Intellicheck(IDN) - 2024 Q2 - Quarterly Results

Second Quarter 2024 Financial Results Overview 1.1 Executive Summary Intellicheck announced its second quarter 2024 financial results, reporting a slight revenue decline but significant improvements in operating expenses and net loss. The company maintained a strong gross profit margin and ended the quarter with solid cash and equity positions Key Financial Highlights (Q2 2024 vs Q2 2023) | Metric | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | Change (%) | | :-------------------------- | :-------------------- | :-------------------- | :--------- | | Total Revenue | 4,672 | 4,716 | -0.9% | | SaaS Revenue | 4,627 | 4,663 | -0.8% | | Gross Profit % | 90.5% | 92.5% | -2.0 pp | | Operating Expenses | 4,443 | 5,213 | -14.8% | | Net Loss | (127) | (853) | +85.1% | | Diluted EPS | (0.01) | (0.04) | +75.0% | | Adjusted EBITDA | (70) | 36 | -294.4% | * As of June 30, 2024, the Company had cash and cash equivalents totaling $7.3 million and stockholders' equity totaling $17.3 million[3] 1.2 Management Outlook CEO Bryan Lewis highlighted the company's strategic focus on innovation and market diversification, anticipating these efforts to drive future financial growth and profitability by converting current economic headwinds into tailwinds * Intellicheck's focus on innovation and market expansion is setting the stage for future financial growth[1] * The market diversification strategy is demonstrating value amidst economic variability in key markets like retail[1] * Management expects current economic headwinds to become tailwinds, contributing to growth and profitability[1] Conference Call Information 2.1 Conference Call Details Details for the earnings conference call held on August 8, 2024, including dial-in numbers for live participation and replay access, which was available until August 15, 2024 * An earnings conference call was held on August 8, 2024, at 4:30 p.m. ET/1:30 p.m. PT to discuss operating results[4] * A replay of the conference call was available until August 15, 2024, using conference identification number 13745588[4] Unaudited Condensed Financial Statements 3.1 Condensed Balance Sheets The condensed balance sheets present Intellicheck's financial position as of June 30, 2024, and December 31, 2023, showing changes in assets, liabilities, and stockholders' equity Condensed Balance Sheets (as of June 30, 2024 and December 31, 2023) | Metric | June 30, 2024 ($ thousands) | Dec 31, 2023 ($ thousands) | | :-------------------------- | :-------------------------- | :------------------------- | | ASSETS | | | | Cash and cash equivalents | 7,260 | 3,980 | | Short-term investments | — | 5,000 | | Accounts receivable, net | 3,315 | 4,703 | | Other current assets | 645 | 692 | | Total current assets | 11,220 | 14,375 | | Property and equipment, net | 592 | 666 | | Goodwill | 8,102 | 8,102 | | Intangible assets, net | 1,912 | 575 | | Other assets | 90 | 90 | | Total assets | 21,916 | 23,808 | | LIABILITIES | | | | Accounts payable | 909 | 884 | | Accrued expenses | 1,902 | 3,245 | | Equity awards liability | — | 4 | | Liability for shares withheld| — | 190 | | Deferred revenue | 1,798 | 2,209 | | Total current liabilities | 4,609 | 6,532 | | Total liabilities | 4,609 | 6,532 | | STOCKHOLDERS' EQUITY | | | | Common stock | 19 | 19 | | Additional paid-in capital | 151,422 | 150,822 | | Accumulated deficit | (134,134) | (133,565) | | Total stockholders' equity | 17,307 | 17,276 | | Total liabilities and equity| 21,916 | 23,808 | 3.2 Condensed Statements of Operations The condensed statements of operations detail Intellicheck's revenues, costs, operating expenses, and net loss for the three and six months ended June 30, 2024, compared to the prior year, showing improved net loss despite a slight revenue dip in Q2 Condensed Statements of Operations (Three Months Ended June 30) | Metric | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | | :-------------------------- | :-------------------- | :-------------------- | | Revenues | 4,672 | 4,716 | | Cost of Revenues | (444) | (352) | | Gross profit | 4,228 | 4,364 | | Selling, general and admin | 3,608 | 3,937 | | Research and development | 835 | 1,276 | | Total operating expenses | 4,443 | 5,213 | | Loss from operations | (215) | (849) | | Interest and other income | 88 | — | | Net loss before income taxes| (127) | (849) | | Provision for income taxes | — | 4 | | Net loss | (127) | (853) | | Loss per common share | (0.01) | (0.04) | Condensed Statements of Operations (Six Months Ended June 30) | Metric | H1 2024 ($ thousands) | H1 2023 ($ thousands) | | :-------------------------- | :-------------------- | :-------------------- | | Revenues | 9,352 | 8,970 | | Cost of Revenues | (879) | (684) | | Gross profit | 8,473 | 8,286 | | Selling, general and admin | 7,544 | 7,931 | | Research and development | 1,653 | 2,584 | | Total operating expenses | 9,197 | 10,515 | | Loss from operations | (724) | (2,229) | | Interest and other income | 157 | 1 | | Net loss before income taxes| (567) | (2,228) | | Provision for income taxes | 2 | 12 | | Net loss | (569) | (2,240) | | Loss per common share | (0.03) | (0.12) | 3.3 Condensed Statements of Stockholders' Equity These statements