Earnings Call Transcript
Intellicheck, Inc. (IDN)
Earnings Call Transcript - IDN Q4 2021
Operator, Operator
Good day, everyone, and welcome to the Intellicheck Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, I am pleased to hand it over to your host, Mr. Gar Jackson. The floor is yours.
Gar Jackson, Host
Thank you, operator. Good afternoon and thank you for joining us today for the Intellicheck fourth quarter and full year 2021 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 headings of Safe Harbor statements 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 09, 2022. 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 Bill White, Intellicheck's Chief Financial Officer, who will discuss the Q4 and full year 2021 results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour, and I will now turn the call over to Bryan.
Bryan Lewis, CEO
Thank you, Gar. As you saw in the press release, Q4 SaaS revenue was $3,715,000, up 23% over the same period in 2020, with the gross profit as a percentage of revenues at 92%. SaaS revenue for 2021 was $12,970,000, up 30% over 2020. The year-over-year percentage change was significant, but as always, I want more. So what do we need to do to continue to accelerate our growth? What we have learned over the past few years is that because we have the most accurate validation technology solution, we have pricing power when it comes to both initial contracts and renewals. That said, we are very much aware that it is imperative that we continue to grow a substantive client base. We believe that we are well positioned to achieve this goal. I'll start with recapping the transformational changes we made in 2021 that we believe will serve us well going forward. First was the buildout of a proper marketing department. This team has done a number of things to raise both awareness of Intellicheck and generate inbound leads. During the year, this team updated our branding, rebuilt the website to truly optimize being picked up in searches, created marketing collateral for the sales team, and most importantly, created targeted online marketing campaigns to create inbound leads or at least have our name known to facilitate warmer calls. The marketing campaigns have certainly paid off. Prior to the launch of these campaigns in April, we basically had zero leads coming in. The inbound leads have been steadily growing with now over a hundred a month coming in and increasing. While most of these have been for age-restricted products, these leads have been across all sectors: banking, age-restricted markets, automotive, online notaries, delivery companies, you name it. The smaller age-restricted deals closed quickly, while the financial services and banking prospects take longer. The inbound age-restricted leads that closed in 2021 had a total ACV of $230,000, with minimal cost of acquisition. That's solid growth in a vertical, considering that we did approximately $1 million in age-restricted revenues in 2021. The most important thing about all these leads is they show that the market for identity verification is enormous across multiple and varied sectors. The other thing to note about many of these leads is that they are from companies using the OCR firms, whom some consider our competitors. The companies are unsatisfied with OCR accuracy, have heard of us, and want to give us a shot. Knowing that we have such a large addressable market and the resources to increase headcount in the sales force, in 2021, we expanded the sales force and we've seen positive effects in two ways. First, smaller deals are not falling through the cracks and are closing quickly. While each of these deals alone aren't game-changing for the company, they're quick and easy to close, and ACV will add up over time. Second, the number of deals progressing through the pipeline of mid to large size prospects is continuing to increase. However, like I've always said, it isn't about the pipeline, but our ability to close the deals in the pipeline and let me be candid: I'm not happy with how some of the sales force has been performing, and we are in the process of making the necessary changes. We are going to continue to grow the sales force as we find the right candidates. As I've said on multiple calls, hiring salespeople is always difficult; they are always very good at selling themselves, but not always so good at selling your product. So some of our hires are no longer with us. I've instructed Bruce to focus on hiring seasoned sales executives with identity experience. To that end, two more senior salespeople with industry experience started earlier in March. I've also directed Bruce to institute a series of changes to upgrade our sales training program. Another significant step we took in 2021 was changing our billing to focus primarily on prepaid buckets of transactions that expire after 12 months or a monthly minimum with overages billed in arrears. Prior to this, all billing was in arrears with minimum monthly commitments that did not come close to representing total transaction volume. Both of the new models have financial incentives for our clients not to underestimate the number of transactions. The larger the bucket or guarantee, the better the price. Two notable examples of this are a financial services company that, in August, prepaid for what they thought would be a year's worth of transactions. At best, we estimate that they have 90 days left in that bucket. So basically, what they estimated would be a year's worth of scans lasted about nine months. The second was the reseller that sells an omnichannel multibiometric platform to banks, marketplaces, and healthcare systems. They pre-purchased 125,000 transactions with the expectation that it would last for a year. After going live in January, they were already halfway through