8/14/2025

speaker
Operator
Conference Call Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss AuthID's second quarter 2025 financial results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to AuthID's General Counsel, Graham Murad.

speaker
Moderator
Conference Call Host

Graham, please go ahead. Thank you, operator. Greetings and good afternoon.

speaker
Graham Murad
General Counsel

This is Graham Murad, General Counsel at AuthID. Welcome to the AuthID second quarter 2025 results conference call. As a reminder, this conference is being recorded. Joining me on today's call are our CEO, Ron DeGuro, our CFO, Ed Solito, and our founder and CTO, Tom Sokey. By now, you should have access to today's press release announcing our second quarter 2025 results. If you have not received this, the release can be found on our website at investors.authid.ai under the news and events 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 appears 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. Finally, if you are listening to this call via the webcast, you will be able to see the results presentation and advance the slides yourself as prompted by our speakers. I'd now like to introduce our CEO, Ron DeGuro.

speaker
Ron DeGuro
Chief Executive Officer

Thank you, Graham, and thank you all for joining us today. I am very excited about the progress we have made through the first half of 2025. We recorded, by far, our highest quarterly revenue in Off-IDs history, $1.4 million. This is a testament to our team's plan to sign clients and bring them live. We are starting to reach the benefits of our strategy, and we will cover our financial results momentarily. But first, I'd like to provide updates on the business. Since joining AuthID, I have had the belief that every single identity management strategy will require facial biometrics in order to combat the advancements of AI being used and abused by fraudsters. No CISO on their own can defend against the current threats they face today. with the identity systems they installed even just a year ago. We see this playing out in the news almost every day, with data breaches taking place at incredibly high rates. Every identity stack will have to incorporate facial biometrics as either an additional signal or as the main signal to determine who is behind the device. I believe that AuthID can solve this problem for companies who have to manage multiple identities from contractors, vendors, and suppliers. In response to this pressing issue, we recently launched our IDX platform in late July. We believe IDX is one of the biggest advances in the identity industry that will eliminate identity fraud, specifically within supply chain workforce. We do this by integrating our highly accurate biometric authentication with a platform developed from the most comprehensive, accountable, and reusable identity management standard for a working end-to-end supply chain identity management solution. The IDX identity solution will be able to exchange an identity that is accountable, deterministic, accurate, and compliant without having to abandon existing identity management infrastructure already in place in a manner that meets regulatory and compliance requirements so that CISOs will ultimately know every single identity in their system. More to come on IDX, but now let me cover our second quarter 2025 highlights in comparison to our last earnings call. During our Q1 2025 earnings call, we stated our ambition to sign another major Fortune 500 customer this year. So this earnings call, I am pleased to report that we have gone live in production with a UK-based Fortune Global 500 customer that is using our privacy key product. After a successful pilot pushed off the thousands of employees for proofing and password reset, we were able to take that deployment live, leveraging the integration already in place from the pilot. We hope to greatly expand this deployment as we work towards a long-term partnership with significant financial upside. Additionally, last quarter I discussed our potential partnership with a major global biometric hardware provider in which we were in advanced discussions to implement joint product development and sales. So this quarter, I'm excited that I finally get to share that major global biometric hardware provider is NEC, a multinational leader in IT and technology solutions which has over 100,000 employees in over 50 countries who has been a leader in biometric solutions since 2007. With the support of NEC that introduced a similar product known as Symphonic Trust in Japan, we will be able to successfully demonstrate interoperability of a reusable identity between two companies over two countries, the United States and Japan, without any changes to the incumbent identity management systems that were in place before IDX. This has never been done before. And to further our relationship with NEC, we are very excited to add Ram Mangani, a former NEC executive, as a critical member of our board of directors. We