Intellicheck, Inc. Q2 FY2025 earnings call

• Revenue growth: Second quarter total revenue grew to $5.1 million from $4.7 million in the prior year period, with adjusted EBITDA of $75,000, a $145,000 improvement vs year ago. - Major client relationships: Multiyear expansions with major bank and credit card issuer clients, including a significant upsell with a leading regional bank in the Southeast, and a large bank and credit card issuer signed a new 3-year tiered contract. - AWS migration: Approximately 95% of clients migrated onto the AWS platform, expected to save over $300,000 annually. - Marketing: New inbound prospects up 30% over Q1, interest from banking and finance users up 79% on Google Analytics, LinkedIn impressions up 300% over Q1, video views up 19% over Q1, launched podcast series and blog posts. - Sales team: SVP of Sales Tim Poulin made changes, revitalized sales staff, hired dedicated channel manager. - Social media client: Facing issue where client changed code, unable to process nearly all documents sent, working on solution with client's engineering team.

Total revenue for the second quarter grew to $5.1 million from $4.7 million in the prior year period. SaaS revenue for the second quarter of 2025 was up 10% to $5.08 million from $4.6 million during the same period of 2024 and represented over 99% of second quarter revenue. Revenue breakdown by vertical: Banking and lending contributed approximately 38%, retail was approximately 25%, age-restricted was approximately 7%, auto was approximately 5% and title insurance was approximately 2%. Gross profit as a percentage of revenues was 89.8% for the quarter, and adjusted gross margin improved to 92.2% in Q2 2025 compared to 91% in Q2 2024.

• Expect Q2 2025 to be the high point in 2025 of cash but expect to finish the year higher than Q1. - Look forward to sharing Q3 results in November.

• Social media client recently changed code, currently unable to process nearly all documents sent by the client, engineers working on solution.

Q: Congrats on the quarter and the large deal with the Southeastern regional bank. When is the step-up in their revenue expected to begin generating in Q3?

A: Yes, we started invoicing for the bank branches in July, and the step-up in revenue should be present for all of Q3.

Q: About the social media client, any time line to a resolution and sense of how big this customer could be based on prior scan volumes?

A: My team is working with them, talking at high levels, but can't give a specific next Tuesday timeline. They would be a significant client, and we've been working with them since they turned the faucet on, trying to figure out the fix as quick as possible.

Q: What was the update on retail scan volumes in the quarter and how are things trending in Q3?

A: Retail was down 2% quarter-over-quarter and down 20% year-over-year, with banking more than offsetting retail. My gut is we're about where we're going to be at the bottom if there is one, and hope rate cuts would help that sector.

Q: With SaaS and total revenue up 10% year-over-year, how does that correlate to retail revenue in terms of percentage of total revenue and how much retail was down year-over-year?

A: Retail revenue year-over-year down 20%, retail was 25% of major revenue, and offset by other sectors up. Retail down 20% due to some customers' clients in retail going out of business and consumer not doing as much in some areas.

Q: What are some of the smaller verticals you guys are most excited about going forward in terms of taking a bigger piece of total revenue?

A: Background checks is exciting, with potential from refinancing leading to more title insurance needs, and gig economy where background checks are needed as consumers demand hiring the right person.

Q: Anything to call out on the sales pipeline and performance of the sales team now under Tim's leadership?

A: Pipeline is full, combination of good senior guys and leads from marketing. Less than half the cost with 3x the results, and signed with a provider for banks, with other credit unions interested.

Q: For the large bank credit card issuer, what was that customer running prior?

A: They were slightly lower than the new 3-year ACV mid-7-figure range but have been expanding drastically, with credit card folks signing on new customers fast.

Q: How is retail feeling so far this quarter?

A: Haven't really looked at the numbers so far this quarter, but retail was down 2% from Q1 into Q2, and my gut is we're about where we're going to be at the bottom if there is one, hoping rate cuts would help.

Q: Recap on the channel partner and credit unions, signed a $20 billion credit union and others interested?

A: There are small banks and credit unions that need software providers. We signed a $20 billion credit union, going live in November through their platform, and other credit unions using the same platform are interested, with Gino leading the channel charge.

Q: What did you learn from the early volumes of the large social media player?

A: It was the scale of volumes they had said from day one, and we learned that something changed in their software, making documents unreadable, and working with both business and development sides to figure out the fix as they know they have a fraud problem and want to get installed correctly.