Good morning, and welcome to IDEX's third-quarter presentation. My name is Anders Storbråten, and I am the Executive Chairman of IDEX. Today, I want to focus on where IDEX stands in a highly relevant and active backdrop and how we will capitalize on that. We will take questions at the end, so please submit them through the webcast. I will go through three parts. First, how the market around us has changed this year.
Second, the business highlights from the last three months. Thirdly, the outlook, both the short-term picture, but also some potential for IDEX. Let me start with the backdrop, because this has really changed fundamentally this year. Already in April, the Mythos announcement showed that AI can find thousands of vulnerabilities in operating systems and browsers we all use every day. At IDEX, we warned early that this would change the threat picture significantly or fundamentally.
Through the summer, there were plenty of warnings, but not so much action. Then the autumn came. In August, pro-Russian hackers disrupted dozens of government services in Norway. In October, what we have labeled Black October, the incidents came one after another. In Denmark, 80% of the people in the national register were exposed. In France, hackers recently heated supermarket fridges in hundreds of stores to up to 50 degrees Celsius. AI found two critical flaws and put 70% of the world's websites at risk. On October 27, NSM in Norway raised the national cybersecurity risk level to high, the first time this has been published openly. In just a few months, this went from specialist warnings to frontline news. This is from TV 2's evening news on November 7. Martin Albert-Hoff, Head of Department at NSM, says, "Now we really have to act.
We cannot sit and consider whether we should do something." When the National Security Authority speaks like that on primetime news, the conversation has moved on. It is no longer about whether to act; it is about how and how fast. Media coverage is increasing every week. What does the industry conclude? In Europe, the threat is that AI makes attacks faster and cheaper to scale. The ECB required Eurozone banks to submit AI cyber action plans by the end of October, and Commission President von der Leyen has warned that AI models could take hacking to a level previously thought impossible. In the U.S., NIST, CISA, and NSA have published guidance for incidents where AI agents undermine human oversight. At the FIDO Alliance Authenticate Conference in October, the theme was clear: human in the loop is required.
You can see the quotes here from the FIDO CEO and from JP Morgan's head of identity. They say the same thing: "Identity must be anchored in a verified human." The principle is agreed: a verified human must stay in the loop. What is not agreed is the method. How do you actually prove that a real human is present? That is exactly what we do at IDEX. Your fingerprint matched on a card in hardware proves it is really you. We believe that IDEX is doing that better than anyone else and is in a unique position to execute on that. We are also getting more and more attention as a company. Over the past month, IDEX has been on TV 2 and Digi.no and Computerworld, to mention some. The point is not attention itself.
The point is that decision makers learn that the solution is already available. I repeat that. A solution is already available. That makes a real difference in the conversations our partners and our own sales team have with customers. The problem is that, for a new technology, it is to have awareness that it is available. Let us move on to the business highlights. Briefly on the numbers, third-quarter revenue was NOK 6.6 million. That is a record for IDEX and four times the second quarter. It continues. Based on the delivery schedule of our current backlog, we expect to reach NOK 14 million in the fourth quarter, more than double Q3. New orders are coming on top of that. This slide reflects some of our activity level. In IDEX Access, we have now 39 pilots signed or live. That is up from 21 in August and seven in May.
About a quarter of them are coming through our channel partners, most of them since the start of Q3. That is the partner network starting to contribute. We have started to receive purchase orders, five so far. They came both from converted pilots and from channel partners buying directly. The largest, at more than $450,000, is the biggest IDEX Access order in our history, with deliveries starting this quarter. To be transparent, we have also lost one pilot, but that was a special situation where the partner withdrew from a process. IDEX Pay, the launch with our first Indian bank, is planned for later in the fourth quarter, with two more pilots ongoing. This slide gives us an overview of our partner network, and this is how we will scale IDEX globally. IDEX is going after a global opportunity, and I will come back to that.
With more than 34 channel partners signed, nine more than in August, seven of them already selling IDEX. In the table, you can see the rest. Nine are in enablement, where we train their sales teams, agree on go-to-market plans, and map current customers together. 18th have not started yet. These partners are giving us global reach. That is important. It gives us global reach. Getting a partner from signing to selling takes time, and frankly, it is where we spend most of our time today. Partners usually roll out market by market. They prove IDEX first in one market, then extend through their footprint. This is moving fast. As more partners start rolling out and actively selling IDEX, activity and orders will increase, and we see that in our pipeline. In October, we decided to consolidate our development in Oslo.
Our U.K. site in Farnborough closed, and engineering and technology moved to Norway. We went from having two sites to one. The next phase is about working closely with customers and everyone in one place to do that. It gives us a much better and dynamic, focused company, with agentic AI development at its core, and how we are going to build the business moving forward. It also lowers our cost base by approximately NOK 20 million on a yearly basis. That is more than 20% of our third-quarter cost base. Having product, sales, technology, marketing, and management in one place really changes the way we can act on opportunities and also drive the business forward in a much faster way. We are also excited to show some progress on IDEX Mobile. We showed that in Q2.
