Intellicheck, Inc.

and welcome to the IntelliCheck Q3 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gar Jackson, Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us today for the IntelliCheck third 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 would company or its management, as well as assumptions made by an information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Throughout this call, we may reference certain financial metrics that have been rounded for the ease of discussion. 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 of the Securities and Exchange Commission. Statements made on today's call are as of today, November 13, 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 will begin today's call with Brian Lewis, IntelliCheck's Chief Executive Officer, and then Adam Skragovic, IntelliCheck's Chief Financial Officer, who will discuss the Q3 2024 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.

Hey, thanks, Gar. And good afternoon and thanks for joining us today for our third quarter 2024 earnings call. Total revenues for the third quarter were $4.71 million and SAS revenues increased slightly, totaling $4.66 million. Our gross margin remains strong at 91% in line with last year's results. Of note, our new business continued to generate higher prices per transaction values. During the third quarter, our new business price per transaction increased 25% year over year and 8% sequentially when compared to the second quarter this year. We believe this further reiterates our pricing power. On our last call, I began with an update on some recent organizational changes. I told you about Sandra Bowers joining the team as vice president of customer success and account management. I'm very pleased to say that she hit the ground running and has already made significant progress in a very short period of time. Sandra has evaluated our customer success program as it made changes to the organization that we believe will drive sales growth as we enter 2025. One of the big opportunities that she saw in an area that we have needed to capitalize on more effectively is driving more use cases per customer and increasing incremental revenue. Sandra has done a deep dive on the product pipeline, has been putting plans in motion that we expect will drive additional revenues with many of our customers. She's effectively aligned with the sales team. gave a fresh look to our customer-facing marketing materials, and is providing valuable input into these important areas. We see the customer success program as a key metric to our success. Organizational change is not a new topic on these calls. I have continued to underscore my commitment to organizational review with a focus on our needs and having the right people in the right positions to drive revenue growth. I will not be reticent in calling it as I see it and will not hesitate to continue to make changes if I did not see the progress I expect. My objective is to put the best people into operational roles that will position us to drive growth and product innovation. We are continuing to attend trade shows as we leverage opportunities to grow brand awareness of our distinctive, hardware-agnostic, state-of-the-art technology solution and our role as thought leaders in the identity theft and fraud space. At the Identity Week conference in September, I was pleased to participate in a panel discussion on fighting online fraud. It was great to have a presence with distinguished co-panelists that included Scotiabank Vice President Global Fraud Management and Capital One Senior Counsel for Enterprise Innovation. In addition, Chris Meyer, our VP of Sales, chaired a roundtable discussion on fighting fraud. Chris was also active at the Dados Insight Financial Crime Trade Show, where he led an intimate roundtable discussion from risk to reward, transforming fraud prevention into customer acquisition. Just a few weeks ago, we participated in Money 2020 for the second year. This conference is considered the world's leading premium content, sales, and networking platform for the global money ecosystem. Money 2020 has a distinctive focus on what's next in the world of payments, fintech, and financial services. This prestigious show allowed us another strong platform to increase brand awareness. We continue to evaluate our attendance at these shows with an eye towards return on investment and brand building as we also explore other opportunities that may serve us well. We believe that we have the most accurate and hardware-free SaaS solution in the market today and that these trade shows should drive both market awareness and sales for IntelliCheck. And one final note on marketing initiatives. Marketing continues to be a focus for us and is another area where we see additional opportunities to drive more interest in IntelliCheck and our product offerings targeting multiple verticals. We are in the process of shifting a greater focus to developing support materials for the sales force based on what we have learned over the past six months. Turning now to sales. In this quarter, we reach an agreement with a retailer located throughout the Southeast region that serves as the umbrella corporation for 287 franchise locations of a well-known retail chain offering a variety of signature home furniture, decor, and accessories. We also achieved an important milestone with a leading operator in the retail lease-to-own space. We are now live, assuring the validity of high-risk applications. This adds to the growth we are seeing with this client who continues to implement our technology in their brick and mortar locations. We anticipate this partnership