Greetings, and welcome to the Intellicheck Q2 2025 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gar Jackson from Investor Relations. Thank you. You may begin.

Thank you, operator. Good afternoon and thank you for joining us today for the Intellicheck Second Quarter 2025 Earnings Call. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage and similar expressions as they relate to the company or its management as well as assumptions made by and information currently available to the company's management identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes, new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the heading of Safe Harbor Statement and Risk Factors listed from time to time in the company's filings with the Securities and Exchange Commission. Statements on today's call are as of today, August 12, 2025. Management will use the financial terms, adjusted EBITDA and adjusted gross margin on today's call. Please refer to the company's press release issued this afternoon for further definition, reconciliation and context for the use of these terms. We will begin today's call with Bryan Lewis, Intellicheck's Chief Executive Officer; and then Adam Sragovicz, Intellicheck's Chief Financial Officer, who will discuss the second quarter financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to 1 hour, and I will now turn the call over to Bryan.

Thanks, Gar, and thank you all for joining us for today's earnings call. Our second quarter total revenue grew to $5.1 million from $4.7 million in the prior year period with adjusted EBITDA of $75,000 for the quarter, which is a $145,000 improvement versus the year ago period. Additionally, we ended the quarter with $8.6 million in cash at quarter end, an increase of $3.5 million versus the $5.1 million balance at the end of the first quarter. During the second quarter, we had some significant achievements that I will recap for you. Among the highlights we will be discussing are the 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. We will also be sharing with you the results of our efforts on contract renewals where we are demonstrating continued strength as well as some new wins. We will discuss organizational moves that we've made within our sales staff and some metrics that show that our marketing spend, while lower than last year, is showing significant gains. Additionally, we've made major progress on our AWS customer migration project that was undertaken for a multitude of reasons. During the second quarter, we announced some very exciting news on that regional bank front. We completed the extensive contract negotiations with a large regional bank as well as all of the integration work. They began their rollout, and we began invoicing that bank in July. As a reminder, this 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. I'm also pleased to report that the large bank and credit card issuer that is using our technology in branch, online, in their call center, in their auto loan group for the issuance of new white label credit cards and for account lookup that has been buying buckets has now signed to a new 3-year tiered contract that is pacing at annual contract value in the mid-7-figure range. We believe this is yet another demonstration of the value add that Intellicheck's technology provides for our customers and their clients across multiple market verticals. We believe that there is great promise for further expansion of our relationships with our largest clients across all sectors. With the addition of our SVP of Customer Experience and Account Management, Sandra Bauer, and the changes she has made to the customer success team, many new initiatives are starting with large clients. The two 3-year agreements previously discussed are examples of those changes working. In another example of doing more with existing clients, one of our top three clients added a 50-location department store retailer that went live late in the quarter. In addition to credit cards, this client also has a significant buy now, pay later business. They have begun using our authentication at their retailers for that side of the business as well. While retail may be off, it's good to see clients continuing to add retailers and new ways to finance with Intellicheck as the first step. And we believe that there is still significant opportunity for growth with both in-mall and off-mall retailers who are dealing with fraud issues. We also believe that what some view as a headwind now will eventually become a tailwind. And the more retailers and use cases our clients have using Intellicheck, the stronger that tailwind will be. It is important to note that we continue to see pricing power that drove both our average price per scan and new business price per scan, which were up 25% and 36%, respectively, versus the prior year. Part of this is being driven by a shift in the market vertical mix as we have put more focus on the new and expanding number of verticals that include title insurance, automotive, notary services and background checks where we charge a much higher price per scan, yet the volumes for these clients are lower than large retail chains. At the same time, we have reduced our focus and emphasis on individual bars and restaurants that were both high maintenance and low revenue per venue. This is a perfect example of a market where a channel partner makes sense. Lots of target clients, but low revenue per client. So we are now shifting that individual bar and restaurant business to one of our channel partners. Turning now to our social media client. What we were waiting for finally happened. The volume of ID verification transactions we've been expecting finally started coming in. Unfortunately, it appears that this client has recently changed some code on their end. And as a result, we are currently unable to process nearly all of the documents that they are sending. Rest assured, we are working on the situation, and our engineers are in contact with this client's engineering team to find a solution. It was agreed that we would hold a comprehensive in-person meeting to discuss the solution as well as look at the entire suite of Intellicheck technology offerings to see how we might help them. We believe that the most effective solution is to embed our