Q2 2021 Intellicheck Inc Earnings Call
Yeah.
Greetings and welcome to the Antero, Jack <unk> 2021 earnings conference call.
At this time, all participants are in listen only mode.
And answer session will follow up with Brendan peasant.
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Thank you operator, good afternoon, and thank you for joining us today for the intelligent <unk> second quarter 2021 earnings call before we get started I will take a few minutes to read the forward looking statement certain statements. In this conference call constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 as amended.
When used in this conference call words, such as will believe expect anticipate encourage and similar expressions as they relate to the company or its management as well as assumptions made by and information currently available to the company's management identify forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are based on management's current expectations and beliefs about future events as with any projection or forecast. They are inherently susceptible to uncertainty and changes in circumstances and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward looking statements, whether resulting from such.
Angel is new information subsequent events or otherwise additional information concerning forward looking statements is contained under the headings of safe Harbor statements and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission statements made on today's call are as of today August 3.2021.
Management will use the financial term adjusted EBITDA in today's call. Please refer to the company's press release issued this afternoon for further definition reconciliation and context for the use of this term.
We will begin today's call with Brian Lewis Intel Jackson, Chief Executive Officer, and then Bill White and Telecheck, Chief Financial Officer, who will discuss the Q2 financial results.
Flowing their prepared remarks, we will take questions from our analysts and institutional investors today's call will be limited to 1 hour and I will now turn the call over to Brian.
Thank you Dara and welcome everyone to the 2021 second quarter Intel check earnings call. As you saw on the press release, it was a productive quarter driven by reopening and new client Onboarding.
Turning to our progress through the steps, we have taken towards increasing the size of the sales team raising awareness of the company, thereby increasing inbound leads and the advancements we have achieved in rounding out the telecheck platform to provide many more risk insights for our clients.
In addition, we are in the passage of revamping, our pricing model to increase pricing upon renewals.
Much of anything during my prepared remarks, but first I'll highlight some of the key financials from the press release.
Total revenue through the quarter were just shy of $4.8 million SaaS revenue was just over $3.2 million.
It was SaaS increase of 16% over Q1, and a 93% increase year over year.
We didn't hear the top of the hardware that we discussed on our last call for the Tullow workstations for financial services company number 3 during the second quarter.
We had a net loss for the quarter was $738000 and adjusted EBITDA of negative $46000 loss is primarily due to our investment team head count for sales and development teams. In addition to marketing spend to drive our growth initiatives.
Same store volume to continue to improve but why are they on their guys. They are still net up to pre pandemic levels.
On the allowance call in April we were down 10% to 15% from April of 2019, depending on the retailer with.
For the second quarter that and true to down 10% overall for the full quarter versus 2019 with improvements each month.
I am pleased to say that the digital side of that business continues to increase each month.
Increase in digital transaction volumes of 484% over the past 12 months.
Does he have any undercounting as some of our clients use our API for both physical and digital transactions and they look the same to us.
Currently on a conservative basis digital transactions represent about 6% of all non age regulated transaction.
Turning to a few of the major financial services clients and what day idle during the quarter, we're seeing continued growth in net partnerships.
Financial services company number 1 has an extensive client base of merchants they provide credit cash for.
Many are small change or a single story to tell extensive merchandise like jewelry.
These are bank branded cards and the retailer is that the 1 on the hook for fraud.
Our new integration solutions on a handheld device or a web portal and the perfect and economical ways to stop the retailers fraud losses fall quickly and efficiently as.
This network is over 14000 merchants nationwide, we began joint marketing effort with number 1 to introduce a solution to each of these merchants.
Financial services company and number 3 completed the rollout of phase 1 for a national home improvement chain that is initially implementing us at the self checkout point of sales systems.
Continuing to work to bring alive. The other Pos systems assisted checkout customer service and commercial checkout.
As mentioned they also took delivery of the first half of the hardware order for the channel workstation scanners.
You may recall that they put these scanners in place so that we can validate passports in addition to driver's licenses and state Ids.
