IronNet is initiating more layoffs, cutting nearly 90 employees or 35% of its workforce, and co-CEO William Welch and CFO James Gerber are leaving the company.

IronNet’s William Welch

IronNet’s James Gerber

IronNet confirmed the layoffs. The company’s shares dropped more than 47% in pre-trading last Thursday after the company reported its latest quarterly earnings.

According to IronNet’s latest 8-K filing with the U.S. Securities and Exchange Commission (SEC), due to market conditions, on Sept. 14, the company committed to and communicated a workforce reduction plan.

“On September 14, 2022, the company announced that it plans to undertake a restructuring that will include a reduction to its current headcount of approximately 250 employees by approximately 35%,” IronNet said. “The company expects to substantially complete this workforce reduction by the end of September 2022. As a result of this workforce reduction, the company expects to incur a pre-tax cash charge for one-time termination benefits, which consist of severance and related costs, of approximately $1 million. The company expects such costs to be the only direct expense of the workforce reduction.”

Cutting Expenses, Preserving Cash

The workforce reduction is part of a broader plan by IronNet to reduce overall expenses and preserve cash.

For its fiscal second quarter of 2023, IronNet reported a $20.6 million net loss compared to a $17 million net loss in the year-ago quarter. Annual recurring revenue totaled $26.5 million, which while up from $24.1 million a year ago, fell short of Wall Street analysts’ expectations of approximately $32 million, according to Seeking Alpha.

In Welch’s absence, Chris Murphy, IronNet’s head of sales operations, will lead the sales team in the interim. Software and cybersecurity executive Cameron Pforr has been appointed as IronNet’s new CFO. Gerber is joining a private cybersecurity company.

“With costs in focus, we determined that it made sense to eliminate the co-CEO position,” Welch said. “I am a true believer in collective defense, and I remain firmly committed to the IronNet mission,” Welch said. “I will continue to support the company in any way I can be of service.”

In June, IronNet confirmed it was cutting 55 workers, or 17% of its workforce. It planned to complete that workforce reduction by the end of June.