will generate annual revenues in the low six figures with their initial use case alone. While we continue to diversify and see substantial growth in our newer vertical markets, retail remains a large important part of our mix. One of our prominent department stores that does their credit card processing through one of our leading bank clients is shifting part of their process to now run their transactions through the bank API. This is good news for us because the bank has a higher transaction value per scan, and as a result, we've seen an uptick in revenue generated from this retail customer, which leads me now to the banking vertical. We believe this move also further solidifies our relationship with this bank that does credit card transactions for multiple merchants as well as their retail locations. Additionally, this incremental revenue reinforces our pricing power. As others with inferior products cut their rates in order to try and gain share and remain relevant, we continue to increase our per transaction pricing with little resistance. We anticipate that the revenue generated from this bank will have a material increase as we enter 2025. To give you a little history, this bank's transaction volume has increased far beyond what they originally projected, and they ran through their prepaid bucket much faster than anticipated. Right now, we're seeing 30% growth across their combined channels And as a result, this banking client is reassessing their future transaction volume needs, recognizing they sharply underestimated their usage. This happened faster than either of us anticipated, so we are currently billing them in arrears for usage, and we are working towards a new three-year annually prepaid commitment from them that we anticipate will be signed and paid for in the first quarter. Continuing with our efforts in the banking market vertical, one of our large regional banks has signed a new multi-year agreement, and they are now fully rolled out and live in 1,200 bank branches with plans to expand to a digital use case in the near future. We anticipate this being a mid-six-figure revenue-producing agreement annually over time. The powerhouse southern regional bank with more than 2,700 branches we previously partnered with, is in the process of working with us towards finalizing a multi-year deal for their in-branch location rollout. This multi-year agreement stands to have significant implications. They are in the process of integrating IntelliCheck's technology solution into their teleworkstations, and we believe it has the potential to become a multi-year, seven-figure contract beginning in the middle of next year. I am pleased to share with you that we have continued our expansion into Canada. During the third quarter, a small but growing Canadian online bank completed integration for digital online use cases. Canada has been a growing market for us, and we continue to believe that we will see additional opportunities to drive revenue there. Our real estate market vertical presence continues to see solid growth. On our last call, I shared with you news of IntelliCheck's partnership with the nation's eighth largest title insurance, Doma Title Insurance. You may recall that Doma Title has partnered with IntelliCheck, providing its agent and attorney customers with access to IntelliCheck's web-based solution that validates, analyzes, matches, and de-risks the identification credentials of parties involved in real estate transactions. is being offered to DOMA agents who are signing documents as part of a DOMA insured transaction. DOMA title turned to us to address a rising trend that is costing title insurance companies and homeowners billions of dollars in losses each year. Seller impersonation fraud is a real estate scam in which a fraudster poses as a property owner to illegally sell without the true property owner's knowledge or involvement residential, or commercial property. As incredible as it sounds, it is happening with greater frequency. Sophisticated fraudsters often use the property owner's fraudulently obtained Social Security and driver's license information in the transaction. In many cases, fraudsters use email and text messages to communicate with the title agent, allowing them to mask their true identities and commit crime from a remote location. Also called seller ID fraud, the scam is most rampant in the high volume states of California, Florida, and Texas, but schemes have targeted property owners throughout the country from rural areas in the south to cities in the midwest. A troubling statistic that demonstrates just how serious the problem is serves to underscore the financial impact. In 2023, 30% of all claims paid by DOMA title insurance involved fraud and forgery. Early data from the first few months of 2024 is further evidence of the significance of this problem. In those first few months alone, seller impersonation claims surpassed 2023 damages. I hope you had time to read the Dolman Title Insurance press release that was issued in August, because I believe you too will appreciate hearing about the consequential impact IntelliCheck's technology solution is having from one of Dolman's Title agents. We believe this further sets the stage for additional growth in this area, and I am pleased to share with you the fact that we are seeing that already. Another title insurance company that is capitalizing on the value of our technology is Westcorp Land Title Insurance Company. Westcorp is the number one independent title insurance underwriter in the nation. Their model is a bit different. They have launched ValID by Westcorp. It's an advanced ID verification tool designed