VerifyMe Inc (VRME) 2024 Q4 法說會逐字稿

Good morning, everyone, and welcome to the VerifyMe fourth quarter 2024 financial results conference call.

大家早安，歡迎參加 VerifyMe 2024 年第四季財務業績電話會議。

(Operator Instructions) Please also note today's event is being recorded.

（操作員指示）另請注意，今天的活動正在被記錄。

At this time I'd like to turn the floor over to Nancy Meyers, CFO. Ma'am, please go ahead.

現在，我想把發言權交給財務長南希‧邁耶斯 (Nancy Meyers)。女士，請繼續。

Good morning, everyone, and thank you for joining us today for our earnings call presentation. On the call today, I'm joined by Adam Stedham, CEO and President, who will give an operations and strategic update. Following our management presentation, we will have a Q&A session.

大家早安，感謝大家今天參加我們的收益電話會議。在今天的電話會議上，執行長兼總裁亞當·斯特德漢姆 (Adam Stedham) 將與我一起介紹營運和戰略最新情況。在我們的管理演示之後，我們將進行問答環節。

I would like to bring your attention to the note on forward-looking statements on slide 3. Today's presentation and the answers to questions include forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and on the risk factors of the company's annual report on Form 10-K and quarterly reports on Form 10-Q.

我想提請您注意投影片 3 上有關前瞻性陳述的說明。今天的演示和問題的答案包括前瞻性陳述。應理解，由於多種因素，實際結果可能與預測結果有重大差異，包括前瞻性聲明標題下所述的因素以及公司 10-K 表年度報告和 10-Q 表季度報告中的風險因素。

I will now turn the call over to Adam Stedham for some opening remarks.

現在我將把電話交給亞當·斯特德漢姆 (Adam Stedham) 來致開場白。

Thank you, Nancy. So 2024 was a significant year for VerifyMe. During the year, we invested significant time, energy, and resources into the code portion of our authentication segment.

謝謝你，南希。因此，2024 年對 VerifyMe 來說是重要的一年。在這一年中，我們在身分驗證部分的程式碼部分投入了大量的時間、精力和資源。

As we discussed on our last earnings call, these investments did not yield the returns we desired. And the investment in time and resources dragged on overall company growth. So our annual revenue for 2024 was 4% below the revenue in 2023. However, we did experience year over year improvements in gross profit. Gross margin and adjusted EBITDA.

正如我們在上次收益電話會議上所討論的那樣，這些投資並沒有產生我們期望的回報。而時間和資源的投入拖累了公司的整體成長。因此，我們 2024 年的年收入比 2023 年的收入低 4%。然而，我們的毛利確實逐年提高。毛利率和調整後的 EBITDA。

In addition, the company grew our total cash net of debt in 2024.

此外，2024 年公司的淨現金總額（扣除債務）有所增加。

So during our last earnings call, the company shared that we're taking steps to reduce investments in areas that are not providing the desired returns. And we're diligently working on strategic investments to deliver shareholder value.

因此，在我們上次的收益電話會議上，公司表示我們正在採取措施減少對未提供預期回報的領域的投資。我們正在努力進行策略性投資，以實現股東價值。

During January of 2025, we further expanded our capabilities in this area by completing a $4.7 million warrant inducement capital raise and retiring the company's bank debt.

2025 年 1 月，我們完成了 470 萬美元的認股權證誘導資本籌集並償還了公司的銀行債務，進一步擴大了我們在該領域的能力。

In addition, our convertible debt reduced from $1.1 million to $800,000. The remaining holders of convertible notes are all affiliates and members of the Board of Directors. So, after adding further to verifying these options to generate additional capital and liquidity, we've also filed a $15.8 million at the market sales offering to be used at our discretion.

此外，我們的可轉換債務從 110 萬美元減少到 80 萬美元。其餘可轉換票據持有人均為關聯公司和董事會成員。因此，在進一步驗證這些選項以產生額外的資本和流動性之後，我們還提交了一份 1580 萬美元的市場銷售報價，供我們自行決定使用。

So as a result of all of these steps, the company is sufficiently capitalized to pursue strategies aimed at rewarding the shareholders. We continue to actively work with bankers and advisors, evaluating multiple options and defining our plan.

