authID Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2024

There are 7 speakers on the call.

Operator

Greetings and good afternoon. This is Graeme Arad, General Counsel at Ortho ID. Welcome to the Ortho ID Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Operator

During the call and during the Q and A session, you can submit written questions using the Q and A button at the bottom of your screen. If you would like to ask a live question at the appropriate time, please indicate that using the quick Q and A function or tap raise your hand and you will be invited to speak. As a reminder, this conference is being recorded. With me on today's call are our CEO, Ron DeGuro and our CFO, Ed Salito. By now, you should have access to today's press release announcing our Q2 2024 results.

Operator

If you have not received this, the release can be found on our website atwww.orthid.ai under the Investor Relations section. Throughout this conference call, we will be presenting certain non GAAP financial information. This information is not calculated in accordance with GAAP and may be calculated differently from other companies similarly titled non GAAP information. Quantitative reconciliation of our non GAAP adjusted EBITDA information to the most directly comparable GAAP financial information appear in today's press release. Before we begin our formal remarks, let me remind everyone that part of our discussion today will include forward looking statements.

Operator

Such forward looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's press release. Others are discussed in our Form 10 ks and other filings, which are made available at www.sec.gov. I'd now like to introduce our CEO, Ron DeGura.

Speaker 1

Thank you, Graham, and thank you, everyone, for joining us this afternoon. Our value proposition continues to resonate strongly in the market as we help our customers defeat identity fraud and malicious AI generated cyber attacks. Let me spend a few moments on one of the attacks our customers are concerned about. On the screen, you will see an AI tool that generates deepfake voices, which is readily available on the Internet. These tools are used to attack call centers, customer support, and help desks to conduct an account takeover.

Speaker 1

Using tools like the one you see here, any fraudster can type in a few words, train the voice model from any public YouTube video, and in seconds, they have a synthetic voice saying exactly what the fraudster wants. Let's hear what our fraudster has to say.

Speaker 2

Hey, John, it's Dwayne. I got locked out of my account again. Can you help me reset my account, please? I report to Sarah Robertson and my employee number is 461-3246 and my email address is therocknewbank.com. Thanks for your help, pal.

Speaker 1

As you can see, the fraudster exploited The Rock to have his account reset, just like any fraudster can exploit any consumer, or any employee or anyone on this call to say exactly what they want. It's not difficult to see how this deepfake voice could easily fool any $20 an hour call center agent who is being asked to reset a password. Now imagine what kind of fraud can happen when a fraudster combines a deepfake voice with a deepfake video. Deepfake tools like you see on the screen allow fraudsters to take any static image or video from the Internet to generate a realistic deepfake that emotes like a natural real human being with natural facial movements, natural body movements, natural eye movements in combination with mouth movements to match words prompted by the fraudster. Let's see what the deepfake fraudster looks like with voice and video together.

Speaker 2

Hey, John, it's Duane. I got locked out of my account again. Can you help me reset my account, please? I report to Sarah Robertson, and my employee number is 461-3246, and my email address is therocknewbank.com. Thanks for your help, pal.

Speaker 1

As you can see, this video is pretty convincing, if The Rock wasn't famous. And it's only going to get even more convincing. I myself have seen improvements in these tools over the last 30 days. No doubt in my mind that this will drastically be improved in the next 90 days with how fast AI can learn, which doesn't leave companies much time to be prepared. In fact, a fraud attack using a deepfake of a company's CFO was successful earlier this year in fooling a financial analyst to move $25,000,000 out of the organization.

Speaker 1

Every day, we hear in our conversations with CISOs from some of the largest banks, hotels, and tech providers out there that this is what keeps them up at night simply because they don't have the technology to stop these kind of attacks. Because AuthID can seamlessly detect and protect organizations against deepfakes, the demand for AuthID's technology is growing. So, let me summarize the pillars of our momentum before I go into them in more detail. The first pillar is our innovative technology. Our biometric authentication technology was already highly differentiated in speed, but our team has worked tirelessly on delivering the highest level of accuracy on our facial biometric matching, as well as the highest level of privacy the industry has ever seen.

Speaker 1

The 2nd pillar is our sales reach, which has expanded exponentially through our partners, which we began building in Q4 of 2023. Through the Q2 of 2024, we have signed 6 new committed partners that have strong sales teams who are selling to their already robust customer portfolios. What's important to note here is that our partners can partner with anyone. But through their rigorous evaluation process, they have selected to partner with AuthID because of the unique value our technology brings to the market compared to anyone else. The 3rd pillar is our market demand, which continues to rise.

