[First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) Intellicheck's Q1 2025 results show revenue growth, reduced net loss, and strategic client diversification [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Intellicheck reported record Q1 2025 revenue of **$4.9 million**, a **5% increase**, with a **90% gross margin** and **reduced net loss**, while diversifying its client base Financial and Operational Summary | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $4,894,000 | $4,680,000 | +5% | | SaaS Revenue | $4,868,000 | $4,609,000 | +6% | | Gross Profit Margin | 90% | 91% | -1 ppt | | Operating Expenses | $4,740,000 | $4,768,000 | -1% | | Net Loss | ($318,000) | ($442,000) | +28% Improvement | | Diluted EPS | ($0.02) | ($0.02) | No Change | | Adjusted EBITDA | ($17,000) | ($117,000) | +85% Improvement | - The company is making significant progress in diversifying its client base, with rapid growth in sectors such as retail banking, title insurance, auto, email account security, background checks, logistics, and shipping[2](index=2&type=chunk) - As of March 31, 2025, the company held **$5.1 million** in cash and cash equivalents and had stockholders' equity of **$17.6 million**[6](index=6&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) The unaudited financial statements for Q1 2025 detail increased total assets to **$24.6 million**, revenue growth, reduced net loss, and positive cash flow from operations [Unaudited Condensed Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Balance%20Sheets) Total assets increased to **$24.6 million** as of March 31, 2025, driven by accounts receivable and deferred revenue, while stockholders' equity slightly decreased Balance Sheet Summary (in thousands) | Balance Sheet Item (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,148 | $4,666 | | Total current assets | $13,527 | $9,912 | | Total assets | $24,561 | $20,933 | | Total current liabilities | $6,953 | $3,186 | | Total liabilities | $6,953 | $3,186 | | Total stockholders' equity | $17,608 | $17,747 | [Unaudited Condensed Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Statements%20of%20Operations) Q1 2025 revenue grew to **$4.9 million**, with gross profit increasing to **$4.4 million**, leading to a narrowed loss from operations and a reduced net loss Income Statement Summary (in thousands) | Income Statement Item (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $4,894 | $4,680 | | Gross profit | $4,392 | $4,245 | | Total operating expenses | $4,740 | $4,768 | | Loss from operations | ($348) | ($523) | | Net loss | ($318) | ($442) | | Loss per common share (Basic/Diluted) | ($0.02) | ($0.02) | [Unaudited Condensed Statements of Stockholders' Equity](index=8&type=section&id=Unaudited%20Condensed%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased to **$17.61 million** by March 31, 2025, primarily due to the net loss, partially offset by stock-based compensation - For the three months ended March 31, 2025, stockholders' equity decreased by **$139,000**, resulting from a net loss of **$318,000** and stock-based compensation of **$179,000**[11](index=11&type=chunk) [Unaudited Condensed Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$750,000** in Q1 2025, with a net increase in cash of **$482,000**, bringing the quarter-end cash balance to **$5.1 million** Cash Flow Summary (in thousands) | Cash Flow Item (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $750 | $869 | | Net cash (used in) provided by investing activities | ($173) | $4,390 | | Net cash (used in) financing activities | ($95) | $0 | | Net increase in cash | $482 | $5,259 | | Cash, end of period | $5,148 | $9,239 | [Non-GAAP Financial Measures](index=12&type=section&id=Non-GAAP%20Financial%20Measures) The company presents Adjusted EBITDA and Adjusted Gross Profit to provide a clearer view of operating performance by excluding non-cash and non-operating charges - Management uses Adjusted EBITDA and Adjusted Gross Profit to monitor and evaluate financial and operating results, believing they provide a more consistent basis for comparison by excluding items like amortization, depreciation, and stock-based compensation[13](index=13&type=chunk)[16](index=16&type=chunk) [Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20GAAP%20Net%20Loss%20to%20Non-GAAP%20Adjusted%20EBITDA) Adjusted EBITDA loss significantly improved to **$17,000** in Q1 2025, reflecting adjustments for depreciation, amortization, and stock-based compensation from GAAP net loss Adjusted EBITDA Reconciliation (in thousands) | Reconciliation Item (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | ($318) | ($442) | | Depreciation and amortization | $154 | $72 | | Stock-based compensation | $177 | $334 | | Other adjustments | ($30) | ($81) | | **Adjusted EBITDA** | **($17)** | **($117)** | [Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Profit](index=12&type=section&id=Reconciliation%20of%20GAAP%20Gross%20Profit%20to%20Non-GAAP%20Adjusted%20Gross%20Profit) Adjusted Gross Profit reached **$4.5 million**, or **91.8% of revenue**, in Q1 2025, after adding back amortization expense allocable to cost of revenues Adjusted Gross Profit Reconciliation (in thousands) | Metric (in thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross Profit | $4,392 | $4,245 | | Add: Amortization | $103 | $24 | | **Adjusted Gross Profit** | **$4,495** | **$4,269** | | Gross profit as a % of revenues | 89.7% | 90.7% | | Adjusted Gross Profit as a % of revenues | 91.8% | 91.2% | [Other Information](index=2&type=section&id=Other%20Information) This section provides details on the earnings conference call, an overview of Intellicheck's identity verification services, and the Safe Harbor Statement for forward-looking statements [Conference Call Information](index=2&type=section&id=Conference%20Call%20Information) An earnings conference call was held on May 13, 2025, to discuss quarterly results, with replay information available for interested parties - An earnings conference call was scheduled for May 13, 2025, at 4:30 p.m. ET, with replay information available for those who missed the live event[7](index=7&type=chunk)[8](index=8&type=chunk) [About Intellicheck](index=15&type=section&id=About%20Intellicheck) Intellicheck is a leading SaaS provider of real-time identity verification solutions, utilizing DMV-issued IDs to combat identity-based fraud across North America - Intellicheck is a SaaS company specializing in real-time identity verification by analyzing government-issued IDs to combat identity-based fraud[20](index=20&type=chunk) [Safe Harbor Statement](index=15&type=section&id=Safe%20Harbor%20Statement) The press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially, with no obligation to update - This release includes forward-looking statements concerning future business performance, which are protected under the Private Securities Litigation Reform Act of 1995, involving risks and not guaranteeing future results[21](index=21&type=chunk)

Fraud & Identity Theft Problem - In 2024, U S fraud impacted 18 million people, costing $27 billion[9] - Account takeover fraud increased by 22%, reaching $16 billion[9] - New account creation accounted for 29% of identity misuse in 2024[9] - 79% of auto dealerships experienced identity fraud-related losses in the past year[9] Intellicheck Overview & Technology - Intellicheck authenticates close to 100 million documents annually in North America[16] - The company's SaaS solutions are used across various industries, both in-person and digitally[15] - Intellicheck works with 28 state-level law enforcement agencies for ID validation[16] - The company's technology validates IDs in less than one second[26] Financial Performance & Outlook - Q1 2025 saw 100% renewal rates with an ACV exceeding $10 million[21] - The company consistently maintains gross margins of 90%+[21] - Intellicheck anticipates positive Adjusted EBITDA for 2025[22] - Q4 2024 total revenue was $5,936,000, with SaaS revenue at $5,913,000[39] - Q4 2024 net income was $488,000 and Adjusted EBITDA was $860,000[39]

Group 1: Company Performance - Intellicheck Mobilisa, Inc. (IDN) has returned approximately 2.9% year-to-date, outperforming the average return of -6.6% for the Industrial Products sector [4] - The Zacks Consensus Estimate for IDN's full-year earnings has increased by 33.3% over the past 90 days, indicating improving analyst sentiment and a positive earnings outlook [3] - IDN belongs to the Security and Safety Services industry, which has seen an average loss of 5.6% this year, further highlighting IDN's strong performance within its industry [5] Group 2: Industry Context - The Industrial Products sector consists of 199 individual stocks and is currently ranked 11 in the Zacks Sector Rank [2] - The Security and Safety Services industry, which includes IDN, is ranked 59 in the Zacks Industry Rank [5] - Another outperforming stock in the Industrial Products sector is Kone Oyj Unsponsored ADR (KNYJY), which has returned 14.3% year-to-date [4][6]

Revenue and Profitability - Revenues for the year ended December 31, 2024 increased by $1,091 or 6% to $19,997 compared to $18,906 for the year ended December 31, 2023, primarily driven by higher SaaS revenue[137] - SaaS revenues increased by $1,215 or 7% to $19,810 for the year ended December 31, 2024, compared to $18,595 for the year ended December 31, 2023[137] - Gross profit for the year ended December 31, 2024 was $18,166, representing a 4% increase from $17,531 in 2023, with gross profit margin decreasing to 90.8% from 92.7%[138] - Net loss for the year ended December 31, 2024 was $(918) or $(0.05) per share, an improvement from a net loss of $(1,980) or $(0.10) per share in 2023[141] - Adjusted EBITDA for the year ended December 31, 2024 was $520, compared to $377 in 2023, reflecting operational improvements[150] Operating Expenses and Cash Flow - Operating expenses decreased by $473 or 2.4% to $19,334 for the year ended December 31, 2024, with research and development expenses decreasing by $823 or 18%[139] - Cash used in operating activities was $(2,694) for the year ended December 31, 2024, compared to $(647) in 2023, while cash provided by investing activities was $2,895[143] Financial Position - Cash and cash equivalents as of December 31, 2024 were $4,666, with total assets of $20,933 and stockholders' equity of $17,747[142] - As of December 31, 2024, the company had cash