因此，透過採取所有這些措施，公司已擁有足夠的資本來推行旨在回報股東的策略。我們繼續積極與銀行家和顧問合作，評估多種選擇並制定我們的計劃。

So let me shift the conversation to our existing operations. So first I'd like to discuss our precision logistics segment. It's important to note the PeriShip business in this segment is a positive cash-generating business that provides a valuable service to the marketplace and we're continuing to optimize our sales strategy.

因此，讓我將話題轉移到我們現有的營運上。首先我想討論一下我們的精準物流部分。值得注意的是，該部門的 PeriShip 業務是一項積極的現金產生業務，為市場提供了有價值的服務，我們正在繼續優化我們的銷售策略。

In 2024 we increased the number of Proactive customers by 6% over 2023. However, the shipments by existing customers in the Proactive service line were down 6% in ‘24 versus the previous year.

2024 年，我們的 Proactive 客戶數量比 2023 年增加了 6%。然而，2024 年 Proactive 服務系列現有客戶的出貨量與前一年相比下降了 6%。

So we've hired additional resales resources in '24 and we're also piloting various marketing strategies to optimize our approach to marketing and sales. So we will we believe that we'll define the optimum sales strategy for this business.

因此，我們在 24 年僱用了額外的轉售資源，我們也正在試行各種行銷策略，以優化我們的行銷和銷售方式。因此我們相信我們將為這項業務制定最佳的銷售策略。

So, at this point, I'd like to mention our authentication segment. The company divested the Trust Codes Global on December 8, 2024. During 2024, this business had an operating loss of $1.2 million, excluding impairments. Our authentication segment also includes our ink business.

因此，在這一點上，我想提一下我們的身份驗證部分。該公司於 2024 年 12 月 8 日剝離了 Trust Codes Global。2024 年，該業務的營業虧損（不包括減損）為 120 萬美元。我們的認證部門還包括墨水業務。

We're continuing to review our strategy for the ink business. But it's important to consider that this portion of the company represents less than 1% of overall company revenues. So overall, I feel that we've taken the steps to position the company to create value for shareholders going forward. So at this point, I'd like to turn the call back over to Nancy Meyers, our CFO, and she'll review the specific Q4 financials.

我們正在繼續審查我們的油墨業務策略。但必須考慮到，這部分業務僅占公司總收入的不到 1%。所以總的來說，我認為我們已經採取措施讓公司為未來的股東創造價值。因此，現在我想將電話轉回給我們的財務長南希·邁耶斯 (Nancy Meyers)，她將審查具體的第四季度財務狀況。

Thank you, Adam. The fourth quarter revenue was $7.7 million versus the prior year of $8.7 million, a decrease of $1 million. The decrease in our precision logistics segment primarily relates to a discontinued contract with one customer in our premium services, as has already been disclosed. In addition, with Thanksgiving arriving later than usual this year, there were fewer days from Black Friday to December 31, making this the shortest peak season since 2019.

謝謝你，亞當。第四季營收為 770 萬美元，而去年同期為 870 萬美元，減少了 100 萬美元。如同已經揭露的，精準物流部門的下降主要與我們與一位優質服務客戶的合約終止有關。此外，由於今年感恩節比往年晚到來，從「黑色星期五」到12月31日的天數減少，成為自2019年以來最短的旺季。

The growth in the authentication segment did not materialize in 2024, and as Adam mentioned, we divested Trust Codes Global on December 8, 2024. Gross profit decreased $0.5 million to $2.4 million in Q4 2024 versus $2.9 million in Q4 2023. As a percentage of revenue, gross margin was 32% in Q4 2024 versus 33% in Q4 of 2023.

身分驗證領域的成長在 2024 年並未實現，正如 Adam 所提到的，我們於 2024 年 12 月 8 日剝離了 Trust Codes Global。2024 年第四季毛利從 2023 年第四季的 290 萬美元減少 50 萬美元至 240 萬美元。以佔收入的百分比計算，2024 年第四季的毛利率為 32%，而 2023 年第四季的毛利率為 33%。

While the quarter did result in a decrease in year over year gross profit percentage, the loss of the one customer in the premium services was partially mitigated by other process improvements made.

