Q4 2024 Intellicheck Inc Earnings Call

Greetings and welcome to the Intel a check fourth quarter and year end 2024 earnings call.

Operator: Greetings and welcome to the Intellicheck fourth quarter and year-end 2024 earnings At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone. As a reminder, this conference is being recorded.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

Gar Jackson: It is now my pleasure to introduce Gar Jackson, investor related. Please go ahead. Thank you, Operator.

Gar Jackson: It is now my pleasure to introduce Gar Jackson Investor Relations. Please go ahead.

Speaker Change: Thank you operator, good afternoon, and thank you for joining us today for the Intel check fourth quarter and full year 2024 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 azimuth.

Gar Jackson: Good afternoon, and thank you for joining us today for the IntelliCheck fourth quarter and full year 2024 earnings call. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company or its management, as well as assumptions made by and information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker Change: When used in this conference call words, such as well.

Speaker Change: I 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.

Gar Jackson: These forward-looking statements are based on management's current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes, new information, subsequent events, 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.

Speaker Change: These forward looking statements are based on management's current expectations and beliefs about future events.

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

Speaker Change: 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 March 20th 2020.

Gar Jackson: Statements made on today's call are as of March 20th, 2025. Management will use the financial term adjusted even on 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.

Speaker Change: 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.

Gar Jackson: We'll begin today's call with Bryan Lewis, Intellitech's Chief Executive Officer, then Adam Sragovicz, Intellicheck's Chief Financial Officer, who will discuss the Q4 and full year 2024 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors.

Speaker Change: We will begin today's call with Brian Lewis <unk>, Chief Executive Officer, Dan haven't shrunk events, and Telecheck, Chief Financial Officer, who will discuss the Q4 and full year 2024 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.

Gar Jackson: Today's call will be limited to one hour, and I will now turn the call over to Bryan.

Speaker Change: Thanks, Gar and thank you all for joining us today for the Intel a check Q4, 2024 and fiscal year 'twenty 'twenty four earnings call.

Bryan Lewis: Thanks, Gar, and thank you all for joining us today for the Intellicheck Q4 2024 and Fiscal Year 2024 earnings call. 2024 marked a year focused on vertical channel diversification and further investment in what we believe are the best-in-class ID validation services. We are keenly aware of the fact that the market for identity verification services continues to evolve at a rapid pace.

Speaker Change: 'twenty 'twenty four mark that you're focused on vertical channel diversification and further investment in what we believe are the best in class I D validation services we.

We are keenly aware of the fact that the market for identity verification services continues to evolve at a rapid pace what are the most important fats as fast as we are focused on is to maintain our competitive stance in.

Bryan Lewis: One of the most important facets we are focused on is to maintain our competitive stance in ongoing investments in our IT initiative.

Speaker Change: And ongoing investments in our I T initiatives.

Bryan Lewis: We have also added new leadership to the customer success team that we believe will be instrumental in enhancing the customer experience through improved marketing and stronger relationships with our key accounts. Leveraging marketing and customer service capabilities will allow us to emphasize our technology solutions key distinguishing benefits as we believe that we are more effective at identifying fake IDs than our competitors. Templating, which is the most common practice for ID verification, is prone to errors. Many factors, such as glare on the license and bad lighting for image capture, impact the accuracy of what others can do, but we are different.

Speaker Change: We have also added new leadership to the customer success team that we believe will be instrumental in enhancing the customer experience through improved marketing and stronger relationships with our key accounts.

Speaker Change: Leveraging marketing and customer service capabilities will allow us to emphasize our technology solutions key distinguishing benefits as we believe that we are more effective at identifying fake ids than our competitors can.

<unk>, which is the most common practice for I D verification is prone to errors. Many factors such as glare on the license and bad lighting for image capture impact the accuracy of what others can do but we are different we utilized a bar code on the back of their license and confirmed that the D. M E planted.

Bryan Lewis: We utilize the barcode on the back of the license and confirm that the DMV-planted hidden attributes exist in that barcode and that the license is, in fact, a government-issued document. Nobody else does this. This is something that is unique to IntelliCheck and is driven by our long-standing relationship with the American Association of Motor Vehicle Administrators.

Speaker Change: Hidden attributes exist in that bar code and that the license is in fact, a government issued document.

Speaker Change: Nobody else does yes. This is something that is unique to Intel a check and is driven by our long standing relationship with the American Association of motor vehicle administrators.

Bryan Lewis: We will begin with an overview of our results that Adam will go into in more detail later on in this call. SAS revenues in Q4 grew 17% quarter over quarter and totaled a record $5.9 million. SAS revenues for the full year grew 7% and came in at a record $19.8 million versus the prior year, just shy of the $20 million mark. We achieved our goal at the outset of the year, finishing adjusted EBITDA positive, and believe that we are well positioned as we go into 2025 to accelerate growth, particularly in the back half of the year.

Speaker Change: We will begin with an overview of our results that Adam will go into in more detail later on in this call.

Speaker Change: SaaS revenues in Q4 grew 17% quarter over quarter and told at a record $5 9 million SaaS.

Speaker Change: SaaS revenues for the full year grew 7% and came in at a record 19.8 million versus the prior year, just shy of the 20 million Mark we.

Speaker Change: We achieved our goal at the outset of the year, finishing adjusted EBITDA positive and believe that we are well positioned as we go into 'twenty 'twenty five to accelerate growth, particularly in the back half of the year.

Speaker Change: What this tells US is that our focus on new verticals is working.

Bryan Lewis: What this tells us is that our focus on new verticals is working. We put a very strong focus on the automotive, title insurance, email, social media, and retail banking verticals. And I'm excited to say that the volume in these new and targeted verticals grew 13%, 2,500%, 54%, and 17% respectively for the year. These new clients are important to us as they are generally at higher rates than our legacy customers. Illustrating this point is the very strong progress we have made in the title insurance vertical.

Speaker Change: We put a very strong focus on the automotive title insurance email social media and retail banking verticals and I am excited to say that the volume in these new and targeted verticals.

Speaker Change: 13%, 2500%, 54% and 17% respectively for the year.

Speaker Change: These new clients, who are important to us as they are generally at higher rates than our legacy customers.

Speaker Change: Illustrating this point is the very strong progress we have made in the title insurance vertical we just signed another title insurance company. After a successful pilot, we anticipate issuing a press release with more details when the rollout is completed later this year that gives us the top two title insurance companies across.

Bryan Lewis: We just signed another title insurance company after a successful pilot.

Bryan Lewis: We anticipate issuing a press release with more details when the rollout is completed later this year. That gives us the top two title insurance companies. Across this vertical, our direct title clients give us approximately 45% of this market.

Speaker Change: Sister vertical our direct title clients gave us approximately 45% of this market in.

Bryan Lewis: In addition, as has been our strategy where it makes sense, we want to sell through channel partners. In this regard, we are up and running with the two largest providers of software to independent title insurance agents.

Speaker Change: In addition, as has been our strategy, where it makes sense, we want to sell through channel partners. In this regard we are up and running with the two largest providers of software to independent title insurance agents.

Bryan Lewis: The growth in these new categories more than offset the headwinds we face from retail bankruptcies and customer churn driven primarily by bars and restaurants and hardware-focused manufacturers that didn't fit into our SaaS-focused growth plans. We are particularly excited about the title insurance vertical that we believe will benefit from lower mortgage rates as of late that have historically driven significant refinancing and improved home purchasing activity.

Speaker Change: The growth in these new categories more than offset the headwinds we face from retail bankruptcies and customer churn driven primarily by bars and restaurants and hardware focused manufacturers that didn't fit into our SaaS focused growth plans.

Speaker Change: We are particularly excited about the title insurance vertical that we believe will benefit from lower mortgage rates as of late that have historically, driven significant refinancing and improved home purchasing activity.

Speaker Change: In addition to our market diversification.

Bryan Lewis: In addition to our market diversification efforts, we set a goal last year to drive more business through existing clients. I'm pleased to announce that we made further progress on this goal. You likely saw the press release we issued recently highlighting the renewal and expansion of a contract with a prominent domestic bank and credit card issuing customer. This leading bank has increased their contract value by approximately 15% resulting in revenues that now total a mid-70-figure annual amount, making them one of our top three clients at this time. Two factors drove this growth. First is the expanding use of our technology in the bank branches.

Speaker Change: First we set a goal last year to drive more business through existing clients I'm pleased to announce that we made further progress on the skull you likely saw the press release, we issued recently highlighting the renewal and expansion of a contract with a prominent domestic bank and credit card issuing customer.

Speaker Change: This leading bank has increased their contract value by approximately 15%, resulting in revenues that now total in mid seven figure annual amount, making them one of our top three clients. At this time two factors drove this growth first is the expanding use of our technology and the bank branches.

Bryan Lewis: Second is they integrated a retail client they provide credit cards for that previously came to us directly. These transactions now have a higher cost per scan. Keep in mind that this retailer was one of the original Intellicheck clients. This further illustrates our pricing power. We believe that this is further testament that we are truly helping credit card issuers stop fraud quickly, efficiently, and without the need for additional hardware purchases.

Speaker Change: Second is the integrated a retail client they provide credit cards for that previously came to US directly. These transactions now have a higher cost per scan.

Speaker Change: Mind, you that this retailer was one of the original Intel of Czech clients. This further illustrates our pricing power.

Speaker Change: We believe that this is further testament that we are truly helping credit card issuer stop fraud quickly efficiently and without the need for additional hardware purchases.

Bryan Lewis: As is often the case with banks, these seven-figure deals take longer than we would like to close but are significant when they do. Case in point, we've come to a verbal agreement with that super regional bank we have been sharing with you. That discussion surrounds a three-year deal with a minimum dollar commitment when fully rolled out. Although many on their team would like this to be implemented immediately, IT still has a say, and they will be doing a phased rollout. We are working on that rollout plan now. We have already agreed to the pricing for the fully rolled out transaction volumes.

Speaker Change: As is often the case with banks. These seven figure deals take longer than we would like to close but are significant when they do.

Speaker Change: A case in point, we've come to a verbal agreement with that Superregional Bank, we have been sharing with you.

