VerifyMe (VRME) 14 May 242024 Q1 Earnings call transcript

Good day, and welcome to the VerifyMe First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note that today's event is being recorded.I would now like to turn the conference over to Nancy Meyers, CFO. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today for our earnings call presentation.

I'm give Adam update. an today, President, CEO call will who operations the joined Stedham, by and On and strategic

our questions attention under actual materially number company's turn of on statements factors, will Form projected like we the due Stedham X. understood described Today's risk the forward-looking forward-looking management will the that and those of Q&A the XX-K to Adam Slide statements. to Following would annual for the on answer now from a It over and Form XX-Q.I session.I be to report statements have on caption opening including differ to some forward-looking on the those call results to and a factors quarterly your could presentation report remarks. note include on bring presentation, should

pleased gross even and XXXX now and improvement revenue Nancy, in everyone. we welcome, positive anticipate noteworthy We announced HX EBITDA. margin our this is exceed an we It's you, consecutive of rate and we're increase HX in realized growth QX Thank report year-over-year profit, and percentage in I'm that adjusted in significant gross meaningful, sales a will adjusted XXXX quarter previously that an EBITDA rate. growth pipeline. our third our experiencing the increase more to

capital EBITDA growth.QX from that's adjusted timing the sales flow working items. pipeline in QX XXXX and trend not are into increases to enabler to continue primarily and is key of this the in We that the believe convert of operations a due cash did efficiently

items experience out, the positive that year-over-year timing and cash we We of flow for we'll to anticipate XXXX, have continue growth. continue as balance these to

cash I'll anticipate represents XXXX significant end net debt, we includes in QX and only company being which convertible with of the valuation into I for we stock prospects, with generating rather strategy. touch a think converted million had our million opportunity a our than the in note As will capital At and our current meaningful $X.X this shareholders. is that likely debt, growth on cash no repaid point, this get of cash.At $X.X

to continue strategy shares. in Thus shares. has to repurchased repurchasing we buyback continue XXXX, have program We our our in around the and far evaluate place company announced minimal

We traceability to the capital conversation We utilize available the value.So of focus maximize creating to shift segments:The XXXX. statement for all our on our result all operational the Trust both continue efficiency as on with our our as QX income redefining technology vertically operating company X our and in monitor up customers throughout go-to-market options strategy stack of our Authentication segment, improvement the our We to our existing let's XXXX Logistics Precision down focus products. for foundation as to the go-to-market ink is the and the as well strategy our Codes for well our shareholder PeriShip within integrated business segment. products

share the this that QX as down shippers well offering, experience marketplace, existing $X.X volumes customers this increase customers. Logistics, new pleased of a Precision differentiated the versus XXXX revenue in to revenue multiple across XXXX.As add with our we million environment factors to growth XXXX. generated this in We million QX continue to wallet in at opportunity to partial we of in environment. major due looking revenue in Now, in good believe as XXXX related our versus provides We're are look $X.X segment shipping with

QX shipping QX about almost customers the we business, XXXX that at X% down volumes our XXXX. ship said, versus QX So With packages had as in look X% QX versus in customer XXXX we more XXXX. same were

our customer which our revenues So is in to opportunity strongest therefore, market expanding our we're in by grow a base.

in believe customers add the in most learned we're our added So geographic new additional and this plans We our X a focusing for plans expected new expanding Maine June. May, sales sales successes in of the region to and in we're value expansion Pennsylvania. a will to representative We sales between efforts guide resources lessons additional from our and company.Our year the will approach force related targeted with geographic to XXXX. create add

an this So capacity achieved the still in we have this associated we're now, Precision in to each enable volumes costs. This internally on in quarter meaningfully segment spending segment. of percentages leverage Authentication this operating to revenues expansion shift shipping improved year. pleased with maintain should partial pleased we've year overall we much of generated further me margin if softer us gross in Authentication segment. let the profile, to pricing over focused $XXX,XXX create even $XXX,XXX with increase QX last the this margin After The our our increase the growth revenue pipeline industry versus revenues that But revenue efficiencies for and QX year.So I'm believe the in our segment to We Logistics the quarterly without in in anticipate XXXX initiatives, grow segment. and increase pressure XXXX.

