authID Inc.

Good day, and thank you for standing by. Welcome to the Q3 fiscal year 2022 earnings conference call and webcast. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 11 on your telephone. I would now like to hand the conference over to your speaker for today, Grace DeFreeze. You may begin.

Thank you, operator. Good afternoon, everyone. With me on today's call are Tom Timo, our CEO, Tripp Smith, our president and CTO, Annie Pham, our CFO, and Graham Arad, our general counsel. By now, you should have access to today's press release announcing our third quarter 2022 results. If you have not received this, the release can be found on our website at www.authid.ai. under the Investor Relations section. Throughout this conference call, we will be presenting certain non-GAAP financial information. This information is not calculated in accordance with GAAP and may be calculated differently from other companies similarly titled non-GAAP information. Quantitative reconciliations of our non-GAAP adjusted EBITDA information to the most directly comparable GAAP financial information appear in today's press release, as well as explanations of our FAR and ARR KPIs. Before we begin our formal remarks, let me remind everyone that part of our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's press release. Others are discussed in our Form 10-K and other filings, which are made available at www.sec.gov. For those on the webcast, please note that we will advance the slides on our end. We will have a Q&A session following our presentation. To participate in that Q&A, you must be registered on the telephone. The telephone number is listed on our investor relations section of the website. I'd now like to introduce our CEO, Tom Timo.

