VerifyMe(US:VRME)2025-11-17 15:02Financial Data and Key Metrics Changes - The company's third quarter revenue was $5.0 million, a decrease of $0.4 million from $5.4 million in the prior year, primarily due to $0.8 million of discontinued services with two proactive customers [7] - Gross profit increased by $0.2 million to $2.1 million in Q3 2025 compared to $1.9 million in Q3 2024, with gross margin rising to 41% from 35% [7][9] - The net loss for the quarter was $3.4 million, or $0.26 per diluted share, compared to a net loss of $2.9 million, or $0.23 per diluted share in Q3 2024 [9] Business Line Data and Key Metrics Changes - PeriShip revenue decreased approximately 14% in Q2 2025 compared to the previous year, but the revenue decline in Q3 2025 was only about 7% due to sales and marketing efforts [4] - Operating expenses decreased to $1.7 million in Q3 2025 from $2.5 million in Q3 2024, primarily due to the divestiture of the Trust Codes business and cost-cutting measures [9] Market Data and Key Metrics Changes - The transition to a new proactive shipping partner is expected to impact Q4 2025 and Q1 2026 revenues, with no guidance provided for 2026 at this time [5][8] - The company anticipates remaining cash flow positive for the full year of 2025 despite the transitional revenue impact [11] Company Strategy and Development Direction - The company is focused on transitioning to a new proactive shipping partner, which is believed to provide a better long-term platform for sustained organic growth [5][12] - The management emphasizes the importance of maintaining customer loyalty during the transition and is actively working to address customer concerns regarding the change [20][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by the transition from the previous shipping partner but remains optimistic about future growth and operational efficiencies [12][33] - The company plans to provide specific guidance for 2026 in the next earnings call, indicating a commitment to transparency and strategic planning [5][33] Other Important Information - A one-time non-cash impairment expense of $3.9 million was recognized in Q3 2025, related to goodwill and intangible assets in the PeriShip business [8][9] - The company has a strong balance sheet with no bank debt and continues to explore potential M&A opportunities [12][26] Q&A Session Summary Question: Revenue contribution from the proactive business that ended in September - Management indicated that they do not have a precise figure for the revenue contribution from the proactive business that is no longer part of the mix, as it is a dynamic situation [18][22] Question: Transition of customers to the new shipping partner - Management stated that not all customers will transition to the new partner, and some may delay their transition until after the peak shipping season [20][24] Question: Potential M&A discussions - Management confirmed ongoing conversations regarding potential acquisitions but noted that timing is difficult to predict [26] Question: Operating expense improvement details - Approximately $500,000 of the operating expense reduction was associated with the Trust Codes business, with the remainder attributed to improved management of operating expenses [28]