Intellicheck, Inc.

Greetings, and welcome to the IntelliCheck fourth quarter and year-end 2020 earnings conference call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Gar Jackson. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us today for the IntelliCheck fourth quarter and full year 2020 earnings call. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company or its management, as well as assumptions made by and information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes as new information, subsequent events, or otherwise. Additional information concerning forward-looking statements is contained under the headings of safe harbor statement and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission. Statements made on today's call are as of today, March 16th, 2021. Management will also use the financial term adjusted EBITDA on today's call. Please refer to the company's press release issued this afternoon for further information, reconciliation, and context for the use of this term. We'll begin today's call with Brian Lewis, IntelliCheck's Chief Executive Officer, and then Bill White, IntelliCheck's Chief Financial Officer, who will discuss the Q4 and full year 2020 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour, and I will now turn the call over to Brian.

Thanks, Garner, and welcome everyone to our fourth quarter and fiscal year 2020 earnings call. We continue to show solid growth with total revenue for fiscal year 2020 of 40% over 2019, and SAS revenue up 54% during the same period. During the fourth quarter, total revenue was up 6% over Q4 2019, but more importantly, SAS revenue was up 18% over the same period. Sequentially, Q4 SAS revenue was up 23% versus Q3 2019. We believe that given COVID and the return to lockdowns in portions of the country throughout the year, those numbers bode well for the future. Let me explain. During 2020, we continued to add clients and retailers, and existing clients continued to add additional use cases all through the lockdowns, partial reopenings, depressed levels of retail traffic, and returns to more lockdowns in some markets. Throughout the pandemic, we could immediately see the impact of closings and openings through transaction counts. From June through December, when some places began to partially reopen, albeit with limited traffic and typically occupancy restrictions, we saw an increase in transaction counts of 190%. While this is an impressive sign of recovery from the pandemic, it isn't a complete recovery versus pre-pandemic levels. Same brand transaction volumes for Q4 2020 versus Q4 2019 were down an average of 20%. As many regions of the country were still not completely open, or limitations on occupancy resulting in limited traffic. Even with this decrease in transactions, SAS revenue was up both sequentially and year over year. We believe the increase was due to a number of factors. First would be the new clients we signed over the year and the additional use cases employed by existing clients. Over the course of the year, we executed 32 integrations that were either for new clients were expanded use cases with existing clients. In Q4, we had 10 companies either begin a pilot, sign on as new, or an existing client expanding a use case. Considering that historically implementations have been limited during the fourth quarter peak holiday selling season, this was a good result. With our expanded focus on e-commerce transactions, we had two existing clients add facial biometrics to their person-not-present authentications. During the fourth quarter, we initiated two pilots that had subsequently become clients. One was for a farm supply store with over 120 locations that is using our ID Check online fraud solution. The second was a bank consortium-owned company that helps financial firms detect and prevent fraud. They started with our no integration web product and are now working to integrate our API into their mobile apps and other products. During the quarter, we also signed a credit union located in L.A., demonstrating that we continue to expand adoption of our technology solutions in the financial services market vertical beyond banks. We also continue to expand to new markets with additional uses for our fraud-stopping technology. During the quarter, we signed a California-based company that does tenant screening for rental leases. This is a new vertical market for us and one that, not surprisingly, is a target for identity theft. I think this underscores what I've been saying. The use cases for where you will need to prove you are who you say you are are ever expanding. The second driver of growth is the expansion in the online or person-not-present space. From June through December, we saw a 93% increase in these transactions, with 15 clients either adding the online solution or the addition of new clients that are only e-commerce focused. One retailer that has been with us for a long time saw a 16% increase in volumes during that same six-month period. Drive and growth was a topic I spoke with you about last quarter. You may recall I shared with you my strategic vision that included investments to build on the growth we have achieved. I have taken those initial steps in sales and marketing. In January, we hired a VP of marketing, a needed function IntelliCheck had been lacking. This VP has already had an impact on our messaging, website, and more importantly, driving inbound leads. Our website has been updated to get our key messages across better and faster and will continue to be refined as our messaging evolves. The sales team now has improved marketing pieces and will be adding video to the arsenal to help them sell. I also spoke about hiring salespeople to handle both inbound leads, and more importantly, extend our outreach, particularly within newer markets. When you have the senior vice president of fraud prevention for one of the largest banks in the world calling your product, and I quote, a true game changer in stopping fraud, top five all-time in fraud prevention tools we've put in place, that means it's time to really put the pedal to the metal. To do that, we need more salespeople. We have begun the process and have already started hiring high-caliber talent. We will also be hiring people with proven strategic account management experience. While our large financial institutions continue to expand use cases, I would like to see it happen faster. We believe that people who understand how to strategically plan and execute strategies to build on existing accounts are key to making that happen. Additionally, as I said on the last call, paid placement is becoming the norm. and we will be spending money judiciously to get our message out. We believe that marketing will be a key factor that will help us expand into new markets. And as demonstrated by the new sectors we have ventured into in the past year, it is part of our growth strategy. 2020 was a heck of a year I pray will never be repeated. I'm sorry for those on my team and those on this call who have lost loved ones. At the same time, I am seeing encouraging signs that we are turning the corner. With the vaccine becoming more widely available, hopefully we are that much closer to herd immunity, a fully open economy, and normalized retail traffic. In the meantime, what we have seen and continue to see is that identity theft and fraud doesn't stop for a pandemic and has served to raise consumer and market awareness of the toll it takes. Ultimately, the data tells the story. In the past year, one in five Americans fell victim to identity theft or attempted identity theft. According to a new Harris Research poll, identity theft has become top of mind for three in five Americans this year, and 60% expect they will suffer financial loss as victims of identity theft. The need is there, and we remain confident we have an important role to play. So we will continue to work with new and existing clients to expand the ways we can stop identity theft with our proven technology solutions. In closing, I'm looking forward to 2021 and what we believe is the promise and opportunity it holds for IntelliCheck. I will now turn the call over to Bill to discuss our financial results in more detail.