Speaker Change: That discussion surrounds at three year deal with a minimum dollar commitment when fully rolled out.

Speaker Change: Although many on their team would like this to be implemented immediately I T still has to say and they will be doing a phased rollout. We are working on that rollout plan now we have already agreed to the pricing for the fully rolled out transaction volumes now we are negotiating higher pricing per transaction life.

Bryan Lewis: Now we are negotiating higher pricing per transaction while volumes scale. They are anticipating the rollout to begin in early Q3 of this year.

Speaker Change: Volumes scale, they are anticipating the rollout to begin in early Q3 of this year.

Speaker Change: I know they are leading off price department store client recently renewed their contract to include a three year commitment with guaranteed volumes, although we've been working with this retailer for years. This is the first time they are guaranteeing minimum volume levels with guaranteed levels in the mid six figures. This retailer has.

Bryan Lewis: Another leading off-price department store client recently renewed their contract to include a three-year commitment with guaranteed volumes. Although we've been working with this retailer for years, this is the first time they are guaranteeing minimum volume levels. With guaranteed levels in the mid-six figures, this retailer has historically done much higher transaction volumes than these current commitments.

Speaker Change: <unk> done much higher transaction volumes than these current commitments, we believe that having guaranteed commitments is important in the event that there is further to get significant slowdown on the retail front and expanded erosion of consumer confidence.

Bryan Lewis: We believe that having guaranteed commitments is important in the event that there is further significant slowdown on the retail front and expanded erosion of consumer confidence. We continue to gain ground in this specialty finance vertical.

Speaker Change: We continue to gain ground in the specialty finance vertical.

Bryan Lewis: I'm excited with the progress we are making in the lease to own space, where we now work with half of the top four players who make up a significant portion of the LTO market. Remember, our product accelerates our clients' customer acquisitions with a frictionless, seamless process that onboards good customers faster while protecting our customer and consumers by stopping fraud. It is important to recognize that stopping fraud is part of the solution, but the speed in which our technology solution responds is another important part of our service. Not to be overlooked is yet another distinguishing factor and value add as our methodology triggers very few false negatives.

Speaker Change: I'm excited with the progress we are making in the lease to own space, where we now work with half of the top four players who make up a significant portion of the L. T O market.

Speaker Change: Remember our product accelerates, our clients' customer acquisitions with a frictionless seamless process that onboard is good customers faster, while protecting our customer and consumers by stopping fraud.

Speaker Change: It is important to recognize it stopping fraud as part of the solution, but the speed in which our technology solution response is another important part of our service.

Speaker Change: Not to be overlooked is yet another distinguishing factor in value add and so I met the geology triggers very few false negatives.

Bryan Lewis: This is another aspect that I don't think customers and investors fully appreciate, which is why we are working to ensure more awareness.

Speaker Change: This is another aspect that I don't think customers and investors fully appreciate which is why we are working to ensure more awareness.

Speaker Change: You may remember that we have shared with you that we moved into the higher education vertical with a university client, where the ease of obtaining false credentials is taking a significant toll.

Bryan Lewis: You may remember that we have shared with you that we moved into the higher education vertical with the university client, where the ease of obtaining false credentials is taking a significant toll. So-called ghost students are robbing legitimate students of the opportunity to attend this university. And keep in mind, it's not only the loan money that is at the heart of this problem. These fake students also tie up class sign-ups, which means legitimate students can't register for classes in order to complete the coursework they need to obtain a degree. By authenticating that the applicants are who they say they are, we have given them an effective, affordable technology solution to address their issue, and at the same time, we see opportunity.

Speaker Change: So called go students are robbing legitimate students have the opportunity to attend this university and keep in mind, it's not only the loan money that is at the heart of this problem.

Speaker Change: These fake students also tie up class sign ups, which means legitimate students can't register for classes.

Speaker Change: Order to complete the course, where they need to obtain a degree.

Speaker Change: By default to indicating that he applicants are who they say they are you have given them an effective affordable technology solution to address their issue and at the same time, we see opportunity. We believe that there are additional prospects to grow this vertical and continue to stop student loan fraud before it starts.

Bryan Lewis: We believe that there are additional prospects to grow this vertical and continue to stop student loan fraud before it starts.

Speaker Change: On the I T front, we've been keeping you up to date on the growing investments we have made over the last two years, we're almost to the finish line with their I moved from Azure to the AWS cloud platform.

Bryan Lewis: On the IT front, we've been keeping you up-to-date on the growing investments we have made over the last two years, and we are almost to the finish line with our move from Azure to the AWS cloud platform. This move will not only result in savings in the hosting front, but more importantly, we believe this will make implementations faster and easier. At the same time, it has considerable impact to both current and future customers because the move results in a more user-friendly environment.

Speaker Change: This move will not only result in the savings and the hosting front, but more importantly, we believe this will make implementations faster and easier at.

Speaker Change: At the same time it has considerable impact to both current and future customers cause of move results in a more user friendly environment.

Bryan Lewis: And as we continue to build out our AI capabilities, our data science team will be key to ongoing investments in this evolving discipline. We're investing in the use of high-performance servers equipped with powerful GPUs for AI capabilities and machine learning in our continuing efforts to keep one step ahead of the bad guys.

Speaker Change: And as we continue to build out our AI cap capabilities, our data science team will be key to ongoing investments in this evolving discipline.

Speaker Change: We are investing in the use of high performance servers equipped with powerful Gpus for AI capabilities and machine learning in our continuing efforts to keep one step ahead of the bad guys.

Speaker Change: As we expand our presence in new market verticals and build on our presence in others are ongoing efforts include leadership additions.

Bryan Lewis: As we expand our presence in New Market Verticals and build on our presence in others, our ongoing efforts include leadership additions. I am very pleased by the progress we have already seen since August when Sandra Bauer came on board to lead this customer success team. She has hit the ground running for sure. Through Sandra's efforts, we have bolstered our relationships with our key accounts and have substantially improved the process for implementation.

Speaker Change: I'm very pleased by the progress we have already seen since August when Sandra Bauer came on board to lead this customer success team. She has hit the ground running for sure.

Speaker Change: Through Sanders efforts, we have bolstered our relationships with our key accounts and have substantially improved the process for implementation.

Bryan Lewis: On the marketing front, we have refreshed much of our customer-facing materials and key message points as part of our ongoing efforts to critique and improve how we are communicating with both current and prospective customers. We have also continued to refine the look and feel of our website to build engaging content and customer support. In addition, all of our materials, the website, the blogs, and our videos have been properly optimized for search. This has resulted in a 15% increase in both followers and impressions since December. Brand awareness has been a focus, and I believe we are on our way.

Speaker Change: On the marketing front, we refreshed much of our customer facing materials and key message points as part of our ongoing efforts to critique and improve how we are communicating with both current and prospective customers.

Speaker Change: We've also continued to refine the look and feel of our web site to build engaging content and customer support.

Speaker Change: In addition, all of our materials the website the blood center videos have been properly optimized for search this is resulting in a 15% increase in both followers and impressions since December.

Speaker Change: Brand awareness has been a focus and I will be believe we are on our way.

Speaker Change: Our staffing changes include customer facing positions as well we have added three new sales associates that we believe are solid fit for the organization.

Bryan Lewis: Our staffing changes include customer facing positions as well. We have added three new sales associates that we believe are a solid fit for the organization. We believe that we should start seeing contributions from them in the back half of the year. They are very excited about our differentiated product technology and the efficacy that we have for helping our clients onboard better customers faster and addressing stopping fraud. Accelerating revenue growth and achieving increased productivity are that much more attractive when viewed with the understanding of just how damaging the problem of fraud continues to be.

Speaker Change: We believe that we should start seeing contributions from them in the back half of the year.

Speaker Change: We're very excited about our differentiated product technology and the efficacy that we have for helping our clients onboard better customers faster and addressing stopping fraud.

Speaker Change: Accelerating revenue growth and achieving increased productivity are that much more attractive when viewed with the understanding of just how damaging the problem of fraud continues to be.

Bryan Lewis: As reported by Javelin Research, businesses and consumers suffered a $43 billion cost from fraud in 2023 alone. Breaking it down further, the Federal Trade Commission said that self-reported consumer losses alone in 2024, about $12.5 billion. And remember, that's only people who self-reported to the FTC. But even that was a 25 percent increase over 23. The bottom line is clear. Credit cards, loan and lease, bank account, employment, and government program-related fraud remains an explosive problem that shows no sign of diminishing.

Speaker Change: As reported by javelin research is this isn't consumers suffered a 43 billion dollar costs from fraud in 2023 alone.

Speaker Change: Breaking it down further the federal Trade Commission said that self reported consumer losses alone in 2024 top 12, and a half billion I remember that's the only people who self reported to the F. T C, but even that was a 25% increase over 23 the <unk>.

Speaker Change: Bottom line is clear credit card loan and lease bank account employment and government program related fraud remains an explosive problem that shows no signs of diminishing.

Speaker Change: The most recent data from bank rate is sobering about one in three adults of experienced financial fraud or a scam in the past 12 months since January 2024 alone.

Bryan Lewis: The most recent data from Bankrate is sobering. About one in three adults have experienced financial fraud or a scam in the past 12 months since January 2024 alone. Among them, nearly two in five lost money. and the generations viewed as tech-savvy aren't immune. Sixty-three percent of Gen Z-ers, those aged 18 to 28, and 64 percent of millennials aged 29 to 44, have been victimized.

Speaker Change: Among them nearly two in five lost money.

Speaker Change: And the generations viewed as tech savvy art immune 63%.

Speaker Change: Sent a gen Z years, those aged 18 to 28 and 64% of Millennials age 29, 44 had been victimized bank.

Bryan Lewis: Bankrate's U.S. economic analyst summed it up well. She noted that Bankrate's survey shows fraud can happen to just about anyone, even those who appear technologically savvy or those who have taken steps to safeguard themselves. and I get it.

Speaker Change: Bank rates U S economic analysts summed it up well she noted that Bankrate survey shows broad can happen to just about anyone even those who appear technologically savvy.

Those who have taken steps to safeguard themselves.

