Intellicheck Inc Aktie

Greetings, and welcome to the Intellicheck Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kety Olson, Investor Relations Manager. Thank you. You may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for Intellicheck Second Quarter 2026 Earnings Call. Before we get started, I'll take a moment to read our forward-looking statement. Certain statements on 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 call, words such as will, believe, expect, anticipate, encourage and similar expressions as they relate to the company or its management identify forward-looking statements. This includes statements regarding the customer transition we will discuss today, the pace, extent and duration of the resulting volume reductions, whether any volumes are retained or restored and the economics of any retained or restored business, our expectations regarding future revenue, profitability and adjusted EBITDA and our ability to recover or replace affected revenue.

These 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 update or alter its forward-looking statements, whether resulting from new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained in the company's filings with the SEC. Throughout this call, we may reference certain financial metrics that have been rounded for ease of discussion. Statements made today are as of August 13, 2026. Management will use the financial term adjusted EBITDA and adjusted gross margin. Please refer to our press release issued this afternoon for further definition, reconciliation and context for the use of these terms. We will begin today's call with Bryan Lewis, Intellicheck's President and Chief Executive Officer; and he will be followed by Adam Sragovicz, Chief Financial Officer. Following their prepared remarks, we will take questions. I'll now turn it over to Bryan.

Thanks, Ketan, and good afternoon, everyone. I will say this for the first time we are doing this call live. I don't know how many people know that you can actually prerecord these things and make yourself sound pretty smart because you don't mess up. So if I stumble I hope you all will understand why I like just talking. So a couple of things. Our diversification strategy now in its second plus year of execution, continues to produce results in the second quarter. It's the operating discipline behind that strategy has generated 4 consecutive quarters of profitability Revenue for the second quarter was up 7% versus last year and up 16% year-over-year. Gross margin came in at 91% and adjusted EBITDA was positive for the fifth consecutive quarter. These results were generated despite the same macro challenges we described last quarter, persisting through the second quarter and continuing to weigh on our retail automotive and title insurance verticals.

So let me start with the hard things, and then I can move on to a great things. As you all know from our historical filings, we often talk about customer concentration, question I get all the time. A customer that represents about 29% of our revenue in the first half of the year recently informed us that as part of a broader vendor review looking across all vendors, departments and use cases, not just IDV so they can evaluate redundancy, ensure there is no single point of failure internally and as a result, they are currently evaluating a multi-vendor IDV approach that is expected to negatively affect our transaction levels with this customer. I want to emphasize the word of valuation that is their word, not mine. As of today, I can say that the traffic shift is nowhere near the extent they said it would be. And additionally, to use the client's own words, this is being driven by not being single threaded to any 1 vendor. And this is their words. This is what they told me, not driven by a flaw in our system and on a sentence on how we perform.

I can also say they recently signed another purchase order. They have also indicated the intention to transition to our newest API, which will give them access to many more of our risk signals to detect fraud, but we believe this reflects recognition of the broader capabilities we can provide and the opportunity to further expand our support of their needs in the longer term. Again, we believe if you add all the things we do in the digital world to what I believe is a gold standard in document verification, great things happen. So I want to be direct, and I remember my very first earnings call as a CEO when I was direct and reset expectations. I got a lot of angry calls. But one of my favorite quotes from the bible is the truth shelf set you free, the truth is this is an evaluation in their words, an evaluation, a new purchase order has been signed.

Volumes have not been down to the level they indicated sometimes corporate strategies call for an evaluation. I look forward to this evaluation. And I want to frame this correctly. This reflects a change in the customer's strategy, not a verdict on the accuracy of our results. Intellicheck remains the gold standard in identity verification, sub-second 99% barcode level decisioning that no competitor can replicate because of our exclusive long-standing DMB relationships. Some customers may choose a valuation or adopt other products based on their own goals. That's their prerogative. It does not change the accuracy gap between our platform in any alternative.

So let's move on to what I would call great. Q2 revenues grew by 7% sequentially, and we expect that underlying growth continue, thanks to the consistent and deliberate customer diversification we've built and our strengthened balance sheet with $11.8 million in cash and no debt. Let me now walk through progress that we're seeing across each 1 of our verticals. The banking and lending vertical remains 1 of our core focus areas, particularly with medium and smaller organizations. They are far easier to integrate and get running the large organization. I'm very happy with the delivery mechanism of our platform that we call desktop. It is a no integration required method. We've signed 3 new clients and are in discussion with several others.

It is our belief that this will add significant growth at a faster pace than landing the whales. I will also point out that we continue to wallet. I also believe there was some confusion about hardware during the Q&A on our last call. If our clients choose to upgrade their scanners, they may have a sourcing problem not us. I will say we have helped our clients find sources for scanners and have sped up the acquisition for them. So retail remained about 26% of Q2 revenue. This quarter, retail revenues were down approximately 2% compared to the same period last year. Any improvement here is consumer sentiment as it stabilizes, will be an incremental upside for us.

In the title market, our direct client relationships still represent an estimated 43% of the market. Mortgage loan origination in Q2 were up 14% year-over-year, and we benefited from this trend. When interest rates will, and I hope we all agree, eventually fall this market should become in our belief, a significant tailwind. Momentum has continued across our emerging and adjacent verticals as well in cargo and freight, our nationwide rollout with our food manufacturer client already in a low 6-figure annual contract value is expected to grow. The roughly $300,000 average loss per truck stolen proves this is a good market for us.

I'm also excited that this client continues to introduce us to other manufacturing and shipping companies. In manufacturing, we continue to see major clients who use us to keep their assembly lines rolling. Our age in stadium and venue concessions, we see somewhat increased revenue over the same period last year. Most of that again is in college and university stadiums. Our age verification verticals in our background check verticals saw some volatility on their smaller basis of revenue. In automotive, scanning volumes at our dealer clients and via our channel partners have been trending lower, but we anticipate that trend reversing. Car sales figures for the quarter overall were roughly flat nationwide.. One consistent question I get a lot relates to the social media vertical and the activity of a large global customer within that vertical. And again, in the interest of full disclosure, I will tell you, they are back.

They have fixed their image capture issues, and we can process from the data we are seeing over 99% of the data they are sending us. They are actively engaged and I will be meeting with them in person in the coming weeks. What this means in terms of volumes, I cannot forecast. But the recent discussions, even the ones I was having over this weekend have me excited. I will reiterate that we have no revenue from them in our current forecast. As I learn more, and I hope you will all understand my honesty. I will keep you informed. Before I hand the call over to Adam, I want to emphasize that rising fraud activity makes our differentiation more valuable, not less. Synthetic identity fraud overall is up 300%, and deep fake driven fraud is up over 1,000% according to multiple studies and it shows no sign of slowing down. Fraud prevention is not optional, spending for any industry, which is why I like where the company sits.

We are seeing new markets come to us as fraudsters increasingly target new channels, creating additional opportunities for us to address. What many companies rely on a visual review of a license or a template check, which is what our competitors offer does not adequately address these sophisticated fakes. That is where our technology stands apart. We want to assure our employees, customers, shareholders and all stakeholders that Intellicheck is dedicated to exceeding expectations and expanding our leadership position in the rapidly evolving industry of fraud prevention. With that, I'm going to hand it over to Adam to walk you through the quarter and financial details.

Thanks, Bryan. The vendor resiliency initiative at our customer that Bryan mentioned, commenced in late June and early July and did not materially affect our results for the 3 or 6 months ended June 30. We Revenue for the second quarter was $5.9 million and SaaS revenue comprised substantially all of total revenue. Operating expenses were $4.9 million, down 1% from a year ago. We earned $573,000 from operations and $633,000 of net income. Adjusted EBITDA was $1.1 million, our fifth consecutive positive quarter.

For the 6-month period, revenue was $11.5 million, net income was $1.3 million and adjusted EBITDA was $2 million. Cash from operations for the first half was $2.2 million, Accounts receivable was $2.7 million, down from $3.4 million at year-end 2025. Deferred revenue was $1.2 million. We will be disciplined on cost while continuing to invest in engineering to enhance our offerings and maintain industry-leading accuracy. We will also invest in go-to-market initiatives to increase market share, expand within existing customers, win new customers and grow through channel partnerships. We ended the quarter with a strong balance sheet with $11.8 million in cash and no debt, no plans to raise capital in the near term.

We expect cash generated from operations to decline slightly in 2025 and we expect to use some cash in operations in future periods. Some of that is timing rather than performance. A portion of our customers' fees have historically been invoiced ahead of usage. So the cash conversion declined faster than the reported results. as we recognize that balance. We expect that we'll generate positive EBITDA in the second half of this year. We also expect to be profitable for the 2026 fiscal year on a GAAP basis. Assuming the customer that Bryan reference completes its plan as communicated and as we noted in the 10-Q, we have not seen that level of volume reduction. We would expect total revenue for 2026 to be slightly lower than 2025. With that, I'll hand the call back to Bryan.

So before we go to questions, let me leave you with this. Our pipeline in desktop in our channel partners across multiple industries and among smaller institutions is where I'm very happy to see growth come from. We've rebuilt this revenue base before. Retail went from 55% of our revenue, and it's peaked about 26%, and banking continues to grow and that does not change. Our core differentiator of gold standard barcode level decisioning is durable and it gets more valuable, not less as AI gets more intelligent. So I stand behind this business, our people, our product -- what we do, and I will say this every single day, I love looking at the number of people that I stopped being -- and I shouldn't say I, we, as a company, stop being victims of crime. So with that, operator, I'll turn it over for questions.

[Operator Instructions] Our first question comes from the line of Rudy Kessinger with D.A. Davidson.

And appreciate the candor on the call and obviously the pro situation with your largest customer. What it, Bryan, like with this customer where they are evaluating alternatives, is that across all use cases you currently serve them for? Or is it for some use cases? I'm trying to get a sense like is that full 29% of revenue potentially going to be disrupted or at risk? Or is it only certain use cases?

I'm going to tell you this. It is cross not just us, it's everything that they do. And I will also say that they are changing what they say, almost minute by minute in terms of what we expect. So it puts me in a way in a hard spot because I can't give like I don't know. The -- we got an update from them literally an hour ago. So I don't know. -- when a company has a merger, things happen. And I can't say, yes, no or to anything. So it puts me in a tough spot, you in a tough spot. And I'm just saying that I believe and I'll use all those terms, right? I believe, we believe they understand we're the best at stop in their fraud. So that's about as much as I could say Rudy .

Okay. Got it. Okay. And I guess you had mentioned they had just signed a new purchase order that indicate you're very much so going to be in the mix. I guess with respect to what they did communicate to you as far as how much you should expect to see transaction with down. Did they indicate they might go down 25%, 50%? Like what's the kind of range that they communicated.

Honestly, like the honest way I can answer that question is that it's nowhere they gave us, I'll say, this kind of like a doomsday scenario and they are nowhere, and it is -- and Adam, please jump in here, but the purchase order they gave us will not support them for very long in a way, it's like 1 of their normal purchase orders because their volume is still so high that unless something drastically changes, they're going to have to do another purchase order. Adam, would you agree?

Yes, I would agree and I just sympathize with Rudy and our other folks following because if you look in our Q, and I know you guys haven't had a lot of time to look at it, but if you look in the notes, and -- we do talk about what the customer said would happen. We are on this call today halfway through the quarter and 6 weeks after the June 30 date, not seeing what they told us right? So we're in this never Nomad plan. of trying to tell you guys what we see and what we expect. What do we expect? We probably expect if it continues in the way that it is right now, that, that revenue in 2026 would be higher than 2025, but it's early days, and it's very volatile. And it is substantially all the use cases. It's not all of them, but it's substantially all where the volume is. And we just -- we wish we had more details to share with you.

Adam and I were talking about how we need higher blood pressure medication because these guys are up and down and up and down in terms of what they're telling us Yes.

Got it. Okay. And last 1 for me. I know there's going to be a lot more questions on this specific customer. So I want to maybe ask this is something else. The Banking and lending 48% of revenue -- what was the growth rate on that total vertical year-over-year? And then you also mentioned the rest of your customer base, excluding this 1 customer, 19% revenue growth in the first half. I just wondered again house cleaning clarify, was that 19% year-over-year growth first half '26 versus first half '25 for the rest of the base ex that customer? Or just if you could clarify that, that would be great. .

I think the first 1 there, really with the banking being about 40% of revenue in the second quarter in 2025. So it's a shift of the pie from, let's say, 40-ish percent to about 48%. And then growth of 19%, I'm assuming, is -- I mean I think, Bryan, it's fair to say that that's pretty broad across

Yes, -- it's across Yes, all verticals. .

Our next question comes from the line of Jeff Van Rhee with Craig Hallum. .

This is Vijay on for Jeff. First kind of question here, just as I'm trying to think about this large customer, in general, you kind of have 2 other large customers that you call out in the Q. Is there any sense that those customers are using you in a sole source capacity and they might eventually take on more vendors? Or is this kind of a one-off situation?

In my opinion, it is a one-off that I'm not quite sure people are happy with where they're at, and I think it has to do with the merger. The rest of our customers I have been at 1 of what I think will end up being 1 of our largest customers in their offices 4 times in the last month. And they tell us that their goal is to do more with us. And so I look at this as companies will do what companies do when they want to put strategies in place. Our other customers are telling us they want to do more with us. Now what does that mean? I can't say, I am not going to put out any projections or any of that kind of stuff. But when you've got some pretty cool regional banks wanting us to come visit them every week to talk about how we can do more and help them I think that's telling about what our company does. .