to empower title agents in validating the identities of borrowers and sellers. They describe this new tool powered by our technology solution as delivering, and I quote them here, unparalleled access and speed in ID verification. The tool features a comprehensive dashboard that provides title agents with real-time tracking of ID verification status, enabling them to manage their workflow efficiently. with validation methods that include state-issued IDs, passports, and support for foreign transactions. ValID provides multiple validation options, including mobile texting and live email hyperlinks, ensuring flexibility and convenience in the verification process. This comprehensive approach to identity validation helps agents enhance their due diligence process mitigate risk, prevent fraud, and prove overall transaction integrity. We really appreciated a comment from Scott Chandler, Chief Operating Officer at Wet Square Land Title Insurance Company. He said, and again, I'm quoting here, we are confident that this tool will be a game changer for our agents, allowing them to perform their duties with greater confidence and efficiency. We couldn't agree more. On our last call, I noted that we are seeing growth in our title business, and the addition of these clients highlights why we believe that trend will continue. In a related development, a wire transfer company that has just completed the integration of our technology solution and are now just starting to ramp up, In this client's recent findings on the state of wire fraud, the data show that 1 in 20 Americans who bought or sold a home within the past three years has been victim of some type of real estate fraud, with the median amount in consumer losses exceeding $70,000 as a result of the stolen buyer's down payment and the seller's net proceeds. The companies warn that fraudsters have become increasingly skilled at leveraging public records, breaching broker and title agency systems, so they're able to effectively pretend to be someone involved in a transaction to steal from unsuspecting consumers. Although there are multiple warnings in place at all parts of a real estate wire transaction, consumers are still targeted through communications that convince them to send money to a fraudulent account or an entity that they believe to be true. Fraud just posing as someone involved in a transaction via email to scam victims out of their funds has seen dramatic growth. The latest data from the FBI showed that this type of crime, which they categorize under business email compromise, cost victims a record 446 million in real estate transactions during 2022. So now turning to our email social media accounts, in the domestic and international social media space, we do have an update. There has been a delay in that rollout, but not for reasons that should be of concern. And in fact, we believe it's good news. This American multinational company operating as one of the largest social media platforms in the world that shows IntelliCheck for ID validation has been so impressed by our technology that it's working on a larger use case than originally anticipated. In our discussions, they have told us that their goal is to be live no later than early next year. This marks the second globally recognized social media platform that has implemented IntelliCheck's technology and has been so impressed with its performance that they are expanding its application. You may recall that the use case for the original social media company we started working with a few years ago was for identity validation to prevent fraudulent account takeovers. In the stadium operations market vertical, we are looking at finalizing deals with two high-profile food and beverage concession operators that service multiple stadiums and arena venues. In addition, through these two operators, we are in the process of closing an agreement with a primary point of sale company for sporting venues that would incorporate the IntelliCheck validation process directly into their point of sale system. What is important to note here is that these leading operators have more than one objective in mind. Of course, they're concerned about preventing underage access to alcohol through fake ID use. However, they have an equally important need to address over-serving. If an individual is over served and leaves their premises drunk, should they be in an accident, engage in violent behavior, or other activity that results in damage and loss, the liability for these operators stands to be monumental. Our technology solution is able to track drinks served per customer and allow the server to prevent over service. We are also continuing to build our position in the digital space. A software company that specializes in identity management is in the process of incorporating our technology solution in their platform. Programming is underway for this new client, which describes itself as an identity security platform behind over half of the Fortune 100, 13 of the 15 largest U.S. banks, and seven of the nine largest global healthcare companies. We believe this agreement underscores the superiority of our technology solution. In the automobile market, we are seeing solid growth in the vertical. Automobile is up 28% over Q3 2023, underscoring why we believe this is a great vertical for us to continue to pursue. On our last call, we introduced another new vertical, employment verification. Employment verification is a multifaceted market vertical where we are starting to see our expansion efforts pay off. In our previous call, we discussed the use case in the cargo transportation area. This is a growing use case and one