IPM

Good afternoon, and welcome to the Q1 2026 financial results conference call for Intelligent Protection Management Corporation, better known as IPM for their quarter ended March 31st, 2026. At this time, all participants have been placed on a listen-only mode. Let me turn the floor over to Joe Dorame of Lytham Partners. Joe, please proceed.

Good afternoon, welcome to all participating on today's call to review the financial and operating results of IPM for the first quarter ended March 31st, 2026. As the operator indicated, my name is Joe Dorame. I'm with Lytham Partners. By now, everyone should have access to the earnings results press release, which was issued after the close of the 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 relationships with its customers, as well as market and potential growth opportunities. Management will make forward-looking statements in response to your questions.

Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and 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 31st, 2025. 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 law.

On this call, management will refer to adjusted EBITDA, a non-GAAP measure that, when used in combination with GAAP results, provides investors with additional analytical tools to understand the company's operations. For adjusted EBITDA, management has provided a reconciliation to the most directly comparable GAAP financial measures in the earnings press release, which has been posted on the Investor relations section of the company's website at www.ipm.com. I am joined today by Jason Katz, IPM's Chief Executive Officer, Jared Mills, IPM's President, and Kara Jenny, IPM's Chief Financial Officer. After Jason's remarks, we will hear from Kara, and then we will conclude with investor questions that were sent in advance of today's call. At this time, I'd like to turn the call over to Jason Katz. Jason, take it away.

Thanks, Joe. Good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call. We are off to a good start in 2026 with solid top-line growth as total revenue increased by over 15%. The increase in revenue was fueled by a 19% increase in our core managed information technology services and a 78.4% increase in procurement revenue in the first quarter of 2026. Managed IT revenue for the quarter was driven by a mix of new customers and the expansion of services sold to existing customers. Procurement revenue can be uneven throughout the year as it is the result of our customers both replacing existing hardware as well as purchasing new hardware in connection with new projects, which projects are generally tied to customer budgets that are often higher early in the calendar year.

We are gaining traction in our business development efforts as our team takes steps to become more efficient and effective in marketing our services in highly regulated businesses, particularly in the healthcare, legal, finance, and banking markets, where we believe we have competitive advantages over our peers. Loss from operations decreased by over 42% compared to the prior year period. The year-over-year change from net income to net loss of 182% was primarily driven by the absence of a non-recurring tax benefit recognized in the prior year period. Management believes that adjusted EBITDA is another useful measure in assessing our performance, which improved year-over-year by over 65% due to stronger revenue and continued operational efficiencies.

We remain focused on advancing the integration of our comprehensive portfolio of IT solutions for managed IT security services, secure private cloud hosting, managed backup and disaster recovery, professional services, web hosting, and other managed services. Additionally, we are expanding functionality through strategic partnerships that we believe accelerate our customers' AI capabilities and strengthening our long-term growth profile. We are collaborating with third parties to integrate artificial intelligence and predictive analytics capabilities into our platform, enabling IPM customers to leverage AI-driven insights within existing data environments. In addition, our partnership with MASORI Therapeutics is designed to support advanced AI in order to provide accelerated results that enhance automation and system integration capabilities, improving workflow efficiency and scalability. These partnerships are intended to strengthen our technology offerings, accelerate scalable growth, strengthen customer retention, and enhance the long-term value we deliver across our platform for our client base.

We are highly focused on being a trusted advisor, delivering successful outcomes and creating value for our customers. In addition to growing our business organically, we will continue to explore strategic opportunities, including potential mergers or acquisitions of other entities or assets that are synergistic to our businesses. We believe we are well-positioned to integrate operations that are synergistic with our core operations that can be acquired at a reasonable valuation to provide greater returns for our loyal stockholders. We look forward to building on our solid first quarter results throughout the rest of calendar 2026. In other developments during Q1 2026, we executed an extension of our existing Phoenix data center colocation license agreement with an industry-leading data center provider through August of 2032.

We entered into a strategic partnership with MASORI Therapeutics, an advanced AI platform that accelerates results by reducing costs, complexity, and time for small and medium AI models, allowing organizations to save significantly by decreasing necessary code development and providing AI-related benefits. We successfully achieved SOC 2 Type 1 compliance, a key milestone in our commitment to safeguard customer data and deliver trusted cybersecurity and cloud infrastructure solutions. I will now turn the call over to Kara Jenny, our Chief Financial Officer, for a review of the numbers. Kara?

