Intellicheck targets new verticals and forecasts AWS-driven cost savings amid 10% revenue growth

Earnings Call Insights: Intellicheck (IDN) Q2 2025

MANAGEMENT VIEW

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Bryan Lewis, CEO, reported total revenue grew to $5.1 million from $4.7 million in the prior year period, with adjusted EBITDA of $75,000 and cash at quarter end increasing by $3.5 million to $8.6 million. He highlighted "multiyear expansions of our relationships with some of our major bank and credit card issuer clients, including the significant upsell we accomplished with a leading regional bank headquartered in the Southeast." Lewis stated a "3-year contract has year 1 revenues in the low 7-figure range and ramps in year 2 and 3 to have a total contract value in the very high 7 figures over the contract duration." He also shared that "a large bank and credit card issuer...has now signed to a new 3-year tiered contract that is pacing at annual contract value in the mid-7-figure range."

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Lewis announced the addition of Sandra Bauer as SVP of Customer Experience and Account Management, noting that "many new initiatives are starting with large clients. The two 3-year agreements previously discussed are examples of those changes working."

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The company shifted its market focus, with greater emphasis on verticals such as title insurance, automotive, notary services, and background checks. Lewis explained, "we have put more focus on the new and expanding number of verticals...where we charge a much higher price per scan, yet the volumes for these clients are lower than large retail chain."

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On product and operational strategy, Lewis stated, "we now have approximately 95% of our clients migrated onto the AWS platform. We expect our savings to be in excess of $300,000 annually going forward."

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Adam Sragovicz, CFO, said, "Revenue for the second quarter of 2025 increased 10% to a first quarter record of $5.1 million compared to $4.7 million in the same period of 2024." He added, "Gross profit as a percentage of revenues was 89.8% for the quarter...Our adjusted gross margin...improved to 92.2% in Q2 of 2025 compared to 91% in Q2 of 2024."

OUTLOOK

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Management highlighted that the "3-year contract has year 1 revenues in the low 7-figure range and ramps in year 2 and 3 to have a total contract value in the very high 7 figures over the contract duration."

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Sragovicz stated, "we expect Q2 of 2025 to be the high point in 2025 of cash, but we expect to finish the year higher than where we were in Q1."

FINANCIAL RESULTS

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Second quarter revenues reached $5.1 million, a 10% increase year-over-year. SaaS revenue was $5.08 million, representing over 99% of total revenue. Gross profit margin was reported at 89.8% for the quarter.

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Adjusted EBITDA was $75,000 for the quarter, an improvement of $145,000 versus the prior year.

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Operating expenses increased $455,000 or 10% to $4.9 million, with R&D expenses higher due to a reduction in capitalized costs compared to the previous year. The company ended the quarter with $8.6 million in cash and working capital of $7.1 million.

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The company expects annual savings from the AWS migration to exceed $300,000.

Q&A

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Rudy Grayson Kessinger, D.A. Davidson: "Has that step-up in their revenue begun to flow yet in Q3? Or when is it expected to begin generating...?" Bryan Lewis: "We started invoicing...for the bank branches in July."

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Kessinger: "Update on retail scan volumes in the quarter? Any improvement or further decline from what you saw in Q1?" Lewis: "Retail was down 2% quarter-over-quarter and down 20% year-over-year, but banking was up 12% Q1 to Q2 and up about 85% year-over-year."

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Logan Hennen, Northland Capital Markets: "Can you help us quantify that with how that correlate to retail revenue in terms of percentage of total revenue and how much retail was down year-over-year?" Lewis: "Retail revenue year-over-year down 20%...overall, retail as a percentage of sort of major revenue was 25%."

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Jeffrey Van Rhee, Craig-Hallum: "The large bank credit card issuer...you referenced a new 3-year ACV mid-7-figure range. What was that customer running prior?" Lewis responded that they were "slightly lower than that, but they've been expanding drastically."

SENTIMENT ANALYSIS

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Analysts pressed for clarity on revenue timing, channel strategy, vertical expansion, and retail softness, with a tone that was neutral, seeking specifics on pipeline and new wins.

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Management maintained a confident and optimistic tone, frequently citing expansion, contract renewals, and new verticals. Lewis highlighted, "I am optimistic about the changes Tim Poulin has made since coming on board in April. He has revitalized the sales staff with new sales executives."

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Compared to the previous quarter, management sustained a constructive and growth-driven sentiment, while analysts continued to probe for detail on execution and results, maintaining a neutral to slightly positive tone.

QUARTER-OVER-QUARTER COMPARISON

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Revenue growth accelerated from 5% in Q1 to 10% in Q2 year-over-year.

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Strategic focus shifted further toward high-value verticals, with expanded efforts in automotive, background checks, and title insurance.

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New multiyear contracts and upsells with major financial clients were finalized and began generating revenue in Q3.

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Management commentary signaled greater confidence in channel strategies and AWS migration benefits. The tone remained optimistic, with a more pronounced focus on operational efficiency and cost savings.

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Analysts' attention remained on the pace of vertical expansion, retail headwinds, and operational execution, similar to Q1 but with more focus on revenue mix and pipeline robustness.

RISKS AND CONCERNS

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Technical issues with a major social media client slowed transaction processing, with ongoing engineering efforts to resolve the problem. Lewis explained, "we are currently unable to process nearly all of the documents that they are sending...our engineers are in contact with this client's engineering team to find a solution."

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Retail sector weakness persisted, with scan volumes and revenue down significantly. Management cited client business closures and reduced consumer activity as contributing factors.

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Increased operating expenses, particularly in R&D, were flagged but expected to normalize as capitalized development costs decrease.

FINAL TAKEAWAY

Intellicheck’s second quarter results highlighted ongoing momentum in revenue growth, major contract wins, and progress in diversifying into new, higher-value verticals. Cost savings from the AWS migration are expected to support future operating efficiency, while management pointed to expanding opportunities in banking and background checks. Although retail headwinds and technical issues with a social media client present near-term challenges, the company emphasized its strengthened client relationships, robust pipeline, and operational improvements as foundations for continued growth.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/idn/earnings/transcripts]

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