We anticipate that the second half of the order will be equally split between Q3 and Q4.
Installation is currently underway and they anticipate a Q4 rollout.
Financial services company number 4 is completed the in store rollout of the Midwest home improvement chain and is expected to go live with the digital channel for that to other retailers this quarter.
We continue to find new use cases for authentication.
In order to prevent account takeover from web and App you changed.
Your privacy settings, they will ask you to validate yourself.
Financial services company number 8 completed the rollout of our services into the online application process and are continuing to build into their mobile app with expected delivery in early Q4.
Outside of our core financial institutions, we brought our Baltimore based credit Union live in June they wanted to stop that immediately so they are using 2 or that no integration products day validate argues for new account openings and all new loan applications. They are now looking at our API is to work on integration to their core teller system.
To use our platform for all teller line transactions.
We're also pleased with the execution and the other element of our strategic plan.
We signed deals with several interesting software providers to enable them to use our technology inside their applications as resellers. The first exhibitor guide or of loan origination and servicing sat here.
<unk> already identified their first client and are expecting to take them live near the end of the quarter.
Second provide software to help customers apply for credit online or in store kiosks or multiple credit providers.
I mean, it's ongoing with this reseller often that certain of the transaction volume aggregate. These resellers may deliver it shows that we are making good on our plan to extend the reach of the sales force through channel partners.
And you can see we've been pretty busy and we believe we will continue this pace.
Optimism is based on what I touched on earlier, our commitment to take the critical steps that are key to continue on this trajectory.
Our investment in our sales team is paying off and we continue to expand the team with the addition of another senior sales person during the quarter with more hiring in the pipeline.
We have said before given the amount of opportunities. We see we will continue to hire sales people as fast as Bruce feels you can effectively train them.
Given what I'm seeing from the growth have been very realistic pipeline of hiring.
He is working and that won't be used to keep it up.
Marketing is also having an impact in a number of qualified sales leads that have increased 6 fold over Q1.
While many of these leads are in the age regulated space. The rest show that the awareness of Intel a check with increasing incentives from potentially large clients as well as significant channel partners.
The nice thing about the age regulated clients as they are quick to call. It's been a highly profitable, especially under a new pricing model.
In the age of regulated space that accounts for approximately 6% of our SaaS revenue under the new class model, we are earning an average 5 times as much. So I like this type of client with a low cost of acquisition I would say that as impressive as the marketing initiative has been so far we believe it is only in second gear.
I mentioned, the new pricing model and we view this as another important element in our continued success clients generally have an idea of how many transactions. They will do in a year or they certainly do what we need a little time.
New contracts in renewables clients commit to a set number of transactions per year from.
The more they commit to the lower the Pos the farther in advance they prepay will also lower their cost per transaction.
Good day Lowball, the transactions and run out they can continue to pay at the higher price and commit to a new contract at a higher transaction volume.
This has been well received by our clients even as we raise these out renewal so far all the minerals had been at higher rates, which again, we believe shows the value our clients place in certainty our platform provides.
We continue to expand the capabilities of our platform.
This allows us to expand into the much larger identity market to provide <unk> tools to financial services income tax.
We are working to bundle their products to help the growing number of fin tech companies, some who our clients perform their K why she functions more easily and quickly.
Improving our internal technology, so that we can be agnostic when it comes to the services that our clients want us to bundle for them.
We plan on working with multiple partners for different services. So that our clients can take the service day thinks is best knowing that they are starting with our IV validation tools, which provide the most certainty.
We continue to build on that channel partner strategy, including discussions with companies that are often considered competitors, but actually do things entirely differently. We do we feel we can become the best first step for their clients as well.
I was recently speaking with the market research analyst and he said something that really put it in context from me. He said in speaking with the bank client is from consults with declining told him that OCR was 60% effective and followed up with.
With that I might as well flip a coin.
Through our investment in sales and marketing people are beginning to understand we are different and that we bring certainty to the transaction as opposed to a point in time.
