Intellicheck, Inc. Q4 FY2025 Earnings Call

Greetings. Welcome to today's conference call. Operator instructions were provided. Please note that this conference is being recorded. I will now turn the conference over to Gar Jackson. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck Fourth Quarter and Full Year 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 as new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor Statement and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission. Statements made on today's call are as of today, March 19, 2026. Management will use the financial term adjusted EBITDA in today's call. Please refer to the company's press release issued this afternoon for further definition, reconciliation and context for the use of this term. 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 Q4 and full year 2025 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.

Thank you, Gar, and good afternoon, everyone. I appreciate you all joining us today to review Intellicheck's fourth quarter and full year 2025 results. I've been with Intellicheck for about eight years now, and this call today has me the most excited I've been since I joined the company. We've come a long way over that time. To reach the milestone of annual profitability and to be well on our way to being a Rule of 40 SaaS company are significant milestone achievements. We'll talk about more of this in a few minutes. First, I'll share a summary of the quarter, then spend some time discussing how we think about growth, our key verticals and what we believe to be the pivot point to profitability in our operating model. Then I'll turn the call over to Adam for a deeper review of the financials. For the fourth quarter of 2025, total revenue grew 12% to a record $6.6 million. And for the full year, we grew 13% and finished the year at $22.7 million, another company record. The investments we made transitioning over to AWS are working on a number of fronts. Gross margin for this quarter increased to 91.4% compared to 91.1% in Q4 of last year, underscoring the continued strength and leverage of our software-driven SaaS model. The AWS platform is also much more versatile and provides better reporting metrics for both us and our clients. I am very excited to report that we achieved annual operating profitability for the first time since becoming a public company. We generated cash during the quarter and ended the year with $9.6 million, a clean cap table and a strong debt-free balance sheet. Since I came on board, I committed to you that we would remain laser-focused on revenue growth and delivering value for our shareholders and stakeholders alike. With net income of $1.3 million for the year and an EPS of $0.06, I'm very pleased we have succeeded in delivering on this commitment. We also set a goal to be adjusted EBITDA positive while still investing in the business. We more than achieved this objective with three consecutive quarters of adjusted EBITDA positive results for the year. Adjusted EBITDA in Q4 of 2025 was a record $1.9 million, and we finished the year at $2.6 million, another record. With the realization of this goal, we demonstrated with consistency the operating leverage inherent in the business model and profitability at these revenue levels. I am proud of the Intellicheck team for the hard work and dedication that allowed us to succeed. At the same time, I want to make it clear that our commitment doesn't end with these successes. We're going to continue our efforts to create new opportunities for growth and profitability as we build on our relationships with our clients and expand our presence in an increasing number of market verticals. Our contract renewals over the past two years have been very successful. Sandra Bauer is doing a fantastic job working with our partners to secure renewals along with an expansion of those partnerships' use cases. A great example of this is the renewal and expansion of our partnership with a leading national U.S. bank that is a top three client. They are using Intellicheck's innovative technology to facilitate customer onboarding, account name verification and account modifications. We anticipated the year-over-year increase in revenue from this client to be approximately 15%. We exceeded those expectations and grew by approximately 33% when comparing 2024 to 2025. This growth is another testament that our product is effectively stopping fraud and is very appropriate for multiple use cases within the banking environment. More recently, another top financial client that is a recognized preeminent regional bank signed a three-year agreement. It too is expanding its use of Intellicheck's technology to include teller workstation transactions in their 1,900 branches. This is an area where we continue to see incremental interest. This client went live with us with this new use case in Q3 of 2025, so the revenue will be up significantly in 2026 with a full year run rate. Additionally, this client is looking at increasing the use cases beyond what they are currently doing. The total contract value over three years is currently in the high seven-figure range. This has made this client a top revenue generator for the company and another significant growth driver. Another area of growth that I believe is often overlooked is via our clients' active M&A and branch expansion growth. Three of our largely regional banks are expanding their branch presence, particularly in the Southeast region of the country. These are areas that are seeing significant population migration. More branches lead to more transactions and quick and easy implementations for our clients. We are very pleased that they continue to give us positive feedback on our product offerings. This work to drive record revenues and profitability hasn't come easy. Sandra's efforts have had a significant impact on Intellicheck. And as a result, she was recently promoted into the newly created role of Chief Commercial Officer. In addition to customer success, Sandra will now have sales reporting to her as well. Along with this new alignment, we are continuing to refine our sales team to meet the changes we are seeing in the rapidly evolving marketplace. Our channel partner program remains a strong focus for us. We believe it will drive significant growth across a number of verticals. We are making great progress with providers of third-party services. Our recent partnership with Alloy is an example of how our program is growing with great partners. They have incorporated our technology into their banking-focused software platform. As a result of this partnership, any of their customers can now utilize us. For those not on the Alloy platform who depend on third-party providers, we have a technology solution that is getting serious market interest. With the rollout of our enriched desktop application, any sized