Intrusion (NASDAQ:INTZ) reported second-quarter 2026 revenue of $1.5 million, up 64% sequentially but down 22% from the prior-year quarter, as revenue from a new Texas state contract partly offset continued delays in Department of Defense funding.
President and Chief Executive Officer Tony Scott called the quarter a “pivotal period” for the cybersecurity company, citing the revenue recovery and its acquisition of managed security services provider VigilAigent. The company said the acquisition adds approximately $3.5 million in annual recurring revenue supported by a diversified base of multiyear customer contracts.
DoD Funding Delay Continues
The company has continued to support previously deployed critical-infrastructure technology and said it remains optimistic that a meaningful portion of associated revenue could be recognized in future periods, subject to final award timing and funding approvals. Intrusion has also entered support and maintenance agreements with local agencies that use its solution; those agreements cover continuing support costs but do not include expansion or additional capabilities.
Scott said Intrusion sees opportunities to expand its critical-infrastructure protection technology to additional locations under the Defense Department’s jurisdiction. He also said the company is engaging agencies and authorities as water and local utility systems in the continental U.S. face attacks and compromises attributed to nation-state adversaries.
Texas Contract Supports Sequential Growth
Revenue from Intrusion’s previously announced $4 million annual contract with the state of Texas began to be recognized during the second quarter and is expected to continue through the remainder of fiscal 2026 and into fiscal 2027. The contract covers cyber threat intelligence and critical-infrastructure protection.
Scott said Intrusion has identified additional opportunities for technology and consulting services through its initial Texas work that could produce revenue beyond the current contract level. The company is also using the Texas engagement as a framework to pursue contracts in other states and territories.
Chief Financial Officer Kimberly Pinson said the company expects revenue performance to improve through the remainder of 2026, citing several potential drivers:
- Sales of critical-infrastructure solutions to additional government agencies and commercial customers;
- Further expansion of the PortNexus partnership;
- Revenue from the Texas contract;
- Recurring revenue from the VigilAigent acquisition;
- Commercial subscription sales through newly signed channel and strategic partners; and
- Opportunities with states that have established and funded cyber commands.
VigilAigent Acquisition Expands Commercial Reach
Intrusion acquired VigilAigent to create what Scott described as an AI-native cybersecurity platform combining threat intelligence, managed security services and detection-and-response capabilities. VigilAigent will operate as a dedicated business unit focused on commercial customers, while Intrusion will continue serving federal, state and local institutions as well as large institutional partners with customized technology and consulting offerings.
Scott said the companies’ technical teams have been working together to develop capabilities intended to detect, manage and remediate threats related to the use of artificial intelligence by insiders and outside actors.
Since the acquisition closed a few weeks earlier, Intrusion said it has secured more than $350,000 in annualized new business and customer renewals. The company also said it signed several new managed service provider partners, each with the potential to generate more than $1 million in annual recurring revenue as deployments ramp.
In addition, the company identified more than $3 million in annualized cost synergies from integration and operational efficiencies. During the question-and-answer session, Scott said Intrusion sees both organic and acquisition-driven growth opportunities in the managed security service provider market, where he said consolidation is already underway.
Scott said that commercial customers can now be offered both Intrusion Shield and VigilAigent’s managed services. He said the combined offering has contributed in some cases to customer renewals and new contracts.
Loss Widens; Company Seeks Additional Capital
Second-quarter gross margin was 66%, compared with 76% a year earlier, reflecting changes in revenue and product mix. Operating expenses totaled $3.4 million, down $0.8 million from the first quarter and up $0.1 million from the prior-year period.
The sequential decline in operating expenses was primarily related to the timing of audit fees, increased allocation of costs of work performed under the Texas contract to cost of sales, and increased software development costs, according to Pinson. The year-over-year increase reflected investments in sales and sales-support personnel, trade shows, brand initiatives and product marketing.
Intrusion reported a net loss of $2.6 million, or $0.13 per share, compared with a loss of $2 million, or $0.10 per share, in the second quarter of 2025. Pinson attributed the wider loss primarily to lower revenue associated with the delayed incremental funding under the Defense Department contract.
As of June 30, Intrusion had $0.2 million in cash and cash equivalents. During the quarter, the company entered two note purchase agreements with Streeterville Capital, selling notes with an aggregate original principal amount of $3.7 million for cash proceeds of $3.3 million. Pinson said the financing was intended to support operations and address short-term liquidity needs related to delayed government payments and losses associated with the DoD funding delay.
The company said it plans to seek additional capital through public or private financings, including its at-the-market program. Scott said Intrusion remains focused on reaching profitability in 2027, adding during the Q&A session that his goal is to become cash-flow positive in the first quarter, though he did not commit to a specific quarter.
PortNexus Program Builds Pipeline
Scott said Intrusion’s POSSE public-safety program with PortNexus had deployments in five Texas counties, two Iowa counties and one Missouri county during the second quarter. While the program did not generate significant revenue in the quarter, he said the company expects its contribution to grow in coming periods.
PortNexus recently announced integration work with a computer-aided dispatch software provider that is installed at hundreds of law-enforcement agencies in the Midwest. Scott said the integration could make the offering easier to add for agencies and help accelerate deployments, although he noted that the sales process remains complex because it requires agreement among school districts, sheriffs’ departments and other local stakeholders.
Intrusion’s annual meeting is scheduled for Aug. 27. Scott urged shareholders to support the company’s proposals, including a measure authorizing the potential issuance of common stock above Nasdaq’s 19.9% threshold in connection with the VigilAigent membership interest purchase agreement.
About Intrusion (NASDAQ:INTZ)
Intrusion Inc, a cybersecurity company in the United States. The company offers its customers access to threat intelligence database, which contains the historical data, known associations, and reputational behavior of Internet Protocol addresses. It offers INTRUSION Shield, a zero trust reputation-based Software as a Service solution that inspects and kills dangerous network connections. The company also provides INTRUSION TraceCop, a big data tool that contains an inventory of network selectors and enrichments to support forensic investigations; and INTRUSION Savant, a network monitoring solution that uses the data available in TraceCop to identify suspicious traffic in real-time.
