VerifyMe, Inc. Q2 FY2025 earnings call

• Primary organic focus is on PeriShip: PeriShip revenue decreased 14% Y/Y in Q2 2025 due to historical customer losses, but new customer sales and expanded revenues with existing customers offset partial shipment market softening.
• Cost reduction: Operating expenses reduced 27% vs Q2 2024; managing costs in alignment with revenues and maximizing gross margin of proactive services in Precision Logistics segment.
• Organic growth initiatives: Focus on expanding revenues with directly contracted PeriShip customers; new customers added in 2025, marketing generating inbound leads; developing relationships with additional freight carriers, now have relationship with 2 carriers handling majority non-USPS parcel shipments in US, integration takes months but reinforces confidence in 2026 organic growth; technology team shifted focus to integrations with shipping carrier relationships.
• Strategic growth efforts: $6.1 million cash at end of Q2 2025; evaluating transformative and tuck-in acquisitions; adopted treasury strategy of loaning portion of cash to Zen Credit Ventures for 9-month promissory note to improve interest income from ~4% to >8%.

PeriShip revenue in the second quarter of 2025 decreased approximately 14% versus the second quarter last year, primarily due to large customers' losses in 2024. However, new customer sales and expanded revenues with existing customers offset some softening of the partial shipment market. Precision Logistics segment's proactive services have maximized gross margin. Authentication revenue in the quarter was $27,000. Revenue for Q2 2025 was $4.5 million versus $5.4 million in the prior year, a decrease of $0.9 million. Gross profit decreased to $1.6 million in Q2 2025 from $2.1 million in Q2 2024, with gross margin at 35% in Q2 2025 compared to 39% in Q2 2024. Operating expenses were $1.9 million in Q2 2025 versus $2.6 million in Q2 2024, a reduction of approximately 27%. Adjusted EBITDA was positive in Q2 2025, an improvement over Q2 2024. Cash balance as of June 30, 2025 was $6.1 million, an increase from $2.8 million on December 31, 2024.

• Expect continued positive cash flow from operations in the second half of 2025. • Focus on organic growth through expanding revenues with directly contracted PeriShip customers and disciplined cost management. • Anticipate organic revenue growth in 2026 from business development and marketing efforts.

• Difficulty in predicting timing and probability of transformative or tuck-in acquisitions. - Seasonal variations in the shipping marketplace may impact the integration of the new freight carrier, as shippers are reluctant to make changes during peak season (Thanksgiving to Christmas).

Q: What is the authentication revenue in the quarter?

A: Jennifer Cola responds it was $27,000.

Q: Excluding the impact of lost business in 2024, what is the growth rate for PeriShip?

A: Adam H. Stedham states it's hard to give a clear answer mathematically but mentions single-digit percentage changes after puts and takes.

Q: What is the impact of the new carrier on revenue in the next few quarters?

A: Adam H. Stedham says integration with the new carrier takes a couple of months, and the build will materialize more noticeably in 2026.

Q: What are the capital allocation priorities?

A: Adam H. Stedham says focus in 2025 is transforming PeriShip to a scalable model, and evaluating strategic acquisitions to deploy capital for shareholder value.