Q1 2025 authID Inc Earnings Call
Thank you for watching!
Good afternoon, everyone, and thank you for participating in today's conference call to discuss.
Speaker Change: authID's first quarter, 2025 financial results. After the speech's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered, and you'd like to remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded, and now I'd like to introduce your host for today's program, General Counsel Graham Arad.
Graham, please go ahead.
Thanks operator. Greetings and good afternoon.
Speaker Change: This is Graham Ragh General Counsel at authID. Welcome to the authID first course of 2025 Earnings Conference Call.
As a reminder, this conference is being recorded.
Drone, Drone, Drone,
Speaker Change: Joining me on today's call are our CEO , Rhon Daguro, our CFO , Ed Sellitto, and our founder and CEO , Tom Szoke.
Speaker Change: By now, you should have access to today's press release announcing our first course of 2025 results.
Speaker Change: If you have not received this, the release can be found on our website at www.authid.ai under the Investor Relations section.
Speaker Change: Throughout this conference call, we will be presenting certain non-GAAP financial information.
Speaker Change: This information is not calculated in the call into the gap and may be calculated differently from other companies, similarly Typhalt's non-gab information.
Speaker Change: Quantitative Reconciliation of our non-GAAP adjusted EBITDA information to the most directly comable GAAP financial information appears in today's press release.
Speaker Change: Before we begin our formal remarks, let me remind everyone that part of our discussion today will include forward-looking statements.
Speaker Change: Such forward-looking statements are not guarantees of future performance, and therefore you should not place Andrew Reliance on them.
Speaker Change: These statements are subject to numerous written uncertainties that could cause the actual results to differ materially from what we expect.
Speaker Change: Some of these risks are mentioned in today's press release, others are discussed in our form 10k, and other filings which are made available at www.sec.gov.
I'd now like to introduce our CEO , Rhon Daguro.
Ron Daguro: Thank you, Graham, and thank you all for joining us today. I'm very excited about authID's growth prospects in future.
Ron Daguro: We have solidified a foundation to become a leader in the evolving and fast-drawing biometric authentication market.
while making progress on our ambitious 2025 goals.
Ron Daguro: Obviously, we are in a very dynamic macroeconomic environment and believe that market uncertainty could accelerate our industry. Historically, in a recession, fraudulent activity ramps up.
Ron Daguro: As Call Center's exposure to these attacks have not been addressed,
Ron Daguro: Chief Security Officers in the industry are looking for solutions to prevent this from happening to them.
Ron Daguro: Existing fraud prevention providers are also looking to include biometrics in their core offering in response to growing exposure and risk [inaudible]
Ron Daguro: Last quarter, I talked about how we spent the previous 18 months building towards an inflection point with the expectation to close multiple Fortune 500 and multinational customers.
Ron Daguro: While delayed timing of large deal cycles impacted our Q1 bookings, this was not due to lack of interest or demand and our pipeline is extremely strong. In fact, we have prioritized large enterprise deals and large partnership deals. [inaudible]
Ron Daguro: We have made very exciting progress on both fronts and continue to receive very positive feedback which reinforces our confidence in generating accelerated growth in the back half of 2025.
Ron Daguro: Let me now cover our exciting key highlights from the first quarter of the year.
Ron Daguro: As I said in our last earnings call, our goal is to sign Fortune 500 Customers this year.
Ron Daguro: To that end, I'm very excited to provide the update that after demonstrating tremendous value in a successful proof of concept we have entered into contract negotiations with a large global fortune 500 prospect to deliver our identity verification and biometric solution.
Ron Daguro: In addition, you signed a paid live production trial agreement with a global fortune 100 retailer to test our product in a controlled rollout and ultimately convert a long term contract before and the year.
Ron Daguro: Next, we are in the final stages with a global Fortune 100 biometric hardware provider to embed authID into a solution offering reusable, interoperable identity credentials for employee workforces.
Ron Daguro: During the first quarter, we initiated joint product development as well as training their partner sales organization as we take concrete steps to go to market with an authID powered solution later this year.
Ron Daguro: We have also been confirmed as a selected vendor by one of the largest identity fraud platforms and are also in the final stages of contract negotiation.
