SideChannel (SDCH) Q2 2025 earnings summary

Executive summary

• Revenue for the six months ended March 31, 2025, increased 3.8% year-over-year to $3.8 million, driven by growth in Cybersecurity Software and Services, despite a 1.7% year-over-year decline in Q2 revenue.

• Gross margin improved to 49.7% for Q2 FY2025, up from 45.0% in Q2 2024, and reached 47.7% for the six months ended March 31, 2025.

• Net loss narrowed to $54,000 for Q2 FY2025 and $249,000 for the six months ended March 31, 2025, both significantly improved year-over-year.

• Operating expenses decreased by up to 11.2% year-over-year, mainly due to lower general and administrative costs.

• Management highlighted progress in Enclave adoption, new vCISO client acquisition, and expanded risk reduction solutions.

Financial highlights

• Q2 FY2025 revenue was $1.9 million, down 1.7% year-over-year, with gross profit of $941,000 and gross margin of 49.7%.

• Cash, cash equivalents, and short-term investments ended the quarter at $1.3 million, with working capital of $1.2 million.

• Deferred revenue increased to $852,000, reflecting higher annual contract renewals.

• Positive cash flow from operations for the fifth consecutive quarter.

• No debt outstanding as of March 31, 2025.

Outlook and guidance

• Management expects existing cash and anticipated cash flows to be sufficient for the next 12 months.

• Strategic investments in sales and marketing are expected to drive sustainable revenue growth and support long-term objectives.

• Focus remains on accelerating Enclave adoption and expanding cybersecurity offerings.