雖然本季的毛利率確實年減，但優質服務中一位客戶的流失因其他流程改善而得到一定程度的緩解。

During our last earnings call, we stated that we anticipated our full-year 2024 gross margin to exceed full year 2023, even though we expected Q4 gross margin percentage to be below Q3 due to the seasonality associated with our Proactive revenue. Our full-year gross margin was 36% compared to 32% in 2023.

在上次財報電話會議上，我們表示，預計 2024 年全年毛利率將超過 2023 年全年，儘管由於主動收入的季節性影響，我們預計第四季毛利率百分比將低於第三季。我們的全年毛利率為 36%，而 2023 年為 32%。

Operating expenses were $2.8 million in Q4 of '24, and in Q4 of 2023. Segment management and technology expenses decreased $0.1 million for the quarter. However, this was offset by an increase in sales and marketing spend.

2024 年第四季和 2023 年第四季的營運費用均為 280 萬美元。本季分部管理和技術費用減少了 10 萬美元。然而，這一增長被銷售和行銷支出的增加所抵消。

Our net loss for the quarter was $0.5 million or a loss of $0.05 per diluted share compared to net income of less than $0.1 million in the fourth quarter of 2023.

本季我們的淨虧損為 50 萬美元，即每股虧損 0.05 美元，而 2023 年第四季的淨收入不到 10 萬美元。

Again, the main driver is the loss of one customer in our premium services. Although our adjusted EBITDA was lower in Q4 of 2024 versus Q4 of 2023, it was positive for the sixth quarter in a row and improved to $1 million for the year 2024 versus $0.4 million for the year 2023. On the last slide is our balance sheet as of December 31, 2024. Our cash as of December 31 was $2.8 million, a decrease of $0.3 million from $3.1 million on December 31, 2023.

再一次，主要原因是我們的優質服務失去了一名客戶。儘管 2024 年第四季度我們的調整後 EBITDA 低於 2023 年第四季度，但它連續第六個季度為正值，並且 2024 年的調整後 EBITDA 將從 2023 年的 40 萬美元提高至 100 萬美元。最後一張投影片是截至 2024 年 12 月 31 日的資產負債表。截至 12 月 31 日，我們的現金為 280 萬美元，比 2023 年 12 月 31 日的 310 萬美元減少 30 萬美元。

During the year, our use of cash included $0.6 million in repayment of debt and interest.

本年度，我們使用的現金包括償還債務和利息 60 萬美元。

Due to the seasonality of our precision logistics segment, our AR unbilled revenue, and accounts payable are higher at year-end compared to the other three quarters. As of December 30, 2024, we had $0.9 million remaining on our loan and $1.1 million on our convertible note. There are no borrowings under our line of credit, and we have $1 million available to us.

由於精準物流部門的季節性，我們的應收帳款未開立發票收入和應付帳款在年底高於其他三個季度。截至 2024 年 12 月 30 日，我們的貸款餘額為 90 萬美元，可轉換票據餘額為 110 萬美元。我們的信用額度下沒有借款，我們有 100 萬美元可用資金。

In January, we entered into an inducement letter agreement and approximately $1.5 million warrants were exercised for $4.7 million. In consideration for the agreement, a new unregistered warrant for approximately $1.5 million at a price of $4 was issued.

一月份，我們簽署了一份誘導函協議，並以 470 萬美元的價格行使了約 150 萬美元的認股權證。作為對協議的考慮，以 4 美元的價格發行了價值約 150 萬美元的新未註冊認股權證。

As Adam mentioned, with the proceeds from this transaction, we pay down the remaining debt on our term loan. And in addition, we have converted about 1/3 of the convertible notes.

正如亞當所提到的，我們利用這筆交易的收益償還了定期貸款的剩餘債務。此外，我們也轉換了約 1/3 的可轉換票據。

With that, I would like to turn the call back to Adam.