that bucket. We have been able to continue to raise prices, both at renewal and as we add new clients. As we targeted the age-restricted space harder than we did before, we also took a hard look at the pricing per transaction. Typically, this was sold via an app on a smartphone or tablet with pricing per device. When we looked at the price per transaction, we determined it was far too low and moved all new age-focused clients to either the transaction bucket or the monthly minimum. The results of our efforts is that the transactional price for age-focused clients signed in 2021 is on average six times higher than in previous years. We've also modified our sales approach in the age-focused space by creating a dedicated team. This group has been tasked with renewing all existing clients at the higher rates. As I said, age-restricted SaaS revenue accounted for approximately $1 million of our 2021 total SaaS revenue, and we believe we will see a continued increase in traction through both new customers and price increases going forward. To further aid the efforts in the age-restricted market, we spent significant time in 2021 on education efforts with legislators in many states. We believe these meetings are extremely important because most state officials do not know how easy it is to get a fake ID. When I speak with a state attorney general or a legislative member and show them a fake from their state, scan it with one of the readily available scanning programs used by many POS systems or handheld devices, and that fake passes, they suddenly realize why visual inspection and simply scanning do not work. Seeing our technology solutions at work shows them the need for validation, and then they recognize that the laws have not kept up with the technology. We've also been meeting with credible organizations that are active on a national and multistate level on key issues surrounding underage access to age-restricted products. I'm pleased to tell you that we've now formalized a partnership with responsibility.org. This organization plays a leading role in the fight to eliminate underage drinking. It is active in all 50 states, as well as at the national and local levels. This organization is supported by 11 major stores who have expressed a commitment to responsible drinking. We expect to announce additional partnerships resulting from these endeavors. Thankfully, more and more companies are looking to do the right thing, but there are still many major corporations out there that put profits ahead of actually doing the right thing. Hopefully, the fear of the $60 million plus lawsuits for wrongful death will move them to do the right thing, and if not, we believe that legislative changes should mandate it. So returning to rate increases, it is important to note that these rate increases on renewals continue to be robust, with many of them starting in Q2 of this year. For example, during Q4, we renewed our department store chain client with just over 1,100 locations with a 33% increase effective in Q2 of 2022. In that same period, we renewed the 1,000-location off-price department store chain, where we parsed non-authenticated applications to a three-year yield. Year one is at the same price and now includes the no-receipt return use case, which should substantially increase transaction volumes. In year two, the price increases 87%, and in year three, it increases 33%. Another growth area in both 2020 and 2021 has been digital adoption. This has increased dramatically and the data bears this out. From the initial beta clients in early 2019, the number of clients using us exclusively for the digital channel or for both physical and digital has grown 550%, with more than 50 digital clients across multiple market verticals, including online banking, credit card issuers, background checks, delivery services, and automotive dealers. And as a testament to our digital capabilities, in Q4, we signed a California-based online bank. This was notable as it was a direct steal from an OCR competitor. Development has begun, and we anticipate a Q3 implementation. The initial use case will be for account opening. Another exciting development in late Q4 is that we began a security audit necessary to start a pilot with another top five bank. As I said many times, these can often take six months or more to complete before their information security teams allow our computers to connect. I'm not worried about passing the audit as all of our banking clients put us through one every year. The initial use case for this client is retail banking, but their teams are already discussing additional physical and digital use cases with us. Now, for what I consider the most transformational step forward as we enter 2022. You may have seen the press release last week about Platform 2.0. This new platform allows our clients to do more than just authenticate a person. We now have the tools in place to take it to the next level, so they can not only be sure that the person is who they say they are, but also determine if the authenticated person is someone they want to do business with. As I have said, this transforms us from a company doing strictly "Is it really John Doe?" to "Is it really John Doe? And I know that he is someone I want to do business with through multiple validation signals?" And I know it internationally, as well as domestically. We currently have two clients live on the platform and seven new and existing clients onboarding, and additional clients are now planning on migrating to the platform. Keep in mind that Platform 2.0 now incorporates multiple facial biometrics vendors and allows for OCR validation of international documents. In the next few weeks, we will be releasing sanctions lookups, PEP address lookups, social security lookups, with more SI lookups