VerifyMe (VRME) 12 Nov 242024 Q3 Earnings call transcript

Hello, and welcome to the VerifyMe Third Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the call over to Nancy Meyers. Please go ahead.

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

projected our to your that will would we Slide be X. on management Forward-looking understood due Q&A those actual caption to on number and from and on results could Risk forward-looking including Following the differ quarterly of I the company's on statements. presentation session. the should described answers forward-looking have on those statements like include under to the annual attention Statements materially and a factors, reports bring of Form XX-Q. Today's the a questions note to Factors presentation, It Form report XX-K

turn some call Stedham the Adam to opening now for over I remarks. will

particular, Nancy. I'm with I'm These versus XXXX profit diligent efforts our leadership customer we our growth quarter improvement gross of by the of offsetting premium have loss third Precision during with In disclosed. has XXXX. EBITDA adjusted the I'm seen in Logistics pleased segment, result pleased margin, the the in to and services very their close revenue that and Thank the come to results. gross in gains been have pleased previously proactive you, our team, report

will net net cash slightly total of for down there is we cash anticipate be Our QX, flow year-to-date at the but end XXXX. neutral

insourcing of XXXX growth. of we FedEx one our disappointed whole, as revenue be factor lack at Looking And customers. PeriShip's a premium to contributing provided is A XXXX revenue anticipate I'm of slightly will XXXX by services the meaningful the below revenue.

still loss contract the sales our seeing expanded full efforts, of will but the of the As on results. year just mentioned, we're that drag results

year a grown the drag revenue year, growth despite which, overall of robust larger this start from hasn't in expectations growth XXXX. at on Authentication comes our this segment, expected Now it

positioning competitive of do in us a led our has thorough to this this Now analysis area.

technology been which efforts has presented many supporting ink shareholder some ultimately exciting efforts been partnerships created Historically, many VerifyMe capability. partner limited distribution have that strategies, on focused anti-counterfeit which for years. partnerships for the have upon in have our shareholders generated but The value. these Now dependent highly were value opportunities,

In way technology in acquired into reduce our reliance XXXX, on our was XXXX, Codes. as completed the Codes' Trust providers with we And a cash. This business, to third-party minimal Trust transaction we integrated code during business. technology

Trust In we sales developing acquisition. and addition, distribution Codes XXXX, on focused potential by created and XXXX the throughout partners

significant transparency. our our segment into agreement of coming distribution XXXX, provider with partnerships to Authentication anticipated growth due our leveraging completing we Now sales Amazon and services and

very growth Disappointingly, segment that in realize segment U.S. sale a in not market. supporting the has and the organic cloud customer through and complex for technology to We lacks is codes customers discovered we've the serialized compete in for We've effectively enterprise market. traceability Authentication also this our scope XXXX. to materialized come that size

the dynamics lastly, and do would. tailwinds believed believe had transparency previously for our not Amazon size then various presents we Authentication positioning, to we the marketplace arrangement due And that the segment and company's it

continued per XXXX, So again vertically by XXXX. as this requires XXXX integrated pursuing cash code I current consider to investment into think $X that approximately company in we we the investments also evaluate need the million strategy of situation, in year and cash

services our put million of I into X% to investment want the company our perspective. annual represent market is help and the required code entire and that revenues. X% about cap of approximately -- of So $X

what or a represents XX% our And which our are on board as we've in provide the strategy. of company other currently of to pursuit our a than Authentication to return the for So been better revenue code or about expertise areas multiple with that integrated options. a shareholders invest opportunities concluded will vertically product, our working advisers result, of strategic to focus assess renewed we've continuing ink various critically related

a portion with relationship Amazon which operation discontinuing business. our would the or segment, that likely of So to by as also end end of exit Authentication we'll divesting the of Transparency result the XXXX this, current prior of the

organic Now we when that initiatives. business business, and I year you believe to value I we introduced we flow a a myself just could believed cash and said presents PeriShip ago, strong create over our through strategic

believe continue the is case. to this We

and that want While the the of the is decision have be on able to we'll likely be codes of strongly to to in value now this At is our that of drive areas shareholder to create not to to know we our We made Authentication business this outside core decision you believe I change to lightly. the segment. investing surprise efforts strategy create portion you, course by Authentication best value. a very