that we have effectively tackled with the major consumer food company we had talked about. You may recall that in this use case, the company has been experienced fraud at all of its shipping distribution locations. Fraudsters with fake identification documents are showing up at the warehouse posing as legitimate transportation personnel and are driving away with an 18-wheeler loaded with product. Losses have been dramatic for the company. In the latest development, our proof of concept pilot was so successful that this company is in the process of rolling out our technology solution to all of their fleet locations. And they have introduced us to a large coffee retailer who is having similar problems in their distribution centers. It is important to understand how consequential the issue of employment fraud is related to cargo transportation fraud. Recent study data shows that cargo freight theft has increased 430% year over year in Q3 of 2023. Further findings reveal that there were 38% more cargo thefts in the first quarter of 2024 compared to the same timeframe last year. Nearly half of those incidents occurred at warehouses and distribution centers, with an average loss of more than $210,000 per theft. While cargo thefts used to be largely centered around Southern California, the hotspots for truckload thefts have started to proliferate around the country. With the rollout of our solution to all locations underway, we look forward to sharing more news on this new partnership. In a related development, we expect to make an announcement shortly about our new partnership that is allowing a nationally recognized company to effectively validate job seekers' applicants' identity documents. This is another facet of the employment verification market vertical that we believe holds opportunities for further expansion. We believe that the channel program remains a great platform to propel volume with our partners. Sandra is working closely with the team to drive revenues through this program. We anticipate that this program will be an important contributor to our revenue growth in 2025. You may recall that I shared a quick peek at our technological advances. We are now migrating clients to our new IntelliCheck Hub, which allows our customers to access their transaction data and perform self-administrative tasks. We believe that this is an extremely important enhancement for a number of reasons. First, it allows clients to be able to gain additional insight into transaction activity. It allows them to gain keen insight into how they can improve their own internal processes. In a lightning-fast digital world, this is a crucial need. At the same time the clients realize important procedural gains, we benefit as well. Our support staff is freed from the time-consuming and costly administrative burdens, allowing them to provide more value-added service benefits. I'm pausing here to remind you that the Hub reflects a critical facet of our client relations. It demonstrates the ongoing dialogue we have with our clients that we seek their input on their evolving needs and we respond to them. This is a win-win situation. And product development is not a nice to have. It's a must as fraudsters continue to evolve their tactics to undermine identity verification solutions So must we, and we are doing that with ongoing enhancements to our ID verification platform. We are moving forward with the enhancements we mentioned that are part of our strategic focus that include new machine learning and statistical calculations to foil the latest printed physical fake IDs and the onslaught of generative AI attacks. I am pleased to report that we're seeing the benefits from my new proprietary statistical models And as previously discussed, these standards deliver a significant impact on OCR match processing, while at the same time, it gives customers another feature enhancement for their own models. Another valuable step forward in product development from IntelliCheck. With the enhancement to document liveness that is enabling physical ID documents to be presented during an electronic validation process, that uses the end user's phone, we like what we're seeing. We're seeing that the accuracy that we are known for in this enhancement that confirm if documents presented in the electronic validation procedure are physical versus printed images or simulated by pointing the camera at another screen. Given the issues that evolved as Froster utilized generative AI, we cannot underscore enough the significance of being able to recognize any edits to the user's picture that appears on the front of the ID. It's a cat and mouse game, and we remain diligent on staying one step ahead. We continue to invest in product and enhancements understanding that it is critical to me in our position as an industry leader in identity verification. Over the course of the past two years, we have invested approximately 8.8 million in R&D related to product development. Additionally, we have invested approximately 2.2 million in the transition from Azure to AWS. This has been a capitalized expense with a big lift largely completed. As a reminder, we utilized outside consultants to get the work done quickly and efficiently and anticipate the cash outlay for the work is largely behind us. Our 90 plus percent gross margins positions us well going forward and we anticipate generating cash next year driven by accelerated top-line sales growth. As you can see, we believe we are making substantial progress on a number of fronts. It is our sense these developments were served to accelerate our revenue growth as we enter 2025. I will now turn the call over to Adam.

