Q4 2023 Intellicheck Inc Earnings Call

Operator: and the rest. Greetings and welcome to the Intellicheck fourth quarter and year-end 2023 earnings call. This time, all participants are to listen only to the audio, and the question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded. Now, it is my pleasure to introduce your host, Gar Jackson with Investor Relations. Thank you, Mr. Jackson.

Greetings and welcome to the Intel a check fourth quarter and year end 2023 earnings call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Gar Jackson with Investor Relations. Thank you. Mr. Jackson you may begin.

Gar Jackson: Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck fourth quarter and full year 2023 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 using this conference call, words such as "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 statements are based on management's current expectations and beliefs about future events.

Thank you operator, good afternoon, and thank you for joining us today for the intelligent <unk> fourth quarter and full year 2023 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 well believe expect anticipate encourage and similar expressions as they relate to the company orange matters 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.

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 expressly disclaims any obligation to update or alter its forward looking statements, whether resulting from such changes new information subsequent ease.

Gar Jackson: As with any projection or forecast, they are inherently susceptible to uncertainty, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes, new information, subsequent events, or otherwise. Additional information concerning forward-looking statements is contained under the headings of the safe harbor statement and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission, and David Smith, and Jeff Ishmael.

Or otherwise additional information concerning forward looking statements is contained under the headings of Safe Harbor statement 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 March 'twenty, one 'twenty 'twenty four 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 well begin today's call with Brian Lewis and Telecheck, CEO, and then Jeff Israel and Telecheck C O.

Bryan Lewis: Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour, and I will now turn the call over to Bryan. Thanks, Dar, and thank you all for joining us today for the Intellicheck Q4 2023 and fiscal year 2023 earnings call. One of the things Jeff and I have been emphasizing throughout previous calls and meetings is that we were going to end the year with adjusted EBITDA break-even or better. I'm excited to point out that we delivered on that goal.

Bryan Lewis: Oh, and CFO, who will discuss the Q4 and full year 2023 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors today's call will be limited to one hour and I will now turn the call over to Brian.

Bryan Lewis: Thanks, Tom and thank you all for joining us today for the intelligence Q4, 2023 and fiscal year 2023 earnings call.

Bryan Lewis: The things, Jeff and I had been emphasizing throughout previous calls and meetings is that we were going to end the year with adjusted EBITDA breakeven or better I'm excited to point out that we delivered on that goal for Q4, we achieved net income of a positive $757000.

Bryan Lewis: For Q4, we achieved a net income of positive $757,000, and an adjusted EBITDA of a positive $1.17 million, and an adjusted EBITDA for the full 2023 year of a positive $377,000. Our gross profit margins continue to remain strong, running at 92% for the year. Given our growth expectations, we expect this trend will continue into 2024 and anticipate that we will also end 2024 adjusted EBITDA positive. Before I get into some of the wins for the fourth quarter and recap some highlights from 2023, I'm first going to share with you some of the substantive changes we have made to the organization. Driven by the changes we made in the engineering team, we reduced year-over-year IT costs by approximately 10%.

Bryan Lewis: Adjusted EBITDA of a positive one quite one $7 million and the adjusted EBITDA for the full 2023 year or a positive 377000, our gross profit margins continue to remain strong running at 92% for the year.

Bryan Lewis: Growth expectations. We expect this trend will continue into 'twenty 'twenty four and anticipate that we will also end 'twenty 'twenty four adjusted EBITDA positive.

Speaker Change: Before I get into some of the wins for the fourth quarter and recap some highlights from 'twenty to 'twenty three I'm first going to share with you some of the substitute changes we have made to the organization.

Speaker Change: You are invited to changes we made in the engineering team, we reduced year over year I T costs by approximately 10%.

Bryan Lewis: At the same time, we have realized some significant upgrades to our software. We are now cloud agnostic, which will further reduce our cloud expenses as we move clients off of Azure. This improvement is an important milestone. Not only does it provide more security for data in transit, but it will essentially eliminate downtime as we are now active-active on parallel platforms. This is a noteworthy distinction because active-active means we have redundancy and can switch over immediately if the cloud provider has an issue.

Speaker Change: At the same time, we have realized some significant upgrades to our software.

Speaker Change: We are now cloud agnostic, which throughout 'twenty 'twenty four will further reduce our cloud expenses as we move clients off of Azure. This improvement is an important milestone.

Speaker Change: Not only does it provide more security of the data in transit, but it will essentially eliminate downtime as we are now active active on parallel platforms. This is a noteworthy distinction because active active means we have redundancy and can switchover immediately if the cloud provider has an issue.

Bryan Lewis: This advancement has also led to a complete rewrite of our API. This, too, is another distinctive step forward because it makes it much simpler to integrate. Anyone can go to our website and program against our testbed and get simulated results.

Speaker Change: This is bad spend has also led to a complete rewrite of our API. This too is another distinctive step forward because it makes it much simpler to integrate.

Speaker Change: Anyone can go to our website and program against our Testbed and get stimulated results. We're already seeing the positive impact for example, we had a prospect integrate in one day and call. It. The next day and tell us that they were ready for the production keys, we loved how excited they were with at the ease of integration.

Bryan Lewis: We're already seeing the positive impact. For example, we had a prospect integrate in one day and call us the next day and tell us they were ready for the production keys. We loved how excited they were at the ease of integration. But we had to tell them we were happy to give them the keys, but in their excitement, they had missed a key step.

Speaker Change: Had to tell him we were happy to give them the keys in their excitement. They had missed the key step we needed to contract signed which they probably did.

Bryan Lewis: We needed the contract signed, which they promptly did. Our technology improvements don't stop there thanks to our revitalized IT organization. We also released a new and much simpler way for our digital clients to capture documents and facial biometrics if needed. Previously, our clients built their own proprietary remote capture screens.

Speaker Change: Our technology improvements don't stop there thanks to our revitalized I T organization. We also released a new and much simpler way for our digital client to capture documents and facial biometrics it needed.

Speaker Change: Previously our clients build their own proprietary remote capture screens, while we still allow clients to do so if they choose we now offer a tool that can be white labeled and can be integrated into the client's existing system with two simple words, but it's been extremely well received and we currently have seven.

Bryan Lewis: While we still allow clients to do so if they choose, we now offer a tool that can be white-labeled and can be integrated into the client's existing system with two simple web hooks. This has been extremely well received, and we currently have seven either existing clients switching over to this tool or new clients integrating it. We've seen with existing clients that they experienced an increase of 20% in completed transactions with the new tool. This is important to highlight because we believe that this new tool will substantially decrease time to revenue for new digital clients.

Their existing client switching over to this tool or new clients integrating it we have seen with existing clients that they experience an increase of 20% and completed transactions with the new tool. It is important to highlight because we believe that this new tool will substantially decrease time to revenue for new Digi.

Speaker Change: It'll clients.

Bryan Lewis: Data science and machine learning began in earnest in Q4. The data lake is complete, and our data team has already come up with new methods to make our ability to spot fakes even more accurate. Throughout the course of 2024, we will continue to enhance our product, while in conjunction with our clients, we will continue to build and create new ones. Across all of our use cases, the number of people in North America that are processed through Intellicheck is impressive, continues to grow, and we believe provides value to our clients. We also have notable changes in marketing. I'm happy to say that in Q4, we hired Christine Elson as our new VP of marketing. She has a fantastic track record of helping to ignite sales at several high-growth cybersecurity and technology companies. I am pleased to report that she is already making an impact.

Speaker Change: Data science and machine learning began in earnest in Q4, the data Lake is complete and our data team and it's already come up with new message to make our ability to spot pigs, even more accurate.

Speaker Change: Throughout the course of 'twenty 'twenty four they will continue to enhance our product while in conjunction with our clients. We will continue to build and create new ones.

Speaker Change: Across all of our use cases, the number of people in North America that are processed through in Telecheck is impressive continues to grow and we believe provides value to our clients.

Speaker Change: We also had notable changes in marketing I'm happy to say that in Q4, we hired Christine Allison as our new VP of marketing.

Speaker Change: A fantastic track record of helping to ignite sales at several high growth in cyber security and technology companies.

Speaker Change: I am pleased to report that she is already making an impact.

Bryan Lewis: As previously discussed, we hired a branding and design company to help with our branding to make our message clear. Through interviews with our clients and the collaborative work with the branding and design team, we think we succeeded. Our clients reinforced two important distinctions that we are certainly calling out: no hardware and the ease of use and simplicity of the process for their clients.

Speaker Change: As previously as previously discussed we are.

Speaker Change: Hired a branding and design company to help with our branding to make our message clear through interviews with our clients and the collaborative work with the branding and design team. We think we succeeded.

Our clients reinforced two important distinctions that we are certainly calling out no hardware and the ease of use and simplicity of the process for their clients.

Bryan Lewis: We truly are the hardware-free, go-anywhere identity validation platform that we believe provides the best identity experience for their customers that their customers never knew they had. We said we would be stepping up the Intellicheck profile in 2024, and we have moved forward. Christine has Intellicheck lined up with speaking engagements at some of the most important industry conferences and trade shows. We had a strong presence at FinTech Meetup a few weeks ago. FinTech Meetup is a high-profile event that brings together more than 4,000 leaders from fintech, banking, payments, and lending to discuss, shape, and create the future of fintech.

Speaker Change: Truly are the hardware free go anywhere identity validation platform that we believe provides the best I doubt any experience for their customers that their end customers never knew they had.

Speaker Change: We said, we would be upping the Intel a check profile of 'twenty 'twenty four and we have moved forward Kristine has Intel a check lined up with speaking engagements in some of the most important industry conferences and trade shows.

Speaker Change: We had a strong presence at Fintech meet up a few weeks ago. They detect them eat up into high profile event that brings together more than 4000 liters from fintech banking payments and lending to discuss shape and create the future of fintech.

Bryan Lewis: The agenda there is designed to focus on the biggest issues, challenges, and opportunities facing the industry. Our SVP of sales, Chris Meyer, delivered a well-attended tech talk on next-gen fraud prevention and how it increases conversion rates by 20%. He and Enterprise Account Executive Joshua Baker held a number of one-on-one meetings during the event.

Speaker Change: The agenda. There is designed to focus on the biggest issues challenges and opportunities facing the industry R. S. V. P of sales, Chris Meyer delivered a well attended tech talk on Nextgen fraud prevention, and how it increases conversion rates by 20%.

Speaker Change: He and enterprise account executive Joshua Baker held a number of one on one meetings during the event.

Bryan Lewis: Previously, in February, Chris attended the Stadium Managers Trade Show. This event brings together personnel from teams, colleges, and universities, facility managers and public sports authorities, and suppliers to the industry. It was yet another important opportunity to build brand awareness and connect with influencers. These are just the first of many trade shows that we'll be attending this year. Coming up, we'll be attending Datos Insights, which focuses on financial crime and cybersecurity and provides a forum for senior-level executives to focus on fraud, AML, cybersecurity, and risk.

