Intellicheck, Inc.

Greetings and welcome to the IntelliCheck second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your hosts, Gar Jackson and Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, and thank you for joining us today for the IntelliCheck second quarter 2024 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 in changes and circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to The 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 with the Securities and Exchange Commission. Statements made on today's call are as of today, August 8, 2024. Management will use the financial term adjusted EBITDA in 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 Operating Officer and Chief Financial Officer, who will discuss the second quarter 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, Gar, and thank you all for joining us for our Q2 earnings call. As we begin today, it is important to look at a milestone that highlights what I continue to emphasize. Fraud and identity theft isn't going away, and a look at the latest data underscores the significance and pervasiveness of the problem. According to the Identity Theft Resource Center, The number of data breach victims has exceeded 1 billion people for the first half of 2024, compared to 183 million people who were data breach victims in the first half of 2023. That represents more than a 400% increase, and both are staggering numbers. It's worth pausing a moment to digest the impact. Each of these data breach victims are now prime candidates for identity theft and fraud. To underscore that data breaches equal identity theft, remember that in 2023, there was a 13% increase in traditional identity theft losses where a stolen identity was used to commit a crime. Losses rose to $23 billion, impacting 15 million victims in the U.S. With that as a backdrop, our mission remains clear. We continue to believe that our technology is the most effective at stopping fraud and identity theft, and that IntelliCheck is the best first step in identifying that a person is who they say they are. It's that simple. The IntelliCheck identity platform allows our customers to confirm that the person they are entering into a transaction with is who they say they are and that they can and want to do business with them. And our customers are able to do it so quickly, easily, and seamlessly without the need for new hardware. Because of our proven technology's high degree of accuracy, this simple first step allows a transaction to go forward with confidence, facilitating the onboarding of new good customers while assuring bad actors will not be successful. In looking at Q2, you will see the value of the strategic moves we have made. You are probably well aware that we are currently heavily dependent on our retailers to drive revenue. We have been successfully expanding our presence in additional market verticals in line with our strategic plan to remain agile as we look to continue to fuel growth. Understand that we are still building on a relatively small base, but one that is growing. This diversification will take time, but we believe we are well underway. Turning now to a brief overview of our Q2 results that Jeff will go over in more detail shortly. Q2 SaaS revenues were $4.6 million, down $36,000 versus a year ago period. We maintained robust expense disciplines showcased by our operating expenses that were down $770,000 or 17% versus the same period last year. The company's net income improved by $726,000 to a net loss of $127,000 for the second quarter of 2024 compared to a net loss of $853,000 for the same period in 2023. A snapshot of market realities gives you an important frame of reference. As it stands today, retail continues to be largely bifurcated with the luxury segment benefiting from high-income purchasers, so it's doing relatively well. However, our clients include many apparel retailers who continue to see headwinds from consumer pullback, and this also impacts department and home improvement stores, channels, and techniques. to enable physical ID documents to be presented during an electronic validation flow that uses the end user's phone. These checks can confirm if the documents presented in this session are physical versus printed images or simulated by pointing the camera at another screen, or they can spot edits to the user's picture printed on the front of ID, which is common with generative AI attacks. You may recall we introduced a product called Capture to simplify our clients' remote capture documents. Instead of doing a lot of programming with two simple webhooks to IntelliCheck, we did it for them. It was completely white-labeled, and their clients never knew it was us. We are now providing a similar tool for clients that want to embed us in their proprietary mobile app. With this new tool, our clients can make one call from their mobile app to launch the IntelliCheck identity validation process. Again, it's completely white-labeled within their app, and their customer never even knew it was us. As we like to say, the best identity experience for your customer that they never knew they had. So before turning the call over to Jeff to discuss our Q2 financial results, I have mixed feelings as I turn to Jeff one last time to discuss our quarterly results. Jeff, everyone at IntelliCheck is grateful to you for all your contributions over the past two years. At the same time, it's hard to say goodbye to someone I think so much of personally and professionally. And I'm also delighted to introduce our listeners today to Adam Stragowicz, who will be taking over the role of CFO on September 1st. Jeff and Adam have already been working together on a seamless transition. Jeff has built a solid finance team, and under Adam's leadership, we believe that we are well-positioned going forward. With that, I thank Jeff, and I turn the call over to him to discuss our Q2 results.