Thank you, Brian. I'm excited to be here at IntelliCheck and to join such a dedicated and talented team under Brian's leadership. As this is my first earnings call, I'm eager to share our progress and outlook for the future. Let's dive into the key points for this quarter. You have heard us in the past discuss our cloud migration from Azure to AWS, and as a result, we anticipate seeing less R&D spend in Q4 and going forward. We believe that this migration, as well as other systems initiatives, such as Hub that Brian just discussed, will improve customer satisfaction, retention, and accelerate new customer onboarding. They should also provide customers with analytics that will help them monitor and improve their own businesses. We are proud that we have maintained our gross profit and gross margins, even while running a dual cloud infrastructure during this period of transition. We've also made a few targeted changes within IntelliCheck's marketing, channel sales, and customer success teams, which should result in better operating efficiencies without increasing spending. Turning now to our third quarter results, revenue for the third quarter of 2024 decreased 1% to $4,709,000 compared to $4,760,000 in the same period of 2023. our SAS revenue for the third quarter of 2024 increased 1% to $4,661,000 from $4,635,000 during the same period of 2023 and represented 99% of our third quarter revenue. Gross profit as a percentage of revenues was at the higher end of our expectations at 91% for both the third quarter of 2024 and the same period of 2023 and is reflective of the architecture efforts even though we incurred transitional overlap in applied expense fees. Our product team and temporary contractors have worked efficiently, and they have been able to maintain recurring margins of over 90% throughout the re-architecture process. We anticipate that this project will conclude with a temporary contractor spot year-end. That being said, we will continue to closely monitor our spending with the goal to maintain or improve upon these margin levels. Operating expenses, which consist of selling, general administrative, marketing, and research and development expenses, decreased $32,000, or 1%, to $5,195,000 for the third quarter of 2024, compared to $5,227,000 for the same period of 2023. The third quarter of 2024 and 2023 included $236,000 and $342,000 respectively of non-cash equity compensation expense and non-revenue expense. Within the third quarter, we recognized $443,000 in software capitalization tied to our re-architecture efforts. Our operating expenses as a percentage of revenues increased 51 basis points against the same period of 2023. Year to date, we have capitalized approximately $1.8 million for software development. Turning to net income and adjusted EBITDA, the company's net income was lowered by $113,000 to a net loss of $837,000 for the third quarter of 2024, compared to a net loss of $724,000 for the same period of 2023. Net loss per diluted share for the third quarter of 2024 was $0.04, per diluted share compared to the same loss of $0.04 per diluted share for the same period of 2023. The weighted average diluted common shares were $19.5 million for the third quarter of 2024 compared to $19.3 million for the same period of 2023. Adjusted EBITDA, which is earnings before interest and other income, provision for income taxes, sales tax accruals, depreciation, amortization, stock-based compensation expense, and certain non-recurring charges improved by 103,000, resulting in a loss of 168,000 compared to a loss of 271,000 for the same period of 2023. Our balance sheet remains strong, and we finished the third quarter with $5.7 million in cash. We also continue to ensure we are properly managing our cash reserves, which generated $73,000 in interest income during the third quarter. Turning now to the progress on internal initiatives and looking at our sales pipeline, I'm struck by nearly all of the significant opportunities are in the financial services, social media, hospitality, and entertainment spaces. Long-term sales, marketing, and product efforts of diversifying the company's revenue mix can be seen in the pipeline itself. It is a real testament to these efforts that IntelliCheck revenue is roughly flat, while retail saw the largest number of bankruptcies since COVID in 2022, an increase in bankruptcies of over 30% compared to 2023. Unfortunately, these bankruptcies included three of our customers. Customer experience is also a dimension in which the company has made decent investments and has already seen significant progress in a short period of time. We believe that the focus on marketing ROI, the role of sales engineers, and the realigning customer experience skill sets are all coming together to improve customer satisfaction and drive additional revenues. In consideration of our end of 2024 outlook, we expect to see continued gross margins of approximately 90 to 91%, while we improve our architecture and data intelligence capabilities. With the expected winding down of R&D contractor spend in Q4, we believe that we will continue to maintain strong gross profit and gross margin costs. This also means that we may see somewhat higher non-cash depreciation costs going forward due to the amortization of these completed projects. In closing, I joined IntelliCheck because I believe that IntelliCheck will soon see real benefits from its re-architecture, sales, and marketing efforts. The company has been successfully pivoting to financial services and other verticals to diversify its revenue streams. Although this process has long lead times, I believe that it can pay off meaningfully. I look forward to sharing the story of the fruits of these labors and discussing our Q4 and full year 2024 results with all of you in March. I'll now turn the call over to the operator to take your questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question is from Scott Buck from HC Wainwright. Please go ahead.

