IDN - Earnings call transcript Q2 2022

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Operator

Greetings. Welcome to Intellicheck Second Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the to turn Relations. Jackson, now will conference Gar over Investor I you, may Thank begin. you

Gar Jackson

Good operator. us second call. the you, and today Intellicheck's earnings XXXX Thank quarter afternoon for joining thank you for

as words I we statement. amended. Reform or and forward-looking as by Act well Securities and These forward-looking forward expressions in Reform beliefs such they statements to forward-looking will management, expectations relate Before are the statements conference currently of statements information looking used the company started, take few in to the of read made Litigation Certain were minutes call similar on its the conference assumptions within of management, management's Securities expect, as Litigation current meaning believe, identify the of about statements Act When as anticipate a this this XXXX. within available based XXXX the to constituted events. company's call, as will, Private future get the any meaning encourage Private

alter resulting projection circumstances as or or in susceptible forward-looking information, uncertainty obligation inherently to forecast, disclaims obligation update are otherwise. whether changes, subsequent and they changes any to or any undertakes statements, expressly the and to from company and such if no events, its new As

issued to term. XXXX. use and listed Securities forward-looking time context the to definition, contained today's information EBITDA Safe the XXth, the call for further Commission. this under the Factors press filings use are adjusted release reconciliation is in afternoon and for on statements today's with Risk of financial from Please Additional Management Harbor the will this time concerning the Statements headings and today, refer Statement term as of company's made in of company's call. August Exchange

with results. Chief QX Ishmael, Lewis will begin Intellicheck’s then Officer, will call today's Financial the XXXX Officer, Executive Intellicheck’s financial and We Chief who Bryan Jeff discuss

and to call analysts I call be from remarks the take will hour prepared will we institutional Following limited over investors. to Bryan. questions our turn their and now one Today's will

Bryan Lewis

to on that joining both to groundwork showed us you, and have sequentially second sales believe on we laid solid forward. you XXXX thank Thank the call. Gar the generate momentum quarter everyone We and SaaS we growth year-over-year earnings for and our going front

review I highlight then I that and our few Jeff results further of Before will detail into go all the with in will you, financial later a call. of

million at was Our SaaS Gross over QX revenue remained to XX% margins and XX%. up $X healthy versus grew sequentially year XX% XXXX. last profit

noteworthy the investments changes efforts During sales down. in quarter, company's we our organization future make our top some progress to furthering essential major made the in from the in including

to years of Chris as President forward For well responsible of accounts experience brings teach our across the them for success. we openers, some deals. excited important management large as sales for largest prospective needed that and we is Meyer of sales. us. new that promoted Chris closes our as Chris Vice This thoroughly is sell step and for team understands Chris Intellicheck signing process into to to at experience. the an Senior knowledge installing every lead been has vertical

both financial of to with and manager people I when our reporting right addition the I the our experience we not sales evaluate relationships We understand industry's Ishmael services. the business sales grow accounts. process This the them with developing of driving metrics an we that made to with four the are to sales our and maintaining people team with for knock new sell I we team, new believe They a doors, performance, he commitment from that CFO the I'm underscores reporting Chris, we also analysis core drivers. for major at and growth will Chris' our progress additional growing who and of the pleased the vigor the ability us the perspectives our this business of I but believe had made about individual on to market excited to finance by team. takes has sales our the get new responsible to to team products on of going Intellicheck, it to the that better around in not sales With industry account and have will our drive provide and that our to with their better way at bringing and directly analysis and be prospects. team the record just well-positioned companies the our cyber Chris' aspects proofing and table we was we the all understanding proven and also changes and successfully the track investors Jeff knowledge XXXX. with growth. you our business key told business Proper our new customers into to to addition with and realizing brought structure, of guidance successful you This what have are any past. manage effectively right core Between growth key has of to and existing to business already Jeff of coupled allow open. the be is also is analyze these am and analysis Each very extensive clients, and to are that our who teach now increase people significant identity security in have

experience He extensive on Given that experience, SaaS contributions his operational looking the to multiple forward come. leader significant a team. the certainly strategic organizational deep I'm managing yet executive expertise and functions are to and become Jeff's valuable and has

our clients pipeline. to now Turning and

branches clients, during we services that QX. company four XX% driver more bank believe per financial growth their bank the Starting opportunities. number the you continued a has last branches Looking platform. three, the generating their now million financial revenue transactions completed rollout to which seeing year. the we number at continue the completed was on quarter will our over are to quarter with they company mobile services X of see rollout updated of I than I financial services

selling provider. bank use the from to home using use recall You the all There customers wares this may furnishings of the were needs in employees lobby full tablet. that in a case banking new they a come that They a card credit and and quarter. several process other their competing onboarding took retailer kitchen completed cases

in-house directly location on store paid cards model. this us a client to goods Previously In bring they label credit began per addition, a sporting they provided to. white

