12% and 14% for each of the three month periods ended September 32022 and 2021.
When comparing our current quarter gross margin to the same period in 2021 after reclassification.
Our gross margin increased to six 2% we.
We anticipate our gross margin will continue to increase as shield revenues make up a greater percentage of our sales we are continuing to control our cost structure, while also making prudent investments in our long term profitable growth.
Third quarter operating expenses of $5 million were down $2 million or 28% year over year.
Looking closer at our operating expenses sales and marketing expenses of $1 $7 million were down $1 8 million or 52% year over year as a result of the actions taken over the past year to realign our sales organization and implement cost savings measures research.
And development totaled $1 $5 million, a decrease of zero point $4 million from the prior year period as.
As you May recall, we began capitalizing internally developed software costs in the second quarter of this year.
When adjusted for amounts capitalized the R&D expense would be $2 million an increase of <unk>.
<unk> $1 million or 5% year over year.
General and administrative expenses of $1 $9 million were up zero point $3 million or 16% year over year, mainly due to legal costs that are nonrecurring in nature.
During the quarter, we finalized the calculation of our employee tax credit related to 2020 in 2021, and we've recognized $2 million and other income net of expenses.
Net loss for the third quarter was $2 $9 million or <unk> 15 per share compared to a net loss of $6 1 million or <unk> 34 per share for the third quarter of 2021.
Our losses have improved significantly compared to the same period of the prior year, which reflects our responsible fiscal management as we grow revenues and manage our costs.
Turning to the balance sheet as of September 32022, we had cash and cash equivalents of $6 9 million.
From $4 1 million on December 31, 2021.
On September 12, we entered into a securities purchase agreement to issue and sell shares in a registered direct offering of common stock and warrants totaling $5 $9 million.
We closed on 959057 shares and warrants or $4 million in the September quarter.
The additional financing allows us to prudently invest in our growing suite of intrusion shield products and address our capital allocation priorities, while driving sustainable shareholder value.
With that financial overview, I would like to turn the call back over to Tony for a few closing comments Tony.
Thanks Kim.
To conclude we are continuing to execute on our strategic initiatives through the launch of our new products and the partnerships that we've announced we're.
We're pleased with our performance and our optimistic for what is yet to come.
I believe that the actions that we're taking today set us up well to end the year on a good note and move into 2023 with strong momentum.
I look forward to sharing our next steps in our journey with all of you and again, thank our investors for your continued support as we execute on our strategy.
This concludes our prepared remarks, and I'll now turn the call over to the operator for Q&A.
At this time, if you'd like to ask a question simply press star followed by the number one on your telephone keypad again that is star one to ask a question, we'll pause for just a moment to compile the Q&A roster.
Our first question will come from the line of Zach Cummins with B Riley Securities. Please go ahead.
Yes, hi, good afternoon, thanks for taking my questions.
Just starting off with shield revenue.
Essentially flat quarter over quarter.
It sounds like you had a non renewal with a customer can you talk about some of the dynamics that are going on there and why that customer decided to not continue forward with with your on premise product.
Yes. This is Tony.
So the circumstance there.
A deal that was signed before I actually got there.
The customer who turned on.
Shiel.
And.
It was a educational institution from the first day of school when all of the students logged in.
Our bogs brand.
On the jewelry.
Yes.
<unk> refused determined back on again.
Again, all of this happened well before.
Got to <unk>. So it was one of those things.
<unk>.
When I got there we spent.
First couple of months on the hardware stabilize.
Our software, making sure things like that wouldn't happen again.
And we just couldnt resurrect out one customer out of the.
And if you will so I felt real bad about it.
But I do understand in that particular case way.
No customer would feel burned and whatnot.
Yes.
I would not want to renew so.
That's the circumstance.
I wish it were otherwise but.
It is what it is.
Understood that's helpful Ed.
Tim I think Hugh you mentioned around kind of the lower gross margin that we saw in this quarter.
Any way you can give us a sense of what sort of costs are being moved into that cost of revenue line versus what was classified as operating expenses before.
Yes, I can.
In reviewing.
Cost of sales and it was primarily we were getting ready for the planning phase of the room.
<unk> this year in 2023.
I noticed some contract contractor expense.
Really some direct labor expense.
<unk> with.
