Intellicheck, Inc. Q4 FY2024 earnings call

• Vertical channel diversification: Focused on automotive, title insurance, email, social media, and retail banking verticals. Volume in new targeted verticals grew in 2024. For example, title insurance vertical saw growth with new clients and partnerships.
• IT initiatives: Moving from Azure to AWS cloud platform, investing in AI capabilities with high-performance servers and GPUs. Data science team key for ongoing AI investments.
• Leadership and marketing: Added Sandra Bauer to lead customer success team, refreshed customer-facing materials, optimized website for search, resulting in 15% increase in followers and impressions since December.
• Customer relationships: Renewal and expansion of contract with a prominent domestic bank, increasing contract value by ~15% to mid-seven figure annual amount. Progress in specialty finance vertical, working with half of top four lease-to-own players.

SaaS revenues in Q4 2024 grew 17% quarter-over-quarter, totaling a record $5.9 million. For the full year 2024, SaaS revenues grew 7% to a record $19.8 million. SaaS revenues in Q4 2024 represented over 99% of the quarter's revenue. Gross profit as a percentage of revenues was 91% for Q4 2024 compared to 95% in the same period of 2023. For the full year 2024, total revenue increased 6% to $19.997 million compared to $18.9 million in 2023. SaaS revenue for the full year 2024 was $19.8 million, up 7% from 2023.

• First quarter 2025 outlook: Anticipates first quarter to be approximately in line with sell-side consensus estimate of $4.78 million. Diversification strategy working, focus on longer contracts with minimums and guarantees bearing fruit.
• 2025 expectations: Expect continued gross margins of approximately 90%, leverage in operating expenses, and aim to improve adjusted EBITDA further than 2024. Focus on expanding customer base and growth in new and existing verticals.

• Market evolution: Market for identity verification services evolves rapidly, need to maintain competitive stance.
• Retail impact: Retail bankruptcies and churn from bars, restaurants, and hardware-focused manufacturers; retail still represents ~75% of scan volume.
• Macroeconomic uncertainties: Cautious outlook for consumers with lower confidence, macro and inflation concerns, uncertainty around tariffs and program changes.

Q: Scott Buck with H.C. Wainwright asked about visibility into the stronger back half and potential operating expense savings from switching to AWS.

A: Bryan Lewis mentioned rollout schedules and POCs driving back half outlook, and IT savings from AWS with balance between normal transaction savings and AI/machine learning investments.

Q: Rudy Kessinger with D.A. Davidson asked about Q4 revenue strength, Q1 outlook, and onetime items.

A: Bryan Lewis attributed Q4 strength to new verticals and Q1 drop to lower retail transaction volumes.

Q: Mike Grondahl with Northland Securities asked about sales team size and priorities.

A: Bryan Lewis discussed new salespeople focus on consultative selling across verticals and top priorities as sales and marketing execution.

Q: Jeffrey Van Rhee with Craig-Hallum Capital Group asked about retail volume dynamics and Q4/Q1 trends.

A: Bryan Lewis clarified retail volume trends and seasonal impacts on revenue.

Q: Unidentified Analyst with Blueprint Capital asked about social media customer and testing.

A: Bryan Lewis stated the customer is fully integrated and tested, waiting on their internal processes to finalize contracts.