We believe that our investment in expanding the platform will help us bring that certainty to more markets.
I'm excited for <unk> future.
With that I will turn it over to bill to discuss the financials from more detail.
Thank you, Brian and good day to our shareholders guests and listeners.
I'd like to discuss some of the financial information that was contained in our press release for the second quarter ending June 32021.
I'll begin with our second quarter results.
Quarter over quarter, SaaS revenue grew 93% to $3.234000 versus $1.671000 in the prior year total revenue for the second quarter ended June 2021 increased to 160% to $4.797000 compared to $1 million 842000 in the prior year.
Your comparable period.
Gross profit as a percentage of revenue was 69, 4% for the quarter ended June 32021, compared to 88, 6% for the quarter ended June 32020.
During the quarter, we sold scanning equipment to a bank that it's continuing to rollout our software to their bank branches, which are normally sold at lower margins.
Excluding the sales of hardware and both periods on a pro forma basis gross profit as a percentage of revenue was 93, 3% for the quarter ended June 30, 'twenty, 1 and as compared to 89, 8% for the quarter ended June 32020.
Operating expenses consist of selling G&A and research and development expenses increased by 69% or $1.665000 to $4 million 67000 for the quarter ended June 32021 versus 2.402 million for the same quarter in 2020.
The increase was primarily due to higher stock based compensation costs increased head count and expanded research and development efforts.
The company posted a net loss of 738000 for the 3 months ended June 32021, compared to a net loss of 760000 for the quarter ended June 32020.
The net loss per diluted share was 4 cents versus a net loss per diluted share of 5 cents in the prior year period.
Adjusted EBITDA for the quarter ended June 32021 was negative 46000 compared to a negative EBITDA of 619000 in the June 32020 quarter.
Interest and other income were negligible for the quarter ended June 32021 and 2020.
I'd now like to focus on the company's liquidity and capital resources as of June 32021. The company had net cash of $11.9 million working capital defined as current assets minus current liabilities of $13.3 million total assets of $25.4 million and stockholders' equity of $22.1 million.
During the 6 months ended June 32021, the company used net cash of $1.2 million compared to net cash provided of $1$1.2 million during the 6 month period June 32020.
Net cash used in operating <unk> was $1 million and 76000 for the 6 months period ended June 32021, compared to 262000 for the same period in 2020 net cash used in investing activities was 182000 for the 6 months.
6 months of 2021 compared to net cash used of 110000 for the 6 months period ended June 32020, and we generated 77000 for financing activities for the 6 month period ended June 32021, compared to $11.6 million for the same period in 2020.
The company has a $2 million revolving credit facility with Citibank as a secured by collateral accounts. There are no amounts outstanding under this facility.
We currently anticipate that our available cash as well as expected cash from operations will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.
As of December 31, 2020, the company had net operating loss carryforwards of $17 million I'll now turn the call over to the operator to take your questions operator.
At this time well be conducting a question and answer session.
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You May press Star 2 if you would like to I need your question from next year.
Thank you speakers.
If I could pick up the handset before asking your question.
1 moment, while we poll for questions.
Your first question comes from Mike Grondahl with Northland Securities.
Please state your question.
Hey, Brian and Bill Congrats on the quarter.
And especially the the 93% SaaS growth year over year.
Is there any way you can at least roughly break that down between maybe new accounts existing accounts and price increase here just to kind of give us a flavor of the drivers.
I'm going to state a majority is gonna be from new usage at existing and adding a new clients because our big our larger contracts are coming up for renewal now.
2 main ones.
With them before and number 3 are now and at the end of the year.
Say that a small but significant portion I guess what is the percentage of what it was in the age restricted space, but it's still a small portion of the revenues.
I'm going to say that most of it.
A good chunk of it are the firms that we have brought on over the course of the pandemic that weren't really producing at the level of a normal world and then the rest is going to be new clients, but off the top of my head I don't have that.
Specific breakdown to that.
Got it got it and.