are excited about our partnership and growth opportunities ahead of us. Also last quarter, I had shared that we had been confirmed as the vendor of choice for a major identity fraud prevention platform. So this earnings call, I am very pleased to finally say their name. AuthID signed an agreement with Prove. one of the largest identity fraud platforms in the world. In fact, we are actively working towards the go-alive of our first joint customer in the coming weeks. We've been very active with Proof through our joint thought leadership webinars, where we have met with customers to share Proof's newly enhanced capabilities with AuthID's platform. This collaboration is not just a customer story. It's a clear vote of confidence from one of the largest independent fraud platforms in the world, I know our investors are eager to understand the financial benefits of our agreement with Peru. And while I wish we could be more specific, our partnership terms are required to keep that confidential. However, investors will begin to see the revenue impact from the partnership through our financial starting in Q3 of this year. And finally, we continue to advance our contract negotiations with a very large Fortune 500 international human capital company in preparation for a global rollout where we remain confident that we will sign a long-term commitment soon, and we will provide an update again when we have news to share. These achievements further illustrate how our technology investments and innovations are in demand for major enterprise customers and partners. Let me now cover the recent progress made across our platform and existing partnerships. One practical shift to note is that we are emphasizing performance-based production-level pilots to showcase our capabilities to prospects. This has been an effective strategy rather than just relying on proof of concepts. Once the pilot is completed, it is far easier to transition their environment from pilot to full production since the integrations have already been in place. This requires a full level of effort on our teams early in the sales cycle and demands a lot of attention, but it has been proven to be an effective way to earn customer trust, shorten our goal lifetime, and time to revenue. With regard to our technology improvements, I'd note that just after launching Privacy Key, we immediately began improving the technology in order to better serve our customers. In this case, we have upgraded Privacy Key with a one-to-many search capability, which has already been put into place in production pilots. This update gives companies the ability to scan multiple faces and return the results lightning fast with the highest accuracy in the marketplace. As a result, our channel partners have been happy to introduce us to additional target customers, which represent an increase in sales pipeline. Our channel partners also add the benefit of bringing us into their key verticals, which helps expand our total addressable market. Before handing it to Ed, let me revisit IDX, our major technological new product milestone. The IDX platform is a global platform built on a fast-adopted standard of the Accountable Digital Identity Association, or ADIA. founded by Ramesh Kessanapalli. Along with NEC, no one else has leveraged this new standard into working software. In fact, the ADIA is merging with the Secure Identity Alliance, which includes ZoomInfo, Idemia, the FBI, and other security-minded organizations. This puts Off-ID in good company and gives us greater visibility and credibility when prospecting customers across the globe. Many large enterprises use contractors who in turn use other contractors for a variety of business operations. Supply chain identity management is a big problem for large companies since they cannot properly vet the identities of their vendor contractors because of various rules and compliance regulations. From an investment perspective, the identity management market is estimated to be $61 billion by 2032 by Fortune Business Insights. OffID can only participate in the authentication subset of this market, but with IDX, OffID is now able to play in the entire market space. Our TAM has dramatically increased, and our launch partner, NEC, is one of the largest biometric hardware providers in the world. We are still in the early stages of IDX, and we look forward to sharing more about our expectations for this new product once we're in a position to provide a well-informed financial forecast. Currently, we partner with identity management companies and rely on them to try to solve the supply chain identity management problem. When we go into a new engagement and our customers want to implement capabilities like IDX, we are not limited to their existing identity management provider anymore, which will allow us to close larger deals faster. I'm very pleased with our second quarter results and progress made through the first half of the year. Ed will now take us through the financials in greater detail.