Speaker Change: Previously in February Chris attended the stadia managers Tradeshow. This event brings together personnel from teams colleges and universities.

Speaker Change: D managers and public sports authority and suppliers to the industry. It was it yet another important opportunity to build brand awareness and connect with Influencers.

Speaker Change: These are just the first of many trade shows that will be attending this year.

I will be attending data insights, which focuses on financial crime cybersecurity and provides a forum for senior level executive to focus on fraud, and cyber security and risk.

Bryan Lewis: So turning now to Q4, we saw new client wins in addition to an expansion of use cases with our longstanding financial services company clients that are also bringing on additional retailers. One of the things we as a management team foresaw was that retail was potentially running into challenges. So focusing on diversifying our portfolio of verticals served became a focus. Given the fact that major retailers are shutting down locations, we were correct in our assumptions as Q4 transactions at our largest retailers were off 15%.

Speaker Change: So turning now to Q4, we saw new client wins. In addition to an expansion of use cases with our long standing financial services company clients that are also bringing on additional retailers.

Speaker Change: One of the things we use the management team foresaw was at retail was potentially running into challenges so focusing on diversifying our portfolio of verticals served became a focus.

Speaker Change: Given the fact that major retailers are shutting down locations. We were correct in our assumptions as Q4 transactions at our largest retailers were off 15%.

Bryan Lewis: You will see that through our wins with new banking clients and new banking use cases, in addition to clients and new verticals not tied to traditional retail, that we are confident that this pivot is working. We believe that over time, these new channels should more than offset the retail reductions we are currently seeing, and we believe that we made the right decision. That being said, we continue to expand our retail penetration and anticipate more than 3,000 new retail doors by the end of the year. During the fourth quarter, financial services company number two brought online a 565-location wholesale beauty supply company.

Speaker Change: You'll see that our wins with new banking clients, a new banking use cases. In addition to clients in new vertical not tied to traditional retail that we are confident that this pivot is working.

Speaker Change: We believe that overtime these new channels should more than offset the retail reductions. We are currently seeing and we believe that we made the right decision that being said, we continue to expand our retail penetration and anticipate more than 3000, new retail doors by the end of the year.

Speaker Change: During the fourth quarter financial services company number two brought online a 565 location wholesale beauty supply company.

Bryan Lewis: In addition, they launched a branded credit card utilizing Intellicheck as a first step in the digital application. They have also begun integrations with two additional retailers they expect to bring live by year-end. One is a clothing store with over 1,000 locations for new account openings and account lookup, and the other is a 170-location hotel and gaming company for new card account openings.

Speaker Change: In addition, they launched a branded credit card utilizing in telecheck as the first step in the digital application.

Speaker Change: They have also begun integrations with two in two additional retailers they expect to bring life by year at what is a clothing store with over 1000 locations for new account openings and account look up and the other is 170 location hotel and gaming company for New card account opening.

Bryan Lewis: Financial Services Company number three is expanding in branch use cases with the addition of wire transfers and new account opening in addition to the current use cases of transactions over a certain account, no debit card present, and account lookup. They anticipate volume for the new use cases to be about 100,000 transactions a month. They are also working on the integration to bring live a retailer with over 2200 locations throughout 49 states that provides home improvement, lawn and garden products, and farming equipment and supplies. They expect to go live in Q3 of this year.

Speaker Change: Financial services company and number three is expanding in branch use cases with the addition of wire transfers and new account opening in addition to the current use cases transactions over a certain count their debit card present, an account look up.

Speaker Change: They anticipate volume for the new use cases to be about 100000 transactions a month.

Speaker Change: They are also working on the integration to bring live a retailer with over 2200 locations throughout 49 state that provides home improvement lawn and garden products and farming equipment and supplies.

Speaker Change: They expect to go live in Q3 of this year.

Bryan Lewis: The two regional bank pilots were completed in Q4 and were fully implemented and revenue-generating in February. A bit behind schedule, but they are now up and running. If you recall, the first bank with 1300 locations had an in-branch proof of concept.

Speaker Change: The two regional bank pilots for completed in Q4 and were fully implemented and revenue generating in February a bit behind schedule, but they are now up and running.

If you recall the first bag with 1300 location tenant in branch proof of concept. This one so well that they are now doing the work to incorporate Intel chip into their digital use cases, they expect rollout in late Q2 for early Q3.

Bryan Lewis: This one did so well that they are now doing the work to incorporate Intellicheck into their digital use case. They expect rollout in late Q2 or early Q3. The other regional bank with over 2,000 locations started the other way around with a single digital use case, opening new accounts. Because of how Intellicheck simplifies account opening, they had hoped for a two percent increase in new account openings after we were implemented, but because of how Intellicheck simplifies account opening, they realized an impressive 20 percent increase. They are now expanding to other digital use cases and are working to incorporate Intellicheck into their bank branches. You may remember we have been working to secure an agreement with the top three banks. I am very pleased to report they completed their security audits in Q4, and we now have a signed contract with them.

The other regional bank with over 2000 location started the other way around with a single digital use cases opening new accounts.

Speaker Change: Cause of Holland, Telecheck sympathize account opening.

Speaker Change: They had hoped for a 2% increase in new account openings. After we were implemented.

Speaker Change: Because of how Intel a check simplifies account opening they realized an impressive 20% increase.

Speaker Change: We're now expanding to other digital use cases and are working to incorporate <unk> into their branch bank branches.

You May remember, we had been working to secure an agreement with a top three bank I'm very pleased to report they completed their security audits in Q4, and we now have a signed contract with them like all very large organization, bringing on a new initiative. It takes time and our sense is that just like the audits where an extensive.

Bryan Lewis: Like all very large organizations, bringing on a new initiative takes time, and our sense is that just like the audits, we're an extensive, time-consuming effort; so will be the implementation. Right now, they are targeting Q4 of this year to go live with their digital and mobile banking apps. We will continue to provide updates on the integration progress on future calls. We are excited by the win.

Speaker Change: Tight time consuming effort so it will be the implementation right.

Speaker Change: Right now they are targeting Q4 of this year to go live with their digital and mobile banking App.

Speaker Change: We will continue to provide updates on the integration progress on future calls.

Speaker Change: Excited by the win we believe that with the back of this size goes with Intel a check is a tremendous validation of what we do and provides a great Foundation for 2025 N V R.

Bryan Lewis: We believe that when a bank of this size goes with Intellicheck, it is a tremendous validation of what we do and provides a great foundation for 2025 and beyond. We're very excited by another step forward. Our products are now being utilized outside of North America. Our client, a renowned global media and tech company reaching nearly 1 billion people worldwide, is now using Intellicheck in the UK to validate people.

Speaker Change: We are very excited by another step forward our products are now being utilized outside of North America.

Our clients, there's a right now as global media and Tech company, reaching nearly 1 billion people worldwide is now using Intel a check in the U K to validate people. We believe that we will see more multinational clients that need to validate people in North America turned to Intel a check for their international needs.

Bryan Lewis: We believe that we will see more multinational clients that need to validate people in North America turn to Intellicheck for their international needs. We are also continuing to expand in the automotive space both directly and with resellers. The reseller that is working with one of the largest auto manufacturers reached a deal with them to fully roll out to all 2600 locations, with expected minimum annual volumes of approximately 750,000 transactions.

Speaker Change: We are also continuing to expand in the automotive space, both directly and with resellers.

Speaker Change: The reseller, there's working with one of the largest auto manufacturers beach to deal with them to fully rollout to all 2600 locations with expected minimum annual volumes of approximately 750000 transactions.

Bryan Lewis: We anticipate that full rollout should occur in Q2. Between Q4 of 23 and Q1 of this year, we have either signed or are in the process of signing an additional four resellers in the automotive space. Title Insurance is another market vertical where we continue to see expansion, again, either through direct sales to inbound needs or through resellers. Between Q4 and Q1 of this year, we signed four of the largest title companies.

Speaker Change: We anticipate that full rollout should occur in Q2.

Speaker Change: Between Q4 of 'twenty three and he wanted this year, we have either signed or in the process of signing an additional for resellers in the automotive space.

Title insurance is another market vertical where we continue to see expansion again, either through direct sales to inbound needs or through resellers between Q4 and Q1 of this year. We signed four of the largest title companies. You've also signed one of the largest providers of software that small title companies use.

Bryan Lewis: We have also signed one of the largest providers of software that small title companies use to run their business. We are fully incorporated into their platform now, and they are looking to really expand the world out in Q2. We believe that being an integral part of a larger platform creates an incremental growth opportunity in the real estate transaction space, which is seeing a significant pickup in fraud. Our growth in the age-restricted space in both unattended and in-person use cases continues to grow.

Speaker Change: To run their business.

Speaker Change: We are fully incorporated into their platform now and they are looking to really expand the rollout in Q2, we believe that being an integral part of a larger platform creates an incremental growth opportunity in the real estate transaction space that is seeing a significant pick up in fraud.

Speaker Change: Our growth in the age restricted space in both and attended an in person use cases continues to grow.

Bryan Lewis: During the fourth quarter, we signed an additional two vending machine companies. Also, in Q4, we signed a company that provides access to unattended liquor distribution in loyalty lounges at hotels. They're going live with a proof of concept with a very large hotel chain in Q2 of this year. A deal that we closed a long time ago but will finally be going live is TrueAge, which was developed by the National Association of Convenience Stores and Connexus to provide a simple way for convenience stores to stop sales to underage customers. Intellicheck will be used to authenticate the user before they are given access to the app.

Speaker Change: During the fourth quarter, we signed an additional two vending machine companies.

Speaker Change: Also in Q4, we signed a company that provides the access to unattended liquor distribution and loyalty lounges at hotels, they're going live with a proof of concept with a very large hotel chain in Q2 of this year.

A deal that we closed a long time ago, but we'll finally going will be going live is true age, which was developed by the National Association of convenience stores and connects it to provide a simple way for convenient stores to stop sales to the under age Intel.

Speaker Change: Intel a check will be used to authentic take the user before they were given access to the app.

Bryan Lewis: They expect to begin nationwide deployment in Q2 of this year, starting slowly and ramping up throughout the year. We continue to expand in new markets. In Q4, we signed two crypto wallet companies. The use case will be to validate people as they open an account for the wallet.

Speaker Change: They expect to begin nationwide deployment in Q2 of this year, starting slowly and ramping up throughout the year.

Speaker Change: We continue to expand in new markets in Q4, we signed two crypto wallet companies. They use case will be to validate people as they open an account for the wallet.

Bryan Lewis: We believe that cryptocurrency could be another meaningful market vertical for Intellicheck. In Q4, we also signed a wire transfer payments company. They see so much fraud that they are going to make validation mandatory on all transfers. Integration is underway, and it will be working to be live by the end of Q2.