organization can immediately implement us with no system integration needed. You may remember that we shared with you that many industry businesses rely on core provider platforms. This typically results in long deployment delays because these providers have lengthy development queues. We believe that we are ideally suited to serve these businesses, and we know they are solving a serious pain point. Partnerships like this allow us to scale distribution more efficiently, reach new markets faster and remain true to our capital-light operating model. Sandra will also be overseeing the growth of these important relationships in her new role. We are very excited about the opportunities they create to stop fraud on a broader level. Throughout the year, we scaled up our marketing and public relations efforts to build awareness of Intellicheck and our state-of-the-art technology solutions. We participated in key industry conferences, including FinovateFall 2025. My keynote presentation was 'Hidden Threat in Identity Verification: Why the First Step is Everything.' I also spoke about the key role of the barcode. It provided a great platform to directly speak to misconceptions such as why facial recognition alone is not sufficient as an authentication strategy. FinovateFall 2025 is a highly regarded conference hosted by Finovate. Finovate is a leading research and events firm focused on innovation in finance and banking technology. It consistently attracts a large, high-impact audience, including senior financial and banking executives and investors. At the Association of Certified Anti-Money Laundering Specialists Conference, I presented an innovative session on the innovation blind spot: why identity starts with real verification. Here, I spoke about why every system is only as strong as its entry point. It also gave me the opportunity to explain why the smartest fight against fraud starts before it begins. Technology with real-time ID verification defeats bad actors at the very first step. Drawing on the latest fraud trends, I discussed rapidly evolving threats, reviewed synthetic identity fraud and deep fake-driven schemes that are undermining traditional identity verification methods. This was an important event for us because it is recognized as the premier global gathering for professionals fighting financial crime. The conference brings together thousands of compliance officers, regulators, law enforcement officials and industry leaders to explore the latest strategies and technologies that are shaping the future of anti-financial crime. We're also very active in building our efforts related to Investor Relations. Programs we participated in included the Sidoti Micro-Cap Virtual Conference, the Ladenburg Thalmann Technology EXPO25, D.A. Davidson Technology Conference, the Craig-Hallum Alpha Select Conference and the Planet MicroCap Conference. These interactions are very valuable because they allow us to communicate our strategic goals and ensure that you, our shareholders and the investment community, are kept current as we grow. There was another important sign of the growing recognition we are achieving as a leader in providing ID verification in the financial services market. I hope that all of you have now seen the IDC Marketscape report on worldwide identity verification in financial services. Their 2025 vendor assessment named Intellicheck a leader. As I said in our press release, and I believe it is worth noting again, we believe this recognition affirms that Intellicheck is not just one in the pack. We are a leader with the state-of-the-art technology solutions that secure trust while preserving a seamless customer experience. Although banking and lending continue to be our primary verticals and growth drivers at this time, we are continuing to focus on new verticals we've been targeting. Many of these new verticals are dependent on interest rates to drive volume, particularly in the automotive and title insurance verticals. While there is recent volatility in interest rates, waning consumer confidence and fear of inflation are increasingly concerning consumers, we believe we are well positioned in these markets when the interest rate environment changes. I'm excited to see what will happen when rates go down. In the meantime, we are succeeding in banking, which is not so dependent on interest rates or consumer confidence. We all need to bank. As a reminder, over the past several years, we've been very deliberate about diversifying away from lower-value transactional use cases such as age verification-focused transactions. We've been targeting verticals where identity theft is expensive, pricing per transaction is stronger and customer relationships tend to be stickier and grow with additional use cases while generating significantly less churn. Among the targeted verticals in addition to banking are title insurance, automotive, specialty finance, background screening, logistics and digital account security. Driven in part by these new categories and contract renewals at higher rates, our average price per transaction increased 25% in Q4 versus the previous fourth quarter. This further illustrates that we continue to have pricing power for our unique product, a product that delivers a decision our customers can rely on for their business processes greater than 99% of the time in under a second. And typically, our software works with the existing hardware a prospect has for in-person validation and on any person's phone or device for digital validation. With this in mind, I want to reiterate the benefits of our operating model. We continue to operate with very high gross margins and limited incremental cost to support additional revenue growth. Our platform today is capable of handling significantly more activity than it does currently, which provides structural operating leverage as revenue scales. While we don't provide formal revenue or earnings guidance, our objective remains straightforward: to build a durable, differentiated high-margin business by expanding with our existing customers and onboarding new customers, improving our revenue mix and maintaining disciplined execution. I also want to respond to those of you who have been asking about AI. AI can mimic an ID. AI is no match for a barcode. AI can figure out how an ID is supposed to look, making visual inspection and templating outdated and ineffectual. We do not rely on AI to authenticate an ID. We use AI to make our clients' customers' journey easier. We use intelligence to see what our clients' customers are doing. If they do it wrong, we correct it. Our clients tell us we help them onboard good customers faster. At the same time, a byproduct of speedy onboarding is we stop fraud. One simple process, two great solutions. With that overview, I will now turn the call over to Adam to walk you through the financials in more detail.