Contract a consulting contract that previously had been included in operating expense and I should have been fully recorded in cost of sales.
And that is that as a long term contract for billing on that contract was consistent so.
We went back and.
And that in a correction of an immaterial error and restated for all periods presented.
And.
It did not have an impact on our operating income gross margin or earnings per share. It was purely a reclassification.
Yes.
Understood. That's helpful and Tony final question for me is really around the launch of your new cloud and endpoint solutions.
Just to make sure I'm getting all the metrics right would you mind repeating some of the pipeline metrics that you shared during the conference call script and I'm, assuming all of the existing channel partners. You have are likely ready to go right now to sell these new solutions.
Yes, so we've been working for the last several months.
Getting our partners and resellers.
So on really.
For this launch getting our collateral collateral materials together.
All of the things that you would expect.
At that particular time.
And so the metrics I was talking about.
It has to do with.
Our.
Cooper values proof of concepts.
And.
And things like that.
So let me.
Let me.
<unk> share of those.
<unk>.
So one of the things that we track.
Our sales force.
As qualified leads so these are leads that.
We know there is a budget we understand what the demand is.
There has been.
And the initial conversation.
And a desire to.
So we're in more about our product feeds on its not just somebody clicking on the website or.
Some sort of casual interest it's a real.
Sales opportunity for us.
And we have a funnel process that we go through two eventually determined that it's.
Our qualified leads it bears.
Our putting time into and also our channel partners putting time in June .
In most cases, they've already put some considerable time into it.
So those have doubled.
We have also doubled the proof of concepts and proof of values. So once we get through the.
Initial sales pipeline, then we actually get our.
Hardware software as the case may be installed at the customer site and we begin.
A defined period of time.
The customer experience is what our product can do in order to make a determination whether they ultimately want to buy.
So those have doubled.
And then probably the other measure that I think is important.
And I talked about on the call is.
Those outstanding So these are cases, where.
Okay.
In dialogue with the customer we have a specific.
Requests to provide a quote.
Yes.
Goal is to turn those quotes into actual sales. So those are all leading indicators.
Trajectory in terms of.
Where the company is going.
And I'm pleased to see those numbers show up in Q3.
Understood.
Extremely helpful well congrats on the continued progress here in Q3, and then best of luck with the rest of the year.
Thank you.
Your next question will come from the line of Scott Berg with HC Wainwright. Please go ahead.
Hi, good afternoon everybody.
Hi, My first question I may have missed it Tony at the front end of the call, but what <unk>.
Part of the quarter did you guys go live with endpoint and cloud.
Yes. It was it was near the end of the quarter.
We're happy.
It happened areas, we were we were ready to go.
We realize there were some additional patent coverage that we.
Really wanted to have and needed to have before we went GA with these products.
So we had a slight delay of a couple of weeks, while we got that patent coverage in place.
The good news is it allowed us to do some.
Additional feature development.
Probably wouldn't have gotten done otherwise so.
I'd call it a good delays for two reasons.
It was a little bit later in the quarter than is originally been hoping for but we did get it out at the end of the quarter both of them.
Was there any revenue contribution from these two products during the quarter.
No because neither.
Yes.
We ended the quarter.
Okay perfect.
My next question on the Tech partnership and it really just your channel partnerships in general can you remind us what the economics look like there, maybe a little bit lower revenue, but higher gross margin versus <unk>.
What would occur under our direct sales relationship.
Right. So we agree.
The agreements in place with all of our resellers.
And.
Most of them are.
Commission kind of basis or discount.
Basis, but they sell our products.
Go with customer.
We build them is kind of the nature of the relationship in most cases, they will provide first line support.
No.
Technical teams.
Help with.
Install.
The answer any tier one.
Yes.
Helped us kind of calls and so on so.
It's a good alternative in my view that building up a large team internally that would be needed. If we were going to do all of that directly ourselves.
Sure.
Many channel partners do you guys have in place currently and what's the pipeline look like for adding additional.
I don't know the exact number.
Off the top of my head.
I can get back to you with that but.
We're focused on around eight to 10 at this particular point or I'll say more active then.
Then the others and it's probably double that.
In total.
I'd say, our active partners, but we're real focused on the top eight or so that are.
Really delivering leads in.
And really engaging in.
Direct customers.
And that's apart from the managed service providers.