And that optimistic this opportunities we're at the We've very see. advisers and alternatives. seeking we engaged point, about with bankers in

this conversation to So I'd increased year-to-date like over a proactive the the customers to discuss X% by services Logistics. XXXX. Precision segment in of bit number We've shift

in We in have our the proposal of also team. sales continued Logistics increasing size to activity Precision see increases

by Now despite these volumes. total we're for proactive shipments the and being shifting services trajectory down customers X% our existing pleased year-to-date, of

well. positions this but the and differentiation year QX we us We navigate to will headwinds, of continue believe our face situation to execution expect that

In once believe ] we're shift. to benefit the market wins positioned shipments the overall addition, PeriShip we well [ from

of call this financials. review quarter Nancy over to at detailed turn point, I'll a So for the third the

Thank you, Adam.

revenue of year-over-year. offset revenue premium slightly Revenue quarter proactive million to third profit Authentication QX XXXX. a down Precision year the versus the million The due was XXXX segment with customer, the versus million Logistics a decrease $X.X $X.X million in by million down contracts in Gross QX discontinued segment, previously $X disclosed one partially million to revenue. our million. decreased $X.X In in $X.X increase the services prior was million, in $X.X was of $X.X $X.X

QX XX% As XXXX XX% revenue, a percentage margin in gross was of versus XXXX. in QX

in we last mitigated our decrease profit quarter customer higher earnings year-over-year premium company a by loss call, in other services, the one with in result margins, has improvements was process in discussed partially impact gross which made. of the has While did the the which

anticipate percentage XXXX gross We year we expect be exceed proactive QX below QX with gross to revenue. margin though year our to to seasonality even margin full our full XXXX still associated due the

was and During intangible and analysis asset segment our portion an as that in the Adam, code as the impairment will result the Authentication discussed completed the analysis to Authentication positioning earlier quarter, of our of long-lived a a likelihood of exit goodwill we competitive by requiring event triggered. segment be

of recorded a goodwill operating total million analysis, we $X.X impairment asset and expenses. intangible result As the a within

expenses and QX were million the XXXX Operating asset this included $X.X noncash goodwill versus QX segment. in Authentication million in impairment onetime intangible that in $X.X XXXX,

and these were total and General Excluding flat recur sales that year-over-year. severance and by million, marketing in by expenses in operating the approximately expenses $X.X items, XXXX. recorded Segment improved expenses to not primarily $X.X did expenses improved technology million. and administrative XXXX management due

for net quarter loss Our $X.X share. of the diluted loss was $X.XX million a per or

versus in loss well share. and per or million contingent Trust Excluding fair Global the our the million, for intangible the net quarter the related value consideration QX $X.X as impairment on diluted loss gain a XXXX $X.X Codes was item to noncash of of business, as of goodwill $X.XX

million loss remained adjusted year-over-year XXXX an improved at a year-to-date $X.X million versus to million $X.X $X.X million, of in $X.X flat EBITDA Our XXXX.

last On XX, balance sheet our XXXX. as slide September the is of

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

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

and have available our and XXXX, we us. $X.X we XX, on on $X September borrowings million remaining convertible of loan no notes. have of $X million line under There million to As our are our credit,

I would that, like turn Adam. the With call back to to

you, Thank Nancy.

create to the verifying for I'm amount I segment, investment the than the shareholders. segment. Authentication areas for of I our our to believe evaluation to to Authentication and that's value related initiatives create can gone that will and this of for and create value analysis into value best As opportunity codes this decision portion organic into is overemphasize can't other pursuing decision. our strategic committed our redirect the we continue meaningful shareholders to

this in Over creating the XX on of value by last our shareholders strengthening codes the our been investing the operations for of and Authentication. focused we've months, Logistics business portion Precision

within I'm and optimistic more in and bankers. Precision about Logistics yield with to increase our However, we're having sales is results. the this I marketing starting conversations business, and focus that feel advisers begun we've recently, to investment

our so call And over the analysts. to this from at I'll point, questions turn

[Operator Research. from Michael Instructions] Today's Barrington comes Petusky with question first

adjusted business? I'm will adjusted curious so positive? Is -- of negative EBITDA EBITDA Authentication what sort is So Or the Adam, curious that of business. I'm it on that remaining remain

would negative in obviously point, we depending it being looking At adjusted of drive be But EBITDA year that, we're beginning of the as upon we're current to a positive evaluate pulling that of backlog this into revenue our to the point EBITDA at XXXX. adjusted year. the

Okay.