Speaker 1

We continue to build great pipeline at a rapid pace to attract and sign customers. A number of our Fast 100 customers quickly helped us prove out our technology and value proposition. And on a daily basis, AuthID continues to advance our sales cycles in the FAT-one hundred, the strategic enterprise opportunities with some of the largest financial services, hospitality, gaming, and gig economy providers. And our 4th pillar of momentum can be seen in our performance results, which continue to improve both sequentially and on a year over year basis as we continue to focus all our energy on helping our customers become successful. I will go into more detail across these pillars now.

Speaker 1

Every day, in conversations with our enterprise prospects and customers, we are reminded that speed and user experience, accuracy, and data protection and privacy are paramount. Over the last quarter, our highly talented engineering team has enhanced our platform with leaps in innovation that address these requirements to eliminate authentication fraud for our customers. Let me highlight the 3 technology advantages that are driving the excitement with the customers and the partners who are filling up our sales pipeline. The first is speed. Announced over a year ago, with our less than 700 millisecond processing time, our competitors have tried to close the gap but are still 5 to 10 times slower.

Speaker 1

Why is this important? In order to participate in payments use cases, you have to get close to 400 milliseconds and below, And we definitely have the capability to get within that range. Our speed has opened up a variety of use cases for AuthID where our customers cannot afford to provide friction or long wait times to their customers. What makes this result even more incredible is that during this sub second time, AuthID seamlessly conducts an extensive series of fraud detects presentation and injection attacks for both facial and document images, detects the presence of deepfakes, and performs highly accurate facial biometric match. The second is accuracy.

Speaker 1

So, I am very excited about this. Today, our engineering team is rolling out a world leading biometric matching accuracy of 1 in a 1,000,000,000, a phenomenal increase over our previous accuracy rate that matched the NIST, the National Institute of Standards benchmark rate of 1 in 100,000. A100000. This achievement is not simply a 100% increase. It's not a 1000% increase.

Speaker 1

It has completely separated AuthID in the market with an increase of 10,000 percent in accuracy improvement. Said another way, our game changing accuracy of 1 in a 1,000,000,000 means that if there were 8,000,000,000 people in the world and we digitize all of them, we would only get it wrong 8 times. This level of accuracy has been validated by the independent testing organization, c SIRO, which has a formal set of standard criteria in their evaluation and their testing results have shown that the accuracy can even exceed 1 in a 1,000,000,000 up to 1 in 34,000,000,000 for higher resolution facial images. This means that any head to head accuracy comparison to any biometric identity vendor on the market, AuthID will be leaps and bounds more accurate. The third is privacy.

Speaker 1

AuthID is delivering superior privacy and data protection and privacy and the protection of their users' biometric data to meet current compliance and future compliance regulations, as well as to eliminate any liability associated with storing biometrics. As you'd expect, organizations see the value of using biometrics, but they are cautious, cautious to adopt because of all the privacy concerns and the jumble of privacy regulations that are developing at the local, state and national levels. So, our challenge is to provide our customers with all the benefits of using biometrics, but without the increased liability or even the compliance confusion. To meet this demand, AuthID has been working maniacally on a solution and is now offering a biometric privacy option that eliminates the need to store biometric data anywhere. This revolutionized solution allows facial images to be converted into a public private key pair, where only the public keys need to be stored, transforming biometric authentication into a cryptographic transaction with no biometric data associated to it.

Speaker 1

What further differentiates auth ID from the others is that the private key is never stored and instead is generated each time a transaction is performed using the live facial image of the person, essentially making the person the private key and not the user's device. Let me show you this more closely. So, before I start the demo, what you're going to see is a facial biometric authentication, which is going to use a private key and a public key to make a match. So, we are not using biometric templates or any form of a biometric recalled from storage to make the match. Let's see it in action.

Speaker 1

User will present their face. And there you go. You could see how fast that was. Basically, on the screen, it recorded 3 60 milliseconds, which is actually faster than the 700 milliseconds that we have been touting. But more importantly, on the screen, you can see the private key on the left, the public key on the right, which is being used to run the match.