to come. All of these are upsell opportunities. Why is this new platform important? Identity, especially in the digital world, is about more than just an ID. All of our clients perform additional diligence before doing business with a person, whether it's opening a bank account, providing a loan, or credit card, or in an investment account. We also know that our clients were forced to choose another ID validation vendor for international documents, and that Telecheck was one very accurate and important step in that process. Again, just one step for one region in the world. We believe that Platform 2.0 allows Intellicheck to move from being simply a North American ID validation company to a global identity company, which is crucial as the world evolves and becomes more digital. We built Platform 2.0 in collaboration with our clients and input from prospects by providing them multiple global steps in the identity process. Through one connection, we reduce their costs and friction, something every company is looking for. We believe the number of clients migrating to this platform proves this point. By speaking with a rather astute individual the other day, who said to me, "There is a hostile world out there," and he was right. Hostile actors continue to increase incidents of identity theft; underage drinking, vaping, and cannabis use continue to be problems. We believe we are uniquely positioned to address all of these problems. Now is about pressing the right levers to drive continued and increasing growth, and we believe the changes we put in place in 2021 are the right levers. Brand awareness is improving, even leading to quick revenue in the age-restricted space, along with the growing pipeline of financial services companies. We believe our lobbying efforts to update ID validation laws in the age-restricted space will bear fruit over time. We believe that our ongoing refinement of our sales team will allow us to capitalize on both existing markets as well as new verticals where we are just beginning to penetrate. The buildout of Platform 2.0, featuring additional multinational ID and KYC capabilities, we believe provides significant opportunities ahead both with new and existing clients. With all these exciting developments, I do want to temper this with the situation of financial services company number two, which recently began a project that will enable them to extend credit to tens of thousands of additional merchants. This required financial services company number two to put a code freeze on all other developments, which means multiple retailers, that we expected to go live in the first half of the year, will not. The above-described project should be an interim delay to our short-term growth, as they expect to resume integrations in the September timeframe. We believe this short-term pain now represents a likely long-term gain, as these new additional applications will need validations. This is very likely going to impact our Q1 results, and although we still have a few weeks remaining in the quarter, we currently anticipate our first quarter SaaS revenues will be in the range of $3.2 million to $3.35 million. Moving forward, I'm happy to say that as part of a general business review, we analyzed the churn rate. Since 2018, the company has not lost a single major client to anything other than bankruptcy, and all the financial services clients have grown their use cases. I believe the reason for basically zero returns is the certainty we provide. I always think it's best when your clients say it for you. So as Lieutenant Joe Jewel of the New Hanover County, North Carolina, Sheriff's Office told the Port City Daily News about our technology solutions, he said, "It worked flawlessly." He went on to say the Sheriff's Office tested 12 companies that claimed to be able to spot fake IDs, and Intellicheck was the only one that worked accurately. I have never heard anyone say that about the competition. I will now turn the call over to Bill who will go over our Q4 financials.
Bill White, CFO
Thank you, Bryan, and good day to our shareholders, guests, and listeners. I'd like to discuss some of the financial information that was contained in our press release for the fourth quarter and full year ending December 31, 2021. I'll begin with the fourth quarter results. Revenue for the fourth quarter of 2021 grew $824,000, or 27%, to $3,902,000 compared to $3,078,000 in the same period of 2020. Our SaaS revenue for the fourth quarter 2021 grew $703,000, or 23%, to $3,715,000 from $3,012,000 in the same period of 2020, and grew 14% sequentially over the third quarter of 2021. Gross profit as a percentage of revenue was 92% for the fourth quarter of 2021 compared to 92.6% for the same period in 2020. Operating expenses, which consist of selling, general and administrative expenses and research and development expenses increased $2,598,000 or 109% to $4,987,000 for the fourth quarter of 2021 compared to $2,389,000 for the same period in 2020. The company is always looking for synergistic opportunities, including merger and acquisition opportunities. Included in selling, general and administrative expenses are approximately $454,000 of costs incurred related to this activity. In addition, the company incurred higher personnel, share-based compensation, consulting, and marketing expenses. The company posted a net loss of $1,396,000 for the fourth quarter of 2021 compared to a net income of $1,260,000 for the same period in 2020. The net loss per diluted share for the fourth quarter of 2021 was $0.07 compared to a net income per diluted share of $0.07 for the same period in 2020. Adjusted EBITDA for the fourth quarter of 2021 was negative $557,000 compared to $635,000 for the same period in 2020. Now turning to our full year 2021 results, revenue for