and cash equivalents of $4,666[157] - The company has approximately $28,500 in net operating loss carryforwards as of December 31, 2024, with $10,900 expiring between 2035 and 2037[151] - The company anticipates that available cash and expected cash from operations will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months[146] Investment Activities - The primary objectives of the company's investment activities are capital preservation, liquidity fulfillment, and fiduciary control of cash and investments[157] - The company does not expect a hypothetical 100 basis point change in interest rates to materially affect the fair market value of its investment portfolio[157] - The company has never entered into off-balance sheet financing arrangements or established special purpose entities[156] Regulatory and Accounting Updates - The FASB issued ASU 2024-03, requiring disaggregated disclosures for certain expenses, effective for annual reporting periods beginning after December 15, 2026[155]

Financial Data and Key Metrics Changes - Fourth quarter revenues increased by 15% year-over-year, reaching a record $5.936 million compared to $5.176 million in Q4 2023 [48][50] - SaaS revenues for Q4 grew 17% quarter-over-quarter, totaling $5.913 million, while full-year SaaS revenues increased by 7% to $19.8 million [13][55] - Adjusted EBITDA for the full year 2024 was positive at $520,000, an improvement from a loss of $377,000 in 2023 [49][59] - Gross profit margin for Q4 was 91%, down from 95% in the same period of 2023, primarily due to increased R&D costs [50][55] Business Line Data and Key Metrics Changes - The company focused on vertical channel diversification, with significant growth in new verticals such as automotive (13%), title insurance (2,500%), email (54%), social media (17%), and retail banking [14][17] - SaaS revenue for the full year was $19.8 million, just shy of the $20 million mark, indicating strong performance in the SaaS segment [13][55] Market Data and Key Metrics Changes - Retail still represents approximately 75% of the company's scan volume, but transaction volumes from major retailers were down 45% year-over-year in Q1 2025 [44][82] - The company anticipates that lower mortgage rates will drive significant refinancing and improved home purchasing activity, particularly benefiting the title insurance vertical [17] Company Strategy and Development Direction - The company is investing in IT initiatives and enhancing customer experience through new leadership in the customer success team [9][31] - A strategic focus on longer contracts with minimums and guarantees is expected to yield positive results [42] - The transition from Azure to AWS is anticipated to improve efficiency and reduce costs, while also enhancing AI capabilities [30][76] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the first quarter of 2025, expecting revenues to align with sell-side consensus estimates of $4.78 million [45] - The company is aware of macroeconomic challenges affecting consumer confidence and spending, which could impact retail volumes [43][71] - Management believes that the diversification strategy is working, with a focus on higher-value transactions in new verticals [42][84] Other Important Information - The company reported a net loss of $918,000 for the full year 2024, an improvement from a loss of $1.98 million in 2023 [58] - The company has a $2 million revolving credit facility with Citibank, which was not utilized during 2024 [60] Q&A Session Summary Question: Visibility on stronger back half of the year - Management indicated that visibility is based on rollout schedules and proof of concepts, with expectations for growth in the back half of the year [65][68] Question: Disruption in sales conversations due to macro conditions - Management reported no disruption in sales conversations, as fraud remains a consistent issue across industries [70][72] Question: Potential operating expense savings from switching to AWS - Management expects significant savings from the transition to AWS, while balancing the need for extensive computing power for AI and machine learning [75][76] Question: Clarification on Q4 revenue strength and Q1 outlook - Management noted that Q4 strength was driven by non-retail improvements, with a significant drop in retail transaction volumes expected in Q1 [81][84] Question: Update on large social media customer - Management is finalizing procurement discussions and expects updates soon, with testing already completed [87][89] Question: Sales team composition and focus - The company has added three new sales associates, focusing on a consultative selling approach across various verticals [92][94] Question: Top priorities for 2025 - Management emphasized that sales growth is the top priority, alongside improving customer success and marketing strategies [98][100]