Thank you, Grace. Turning to slide three, legacy MFA doesn't cut it. Yes, legacy multi-factor authentication and passwords no longer create a safe digital world. Nearly every day, we read about a significant data breach at large organizations, including Twilio, Cisco, Intuit, and just yesterday, American Airlines. All of them have one thing in common. They all use social engineering attacks that exploited human behavior, and in particular, vulnerable legacy MFA technology. As quickly as chief technology and information officers, and the identity access management architects supplement passwords with fishable one-time passwords or clunky push MFA apps, hackers are finding new ways to exploit security's human element. In the 2022 Verizon Data Breach Investigation Report, the human element was identified as the root cause of 82% of the 4,000 data breaches studied. So after 60 years of passwords, we are in the midst of a fundamental evolution in the science of authentication, with a renewed push to replace those hated and insecure credentials with cryptographic FIDO2 passkeys or a FIDO token bound to a device. According to research and markets, the market for passwordless authentication is projected to grow over the next 10 years at a CAGR of more than 16%, to almost $54 billion by 2030, from approximately $13 billion today. North America is expected to dominate the global passwordless authentication market, currently accounting for at least 38% of the worldwide market. In addition, with new research data showing that banking and healthcare are dominating the shift to passwordless authentication, we feel confident that we are targeting the right market segments. Turning to slide four, Q3 technology enhancements. With path keys replacing something you know with something you have, it is an improvement. But deploying passwordless authentication alone creates security and usability challenges, including limited portability and complex account recovery methods that often fall back to insecure identity authentication. For instance, With the Cisco breach, it appears that once the hackers gained control of a user's device, they enrolled and redirected StepUp to new devices. Device authentication was now something hackers had, not the users. The White House zero trust mandate also specifies that strong authentication include both device and identity authentication. These shortcomings, the path keys, create a tremendous opportunity for AuthID and allow us to differentiate our solutions. In anticipation of the ramping passwordless evolution, we made a strategic decision mid-year to significantly upgrade and innovate our verified platform. Our stellar product and engineering teams quickly developed and received certification of our platform by the FIDO Alliance. In October, we launched verified 3.0 and human factor authentication or HFA, which we believe is a pioneering solution. HFA binds strong, unfishable passwordless authentication with cloud biometric identity to authorize the human behind the device. HFA fortifies something the user has with something the user is, which is their unique face. If the human element is the problem in 82% of breaches, then solving for the human element with cloud biometrics is the ideal solution. Verified 3.0 and our differentiated human factor authentication address cyber risks that exploit human behavior with passwordless authentication bound with strong identity assurance, offer adaptive authentication that balances high security with speed and ease of use. Driven by customer demand, these features are designed to improve workforce productivity and reduce friction for customers. Include support for the OpenID Connect authentication protocol, allowing our customers to integrate our solutions in under 10 minutes. Further, Verified 3.0 makes the move to zero trust easier because it offers our customers streamlined access to the ecosystem of identity access management, privileged access management, and endpoint detection and response providers. A few of the identity ecosystems providers we are now working with include Okta, Auth0, BeyondTrust, Sensegura, and VMware. As we complete the launch of these services, we will provide more information in the coming weeks. Turning to slide five. Rather than simply talk about HFA, I want to share a video of verified HFA in action. using our recent Cloud Connect integration with Okta, the identity access management provider. Watch how an enrolled verified user seamlessly logs in with our FIDO2 certified passwordless authentication on any mobile device or desktop device. Once the user is inside the corporate network, Verified seamlessly elevates authentication with a quick selfie to authorize user access to sensitive applications. let's see hfa in action on the left hand side of your screen operator can you play the video so so Turning to slide six. There. That's the beauty of HFA. In less than one minute, In the same interface with no searching or recalling a password, no fumbling for a secondary authentication application or looking for a fishable one-time passcode, the verified user simply entered their username and used their passkey and device biometrics, in this case Touch ID, to log in to the company's network. To authorize user access to the company's gated assets, their intranet, Verified seamlessly elevated authentication in the user's browser. The user accepted the activity request and then captured a quick selfie. Now, on that selfie was something you might have missed, a key UX change that we made with Verified 3.0 that users no longer need to smile during a selfie, resulting in instantaneous image captures that are secured with our iBeta Pad Level 2 liveliness detection. That's it. That's human factor authentication. Human factor authentication secures both login access with a FIDO2 passkey and seamlessly gates use of enterprise assets by verifying the human behind the device. Delivering enhanced enterprise security, human factor authentication also offers the ease of use and portability both workforce and consumers and all of us are demanding. Turning to slide seven, Verified 3.0 is now a market compelling product. And our sales efforts and marketing campaigns continue to focus on two offerings, workforce and consumer. Verified HFA closes security gaps for both enterprise workforce and consumer applications by combining passwordless authentication with biometric certainty to shut down access privileges and lateral movement for unauthorized users. Chief information security officers need solutions that replace legacy MFA solutions and stop hackers from logging into corporate production systems with stolen credentials. We believe that these needs will outweigh the hesitancy with buying decisions in the current uncircuit certain macroeconomic environments. We have also taken a very targeted and thoughtful approach to the markets where we can best impact sales. These three markets, financial services, healthcare, and cybersecurity, have been identified by industry researchers as ready for passwordless and are the segments we believe can most benefit from verified human factor authentication. With highly valued assets and data, these segments are frequently targeted by social engineering and account compromise attacks that can cause significant damage to reputation, positioning, and market trust. Turning to slide eight, where we are on our journey. In early 2022, we started working with early prospects to foster product adoptions. Our efforts to harden our platform security and comply with ISO 27001 standards, I-beta pad specifications, and FIDO2 protocol have strengthened our competitive positioning. Of further note, the successful transformation of our platform has not gone unnoticed by industry experts. In October, Juniper Research awarded AuthID the gold winner for best biometric use in payments. Juniper's Future digital awards recognize the most impactful financial products and services that are driving innovation across banking, retail, fintech payments. The increased cybersecurity attacks exploiting human behavior have also helped significantly to advance the understanding of why products like Verified should be adopted. We are moving along our journey with customer wins and implementations within financial services and healthcare, admittedly, not as quickly as we would all like to see. During the quarter, we signed several new financial services customers, including various regional U.S. credit unions, and as we announced in September, compliant a U.S.-based AI-driven business onboarding and risk scoring company. We continue to work on developing and closing opportunities generated by our marketing activities. Our customer success team is actively supporting our new clients the streamlined implementation plan they are also diligently working to upsell our new passwordless authentication services to existing customers now let me turn the call over to annie who will give you an update on our financial results and kpis annie thank you tom turning to slide number nine