VerifyMe outlines new freight carrier integration and targets organic revenue growth in 2026

Earnings Call Insights: VerifyMe, Inc. (VRME) Q2 2025

MANAGEMENT VIEW

* Adam H. Stedham, CEO, expressed satisfaction with the company’s progress in 2025, highlighting a primary organic focus on PeriShip despite a 14% decrease in PeriShip revenue compared to the previous year’s quarter, attributing the decline to previously announced large customer losses in 2024. He emphasized that "new customer sales and expanded revenues with specific existing customers have offset some overall softening of the partial shipment market."
* Stedham announced a significant reduction in operating expenses by approximately 27% versus Q2 2024 and noted improvements in gross margin within the Precision Logistics segment. He stated, "Our positive adjusted EBITDA in Q2 2025 is an improvement over Q2 2024. So we're taking the steps that are required to ensure we have sufficient resources to invest in our strategies for both organic and strategic growth."
* Stedham detailed the expansion of relationships with two freight carriers that manage the majority of non-US Postal Service parcel shipments in the US, moving away from a historical single-carrier strategy. He said, "The process of integrating our technology and services with our additional freight carrier will take a couple of months, but the addition of a second carrier further reinforces the confidence we have in organic revenue growth in 2026."
* The CEO also introduced a new treasury strategy to loan a portion of available cash to Zen Credit Ventures for a 9-month promissory note at a higher interest rate, aiming to increase annualized interest income from about 4% to over 8%. Stedham asserted, "We don't believe this strategy will have any impact on our ability to pursue strategic options for the company."
* Jennifer Cola, CFO, reported, "The second quarter revenue was $4.5 million versus the prior year of $5.4 million, a decrease of $0.9 million." She highlighted cost reductions and improved operational efficiencies, noting, "Our adjusted EBITDA improved to $0.3 million in Q2 2025 compared to $0.2 million in Q2 2024 as a result of our continued efforts to reduce costs and develop our operational efficiencies."

OUTLOOK

* Management anticipates that the integration with the new freight carrier will take a few months, with substantial impact expected to materialize in 2026 rather than the immediate next quarters. Stedham indicated that the new carrier handles a larger share of the target market, supporting expectations for "meaningful organic revenue growth in 2026."
* Cola stated, "We expect the gross profit percentage to increase compared to Q3 and Q4 of 2024, factoring in the seasonal variation in our Precision Logistics segment."

FINANCIAL RESULTS

* Cola reported Q2 2025 revenue of $4.5 million, a decrease of $0.9 million year-over-year, primarily due to discontinued contracts and service reductions, partially offset by new and existing customer growth in Precision Logistics.
* Gross profit was $1.6 million versus $2.1 million in Q2 2024, with gross margin at 35% compared to 39% in the prior year quarter. Operating expenses were $1.9 million in Q2 2025, down from $2.6 million in Q2 2024.
* Net loss for the quarter was $0.29 million, or a loss of $0.02 per diluted share, compared to a net loss of $0.35 million, or $0.03 per diluted share, in the prior year.
* The company purchased 201,000 shares during Q2 2025 at a cost of $153,000, with $330,000 remaining under the repurchase program. Cash balance as of June 30, 2025, was $6.1 million, up from $2.8 million at year-end 2024, and $0.7 million in cash was generated from operations.
* On August 8, 2025, VerifyMe entered a $2 million short-term loan agreement at an annual interest rate of 16%.

Q&A

* Michael John Petusky, Barrington Research: Asked about authentication revenue in the quarter. Cola replied, "$27,000."
* Petusky inquired about PeriShip growth excluding lost business. Stedham explained that net growth would be in the single-digit percentage range one way or the other, after accounting for puts and takes, but emphasized complexity in isolating the figure.
* Petusky queried the timeline and materiality of the new carrier relationship. Stedham responded, "I wouldn't expect it to have anything to happen soon because as I said, it's going to take a couple of months to integrate with their technology... it will be -- the build will be pushed further back, start to materialize more noticeably in 2026."
* Petusky asked about capital allocation priorities. Stedham stated, "The focus of 2025 really has been on transforming PeriShip... we're looking to deploy [capital] in other ways to create value... we're just -- we're trying to be very, very diligent and make sure that whatever we do, we get it right, and it provides a very meaningful return to the shareholders."

SENTIMENT ANALYSIS

* Analysts focused on the pace of integration with new carriers, capital allocation, and growth beyond lost customers, showing a neutral to slightly positive tone, with appreciation for cost control and cash generation.
* Management tone was confident and methodical in prepared remarks and Q&A, emphasizing discipline in cost management, deliberate capital allocation, and optimism for future growth. Stedham consistently framed strategy in terms of "confidence" and "meaningful shareholder returns."
* Compared to the previous quarter, management's confidence appeared to strengthen as operational improvements and new initiatives advanced, while analysts maintained a consistent, fact-finding approach.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language shifted to a more specific timeline for new carrier integration, with management outlining a multi-month process and a 2026 revenue growth expectation. In the previous quarter, management described ongoing conversations and early-stage integration projects, while now, technology integrations with e-commerce platforms have been completed and attention is shifting to carrier technology.
* Operating expenses continued to fall, from $2.1 million in Q1 2025 to $1.9 million in Q2 2025, and cash balance increased to $6.1 million from $5.7 million.
* Analysts continued to focus on customer growth, capital use, and the impact of strategic initiatives, but with more emphasis this quarter on near-term materiality and capital allocation.
* Management's tone grew more forward-looking and confident, particularly regarding organic growth and balance sheet strength.

RISKS AND CONCERNS

* Management cited historical customer losses as a continuing drag on revenue, with new business only partially offsetting market softness. The integration of a new freight carrier presents execution risk and a lag before financial impact.
* Cola referenced discontinued contracts and service reductions as factors in revenue decline, partially offset by growth in Precision Logistics.
* Analysts questioned the timing and materiality of new initiatives, as well as clarity on capital allocation and organic versus strategic growth.

FINAL TAKEAWAY

VerifyMe’s management highlighted progress in cost control, operational efficiency, and expanding customer relationships, particularly the addition of a second major freight carrier. While current revenues remain affected by prior customer losses, the company expects that the integration with the new carrier and strengthened technology partnerships will underpin meaningful organic revenue growth in 2026. Strong cash generation, a healthy balance sheet, and disciplined capital allocation provide a foundation for both strategic and organic expansion, with management maintaining a confident outlook for shareholder value creation.

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

MORE ON VERIFYME

* VerifyMe, Inc. (VRME) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4813193-verifyme-inc-vrme-q2-2025-earnings-call-transcript]
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