Managed security service providers that are their own sort of.
Activity.
Right, Okay, and they are all educated up on the product.
So theres not a six month lag in terms of when they could.
Actually start selling.
Yes, they are.
We will obviously continue to develop a dismal additional material.
One of the things that happens when you get a product into the marketplace. As you try to anticipate ahead of time, what all the questions.
All of.
Frequently asked concerns or whatever might be.
There is no substitute for getting out in the marketplace and getting feedback.
And hearing what the real customers have to say so.
There will be a period here where.
That feedback will be critically important.
As we try to do a better job.
Sure Alright.
Just one more from me you guys have done a nice job, bringing down opex over the course of the last year.
What's the expectation going forward.
In terms of are there some.
Digital areas that you can.
I don't know it would be more disciplined around if the environment gets a little bit worse.
Or do you need to really start to adhere to support.
The growth in the topline.
Well I'll, let Jim comment, but our main goal is to improve sales. We think now we have the opportunity with the two new products.
Pretty complete offering.
Really.
Per sale.
And then our objective is to grow.
Internal resources at a slower rate than sales. So I think Tim mentioned improved margins.
And her.
Conversation, but our goal for the next two quarters in particular, and I think forever will be broke sales.
<unk>.
Grow costs at a slower rate.
And then just to add on to what Tony said.
I think go to market structure that we have.
We will allow us to.
Right Alright, thank you.
<unk> and <unk>.
Make those significant investments.
As we grow our company.
So we do plan on.
Responsible fiscal management and really not getting ahead of ourselves in Charleston.
Expense spend.
And we will continue to spend responsibly continue to invest in.
<unk> features and functionality and new products, but we will moderate that with.
Our product adoption.
The rate at which our topline growth.
And on that same basis.
Sure.
We will continue to invest in sales and marketing.
But due to the go to market structure, it will be at a lesser extent than what otherwise we would have seen.
New products launched.
Yes.
Okay, Great I appreciate the time guys. Thank you so much.
Thank you.
Your next question comes from the line of Ed Woo with <unk> capital. Please go ahead.
Congratulations on the product releases. My question is you mentioned about the weakening macro environment.
At the same time cyber security remains a priority or do you anticipate longer sales cycles, and or maybe pricing pressures.
Going forward.
Yes, I think Thats a natural.
Result, given the macroeconomic climate we're in.
But there's a couple of other things I would mention here too.
I hear a couple of fees.
<unk> and <unk>, when we talk to them one of them is their value.
Having 52 vendors in the cyber security space.
Sort of looking for.
Better coverage from a fewer number of vendors and what they have today. So it tells me that.
Likely to be some industry consolidation or.
Things like that is.
<unk>.
Pressure comes to.
From from our customer base.
But I also here.
And I think this helps intrusion theyre looking at solutions that are focused on the coming threats and the and the threats that are that seem to be growing today versus yesterday's problems.
And I think our forward facing.
Cyber security solutions.
Well in that in that dynamic so.
And as we all know cyber security attacks are still successful.
There was news this week of yet another one so.
Big company, giving it so.
I think goes to show that.
We're not winning the war.
Against.
Some of these some of these add reserves.
Alright, well, thanks for answering my questions and I wish you guys. Good luck. Thank you. Thank.
Thank you.
Your next question comes from the line of Erin Warwick with breakout investors. Please go ahead.
Yes.
Hey, good evening.
I'm, sorry, I had a problem the technical difficulty getting on the call and I got on at the very end. When you were talking about strategic partnerships and some delays could you cover that again for me.
Sure well.
<unk>.
The bottom line of business I hope to announce.
Major strategic partnership.
By the end of the third quarter.
In my comments I said I think the macroeconomic conditions are creating an environment where.
Those conversations have slowed down a little bit.
Just to add a little color one of the partners we're talking to.
Staff reduction of almost 50% in the team that was talking with us so.
I think it means that in major tech companies and you're seeing this in.
And the market broadly most of them are not having a great.
Time, right now and that puts a lot of pressure.
Internal teams and I think also limits the kinds of.
Great relationships with.
Willing to engage them.
So I'm seeing that firsthand.
That said Nobody has said go away we don't Wanna.
Talk to you anymore.
And our conversations will continue so.
We will announce something in due time limits.