that So yes, to -- that essentially, accretive, the understand adjusted of yes. gross revenue. exist EBITDA down, segment -- does it's margin a to EBITDA but given make sense not such I it's itself it part go it's tiny road for I want accretive

in -- company in how to this total which in informed that it in still is want a discuss we sense not the low given that we about But services talking we up people our And it company bring reporting revenues, may really area. more view history Authentication discretely You very it manner. given good a discrete people of a keep percentage to of patents and of and the make At it. the of by question. have the time, terms discuss in

it it you're make part VerifyMe wasn't and fact -- drag that guess a I forward. about, I how as it's on won't questioning. I I was does be but forward, given it like the the sense going Yes, had Talking adjusted it EBITDA, contributes hopeful going little was, sounds question of

a would is to if definitely committed our the the that the create Right. -- relative most that shareholders we path we're we're looking -- at follow. And value to business, what path we're there think that of that's that. whatever for the considering And portion was

sense. Makes you. Got

that quarters obviously, decision, time a that business you So because you removed of I quick. also have. sort in the curious of I now guess still wondering, at piece just of we're from I'm FedEx stick is a remaining but premium on I'm you near decision. just not business the maybe couple conviction in think terms premium as that as premium there's going quite any longer maybe business didn't that And some there high around, term. to of sort the the -- forward? your the high hopeful of guys have And I just would the wanted term, maybe announcement, real of on FedEx your ask outlook were update

around, of And hey, be asking should business for I'm I forward? 'XX the and this about going part and thinking 'XX particularly

question. great Great, Right.

a a get paid reminder, we And get customers. our for shipping As -- premium and shipping our of to types for service. simply means our from customer back of costs, paid is have whereas we we strategy, any service go if we X independent what premium proactive,

they So premium to premium a shipping. or customer we and customers. FedEx direct for is FedEx then And directly that directly service is provide are provide pays What that subcontracted are to there the the whomever service by indirect they direct else premium. us That's resell. pay means our

we in are our increased our we pipeline. growth premium had So direct and activity seeing customers, actually of

indirect think profile, And margin same going is business aspect premium. gross will margin and to so premium at grow that profile our it our of as the we grow

positive us. that's So for

product AI work the significant we of customers. subcontracted has significant seen an point, stable, product it to what AI we subcontracted to of in With to that FedEx that has and investments has evolves, as this To shift are the haven't ability said, FedEx some remained a do made and do.

that would future our any in is direct So current premium grow we a And this near there is offset from strategy any point to this. decline impact at indirect premium. rate the at anticipate don't the

sit the answer that that So Does sense? now. Does we make where that's question?

guys does. question. one It have How you exposure to? how sort much currently do It of bring direct much -- direct does revenue premium

XX% premium About the premium is of currently. direct revenue

dollars talking that couple And like of about? a total million a what, we're that's,

no. Because... No,

isn't somewhere I but couple dollars -- don't of, premium a like... the mean million around of XX% or XX%

X%. to No. It's -- it's X% of north

Okay.

Okay. Even after the FedEx months decision ago. X from

Yes.

Okay. it. Got

Okay. Terrific.

The Aarde Jack next Maxim Group. with question Vander comes from

But things just on in redundant Adam, you're terms ready or just of forward, through I Great. going that still Okay. strategy, a I'm been I've the of little a Authentication well to couple working kind apologize obviously. segment if this But aren't touch I of just yet. going bit. as understand which the things.

the of for of the that as component pieces else missing am what business Is still well? play in just So certain? Or inks it something are I business?

-- it's ink I technology would the so supports Well, and component patents in strategies. various leveraged in as partnerships technologies with other But equipment the historically, said, is up play component ink that relative other that that the ink join right now, to has strategy. allow company, and the and keep the the the or mind

partnerships partner created create value. So partnerships that that in past the created there a lot I perspective. that, we a the have We're as very were analyzing said code do value. of were on cognizant, some didn't side earlier, But those that we're from way the

and so so and distributor So on partnerships -- terms in forth. of

With So of overall opportunities do the we're at that's at. said, Authentication within looking in have and where that some services. various Authentication could expertise the realm we in of that really be we're anti-counterfeit

That's get then segment Okay. And involved the you revenue regardless helpful. Authentication Any a indeed the that's of just XXXX? the to of of for or check, in very it sort specifics, -- was baseline just ] ramping guess. up expect maybe I Sandy anything do of [ Is -- general, from there? else revenue ink's any in