better opportunities pipeline We cycle associated to specific refining understanding this of service. related sales in We're our transparency. new our sales and have Amazon model the developing with the the integration multiple with a sales

value calls new customers for the most and our relationship ink consumers and our growth to print partners. highlight Participation and to Amazon Analyst then go-to-market Dscoop this believe large-format the So see customers; I as attended to XX,XXX and we strategic opportunity in to our we This with converting in sales. forward with Indianapolis. creates We're value discussed a segment addition their our to the to customers' trends define positive is to our and for Hewlett-Packard XXXX. pipeline us. And that VerifyMe our significant APAC revenue future in Amazon equipment. sales.We generated ink, opportunities we strategic associated importantly, business, conference growth earnings look was traceability into create working the of at currently Dscoop Conference continue the relationship, food in has to marketing a we we strategy Authentication agriculture and and of conference QX, ink the aligns to plans mutual Amazon; shareholders.In continue continued details partners brands; in how success traceability. community growth with We X% continue adds our good products for believe you this our current technology GSX part related We sharing our of Day. is with also to to for industrial for the standards. relationships throughout a believe APAC in anticipate QX, and

sales June, she'll GSX will at believe I'll detailed information. in just is create the in provide So Conference company call Orlando. the participating Dscoop opportunities the in turn We back point, CFO, created financial to more ink sales conference the this and Nancy over our this opportunities.So as Myers, conference

Adam. you, Thank

increased QX year $X.X revenue million slipped million million. versus to to X% Authentication to revenues XXXX has decreased XXXX. revenue The $X.X order million quarter QX First large by $X.X million. into X% from of by and from for $X.X from $X.X Logistics million prior increased QX as a Precision $X.X

profit in $X.X million pipeline growing XXXX in or we to million million QX QX is increased XXXX.Gross $X.X XX% Adam this remainder in XXXX. by growth our versus of As and anticipate $X.X and in through the mentioned, segment, QX

has from XXXX. year-over-year company due million increased Precision directly well profit from costs in related been is to align This profit adjusted the service prior been service XX% are was process to of to direct improvements our XXXX made. The the in related $X.X providing offerings gross profit XX% percentage in decreased customer centers a the $X.X as to as versus service revenue, they variable increase million. As the shift Logistics gross mix to X% year Logistics to generates in as our customer has gross revenue. in and that Precision and in mainly to by segment our The better has operating

We internally identify clearly are to and have reorganized costs. these able

of XXXX, to have When understand line will added QX could While gross consistent. of remain continue management we review these we for we anticipate QX the a grow, our margin operations, new scale and to we cost segment economies are component you of item operating you believe relatively we of statement technology. costs as our fluctuate.For see and there

result reclassified standards. is These $X.X accounting provide directly visibility as are to severance professional million $X.X decrease to Trust and million for million QX reviewed a Segment across of company and Codes by primarily resources the that increased those with between included well by relates managed.General XXXX. administrative QX costs million expenses in $X.X with XXXX, by for broken being General quarter expense now XX-Q. management in being the the QX performance are to the are line to segment. of in not related Trust segments million The This operating related and how have XXXX. in costs The expenses segments Authentication further is decreased new are shared million QX in in full versus in XXXX those fees of in costs out in $X.X footnote to costs expenses $X.X and costs. our our and expenses $X.X in as line did employees QX QX segments We our versus versus primarily that X public million consultants to $X.X that XXXX as Codes' primarily in acquisition recur.Sales a reduction to X XXXX XXXX. of for a segments include $X.X million the million allocation technology in and both decrease and $X.X marketing QX decreased XXXX are in administrative onetime

loss million per versus improved for loss of QX a to of $X.XX and diluted a net loss XXXX Our $X.XX in million $X.X $X per $X.X share by the quarter share. million diluted or

for $X.X Our quarter balance last the our positive increased by is million as $X.X March million XXXX. of sheet EBITDA slide XX, first the a to XXXX.On adjusted of

of a $X.X $X.X December on Our as of decrease XXXX. March million million is $X.X XX, XX, million, from XXXX, cash

During Logistics at XXXX, quarters. of repayment accounts $X.X year-end payable of use the and to first X in compared other debt to the segment; AR, Precision our seasonality interest. included much Due the cash of unbilled and our of higher are million quarter our

have that, turn XX, remaining are no our of borrowings loans our us.With There of to we I Adam. million $X.X on convertible and back credit, available we like XXXX, million to March As the note. have million on to and would call $X.X line $X under our

pleased I've Thank point be that process start It's point. that always up a from exciting and transformation call that also they from pivot been the I has hole look the to begins the QX quarter speed the revenue at third by VerifyMe at construction share share projects, am for hard Most call growth. due see generated the it's ground. you, continuing quarterly company. more was team, about to the with that satisfying positive I with to next pleased quarter Nancy. let's over the the company, the and the my turn I'm structure and and of rise the EBITDA digging adjusted to to now, questions. upcoming success for to work forward growth.But to our each