Speaker Change: We believe that crypto currency could be another meaning meaningful market vertical for Intel a check.

Speaker Change: In Q4, we also signed a wire transfer payments company. They see so much fraud that they are going to make about validation mandatory on all transfers.

Speaker Change: Integration is underway and it would be working to be live by the end of Q2.

Bryan Lewis: I am happy to say that our pipeline of pilots is all going extremely well, which I believe bodes well for future quarters. In closing, with the current wins going live over the next two quarters, as well as the robust pipeline that the sales team has created, we see significant growth throughout the rest of the year and look forward to keeping you updated as clients go live and we report our Q1 results in May. With that, I'll turn it over to Jeff, who will provide more details on the finances. Thank you, Bryan.

Speaker Change: I'm happy to say that our pipeline of pilots all are going extremely well, which I believe bodes well for future quarters.

Speaker Change: In closing with the current wins going live or the next two quarters as well as the robust pipeline that the sales team has created we see significant growth throughout the rest of the year and look forward to keeping you updated as clients go live and we report our Q1 results in May.

Speaker Change: With that I'll turn it over to Jeff who will provide more details on the financials.

Jeffrey Ishmael: Thank you Brian I'm pleased with the continued progress we've been making across all levels of the organization as we continue our efforts to recalibrate, our spend and redistributed investment into areas that will fuel our growth and profitability, our fourth quarter revenues were $13, 7% higher versus the prior year. We continue to report a higher average price per.

Jeffrey Ishmael: I'm pleased with the continued progress we've been making across all levels of the organization as we continue our efforts to recalibrate our spend and redistribute investment in areas that will fuel our growth and profitability. Our fourth-quarter revenues were 13.7% higher versus the prior year. We continue to report a higher average price per scan versus the prior year.

Scan versus the prior year and we not only achieved our committed goal of adjusted EBITDA neutral results for the year, but we finished the year with a gain of 377000 or two cents per share on an adjusted basis.

Jeffrey Ishmael: And we not only achieved our committed goal of adjusted EBITDA neutral results for the year, but we finished the year with a gain of $377,000, or two cents per share on an adjusted basis. As Bryan mentioned earlier, we are also pleased to see the continued trailing 12-month growth progression in SAS revenues each month, which has been achieved consecutively for the last four years. We continue to cast a critical eye on the metrics of our SAS revenue. It's encouraging to see a 16% increase in our average price per scan versus the prior year as we have continued right-sizing the pricing of our legacy accounts and enforcing internal disciplines on CPI increases. This is especially encouraging as it continues to speak to the value realized by our customers. We are also continuing to maintain our focus on our operating expenses to ensure that we achieve the expected return on our investments in this area.

Jeffrey Ishmael: As Brian mentioned earlier, we were also pleased to see the continued trailing 12 month growth progression SaaS revenues, each month, which has been the chief consecutively for the last four years.

Jeffrey Ishmael: Continuing to cast a critical eye to the metrics of our SaaS revenue, it's encouraging to see a six 2% increase in our average price per scan versus the prior year.

Jeffrey Ishmael: We have continued right sizing the pricing of our legacy accounts and enforce internal disciplines on CPI increases this is especially encouraging as it continues to speak to the testament of the value realized by our customers.

Jeffrey Ishmael: We are also continuing to maintain our focus on our operating expenses to ensure that we achieve the expected return on our investments in this area.

Jeffrey Ishmael: Within the Q4 period, we started to realize the benefits of our mid-year restructuring efforts and the subsequent increase in our adjusted EBITDA, details of which I will share after the summary of our fourth quarter results. We've also successfully launched our channel program, which I will also provide more details on later in the remarks.

Jeffrey Ishmael: Within the Q4 period, we started to realize the benefits of our midyear restructuring efforts and the subsequent increase in our adjusted EBITDA I'm sure more details after the summary of our fourth quarter results. We've also successfully launched our channel program, which I also will provide more details on later in the remarks, we expect this program to have a noticeable improvement.

Jeffrey Ishmael: We expect this program to have a noticeable impact on our 2024 pipeline growth and bookings and to be an important driver of our sales going forward. We believe that this combination of efforts will provide the necessary support for the sales team to drive increases in customer engagement, bookings, and revenues in 2024. Turning now to our fourth-quarter results, revenue for the fourth quarter of 2023 increased 13.7% to a record $5,176,000 compared to $4,551,000 in the same period of 2022. Our SAS revenue for the fourth quarter of 2023 grew 13.2% to $5,069,000 from $4,479,000 during the same period of 2022 and represented 98% of our fourth quarter revenue. Gross profit as a percentage of revenues was 94.9% for the fourth quarter of 2023 compared to 94.8% for the same period of 2022. The nominal increase reflected a credit received from our cloud service provider, which also occurred in the same period of 2022. We are considering these credits to be non-recurring as we continue our migration to a cloud-agnostic structure to minimize any downtime and ensure service availability for our customers.

Jeffrey Ishmael: <unk> 'twenty 'twenty four pipeline growth and bookings seem to be an important driver of our sales going forward.

Jeffrey Ishmael: We believe that this combination of efforts will provide the necessary support to the sales team to drive increases in customer engagement bookings or revenues in 2024.

Jeffrey Ishmael: Turning now to our fourth quarter results.

Jeffrey Ishmael: Revenue for the fourth quarter of 2023 increased 32, 7% to a record 5.176 million compared to $4 million 551000 in the same period of 2022.

Jeffrey Ishmael: SaaS revenue for the fourth quarter of 2023 grew 13, 2% to 5.069 million from $4 million 479000. During the same period of 2022, and representing 98% of our fourth quarter revenue.

Jeffrey Ishmael: Gross profit as a percentage of revenues was 94, 9% for the fourth quarter of 2023 compared to 94, 8% for the same period of 2022.

Jeffrey Ishmael: The nominal increase reflected a credit received from our cloud service provider, which also occurred in the same period of 2022.

Jeffrey Ishmael: Considering these credits to be nonrecurring as we continue our migration to a cloud agnostic structure to minimize any downtime and insurance service availability for customers as.

Jeffrey Ishmael: As we discussed during the last few quarters, we've been modeling gross margin performance in a range of 90 to 91% as we continue to improve our cloud cost infrastructure. But, as the product team has shown, we've been able to maintain recurring margins of 92% as the re-architecture progresses. We will continue to scrutinize our cost structure with the goal of maintaining that level. Operating expenses, which consist of selling, general and administrative, marketing, and research and development expenses, decreased 763,000, or 15.1%, to $4,291,000 for the fourth quarter of 2023, compared to $5,054,000 for the same period of 2022. Also included within operating expenses for the fourth quarter of 2023 and 2022 were $249,000 and $687,000, respectively, of non-cash equity compensation expense.

Jeffrey Ishmael: As we discussed during the last few quarters, we've been modeling gross margin performance in a range of 90% to 91% as we continue to improve our cloud cost infrastructure, but it's the product team has shown we've been able to maintain reoccurring margins of 92%. That's the re architecture progresses, we will continue to scrutinize our cost structure with the goal to maintain that level.

Jeffrey Ishmael: <unk>.

Jeffrey Ishmael: Operating expenses, which consist of selling general and administrative marketing and research and development expenses decreased 763000, or 15, 1% to 4.291 million for the fourth quarter of 2023 compared to 5.054 million for the same period of 2022.

Jeffrey Ishmael: Included within operating expenses for the fourth quarter of 2023, and 2022 with 249680 7000, respectively of noncash equity compensation expense.

Jeffrey Ishmael: While we realize the benefits of our restructuring efforts in the period, there were two notable entries for the fourth quarter. First, in support of our re-architecture efforts, we are capitalizing $407,000 in costs tied to this project. We anticipate that we will see similar levels of capitalization in Q1 and will then see the amount decrease in the Q2 period. Second, while we have historically invoiced for and remitted sales taxes on required transactions, it was determined that sales taxes for certain customers were not being collected for the periods of 2018 through 2023. The company initiated and finalized a voluntary disclosure agreement with the primary state in question and has recorded the necessary liability of $227,000 within the Q4 period, as well as $308,000 for the Q4 2022 period. While the amounts are not material to any one year, it was necessary to record the tax liabilities for the entire amount within the fourth quarter periods.

Jeffrey Ishmael: While we realize the benefits of our restructuring efforts in the period. There were two notable entries for the fourth quarter.

Jeffrey Ishmael: First in support of our re architecture efforts, we are capitalizing $407000 in costs tied to this project.

Jeffrey Ishmael: We anticipate that we will see similar levels of capitalization in Q1, and we already see the amount of decreasing the Q2 period.

Jeffrey Ishmael: Second while we have historically envoy score and related sales taxes on required transactions. It was determined that sales taxes for certain customers, who were not being collected through the periods of 2018 through 2023.

Jeffrey Ishmael: The company initiated and finalize the voluntary disclosure agreements primary state in question and has recorded the necessary liability of 227000 within the Q4 period and it's almost 308000 for the Q4 2022 period, while the amounts are not material to any one year it was necessary to record the tax liabilities.

Jeffrey Ishmael: The entire amount in the fourth quarter periods.

Jeffrey Ishmael: Adjusted for these two entries are operating expenses would have decreased by five 8% on a constant basis.

Jeffrey Ishmael: So notable reduction was in stock based compensation expense, which decreased 438000 versus the same period of 2022.

Jeffrey Ishmael: Discussed in our last call. We expect our total noncash expenses will continue to decrease and comprised approximately 10% of our operating expenses are stock based compensation comprising 90% of that figure.

Jeffrey Ishmael: Adjusted for these two entries, our operating expenses would have decreased by 5.8% on a constant basis. The most notable reduction was in stock-based compensation expense, which decreased $438,000 versus the same period in 2022. As discussed in our last call, we expect our total non-cash expenses to continue to decrease and comprise approximately 10% of our operating expenses, with stock-based compensation comprising 90% of that figure. This compares to our prior historical trend of 13% to 15%, turning to net income and adjusted EBITDA. The company reported a gain of $757,000 for the fourth quarter of 2023 compared to a net loss of $869,000 for the same period of 2022. Net profit per diluted share for the fourth quarter of 2023 was a gain of $0.04 compared to a net loss per diluted share of $0.05 for the same period of 2022. As noted above, the Q4 periods reflect the adjustments of the sales tax liability entries. The weighted average diluted common shares were $19.3 million for the fourth quarter of 2023, compared to $18.9 million for the same period of 2022.

Jeffrey Ishmael: Compares to our prior historical trend of 13% to 15%.

Jeffrey Ishmael: Turning to net income and adjusted EBITDA. The company reported a gain of 757000 for the fourth quarter of 2023 compared to a net loss of 869000 for the same period of 2022.

