Show Me Your Margins, Part II: CISO Global Cleans House

CISO Global (NASDAQ: CISO) just dropped their Q1 2025 earnings, and while people are freaking out in after-market, as I am writing it is 82 cents in after-hours. (This went as low as 66 cents with panic sellers, who I’m guessing didn’t read the filing) Two weeks ago, that price would have gotten me excited, now I am not a fan. I still think we will open higher tomorrow, probably around $1. After hours are the upside down and don’t have a lot of impact on reality, it is where low volume tantrums take place.

I am breaking down the quarter as best I can here, the basic story is that it met and actually exceeded my expectations in some areas. We have brought in about 1/5th of the revenue goal for the year, which matches the historical trend. I think the reaction we are seeing is mostly from people who thought they could take the total year’s guidance and just divide by 4.

Here are the details of the filing, while the topline may have contracted, the bottom line told a different and far more compelling story.

We are watching a company cut the dead weight and let its margins breathe.

Margins Are Back

• Gross profit more than doubled to $1.78 million, up from just $706k last year.

• Gross margin expanded from 9 percent to 25 percent, a massive win and a nod to the future.

• Operating loss shrank 65 percent, from $4.90 million to $1.71 million.

• SG&A expenses dropped by more than $1.3 million.

• While the net loss came in at $5.38 million, most of that was related to legacy high-interest debt.

Out with the Old, In with the Profitable

• Revenue dipped to $7.16 million from $8.03 million, but that was intentional.

• CISO sold off its low-margin Latin America operations, which removed not just revenue but also debt and inefficiencies.

• More importantly, they converted $7.7 million of debt into equity, which reduced financial strain and helped clean up the balance sheet.

Strategic Focus: Software and Recurring Revenue

• Software revenue showed growth, and margins in that segment are projected to be around 75 percent or higher.

• The company's high-margin software platform, Checklight, is now being bundled with cyber insurance and security warranties.

• Currently, 75 percent of revenue is recurring, with 93 percent client retention. Those are impressive numbers for a company in the cybersecurity services space.

Liquidity and Balance Sheet Progress

• Cash increased to $1.79 million, up from $993,000 at the end of Q4.

• Derivative liabilities dropped from $2.1 million to just $80,000.

• The line of credit was used conservatively, showing improved capital management.

• Most legacy loans have been paid off. Remaining convertible notes are now friendly and structured more favorably.

The Outlook: EBITDA is Here, Profit is Coming

CISO has set the stage for:

• $34 million in adjusted EBITDA-profitable services revenue for 2025

• $5 million in expected software bookings

• An adjusted EBITDA-positive year, which was hard to imagine just a year ago

My Perspective

This quarter does not scream excitement at first glance. But if you are an investor who values how a company earns its money, not just how much it earns, then this is worth your attention.

CISO has started to turn the corner. They are shifting from excess to efficiency, from debt-driven to equity-cleansed, and from service-heavy to software-smart.

There is still work to be done, but for the first time, the structure is in place to support sustainable growth.