scanning technology as the first step in their workflow, and that will be one of the topics of discussion. We are pleased that this has reached the very top of the identity organization management there and both our SVP of Sales, Tim Poulin and I have spoken with them. I look forward to the engineers finding a solution. I stand by what we shared with you before regarding the crucial role we can play as a partner to this social media giant with our industry-leading technology. The top issue they said they are facing is account takeover and all the issues that come with that for them, reputational ruin, crime and underage access. Given what we do for all of our financial institutions and our email client, they understand we can do it for them. We will keep you posted as new developments occur. On the sales front, 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 who are all seasoned strategic account representatives focused on targeting major accounts. He's also hired a dedicated channel manager to strengthen our coverage in strategic verticals and provide consistent new revenue streams. Although we have had channel partners in place previously, we need to have a substantive focus on driving revenues through these accounts and onboarding new strategic partners. Our new channel manager will have a dual role of both signing up these new partners and driving revenue through our existing partner base. To that point, on previous calls, I've spoken about our commitment to sign the companies that provide the backbone software for generally smaller banks and credit unions that want to outsource that function. These software providers are really the only way to reach this potential client base. I am pleased to say that we've signed our first. We will be going live in November through their platform with a $20 billion credit union and have other credit unions on this platform interested in our solutions. Our channel partner manager is working with their partner manager to build out the launch plan, and you'll see press releases and a lot of marketing around that as we get closer to launch. Our marketing programs have really helped us gain ground in promoting our business value, making our outreach more effective. The more people that know who Intellicheck is and how we stop fraud differently than the rest of our competitors who simply template the front of the license, the easier it is for our sales team to get meetings. Looking at some of the stats, it's clear that the new marketing efforts are working. A few examples of the progress we are making include new inbound prospects are up 30% over Q1. Interest from banking and finance users is up 79% on Google Analytics over Q1. LinkedIn impressions are up 300% over Q1. Video views are up 19% over Q1. We also launched the Intellicheck podcast series in Q2 and released 5 episodes, and we published 7 blog posts during the quarter. Both the blog posts and the podcasts can be found under the Resources tab on our website. My goal here was and remains thought leadership and brand awareness, and we believe the stats and inbound leads show we are achieving that. In fact, this is a good time to share with you a little color on our revenue breakdown per vertical. Now keep in mind that there's a fair bit of volatility to these figures for a number of reasons. For example, we believe the branch banking business will remain fairly consistent. But if one of our banks brings on board or, for that matter, loses a retail client, the mix between banking and retail can shift dramatically. In addition, as we have repeatedly said, there is significant seasonality to retail volume. Retail is also volatile because of consumer confidence, tariff concerns, inflation impacts and other things that impact retail sales in general. That being said, this is where we believe our Q2 revenue breakdown by vertical stands. Banking and lending contributed approximately 38%, retail was approximately 25%, age-restricted was approximately 7%, auto was approximately 5% and title insurance was approximately 2%. On the IT product front, we have spoken about the AWS migration from the Azure platform, and I'm pleased to say that 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. These savings are of particular benefit because we believe they will more than offset the additional GPU spending for AI that is becoming ever more important in what our data science team is doing for future product offerings for our clients and to bolster our current offerings. It's important to point out that this migration wasn't solely focused on cost savings. It was also designed to make it easier for our developers to write and release code and for our sales engineers and customer success teams to onboard new customers faster and more easily. It also provides expanded data feeds that allow for additional risk analytics to inform our clients' decision-making processes. The back-end rewrite to make the move to AWS also made the code base much simpler and platform agnostic. We can now easily move between cloud providers based on client needs and additional savings. Although we don't anticipate any additional platform migrations at this time, we believe it is good to be in a portable position if necessary. As part of our efforts to raise visibility with both investors and prospects, we are continuing to attend and speak at key conferences. We will be presenting at the Sidoti Microcap Conference on August 20 as well as hosting one-on-one meetings. For more information and to schedule a meeting, please visit the Sidoti website at sidoti.com/events. It isn't necessary to be a Sidoti client to schedule a meeting or listen to the presentation. On the trade show front, we are looking forward to FinovateFall, where I will be speaking on September 9. We will also be presenting at MoneyLIVE in Chicago, September 15. Several of our major banking clients will be attending, and we are looking forward to seeing them and meeting with additional prospects. Finally, we will be participating at the ACAMS, the Association of Certified Anti-Money Laundering Specialist Conference, which is scheduled for September 16 to 18 in Las Vegas. I will be speaking there on the 16. I will now turn the call over to Adam, who will go into more details about our financial results.