Net gain per diluted share for the fourth quarter of 2023 was a gain of four cents compared to a net loss per diluted share five cents for the same period of 2022.

Jeffrey Ishmael: Noted about the Q4 periods reflect the adjustments of the sales tax liability entries.

Jeffrey Ishmael: Weighted average diluted common shares were $19 3 million for the fourth quarter of 2023 compared to $18 9 million for the same period of 2022.

Jeffrey Ishmael: We also continue to ensure we're properly managing our cash reserves, which generated 83000 in interest income versus 5000 in the same period of 2022.

Jeffrey Ishmael: EBIT for the fourth quarter of 2023 increased 780000, or 201%, resulting in a gain of $1 million 169000 compared to a gain of 389000 for the same period of 2022.

Jeffrey Ishmael: Now turning to our full year 2023 results.

Jeffrey Ishmael: Revenue for the full year of 2023 increased 2.940 million or 18, 4% to 18.906 million compared to $15 966000 in the same period of 2022.

Jeffrey Ishmael: Excluding equipment or SaaS revenue for the full year 2023 grew 2.867 million or 18, 2% to $18 595000.

Jeffrey Ishmael: We also continue to ensure we are properly managing our cash reserves, which generated $83,000 in interest income versus $5,000 in the same period of 2022. Adjusted EBITDA for the fourth quarter of 2023 increased 780,000 or 201%, resulting in a gain of 1,169,000 compared to a gain of 389,000 for the same period of 2022. Now turning to our full year 2023 results. Revenue for the full year of 2023 increased $2,940,000, or 18.4%, to $18,906,000 compared to $15,966,000 in the same period of 2022. Excluding equipment, our SAS revenue for the full year of 2023 grew $2,867,000, or 18.2%, to $18,595,000 from $15,728,000 for the same period of 2022. Thank you.

Jeffrey Ishmael: 15.728 million for the same period of 2022.

Jeffrey Ishmael: Gross profit as a percentage of revenues was 92, 7%.

Jeffrey Ishmael: Full year 2023, compared to 92.0% for the full year of 2020 to be.

Jeffrey Ishmael: The increase in gross margin profit percentage was primarily driven by a concentration of SaaS based revenues. The credit we received from our cloud service providers had a negligible impact on our full year gross margin results.

Jeffrey Ishmael: Operating expenses, which consist of selling general and administrative marketing and research and development expenses increased 1.086 million or five 8% to 19.807 million for the full year of 2023 compared to $18 721000 and for the full year 2022.

Jeffrey Ishmael: This increase was primarily driven by higher general and administrative costs, specifically severance related expenses of 984000.

Jeffrey Ishmael: Included within operating expenses for the full years of 2023, and 2022 1.596 million and $2 million 455000, respectively of noncash equity compensation expense.

Jeffrey Ishmael: Gross profit as a percentage of revenues was 92.7% for the full year of 2023 compared to 92.0% for the full year of 2022. The increase in gross margin profit percentage is primarily driven by our concentration of SaaS-based revenue. The credit we received from our cloud services providers had a negligible impact on our full-year gross margin results. Operating expenses, which consist of selling, general, and administrative, marketing, and research and development expenses, increased $1,086,000 or 5.8% to $19,807,000 for the full year of 2023 compared to $18,721,000 for the full year of 2022. This increase was primarily driven by higher general and administrative costs, specifically severance-related expenses of $984,000, included within operating expenses for the four years of 2023 and 2022; $1,596,000 and $2,455,000, respectively, of non-cash equity compensation expense.

Jeffrey Ishmael: As mentioned earlier and included in our full year results for the two notable entries for the fourth quarter, which included the product capitalization entry with 407000 and the sales tax liability entries of 227000 and 308000 for the fiscal year 'twenty, three and fiscal year 'twenty two periods adjusted for these two entries.

Jeffrey Ishmael: Our operating expenses would have increased by only eight 5% on a constant basis compared to a revenue growth of 18, 4% the.

Jeffrey Ishmael: The most noticeable reduction wasn't stock based compensation expense, which decreased to 859000 versus 2022.

Jeffrey Ishmael: The company reported an improved net loss of one literally at 980000 for the full year of 2023 compared with a net loss of 4.159 million for the same period of 2022.

Jeffrey Ishmael: Net loss per diluted share for the full year of 2023 improved to 10 cents compared to the net loss per diluted share a 22 cents for the full year of 2022 <unk>.

Jeffrey Ishmael: The impact of these two noticeable entries above represented one cent within our net loss per diluted shares result.

Jeffrey Ishmael: The weighted average diluted common shares for $19 3 million for the full year of 2023 compared to $18 8 million for the same period of 2022.

Jeffrey Ishmael: As mentioned earlier, and included in the full year results were the two notable entries for the fourth quarter, which included the product capitalization entry of $407,000 and the sales tax liability entries of $227,000 and $308,000 for the fiscal years 23 and 22 periods respectively. Adjusted for these two entries, our operating expenses would have increased by only 8.5% on a constant basis compared to our revenue growth of 18.4%. The most noticeable reduction was in stock-based compensation expense, which decreased $859,000 versus 2022.

Jeffrey Ishmael: Adjusted EBITDA for the full year of 2023 improved to a gain of 377000 versus a loss of 924000 for the same period of 2022.

Jeffrey Ishmael: Turning to the company's liquidity and capital resources as of December 31, 2023, the company had cash and cash equivalents that totaled 9.0 million. That's currently on deposit Citi Bank and capital one.

Jeffrey Ishmael: Working capital defined as current assets minus current liabilities of $7 8 million total assets of $23 8 million and stockholders' equity of $17 3 million. The company recognized an adjustment to the beginning balance of stockholders' equity in 2022 of 529000 with consideration to recognize sales tax.

Jeffrey Ishmael: The company reported an improved net loss of $1,980,000 for the full year of 2023, compared to a net loss of $4,159,000 for the same period of 2022. The net loss per diluted share for the full year of 2023 improved to 10 cents compared to a net loss per diluted share of 22 cents for the full year of 2022. The impact of these two noticeable entries above represented one cent within our net loss per diluted share result. The weighted average diluted common shares were $19.3 million for the full year of 2023, compared to $18.8 million for the same period of 2023.

Jeffrey Ishmael: As for the years of 2018 through 2020 one.

Jeffrey Ishmael: The company has a $2 million revolving credit facility with Citibank that are secured by collateral accounts. There are no amounts outstanding under this facility and the facility was not utilized during the quarter.

Turning now to the progress on our internal initiatives Twenty-twenty theory, but certainly represented a year of significant changes for Intel a check as we executed on a number of key initiatives that we believe set us up well for further growth in 2024.

Jeffrey Ishmael: During the Q2 period, we initiated a 2 million dollar expense savings initiative aimed at right sizing our expense structure and securing the necessary team and talent to properly drive product marketing and operational efficiencies through the Q2 period, we hired Jonathan Robbins Who's our VP of engineering, who subsequently promoted to the role of CTO in Q4.

Jeffrey Ishmael: Adjusted EBITDA for the full year of 2023 improved to a gain of $377,000 versus a loss of $924,000 for the same period of 2022. Attorney of the company's liquidity and capital resources. As of December 31st, 2023, the company had cash and cash equivalents that totaled $9.0 million. That is currently on deposit at Citibank and Capital One.

Jeffrey Ishmael: Jonathan has been Recalibrating that team working with the broader team on the re architecture of our SaaS platform moving us towards a cloud agnostic structure as well as bringing in additional talent to drive our data science reporting intelligence efforts.

As Brian mentioned in January of this year, we brought on Chrystie Nelson is our new VP of marketing, we believe that Kristine is the right person to drive additional recognition of the Intel a check brands and should provide the support that the sales team needs to further drive revenues and logo wins.

Jeffrey Ishmael: As we executed on expense initiatives, we made significant shifts in our expense structure and as much of our spend under the G&A and product areas to our previously discussed investments in sales and marketing.

Jeffrey Ishmael: Working capital, defined as current assets minus current liabilities of $7.8 million, total assets of $23.8 million, and stockholders' equity of $17.3 million. The company recognized an adjustment to the beginning balance of stockholders' equity in 2022 of $529,000 in consideration of recognized sales tax liabilities for the years of 2018 through 2021. The company has a $2 million revolving credit facility with Citibank that is secured by collateral accounts.

These initiatives have already had a demonstrable impact and are reflected in our fourth quarter results were operating expenses decreased 15, 1% versus the prior year compared to a 13, 7% increase in Redmond nail and delivering on our goal of adjusted EBITDA breakeven or better.

Jeffrey Ishmael: As a percentage of expenses, we are expecting to see our R&D spend continues to decrease year over year, while sales and marketing expenses will increase by approximately 8% to 10% to support a broad range of brands and marketing initiatives.

Jeffrey Ishmael: There are no amounts outstanding under this facility, and the facility was not utilized during the quarter. Turning now to the progress on our internal initiatives. 2023 certainly represented a year of significant changes for Intellicheck as we executed a number of key initiatives that we believe set us up well for further growth in 2024. During the Q2 period, we initiated a $2 million expense savings initiative aimed at right-sizing our expense structure and securing the necessary team and talent to properly drive product, marketing, and operational efficiencies. In Q2, we hired Jonathan Robbins as our VP of Engineering, who was subsequently promoted to the role of CTO in Q4.

Jeffrey Ishmael: Overall, we expect to see significant leverage increases in our opex spend against our growth and 24, while we are significantly increasing program spend on the sales and marketing side of the business. We believe we are properly structured and our head count and expected 2024 year in headcount that would be equivalent to the 52 person cannot we finished with it.

Jeffrey Ishmael: 2022 now.

Jeffrey Ishmael: We now have a significantly higher caliber team that has the financial support to drive the growth that we expect this brand should be able to achieve.

Jeffrey Ishmael: As mentioned in earlier remarks, we continue to improve our cost structure, which when adjusted for the previously noted adjustments increased a mere eight 5% for the full year versus 2022, while revenue increased 18, 4%.

Jeffrey Ishmael: Jonathan has been recalibrating that team, working with the broader team on the re-architecture of our SaaS platform, moving us towards a cloud-agnostic structure, as well as bringing in additional talent to drive our data science and reporting intelligence efforts. As Bryan mentioned in January of this year, we brought on Christine Elson as our new VP of Marketing. We believe that Christine is the right person to drive additional recognition for the Intellicheck brand and to provide the support that the sales team needs to further drive revenues and logo wins.

We have remained committed the entire you to achieving adjusted EBITDA breakeven for the year, which we have exceeded now puts us in a position to start moving that result into a more positive position for 2024.

Jeffrey Ishmael: The higher adjusted EBITDA result for 'twenty 'twenty four will be the combined disciplines of executing on our revenue plans, ensuring consistency in our gross margins and holding all the team accountable for their FY 'twenty four operating budgets.