speaker
Ed Solito
Chief Financial Officer

Thank you, Ron. Thank you all for joining us today. I look forward to walking you through our Q2 results. Looking at our Q2 2025 gap results, total revenue for the quarter increased significantly to $1.4 million compared to $0.3 million last year and $0.3 million in Q1. The strong revenue growth in Q2, both sequentially and year-over-year, was primarily driven by the go-live of several contracts signed earlier in 2024. These implementations have now been successfully delivered and are contributing meaningfully to top-line results. Operating expenses for Q2 were $5.9 million compared to $3.6 million a year ago and $4.7 million last quarter. The year-over-year increase is primarily due to increased headcount investment in sales and R&D. The sequential increase is primarily driven by a $0.8 million impact related to provision for estimated credit loss expense. This represents a credit risk assessment related to certain customer contracts. While this provision reflects our estimated risks, we continue to have a strong confidence in our ability to collect on these customer contracts. Net loss for the quarter was $4.4 million, of which non-cash charges were 1.1 million. This compares to a net loss of 3.3 million for the same period last year, which included 0.8 million in non-cash and one-time severance charges and a net loss of 4.3 million in the previous quarter. Net loss per share for the quarter was 33 cents compared with 34 cents a year ago and 40 cents last quarter. Turning to RPO on the next slide. Remaining performance obligation, or RPO, represents the minimum revenue expected to be recognized from our signed contracts based on our customers' contractual commitments. As of June 30th, 2025, our total RPO was 13.8 million a decrease of approximately $0.1 million over the prior quarter as we recognized contracted revenue in Q2 and also added new contracts signed in the quarter. Our RPO for Q2 compares favorably with the RPO at the same period last year, which was $4.2 million. We expect to recognize the full RPO of $13.8 million over the entire life of our contract, which are typically signed with a three-year term. Turning to our balance sheet highlights, As of June 30th, our cash balance totaled $8.3 million, which includes approximately $8.5 million in net proceeds received from our successful capital raises in April and May 2025. Our common shares outstanding stood at $13.4 million, with 2.2 million shares added from our fundraise. We will use these funds for a number of priorities, including closing key deals with Fortune 500 prospects, generating revenue growth through our recent IDX platform launch, as well as by implementing and ramping our customer base. On to our non-GAAP results on the next slide. Adjusted EBITDA loss was $3.4 million for Q2, compared with the $2.5 million loss for the same period last year and a $3.9 million loss last quarter. As described with our operating expense results, The year-over-year increase in EBITDA loss is primarily due to increased headcount investment in sales and R&D, as well as the Q2 provision for estimated credit loss expense. We also monitor and report on annual recurring revenue, or ARR, which is defined as the amount of recurring revenue earned during the last three months of the relevant period as determined in accordance with GAAP, multiplied by four. ARR as of Q2 is $5.8 million, compared to 1.1 million of ARR as of Q2 2024 and 1.2 million as of last quarter. Turning to 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. The gross amount of BAR signed in the second quarter of 2025 was $2.2 million, up from 0.6 million of gross BAR a year ago and 0.01 million in Q1. The increase in BAR for the quarter was led by the signing of proof, the identity fraud platform Brian called out earlier. As previously explained during our quarterly earnings call, BAR comprises two components, which we refer to as CAR and UAC. CAR, or Committed Annual Recurring Revenue, 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 each customer goes live with the service. Q2 2025 CAR represents $0.9 million, approximately 41% of reported VAR. UAC, or estimated usage above commitment, is an estimate of annual customer usage that will exceed contractual commitments. Q2 UAC represents the remaining $1.3 million, or 59% of reported VAR. Turning to our revenue growth stages on the next slide. I will finish off by summarizing the progress we're seeing through our revenue growth stages. The first milestone we used to monitor our growth is bookings as measured by bar. In Q2, we realized the total gross bar of $2.2 million. We're excited to begin closing the major large enterprise and platform partnership deals that we discussed last quarter and expect to continue accelerating our bookings growth over the remainder of 2025 as we add pipeline and progress our key large enterprise and platform partnership deals. The next milestone is our remaining performance obligation, or RPO. As I detailed earlier, as of Q2, we have secured approximately $13.8 million in RPO, a number that we expect to increase as our bookings continue to grow throughout the remainder of the year. Our third milestone is revenue, recognized in accordance with GAAP. Our Q2 year-to-date revenue of $1.7 million already surpasses our 2024 full-year revenue by approximately $0.9 million. And we expect this growth to continue throughout the year as our existing signed contracts continue to go live and ramp. And as we've called out in prior earnings calls, we are increasing our focus on customer retention and expansion this year as our customer contracts mature. We continue working to build on our customer expansions and grow our customer relationships by adding tangible value and helping our customers achieve their objectives as well as expand and identify new use cases. Overall, we look forward to building on our Q2 momentum. As we previously stated, our goal is to deliver $18 million in bar for 2025. We remain on track to meeting our expectations and look forward to updating our investors again in our Q3 call. With that, Operator, we would now like to open up for questions.

speaker
Operator
Conference Call Operator

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. One moment for questions.

