SideChannel Strategy Validated by Revenue Growth of 30.9% Year-over-year in Second Quarter 2023
Financial results conference call on Tuesday, May 9 @ 4:00 p.m. EDT
WORCESTER, MA / ACCESSWIRE / May 9, 2023 / SideChannel, Inc. (OTCQB:SDCH) (“SideChannel”), a provider of cybersecurity services and technology to emerging and middle market companies, today announced its financial results for the three months and six months ended March 31, 2023.
Second Quarter 2023 Highlights
- Revenue of $1.6 million up 30.9% versus the second quarter of 2022
- Sequential quarter growth of 4.6%
- Gross margin of 45.6%
- Net loss of $0.9 million or $0.01 per share
- Trailing twelve-month revenue reaches $5.7 million as of March 31, 2023
- Revenue Retention was 83% for the twelve months ended March 31, 2023
- New client contracts from October 1, 2022 through March 31, 2023 with $2.0 million of potential annual revenue
- Cash of $1.9 million as of March 31, 2023; cash used in operations during the quarter of $0.7 million
- Began implementing operating expense decreases of up to $0.9 million on an annualized basis
Commenting on the fiscal second quarter ended March 31, 2023, Brian Haugli, President and CEO of SideChannel, Inc., said, “We are delighted to see our strategy substantiated by our year-over-year revenue growth of 30.9% for the quarter and 38.5% for the year-to-date. We believe our new client pipeline remains strong as reflected by the new contracts with $2.0 million of potential annual revenue we secured during the first six months of this fiscal year. These new contracts will fuel our growth during the second half of the year. We anticipate gaining additional new clients during the next six months to set us up for further growth going into the next fiscal year.”
“Cybersecurity Software and Services outpaced the growth of our vCISO Services, demonstrating the eagerness of emerging and mid-market companies to embrace our complete program. Cybersecurity Software and Services grew 59.3% and vCISO Services grew 16.2% for the quarter. Year-to-date, the growth rate for Cybersecurity Software and Services is 43.4% and the growth rate for vCISO Services is 35.7%. Our strategic focus remains on expanding our vCISO partnerships, while incorporating complementary products, cybersecurity solutions, and privacy services to empower our clients in their pursuit of cost-effective risk reduction,” said Haugli.
Mr. Haugli concluded, “We made investments in growth since closing the business combination in July 2022, and we are seeing the benefits. We expect to experience continued revenue growth from these investments. Recently our team put a more focused emphasis on achieving net income and positive cash flow by improving gross margins and reducing non-customer facing operating expenses.”
Financial Outlook for Fiscal 2023
The Company provided a financial outlook expected for fiscal year 2023 as follows:
- Revenue ranging from $6.3 million to $6.5 million
- Gross margin ranging from 50.0% to 52.0%
- Operating losses to be lower in the second half of the year compared to the first half
Conference Call Information
A conference call discussing financial results for the quarter ended March 31, 2023 will follow this release today at 4:00 pm EDT.
Date: Tuesday, May 9, 2023 – 4:00 PM EDT
Toll Free: 877-545-0523
Participant Access Code: 551349
For those unable to participate in the live call, a replay will be available shortly after the call. Interested parties can access the replay by visiting the Company’s website https://investors.sidechannel.com/events-presentations.
Second Quarter 2023 Review
The second quarter Form 10-Q is accessible in its entirety at https://investors.sidechannel.com/sec-filings.
|In thousands, except shares and per share data||Three Months Ended|
|Operating income (loss)||(858)||358||(1,216)||(607)||(251)|
|Net income (loss)||(856)||361||(1,217)||(602)||(254)|
|Net income (loss) per common share||$(0.01)||$0.01||$(0.02)||$(0.00)||$(0.01)|
|Weighted average common shares outstanding – basic and diluted||148,928,663||62,016,618||148,733,860|
|As of March 31, 2023||As of September 30, 2022|
Share Issuance for Revenue Milestone
SideChannel also announced the issuance of 62,016,618 shares of common stock associated with the business combination which occurred on July 1, 2022 comprised of 59,900,000 shares issued for exceeding $5.5 million of trailing twelve-month revenue and 2,116,618 shares of common stock for the closing working capital adjustment. After this issuance, the Company had 211,587,899 common stock shares outstanding as of May 4, 2023.
SideChannel, founded in 2019, creates top-tier cybersecurity programs for mid-market companies to help protect their assets. SideChannel employs a combination of skilled and experienced talent, technology tools, and battle-tested processes to offer a complete program. SideChannel also offers Enclave; a network microsegmentation solution that simplifies securing a network in a zero-trust model. Learn more at sidechannel.com.
146 Main Street
Worcester, MA 01608
This press release may contain forward-looking statements, including information about management’s view of SideChannel’s future expectations, plans and prospects, subject to the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “believes”, “hopes”, “expects”, “intends”, “plans”, “anticipates”, “potential”, “could”, “should”, or “may”, and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act and are subject to the safe harbor created by the Act and otherwise. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of SideChannel to be materially different than those expressed or implied in such statements. These risk factors include, but are not limited to, our ability to integrate the operations of the acquired company into our company; that we have incurred net losses since inception, our need for additional funding, the substantial doubt about our ability to continue as a going concern, and the terms of any future funding we raise; our dependence on current management and our ability to attract and retain qualified employees; competition for our products; our ability to develop and successfully introduce new products, improve current products and innovate; unpredictability in our operating results; our ability to retain existing licensees and add new licensees; our ability to manage our growth; our ability to protect our intellectual property (IP), enforce our IP rights and defend against claims that we infringed on the IP of others; the risk associated with the concentration of our cash in one financial institution at levels above the amount protected by FDIC insurance; and other risk factors included from time to time in documents we file with the Securities and Exchange Commission, including, but not limited to, our Forms 10-K, 10-Q and 8-K. These reports are available at www.sec.gov. Other unknown or unpredictable factors also could have material adverse effects on SideChannel’s future results. Further, factors that we do not presently deem material as of the date of this release may become material in the future. The forward-looking statements included in this press release are made only as of the date hereof. SideChannel cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, SideChannel undertakes no obligation to update these forward-looking statements after the date of this release, except as required by law, nor any obligation to update or correct information prepared by third parties.