And I get it in fact, it hit home for me recently My wife was just last month the target of fraudsters.

Bryan Lewis: In fact, it hit home for me recently. My wife was just last month the target of fraudsters. She had somebody try and open up online three different credit cards and they successfully changed personal information with one of the credit bureaus. I have now seen firsthand how long it takes and how difficult it is to correct anything related to identity theft. And it's even worse for the victim when they are able, the crooks are able to open accounts. It is happening with an increased frequency, and generally when I talk to someone, they are personally aware of someone else who has been a victim of attempted fraud.

Speaker Change: She had somebody try and open up online three different credit cards and she they successfully changed.

Speaker Change: Personally information with one of the credit bureaus.

Speaker Change: We have now seen firsthand how long it takes and how difficult. It is to correct anything related to identity theft, and it's even worse for the.

Speaker Change: The victim when they are able the crooks are able to open accounts it.

Speaker Change: It is happening with the increased frequency and generally when I talked to someone they are personally aware of someone else who has been a victim of attempted fraud.

Speaker Change: So before turning the call over to Adam Here's some color on our first quarter outlook.

Bryan Lewis: So before turning the call over to Adam, here's some color on our first quarter outlook. Coming off a solid Q4 that was propelled by the additional scan volumes driven by the holiday, the first quarter sees a natural retraction. Of note, our retail customer transaction volumes in Q4 were down more than our current outlook would indicate because they were offset by the growth we are seeing in our new verticals that typically have a higher price per transaction value. We believe our diversification strategy is working and our focus on longer contracts with minimums and guarantees are starting to bear fruit.

Speaker Change: Coming off a solid Q4 that was propelled by the additional scan volumes driven by the holiday the first quarter season natural retraction.

Speaker Change: Of note, our retail customer transaction volumes in Q4.

Speaker Change: We're down more than our current outlook would indicate because they were offset by the growth we're seeing in our new verticals. They typically have a higher price per transaction value.

Speaker Change: We believe our diversification strategy is working and our focus on longer cramped contracts with minimums and guarantees are starting to bear fruit.

Bryan Lewis: Many of you have probably seen reports with cautious outlooks for the consumer as we start 2025. Recent reports show that while U.S. consumers opened their wallets during the holiday season, that quickly changed as 2025 got underway. Recent research shows consumers are now focusing on needs-based spending, with drivers cited such as lower consumer confidence numbers, macro and inflation concerns, the continual rise in prices on grocery items and other basics, as well as across the board, all against a backdrop of uncertainty around tariffs and program changes at the federal and state level. This has driven cautious outlooks from many retailers, some of whom are our customers.

Speaker Change: Many of you have probably seen reports with cautious outlooks for the consumer as we start 2025.

Speaker Change: Recent reports show that while U S consumers open their wallets during the holiday season that quickly changed as 2025 got it underway.

Speaker Change: <unk> research shows consumers are now focusing on needs based spending with drivers sided such as lower consumer confidence numbers macro and inflation concerns the continual rise in prices on grocery items in other basics as well as products across the board all against the backdrop of uncertainty.

Speaker Change: Tariffs and program changes at the federal and state level.

Speaker Change: This is driven cautious cautious outlooks for many retailers some of whom are our customers.

Bryan Lewis: Although we continue to diversify away from retail, it still represents approximately 75% of our scan volume, either through the retailers directly or through one of our bank or credit card partners. While we remain excited about our growth for the year, particularly in the back half, we anticipate that our first quarter will approximately be in line with the self-side consensus estimate that at the time of this call was $4.78 million.

Speaker Change: Although we continue to diversify away from retail it still represents approximately 75% of our scan volume either through the retailers directly or through whenever a bank or credit card partners.

We remain excited about our growth for the year, particularly in the back half.

Speaker Change: We anticipate that our first quarter will approximately be inline with the sell side consensus consensus estimate that at the time of this call was 4.78 million.

Bryan Lewis: Another thing to note, all of our Q1 renewals re-signed, and including upsells and guarantees, these renewals have an ACV that exceeds $10 million, giving us a solid base to build upon as we focus on growth in 2025 and the other renewals that we have coming throughout the Finally, I want to remind everyone that we will be presenting at the iAccess Alpha virtual conference next Tuesday at 2 p.m. Eastern, and I'll be hosting one-on-one meetings on Wednesday. We issued a press release earlier this week with the details. You can find the press release posted in the newsroom on our website.

Speaker Change: Another thing to note all of our Q1 renewals resigned and including Upsells and guarantees. These renewals have an ACB exceeds $10 million, giving us a solid base to build upon as we focus on growth in 2025, and the other renewals that we <unk>.

Speaker Change: Coming throughout the year.

Speaker Change: Finally, I want to remind everyone that we will be presenting at the eye access Alpha Virtual conference next Tuesday at two P M eastern and I'll be hosting one on one meetings on Wednesday.

Speaker Change: We issued a press release earlier this week with the details.

Speaker Change: Can find the press release posted in the newsroom on our website.

Speaker Change: Additionally, we will be presenting at planet Microcap showcase on April 23rd and 24th in Las Vegas, We look forward to seeing you there.

Bryan Lewis: Additionally, we will be presenting at Planet MicroCap Showcase on April 23rd and 24th in Las Vegas. We look forward to seeing you there.

Adam Sragovicz: I will now turn the call over to Adam, who will discuss our financial results in more detail. Thank you, Bryan. 2024 was an important year for Intellicheck on the financial side, as well as on the business side, where the initiatives that we have talked to you about in the past are now bearing fruit. As you just heard, our fourth quarter revenues were 15% higher than the prior year. We also saw new business pricing firmer growing at 5% versus 20%. We achieved an important goal that we have mentioned of adjusted EBITDA positive results for the year in the amount of $520,000 for 2020.

Speaker Change: I will now turn the call over to Adam who will discuss our financial results in more detail.

Adam: Thank you Brian.

Adam: 124 was an important year for Intel check on the financial side as well as on the business side. What are the initiatives that we've talked to you about in the past are now bearing fruit.

Adam: As you just heard our fourth quarter revenues were 15% higher than the prior year. We also saw new business pricing firm are growing at 5% versus 2023.

Adam: We achieved an important goal that we've mentioned are adjusted EBITDA positive results for the year and the amount of $520000 for 2024.

Adam Sragovicz: As Bryan also mentioned, we are pleased to see the continued growth progression of SAS revenue. As we previously have discussed, we are continuing to maintain our focus on our operating expenses to ensure that we achieve the expected return on our investment. In these areas, we migrate customers from Azure to AWS. Starting first with some quarterly results, revenue for the fourth quarter of 2024 increased 15% to a record $5,936,000. That's compared to $5,176,000 in the same period of 2020. Our SAS revenue for the fourth quarter of 2024 grew 17%. $5,913,000 to $5,069,000 during the same period of 2023 and represented over 99% of our fourth quarter revenue.

Adam: As Brian also mentioned we are pleased to see the continued growth progression of SaaS revenue as we previously have discussed we are continuing to maintain our focus on our operating expenses to ensure that we achieve the expected return on our investments in this area as we migrate customers from Azure to AWS.

Adam: Starting first with some quarterly results revenue for the fourth quarter of 2024 increased 15% to a record $5 million $936000.

Adam: As compared to $5 million $176000 in the same period of 2023 or.

Adam: Our SaaS revenue for the fourth quarter of 2024 grew 17%.

Adam: 5.913 million.

Adam: 5.069 million during the same period of 2023 and represented over 99% of our fourth quarter revenue.

Adam: Gross profit as a percentage of revenues was 91% for the fourth quarter of 2024 compared to 95% for the same period of 2023.

Adam Sragovicz: Gross profit as a percentage of revenues was 91% for the fourth quarter of 2024, compared to 95% for the same period of 2023. Cost of goods sold in Q4 of 2024 was a bit higher, at about $528,000 versus $263,000 in 2023, partly due to cloud computing costs as we ran both AWS and Azure in parallel for a period of time to ensure stability of the customer experience during migration. We expect to largely complete this customer move to AWS around the middle of 2020. Operating expenses, which consist of selling, general and administrative marketing and research and development expenses, increased $864,000, or 21%, to $4,928,000 for the fourth quarter of 2024, compared to $4,064,000 for the same period of 2020.

Adam: Cost of goods sold in Q4 of 2024 was a bit higher at about 528000 versus 263000 in 2023, partly due to cloud computing costs as we ran both AWS and Azure in parallel for a period of time to ensure stability of our customer experience during migraine.

Adam: We expect to largely complete this customer moved to AWS around the middle of 2025.

Adam: Operating expenses, which consist of selling general and administrative marketing and research and development expenses increased 864000.

Adam: 1% to 4.928 million for the fourth quarter of 2024.

Pair to 4.064 million for the same period of 2023.

Adam Sragovicz: On an accounting basis, R&D expenses were higher in Q4 of 2024, driven largely by the fact that we have put many development projects into production and are now only capitalizing very few of our ongoing engineering. We've also started to amortize previously capitalized software development. Going forward, we expect our cash R&D spend to be flat to only modest In any case, we expect such spending to grow at a rate less than the growth rate of revenue. In broader context, I would mention you'll shortly hear about how our overall V&A expense fell for the year in 2024 versus While we realize the benefits of our cost-conscious efforts in the period, we are capitalizing $216,000 in costs tied to software projects in the course.

Adam: On an accounting basis R&D expenses were higher in Q4 of 2024, driven largely by the fact that we have put many development projects into production and are now only capitalizing very few of our ongoing engineering expenses. We've also started to amortize previously capitalized software development expenses.

Adam: Going forward, we expect our cash R&D spend to be flat to only modest growth.

Adam: In any case, we expect such spending to grow at a rate less than the growth rate of revenue.

Adam: It's a broader context I would mentioned you will shortly hear about how our overall G&A expense fell for the year in 2024 versus 2023.

Adam: While we realize the benefits of our cost conscious efforts in the period, we are capitalizing $216000 in costs tied to software projects in the quarter.

Adam Sragovicz: We anticipate that we will see de minimis levels of capitalization of software going forward as the migration and other projects we've been sharing with you have moved into production. The weighted average diluted common shares were fairly stable at $19.3 million for the fourth quarter of 2024, compared to $19.2 million for the same period of 2020.