speaker
Conference Facilitator
Question Facilitator

Our first question comes from Gary Brody with Deep Knowledge Investing.

speaker
Operator
Conference Call Operator

You may proceed.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Hey, guys. I've got a question about the financials. You might be the right person to answer this. So it looks like you took in $1.2 million of deferred revenue in the quarter. First, can you talk a little bit about where that came from? And then second, you're showing annual recurring revenue of $5.8 million, which is the quarter's revenue times four. But if you took in $1.2 million of deferred revenue in the quarter, is that recurring?

speaker
Conference Facilitator
Question Facilitator

Hey, Gary.

speaker
Ed Solito
Chief Financial Officer

Nice to hear your voice. Thanks for the question. So two-part question. The first was about the deferred revenue, the $1.2 million. And that came from invoices that we received from customer contracts that have not yet been recognized as revenue. So we have some invoices that have been issued based on our contract terms that come ahead of the revenue recognition. And so we do expect those invoices and deferred revenue to contribute and roll into revenue over the coming quarters as revenue gets recognized, number one. And number two, your, sorry, can you repeat the second part of your question again?

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Well, I think you've answered. The second part of the question is, is that actually recurring? But if what you're saying is that the deferred revenue came from invoices from customer contracts where you guys are about to start providing services, then it is recurring and your $5.8 million of annual recurring revenue is accurate. Am I understanding you correctly?

speaker
Ed Solito
Chief Financial Officer

That's correct. The amounts that are in deferred revenue results are coming from contract-driven invoices that are recurring in nature and are just yet to be recognized according to our revenue recognition policy.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay. Got it. All right. And then can I ask you, do you want me to jump back in the queue or can I ask you a few questions about the approved deal?

speaker
Ed Solito
Chief Financial Officer

Go ahead, Gary.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay, so on the webinar that Dale did earlier this week with Prove, they said something on the call that implied you guys were very close to or you had a working combined model and that that was already up and running. They didn't say it, but it was implied. And then today you guys were talking about being very close to launching with Proove and one of their customers. So I'm assuming that that's correct, that there is a working model for the combined company, for the combined services rather. And then you guys are about to start providing services to a Proove customer. First of all, is that correct? And second, when would you anticipate starting to collect revenue with that contract?

speaker
Ron DeGuro
Chief Executive Officer

Hey, Gary, I'll take that question. And thank you for that question. Yeah. Can you hear me loud and clear? I just want to make sure.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Yeah, crystal clear.

speaker
Ron DeGuro
Chief Executive Officer

All right, fantastic. So the Prove partnership is actually almost like two parts. The first part is, you know, AuthID has capabilities with onboarding. So our, we call it document verification, onboarding a new customer, new client. We have those capabilities that Proof has had other partners for. And that piece and that technology where we're partnering with them can be realized very quickly. No integration. We just perform. We perform better than most in the marketplace. And that's kind of like how we won the partnership to be able to work with Proof. So that's part number one. So there's an integration piece that really is very simple to do. The second part that's a little more strategic where Proof is as the largest fraud platform out there, they are aligning with that previous statement I said in my comments that every identity stack is going to have to either incorporate a biometric signal in part or in whole to add to their service just because fraud is so rampant, especially with AI. So the second part is a part that's a little bit more strategic for proof. And that is the part that we are working very closely with them to build our technology close into their stack and to make it an offering within the Prove platform. I don't want to give the name away that they're using, so let them announce that. But that is the second part that's a lot more strategic for us, and we're very excited about that as well. But we'll temper the announcements with Prove and allow them to do that, but really it's a two-part partnership, which is why we're excited about it.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay.

speaker
Ron DeGuro
Chief Executive Officer

I think you have a question, right?