Yes. Absolutely. And kind of on those -- that banking and lending section, you said, I think it was 48% of Q2 revenue. Just based on the current kind of growth rates, what could that get to as a percentage of total revenue? And do you at all worry maybe less about customer concentration, but a little bit more about industry concentration, maybe being beholden to some of the macro trends there? Or does that not really worry you?

I'm not so worried about macro trends when it comes to banking because people have to bank, right? So the way that I'm looking at this and particularly where I live. There's 10 banks I never heard of in my life. They all have fraud right? And I guarantee almost everybody on this call will have some little bank they never heard of outside their area. They all need us. And that's kind of the cool thing that we're going after because they're simple to install. And they might have 10 branches where they might have 177. And so that's why I really like going after the banking sector because -- and like just weird stuff that I learned as I'm going along -- in South Carolina, if you have a HELOC, it's public information, South Carolina and Georgia. And people are going in and know you have a HELOC that you've not taken money out of and they're going to try and steal your identity to get like $45,000 out of a bank. We stopped that. So like that's -- I think that's the cool stuff that we do.

Yes. Absolutely. And then just kind of last 1 for me. I was wondering, moving to kind of the competitive landscape, if you might provide some of the kind of nuances between you guys and Socar, I've seen their name kind of popping up a little bit. And I was wondering just if you could provide what you do to be better or what the differences are?

In my opinion, -- so cure is much more an orchestration layer than they are doing IDB. So cure, in my opinion, is doing what I would call templating. So does it look like the real ID and I want to be careful on how I use that word real ID because real ID just means you have a star in the upper right-hand corner, of the license. So what I'm saying is, does it look like an authentic license. We do something very, very different. And I tell everybody on the planet don't believe me, go Google dl/idcard verification program. and you will see what we do with the DMVs. And it's a very, very different thing. .

Our next question comes from the line of Mike Grondahl with Northland.

This is Logan on for Mike. Brian, I really appreciate the color and being straightforward in the prepared remarks. First 1 from us. Could you maybe just provide us some insight into this evaluation process as you called it, if it started, when it started and any insight into how long we could expect it to last.

They're trying to set up a call with me and Sandra in just a couple of weeks. .

And that will begin the evaluation process?

No, no, no. Look, the evaluation process was supposed to start, didn't go didn't go in my mind as fast as they thought it would. Again, my opinion. And Adam jump in if I'm saying things I probably shouldn't say, but in my opinion, yes. In my opinion, and I'm sure the lawyers have love that I said my opinion, it isn't working. So we don't know. But we will know in short order. And I think I think that most people who know me and Adam will know that if something significant comes out that is negative, we will 8-K it.

Just answer correctly, we did disclose in the Q, we talked about how we heard about this sort of at the very end of in the second quarter, and it's basically supposed to be a third quarter evaluation project. It has not gone as quickly as they said, and it has not resulted in as much volume shift, as they said, the reason for that are opaque and mysterious to us. We can sort of only guess, but we certainly see them in an environment where the merger weighs heavy on them. then the resiliency as we laid out a lot of that stuff in the queue, but there's a lot of factors and a lot of things going on. So we're doing our best to try to keep you guys informed.

That's very helpful. We appreciate that color. Then 1 more from us. Just looking at the other side of operations. Can you maybe provide some more color on the 3 new banking and lending clients you guys signed and the several additional opportunities currently in discussion that you mentioned in the paired remarks. Just trying to think through about how do growth balance growth between existing and new logos, that's what we're thinking about.

Well, look, my thing is like I don't want to say beat my team up, but I do like new logos. And what I believe is that with this new delivery mechanism that doesn't require major integration, we will get a lot more of the smaller banks, right? And when I say smaller banks, like 1 of the things I said earlier, it could be 15 or could be 170 branches -- there are fraud rates. I look at the fraud rate between some of our very small saving and loan customers and the fraud rate across our largest banks, the percentage fraud is the exact same. So they need us as much as anybody else. And they generally don't have the same issues of 80 million people, people needing to be on the call, right?

I laugh -- and I've said this probably on some of these calls, and I'd certainly tell it to clients. But when we were integrating 1 of our largest customers, we would have a weekly phone call with them. They had 102 people on that call. So you understand how it's like almost dealing with the federal government. It takes a really long time. But when you get a bank that maybe only has 100 branches, and they're going to pay more per transaction than somebody who's doing a ton more branches, a ton more transactions like I'd rather get them. And sort of that's where we want to make sure that we are looking at where do we go.

And we have reached the end of the question-and-answer session. And therefore, I will now turn the call back over to CEO, Bryan Lewis, for closing remarks.

No. All right. Thank you all. And thank you all for your time today. I truly appreciate people wanting to be on the call. I want to hear what we have to say. And so I'll say this in closing. We are laser-focused on execution. All right? And here's what I want to leave you all with. We are a fraud prevention company that also speeds up the acquisition of good customers, right operating in a world where fraud is exploding and the fraud is getting more sophisticated by the quarter. And AI, everybody asked me about AI. I think AI is going to hurt the folks, the people believe we compete with more than us, right? We changed our customer mix. .

We've rebuilt before when I started, this place was a bit of a mess. And the other thing is we've got $11.8 million in the bank and no debt. That gives us the room to go out and grow revenue on our own terms, funded by our own balance sheet, and we're going to do just that. So we look forward to updating you on the progress I'm looking forward to meeting with additional clients and seeing what we can do with some of the folks you've always been asking me about. And I think we've got good sunny days ahead of us. So thank you all. Have a great evening

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Greetings, and welcome to the Intellicheck Q1 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, Gar Jackson of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for Intellicheck's First Quarter 2026 Earnings Call.

Before we get started, I will take a moment to read our 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 call, words such as will, believe, expect, anticipate, encourage and similar expressions as they relate to the company or its management identify forward-looking statements. These 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 update or alter its forward-looking statements, whether resulting from new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained in the company's filings with the SEC.

Throughout this call, we may reference certain financial metrics that have been rounded for ease of discussion. Statements made today are as of May 12, 2026. Management will use the financial terms adjusted EBITDA and adjusted gross margin. Please refer to our press release issued this afternoon for further definition, reconciliation and context for the use of these terms.

We will begin today's call with Bryan Lewis, Intellicheck's President and Chief Executive Officer. He will be followed by Adam Sragovicz, our Chief Financial Officer. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to 1 hour, and I will now turn it over to Bryan.

Thanks, Gar, and good afternoon to everyone, and thank you for joining us today. I'll start by doing something I always try to do, be direct about what drove the quarter, which was impacted in part by the macro environment. Then I will get to the numbers that showed significant EBITDA growth, marking our fourth quarter in a row of positive EBITDA and our third quarter in a row of positive net income.

The first quarter of 2026 played out against one of the more challenging macroeconomic backdrops that we have seen in several years. The military conflict in Iran, which intensified in the first quarter, created a genuine economic ripple effect across virtually every sector of our economy. Oil prices surged, pushing gasoline prices toward $4 and above in many markets. This is one of the factors that impacted consumer confidence and consequentially affected our retail customers.

Additionally, as evidenced by reporting on multiple news outlets, mortgage rates climbed to their highest levels in 7 months as financial markets absorbed the geopolitical shock. And consumer confidence, which I just noted was already trending in the wrong direction, deteriorated further. And inflation, which had appeared to be normalizing at around 2.4% early in the quarter, reaccelerated sharply to 3.2% year-over-year in March.

For Intellicheck specifically, these forces created headwinds in 3 of our verticals. In retail, that is now approximately 30% of our revenue, consumer belt tightening continued to weigh on transaction volumes. Our retail clients scan fewer IDs when foot traffic declines, and foot traffic clearly slowed in Q1 for our customers as consumers pulled back in addition to the normal Q4 to Q1 holiday decline.

In automotive, U.S. auto sales are estimated to have fallen 5% to 6% year-over-year in Q1 as high borrowing costs, record vehicle purchases and economic uncertainty kept buyers on the sidelines, impacting scanning volumes at some of our auto dealer clients. On the title insurance side, the combination of rising rates and geopolitical uncertainty slowed mortgage origination activity.

Despite all of these economic factors, I am pleased to report that Intellicheck continued its growth trajectory with growth of approximately 13% year-over-year. I believe this underscores the wisdom of our decision to expand into other verticals. Our first quarter revenue was approximately $5.5 million versus $4.9 million in Q1 2025. We delivered adjusted EBITDA of $935,000, representing a margin -- EBITDA margin of approximately 17% versus our adjusted EBITDA of negative $17,000 1 year ago. This marks our fourth consecutive quarter of positive adjusted EBITDA. This is a milestone that I believe speaks directly to the operating leverage we have built into this model. We had earnings per share of $0.03, marking our third quarter in a row of profitability and ended the quarter with over $10 million in cash and $0 debt. I will tell you, delivering 13% revenue growth in this macro environment with 17% EBITDA margin is something I am generally proud of.

Now let's walk through our vertical performance. Banking and lending remain our core growth engine and represented over 50% of our quarterly revenue growing strongly in Q1. This mix shift has fundamentally changed the resilience of this business. Our largest regional banking client with a 3-year contract valued in the very high 7 figures is now fully implemented throughout all their bank branches. Their team is not just ramping volumes. They are in active conversations with us about expanding the use of Intellicheck's technology in additional use cases and departments.

The ROI and fraud prevention at these banks is not subtle. Account takeover losses average approximately $2,300 per incident. Some clients tell us they experienced monthly fraud losses north of $40,000 before they implemented Intellicheck. The payback on our technology is often measured in days, not months. And in addition to stopping fraud, we also help them onboard good customers faster, a significant and valuable attribute that I believe is frequently overlooked.

Beyond our major bank relationships, our new desktop delivery method is opening meaningful new doors with smaller banks and credit unions. This clearly reflects the benefits of our desktop delivery of our core services. This delivery service requires no integration with the bank's core platform and implementation is immediate. You may recall that credit unions and smaller banks have historically been hampered by long technology integration queues with their core technology providers. I am pleased to report that we are seeing strong inbound interest for our desktop product that is designed to address this issue. We believe this product has the potential to materially expand our addressable market without requiring a third party to facilitate the growth. Implementing this desktop technology, we have signed 3 new clients with several others in review. While these are smaller deals, they can get up and running quickly.

That being said, bank platform partnerships are also very important. I'm also excited to share that our new partnership with Alloy is starting to generate early traction. Our partnership here is a valuable one given it is one of the leading identity and fraud prevention platforms in the banking and fintech space. Their customer network is substantial. We believe being embedded in our platform significantly reduces buying friction for institutions already operating within the Alloy ecosystem. These kinds of strategic partnerships are an important element in how we grow this component of the banking vertical from here.

Retail represented approximately 30% of 2025 revenues, and as I discussed earlier, was certainly challenging during the first quarter. We saw year-over-year declines in scanning volumes that was similar to the sequential period last year, and we believe that it is entirely consistent with the consumer confidence and macro headwinds I described. Through our active diversification efforts, we are no longer dependent on retail for growth. If consumer sentiment improves as the macro picture settles, any recovery in retail volumes will be an incremental upside for us.

Also, as I previously discussed, our title insurance vertical was impacted in Q1 by the mortgage rate environment. However, I want to call out a milestone that I am genuinely excited about. First American Title successfully launched their digital e-commerce identity verification capability in Q1. You may remember, we told you this was coming on the last quarter's call. This is a meaningful expansion of how our technology is embedded in their platform. It is exactly the kind of deepening of the relationship that drives long-term value. When rates normalize and real estate volumes recover, we believe this vertical has substantial upside potential.

We're also seeing growth in our other verticals. Our age-related and background check verticals continue to grow steadily. The nationwide rollout with our food manufacturer client addressing cargo freight fraud is showing good progress as well. That account is now running in the low 6-figure annual contract value range. Additionally, our foreign auto manufacturer clients and their supplier networks continue to expand. In the stadium concessions market vertical, we added a few additional clients, although these are starting at very low volumes. While this remains a long-term opportunity, we are building the foundation for further growth.

On the product and technology front, our team continues to execute at a high level. As I shared with you, our desktop application is gaining solid traction. We are also seeing progress with our mobile SDK, hub reporting console and portal delivery method. As a reminder, our customers like our hardware-free solutions that are quick and easy to implement.

And here's the thing I keep coming back to. Our core differentiation is unique and it is durable. We can verify the authenticity of a government-issued ID in less than a second with 99% decisioning. We do this by checking against the exact bar code specification embedded by each state DMV at the time of issuance. Keep in mind that no competitor has access to these specifications. This is because we continue to be the trusted test lab for state DMV systems, a relationship we've had for more years than I can count.

This exclusivity is key as we see threats continue to evolve at an extraordinary pace. AI-generated fakes are becoming more sophisticated every quarter, which I believe will become an increased problem for our competitors. Synthetic identity fraud skyrocketed 300% in just the first quarter. Deepfake-driven fraud was up over 1,000%. Visual template checks, which is what most of our competitors rely on, cannot stop these fakes. We can. That is not going to change, and it gets more valuable every year.