the full year ended December 31, 2021, increased $5,658,000, or 53%, to $16,393,000 compared to $10,735,000 for the same period in 2020. Our SaaS revenue for the full year ended December 31, 2021 was $12,970,000, an increase of $3,597,000, or 38%, compared to $9,373,000 for the same period in 2020. Gross profit as a percentage of revenue was 78.6% for the year ended December 31, 2021 compared to 86.7% for the same period in 2020. The decrease in gross profit percentage is primarily due to higher 2021 hardware sales, which contain lower margins, partially offset by the continued growth of our SaaS revenue. Excluding hardware sales and related costs, our gross profit as a percentage of revenue was 93.2% and 92.1% for the years ended December 31, 2021 and 2020, respectively. The increase in this percentage is primarily due to the continued growth of our SaaS revenue. Operating expenses for the full year increased by $7,475,000, or 78%, to $17,044,000 for the year ended December 31, 2021 from $9,569,000 for the same period in 2020. Selling, general, and administrative expenses increased by $5,670,000, or 96%, to $11,564,000 for the year ended December 31, 2021 from $5,894,000 for the same period in 2020. Research and development expenses increased by $1,805,000, or 49%, to $5,480,000 for the year ended December 31, 2021, from $3,675,000 for the same period in 2020. These increases are primarily due to higher share-based compensation costs, higher personnel costs, and higher marketing expenses. The company had a net loss of $4,146,000 for the year ended December 31, 2021, as compared to a net income of $558,000 for the same period in 2020. The net loss per share for the year ended December 31, 2021 was $0.22 versus a net income per diluted share of $0.03 in the prior year. The weighted average diluted common shares used in computing the per share amount was 18.7 million shares for the year ended December 31, 2021 compared to 18 million shares for the same period in 2020. Adjusted EBITDA was a negative $925,000 for the year ended December 31, 2021 compared to an adjusted EBITDA of a positive $329,000 for the same period in 2020. Now I'd like to focus on the company's liquidity and capital resources. As of December 31, 2021, the company had cash of $13.7 million, working capital defined as current assets minus current liabilities of $12 million, total assets of $25.7 million, and stockholder's equity of $21.2 million. During the year ended December 31, 2021, the company's cash balance increased by $530,000 compared to a net increase in cash of $9,770,000 during the same period in 2020. Net cash provided by operating activities was $1,116,000 for the year ended December 31, 2021, compared to a net cash used in operating activities of $19,000 for the same period in 2020. Net cash used in investing activities was $662,000 for 2021 compared to $416,000 for 2020, and net cash provided by financing activities was $76,000 for the year ended December 31, 2021 compared to $10,205,000 for the same period in 2020. The company has a $2 million revolving credit facility with Citibank that is secured by collateral accounts. There are no amounts outstanding under this facility. We currently anticipate that our available cash, as well as expected cash from operations, will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months. As of December 31, 2021, the company had net operating loss carryforwards of approximately $18.7 million. I'll now turn the call back over to the operator to take your questions.
Operator, Operator
Our first question comes from Mike Grondahl with Northland Securities. Please go ahead with your question.
Michael Grondahl, Analyst
Yeah, thanks guys and good afternoon. As you talk about the Platform 2.0, what are maybe the three most important features that it offers, or the couple of things that clients seem to appreciate the most about it?
Bryan Lewis, CEO
I'd say, hey, Mike, good talking to you. I would say the ability to do international verification is something that a lot of the clients have been asking us about. And they all come together in a way, I guess one bit would be the ability to do more of the KYC portion of what needs to be done. I think that certainly opens up other markets for us, like brokerage firms and other entities that need to verify identity. And then the ability to tie into various databases to confirm identity, such as Social Security databases, phone book updates, and address lookup databases, to connect everything. Those seem to be the three things that people are asking about most. Another factor to consider is that some clients are particular about who they want to use for facial recognition, depending on how well they think that company handles demographic bias in the results.
Michael Grondahl, Analyst
Got it. And then Bryan, what did you say about clients migrating? I don't know if you mentioned a number or just an interest level, and is there an average lift in price as a client migrates?
Bryan Lewis, CEO
So there's initially no lift in price as they get started and get tested, and then they bring in additional services, which we're a reseller of. So currently we have a brand new client who is live on the system, but they just haven't gone live with their customers yet. We've got an existing client who's live on the system. We've got seven in active development or UAT, and then we have a bunch more who are now going through specifications and planning for when they will migrate. Part of the thing is it does make it easier for them. Previously, when we changed things and brought out different features, clients had to program on their side. Now we've made it much simpler for them because it's standardized to get any of the other products that we would need to be adding and potentially selling to them.