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Yeah, the other question on that is, at what point will you start collecting revenue? Because it sounds like you're close, but I don't, you know, I don't want to be overly optimistic.

speaker
Ron DeGuro
Chief Executive Officer

Yeah, so in my comments, I said we were about to take a customer live here in a couple days. In reality, you know, hopefully tomorrow. But we don't know yet. We'll see. But we're very close of taking one of our joint customers live on that first part of that partnership that I just described. So on the, you know, like I said, I described the two parts. The first part of that partnership that doesn't require massive integration, that's the first initiative, and we're going to be hopefully taking one of those joint customers live here in the next coming days. So the main question is, when will we start to see those results? Yes, we're going to see them a heck of a lot sooner than ever before because we're now taking those customers live here shortly.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay, so if you do go live within the next day, week, something like that, there will be revenue in this quarter, the third quarter, related to that.

speaker
Ron DeGuro
Chief Executive Officer

If transactions are being called, which we hope they will be, if transactions are being called, they should be billed, we should be able to invoice.

speaker
Ed Solito
Chief Financial Officer

Yes, once we go live, just to reiterate, once we go live, we will start to recognize the contractual commitment portion of the contract as we normally do.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

All right, guys. That's very helpful. I do have more questions, but I don't want to monopolize the call. Why don't you see if other people have questions, and I'll, you know, hit star 1-1 after and get back in line. Thanks, Gary.

speaker
Operator
Conference Call Operator

Thank you. And as a reminder, to ask a question, please press star 1-1 on your telephone. One moment for questions.

speaker
Conference Facilitator
Question Facilitator

Our next question comes from Gary Brody with Deep Knowledge Investing.

speaker
Operator
Conference Call Operator

You may proceed.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay, well, glad to be back. Can we talk about the Indian contract that you guys signed last November? Have you started providing services, or are you still in ramp-up condition with the company?

speaker
Ron DeGuro
Chief Executive Officer

We are working with them, and we're still ramping, but we are engaged with them, yes.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay. So you're working on it that hasn't gone live yet, is that right?

speaker
Ron DeGuro
Chief Executive Officer

That's right.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay. And that, I'm assuming then that you haven't recognized revenue from them at this point, is that right?

speaker
Ed Solito
Chief Financial Officer

I'll just clarify Ron's comment. We are still ramping them, but we did go live and deliver the service to them.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

the customer okay uh so have you sorry go ahead yeah i just wanted to clarify that sorry go ahead thanks ed so thank you um so have you started collecting revenue from them yet yes uh yes we are we are recognizing uh started to recognize revenue as we went live with the customer that's right okay um that's great and then when you announce the deal um I believe there was a provision in there that you're supposed to collect $3.3 million of revenue each year, 25, 26, 27. Given that you didn't start collecting revenue at the beginning of the year from them, understandably, there's no way you're going to be able to launch in two months. Do you still expect to collect the $3.3 million from them this year that you discussed was a contractual obligation before?

speaker
Ed Solito
Chief Financial Officer

Yeah, so said differently, we do recognize in the first contract year, given that there's a delay in goal life for contracts of any kind, if we have a commitment for the first year, we do recognize that commitment throughout the remainder of the first contract year. So if it's several, a month or two or more that's not recognized, we'll recognize it in the balance of the first contract year. So we would, by the end of contract year one, we would have recognized the first the first year's worth of commitment.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay. And I just want to clarify something there because I got a little confused with it. If the contractual obligation is $3.3 million, and I'm just going to say for the purposes of this conversation, I'm not trying to back into a corner, but let's just say hypothetically you guys started collecting revenue July 1st. Does that mean you expect to collect $3.3 million from that contract this calendar year? or half of that because you'll have been collecting revenue for half the year?

speaker
Ed Solito
Chief Financial Officer

We would recognize all of it in the first contract year, and we would just recognize it in the period between when they start to go live and when the contract year ends.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Got it. Okay. So basically you are anticipating collecting $3.3 million from this contract in the second half of this year. Yes, that's a fair inference. Okay, well, that's incredible given the revenue number you guys just posted. That's really good news. Okay. And then on the NEC deal, I know with IDX, the implications are enormous. Are you guys able to talk at all about a booking estimate, a guaranteed minimum revenue, term of the contract, or when you might start providing services or collecting revenue. Can you give us any detail on any of those things?