Speaker 1

And once the match is completed, both the private key and the facial image stored are completely deleted. No biometric is ever stored. And the consumer is never affected and the experience remains absolutely seamless. Our new biometric privacy option is a market game changer because no other biometric authentication provider has this ability. This has been absolutely been helping us advance our opportunities with many large enterprise prospects.

Speaker 1

Moving on. Building a strong channel ecosystem is a key pillar of our success. Our channel partners, including Finclusiv, Sintro, IBMWorks, Kiosoft, and just announced today, DataVizor, are all the force multipliers that deliver more feet on the street and quicker access to the customers and verticals they already serve. Because of that quicker access, we refer to their customers as the faster 100. Our partners are excited about the added value and market differentiation derived from our combined product set to fight fraud.

Speaker 1

More importantly, they embrace the opportunity to grow their revenue and they have had an immediate effect in amping up our sales and our sales pipeline. We have already signed agreements via our partners in Q2 and are in the process of going live with 2 customers through the channel, which include a large North American gaming customer and a cannabis e commerce platform. On the direct sales side, auth ID has advanced opportunities across our FAT 100 pipeline, those being large enterprise customers with deal sizes that generate higher revenue and longer term enterprise value for AuthID. Every day, we demonstrate our value technology to large hotels, gaming platforms, financial institutions, HR providers, telcos, identity access management platforms, and gig economy platforms. The main common denominator between large scale enterprise CISOs is the fear of the rapid pace of malicious AI driven attacks and scams targeting both their customer facing and workforce systems like I shared in the opening demo.

Speaker 1

AI generated IDs and deepfakes are attacking the large enterprises who have the most to lose, which is driving the urgency. Moving on to revenue. Our 4th pillar of momentum is our strong metrics, including our sequential and year over year growth in revenue. In Q1 2024, our revenue of $160,000 approached the revenue in all of 2023. In Q2, we grew revenue by 75 percent over Q1 to $280,000 by launching the services with 4 new customers.

Speaker 1

Given our current RPO of over $4,000,000 we expect to continue to see quarter over quarter and year over year revenue growth for the balance of 2024. Ed Salida will provide additional details during his part of the presentation. Moving to pipeline. Our robust sales pipeline growth also reflects continued demand for off ID's biometric solutions. In Q2, our direct sales team and channel partners expanded our sales pipeline to its current value of over $25,000,000 a 20% increase over the Q1 pipeline of $21,000,000 Our current pipeline includes 71 opportunities valued at $100,000 plus and 12 deals valued at $500,000 plus Our continued growth in book contracts also further confirms strong and book contracts also further confirms strong market demand for AuthID's biometric authentication.

Speaker 1

In the Q2, our sales team secured contracts valued at over 630,000 in gross bar, a strong increase over Q1 and approximately tripled growth over the Q2 gross bar a year ago. Our Q2 bar included both direct and channel partner signed deals representing gaming, cannabis, compliance, gift cards and universal basic income. While both our channel partners and direct sales teams will continue to identify new prospects and add deals to our pipeline, at this point in the year, we are estimating that we could achieve a 33% close ratio on the $25,000,000 in pipeline to attain our $9,000,000 bar target for 2024. Before I turn it over to Ed, I'm excited that we continue to build strong market momentum. I'm confident that AuthID is on the right path and that we will deliver upon our mission to eliminate authentication fraud and realize our near term and long term goals.

Speaker 1

Thank you for your time. I will now turn the call over to Ed Salido to present our Q2 financial results.

Speaker 3

Thank you, Ram. As you highlighted, we continue to expand AuthID's market reach and advance our growth in Q2 of 2024. Our sales teams expanded our channel partner network by signing new reseller and OEM agreements with FinTech and risk management platforms and also increased our book contracts by signing new enterprise customers. Our engineering and customer success teams work to enhance our biometric platform and rollout service to our customer base. I'll now present our Q2, 2024 financial results.

Speaker 3

Starting with our GAAP measures, the following highlights compare our GAAP results for the quarter 6 month period ended June 30, 2024 with the quarter 6 month period ended June 30, 2023, unless specified otherwise. Total revenue for Q2 2024 was $280,000 compared with $400,000 a year ago. For the 6 months ended June 30, 2024, total revenue was $440,000 compared with $700,000 a year ago. Operating expenses for Q2 twenty twenty four were $3,600,000 compared with $2,800,000 a year ago. For the 6 month period in 2024, operating expenses were $6,900,000 compared with $3,800,000 for the same period last year.