Thank you, Bryan. In addition to Gar's forward-looking statements, please note we occasionally use rounding during this call. For more detailed and authoritative financial information, please refer to our press release, to our quarterly report filed earlier today on Form 10-Q with the SEC. It's great to share more details around the numbers of the second quarter of 2025. As Bryan mentioned, our second quarter revenues were 10% higher versus the same period in the prior year. We also saw continued strong pricing, up 10% for new business versus the first quarter of 2025. You can see the strategy paying off, pursuing verticals such as auto and title insurance with higher cost per scan. Adjusted EBITDA also improved by $145,000 versus 2024 with a gain of $75,000 for the quarter. 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. Our SaaS revenue for the second quarter of 2025 was also up 10% to $5.08 million from $4.6 million during the same period of 2024 and represented over 99% of our second quarter revenue. Gross profit as a percentage of revenues was 89.8% for the quarter, which included about 260 basis points of amortization expense related to the software development projects previously discussed. This compares to 90.5% that included about 60 basis points of amortization expense in the second quarter of 2024. Our adjusted gross margin, which you may remember as a new metric we introduced in the first quarter of 2025, it improved to 92.2% in Q2 of 2025 compared to 91% in Q2 of 2024. We capitalized $47,000 this quarter and don't expect to see any more capitalization next quarter. It has been a remarkable journey of modernization for Intellicheck, where Q2 of 2024 saw $781,000 of capitalization expense. This was mostly driven by the software that we have been developing for deployment on AWS that, as Bryan mentioned, is now in production. Operating expenses, which consist of selling, general and administrative, marketing and research and development expenses, increased $455,000 or 10% to $4.9 million for the second quarter of 2025 compared to $4.4 million for the same period of 2024. On an accounting basis, R&D expenses were $528,000 higher in Q2 of 2025. But as I just mentioned, we capitalized $781,000 of R&D expenses in Q2 of 2024 and only $47,000 in Q2 of this year. Beginning in Q3, we expect that R&D costs will hit the P&L in their entirety for our current offerings. The weighted average diluted common shares was 19.8 million for the second quarter of 2025 compared to 19.5 million for the same period of 2024. As to the company's liquidity and capital resources, at June 30, 2025, the company had cash and cash equivalents of $8.6 million. We shared with you last quarter that 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. As we look at the timing of customer payments and future processing costs related to those, we believe this forecast will hold. At quarter end, there was working capital, which is current assets minus current liabilities of $7.1 million, total assets of $23.1 million and stockholders' equity of $18 million. At this point, we usually talk about liquidity available from financing and the company's $2 million revolving credit facility with Citibank. There are no amounts outstanding under this facility, and the facility was not utilized during 2025. We are gradually winding that relationship down. On another note, you may soon see a filing of an S-3, also known as a shelf register. This will allow Intellicheck to sell shares in the market efficiently if the need or unusual opportunity arises. You have heard about our cash balances being strong, and we don't currently have any reason to sell shares in the market. You may also note that it will be filed without any particular bank or purpose mentioned. We do see having a registration statement like this on file as being good corporate housekeeping. We are really just renewing the company's previous filing that was made in 2020. As the CFO and an Intellicheck employee and shareholder, it is gratifying to see the execution of Bryan's and the rest of the leadership strategy. With such a solid cash position, growing revenue and strong pricing, I am confident in our ability to drive sustainable growth and deliver continued value to our shareholders and customers. We look forward to sharing our Q3 results with you in November. I'll now turn the call over to the operator, who will take your questions.

The first question is from Rudy Kessinger from D.A. Davidson.