Our marketing initiatives are continuing to make a difference as they continue generating lead activity. The agency we brought on board is sharpening our messaging and building brand awareness. Our IDN threat report has been an effective thought leadership piece across banking, title, automotive and the cargo freight audiences. This original data documenting the fraud trends we observed in 2025 positions us as a credible source of industry data and intelligence. Our podcast content, white papers and industry conference presence continue to build Intellicheck's brand as the definitive authority in real-world ID verification.

In closing, I'm continuing to be mindful as to how 2026 is unfolding. Clearly, the macro environment remains uncertain. The Iran conflict, elevated interest rates and consumer caution are real factors that will continue to influence some of our verticals in the near term. We are watching that carefully every day.

But here's what gives me added confidence. Our banking and lending vertical is driven by fraud prevention. This is mission-critical, nondiscretionary spending for every bank and credit union we work with. This category does not soften in a difficult economy. If anything, it becomes more urgent. Keep in mind, this is now more than half of our business. We believe that we have opportunities to continue growth with our existing clients in addition to signing new clients.

We believe that we are at the inflection point in our business model to profitability. At our current run rate, virtually every incremental revenue dollar flows meaningfully to the bottom line. We have over $10 million in cash, no debt and a product that we believe genuinely cannot be replicated. Without providing formal guidance, we believe EBITDA margins will remain positive, and we see potential acceleration in the back half of the year. Looking forward, we believe that we are well positioned to deliver positive net income for the full year 2026. This would be a significant milestone for this company.

We also continue to advance our Investor Relations initiatives and expect to participate in a number of upcoming investor conferences, including the Sidoti Microcap Virtual Conference next week. In June, we will be participating in the RBC Financial Technology Conference in New York, the D.A. Davidson Conference in Nashville and the Planet MicroCap Showcase in Las Vegas. These events provide valuable opportunities to further expand awareness of Intellicheck and communicate our strategic priorities and long-term growth objectives. In addition, they provide valuable platforms to keep you, our shareholders, informed while at the same time engaging with the broader investment community.

The headwinds we faced in Q1 are real, but so is the trajectory we are on to maintain and expand profitability. We are a fundamentally different company than we were 24 months ago, and I am confident in where the business is going. Now I will turn it over to Adam.

Thank you, Bryan. We are off to a strong start in 2026, and I want to take a moment to put that in context. Bryan described the macro backdrop and against that backdrop, I'm genuinely pleased with what we've delivered.

Total revenue for the first quarter of 2026 increased $630,000 or 13% to $5.524 million compared to $4.894 million in the first quarter of 2025. SaaS revenue grew $646,000 or 13% to $5.514 million from $4.868 million in the same period of 2025. The growth was driven especially by financial services and banking, where identity fraud pressures remain elevated and customers continue to deepen the use of our platform.

Gross profit as a percentage of revenues was 91% in the first quarter of 2026 compared to 89.7% in the first quarter of 2025, a 130-basis point improvement. On an adjusted basis, excluding noncash amortization of capitalized software costs, adjusted gross profit margin was 93.4% compared to 91.8% in the prior year period, representing a 160-basis point improvement. Both measures reflect the continued operating efficiency we have achieved with our cloud infrastructure.

Our cost of revenue, excluding amortization, was $362,000 in Q1 of 2026, down from $399,000 in Q1 of 2025, even as revenue grew 13%. Noncash amortization allocated to cost of revenues was $137,000 in Q1 of 2026 compared to $103,000 in Q1 of 2025 as previously capitalized software development costs continue to amortize through the income statement. As we noted on our last call, our capitalization of new software costs has declined to near 0 levels, which means this amortization headwind will diminish over the next several years as earlier vintage capitalized assets roll off.

Operating expenses decreased $257,000 or 5% to $4.483 million in the first quarter of 2026 compared to $4.740 million in the first quarter of 2025. In 3 of the past 5 quarters, including the last 2, operating expenses have declined year-over-year, while revenue grew at double-digit rates. SG&A expenses decreased $211,000 or 6% to $3.242 million compared to $3.453 million in Q1 of 2025. The reduction reflects continued discipline across personnel costs, marketing spend and professional fees. R&D expenses decreased $46,000 or 4% to $1.241 million from $1.287 million in Q1 of 2025. I would note that R&D costs are now almost entirely cash expenses given the near elimination of software capitalization. The GAAP number and the cash number are effectively the same, which makes our R&D line more straightforward to interpret than in prior years.

As a result of these dynamics, we reported operating income of $542,000 in the first quarter of 2026 compared to an operating loss of $348,000 in the first quarter of 2025, an $890,000 year-over-year improvement at the operating line. Other income was $94,000, primarily consisting of interest earned on our cash balances compared to $30,000 in the prior year period. The increase reflects both the higher average cash balance we carried and favorable short-term rate positioning.

Net income for the first quarter of 2026 was $636,000 or $0.03 per diluted share compared to a net loss of $318,000 or $0.02 per diluted share in the first quarter of 2025, a swing of nearly $1 million year-over-year. This marks our third consecutive quarter of positive net income. The weighted average diluted share count was 20.9 million for Q1 of 2026 compared to 19.8 million for Q1 of 2025.

Adjusted EBITDA for the first quarter of 2026 was $935,000 compared to a loss of $17,000 in the first quarter of 2025, representing a year-over-year growth of $952,000. This is our fourth consecutive quarter of positive adjusted EBITDA. And I want to remind everyone that Q1 is seasonally our softest quarter given the absence of a certain holiday retail uplift we see in Q4. To put that in perspective, 1 year ago, we were essentially at breakeven on an adjusted EBITDA basis in Q1. This quarter, we generated nearly $1 million and delivered an adjusted EBITDA margin of approximately 17%.

Depreciation and amortization was $193,000 and stock-based comp was $200,000 in Q1 of 2026, consistent with recent trends. For the first quarter of 2026, we recognized no income tax provision. We continue to carry a full valuation allowance against our net deferred tax assets of approximately $6.7 million, which GAAP requires as long as our 3-year cumulative taxable income position remains negative. As I mentioned on our last call, the prior year's losses keep that cumulative test negative for now, but the window is improving as each profitable quarter is added and loss periods roll off.

At March 31, 2026, the company had cash and cash equivalents totaling $10.062 million, an increase of $412,000 from $9.650 million at December 1, 2025. The first quarter is typically a period of cash usage given the seasonality of our business, so generating operating cash flow of $444,000 in Q1 is a strong result. We have no outstanding debt, which means our balance sheet is entirely equity and business financed. Working capital at March 31, 2026, was $11.119 million. Total assets were $27.109 million and stockholders' equity was $21.533 million.

Accounts receivable grew to $5.740 million at March 31 compared to $3.365 million at December 31. This increase is largely a timing artifact of our Q1 billings pattern. Annual contracts that renew in the first quarter generate substantial invoicing in the first weeks of the year with collections sometimes completing in Q2. Our allowance for credit losses remained stable at $157,000.

Our capital requirements remain modest. Capital [indiscernible] only $33,000 in Q1 of 2026. Our product improvements are expensed as incurred rather than capitalized and our infrastructure runs on major cloud platforms rather than owned hardware. We are encouraged by how the year has started. The combination of consistent revenue growth, improving margins and the first profitable Q1 in company history tells us that the operating model changes we've made are working.

Looking ahead, we expect gross margin profile to remain in the 90% to 91% GAAP range with adjusted gross margins continuing to run the 92% to 93% range. The noncash amortization of capitalized software costs will remain a small headwind in the near term, but will diminish over time. On the expense side, we remain committed to growing operating expenses at a rate below our revenue growth rate. That discipline is what drives the operating leverage we are seeing.

Finally, I want to briefly address capital allocation. Our cash position gives us flexibility. We are investing in the business, especially in marketing and sales capacity, customer success and in product at a level we believe is appropriate given our growth targets. We will continue to regularly evaluate how to deploy that capital in ways that create long-term value for shareholders.

I'll now turn the call over to the operator for questions.

[Operator Instructions] And the first question comes from the line of Mike Grondahl with Northland Securities.

For the retail vertical, do you guys have what revenue was 1Q '25 and 1Q '26?

Good question, Mike. I didn't run those numbers, but it roughly runs in line with, obviously, transactional volume, which was -- if you remember, generally, we drop at least 10% Q1 to -- I'm sorry, Q4 to Q1 just for the seasonality of the holidays. And we still have 2 of our major clients who have a lot to do with retail who are not on a straight-line revenue model yet. So they saw the seasonality, but we did see, I'm going to say, another good 5% to 10% drop, which I'm going to say is probably economic factor.

Got it. Got it. And then any trends you're seeing on pricing or transaction volume overall?

So that is -- so pricing, we continue to see upticks in pricing. And I think it's also very much dependent upon the market. Again, if you think about our largest clients all renewed last year, and they go into 3-year contracts with CPI kind of adjustments every year. But in the new markets that we're going to, we continually are able to show pricing power. And those new sales are moving up. And we're also really starting to price a lot of things that we're changing is minimum to play.

Again, one of the things we look at is, for example, the suppliers to some of the automotive companies that we're dealing with, it's like, look, we're not going to deal with you without paying X, right? And that means the price per transaction is relatively high, but we're saying we need to do that to factor in what it costs to support you. So overall, we're seeing what I feel is people are understanding that we are a differentiated product that deserves a premium because, again, I've said this a million times, just about everybody else does it the same way. Take a picture, compare to a template. They do not have the authoritative data that we have on the barcode, and that deserves a premium.

The next question comes from the line of Rudy Kessinger with D.A. Davidson.

So with the kind of headwinds to the scan volumes in a few of your verticals, just -- if we operate under the assumption that those persist in Q2 and likely throughout the second half of the year, how should we think about your potential growth profile throughout the rest of the year?

Look, I'm just going to go back to some of the numbers that we did. We still grew 13% year-over-year. And I think that has to do with other verticals that we're bringing in. I'd say the desktop delivery method is opening new markets. And it's not just banking. I mean it's -- desktop is working in the background check part of our business. It's working in the cargo part of our business because those folks generally don't have big IT staffs and they don't need it. They can get centralized reporting and instant implementation. So I think our expansion into new markets and expansion into new delivery methods is going to allow us to have continued growth throughout the year.

And then the other thing that I'd say is that -- and I'm sure maybe your macroeconomic guys have a good idea of where things will go. But what we talk about a headwind, and we've seen it, right? When the market got good, all of a sudden, we had a tailwind from those markets. We are -- our customers continue to expand and bring on new retailers. However, until consumer confidence gets up there, and I think interest rates go down -- we've got some of our credit card customers are up around 35%, 39% on interest rates. That bumps people up. Now when that changes, I think it picks up. And in a way, just through being good stewards of our customers and the business that they're bringing in, that's a massive tailwind. So I'm happy with what I'm seeing in terms of pipeline, sales progress and then keep that going plus hopefully, the economy turns around in short order. I'm excited.

Okay. Got it. And then talk to me about the pipeline. What does that look like both from a new logo standpoint? And then also, do you have any of your large financial customers that are set to renew this year? And if so, any expectations for expansion on those contracts?

So the majority of our large customers renew on our contracts. One of them is still in the kind of buying buckets, and they are expanding because they have been bringing on new retailers. One of the things that I like about them is part of the way they win business away from their competitors for credit card programs is they can offer better rates, and we know this because we've been on some of their sales calls, offer better rates on the program if they implement Intellicheck, which does 2 things for the retailer, lower rates and faster adoption of customers. So they've been bringing on more clients. So that's why part of what they've been doing is it has been expanding with us. And generally, every year, they think they buy a bucket that's going to last them the year and it never does.

So overall, anybody that's big is locked in and/or growing. And then from the pipeline standpoint, like we said in the prepared remarks, I'm very, very happy with what the marketing crew we brought in have been doing. Really good leads, new RFPs that probably we would not have seen before. I'll be quite honest, through some banking relationships, we're getting introduced to new customers that -- or new prospects, I should say, that they know could use our product. So all in all, I'd say good team, good prospects and really good customers.

The next question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group.

A couple for me. First, maybe just in terms of the quarter, how did they play out monthly? It feels sort of normal. January, February fell off. March, it got ugly. Just kind of curious, I mean, obviously, we're out into May, now you're well into Q2. Just kind of curious how each of those months has strung together. Have we hit a bottom? You've got pretty good visibility through the scan volumes. Just any commentary there on a more of a real-time month-by-month basis?

I'd say that banking was growing, retail was -- and when I say retail, consumer credit. The credit cards in that regard were lower than we've seen in previous quarters. Again, I think that has a lot to do with consumer confidence certainly picked up more when the whole Iranian conflict kind of got heated up. And I think the price of oil, which runs everything went up, offset a little bit by bringing on some new customers or existing banking clients expanding their usage and their volumes. I think you can look at the numbers. I don't think consumers are any more positive in May than they might have been in March or April.

Should we think then -- I mean, if I look at the last 3 years, I think your average Q1 to Q2 sequential growth is 5%. But it sounds like from what you're saying, we should be thinking more like flattish. I know you don't give guidance, but I mean, we need to get at least in the ballpark, just are we closer to flattish than your typical 5% growth quarter? And then just while you're on that, you mentioned being happy with the pipeline. Any particularly large needle-moving deals? Or is it a lot of onesie, twosies? Just a little more color on the pipeline.

