Intrusion Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the third quarter of 2026 was $2.7 million, representing an 84% increase on a sequential basis and a 36% increase year-over-year compared to the prior year period.
• Gross profit margin was 55% for the third quarter of 2026, down from 66% in the second quarter of 2026 and 77% in the prior year period, primarily due to the addition of lower-margin managed services revenue from VigilAigent.
• Operating expenses were $4.3 million, an increase of $0.8 million sequentially and $0.6 million year-over-year; VigilAigent contributed approximately $0.8 million to this total.
• Excluding VigilAigent, legacy Intrusion operating expenses decreased approximately $0.2 million, or 5%, year-over-year.
• Net loss attributable to Intrusion was $2.9 million ($0.12 per share) for the third quarter of 2026, compared to a net loss of $2.1 million ($0.10 per share) in the third quarter of 2025.
• Interest expense increased by $0.4 million year-over-year, contributing to the higher net loss.
• Cash and cash equivalents were $0.4 million as of September 30, 2026, down from $3.6 million as of December 31, 2025.
• Deferred revenue was $397,000 as of September 30, 2026, compared to $503,000 as of December 31, 2025.
• Total stockholders' equity was $2.8 million as of September 30, 2026, down from $7.3 million as of December 31, 2025, though recent capital actions increased equity to more than $5.0 million.

Guidance and Future Outlook:

• Management remains committed to disciplined execution to achieve profitability and create long-term value for shareholders.
• The company aims to grow recurring revenue and expand commercial reach in both commercial and government markets.
• Management expressed encouragement regarding the quality of opportunities in the pipeline, including expanding existing partnerships and government relationships.
• The company expects opportunities to meaningfully support future sustainable revenue growth.

Business Segments and Product Lines:

• The VigilAigent acquisition contributed its first full quarter of revenue ($0.8 million) and operating expenses ($0.8 million) in the third quarter of 2026.
• Legacy business revenue approached prior-year levels, driven primarily by a contract with the State of Texas.
• The company integrated VigilAigent's AI-native managed security service provider capabilities with its existing platform.
• Intrusion Shield commercial product and solutions are being marketed to an expanding customer base.

Market and Competitive Landscape:

• Intrusion specializes in AI-powered cyberattack prevention, threat intelligence, and managed cybersecurity solutions.
• The company leverages a proprietary database cataloging historical behavior, associations, and reputational risk of IPv4 and IPv6 addresses, domain names, and hostnames.
• The company serves both commercial and government markets.

Risks and Challenges:

• Forward-looking statements involve substantial risks and uncertainties, including the ability to continue as a going concern.
• Risks include the ability to successfully market, sell, and deliver solutions to an expanding customer base.
• The company faces risks related to the outcome of events described in forward-looking statements, subject to factors detailed in SEC filings.

Management Commentary and Tone:

• Tony Scott, President & CEO, stated that the third quarter results represent an important step forward in stabilizing the business and executing the growth strategy.
• Management highlighted the quality of opportunities developing in the pipeline to support future growth.
• The tone reflects a focus on stabilizing operations, integrating acquisitions, and building a stronger AI-driven platform.

Other Key Points:

• On October 29, 2026, the Company completed a $4.0 million debt-for-equity exchange, converting outstanding debt into Series B preferred stock.
• This transaction, combined with a warrant inducement and sales through the at-the-market (ATM) facility, increased stockholders' equity to more than $5.0 million.
• As a result of these capital actions, the Company satisfied Nasdaq listing requirements and secured an additional 180-day extension to regain compliance with the $1.00 minimum bid price requirement.
• The Company implemented cost-reduction initiatives, including headcount reductions, reduced contractor and discretionary marketing spending, and a voluntary exchange of management and Board cash compensation for equity.
• Goodwill on the balance sheet increased to $4.4 million as of September 30, 2026, reflecting the VigilAigent acquisition.
• Accounts receivable increased to $1.1 million as of September 30, 2026, from $131,000 as of December 31, 2025.
• Notes payable increased to $4.8 million total ($3.3 million current, $1.5 million noncurrent) as of September 30, 2026, compared to zero in the prior period.