Thank you, Bryan. 2025 was a transformational year for Intellicheck, both financially and operationally. The initiatives we have been discussing with you over the past several quarters are now delivering meaningful results. As Bryan mentioned, our fourth quarter revenues were 12% higher versus the prior year. And for the full year, we grew revenue 13% to a record $22.7 million. We also achieved a milestone that I'm particularly proud of: our first full year of GAAP profitability from operations with net income of $1.3 million compared to a GAAP net loss of $918,000 in 2024. Our adjusted EBITDA for the full year was $2.6 million, nearly five times the $520,000 we reported in 2024. This reflects the operating leverage we have been building in this business and the discipline we have maintained around expenses. We are also pleased to see the continued growth of SaaS revenue, which represented 99% of total revenue in 2025. New business pricing continues to hold firm, and we believe the demand environment remains strong, particularly in financial services and retail, where identity fraud continues to escalate. Our recently published North America identity verification threat report based on nearly 100 million verification transactions in 2025 underscores the critical nature of the problem we solve and the scale of our platform. Starting with quarterly results. Revenue for the fourth quarter of 2025 increased 12% to a record $6,635,000 compared to $5,936,000 in the same period of 2024. Our SaaS revenue for the fourth quarter of 2025 grew 12% to $6,620,000 from $5,913,000 during the same period of 2024 and represented over 99% of our fourth quarter revenue. Gross profit as a percentage of revenues was 91.4% for the fourth quarter of 2025 compared to 91.1% for the same period of 2024. On an adjusted basis, excluding noncash amortization of capitalized software costs, our adjusted gross profit margin was 93.5% in Q4 of 2025 compared to 93% in the prior year period. The improvement in adjusted gross margin reflects the efficiency we are achieving in our cloud infrastructure. Azure spend has declined more than 55% from its peak levels in mid-2024, and AWS is now our primary hosting platform, which positions us well for maintaining strong margins going forward. Operating expenses, which consist of selling, general and administrative, research and development expenses, decreased $357,000 or 7% to $4.6 million for the fourth quarter of 2025 compared to $4.9 million for the same period of 2024. SG&A expenses decreased $604,000 or 15% year-over-year, reflecting the benefits of our continued cost discipline and the efficiency initiatives we implemented over the course of 2024 and 2025. On an accounting basis, R&D expenses were higher in Q4 2025 at $1.3 million compared to $1 million in Q4 of 2024. However, I would like to provide some context on this. Cash R&D spend remains well controlled. The GAAP increase is driven by two factors. First, the amortization of previously capitalized software development costs that are now in production; and second, the fact that we capitalized essentially zero software costs in the back half of 2025. For the full year, we capitalized only $213,000 in 2025 compared to over $2 million in 2024, a 90% reduction as our major platform projects moved into production. Going forward, we expect R&D spend to grow at a rate below our revenue growth rate. The fourth quarter of 2025 was our strongest quarter of the year, capping a second half in which both Q3 and Q4 were profitable at the GAAP level. We reported operating income of $1.5 million compared to $480,000 in Q4 of 2024 and net income of $1.55 million or $0.08 per fully diluted share compared to net income of $488,000 or $0.03 per fully diluted share in the same period of 2024. Adjusted EBITDA for the fourth quarter was $1,877,000 compared to $860,000 in Q4 of 2024, more than doubling year-over-year. The weighted average diluted common shares were 20.2 million for the fourth quarter of 2025 compared to 19.3 million for the same period of 2024. Now turning to our full year 2025 results. Total revenue for the full year of 2025 increased $2.7 million or 13% to a record $22.67 million compared to $19.997 million for 2024. SaaS revenue for the full year of 2025 grew $2.6 million or 13% to $22.4 million from $19.8 million for 2024. Gross profit as a percentage of revenues was approximately 90% for the full year of 2025 compared to 91% for the full year of 2024. This modest compression is primarily attributable to higher noncash amortization of software costs flowing through the cost of revenue, which increased to approximately $499,000 in 2025 from $181,000 in 2024 as our platform investments moved into production. Excluding this amortization, our adjusted gross profit margin was approximately 93% for the full year compared to about 92% from the prior year. Importantly, our underlying cloud computing costs grew at a rate below revenue