authID Inc.

and good afternoon. This is Graham Morag, General Counsel at AuthID. Welcome to the AuthID first quarter 2024 results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. You can submit written questions using the Q&A button at the bottom of your screen. And if you would like to ask a live question at the appropriate time, please indicate that using the Q&A function or tap raise your hand and you will be invited to speak. As a reminder, this conference is being recorded. With me on today's call are our CEO, Ron DeGuro, our CFO, Ed Salito, and our CTO, Tom Sokey. By now, you should have access to today's press release announcing our Q1 2024 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-gap adjusted EBITDA information to the most directly comparable gap financial information appear in today's press release. 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. I'd now like to introduce our CFO, Ed Salito.

Thanks, Graham. I'm pleased to report that Q1 2024 has been a pivotal turning point for RothID's revenue growth. Our sales, engineering, and customer success teams have worked tirelessly to launch new customers so that we can begin to recognize revenue from customers booked in 2023. Turning to slide four. The following highlights compare our GAAP results from continuing operations for the three-month period ended March 31, 2024, with the three-month period ended March 31, 2023, unless otherwise specified. The total revenue for the quarter increased to $0.16 million, compared with $0.04 million for the same period last year, as the result of the launch of several new customers that were signed in 2023, including both consumer and workforce use cases. Q1 revenue is already approaching the $0.19 million in revenue earned in all of 2023. Operating expenses for the quarter totaled $3.31 million, compared with $1.02 million for the same period last year. This increase was driven by a one-time non-cash expense reversal in Q1 2023 of $3.4 million from the reversal of certain stock-based compensation related to employee terminations, which was not repeated in 2024. From a quarter-over-quarter perspective, operating expenses for Q1 2024 remained in line with the operating expenses incurred in Q4 2023. Losses from continuing operations for the quarter was $3.06 million, of which non-cash charges were $0.77 million, compared with a loss of $1.78 million in Q1 of 2023, of which the impact of non-cash and one-time severance charges was a negative $0.42 million, comprised of the $3.4 million reversal of stock-based compensation noted previously, as well as $3.0 million in additional non-cash and severance charges. Looking again from a quarter-over-quarter perspective, loss from continuing operations decreased approximately 4% from $3.2 million in Q4 2023 to $3.06 million in Q1 2024. Net loss per share for the quarter was $0.32 compared with $0.56 for the same period last year. Moving to slide 5. As reported on our 2023 annual results call held in March, we also monitor and manage our remaining performance obligation, or RPO, in accordance with GAAP as noted in our financial statements for the period. RPO provides a measure of the minimum revenue expected to be recognized from our signed contracts based on customers' contractual commitments. As of Q1 2024, our total RPO was 4.03 million, which equated, which equaled the RPO from Q4 of 2023. The quarter-end RPO includes deferred revenue of $0.31 million, an increase over 2023 of $0.18 million, which moves from additional non-cancellable revenue as a result of customers invoiced in Q1. Deferred revenue represents advanced payments received which are not yet recognized as revenue. The Q1 2024 RPO also includes $3.73 million in additional non-cancellable revenue under contracts that were signed in 2023 and Q1 of 2024, but which has not yet been recognized. Total RPO remains flat quarter over quarter, as new contractual commitments signed in Q1 of 2024 were largely offset with revenue recognized in the quarter. We expect to recognize the full RPO of $4.03 million over the entire life of the contracts, which are typically signed with a three-year term. Over the next 12 months, ending March 31, 2025, the company expects to recognize approximately 40% or $1.6 million of the $4.03 million in RPO as revenue, based on contractual commitments and expected usage patterns. While the RPO is based on contractual terms as agreed to by our customers, the expected time to recognize revenue is based on our best estimates, given the current known facts and circumstances. Of course, while RPO is based only on minimum contractual commitments, we have reason to believe that each of these customers will exceed their minimum commitments. Moving to slide six. Before we review our non-GAAP results, I want to take a moment to discuss how going forward we will provide additional detail to explain our bookings metric known as BAR. In 2023, we reported our metric for 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. Starting with this quarter, we're providing additional details by breaking bar into two components, committed annual recurring revenue, or CAR, and usage above commitment, or UAC. The chart shown here on the slide illustrates how both measures convert into revenue over a three-year period. Car, as shown on the dark purple on the left side of the chart, represents the total annual customer contractual commitment through fixed license fees and minimum usage commitments. These commitments are directly recognized as revenue in each contract year after the customer goes live with the service. UAC, as shown in light blue on the right side of the chart, is an estimate of annual customer usage that will exceed contractual commitments. By the time a customer fully rounds its usage by month 18 of its contract, CAR is expected to comprise approximately one half of the recognized revenue, with UAC making up the other half. On the slide, I've illustrated the breakdown of the $3.0 million in 2023 bar bookings and how we expect that to translate into revenue over a three-year period. The $3.0 million in bar was comprised of $1.4 million of car and $1.6 million of estimated UAC, as shown in the fully ramped year of 2026 at the bottom of the chart. The car of $1.4 million is recognized consistently each contract year once the customer is live with the product, as shown in the dark purple bar for years 1, 2, and 3. The UAC component begins to show in the second year or at 18 months as usage exceeds the annual minimum commitment. This chart illustrates how we would expect around $0.8 million or half the full year UAC to be recognized in the second year of the contract. In year three, the customer is fully ramped for the full year with 1.4 million or 47% from car and 1.6 million or 53% from UAC expected to be recognized for a total of 3.0 million in recognized revenue.

Turning to our non-GAAP results on slide seven.