SideChannel (SDCH) Q3 2025 earnings summary

Executive summary

• Revenue for the nine months ended June 30, 2025, increased 1.3% year-over-year to $5.6 million, driven by growth in Cybersecurity Software and Services, offset by a decline in vCISO Services revenue.

• Q3 revenue was $1.8 million, a 3.8% decrease year-over-year, with gross margin at 47.0%.

• Net loss for the nine months ended June 30, 2025, was $510 thousand, improved from $645 thousand in the prior year period; Q3 net loss was $261 thousand.

• Enclave platform adoption is increasing, especially in regulated sectors and government, with two Department of Defense clients onboard; Insider Threat Service launched at DEFCON 33.

• The company is focused on expanding Enclave, acquiring new vCISO clients, and broadening cybersecurity offerings.

Financial highlights

• Q3 revenue was $1.776 million, down 3.8% year-over-year; nine-month revenue was $5.578 million, up 1.3% year-over-year.

• Gross margin for Q3 was 47.0%, down from 48.9% last year; nine-month gross margin was 47.5%, unchanged year-over-year.

• Operating expenses for Q3 rose to $1.1 million, mainly due to higher selling and marketing costs for Enclave; nine-month operating expenses fell 3.1% to $3.19 million.

• Cash, cash equivalents, and short-term investments totaled $1.2 million at June 30, 2025, down $46,000 since fiscal year start.

• Cybersecurity Software and Services revenue grew 22.8% year-over-year, offsetting vCISO revenue declines.

Outlook and guidance

• Management expects continued growth from Enclave and Insider Threat programs, targeting further expansion in the Department of Defense and critical markets.

• Focus remains on modernizing cybersecurity defenses and driving long-term growth.

• Continued investment in selling and marketing infrastructure to support proprietary software growth.

• Management believes existing cash and anticipated cash flows will be sufficient for the next 12 months.