Summary
Intellicheck's fiscal 2022 second quarter told two stories at once. Total revenue fell 16.4% to $4.01 million for the quarter ended June 30, 2022, from $4.80 million in the prior-year quarter. Nearly all of the decline came from hardware. The prior-year period carried an extraordinarily large, one-time equipment purchase, while the current quarter had negligible non-core hardware sales. SaaS revenue, the piece management wants investors to watch, rose 21% to a record $3,928,000 from $3,234,000. Excluding equipment sales, revenue for the quarter increased 16%. For the six months, SaaS revenue rose 21% to $7,281,000 from $6,009,000, and revenue excluding equipment rose 18%. The company sells identity validation for KYC, fraud and age verification to financial services, fintech, e-commerce and retail businesses, plus law enforcement and government agencies.
Gross profit rose 9.5% to $3.64 million for the quarter from $3.33 million. Gross margin was 90.9%, up 21.5 percentage points from 69.4%, a gain driven by the mix shift away from low-margin equipment. Excluding equipment, gross margin was 93% in both quarters, so the underlying software economics did not change. Year to date, gross profit of $6.72 million rose 12.6% and gross margin of 90.8% was up 12.9 percentage points. Operating expenses rose 14% to $4,742,000 for the quarter from $4,165,000 on higher personnel costs, professional fees and marketing. Equity compensation inside that figure was $446,000, down from $749,000.
Profitability still moved backward in the quarter. Operating loss widened to $1.10 million from $0.84 million, and net loss widened to $1.10 million from $0.84 million. Diluted loss per share was $0.06 against $0.04. Operating margin was -27.4% for the quarter, down from -17.4%. Adjusted EBITDA, a non-GAAP measure, was negative $583,000 compared with negative $47,000. The six-month view is friendlier. Revenue of $7.40 million was down 3.4%, but the net loss of $2.57 million narrowed 53.0% from $5.46 million, and operating margin of -34.7% improved 36.8 percentage points from -71.5%. Diluted loss per share for the year to date was $0.14 versus $0.29.
Cash generation was uneven. Operating cash flow was $0.86 million for the quarter, up from negative $0.60 million a year earlier. For the six months, operating cash flow was negative $1.54 million, worse than negative $1.08 million. Capital expenditures were $0.02 million for the quarter, down from $0.13 million, and $0.16 million year to date, down from $0.18 million. Contract indicators improved sharply. Deferred revenue, current portion, was $1.78 million, up 229.7% from $0.54 million. Remaining performance obligations were $1.78 million, up 226.4% from $0.55 million. Those balances reflect work booked but not yet recognized.
Management gave no formal guidance for the third quarter or the full fiscal year. The release leans on the SaaS trajectory and new use cases in digital identity validation instead. Risks are familiar and real. The company cites COVID-19 uncertainty, long sales and implementation cycles, supply chain delays, dependence on government-provided data, and liability from security breaches or product failure. It also flags the possibility of raising additional capital and the need to monitor its stock price and operations for impairment triggers. Results are preliminary until the Form 10-Q is filed, and the reported figures do not consider adjustments that may be required in connection with the completion of the review process.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $4.0M | $3.4M | +18.1% | $4.8M | -16.5% |
| Gross profit | $3.6M | $3.1M | +18.4% | $3.3M | +9.5% |
| Gross margin | 90.9% | 90.7% | +0.2 pp | 69.4% | +21.5 pp |
| Research & development | $1.6M | $1.6M | +0.9% | $1.4M | +19.6% |
| Sales & marketing | $3.1M | $2.9M | +6.2% | $2.7M | +15.1% |
| Total operating expenses | $4.7M | $4.5M | +4.3% | $4.1M | +16.6% |
| Operating income (loss) | -$1.1M | -$1.5M | +25.2% | -$738.4K | -48.7% |
| Operating margin | -27.4% | -43.2% | +15.8 pp | -15.4% | -12.0 pp |
| Net income (loss) | -$1.1M | -$1.5M | +25.2% | -$737.8K | -48.8% |
| Net margin | -27.4% | -43.2% | +15.8 pp | -15.4% | -12.0 pp |
| Diluted EPS | -$0.06 | -$0.08 | +$0.02 | — | — |
Risks
The company identified a material weakness in internal control over financial reporting related to administrative errors in accounting for shares surrendered in option exercises, calculation of shares issued and outstanding and weighted-average shares outstanding, and treatment of certain equity awards as liabilities. Management concluded internal control over financial reporting was not effective as of March 31, 2022, raising the possibility of restatement and additional costs.
Risk factors state the ongoing COVID-19 pandemic and current economic conditions may cause a decline in business and consumer spending. MD&A says the company is unable to predict the pandemic's impact on its financial position, results of operations and cash flows; Q2 revenue decreased 16.4% to $4.01 million and net loss widened to $1.10 million.
The filing adds risk that the ongoing conflict in Ukraine and sanctions against Russia could disrupt global economic and capital markets and reduce revenue, even though the company does not conduct business in Ukraine or Russia. It also warns of increased cyber-attack risk following a CISA warning on Russian attacks on US networks.
MD&A reports operating cash flow for the six months ended June 30, 2022 decreased 43.1% to negative $1.54 million, compared with negative $1.08 million in the prior-year period, and Adjusted EBITDA was negative $1.39 million for the six months. The company says it may raise additional funds and there can be no assurance it can secure funds on satisfactory terms.
Risk factors note that customer business disruption or reduced technology spending could negatively affect the willingness of customers to enter into or renew contracts and ultimately adversely affect revenues. MD&A attributes the Q2 revenue decrease primarily to lower equipment revenues, while SaaS revenue increased 21% to $3.93 million.
SaaS KPIs
All quarters →Adjusted EBITDA
SaaS Revenue
Summary, forecast, risks and KPIs are extracted from Intellicheck, Inc.'s SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.