speaker
Ron DeGuro
Chief Executive Officer

Yeah, I'll take that. Unfortunately, not at this time. So we just released the product. We have the technology looking to go into certain customers for a pilot, and we're trying to still flush that all out and trying to even understand the deal cycle and deal motion and what the pricing terms are. So we don't have that all fleshed out. I do have my own ambitious goals that I want to achieve, but I need to put some more formula behind that. And so we'll share that as soon as we can, but they're very excited to get to that point here shortly.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay. Then let me ask the question in a different way. You guys are at $2.2 million in bookings so far this year, and I believe that includes the approved deal. And then you've got the NET deal with an unspecified number, and then you talked about a UK Fortune 500 retailer or a Fortune 500 international benefits company. Are you still comfortable with the $18 million of bookings you talked about the last couple of quarters?

speaker
Ron DeGuro
Chief Executive Officer

Yeah, absolutely. Absolutely. Okay.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Got it. And then the last question I've got for you is, I know last year you guys had some delays and spent a lot of time and money upgrading the software to enterprise-capable. Is it reasonable to assume with the Prove deal and the NEC deal that that work is done to a level that you're satisfied with, or is there still more to do?

speaker
Ron DeGuro
Chief Executive Officer

It's done to the level where we can win deals, but there's definitely more to do. And so we're learning more as we go into these larger enterprise opportunities to see what adjustments and stuff we need to make. But it's not nowhere near the major overhaul that was required to release basically two brand new products, two brand new SKUs into the marketplace. It's tough to just do one, but to do two in such a short period of time is obviously really tough. At the same time, it was what our customers needed and wanted, and nobody was fulfilling it. So we think we made the right adjustments. I know we made the right adjustments, and that's how we're able to enter these particular large opportunities and have a really high probability of winning them.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Okay, so you're more in the kind of normal R&D phase as opposed to the, oh, crap, we have to overhaul the whole thing phase where you were last year.

speaker
Ron DeGuro
Chief Executive Officer

I like the way you worded it, but yes. It's not the holy crap anymore. It's a, hey, this is working. It's stable. One of the things we described in my comments was we were in these pilots and POCs, and now we're advancing past them. That's because the product has been showing very, very effective for our customers and clients. If those pilots did not go the way they needed to go, then obviously we'd be in a different situation as opposed to moving to finalizing and moving things to longer-term relationships with these customers. So the product is working very well. in that regard, but we're absolutely not slowing down on innovation and improving the product sets. Just like with Privacy Key, you know, we wanted that one-to-one billion false match rate. We wanted that 22 milliseconds authentication. We wanted all that speed. And then our customers said, we want to also scan thousands of faces, and we want you to pinpoint Gary's face out of this entire population. Can you do it? And, of course, we weren't going to say no, so we did. We did it, and we delivered it, and the customers were happy.

speaker
Gary Brody
Analyst, Deep Knowledge Investing

Got it. Okay. Thanks for the clear, straightforward answers, both you and Ed. Again, I'll step back and let somebody else ask questions. Thank you.

speaker
Moderator
Conference Call Host

Thank you. Our next question comes from Dean Cedricus with DECA Capital.

speaker
Operator
Conference Call Operator

You may proceed.

speaker
Dean Cedricus
Analyst, DECA Capital

hi uh congratulations on the quarter looks like you're making good progress i was wondering if you could elaborate on the pilots um it would be nice to have some idea of the scope um can you comment on that you know how many customers or employees are part of some of these pilots that's one and then number two how quickly can these uh get scaled up what's the go live process and the time to revenue compared with the normal, you know, 12, 18 months, how short is it once you sign a contract with these that you've already piloted to actually going live and getting revenue?