Thank you, Jason. For the three months ended March 31st, 2026, revenue totaled $6.4 million compared to $5.5 million for the three months ended March 31st, 2025, an increase of 15.2%. This is attributed to an increase in core managed IT services of 19% compared to the prior year period, as well as an increase in procurement of 78.4% compared to the prior year period. Total revenue by revenue component for the first quarter ended March 31st, 2026 were as follows: Core managed information technology revenue, which includes revenue from our managed IT security services and managed backup and disaster recovery solutions, was $3.4 million, an increase of 19% from Q1 2025. Procurement revenue was $1.7 million, an increase of 78.4% from Q1 2025.

Professional services revenue was $483,000, a decrease in 33.5% from Q1 2025,. Subscription revenue was $254,000, a decrease of 9.7% from Q1 2025. Loss from operations for the three months ended March 31st, 2026 was $0.8 million compared to $1.3 million for the three months ended March 31st, 2025. Loss from operations for the three months ended March 31st, 2026 included $0.5 million of non-cash expense, consisting primarily of amortization and depreciation, compared to $0.9 million of non-cash expense for the three months ended March 31st, 2025. Net loss for the three months ended March 31st, 2026 totaled $0.7 million compared to net income of $0.8 million for the three months ended March 31st, 2025.

Net income in 2025 was attributed to recording an income tax benefit during the first quarter of 2025 of approximately $2.1 million in connection with the transactions. Adjusted EBITDA for the three months ended March 31st, 2026 totaled negative $0.2 million compared to negative $0.5 million at March 31st, 2025. As of March 31st, 2026, the company had $8.1 million of cash and cash equivalents, including $1.0 million of restricted cash on its balance sheet and no long-term debt. We had cash used by operations of $0.2 million for the three months ended March 31st, 2026, compared to cash provided by operations of $1.7 million for the three months ended March 31st, 2025.

Deferred revenue was $4.7 million as of March 31st, 2026, which will be recognized as revenue in future quarters as products and/or services are installed. During the first quarter of 2026, the final 50,000 shares designated under the stock repurchase plan dated May 8th, 2025 were repurchased for $83,491. As of March 31st, 2026, all shares of common stock available for repurchase under the plan have been repurchased. That concludes my remarks. At this time, we will open the call for investor-submitted questions. Joe, please commence the Q&A.

Thanks, Kara. The first question: What differentiates your services offering in regulated markets such as healthcare, legal, finance, and banking?

Joe, our DNA comes from having been the technology division of a bank, which means we were purpose-built to operate in highly regulated industries. Through our MSSP and vCISO offerings, we provide comprehensive 24/7 security coverage with oversight from teams that have deep experience operating in these environments. In addition, our secure managed private hosting capabilities give customers great control and peace of mind around data privacy at a time when those concerns are top of mind. We announced in January of this year that we achieved SOC 2 Type 1 compliance, a key milestone in our ongoing commitment to safeguard customer data and delivering trusted cybersecurity and cloud infrastructure solutions.

Thanks, Jared. Next question. Where do you see the most compelling opportunities to accelerate growth in the back half of the year?

In the first half of the year, we focused on laying the groundwork by evaluating AI technologies and partners that can help our customers realize value from these tools. In the back half, our focus shifts to execution, expanding our range of AI solutions through further strategic partnerships and working with customers to adopt these solutions and leveraging our AI data readiness service to give them a strong foundation for successful AI initiatives. We're also continuing to enhance our core managed services and hosting platforms to support customers as their technology needs grow and become more complex.

Thanks, Jason. Last question. Can you break down the contribution from new customers versus existing customers and how that mix is trending?

Sure. Our focus on adding new logos in highly regulated industries like legal, finance, healthcare, manufacturing, and energy continues to be a strong push that is growing the MSSP and private cloud business lines. In addition, we're putting a lot of energy into penetrating our existing customer base with offers for additional managed service and security-related solutions. Strong customer response to these efforts during the first quarter turned into managed services revenue growth for IPM.

Great. That completes our investor-submitted questions. I'll turn the call over to our CEO, Jason Katz, for closing remarks. Jason?

I'd like to thank everyone for your support and for joining us today. We're very grateful for your interest in our business. We look forward to updating the market on our progress as we continue to execute on our business plan. We will talk with you again to review our second quarter 2026 results. Have a great day.

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.

Good afternoon. and welcome to the Q4 2025 Financial Results Conference Call for Intelligent Protection Management Corporation, better known as IPM for the quarter and year ended on December 31, 2025. At this time, all participants have been placed on a listen-only mode. Let me turn the floor over to Joe Diaz of Lytham Partners. Joe, please proceed.

