IronNet Reports Fiscal Year 2022 Financial Results

Achieves Record Revenue in the Fiscal Fourth Quarter

Annual Recurring Revenue Increases 23% Year-Over-Year; Adds 61 New Customers Year-Over-Year

IronNet, Inc. (NYSE: IRNT) (“IronNet”), a leading provider of solutions Transforming Cybersecurity Through Collective Defense℠, announced today its financial results for the fourth quarter and fiscal year ended January 31, 2022.

“Never before has the need for the exchange of real-time cyber threats across the public and private sectors been more critical than it is today,” said GEN (Ret.) Keith Alexander, Chairman and co-CEO of IronNet. “IronNet’s technology addresses the concerning gaps created by the status quo in cyber security, with nations, industries and companies still defending largely in isolation. Our Collective Defense platform goes beyond threat detection to enable security operations center analysts to ‘prove the positive’ by triaging alerts in an automated fashion to help better defend their data networks from cyber attacks.”

William Welch, co-CEO of IronNet, also commented: “I am proud of our team for executing well in the fourth quarter as we drive the business forward and seize the opportunity to transform the cybersecurity market. We are encouraged by the momentum of our cloud-based subscription business model as the market has a growing appreciation for the potency of IronNet’s platform solution. Our platform is enabling our customers to quickly multiply the capabilities and effectiveness of their own network security team while also protecting their operational privacy.”

Fourth Quarter and Fiscal Year 2022 Financial & Operating Highlights

• Annual Recurring Revenue (ARR): $31.8 million at January 31, 2022 compared to $25.8 million at the end of the prior fiscal year and $27.5 million at the end of the prior quarter.
• Revenue: Revenue for the fourth quarter was $8.2 million compared to $7.4 million in the same quarter last year. Cloud subscription revenue was $5.0 million, or 68% of product revenue.
  
  Revenue for the fiscal year 2022 was $27.5 million compared to $29.2 million in the prior year, a 6% decline driven in part by a $2.3 million decline in professional services revenue in fiscal 2022. Cloud subscription revenue for the full year 2022 was $16.0 million, or 63% of product revenue.
• Gross Margin: Gross margin for the fourth quarterwas 60.1% compared to 74.4% in the same quarter last year, with cost of sales accounting charges during the fourth quarter representing approximately half of the decline.
  
  Gross Margin for the fiscal year 2022was 65.9% compared to 76.0% in the prior year, with the same cost of sales accounting charges representing nearly one-third of the decline.
• GAAP net loss and non-GAAP adjusted net loss: GAAP net loss for the fourth quarter was $44.2 million. Non-GAAP adjusted net loss, which excludes certain expenses described below, for the fourth quarter was $19.6 million compared to $20.2 million in the third quarter.
  
  GAAP net loss for the fiscal year 2022 was $241.7 million*, which includes transaction related expenses of $170.0 million (for non-cash stock-based compensation and change in fair market value of private warrants between the closing of the merger with LGL in August and their exercise in late September and early October, and $3.2 million of transaction expenses). Non-GAAP adjusted net loss for the fiscal year 2022, which excludes those transaction related expenses and certain other expenses described below, was $71.6 million.
• Dollar-based average contract length: 2.7 years for the fourth quarter and full fiscal year.
• Cash and cash equivalents: $47.7 million at end of quarter. The company has not yet drawn on its equity line facility with Tumim Stone Capital, which allows the company, subject to certain conditions and limitations, to issue shares of common stock for up to $175 million in gross proceeds.
• Customer Count: 88 compared to 27 at the end of the same quarter last year and 74 at the end of the prior quarter.

Business Highlights

• Earned the highest AAA rating for Network Detection and Response (NDR) from the highly regarded independent testing organization, SE Labs, as part of its Enterprise Advanced Security Protection assessment, based on NDR performance against a range of ATP attacks.
• Launched new product capabilities which increase the automation of the IronNet Collective Defense platform by reducing false positives and analyst workflow through automated alert correlation and triage, enabling malicious payload detection, and extending the supported hunt window.
• Enhanced our longstanding relationship with the U.S. Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) to become a Specialist Partner of the Joint Cyber Defense Collaborative (JCDC). IronNet has collaborated with CISA in numerous areas to enhance the nation’s cybersecurity through public-private partnership, including through our membership in the Cyber Information Sharing and Collaboration Program (CISCP).
• Announced multiple customer wins including a multi-year contract with a Gulf Cooperation Council Country (GCC) that represents our largest international AWS deployment, an expanded partnership with the New York Power Authority (NYPA) to defend key supply chain partners, and a major Texas-based bank, among others.
• Entered into a Common Stock Purchase Agreement on February 10, 2022 with Tumim Stone Capital for up to $175 million for working capital and general corporate purposes to support future growth.
• Named Fernando Maymi as the company’s new Chief Information Security Officer, leading cybersecurity operations, governance, risk management, and compliance for the company, and assuming the role from George Lamont, who will remain the company’s Chief Information Officer.

Outlook

James Gerber, CFO of IronNet stated: “Our fiscal year guidance reflects our confidence in our growth on the transactional side of the business. We will increase our guidance as appropriate to reflect strategic customer contracts. Our existing cash and cash equivalents, combined with the potential liquidity from our recently announced equity line financing, should provide IronNet with the operational and strategic flexibility needed to continue to advance our market strategy.”

For the fiscal year 2023, IronNet expects for the transactional business:

• Revenue of approximately $34 million, representing nearly 25% growth
• ARR of approximately $48 million, representing 50% growth

Conference Call & Webcast Information

IronNet will host a conference call to discuss these results today, Wednesday, April 6, 2022, at 5:00 p.m. ET. A live webcast of the conference call and additional materials can be accessed on IronNet’s Investor Relations website at https://www.ir.ironnet.com. A replay of the webcast will be available through the same link following the conference call.

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