I look for expect to in whole. do We going But Right. think at revenue company material if it's as XXXX. a you it, the be don't

year, our it's with material will -- overall codes If the the and questionably it ink. you be I at this think don't look revenue,

So revenue in it there will be of XXXX. amount anticipate material I in revenue a will don't be But XXXX.

so there? Okay. the the for is too, gears If guys color. correct. piece then what's I services mix revenue? could see just to I sandicheck called the dollar sense you us proactive of proactive there, just That's actually [ amount? up And just And give helpful switching What you Precision services it ] Logistics. have Or X% out was did the a year-over-year.

perspective, Yes. proactive. -- mix I from about premium, would a you're dollar XX% mean revenue revenue the looking a of the is of at I from is or XX%

Got you.

Okay. helpful. That's

Nancy there's so move a to because QX. goes way seasonality Keep proactive proactive that in QX, QX component and in mix premium in mind, in doesn't the as up strong said, same the in substantially changes the

patterns, the will what we're assumptions will year, to what that, things the all really like making year, somewhat holiday one of knows is just else, patterns, shopping over. addition In be this those assuming this on no everyone we're until seasonality be season Christmas shopping after some that. But

Sure.

and you see of just given, how a adjusted bit. forward just sounds next helpful. But out kind overhead could? to Trust be is Okay. if margin going expect we the general, still the absorbed? business Codes you kind gradual you steady the a your you're will gross well. That's as takes fourth expect And of guess, together your volume, maybe here. quarter guess things positive this down like less Are quarter to give tick us a Or in just uplift Obviously, and do they kind looking gives around margin I -- just sense the of EBITDA comments of nonetheless, then kind just volume year. some But for gross then then where there's puts year? today higher state, sounds And and expect -- expecting also It of just being there? due I of want fourth the like we to margin. comments from get to play I gross

mind, keep higher margin much a X reasons. versus that uplift year-over-year I don't our margin than think for in business premium see next a year is, profile is gross our proactive. One gross XXXX we'll

where the And premium much in-sourcing of so effect customer. the one that year, that in comparison with we margin creates halfway of happened to first had this through year the the customer higher due a that gross a half

our see to expect we proactive happening that, the in of top On growth business.

proactive a is are have in that. rationalization, we on cost -- would of lower going see which to of percentage will versus automation, that our the and we our the effect higher gross which downward total expect the would grows, as margin. some revenue With through margin that So gross of that said, increase, investments business type the technology offset

a margin think half looking year. with gross the the of the I overall, the So profile customer comparison we're premium at into of from flattening announced next impact year first having exception the of of going the previously

from Michael Barrington is next a follow-up with Research. question Petusky The

I last missed this question.

hired I had salespeople Logistics you Adam, QX? So in to I of to you that Have you for couple in it. you know I added -- missed guys alluded QX. guys a specifics, if base but that Precision apologize,

had person Yes. another and sales first in -- another we QX. we added marketing

Okay. is the XX out over you bolster cover And months sort do that any you near... you as to plans next of X look to to the have for Or that? going

could plans. definitive growth that redirecting have the one is organic we're a significant to that. logical revenue mean We're resulted at of have mean, into results be away, things portion Precision as one that PeriShip looking resulted I strategies business. growth part this in of do that expense -- It would don't with the be of dollars money we not in wanted, that the have things sales that Logistics. deployed towards that not deploying which We I the investment very a going we're for and -- evaluating year it's of in

a as final yet. plan of But don't have we

few of the talk want a idea we say, year, have just to discussed some reset any essentially go-forward last our things have in sort outlook? or Investor of about kind the Day sort doing question. have Okay. past And you of then guys where hey, plans changed Do of you

our will also so that call provide earnings Day will our share be for expectation earnings, to able XXXX. to Shareholder year-end -- the time my -- have adequate likely insight strategy far only is more we QX the QX we that absolutely We are but extended not to

This back for now concludes call session. our management to over question-and-answer to like I remarks. turn the any closing would

and value as much. you that we the and And the But that just thought very went that said, how of are you much into growing the it. said, shareholder thank the company, our to surprising with end decisions are Well, realize at laser-focused providing people. day, probably shareholders. making returns of building we're some very, very understand made that And hopefully, to decisions been have you on

So for everybody, thank you, attending today.

has The you for participation. conference now Thank your concluded.

now your may disconnect You lines.