Financial Data and Key Metrics Changes - Fourth quarter revenues increased by 15% year-over-year, reaching a record $5,936,000 compared to $5,176,000 in Q4 2023 [31] - SaaS revenues for Q4 grew 17% quarter-over-quarter, totaling $5,900,000, while full-year SaaS revenues increased by 7% to $19,800,000 [8][32] - Adjusted EBITDA for the full year improved to a positive $520,000 compared to a loss of $377,000 in 2023 [39] Business Line Data and Key Metrics Changes - The automotive vertical saw significant growth, with volumes increasing by 2,500% year-over-year, while title insurance grew by 54% [9] - The company achieved a gross profit margin of 91% for both Q4 and the full year, down from 95% and 93% respectively in the prior year [33][37] - Operating expenses increased by 21% in Q4, totaling $4,928,000, primarily due to higher R&D costs [34] Market Data and Key Metrics Changes - Retail still represents approximately 75% of the company's scan volume, although transaction volumes in retail were down about 2.5% year-over-year [29][49] - The company is diversifying away from retail, focusing on verticals such as automotive and title insurance, which have higher transaction values [11][80] Company Strategy and Development Direction - The company is focused on vertical channel diversification and enhancing ID validation services, with a strong emphasis on technology solutions that outperform competitors [5][6] - Ongoing investments in IT initiatives, including a migration from Azure to AWS, are expected to improve efficiency and reduce costs [19][20] - The company aims to leverage marketing and customer service capabilities to enhance customer experience and drive growth [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in the second half of 2025, driven by rollout schedules and proof of concepts [44][45] - The company is cautious about the retail environment, noting that consumer confidence and spending have declined, impacting transaction volumes [29][54] - Management anticipates continued improvements in adjusted EBITDA and gross margins, with a focus on maintaining operating expenses below revenue growth [41][60] Other Important Information - The company reported a GAAP loss of $918,000 for the full year, an improvement from a loss of $1,980,000 in 2023 [38] - The company has a $2,000,000 revolving credit facility with Citibank, which was not utilized during 2024 [39] Q&A Session Summary Question: Visibility on stronger back half of the year - Management indicated that visibility is based on rollout schedules and proof of concepts, with some delays due to IT integration [44][45] Question: Impact of macroeconomic conditions on sales - Management noted that sales conversations have not been disrupted, as fraud remains a consistent issue across industries [47][48] Question: Clarification on Q4 revenue strength and Q1 expectations - Management explained that Q4 strength was driven by non-retail sectors, while Q1 is expected to see a decline in retail transaction volumes [53][54] Question: Update on large social media customer - Management stated that procurement processes are ongoing, with testing completed and positive feedback received [58][59] Question: Future EBITDA expectations - Management expects continued improvement in EBITDA for 2025, with a focus on maintaining positive growth [60] Question: Sales team structure and focus - Management highlighted the addition of three new sales associates, emphasizing a consultative selling approach across various verticals [62][63] Question: Top priorities for 2025 - Management identified sales growth and enhancing customer success as top priorities for the year [64][66]

Financial Data and Key Metrics Changes - Fourth quarter revenues increased by 15% year-over-year, reaching a record $5,936,000 compared to $5,176,000 in Q4 2023 [31][32] - SaaS revenues for Q4 grew 17% quarter-over-quarter, totaling $5,900,000, while full-year SaaS revenues increased by 7% to $19,800,000 [9][36] - Adjusted EBITDA for the full year improved to a positive $520,000 compared to $377,000 in 2023 [39][42] - Gross profit margin for Q4 was 91%, down from 95% in the same period of 2023, primarily due to increased R&D costs [34][37] Business Line Data and Key Metrics Changes - Significant growth was observed in new verticals, with automotive, title insurance, email, social media, and retail banking verticals growing by 13%, 2,500%, 54%, and 17% respectively [10] - The title insurance vertical is particularly strong, with direct title clients accounting for approximately 45% of the market [11] - The company faced headwinds from retail bankruptcies and customer churn, particularly in bars, restaurants, and hardware-focused manufacturers [12] Market Data and Key Metrics Changes - Retail still represents approximately 75% of the company's scan volume, but transaction volumes from major retailers were down about 45% from Q4 2023 [29][55] - The company is diversifying away from retail, which is crucial given the current economic climate affecting consumer spending [29][51] Company Strategy and Development Direction - The company is focused on vertical channel diversification and enhancing ID validation services [6][7] - Investments in IT initiatives and customer success leadership are aimed at improving customer experience and marketing capabilities [7][21] - The migration from Azure to AWS is expected to yield cost savings and improve implementation speed [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in the back half of 2025, driven by rollout schedules and proof of concepts [45][46] - Concerns about consumer confidence and macroeconomic factors are acknowledged, but the company remains focused on fraud prevention as a consistent need across industries [49][50] - The company anticipates a cautious outlook for Q1 2025, aligning with sell-side consensus estimates of $4,780,000 [28][39] Other Important Information - The company has a $2,000,000 revolving credit facility with Citibank, which was not utilized during 2024 [40] - The company expects to finish Q1 2025 with a cash balance of approximately $5,000,000, indicating strong cash generation capabilities [39] Q&A Session Summary Question: Visibility on stronger back half of the year - Management indicated that visibility is based on rollout schedules and proof of concepts, with delays potentially leading to easier implementations in the future [45][46] Question: Disruption in sales conversations due to macro conditions - No significant disruption was noted in sales conversations, as fraud remains a consistent issue across industries [49][50] Question: Potential operating expense savings from switching to AWS - Management expects significant savings from the AWS transition, with ongoing negotiations for better rates from cloud providers [52] Question: Clarification on Q4 revenue strength and Q1 expectations - The strength in Q4 was attributed to non-retail improvements, while Q1 is expected to see a drop due to worsening retail conditions [55][58] Question: Update on large social media customer - The company is finalizing procurement discussions and expects updates soon [60][61] Question: Expectations for EBITDA improvement in 2025 - Management anticipates continued improvement in EBITDA for 2025, with a focus on maintaining positive growth [62]

Revenue Performance - Revenues for the three months ended September 30, 2024 decreased by $51, or 1%, to approximately $4,709 compared to $4,760 for the same period of 2023[116] - Revenues for the nine months ended September 30, 2024 increased by $330, or 2%, to approximately $14,060 compared to $13,730 for the same period of 2023[119] - Equipment revenue decreased by $93, or 88%, to $13 for the three months ended September 30, 2024, while SaaS revenue increased by $26, or 1%, to $4,661[116] - SaaS revenue for the nine months ended September 30, 2024 increased by $370, or 2%, to $13,896 compared to $13,526 for the same period of 2023[119] Profit and Loss - Gross profit for the three months ended September 30, 2024 decreased by $47, or 1%, to $4,285, maintaining a gross profit margin of 91%[117] - The net loss for the three months ended September 30, 2024 was $(837), compared to a net loss of $(724) for the same period in 2023[118] - The net loss for the nine months ended September 30, 2024 was $(1,406), significantly improved from a net loss of $(2,964) for the same period in 2023[124] - Net loss for the three months ended September 30, 2023, was $(837) million, while the net loss for the nine months ended September 30, 2023, was $(1,406) million[134] Operating Expenses - Operating expenses for the nine months ended September 30, 2024 decreased by $1,352, or 9%, to $14,391 compared to $15,743 for the same period of 2023[123] - Restructuring severance expenses amounted to $376 million for the three months ended September 30, 2023, and $548 million for the nine months ended September 30, 2023[134] - Stock-based compensation, including liability classified awards, was $237 million for the three months ended September 30, 2023, and $1,347 million for the nine months ended September 30, 2023[134] Cash and Assets - As of September 30, 2024, the company had cash and cash equivalents of $5,747 and total assets of $20,682[125] - The company anticipates that available cash and expected cash from operations will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months[127] Other Financial Information - Adjusted EBITDA for the three months ended September 30, 2023, was $(167) million, compared to $(341) million for the nine months ended September 30, 2023[134] - Interest and other income for the three months ended September 30, 2023, was $(73) million, while for the nine months it was $(230) million[134] - The company reported a provision for income taxes of $8 million for the three months ended September 30, 2023[134] - Depreciation and amortization for the three months ended September 30, 2023, was $130 million[134] Financing and Risk - The company has not entered into any off-balance sheet financing arrangements or established any special purpose entities[135] - There were no guarantees of debt or commitments of other entities by the company[135] - The company has not disclosed any market risk applicable to smaller reporting companies[135]