說完這些，我想把電話轉回給亞當。

So thank you Nancy. Before we open the call for questions, I'd really like to review the current situation for the company.

所以謝謝你南希。在我們開始提問之前，我真的很想回顧一下公司的現況。

So the company operates a cash flow positive business that provides a differentiated service for shippers of time and temperature-sensitive goods. We're increasing our efforts to identify and pursue avenues for expansion of our precision logistics segment.

因此，該公司經營現金流為正的業務，為時間和溫度敏感貨物的托運人提供差異化服務。我們正在加強尋找和尋求擴大精準物流部門的途徑。

We have a strong balance sheet and $0.46 per share of cash on hand. Also, the company has access to additional low-cost capital to pursue avenues for meaningful shareholder value creation. So overall, I'm pleased by the foundation we've created to move the company forward and reward our shareholders. So at this point, let's open the call up for questions and answers.

我們的資產負債表強勁，每股現金為 0.46 美元。此外，該公司還可以獲得額外的低成本資本來尋求有意義的股東價值創造途徑。總的來說，我很高興我們為推動公司發展和回報股東所建立的基礎。現在，讓我們開始問答環節。

Ladies and gentlemen, at this time we'll be in the question and answer session. (Operator Instructions)

女士們、先生們，現在我們進入問答環節。（操作員指示）

Michael Petusky, Barrington Research.

巴林頓研究公司的麥可‧佩圖斯基（Michael Petusky）

Hey, good morning, Nancy --

嘿，早安，南希--

Good morning.

早安.

Hey, good morning. Nancy, could you help me in terms of your expected share account for Q1 just to sort of level set?

嘿，早安。南希，您能否幫我估算一下第一季的預期股票帳戶，以便進行某種程度的設定？

Yeah, so we're going to -- it'll be about $12.5 million.

是的，所以我們將花費大約 1250 萬美元。

Right. And then in terms of -- Adam, I would assume in terms of logistics in one trend I would assume they're probably soft just sort of from a macro perspective and I'm assuming in terms of company specifics. Any commentary around what you're getting back there?

正確的。然後就 - 亞當而言，我認為就物流而言，從宏觀角度來看，我認為它們可能是軟的，而且我假設就公司具體情況而言。對於您在那裡得到的結果，您有何評論？

Sure, I think that there's a couple of factors to it. I first off, the previously announced loss of the one customer will continue to be a drag on comparatives in Q1 and Q2. That event happened at the end of Q2 last year. So from that perspective on the premium side that will continue to be a drag, we have had growth in our direct premium business. But that's not large enough to offset that one large customer.

當然，我認為這有幾個因素。首先，先前宣布的失去一位客戶將繼續拖累第一季和第二季的業績。該事件發生在去年第二季末。因此，從保費方面來看，這將繼續成為拖累，而我們的直接保費業務已經實現成長。但這還不足以抵銷那一個大客戶的影響。

On the Proactive business, the business is the business is relatively stable -- not even relatively, it's very stable. With that said, overall market conditions do seem to be down a little bit. The total number of shipments are down a bit, as we pointed out. We try to give our effectively a same store sales number for you. So last year we did see that down slightly. That trend continues to be prevalent. We are adding more customers and so hopefully that's balancing out the increase in number of customers and the reduction of shipping with existing customers.

就主動業務而言，該業務相對穩定——甚至不是相對穩定，而是非常穩定。話雖如此，整體市場狀況似乎確實有所下滑。正如我們所指出的，總出貨量略有下降。我們盡力為您提供有效的同店銷售數字。因此，去年我們確實看到該數字略有下降。這種趨勢仍在持續流行。我們正在增加更多客戶，因此希望這能夠平衡客戶數量的增加和現有客戶的運輸減少。

Okay. And really the last area I just want to touch on it doesn't appear to me that you guys have really provided any guidance around what you expect in '25. Any comment on that, and any help you could give on that?

好的。我最後想談的是，在我看來，你們似乎並沒有真正提供任何有關 25 年預期的指導。對此有何評論？您能提供什麼協助？

No, we haven't given any guidance and we don't plan on giving guidance. I think overall I would look at the business and assume it's relatively stable. We are very stable other than the one customer that we lost last year. On top of that, we made significant efforts last year to align our cost with the changes that were associated with the loss of that customer.