Ron Daguro: Aided by our recent capital infusion, we are also developing new and exciting opportunities many of which we believe we can execute in the year.
Ron Daguro: For example, we are integrating with a blockchain-based data privacy and security platform to validate identity of data owners through privacy preserving biometrics. This will bring authID technology into smart cities in South America and India just to start.
Ron Daguro: In a big shift, we are now accelerating our efforts into the public sector by providing a reusable identity platform for removing the barriers between siloed systems for government workforces.
Ron Daguro: by issuing interoperable digital credentials compliant with the ADA standard to provide secure, accountable, and trusted access to sensitive systems.
Ron Daguro: Additionally, with our major Indian AI Applications Development Customer, we are working on new opportunities in the Indian banking sector.
Ron Daguro: protecting high-value transactions and account access with authID's privacy key technology, as well as government applications in the U.S. and India, requiring biometric authentication for internal workforces and citizens access to government services, and movement through secure control points.
Ron Daguro: The reason authID has been able to advance these large important deals is because of two big strategic bets that we made over the past 18 months to position authID as a leader in biometric authentication of four key categories.
Speed, Accrecy, Privacy, and Interoperability
The first thing that we made was on privacy key.
Ron Daguro: with a 1-to-1 billion false match rate, the highest accuracy in the market today.
Ron Daguro: We have now built this into our core product, making us among the first to offer biometric authentication without the need to store any biometrics.
Ron Daguro: To be clear, we do this by leveraging well-established public private key technology, a de facto standard for all enterprise encryption and crypto.
Ron Daguro: the privacy and compliance that authID's privacy he provides is important to all our customers and prospects, but is most important to the largest enterprise and platform providers.
Ron Daguro: who have an absolute requirement for privacy preserving biometrics in their solutions and an unmatched revulability of biometrics.
Ron Daguro: This is where we are winning in the market, attracting interest and beating out our competition.
Ron Daguro: The second big that we made is on integrating our biometric authentication platform with an interoperable solution for reusable identities, enabling organizations to leverage trusted credentials bound to an individual's facial biometrics across multiple agencies and entities without changing their existing infrastructure.
Ron Daguro: We have developed this solution on the ADA Standard, which is founded by the same organization that created the widely adopted Fido Standard.
Ron Daguro: The bet we made on building authID into this technology has led to an opportunity to work with a major global Fortune 500 biometric hardware provider, where we are making significant progress in finalizing a joint product development and sales partnership which would cover multiple
Ron Daguro: Our efforts and product innovation are being recognized by the greater market.
Ron Daguro: In the first quarter, authID earned the honor of the Best ID Management Platform in 2025, Fintech Breakthrough Awards.
Ron Daguro: This is a testament to the dedication of our team in delivering innovative solutions and making a digital ecosystem safer, more secure, and more user friendly for both businesses and consumers.
Ron Daguro: These strategic bets were difficult choices to make early on since we knew they would take time and resources However, we believe that the game changing capabilities we were developing would meet the current and future needs of the market
Ron Daguro: With the customer feedback we have heard and tangible progress we've made in Q1, I believe we have finally come to the inflection point we've been working towards for almost two years.
Ron Daguro: We are also excited to note that we completed two capital raises in April and May which approved our balance sheet, brought in our investor base and provided us with additional expertise and support to scale our business.
and invest in new opportunities.
Ron Daguro: Between the two raises, we secured nearly $9 million after expenses from existing and new shareholders, while also creating an advisory board, comprised of two new expert advisors, Eric Swider and Donald Nady.
Ron Daguro: Both leaders have deep experience in different industry and government sectors where authID's biometric identity solutions can address critical needs.
Ron Daguro: They have already provided meaningful contributions to our pipeline development efforts.
Ron Daguro: In conclusion, we continue to focus on major enterprise and partner prospects in order to achieve our booking targets, which will be dominated by the fat 100 and faster 100 segments, as we move through the second quarter.
Ron Daguro: I am confident that we will sign new customers and continue to drive significant growth towards our 18 million bookings target for 2025. And now I will turn it over to Enselito, our CFO , to cover our financials.
Ed Sellitto: Thank you, Ron. And thank you for joining us today.
