IronNet Layoffs, ‘Due to Market Conditions,’ Impact 17% of Workers

IronNet is the latest cybersecurity company to confirm layoffs, cutting 55 workers, or 17% of its workforce.

OneTrust, Cybereason and Lacework also recently confirmed layoffs. IronNet announced the layoffs in a Securities and Exchange Commission (SEC) filing.

“Due to market conditions, on June 22, 2022, IronNet … committed to and communicated a workforce reduction plan,” it said in the filing. “The company has reduced its number of employees by approximately 55 employees, which represents approximately 17% of its total employees. The company expects to substantially complete this workforce reduction by the end of June 2022.”

Setting Up IronNet for ‘Rationalized’ Growth

Joseph Depa III is IronNet‘s public relations/social media manager.

IronNet’s Joseph Depa

“The workforce reduction is part of a broader plan to streamline our operations for higher efficiency, to reduce overall expenses and preserve cash, and to set IronNet up for rationalized growth going forward,” he said. “Our strategy remains the same, to transform cybersecurity through collective defense. In fact, we’ve seen momentum around the concept of collective defense in the past several quarters, with President Biden and his cyber experts even referring to it as the path forward.”

For the first quarter of its fiscal year 2023, IronNet reported a net loss of $33.2 million, compared to a $15.5 million net loss in the same quarter last year. Annual recurring revenue (ARR) was $30.1 million; that compares to $25.6 million for the year-ago quarter.

Revenue was $6.7 million, compared to $6.4 million for the year-ago quarter. Cloud subscription revenue was $5.2 million, or 81% of product revenue, compared to 65% in the year-ago quarter.

Transactional Business Delayed

William Welch is IronNet‘s co-CEO.

IronNet’s William Welch

“Our topline results were consistent with our expectation that certain customers in our transactional business would be delayed in signing or renewing their contracts, resulting in reduced ARR and revenue from the prior quarter,” he said in the earnings announcement. “We would like to reiterate that we see these opportunities as pending rather than lost. In addition to our transactional business, we believe that our strategic business pipeline of deals larger than $5 million in ARR remains strong, and our conviction is high that a number of these opportunities will materialize to support our growth for the year.”

Rik Turner is principal analyst at Omdia, which shares a parent company with Channel Futures (Informa).

Omdia’s Rik Turner

“We’ve been seeing a few companies doing layoffs,” he said. “Cybereason laid off around 10% of their total workforce last month after raising $325 million in 2021. In their case, it was a response to the inability to go to initial public offering (IPO) at the moment, given overall market conditions, and a perceived need to double down on achieving profitability as a result. The OneTrust layoff was, I believe, even bigger, representing around 25% of its staff, if I remember correctly. Clearly a lot of privately-held companies are going to follow Cybereason’s lead, particularly if they were preparing for IPO before the downturn, as the EDR vendor was. As for companies that are already public, I wonder whether they’ve already done most of their downsizing.”