VerifyMe, Inc.

Good day and welcome to the Verify Me first quarter 2024 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. Please note, this event is being recorded. I would now like to turn the conference over to Nancy Meyers, CFO. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us today for our earnings call presentation. On the call today, I am joined by Adam Stedham, CEO and President, who will give an operations and strategic update. Following our management presentation, we will have a Q&A session. I would like to bring your attention to the note on forward-looking statements on slide three. Today's presentation and the answer to questions includes forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and on the risk factors of the company's annual report on Form 10-K and quarterly reports on Form 10-Q. I will now turn the call over to Adam Stedham for some opening remarks.

Thank you, Nancy, and welcome, everyone. I'm pleased to report that in Q1 2024, we realized an increase in year-over-year revenue and a significant improvement in gross profit, gross margin percentage, and adjusted EBITDA. It's noteworthy, this is now the third consecutive quarter of positive adjusted EBITDA. and even more meaningful, we're experiencing an increase in our sales pipeline. We previously announced that we anticipate our H2 2024 growth rate will exceed our H1 growth rate. We continue to believe this is the trend, and the increases in sales pipeline are a key enabler of that growth. Q1 2024 adjusted EBITDA did not convert efficiently into cash flow from operations in Q1, and that's primarily due to the timing of working capital items. We continue to anticipate that we'll have positive cash flow for 2024 as the timing of these items balance out and we continue to experience year-over-year growth. As a company with no net debt that is generating cash, with meaningful growth prospects, I think our current valuation represents a significant opportunity for our shareholders. At the end of Q1 2024, we had $2.8 million of cash and only $2.4 million in debt. And this includes the convertible note, which we anticipate will likely get converted into stock rather than being repaid in cash. At this point, I'll touch on our capital strategy. We continue to have our announced buyback program in place, and we continue to evaluate our strategy around repurchasing shares. Thus far, in 2024, the company has repurchased minimal shares. We continue to monitor all available options to utilize our capital to maximize shareholder value. So let's shift the conversation to our two operating segments. The Q1 2024 improvement up and down the income statement is the result of our focus on creating the foundation for the company throughout 2023. We focus on operational efficiency and our go-to-market strategy for our peri-ship business within the precision logistics segment. We vertically integrated the Trust Code technology stack with all of our existing customers in our authentication segment, as well as redefining our go-to-market strategy for both our traceability products as well as our ink products. Now, looking at precision logistics, this segment generated $5.6 million in revenue in Q1 of 2024 versus $5.4 million in revenue in Q1 2023. As we look across the marketplace, Partial shipping volumes with the major shippers are down in 2024 versus 2023. Now, we're pleased that due to multiple factors related to our differentiated offering, we continue to experience revenue growth in this environment. We believe this environment provides a good opportunity to add new customers as well as increase our share of wallet with existing customers. So as we look at the business, we had almost 3% more customers ship packages in Q1 2024 versus Q1 2023. With that said, our same customer shipping volumes were down about 2% in Q1 2024 versus Q1 2023. So therefore, we're in a market in which our strongest opportunity to grow our revenues is by expanding our customer base. So we're focusing our efforts to add new customers in the region between Maine and Pennsylvania. We added a new additional sales representative in May, and we're expected to add two additional sales resources in June. We believe our plans of expanding our sales force with a targeted geographic approach will create the most value for the company. Our successes and lessons learned from this year will guide plans related to geographic expansion in 2025. So, we're pleased with the efficiencies and improved gross margin percentages we've achieved in the precision logistics segment. But we still believe that we have the capacity to further increase our revenues without an associated increase in operating costs. This leverage should enable us to grow revenues and maintain our margin profile, even if softer overall partial shipping volumes create pricing pressure in the industry this year. Now, let me shift over to our authentication segment. After spending much of last year on internally focused initiatives, I'm pleased with the pipeline expansion in this segment. The authentication segment generated 150K in revenue in Q1 2024 versus 250K in Q1 2023. We anticipate the quarterly revenue growth for this segment to increase meaningfully each quarter of this year. We have multiple sales opportunities in the pipeline related to our new integration with Amazon transparency. We're refining our sales model and developing a better understanding of the sales cycle associated with this specific service. So we continue to believe our relationship with Amazon creates a significant opportunity to create value for Amazon, our mutual customers, and consumers of our customers' brands, and most importantly, verified niche shareholders. In addition to the Amazon relationship, we continue to see positive trends for our APAC business, strategic relationships, and in ink sales. We generated 5% revenue growth in APAC in Q1, and we anticipate continued growth throughout 2024. We're currently working with our strategic partners to define marketing plans to highlight how our technology adds value to their equipment. And then, as for Inc., in Q1, we attended the D-Scoop conference in Indianapolis. D-Scoop is the community of 16,000 Hewlett Packard industrial print and large format customers and partners. Participation in this conference is a part of the new go-to-market strategy for our ink products that we discussed with you at the Analyst Day. We believe this conference was a good success for us. I look forward to our future earnings calls and sharing details associated with converting our current pipeline into sales. We continue to also believe the authentication segment has growth opportunities related to food and agriculture traceability. This traceability aligns to the GS1 standards. So in June, the company is participating in the GS1 conference in Orlando. We believe this conference will create sales opportunities just as the D-Scoop conference created Inc. sales opportunities. So at this point, I'll turn the call back over to Nancy Myers, our CFO, and she'll provide more detailed financial information.