Speaker 3

The 2024 increase is primarily due to a 2023 one time event representing a reversal of approximately $3,400,000 in stock based compensation resulting from Q1 2023 terminations. Net loss from continuing operations for Q2 was $3,300,000 of which non cash charges were $800,000 compared with a net loss of $10,900,000 a year ago, of which non cash charges were $9,200,000 For the 6 month period in 2024, net loss was $6,300,000 including $1,600,000 in non cash and one time severance charges. This compares to a net loss of $12,700,000 for the same period last year, which included $8,800,000 in non cash and one time severance charges with approximately $7,500,000 related to the exchange of convertible notes for common stock in 2023. Net loss per share for Q2 improved to $0.34 compared with $2.16 a year ago. For the 6 months ended June 30, net loss per share improved to $0.67 compared with $3.09 for the same period in 2023.

Speaker 3

Next, let's turn to our RPO. We also monitor and manage our remaining performance obligation or RPO in accordance with GAAP and as noted in our financial statements. RPO provides a measure of the minimum revenue expected to be recognized from our signed contracts based on our customers' contractual commitments. As of June 30, 2024, our total RPO was $4,240,000 an increase of $200,000 over the prior quarter. The Q2 RPO includes deferred revenue of $240,000 Deferred revenue represents advanced payments received, which are not yet recognized as revenue.

Speaker 3

The current RPO also includes $4,000,000 in additional non cancelable revenue, which has not yet been recognized under contracts that were signed in 2023 and through June 30, 2024. This compares favorably with the RPO as of June 30, 2023, which was approximately 400,000 dollars We expect to recognize the full RPO of $4,240,000 over the entire life of the contracts, which are typically signed with a 3 year term. Over the next 12 months ending June 30, 2025, the company expects to recognize revenue of approximately 36% or $1,500,000 of the $4,240,000 in RPO based on contractual commitments and expected usage patterns. While the RPO is based on contractual terms as agreed to by our customers, the expected time to recognize revenue is based on our best estimates given the current known facts and circumstances. Of course, while RPO is based only on minimal contractual commitments, we have reason to believe that each of these customers will eventually exceed their minimum commitments.

Speaker 3

Turning to our balance sheet highlights. As of June 30, 2024, our cash balance totaled $14,400,000 which includes approximately $10,000,000 in proceeds received from our successful June 2024 fundraise. Our common shares outstanding stood at 10,900,000 with 1,500,000 shares added from our fundraising. We will use these funds for a number of initiatives, including expanding our sales and partnerships team to drive continued bookings growth, as well as growing our customer success team to handle the increasing number of customers on boarding onto the OFID platform. On to our non GAAP results.

Speaker 3

Adjusted EBITDA loss was $2,500,000 for Q2 compared with a $1,700,000 loss for the same period last year. For the 6 months ended June 30, 2024, adjusted EBITDA loss was $4,900,000 compared with a $3,900,000 loss for the same period last year. The increase in EBITDA loss is primarily due to our reinvestment in identity domain experts across sales, engineering and customer success following the early 2023 restructuring. We also monitor and report on ARR or annual recurring revenue, which is defined as the amount of recurring revenue earned during the last 3 months of the relevant period as determined in accordance with GAAP multiplied by 4. The amount of ARR as of June 30, 2024 increased to $1,120,000 as compared to $400,000 of ARR as of June 30, 2023.

Speaker 3

Turning to VAR or booked annual recurring revenue, which is the projected amount of annual recurring revenue we believe will be earned under contracted orders looking at 18 months from the date of signing of each customer $600,000 approximately 3 times the $200,000 of gross bar a year ago. The gross amount of bar signed in Q2 also increased quarter over quarter from the gross bar of $100,000 signed in Q1. Our Q2 bar included both direct and channel partner signed deals, representing use cases in gaming, cannabis, compliance, gift cards and universal basic income. Net bar, which reflects the deduction of bar from contracts previously included in reported bar, which were subject to attrition during the quarter, was $400,000 compared to $200,000 of net bar signed in the Q2 of 2023. As previously explained during our Q1 earnings call, VAR comprises 2 components, which we refer to as CAR and UAC.