outline the changes in stockholders' equity for the three and six months ended June 30, 2024 and 2023, reflecting impacts from stock-based compensation, stock option exercises, and net loss Stockholders' Equity (Three Months Ended June 30, 2024) | Metric | Common Shares | Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :-------------------------- | :------------ | :----------- | :------------------------- | :------------------ | :------------------------- | | BALANCE, March 31, 2024 | 19,404,561 | $19 | $151,166 | $(134,007) | $17,178 | | Stock-based compensation | – | – | 256 | – | 256 | | Stock option exercises | 4,875 | – | – | – | — | | Issuance of shares | 83,266 | – | – | – | – | | Net loss | – | – | – | (127) | (127) | | BALANCE, June 30, 2024 | 19,492,702 | $19 | $151,422 | $(134,134) | $17,307 | Stockholders' Equity (Six Months Ended June 30, 2024) | Metric | Common Shares | Stock Amount | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :-------------------------- | :------------ | :----------- | :------------------------- | :------------------ | :------------------------- | | BALANCE, December 31, 2023 | 19,354,335 | $19 | $150,822 | $(133,565) | $17,276 | | Stock-based compensation | – | – | 600 | – | 600 | | Stock option exercises | 4,875 | – | – | – | — | | Issuance of common stock | 133,492 | – | – | – | – | | Net loss | – | – | – | (569) | (569) | | BALANCE, June 30, 2024 | 19,492,702 | $19 | $151,422 | $(134,134) | $17,307 | 3.4 Condensed Statements of Cash Flows The condensed statements of cash flows for the six months ended June 30, 2024 and 2023, illustrate the sources and uses of cash across operating, investing, and financing activities, showing a significant increase in cash from investing activities in 2024 Condensed Statements of Cash Flows (Six Months Ended June 30) | Metric | H1 2024 ($ thousands) | H1 2023 ($ thousands) | | :-------------------------------------- | :-------------------- | :-------------------- | | Net loss | (569) | (2,240) | | Net cash used in operating activities | (312) | (856) | | Net cash provided by (used in) investing activities | 3,592 | (31) | | Net cash used in financing activities | — | (124) | | Net increase (decrease) in cash | 3,280 | (1,011) | | Cash, beginning of period | 3,980 | 5,196 | | Cash, end of period | 7,260 | 4,185 | Non-GAAP Financial Measures 4.1 Adjusted EBITDA Reconciliation This section defines Adjusted EBITDA as a non-GAAP measure, explaining its utility for investors in assessing operational performance by excluding certain non-cash and non-operating charges, and provides a detailed reconciliation to GAAP net loss * Adjusted EBITDA is a non-GAAP financial performance measurement used to supplement GAAP results, aiding investors in comparing financial results by excluding non-cash and non-operating charges[13] * Limitations of Adjusted EBITDA include the exclusion of interest and other income, stock-based compensation, depreciation, and amortization, which impact profitability and long-term asset utilization[14] Reconciliation of GAAP Net Loss to Adjusted EBITDA | Metric | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | H1 2024 ($ thousands) | H1 2023 ($ thousands) | | :-------------------------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Net loss | (127) | (853) | (569) | (2,240) | | Non-restructuring severance expenses | — | 417 | — | 417 | | Provision for income taxes | — | 4 | 3 | 12 | | Interest and other income | (88) | — | (157) | (1) | | Sales tax accrual | — | 76 | — | 147 | | Depreciation and amortization | 73 | 69 | 145 | 139 | | Stock-based compensation | 72 | 323 | 405 | 1,005 | | Adjusted EBITDA | (70) | 36 | (173) | (521) | Corporate Information and Disclosures 5.1 About Intellicheck Intellicheck is an identity company specializing in on-demand digital and physical identity validation solutions for various industries, including financial services, retail, and government agencies across North America * Intellicheck (Nasdaq: IDN) is an industry-leading identity company[16] * It delivers on-demand digital and physical identity validation solutions for KYC, fraud, and age verification needs[16] * Solutions are utilized by financial services, fintech, BNPL providers, e-commerce, retail, law enforcement, and government agencies across North America[16] 5.2 Safe Harbor Statement This statement clarifies that future-looking statements in the news release are subject to risks and uncertainties under the Private Securities Litigation Reform Act of 1995 (PSLRA), and actual results may differ materially from expectations * Statements regarding future expectations are considered 'forward-looking statements' under the PSLRA[17] * Actual results and corporate actions could differ materially due to various factors, including market acceptance, demand changes, and regulatory impacts[17] * The company does not undertake any obligation to update forward-looking information[17] 5.3 Contact Information Contact details for investor relations and media inquiries are provided for interested parties * Investor Relations contact: Gar Jackson at (949) 873-2789 or gjackson@intellicheck.com[16] * Media and Public Relations contact: Sharon Schultz at (302) 539-3747 or sschultz@intellicheck.com[16]