Intelligent Protection Management Q3 2026 Earnings Results & Report

Intelligent Protection Management EPS Results

• Actual EPS: -$0.06
• Consensus EPS: $0.02
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: N/A

Intelligent Protection Management Revenue Results

• Actual Revenue: $10.95 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Intelligent Protection Management (NASDAQ:IPM) (NASDAQ:IPM) is a managed technology solutions provider focused on cybersecurity and cloud infrastructure. IPM provides dedicated server hosting, cloud hosting, data storage, managed security, backup and disaster recovery, and other related services, including consulting and implementing technology solutions for enterprise and commercial clients across the United States. IPM's other products include ManyCam. IPM has an over 20-year history of technology innovation and holds 8 patents. For more information, please visit: www.ipm.com.

Intelligent Protection Management Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue rose 75.5% to $10.95 million in the third quarter, driven largely by a 271% increase in procurement revenue, including sales of AI-related equipment and fulfillment of a significant customer order.
• Negative Sentiment: Procurement generally carries lower gross margins, so profitability did not increase in line with revenue. The company still reported a $779,000 net loss, although its operating loss narrowed and Adjusted EBITDA turned positive at $159,000.
• Positive Sentiment: Core managed services revenue from non-affiliated customers grew 33%, while operating cash flow was $5.6 million and quarter-end cash was $12.5 million with no long-term debt. Management said it aims to achieve positive Adjusted EBITDA in the fourth quarter.
• Neutral Sentiment: IPM signed an agreement to acquire AdTech IT, a recurring-revenue managed services business, in a two-step closing process. Management expects the deal to expand customer reach and create cross-selling opportunities, while noting that growth depends on completing the transaction and executing successfully.

Presentation

[Operator]

Good afternoon, and welcome to the Intelligent Protection Management Corp Third Quarter 2026 Earnings Conference Call. All participants are in listen-only mode. Following prepared remarks, management will address questions submitted in advance of the call. As a reminder, this call is being recorded. Joining us today are Jason Katz, Chairman and Chief Executive Officer, Jared Mills, President, and Kara Jenny, Chief Financial Officer. I will now turn the call over to Joe Diaz for the safe harbor statement.

[Joe Diaz, Managing Partner at Lytham Partners]

Good afternoon, and welcome to all participating in today's call to review the financial and operating results of IPM for the third quarter ended September 30, 2026. As the operator indicated, my name is Joe Diaz. I am with Lytham Partners. We are the investor relations representative for IPM. By now, everyone should have access to the earnings results press release, which was issued after the close of market today. This call is being webcast and will be available for replay. During the course of this call, management will include statements that are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements about future results of operations, business strategies and plans, IPM's relationship with its customers, as well as market and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions.

[Joe Diaz, Managing Partner at Lytham Partners]

Forward-looking statements are based on management's current knowledge and expectations as of today, and are subject to certain risks, uncertainties, and assumptions related to factors that may cause actual results to differ materially from those anticipated in the forward-looking statements. These expectations and beliefs may not ultimately prove to be correct. A detailed discussion of such risks and uncertainties is contained in IPM's filings with the SEC, including its annual report on Form 10-K for the year ended December 31, 2025, and its quarterly reports on Form 10-Q. You should refer to and consider these factors when relying on such forward-looking information. The company does not undertake and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. On this call, management will refer to adjusted EBITDA, a non-GAAP financial measure.

[Joe Diaz, Managing Partner at Lytham Partners]

Management believes this measure, when considered together with GAAP results, provides investors with an additional tool to evaluate the company's operating performance. Adjusted EBITDA should not be considered in isolation or as a substitute for GAAP results, and may not be comparable to similarly titled measures used by other companies. A reconciliation to the most directly comparable GAAP financial measure is provided in the earnings press release posted in the investor relations section of the company's website at ipm.com. After Jason's remarks, we will hear from Kara. We will conclude by addressing investor questions that were submitted in advance of today's call. At this time, I would like to turn the call over to Jason Katz. Jason, please go ahead.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

