authID Inc. (AUID) Earnings

Management highlights

### Financial and Balance Sheet Actions - In late April 2026 (early Q2), AuthID secured $4.2 million in bridge loan financing to extend operational runway while working through long enterprise procurement and evaluation cycles, and to support conversion of the sales pipeline to contracted revenue. - Financial advisors are actively evaluating a range of strategic alternatives including capital markets initiatives, new partnership structures, and other options to enhance shareholder value and support long-term growth. - A targeted Q2 2026 operating expense reduction delivered $3.5 million in annualized cost savings, achieved via strategic capital reallocation to high-value activities and efficiency gains from AI automation tools, which preserved full operational and technical capacity. ### Technology Milestones - Launched the industry's first quantum-resistant biometric authentication platform, built on the PrivacyKey framework, to address the growing near-term threat of quantum computing compromising conventional encryption. - The platform uses a dual-layer defense: NIST-standard quantum-resistant encryption algorithms, plus cryptographic key sharding that eliminates single-point-of-failure vulnerabilities. - Unlike competing systems, AuthID generates and immediately destroys cryptographic keys and biometric data after each transaction, leaving no stored biometric data vulnerable to theft. The company is already in discussions with a large global bank for testing and deployment. - Added full support for biometrically secured digital IDs (including mobile driver's licenses) and verifiable credentials (VCs) to meet global regulatory requirements, including EU rules. VCs enable streamlined 2-click consumer onboarding for banking, retail, and healthcare services, compared to the industry standard 15-click process. ### Sales Pipeline Updates - As of Q1 2026, AuthID has over a dozen active structured proof-of-concept (POC) engagements with large household-name enterprises spanning retail, banking, fintech, crypto, industrial/chip manufacturing, and healthcare. - Key pipeline dynamics include: concentration of engagements with top 3 firms in retail, banking, and technology hardware (a single win could be transformative for the company); rigorous evaluation processes that signal serious commercial intent; nearly half of top pipeline accounts sourced from channel partners (Microsoft ecosystem specialists Formula 5 and MajorKey) which reduces customer acquisition cost and accelerates access to regulated verticals; and cross-industry validation confirming AuthID's platform as a horizontal enterprise identity solution rather than a single-vertical product. - Customer retention and expansion of existing accounts is a core focus, with active work to identify and develop new use cases with current customers to grow transaction volume.

Guidance

- Management expects the compound effect of balance sheet strengthening, cost restructuring, technology advancement, and pipeline development to materially improve business performance across the final three quarters of fiscal 2026, and position the company for a much stronger entry into fiscal 2027. - The full annualized benefit of the $3.5 million cost reduction will be realized throughout the remainder of 2026 and into 2027, with more significant operating expense reductions expected starting in Q2. - Management expects RPO growth to resume in the second half of 2026 as POCs are completed and large enterprise deals are closed. - The company targets conversion of a portion of its active POC pipeline into production contracts between Q2 and Q4 2026, which would deliver a step change in future revenue given AuthID's recurring transaction-based revenue model. - The company's six structural improvements are expected to create conditions for AuthID to reach cash flow sustainability and long-term financial independence.

Segment performance

AuthID does not break out performance across multiple product segments in this call. Total company revenue for Q1 2026 was $480,000, a 62% year-over-year increase from $296,000 in Q1 2025. Total GAAP operating expenses for the quarter were $5.0 million, up from $4.7 million in Q1 2025. Net loss for Q1 2026 was $4.5 million, compared to a $4.3 million net loss in Q1 2025. Non-GAAP adjusted EBITDA loss improved to $3.4 million from $3.9 million year-over-year. Annual Recurring Revenue (ARR) as of Q1 2026 was $1.9 million, up from $1.2 million in Q1 2025 and $1.8 million in Q4 2025. Gross Booked Annual Recurring Revenue (BAR) signed in Q1 2026 was $0.08 million, up from $0.01 million in Q1 2025. Total Remaining Performance Obligation (RPO) as of March 31, 2026 was $2.0 million, down slightly from $2.2 million at the end of Q4 2025. Ending cash on hand at the end of Q1 was $1.2 million, with $3.4 million in cash used for operating activities during the quarter, a year-over-year improvement from $5.4 million in cash used in Q1 2025.

Risks & headwinds

- Forward-looking statements about future performance, pipeline conversion, and product adoption are subject to significant risks and uncertainties that could cause actual results to differ materially from expectations, per standard SEC disclosures. - Large enterprise deals have extended procurement and evaluation timelines that can delay revenue recognition and contract closing. - Quantum computing advancements are expected to compromise conventional encryption, creating emerging industry-wide security risks that AuthID's platform is designed to address, but which create uncertainty for all identity and authentication providers. - The company operated with a limited cash balance at the end of Q1 2026, relying on post-quarter bridge financing to extend operational runway to close pipeline deals.

Analyst Q&A

• Q: Can you share additional details about the current proof-of-concept engagements AuthID is working on? /

  A: There are roughly 20 active POCs, all with the top three largest firms in each of their respective verticals, making this the highest-caliber pipeline the company has ever held. Clients follow thorough, structured vendor onboarding processes that AuthID has already completed, and the company is now competing head-to-head with other vendors for the contracts. Management expects to close a number of these contracts over the next two quarters.

• Q: How does AuthID's current technology stack compare to its closest competitors for these POC deals, particularly following the quantum-resistant platform launch? /

  A: Quantum resistance has been a common requirement in enterprise RFPs for years, and AuthID built quantum-resistant capabilities directly into its PrivacyKey platform from the early retooling phase. No other competitor currently offers a purpose-built quantum-resistant biometric authentication solution, even as publicly available quantum computing has already demonstrated the ability to break conventional encryption, making this a pressing near-term risk. This capability puts AuthID ahead of the industry on both privacy and future-proof security, strengthening its competitive position for large enterprise deals.