Hi, good afternoon, guys. Thanks for taking my questions. Brian, I guess the first one, I'm curious, When do you guys start to anniversary some of those more difficult retail comps? Trying to understand when, you know, we might see some better, you know, growth on the optic side.

Hey, Scott. So happy to answer your questions. Are you saying when do we expect retail to come back? Or I'm not quite sure I understand.

When do you anniversary when the softer trend started? So the year over year comparable start to look a little bit better because that weakness is already kind of baked in at that point?

Yeah, look, I think, you know, the weakness, you know, I'm looking at the numbers, the weakness certainly didn't start in my mind until about halfway through last year. So, you know, that's why I'm looking at, you know, I should say actually, you know, even in the third quarter, you know, things have started being, been going down as soon as inflation went up. And, you know, if you're looking at now the amount of credit a lot of people are carrying, you know, there's issues there. Even something came out today that, you know, retail hiring in October was the lowest it's been in I think it was 10 years. So I think retail certainly is hurting. I'm hoping that, you know, as we see inflation dropping and other things happening that it comes back. You know, I'm looking at it. You know, hopefully I'm looking at is if I'm flying to the West Coast, it takes longer because I'm going into the wind and flying to the East Coast because I'm going with the wind. So I'm looking at something that a headwind that could become a tailwind. But, you know, what I'm happy to say is, you know, we look at the other verticals we're going into and even in some of the customers in those verticals haven't fully implemented and we know what they're going to do. I'm happy that, you know, well over a year ago, we decided to make sure that we were looking at other places that need to know that you are who you say you are. Yep. No, that makes sense.

I appreciate that. And then the second thing, I'm just curious on cash levels, where your kind of comfort is and if you have some room, whether it makes sense to, you know, put a little more money into sales and marketing to try to drive that top line if the opportunities are there.

Look, I'm still comfortable that we do not need to raise cash to run the business. And, you know, currently what we're doing is assessing where did we spend money last year on marketing that we're not going to this year. You know, looking at ROI, you know, some of these conferences have become kind of ridiculously expensive. And if we're not seeing the ROI, we're not going back. How do we tighten up our messaging? How do we get out there and do things differently than we did? And certainly, you know, reminding everybody that, you know, the partnerships that we have with EMBA and the DMVs is what makes us unique. You know, I was talking to a woman who runs partnerships for a company that does software for issuing credit. and explained to her what we do, she thought everybody was the same. And I've said this many times. One of our hardest things is getting people to realize we don't template. We don't need that picture. And that picture doesn't work anymore because AI and machine learning has made it so the bad guys have really, really good fakes. We've got something unique, and that's still what we need to get across, and we will, that you need to talk to us because we do it different than everybody else who might have a much, much larger marketing budget.

Yeah, no, that makes sense. Well, I appreciate it, guys. That's it for me. Thanks again. Thanks, Scott.

The next question is from Mike Brundle from Northland. Please go ahead.