Looking at our Q-1 2025 Gap results.
Ed Sellitto: Total revenue for the quarter with approximately $0.3 million compared with $0.16 million a year ago.
Ed Sellitto: , , , , , , , , , , , , , ,
Ed Sellitto: Operating expenses for Q1 were $4.7 million, compared with $3.3 million a year ago, and $4.9 million last quarter.
Ed Sellitto: The year-over-year increase is primarily due to increased headcount investments in sales and R&D throughout 2024 to support the development of our pipeline and deliver on our product roadmap.
Ed Sellitto: Net loss for the quarter was $4.3 million, of which non-tash charges was $0.5 million.
Ed Sellitto: This compares to a net loss $3.1 million for the same period last year, which included $0.8 million in non-cash and one-time severance charges, and a net loss of $4.6 million in the previous quarter.
Ed Sellitto: Net loss per share for the quarter was 40 cents, compared with 32 cents a year ago with 49 cents less quarter.
Turning to RPR on the next slide.
Ed Sellitto: Remaining Performance Abligation, or RPO, represents the minimum revenue expected to be recognized from our sign contract based on our customers' contractual commitments. As of March 31st, 2025, our total RPO was $13.85 million, a decrease of 0.41 million over the prior quarter.
Ed Sellitto: Our RPO for the quarter compares favorably with the RPO at the same period last year, which was 4.03 million.
Ed Sellitto: We expect to recognize the full RPO of 13.8 5 million over the entire life of the contract which are typically signed with a three-year term.
on to our non-GAAP results on the next slide.
Ed Sellitto: Adjusted EBITDA loss was $3.9 million for Q1, compared with a $2.4 million loss for the same period last year.
10 4.1 million last quarter.
Ed Sellitto: The increase in EBITDA law is primarily due to increased head count investment in sales and R&D throughout 2024 related to development of ourselves pipeline and product roadmap.
Ed Sellitto: We also monitor and report on annual recurring revenue or ARR which is defined as the amount of recurring revenue earned during the last three months of the relevant period and the term in accordance with Gap multiplied by four.
Ed Sellitto: The amount of the ARR as a Q1 is $1.2 million, compared with 0.6 million ARR as a Q1 2024, and 0.89 million as a glass quarter.
Ed Sellitto: Turning to Bar, or Booked Annual Recurring Revenue, which is the projected amount of annual recurring revenue we believe will be earned under contracted orders looking at 18 months from the date of signing of each customer contract.
Ed Sellitto: The gross amount of bar signed in the first quarter of 2025 was 0.01 million down from 0.10 million of gross bar a year ago.
Ed Sellitto: Our Q1 bar was lower than expected due to delays in the sales process for certain deals expected to sign in Q1, for the delays driven in part by uncertainty in the economic outlook.
Ed Sellitto: These deals are continuing to progress and are expected to contribute to our 2025 full-year bookings target $18 million dollars.
[inaudible]
Ed Sellitto: As previously explained during our core learning calls, BAR comprises two components which we refer to as CAR and UAC.
. . .
Ed Sellitto: The 0.019 of Gross Bar in Q1 2025 is fully comprised of UAC or usage of our commitment, as the new business signed in the quarter contains purely usage based terms.
Ed Sellitto: Going forward, we do expect our 2025 bookings to revert to the average of approximately 50% of our gross car being comprised of contractually committed annual returning revenue or car.
Turning to our revenue growth stages on the next slide.
Ed Sellitto: Now, finish off by summarizing the progress we're seeing through our revenue growth stages.
Ed Sellitto: The first milestone we use to monitor our growth is bookings, as I should buy bar.
Ed Sellitto: In Q1 2025, we realized the total gross bar of 0.01 million
Ed Sellitto: As I mentioned earlier, we expect the temporary dip we experienced in Q1 to compress our bookings over the next three quarters as we are both adding pipeline and progressing large enterprise and platform partnership deals.
Ed Sellitto: We reiterate our goal to achieve $18 million in bookings by the end of 2025.
The next milestone is our Remaining Performance Abligation, or RPO.