Adam: We anticipate that we will see de minimus levels of capitalization of software going forward as the migration and other projects we've been sharing with you moved into production.

Adam: The weighted average diluted common shares were fairly stable at $19 3 million for the fourth quarter of 2024 compared to $19 2 million for the same period of 2023.

Adam: Now turning to our full year 2024 results.

Adam Sragovicz: Now turning to our full year 2024 results. Total revenue for the full year of 2024 increased $1.1 million, or 6%, to $19.997 million, compared to $18.9 million for 2020. Excluding equipment, our SAS revenue for the full year for 2024 grew 1.2 million, or 7%. 19.8 million from 18.6 million for 2020. Gross profit as a percentage of revenues was 91% for the full year of 2024, compared to 93% for the full year of 2021. Gross Margin Profit Percentage was impacted mostly by Q4 R&D costs as previously mentioned. Operating expenses, which consist of selling general administrative marketing and research and development expenses, decreased $473,000, or 2%, to $19.3 million for the full year 2024, compared to $19.8 million for the full year of 2023.

Adam: Total revenue for the full year of 2024 increased $1 1 million or 6% to 1999 7 million.

Adam: Blair to $18 9 million for 2023 <unk>.

Adam: Excluding equipment, our SaaS revenue for the full year for 2020 for $1 2 million or 7% $19 8 million from $1 6 million for 2023.

Gross profit as a percentage of revenues was 91% for the full year of 2024 compared to 93% for the full year of 2023.

Adam: Gross margin profit percentage was impacted mostly by Q4 R&D costs as previously mentioned.

Adam: Operating expenses, which consist of selling general and administrative marketing and research and development expenses decreased $473000 or 2%.

Adam: $19 3 million for the full year 2024, compared to $19 8 million for the full year of 2023.

Adam Sragovicz: The reduction was primarily driven by lower R&D costs over the course of the 2024 year. Another item to note in 2024 was stock-based compensation expense, which decreased by $720,000 versus 2020. As discussed on our last call, we expect our total non-cash expenses will 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%. The company reported improved net income, a gap loss of $918,000 for the full year of 2024, compared to a net loss of $1.98 million for the same period of 2024.

Adam: The reduction was primarily driven by lower R&D costs over the course of the 2024 years.

Another item to note in 2024 was stock based compensation expense, which decreased by 720000 versus 2023.

Adam: As discussed on our last call. We expect our total noncash expenses will continue to decrease and comprised approximately 10% of our operating expenses with stock based compensation comprising 90% of that figure. This compares to our prior historical trend.

Adam: 13% to 15%.

Adam: The company reported improved net income GAAP loss of 918000 for the full year of 2024.

Adam: To a net loss of $1 nine 8 million for the same period of 2023.

Adam Sragovicz: Net loss per diluted share for the full year of 2024 improved to $0.05 compared to the net loss per diluted share of $0.10 for the full year of 2024. The weighted average diluted common shares were $19.3 million for 2024, compared to $19.2 million for 2026. Adjusted EBITDA for the full year of 2024 improved to a positive $520,000 worth of $377,000 for the same period. As to the company's liquidity and capital resources, on December 31st, 2024, the company had cash and cash equivalents that totaled $4.7 million. At year-end, there was working capital, which is current assets minus current liabilities, of $6.7 million, total assets of $21 million, and stockholders' equity of $17.7 million.

Adam: Net loss per diluted share for the full year of 2024 improved two five cents.

Adam: Paired to the net loss per diluted share of <unk> 10 sets for the full year of 2023.

Adam: The weighted average diluted common shares were $19 3 million for 2024 compared to $19 2 million for 2023.

Adam: Just that EBITDA for the full year of 2024 improved to a positive $520000 or $377000 for the same period 2023.

Adam: I'd say, the company's liquidity and capital resources at December 31, 2024, the company had cash and cash equivalents that totaled $4 7 million at year end. There was working capital, which is current assets minus current liabilities of <unk>.

Adam: $6 7 million.

Adam: Assets of $21 million, and stockholders' equity of $17 $7 million.

Adam: Our first quarter of 2025 is not yet complete but we expect to finish the first quarter with a cash balance of approximately $5 million at least a few hundred thousand higher than at the end of 2024.

Adam Sragovicz: The first quarter of 2025 is not yet complete, but we expect to finish the first quarter with a cash balance of approximately $5 million, at least a few hundred thousand higher than at the end of 2024. This shows the business's ability to generate cash, even in a seasonally weaker first quarter. On another liquidity note, the company has a $2 million revolving credit facility with Citibank. That credit line may be secured by accounts receivable. There are no amounts outstanding under this facility and the facility was not utilized during 2020.

Adam: This shows the business's ability to generate cash even in a seasonally weaker first quarter.

Adam: On another liquidity note. The company has a $2 million revolving credit facility with Citibank that credit line may be secured by accounts receivable. There are no amounts outstanding under this facility and the facility was not utilized during 2024.

Adam: In 2024, and we executed on a number of key initiatives that we believe set us up well for continued strong performance in 2025, we believe that our more efficient new marketing approaches are already yielding dividends for the sales pipeline and we anticipate that we will be able to generate significantly better results with the same or even slightly lower.

Adam Sragovicz: In 2024, we executed on a number of key initiatives that we believe set us up well for continued strong performance in 2025. We believe that our more efficient new marketing approaches are already yielding dividends for the sales pipeline, and we anticipate that we will be able to generate significantly better results with the same or even slightly lower costs. We have remained committed to achieving adjusted positive EBITDA for the year, which we did in 2024, and it now puts us in a position to improve on that result in 2025. We believe that we have discipline in executing on our revenue plans and will keep a close eye on operating expenses, which should help us achieve this very important EBITDA goal.

Adam: Spending.

We have remained committed to achieving adjusted positive EBITDA for the year, which we did in 2024 and now puts us in a position to improve on that result in 2025, we believe that we have discipline in executing on our revenue plans and we'll keep a close eye on operating expenses, which should help us achieve this very important.

Adam: Joel.

For 2025, we expect to see continued gross margins of approximately 90%, while we improve our architecture and data intelligence capabilities.

Adam Sragovicz: For 2025, we expect to see continued gross margins of approximately 90% while we improve our architecture and data intelligence capabilities. We also expect to see continued leverage in our operating expenses as a result of the initiatives we implemented in 2024, and do not expect that expenses will grow as quickly in 2025 as already. I would specifically mention two of the initiatives that I'm most excited about to drive results in 2025 and beyond, as Bryan alluded to, improved marketing strategy and tactics, and a revamped, holistic approach to the customer experience. I see these two areas of focus as being critical for new customer acquisition, as well as for boosting existing customer satisfaction.

Adam: We also expect to see continued leverage in our operating expenses as a result of the initiatives. We implemented in 2024 and do not expect that expenses will grow as quickly in 2025 as our revenue.

Speaker Change: Specifically mentioned two of the initiatives that I'm most excited about to drive results in 2025 and beyond as Bryan alluded to improved marketing strategy and tactics and our revamped holistic approach to the customer experience I see these two areas of focus as being critical for new customer acquisition as well.

Adam: Well as for boosting existing customer satisfaction.

Operator: I'll now turn the call over to the operator who will take your questions. Thank you.

Speaker Change: I'll now turn the call over to the operator, who will take your questions.

Speaker Change: It is.

Speaker Change: Yeah.

Speaker Change: Thank you we will now be conducting the question and answer session. If you'd like to ask a question. Please press star one on yourself on keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two to remove a question from the queue.

Operator: We will now be conducting the question-and-answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 to remove a question from the queue.

Scott Buck: Our next question comes from the line of Scott Buck with H.C. Wainwright. Please proceed with your question. All right, good afternoon, guys. Thanks for taking my questions. I'm curious, Bryan, you mentioned... you know, stronger back half.

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

Scott Buck: Hi, Good afternoon, guys. Thanks for taking my questions I'm curious, Brian you mentioned.

Scott Buck: You know stronger back half could you give us a little color on your visibility there. It is it just simply.

Bryan Lewis: Could you give us a little color on your visibility there, and is it just simply, you know, that's what the rollout schedule is telling you, or is there something more to it? Yeah, so two things.

Scott Buck: That's what the rollout schedule is telling you or is there something more to it.

Speaker Change: Yeah. So two things first apologize to everybody you know technical difficulties were going on and we were all <unk> did you were probably.

Bryan Lewis: First, I apologize to everybody, you know, technical difficulties were going on and we were all as flummoxed as you were probably. Yeah, so looking at rollout schedules, that's really what we are seeing. Rollout schedules, proof of concepts, when they're ending and, you know, and generally a proof of concept is a full implementation where they have an out. You know, if we don't do what we said we do going into it. So that's why we're saying sort of the back half of the year. I think things would have been sooner. You know, as I said, hadn't it been for the fact that that one bank wanted to move, you know, their IT guys want to move things out, which is, you know, I look at it as twofold.

Speaker Change: Yeah. So looking at rollout schedules, that's really what what we are seeing rollout schedules are proof of concepts when they they were ending in N.

Speaker Change: Generally a proof of concept is.

Speaker Change: A full implementation where they have an hour.

Speaker Change: You know if we don't do what we said we'd do going into it. So that's why we're saying sort of the back half of the year I think things would have been sooner you know as I said had and had been for the.

Speaker Change: The fact that that one bank wanted to move your I T guys wanted to move things out which is you know I look at it is two fold, it's really painful on one end, but on the other end there building new middleware that they want us to connect to which means it connects to every part of the bank as opposed to.

Bryan Lewis: It's really painful on one end, but on the other end, they're building new middleware that they want us to connect to, which means it connects to every part of the bank, as opposed to so far with them, it's been a new development process, whether it was online for one use, online for another use, and then, you know, in branch, you know, I'm hoping that delay, while painful, means easier going down the road. So, yeah, all timing on rollouts and POCs. Great, I appreciate that.

Speaker Change: So far with them, it's been a new development process, whether it was.

Speaker Change: Online for one use online for another use and then.