Thank you and good afternoon, everyone. Third quarter was a strong one for IPM as we continue to build momentum across our core business while advancing key strategic initiatives that position us for long-term growth. Exceptional customer demand and continued execution of our growth strategy drove total revenue up more than 75% to approximately $11 million compared with the third quarter of 2025. For the first nine months of the year, revenue grew 36% to $23.8 million compared to the prior year. The primary driver was procurement. Procurement revenue rose approximately 271% during the quarter compared to the prior year period as customers accelerated infrastructure investments in cybersecurity, cloud modernization, data center expansion, and artificial intelligence. Additionally, I am pleased to report that we successfully fulfilled a significant customer order during the third quarter, further demonstrating our ability to execute on large-scale opportunities and meet customer demand.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

Our strategy is to build IPM around six complementary service lines: managed IT security services, secure private cloud hosting, managed backup and disaster recovery, professional services, procurement, and web hosting. Together, these offerings connect the infrastructure customers invest in today with the protection, resilience, and ongoing support they need over time. Our focus is not simply on supplying technology, but on becoming a long-term partner in how customers secure, operate, and recover their IT environments. Procurement generally carries lower gross margins than our managed services, cybersecurity, and cloud infrastructure offerings, so profitability did not rise at the same rate as revenue. At the same time, procurement can provide an entry point for broader customer relationships. Our professional services help customers plan their technology investments. Our procurement services source the infrastructure.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

Our managed IT security services, private cloud, and managed backup and disaster recovery services create opportunities to support those environments over time. Our objective is to convert these opportunities into recurring engagements, recognizing that conversion is not automatic and depends on customer needs and execution. We are making progress in expanding our recurring business. Core managed services revenue from non-affiliated customers increased 33% over the prior year period. That result supports our focus on deepening customer relationships and diversifying our revenue base. We remain focused on expanding higher-margin recurring engagements across our service portfolio while continuing to execute on professional services and procurement opportunities. Year-to-date, we have made significant operational progress as we continue to execute against our strategic priorities.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

We launched IPM GO, your always-available AI virtual assistant that is hosted within IPM's private cloud infrastructure, enabling clients to deploy, manage, and scale web-based engagement solutions related to customer sales and support interactions. We added a dedicated sales territory covering the Phoenix metropolitan area and broader West Coast market, bringing an established customer base and industry expertise. We extended our Phoenix data center co-location agreement through August of 2032. We entered into a strategic collaboration with an AI platform designed to reduce the cost, complexity, and time of developing small and medium AI models. We achieved SOC Two Type One compliance, a key milestone in safeguarding customer data. We repurchased 50,000 shares of common stock during the first quarter of 2026 under a stock repurchase plan for an aggregate of $83,491.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

As of September 30, 2026, all shares of common stock available for repurchase under the plan had been repurchased, and the plan has expired. Subsequent to quarter end, in October, we entered into a unit purchase agreement to acquire AdTech IT LLC, a subsidiary of Advanced Technology Distributors, through a two-step closing process. AdTech has built a managed services business with longstanding customer relationships and recurring revenue model that aligns with our strategy. Once completed, we believe the transaction can expand our customer reach and create opportunities to introduce IPM's managed IT security services, private cloud, managed backup and disaster recovery, professional services, and procurement offerings across a larger combined customer base. These service lines address different but connected customer priorities. Managed IT security services combines monitoring and remediation to help customers manage cyber risk. Private cloud provides infrastructure hosted and managed by IPM.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

Managed backup and disaster recovery supports data protection and recovery planning. Professional services help align technologies and decisions with business priorities, while procurement enables customers to source the equipment needed to implement those plans. By combining these capabilities with AdTech's managed services expertise, we believe we can offer customers a broader, more coordinated approach to their technology needs. The strategic rationale for the acquisition is straightforward: expand our capabilities, deepen customer relationships, and build more opportunities for recurring services. Our focus will be on disciplined execution and on translating those opportunities into customer value, rather than assuming that a larger platform alone will deliver growth.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

