I'd now like to turn the floor over to today's host, Bryan Lewis, CEO of Intellicheck. Bryan, the floor is yours.
Thank you, and thank you folks for sitting in on our presentation. Just a reminder that the deck that I'm going to be running through today can be found under the investor section of our website. As you know, kind of required by law, let me just also point you to the forward-looking statements, safe harbor stuff, as part of this presentation. A couple of things, right? You know, part of what we feel like and why I really like working at Intellicheck is we think we are the only identity validation company out there that uses DMV-issued IDs to create a trusted environment because of what we do and how we do it, which we'll be talking about throughout this presentation.
A couple of things just to know a little bit about Intellicheck, if you don't know much about us, we authenticate close to 100 million people in North America annually. We are a hardware-free company. I think that's one of the things that's really an important differentiator between ourselves and everybody else in this space who requires a photo of the document to be able to authenticate it.
All we need is the barcode, which means we can work in any retail environment because the same device that's used to ring up merchandise can read the barcode. The device in a bank that can read the check can read the barcode. No expensive hardware to take photos of things. And when I say expensive, we're talking $600-$800.
Think about a retailer who wants to be able to issue credit cards or do account lookups at any location for credit, now having to spend $800 per checkout to do that. They're not going to do it, and the bank that provides the credit cards isn't going to do it either. The other thing I think to talk about how effective we are at what we do, we've got 28 state-level as well as lots of local and university law enforcement agencies that use us to authenticate driver's license and DMV-issued IDs.
I think that's really telling because they're the only ones who can actually call into every DMV and see if the license is real. They're trained to be able to spot fake, and they can't. That's why they use us.
If trained law enforcement can't, you have to figure that everybody in, you know, the retail or banking world isn't going to be able to either. I always tell people, you know, I lived in New Jersey for most of my life, and I worked in New York for most of my life, and I couldn't tell you what a New York license looked like, how is anybody else. Important to note, we also work in the digital world.
Your phone turns into the device that we need to use to analyze the, the document. You know, and I'd say that we're positioned well for success. One of the things that we get asked about all the time is what is our renewal rate. And I'd say it's a positive renewal rate because our clients at renewal generally increase their spend with us.
To talk about how, you know, how much people renew, every single renewal that we had, and I'm going to caveat that there's some bars and restaurants that are clients that go out of business, but every bar, every other client we had in Q1 that was up for renewal did renew. Between renewals, upsells, and other things, those renewals in Q1 had an ACV exceeding $10 million.
We consistently run at greater than 90% gross margins. I think we're very attractive, in my opinion, at 2x revenue. I wish we weren't blacked out. We've got just over $28 million in historical NOLs, and we expect positive EBITDA for 2025.
For those that aren't familiar with identity theft and why what we do continues to be in such demand, if we look at just fraud, right, and I'm not talking about things now, other areas where we're growing like, you know, email account takeovers, social media, other things, but just straight fraud theft, right? $23 billion in 2023. The numbers aren't completely out yet for 2024. A billion victims of data breaches worldwide. I in 2024 was in five breaches myself, right?
One of the fastest growing areas is account takeover where they come in and say, "Take over your whole account at your bank and steal it." $13 billion in 2023. That's a 15% increase in fraud. And then where does it happen? 35% of the time, there's identity misuse when people are opening accounts.
One of our areas that we're growing very quickly in, in the automotive space, 79% of auto dealerships have said that they've had an identity fraud loss within the last year. If you think about how much that car costs, even the dealership before they mark it up, which isn't all that much, that's a lot of money that they're losing, and that's what we stopped. The other thing is stealing an identity is cheap and easy.
You know, if you look at it, there were about 300 million people that were in that UnitedHealthcare hack alone. That got your name, address, Social Security number, email, phone number, and in most cases, a photo of the front and back of your driver's license. That means it's super simple now to become you, right?
As you can see, the Border Patrol stops 40 shipments of fake IDs in the month of August alone. That's probably the most expensive part of stealing your identity. It only costs about $20 to buy all that information about you on the dark web. The driver's license, the fake that even law enforcement can't tell apart, is going to cost you about $40. So for $60, they can become you and go shopping, right?
Now, what I'll say is that with the right technology, stopping identity theft is very simple, right? Now, the way that we do it is that there is a barcode on the back of a driver's license. What the bad guys do is AAMVA, which is the organization that all North American DMVs belong to, prints a standard.