I'd say that there's a couple of things. One is, and I think I mentioned this on the last call, there is sort of a shortage of scanners out there that banks need. And we have a couple of these banking clients who want to be able to do passports in addition to just drivers' licenses, which means they're all looking to upgrade their scanning devices. But if you just go look at what it takes and the time frame to get them, that will be, I think, sort of one of the determining factors on how fast our revenue grows and in which quarter.

It will depend on delivery of those scanners to several of our signed customers who want to get moving. And that's completely out of my control. The customers are signed. The customers believe in us. The customers want to be up and running as fast as they can. And that's with this desktop product, which doesn't mean we don't have to be integrated to any of those core banking platforms that take forever. So it's -- that's out of my control. What I can say is the customers have signed and are ready to go.

And just the second part of the question then on pipeline. You commented on good pipeline. I guess what I'm wondering, is there any meaningful -- assuming volumes stay bleak, the economy stays bleak, oil prices stay elevated, I'm trying to figure out where the growth comes from. And if it's not volumes, I'm wondering what opportunity there is in the second half for major needle-moving customers like what you put up in '25, and I mean, seemingly every year, 1.5 years. Just what does that mega customer pipeline look like?

We always have customers in that kind of pipeline. It's just they take a very long time, and they are, what I'd say, stop and start all the time. Now what I like about this new sector that we've really gone into that we can get to with desktop -- they're smaller, they're nimble. They might not be worth $4 million a year, but they might be worth $0.25 million a year, but they can be up and running in 3 months. And you get -- and they're much easier. You get 10 of them, I'm just as happy.

So while we're always going after the whales, we're also looking at the banks that are smaller. And then there's a ton of other different opportunities, different market sectors that are coming to us. I didn't say anything about cargo, right? But the average loss of a tractor trailer is $300,000, and it's happening all the time. That's a huge, huge sector for us. And we've got some of the biggest names in manufacturing who are recommending us to other people, their competitors because they all feel it because it's the same companies ripping them off. So there's a lot going on. I don't need to have one whale every year if I can make sure that I'm hitting a bunch of doubles all the time.

Last for me then, just in terms of actual signings in the quarter, the bookings of new business versus expectations, how did you fare?

For Q1, I think that we signed everybody we expected, but 1 who signed quite shortly after the quarter ended. Just a timing issue on their lawyers and our lawyers.

The next question comes from the line of Scott Buck with Titan Partners.

Bryan, if I look at the year-over-year revenue growth, what of that -- in software, what of that of the 600 or so, 1,000 is coming from new logos versus just expansion of service with existing or legacy customers?

I'd say for this quarter -- and by the way, congratulations on the new spot. I'd say that for this quarter, the majority of it was expansion of existing clients, which kind of typically is our Q1 anyway. Given that almost nobody in banking or retail wants to touch their systems in Q4, which is -- even banking has a tad of seasonality to it, they don't want to go down. So generally, it has been we'll sign people, but they're not going to come up live because they're not doing anything in Q4 that could impact their core system that interacts with their clients. So I'd say that I think that the mix is kind of typical for what we have seen over the years that I've been with the company.

Okay. Perfect. That's helpful. And then my second question, I just wanted to ask about title insurance. How many partners in that space do you have? I mean, I guess if you were to put a -- you're touching X percent of the market or have access to X percent of the market. What does that look like today?

So the last time I ran numbers on who we have as direct clients, that would represent about 43% of the title market. If you just do a quick search, like who control the title market, ChatGPT gives you percentages of the market of each of the major names that added up to 43%.

Okay. Wow, so you already have fairly significant scale in that vertical?

Yes. And talking to the other few big guys that we don't have currently. But we have the who's who to pretty much a title.

The next question comes from the line of Logan Hennen with Northland Securities.

This is Logan jumping back in for Mike. You kind of touched on a bit already, but if you could just give some additional color into the pipeline opportunity with new and existing customers in the banking and lending vertical, that would be great.

I'm sorry, Logan. Can you clarify that question for me? What were you looking for?

Some additional color on the pipeline opportunity with new and existing customers in the banking and lending vertical.

Okay. So for existing customers, there's always new expansion. Pretty much all of our clients have been talking to us about where else they can use us. I'd say there's one of our clients -- I don't know where else they could put us is probably the way I put it. And they're the one that have been growing a lot by taking credit card programs away from some of their competitors. The rest always are talking about how do we expand, what could we do different? Sandra, who now is my Chief Commercial Officer, and I have meetings this week and next week with 2 of what I call our super regionals so that we can discuss how we get partnered better with them at their request, right? They want to see what we're doing.

Through the partnership with Alloy and then also the amount of inbounds that I'm seeing through marketing, again, smaller deals, maybe $100,000 to $250,000, but quick to implement, no cost to implement and basically immediate revenue, that's where I'm seeing a lot of interest and inbound interest as these smaller credit unions and smaller banks that get hit at the exact same proportion. So I run these stats all the time. And the percentage attempts of fraud are no different at these smaller places than they are at the largest nationwide banks that we have. So they get hit and the losses are the same, and it hurts them probably even more because they have fewer assets.

This concludes the question-and-answer session. And I'd like to turn the call back to Bryan Lewis for closing remarks.

So first of all, thank you all for your time today. I'd say in closing, I'm sure is the case for every CEO, I'm very focused on the macro environment, which is challenging right now. I think we can all agree on that. But I want to leave you with this. We are a fraud prevention company that also, at the same time, speeds up the acquisition of great customers. And that is in the backdrop of a world where fraud is exploding, okay? We believe we have the best technology in this space, the right customers and the financial foundation to execute on our multiyear growth trajectory. I want to reiterate $10 million in the bank, no debt, right? That frees us up to be able to do, I believe, some good things. So we look forward to updating you on our progress when we report on our Q2 results. And with that, thank you all, and have a great evening.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Ladies and gentlemen, I am Guy Smith, Chairman of the Board of Intellicheck and Chairman of this meeting. I hereby call this 2026 Annual Meeting of Stockholders to order. On behalf of my fellow directors and the officers of the company, it is my pleasure to welcome you to this annual meeting. I would like to take this opportunity to introduce directors and officers of the company who are participating virtually today. Dondi Black, Director; Greg Braca, Director; Dylan Glenn, Director; Bryan Lewis, Chief Executive Officer and Director; David E. Ullman, Director.

The company will take written questions from stockholders regarding the proxy only and will answer questions presented by stockholders after the meeting has ended. I've asked Adam Sragovicz to act as Secretary of this meeting and to record the minutes.

Before considering the business to be taken up at this meeting, I would like Adam to report on the formal steps taken in connection with this meeting.

Mr. Chairman, the Board of Directors has adopted resolutions, which provide that this meeting be held today and which fixed the close of business on March 23, 2026, as the record date for the determination of stockholders entitled to notice and to vote at this meeting. I hereby present the affidavit of Robert Zubrycki, an employee of Continental Stock Transfer & Trust Company, the company's transfer agent, which states that the Notice of the 2026 Annual Meeting of Stockholders, proxy statement and proxy card were mailed on or about April 6, 2026, to each holder of the company's common stock at the close of business on the record date.

Thank you, Adam. I would like to file the affidavit as to the mailing of the proxy materials in the minute book of the meeting with the minutes of this meeting.

If there are any persons participating virtually who are proxies for stockholders and have not yet voted their shares, please do so now. Are there any stockholders present and participating virtually who have not voted and desire to do so, please vote now. Are there any stockholders present and participating virtually who have submitted a proxy but now desire to change any of their votes on your original proxy card, please vote now.

[Voting]

I hereby appoint Vito Cerone, an employee of the Continental Stock Transfer & Trust Company, the company's transfer agent, to act as Inspector of Election of this meeting. The Inspector has executed an oath to carry out his duties impartially and to the best of his ability. He will distribute and collect the ballots and count the votes.

Mr. Chairman, I present to you electronically the oath I signed as the Inspector of Election.

The oath of the Inspector of Election will be filed with the minutes of this meeting. Will the Inspector now provide us with a count of the stockholders present in person or by proxy?

Mr. Chairman, I can report that a preliminary count indicates the presence of a quorum. I am in the process of completing a count of all stockholders present, participating virtually or by proxy and will render an exact report at the end of the meeting. Since the holders of record of a majority of the voting power of outstanding shares of common stock of the company entitled to vote at this meeting are present in person or by proxy, I declare that a quorum is present.

The first order of business is the election of 6 directors. The persons receiving a plurality of the votes of the shares present in person or represented by proxy shall be elected. Each director will hold that position for a term of 1 year and until his successor has been duly elected and qualified. Nominations for directors were made by the Nomination and Governance Committee of the company's Board of Directors, and the 6 nominees were included in the ballots included in the proxy materials mailed to stockholders.

The second order of business is the approval of the appointment of Forvis Mazars, LLP as the company's independent auditors for the 2026 fiscal year. The Audit Committee of the Board of Directors appointed Forvis Mazars, and this appointment was included in the ballots included in the proxy materials mailed to the stockholders.

The third order of business is the approval of advisory votes to approve compensation of our named executive officers. This advisory vote was included in the ballots included in the proxy materials mailed to the shareholders.

The fourth order of business is the approval of the frequency of future advisory votes to approve executive compensation. This advisory vote was included in the ballots included in the proxy materials mailed to the shareholders.

I now call for votes for the approval of the election of directors; the approval of the appointment of Forvis Mazars as the company's independent auditors for the 2026 fiscal year; the approval of the advisory votes to approve compensation for our named executive officers; and the approval of the frequency of future advisory votes to approve executive compensation.

[Voting]

I now declare the polls closed with respect to the election of directors; the approval of the appointment of Forvis Mazars as the company's independent auditors for the 2026 fiscal year; the approval of the advisory votes to approve compensation for our named executive officers; and the approval of the frequency of future advisory votes to approve executive compensation.

Now I would like to have the Inspector of Election complete his report showing a final count of the stock represented here today in person or by proxy and the tally of votes cast regarding each proposal.

As the Inspector of Election, I hereby report that there are, on a preliminary count, 15,191,638 shares of common stock entitled to vote represented at this meeting, either in person or by proxy, compromising (sic) [ comprising ] approximately 75.6061% of the voting power of outstanding common stock of the company.

Thank you, Mr. Cerone. I declare that based on the information you have given me and the preliminary report of the inspector of elections through a plurality of shares voted, Dondi Black, Greg Braca, Dylan Glenn, Bryan Lewis, David Ullman and I, Guy Smith, have each been elected to serve as Director of the company for a 1-year term.

The appointment of Forvis Mazars as independent auditors of the company has been approved.

The advisory votes to approve compensation of our named executive officers has been approved.

The frequency of future advisory votes to approve executive compensation has been approved for 1 year.

This is Bryan Lewis, and I move that the meeting be adjourned.

It's Adam Sragovicz. I second the motion.

There being no objections to the motion made to adjourn this meeting, I hereby declare this meeting adjourned, and I want to thank all of our shareholders who are participating for being with us today.

Thank you very much, and have a good day.

Greetings. Welcome to today's conference call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to Gar Jackson. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck Fourth Quarter and Full Year 2025 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 19, 2026.

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 Bryan Lewis, Intellicheck's Chief Executive Officer; and then Adam Sragovicz, Intellicheck's Chief Financial Officer, who will discuss the Q4 and full year 2025 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to 1 hour, and I will now turn the call over to Bryan.

Thank you, Gar, and good afternoon, everyone. I appreciate you all joining us today to review Intellicheck's fourth quarter and full year 2025 results. I've been with Intellicheck for about 8 years now, and this call today has me the most excited I have been since I joined the company. We've come a long way over that time. To reach the milestone of annual profitability and to be well on our way to being a Rule of 40 SaaS company are significant milestone achievements. We'll talk about more of this in a few minutes.

First, I'll share a summary of the quarter, then spend some time discussing how we think about growth, our key verticals and what we believe to be the pivot point to profitability in our operating model. Then I'll turn the call over to Adam for a deeper review of the financials.

For the fourth quarter of 2025, total revenue grew 12% to a record $6.6 million. And for the full year, we grew 13% and finished the year at $22.7 million, another company record. The investments we made transitioning over to AWS are working on a number of fronts. Gross margin for this quarter increased to 91.4% compared to 91.1% in Q4 of last year, underscoring the continued strength and leverage of our software-driven SaaS model. The AWS platform is also much more versatile and provides better reporting metrics for both us and our clients.

I am very excited to report that we achieved annual operating profitability for the first time since becoming a public company. We generated cash during the quarter and ended the year with $9.6 million, a clean cap table and a strong debt-free balance sheet. Since I came on board, I committed to you that we would remain laser-focused on revenue growth and delivering value for our shareholders and stakeholders alike.

With net income of $1.3 million for the year and an EPS of $0.06, I'm very pleased we have succeeded in delivering on this commitment. We also set a goal to be adjusted EBITDA positive while still investing in the business. We more than achieved this objective with 3 consecutive quarters of adjusted EBITDA positive results for the year. Adjusted EBITDA in Q4 of 2025 was a record $1.9 million, and we finished the year at $2.6 million, another record.