As bring revenue model. move per they locations the they in-house to higher the transaction

in QX. these things price Last sequential we about applications. three-year moving an increase flat model year-three. transaction of increase XX% increase first and the off pricing revenue quarter the a parse deal in of XX% a for a that XX% the All percent versus in also retailer with prefill to use renewed They Intellicheck spoke led have year, to in year-two and to a

completed use it early they the transactions of From double like of volume. receipt would look no returns. case QX During would the transaction this new rollout

QX our across QX up most grew the with range. transaction QX a versus XX% in In versus retailers minimum volumes XXX% fact large up were XX% in Overall, QX. volumes in

marketplaces earlier regarding they reselling January omnichannel running banks, increasing. been steadily transactions. our an as moving example towards began have that a bucket, healthcare company of in working We announcement that so multi-buyer down has less an transactions and process agreement They part are in sells XXX,XXX. volumes with going and pre-purchased remaining also than bucket systems. is their to validation had part ID seeing of to and are more platform They related this continued an said They I would strong tools of our purchased had to have another and XX% their metric forward. results are resellers, XXX,XXX we of strategy onboarding pre-purchase now an be

also as as so also case, the updates through unit I banks concept. seems bank out or some regional banks of that with We audit now. on InfoSec the being wanted going It at services process you all going the same it but is news larger mobile spoke I good to our longer the pilot the proof security proof share about about still no on with launch. top to without not last of they that the process call we The said doubt The the us review in their happening, three continues southern process. the and of is review, the go while thought in had concept the the work have business banks continuing to turned XXXX they to that additional through are our that have The which to be with banks. with one identify are much across is, we headquartered audit that they could could pass is through. bank large list. start to the the adjusts will locations, high priority I on used, areas InfoSec right of banking be we're pretty

to completed of concept, over the will working we check This now retailers. colors. successful signed the process need retailers XX,XXX to for criteria based They as Their to direct-to-consumer case a flying passed precursor for devices for well our home of in a solutions southern licenses, other be The are with the financing existing and a major a their provider read regional scanning with bank loans their provider is of full online healthcare of of proof financing use their initial rollout. needs. has one as of improvement the concept software success all hardware After proof barcode.

an firm client, to sense interesting development. had it decently that my there's been grow been financing be could a very alone new this sized While

of they that a were firm purchased global a management firm, proof is leading wide banking the securities by financial services. and a While multinational that range was provides of investment concept investment underway,

loan spoke negotiate of wanted the so firm MSA to saw later. with our services, the them, is the and because our investment purchaser process, not investment want other This the a loan the to highly During another internal did MSA signed not be cases for provider. use providers

a developments us. delayed growth by significant we the to believe initiatives. In closing, I'm on these part opportunities. provider, focus excited of citing leads original While this changes larger continued all other loan I taking are made where have are that the

an use as that presence expand We our cases. demand physical and our more providing digital identity on solution advanced for continue adaptable both global a is clients to platform validation

clients identity We with defeat attracting choice, believe equally by that will dedicating a certainty. so our of be that near global a new solutions our out effective ID in because risk inclusive stand we freedom signals on clients in fraud. that deliver We a solutions, perfect additional platform marketplace. to this confident enhanced have first technology give validation all multifaceted government is issued remain built to step our critical driven I the critical

have continue Additionally, I age we and prospects will while access I I changed. I increasing the our and Jeff. and was enforcement in believe remain law remain strides to that a Early by I ahead feelings future I that lie excited controlled future underage call this not held. products is excited I preventing the you effectiveness my told and tenure, bright safety. the believe a leader by to company. that in opportunities in now the there remaining turn over venues My energized for innovative confident

Jeffrey Ishmael

Bryan. you, Thank

$X,XXX,XXX quarter key attributed to the approximately to equipment noncore last first to compared hardware of The Turning in declined XXXX. results. entirely of revenue is million the year's of our the large of customer. $X.X a versus period last year sale second decline had XXXX exceptionally half nominal same quarter noncore $X,XXX,XXX to to Revenue sales that XX% for second now

quarter. percentage The compared Gross lower second of the driven SaaS sequentially for of and in profit of was revenues basis, period grew sales prior for from profit achieved for Our to versus by higher record to same period company for of quarter of for the XXXX. quarter percentage a a revenue gross second the increase XX% same XXXX. the the primarily SaaS growth to SaaS the equipment XX.X% was quarter. as On XX.X% $X,XXX,XXX current $XXX,XXX XXXX XXXX the $X,XXX,XXX only revenues

