IPM aims for adjusted EBITDA positivity by early 2026 while advancing cybersecurity and cloud growth strategy

Earnings Call Insights: Intelligent Protection Management Corp. (IPM) (IPM) Q2 2025

MANAGEMENT VIEW

* Jason Katz, CEO, outlined the successful integration of Newtek Technology Solutions (NTS) and the divestiture of legacy video chat products, noting "we've laid the groundwork from sales, marketing, accounting and human capital to position IPM to be poised for growth for the benefit of our customers, employees and shareholders."
* Katz disclosed new strategic partnerships and product launches: "IPM was selected by Hewlett Packard Enterprise to be an accredited partner for its HPE Private Cloud AI solution," and announced a collaboration with IT Ally focused on lower middle market private equity firms.
* The company initiated a stock repurchase plan for up to $400,000 of its outstanding common stock and began offering Aura, an AI-powered online safety solution.
* Regarding ongoing patent litigation, Katz reminded, “a jury awarded us $65.7 million... in connection with a lawsuit against WebEx Communications, Cisco WebEx LLC and Cisco Systems," with the final judgment entered in IPM's favor, but clarified, "we estimate that we would receive no more than 1/3 of the gross proceeds... subject to post-trial proceedings.”
* CFO Kara B. Jenny stated, "For the 3 months ended June 30, 2025, revenue totaled $5.7 million compared to $0.3 million for the prior year period. On a sequential basis, revenue increased 4% from the first quarter of 2025."

OUTLOOK

* Katz indicated the company aims "to continue to increase top line consecutive growth and to continue to improve adjusted EBITDA with the goal towards being adjusted EBITDA positive by early 2026."
* The company expects growth through expanding service offerings to legacy NTS customers and cross-selling ManyCam software to its web hosting customer base.
* Management does not anticipate material impact from proposed tariff increases in fiscal 2025.

FINANCIAL RESULTS

* Revenue for the quarter was reported as $5.7 million, increasing 4% sequentially from Q1 2025.
* For the 6 months ended June 30, 2025, revenue reached $11.2 million.
* By revenue stream for Q2: Managed Information Technology revenue was $3.5 million; Procurement revenue was $1.2 million; Professional services revenue was $0.7 million; subscription revenue was $0.3 million.
* Net loss from continuing operations for Q2 was $1.1 million, a reduction from $1.3 million in the prior year period. Net loss for the 6 months ended June 30, 2025, totaled $0.2 million.
* Adjusted EBITDA was negative $0.4 million for Q2 and negative $0.9 million for the first half.
* Cash and equivalents stood at $8.3 million, including $1 million of restricted cash; no long-term debt was reported.
* Deferred revenue of $3.9 million is to be recognized in future quarters as products and services are installed.

Q&A

* Joe Diaz, Lytham Partners, asked about the $1 million in restricted cash; Katz responded, "we entered into a credit agreement with an affiliate of NewtekOne, Inc. that provides for a secured revolving line of credit. Line of credit is collateralized by a CD in the amount of $1 million. So we've classified it as restricted cash as of June 30, 2025."
* Diaz inquired about revenue growth initiatives; Katz highlighted the referral program's early traction, stating, "we have started to see introduction start to cultivate... word of mouth is an easy, cost-effective way to promote them."
* When asked about growth and margin improvement, Katz said, "our aim is to continue to increase top line consecutive growth and to continue to improve adjusted EBITDA with the goal towards being adjusted EBITDA positive by early 2026."
* On potential tariff impacts, Katz said, "we do not anticipate that an increase in tariffs would have a material impact on our business in fiscal 2025."

SENTIMENT ANALYSIS

* Analysts maintained a neutral tone, focusing on clarifications about restricted cash, revenue drivers, margin outlook, and tariff risks.
* Management’s tone was confident and forward-looking, as seen in Katz’s statements about growth and operational strategy, but included cautious notes regarding litigation proceeds: “we estimate that we would receive no more than 1/3 of the gross proceeds... subject to post-trial proceedings.”
* Compared to last quarter, management continued a positive outlook but provided more explicit targets for adjusted EBITDA and addressed new partnership announcements, while analysts’ tone remained consistently neutral.

QUARTER-OVER-QUARTER COMPARISON

* Guidance shifted to target adjusted EBITDA positivity by early 2026, while last quarter focused on integration and establishing the growth pipeline.
* Strategic focus advanced from initial integration and cross-selling to new partnerships (HPE, IT Ally) and product launches (Aura).
* Analysts maintained a focus on operational specifics, shifting from questions about sales and marketing hires to detailed financial and operational mechanics (restricted cash, margin improvements).
* Key metric changes included a sequential revenue increase of 4% and progress toward reduced net loss and improved adjusted EBITDA.
* Management’s confidence remained positive, now anchored with explicit financial goals and new partnerships, while analysts’ sentiment held steady.

RISKS AND CONCERNS

* Litigation proceeds remain uncertain as the exact amount to be received depends on post-trial and appellate proceedings, and significant legal expenses are anticipated.
* The company noted that GAAP comparability will only be achieved in Q1 2026 due to recent acquisitions and divestitures.
* Management acknowledged potential revenue lumpiness due to recognition timing and reaffirmed continued focus on expense reduction and marketing efficiency.
* Potential tariff increases are not currently expected to materially impact the 2025 business but will be monitored.

FINAL TAKEAWAY

IPM’s second quarter highlights the company’s transition toward a managed services focus, with growth reinforced by new partnerships and product launches. Management’s explicit target to achieve adjusted EBITDA positivity by early 2026, alongside steady revenue gains and strong cash liquidity, underscores a forward-looking strategy aimed at capitalizing on cybersecurity and cloud infrastructure demand. Ongoing patent litigation and the timing of litigation proceeds remain a key uncertainty, but the company’s operational integration and expansion initiatives, coupled with disciplined cost management, form the basis for anticipated growth in the coming quarters.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ipm/earnings/transcripts]

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