growth, and we expect further efficiencies as the Azure to AWS migration is now substantially complete. Total operating expenses were essentially flat year-over-year at $19.4 million for 2025 and $19.3 million for 2024. This was a significant accomplishment given our 13% revenue growth. SG&A expenses decreased about $1.4 million or 9% to $14.1 million for the full year of 2025 compared to $15.5 million in 2024. This reduction was primarily driven by lower sales and marketing and personnel-related costs, including a reduction of $820,000 in marketing expense in 2025 compared to 2024. Our outsourcing and marketing drove a reduction of almost 40% in marketing spend year-over-year, which, as Bryan has mentioned, has still resulted in substantially better results. As we discussed previously, we expect our total noncash expenses to comprise approximately 5% to 10% of our expenses with stock-based compensation comprising the majority of that figure. R&D expenses on a GAAP basis increased $1.5 million to $5.3 million, reflecting the near elimination of software capitalization and the amortization of prior year capitalized costs. To put the capitalization trend in perspective, we capitalized over $2 million of software costs in 2024 and just $213,000 in 2025. We expect a de minimis level going forward. The GAAP R&D line now more closely reflects our cash engineering spend. The company reported net income of $1,273,000 for the full year of 2025 compared to a net loss of $918,000 for 2024, a swing of over $2.2 million. Net income per fully diluted share for the full year of 2025 was a gain of $0.06 compared to a net loss per fully diluted share of $0.05 in 2024. The weighted average diluted common shares were 20.2 million for 2025 compared to 19.3 million for 2024. Adjusted EBITDA for the full year of 2025 improved to $2.56 million, nearly five times the $520,000 we reported for 2024. Turning to income taxes. We recognized $58,000 in tax expense for 2025, entirely state income and franchise taxes. No federal cash taxes are owed because our NOL carryforwards fully sheltered 2025 taxable income, resulting in an effective rate of approximately 4%. We carry a full valuation allowance of approximately $6.7 million against our deferred tax assets. GAAP requires this allowance as long as our three-year cumulative taxable income position remains negative. Despite our $1.3 million pretax gain in 2025, the prior two years' losses keep that cumulative tax position negative. If profitability continues and the three-year window improves, we could release some or all of the allowance, producing a noncash benefit of up to $6.7 million. We are not providing timing guidance, but investors should understand this as a meaningful potential future benefit. As to the company's liquidity and capital resources, at December 31, 2025, the company had cash and cash equivalents that totaled $9.65 million, more than doubling from $4.7 million at December 31, 2024. This improvement reflects strong cash generation from operations during the year with operating cash flow of approximately $4.5 million in 2025. At year-end, there was working capital of approximately $10.1 million, total assets of approximately $24.5 million and stockholders' equity of approximately $20.7 million. I would also note that the significant decline in software capitalization from over $2 million in 2024 to just $213,000 in 2025 means that our GAAP operating results and our cash generation are now much more closely aligned. This is a cleaner financial profile that we expect to maintain going forward. In 2025, we executed on a number of key initiatives that we believe set us well for continued strong performance in 2026 and beyond. We believe that our more efficient marketing approaches are already yielding dividends for the sales pipeline. We anticipate that our improved go-to-market strategy, combined with the growing threat landscape that our threat report highlights, including the 158% year-over-year growth in password reset verification use cases, will continue to drive demand for our platform. For 2026, we expect to see continued gross margins of approximately 90% to 91% with potential for future improvements as we realize the full benefit of our completed AWS migration. We also expect to see continued leverage in our operating expenses because of the expense discipline we have maintained, and we do not expect that expenses will grow as quickly in 2026 as our revenue. Our FY '26 operating plan targets continued revenue growth and further improvement in profitability. We remain focused on several strategic priorities: continued investment in customer success and the customer experience, disciplined hiring in engineering and sales and deepening our presence in key verticals, including financial services and banking, where the market data show that fraud rates remain elevated. I'll now turn the call over to the operator, who will take your questions.