Congratulations on the quarter and on the significant deal with the Southeastern regional bank. I want to start by discussing that regional bank. I understand there was an initial commitment in the low 7-figure range for year 1 that had straight-line revenue recognition. Has that increase in their revenue started to materialize in Q3? When is it anticipated to start generating...

Yes, we began invoicing in July for the bank branches, as they had previously been a small client.

Okay. So just to be clear, that step-up in revenue should be present for all of Q3?

Correct.

Okay. Got it. Okay. And then I want to ask about the social media client. It sounds like there's some integration issues or technical issues you guys are working through. Just any kind of timeline to a resolution that you have visibility to today. And could you also maybe just give us a sense of how big this customer could be based on those scan volumes you were seeing prior to this technical issue?

They would be an important client for us. My team spoke with them today, and they are still evaluating the situation. One of the discussions my team is having with them focuses on how we can assist them with their current challenges. They have emphasized that the United States and Canada are two of their key markets. The main requirement in these countries is the ability to use authentication as a driver's license. They appreciate our efforts but recognize that their technology, which was developed when processes involved more manual reviews, is not sufficient for their current needs. Issues such as poor image quality have been raised, and we have suggested solutions, like using scanners instead of photographs for driver’s licenses. We are committed to addressing these concerns, and they are also considering the resources needed to implement this new work. They acknowledge their problem, and the priority is to find a resolution. Fortunately, we're engaged at the right levels, and they've identified the individuals who will drive this effort forward, motivated by financial incentives. We’re collaborating with them since they initiated more intensive discussions, and we are all working to expedite the process. I can't provide a specific date for completion, but we are focused on getting it resolved as soon as possible.

Okay. And then last one for me. Just what was the update on retail scan volumes in the quarter? Any improvement or further decline from what you saw in Q1? And just how are things trending there so far in Q3?

Yes. I'd say two things. One is the good thing is banking is more than offsetting retail. 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.

The next question is from Mike Grondahl from Northland Capital Markets.

This is Logan on for Mike. First, so with SaaS and total revenue up 10% year-over-year, 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?

So retail revenue year-over-year down 20% and again but offset by things like banking and other sectors that were up. And also, if you look at the numbers that I gave out on the call, you'll see that I think they add up to around 76%. The rest of it are other markets, and that's where we're looking at where do we have, I like those other kinds of little markets, things that are coming to us. So we look at that as areas of where maybe should we shift some marketing and sales focus. But yes, overall, retail as a percentage of sort of major revenue was 25% and retail revenue was down 20% year-over-year.

Okay, great. And that's building on that.

Yes. And that 20% down is a combination of a significant amount of our customers' clients in retail who went out of business last year. And then obviously, the consumer isn't doing as much in some areas as they were before.

That's great. And then building on that, what are some of the smaller verticals you guys are most excited about going forward in terms of do you see taking a bigger piece of the total revenue?

I was speaking with the sales team today, and I believe background checks are going to become increasingly important for us. Currently, their impact is modest, but I'm expecting interest rates to fluctuate between no cuts and four cuts by the end of the year. This could lead to a significant increase in refinancing, resulting in a higher demand for title insurance. If this occurs, it would positively impact us, as well as boost consumer sentiment and spending, which would be beneficial as we approach the holiday season. We're also exploring various aspects of the gig economy, which relates to background checks, particularly concerning drivers and similar roles. Consumers are becoming more discerning, and service providers must ensure they are hiring the right individuals. The issue of identity is critical in a remote work environment. A recent case highlighted a fake nurse who treated thousands of patients and was caught, underscoring the need for thorough hiring practices. I'm quite optimistic about these developments.

Got it. And then one more from us. Anything to call out on the sales pipeline and performance of the sales team now under the leadership of Tim?

Under Tim, the pipeline is looking great. We have some very experienced senior team members who know how to effectively manage deals, and the leads we’re receiving from marketing are vastly improved compared to our previous efforts. I appreciate that it’s costing us less than half what we spent before while delivering approximately three times the results. The pipeline is quite full, and what's particularly interesting is that we not only have new opportunities but we also signed a company that provides essential software for banks. We already have one client, and there are at least five more interested before we’ve even fully launched. This interest seems to be a trend; when one key player starts working with us, others in the industry become very keen because they recognize our effectiveness.

