Summary
IDN, a technology company that develops identity authentication and threat identification solutions for bank and retail fraud prevention, law enforcement, and government, military and commercial markets, closed fiscal 2022 with a fourth quarter that showed revenue growth and narrower losses. Revenue in the quarter ended Dec. 31, 2022 was $4.55 million, up 16.6% from $3.90 million in the prior-year quarter. Gross profit was up 20.1% to $4.31 million, and gross margin was 94.8%, up 2.8 percentage points from 92.0%. The operating loss narrowed to $0.43 million from $0.99 million. The net loss narrowed to $0.56 million from $0.99 million. The quarter also produced a negative operating margin of 9.5%, up from the negative 25.4% operating margin in the prior-year quarter.
Full-year results were mixed. Revenue for fiscal 2022 was $15.97 million, down 2.6% from $16.39 million in fiscal 2021. The company said the decline came mainly from lower non-recurring equipment revenue, while SaaS revenue grew. The fourth quarter benefited from higher revenue, but the full-year top line still fell. Gross profit was up 14.0% to $14.69 million from $12.88 million, and gross margin was 92.0%, up from 78.6%. The company reported an operating loss of $3.72 million for fiscal 2022, narrower than the $7.49 million operating loss in fiscal 2021. The full-year operating margin was negative 23.3%, up 22.4 percentage points from negative 45.7% in fiscal 2021. The net loss narrowed to $3.85 million from $7.48 million. Diluted loss per share narrowed to $0.20 from $0.40. Adjusted EBITDA was negative $924,000 for both years.
Cash flow and backlog showed pressure. Operating cash flow was negative $1.77 million in the fourth quarter, down from positive $0.71 million in the prior-year quarter. For the full year, operating cash flow was negative $3.48 million, down from positive $1.12 million. The operating cash flow swing was large. The company generated positive operating cash flow in fiscal 2021, but used cash in fiscal 2022. Capital expenditures were $0.03 million in the quarter and $0.19 million for the year. Capital spending remained modest, so the cash burn was not driven by heavy investment. Deferred revenue was $0.91 million at Dec. 31, 2022, down 28.4% from $1.27 million a year earlier. Remaining performance obligations were $0.91 million, down 28.8% from $1.27 million. The drop in deferred revenue and RPO suggests some customers are not committing to as much future work. The company said it is monitoring COVID-19 and cannot predict how the pandemic will affect its financial position, results of operations and cash flows.
Risks remain. The company may raise additional funds to respond to business contingencies, fund faster expansion, develop new markets or acquire complementary businesses. There is no assurance that it can secure additional funds on satisfactory terms. It recorded a full valuation allowance for net deferred tax assets as of Dec. 31, 2022. The company has net operating loss carryforwards, and management noted that it is not involved in any legal or regulatory proceeding expected to have a material adverse effect on the business. The filing's forward-looking statements anticipate future growth in revenues, loss from operations and cash flow. The company also has a shelf registration statement that gives it flexibility to access additional capital when market conditions are appropriate. The company's liquidity depends on its cash, expected cash from operations and availability under its revolving credit agreement. Management said it expects those sources to meet working capital and capital expenditure requirements for at least the next 12 months. The quarter's revenue growth and margin gains are encouraging, but the full-year revenue decline, negative operating cash flow, and lower backlog remain the main watch items.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $4.6M | $4.0M | +13.4% | $3.9M | +16.6% |
| Gross profit | $4.3M | $3.7M | +18.1% | $3.6M | +20.1% |
| Gross margin | 94.8% | 91.1% | +3.7 pp | 92.0% | +2.8 pp |
| Research & development | $1.3M | $1.5M | -8.8% | $1.4M | -3.2% |
| Sales & marketing | $3.4M | $2.9M | +17.0% | $3.6M | -5.5% |
| Total operating expenses | $4.7M | $4.4M | +8.4% | $5.0M | -4.8% |
| Operating income (loss) | -$432.0K | -$724.0K | +40.3% | -$1.4M | +69.1% |
| Operating margin | -9.5% | -18.1% | +8.6 pp | -35.8% | +26.3 pp |
| Net income (loss) | -$561.0K | -$724.0K | +22.5% | -$1.4M | +59.8% |
| Net margin | -12.3% | -18.1% | +5.7 pp | -35.8% | +23.4 pp |
| Diluted EPS | -$0.03 | -$0.04 | +$0.01 | -$0.07 | +$0.04 |
Risks
Revenues from the ten largest customers accounted for 72% of total revenues in 2022 and 79% in 2021, and three customers accounted for 52% of revenues in 2022 while two customers accounted for 55% in 2021. The loss of one or more significant customers could have a significant adverse impact on business, financial condition, and results of operations.
Long sales and implementation cycles for target customers such as banks, credit card issuers, large retailers, and government agencies continue to adversely impact the timing of revenue realization. Budgetary constraints and potential economic slowdowns or inflationary pressures may also delay purchasing decisions; FY2022 year-to-date revenue was down 2.6% to $15.97M from $16.39M in FY2021 year to date.
Proprietary software relies on reference data provided by government and quasi-government agencies, including the fifty states, ten Canadian provinces, and the District of Columbia. If one or more of these jurisdictions stop providing sample identification cards or reference data, the utility of the software would be diminished in those jurisdictions and the business would be damaged.
Cash used in operating activities was $(3,480) for FY2022 compared to cash provided by operating activities of $1,116 for FY2021, down 411.8% year to date. The company may need additional capital, and its shelf registration statement could result in dilution to existing stockholders.
The company relies on a limited group of suppliers for certain hardware, services, and software applications, and long lead times for components create uncertainty. If demand exceeds forecasts, it may not have enough products to meet customer obligations, and finding alternative suppliers could take several months.
The company incurred net losses of $(3,851) and $(7,478) for FY2022 and FY2021, respectively, and had an accumulated deficit of $(130,748) as of December 31, 2022. It expects additional expenditures in line with sales growth and may not achieve operating profits in the near future.
The ongoing COVID-19 pandemic and potential re-imposition of safety precautions, travel restrictions, business closures, and cancellation of industry events could limit the company's ability to meet with existing and potential customers. MD&A notes disruptions were not as severe in FY2022 but the impact remains uncertain.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from Intellicheck, Inc.'s SEC filings for Q4 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.