Ed Sellitto: As I detailed earlier, as a Q1, we have secured approximately $13.85 million in our P.O. A number that we expect to increase in line with our bookings throughout the remainder of the year.
Our third milestone is revenue, recognized in accordance with debt.
Ed Sellitto: Our Q1 revenue of $0.3 million grew approximately $0.14 million over the same period in 2024.
Ed Sellitto: We also expect to expect this to grow substantially later in the year as our 24 bookings continue to go live.
Ed Sellitto: And as we've called out in prior earnings calls, we are increasing our focus and customer attention and expansion in 2025 as our customer contracts mature.
Ed Sellitto: We're looking to build on the customer experience we've highlighted in Q4.
Ed Sellitto: and continue to broaden relationships with our customer base by adding tangible value and helping our customers achieve their objectives with our authID solutions.
[inaudible]
Ed Sellitto: Overall, we look forward to executing on our strategy and delivering increased growth and shareholder value in 2025.
Speaker Change: With that operator, we would now like to open up for questions.
Speaker Change: Certainly, an answer reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. If your question has been answered, and you'd like to move yourself from the queue, simply press star 11 again.
Speaker Change: And our first question for today comes from the line of Ricky Solomon for...
Independent. Your question please.
Yeah, hey, Ron, um...
Speaker Change: Could you talk a bit about when you're going to start seeing leverage from you highlighted a couple of partnerships? When do you think that will actually start resulting in some bookings?
Thank you for watching!
Speaker Change: Yeah, great question. Thank you, Ricky. We're already, you know, kind of benefiting from those partnerships, the bookings.
Speaker Change: The bookings will come, so we've invested a lot into the channel and we believe that, you know, from a payout perspective, we have to invest in the channel and the channel partners.
Speaker Change: as we help to enable them bring authID to their customer, so it's an ecosystem for which we are investing in, so we have to obviously sign the partnerships, or win the partnerships first by proving authID is the best biometric authentication platform.
Speaker Change: who have basically a large set of customers in their ecosystem. Our existing partnerships already have brought us into the Indian bank detector, have brought us into five large employment agencies, brought us into a large financial exchange as well as more banks, and then we have some upcoming partnerships.
Speaker Change: which will include one of the largest fraud platforms in the market, which plans to onboard over 100 banks.
50 of which will be within the first year.
Speaker Change: Another key partnership is with the Fortune 500 biometric hardware provider that I talked about earlier that we that will work with authID to go to market large enterprises specifically in public sector as well, not only in the US but globally. And then another upcoming key partnership.
Speaker Change: will be bringing authID into the smart city projects in South America and India. So from a partnership's perspective, it's very important to authID. We are very excited to make these announcements hopefully very soon.
Okay, so so
Speaker Change: If you look at expenses or expenses, compared to the revenue, they're quite high. Why have we had to have these expenses so far ahead of the revenue? I know there's been delays. Can you kind of walk us through your thinking on that?
Ed Sellitto: Ed, why don't you take that first and then I'll add to that.
Sure, thank you, thanks for the question.
Speaker Change: I'll start by saying that our current expense rate is driven by investments that we've been making in
Mostly, it had count furthering our sales and our endocapabilities.
Speaker Change: that are both really important investments to drive the growth that we're that we're working towards signing, onboarding and supporting not only our existing clients, but really the large clients in the pipeline as well that Rhon's been talking about and the providing solutions for those customers.
Speaker Change: While we're onboarding our existing customers that we've signed, and also...
Speaker Change: working towards signing and onboarding the new customers that are in our pipeline. We are expecting the growth and revenue to throughout this year to continue to start to outpace the growth of our expenses. And we'll see that gap start to close.
Speaker Change: We're always looking to deploy our capital strategically to ensure that we're doing the right thing to support and drive our growth and execute on our strategy.
[inaudible]
Ron Daguro: So Rhon, if there's anything you'd like to add, I'll turn it back to you.
Ron Daguro: I think you covered it as we're as we're starting to close these big, big, big customers and I've described it earlier especially in the partnerships. It does require us to make sure that we're training all those folks.
Ron Daguro: as well as with large enterprise we're working with, typically instead of working with five people on smaller companies we're working with a group of 27 people in these large timidies and so it requires us to make sure we invest in our team and to be able to support them properly.
