Intellicheck, Inc. Q2 FY2024 earnings

Intellicheck reported second quarter revenue of $4.67 million, down 0.9% from $4.72 million in the same period of 2023. Gross profit fell 3.1% to $4.23 million. Gross margin was 90.5%, down 2.0 percentage points from 92.5%. The operating loss narrowed to $0.22 million from $0.85 million. Net loss improved to $0.13 million from $0.85 million. Diluted loss per share was $0.01, compared with $0.04. For the six months ended June 30, 2024, revenue rose 4.3% to $9.35 million. Gross profit increased 2.3% to $8.47 million. Gross margin was 90.6%, down 1.8 percentage points from 92.4%. The six-month operating loss narrowed to $0.72 million from $2.23 million. Net loss narrowed to $0.57 million from $2.24 million. Diluted loss per share was $0.03, compared with $0.12.

The quarterly revenue decline came as transaction volumes for SaaS fell, according to management. Intellicheck said its market diversification strategy is already showing value amid economic variability in key markets such as retail. CEO Bryan Lewis said the company expects those headwinds will become tailwinds that contribute to growth and profitability. Profitability remains negative, but the trend improved. Adjusted EBITDA, a non-GAAP measure, decreased by $106,000 to ($70,000) in the second quarter from a gain of $36,000 in the same period of 2023. For the six months ended June 30, 2024, Adjusted EBITDA was ($173,000), compared with ($521,000) in the same period of 2023. Operating margin was -4.6%, up 13.4 percentage points from -18.0%. On a six-month basis, operating margin was -7.7%, up 17.1 percentage points from -24.8%. Management said lower research and development costs and headcount-related expenses drove the operating expense reduction.

Cash generation remains a weak spot. Operating cash flow was negative $1.18 million in the second quarter, down 8.4% from negative $1.09 million in the same period of 2023. For the six months ended June 30, 2024, operating cash flow was negative $0.31 million, up 63.6% from negative $0.86 million. Capital expenditures were $0.01 million in the second quarter, down 28.6% from $0.01 million. Year to date, capital expenditures were $0.02 million, down 38.7% from $0.03 million. Deferred revenue was $1.80 million at June 30, 2024, up 36.3% from $1.32 million a year earlier. Remaining performance obligations also were $1.80 million, up 36.3% from $1.32 million. The current portion of deferred revenue is the figure reported.

Management's outlook remains qualitative. It pointed to retail as a key market where economic variability has weighed on results, and it expects that pressure to ease. The release also flagged risks, including market acceptance of its products, the transition of pilot programs into commercial scale deployments, long sales and implementation cycles, dependence on government-provided data, and potential liability from security breaches or product failure. Intellicheck said the unaudited results are preliminary and do not consider adjustments that may be required in connection with the completion of its review process. The numbers should be considered preliminary until the Form 10-Q is filed. Management said no events or circumstances during the three and six months ended June 30, 2024 would more likely than not reduce the fair value of the company below its carrying amounts, and it will conduct the annual goodwill impairment test in the fourth quarter. The company also said it is not currently involved in any legal or regulatory proceeding expected to have a material adverse effect.