Speaker Change: You know in branch.

I'm, hoping that delay while painful means easier going down the road. So yeah, all timing on AR on Rollouts and in T O sees.

Speaker Change: Great I appreciate that and then second you mentioned some of the uncertainty that that's out there in regards to the retail customer, but I'm curious whether or not your sales conversations have.

Bryan Lewis: And second, you know, you mentioned some of the uncertainty that's out there in regards to the retail customer, but I'm curious whether or not your sales conversations have, you know, seen any kind of disruption due to the current macro. No, nothing from the sales side because it doesn't really matter. The fraud has been so consistent. The percentage of transactions that happen is so consistent across every industry. They all have their number. That doesn't change. So it's the same impact on profitability. And what I'm also seeing, and part of what's really been resonating with sort of our sales pitch is people, they get a pat on the back for cutting the fraud losses, and they get a bonus based on bringing on new clients.

Speaker Change: Seen any kind of disruption due to the current macro.

Speaker Change: No no nothing from the sales side, because it doesn't really matter. It's you know the fraud is been so consistent the percentage of.

Speaker Change: Transactions that happened is so consistent across every industry. They all have their number that doesn't change. So it's the same impact on profitability.

Speaker Change: And what I'm also seeing and part of what's really been resonating with sort of our sales pitches.

Speaker Change: People. They you know they get a pat on the back for cutting the fraud losses, and they get a bonus based on bringing on new clients and one of the things that they're all notice thing about us is the speed and ease of bringing on a new client and they were almost looking at stopping the fraud as a byproduct of getting all of those new clients. So that's used to be.

Bryan Lewis: And one of the things that they're all noticing about us is the speed and ease of bringing on a new client. And they're almost looking at stopping the fraud as a byproduct of getting all those new clients. So that seems to be resonating well in the sales process. I just look at the consumer as right now, as I said on the call, 75% still of the transaction volume is retail. So that is still significant. That's down about 2.5% from 23. But it is a component. If people don't want to go get credit, if people don't want to use their credit card at a retail location, that does impact us.

Speaker Change: Resonating well in the sales process you know I just look at the consumer.

Speaker Change: As <unk>.

Speaker Change: Right now you know as I said on the on the call 75%.

Speaker Change: Still the transaction volume is retail so that you know is still significant that's down about two 5% from 23, but it is it is a component right. If people don't want to go get credit if people don't want to use their credit card you know what a retail location.

Speaker Change: That does impact US you know hopefully most of the bankruptcies are over with but again retail is still a portion of of a big portion of our business. So it's something that we watch with a close eye.

Bryan Lewis: Hopefully most of the bankruptcies are over with. But again, retail is still a big portion of our business. So it's something that we watch with a close eye.

Scott Buck: Great. If I could squeeze one more in.

Speaker Change: Great and if I could squeeze one more in I don't know if you disclosed it or not but the potential operating expense savings from switching to AWS.

Bryan Lewis: I don't know if you've disclosed it or not, but potential operating expense savings from switching to AWS. You know, here's what I'd say, you know, my, um... My IT guys gave me a big number, I cut it in half, I think, you know, we're probably exceeding what I was hoping. It's becoming really a bit of a battle out there between the different providers of, you know, the cloud hosting. You know, because Once we get this move done, we're basically cloud agnostic. And, you know, I can tell you some of the other big cloud vendors are coming to us and saying, all right, you know, we'll buy out your contract.

Speaker Change: Oh, Here's what I'd say you know my.

Speaker Change: Now it guys gave me a big number I cut it in half I think you know, we're probably exceeding what I was hoping.

Speaker Change: It's becoming really a bit of a battle out there between the different providers of the cloud hosting cos.

Speaker Change: Once we get this move done we're basically cloud agnostic and you know I can tell you some of the other big cloud vendors are coming to us and saying all right. We will buyout. Your contract will give you rates like this so I think we're going to continue to see.

Scott Buck: We'll give you rates like this. So I think we're going to continue to see reductions. Now, I also want to be clear, part of what we have to do, and when I was discussing AI and all those things, you know, that requires expensive computing power. So it's going to be a balance between what we're saving on our normal transactions and then what we're doing to truly enhance our product through AI and machine learning. Great. Well, I appreciate the time, guys. Thanks, and congrats on the quarter. Great. Thank you. Have a good one, Scott.

Speaker Change: Reductions now I also want to be clear part of what we have to do and when I was discussing.

AI and all those things you know that requires extensive computing power. So it's gonna be a balance between what we're saving on our normal transactions and then what we're doing to truly enhance our product through AI and machine learning.

Speaker Change: Great well I appreciate the time guys, thanks, and congrats on the quarter.

Scott Buck: Great. Thank you have a good one Scott.

Speaker Change: Our next question is from Rudy Kissinger with D. A davidson.

Rudy Kissinger: Our next question is from Rudy Kissinger with D.A.

Rudy Kissinger: David. Hey, thanks for taking my questions, guys. I want to start maybe just understanding the big Q4 revenue number. I mean, the sequential was much stronger than past years. And, you know, I mean, SAS revenue growth went from, I think, 1% year-over-year last quarter, 17% in Q4, and then you're kind of indicating back to low single digits in Q1. So was there any one-time kind of revenue or true-ups or anything in Q4 that drove that? I'm curious why, if not, then why such a drop-off? I think, you know, you know how we look at the transaction volumes very closely.

Rudy Kissinger: Hey, Thanks for taking my questions guys.

Speaker Change: Want to start maybe just understanding the.

Speaker Change: The Big Q4 revenue number I mean, the sequential was much stronger than past years and.

Speaker Change: You know I mean, SaaS revenue growth went from I think 1% year over year last quarter, 17%. In Q4, then you're kind of indicating back to low single digits. In Q1. So was there any one time kind of revenue or true ups or anything in Q4 that drove that or I guess why.

Speaker Change: If not then why such a drop off in Q1.

I think you know.

Speaker Change: You know how we look at the transaction volumes very closely and you know I looked at it.

Adam Sragovicz: And, you know, I looked at, you know, for Q1, you know, for their first two months and then, you know, extrapolated out what the quarter would be. And the major retailers are not seeing anywhere near the transaction volume that they did before. So, you know, again, that's why I think consumer credit worries and things like that are impacting it. You know, there are, you know, I think on average, we saw that they're down transactional volume. Forty-five percent from Q4 last year would normally that would be about a 15 percent drop. So that's why we're seeing, you know, you know, what I'm looking at.

Speaker Change: For Q1, you know for their first two months and then.

Speaker Change: Extrapolate it out what the quarter would be and the major retailers.

Speaker Change: We're not seeing anywhere near the transaction volume that they did before so you know again, that's why I think consumer credit worries and things like that are impacting it there.

Speaker Change: You know I think on average we saw that theyre down transactional volume.

Speaker Change: 45% from Q4 last year would normally that would be about a 15% drop.

Speaker Change: So that's why we're seeing you know.

Speaker Change: You know what I'm looking at.

Adam Sragovicz: And it seems consistent. We looked at our top retailers and then, you know, the one, you know, top three company we have that does nothing but retail credit cards. And they're all down fairly consistently.

Speaker Change: And it seems consistent we looked at our top.

Speaker Change: Our top retailers and then you know the one you know top three company, we have that does nothing but retail credit cards.

Speaker Change: And they're all down fairly consistently.

Speaker Change: Okay. That's helpful. So I guess my read it back I mean, the strength in Q4, it sounded like it came from non retail improvements and scan volumes. There and then the reversal in that growth rate in Q1 is retail getting worse on a year over year basis is that yeah, a little bit yeah, I mean, and certainly I think.

Rudy Kissinger: Okay, that's helpful. So I guess if I read it back, I mean, the strength in Q4 sounds like it came from non-retails, improvements in scan volumes there. And then the reversal in that growth rate in Q1 is retail getting worse on a year-to-year basis. Yeah, a little bit, yeah, I mean, and certainly I think, I think you look at credit and, you know, credit card spending and other things during the holiday season, you know, people did go out there and spend money, and I think that they're just being very, very cautious now. Okay, and then one last one, if I could.

Speaker Change: I think you look at credit and credit card spending and other things and during the holiday season, you know people did go out there and spend money and I think that they're just being very very cautious now.

Speaker Change: Okay, and then one last one if I could I don't believe I heard any update about the large social media customer any update you can provide there and then Adam Joe you clarify I believe you said on EBITDA you expect to make.

Bryan Lewis: I don't believe I heard any update about the large social media customer. Any update you can provide there? And then Adam, just to clarify, I believe you said on EBITDA, you expect to further progress on the E-value in 2024. Just to make sure I'm hearing that right, you expect E-value to be higher for the full year in 2025 than 2024 or not. So I'll start, you know, the joy of big companies is they're usually big deals. The pain of big companies, it means procurement and everything gets into it. And I think if you all recall, one of the things that they wanted to do, and which then also delayed testing so much, is they wanted to use another one of our products, which, you know, being able to, they wanted us to OCR the front of the license and that kind of stuff, so they needed to test it.

Speaker Change: Further progress on the EBITDA you did in 24, just to make sure I'm hearing that right you expect EBITDA to be higher for the full year and 25 and 24.

Speaker Change: Or now.

Speaker Change: So I'll start.

Speaker Change: You had the joy of Big companies is they're usually big deals the pain of big companies. It means procurement and everything gets into it and I think if you all recall one of the things that.

Speaker Change: They wanted to do and which then also delayed testing so much as they wanted to use another one of our products.

Speaker Change: Being able to they wanted us to OCR the front of the license and that kind of stuff. So they needed to test. It once it was tested and they said that they were good with it.

Bryan Lewis: Once it was tested and they said that they were good with it, you know, then procurement comes in and that can drag on. So that's what's happening now. We're just going back and forth on some final language on what a successful transaction is with procurement. And then, you know, we should have further updates after that.

Speaker Change: Then procurement comes in and that can drag on so that's what's happening now, we're just going back and forth on some final language on what a successful transaction is.

Speaker Change: With procurement.

Speaker Change: And then you know we should have further updates after that.

