authID Inc.

Thank you for standing by. My name is Bella and I will be your conference operator today. At this time, I would like to welcome everyone to the ALF-ID third quarter 2024 earnings call. All lines have been placed in mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Graham Arad. Please go ahead.

Thank you, Operator. Greetings and good afternoon. This is Graham Arad, General Counsel of AuthID. Welcome to the AuthID Third Quarter 2024 Results Conference Call. As a reminder, this conference is being recorded. With me on today's call are our CEO, Ron DeGuro, and our CFO, Ed Salisa. Right now, you should have access to today's press release announcing our third quarter 2024 results. If you have not received it, the release will 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 reconciliation of our non-GAAP adjusted EBITDA information to the most directly comparable GAAP 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. Thus, forward-looking statements are not guarantees of future performance, and therefore, we should not place 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.fcc.gov. I'd now like to introduce our CEO, Ron Tagura.

Thank you, Graham, and thank you all for joining us today. I'm very excited to cover our third quarter results and provide an update across all of our initiatives. AuthID had a highly productive quarter, and I'm pleased with our progress and our overall path of growth. Turning to slide four, we are focused on accelerating and diversifying revenue growth. To do that, we must continue to improve our technology, widen the gap from our competitors, and assure our customers that we are offering the best technology, superior security, and customer delight. It is very important for AuthID's product leader to have the depth and experience to help us reach $100 million in ARR and beyond. And so, we are excited to welcome Eric Soto as our new Chief Product Officer. Eric brings over 15 years of experience in identity verification and financial services, and has a proven track record in driving product innovation. Combined with our history of collaboration in building a unicorn company, Eric positions us to further strengthen our platform and deliver exceptional value to our customers. I also want to cover the news we issued earlier this week announcing that AuthID has signed a $10 million agreement with a next-generation AI company to enable biometric authentication for a wide range of industries in India. This agreement represents a $10 million commitment over a three-year period, with a minimum commitment of $3.3 million each year for licensing off-ID identity platform services. We are incredibly excited to enter the Indian market where, over the next 10 years, the biometric authentication industry could see exponential growth in transaction volume as the demand of biometric identification continues to rise. We look forward to closely working with our new partner to deliver biometric authentication accuracy and a frictionless user experience to a wide variety of customers across banking, financial services, emergency services, and transportation industries in India and beyond. We also made good progress in securing new customers and OEM contracts in Q3. We signed a multi-year agreement with a global retail technology organization which will leverage our biometric identity solutions to enhance digital experiences for multinational retailers and serve as an OEM reseller in the Asia-Pacific market. This customer deal was over $1 million in contract booking, adding another booking over $1 million coming out of our FAT100 target. Further, we entered the telecommunications sector by signing an agreement with a broadband provider operating in all 50 states, enabling them to streamline and secure account onboarding through our biometric identity and document verification solutions. Next, I want to highlight some recent customer go-lives and successful adoption of our solutions. Last quarter, I was excited that we took four customers into production go-live. I'm even more excited to do it back-to-back. For the second consecutive quarter, we have taken four customers to production go-live, and the best part is that two deals signed in Q3 went to production go-live in the same quarter. Managing our current time estimate for Go Live, which can take three to six months depending on the size of the company. We recently made key staff appointments to bolster our sales initiatives. I'm very excited to add to our team Donna Shawian as VC of Partnerships and Eric Acri as VC of Sales, both of them specializing in financial services. The additions of Donna and Eric further emphasize our commitment to expanding our go-to-market reach. We hired these identity domain experts because of their fantastic track records, and I'm confident they'll bring tremendous value to our clients. Continuing to slide five, we are seeing growth in the usage of our proof and verify products. Looking at the graph on the left, let's start with our proof product. The average number of proofs processed per quarter before I joined was approximately 20,000. From the time we relaunched the company in June 2023 to June 2024, the number of identities processed per quarter has gone up approximately 25 times. to an average of 440,000 proofs. We are also seeing a strong ramp in volume for the third quarter of 2024, with almost 800,000 proofs being completed, which is nearly double the average volumes we processed during the earlier quarter. And finally, over the last 12 months, up to the beginning of October 2024, AuthID has processed more than 2 million proofs, which is more than 50 times the transaction volume compared to the years before it started. Looking at the graph on the right, our verified product is also seeing great ramps since I took over. Historically, AuthID registered approximately 600 user identities per quarter. Since the reboot of the company in June 2023 to the beginning of October 2024, we have registered an average of 21,000 user identities per quarter, which is 42x growth. Even better, the third quarter has shown strong growth of more than 94,000 registered identities a greater than 4x increase from previous quarters during this period. We are really pleased to see our usage ramp finally showing up in Q3. However, at the same time, we have experienced delayed customer go-lives and adjustments to their volume expectations that have pushed out anticipated revenue from 2024 to 2025. In consideration of these delayed customer go-lives and volume adjustments, we have reduced our full-year revenue guidance to a range of $800,000 to $900,000. Ed will walk us through the financial shortly. And while we are disappointed to bring down our guide, I want to emphasize that this is still 4X growth over last year, during which I was only fully operational for six months. Again, the fact that we have successfully assigned customers and taken them live within the same quarter shows significant improvement, demonstrating that we are much more capable today than we were six months ago. As we find more clients, and RAMP customers, our revenue and RPO projections will get much more consistent. Moving to slide six. We have invested heavily in improving our technology and in making significant innovations that will unlock adoption of using biometric authentication. We made significant strides in advancing privacy capabilities by completely eliminating every single privacy and compliance concern for adopting biometrics. Very large enterprise customers have told us they are only doing technology evaluations with OpID because we have eliminated privacy and compliance issues associated with storing biometric data. They have always wanted to use biometrics, but were hesitant due to the potential liabilities while regulations for biometrics are still being enacted. One customer said they would have to hire a compliance officer who specialized in biometrics if they were to use a biometric solution. All of that concern is completely gone with our release of version 4.0 with privacy key. AuthID can now provide evidence-based identity verification without compromising user biometric privacy. This is critical as the world moves away from passive and predictive-based identity verification and moving towards evidence-based identity verification. In addition, we've achieved a tremendous leap in accuracy with a false match rate of 1 in 1 billion. Simply explained, for every set of 1 billion people, we may get it wrong just once. And with 8 billion people on the planet, we would only get it wrong eight times. This is near-perfect accuracy. This is far more accurate than the NIST standard 1 in 100,000 or Apple's Face ID at 1 in 1 million. In this new release, we continue to go faster in processing speed, and we have added more capabilities to license detection to combat AI and defense. In addition, we have focused on user flow by improving the algorithms for docking and capture to improve completion rates, as well as enhanced deduplication capabilities to clean up identity records where fraudulent accounts can exist. And lastly, to make sure we properly serve our enterprise customers, we have completed the integration needed to incorporate AuthID into their platform. I am proud of our team. and our third quarter accomplishments, and we remain focused on executing our strategy and driving growth to finish the year strong. With that, I would like to turn over the call to our Chief Financial Officer, Ed Solito.