In October, IPM's managed security services provider, or MSSP, practice moved quickly to help protect managed clients from the critical PHP2Shell vulnerabilities, CVE-2026-109618 and CVE-2026-109619, which CISA added to its Known Exploited Vulnerabilities Catalog following evidence of active exploitation and warned could enable unauthenticated remote code execution in PHP environments. Our teams prioritized identification and remediation of affected systems, including patching and backported security fixes where appropriate, while using additional protective controls such as web application firewall protection for certain legacy assets. This response reflects IPM's MSSP strategy of combining rapid vulnerability remediation, layered security controls, and continuous monitoring to reduce cyber risk for the organizations we protect. Our balance sheet remains strong with $12.5 million in cash and cash equivalents and no long-term debt at quarter end, giving us flexibility to pursue both organic growth and strategic opportunities with disciplined capital allocation.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

With that, I'll turn the call over to our CFO, Kara Jenny.

[Kara Jenny, CFO at Intelligent Protection Management]

Thank you, Jason, and good afternoon. For the third quarter ended September 30th, 2026, total revenue was $10.95 million, up 75.5% from $6.2 million a year ago. By component, procurement revenue was $6.3 million, up 271%. Managed IT revenue was $3.9 million, up 1.8%. Core managed IT revenue, which consists of revenue from our managed IT security services and managed backup and disaster recovery solutions from non-affiliated customers, grew 33%. Professional services revenue were $545,000, up 14.5%, and subscription revenue was $244,000, down 10.4%. Third quarter revenue growth was driven by both new customer wins and the expansion of services provided to existing customers, as well as increased procurement revenue from the sale of AI-related equipment. This revenue included the fulfillment of a significant customer order that was previously discussed in our second quarter update.

[Kara Jenny, CFO at Intelligent Protection Management]

Loss from operations for the third quarter ended September 30th, 2026, improved 38% to $886,000, which included approximately $195,000 of acquisition-related expenses incurred in connection with the AdTech acquisition, from a loss of $1.4 million. Net loss narrowed to $779,000 from a loss of $1.1 million. Adjusted EBITDA was positive $159,000 compared with negative $260,000 in the prior year quarter. Cash provided by operations in the third quarter ended September 30th, 2026, was $5.6 million, an increase of $5.5 million from $133,000, primarily reflecting product sourcing tied to procurement activity during the quarter. Deferred revenue stood at $4.9 million as of September 30th, 2026, which we expect to recognize in future quarters as product and services are installed. For the nine months ended September 30th, 2026, total revenue rose 36% to $23.8 million. Managed IT revenue grew 6.7% to $11.6 million, and procurement grew 158% to $10 million.

[Kara Jenny, CFO at Intelligent Protection Management]

Loss from operations improved 19% to $3.2 million. Net loss was $2.8 million compared with a loss of $1.3 million. Adjusted EBITDA improved to -$536,000 from -$1.1 million. Operating cash flow was $4.9 million, an increase of $3.9 million versus $1.0 million in the comparable nine-month period. We ended the third quarter with $12.5 million in cash, representing an increase of $5 million, or 67%, compared to $7.5 million at June 30th, 2026. The company finished the third quarter with no long-term debt. That concludes my review. I will turn the call back to Jason.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

Thank you, Kara. Our priorities remain clear. Grow recurring revenue and customer lifetime value through managed IT security services, private cloud, and managed backup and disaster recovery. Use professional services and procurement to address customer needs and create opportunities for broader engagements. Pursue strategic acquisitions that enhance our capabilities and market reach, and maintain a strong balance sheet. This was a quarter of meaningful progress. We grew revenue by more than 75%, narrowed our net loss to $779,000, generated $5.6 million in operating cash flow, and reported positive adjusted EBITDA of $159,000. Core managed services revenue from non-affiliated customers grew 33%. Our year-to-date operational milestones, including the launch of IPM GO, and subsequent to quarter end, we signed an agreement to acquire AdTech. These developments support a consistent strategy.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