Excluding XX.X XXXX, diluted quarter $XXX,XXX $XX,XXX XXXX period of for same Adjusted quarter for the second average and diluted the company expenses primarily per the a for of reported diluted second and equipment XXXX selling, net the were period revenues XXXX. noncash compared The quarter XX% sales share was of respectively and XXXX. compared percentage loss $X,XXX,XXX to of same compared same the XX% professional to period gross personnel for The and $XXX,XXX of of marketing, consists weighted expense. for net The the Operating loss the of common the Included higher development share the marketing XXXX. shares for $X,XXX,XXX same period for for of of was $XXX,XXX a to of second for increase expenses. expenses, a XXXX. compared was of second XXXX a same equity XXXX the and $X.XX loss of was compensation expenses of and and for of XXXX the within both our which quarters expenses XXXX of XXXX administrative, driven quarters of The operating loss XX.X for the period by loss to net June of per $X.XX of $XXX,XXX general were XX, million EBITDA to fees, the loss increased of profit XXXX. research $X,XXX,XXX quarter second quarter second million as for XXXX. compared net ended

resources. liquidity to the Turning company's and capital

and As million equity facility. revolving had There cash under The $XX amounts has million, Citibank $XX.X of assets the credit as current current facility XX $X XXXX secured is million of of no stockholders' total collateral with June of of outstanding million. this million, by $XX.X capital $X.X are accounts. that company a liabilities assets company minus working defined

As of the million. operating the net carryforwards June call I'll now XX, your company questions. operator over the take had of to loss $XX to approximately XXXX turn

Operator

question D.A. Please first you. with Thank Davidson. Our from proceed. [Operator Kessinger Rudy Instructions] is

Rudy Kessinger

guys. questions, my taking for thanks Great,

growth, I quarter? I'm get you of should it branches to should know, kind called fast a sequential, three, out if of the when how we live, think really get I to when, know, nice, And into quarter-over-quarter what you live go sense like a growth had in it a went basis just guess on expansions some I'm guess of those look see you just XX% trying with the sequentially at you number about You trying QX? we of sense

Bryan Lewis

Rudy. Hey,

the all to when got volume So and out location, equal. rolled you've all a remember, is also equal they are same the they're varied and too high they low There's thing, and branches, you not retail the other not roll volume thing stores. out certainly

that come most say the month given data. historical So take of walk will located, the say, big say it's And that how us compare month with bit to fact it you a did in? to it next So hard volumes the the like, without -- in is to and don't does where having they're it's after? and know where pretty

a happening I it's the entire say, chunk number bank a price store, quarter went say So continuing. retailer, already the branches the know four, for was example, number Part of goodly sporting off done. senior not or outdoor complete what's with It through of rolling answer. the still that's out of

of things. blend it's a So

Rudy Kessinger

FinServ about you see can so, Okay, those and to Have did we of increases on I and we're included take those renew and had you yet QX. when this should -- two those expect talk kind then about you hear quarter if last that you in going price and quarter effect? didn't in those talk to what you you three

Bryan Lewis

allows so FinServ that late on them Yes, three, them extend but double the single, lower done, quarter. know, contract. we've their I'm digit contract renewals renewed, can you like, the sort numbers two of the they're And initial sorry, got increases lower in they started or,

see increases well same yes. that's until So beginning it. going in we 'XX. and the the probably coming types increase won't that of of in But Correct,

Rudy Kessinger

are Chris last eight. the kind And guess currently the I the four, then said had the role, you others lose it you said sliding four, reps it. to XX any of bring SVP you got added down into nine you gets did you that or then quarter it side, on sales quarter? would with in Okay, you And at so

Bryan Lewis

got another on interestingly, here, before right Yes, excellent and call candidate then one is gone I accepted. other the

sales accepted. now have accepted. five The manager there's people account So has

started, next just some Some are week. starting

place the them. got a for starting we week in put great are Some program training after. We've

now. we're so six, counted XX at we So right

Rudy Kessinger

Okay. Can I just ask…

Bryan Lewis

Chris Chris, sliding out, will yes. Including be

Rudy Kessinger

with And about think sales or near still then to business just EBITDA And additions, should modestly level then the intentions sales beyond? of should QX or negative in additions? we run expect near term you about term, how and Okay. of that lastly, that in secondly, are we level OpEx the breakeven to slightly be your negative given near