Good afternoon, and welcome to all participating on today's call to review the financial and operating results of IPM for the fourth quarter and year ended December 31, and 2025. As the operator indicated, my name is Joe Diaz, I'm a Lytham Partners. We are the Investor Relations representative for IPM. But 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. And including forward-looking statements about future results of operations, business strategies and plans, IPM relationships with its customers as well as market and potential growth opportunities. In addition, management may make forward-looking statements in response to your questions. 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 filings with the SEC including its annual report on Form 10-K for the year ended December 31, 2025. 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 measure, that when used in combination with GAAP results, provides investors with additional analytical tools to understand the company's operations. or adjusted EBITDA management has provided a reconciliation to the most directly comparable GAAP financial measure in the earnings press release which has been posted on the Investor Relations section of the company's website at www.ipm.com. As previously disclosed, on January 2, 2025, IPM completed its acquisition of Newtek Technology Solutions Inc. or NTS from NewtekOne Incorporated. The company also divested its Paltalk, Camfrog and lumbar applications and certain assets and liabilities related to such applications to Meteor Mobile Holdings Inc. which are referred to as the transfer assets. I'm joined today by Jason Katz, IPM's Chief Executive Officer; Jared Mills, IPM's President; and Kara Jenny, IPM's CFO. After Jason's remarks, we will hear from Kara then we will conclude with investor questions that were sent in advance of today's call. At this time, I'd like to turn the call over to Jason Katz. Jason, take it away.

Thanks, Joe. Good afternoon, everyone. We greatly appreciate you taking the time to join us on today's call. We completed our first year of operations following our acquisition of NTS. It was a very good first year operating as a managed technology solutions provider. During 2025, we streamlined our service operations and our technology vendor partner licensing and manufacturing cost centers. We made significant progress on a number of key metrics, including managed recurring revenue growth, expense optimization and risk management. In the fourth quarter, revenue from our core business, managed IT, excluding web hosting, increased sequentially by 7%. Net loss narrowed by 42% and adjusted EBITDA was positive. Cash flow from operations was positive for both the quarter and the full year. And as of December 31, 2025, we had cash and cash equivalents totaling $8.4 million and no long-term debt. We have important differentiators that set us apart from our industry competitors, large and small and have significant competitive advantages of those peers that lack our level of expertise in highly regulated vertical markets, including legal, health care, finance and banking. Our success in these markets represents a large opportunity in the coming years. From a customer service perspective, our managed clients benefit from a VIP high-touch experience with a dedicated technology manager as a single point of contact as opposed to competitors in our industry that use automated voice response to phone calls, telephonic menus and handing off service calls to agents and call centers in foreign countries all of which can be frustrating and can impact the customer experience. We don't do any of that. Our clients speak directly to their IPM account team members who deeply understand the clients' needs and business goals. This is an important IPM customer service advantage that fuels our superior customer loyalty, so much so that in 2025, we retained all major clients while entering new markets with near 0 churn. Since the January 2025 acquisition of NTS, we have successfully integrated NTS into IPMs mission, vision and operations and service our customers without interruptions or downtime. We are well positioned to grow the company through the expansion of our service offerings to existing legacy NTS customers, new customers and our historical web hosting customer base. We continue to advance operationally with a focus on efficiency. And at the same time, we manage expense with the goal of driving value for all of our stakeholders. For full year 2025, we extended our Phoenix data center license agreement with an industry-leading provider through August 31, 2032, reinforcing a long-standing strategic relationship supporting our continued focus on scalable, secure and highly reliable digital infrastructure. We successfully achieved SOC 2 Type 1 compliance A key milestone in our ongoing commitment to safeguard and customer data and delivering trusted cybersecurity and cloud infrastructure solutions. We announced a collaborative growth initiative with AltiGen Technologies to refer integrated communications, AI-driven analytics and managed security and hosting solutions to their respective customers. We entered into a reseller agreement with MindsDB, a leading open source AI platform to provide its current and future customers with sophisticated AI capabilities. We initiated a collaboration with IT Ally, a trusted business technology services provider focused on lower middle market private equity firms and their portfolio companies. In May 2025, our Board of Directors approved a stock repurchase plan for up to $100,000 of outstanding common stock, which plan expires on the 1-year anniversary of such date. Pursuant to the repurchase plan since inception, we have purchased 151,258 shares, an average price of $1.99. There were no shares repurchased in the fourth quarter of 2025. We commenced offering Aura, a leading AI-powered online safety solution for business, families and individuals designed to help me the impact of data breaches, scams and other online threats to businesses and consumers. And finally, we initiated our Heroes program to provide a 10% discount on all IPM products and services to all existing and future military first responder, health care, teacher and veterinary business owners. Having our company transition to a pure play managed services technology provider over the course of the year has been gratifying. We look forward to many opportunities to dramatically expand our business in the coming years. With that, let me turn over the call to Kara Jenny, our CFO, for a summary of our financial results for the fourth quarter and full year 2025. Following Kara's remarks, we'll move into the Q&A and answer questions that were submitted by e-mail prior to this call. Kara, until yours.