speaker
Ron DeGuro
Chief Executive Officer

I've been trying to remember all those parts, Dean, so thank you for the question. This is an area that I'm super fired up about because right now when we were doing traditional, let's say, sales motion with large enterprises, they have a committee that says, hey, you need to go through vendor supplier, and then what we need to do is put you in a sandbox, and then we're going to do a proof of concept with maybe five to ten users. We're going to probably run a couple tools, make sure you don't crash, and then based off of the POC results, which is usually unlimited data, they're going to go ahead and make a decision, and they'll either go for off-ID or not, and we've been successful with those POCs, but that time period can go anywhere between three to six to nine months just because you're in a large enterprise. We made a change, and I want to take full credit for it, but I also want to recognize what's happening in the marketplace. The marketplace has been very good to us with AI causing all kinds of problems and havoc. And so for these companies to evaluate the technology faster, instead of doing that POC that I just described, they're saying, hey, you know what? Instead of putting you in a sandbox, let's put you in the real production live environment. Let's put you in full-blown production live environment on live data centers that are operating our current existing systems today. But what we'll do for the test, instead of rolling it out to, let's say, 100% of the population within that organization, we're going to roll it out to 1%, then 5%, then 10%. And so right now, for our customers, that could be tens of thousands of people, which is why we're pretty fired up. And when they see the performance live, that means that if they want to move forward with off ID, it's a flip of the switch to go live. And it's a flip of the switch for us to go time to revenue. And it's a flip of the switch for us to be able to not have to worry about, you know, making sure the integrations work, all the testing work or any of that stuff. So for us, that's the right way to go. We've been trying that we've been successful. We don't know if that's going to be the standard moving forward, but heck we're going to darn try. But it does require our team to, to be 100% staffed for that customer up front on the deal, as opposed to typically they're 100% staffed after we close the deal. Because if we have a forecast to close the deal, we then know how to staff up and ramp up. But if we're trying to put all these resources in the beginning, it's going to be a lot tougher. We're going to spend a little bit more money, but we're finding that that's the faster way for time to revenue. So we're sorry for the long-winded answer, but we're figuring that out. But we believe the shift to pilots is going to be a good way for us to go to a time to revenue faster.

speaker
Dean Cedricus
Analyst, DECA Capital

That's great. So what it sounds like is you've done a lot of the plumbing work already that you would normally have done over that 12-month period or even more in some cases to get to the full bar number.

speaker
Ron DeGuro
Chief Executive Officer

You nailed it. You absolutely nailed it. Those pieces and areas where you all have been asking us to figure out how to go live faster, this was one of those key ways. that allowed that to happen. And again, I'd like to take full credit for it, but no, because a lot of our customers are getting hit right now. And they don't have that time to do the POC way. They need to figure it out now. So I think in combination of AI rising, so if the bet is AI is going to get better and better and better to help these fraudsters perform more damage faster and faster and faster, we should be able to accelerate our side. So the danger on our side is we have to staff up. And so we have to be able to make sure that we can do that and do that and predict that and, again, be mindful of our spending. But that is a shift in our process. And it may require, hopefully not, but it may require a little bit more resources up front.

speaker
Dean Cedricus
Analyst, DECA Capital

Okay. Well, that was going to be my next question. Well, actually. Because you were asking about scale, right? Yeah. And that is, I mean, it sounds like you're on the cusp of being able to, really get some revenue in here, or at least convert this to real ARR very quickly between these pilots converting to contracts and going to revenue much faster. And number two, the prove deal, and this is without even really getting into the NEC deal, which sounds huge, but a little earlier stage. But are you also in pilot with... with anybody with that technology or not really yet?

speaker
Ron DeGuro
Chief Executive Officer

Okay, so there's two parts there, but I'll answer the last one. On the IDX side with NEC, we're not yet, but we're moving into those, and so we're working diligently on that. But another, I guess when you're talking about PROVE, were you asking whether we're integrated there to the I'm not sure.

speaker
Dean Cedricus
Analyst, DECA Capital

Well, my understanding, or at least my interpretation, is that that could be almost plug and play with the Prove customer database that's already there since you, I think I heard, have essentially integrated with their system. Or I don't want to put words in your mouth. That was just my interpretation.

speaker
Ron DeGuro
Chief Executive Officer

Yeah, yeah. Let me go back. So with Prove, it's like a two-part partnership. Part one is our stuff that works today out of the box. And their current customers right now, Prove doesn't do what AuthID does. So the Prove customers can benefit from the AuthID technology through the Prove platform. So they can take advantage of that today. And that's what's about to go live hopefully soon. The longer-term strategy for Prove is to incorporate biometrics inside their entire core platform, essentially like an OEM. And so that has not been completed yet. We're still working on that with them. And again, I'm not going to reveal their strategy with that, but from a biometric perspective, we are working with Proof to be their core biometric technology.