Operator instructions were provided. And our first question comes from the line of Mike Grondahl with Northland Securities.

Congratulations on another strong quarter. On the third quarter call, you said the banking and lending channel was 50% of revenue, and it grew 80% year-over-year along with retail and a couple of others. Do you have that data for Q4?

I have it for the year. And what I'll say, Mike — and by the way, thank you. Q4 came in — the holidays came. So retail did bump up, but I think that's going to be something interesting to watch overall. It went up probably about 10% to 15% as the whole breakout across our different revenue, but it was still down Q4 2024 versus Q4 2025. So banking and lending continues to grow. The percentage change year-over-year for banking and lending is nearly double, whereas retail is down 1%.

Got it. But I think you said retail grew year-over-year for the fourth quarter?

It was down 13% Q4 2024 versus Q4 2025. It was up 25% over Q3 2025. So the seasonal lift came in. And remember, we still don't have every one of our customers on the new pricing model that allows us to straight-line it. So that's why we saw a lift. A couple of the big four customers we have that do a lot in retail in that credit card space are still on a more transactional model than a straight-line model. So that brought in seasonality from them.

Got it. And how does the pipeline look for new customers or customers you're rolling out here in the first half of 2026?

I think it's been really good. Part of that is due to that new desktop solution, the delivery method that we've been talking about because there are a lot of midsized credit unions and banking institutions that want to use us, but they have been held back by their core banking platforms. Now they don't have to worry about that. So there is a ton of interest in that. And then also this partnership with Alloy is already producing a lot of good names that are saying, 'Hey, how do we get this going? How do we get it onboarded?' I'm also going to say that the marketing is truly paying off in ways that we haven't seen in the past. I love the fact we're spending less on marketing but getting a heck of a lot more out of it. Year-over-year, even our followers on LinkedIn are up about three times. So those are the things that help drive pipeline, make cold calls warm and everybody loves a really good inbound lead, and they're getting that for us.

Great. One more question. You have a relationship or a commercial relationship with, I think, Ping Identity. They seem to be connected to a couple of global social media companies. What's the opportunity there? Are they facilitating you guys?

Not to the point that I would like. And it's one of the reasons that we continue to refine our channel partnership model and how we make sure that we are helping their sales force light us up. That's one where I think we need to do better. We're doing great in title. We're doing really well in automotive, and we're doing well in background screening. But that particular channel partner, we need to do a better job on.

And our next question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group.

