IronNet, Inc.

Greetings and welcome to IronNet Inc. Fiscal 2023 Q1 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nancy Fazioi, Investor Relations. Please go ahead.

Thank you, Operator. Hello, and thank you for joining us. Today's conference call will address IronNet's financial results for the fiscal first quarter ended April 30, 2022, that were announced this afternoon. Before we begin, please note that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. We therefore refer you to the risk factors included in our latest SEC filings. Supplemental information is also provided on the Investor Relations website from time to time. And now I'll turn the call over to our founder and co-CEO, General Alexander, who is joined by our co-CEO, Bill Welch, and CFO, Jamie Gerver, all of whom have some brief remarks before we move to the question and answer portion of the call. General Alexander, over to you.

Thank you, Nancy. Good afternoon to everyone, and thank you for joining us today. I am quite optimistic about our progress. We had a new transactional annual recurring revenue, ARR, of 5.5 million in the first quarter. As noted in our earnings release, our revenue and net ARR results were consistent with our expectation that certain customers in our transactional business would be delayed in signing or renewing their contracts. Those delayed opportunities and one non-renewal resulted in a decline of $7.2 million in ARR per quarter, leading to a net decline of $1.5 million in ARR quarter over quarter. We would like to reiterate that we see the significant majority of these ARR opportunities as pending rather than lost. Two of these pending transactions representing approximately $5 million in ARR are public sector customers impacted by budget delays. Another non-renewed contract, the only one we would categorize as lost, represents approximately $1 million in ARR. This is a structural issue. It is an opportunity that has not been fully deployed due to the FedRAMP authority to operate, or ATO, not being achieved. We have achieved FedRAMP ready status, but not ATO. This is an area where we are making progress and we hope to have it resolved this fiscal year. Once this is achieved, we also expect this customer to come back in as well. We believe FedRAMP ATO status has the potential to uplift our sales momentum when complete. We do not see it as an impediment to closing the majority of public sector strategic opportunities that are in our pipeline today. Our issue continues to be largely timing and bureaucracy, not a lack of perceived value by our customers. And this is important to highlight as a reason for our high confidence and our ability to bring this business back. Our customer wins this quarter were in sectors that represent important areas of growth for us, healthcare, space, state agencies, energy, and public utility. Bill will provide additional color on these wins and give insights into the value customers are finding. Pipeline opportunities from strategic customers, which to remind you, we define as those exceeding $5 million in ARR, remain as robust as discussed last quarter. We feel confident that we will see these opportunities start to close in the next couple of quarters. As a team, we continue to show strong thought leadership and to increase our brand awareness, from customer engagement at Gartner Security and Risk Management Summit, to our targeted presence at the resurrected RSA event in San Francisco, to our presentation at the National Association of State CIOs, where we partnered with AWS to present on the importance of a whole-of-state approach to cybersecurity. We will maintain this pace and momentum in highlighting our value proposition while also continuing to show discipline in our approach to sales and marketing. In April, in partnership with the New York Stock Exchange CISO Steve Pugh, we hosted National Cyber Director Chris Inglis and Southern Company CEO Tom Fanning for a virtual webinar on collective defense. It was well attended by critical infrastructure and particularly energy company executives and IT leaders. There are two noteworthy comments from the presentation that I believe speak eloquently to IronNet's unique value proposition. Director English remarked that cyber defenses must evolve to a point where you have to beat all of us to beat one of us. CEO of Southern Company Tom Fanning cautioned that none of us can individually own the talent in our organizations or to adequately support our own supply chain working alone, rather that we must work collectively. He also highlighted that addressing these gaps is a fiduciary responsibility for boards and management teams. I would like to add that there is simply no amount of cybersecurity investment, even for the most sophisticated among us, that will enable us to prove the positive in our environments the way collective defense can. This perspective comes from my experience leading the offense for our nation. An isolated approach to cybersecurity is a legacy, and from my perspective, a short-sighted and dangerous approach. What we have set out to accomplish in transforming cybersecurity through collective defense is hard and has not been frictionless. Yet our approach and our technology are increasingly being validated, as I have just noted, And as Bill will further illuminate for you through customer insights, we are encouraged about our opportunity and confident that we are on the right path. With that, let me now turn it over to Bill for his remarks.