[Operator Instructions] Research. question comes Petusky Barrington from And Michael the from first

I negative was this. comp may of in sort each missed or What growth percentage of please? have the segments, the

again? say that sorry, I'm

percentage The comp for each quarter? or segments in the growth revenue of negative the

Okay. Yes.

went So to Logistics Authentication and X%, by $X.X was million. from Precision $X.X It down. million increased

any chance? What's by the percentage

off the head. don't, of I my top

right. All Okay.

dealing of me let maybe terms industries shipping that of more Adam, macro growing that up more impacted? -- the Precision problem up better than But are parts I around sort sort environment. maybe of holding understand holding of question there here? seeing business that I'm just maybe are you certain are guess I are curious others with versus some So are if are guys that in being difficult or Logistics. ask a you're your others this

-- a had products a little on bit to sciences The as a expensive the has have as more side. we well concentration products end strong consumer bit be So affluent. more tendency life are that those in of little that a

those bit conditions a areas more less X a economic X slowdowns. impacted are little by resilient, and and little those so markets And

we in strength -- expensive are that at products maybe that's right those think and have where goods and that that other us we seeing the what's So now.We do we're of that's giving products baked less that's our general more and what we're is the seeing slowdown some ship. marketplace, the aimed

the I with And the then Conference -- Investor with know Quarter right. All and affirmed Fourth think, Day with the I investor Call.

have been -- obviously. growth I guys think, line both are top you for segments, double-digit hoping in

Correct.

that perspective. more This is Are it point? a great feel guys is tough you and comfortable? behind understand like To is maybe maybe of supposed quarter at me, better quarter do growth a like but this -- margin a let to -- -- of is still does pretty it great that but perspective, not sort from possibly line possibly I know. quarter goal top maybe from an from not, a aspirational you second the -- me feels be but you're I don't half, but behind, first half feel I'm you -- that not tracking than this Or tracking

No.

with feel it. do comfortable we actually, So

of additional adding out X that One is we're the that things pointed we've salespeople.

were those so And the not that plan additional X part time. salespeople initially at of

revenue we the make making room in that we've target freed resources. up investments believe hit is revenue The hit the So way by those and the growth additional income we the in the will to target. statement sales sales growth in investments we'll resources,

as will And segment well be towards mind, Logistics. weighted a we Precision double-digit that of So HX growth versus our each will hit it very percentage the the is the we revenue to generated in HX.Keep fourth in overall. in large for as quarter revenue company continue believe

So cycle us business naturally, to a see than for growth the rate HX much in us that HX. higher opportunity gives

Can does assume market, sort it the Your internal the of second assumptions half? macro in around the improves I just ask? that

No.

think second an there's assumes If in the that an significantly that's does if the improvement, there's it macro negative. positive. assumption. Status the not is quo I that's erode erosion, And half.

Group. Aarde The question Instructions] [Operator from next from Jack comes Vander Maxim

Adam, positive looks you're I'm like X doing with EBITDA for as well. CEO. X adjusted It

to great that's So see.

business questions. tracking in Precision of It's along. growth Just the to a Logistics the see couple good

Authentication, mentioned of you growth strengthening the pipeline expect and revenue going you forward. terms In

things. up from Will business the the versus revenue do expect growth. you capture away? of Do business this some Recent mentioned. can back conferences maybe mix the half to of you couple walking drive and you you orders what Do Trust between maybe focus revenue to X near-term conferences for Just to your a -- and Authentication hope -- ink just you expectations Codes maybe you these set growth?

Absolutely. Great question.

So we're in -- the cycles when as we in finding Authentication ink we it, well our well look codes. the as or expect the of at as both expected. sales longer is to are portion growth see what as segment the ink segment than we've And codes that

So of queuing you your in have pipeline. kind a

longer that on we're experiencing we're have pipeline have previously our expected I not experiencing some So lower But sales building. pipeline converted than cycle is that importantly, conversion that a building already. and would would what of we pipeline.Now is a rate expected.

within than So the that we just to it's sales are not other well as if we're Amazon losing complicated expected a more expansion we players as And when strategy little more on sales that's a involves with look the sale deals lose. the longer go-to-market cycle side environment, longer. cycles at as ink. our for The into more

look longer sales to you have If targeting where ink be at a tendency the sales we're now, those cycle.