With the realization of this goal, we demonstrated with consistency the operating leverage inherent in the business model and profitability at these revenue levels. I am proud of the Intellicheck team for the hard work and dedication that allowed us to succeed. At the same time, I want to make it clear that our commitment doesn't end with these successes. We're going to continue our efforts to create new opportunities for growth and profitability as we build on our relationships with our clients and expand our presence in an increasing number of market verticals.

Our contract renewals over the past 2 years have been very successful. Sandra Bauer is doing a fantastic job working with our partners to secure renewals along with an expansion of those partnerships use cases. A great example of this is the renewal and expansion of our partnership with a leading national U.S. bank that is a top 3 client. They are using Intellicheck's innovative technology to facilitate customer onboarding, accounting verification and account modifications. We anticipate the year-over-year increase in revenue from this client to be approximately 15%. We exceeded those expectations and grew by approximately 33% when comparing 2024 to 2025.

This growth is another testament that our product is effectively stopping fraud and is very appropriate for multiple use cases within the banking environment. More recently, another top financial client that is a recognized preeminent regional bank signed a 3-year agreement. It too, is expanding its use of Intellicheck's technology to include teller workstation transactions in their 1,900 branches.

This is an area where we continue to see incremental interest. This client went live with us with this new use case in Q3 of 2025, so the revenue will be up significantly in 2026 with a full year run rate. Additionally, this client is looking at increasing the use cases beyond what they are currently doing. The total contract value over 3 years is currently in the high 7-figure range.

This has made this client a top revenue generator for the company and another significant growth driver. Another area of growth that I believe is often overlooked is via our clients' active M&A and branch expansion growth. Three of our largely regional banks are expanding their branch presence, particularly in the Southeast region of the country. These are areas that are seeing significant population migration. More branches lead to more transactions and quick and easy implementations for our clients. We are very pleased that they continue to give us positive feedback on our product offerings.

This work to drive record revenues and profitability hasn't come easy. Sandra's efforts have had a significant impact on Intellicheck. And as a result, she was recently promoted into the newly created role of Chief Commercial Officer. In addition to customer success, Sandra will now have sales reporting to her as well. Along with this new alignment, we are continuing to refine our sales team to meet the changes we are seeing in the rapidly evolving marketplace. Our channel partner program remains a strong focus for us. We believe it will drive significant growth across a number of verticals.

We are making great progress with providers of third-party services. Our recent partnership with Alloy is an example of how our program is growing with great partners. They have incorporated our technology into their banking-focused software platform. As a result of this partnership, any of their customers can now utilize us. For those not on the Alloy platform who depend on third-party providers, we have a technology solution that is getting serious market interest.

With the rollout of our enriched desktop application, any sized organization can immediately implement us with no system integration needed. You may remember that we shared with you that many industry businesses rely on core provider platforms. This typically results in long deployment delays because these providers have lengthy development queues. We believe that we are ideally suited to serve these businesses, and we know they are solving a serious pain point.

Partnerships like this allow us to scale distribution more efficiently, reach new markets faster and remain true to our capital-light operating model. Sandra will also be overseeing the growth of these important relationships in her new role. We are very excited about the opportunities they create to stop fraud on a broader level. Throughout the year, we scaled up our marketing and public relations efforts to build awareness of Intellicheck and our state-of-the-art technology solutions.

We participated in key industry conferences, including FinovateFall 2025. My keynote presentation was hidden threat in identity verification, why the first step is everything. I also spoke about the key role of the barcode. It provided a great platform to directly speak to misconceptions such as why facial recognition alone is not sufficient as an authentication strategy. FinovateFall 2025 is a highly regarded conference hosted by Finovate. Finovate is a leading research and events firm focused on innovation in finance and banking technology.

It consistently attracts a large, high-impact audiences, including senior financial and banking executives and investors. At the Association of Certified Anti-Money Laundering Specialists Conference, I presented an innovative session on the innovation blind spot, why identity starts with real verification. Here, I spoke about why every system is only as strong as its entry point. It also gave me the opportunity to explain why the smartest fight against fraud starts before it begins.

Technology with real-time ID verification defeats bad actors at the very first step. Drawing on the latest fraud trends, I discussed rapidly evolving threats, reviewed synthetic identity fraud and deep fake-driven schemes that are undermining traditional identity verification methods. This was an important event for us because it is recognized as the premier global gathering for professionals fighting financial crime. The conference brings together thousands of compliance officers, regulators, law enforcement officials and industry leaders to explore the latest strategies and technologies that are shaping the future of anti-financial crime.

We're also very active in building our efforts related to Investor Relations. Programs we participated in included the Sidoti Micro-Cap Virtual Conference, the Ladenburg Thalmann Technology EXPO25, D.A. Davidson Technology Conference, the Craig-Hallum Alpha Select Conference and the Planet MicroCap Conference. These interactions are very valuable because they allow us to communicate our strategic goals and assure that you, our shareholders and the investment community are kept current as we grow.

There was another important sign of the growing recognition we are achieving as a leader in providing ID verification in the financial services market. I hope that all of you have now seen the IDC Marketscape report on worldwide identity verification in financial services. Their 2025 vendor assessment named Intellicheck a leader. As I said in our press release, and I believe it is worth noting again, we believe this recognition affirms that Intellicheck is not just one in the pack. We are a leader with the state-of-the-art technology solutions that secure trust while preserving a seamless customer experience.

Although banking and lending continue to be our primary verticals and growth drivers at this time, we are continuing to focus on new verticals we've been targeting. Many of these new verticals are dependent on interest rates to drive volume, particularly in the automotive and title insurance verticals. While there is recent volatility in interest rates, waning of consumer confidence and fear of inflation increasingly concerning consumers, we believe we are well positioned in these markets when the interest rate environment changes.

I'm excited to see what will happen when rates go down. In the meantime, we are succeeding in the banking, which is not so dependent on interest rates or consumer confidence. We all need to bank. As a reminder, over the past several years, we've been very deliberate about diversifying away from lower-value transactional use cases such as age verification focused transactions. We've been targeting verticals where identity theft is expensive, pricing per transaction is stronger and customer relationships tend to be stickier and grow with additional use cases while generating significantly less churn.

Among the targeted verticals in addition to banking are title insurance, automotive, specialty finance, background screening, logistics and digital account security. Driven in part by these new categories and contract renewals at higher rates, our average price per transaction increased 25% in Q4 versus the previous fourth quarter. This further illustrates that we continue to have pricing power for our unique product, a product that delivers a decision our customers can rely on for their business processes greater than 99% of the time in under a second.

And typically, our software works with the existing hardware a prospect has for in-person validation and on any person's phone or device for digital validation. With this in mind, I want to reiterate the benefits of our operating model. We continue to operate with very high gross margins and limited incremental cost to support additional revenue growth. Our platform today is capable of handling significantly more activity than it does currently, which provides structural operating leverage as revenue scales. While we don't provide formal revenue or earnings guidance, our objective remains straightforward to build a durable, differentiated high-margin business by expanding with our existing customers and onboarding new customers, improving our revenue mix and maintaining disciplined execution.

I also want to respond to those of you who have been asking about AI. AI can mimic an ID. AI is no match for a barcode. AI can figure out how an ID is supposed to look making visual inspection and [indiscernible] outdated and ineffectual. We do not rely on AI to authenticate an ID. We use AI to make our clients' customers' journey easier. We use intelligence to see what our clients' customers are doing. If they do it wrong, we correct it. Our clients tell us we help them onboard good customers faster. At the same time, a byproduct of speedy onboarding is we stop fraud. One simple process, 2 great solutions. With that overview, I will now turn the call over to Adam to walk you through the financials in more detail.

Thank you, Bryan. 2025 was a transformational year for Intellicheck, both financially and operationally. The initiatives we have been discussing with you over the past several quarters are now delivering meaningful results. As Bryan mentioned, our fourth quarter revenues were 12% higher versus the prior year.

And for the full year, we grew revenue 13% to a record $22.7 million. We also achieved a milestone that I'm particularly proud of, our first full year of GAAP profitability from operations with net income of $1.3 million compared to a GAAP net loss of $918,000 in 2024. Our adjusted EBITDA for the full year was $2.6 million, nearly 5x the $520,000 we reported in 2024. This reflects the operating leverage we have been building in this business and the discipline we have maintained around expenses.

We are also pleased to see the continued growth of SaaS revenue, which represented 99% of total revenue in 2025. New business pricing continues to hold firm, and we believe the demand environment remains strong, particularly in financial services and retail, where identity fraud continues to escalate. Our recently published North America identity verification threat report based on nearly 100 million verification transactions in 2025, underscores the critical nature of the problem we solve and the scale of our platform. Starting with quarterly results.

Revenue for the fourth quarter of 2025 increased 12% to a record $6,635,000 compared to $5,936,000 in the same period of 2024. Our SaaS revenue for the fourth quarter of 2025 grew 12% to $6,620,000 from $5,913,000 during the same period of 2024 and represented over 99% of our fourth quarter revenue.

Gross profit as a percentage of revenues was 91.4% for the fourth quarter of 2025 compared to 91.1% for the same period of 2024. On an adjusted basis, excluding noncash amortization of capitalized software costs, our adjusted gross profit margin was 93.5% in Q4 of 2025 compared to 93% in the prior year period. The improvement in adjusted gross margin reflects the efficiency we are achieving in our cloud infrastructure. Azure spend has declined more than 55% from its peak levels in mid-2024, and AWS is now our primary hosting platform, which positions us well for maintaining strong margins going forward.

Operating expenses, which consist of selling, general and administrative, research and development expenses, decreased $357,000 or 7% to $4.6 million for the fourth quarter of 2025 compared to $4.9 million for the same period of 2024. SG&A expenses decreased $604,000 or 15% year-over-year, reflecting the benefits of our continued cost discipline and the efficiency initiatives we implemented over the course of 2024 and 2025.

On an accounting basis, R&D expenses were higher in Q4 2025 at $1.3 million compared to $1 million in Q4 of 2024. However, I would like to provide some context on this. Cash R&D spend remains well controlled. The GAAP increase is driven by 2 factors. First, the amortization of previously capitalized software development costs that are now in production; and second, the fact that we capitalized essentially 0 software costs in the back half of 2025.

For the full year, we capitalized only $213,000 in 2025 compared to over $2 million in 2024, a 90% reduction as our major platform projects moved into production. Going forward, we expect R&D spend to grow at a rate below our revenue growth rate. The fourth quarter of 2025 was our strongest quarter of the year, capping a second half in which both Q3 and Q4 were profitable at the GAAP level.

We reported operating income of $1.5 million compared to $480,000 in Q4 of 2024 and net income of $1.55 million or $0.08 per fully diluted share compared to net income of $488,000 or $0.03 per fully diluted share in the same period of 2024.

Adjusted EBITDA for the fourth quarter was $1,877,000 compared to $860,000 in Q4 of 2024, more than doubling year-over-year. The weighted average diluted common shares were 20.2 million for the fourth quarter of 2025 compared to 19.3 million for the same period of 2024.

Now turning to our full year 2025 results. Total revenue for the full year of 2025 increased $2.7 million or 13% to a record $22.67 million compared to $19.997 million for 2024. SaaS revenue for the full year of 2025 grew $2.6 million or 13% to $22.4 million from $19.8 million for 2024. Gross profit as a percentage of revenues was approximately 90% for the full year of 2025 compared to 91% for the full year of 2024.

This modest compression is primarily attributable to higher noncash amortization of software costs flowing through the cost of revenue, which increased to approximately $499,000 in 2025 from $181,000 in 2024 as our platform investments moved into production. Excluding this amortization, our adjusted gross profit margin was approximately 93% for the full year compared to about 92% from the prior year.

Importantly, our underlying cloud computing costs grew at a rate below revenue growth, and we expect further efficiencies as the Azure to AWS migration is now substantially complete. Total operating expenses were essentially flat year-over-year at $19.4 million for both 2025 and $19.3 million for 2024. This was a significant accomplishment given our 13% revenue growth. SG&A expenses decreased about $1.4 million or 9% to $14.1 million for the full year of 2025 compared to $15.5 million in 2024.

This reduction was primarily driven by lower sales and marketing and personnel-related costs, including a reduction of $820,000 in marketing expense in 2025 compared to 2024. Our outsourcing and marketing drove a reduction of almost 40% in marketing spend year-over-year, which, as Bryan has mentioned in the past, has still resulted in substantially better results.

As we discussed previously, we expect our total noncash expenses to comprise approximately 5% to 10% of our expenses with stock-based compensation comprising the majority of that figure. R&D expenses on a GAAP basis increased $1.5 million to $5.3 million, reflecting the near elimination of software capitalization and the amortization of prior year capitalized costs.

To put the capitalization trend in perspective, we capitalized over $2 million of software costs in 2024 and just $213,000 in 2025. We expect de minimis level going forward. The GAAP R&D line now more closely reflects our cash engineering spend. The company reported net income of $1,273,000 for the full year of 2025 compared to a net loss of $918,000 for 2024, a swing of over $2.2 million. Net income per fully diluted share for the full year of 2025 was a gain of $0.06 compared to a net loss per fully diluted share of $0.05 in 2024.