Use professional services and procurement to help customers build their technology environments and expand the managed IT security services, private cloud, and managed backup and disaster recovery of relationships that support those environments over time. Looking ahead, our goal remains to achieve positive Adjusted EBITDA for the fourth quarter. Our $4.9 million in deferred revenue is expected to be recognized as products and services are installed. Our new West Coast territory creates opportunities to reach additional customers, and once completed, the AdTech acquisition should broaden our capabilities and cross-selling opportunities. Across these initiatives, our focus is on converting infrastructure projects into long-term, higher-margin recurring relationships. We believe our balance sheet and service capabilities position us to pursue that objective, while recognizing that the timing and results will depend on customer demand and execution. None of this happens without people, and I want to recognize them.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

First, I'd like to thank the entire IPM team for delivering a strong quarter. Your commitment to serving our customers, executing on key initiatives, and driving growth made these results possible. I'm proud of what we achieved together. To our customers, thank you for trusting us with your most critical technology. Your confidence drives everything we do. Following the closing of the transaction, we look forward to welcoming the AdTech team and its customers to the IPM family. To our shareholders, thank you for your continued confidence and support. We remain focused on executing our service-led strategy and allocating capital prudently. We believe this disciplined approach can support long-term shareholder value.

[Joe Diaz, Managing Partner at Lytham Partners]

Thank you for those comments, Jason. Operator, we will now turn to the questions submitted in advance of today's call. I'll direct the first question to Jason. Procurement drove significant growth this quarter. Beyond the immediate revenue, how can a large procurement win translate into recurring managed services, cybersecurity, cloud, and backup revenue for IPM?

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

We view procurement services as much more than a transaction. It can be an entry point into a much broader customer relationship. When we help a customer design and source a meaningful technology deployment, we gain a detailed understanding of their environment, their security requirements, and where they're going strategically. That naturally creates opportunities for professional services, managed IT security services, secure private cloud hosting, managed backup and disaster recovery, and ongoing support. It can also work in the opposite direction. When we win a managed IT services customer, that relationship often generates professional services and procurement services opportunities as we build out the customer's technology roadmap. So the real opportunity is the life cycle of the customer, not any single transaction.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

We don't assume that every procurement engagement will convert into recurring revenue, but having that trusted relationship gives us an opportunity to earn a larger share of the customer's technology spend over time. That is the model we are focused on.

[Joe Diaz, Managing Partner at Lytham Partners]

Let's go to Jared. Core managed services revenue from non-affiliated customers grew 33% year-over-year. What's driving that growth, and what are you seeing in the pipeline, Jared?

[Jared Mills, President at Intelligent Protection Management]

The 33% growth is really coming from two places, adding new managed IT services customers and expanding the number of services we provide to existing customers. We have been deliberately targeting highly regulated markets where our security, compliance, and infrastructure experience is particularly relevant, while also going back into our existing customer base with additional managed services, cybersecurity, cloud, and backup solutions. We are encouraged by the pipeline. Earlier in the year, we were seeing specific traction in legal and finance, and a strong pipeline across healthcare, energy, private equity, manufacturing, and retail customers. While procurement services revenue can move around quarter to quarter, what we are most focused on is building a recurring revenue base. We believe the 33% increase is a good indication that the strategy is gaining traction, and we believe there is a meaningful runway ahead of us.

[Joe Diaz, Managing Partner at Lytham Partners]

In that regard, Jared, what differentiates IPM when competing against traditional managed service providers, cybersecurity firms, and large cloud providers?

[Jared Mills, President at Intelligent Protection Management]

I think the biggest difference is that we don't approach the customer through a single product or service. We can sit with a customer as a technology advisor, help them design the architecture, procure the infrastructure, secure it, host it in a private or hybrid cloud, manage it, and protect it with managed backup and disaster recovery. That gives the customer one partner across a much larger portion of the technology life cycle. Second, we have a real depth in highly regulated industries. Our experience includes banking and financial services, healthcare, legal, merchant processing, and other industries where reliability, security, and compliance are fundamental requirements rather than add-ons. We also operate our secure private cloud from private suites leased within U.S.-based Tier III data centers, alongside our managed IT security services. Finally, we differentiate on service. We're not trying to replace personalized support with automation.

