Intellicheck, Inc.

Hello, and welcome to the IntelliCheck first quarter 2023 earnings call and webcast. 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, Investor Relations. Please go ahead, sir.

Thank you, operator. Good afternoon, and thank you for joining us today for the IntelliCheck first quarter 2023 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, 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 at the Securities and Exchange Commission. Statements made on today's call are as of today, May 9th, 2023. Management will use the financial term adjusted EBITDA on today's call. Please refer to the company's press release issued this afternoon for further definition, 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 Jeff Ishmael, IntelliCheck's Chief Financial Officer, who will discuss the Q1 2023 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.

Thank you, Gar, and welcome everyone to the Q1 2023 earnings call. As you saw from the earnings release, total revenue was $4.25 million, up 25% year over year, And SAS revenue was 4.22 million, up 26% year over year. As expected, this is down 5% from Q4 2022 when our retail store revenue is typically sequentially down given the seasonality of the peak holiday shopping season. The fact that we are down less sequentially than we have been historically illustrates that we are delivering on an increasingly diversified client base, which I will be speaking about later. Adjusted EBITDA was at negative $556,000, down from a negative $807,000 in Q1 2022. As I've said on previous calls, we will be watching expenses very closely this year with a continued focus of getting back to EBITDA break-even over time. Our top-line revenues continue to grow, and I have to say that our trailing 12-month SAS revenues have increased each month for the past 39 months. In looking at the numbers, we're going to first look at the importance of the growing diversity of our client base, which is a primary growth focus for us, and what we are seeing year over year with the existing and new customers across some of our major verticals. Overall, apparel stores are down 3% versus Q1 of 2022. Most of that is driven by a few retailers that I'm sure you're hearing about in the media. As you have no doubt heard, some are down as much as 30%. That has largely been offset, however, by apparel retailers that we added throughout the year and with those who were not fully implemented in Q1 last year. Furniture is down 7% for the period comparison. It's important to recognize, however, that since these tend to be low volume accounts, it is better for us to charge a fixed fee each month per location So the decline does not have a significant impact on revenue. Turning to verticals where we saw growth. Cosmetics and beauty products were up 3% versus Q1 2022 as this space continues to perform well post-pandemic. Automotive volumes more than doubled versus Q1 2022 and are up 117%. Revenue from a leading reseller partner in this space was up 93% for the same period comparison. and we are in discussions with them to find ways to work even more closely together as this has been a fruitful partnership for both companies. Banking and lending, which includes use cases like teller workstations, online and mobile apps, call centers, and buy now, pay later, were up 40% versus Q1 2022. As I said on the last call, we're getting a lot of interest from title companies. In this last quarter, we've signed over a dozen title companies including a cash flow solutions provider who will be acting as a reseller in this space. Resellers will continue to be a large focus for our growth efforts going forward. I should also point out that we continue to see strong inbound needs and interest in the title space that has also benefited from referrals from other users. Now, a few updates on some of our pilot programs. Unfortunately, the regional banking pilots were delayed. That isn't surprising given all that's going on in that space currently. The 1400 location bank looking to do the three month pilot with our product integrated into their bank system was not able to roll out the software update from their scanning vendor into their tech scanners for the date they initially targeted causing the delay. However, I think the delay will actually prove our worth much more quickly. They had planned on updating the software in just a few branches for the pilot. Now they want to go system-wide in every branch, which will delay the pilot until June, but we can now show them a much broader solution to stop fraud attacks. The second regional bank with the 2,700 locations and a 30-day proof of concept had wanted to begin their pilot in April, but it will be delayed until the middle of May. A couple of reminders on renewals. We renewed the 2,700 location retailer to a new two-year effective February 1st with a 20% price increase each year. And remember, financial services company number three renewed for a guaranteed increase of volume of 20% and a price increase that was effective January 1 of this year. Also during the quarter, the omni-channel, multi-biometric platform for banks, marketplaces, and healthcare systems reselling our core ID validation products more than doubled their commitment to us. Given current transaction volumes, it appears they will burn through that prepaid bucket well before year end. There are a few other new wins that also demonstrate the growing diversity of the client base. In the financial services space, we signed a financial services provider headquartered in the Northwest with branches in five states and one Canadian province. This company offers payday loans, installment loans, prepaid debit cards, and money orders, amongst other financial services. They will be using our direct product to initially validate people applying to open an account online with the intent to bring us in store at a later date. In the automotive space, we signed a company that works with automotive groups and power sports to drive their digital customer experience, which is really so much of car buying today. They are working with a very large automotive manufacturer with 2,700 dealerships and have incorporated IntelliCheck into their system to check IDs both in person and online. They started a pilot with 11 stores and have already caught fake licenses as we knew they would. So they were very excited about the success so far. We continue to sign with big concessions companies for the hospitality space at sports and concert venues. We just added another concessions company serving a big tent school in the Midwest with over 75,000 seats in its football stadium alone. Our speed and accuracy were the big winners here. The last thing they wanted were long lines at the concession stands or kids being served who are underage. As I said earlier, we signed up over a dozen new title companies. This is in addition to over 20 bars and restaurant groups, four cannabis dispensaries, multiple tobacco and vape sellers, multiple auto dealerships, and two small auto rental companies. Also of note on the last call, I spoke about our completion rates. That is the percentage of time we can render a decision on the license. It continued in Q1 at the exceptionally high rate of 99.25% of the time. This is important because it underscores our ability to deliver results over 99% of the time. These are standout numbers that we believe distinguishes our technology solutions from competitors. I believe the word is getting out that we are different and we are clearly better. Our speed, accuracy, the benefit of no need for new hardware or no need for human intervention are all major differentiators that people are beginning to notice as a sales show we can close the larger long cycle financial institutions while at the same time closing the smaller and mid-sized deals increasing sas revenue each month we continue to penetrate new markets and given the amount of clients we are signing who are either only in the digital market or choosing to start there and then move in store substantiates that we are not just the brick and mortar services provider. I said this last call and there's nothing about it has changed since then. It's an irrefutable fact is that the identity theft and identity fraud continue to spiral. As bad actors continue to expand their efforts at every turn, there is no question that what we do is becoming increasingly more necessary. At the same time, we recognize our customers and prospects want to realize two key value add. They want to improve their process and make it easier for them to gain new clients. At the same time, they are making sure they are not the victim of fraud or doing business with people that they shouldn't. We believe, and my sense is that our clients would agree, that nobody does that better than IntelliCheck, both in person and digitally. With that, I will turn it over to Jeff for some details on the financials.