This is Daniel Hibshman on for Jeff Van Rhee. Congrats on the quarter, Bryan, Adam. On the retail backdrop, maybe if you could just explain a little bit more on that and your outlook in retail. I know that generally improved across 2025, and it sounds like going into Q4 we had thought maybe it would be a light quarter in terms of retail, and it sounds like it ended up being better than expected. Maybe just your thoughts a little bit more looking forward. I mean, was 2025 in general a down-ish year for retail? Are your expectations that maybe a plateau, a flattening, actually return to some growth? What are your thoughts there?

Yes, 2025 was a down year in terms of a lot of retail sales, credit card issuance, people maxing out their cards, those types of things. What I always like to point out is that even though it was down, and even Q4 of this year was down 13% from Q4 2024, because we have expanded into a lot of other markets, we still grew. The whole retail world—consumer confidence, consumer sentiment—those types of things are probably going to drive it. I like the fact that our customers are bringing on more retailers, and they use us to help bring them onboard because they can say, 'I'm going to give you better rates on your credit card program if you put this process in place,' because they know that the fraud is going to go away. So I look at it as we are building a pipeline for the economy, if you will, so that when interest rates reduce, what has been a headwind will become a major tailwind.

Okay, that's helpful. And then maybe just in terms of the strength in the quarter and the beat on the Street, just your thoughts narrowing in a little bit more color on the source of that, whether you attribute that primarily to the retail backdrop in the quarter or more so the new verticals coming in, whether that's automotive or title insurance, et cetera, just the source of the beat.

I would say it's a combination of all of the above. Retail certainly came in stronger than we were anticipating. But through our channel partners, automotive is growing a lot; increased banking use cases with new and existing clients; and other verticals are contributing as well. So it's sort of all of the above. I would expect to see seasonality in retail, and since we still have some customers who are not on the straight-line model yet, Q4 retail and Q1 retail can show swings. But we've been, as Adam said, very smart on costs. I'm excited about where we're going, but retail is still one of those areas where the timing of a rebound is uncertain.

Yes. Last question for me would just be, do you have any update on the status of the large global social media customer that was getting implemented?

They are 100% implemented. They tell us how much they love us. They are one of the strangest companies I've ever dealt with, and I'm hearing that from many other companies that work with them. I have taken the revenue out of our internal forecast because they're too unpredictable. We have a great contract. They renewed it and actually signed on for more services. Sometimes the pipeline turns on really big and then sometimes it goes away, and they almost can't even explain why that is. So to me, they're gravy on our revenue numbers; we'll see where it goes. But fully implemented: 100% contract signed and renewed.

And our next question comes from the line of Rudy Kessinger with D.A. Davidson.

This is Clark Wright on for Rudy Kessinger. Could you provide any additional parameters to frame growth expectations for 2026, given the step-up in revenue from the financial client that went live in Q3?

We don't give formal guidance as company policy. For that particular client, remember they rolled out from zero to 100 over the course of a year, and what we ended up doing with them is straight-lining revenue. So year one of what they spent was about 50% of what they'll spend in year two. So there's built-in growth there. The rest of it is a matter of how fast we can get implementations done. There are banks that want to use us but are running on really old technology and want to buy new scanners because they don't want to do two implementations. Some of these scanner companies are running on six- to eight-month backlogs. I'm comfortable about our growth. I like the amount of built-in growth that we have. The rest depends on implementation speed and whether supply chain shortages impact us.

Got it. That's helpful. I also appreciate the additional color you provided on the trajectory of gross margins and operating expenses going forward. Should we expect to see EBITDA margins expand from where they're at currently given some of the dynamics associated with the conversion to the cloud? Or should we expect effectively flat or down from 2025 levels?

A portion of the savings from moving cloud providers is being reinvested in smart machines and data team tools. I will probably look to expand our marketing because it is performing well. We don't want expenses to grow at the same rate as revenue, and I think that we can easily accomplish that. So I would expect some EBITDA margin expansion over time as revenue grows and we maintain expense discipline, though we'll selectively reinvest some savings to drive growth.

In terms of how we should imply that going forward with headcount, should we expect headcount to remain relatively flat then going forward based on reinvestment of cost savings? Or should we expect that line item to increase over time?