When it's done.
Pursuing those with vigor and.
I'm still hopeful that we'll be able to get one done the timing is just a little more uncertain.
I would say I felt that was going to be.
Three or four months ago.
Okay.
Well it was a good.
Positive note I guess it was good to hear about that.
Deepening of the relationship with Super micro.
Could you talk about that a little bit more I mean, I, just specifically I guess from the perspective I know they do a lot of white box offerings I know they have an international presence.
And what does that what is this kind of open up with you guys I guess in terms of opportunities.
Yes.
Super micro builds a lot of platforms.
There is a platform so a lot of open source solutions.
<unk> got great penetration in the small medium.
Market and.
Increasingly as there's cost pressure.
On it budgets and so on.
We're going to be a great alternative to.
Some of the higher price.
Solutions that.
Are there in the market.
So our ability to partner with them.
And be a part of the portfolio is taken off of their customers.
<unk>.
Is good for us.
I think good for them as well.
They wanted to broaden their offerings.
I think we are.
Very good partner for them in that in that respect.
Okay. Good thank you for that.
Final one from me I guess it would just be as it relates to more of the government side have you guys.
And to get it.
Added to the GSA schedule are being added to things like <unk>.
Currently in terms of the offerings that theyre able to accept.
Yes.
And we'll go on initially.
A sub to other.
Offerings not directly but we are working on.
So being on directly.
As well, but the most immediate.
Occurrence will be as a sub to other offerings.
And does that on like for both departments.
Yes.
GSA Noxa suite.
And <unk> our.
Our three primary targets.
Excellent. Thank you.
Thank you Tony.
Okay.
Thanks.
Our final question will come from the line of Ross Taylor with IRS investment partners.
Thank you and congratulations on getting the cash burn down.
Tony Real quick just to pick up on an answer you gave to Aaron you said you'd be a subset.
Their offerings that sounds very much like you already know who those other offerings are and they are in the process of getting.
Approval or getting put into those offerings because that the correct way to read that.
That is correct yes.
So.
What needs to be done.
Crossed that bridge it sounds like that could be a fairly and that could either be a forever or it could be a very quick short bridge to cross how long do you think it takes before you get.
Yes, the normal caused us would be a proposal goes in.
And.
Okay.
The prime contractor lists.
The subs that they want to use or could participate in that particular contract and once it is awarded.
Then.
The prime becomes responsible for the relationship.
So as we mentioned there is a CR right now so.
We're not expecting any new contracts until after the Crs yet.
Ended in normal funding occurs but.
As in every year, where there's been <unk> ends up building a lot of demand behind the dam if you will.
As soon as the CR ends then.
Contracts start to flow so we.
Hope to be on.
Of those new contracts.
When the dam finally gets released.
So I read that as you're saying that.
Since they are in that process and are being held up by the CR.
We've had 15 of them in the last 20 budget yet.
They're already.
Already have the prime that has put the contract again and you've already basically work with the prime. The Prime is intended to include you in that is that correct.
We have yes, we have some and we're working on a whole heck of a bunch more.
So is the way I would characterize that.
No.
Sure.
Handful today, and I want to be in multiple handfuls.
Within the next year.
Do we know have you announced those primes that you're working with are they already customers are they people who at this point in time, we did not know are going to be working with you.
We've not made any announcements in that regard at this point no.
So you basically and what theyre going for specific contracts. So these when they get when we get out of the CR and these get approved this could be a fairly significantly.
Revenue ramp and quite honestly proof point.
Although I think it's becoming less.
Yeah.
As a concern for many investors as to whether or not.
<unk> works it will be a massive proof point as you get these contracts out so it.
Sounds like you've already won those primes over on the value of shield would that be correct.
I would say that's true I think the one <unk>.
Is that in most of these cases, there is competitive bidding going on.
So if our prime the one we selected doesn't win the contract then.
Neither do we.
Yes.
And so we'll see over time, how many of these end up being winning.
Contracts versus ones that are.
Not winning.
That's always a little hard to tell.
Yes.
Our goal is to.
Our goal is to have more at bats than we've historically had and I think we're well positioned to do that.
Talk about the competitive landscape for people doing what you do in the <unk>.
Path.
It was said this is a fairly unique thing.