Jeffrey Ishmael: During the prior quarter. We also discussed the early efforts regarding the formalization of our channel partner program and I'm happy with the results that we're seeing.

Jeffrey Ishmael: Since the launch of the program, we have rolled out our partner portal, where we will conduct our deal registration and where our sales team will start accepting registered leads through partners. We have also successfully signed our first cohort of partners we.

Jeffrey Ishmael: As we executed on expense initiatives, we made significant shifts in our expense structure and moved much of our spend out of the G&A and product areas to our previously discussed investments in sales and marketing. These initiatives have already had a demonstrable impact and are reflected in our fourth-quarter results, where operating expenses decreased 15.1% versus the prior year compared to a 13.7% increase in revenue and delivered on our goal of adjusted EBITDA break even or better. As a percentage of expenses, we are expecting to see our R&D spend continue to decrease year over year, while sales and marketing expenses will increase by approximately 8% to 10% to support a broad range of brand and marketing initiatives.

Jeffrey Ishmael: We're excited to see a group of partners that will expand our presence within the automotive law enforcement and government sectors. One of our top partner signings has a technology ecosystem of more than 10000 government contractors value added resellers solution providers and system integrators.

Jeffrey Ishmael: In consideration to our 'twenty 'twenty four outlook, we expect to see continued gross margins of approximately 92%, while we continue to improve our architecture and data intelligence capabilities.

Jeffrey Ishmael: We also expect to see continued leverage in our operating expenses as a result of the expense initiatives, we implemented in 2023.

Jeffrey Ishmael: Overall, we expect to see significant leverage increases in our OpEx spend against our growth in 24. While we are significantly increasing program spend on the sales and marketing side of the business, we believe we are properly structured in our headcount and expect a 2024 year-end headcount that will be equivalent to the 52-person count we finished with in 2022. Thank you.

Jeffrey Ishmael: As previously discussed we expect the non cash component of our spend to decrease by four to 500 basis points versus 2023, with 90% of that being total stock based compensation.

Jeffrey Ishmael: In closing we remain committed to the continued improvement of our corporate performance, maintaining our strong balance sheet and driving shareholder value with these new initiatives. We look forward to sharing our Q1 results with you in may.

Jeffrey Ishmael: We now have a significantly higher-caliber team that has the financial support to drive the growth that we expect this brand should be able to achieve. As mentioned in earlier remarks, we continue to improve our cost structure, and Justin, for the previously noted adjustments, increased a mere 8.5% for the full year versus 2022 while revenue increased 18.4%. We have remained committed the entire year to achieving adjusted EBITDA break even for the year, which we have exceeded and now puts us in a position to start moving that result into a more positive position for 2024. A higher adjusted EBITDA result for 2024 will be the combined disciplines of executing on our revenue plans, ensuring consistency in our gross margins, and holding all the team accountable for their FY24 operating budget.

Jeffrey Ishmael: Now I'll turn the call back to Brian who will discuss our Q1 revenue outlook.

Bryan Lewis: Thanks, Jeff as I mentioned in my prepared remarks, we have a lot of activity in the pipeline with a number of deals going live in Q2, and Q3 that we believe will drive significant revenue growth in the back half of the year like I've always said larger deals take longer to close and longer for the implementation. We are on the cusp of a number of size.

<unk> revenue generators that we believe will really move the needle in the back half of the year. These include the new retailers with our long standing Bank partners additional bank use cases global media companies auto title and now crypto currency our latest vertical.

Bryan Lewis: As it stands today, we've seen year over year declines in scanning volumes in the first quarter at our retail partners that we believe is driven by some of our larger clients, reducing door counts and weaker store traffic in general.

Bryan Lewis: Additionally, as I mentioned in my prepared remarks, we've had longer than originally anticipated implementation times to onboard larger customers. For example, the two regional banks that are now live.

Jeffrey Ishmael: During the prior quarter, we also discussed early efforts regarding the formalization of our channel partner program, and I'm happy with the results that we are seeing. Since the launch of the program, we have rolled out our partner portal, where we will conduct our deal registration, and where our sales team will start accepting registered leads from partners. We have also successfully signed our first cohort of partners.

Bryan Lewis: As it stands today, we anticipate Q1 revenues in the range of 4.3 to four 4 million with year over year growth accelerating sequentially throughout the remainder of the year with the new hires we have in place our pipeline and our gross margin and expense structures. We believe that we are well positioned for accelerated growth and to be.

Jeffrey Ishmael: We are excited to see a group of partners that will expand our presence within the automotive, law enforcement, and government sectors. One of our top partner signings has a technology ecosystem of more than 10,000 government contractors, value-added resellers, solution providers, and system integrators. In consideration of our 2024 outlook, we expect to see continued gross margins of approximately 92% while we continue to improve our architecture and data intelligence capabilities. We also expect to see continued leverage in our operating expenses as a result of the expense initiatives we implemented in 2023. As previously discussed, we expect the non-cash component of our spend to decrease by 400 to 500 basis points versus 2023, with 90% of that being total stock-based compensation.

Speaker Change: At EBITDA positive in 2024, I will now turn the call over to the operator to take your questions.

Speaker Change: Thank you.

Speaker Change: We'll now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Somewhat indicate that your line is another question I cant and.

Speaker Change: Press Star two if he would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the snarky.

Speaker Change: One moment, please pull for questions.

Speaker Change: Thank you.

Speaker Change: First question comes from the line of Mike Grondahl with Northland Securities. Please proceed with your question.

Michael John Grondahl: Brian and Jeff.

Michael John Grondahl: Brian could you talk about pricing.

Speaker Change: Overall I.

Michael John Grondahl: I think at one point like a 16% increase in average.

Michael John Grondahl: Pricing per scan was may be called out.

Michael John Grondahl: I'm just kind of curious like are you seeing pricing pressure pricing power trying to understand that a little bit.

Michael John Grondahl: And then if you could segue into transaction.

Michael John Grondahl: I think you talked about.

Michael John Grondahl: If you just meant at the big retailers like down 15% or kind of what overall are you seeing that with with transaction trends.

Michael John Grondahl: Sure.

Speaker Change: Okay. So in terms of pricing the only time that we see.

Jeffrey Ishmael: In closing, we remain committed to the continued improvement of our corporate performance, maintaining our strong balance sheet, and driving shareholder value within these new initiatives. We look forward to sharing our Q1 results with you in May. I will now turn the call back to Bryan, who will discuss our Q1 revenue. Thanks, Jeff.

Speaker Change: Pricing pressure I would say is that we're looking at bringing on.

Speaker Change: People in that age restricted space and I think there's a lot of people that want to sell into there and I also think that there's a lot of.

Speaker Change: There's plenty of places that don't really want something as accurate as we are because when youre is accurate is that you're cutting their revenue, where we always win and certainly have pricing power is where it hurts our client.

Bryan Lewis: As I mentioned in my prepared remarks, we have a lot of activity in the pipeline with a number of deals going live in Q2 and Q3 that we believe will drive significant revenue growth in the back half of the year. But, like I've always said, larger deals take longer to close and longer for implementation. We are on the cusp of a number of sizable revenue generators that we believe will really move the needle in the back half of the year. These include new retailers with our longstanding bank partners, additional bank use cases, global media companies, auto, title, and now cryptocurrency, our latest verticals. As it stands today, we've seen year-over-year declines in scanning volumes in the first quarter at our retail partners that we believe are driven by some of our larger clients reducing door counts and weaker store traffic in general.

Speaker Change: Nationally if somebody gets through and commits identity theft.

Speaker Change: So overall I'd say that in our in the core markets, where people really care you know title in auto and banking and all those things and you know and even crypto keys get crypto wallet empty, you and you're kind of in trouble. So.

Speaker Change: Where it really matters that you catch the bad guys, we have pricing power.

Speaker Change: And again some of the age restricted spaces.

Well just walk away from the business is it really worth it for you know what some people are willing to do it but the systems just don't work and I think in the end of the day, they're going to get costs, they're going to get fine they'll probably come back to us.

Operator: Additionally, as I mentioned in my prepared remarks, we've had longer than originally anticipated implementation times to onboard larger customers, for example, the two regional banks that are now live, and the stance today we anticipate Q1 revenues in the range of 4.3 to 4.4 million with year-over-year growth accelerating sequentially throughout the remainder of the year. With the new hires we have in place, our pipeline, and our gross margin and expense structures, we believe that we are well positioned for accelerated growth and to be adjusted EBITDA positive in 2024. I will now turn the call over to the operator to take your questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone and say John Hibshman, and you may press start to if you would like to remove John and Michael Grondahl. It may be necessary to pick up your handset before pressing the One moment, please.

Speaker Change: In terms of I think you're asking my overall.

What are we seeing in transactions transaction volumes continue to go up in areas other than retail I'm looking at you know some of the numbers now if I compare.

Speaker Change: You know this year to Q4 this year to Q4 last year I'm looking at some of our you know very large retailers down anywhere between 15% to 25% in terms of their transaction volume, so and everything that I'm reading you know, we've got you know retailers shutting down a 150 stores.

Speaker Change: People are talking about.

Speaker Change: Credit cards getting maxed are people worried about the interest rates. So I think that that's one of the reasons that we really made sure that we were diversifying and getting into other markets that really aren't dependent on a transaction you know if you need to reset your email or something it's really important you have to do it.

Speaker Change: Those arent subject to.

Speaker Change: Economic conditions, and they're making sure they were getting into more and more businesses like that.

Got it and then.

Speaker Change: I don't know can you call out maybe.

Operator: I'll be pulled for questions. Thank you. Our first question comes from the line of Mike Grondahl with Northland's. Please proceed with your questions, Bryan and Jeff.

Speaker Change: Two <unk>.

Speaker Change: New wins.

<unk> really help you in the back half of 'twenty four.

Speaker Change: In trying to kind of understand the statement in the press release, some sizable revenue growth you know some wins it will really move the needle trying to figure out which ones we need to track closely.

Michael John Grondahl: Bryan, could you talk about pricing? and the rest of the team. Pricing Per Scan was maybe called out. I'm just kind of curious, like, are you seeing pricing pressure, pricing power? Trying to understand that a little bit.

Speaker Change: You know I think that these automotive partnerships are very important to US you know certainly you know getting.

Bryan Lewis: And then if you could segue into transactions, I think you talked about, I don't know if you just meant at the big retailers, like down 15%, or kind of what overall are you seeing with transactions? We'll start with that. Sure.

Speaker Change: 2600 locations, you know with guaranteed volumes minimums.

Speaker Change:

Speaker Change: Look at what I think that really can be certainly should be must have much higher I think getting into the other use cases at the regional banks.