speaker
Dean Cedricus
Analyst, DECA Capital

Okay. Well, thank you. I think that's all I have for now.

speaker
Operator
Conference Call Operator

Thank you. Our next question comes from Kelsey Jones with Verana Capital. You may proceed.

speaker
Phil Brenham
Analyst, Verana Capital

Oh, it's not Kelsey Jones. It's Phil Brenham, and Kelsey works with me. My question – hey, Ron. Very interesting quarter, clearly. My question – I'm not one who typically asks questions, but I think the question I have is probably a little bit on the forefront of many investors' minds. So I'm going to put it out there and see what your response is on behalf of, I guess, all of us. First, shout-out to Gary Broad for helping open up the conversation here, asking good, astute questions. So your organization, you and your team have received a fair bit of criticism about the communication or kind of lack thereof evidenced by the company. And even while understanding that there is tension between your counterparts, your clients, and what you can reveal versus what we want to know as investors, have you guys given some thought about how to upgrade the paradigm? so we don't feel so, you know, bluntly kind of completely lost by rather anodyne press releases?

speaker
Ron DeGuro
Chief Executive Officer

Yeah, absolutely. Thank you, Phil, and I appreciate the question and certainly empathetic to the request. And so what we've done internally is we've set a process where we know that there's a blackout period, which then the investors don't know about that, and then we haven't set up time yet to speak with investors in a dedicated way. So either the investors reach out sporadically to the leadership team, we then have to figure out how to work that into a schedule because the leadership team is very, we're overstrapped here, we're overworked and hopefully you can appreciate that. And so sometimes we can't respond in a way in an ad hoc moment. So what we are going to do and what we started to do after this call is that we are reaching out to those folks who have asked questions in the past we could not answer due to the blackout period per our internal policy. And we are reaching out, we're scheduling time with people like yourself in a dedicated way where you can spend intimate time with me and the leadership team to ask questions and get more details for the questions you have, as opposed to kind of like this, you know, reach out whenever you want to reach out and And then hopefully we respond whenever we can. And maybe we respond quickly. Maybe we don't respond, depending on what the time period is, whether it's a blackout or not. So we want to schedule the time with you all and then have a better cadence in that way so it's more predictable. And then I could actually spend more intimate time with you when I'm not in a blackout period and answer your questions. So we're hoping that we'll alleviate that.

speaker
Phil Brenham
Analyst, Verana Capital

Some of that is, it will be helpful, but bluntly, spending a lot of time answering my questions doesn't help the business grow, so I'm not really interested in taking you away too much from your primary duties. I'm speaking more to the press release communications, the information that's provided in these press releases that we're all scrutinizing probably too closely, but nonetheless, it's all we have traditionally gotten. and they tend to be quite bereft of helpful insights. That's what I'm really speaking to. I would love to hear the dulcet tones of your voice more often, but really for everyone's benefit, how do we get more information in these press releases so people can feel at least somewhat satisfied that things are progressing nicely other than, hey, we have this, and we're not going to tell you what it is, so just take our word for it.

speaker
Ron DeGuro
Chief Executive Officer

Phil, if my customers would allow me to tell you the details of the contract or the financial terms that you're looking for so that you can make an investment, I would tell you this. But our customers will not let us do that. So to the point where we can get that information so that we can share, we're going to work really hard to get you what you need while making sure that we adhere to our customers' privacy.

speaker
Phil Brenham
Analyst, Verana Capital

I understand. There's obviously tension on the other side. I would just ask you guys to pay as much attention to providing that additional information as you can. So with that, I'll let it go. I'm sure Gary is back in the queue, and I'd like to hear what he has. Thank you.

speaker
Operator
Conference Call Operator

Thank you. At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. DeGuro for any closing remarks.

speaker
Ron DeGuro
Chief Executive Officer

Well, thank you, everyone, and certainly thank you for the question. Thank you for listening today. If you have any further questions about our progress like I talked about earlier, definitely reach out to investor.relations at offid.ai. We'd gladly set up time to be able to answer any additional questions that came from this call or post-call that we didn't answer. And if not, we look forward to sticking more with you when we report our third quarter results in November. Thank you, everyone. Thank you.

speaker
Operator
Conference Call Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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