SideChannel, Inc.

What they do

SideChannel generates revenue from two categories: vCISO Services (fractional Chief Information Security Officer engagements) and its Enclave proprietary software product, which unifies asset intelligence, network segmentation, and certificate lifecycle management for zero-trust security. The company also resells third-party cybersecurity products and services, and leverages AI-based security operations for incident response.

Revenue drivers

• vCISO Services — Recurring revenue from embedding virtual CISOs into client leadership teams; this is the company's primary service offering and historically the largest revenue contributor.
• Enclave software platform — Proprietary zero-trust network access and microsegmentation software; focus of growth strategy, with management citing increased adoption as a priority.
• Reselling and other cybersecurity services — Revenue from third-party cybersecurity software and services resold through the company's security engineers and VAR network; supplements the service portfolio.

Recent performance

For the quarter ended March 31, 2026, revenue was $1.6 million, down 16.8% from $1.9 million in the prior-year quarter; gross margin improved to 53.5%, up 380 basis points. Net loss was $444 thousand ($0.10 per share) versus a $54 thousand loss in the prior year. For the six months ended March 31, 2026, revenue was $3.4 million (down 11.9%) and net loss was $840 thousand. Cash and short-term investments fell to $311 thousand at March 31, 2026, from $1.165 million at September 30, 2025. Trailing twelve-month revenue retention improved to 66.8% as of March 31, 2026, from 63.6% at fiscal year-end.

Strategy

Management aims to drive revenue growth by increasing adoption of Enclave among existing vCISO clients, securing new vCISO clients, and adding new cybersecurity software offerings (including AI-based security operations, data security posture management, and others). In the most recent quarter, the company increased selling and marketing expenses by 71% year-over-year to $388 thousand, which management called 'targeted investment' to scale the platform business. Management states it remains focused on managing operating cash carefully while converting Enclave pipeline into recurring revenue.

Risks

• Cash position — Cash and short-term investments were $311 thousand at March 31, 2026, down $854 thousand from September 30, 2025, which may limit the ability to fund operations.
• Revenue decline — Recent quarters show a year-over-year revenue decline (Q2 FY2026 down 16.8% and six-month down 11.9%), indicating potential customer losses or reduced demand.
• Customer retention — Trailing twelve-month revenue retention is 66.8%, meaning the company retains less than two-thirds of its recurring revenue, which could pressure growth.
• Operating losses — The company has reported net losses in each of the last several fiscal years (FY2023 -$7.0M, FY2024 -$0.9M, FY2025 -$0.9M) and increasing operating expenses, which could strain profitability.

Outlook

Management expects to continue investing in sales and marketing to drive Enclave adoption and maintain operating discipline. They aim to convert Enclave pipeline into recurring revenue during the balance of fiscal 2026. The company has not provided specific revenue or earnings guidance.