Bryan Lewis: Okay. So in terms of pricing, the only time that we see pricing pressure, I'd say, is if we're looking at bringing in people in the age-restricted space. And I think there are a lot of people that want to sell into there, and I also think that plenty of places that don't really want something as accurate as we are because when you're as accurate as us, you're cutting their revenue. Where we always win and certainly have pricing power is where it hurts our clients financially if somebody gets through and commits identity theft. Overall, I'd say that in the core markets where people really care, you know, title, auto, banking, and all those things and even crypto. If you get your crypto wallet emptied, you're kind of in trouble.

Speaker Change: It can be significant revenue.

Speaker Change: Yeah, it could be the true age.

Speaker Change: And their partnership with Max could be significant revenue to the back half of the year. So I think it's a combination of a lot of things you know some of the things that we're working on with the resellers.

Speaker Change: Can really help us blow up at the back end of the year. Some of the pilots that we've been working with some large organizations and again just the larger it is the longer it takes us.

Speaker Change: The amount of people that have to give their stamp of approval you know it seems everywhere. We go to business people like I want it yesterday and rightly, so dev ops and info stack or making sure that everything about us is safe so that they don't get hacked and it just always takes longer than we would hope and certainly longer than that.

Bryan Lewis: So where it really matters that you catch the bad guys, we have pricing power. And again, some of the age-restricted spaces, you know; we'll just walk away from the business. Is it really worth it?

Bryan Lewis: You know, some people are willing to do it, but the systems just don't work. And I think at the end of the day... They're going to get caught. They're going to get fined.

Speaker Change: Our business folks at home. So I think it's a combination of some of the deals that we signed and then some of the pilots that we have in place are really hitting me afterwards.

Speaker Change: Got it and then just lastly.

Bryan Lewis: They'll probably come back to us. In terms of, I think you're asking, Mike, overall, what are we seeing in transactions? Transaction volumes continue to go up in areas other than retail. I'm looking at some of the numbers now, and if I compare this year to Q4, this year to Q4 last year, I see some of our very large retailers down anywhere between 15% to 25% in terms of their transaction volumes. So in everything that I'm reading, we've got retailers shutting down 150 stores. People are talking about credit cards getting maxed out, or people worried about interest rates. So I think that that's one of the reasons that we really made sure that we were diversifying and getting into other markets that really aren't dependent on a transaction. If you need to reset your email or something, it's really important.

Speaker Change: Retail customers.

Speaker Change: <unk> what percent roughly of revenue are they still.

Speaker Change: There's still the majority you know upwards of Jeff might have better numbers off the top of his head, but I'm going to say, they're still up there around if I look at financial services and again, you know a number for everything comes through one fee. So it's hard to break it out, but you know the financial services and everything that they're doing probably about 95.

Speaker Change: 5%.

Speaker Change: But you know a greater percentage of financial services. Overall is also becoming banking just regular banking transactions and again something that you know it certainly is not so much economic dependent.

Speaker Change: It's just that you know certainly some of our largest retailers, where a significant volume of transactions, but again, they're hitting headwinds and that will hit us again, why we're focusing so much on diversifying.

Bryan Lewis: You have to do it. Those aren't subject to it. You know, economic conditions, and we're making sure that we're getting into more and more businesses like that. I don't know, can you call out maybe two, New Wind, that really help you in the back half of 24 and try to kind of understand, you know, the statement, the press release: sizable revenue growth, you know, some wins that will really move. Trying to figure out which ones we need to track closely. You know, I think that these automotive partnerships are very important to us, you know, certainly, you know, getting, you know, 2600 locations, you know, with guaranteed volumes, minimums, you know, I look at what I think that really could be, certainly should be much higher. I think getting into the other use cases at the regional banks could bring significant revenue.

Speaker Change: For sure got it Okay, Hey, thanks, guys.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Scott Buck with H C. Wainwright. Please proceed with your question.

Scott Christian Buck: Hi, good afternoon, everyone. Thanks for taking my questions.

Scott Christian Buck: Uh huh.

Scott Christian Buck: Brian I was hoping you could give a small following up there a little bit on the pricing I was hoping you could give a little color on.

Three quarters of a million dollars of auto transactions look similar pricing wise to three quarters of a million card not present or do you charge.

Scott Christian Buck: A material difference between customers are of that nature.

Scott Christian Buck: And it is what we're looking at more the only time. It was really a difference in pricing is age restricted versus kind of everything else. So the transaction.

Bryan Lewis: You know, it could be the True Edge, you know, in their partnership with NAICS, could bring significant revenue through the back half of the year. So I think it's, you know, a combination of a lot of things, some of the things that we're working on with the resellers could really help us blow up at the back end of the year. Some of the pilots that we've been working on with some large organizations, and again, just the larger it is, the longer it takes because, you know, the number of people that have to give their stamp of approval. It seems everywhere we go to visit, people are like, I want it yesterday. And rightly so, DevOps and InfoSec are making sure that everything about us is safe so that they don't get hacked.

Scott Christian Buck: For auto dealer, it's gonna be if theyre doing volume like that they're going to be almost like a retailer who is the only thing you know.

Scott Christian Buck: Card not present transaction when I certainly will say is we continue to raise pricing you know I think Jeff said in his remarks, we were up about 16% overall for the year that includes every deal that we have been.

Scott Christian Buck: Closing. So you know we are always doing a combination of you know where we're pushing the pricing because we know and we see how much we're saving for people and you get enough auto dealers and you could realize why we did that for them, we're going to raise the price for everybody else and that's what we've done.

Bryan Lewis: And it just always takes longer than we would hope, and certainly longer than their business folks would hope. So I think it's a combination of some of the deals that we've signed, and then some of the pilots that we have in place, really hitting the afterburner.

Speaker Change: Great. That's helpful and then I wanted to ask about.

Speaker Change: The balance between our profitability and revenue growth it sounds like 24, we're going after.

Michael John Grondahl: And then, hey, just lastly, retail customers, transactions. What percent roughly of revenue are they still? There's still the majority, you know, upwards of, Jeff might have better numbers off the top of his head, but I'm going to say there's still up there around, if I look at financial services. And again, number four, everything comes through one feed, so it's hard to break it out. But, you know, the financial services and everything that they're doing, probably about 95%, but, you know, a greater It's just that, you know, certainly some of our largest retailers had a significant volume of transactions, but again, you know, they're hitting headwinds, and that will hit us, and again, why we're focused so much on diversifying. For sure. I got it.

Speaker Change: The EBITDA margins improve a little bit, but you're certainly not taking the foot off the gas here on growth right.

Speaker Change: No no no no no not at all you know I think you know.

Speaker Change: Yeah.

Speaker Change: Nothing we are running as hard and fast as we can for growth.

Speaker Change: And at the same time, you know I love as Jeff has been able to bring.

Speaker Change: Yeah, our financial diligence that really didn't exist before and put all the systems in place. So I think we've got a better picture of where and how we're spending money and we can quickly move it to the things that we think are going to accelerate growth and certainly that you know it was the marketing the branding.

Speaker Change: And the channel program and then making sure also we have the right salespeople, which I really believe we finally have the right team in place.

Speaker Change: So growth is what we are going for you know we are all tied to revenue from the.

Operator: Okay. Hey, thanks, guys. Thank you. Our next question comes from the line of Scott Buck with HC Wainwright. C. with their, Hi, good afternoon, everyone.

The most recent employee in the company to me all we care about is making sure that were growing revenue, while we've got Jeff in the corner over there and making sure we're not spending a ton of money and blow on margins. So yeah grocery is king.

Scott Christian Buck: Thanks for taking my questions. Thanks, guys. Brian, I was hoping you could follow up on a little bit on the pricing. I was hoping you could give a little color on, you know, if three quarters of a million dollars in auto transactions look similar pricing wise to three quarters of a million dollars, you know, card not present, or do you charge? you know, a material difference between customers of that nature and what we're looking at more; the only time there's really a difference in pricing is age-restricted versus kind of everything else.

Speaker Change: Okay. That's great appreciate it.

Speaker Change: Got it Yeah go ahead, Jeff.

Jeffrey Ishmael: No I was going to say you know were definitely cognizant of how we're deploying that that spend I mean, one of the things I watch as I look at our employee count and were looking at moving towards 52 people and we've got a very high revenue per employee and I'm cognizant that because what we don't want to do is overheat the team either so there's Jonathan work centers re.

Bryan Lewis: So the transaction, you know, For an auto dealer, it's going to be, if they're doing volume like that, they're going to be almost like a retailer who's doing, you know, a part not present transaction. What I certainly will say is we will continue to raise prices. You know, as Jeff said in his remarks, we're up about 16% overall for the year. That includes every deal that we have been closing. So, you know, we always do it a combination of pushing the prices because we know and we see how much we're saving for people. And, you know, you get enough auto dealers, and you can realize, wow, we did that for them. We're going to raise the price for everybody else, and that's what we do. Great, that's very helpful.

Jeffrey Ishmael: Her efforts, it's I don't think that you're resource constrained. If you are a compelling case to be more spend to relocate that will work across the entire team has pursued rules out all of these marketing initiatives all of the trade shows that we're gonna be attending conferences, Hey, let's balance you know aren't.

Jeffrey Ishmael: John knows what's gonna be affected these are all new cut you know much work as a team. So there's really not a rather limit or in place, but we're making sure that we stay in the guardrails of the children those committed to EBITDA levels.

Jeffrey Ishmael: Publicly.

Speaker Change: Great that's.

Speaker Change: That's helpful. And then last one for me in terms of capital allocation you know as the business starts to generate more cash internally. How are you thinking about uses of that cash could we see you know what.

Bryan Lewis: And then I wanted to ask about the balance between profitability and revenue growth. It sounds like 24, we're going to see EBITDA margins improve a little bit, but you're certainly not taking the foot off the gas here on growth, right? No, no, no, no, no, no, not at all.

Speaker Change: An aggressive share repurchase.

Speaker Change: With with a doctorate in Denver.

Like I say that kind of everything on the table you know were always going to look at what do we think brings the most shareholder value and that could be everything from a stock repurchase to it is there a small little tuck in company with really cool technology that makes sense to add into our portfolio.

Bryan Lewis: You know, I think, you know, I we are running as hard and fast as we can for growth. And at the same time, what I love is Jeff has been able to bring a financial diligence that really didn't exist before and put all the systems in place. So I think we've got a better picture of where and how we're spending money, and we can sort of quickly move it to the things that we think are going to accelerate growth. And certainly that, you know, it was marketing, the branding, and the channel program, and then making sure we have the right salespeople, which I really believe we finally have the right team in place.

Speaker Change: So yeah, and a lot of cool startups and other things come across our door, where they all know that you've got something very interesting, but it's useless without a really really accurate first step. So we're always looking and it would you know again, what makes the most sense for that.

Speaker Change: Future growth of Intel a check and also for the shareholders.

Speaker Change: Great well, thanks for the time guys and appreciate all the detail in the prepared remarks today.

