Intelligent Protection Management (NASDAQ:IPM) reported higher second-quarter revenue as growth in managed IT services and AI-related infrastructure procurement offset declines in professional services and subscription revenue. The company said supply chain constraints delayed some product shipments and contributed to a loss on part of a large customer order, widening its quarterly net loss.
For the quarter ended June 30, 2026, revenue rose nearly 13% to $6.5 million from $5.7 million a year earlier. First-half revenue increased 14% to $12.8 million, compared with $11.2 million in the prior-year period.
Managed IT and Procurement Revenue Rise
Managed IT revenue, which includes managed IT security services, backup and disaster-recovery solutions, and web hosting, increased 8.4% year over year to $3.8 million in the second quarter. Chief Financial Officer Kara Jenny attributed the gain to new customer additions and expanded services for existing clients.
Procurement revenue rose 64% to $2 million, driven by customer investments in servers, storage and infrastructure supporting business and AI applications. Katz said that while procurement revenue is project-based and generally carries lower gross margins than other areas of the business, infrastructure deployments can create opportunities to provide ongoing cybersecurity, cloud management, monitoring, disaster recovery and managed IT support.
Other revenue categories declined. Professional services revenue fell 47.3% to $363,000, while subscription revenue declined 10.5% to $249,000.
President Jared Mills said professional-services bookings remained “strong and growing,” but customer timing and resource constraints delayed some engagements and affected billing during the quarter. He said the company expects those timing issues to ease after the summer months.
The company also reported lower revenue from NewtekOne, a related party and significant customer, which has been reducing information technology spending. Katz said NewtekOne remains an important customer but represents only one part of IPM’s operations. The company said it partly offset the decline through recurring-revenue growth from non-related-party customers, including new relationships and expanded service contracts.
Supply Constraints Pressure Margins and Delay Revenue
IPM said constraints involving memory, CPU and GPU components extended product lead times during the quarter, resulting in delays between customer bookings and shipments. Some orders booked in the second quarter remained unrecognized as revenue as of June 30 because products had not yet been fulfilled and delivered.
The company reported deferred revenue of $4.5 million at quarter-end, up from $3.9 million on Dec. 31, 2025. Management said deferred amounts will be recognized as revenue as products and services are installed and contractual obligations are fulfilled.
A large customer order was also fulfilled across two reporting periods because of constraints affecting both IPM’s vendor and distribution channel. The first shipment, completed in the first quarter, was recognized at expected margins. However, the second-quarter shipment included higher component and freight costs, producing a loss on that portion of the order. Jenny said the combined order resulted in a loss and increased cost of revenue during the quarter.
Katz characterized the margin impact as an isolated operational event rather than a structural change in the company’s pricing model or competitive position. He said IPM has broadened its supplier ecosystem and expanded relationships with distributors, vendors, partners and manufacturers to improve procurement flexibility and reduce future execution risk.
Management said the supply constraints were limited to the procurement business and did not affect the company’s services operations. Katz added that customer demand remained intact, with orders booked and customers committed, though revenue recognition was delayed until delivery and installation occur.
Loss Widens Despite Revenue Growth
IPM recorded a second-quarter net loss of $1.4 million, compared with a net loss of $1.1 million in the year-earlier quarter. Adjusted EBITDA was negative $0.6 million, compared with negative $0.4 million a year earlier.
For the first six months of 2026, net loss totaled $2 million, compared with a net loss of $0.2 million in the prior-year period. First-half adjusted EBITDA improved to negative $0.8 million from negative $0.9 million.
Cash used in operations was $0.6 million in the second quarter, compared with $0.9 million used a year earlier. For the first half, cash used in operations was $0.8 million, compared with $0.9 million provided by operations in the prior-year period. Jenny said the first-half cash usage was primarily associated with sourcing inventory to support increased procurement revenue.
The company ended the quarter with $7.5 million in cash and cash equivalents and no long-term debt.
Customer Pipeline and Data Center Capacity
Mills said IPM continued to use customer case studies and referrals to pursue accounts in regulated industries. The company saw specific success during the reporting period in legal and finance, he said, while maintaining a pipeline in healthcare, energy, private equity, manufacturing and retail.
IPM also extended its Phoenix data center agreement through 2032. Mills said the Tier III, Uptime Institute-certified facility provides significant capacity at a discounted rate and has experienced steady customer growth in private cloud, dedicated private cloud, private cloud AI, and managed backup and disaster-recovery services.
Katz said the company continues to evaluate acquisition opportunities in managed services, cybersecurity and cloud infrastructure, with a focus on targets that add recurring revenue, technology capabilities or geographic reach. Based on its current outlook and execution plan, IPM’s goal remains to achieve positive adjusted EBITDA in the fourth quarter of 2026.
About Intelligent Protection Management (NASDAQ:IPM)
Intelligent Protection Management Corp. engages in the development of communications software to enhance security and privacy solutions for multimedia communication and data transmission. Its solutions include blockchain strategy consulting, blockchain implementation, white label video solutions, and technology licensing. The firm’s product portfolio includes Paltalk and Camfrog. The company was founded by Clifford Lerner and Darrell Lerner on July 19, 2005 and is headquartered in Jericho, NY.