As long as you print the barcode on the back of the fake to that standard, it will scan and it will look real. The thing is, no state, province, or U.S. territory uses that standard. They all have their own hidden unique security features, everything from digital signatures to subdirectories you need to unlock, all those types of things that can't really be discovered even with AI.
What I'd say our competition does, which is take a photo of the license, compare it to a template, you know, does this look like how an Ohio license should look and make a guess on how real is it, and then parse the data out of the back of the barcode and match it to the front? That doesn't work because it will parse, it looks real, and you can't tell it apart.
You can go look on the website to find out about the management team. The one thing I will say is that almost everybody on this team has experience in high-growth SaaS businesses. You know, why do people use us? You know, I'm not going to run through everything except for the fact that one of our largest banks, their head of fraud called us one of the top five fraud stoppers of all time, a true game changer.
What I will say is that the New York State DMV, before they put us in production, tested us against 1,000 fake IDs, and we caught every single one.
I think that shows why law enforcement uses us and why anybody who loses a lot of money and any time that a fake gets through, like banking, like credit cards, like automotive, like title insurance, they use us because they can be assured that they are not going to get hit with that loss. All right. Where are we used?
One of the questions that I get asked a lot. Across just about every vertical that we're in, there's new account creation, whether that is in the physical or the digital world. You know, automotive is a good example. A lot of laws about what needs to be done with your license if you're coming in looking at a car. They can now do that whether you're standing right in front of them or a thousand miles away.
We're using instant credit, buy now, pay later, lease to own, title insurance, email account recovery, social media account recovery, property management, background checks, you name it. If somebody needs to know it's you, they use us. In retail, certainly card not present. You know, I don't know about you all, but I like my points. I just don't like carrying around credit cards.
If I want to get the points, I just say, "I forgot my credit card." They say, "No problem. Show me your license." We scan the license. We prove that it's real or it's fake or it's real but expired. Send that information off to the bank. They say, "Yep, Bryan has a credit card, issue the credit." I get my points, the retailer gets their sale, and everybody's happy. In the banks, we're used in the branches, in their call centers, and online.
As I said, in the corporate world, we're used for employee onboarding, internal account resets. You know, that's where a lot of the breaches have been coming from lately. People call in and pretend to be an employee, get a password reset, and now they're in the system. Our customers have been using us to verify that it really is Bryan when he calls in to the support desk to get a password reset.
How do we do it, right? What we do, we do in less than a second. We're going to scan the ID, and using our 100% proprietary barcode verification, we're going to make sure that the barcode is real and matches. There are currently about 250 valid formats in circulation today. We're going to know that it matches that jurisdiction's format for that date of issuance, right?
If it's, we can also tell if the document has been, particularly in the digital world, if it's been altered in any way, if it's an image of a document, or if it's an image taken off the screen. We have nearly 100% decisioning. I think we're currently running about 99.975% of the time that we're presented with a document, we can render a decision on whether it's good or bad.
Those that are doing templating, you know, our competitors can't say the same thing. It runs at a much lower rate, and oftentimes it requires that the picture of the document be sent off to a human being for them to look at it and make a decision. That does not work in most environments. You know, it does not work in the retail environment because they don't want their lines backing up. Again, no hardware required.
In almost every situation we're in, whatever they are using to, you know, that business is using to run their business, we can integrate with something that can read a barcode. Again, in the digital world, people's phone becomes the device that's used to gather all the information we need to do, you know, to render that decision. All right. We then analyze all that data, right?
Everything from NIST-certified facial, biometrics to phone carrier lookup to is this, you know, coming through, you know, a known website or a known carrier of fraud. We're going to tell our customers that. They can use that information to decide whether or not they can and want to do business with the, you know, whoever is on the other end of that transaction. Right. We provide the results back to the customer.
We verify the ID is real. If they want, our customers decide the level of friction. Do they really want to go all the way to facial recognition? Most do not because they are so happy with the barcode. They do not want to risk adding more to the transactional friction and potentially lose that customer. We are going to let them know that it is real if they want that not only is it real, but the owner is holding it. Are there other risk factors that might make them say, we maybe should think about this transaction further? That happens in seconds. All goes into databases, which our customers can query in real time, and can be stored for as long as they want.
We also have many ways that our customers can access us because not everybody wants to be or can is able to do integrations. For example, there are three different ways people can use us without having to do anywhere. There is a mobile app that they can download. There is a website that they can log into and be, you know, send a text to somebody's phone, whether they're in front of them or, again, thousands of miles away. This is one of the largest ways that auto dealerships use us.