Implementation did they bounce back in to queue and kind of what does the backlog look like for new implementations.
Sure, but you just picked up those numbers since you don't really know.
Just talking about it before the call.
[laughter] implementations are completed through the end of July were 19.
And there is a about 40 in backlog.
Got it and Bill would you expect those 40 to get implemented.
This year still.
Uh huh.
We're hoping.
Some of that some of the.
Some of the holdup would be.
On the customer side, Mike and how how fast they can move from an it perspective, but we're moving in that direction. We're doing everything we can to get it implemented.
Right and some of them are retailers and other things like that so it's you know then they've got to get out and get it to their clients and things, but you know.
Generally you know.
Again retailers they'll tend to lock down anything in Q4.
In terms of touching your point of sales system, you know they don't go much past mid October.
But the good thing is in the sort of the expanded world, we're selling to them, particularly with retailers and then also banks doing for their own sort of tell their workstation and the other things. They don't have the same restrictions or fears about attaching their point of sales system during the holiday season.
Got it great well, hey, nice to see the SaaS growth again, thanks guys. Thank.
Thank you.
Yeah.
Your next question is from Jeff Van <unk> with Craig Hallum.
Great. Thanks for taking for.
Taking my questions guys just a couple from me.
On the pipeline question I'm I might've missed it or the the comment in the prepared script. I think you said leads were up 6 ex and you were coming in and commenting a little bit on the on the pipeline was just to be clear was that the quantity of leads or the overall value of the leads and then just maybe a little more while you're on pipeline talk about exactly you know sort of how the makeup of that pipeline has morphed.
<unk> here.
Yeah. So that was overall leads coming in so sql's and wanted to be clear and just if it wasn't the majority of them are coming from our age restricted product sales, which we have dramatically increased the pricing of.
And we find that very very profitable business because the.
The transaction costs are pretty high so and I like it because it's quick business turns over you know.
Cost of sale isn't that expensive.
We did also in what I'm happy to see is we're seeing a lot more.
As you know potential resellers and large clients finding us and in the past they couldn't so theres some very interesting.
<unk>.
Prospects were talking to right now.
Talking to put our product in their stuff for either age verification or MLK YC stuff for loan origination and those types of things so.
Predominantly lower.
Revenue, but quick sales and then some really good large ones. So I'd say the marketing is working.
Yeah, Great and then on the leadership front, obviously, you added Garrett and Bruce and <unk> been broadening things out, but specifically with Bruce.
You know since his arrival maybe spend a minute on the sales front.
You know just where are you in terms of head count additions I think you referenced 1 additional in the quarter, but just goals for the end of the year and maybe a little more color about what's changing in the sales org sales structure.
Yeah, So you're up to 10 people in the sales organization.
I think that you know there are a number of things that have changed we've got.
Proper CRM in I think Bruce is doing a great job of training. The people. He brought a lot of identity knowledge to the table.
What are the other things about depend amick is it's easy for us to now hired anywhere.
Long Island is a great spot, but where we were at made it difficult to hire people now are getting talent from.
From anywhere.
And I think the big change is probably Bruce's management and training style I've got a super motivated team.
They came in the compensation plan, if they bring in the revenue and we expect them to given the margins that we have they can use very well compensated for it so we got.
Really good competitive hungry team out there.
With that I think is really good sales leadership.
And 1 last from me if I could then on the on the distribution front I think you talked about.
Partnerships with some new avenues that youre going down are there any splits at gold's you've established in terms of in terms of what you want these partnerships or new partnerships.
Presented as a percent of revenue or just give us a sense of the magnitude of what you're working on there.
I I think that it could represent a significant portion of revenue.
If you look at a lot of our.
Our OCR competition, a lot of them are basically Intel inside.
And we can and should be doing the same thing I think it's a wonderful way to expand the sales force because there are a lot of products out there that you have.
No indication tools built into them never spent a lot of time talking to those folks because nobody had ever heard of us.
Now that were being mentioned more in trade research journals and you know some of the papers put out by the likes of <unk>, and Gartner and javelin and other things.
