Intelligent Protection Management Corp.

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 Lithum 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, 2025. As the operator indicated, my name is Joe Diaz. I'm with Lithum 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 Security 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. 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's 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. For 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 2nd, 2025, IPM completed its acquisition of NewTek Technology Solutions Incorporated, or NTS, from NewTek One Incorporated. The company also divested its PalTalk, CamFrog, and Bumber applications and certain assets and liabilities related to such applications to Meteor Mobile Holdings Incorporated, which are referred to as the transferred assets. I'm joined today by Jason Katz, IPM's Chief Executive Officer, Jared Mills, IPM's President, and Cara 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, and 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, that's excluding web hosting, increased sequentially by 7 percent. Net loss narrowed by 42 percent, and adjusted EBITDA was positive. Cash flow from operations was positive for both the quarter and the full year, and as of December 31st, 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 over those peers that lack our level of expertise in highly regulated vertical markets, including legal, healthcare, 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 client's 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 zero churn. Since the January 2025 acquisition of NTS, we have successfully integrated NTS into IPM's mission, vision, and operations and serviced 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 31st, 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 safeguarding customer data and delivering trusted cybersecurity and cloud infrastructure solutions. We announced a collaborative growth initiative with Ultigen 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 and technology services provider focused on lower middle market private equity firms and their portfolio companies. In May 2025, our Board of Directors approved the stock repurchase plan for up to $400,000 of outstanding common stock, which plan expires on the one-year anniversary of such date. Pursuant to the repurchase plan, since inception, we have purchased 151,258 shares at 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 minimize 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, healthcare, teacher, and veterinary business owners. Having our company transition to a pure plain 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 Cara Jenny, our CFO, for a summary of our financial results for the fourth quarter and full year 2025. Following Cara's remarks, we'll move into the Q&A and answer questions that were submitted via email prior to this call. Kara, it's all yours.

Thanks, Jason. For the three months ended December 31st, 2025, revenue totaled $6.1 million. On a sequential basis, total revenue decreased 1.7% from the third quarter of 2025. Revenue for the full year ended December 31st, 2025, totaled $23.6 million. Total revenue by revenue component for the fourth quarter and year end did December 31st, 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 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 three months ended December 31, 2025, totaled $0.6 million. Net loss for the full year ended December 31, 2025, totaled $2.1 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 PALTOC, CAMFROG, and VUMBR applications. Adjusted EBITDA for the three months ended December 31, 2025 was positive $5,000. Adjusted EBITDA for the full year ended December 31, 2025 was negative $1.1 million. As of December 31st, 2025, IPM had no long-term debt and cash and cash equivalents totaled $8.4 million, which included $1.0 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 product and or services are installed. We had more than 10,000 devices under management at December 31st, 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 was 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 critical 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 non-existent. How does IPM do that?

This is such 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. How does a small American microcap public company earn the 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 leased 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 2026 first 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.