Does it still remain is there anyone else is offering a product like what youre often are the people bidding for these contracts using a different totally different approach.
Provide.
You've said before that basically.
Shield is almost promised Asia.
Zero day defense.
Cloud defense.
Very unique is that is.
Is that the case so other people are offering what you would considered carrier defense.
Well I think.
It's a question of.
Two things one is.
There is nobody else.
<unk> that we can find that has this sort of reputation based approach and the really large database that we have there is nobody that comes close.
I think we are at least 10 times bigger than the.
The next closest guys. So.
We think.
Offers a real strong advantage.
There are others, who claim that their solutions are effective because they use.
Things and these are all great buzzwords in the industry today machine learning.
Behavior based analytics lift.
The list kind of goes on and on and on.
We still think our solution is more effective than those.
Kinds of approaches and.
The fact that we don't rely on.
Strictly on signatures are seeing your brands or.
Some known set of behavior.
That we've seen before is.
Thank you.
Unique in the marketplace.
So time will tell.
Right now, we're still a little known company.
Our biggest effort is too.
Speak a little louder voice and get more exposure. So people can learn what we do and.
Try us out.
Provided additional.
References and things like that.
But we keep looking around to try to see if theres anybody.
Doing what we do.
While there are some companies that.
We're starting to gather the kind of data that we have.
They can't get to 30 year history that we already have.
It's just not.
About possible so we still think.
There is unique value there.
One that gives us a leg up.
But a different way by the time they have a 30 year history of 106.
Yes.
One of the ways that an investor like me judges companies like you are it's hard to truly understand the nature of the dynamics of the product is by finding who you ally with we were early into the scalar because of the relationship they have with Microsoft.
Well.
When we know the names of your prime through we know the names of your strategic.
Partners.
We are impressed by them.
Well impressed I hope so, but you will know the names for sure.
So there'll be significant players in the space.
That's our goal, yes, okay, and what kind of work through those guys to dos prompt due to prove out your product.
Well there we.
Pick the ones in the each in.
Different spaces, so some have.
One has products that we would.
Integrate with.
One has.
Services that we would.
Integrate with.
As an example, so we're at.
At the moment, we are not talking to multiple.
Versions of each of those.
We picked a leading product company leading.
<unk> services company.
So that was our best shot after looking at.
Caps that they have in there.
Offerings.
I will say that.
Things stay slow I will probably.
Broaden our conversation to more companies and were currently talking to.
It would seem that if you do have this truly unique product that would make a great deal of sense to effectively kind of create.
Youre going to play with one player or any space it would make sense to actually create a little bit of a race or hustle for it because.
If people start to recognize that this is.
This is what it appears to be that it should be.
Landslide pushing towards that.
Yes.
Just wanted to I think that I could talk greater length at six o'clock I think people have certainly tired of giving mistake, they probably tired of hearing you.
My only comment Ross would be.
I chose one because the impact on resources.
These conversations take.
People engineers bubble blah blah.
I didn't want to delude our resources.
<unk>.
Those are more focused approach.
We'll see what happens.
As time marches on here, but that was a deliberate choice to initially.
On the same measure the people who are partnering with these potential deals with.
With the government have also committed resources decided after that please.
Resources.
They want to include you in their package. So they are willing to bet their reputations on years.
Years ago, I made a lot of money on it coming to Albany International which developed a new way to make fan blades for jet engine. When Boeing said that they were going to use them as the sole entrant people thought I was crazy, but they actually.
Okay.
There are leading edge technologies that come from companies, we never think could happen that's right that's exactly right.
Thanks, Vince if there is a lot more going on here than you are letting on mute.
It's pretty exciting I think picking up some of the stuff that some of the following coming through some of these stores and opened thank you very much I'll talk to you later.
Thank you.
With that I'll turn the conference back over to management for any closing remarks.
Well again I would just like to say, thank you to our investors and analysts and all of those who are paying attention to us.
For me, it's coming up on our one year anniversary of joining the company in.
Quite proud of the team I am proud of the work that.
We've been able to do this year.
And I'm, even more excited about what the next year will bring so.
Youre going on the journey with us.
Stay tuned we'll have.
More exciting news for you in the coming weeks and months. So thank you very much.
Ladies and gentlemen that will conclude today's call. Thank you all for joining you may now disconnect.
[music].