Operator, Operator
Our next question comes from Scott Buck with H.C. Wainwright. Please proceed with your question.
Scott Buck, Analyst
Good afternoon, guys. I'm curious, Bryan, do you know off the top of your head what same-store volumes looked like during the fourth quarter versus a year ago, trying to determine if the 27% or so year-over-year growth is due to actual new business or maybe a COVID pickup from late 2020?
Bryan Lewis, CEO
The same-store sales were just slightly below where they were. There was a decent lift again, getting back to normal last year. I'd say that same-store sales were very, very close, so the growth across them would have been similar quarter over quarter and the rest would have been new business.
Scott Buck, Analyst
Okay. That's helpful. And I was wondering if you could provide a little bit of additional color on this financial services client who's adding tens of thousands of merchants. I guess, how does one go about doing that?
Bryan Lewis, CEO
How are they doing it? I'm looking at what they are saying in their public statements about what it will do. But basically, it's a play in the virtual credit card space, and they're connecting to a system that is used by many small merchants out there who sell high-value, high-dollar products where people might want to get an instant credit card. But nobody's going to give them a white-label card as they don't do enough of it. I view this as very much akin to what financial services company number one does with their merchants. However, they have no connectivity. This system is basically the point-of-sale system that many of these merchants use, and they're going to tie into it to offer credit to all of them through virtual credit cards. So it's a big lift for them to do this, and they're looking at it as a great way to expand their credit portfolio. We know for one thing that they really appreciate what we do, and being part of that process will be important.
Scott Buck, Analyst
Yeah, no, that's very helpful. And then Bill, on OpEx, there was a pretty big jump from 2020 to 2021. How should we think about operating expense growth in 2022 and beyond? Are the pieces in place now or is there still a fair amount of investment remaining to support the top-line growth?
Bill White, CFO
Yeah, most of the pieces are in place. I think you could expect expenses in the $5 million per quarter range going forward for OpEx.
Scott Buck, Analyst
Okay. That's perfect, guys. I appreciate the time. Thank you.
Operator, Operator
Our next question comes from Jeff Van Rhee with Craig-Hallum Capital Group. Please proceed with your question.
Jeff Van Rhee, Analyst
Sorry about that, guys. So I have a couple of questions. I think on financial services company number two, can you put a little finer point in terms of the impact on Q1 of their code freeze? And, certainly early, but do you have any insights on the Q4 potential upside they're creating to determine the impact of this code freeze?
Billy White, CFO
Yeah, so they put this code freeze on, I think kind of in November is when they really notified us about it, and it impacted two things. It impacted a number of retailers that we were expecting to go live with. One jewelry company owns a lot of different brands—one went live, but the rest didn't meet their cut-off deadline. So, I would say that was significant, but not the entirety of it. It was likely the majority, though. Then it's going to be about what can be done and how fast they can get this trial process completed and get back to working on the other projects. Certainly, they consider getting us up and running a priority because it translates to revenue for them. It's just a matter of whether they start in August, September, or late September because that will depend on when the retailers finalize their point-of-sale code freeze, usually at the end of October or the first week of November. At this point, I don't have enough details to say what will happen on the back end of the year, but it wasn't a minor issue; it was a portion of the decline we see from where we projected our expectations.
Jeff Van Rhee, Analyst
Yeah, just to be clear on Q1, it's not lost revenue; it's lost growth revenue based on what you already have, correct?
Billy White, CFO
You are correct. It was lost growth revenue, if you will. Our contacts over there are not happy, but the project they've been working on for a long time has finally received the green light, which diverted all their resources. They had quite a lineup of their account managers collaborating with our account manager. They had anticipated a nice ramp of clients that were now delayed.
Jeff Van Rhee, Analyst
Yeah, that's helpful. Two quick housekeeping items: in terms of implementations in the quarter, how many implementations occurred, and can you provide an update on digital? It sounds like you mentioned 50 customers—give me a sense of what percentage of revenues are now digital?
Billy White, CFO
Sort of back of the envelope and this is, again, always low, because one of our big clients has one pipeline to us that goes through all their processes. So we don't know what is classified as digital or not digital. They are going to tag that for us eventually, so we know what's what. So, excluding this client, which is very large, it's about 10% of the revenues right now. I should clarify that it is 10% of the non-age restricted revenues; there's very little age-restricted revenue that is digital at the moment, except for some delivery clients who are beginning to grow. Implementations for the quarter typically have a near-zero average in Q4 because we hit that code freeze when nobody is doing anything. We did have one of the multiple jewelry chains by that one holding company go live, along with some smaller entities, like automotive dealers. But in size, the notable one is that jewelry chain, which again, is typical for Q4 we generally don't engage in major implementations.