Bryan Lewis: So growth is what we are going for. You know, we are all tied to revenue. From the most recent employees in the company to me, all we care about is making sure that we're growing revenue. Well, we've got you.

Speaker Change: Thanks Scott.

Speaker Change: Our next question comes from the line of Rudy passenger with D. A Davidson. Please proceed with your question.

Rudy Passenger: Hey, great. Thanks for taking my question I guess finally, or Jeff If you had to take a swag at it kind of going back to Mike's last question.

Rudy Passenger: Of the 95% that's coming from financial services is it's you know I know, there's some messiness in the data you're getting but it's like two thirds of that coming from retailers. It reinforces it at like.

Jeffrey Ishmael: We've got Jeff in the corner over there making sure we're not spending a ton of money and blowing up the markets. So, you know, growth is king. They forget all of them.

Jeffrey Ishmael: Yeah, go ahead, Jeff. But no, I was going to say, you know, we're definitely cognizant of how we're deploying that spend. I mean, one of the things I watch is our employee count, and we're looking at moving towards 52 people. We've got a very high revenue per employee, and I'm cognizant of that because what we don't want to do is overheat the team either. So as Jonathan works on his re-architecture efforts, it's like, don't think that you're resource constrained. If you have a compelling case and you need more spend, communicate that. We'll work across the entire team.

Jeffrey Ishmael: Is there any kind of bounce you can put around it.

Jeffrey Ishmael:

It's gonna be big.

Jeffrey Ishmael: Michigan portion of it you know 75% to 80% probably are in that range.

Okay, that's very helpful.

It seems it's going down every quarter as we add more pure bags and then also.

Jeffrey Ishmael: As the banks that we have had more banking use cases, so it continues to move down.

Yeah, Okay, and then as far as you know you said you saw some large retailers with 15% to 25% decline in Q4.

Jeffrey Ishmael: And as Christine plans out all of these marketing initiatives, all of the trade shows that we're going to be attending, conferences, hey, let's balance, you know, our needs for those, what's going to be effective. These are all new, but, you know, let's work as a team. So there's really not a rev limiter in place, but we're making sure that we stay within the guardrails of achieving those committed EBITDA levels, you know, publicly. Right, that's helpful.

Jeffrey Ishmael: Hmm what have you seen quarter to date I know, you said down year over year quarters, as Q1, but like what level of decline has it gotten worse throughout Q1 or is it a if I look at it yeah. If I look at Q1, I think and that's part of the reason you know what I think you know.

Jeffrey Ishmael: What we're seeing in Q1.

Jeffrey Ishmael: I'm looking at the numbers I was running.

Bryan Lewis: And then last one for me, in terms of capital allocation, you know, as the business starts to generate more cash internally, how are you thinking about uses of that cash? Could we see, you know, an aggressive share repurchase? With the stock trading down here, I'd say that kind of everything's on the table.

Jeffrey Ishmael: And just felt like we've got some down.

Jeffrey Ishmael: Words of 27%.

Jeffrey Ishmael: The large guys are basically down anywhere between 18 and 27.

Jeffrey Ishmael: 7%.

Jeffrey Ishmael: Okay, so a bit a bit worst thus far in Q1 that Q4.

Scott Christian Buck: You know, we're always going to look at what we think brings the most shareholder value, and that could be everything from a stock repurchase to is there a small little tuck-in company with really cool technology that makes sense to add to our portfolio. So, you know, and a lot of cool startups and other things come across our door where they all know they've got something very interesting, but it's useless without a really, really accurate first step. So we're always looking, and it would make the most sense for the future growth of Intellicheck and also for the shareholders. Great Well, thanks for the time, guys, and I appreciate all the added detail in the prepared remarks today. Great Thanks, Scott. Our next question comes from the line of Rudy Kessinger with DAT.

Jeffrey Ishmael: But I'm comparing yeah. So they can do apples to apples because you know we always see a decline in retail in Q1, just because you know the holidays holiday shopping and everybody's like you know not spending a lot of money, but its not comparing it to.

Jeffrey Ishmael: And the.

Jeffrey Ishmael: First two months of this year versus two months of last year and that's what those numbers are.

Jeffrey Ishmael: Okay.

Speaker Change: And then I guess, you know want to be clear one thing that you said you do expect growth to accelerate sequentially throughout the year and so does that mean improving year over year growth in.

Speaker Change: Q2 versus Q1 Q3 versus Q2, so on and so forth.

Operator: Please proceed with your questions. Hey, Greg, thanks for taking my question. I guess, Brian or Jeff, if you had to take a swag at it, kind of going back to Mike's last question, you know, of the 95% that's coming from financial services, it's, I know there's some messiness in the data you're getting, but is like two-thirds of that coming from retail? Is it very forced? Is it half? Is there any kind of balance you can put around it?

Speaker Change: And could you just maybe.

Speaker Change: You know.

Speaker Change: Some of these new wins you know are these all.

Speaker Change: Kind of six figure a year revenue opportunity is is the big three bank was just the initial use cases like is that does that push them into a seven figure a year customer like the other large banks that you have I mean, just what and where should growth accelerate to by the end of this year.

Rudy Grayson Kessinger: It's going to be a significant portion of it, 75% to 80%, probably in that range. Okay, that's, you know, it seems it's going down every quarter as we add more pure banks. And then also, you know, as the banks that we have add more banking use cases, so it continues to move down. Yeah, okay. And then as far as, you know, you said you saw some large retailers with a 15 to 25% decline in Q4. What have you seen quarter to date? I know you said down near the year quarter to date in Q1, but like what level of a decline? Has it gotten worse throughout Q1, or is it not?

Speaker Change: Look I think that.

Speaker Change: You know looking at that large bank there should be just like all of our other large banks. There's the same use cases, the same need them. It's just a matter of how fast do they get up and running and again, they're going to start with everything digital in their mobile apps.

Speaker Change: And then you roll everything into in branch in 2025.

Speaker Change: One of the things that.

Speaker Change: You know we're doing as part of our strategy is not chasing the well, it's something we're always doing and they take a really really long time.

Speaker Change: But we're also through our channel partners and also now with the simplicity of our tools to be able to integrate them, particularly in the digital World. You know, we're certainly making sure. The sales team is going after the singles and doubles as well. So you know I expect to see that we'll bring in you know fifth.

Bryan Lewis: If I look at, yeah, if I look at Q1, I think, and that's part of the reason, you know, and I think, you know, what we're seeing in Q1. I've been looking at the numbers I was running. I, Paul, we've got some down upwards of 27%. The large guys are basically down anywhere between 18 and 20.

Speaker Change: 50 to $75000 kind of deals with more frequency because they're easy to bring up while at the same time continuing to grow the existing clients, adding some of the folks that should be you know seven figure kind of deals.

Rudy Grayson Kessinger: Okay, so a bit worse thus far in Q1 than Q4, and many more. Okay, and then I guess, You know. I want to be clear on one thing that you said. You do expect growth to accelerate sequentially throughout the year, and so does that mean improving year-over-year growth? Q2 versus Q1, Q3 versus Q2, so on and so forth. And could you just maybe, you know, some of these new wins? Are these all kind of six-figure-a-year revenue opportunities? Is the big three banks just the initial use cases?

Speaker Change:

Speaker Change: So a combination of things that we're hoping for brings in a way less lumpiness to the revenue growth.

Speaker Change: Make sure that we continue to land the big giant deals that are I think really important and improve how good we are and at the same time, making sure. The sales guys are bringing in stuff. So that they make emissions ended up you know, they're happy and they stay.

Speaker Change: So that's the whole point of getting the marketing right. The messaging right more people to know who we are because you know I still say it people think that everybody's the same doing IV validation and we're not and when they see how different we are things move.

Bryan Lewis: Like, is that, does that push them into a seven-figure-a-year customer like the other large banks that you have? I mean, just what, and where should growth accelerate to by the end? Look, I think that looking at that large bank, they should be just like all of our other large banks. There are the same use cases, the same needs. It's just a matter of how fast they get up and running.

Move quickly.

Speaker Change: Between the business side, we still have to go through all the info SEC and those types of things, but it moves quickly when people realize what we can do that really nobody else can do in our opinion and they want us. So I think a combination of things you're going to put us all across the board this year and the size of the deals that we're bringing it used to.

Bryan Lewis: And again, they're going to start with everything digital and their mobile apps and then roll everything into branches in 2025. I think one of the things that... and the rest of the team. So, we're going to be doing the $75,000 kind of deals with more frequency because they're easy to bring in while at the same time continuing to grow the existing clients, adding some of the folks that should be, you know, seven-figure deals. So, a combination of things that we're hoping for brings in way less lumpiness to the revenue growth, make sure that we continue to land the big, giant deals that are, I think, really important and prove how good we are, and at the same time, make sure the sales guys are bringing in stuff so that they make commissions, they're happy, and they stay.

Speaker Change: Be very big in sort of very small now, we're making sure that we get that mid range as well.

Okay. That's helpful. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Jeff Van <unk> with Craig Hallum. Please proceed with your question.

Jeffrey Ishmael: Great. Thanks for taking my questions Hey, guys. Some several.

Jeffrey Ishmael: Several here maybe wanted to follow on Rudy there in terms of the new signings, maybe you could just give us a swag of the a C V of contracts that are signed but not yet implemented as of Q4, even a ballpark you know put them all together the majors that you mentioned, putting aside any churn or anything else just the incremental VAT.

Bryan Lewis: So that's the whole point of getting the marketing right, the messaging right, more people to know who we are. Because I still say it, people think that everybody's the same when it comes to ID validation, and we're not. And when they see how different we are, things move quickly. You know, always on the business side, we still have to go through all the infosec and those types of things. But it moves quickly when people realize what we can do that really nobody else can do, in our opinion, and they want us. So I think a combination of things is going to put us all across the board this year in the size of the deals that we're bringing in, which used to be very big and sort of very small.

Speaker Change: The signings that you have in hand.

Inc. Can you give us a ballpark of that.

Speaker Change: I you know what I'd be worried about us, giving a number without having a better idea of whether they're gonna go live is that it seems as though you're getting back things, we certainly plan on get a.

Speaker Change: So.

Speaker Change: You know 22020 for guidance on our next call just where we kind of expect to end out the year.

Speaker Change:

Speaker Change: So what I would say is I am very comfortable with what the H C V that I've seen just and I'll also say this my sales team always seems to.

Rudy Grayson Kessinger: Now we're making sure that we get that mid-range as well. Okay, that's helpful. Thank you. Thank you. Our next question comes from the line of Jeff Van Rhee with Craig Halland. Thanks for sticking with your question. Great. Thanks for taking my questions. Hey, guys, several here, maybe one to follow on Rudy there.

Speaker Change: Sell smaller buckets the people that'd become very much bigger buckets. So it's always in my mind, an underestimation of.