Speaker 3

CAR or committed annual recurring revenue as shown in the dark purple on the chart represents the total annual customer contractual commitment through fixed license fees and minimum usage commitments. These commitments are directly recognized as revenue each contract year after the customer goes live with the service. The Q2 2024 call represents $350,000 or 56 percent of reported bar. UAC or estimated usage above commitment, as shown in the light blue on the chart, is an estimate of annual customer usage that will exceed contractual commitments. The Q2 2024 UAC represents the remaining $270,000 or 43 percent of reported bar.

Speaker 3

Turning to our revenue growth stages. As we work to build a sustainable recurring revenue stream, we continually review our progress through the following revenue growth stages. The first milestone we use to monitor our growth is bookings as measured by bar. For the 6 month period ended Q2, 2024, we realized the total gross bar of $730,000 approximately a $500,000 increase over the same period last year. Regarding our customer financial commitments, we monitor our revenue performance obligation or RPO.

Speaker 3

As I detailed earlier, as of the end of the quarter, we've secured over $4,240,000 in RPO, a $3,800,000 increase over the RPO secured by the end of Q2 2023. Our third reporting metric is revenue as recognized in accordance with GAAP. Our year to date revenue of $440,000 grew substantially over the same period in 2023. And as our customer contracts mature, we will increase our focus in monitoring on customer retention and expansion. Key efforts will include refining our sales and support methodologies to deepen our customer relationships and increase the value added by our services through continued usage growth, use case expansions, renewals and the upsell of new relevant products.

Speaker 1

Looking at

Speaker 3

our full year targets and guidance for 2024. On our revenue growth, we're pleased with our quarter over quarter and year over year revenue growth in Q2 and reiterate our guidance of $1,400,000 to $1,600,000 in revenue for the full year 2024 based on the contracts we have in place as our customer implementations continue to progress in the remainder of the year. Looking to booked ARR, our sales pipeline grew in the Q2 to over $25,000,000 Based on this robust growth in our projected close dates, we remain committed to our previously stated target of $9,000,000 in bar for 2024, which represents a 3x year over year growth. If we retrieve $9,000,000 in bar, dependent on the level of our customer commitments and term lengths, we would expect to also grow our remaining performance obligation to a range of $12,000,000 to $13,000,000 In summary, AuthID continues to make progress in advancing our sales and financial momentum. We improved our balance sheet with our recent fundraise and we continue to post strong metrics that reflect quarter over quarter and year over year growth.

Speaker 3

Our direct sales team and channel partners are expanding our sales pipeline and signing new customers and our customer success team is working diligently to help onboard and ramp these customers as quickly as possible. We're confident that we'll continue our growth in revenue and value creation for our shareholders. With that, we'd now like to open up for questions. Let's turn back to Graham, who will moderate.

Operator

Thank you, Ed. To participate in the Q and A, you may type your question using the Q and A icon in the Zoom menu, usually located at the bottom of your screen. To join our call and verbally ask a question in person, tap the raise your hand Our first question is from Gary Brody. Gary, good to see you on the call. Please go ahead.

Speaker 4

Hi. Thanks, Graham. I appreciate you taking my call or my question. Ron and Ed, I've got a question for you guys. I know you kept the revenue and bar guidance the same, so booking sales about $9,000,000 for the year.

Speaker 4

And then you put up that great slide showing the current pipeline is $25,000,000 made up of 83 potential deals. Can you walk us through how you get from that $25,000,000 in pipeline or discussions that you're having to $9,000,000 in bookings this year?

Speaker 1

I'll start. So Gary, as we've shared, as we shared in previous earnings calls, we categorize the deals in basically 3 buckets. 1st bucket is what we call the customer and clients that really fit the use case very closely, and we could basically win the business with our current capabilities and maybe win the business with pricing. And we call that the Fast 100. The second bucket that we are looking at is this group of strategic large enterprise accounts.

Speaker 1

We're talking about the top 5 banking institutions in the world and essentially, probably the top mega clients of each vertical and each industry. And those types of customers fall in our strategic enterprise bucket, which we call the FAT 100. And then we just quickly generated over the last basically, Q4 of last year, we stood up a new program with our channel, with our partners, to be able to acquire and sell more deals without using the burden of my own sales force. And that is through the channel. So essentially, we basically have 2 buckets of accounts that we go after with minimal company effort, right?

