Intellicheck, Inc. Q1 FY2023 earnings

Intellicheck opened fiscal 2023 with revenue of $4.25 million for the quarter ended March 31, 2023, up 25.3% from $3.40 million in the prior-year quarter. SaaS revenue did most of the work. That line rose $875, or 26%, to $4,228 from $3,353 a year earlier. Gross profit reached $3.92 million, up 27.4% from $3.08 million. Gross margin climbed to 92.2% from 90.7%, a gain of 1.5 percentage points. Management credited a higher concentration of SaaS revenue, a nominal decrease in hardware revenue, and an improved cloud cost structure.

Costs still grew faster than the top line in dollar terms. Operating expenses rose $685, or 15%, to $5,232 from $4,547. Higher general and administrative costs, mainly headcount related expenses, plus higher accounting and professional fees drove the increase. The operating loss narrowed to $1.31 million from $1.47 million, an improvement of 10.8%. Operating margin was -30.8%, better than -43.2% a year earlier, a swing of 12.4 percentage points. The net loss narrowed to $1.32 million from $1.47 million. Diluted loss per share narrowed to $0.07 from $0.08.

Cash generation turned positive. Operating cash flow was $233,000 for the quarter, against $2.40 million used in the prior-year quarter. Capital expenditures were $17,000, down 87.0% from $131,000. Cash used in investing activities was $17,000, compared with $131,000 a year earlier, and cash used in financing activities was $57,000. At March 31, 2023 the company held cash and cash equivalents of $5,355, short-term investments of $4,881, working capital of $8,752, total assets of $23,595 and stockholders' equity of $17,830.

Contract indicators point to a larger backlog. Deferred revenue, current portion only, was $2.03 million, up 96.4% from $1.03 million. Remaining performance obligations were $2.03 million, up 95.4% from $1.04 million. On a non-GAAP basis, Adjusted EBITDA was a loss of $558,000, narrower than the $807,000 loss a year earlier. The reconciliation adds back stock-based compensation of $682,000, depreciation and amortization of $70,000, a provision for income taxes of $7,000 and interest and other income of $1,000.

Guidance is absent. The filing carries no revenue or earnings outlook for the next quarter or the full fiscal year. It does include a liquidity statement: management expects available cash, expected cash from operations and availability under the revolving line of credit to cover working capital and capital expenditure needs for at least the next 12 months. The company also keeps the option open to raise additional funds and warns there is no assurance it can secure them on satisfactory terms.

Other risks sit on the balance sheet. Goodwill was $8,102 as of March 31, 2023, and management concluded that no events or circumstances during the quarter made impairment more likely than not, though the annual test comes in the fourth quarter. A full valuation allowance remains against net deferred tax assets. The company reported no legal or regulatory proceeding expected to have a material adverse effect on the business. Forward-looking statements in the filing anticipate future growth in revenues, loss from operations and cash flow.