Core Viewpoint - Investors reacted negatively to Intellicheck's slight revenue miss, resulting in a 12% drop in shares, but management highlighted potential growth in identity verification services, particularly in real estate and banking sectors [1] Financial Performance - Third-quarter revenue was $4.7 million, approximately flat year-over-year and about 3% below consensus estimates [2] - Software-as-a-Service (SaaS) revenue increased by 1%, contributing significantly to the overall revenue [2] - Pricing power remained robust, with new business pricing per transaction rising by 25% year-on-year and 8% sequentially [2] Business Development - The appointment of Sandra Bower as vice president of customer success is expected to enhance revenue from existing customers through a deeper focus on the product pipeline [3] - A large regional bank has signed a multiyear agreement, fully implementing Intellicheck's services in 1,200 branches, with expectations of mid-6-figure annual revenue [5] - Another regional bank with over 2,700 branches is finalizing a multiyear deal for in-branch implementations, with potential for a seven-figure revenue increase by 2025 [6] Sector Growth - The real estate sector is experiencing solid growth, driven by the need for identity verification due to fraud schemes that have resulted in billions in losses [7] - Fraudsters often exploit stolen personal information in real estate transactions, highlighting the importance of Intellicheck's ID verification tools [8] - Westcor Land Title Insurance Company is utilizing Intellicheck's technology for advanced ID verification, contributing to growth in the automobile segment, which saw a 28% year-on-year increase [9] Market Challenges - The retail segment has faced pressures, including bankruptcies of three clients and reduced consumer spending, impacting overall revenue stability [10] - Management expressed hope that declining inflation could reverse current headwinds into tailwinds for the business [11] - The company is actively exploring other verticals for growth, indicating that many customers have not fully implemented their solutions yet [12]

Financial Data and Key Metrics Changes - Total revenues for Q3 2024 were $4.71 million, a decrease of 1% compared to $4.76 million in Q3 2023 [67] - SaaS revenues increased by 1% to $4.66 million from $4.64 million in the same period last year, representing 99% of total revenues [67] - Gross margin remained strong at 91%, consistent with the previous year [66][68] - Net loss for Q3 2024 was $837,000, compared to a net loss of $724,000 in Q3 2023, with a net loss per diluted share of $0.04 for both periods [71] Business Line Data and Key Metrics Changes - New business price per transaction increased by 25% year-over-year and 8% sequentially from Q2 2024 [7] - The banking vertical is expected to see significant revenue growth, with a new multiyear agreement anticipated to generate mid-6-figure annual revenues [23][24] - The automotive vertical experienced a 28% growth over Q3 2023, indicating strong performance in this area [47] Market Data and Key Metrics Changes - Retail transaction volumes saw a double-digit decline in Q3 2024, attributed to economic conditions and inflation [90] - The company is diversifying into new verticals, which are expected to show significant growth opportunities in 2025, offsetting weaknesses in retail [100] Company Strategy and Development Direction - The company is focusing on expanding into financial services and other verticals to diversify revenue streams [76] - Marketing initiatives are being enhanced to drive interest in product offerings across multiple verticals [16] - The company is committed to maintaining high gross margins while improving architecture and data intelligence capabilities [75] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of retail bankruptcies and consumer spending pullback on business but emphasized the successful strategic plan to enter new markets [99] - The outlook for Q4 2024 anticipates continued gross margins of approximately 90% to 91% [75] - Management expressed optimism about the sales pipeline, particularly in financial services, social media, hospitality, and entertainment sectors [73] Other Important Information - The company has invested approximately $8.8 million in R&D related to product development over the past two years [61] - A significant focus is placed on enhancing the ID verification platform to stay ahead of evolving fraud tactics [60] Q&A Session Summary Question: When do you start to anniversary some of those more difficult retail comps? - Management indicated that the weakness in retail began about halfway through the previous year, with hopes for recovery as inflation decreases [80][82] Question: What is the comfort level regarding cash and potential investments in sales and marketing? - Management expressed confidence that there is no need to raise cash for operations and is assessing past marketing expenditures for better ROI [84][86] Question: Could you provide insights on retail volumes in Q3 and expectations for Q4? - Management noted a double-digit decline in retail transaction volumes in Q3 but remains hopeful for seasonal growth in Q4 due to new verticals coming online [90][91] Question: Clarification on the price per transaction increase and its implications? - Management clarified that the 25% year-over-year increase in price per transaction was specific to new business and not solely from existing customers [93] Question: What is the current size of the sales pipeline compared to previous quarters? - Management reported a more favorable pipeline today compared to three quarters ago, with ongoing discussions with large clients [95][96]