Bryan Lewis

looking by at it's people people. we're goal and because up on get and point to huge. My to want in down not so not purposing in breakeven, board, like continue add I Sales not I'm adding exorbitant those is cost to of so salaries millions we're a bringing it, dollars nothing where are to

automotive As bringing But can to is very that we need I we inbound markets, focus right? seeing who had we lots well of the where look leads understand fairly and at those it I into it the in also financial it's as we services. not in whatever us know, on have, people could apparent automotive language and lot I and But can get we're understand need that hit have heavily is the and because notary, of understand and that verticals, doing of we're that. if gaming, salespeople well we think that go people we them. the that attack do that. opportunities as we're really people So a gaming

to vertical TAM in sense we hit. we're to see long that a enough to that continue it as it So as with makes going add, there's

Rudy Kessinger

back Great. you. Thank it the from I'll me. in queue. That's jump

Bryan Lewis

Thanks.

Operator

proceed. Our Capital from with Rhee is next Please question Jeff Craig-Hallum Group. Van

Jeff Van Rhee

the Yes, questions. up a few sales my on taking side. for Thanks Great. follow to

do in his what learned in time worked, just work? Chris, guess say? didn't firm and, the then many in see those you same what terms of clear, includes with a you the of things Bruce, vein with are think from let's be changing the nutshell, I that how I reps, departure So how of quota to XX, what And of on year just that the a tenured

Bryan Lewis

to Right I'm going now one X.X guys. would exact year can't be them, start of I of tenure say tenured a the the date of remember because

industry tenured, are of are guys from we're building so the sort So, we're even though a lot are that had tenured in the that's phase, what but younger, We the but still record, less we looking the think who excellent irrespective building And came good lot a track phase, I a of sales excites me leads. hire of people learned. is, bringing were industry. but one really things of in in a to a just of that good

we that mistake. or think I I is learned a learned, that

So we're they people, cybersecurity are how also same hiring proofing they to know know people the in. companies identity from selling directly because that but other products or get

into cybersecurity So we to and be torturing who really can get cutthroat reviews. InfoSec look often for cybersecurity selling They to the where us banks. go those because on are people, we good need guys are got us the

we who that's Stick you're So the what I in. somebody think that knows learned. vertical to

Jeff Van Rhee

I I in XXXX I just three value for should XXXX, it's but here, looking it's I get of to Helpful. a it you're XXXX? you for bookings not decelerating revenue of want what a two look mirroring at use each know year? guess just a to billings sense model to of formulate quarters, you we trying are If, what -- at guide does as try deceleration, is what shouldn't quarters, and the here we perfect go for realize if we as the the would of of And off does billings? that, there define acceleration bookings, been metric, four questions or but kind don't

Bryan Lewis

aspects of question? you want part any Jeff, accounting the to that That do of was things? take

Jeffrey Ishmael

on specifically day-to-day, about and things go all to in place. talking Jeff, I'll we the the the we a in was been average are getting as average in mean, ones Yes, those metrics weeks month-to-month data is last into that you're And over talking that. I That QX so week-to-week, jump going dialing lot on that that of the length, wealth data we've been about that eight silenced. been a contract is Bryan that SaaS Bryan one metrics period. billings really have that. on thrived of has customer, the focused has per of of

So, that period work QX is a the during as process address in we systems. our

Bryan Lewis

Yes.

out out that and and very properly force in I'm NetSuite able we as things to the on want that is And you out to way report metric the it, tying started installed be those is, important, I difficult. But the the me the important things what able and things, But the got that guys by be ACV I here are as and company. the remarks, we of to sector of we Jeff to one until begin way better. that's think report So to can driving because right ready publish very getting model and that. is sales of it types should prepared to are help things those getting said an

Jeff Van Rhee

Okay.

it data back, to was year measurable then to I sales digital was, And quite going, I'm I last quantification? progress about the bit think any think point of trying a later last know emphasized channels revenue, there, trying update partner any you get there? XX% had as on

Bryan Lewis

consumer about all but couple Buy more clients about loan that signed at. I retailers else or who signed good Pay just XX%, growing. are Later we're a digital. is coming we We of Yes, everything the talked purely digital, are smaller be the to a that They the into lenders digital is whether Now doing that only that because online, it's are purely all it's continues example seeing, XX,XXX us digital. We've so other certainly

partners, but we some call, just, look We've about all well. they bought but staying it's, XXX,XXX very to partnerships everything And automotive looks the And is good the we need the flat, bucket. they analogy. grow coming it's of tide realize continue it question a in rising good it's space on-prem the of example that there's percentage it transaction the proofing, in the from Yes, to just succeeding companies at kind at revenue other doing the, made It's So space. be biometrics, yes. are the, first then but other us. we one to we are continues they was, identity talked another so it's because a ships in other that like may

So we've of lot got a the in things works.