[Jared Mills, President at Intelligent Protection Management]

The model is highly consultative and white glove. We believe we combine large provider capabilities with the responsiveness and customer intimacy you generally associate with a smaller specialist, and that combination is difficult to replicate.

[Joe Diaz, Managing Partner at Lytham Partners]

Jared, what are customers telling you today about cybersecurity, private cloud, and AI that is different from what they were asking for a year ago? What's changed?

[Jared Mills, President at Intelligent Protection Management]

The conversation has become much more integrated. A year ago, customers often approached cybersecurity, cloud infrastructure, and AI as separate initiatives. Today, those conversations are increasingly converging around one question: How do I modernize the business without losing control of my data, increasing risk, or creating unpredictable costs? On cybersecurity, customers increasingly expect continuous protection rather than periodic projects. As we discussed in our prepared remarks, a good recent example is our response to the critical PHP vulnerabilities. Our managed IT security services team moved quickly to help protect managed clients by prioritizing identification and remediation of potentially affected systems and applying additional security controls where appropriate. That is the type of proactive capability customers increasingly expect from their technology partner.

[Jared Mills, President at Intelligent Protection Management]

In cloud infrastructure, we are seeing greater interest in understanding where private, dedicated private, hybrid, and public cloud each make economic and operational sense, rather than simply taking a move everything to the public cloud approach. Our secure private cloud hosting strategy is particularly relevant because it gives customers another option around data control, security, performance, and cost. AI has probably changed the conversation the most. Customers are moving from asking: What can AI do? to; How do I deploy AI securely against real company data?" We are receiving requests from managed clients about bringing tools such as Microsoft 365 Copilot and other AI capabilities into their business, and the conversation quickly becomes one of governance, data loss prevention, compliance, and control. That fits very naturally with our managed IT security services and secure private cloud hosting capabilities.

[Jared Mills, President at Intelligent Protection Management]

It is also why we launched IPM GO, our always-available AI virtual assistant hosted within IPM's private cloud infrastructure, which enables clients to deploy, manage, and scale web-based engagement solutions related to customer sales and support interactions.

[Joe Diaz, Managing Partner at Lytham Partners]

Jason, what specifically attracted IPM to AdTech, and where do you see the greatest opportunity to create value from this acquisition?

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

What attracted us to AdTech was very straightforward. It is a longstanding managed services business with recurring revenue, established customer relationships, and a strong presence in California. That aligns extremely well with the business we are building at IPM. We believe the biggest value creation opportunity from the pending AdTech acquisition will be cross-selling. AdTech brings relationships with small and medium-sized businesses that already rely on them as a trusted technology partner. Following the final closing, we believe we can bring IPM's managed IT security services, secure private cloud hosting, managed backup and disaster recovery, professional services, and procurement services capabilities to those relationships. At the same time, we expect the acquisition to expand our geographic reach and give the combined organization a larger customer base across which to sell complementary solutions. We do not view AdTech simply as buying revenue and adjusted EBITDA.

[Jason Katz, Chairman and CEO at Intelligent Protection Management]

We view it as an opportunity to add a recurring customer platform where we believe the combined company can provide more services per customer, deepen those relationships, and increase customer lifetime value over time. That is exactly the type of acquisition that fits our strategy of building a scaled managed technology services platform.

[Joe Diaz, Managing Partner at Lytham Partners]

Okay, this concludes our question and answer session. Thank you, Jason, Kara, and Jared, and to everyone dialed into this call for your participation. We will look forward to talking with you again at the conclusion of our fourth quarter to wrap up the results for the year. Have a great day.

[Operator]

Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.

Participants

Executives

• Jason Katz, Chairman and CEO
• Kara Jenny, CFO
• Jared Mills, President

Analysts

• Joe Diaz, Managing Partner at Lytham Partners