I think we'll add where needed to get things out the door and swap some consultant expense for full-time employees in development, so not a huge increase there. If we find a phenomenal salesperson, we'll hire them because they pay for themselves. We might see a slight increase in marketing expense. As we bring on more clients, we would probably need more customer success people, but they pay for themselves because when you spend time with the customer, you find new use cases. So headcount should go up, but not at the same rate as revenue.

And our next question comes from the line of Scott Buck with H.C. Wainwright.

Bryan, you mentioned in the prepared remarks that you like the way you're positioned in automotive. Once there's a rebound there, you guys should be able to ride that wave. I'm curious, are there any metrics you can give us around that? How many dealerships do you have exposure to or some way for us to wrap our heads around the opportunity?

Automotive revenue grew 125% year-over-year. A lot of that is through channel partners. There are about 19,000 rooftops out there, and we're nowhere near fully penetrated, so I see a lot of growth potential. We brought on another channel partner now incorporated into one of the largest automotive software providers as part of the F&I experience. I expect that should bring in many more rooftops. We are pursuing a couple of angles in automotive: compliance, which starts at the front end, and F&I, which is at the back end. I really like the automotive space because there are so many rooftops, and we're approaching it via partners rather than knocking on every single door.

That makes a ton of sense. Given the expansion of business with some of the financial institutions, is there anything on the customer concentration front that we should be keeping an eye on?

As we bring on more financial institutions of different sizes, I think concentration will likely lessen. We've expanded into different use cases with various customers, and that tends to make the relationships stickier. There's always risk, but customers are getting more integrated with our platform and that feels positive.

I would add that as we've expanded into different use cases with these customers, it feels like the business becomes stickier. There's risk with concentration, but on the other hand, expanded opportunities within those customers—such as when banks acquire other banks and they add branches—provide more ways to grow with the same customer.

And our next question comes from the line of Kris Tuttle with Blue Caterpillar.

Adam, a couple of items not covered yet that I wanted to ask about are end-market related. One you've talked about in the past was employment verification, which still has a lot of fraud in it. Then there's a lot of initiatives around reducing healthcare fraud. And last, and maybe lower probability but potentially large, the chances we might get a voter ID law in the next couple of years. Just your thoughts on those, with employment verification probably the most realistic but others also possible.

Employment verification is a market I still love, almost as much as automotive, and the two are somewhat interrelated. We have two automotive manufacturers that use us to verify all of their employees and contractors. One realized a supplier had undocumented workers, and they lost production. One of them said they lose $49,000 a minute if an assembly line isn't running, so they're now requiring suppliers to use us to authenticate all of their employees. I think we'll see more of that. It's been a great market; one manufacturer has 200 suppliers, and I'd take every one of those. Remote hiring is another area where we're seeing bad actors from other countries pretending to be U.S.-based developers and getting access to systems. That is scaring people and driving demand for stronger verification. Voter ID excites me. I've spoken with multiple states about what they think they need to do. We have an elegant solution that works for in-person verification and could also authenticate mail-in ballots. It's a matter of watching how the law evolves and talking to the right people. Many places already take a photo of a driver's license to parse data but not to authenticate it; embedding our authentication into that process would be quick and effective. South Carolina and New Jersey already do aspects of this, so there's clear precedent. I hope that answers your questions, Kris.

Yes, absolutely. Those sound like great applications for you, even if not immediate in the numbers. They make a lot of sense.

This concludes our question-and-answer session. I will now turn the call back over to Bryan Lewis for any closing remarks.

I just again want to thank everybody for joining us today. I want to highlight that I believe we're at an important juncture with the historic achievement of annual operating profitability and sustained EBITDA positive growth. I want to be clear: we believe we are positioned to build on these successes. We look to expand opportunities with current clients. I look at the pipeline and I think we're going to be doing well. Particularly, I'm going to say banks, autos and title insurance. Two of those are somewhat dependent upon the economy; one is less so because identity-related risk is evergreen. I look forward to updating you all on our progress on our next call. Everybody, have a great evening, and thank you again.

This does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time. Have a wonderful day.