Speaker Change: Great. Thanks for your question, Yeah, I think that we're gonna be are seeing continued improvement in 2025.

Adam Sragovicz: Great. Oh, thanks for your question. Yeah, I think that we're going to be seeing continued improvement in 2025. But, you know, again, if you've if you've been following us for a while, you know that our are really great quarter in terms of cash generation and adjusted EBITDA is is it comes down to Q4. So the magnitude of the increase will probably be, you know, how we see Q4 2025. But I expect the number to be positive, and I do think we'll improve on 2024.

Speaker Change: But you know again, if you have a if you've been following us for a while you know.

Speaker Change: Know that our a really great quarter in terms of cash generation and adjusted EBITDA as it comes down to Q4. So the magnitude of the increase will probably be you know how we see Q4 2025.

Speaker Change: But I I expect that number to be positive and I do think we'll improve on 2024.

Mike Grondahl: Our next question is from Mike Grondahl with Northland Securities.

Mike Grondahl: Our next question is from Mike Grondahl with Northland Secure. Hey guys, thank you.

Mike Grondahl: Hey, guys. Thank you.

Mike Grondahl: Brian the three new salespeople.

Bryan Lewis: Bryan, the three new salespeople, how many total people do you have in sales now? And what did you focus the three new salespeople on, like a specific vertical, or how did you kind of point them in the right direction? So the three folks have really just started and we're kind of going a little bit different. In the past, we've hired a lot of people who are sort of experienced. And this time, you know, one of the things I like is bringing on really young, hungry people who have generally, I think where you get good salespeople is where they've been working at a place.

Speaker Change: How many how many total people do you have in sales now and why did you focus the three new salespeople on like a specific vertical or how did you kind of point them in the right direction.

Mike Grondahl: So the three folks have really just started.

Mike Grondahl: And where we're kind of go in a little bit different when you're you know in the past we've hired a lot of people who are sort of experienced and this time you know one of the things I like is bringing on really young hungry people, who have generally yeah, I think where you've got good salespeople, who is where they've been working at a place.

Bryan Lewis: booking meetings for somebody else who makes all the money, and they want to do it. And that's kind of what we focused on. You know, the good thing is, The way that I look at what we do, the problem is the same problem across any vertical, you know, do I need to know who you are with certainty? And that message works for every single vertical. So, instead of, you know, some take, some verticals take longer to close than others, we're going to give a mix of here's some very targeted accounts. Now, we do have verticals that we're focusing on, and that's where we're doing targeted marketing, you know, all the things that really smart, modern digital marketers know how to do, you know, to go and hit the right person to warm up that cold call.

Mike Grondahl: Booking meetings for somebody else, who makes all the money and they want to do it and that's kind of what we focused on.

Mike Grondahl: Now the good thing is.

Mike Grondahl: The way I look at what we do the problem is the same problem across any vertical.

Mike Grondahl: Do I need to know who you are with certainty and that message works for every single vertical. So instead of you know some take some verticals take longer to close than others, we're going to give a mix of here's some very targeted accounts now we do have verticals that were focusing on and that's where we're doing targeted mark.

Mike Grondahl: Getting.

Mike Grondahl: You know all the things that really smart modern digital marketers knew know how to do Joe to go and hit the right person to warm up that cold call.

Bryan Lewis: That's how we're focusing what we're doing. So, you know, and then people might find they've got a natural affinity to one or another vertical. But I think that, you know, it's not like, you know, I'm an equity guy trying to sell fixed income. This is, you know, I'm selling the solution of identity validation. And then it's just what's your use case? How do you want to consume it? You know, is it, do you need international? Do you need this? Do you need that? You know, just questions to figure out how to provide the solution. Much more consultative selling, because I think that works better than just trying to go out and demo a product.

Mike Grondahl: That's how we're focusing what we're doing so you know and then people might find they've got a natural affinity to one or another vertical but I think that you know it's not like you know I'm an equity guy trying to sell fixed income. This is a you know I'm selling the solution of <unk>.

Speaker Change: Density validation.

Speaker Change: And then it's just what you use case, how do you want to consume it you know is it do you need international do you need. This you need that you know just questions to figure out how to provide the solution much more consultative selling because I think that works better than just trying to go out and demo of product.

Speaker Change: Got it.

Bryan Lewis: Um, and Bryan, what would you say are your top two priorities now for 25? Sales, sales, sales. You know, honestly, I think that we finished the You know, we finally got the really the right marketing people in place, and I cannot believe what they've done. I mean, the fact that without even boosting or doing anything on any post or any of that stuff, you know, we're up 15% in both, you know, impressions and followers. I think that shows that the message is getting out. So that's working right. Finance is working right. You know, IT, you know, it's working right.

Speaker Change: And Brian what would you say are your top two priorities now for 25, what are you focused on.

Speaker Change: Sales sales sales you know honestly I think that we finished the.

Speaker Change: We finally got the really the right marketing people in place and I cannot believe what they've done I mean, the fact that.

Speaker Change: Without even boosting or doing anything on any post or any of that stuff. You know were up 15% in both you know impressions and followers I think that shows that the message is getting out so that's working right.

Speaker Change: Finances, working right you know I T.

Bryan Lewis: IT people are always like, I can't make that deadline, but we'll get them there. I think that we just need to make sure that we've got the right. sales thing happening. And that's, you know, we're getting there. That's working pretty good. We've got good leads in the pipe. We've got good things happening. Now we just need to get more of that.

Speaker Change: It's working right I T people are always like I can't make that deadline, but we'll get them. There I think that we just need to make sure that we've got the right <unk>.

Speaker Change: Sales things happening.

Speaker Change: And that's you know we're getting there that's working pretty good and we've got good leads in the pipe. We've got good things happening now we just need to get more of that and then you know Sandra is so experienced in customer success customer journey all of those types of things like I don't have to worry about that that's just being completely taken care of.

Bryan Lewis: And then, you know, Sandra is so experienced in customer success, customer journey, all those types of things. Like, I don't have to worry about that. That's just being completely taken care of. Got it.

Speaker Change: Got it and then.

Bryan Lewis: And then Last question. If I heard it right, I think you said in Q1... You re-signed about $10 million. That seems like a huge number relative to your roughly $20 million in sales. Is it a lot of things just came due, and what's kind of the pace the rest of the year? So, the rest of the year is, you know, certainly a little bit more even, if you will. A couple of things, I think, made this one really big, right? So, you know, obviously, you know, one of the big banks always just every year, you know, their contract is, you know, it was a three-year contract.

Speaker Change: Last question.

Speaker Change: If I heard it right I think you said in Q1.

Speaker Change: Re signed about $10 million of HCV.

Speaker Change: Yeah Mhm.

Speaker Change: That seems like a huge number.

Speaker Change: Relative to your roughly 20 million in sales.

Speaker Change:

Speaker Change: Is it.

Speaker Change: A lot of things just came due.

Speaker Change: Yeah, so what's kind of the pace and the rest of the year.

Speaker Change: So the rest of yours is.

Speaker Change: Certainly a little bit more for even if you will a couple of things I think made this one really big right. So you know obviously you know one of the big banks always just every year you know their contract as you know it was a three year contract or in year two of it now.

Bryan Lewis: We're in year two of it now. That ends on December 31st. And then they say, you know, all right, you know, same amount of transactions, or we've given them some sort of break points going up, you know, or you can commit to this number, this number, this number, you know, so that came in. And then that other bank that we talked about on the earnings call, who had been buying buckets, like, again, the buckets ended way earlier than they thought. So, you know, it was a, and we didn't have time to renew it in December.

Speaker Change: And on December 31st and then they say you know alright.

Speaker Change: Same amount of transactions or we've given them.

Speaker Change: Some sort of break points going up you know or you can commit to this number. This number this number so that came in and then that other bank that we talked about on the earnings call, who had been buying buckets like again, the buckets ended way earlier than they thought so.

It was a and we didn't have time to renew it in December so we say to them look fine, we'll just do well just keep billing you, but in arrears and then in January you can buy a new bucket and now they realize that that bucket won't make it. So they want to start thinking about how do they go on a model like the bank I spoke about Pryor.

Bryan Lewis: So, we said to them, look, fine, we'll just do, we'll just keep billing you, but in arrears. And then in January, you can buy a new bucket. And now they've realized that that bucket won't make it, so they want to start thinking about how do they go on a model like the bank I spoke about prior, where it's, they're going to commit to a number of transactions. for the year. And then if they miss that, they can, you know, pay through the end of the year at that rate. And then in the following year, they can commit to a higher rate and get a slight discount, you know, but, you know, so they went a little bit and we went a lot.

Speaker Change: Where it's they're going to commit to a number of transactions for the year and then if they miss that they can pay.

Speaker Change: Pay through the end of the year at that rate and then in the following year. They can commit to a higher rate and get a slight discount, but you know so they went a little bit and we win a lot. So it's just a bit of timing.

Bryan Lewis: So it's just a bit of timing, you know, and what I like about the way we're doing it now is we'll be able to give a little bit of guidance better because, you know, I can talk about ACV and TCV and those types of things.

Speaker Change:

Speaker Change: And what I like about the way we're doing it now is we'll be able to give a little bit of guidance better because like you know I can talk about a C V N T C V and those types of things.

Speaker Change: Got it Okay, hey, thanks.

Mike Grondahl: Okay. Hey, thanks. Yep.

Yep.

Speaker Change: Our next question is from Jeff Van <unk> with Craig Hallum Capital Group.

Jeff Van Ree: Our next question is from Jeff Van Ree with Craig Hallam Capital.

Speaker Change: Even Adam Brian. Thanks for taking my question. This is Daniel on for Jeff.

Daniel: Evening, Adam, Bryan. Thanks for taking my questions.

Daniel: This is Daniel on for Jeff. Just briefly on the sequential here from Q3 to Q4, it sounds like there was, still trying to understand on the retail dynamic. So I think last quarter it was called out that there was a double digit decline year over year in retail volumes. Sounds like that improved to like negative 2.5%. I think it was mentioned year over year for Q4. And it sounds like that was sort of a... on a stronger than usual seasonal strength in Q4. And that's expected to kind of go back to more pressure in Q125.