The weighted average diluted common shares were $20.2 million for 2025 compared to $19.3 million for 2024. Adjusted EBITDA for the full year of 2025 improved to $2.56 million, nearly 5x the $520,000 we reported for 2024.

Turning to income taxes. We recognized $58,000 in tax expense for 2025, entirely state income and franchise taxis. No federal cash taxes are owed because our NOL carryforwards fully sheltered 2025 taxable income, resulting in an effective rate of approximately 4%. We carry a full valuation allowance of approximately $6.7 million against our deferred tax assets. GAAP requires this allowance as long as our 3-year cumulative taxable income position remains [indiscernible].

Despite our $1.3 million pretax gain in 2025, the prior 2 years losses keep that cumulative tax negative. If profitability continues and the 3-year window improves, we could release some or all of the allowance, producing a noncash benefit of up to $6.7 million. We are not providing timing guidance, but investors should understand this as a meaningful potential future benefit.

As to the company's liquidity and capital resources, at December 31, 2025, the company had cash and cash equivalents that totaled $9.65 million, more than doubling from $4.7 million at December 31, 2024. This improvement reflects strong cash generation from operations during the year with operating cash flow of approximately $4.5 million in 2025. At year-end, there was working capital of approximately $10.1 million, total assets of approximately $24.5 million and stockholders' equity of approximately $20.7 million.

I would also note that the significant decline in software capitalization from over $2 million in 2024 to just $213,000 in 2025 means that our GAAP operating results and our cash generation are now much more closely aligned. This is a cleaner financial profile that we expect to maintain going forward.

2025, we executed on a number of key initiatives that we believe set us well for continued strong performance in 2026 and beyond. We believe that our more efficient marketing approaches are already yielding dividends for the sales pipeline. We anticipate that our improved go-to-market strategy, combined with the growing threat landscape, our threat report highlights, including the 158% year-over-year growth in password reset verification use cases will continue to drive demand for our platform.

For 2026, we expect to see continued gross margins of approximately 90% to 91% with potential for future improvements as we realize the full benefit of our completed AWS migration. We also expect to see continued leverage in our operating expenses because of the expense discipline we have maintained, and we do not expect that expenses will grow as quickly in 2026 as our revenue.

Our FY '26 operating plan targets continued revenue growth and further improvement in profitability. We remain focused on several strategic priorities, continued investment in customer success and the customer experience, disciplined hiring in engineering and sales and deepening our presence in key verticals, including financial services and banking, where the market data show that fraud rates remain elevated.

I'll now turn the call over to the operator, who will take your questions.

[Operator Instructions] And our first question comes from the line of Mike Grondahl with Northland Securities.

Congratulations on another strong quarter. On the third quarter call, you gave us like bank lending channel was 50% of revenue, and it grew 80% year-over-year and the retail channel and a couple of others. Do you have that data for 4Q?

I have it for the year. And what I'll say, Mike -- and by the way, thank you. Q4 came in Christmas came is what I'd say, right? The holidays came. So retail did bump up, but I think that, that's going to be something interesting to watch overall. It went up probably about 10%, 15% as the whole breakout across our different revenue, but it was still down Q4 2024 versus Q4 2025. So the banking and lending continues to grow. The percentage change year-over-year for bank and lending, it's nearly double, whereas retail is down 1%.

Got it. But did -- I think you said retail grew year-over-year for the fourth quarter.

It was down 13% Q4 2024 versus Q4 2025. It was up 25% over Q3 2025. So the seasonal lift came in. And remember, we still have -- we don't have every one of our customers on the new kind of pricing model that allows us to straight line it. So that's why we saw a lift in that, right? So a couple of the, I'd say, big 4 customers we have that do a lot in retail in that credit card space. are still on a more transactional model than a straight-line model. So that brought in seasonality from them.

Got it. And how does the pipeline look for new customers or customers you're rolling out here in the first half of 2026?

I think it's been really good. And I'm going to say part of that is due to that new desktop solution, the delivery method that we've been talking about because there are a lot of, I'd say, midsized credit unions and banking institutions that want to use us, but they have been held bound by their core banking platforms. Now they don't have to worry about that. So there is a ton of interest in that. And then also this partnership with Alloy is already producing a lot of good names that are saying, "Hey, how do we get this going? How do we get it on board? So -- and then I'm also going to say that the marketing is truly paying off in ways that we haven't seen in the past.

And I love the fact we're spending less on marketing, but getting a heck of a lot more out of it. Like year-over-year, even our followers on LinkedIn is up like 3x. So those are the things that help drive pipeline, make cold calls warm and everybody loves a really good inbound lead, and they're getting that for us.

Great. One more question. You have a relationship or a commercial relationship with, I think, Ping Identity. And they seem to be connected to a couple of global social media companies. What's the opportunity there? Are they facilitating you guys?

Not to the point that I would like. And it's one of the reasons that we continue to refine our channel partnership model and how do we make sure that we are helping their sales force kind of light us up. And that's one where I think that we need some -- we need to do better on that particular one. We're doing great in title. We're doing really well in automotive, and we're doing well in background. But that particular channel partner, we need to do a better job on.

And our next question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group.

This is Daniel Hibshman on for Jeff Van Rhee. Congrats on the quarter, Bryan, Adam. On the retail backdrop, maybe if you could just explain a little bit more on that and your outlook in retail. I know that generally improved across 2025, and it sounds like -- I think going into Q4, we had thought maybe it would be a light quarter in terms of retail, and it sounds like it ended up being better than expected. Maybe just your thoughts a little bit more looking forward.

I mean is this -- 2025 in general was a down-ish year for retail? Are your expectations that maybe a plateau, a flattening, actually return to some growth? What are your thoughts there?

Yes, 2025 was a down year in terms of basically a lot of retail sales, credit card issuance, people making out their cards, those types of things. So what I always like to point out is even though it was down, right? And like I said, even Q4 of this year, right, was down 13% from Q4 2024. Even with that, because we have expanded into a lot of other markets, we still grew. Now the whole retail world, consumer confidence, consumer sentiment, those types of things are probably going to drive it.

I like the fact that our customers are bringing on more retailers. And they use us to help bring them on board because they can go and say, I'm going to give you better rates on your credit card program if you put this process in place because they know that the fraud is going to go away. So I look at it as we are building a pipe for the economy, if you will, so that when interest rates reduce because you look at some of the interest rate on credit cards out there running at like 39%, that's hard for people. But when they come down, I look at it as what has been, again, a headwind will become a major tailwind.

Okay. That's helpful. And then maybe just in terms of the strength in the quarter and the beat on the Street, just your thoughts maybe narrowing in a little bit more color on the source of that, whether you attribute that primarily to the retail backdrop in the quarter or more so the new verticals coming in, whether that's automotive or title insurance, et cetera, just sort of the beat.

Yes. I'd say a combination of, in a way, all the above. Retail certainly came in stronger, I think, than we were anticipating. But again, through our channel partners in automotive, that space is growing a lot, increased just straight-up banking use cases with new and existing clients. So it's sort of like all of the above.

I would expect to see -- again, there's always the seasonality in retail. And since we still have some folks who are not on a straight-line model yet, Q4 retail and Q1 retail, there's always a drop. And so that's how I'm looking at the numbers. But we've been, like Adam said, very smart on costs. And I'm excited about where we're going. But retail still is one of those things. It's just like when will it come back to life.

Yes. Last question for me would just be, do you have any update on the status of the large global social media customer that was getting implemented?

Look, they are 100% implemented. They tell us how much they love us. They are one of the strangest companies I've ever dealt with, and I'm hearing that from many other companies that work with them. So I have taken the revenue out of our internal forecast. And I think I said this on calls before, just because they're too unpredictable. I have no idea. So we're in.

We have a great contract. They renewed it. Sometimes the pipe turns on really big and then sometimes it goes away. And they almost can't even explain why that is. So I just kind of leave them -- to me, they're gravy on our revenue numbers, and we'll just -- we'll see where it is. But fully implemented, 100% contract signed, 100% contract renewed, actually signed on for more services. It's just up to them to figure out when and how they want to use it.

And our next question comes from the line of Rudy Kessinger with D.A. Davidson.

This is Clark Wright on for Rudy Kessinger. Could you provide any additional parameters to frame growth expectations for 2026, given the step-up in revenue from the financial client that went live in 3Q?

Look, we don't give guidance as sort of company policy. But the one thing that I've tried to make clear to people for that particular client, remember, they rolled out from 0 to 100 over the course of a year. And what we ended up doing with them is straight-lining revenue. So you figured year 1 of what they were spent was 50% of what they'll spend in year 2, right? So there's built-in growth there.

The rest of it, it's a matter of how fast can we get things implemented. And there's all sorts of things going on with implementations that I'll point out to the point that we've got banks that know they want to use us. They know that they're running on really, really old technology, and they want to buy new and better scanners to get it working because they don't want to have to do 2 implementations. But some of these scanner companies are running on 6- to 8-month backlogs on being able to deliver product. So I'm feeling comfortable about our growth. I like the amount of built-in growth that we have. And then the rest of it is sort of, again, how fast can we implement and will supply chain shortages impact us.

Got it. That's helpful. And then I also appreciate the additional color you provided on the trajectory of gross margins and operating expenses going forward. Should we expect to see EBITDA margins expand from where they're at currently given some of the dynamics that you previously allocated with the conversion to the cloud? Or should we expect effectively flat or down from 2025 levels?

Well, the way I kind of look at a lot of the savings that we got from moving from one cloud to another. A part of that savings is going into buying the smart machines, right, that our data team is using and that kind of stuff. I will probably be looking to expand our marketing because it really is doing well.

And again, like I said, bringing in prospects -- and the thing I love about prospects coming in and us talking to them, we don't lose what I'd call a scan off. When somebody compares us head-to-head, we win. So the more of that I can bring in, the better for the whole company. But my other thing is, as Adam pointed out, we don't want expenses to grow at the same rate as revenue. And I think that we can easily accomplish that.

Got it. In terms of how we should imply that going forward with headcount, should we expect headcount to remain relatively flat then going forward based off of the reinvestment of cost savings? Or should we expect that line item to increase over time?

Look, I think that we're going to add just to help get things out the door we're going to swap out some expense that was in the dev team where we were using consultants. We'll probably bring -- swap that out for full-time employees. So not a huge increase in that. What I always say is like if I see a phenomenal salesperson, we're going to hire them, right? Because that's hard to find and they're great and you bring them on board and they pay for themselves. And then we might see a slight increase in marketing expense. The only other stuff is as we start to bring on more clients, we would probably need more customer success people. But again, they pay for themselves because when you spend time with the customer, you find new use cases. So again, headcount should go up, but not in any way that is at the same rate as revenue.

And our next question comes from the line of Scott Buck with H.C. Wainwright.

Bryan, I think you mentioned in the prepared remarks that you like the way you're positioned in automotive. And once there's a rebound there, you guys should be able to ride that wave. I'm curious, are there any metrics you can give us around that? How many dealerships you have exposure to or some way for us to, I don't know, kind of wrap our heads around the opportunity?

Yes. I could say automotive revenue grew 125% year-over-year. A lot of that is through channel partners. And we have what it is about, I think, 19,000 rooftops out there. We're nowhere near fully penetrated into that. So I look at that as a lot of growth. We brought on another channel partner that is now incorporated into one of the largest automotive software providers out there and as part of the F&I experience.

So I expect that, that should bring in a bunch more rooftops. So that gives us a couple of different angles that we're going after automotive. One is compliance, starts at the front end and the other is F&I, which is sort of at the back end. So I really like the automotive space because there's so many rooftops out there. But knocking on each individual door, I don't want to do that. That's why we're doing it with partners.

Right, right. No, that makes a ton of sense. I appreciate that. And then my second one, just given the expansion of business with some of the financial institutions, is there anything on the customer concentration front that we should just be keeping an eye on?

No. And I don't know, Adam, feel free to chime in on that if you've got a thought on customer concentration. But as we bring on more financial institutions of all different sizes, I think the concentration will probably lessen.

I mean I guess the other thing I would say is that as we've expanded into the different use cases that we have in these various customers, it feels like it's stickier. I mean there's always risk, right? I can't say there's not risk, but it feels like they're getting more and more integrated using our platform. And you feel better when you say, oh, now like Bryan was mentioning the M&A opportunities when banks are emerging and they say, "Oh, now we have a few hundred more branches to roll you out in. It's -- on the one hand, it's concentration. On the other hand, it's expanded opportunities.

And our next question comes from the line of Kris Tuttle with Blue Caterpillar.

Adam, just a couple of things that weren't covered yet that I wanted to ask you about are really end market related. One you've talked about in the past was the employment verification area, which still has a lot of fraud in it. And then, of course, we hear a lot about there's some initiatives, a lot of initiatives around reducing health care fraud. And last and maybe in terms of probability, but potentially size, it would be the opposite would be the chances we might get a voter ID law in the next couple of years. Just kind of your thoughts on the diverse one is probably the most realistic, but just kind of getting a feel for you on those in addition to the ones that you're already penetrating.

Yes. So unemployment is -- I still love that market almost as much as I love automotive. And it's funny because the 2 of them are kind of interrelated. We have 2 automotive manufacturers that use us to verify all of their employees and anybody who comes on into the factory. And one of them realized that one got shut down because they had undocumented people, one of their contractors had undocumented people working on building out the plant.