We have a product that, all they need to do is get a simple dip scanner, attach it to their computer, and they can be running transactions immediately. Then we have two ways that if they want to integrate with us, they can put us as part of their system.
Direct is an API that allows them to write their own front end, and is also what is used, mostly in banks and retail locations where they're just using their existing equipment. We have a product called Capture for Delivery that, two simple webhooks, they're up and running in a white-labeled experience. The one thing that I should point out, given that we're in about 30,000 retail locations and I think 8,000 or 9,000 bank locations, probably likely that some of you on this call have gone through our system and never would know it.
We're always white-labeled. People don't know that it's us. You know, what makes us different? What I'd say is that it really has to do with our long-standing relationship with AAMVA and the DMVs.
You know, basically when the DMVs went to barcodes, you know, many years ago, IntelliCheck was the one who helped them do it. And we helped the DMVs to, you know, still to this day. If you Google the DL/ID card verification program, you'll be brought to the AAMVA website, which talks about how we work with states when they're changing their barcode format to make sure that they've printed it properly and that it still meets the AAMVA standard.
That's what gives us this proprietary information that allows us to be so accurate in finding fakes. One of the things that I think, again, is important to point out, you know, I have a stack about 3 inches high of fake IDs on my desk that we've gotten from our customers and law enforcement. Again, every single one of those documents will scan, right?
That data will come out, that data will parse, but it does not mean the document is real, right? What we know, again, are all the hidden security features in that particular document. There are some very sophisticated rules about how the information needs to be put in the document. There are some very sophisticated rules, things like when you're parsing the data out, different fields need to add up and say, "Match a number somewhere else in the document."
There's all these sort of puzzle pieces in there that really cannot be discovered even with AI because there is no sense to what's going on. It is very hard to figure out the correlation. I'd say, you know, given that law enforcement tells us we're greater than 99% accurate when they're using us, it proves that it cannot be broken.
Now, on the other hand, templating is very easy to figure out how to break. It does not take much for AI to figure out where everything should be on a document. You do not need that many to figure it out. You know, even you can go on the dark web, as we do when we're monitoring things, and there are people showing you how to use AI to template a document.
They can't figure out how to template the barcode to match all the hidden security features. So that's why we're able to verify the licenses with such accuracy. You know, and I think a couple of things about 2024, let me just skip some of these slides. They're just a little bit redundant in my opinion.
To give you the magnitude also then of who, you know, who we deal with, we work with some of the largest banks, the largest title companies, largest automotive dealers, very big players in the technology for background checks are now coming live on the system. Even though we're a little company that many people haven't heard of, some of the largest banks in the world rely on us to be the first step in their business process. In 2024, you know, one of the things that we wanted to do was to make sure that we were expanding into other markets other than just credit cards and retail, which can be very tied to the economy and have a lot of seasonality to them.
A couple of things that we looked at and where would we go, you know, we looked, we signed up Qualia, which is a real estate transaction platform used by many title companies out there. We signed Doma Title Insurance. They're the eighth-largest title insurance company. We signed Accio Data, which is the largest provider or one of the largest providers of software to background check companies. So it'll be completely integrated into their process. We have one of the most widely recognized brands in banking.
They're a top 10 issuer of Visa and Mastercard credit cards. They just renewed and increased their spend with us 15%. And so far what they thought they would be, they buy a bucket from us of transactions they'll use. They thought that was going to last them 2025, and they're already back because they understand that it will not.
We did just recently sign the U.S.'s largest title insurance company. We've got one of the largest lease-to-own companies with over 1,700 locations. We went into the university space. The amount of fraud in the student loan space is phenomenal. If I remember reading right, it was about $8 billion or $9 billion in Pell Grants in California alone. This university was getting, taking on lots of losses from it. They put us in place that has now stopped their losses. Some 2024 financial highlights.
In Q4 2024, we had record total and SaaS revenue of $5.93 million and $5.91 million. Our gross margin for the quarter was 90%. Generally we're between 90% and 92% on gross margins. We've got cash on hand of $4.7 million and zero debt. For the quarter we had net income of $488,000 and adjusted EBITDA of $860,000.