Thanks, Jason. For the 3 months ended December 31, 2020, revenue totaled $6.1 million. On a sequential basis, total revenue decreased 1.7% from the third quarter of 2025. And Revenue for the full year ended December 31, 2025, totaled $23.6 million. Total revenue by revenue component for the fourth quarter and year-ended December 31, 2025, were as follows: Managed Information Technology revenue was $3.9 million and $14.8 million, respectively. Procurement revenue was $1.5 million and $5.4 million, respectively. Professional services revenue was $0.4 million and $2.3 million, respectively, and subscription revenue was $0.3 million and $1.1 million, respectively. Operating loss from continuing operations for the fourth quarter ended December 31, 2025, totaled $0.8 million, operating loss from continuing operations for the full year ended December 31, 2025, totaled $4.7 million. Net loss for the 3 months ended December 31, 2025, totaled $0.6 million. Net loss for the full year ended December 31, 2025, totaled $2 million. We recorded an income tax benefit during the first quarter of 2025 of approximately $2.1 million in connection with our acquisition of NTS and the divestiture of our Auto, Camfrog and umber applications. Adjusted EBITDA for the 3 months ended December 31, 2025, was positive by $1,000. Adjusted EBITDA for the full year ended December 31, 2025, was negative $1.1 million. As of December 31, 2025, IPM had no long-term debt and cash and cash equivalents totaled $8.4 million, which included $10 million of restricted cash. Cash provided by continuing operations for the full year ended December 31, 2025, was $1.1 million. We reported deferred revenue of $3.9 million for the full year ended December 31, 2025, which will be recognized as revenue in future quarters as products and/or services are installed. We had more than 10,000 devices under management at December 31, 2025, representing the number of endpoints, servers and network devices that are outsourced to us under managed service agreements. That concludes my comments, and we will now move on to addressing online submitted questions.

Jason, this is a great first year for IPM as a managed technology solutions provider. What did you consider the highlights of the year? What were your biggest challenges? And what are your expectations for 2026 and 2027.

As I mentioned, we're very pleased with our performance in our first full year as a managed technology solutions provider following the acquisition. Some of the highlights include the continued growth in the managed IT portion of our business a meaningful reduction in our net loss and the progress we've made at the EBITDA line. Notably, we reported positive adjusted EBITDA in the fourth quarter of 2025, which we view as an important milestone for the company. In terms of challenges, much of the uncertainty facing our industry comes from the evolving threat landscape and broader macroeconomic factors. Cybersecurity threats from bad actors overseas continue to target trickle infrastructure, and there are also uncertainties around issues such as tariffs and other policy developments. While we have not been directly impacted by these factors, our team remains very focused on proactively managing risk and ensuring that we are all well positioned to respond to potential changes in the operating environment. Looking ahead to 2026 and 2027, our team is highly focused on continuing to grow the business, both organically and where appropriate, through strategic acquisitions that we believe will be accretive to our long-term growth strategy. We are also very excited about the opportunities to incorporate various aspects of AI into our operations and product offerings. We believe these technologies will allow us to deliver greater value to our customers by helping them operate more efficiently, accelerate their growth and stay ahead in an increasingly dynamic technology landscape.

Jared as President of the company, IPM customer churn is nearly nonexistent. How does IPM do that?

This is a great question because it speaks to the heart of who IPM is as a company. We're just as passionate about customer service and the overall customer experience as we are about reliability and security. It's what made this company great and it's our David and Goliath story. Not as a small American microcap public company earned a business we earn and keep the business we keep. It's good old-fashioned customer service. We invest heavily into the idea that people want to talk to people and ideally the same people they talked to yesterday. That means we build relationships, and that means we're high touch. And the result of that is a white glove VIP experience that, quite frankly, you can't get anywhere else. We care about the customer more than the technology here. And for that reason, our churn is nearly nonexistent.

Jason, can you give us an update on how you think about the company's excess lease data center capacity and how best to exploit it.

Sure. We're very pleased to have renewed our lease agreement with one of the premier data center partners in the country, extending that relationship through 2032. That long-term partnership gives us the stability and capacity we need to support our growth plans. Their state-of-the-art facility not only enables us to scale our infrastructure as demand increases, but it also allows us to leverage their operational expertise and reliability in servicing our customers. From a strategic standpoint, this capacity gives us flexibility to support both organic growth and new opportunities within our managed services offerings. Overall, we believe the partnership positions us very well to deliver continued value to our customers while supporting sustainable growth for the business.

Okay. That concludes our Q&A session. Let me turn the call over to Jason for closing remarks. Jason?

Thanks, everyone, for your support and for joining us today. We're very grateful for your interest in our business. We look forward to updating the market on our progress as we continue to execute on our business plan. We will talk with you again to review our 20,261st quarter results. Have a great day.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.