I it's focused on important and very a think a lot it. me channel for we've

So a at or company, can automotive, tools they to company everything we're need. selling to selling whether all it's technology retailers systems we're a simple to that because looking provide signals we compliance them link the to and

Jeff Van Rhee

in it. comparable direct Got I the last us to given last, it for the -- and on One you for have number. focus if know the sneak and wanted quarter? you quarter you the that more could the historically prior but Do I implementations quarter implementation/integrations, just had

Bryan Lewis

with we're and it For bringing I that new meaning them we've of implementations on we I that of things in of numbers four. could direct this also, you retailers and front the don't quarter sort get count, had have I did other know those. me. number of if certainly multiple like

out there. reasons from cases at Now is transaction you one to of them a I'm the our growth on get kind is what accounts, because And expand certainly that's those use why, clients, new but existing numbers and of way at I'm very and them, comes of happy in volumes look put with easy. focusing land existing the lot the

Jeff Van Rhee

Thank great. you. be that'd Yes,

Bryan Lewis

Yep.

Operator

with question Grondahl is Mike proceed. next Northland Please from Securities. Our

Michael Grondahl

for is on Mike. this Hey guys, Luke

and and that's Platform going additional that feedback touch with migrating any on X.X that? have how the to clients guys on platform, you been hearing wanted Just to

Bryan Lewis

so more work for and clients. just, was our faster it wording systems was our X.X again, just so make Yes, convenient that internal better, it to

or as X.X, So it. market every is new we on platform Identity client the

So it again, clients versus take I'd about API, to Connect that because it's in a say XX% them the link. allows thing because to API that signals. risk it's we really made seeing our just faster our simpler more about We're for it what old one to simpler still

behind is still to that's clients things happy core that, the wow, our that same. that. are basically the heard easy So, only is connect engine far with to we've The and it

to service. time, client Happy other this So well. we we months for the day I past, use had the it's that's on to a the XXX% ID, the for all right say the, the run had wood now. for service same very up that knocking a so check working I'm past to six that

Michael Grondahl

if That's then, last touching to here don't in this two know pilot great but hear. beginning talked missed quarter, I major on guys earlier, studies I Awesome. And banks you had QX. just about

Just have how of if you slated are have, wondering started those to those long take? and guys kind

Bryan Lewis

Yes.

of does InfoSec mostly in on don't to it just that in the So go we to use do Southern our without place now, pilot so what's review into of web two the could them. to touched connecting going product, the We done. that want knowing which go one do so weren't because thought need remark, it an They they were those we folks we're doesn't banks, them if business we work, without review require to place. integration. going InfoSec no team the and said, pilots

questionnaire them they're to about it reviewing and we're delayed the got review, that's now. while three ago weeks InfoSec So we the doing

the with went flying passed every one, they colors. The off, success other it, criteria pilot loved

what they to are make They read Now station. checks looking the, they they just scan provides software the sure have devices speaking are telework they company the at all is, the can their barcode. physical to need on already a with that the upgrade that that that

need that they installed once the to stations. telework that they at software get go all So ready they're

Michael Grondahl

Well, nice thanks guys. questions taking Okay, Congrats awesome. a quarter. for on the

Bryan Lewis

Thank you very much. Have a great night.

Operator

the like conference We to closing back turn over have I session. comments. reached Bryan end question-and-answer to the our would of for

Bryan Lewis

today. appreciate us joining everyone Great, I

in was quarter this heard progress. by you've As really defined change

best to the clients on I both with opportunities and and yet continue focus believe find exciting. market shape very to We in We different is our come. verticals which to new organization existing

have all you So of rest a and day. your great thank

Operator

you. today's does conference. This conclude Thank

You may this participation. time disconnect your you your for lines at and thank

Intellicheck (IDN) 11 Aug 222022 Q2 Earnings call transcript