Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VerifyMe Inc (VRME, Financial) reported improvements in gross margin, gross profit, and adjusted EBITDA for 2024 compared to 2023.
- The precision logistics segment experienced revenue growth in proactive services, nearly offsetting the loss of a premium customer.
- The company has increased its number of proactive services customers by 6% year-to-date over 2023.
- VerifyMe Inc (VRME) is optimistic about opportunities from engaging with bankers and advisors for strategic alternatives.
- The company has made process improvements that partially mitigated the impact of losing a high-margin premium customer.
Negative Points
- Total year-to-date net cash is slightly down, and 2024 revenue is anticipated to be slightly below 2023 levels.
- The authentication segment did not achieve the expected growth in 2024, leading to a strategic reevaluation.
- A $2.3 million goodwill and intangible asset impairment was recorded due to challenges in the authentication segment.
- Operating expenses increased to $4.8 million in Q3 2024 from $2.9 million in Q3 2023, partly due to the impairment charge.
- The company plans to exit the code portion of the authentication segment, ending its relationship with Amazon Transparency.
Q & A Highlights
Q: Hi, Adam. Regarding the remaining authentication business, is it adjusted EBITDA positive or negative?
A: At this point, it would be adjusted EBITDA negative. However, we aim to drive it to adjusted EBITDA positive in 2025. β Adam Stedham, CEO
Q: Does it make sense for the authentication segment to exist given its small contribution to revenue?
A: We are considering the best path to create shareholder value, which may involve reevaluating the segment's role within VerifyMe. β Adam Stedham, CEO
Q: Can you update us on the outlook for the premium business post-FedEx decision?
A: We see growth in direct premium customers and stable indirect premium business. We aim to grow direct premium to offset any decline in indirect premium. β Adam Stedham, CEO
Q: What components of the authentication segment will remain?
A: The ink component and related technology will remain, and we are analyzing potential partnerships to create value. β Adam Stedham, CEO
Q: Do you expect revenue from the authentication segment in 2025?
A: Yes, we expect revenue, but it may not be material relative to the company's overall revenue. β Adam Stedham, CEO
Q: What is the mix of proactive services revenue in precision logistics?
A: Approximately 80% of the revenue is from proactive services, with the remaining 20% from premium services. β Adam Stedham, CEO
Q: How do you expect gross margin to trend in 2025?
A: We anticipate a flattening of the gross margin profile due to changes in revenue mix and cost rationalization efforts. β Adam Stedham, CEO
Q: Have you added more sales personnel in logistics?
A: Yes, we added another sales and marketing person in Q3 and are evaluating further investments in sales strategies. β Adam Stedham, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