Speaker Change: Briefly on the sequential here from Q3 Q4, you know it sounds like there was still trying to understand on the retail dynamic. So I think last quarter. It was called out if it was a double digit decline year over year in retail volume it sounds like that improved yeah like negative two.

Speaker Change: 0.5% I think it was mentioned year over year for Q4, and it sounds like that was sort of a.

Speaker Change: A stronger than usual seasonal strength in Q4, and that's expense expected to kind of go back to more pressure in Q1, 25 am I reading that right or am I wrong there.

Adam Sragovicz: Am I reading all that right or where am I wrong? uh And just so I clarify, if you're saying that, um, was it a stronger Q4 than in, um, in 23? uh yeah I'm looking at the numbers right now so uh it was not in terms of the seasonal impact it was not right it was it was so it was q q 4 24 And again, I'm just looking at, you know, this listing of our, you know, our top retailers and then that one company that does nothing but retail was down 9% from Q4'23. Okay, so...

Speaker Change: Uh huh.

Speaker Change: And just so I clarify if you're saying that was it a stronger Q4 than in.

Speaker Change: In 'twenty three.

Speaker Change: Yeah, I'm looking at the numbers right now so.

Speaker Change: It wasn't in the arms of the seasonal impact it was not right. So.

Speaker Change: <unk>.

Speaker Change: Q4 24.

Speaker Change: And if I don't and again I'm just looking at this.

Speaker Change: This listing of our.

Speaker Change: Our top retailers and then that one company that does nothing but retail was down 9% from Q4 'twenty three.

Speaker Change: Okay.

Bryan Lewis: But... Yeah, but you know, and that's just those volumes. But I think part of what happened is, you know, we do have part of it was some is, you know, things were at a higher rate for some of these customers. Right. So there was a jump, right. And I'm, I'm looking overall. So, you know, I mean, I'm sorry, I'm looking at a few specific ones. Overall, you know, we did see retail was good and strong. But, you know, also, there's other areas to that, you know, you can consider retail or not, but automotive was very strong, you know, and those are things where, again, much, much higher price per transaction than if you're going into a department store.

Speaker Change: But yeah.

Speaker Change: Yes, but you know that and that's just those volumes, but I think part of what happened as you know we do have part of it was some as you know things were at a higher rate for some of these customers right. So there was a jump right and I'm I'm looking overall, so you know I mean.

Speaker Change: I'm, sorry, I'm looking at a few specific ones overall.

Speaker Change: We did see retail was good and strong but you know also there's other areas too that you know you can consider retail or not but automotive was very strong.

Speaker Change: And those are things, where again much much higher price per transaction and if you're going into a department store.

Speaker Change: Okay. So so you know normally you see sort of a low teens call. It.

Bryan Lewis: Okay. So, you know, normally you see sort of a low teens, call it sequential uptick in Q4 revenue, mostly off of retail volumes that I'm taking in. Maybe saw a little bit less of that impact than normal this Q4. So to be up, you know, 26% sequential, you're talking about, you know, over 10 points of that being strength elsewhere. Just help us walk through, you know, is that primarily title insurance? Help us size 8020 where that's landing. I think it's more automotive than title at this point. And again, I look at automotive, you know, automotive and title are, you know, both significantly higher priced than, you know, our banks who are providing credit cards doing, you know, tens of millions of transactions.

Speaker Change: Sequential uptick in Q4 revenue, mostly offer retail volumes and I'm, taking you maybe saw a little bit less of that impact than normal just to keep four so to be up 26% sequential you're talking about you know over 10 points of that being Frank elsewhere, just help us walk through you know is that primary.

Speaker Change: Lee title insurance have besides 80, 20, where that's landing.

Speaker Change: I think it's a more automotive entitled at this point so.

Speaker Change: And again, Adam I look at automotive as you know automotive entitle our.

Speaker Change: Both significantly higher priced than you know, our our banks, who are providing credit card's doing you know.

Speaker Change: Tens of millions of transactions. These folks are doing a lot less so the you know their price per transaction is much higher. So you know one of those transactions can be equal to you know four.

Adam Sragovicz: These folks are doing a lot less. So, you know, their price per transaction is much higher. So, you know, one of those transactions can be equal to, you know, four or five of a retail transaction. Okay, that's helpful. And then just one last for me on the, you know, the result, I think last quarter, it was said sort of guidance for Q4 here was that there would be year over year growth, wasn't said how much, but, you know, kind of interpreted that as low year over year growth, like single digits, we ended up coming in at 15%.

Speaker Change: Four or five of a retail transaction.

Speaker Change: Okay. That's helpful. And then just one last for me on the you know the result, I think last quarter, we said sort of guidance for Q4 here was that there would be year over year growth wasn't that how much but you know kind of interpreted that as low year over year growth like single digits. We ended up coming in at 15%. So it looks like it was a <unk>.

Bryan Lewis: So it looks like it was a stronger quarter than was, you know, expected as of kind of mid quarter. Was there, you know, something, you know, was this sort of fair to read this as some big wins kind of late in the quarter? Or how should we read that? You know, a few things did go live, you know, in that quarter, you know, not that I would consider them really big wins that, you know, would impact it. I think what we saw is across where consumers were spending money, right? So that's not just retail, but it's also, you know, in the automotive space, in other places like that, we saw increased demand and usage, right?

Speaker Change: Stronger quarter than was expected as ive kind of mid quarter, what's there.

Speaker Change: It's something you know was this sort of fair to read this as some big wins kind of late in the quarter or how should we read that.

A few things did go live you know in that quarter, you know not that I would consider them really big wins.

Speaker Change: That would impact it I think what we saw is a cross.

Speaker Change: Where consumers are spending money right. So that's not just retail, but it's also you know any automotive space in other places like that.

Speaker Change:

Speaker Change: We saw increased demand and usage right. The other thing is we certainly saw.

Bryan Lewis: The other thing is we certainly saw, surprisingly, you know, in the email recovery, it went up. So there are different, there was, you know, different sectors. And part of it that, you know, that's part of the reason that I want to get out of things that aren't tied to, you know, somebody doing an economic transaction. You know, one of the things I'm looking forward to is, you know, like, you know, we announced it a while back, they're doing the development now, but, you know, that company that provides background checks to, you know, tons and tons, you know, a vast majority of the independent background check companies, they're excited, I'm excited, you know, because jobs happen all the time, and it's, you know, background checks happen at all levels.

Speaker Change: Surprisingly you know in the email recovery. It went up so there are different there was you know different sectors and part of it that you know as part of the reason that I want to get out of things that arent tied to you know somebody doing an economic transaction you know one of the things that I'm looking forward to as you know like you know, we announced that a while back.

Speaker Change: Doing the development now, but you know the company that provides background checks too.

Speaker Change: Tons and tons, you know a vast majority of the independent background check companies, they're excited I'm excited because jobs happen all the time and it's you know background checks happened at all levels. So to me that's gonna be a great way to make sure that we're further insulating ourself from user can.

Bryan Lewis: So, you know, to me, that's going to be a great way to make sure that we're further insulating ourselves from easy consumer making a transaction.

Speaker Change: Sumer, making a transaction.

Speaker Change: That's it for me Thanks, Brian.

Daniel: That's it for me, thanks, bye.

Operator: All right, thank you.

Speaker Change: Alright, thank you.

Speaker Change: Our next question is from Neil Cataldi with Blue Brining capital. Please proceed with your question.

Neil Cataldi: Our next question is from Neil Cataldi with Blue Pryne Capital. Please proceed with your question. Hi, Bryan. Great quarter. Thanks for taking a question or two here. If I could ask, identity verification across social media seems to have really strong tailwinds right now.

Neil Cataldi: Hi, Brian Great quarter, Thanks for taking a question or two here.

Speaker Change: And if I could ask I identity verification.

Speaker Change: Across social media seems to have really strong tail ends right now I'm curious if you could talk a little bit about the role you think Intel attack can play.

Bryan Lewis: I'm curious if you could talk a little bit about the role you think IntelliCheck can play as age verification, possibly become the norm, and are you guys seeing any activity in your pipeline to support your role expanding in that vertical? Yeah, I think the main thing is, you know, the discussions we've had about where else, you know, this current client can use us and, you know, when you look at where they are talking about where they know that they have issues, you know, certainly you mentioned one, age verification, you know, that's becoming important, not only across, you know, for what they're doing, but now you've got, you know, many states that are passing laws for pornographic websites that you need to age verify there.

Speaker Change: As age verification, you know, possibly you come to the norm and are you guys seeing any activity in your pipeline to support your role expanding in that vertical.

Speaker Change: Yeah I think the main thing is you know the discussions we've had about where else you know this current client can use us and you know when you look at where they are talking about where they know that they have issues. You know certainly you mentioned one age verification, that's becoming important now.

Speaker Change: Only across you know for what they're doing but you know you've got you know many states that are passing laws for pornographic websites that she needed age verify their so that's just a whole other area, but if you think about you know theres marketplaces on these things where people are buying and selling and there's a lot of crime that take.

Bryan Lewis: So that's just a whole other area. But if you think about, you know, there's marketplaces on these things where people are buying and selling, and there's a lot of crime that takes place, because people are pretending to be people who they're not, or it's a front for selling stolen goods, you know, they need to make sure people are right there. One of the things that they've said is, you know, we want to make sure that people are not bots. And how do we do that? So to me, you know, social media is kind of the wild, wild west of where people hadn't thought about proving who you were, you know, you pay your eight bucks or whatever it is, and you get a blue check doesn't mean you're real.

Speaker Change: Place because people are pretending to be people, who are there or not or it's a front for selling stolen goods. They need to make sure people are right. There one of the things that they've said as you know we want to make sure that people are not bots and how do we do that so to me you know social media is kind of the wild wild.

Speaker Change: West of where people hadn't thought about proving through you were you pay your eight bucks or whatever it is and you get a blue checks doesn't mean, you're real and you know the important thing is those are the ones that are usually.

Bryan Lewis: And, you know, the important thing is, those are the ones that are usually, you know, get the most clicks and the most credibility.

Speaker Change: Get the most clicks and the most credibility and know what they're talking about is how do we ensure that credibility is deserved.