is sales previously cycles Authentication they the had take me business anticipated perspective a that's little I I [ So that an fact do think aha the for than ] longer been would. biggest from the

makes with switch expect going margins there? sense. you bit? your that And given margins to bright a it would assumption for Authentication I gears forward. there a then like me current Or to what gross that Okay. potential margin to to like another spot. the if that that the have expectation margin It just quarter? around are just gross speak ramping just gross was believe Can stream. be in conservative be upside what just thoughts your to margins That I feels revenue general, is given again, you gross consistent fairly sounds But sales maybe Is

we few pricing things. experience we If then the So year. to start that responding order could margin gross for on plan pressure, revenue appropriately in do target our pressure hit to pricing to to a the actually continue

result revenue a margins below possibly see to capacity we that some gross believe we erosion.With add cost. gross As that, that we organization of have incremental margin said, the in without could

see So of our margin or it's percentage true, go our slightly down go as a margin hit as have would offsetting -- gross believe target, we hold we gross percentage sum lower would bottom margin line our to pricing down, cost percentage line even our if we margin a revenue maintain sales our profile. should of did below because revenue, and might we bottom to but

current economy that's sales -- scenario to that a to able establish to that the an the does mix that don't to that quarters. gross we're status and at see see in able half the response obviously, we pressures growth do maintain models, in hand, year.Now your So different the pressure, we're some for we our out and has quo say second have point, improve and overall fact of marketplace.On would QX the margin in when could other the to other with play if if that the you adjust adjust our price in margin within force, have pricing we I than pricing increase pricing X the maintain

So for that's much need our thing about margin than and model.Secondly, you Authentication one our a adjust gross has higher business your think to Logistics Precision in business.

as revenue you we a overall So was the were as than that the we in start and to between grows for. in Precision gross Logistics, little Authentication to, be that Authentication expect a as looking could would Precision and get probably compared the to Logistics longer well.That profile more if product little margin a much it bit that segment adjust to you answer Authentication starts more imagine the mix balanced the or way

I but sure did that the your for -- all want make you factors So Does had make to just sense? modeling.

and sense, and execute look to I It's you forward guys complete good makes the story. to very the see response. to tracking No, much thorough no. continue That appreciate

Barrington is Michael Petusky question from from a And the Research. follow-up next

part the gross want to were about your I the first gross understand talking sure the -- that gross response. erosion, potential margin make question previous or only of both? catch didn't margin, you around The I business I and margin Authentication

No. margin If status gross -- if of should so, we maintain. quo, our -- as think

Got Yes. you.

profit that experience to start see marketplace revenue bottom marketplace, deliver would in we want will we some pickup pressure strategy improves hand, see will status economy gross or We If maintains do If in to margin.On that quarters. we the would gross QX of different believe the the with you below offsetting we accounting quo, accordance you other erosion. erosion the the that QX erosion; a our order get the that to see in expect a different that deliver. in gross margin we pricing the get a in the different, has pressure mix and increased margin other happens, margin line than if be because not fact growth pricing the don't to you for do we gross product adjust

factor. one So, except for that

a there concerned your getting of about of that [ side year? pricing some business difficult Is more pressure the ] the you're potential through

not critical an when it's the desirable, overall if our No, which impacted the revenue environment. not is get segments is we But the are sales then if market customers. -- think targeting really market macroeconomic It's of you're think which easier know area growth, in are find market to of segments broader the the grow by the customers easier We the customers to I we the really. that process. are

a as segments those so because we're to segments, sales but market. efficient less opposed the targeting specific able broader little we're to being target we're targeting -- it's having So process

a are bit to thought say be. previously it say little growth than So areas get would to I about. the I that I'm would laborious that concerned more be it's just had going revenue there we wouldn't

aspects, I et top Okay. of my all mean, All affirmed aspects prior whether flow, cash essentially you've right. all line cetera. financial sense or guidance, is it's But

Correct. Correct.

closing ladies And gentlemen, I question-and-answer any the back over our Adam remarks. concludes turn to session. this and would to conference Stedham like for

it's so Thank an of forward the far. do exciting journey been look year, you. we Well, and to the remainder so

for I forward second the mark look results will to quarter. call me with next forward that look the for the Our X-year I you call. company. the to sharing point with

So thank everyone. you,

Thank concluded. thank you. And attending presentation. today's conference you The for has now

now You disconnect. may