Speaker 1

1 is the Fast 100, where we just have great product market fit and the use cases 2, with the channel partners, where they're basically finding the deals for us and we're supplying them the part that takes a lot of time. That is with these enterprise large institutions who, when we them our technology, they'll say, hey, this looks really great, but can it work with this ERP that we have? Or can it work with this call center technology or hey, we want to extend it to this population for this particular line of business. And sometimes our technology fits and a lot of times our technology needs to be modified it or, you know, engineered to be able to handle that capability. And so that's why we look at that as one the enterprise customers, we have to make sure we can give them all the nuances and specialty things that they need for their business.

Speaker 1

And at the same time, we got to work through their process because large institutions have a bigger process of approvals and committees to approve. And so those sales cycles are naturally longer. Right now, the way it's forecasted is the bigger fat 100 accounts that we're talking about are going to be landing here at the between here at Q3 and Q4. And that's how we're going to close the gap.

Speaker 4

Got it. Okay. Thank you.

Operator

Did you have another question, Gary?

Speaker 4

No. That's terrific. Mean, basically what I think I hear you saying, Ron, is some parts of this don't require a lot of time and attention. The part that does, you expect to start to show bookings in the second half of this year. Is that right?

Speaker 1

Yes. We're if you can imagine, we're in POCs and we're currently in those opportunity evaluation stages and we're moving down the sales, what I call the sales process with these large enterprise fat 100 accounts. And we're anticipating that for them to land in the later half of the year.

Speaker 4

Okay. And for and I realized the FAT 100, it's that's going to be a wide range. But roughly, what would be the amount of bookings or revenue we would expect from one of those signings?

Speaker 1

Unfortunately, my mine cut off. So I didn't hear what you said.

Speaker 4

Oh, sorry. So regarding the fat 100, and I know this will be a wide range, but what are the. How much bar or bookings or revenue would you expect from one of those signings that we might see that we'd expect to see in the second half?

Speaker 1

Well, on average, they're greater than $500,000,000 for sure. Some of them go over $1,000,000 and some of them are close to $2,000,000 to $3,000,000

Speaker 4

Okay. Got it. Thank you very much.

Speaker 1

Thank you, Gary. Thank you, Gary.

Operator

Our next question is Dean Siedequist. Dean, thanks for joining the call. Please go ahead and ask your question.

Speaker 5

Thank you. Thank you, Graham. My question is, can you comment on the activity level for your existing customers? How has it been ramping up?

Speaker 1

Great question. Tom, you want to take that?

Speaker 6

Yeah. Hey, Dean.

Speaker 4

Hi, Dean.

Speaker 6

So our existing customers are in ramp. They're in full production. We're seeing significant growth week over week in new onboardings, and those are converting into monthly active users that use our VERIFI product. So we're seeing a really nice ramp going into the second half of this year.

Speaker 5

What are the volumes on some of these users? As I recall, you had verified in the Q1 like 500,000 times. And I just don't know how much you've experienced in this quarter. If you have that metric, it would be nice to know.

Speaker 6

Well, 2nd quarter is when most of these started to go live. So we're seeing just the incremental ramp. We've continued to be around that $500,000 throughout the second quarter, and we're seeing the increase now towards into this new quarter showing up quite significantly. So we're seeing that increase as there is starting to ramp. So it's really real early, but they're starting to ramp right now as they just went live during the Q2.

Speaker 5

Okay. My second question is, what's your biggest challenge right now?

Speaker 6

In terms of the ramp?

Speaker 5

No, overall in your business.

Speaker 1

Okay. Is Ryan? Yes. Let me go ahead and answer this because this I just kind of just got done talking about the FAT 100 in these accounts. So these FAT 100 accounts obviously are the ones that give us the most enterprise value.

Speaker 1

And these are the clients and customers that obviously everybody wants to have and we absolutely want to have them as well. Some of them are requesting capabilities that extend our product. They want to build off our core and have additional capabilities off of that. And we are trying to figure out how to service as many of those requests as possible, but at the same time not killing and overburdening our organization. So right now, we think it's a mirror of figuring out how to balance the investments and the development and coding engineering that's going to be required, but at the same time making sure we don't lose any customer and we win every single customer out there that wants our technology.

Speaker 5

Okay. I guess last question is you it sounds like you just added really in the last month or so this dramatic leap in accuracy. And was that related to or do you expect it to be related to a boost in activity that will go along with it? In other words, were the account participants that you're seeking as customers really looking for that capability that you now have? And have they sort of been waiting for it?