We're getting to be known and as soon as we get talking to somebody and we talk about certainty and we talked about the fact that we're way better than a coin flip.
They begin to get why we're different and they need to take a look at us. So given how accurate we are and how much easy we are for the end consumer because you don't have to take a photo of a shiny license to make it work.
These resellers seem rather interested in it so Bruce his team as they've got they all have hard targets on particular retailers, we want them going after and we're gonna be.
Monitored very carefully on how well, we're reaching those goals, but I do think it could become a significant portion of the revenue.
Because if you think about it and in fact, the banks are resellers.
Because they're the ones really selling the retailers and so we know the model works, we just need to expand the resellers.
We're talking to.
Yeah, It's definitely worked but 1 last 1 on the model just on the expense growth I think you had talked about 25 to 30.
Just any updates there on how to think about expense growth.
Yeah, I think it was 25% to 35 and obviously, we're outpacing that.
I think if were.
You know modeling out through the end of the year.
Taking a 4 to $4.5 million a quarter Opex is probably.
Probably more accurate.
Okay fair enough. Thanks, so much guys. Thank.
Thank you.
Your next question is from Scott Buck with B Riley. Please state your question.
Hey, good afternoon guys.
On the gross margin on the SaaS at 93.3.
Brian how much of that is you know maybe some of those pricing changes that you guys have implemented versus just higher volumes in the quarter, obviously versus a year ago.
I think the majority right now would be the volumes.
Volume, Okay. That's helpful and then I'm curious with some of the new hires you've made on the sales side, what's kind of the typical ramp up period for those folks to really get their feet under them and start.
Starting to make a meaningful contribution.
I think.
A good sales person is going to get a little bit of luck and a little bit of skill over time, we've had.
Some of our new people have already closed some smaller deals the bigger deals take a little bit more time and to really fully understand it I would say 3 to 4 months, if if you're not seeing productivity out of a salesperson and maybe they're not right for the fit for that particular.
The type of sale. So I think that's pretty much what we're kind of looking at but so.
So far I would say that they're all coming up to speed.
A lot quicker than I anticipated, a they really spend a lot of time working with each other to bring each other up to speed.
So it's a really really tight team that knows day all succeed when they succeed so that the help is amazing that they're giving you Joel.
Yeah.
Okay. That's good color and last 1 from me you guys talked a little bit about our increasing.
Increasing investment on the R&D side.
Is there anything that you could be doing inorganically.
You know it makes sense to go out and acquire the technology rather than try to build it yourself.
For a lot of things, we do right I'm not a fan of reinventing the wheel, but part of what we're doing is a lot of it.
Sort of.
Redoing the backend if you will so it's easier.
For us to plug and play with maybe other providers of services that people want us to bundle in and then on the other side and make it easier for our clients to plug and play into us and pick which 1 of those service providers. They want so that they can build their own on their mind best in breed authentication Sir.
So it's really a lot of retooling.
Where it looks like something that it's going to be just a project with the beginning a middle and an end.
We're certainly using outsourced for that so that when that project is done when we don't have that head count that was better used 1 off so were being pretty smart about how we do it.
And again, if it's something we can get whereby we do it.
It's the same way that you know I've said this for a long time.
Facial recognition world at first thought okay, maybe we need to build that and then there's so many of them selling it why bother, it's better to do that through partnerships and that's how we look at everything in the whole development stock in Q.
Great. It makes sense guys I appreciate the time thank you.
Thank you.
Your next question comes from really Catherine Java.
Please state your question.
Hey, guys, great. Thanks for taking my questions.
I want to circle back to the pricing I know I think you had said with the age restricted stuff like the new pricing model I think it terms of fivefold increase correct me, if I'm wrong there but.
With respect to our financial services customers 3 and 4.
I think you said 3.1 of them is coming up I think this quarter. The other 1 end of the year. Just can you help us put any bounds around that the kind of expected price increase you see with those 2.