Bryan Lewis: And now what they're talking about is how do we ensure that credibility is deserved? Got it. Okay.

Speaker Change: Got it Okay, and then just a follow up on the on the on the one customer that you have referenced I completely understand why its hard to forecast you you mentioned procurement.

Bryan Lewis: And just to follow up on the one customer that you have referenced, I completely understand why it's hard to forecast. You mentioned procurement, which seems like you're finalizing pricing on the new applications and whatnot. If I could ask, are they finished testing or are there other testing steps that also still need to occur as part of the process? Right now we are fully integrated. They're running transactions through the system, not just at the volumes that they said they will, just to keep the pipe live, if you will. But fully tested, fully vetted. They gave us great marks on what we did and the results we did.

Speaker Change: It seems like you're finalizing pricing on the new applications and end and when not if.

Speaker Change: I could ask are they finished testing or are there other testing steps that that also still know occur right. Now. We are we are fully integrated where they're running transactions through the system not just the volumes that they said they will.

Speaker Change: Just you know to keep the pipeline if you will but fully tested fully vetted. They gave US you know.

Great marks on on what we did and the results. We did you know I think it's interesting too when you work with companies.

Bryan Lewis: I think it's interesting too, when you work with companies like that, it helped us think about new ways to work with our products. Part of what we did with the expense of AI machines, we were like, there was a process that everybody usually has, take the front, take the back of the document. We now have a detector. We don't care what the customer on the end does, which means I look at that as we can do that across every single one of our customers and hopefully get more volume out of it. Because if somebody in the past sent the front when it should have been the back, we couldn't process it, give them a result and charge for it.

Speaker Change: Companies like that.

Speaker Change: It helped us think about new ways to work with our products. So you know part of what we did with you know the expense of like AI machines.

Speaker Change: We were like there's this there was a process that everybody usually has take the front take the back of the document. We now have a detector, we don't care what the customer on the N does which means you know I look at that is we can do that across every single one of our customers and hopefully get more volume out of it because if somebody in the past center front.

Speaker Change: When it should have been the back we couldn't process. It give them a result and charge for it. So you know sometimes you know.

Neil Cataldi: Sometimes delays can help you build products that get you revenue across the board. Got it. All right. Well, look forward to hearing updates on that as the year progresses. Thanks for the time. Great. Have a good one, Neil.

Speaker Change: Delays can help you build products that gets you revenue across the board.

Speaker Change: Got it alright, well look forward to to hearing updates on that as the year progresses. Thanks for the time.

Speaker Change: Have a good with you.

Speaker Change: Our next question is from P. J solid with Potomac capital. Please proceed with your question.

P.J. Sollett: Our next question is from P.J. Sollett with Potomac Capital. Please proceed with your question.

Speaker Change: Well I must have been at the back of the he was so all my questions were answered, but I guess.

Bryan Lewis: Well, I must have been at the back of the queue, so all my questions were answered. But I guess while I'm here, I'll say congrats on a nice fourth quarter. And maybe big picture-wise, my interest in the company has always been that you have such great gross margins that if you can get some accelerating growth, the operating leverage is substantial. As you're looking into second half and into 2026, I mean, is it too optimistic to think that you can really start to sustain growth rates well into the double digits and see some of that leverage?

Speaker Change: All of them here I'll say, congrats on a nice fourth quarter and maybe big Big picture Wise My interest in the company has always been that you have such great gross margins that if you can get some accelerated growth the operating leverage is substantial.

Speaker Change: As you're looking into second half and into 2026, I mean is it too optimistic to think that you can really start to sustain growth rates well into the double digits in and see some of that leverage.

Bryan Lewis: Yeah, I mean, that's, you know, I can tell you that the board certainly has set growth rates that are, you know, that would make everybody happy, including me. So yeah, and again, I always say this to everybody. I don't need legions of people to run this company, right? It's the technology team does not need to be any bigger really than it is today, other than maybe a few specialty people like a product manager and that kind of stuff. Salespeople, they should pay for themselves so they don't matter. We need some good account management, customer success people, because I think that we still leave a lot of money on the table with existing clients, just because we're not focusing on it like we should.

Speaker Change: Yeah, I mean, that's you know that I can tell you that the board certainly you said growth rates that are you know.

Speaker Change: What that would make everybody happy you know including me.

So yeah, you know and again I always say this to everybody.

Speaker Change: I don't need legions of people to run this company right. It's it's if the technology team.

Speaker Change: It does not need to be any bigger really than it is today other than maybe you know a few specialty people like a product manager and that kind of stuff salespeople. They should pay for themselves. So they don't matter we need some good account management customer success people, because I think that we still leave a lot of money on the table.

Speaker Change: With existing clients, just because we're not focusing on it like we should but again they should pay for themselves. So I don't see.

Adam Sragovicz: But again, they should pay for themselves. So I don't see any need for increasing expenses. And the only thing I see a need for is increasing the revenue.

Speaker Change: Any need for increasing.

Speaker Change: Expenses and you know the only thing that you see a need for is increasing the revenue.

Speaker Change: That's a good one.

Adam Sragovicz: Hey, it's Adam. I'll just jump in real quick and mention that, you know, one of the things to think about margins and, you know, in this business, cost of goods sold is mostly made up of, you know, cloud computing expenses. And as Bryan mentioned, that's a place that has, you know, a lot of downward pressure in pricing. So that's kind of exciting to look at because there are a lot of other things that have, you know, pricing going up. But the cloud hosting, which is, you know, the vast majority of our cost of goods sold has kind of downward pricing pressure.

Speaker Change: Adam I'll just start on Trump.

Speaker Change: Jump in real quick and mentioned that you know one of the things to think about margins and you know in this business cost of goods sold is mostly made up of you know cloud.

Speaker Change: Cloud computing expenses and as Brian mentioned, that's a place that has you know a lot of downward pressure on pricing. So that's kind of exciting to look at because there are a lot of other things that have a you know pricing going up but the cloud hosting which is as you know vast majority of our cost of goods sold.

Speaker Change: It has kind of downward pricing pressure so that that's a that's something that doesn't make us optimistic.

Adam Sragovicz: So that's something that does make us optimistic. Great, and you kind of alluded to it before, we'll see it improve, but probably not until after this summer when you get rid of the dual systems. Correct.

Speaker Change: Yeah, that's right I mean, you're kind of alluded to before we will see it improve but probably not until after the summer when you get rid of the duals is yes.

Speaker Change: Correct Okay.

Bryan Lewis: And last thing on the social media customer, sounds like you're getting closer, is it too optimistic to hope that maybe that could hit sometime in the second quarter or is that just too optimistic? Uh, yeah, I'm... They've been an interesting customer to deal with. So it's almost like I've begun to figure out, I almost can't figure out what they're doing. But here's what I'll say. Again, we are completely integrated, right? There is no more testing need be done. Now it's just a matter of, you know, them getting their stuff and their act together on their side, and then we should be in good shape.

Speaker Change: Last thing on the social media customer it sounds like you're getting closer is it too optimistic to hope that maybe that gets hidden sometime in the second quarter or is that is it just too optimistic.

Speaker Change: Yeah I'm I'm.

Speaker Change: They've been an interesting customer to deal with so it's almost like I've begun to figure out I can't figure out what theyre doing but here's what I'll say again, we are completely integrated right. There is no more testing needs to be done.

Speaker Change: Now, it's just a matter of it.

Speaker Change: I'm getting their stuff in their act together on their side and then we should be in good shape. So you know it.

Bryan Lewis: So, you know, it. At this point in time, it's just, you know, up to them almost, you know, once we get the contract signed, you know, for the, or I should say the new purchase order for the new product signed.

Speaker Change: At this point in time, it's just.

Speaker Change: Up to them almost you know once we get the contract signed you know for the or I should say the new purchase order for the new product side.

Speaker Change: Okay, great. Thank you.

P.J. Sollett: Thank you. Yep, have a good one, PJ. Thank you.

Speaker Change: Have a good one P J.

Speaker Change: Thank you there are no further questions at this time I would like to hand, the floor back over to Brian Lewis for any closing comments.

Bryan Lewis: There are no further questions at this time.

Bryan Lewis: I would like to hand the floor back over to Bryan Lewis for any closing comments. Great. So thanks, everybody, for joining us. You may remember at the close of the last earnings call, you know, what I said is that our new strategic plan and the implementation of that, I think, was going to be, you know, the key to us handling some of the marketplace challenges, particularly what I was seeing, you know, in the economy, in consumers, and how they're feeling. And I think that that decision to move into new market verticals, you know, continues to be key in us growing.

Speaker Change: Great. So thanks, everybody for joining us.

Speaker Change: Remember at the close of the last earnings call. You know what I said is that our new strategic plan and the implementation of that I think what is going to be the key to us.

Speaker Change: Handling some of the marketplace challenges, particularly what I was seeing you know any economy and consumers and how they're feeling and I think that that decision to move into new market verticals you know.

Speaker Change: Continues to be key in us growing and I think you'll see that that has helped us in some of these downturns. We believe will continue to show progress in 2025.

Bryan Lewis: And I think you'll see that that has helped us in some of these downturns. We believe we'll continue to show progress in 2025. You know, we're going to remain focused on expanding our customer base. growing within our existing customers through the efforts of Sandra and her team and getting in much stronger in some of these new market verticals. And one thing we really didn't talk about, but I am excited about is our partners that's really beginning to show real growth and benefit, and we're gonna focus on that more.

Speaker Change: You know, we're going to remain focused on expanding our customer base growing within our existing customers through the efforts of Sandra and her team.

Speaker Change: And getting in much stronger than some of these new mark the market verticals.

Speaker Change: And you know one thing, we really talk about but I am excited about is our partners there.

Speaker Change: It's really beginning to show real growth and benefit and we're going to focus on that more so I look forward to discussing our Q1 results with you in mid way in May So thank you and have a great evening everyone.

Bryan Lewis: So I look forward to discussing our Q1 results with you in midway, mid-May. So thank you and have a great evening, everyone.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes today's conference. You may disconnect your lines at this time.

Operator: Thank you for your participation.