Hey, guys. This is Logan on for Mike. Could you provide some color around how retail volumes trended in 3Q and then also what you guys have seen in 4Q so far in terms of seasonality? Thanks.

Look, I haven't looked at yet seasonality because it really picks up, you know, really right about now. You know, October is usually kind of like October. It really is what it is. But certainly across department stores, apparel stores, jewelry stores, you know, those types of things, we saw a double-digit decline in transaction volume there, which, again, I'm going to point to and say I'm happy we decided to go get other markets that aren't tied to the economy.

Okay.

Yeah, so with those new ones too, should we expect possible year-over-year growth in 4Q?

Look, that's my hope. That's my anticipation. I think it depends on when some of these big guys that we've been working on go live. You know, I still think there's going to be, in my mind, some seasonal growth because you always, you know, people will be shopping. There are some people that are hurting and there are some people that aren't. But, you know, hopefully the goal is a few of the folks that we get live do help fuel growth.

Perfect. Yeah, that's all from us. Thank you, guys. Congrats on the quarter. Thank you.

The next question is from Rudy Kessinger from DA Davidson. Please go ahead.

Hey, guys. Thank you for taking my questions. I guess first I just want to clarify on the price per transaction. You said up 25% year-to-year, 8% quarter-to-quarter. You said on new business, though. So just to be clear, was that across the board for all scan volumes, or that was – pricing for stand volumes from new logos that you signed in Q3 versus Q2 and Q3 last year?

Yeah, good question. We haven't had any of our largest clients. They're not up for renewal yet, right? It'll be year end and beginning of next year. One of the things I just wanted to make clear to everybody, because I think there was some confusion that people thought our growth was being driven only by charging existing customers more, right? So that is new business versus new business. So, you know, comparing customers that were brand new to us a year ago versus customers that were brand new to us you know, Q3. And a customer is brand new Q2 to brand new in Q3. Just to show that, you know, people are willing to pay for the accuracy that we bring to the table.

Okay. That's helpful. And, you know, I know you guys called out several, you know, banks, social media, a few customers that have, you know, low mid six figure revenue potential sounds like starting at some point next year. I guess just as you evaluate the pipeline today, what is the size of the pipe versus, you know, I don't know, one, two, three quarters ago. And are there any other large, you know, needle moving type of deals in there that could propel you back to your growth of the next one or two quarters?

I'm much happier with the pipeline today than I was, you know, three quarters ago. We are certainly talking to and in proof of concept with some clients, you know, prospects that I would consider to be needle moving. I just don't want to like, I'm a more, you know, Under-promise and over-deliver. I would rather that we get, you know, I talk to you all next call and there's more substantive things to say about it. But we certainly have people coming to us, large clients, and telling us what they have. And what they're using, you know, that templating system that just about everybody else on the planet tries to do to see if an idea is real, isn't working. And when we get to them and get them to understand we are way different than what they're doing, they want to talk and they want to get into a proof of concept. But, you know, the thing is with very large customers, sometimes it takes a while to get through the proof of concept and then to get through the security audit that they always put you through. So hopefully more to talk about that on the next call. Great. Thank you, guys.

This concludes the question and answer session. I would like to turn the floor back over to Brian Lewis for closing comments.

So, you know, thanks, everybody, for joining us. You know, as we look back on this quarter, you know, I believe we've made progress in a number of ways. You know, the reality is that, you know, retail bankruptcies, consumer pullback on spending, and certainly credit tightening, you know, reflects the state of the economy and has hurt part of our businesses. but we stayed the course and implemented what I believe to be a successful strategic plan, and that is getting into other markets. In the face of, as I said earlier, double-digit drops in the retail sectors, we're flat to slightly growing. So those new verticals are paying off, right? And our strategic vision in pursuing new directions has allowed us to achieve growth and offset this economic weakness. We believe these new verticals will continue to show significant growth opportunities in 2025. So in closing, we remain committed to revenue growth, and I will continue to work in concert with the executive team and staff to achieve our revenue goals for our shareholders and stakeholders alike. Thank you all, and have a great evening.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.