Jeff Van Rhee, Analyst
You okay. That's helpful. Then maybe—
Billy White, CFO
One other quick thing I'd like to mention is that during that quarter, financial services company number four began rolling out their services to their retail branches in earnest. They are rolling it out every week and expect to complete this sometimes next quarter.
Jeff Van Rhee, Analyst
Okay. That's helpful. One last question for me. You commented several times about sales, and certainly we're hearing that across the board: it’s very hard to find sales talent. To put a finer point on it from last quarter, you had a rep count of 11—eight seniors and three juniors—and I know you're adding reps. It sounds like you did a stop and reset; can you specify what that reset looks like? How many heads were let go? How many did you just add? Where do we currently stand? And how long until those new reps really ramp up to productivity?
Billy White, CFO
We stand at 10 right now. I think that the reps we just started will probably be productive a lot sooner than reps who didn't come from this industry. Normally, I would say that if you're not seeing productivity out of a rep within six months, at least they should be getting meetings and booking appointments–those types of things. Otherwise, they probably won't last. I would expect these new hires to demonstrate productivity quicker than that. I'm already seeing they’re getting meetings, which is good. Their ability to know the industry and connect with the right people, as well as targeting prospects who are previously unhappy with the solutions they sold, allows them to pitch something that works effectively. So we're at 10 now; three ended up not working out. But hiring talent has been a challenge for everyone; every one of my friends is telling me they're having a hard time finding people. We're working hard at it.
Jeff Van Rhee, Analyst
Yeah. Sounds good. Appreciate the updates. Thanks.
Operator, Operator
Our next question comes from Rudy Kessinger with D.A. Davidson & Co. Please proceed with your question.
Rudy Kessinger, Analyst
Yes. Thanks for taking my questions. I guess I'll ask it again regarding Q1. Can you quantify how significant of an impact the code freeze from financial services company two is? Are we talking about $100,000, $200,000 on Q1? And at this point, do you have any visibility into the potential revenue size of that project once it gets live for those tens of thousands of retailers?
Billy White, CFO
What I'd say is I couldn't tell you exactly what the impact is because it's going to be an assumption of what they told us and what we thought. I can’t provide specific targets for the quarter without diving into that. However, it did affect multiple retailers of decent size.
Rudy Kessinger, Analyst
Got it. And then, I guess the second part of that question: you mentioned earlier about the project to get it into the POS systems with the tens of thousands of retailers. I know it's certainly a new project for them, too. But at this point, do you have any idea of the scope or potential scale that this project could have in terms of revenue?
Billy White, CFO
Yeah, I believe this will be, you know, definitely focused on the latter half of the year before we see any revenue coming in, depending on how fast they wrap this project. If I look at it, these smaller retailers typically submit anywhere from five to 50 applications a month. So, individually, it's not that significant, but if it scales across even half of that client base, the numbers could accumulate.
Rudy Kessinger, Analyst
And you mentioned earlier a security audit pilot with another new top five bank. Could you clarify what exactly it was? Also, how does this particular top-five bank compare in terms of the total scope of opportunity relative to the other top-ten banks that you've already signed on?
Billy White, CFO
If I look at these, they are in the top percentage of banks in terms of accounts, credit cards, and all those things. So, they are a major top-five bank, and I'm pretty excited about it. The challenge with any bank, regardless of size, seems to get worse the larger they are, especially with security audits. The folks that we're dealing with on the business side are very excited. One of the project leaders moving to this bank was doing something similar at one of our other clients, so he knows the process well. Now, it’s about ensuring that our security protocols meet their standards, as they've already passed those with many other banks. Every single bank asks similar questions, just with slight variations.
Rudy Kessinger, Analyst
Got it. That’s all for me. Thank you.
Operator, Operator
Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Mr. Bryan Lewis for closing remarks.
Bryan Lewis, CEO
I just want to thank everybody for listening to the call. I am very excited about the opportunities we have, given the neo bank that we signed and the very large bank we are conducting a security audit with. Additionally, I see the progress my team is making internally and am confident about 2022. I look forward to speaking with you all again in a couple of weeks about Q1. Thank you all, and have a good night.
Operator, Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.