END OF THE WORLD
Okay. Thank you.
Thanks for the question.
Thank you. Bye.
Speaker Change: Thank you, and our next question comes from the line of Gary Brode from deep knowledge investing your question, please.
Gary Broad: Hi, Rhon. The press release, yeah, in that you mentioned you're nearing the finish line with multiple Fortune 500 customers or that you're already in negotiations. So I don't think you're really close to the bunch of them.
Gary Broad: and you also, on this call, reiterate the $18 million bar target or bookings target. How many of those big Fortune 500 clients do you need to sign this year to make that $18 million goal?
I think, first of all, Gary, thank you for the question.
Gary Broad: to make sure that we can fit within their enterprise and as well as make sure that we can fit and win not only with the partner but also win with the large enterprises, so that's really been a big emphasis for us.
Gary Broad: What I really love about the Fat 100 deals is their big deal sizes. So these deal sizes are at least a million in above and some of them are in the 2-3 million range. So for us, probably with all the other opportunities.
Gary Broad: Maybe we only need like four or five. We have one opportunity or two actually two opportunities, but we have two opportunities that can make the entire number for the year.
Gary Broad: if it comes down. So I'm very, very optimistic. Now that we have built the right foundation to close the large FAT 100 or large enterprise deal that we've been working towards, that's then a big delay for us.
Gary Broad: and making sure that we can service those accounts, but right now all the POCs have been very successful, all the customer feedback has been very successful, and the result is moving the contracts.
Gary Broad: So we anticipate those to go in the contracts. We expect to help the customer go at full volume as fast as possible. And with that we hope to maximize the large deal sizes, but there's roughly all above a million dollars and a lot more, but we probably maybe four to five is what I'm hoping would be enough to knock out the year.
Speaker Change: Got it. That four to five number makes sense and consistent with other things you said in the past. I just want to know, did you just say you have one potential deal big enough to cover the whole 18 million or it would be a couple that would do that. We do have one potential deal that can cover the whole thing. [inaudible]
Thank you for listening. Have a wonderful day.
Speaker Change: Got it. Okay, good to know. Thanks, Rhon. The reason why partnerships are awesome is that they've already established all the customers that we could have ever wanted.
Speaker Change: and they already have the infrastructure, they already have a platform and all we want to do is make sure that if they make a choice for biometric authentication it comes to authID and I think these these vets that we've been making have really put us in this position that's why we're very excited about it.
Speaker Change: God, it sounds good. Thanks a lot. And please feel free to move on to the next question. I appreciate it.
Speaker Change: Thank you. Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone.
Speaker Change: I'm going to run while we're waiting for any additional questions. You've talked about the pipeline and the issues in the market relation to fraud. Could you talk about what you think is the demands pulled for biometrics right now?
Speaker Change: 13 million, a new pipeline, Q2, we're only in the big way, Mark, and we're already at 8.5, approaching 9. So we are trying to build pipeline a quarterly basis.
Speaker Change: to the tune of 13 million, 15 million, 18 million per quarter. Can't be doing that if there isn't a demand. So we're very, very excited about that. And it's all rooted in biometric. So when we brought to the market, the verified with privacy key.
Speaker Change: and using the public key and private key pair for basically essentially executing biometrics without storing biometrics.
That absolutely has taken everybody's attention.
by storm.
Speaker Change: And one, because the standard basis of using public key and private key is something that's well known.
Speaker Change: In the industry today, if you say, hey, use biometrics, a standard engineer would be like, I don't know anything about biometrics, but they know everything about public key and private key.
because they have been doing that for years. [inaudible]
Speaker Change: and so I think that has allowed us to build a lot of excitement around our technology with our new baking partner and thank you to Madison Global for making that introduction to Dominarie, like with their new advisors that had helped us and they're introducing us to all the people in their network and their space, that is absolutely what they're all fired up about, which is
Speaker Change: the Public Key Private Key Ability to that technical pattern for biometrics. And we're seeing a great demand there.
END OF THE STATE
OK, thank you. Thank you, Rhon.
[inaudible]
Speaker Change: Certainly, thank you ladies and gentlemen for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.