And then they realized, well, wait a minute, if we were up and running, and one of them said to me that they lose $49,000 a minute if the assembly line isn't running. So they are now requiring their suppliers to use us to authenticate all of their employees. So I think we're going to see more things like that happening. So it's been a great market, and they have 200 suppliers. I'll take every one of those. So that's a big area. I think it's also going to happen more and more, the retail stores, whomever who's hiring people, you got to approve.

And we already know in the remote hiring world that we've got bad actors from countries like North Korea pretending to be developers working and living in the U.S. and getting access to systems. And I know that, that is scaring people as well. Voter ID has me very excited. I have been -- I have spoken with multiple states about what they think that they need to do. I think we have an elegant solution that works for in-person already and another solution that could do authentication for mail-in ballots. And now it's just a matter of we got to see where the law goes and who do we talk to.

But I can tell you that has been a big push within senior management of the company to figure out how do we play in this game because the easiest thing is most people have a driver's license or a state ID. And a lot of places now already have a machine that will take a photo of the license or do some scanning on it only to parse the data, right, but not to authenticate it. I know that South Carolina does it. I know that New Jersey does it. So embedding us in that process would be quick, easy and simple. and then authenticate it as well. Did I answer your questions, Kris?

Yes, absolutely. I just -- those definitely sound like not in the numbers, of course, but I just love those applications for you because it just makes so much sense, right? So much sense.

And with that, ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Bryan Lewis for any closing remarks.

I just again, want to thank everybody for joining us today. And I want to highlight that I believe we're at an important juncture with the historic achievement of annual operating profitability and sustained EBITDA positive growth, right? And I want to be clear, folks, we believe we are positioned to build on these successes, right? We look to expanded opportunities with current clients. And I look at the pipeline and I go, yes, I think we're going to be doing well, right?

And particularly, again, I'm going to say banks, autos and title insurance. 2, I think are somewhat dependent upon the economy. One, it doesn't matter because it's a great spot to go rob. That's why there's so many bank robbers, and we can help stop that kind of crime. So I look forward to updating you all on our progress on our next call. And everybody, have a great evening, and thank you again.

And with that, ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation, and you may disconnect your lines at this time, and have a wonderful day.

Greetings, and welcome to the Intellicheck Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Gar Jackson, Investor Relations. Thank you, sir. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck Third Quarter 2025 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.

Throughout this call, we may reference certain financial metrics that have been rounded for ease of discussion. These forward-looking statements are based on management's current expectations and beliefs about future events. As of 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 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, November 12, 2025. Management will use the financial term adjusted EBITDA and adjusted gross margin 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 these terms.

We will begin today's call with Bryan Lewis, Intellicheck's Chief Executive Officer; then Adam Sragovicz, Intellicheck's Chief Financial Officer, who will discuss the Q3 2025 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to 1 hour, and I will now turn the call over to Bryan.

Thanks, Gar, and good afternoon to all. We appreciate you joining us today. I'm extremely excited by our performance in Q3 with revenues that grew 28% or $1.3 million or to $6 million with a gross margin that was 91% driven by leveraging operating expenses that were relatively flat year-over-year, we had a positive net income of $290,000, earnings per share of $0.01 and adjusted EBITDA that was a third quarter record of $631,000.

A significant driver of the revenue growth was the regional bank that began using Intellicheck in its bank branches. As we have previously stated, this client has a 3-year total contract value in the very high 7 digits with the first 12 months being low 7 digits and accelerating in years 2 and 3. The rollout is going very well, and they are already speaking with us about additional use cases.

We also showed significant growth with a leading lease-to-own company that grew over 700% and has produced a low 6-figure revenue number in Q3. Of note is our largest bank and credit card issuer that grew over 60% in Q3 versus the prior year and bought an additional bucket of transactions for a low mid-7 figure amount that we anticipate we'll get them through spring of 2026. This is further testament that our product is stopping fraud, both with new account applications, account lookup and in-branch and online customer validations.

On top of that, another 1 of our top 3 banks signed a 3-year renewal with an annual contract value also in the low mid 7-figure amount. We also entered into 2-year agreements with our top title insurance company and expanded our relationship with a top 20 bank with a 2-year agreement that when combined are now anticipate to generate 6-digit annual recurring revenue streams. An important event in the third quarter came when Intellicheck was named a leader in the IDC MarketScape Worldwide identity verification in Financial Services 2025 vendor assessment.

As I said in our press release, bad actors continually change and sophisticate their tactics which is why organizations need a partner that is proactive with state-of-the-art technology and expertise to arm them with proven solutions. We believe that our recognition underscores our role as a leader with the technology solutions that secure trust while preserving a seamless customer experience. We believe that this will significantly raise the visibility of Intellicheck and these third-party endorsements have become a very important aspect of our visibility and associated marketing efforts in today's tech environment.

We continue to make progress with the global social media company that continues to be in the build-out phase. Our team is working with their team on the image capture front. Although this has taken longer than anticipated, they are paying us for this scanning volume. During Q3, that revenue generated from this client was a mid-5-figure number and for Q4, we anticipate a low 6-figure number based on the volumes we've already seen as their build-out continues. We continue to believe that there is a significant potential for this client to drive more volume and revenue in the future, we just don't have any definitive answers on the timing.

And as a reminder, this isn't the only social media company that we work with. The other social media company we work with for e-mail password resets, grew over 60% versus last year and produced a low 6-figure revenue amount in the third quarter.

During the third quarter, First American Title, a leading provider of title insurance and settlement services and the largest subsidiary of First American Financial Corporation announced an expansion of its fraud prevention services included with every First American transaction. Their agent net platform now features advanced identity verification technology powered by Intellicheck. By confirming the identities of real estate transaction participants early in the process, the new service delivers greater protection and adherence to the latest industry best practices, reducing fraud risk for First American Title agents and their customers. This quarter also saw an expansion of use cases for our technology with this client as they added passport verification and also document lines and selfie capture. They plan to launch digital e-commerce identity verification in Q1 of 2026.

I'm also pleased to update you on the progress we've made in the background check market. As I've been saying, we believe that there is significant opportunity in this area. When people typically think about background checks: employment screening, apartments, auto rentals, et cetera, come to mind. We are approaching this vertical from an additional angle, supplier and vendor screening. During the quarter, we saw additional traction from a foreign auto manufacturer building cars in the South. Not only are they using us on site to make sure that people are who they say they are, they're so happy with their experience, with our technology that they are encouraging their suppliers to adopt our technology. We've had one of their suppliers signed up this quarter. This remains a market of interest, and we will continue to look at future opportunities to expand our market penetration.

Automotive retail was another growth driver during the quarter as auto retailers, particularly with high-end cars, continue to see the value of our product offering to stop fraud. Although not material to volumes during the quarter, these two categories drove an increase in our year-over-year new business average price per scan by approximately 14%.

Additionally, we are getting some traction on the stadium concessions front. While this is a slow process and lower average cost per scan due to the anticipated high volumes, we believe this remains an opportunity for growth, particularly if we can integrate with significant POS system providers, which is a long process. During the quarter, we added one stadium and one concessions provider.

We are also exploring additional opportunities in the area of cargo freight fraud. We are continuing to move forward with the food manufacturer that was dealing with fraud from drivers. They are continuing their nationwide rollout of our technology, and this account is now running in the low 6-figure ACV.

As far as our vertical breakdown by business segment goes, keeping in mind that there is a fair amount of volatility in the mix, as I spoke of last quarter, this is how we stand. Banking and lending grew approximately 80% and represented approximately 50% of our quarterly revenue. Retail declined approximately 5% and represented approximately 30% of our quarterly revenue. Age-related grew approximately 15% and represented approximately 8% of our quarterly revenue. Title grew approximately 120% and represented just over 2% of our quarterly revenue. As I've spoken of in the past, we continue to focus on signing multiyear commitments with straight line revenue recognition that reduces the seasonality of the business. As we look at fiscal year 2025, we anticipate approximately 24% of our total revenue will be accounted for that way.

Now on the IT front. The development efforts our IT team has been focused on for quite some time has resulted in a number of important advancements and we are very excited about the product innovations and milestones that we have achieved this quarter. We have introduced a new and enhanced optical character recognition or OCR product. This is a machine learning model used to read the printed text on the front of IDs to match the data in the bar code. We made this strategic decision to move this development in-house instead of continuing through a third-party provider to eventually reduce cost. We believe that OCR is a beneficial additional signal to the ID verification process for those clients who want to add it to their workflow to stop fraud.

Our new hub customer console is an advanced streamlined web application that now provides a simple interface for our customers to view their transactions that they have submitted for processing from all of our access methods, whether it be portal, direct, capture, mobile or desktop. This unified approach gives our customers a sleek efficient method to review their transactions, view stats and download reports on their transaction data.

We updated our Portal product, which is our web application used by any client that to validate people remotely without integration such as auto dealers and call centers. Portal is used to perform ID verification with a link to a web app sent via text message for the user to use their mobile device to take pictures of their ID and a selfie. The new portal further enhances the application and now also supports sending link to run the ID verification process via WhatsApp, which is used extensively internationally.

We also now have an all-new desktop application. It features a new user interface and leverages our improved ID verification signals that ties to our hub reporting tool. This desktop application is installed on Windows computers with a locally connected ID scanner, the same ones the banks generally have already installed. We believe the significance of this product is twofold. First is that it requires no integration but still provides centralized reporting and a simpler customer experience. The second is the smaller banks and credit unions are often tied to and at the whim of the banking technology providers and their schedules to install our services. And as we have discussed on calls in the past, even though we are signing these service providers as resellers, their development queues can be quite long. This product allows us to immediately enter the market.

Our new mobile SDK provides mobile application developers with the screens and logic necessary to integrate the ID verification process into an existing native mobile application running on iOS or Android with minimal code. The mobile SDK provides image capture and barcode reading required to perform ID verification eliminating the need for developers to perform complex image processing. Like the new desktop, the transaction information is essentially stored in the cloud via hub for searching and reporting. We will be launching new marketing initiatives around these updated features shortly.

Another significant development came when we achieved an important milestone with the migration of our last large bank onto the AWS platform. This project is now basically complete, and I'm giving big credit to our team for getting us over the finish line.

Our marketing team is continuing to make great progress. We believe that a key component of our recent growth has been driven by our marketing efforts, and these efforts continue to gain momentum. The podcast the marketing team introduced are generating interest with their informative look at key issues from call center fraud and hiring and employment fraud, the first person stories on identity theft. The same is true of our blogs. They have successfully created a great platform for thought leadership as we dive into a range of issues from the importance of the customer experience to the rise of [ dose ] student fraud.

Another area of strategic importance continues to be our attendance at selected industry trade shows as we leverage opportunities to grow brand awareness and recognition as thought leaders. We recently attended four important industry trade shows. At ACAMS, the Association of Certified Anti-Money Laundering Specialists, our visibility was important because it is the world's largest annual conference dedicated to anti-financial crime. This is a premier global gathering for professionals fighting financial crime with thousands of compliance officers, regulators, law enforcement officials and industry leaders gathering to explore the latest strategies and technologies shaping the future of anti-financial crime.

I was pleased to present an innovation session. My topic was the innovation blind spot, why identity starts with real verification. I detailed why every system is only as strong as its entry point. I explained why the most important part of the battle to protect against fraud should start with real-time ID verification as the very first step.

I also discussed the latest fraud trends, highlighting how rapidly evolving threats, such as synthetic identity fraud and deep faked driven schemes are undermining traditional identity verification methods. The significance of these threats can be seen in the impact during the first quarter of 2025 alone, synthetic identity fraud skyrocketed by an enormous 311% while deep fake driven fraud sorted by a whopping 1100%.

At the prominent FinovateFall 2025 conference, I was pleased to be a keynote speaker. My presentation on the hidden threat and identity verification, why the first step is everything reinforced one of our key messages, which distinguishes Intellicheck's industry-leading technology solution from the many templated solutions that are not up to the task. We stop fraud before it starts with that critical first step.

Just last month, we were at Money 2020, a show that is considered the premier industry event with over 11,500 attendees from 3,000-plus companies, it is a concentrated high-powered event that is packed with activities, leading it to often be described as similar to speed dating, networking on steroids. Having a product that doesn't require hardware and can render a decisioning result 99.9% of the time and less than a second with industry-leading accuracy generated a lot of interest.

We also had a team at MoneyLIVE North America. This event brings together key stakeholders from across consumer banking and payment. Our Vice President of Account Management and Customer Experience, Sandra Bower; and Chief Technology Officer, Jonathan Robins, networked with a number of industry representatives there. Jonathan was a presenter at the conference, delivering a focused look at the needed vital first step in verification, which is Intellicheck.

I will now turn the call over to Adam, who will provide additional details about our financial results.

Thank you, Bryan. In addition to Gar's forward-looking statements, please note we use rounding for convenience during this call. For more detailed and authoritative financial information, please refer to our press release and to our quarterly report filed at the close of the market today on Form 10-Q.

We are excited to tell you more about our record third quarter of 2025. As Bryan mentioned, revenues were 28% higher versus the same period in the prior year. We also saw strong pricing, up 14% for new business versus the third quarter of 2024. You can see the strategy paying off of upselling existing clients and pursuing verticals such as title insurance companies, auto dealers and background check firms that generate higher revenues per scan.

