Intrusion (NASDAQ:INTZ) reported a sharp increase in third-quarter revenue as a Texas government contract and its VigilAigent acquisition contributed sales, but its loss widened and profit margins declined.
The cybersecurity company posted revenue of $2.7 million for the third quarter of 2026, up 36% from a year earlier and 84% from the preceding quarter. Net loss attributable to Intrusion grew to $2.9 million, or $0.12 per share, from $2.1 million, or $0.10 per share, a year earlier.
CEO Tony Scott said on the earnings call that the company is pursuing government and commercial opportunities while working to reduce costs. Intrusion ended September with $0.4 million in cash and cash equivalents, according to CFO Kimberly Pinson.
Acquisition and Texas contract drive growth
VigilAigent contributed $0.8 million in revenue during its first full quarter as part of Intrusion. Revenue from the pre-acquisition business was $1.9 million, down 2% from the prior-year quarter, Pinson said.
The acquisition also changed Intrusion’s customer mix: U.S. government customers accounted for 67% of quarterly revenue, compared with 97% a year earlier. For the first nine months of 2026, consolidated revenue was $5 million, down 11% from $5.6 million in the comparable period.
Pinson said revenue from the $3.9 million Texas State Agency contract awarded in May had fully offset the loss of Department of War revenue. The Texas engagement has generated consulting revenue and could lead to deployments of Intrusion’s Shield product, she said, though additional awards are not guaranteed.
Scott said the integration of VigilAigent remains in its early stages, with four to six months of work ahead to complete initial plans. He also said the VigilAigent team had sold Intrusion Shield technology during the current quarter. The company is open to further acquisitions, he said, but has no specific deal under consideration and would need the appropriate capital support.
Margins narrow as expenses rise
Third-quarter gross margin fell to 55% from 77% a year earlier and 66% in the second quarter. Pinson attributed the decline to the revenue mix, including VigilAigent’s managed cybersecurity services and lower-margin consulting work on the Texas contract. VigilAigent generated approximately $0.2 million in gross profit at a 23% margin.
Operating expenses rose to $4.3 million from $3.6 million a year earlier, with VigilAigent contributing $0.8 million. Interest expense increased to $397,000 from $17,000.
Pinson said Intrusion has eliminated five full-time positions, stopped using certain contractors and reduced discretionary sales and marketing spending. Senior managers and board members also voluntarily accepted reductions in cash compensation in exchange for equity.
Asked about a previously identified $3 million in potential annual expense reductions, Scott said the company had achieved roughly 70% of that amount, with more to come. He said the company is also focused on increasing revenue, while avoiding cuts that could prevent it from pursuing larger contracts.
Government pipeline and Nasdaq compliance
Scott said representatives from multiple government agencies had expressed interest in Intrusion’s cybersecurity products, including its critical infrastructure solution. He declined to quantify the company’s pipeline, noting that discussions must translate into contracts.
“It is probably, in my view, as good as it has ever been,” Scott said of the opportunities he is seeing in Washington, Texas and through partner PortNexus.
Scott also said Nasdaq had granted Intrusion a second 180-day extension to regain compliance with the exchange’s $1 minimum bid-price requirement. He said the company would do what is necessary to remain listed, including a reverse stock split if necessary, but its primary focus is growing sales.
During the question-and-answer session, Pinson said roughly $1 million remained following a recent conversion to preferred shares, in response to a question about notes payable. Scott declined to comment when asked separately about his employment contract and an 8-K filed that day.
About Intrusion (NASDAQ:INTZ)
Intrusion, Inc. (NASDAQ: INTZ) is a cybersecurity company that develops solutions designed to help organizations identify, investigate and respond to cyber threats. Its offerings combine network monitoring, threat intelligence and security analytics to provide visibility into potentially malicious activity across enterprise environments. The company is known for its proprietary threat intelligence capabilities, including databases that associate internet protocol addresses with information about online activity and potential threats.