Speaker Change: What the ACB could really be I'm comfortable with it in terms of what it means for growth for the year and you know where people where consensus has us and things I'm I'm very happy and comfortable with what I have seen sign and what I expect to be signed.

Operator: In terms of the new signings, maybe you could just give us a swag of the ACV of contracts that are signed but not yet implemented as of Q4, even a ballpark. You know, put them all together, the majors that you mentioned, putting aside any churn or anything else, just the incremental value of the signings that you have in hand in ink. Can you give us a ballpark figure of that? What I'd be worried about is giving a number without having a better idea of when they're going to go live because that just seems to always impact things. We certainly plan on giving some 2024 guidance on our next call, which is where we kind of expect to end out the year. So, what I would say is I am very comfortable with the ACV that I've seen, and I'll also say this: my sales team always seems to sell smaller buckets to people that become very much bigger buckets. So it's always in my mind an underestimation of what the ACV could really be.

Speaker Change: Okay.

Speaker Change: Got it and then maybe back to the the scan reductions of 15 to 25, and then maybe maybe accelerating a bit.

Speaker Change: How do you think about 'twenty for you what do you anticipate in terms of scan volume trends and maybe just a little bit about what's going on in those retailers I'm not a lot of retail while there are some but I mean I was a group certainly not putting down 20% on the revenue line. So maybe you can parse that just a little bit how much of that is due to your <unk>.

Speaker Change: Retailers, you know closing closing doors.

Versus just reduced economic activity versus potentially just people somehow finding a way around your solutions, just maybe parse that to the degree you can and how you think about it.

Jeffrey Van Rhee: I'm comfortable with it in terms of what it means for growth for the year and where people, you know, where consensus has us and things. I'm very happy and comfortable with what I have seen signed and what I expect to be signed. Okay. I got it. And then maybe back to the scan reductions of 15 to 25, and then maybe accelerate them a bit.

Speaker Change: If I'm looking at.

Speaker Change: The stores that are down the retailers that are down the most they're the ones that you're reading about because either they sort of lost their branding and people you know maybe you didnt want it it just didn't make sense to them anymore.

Bryan Lewis: How do you think about 24 and what do you anticipate in terms of scan volume trends? And maybe just a little bit about what's going on in those retailers. Not a lot of retailers.

Speaker Change: Or they're shutting down their stores.

Speaker Change: At that Hum.

Speaker Change: So what I'm seeing where they're down.

Bryan Lewis: Well, there are some, but I mean, as a group, certainly not putting 20% down on the revenue line. So maybe you can parse that just a little bit. How much of that is due to your retailers, you know, closing their doors versus, you know, just reduced economic activity versus potentially just people somehow finding a way around your solutions? Just, you know, maybe parse that to the degree you can and how you think about it. If I'm looking at the stores that are down, you know, the retailers that are down the most, they're the ones that you're reading about because, you know, either they sort of lost their branding, and people, you know, maybe didn't want to, it just didn't make sense to them anymore. Or they're shutting down their stores. You know, I'm looking at that.

Speaker Change: Is mostly.

Speaker Change: Large amounts is mostly.

Speaker Change: Those types of things I think again retailers that have lost their way that we've all been reading about for a while if I look at it across the rest of them. You know there are certain stores I think they have it right and they're up but you know there are smaller so they're up doesn't offset the down but overall.

Speaker Change: Looking at it.

Speaker Change: You know the big guys out people are fairly neutral or slightly up.

Speaker Change: So anywhere from you know, 95% to 100 and.

Speaker Change: 2%.

Speaker Change: Where they were this time last year.

Speaker Change: So you know I think that there is definitely some folks who are thinking about hey should I be.

Speaker Change: Spending money now.

Bryan Lewis: So what I'm seeing where they're down is mostly, you know, those large amounts are mostly those types of things. I think, again, retailers that kind of lost their way that we've all been reading about for a while. If I look at the rest of them, there are certain stores I think that have it right, and they're up. But, you know, they're smaller, so their up doesn't offset the down.

Speaker Change: Well as you know I think that's what we're seeing partially but I think a lot of it is really just retailers who lost their way.

Speaker Change: Yeah, Yeah, I mean, you're you're you're given thought to obviously the annual guide I mean, how do you tackle that how do you think about retail scans for 24 at this point.

Speaker Change: Look I think that if this trend continues I don't see a diving much more below this.

Speaker Change: And it could be that people spend a lot of money who knows on Christmas this year and holidays in there now.

Bryan Lewis: But overall, you know, looking at it, you take the big guys out, people are fairly neutral or slightly up. You know, so anywhere from 95% to 100% and 2% of where they were this time last year. So, I think that there definitely some folks who are thinking about, hey, should I be spending money now to do this? as well as, you know, I think that's what we're seeing partially, but I think a lot of it is really just retailers who lost their way. Yeah, I mean, you're obviously giving thought to the annual guide. I mean, how do you tackle that?

Speaker Change: Sitting back for a while.

Speaker Change: I don't unless something really crazy happens with the economy everything I'm reading is saying you know retail slightly off.

Speaker Change: But.

Speaker Change: We don't expect it to take a header so I don't know.

Speaker Change: I don't see it getting much worse than where we are now if anything potentially approving once we get out of Q1, and maybe people start to think about spending money more.

Got it got it and Jeff are Dr. P. O's I know it's in the excuse in case I don't know if you have that handy.

Speaker Change: I I don't know not in front of me Scott.

Speaker Change: Jeff that's alright.

Bryan Lewis: How do you think about retail scans for 24 at this point? Look, I think that if this trend continues, I don't see it diving much more below this. You know, and it could be that people spent a lot of money, who knows, on Christmas this year and the holidays, and they're now, you know, sitting back for a while. I don't, unless something really crazy happens with the economy, everything I'm reading is saying, you know, retail is slightly off, but they don't expect it to take a header. So I don't, you know, I don't see it getting much worse than where we are now and, if anything, potentially improving once we get out of Q1 and maybe people start to think about spending money more.

Speaker Change: I'm, sorry, I'm, sorry, no I don't I actually that's probably one of the one piece of data I don't have in front of me, but I'll make sure I have that prepared on the next call.

Speaker Change: It sounds good yeah, we'll get it offline. Thank you.

Speaker Change: Thank you.

Speaker Change: At the end of our question and answer session and with that I would like to turn the floor back over to Mr. Brian Lewis for closing comments.

Thank you operator, so I'd say in closing 2023 was a year of change and growth for us and you know everything from our new CTO, New channel partner program, New Vice President of marketing.

Bryan Lewis: What I'm happy about is we continued to build the strength of our organization and I think the changes that we've made you can see it already have an impact on cost productivity and new sales to be implemented in this year and as I told everybody before we're continually analyzing our performance and we don't hesitate.

Bryan Lewis: Got it, got it. And Jeff, the RPOs, I know it's in the Qs and Ks. I don't know if you have that handy.

Jeffrey Van Rhee: I don't, not in front of me, Scott. Jeff, that's all right. Thank you, Jeff. I'm sorry. Yeah, I'm sorry. No, I don't. Actually, that's probably one of the pieces of data I don't have in front of me, but I'll make sure I have that prepared. Sounds good.

Bryan Lewis: And make changes, where we think it will accelerate growth or reduce cost.

Bryan Lewis: Carrying for the Bottomline requires that we constantly raised the bar against which we measure ourselves and our progress which we do.

Speaker Change: Everybody asks are you satisfied with where you are in I would say no, but you know I am a pragmatist.

Bryan Lewis: Yeah, we'll get it offline. Thank you. We've reached the end of our question and answer session. And with that, I would like to turn the floor back over to Mr. Bryan Lewis for closing. Thank you, Operator. So I think closing, you know, 2023 was a year of change and growth for us.

Speaker Change: Understand that the large deals and the organizations that we deal with you know that can benefit so much from our services and multiple structural channels that we have to get through before they can integrate a new process of service. So you know well and we totally wish that there are ways to streamline.

Bryan Lewis: And, you know, everything from a new CTO, a new channel partner program, and a new Vice President of Marketing. What I'm happy about is that we continue to build the strength of our organization. And I think the changes that we have made, and as I told everybody before, we're continually analyzing our performance, and we don't hesitate to make changes where we think they will accelerate growth or reduce costs. Caring for the bottom line requires that we constantly raise the bar against which we measure ourselves and our progress, which we do. So everybody asks, are you satisfied with where you are? And I would say no, but I am a pragmaticist.

Speaker Change: The implementation and we work with our clients to do that we recognize that it might take awhile, but these partnerships.

Speaker Change: <unk> that these programs.

Speaker Change: Ladies and gentlemen, please standby.

Speaker Change: Yeah.

Speaker Change: No.

Speaker Change: Oh.

Speaker Change: [music].

Bryan Lewis: I understand that the large deals and the organizations that we deal with that can benefit so much from our services have multiple structural channels that we have to get through before they can integrate a new process or service. So, you know, and we totally wish that there were ways to streamline the implementation, and we work with our clients to do that. We recognize that it might take a while, but these partnerships, these programs. Ladies and gentlemen, please stand by, and the rest. BF-WATCH TV 2021, Thank you, and many more. Thank you for watching! and the rest, and many more, and the rest.

Speaker Change: Yeah.

Speaker Change: Hum.

Speaker Change: [noise].

Speaker Change: Thank you, ladies and gentlemen for standing by.

Operator: Thank you. Thank you, ladies and gentlemen, for standing by. Mr. Lewis, please continue. Well, sorry about that for everybody. You've got to love it when your call says call failed. So just to end, what I'd say... These big deals take a long time, but they also have a lot of value and a lot of long-term benefits. So we feel that they're worth it. Also, we changed the business model to make sure we also get every single and double out there.

Bryan Lewis: Mr. Lewis Please continue.

Lewis: Oh, sorry about that for everybody you got to love. It on your call says call sale, so just to and when I say.

Bryan Lewis: These big deals take a long time. They also have a lot of value and a lot of long term benefit so we feel that they're worth it.

Bryan Lewis: Also why we changed the business model to make sure. We also get every single and doubles out there. So again my thanks for you joining us today, we really anticipate more good news to come and we look forward to sharing with it all with you. So have an excellent night clubs.

Bryan Lewis: So, again, my thanks for joining us today. We really anticipate more good news to come, and we look forward to sharing it all with you. So have an excellent night, folks. This concludes today's teleconference. You may disconnect your lines at this time.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time.

Operator: Thank you for your participation, and the rest. BF-WATCH TV 2021, and the rest. BF-WATCH TV 2021, transcript Emily Beynon BF-WATCH TV 2021, transcript Emily Beynon BF-WATCH TV 2021, and many more. BF-WATCH TV 2021, transcript Emily Beynon BF-WATCH TV 2021, and the rest of the crew. transcript Emily Beynon

Speaker Change: You for your participation.

Speaker Change: Oh, Oh Oh.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: [music].

Speaker Change: Yeah.