I have we haven't begun really all 4 so I can't tell you that I mean, I will say that everything is going up and you know it.
And with numbers 3 where we're down now to just some minor legal knits is the way I would I would look at it but you know they are prepared to sign a multi year deal a 3 year deal guaranteeing a significant amount of transactions.
Year and prepaying for the full year.
And then they also are anticipating probably their volumes will go up so that's that whole model of prepay commit.
And we're still getting price increases, so and theyre going to vary across the board given where they started and again the older the contract in my opinion.
The less value, we were getting for it and so some of these much older contracts where at rates I wouldn't even thought of signed deals and over time, we've been increasing it so.
The letter of the contract was signed.
More close to what I would say no real market pricing. It is so itchy much older contracts, where we're going to see probably significant increases in pricing.
Yeah.
Got it and then last quarter you had talked about the 25 NDA as you had signed.
And at the end of April I'm curious if that's you know are you able to share how many andas you signed this quarter and then you know on those 25 aside whats the typical duration from NBA signing to contract signing and obviously they are all going to go through but and then maybe is there anything you can share of how many of those have actually turned.
Enter into signed contracts to date.
I'd say that a lot of the ones that were for.
Some of them like the resellers that I talked about those are examples.
There are some that were in and contract negotiation with now I don't know of a single 1.
That is not.
<unk> said no it's not working out there some of them might be timing issues of when we can get around to maybe doing some development, we need to connect to them all of them I think are still active or closed.
Or in contract negotiation and Bill you probably have an idea of how many we signed this quarter because I know you're busy busy doing them.
Yeah, well actually we signed 22 in July alone Brian Yeah.
Oh.
Oh Wow.
Got it and then just lastly, you know.
Certainly the partners resellers it sounds like you're making decent early early progress there I'm curious with with some of these companies to people would traditionally think of as competitors have.
Have you seen any awareness from them or maybe any changes in.
In behavior, I guess, maybe in 1 or 2 aspect either.
And then being more open to potentially partner with you guys on the awareness front or maybe them seeing you as more of a competitor than they have in the past and maybe changing their stance or trying to change how they're doing things.
I'd say at this point in time, it's more how do we partner.
They understand we do something very very different that could be beneficial to their clients.
So we haven't seen it it's become more competitive because again.
It's.
To consider them competitors, we do something so different at the end, we're all trying to figure out you know.
Is the person really real.
But we go about it in such a completely different manner.
It's hard to say that there's competition.
Got it that's very helpful. That's it from me thanks, guys. Thank you.
Thanks, Mike.
Your next question comes from Roger Mcgough, with clear Harbor asset management basically.
The strength.
Thank you operator.
Brian and Bill good afternoon.
Great report thank you.
I wanted to get a little.
Texture on the age restricted.
Yes.
Is the access.
The acceleration you're seeing here a function of cannabis.
And if so.
Our hold our hands a little bit of the sustainability.
After that or maybe it's ready to blow right through the ceiling.
Or are we really speaking of tobacco and alcohol to conventional stuff.
I'd say right now the majority of it is alcohol.
So alcohol alcohol delivery, we certainly see cannabis business, we've got a pretty good business already I think there's no better way for us to get into candidates as you know some of the some of the resellers and partners that we're talking to our providers and the inventory and point of sales systems for.
Canada stores.
But what we're seeing there.
Because.
There's certainly some interesting laws about advertising to cannabis people on average you gotta be careful how you go about that on social media. So it's much easier address target.
Traditional alcohol and tobacco and tobacco is by far the largest amounts of leads and the age regulated space.
Is shaping significant in any way.
You know it was for a while anyway pre COVID-19 when there was so much in the press about it but it really has died down so much I'm not quite sure that there is a lot of enforcement happening in that area, but there's certainly there's a lot of enforcement and and the alcohol space.
And you know 1 of our things is certainly having so many law enforcement agencies that use our product to go out.
And you know do enforcement there are probably some of our best salespeople because the first thing the bar owner asked is like what do you use them and we know in some places if you'll give them a warning some of our law enforcement.
