IronNet Lays Off 35 Percent Of Staff, Raises ‘Going Concern’ Red Flag
The cybersecurity company, founded by the former director of the National Security Agency (NSA), said “management believes that the company may not have sufficient cash and cash equivalents on hand to support current operations for at least one year.”
A year after going public at a valuation of $1.2 billion, the once-high flying IronNet is now laying off 35 percent of its staff and warns that it may not have enough cash to support operations for the next year.
In a recent federal filing, the McLean, Va.-based cybersecurity firm, which laid off 17 percent of its staff in June, said it will undergo yet another round of layoffs, eliminating nearly 90 jobs, or 35 percent of its workforce. It also is replacing its CFO and eliminating one of its co-CEO positions as a way to save money.
“Management believes that the company may not have sufficient cash and cash equivalents on hand to support current operations for at least one year,” the company said.
“Management has concluded that this circumstance raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.”
IronNet Stock Plummets After News
Wall Street, which has been pummeling IronNet’s stock since it announced it was laying off 55 employees in June, proceeded to further beat up what’s left of IronNet’s shares after the firm announced disappointing second quarter numbers earlier this week.
The firm’s stock was trading in the $1.20 range early Friday morning, down 44.5 percent over the past few days and way off its 52-week high of $37.60 in mid-September 2021.
Though the firm announced somewhat encouraging news on its revenue and annual reoccurring revenue fronts, IronNet’s net losses continued to mount in the second quarter, rising to $28.4 million from $17.2 million during the same period last year.
The firm, which was founded by a former head of the National Security Agency and U.S. Cyber Command, also said it is “withdrawing its previously issued revenue and ARR guidance for fiscal 2023,” citing recent financial setbacks and its ongoing restructuring.
Roughly 90 Employees To Be Impacted
In the firm’s press release announcing its second quarter financials, co-CEO Keith Alexander, the founder of IronNet and former director of the National Security Agency and former head U.S. Cyber Command, said his firm had “encountered unexpected headwinds in our transactional business” during the second quarter.
“To contain costs, we are undertaking a further restructuring of the company,” said Alexander, who’s also a retired four-star general.
In an email to CRN, IronNet confirmed it’s cutting its workforce of 250 by about 35 percent, or roughly 90 employees.
Meanwhile, the company is making major changes at the corporate top, with co-CEO William Welch agreeing to retire from his executive post and from the board of directors as a way to preserve cash.
In a statement, Welch, the former COO of Duo Security and Zscaler, said: “With costs in focus, we determined that it made sense to eliminate the co-CEO position. … I remain firmly committed to the IronNet mission. I will continue to support the company in any way I can be of service.”
In addition, IronNet announced that Cameron Pforr, an experienced software and cybersecurity executive, has been appointed as the firm’s new chief financial officer, replacing James Gerber, who the firm said will be “departing the company to join a private cybersecurity company.”
Layoffs Hit Cybersecurity Market
In recent months, a number of cybersecurity firms have announced layoffs, but they were usually tied to late-stage, venture-backed firms trying to preserve cash amid recent market turmoil.
IronNet’s layoffs in June were initially seen as part of that layoffs trend, with the company blaming “market conditions” for its early summer woes.