不，我們沒有給任何指導，我們也不打算給予指導。我認為總體而言，我會審視該業務並假設它相對穩定。除了去年失去的一位客戶外，我們的狀況非常穩定。除此之外，去年我們做出了巨大努力，使我們的成本與失去該客戶所帶來的變化保持一致。

So at this point we've aligned cost with revenue with that customer and now we're continuing to look to optimize our sales which should lead to new customers and continue to add our Proactive customer base. With that said we're also going to be subject to the same market conditions as everyone else, which I think are a little bit unpredictable right now. So our inability to predict the external market in combination with the fact that much of our 2025 will be based upon how effectively we deploy the resources that we have available to us, which is difficult to predict the timing of anything like that.

因此，此時我們已經將成本與該客戶的收入進行了調整，現在我們將繼續尋求優化我們的銷售，這將帶來新客戶並繼續增加我們的主動客戶群。話雖如此，我們也將像其他人一樣受到相同的市場條件的影響，我認為目前這些條件有點難以預測。因此，我們無法預測外部市場，再加上 2025 年的大部分內容將取決於我們如何有效地部署我們可用的資源，因此很難預測任何事情的時間。

The money is not burning a hole in our pocket. We are adamant about diligently working very hard to identify options that can provide meaningful shareholder return with minimal risk. And so it's hard to predict the timing of those types of events, and that's why overall that's why we're not giving guidance for the year.

這些錢不會花光我們的錢包。我們堅持不懈地努力尋找能夠以最小風險為股東帶來可觀回報的選擇。因此，很難預測這些類型事件發生的時間，這就是為什麼我們總體上不提供年度指導。

Can I just sort of ask a part B to that last question and then and then I'll get off here. The fourth quarter came in softer than I had expected. I had expected you guys to be able to mitigate more of that FedEx loss than you ended up doing. Is it reasonable to model as the past the last test that hey, sort of that low double digit decline on the top line. Really should be sort of assumed at least through the first half. Given the way the comps roll through due to that loss?

我能否先問最後一個問題的 B 部分，然後我就到此為止了。第四季的表現比我預期的要差。我原本期望你們能夠減輕聯邦快遞的損失，但結果卻並非如此。按照上次測試的結果建模是否合理，即收入出現某種低兩位數的下降。確實應該至少在上半場進行這樣的假設。考慮到由於該損失而導致的業績下滑情況？

I don't think -- I think that's a very reasonable modeling assumption given all the factors as we said, we live in a in a somewhat unpredictable world right now. And there's some very -- yeah, there's some very exciting things happening and then there's some things that are not exciting happening in the world, but from a modeling perspective, I think that's a smart move on your part.

我不認為——我認為考慮到所有因素，這是一個非常合理的建模假設，正如我們所說，我們現在生活在一個有點難以預測的世界。是的，世界上確實發生了一些非常令人興奮的事情，但也有一些不那麼令人興奮的事情發生，但從建模的角度來看，我認為這是你的明智之舉。

Okay. Very good, thanks.

好的。非常好，謝謝。

Not a problem.

沒問題。

(Operator Instructions) And ladies and gentlemen, at this time and showing no additional questions, I'd like to turn the floor back over to management for any closing remarks.

（操作員指示）女士們、先生們，現在沒有其他問題了，我想將發言權交還給管理階層，請他們做最後發言。

Perfect, thank you. So appreciate everybody joining the call as we said, 2024 was quite the transition year for the company. And I think we've successfully navigated that transition. The company has set a strong foundation for growth. And we look forward to continuing to communicate with you throughout 2025. So thank you.

非常好，謝謝。因此，感謝大家參加電話會議，正如我們所說，2024 年對公司來說是一個重要的轉型年。我認為我們已經成功完成了這項轉變。公司已為發展奠定了堅實的基礎。我們期待在 2025 年繼續與您保持溝通。所以謝謝你。

And with that, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

今天的電話會議和演示就此結束。我們非常感謝您的加入。現在您可以斷開線路了。