The next question is from Jeff Van Rhee from Craig-Hallum Capital Group.

I'll add my congrats. A few for me. The large bank credit card issuer, your in branch, online, auto loans, etc., you referenced a new 3-year ACV mid-7-figure range. What was that customer running prior?

They're slightly lower than that, but they've been expanding drastically. It's interesting, we had a quarterly business review with the risk team, and they mentioned that their credit card team is signing on new customers so quickly that they aren't even aware of it at the time. They expect to keep expanding. I appreciate the predictability of it since they're doing what many others have committed to this year. Next year, they can adjust their tiers as they see increased input, which is different from the past when we knew what they would do but they would purchase a set amount, expecting it to last a year, and it would only last 9 months, requiring us to renew. This approach is simpler for everyone and gives me more predictability regarding what I can expect from them over the course of a year.

On the retail, down 20%, how is that feeling so far this quarter?

I haven't really looked at the numbers so far this quarter. They were down 2% from Q1 to Q2. My gut feeling is that nothing drastic has changed. I believe we are about where we might bottom out if that happens. I'm hopeful for rate cuts, as I think they would be beneficial for that sector.

You mentioned a channel partner and something around credit unions, I missed that. You mentioned you signed a $20 billion credit union, if I heard that part right. But just can you just recap there? It sounded like you're formulating a bit of a new push there.

Yes, absolutely, Jeff. We've been discussing the numerous small banks and credit unions that our sales team engages with. Many of them express interest in our offerings but don't manage their own software. They are advised to consult with companies like Alloy, Jack Henry, or Galileo, which handle complete banking processing and necessary computer systems. These providers typically present options for payment processing, credit card issuance, and identity verification. We connected with a significant credit union whose representative was eager to work with us. We coordinated with their provider, who confirmed that they would get us set up and we could be live by November. Coincidentally, we found several other credit unions interested in the same platform, and they are excited about our launch as we prepare to kick off real marketing efforts. I have tasked Gino, our channel leader, with prioritizing these partnerships since they are crucial for us. This is essentially core banking, which I find appealing. One impressive aspect of the $20 billion credit union joining us is that they compared our web-based portal product against those of our competitors and determined that none of them met their expectations. They decided they must have our solution after witnessing a substantial reduction in fraud.

Interesting. Very helpful. And last for me, the large social media player that turned on, obviously, unfortunate that you've got the integrations bungled up here, but presuming you'll get on top of that in the not-so-distant future. But what did you learn from the early volumes? I mean, obviously, you got a glimpse of what they were intending to throw at you. Was it the type of volume, the scale of volume? Or were there any learnings in just that early glimpse in terms of what they want to use you for and how?

It was the scale of volumes they mentioned from the beginning, so we were pleased to see that. However, something changed in their software. A few weeks before fully ramping up, we noticed an increase in the fail rate because the documents they sent us, which included photographs of the front and back, became difficult to read even at a glance. We are collaborating with them to understand what changed on their side. From our discussions, it's clear they recognize they have a fraud issue, particularly focusing on North America. They want to ensure proper authentication since almost everyone they deal with there has a driver's license. This is what we are currently addressing together. Overall, it’s positive work, although it's unfortunate that something shifted. They’ve acknowledged the limitations of their technology, noting that much of what they developed was based on a two-day authentication process. Now, they understand that some of their tools aren’t quite effective, and they're working with us to find ways to improve them.

There are no further questions at this time. I would like to turn the floor over to Bryan Lewis for closing comments.

Thanks, operator. So in closing, I think this quarter demonstrated that we're delivering on the commitments to grow by making changes, aligning our resources, I think, to where we get bigger bang for the buck and continuing to evolve our market presence and getting branding and other things out there. And hopefully, that continues to deliver value for you, our clients and their clients and the customers they serve. I also just want to remind everybody; I think it's very telling that our four largest clients have committed to and signed multiyear renewal agreements. I think that's a real validation of our technology. And I like the fact that it adds additional predictability for our business. We are going to continue to expand our market penetration in our existing verticals. As you have seen, we're doing a pretty good job with that. And we are definitely landing and expanding our presence in new ones. So we look forward to sharing more new developments with you guys on our next call in November. And with that, I'd like to thank you for joining us today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.