It's basically where we get the best of both worlds, and we will come back with more details around that later in the year. We all know that we all use mobile phones, and together with our card, we can make that a very, very valuable proposition for our customers. Then to the outlook. First, the short-term picture. Partner scaling has only just begun. Seven of our 34 partners are selling today, and 27 have yet to start. This is moving fast, and we are now getting both pilots and orders through our network. Around a quarter of our pilots are partner-sourced, and our largest order to date, NOK 4.3 million, came from a single channel partner. For the fourth quarter, we expect more than NOK 14 million in revenues based on the backlog, with new orders as upside.
Cost comes down by around NOK 5 million per quarter from November. There is a possibility of positive cash flow already in the fourth quarter. That mainly requires the backlog to ship on schedule and more than NOK 4 million in new orders to land, because those deliveries go straight from inventory we already have. The big picture is even stronger. Traction is increasing, and IDEX can make everyday digital life safer, easier, and compliant. Password logins can be replaced by an IDEX card. That's our addressable market: everyone who uses passwords and logs in today. Today, we focus where the need is most acute: critical access inside enterprise, meaning employee login to IT systems and applications. That is where AI is making phishing cheaper, more convincing, and far larger in scale. We also believe the way we authenticate ourselves is changing.
Identity and access will work the same way as you pay. You tap, and you're verified. At the same time, we have a highly scalable business model. Break-even is around 250,000 cards a year before service revenues from IDEX Care, with an annual cost base between NOK 60 million and NOK 80 million. Where we land in that range depends on how fast things are moving in the short term.
Because partners take IDEX to market, we get sales leverage without adding additional costs. To sum it up, the world has woken up to the threat. The industry agrees that a verified human must stay in the loop, and IDEX has the product available, the partners, and a highly scalable business model to capitalize on this. Identify yourself as a human. Thank you. We'll now take your questions. Question is here: "How do you win against Yubico, which is established and widely deployed?
Why choose an IDEX card over YubiKey when you realistically expect to reach 250,000 cards a year? Yubico has a great product. They have a very, very small share of the overall market. I think our feedback is that many customers prefer a card form factor over a USB stick. That was the first one. Secondly , IDEX can verify a human, for sure. Yubico has an approximation of that. It's not 100% verified. When do you realistically expect to reach 250,000 cards a year? It will happen next year. Second question here: what is your threshold for announcing orders and customer wins? Is there anything much here than the pipeline that hasn't been announced yet, and when would you expect to announce it?
We have guidelines for what we announce, but I will not be able to share more details about that at the time being. Yes. Question regarding break-even with the operating cost base. That implies a contribution margin of around NOK 250-NOK 320 per card. Is that a correct interpretation, and what assumptions are you making about the product mix? I think the key here is the product mix. We are pricing, we are selling different products at different prices, some with service revenues and some not, but this is an approximation of what you need to see in order to get to break-even. I think your assumption there is fair, but you will also see different service revenues and different products being priced differently. But this is the average, yes. New question.
What would you need to see in the next two quarters to say the strategy is working? I think what we have presented today shows that it is working. We are product-ready . We activate channel partners. We sign pilots. They are being executed well, and they are materializing into purchase orders. At the moment, we are pretty content with where we are and how well it is going, and we are very positive about the speed of execution going forward. There is a question around the target number of cards sold in 2027 and 2028. We will not give any guidance on that one, other than I will be disappointed if I do not sell the numbers for the break-even. If a major customer places an order for a significant number of cards, what would the realistic delivery timetable be with your current manufacturing partners?
We are adding on the manufacturing partners, also nearshoring into Europe, so we do not see a big problem with scaling up production and delivery. There is no change there. Which of your 39 pilots has the largest potential rollout, and how many cards would that be? We are not going to go into details about the pilots, but what I can say is that we are working on things that are not in the pilot program, which is much bigger than the existing pilots. But the way to think about pilots is that once one case is going through, we had a release the other day, that can also be a starting point for much bigger volumes, because they have multiple clients, and they are taking that successful use case out to other customers in their customer base. Yes. What size are we talking about?
How close are you, and when can we expect to hear more? When can we expect more? We will inform the market when we think there is something to report on that makes sense. We are close on a lot of opportunities, and sizes are meaningful. Boring. What do you define as close? Close is these weeks and this month, this quarter, yes. Okay. One more question, maybe. Yes, take one final question here. "Thank you. Keep it up. What did you learn from missing the Q3 revenue guidance, and how confident are you in the Q4 number?" For the Q3 revenue guidance, it was just slipping a few days into Q4. Yes, we can call it a miss, but the revenues were collected. And how confident are you in the Q4 number?
There's no reason why the Q4 number shouldn't materialize, as we have indicated here. But I do think that if you go back to the presentation and see what we're talking about in the outlook, our pipeline is growing very, very fast. It's with high-quality opportunities. They are getting the right products. They've agreed to pricing. So, I think that's what you should focus on: that this is going in the right direction. We're very happy with where we are today. Thank you.