Speaker 1

When we were working in developing and figuring out a strategy to deliver the accuracy as well as the privacy, we did mention it to certain small amount of key customers who have expressed to us that they needed that technology and needed that capability. We made the announcement today, but we have not gone full blown into the marketplace and have gone full on attack with those capabilities. What we demonstrated today was an early version of it. We're ready to be we'll go to GA general availability soon. But we are certainly using these in our POCs right now to win some of the accounts that I just described that got an early preview of the tech.

Speaker 1

But we will start to market that and amplify that message out to the marketplace specifically to

Speaker 5

our FAT 100 accounts. Okay. Thank you.

Operator

Thank you, Dean. We've had a couple of written questions, Ron. One is asking about our channel partners. The company has had mixed success over the years with channel partners. Some have been very productive, others not so much.

Operator

But why are you excited about the new channel partners that we've been signing recently and their activity?

Speaker 1

I didn't hear the question. So you cut up.

Operator

I'm sorry.

Speaker 1

No, I did not hear the question.

Operator

We've had the question relates to the channel partners. And in the past, we've had mixed success. Some have been very productive, others not so much. Why are you excited about the new channel partners that we're signed recently and started to work with?

Speaker 1

I'm going to just attempt that this is the question that's posted by Ricky in the chat, correct? Right. Okay. So, from a channel channel partner perspective, there's, are 2 philosophies here that I carry that's very different from what I believe is what happened in the past. I myself have built a massive channel partner business in my previous role and won numerous awards for my channel partner business building capabilities with Oracle, specifically, is where I got recognized for this.

Speaker 1

The way I build channel partners is that I have to create a mutual business plan where both organizations have to make money. There's no point in announcing a partnership if you can't make money together or set target goals. So before we even sign a partnership, we qualify whether the partner is willing to do that and put that investment into moving the partnership forward. 2nd, what we do is we make sure the partners are willing to commit dollars, meaning they will sign up for a commitment to generate X amount of revenue for the business. This helps us qualify serious partners from not serious partners.

Speaker 1

And so that's why we will be making partner announcements. We will not be making an erroneous amount of partner announcements because there's only so much capability that we have to support our partners. And partner's ecosystem is very important to us. So, we highly qualify who we partner with. We secondarily qualify them based off of their commitment.

Speaker 1

And third, we as an organization form a business plan around generating revenue with those partners, which I think is a far different approach from the previous organization.

Operator

Fair enough. Thank you, Ron. Those appear to be all the questions that we have. So perhaps, Ron, you can just wrap the call up and give your final thoughts.

Speaker 3

All right.

Speaker 1

Thank you, everyone. We greatly appreciate your questions and your time today. I want to thank our investors for their continued support of Auth ID's efforts to achieve our greatest potential. I am excited that we continue to make significant progress on our initiatives. We continue to improve every facet of our business, recruit the best people, bring on the best customers, build great top technology and produce strong business performance results in the short amount of time that I've been here.

Speaker 1

Thank you to our entire team and our shareholders for their continued commitment to AuthID and dedication to our mission to eliminate authentication fraud. Thank you again.

Operator

Thank you, everyone. I apologize we've had a couple of technical issues on the call, but thank you, everyone, for joining. That's the end of the call.

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Key Takeaways

  • The company highlighted accelerating deepfake voice and video attacks on call centers and financial systems as a major driver of demand for AuthID’s fraud detection technology.
  • AuthID’s platform now delivers sub-700 ms authentication speed, a world-leading 1 in 1 billion facial match accuracy (validated by CSIRO), and a novel biometric privacy option that removes any need to store raw biometric data.
  • Channel momentum grew in Q2 with six new partner agreements, enabling rapid access to ‘Fast 100’ customers, while direct sales advanced larger ‘FAT 100’ enterprise pipelines, boosting total pipeline to over $25 million (20% sequential increase).
  • Q2 revenue rose 75% QoQ to $280 K, RPO reached $4.24 million, and cash on hand totaled $14.4 million after a $10 million fundraise, supporting reiterated full-year guidance of $1.4–$1.6 million in revenue and $9 million in bookings.
  • Annual recurring revenue (ARR) increased to $1.12 million and booked ARR to $600 K, with the company targeting a 33% close rate on its current pipeline to achieve its 2024 objectives.
AI Generated. May Contain Errors.
Earnings Conference Call
authID Q2 2024
00:00 / 00:00