Our clients tell us they give them a warning if they put it in our product because when they know that theyre going to be actively checking and keeping kids out. So it's almost like an incentive for them to do it.
So it's you know I think a combination of a lot of factors there, but certainly alcohol gets more enforcement I think than anything else.
Okay.
Hi, just a little clarification from Bill you mentioned the.
It was at 22.
Implement 22 implementations you signed in July alone is not a spike or could this be a run rate indicator.
That was those were NDA as Roger.
Fully execute it and do you think a pharyngeal yep, okay. Okay conversion rates from N V. A I think its NDA.
It's almost a 1 for 1 but tell me.
I'd say that.
Yeah, Okay I'm sorry go ahead bill.
Oh I was just going to say, we have a high conversion rate Roger I don't know that we have.
We've ever said publicly what what the percentage of conversion ratios Brian have we.
No and I mean, it's a good thing we can they can start tracking it and talking about it.
I said.
Any of the NDA, so far that we've signed this year I can't off the top of my head you know maybe there was a couple or we just decided there wasn't a fit but off the top of my head I can't recall any where they said no just doesn't work for us.
You know somebody signed and some are in technical discussions because it's okay. How do we now can net to you those types of things.
So I'm I'm pleased with it for sure.
Mhm.
Final question.
And I hope you could give some texture because I think it's important for us to understand.
Better.
It's on the.
Policies and practices.
5 of sharing the fraud losses or <unk>.
1 side or the other being the bag holders.
Losses.
All right.
Are the old practices of banks and financial service institutions continuing in this.
Fraud challenged.
And what about incentives like if you.
Install idms suite.
We will eat a proportionally the financial service.
Proportionately larger amount of fraud losses.
Going the other way also.
Yeah, I'd say it is for the most part still staying that kind of a traditional model where the bank is the 1 that heats the fraud.
But you know there's oftentimes a split maybe on accounts look ups or other things like that so the retailer always has an incentive to want to help with the fraud and then the other thing too is even the retailers that eat none of it a lot of them are very happy to do it because they know theyre going to get more credit.
Cards, because it speeds the process is.
Seamless to the end user and again, they told US multiple times that you shop about 4 times more often in the store, where you've got a card with reward points and all that other stuff. So you know in talking to some of the retailers. They tell US a day of targets every year for the number of credit cards. They want it they want it.
Onboard so they like the speed and simplicity.
Our process for it now again the smaller retailers.
They're more at the Mercy, that's why number 1.
They'll they'll let him get instant credit in the store, but it's branded number 1 card and the retailer eats all the laws. They started slowly introducing us to some of those clients and they snap us up because you know you.
You lose a couple of Rollouts of the year a couple of things are going to happen 1 oftentimes the Banco stopped working with them close is just you know they don't want to be part of all of that kind of fraud and to it it adds up for for that.
Retailer, so they're happy to pay for our solution.
You know, it's not high volume, but there's a lot of them to sell to so I think it could add up very quickly. So then I'll also say third point on that in terms of color.
Even though the banks eat the loss, we certainly know that number 4 they've taken.
Our credit card programs away from other retailer I mean, other banks because they give them in the channel so give them a better program right because number 4 knows that there is going to be a much more profitable accounts because of the fraud goes away. So we've been on sales calls with them.
He was talking about how easy it is to implement and what theyre going to do so that you have.
Number 4 gets decline so I think some of the smarter guys are realizing that they can use fraud prevention.
As a sales tool to gain more programs.
Okay extremely helpful. Thank you.
Yes.
Yeah.
Ladies and gentlemen, we have reached the end of the question and answer session and I would now like turn the call back to Mr. Kramer for closing remarks.
Hi, So I just want to thank everybody for attending the call and I was excited to talk about the quarter as I said I'm very excited about the future.
And I look forward to the Q3 earnings call and speaking to you all again, so thank you and have a good evening.
That does conclude our conference. Thank you for your participation you may now disconnect.
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