Total revenue for the third quarter of 2025 increased by 28% or by $1.3 million to a third quarter record of $6 million, compared to $4.7 million in the same period of 2024. Our SaaS revenue for the third quarter of 2025 was up 26% to $5.9 million from $4.7 million during the same period of 2024 and represented about 98% of our third quarter revenue.

Gross profit as a percentage of revenues was 90.5% for the third quarter, which included $137,000 of amortization expense related to the software development projects we have talked with you about in the past. This gross profit compares to 91% that included only $24,000 of amortization expense in the third quarter of 2024.

Our adjusted gross margin, which you remember, as a new metric we introduced in the first quarter of 2025, improved to 92.8% in Q3 of 2025 compared to 91.5% in Q3 of 2024. Our margin is also gradually improving as we migrate customers away from Microsoft Azure, and we use that service less and less.

We held to our estimates made earlier in the year and had no capitalization of software development expenses this quarter and don't expect to see any additional capitalization this year. Q3 of 2024 saw $443,000 of capitalization expenses. That was driven by the software that we developed for deployment on to AWS that is now fully in production.

Operating expenses, which consist of selling, general and administrative, marketing and research and development expenses were essentially flat year-over-year and increased only $10,000 to $5.21 million for the third quarter of 2025 compared to $5.2 million for the same period of 2024. On an accounting basis, R&D expenses were $214,000 higher in Q3 of 2025. But as I mentioned, we capitalized $443,000 of R&D expenses in Q3 of 2024. Since we had no capitalization of software development this quarter, we saw R&D costs hit the P&L in their entirety.

Driven by our 28% revenue growth and operating expenses that remained relatively flat, our net income improved by $1.1 million to gain $290,000 for the quarter on a GAAP basis. We currently expect net income to be slightly positive for the year. Our earnings improved from a loss of $0.04 per share last year to a gain of 1% this year.

Adjusted EBITDA also improved nicely by $798,000 to a positive $631,000 for the third quarter versus negative $160,000 in the third quarter of 2024. We currently expect adjusted EBITDA to be positive for the year as well.

The weighted average diluted common shares were $20.8 million for the third quarter of 2025 compared to $19.5 million for the same period of 2024. As to the company's liquidity and capital resources, at September 30, 2025, the company had cash and cash equivalents of $7.2 million. We had expected the peak in 2025 cash to be in Q3 of 2025 but we may see the same or even slightly higher cash balances at the end of 2025. We see this dynamic due to those customers paying us upfront in bucket type arrangements where the cash effect is immediate but the revenue effect will be spread out over time.

At quarter end, there was working capital, which is defined as current assets minus current liabilities of $8.2 million, total assets of $25.3 million and stockholders' equity of $18.9 million. We have mentioned a $2 million credit facility with Citibank in the past, which had no activity or balances during the quarter. We are gradually winding that commercial banking relationship, most likely exiting it entirely by the end of 2025.

When we reflect on 2025 so far from the financial point of view, we see the strategies of upselling to current clients and diversification into new industries bearing fruit. As CSM and sales efforts encourage clients and prospective new clients, to subscribe to our offerings in annual buckets, we are especially pleased with our strong cash position in the current environment. We look forward to sharing our 2025 full year results with you on our call in March of 2026 and I'll now turn the call over to the operator who will take your questions.

[Operator Instructions] Our first question comes from Mike Grondahl with Northland Securities.

Congrats on 28% year-over-year growth. Bryan, is -- are the retail headwinds pretty much gone? I mean retail shrink or declined 5% year-over-year for revenues. Can you give us an update on kind of what you're seeing there, what you expect going forward?

Yes, I'm going to say two things. One, I'm glad that we keep diversifying from retail because I think that's where a lot of our growth is coming from. What I'd say, certainly throughout the year, we've seen softening in retail. And I'm looking at numbers sort of every day. And I don't know whether it's people not spending money because they were the shutdown or other things like that. But Christmas hasn't come yet, is the way I'll see it, but sometimes it doesn't come this early in the quarter. But who knows, right? It's still early in the quarter.

I will say that the overall slowness in retail throughout the year might mean that some of our customers who would normally are on these bucket things might have to pay us some breakage, some overage at the end of the quarter. We're watching that carefully. But yes, if you look in a lot of retail, I think even -- I was watching the news the other day, I think BofA said they expect retail to be down 5% so I think it varies from -- still, it's always like industry to industry, but it's not 100%. That's what I'd say. But that's why we've made sure that we're getting out of retail being our main revenue generator.

The last three to four years, it's better real headwind. And that knowledge is only down to a 30% mix and it's only a 5% headwind. So you've kind of gotten around it. That's great. And then you said that pricing on new business was up 14%. How much of your $6 million in revenue qualifies as new business? And then a follow-up to that, just any guess at what overall pricing is doing directionally?

Honestly, I would be making a wild guess to say what percentage of it. If I think about some of the drivers of it, it's -- I don't know, Adam, if you've got a guess on it, it's not more than 10%, probably would be my guess because it's in Title, it's in Auto. We could probably back into it, right? Title being about 2%, automotive, I think, was like 5% and then some of our new banking customers coming in there. So probably make that 7% to -- because most of that's new business, make that 7% to 10% might be part of that new business. And then the second question was -- I'm sorry, I forgot it, Mike.

Just -- if you had to look at overall pricing, total pricing year-over-year, what kind of tailwind is that?

I'd say overall pricing, when we go into renewals, we're raising prices still. So that really hasn't been an issue. The more significant increases, obviously, are with new clients because it's sort of like we know what we're worth now. When I first started, we were like we needed the business. So we were going to make deals. Now we know that we don't have to do that anymore.

Our next question comes from Jeff Van Rhee with Craig Hallum Capital Group.

This is Daniel Hibshman on for Jeff Van Rhee. Just on the SaaS revenue sequential pickup this quarter, real strong, like you said, the regional bank being a significant driver there. Is there anything onetime or seasonal as well to call out about the number for this quarter on SaaS? Or is that a pretty good baseline to think about?

That's -- it was -- there's nothing onetime. I think we had yes, overall revenues, I think we had about $140,000, $150,000 worth of professional services fees, which we're going to start doing going forward because otherwise, implementations can drag on nothing that I would say is sort of out of the ordinary other than just some sequential smaller new customers, this bank really starting to come on. Adam, anything else you might add?

No, I think it's a great point that the -- I suppose that's non-SaaS revenue, right, of the implementation from professional services that, that kind of serves two purposes, like Bryan said, to accelerate the implementation, but also it's really a selling point, sort of a competitive differentiator for Intellicheck, and we expect to see more and more of that non-SaaS revenue with sort of larger financial institution implementations.

Okay. And then on the uplift side from the regional bank, is that a full quarter of impact we're getting here? Or how should we think about that?

Yes, that was a full quarter of impact.

Okay. And then just last for me is on the social media customer, just a little bit of clarification on sort of where they stand with ramping into volumes, 5 figure this quarter, expecting maybe you get to 6 figure dollar value in terms of the volume. My understanding from last quarter was there was that coding change that needed to be made on their side to make the data processable, so how -- just clarify sort of where that's at. If they're ramping volumes, is that them paying for developmental work? Or are you're saying they're actually running operational volume through that's ramping, that's reramping into Q4?

They are not running full operational volume. But what they do is they've been -- it's almost like they tweak it. it works, they put more in, right? And because the main thing was so much of what they were sending us was just you could not process it. I mean the images were that bad. So we've met with them in person, they know that it's something -- it's still a major priority to get identity right. They know that there's three areas on the platform where fraud is taking place and they want to -- they need and want to attack that. It's just dealing with massive organizations is very fulfilling once you're done, but it takes a lot to get fulfilled and priorities move, priorities change. And they have said that they're doing their debt priorities for Q1. And they've told us that this is a very, very high priority. So fingers crossed, they actually get to it. We're working with them and we're also, in a way, on our side, which one of the things that our AI teams are doing is how do we augment their images so that we can do it better. That's part of even sort of what we just did with the OCR. How can we take a blurry poor quality image and make it look better, which might also help, right? So we're sort of working hand-in-hand with them to figure out how do we solve this problem in the best way.

Our next question comes from Rudy Kessinger with D.A. Davidson.

This is Andres Miranda for Rudy. I just have a couple of questions and congrats on a great quarter. So we -- if our math is right, incremental EBITDA margins were 62% on a year-over-year basis. That's a huge and fantastic number. Could you maybe just talk about the dynamics driving it? And how should we think about margins moving forward? Is it like a new baseline, a new normal having 10% EBITDA margins? Or how should we think about it?

Let's throw that over to Adam.

So I think there's a few moving parts to that question, right? So the first part of that question is the sort of what we call adjusted gross profit or gross margin. So I think that number is -- we're comfortable with that number being sort of in the very low 90%. So as revenue grows, we think that we'll be able to maintain that even at a higher level of revenue.

I mean, as far as adjusted EBITDA is concerned, I think our operating costs have been remarkably stable as we've been able to grow. So I mean, to be honest, I think in 2024, you saw this quarter still had negative EBITDA and now we've delivered EBITDA positive this quarter as well as the previous quarter. And so I do think that you have certain fixed costs in the business that as the revenue grows, you're just going to see more and more contribution.

I think the question becomes -- which is a big strategic question that I couldn't answer. That's more for Bryan but how does the company grow forward in terms of investments in marketing? And how does it reinvest in its own growth. So I don't know exactly what that looks like for the future. But I feel pretty good that margins are going to stay where they are, they're going to be solid, where they are and that the company doesn't have plans currently to really expand its operating expenses. So I think as God willing, we're able to grow revenue, you'll continue to see improvement on those fronts.

Yes. And the only thing I'd add to that, I've said forever that we do not need legions of people to run the company. We could -- we don't need a ton more development staff or anything like that. If we added a bunch more customers, I probably need to add one or two customer success people, somebody on the support desk, those types of things. So what we're going to do is we've always been rather prudent is make sure that we're not spending money stupidly, but certainly, we can tell there is a massive ROI to marketing. So we will certainly divert some of the money that we're bringing into marketing. But my goal is to make sure we're also making sure we put cash in the bank.

Sounds good. And maybe following up with marketing and sales productivity. Tim Poulin joined maybe a couple of quarters ago. Could you talk a little bit about how is that progress going with the sales organization and what new initiatives are driving new business?

So I'd say that a couple of things are driving new business. Certainly, marketing, outbound sales reach is bringing in some what I would consider some very good interesting partners. The thing is the larger the client, the longer it takes to land it. But so far, the combination of marketing sales and customer success has done a lot to bring in the revenue that we're seeing.

Our next question comes from Scott Buck with H.C. Wainwright.

Just one for me today. Bryan I'm curious, as the business has branched out into these new verticals, are you coming across any new tricks that fraudsters are using or anything that might identify a blind spot in the current product offering you have?

I wouldn't say new tricks other than things that I've learned, and I honestly, I learned this from the social media company, they're trying to drive people to do things more mobile versus a laptop because they're finding that it's easier for people to commit fraud through a laptop. And thankfully, we've got really good -- a laptop can kick off our tools, which pushes somebody onto their mobile device. So no new tricks.

Certainly, the big tricks that they're doing, where we're seeing massive increases in attempts are deep fakes, but again, we stop a deep fake because it doesn't matter how good your deep fake is, you can't take the license. So where they're looking like sort of the new vectors of fraud that we're seeing on this, our synthetic identity theft seems to be growing. I think that was up like 311% and deep fakes were up like, I think, 1,100% sort of year-over-year. So they're trying -- and in my opinion, they can get past to people who can't detect a fake license as well as we can. But go ahead, keep doing on that stuff, bad guys, we'll catch you because your license won't get past us.

All right. That's helpful. And I guess I'll sneak one more in. On cash, how are you kind of prioritizing what you're doing with the cash balance and as you start to stack more what makes the most sense here? Is it just continuing to reinvest in R&D and in the business? Or are there some inorganic opportunities that might make some sense?

We're -- it's inorganic, if somebody showed us something that made the most sense to like, "Oh, you got to go buy that". Obviously, we would think about it. But where we're looking right now is continuing to execute on a plan that is working by the numbers. And that means making sure that we're doing the right things in marketing, I think doing the right things and the tools that we're doing a lot with machine -- large language models, AI, that type of stuff to make our customers' customer experience much, much better and then making sure we're giving the sales and the CX team what they need to bring in more revenue. So that's how we're looking at it. Again, it's not going to be like massive head count or any of those types of things. And with the right marketing people, you can do a lot without having to spend huge amounts of dollars.

We've reached the end of our question-and-answer session. I would now like to turn the floor back over to Bryan Lewis for closing comments.

Thank you, operator. So last quarter, I closed the call with a commitment to continue our efforts to expand our market penetration in both new and existing markets and with existing customers. And I believe this quarter demonstrates that we've done just that. I'm particularly pleased that we've done this in light of some economic headwinds and developments that normally would have really hurt us, but I think the diversification has helped. So we will continue to execute on this plan. We're going to build on this success, manage our business resources smartly, but remain aggressive to continue to grow with both existing and new clients.

So I thank you all for joining, and have a great evening.

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