I have Adam on the call in case somebody later wants to understand, you know, the EBITDA walk. That's Adam's forte, not mine. Just a couple of other things before we open it up to questions. You know, this is certainly how I feel what we do. Fraud starts with identity theft. Hit me and hit my wife just recently. She said people tried to steal her identity three places, three times. I say it ends with us. That is one of the things I like about my job.
I enjoy looking at the reports every day where I can see the number of people that we have stopped from becoming victims of crime. I think that makes all of us at Intellicheck feel pretty good about what we do. With that, we'll start answering the questions.
Gar, you want to?
Sure.
We have time for a couple of questions. The first one's regarding the channel partner program. Bryan, could you talk a bit about your partnership program, how it's working so far? How many resellers do you have at the moment? What are your ambitions for the program going forward?
I'd say it's going really well. The partners that we've been integrated with are all growing. I'd like to make it work even better. I can tell you that our goals are we want to find sort of two channel partners for, you know, every vertical. Some verticals would, you know, say that there would be more, like banking, because there are four or five companies that do a lot in banking. We want to get embedded with them.
I think to make it work even better than it is today, I want to bring on board somebody who's experienced in managing channel partners because the goal there is to make sure that their people understand our differentiators and how to sell it. Being a salesperson for most of my career, I know that you, you take the path of least resistance. You sell what's easy, and something new isn't always easy. If we don't make it easy for them, they are, you know, they won't sell it. I want to help them. That's the goal for the year.
All right. Our next question. How does Intellicheck plan to accelerate SaaS growth in 2025, particularly outside the retail vertical?
Two ways. I think it dovetails into the first question. Our channel partners.
We're bringing on some channel partners in banking, which I think will help us get into small and mid-sized banks. Many of them don't have their own software for us to integrate with. They outsource that. We have quite a few, you know, I'd say fairly decently sized credit unions that want to use us, but can't until we get integrated.
Those discussions are going well because we've got, again, these banks going to the integrator saying, "We need Intellicheck." I would expect to see growth in that area. We've got a bank that has given us their rollout, which will start in Q3. Again, pure banking, which is not so retail cyclical.
They want to roll out to be fully integrated and fully implemented, in Q1 of next year, at which point they're, you know, given the volumes and the multi-year contract that we have nearly complete, would make them one of our top three customers. I just think sales execution only improving on that, will accelerate growth. Between our partners who are already in place, our partners we're putting in place, and, you know, the banks and other customers that we are in various stages of implementation and release, that should help accelerate the growth.
Our next question. How has the move to AWS impacted cost savings and how might further vendor competition affect margins?
I'm going to say two things. It hasn't yet impacted savings because we're running on both Azure and AWS until we fully migrate people over.
Now, I will say that, you know, the cost per transaction, if you will, on AWS is much cheaper than it is on Azure. You know, I'm also going to say that we are also putting money into some of the machines that you need to be running AI because we are looking at what data products can we make that enhance our customers' decisions on fraud. You know, I see what one customer sees, you know, I said may change that.
Customers only see what they see. I see what they all see. How can we work together to fight fraud? Those are the discussions that we're having. I think the banks particularly are getting more comfortable with it, whereas before they were afraid of, you know, data sharing, data, storage for too long, you know, for breach purposes.
They now are coming back to us and saying, "We really need to get this going. How do we make it work?" As far as further vendor competition, once we move off of Azure completely and get everybody onto AWS, we are 100% vendor agnostic or, you know, cloud provider agnostic. We can go anywhere. I can tell you the competition is getting fierce to the point that if you have a commitment to one cloud, the other clouds are willing to buy it out. I think that that should, you know, continually help to increase margins.
I think we have time for one more question. That's, how does Intellicheck's fraud prevention technology continue to evolve to meet consistent fraud trends across industries? That I'd say is one of the reasons that we really are, looking, you know, or investing in, AI and machine learning.
It's, and how do we do all these things in real time? I think a good example of even where that works, there was one particular state that had one DMV that screwed up the program on their machine and was printing the date wrong in the barcode. We were able to alert the state so within two days they could fix their error, you know. Now we know that, you know, licenses issued over that two-day period don't follow the normal standard. We're not going to say that they're fake, but we know what's going on.
I'd say machine learning, and AI, and how do we look at these large data sets to figure what can we do in conjunction with our customers to improve the fraud fighting is going to be what we're, where we are investing, time, effort, money, and brain.
All right. That concludes our Q&A session.
Yep.
Thank you, everybody, for attending.
Thank you very much. That does conclude Intellicheck's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.