Earnings Call Transcript
Intellicheck, Inc. (IDN)
Earnings Call Transcript - IDN Q4 2024
Operator, Operator
Greetings and welcome to the Intellicheck Fourth Quarter and Year-end 2024 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Gar Jackson from Investor Relations. Please proceed.
Gar Jackson, Investor Relations
Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck fourth quarter and full year 2024 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 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 March 20, 2025. 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; then Adam Sragovicz, Intellicheck's Chief Financial Officer, who will discuss the Q4 and full-year 2024 financial 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
Thanks, Gar, and thank you all for joining us today for the Intellicheck Q4 2024 and fiscal year 2024 earnings call. 2024 marked a year focused on vertical channel diversification and further investment in what we believe are the best-in-class ID validation services. We are keenly aware of the fact that the market for identity verification services continues to evolve at a rapid pace. One of the most important facets we are focused on is to maintain our competitive stance and ongoing investments in our IT initiatives. We have also added new leadership to the customer success team that we believe will be instrumental in enhancing the customer experience through improved marketing and stronger relationships with our key accounts. Leveraging marketing and customer service capabilities will allow us to emphasize our technology solutions' key distinguishing benefits, as we believe that we are more effective at identifying fake IDs than our competitors. Templating, which is the most common practice for ID verification, is prone to errors. Many factors such as glare on the license and bad lighting for image capture impact the accuracy of what others can do. But we are different; we utilize the barcode on the back of the license and confirm that the DMV planted hidden attributes exist in that barcode and that the license is, in fact, a government-issued document. Nobody else does this. This is something that is unique to Intellicheck and is driven by our long-standing relationship with the American Association of Motor Vehicle Administrators. We will begin with an overview of our results that Adam will go into in more detail later on in this call. SaaS revenues in Q4 grew 17% quarter-over-quarter and totaled a record $5.9 million. SaaS revenues for the full year grew 7% and came in at a record $19.8 million versus the prior year, just shy of the $20 million mark. We achieved our goal at the outset of the year, finishing adjusted EBITDA positive and believe that we are well positioned as we go into 2025 to accelerate growth, particularly in the back half of the year. What this tells us is that our focus on new verticals is working. We put a very strong focus on the automotive, title insurance, e-mail, social media, and retail banking verticals. And I'm excited to say that the volume in these new and targeted verticals grew 13%, 2,500%, 54%, and 17%, respectively, for the year. These new clients are important to us as they are generally at higher rates than our legacy customers. Illustrating this point is the very strong progress we have made in the title insurance vertical. We just signed another title insurance company after a successful pilot. We anticipate issuing a press release with more details when the rollout is completed later this year. That gives us the top two title insurance companies across this vertical; our direct title clients give us approximately 45% of this market. In addition, as has been our strategy where it makes sense, we want to sell through channel partners. In this regard, we are up and running with the two largest providers of software to independent title insurance agents. The growth in these new categories more than offset the headwinds we faced from retail bankruptcies and cost of churn driven primarily by bars and restaurants and hardware-focused manufacturers that didn't fit into our SaaS-focused growth plans. We are particularly excited about the Title Insurance vertical, which we believe will benefit from lower mortgage rates as of late that have historically driven significant refinancing and improved home purchasing activity. In addition to our market diversification efforts, we set a goal last year to drive more business through existing clients. I'm pleased to announce that we made further progress on this goal. You likely saw the press release we issued recently highlighting the renewal and expansion of a contract with a prominent domestic bank and credit card issuing customer. This leading bank has increased their contract value by approximately 15%, resulting in revenues that now total a mid-seven figure annual amount, making them one of our top three clients at this time. Two factors drove this growth. First is the expanding use of our technology in the bank branches. Second is they integrated a retail client; they provide credit cards for that previously came to us directly. These transactions now have a higher cost per scan. Remember that this retailer was one of the original Intellicheck clients. This further illustrates our pricing power. We believe that this is further testament that we are truly helping credit card issuers stop fraud quickly, efficiently, and without the need for additional hardware purchases. As is often the case with banks, these seven-figure deals take longer than we would like to close but are significant when they do. A case in point, we've come to a verbal agreement with that super-regional bank we have been sharing with you. That discussion surrounds a three-year deal with a minimum dollar commitment when fully rolled out. Although many on their team want this to be implemented immediately, IT still has to say, and they will be doing a phased rollout. We are working on that rollout plan now. We have already agreed to the pricing for the fully rolled-out transaction volumes. Now we are negotiating higher pricing per transaction as volume scales. They are anticipating the rollout to begin in early Q3 of this year. Another leading off-price department store client recently renewed their contract to include a three-year commitment with guaranteed volumes. Although we've been working with the retailer for years, this is the first time they are guaranteeing minimum volume levels. With guaranteed levels in the mid-six figures, this retailer has historically done much higher transaction volumes than these current commitments. We believe that having guaranteed commitments is important in the event that there is further significant slowdown on the retail front and expanded erosion of consumer confidence. We continue to gain ground in the specialty finance vertical. I'm excited about the progress we are making in the lease-to-own space, where we now work with half of the top four players; we make up a significant portion of the LTO market. Remember, our top product accelerates our clients' customer acquisitions with a frictionless, seamless process that onboards good customers faster while protecting our customer and consumers by stopping fraud. It is important to recognize that stopping fraud is part of the solution, but the speed at which our technology solution responds is another important part of our service. Not to be overlooked is yet another distinguishing factor and value-add; our methodology triggers very few false negatives. This is another aspect that I don't think customers and investors fully appreciate, which is why we are working to ensure more awareness. You may remember that we have shared with you that we moved into the higher education vertical with a university client, where the ease of obtaining false credentials is taking a significant toll. So-called ghost students are robbing legitimate students of the opportunity to attend this university. And keep in mind, it's not only the loan money that is at the heart of this problem. These fake students also tie up class sign-ups, which means legitimate students can't register for classes in order to complete the coursework they need to obtain a degree. By authenticating that the applicants are who they say they are, we have given them an effective, affordable technology solution to address their issue, and at the same time, we see opportunity. We believe that there are additional prospects to grow this vertical and continue to stop student loan fraud before it starts. On the IT front, we've been keeping you up to date on the growing investments we have made over the last two years, and we are almost to the finish line with our move from Azure to the AWS cloud platform. This move will not only result in savings on the hosting front, but more importantly, we believe this will make implementations faster and easier. At the same time, it has considerable impact on both current and future customers because it results in a more user-friendly environment. And as we continue to build out our AI capabilities, our data science team will be key to ongoing investments in this evolving discipline. We're investing in the use of high-performance servers equipped with powerful GPUs for AI capabilities and machine learning in our continued efforts to stay one step ahead of the bad guys. As we expand our presence in new market verticals and build on our presence in others, our ongoing efforts include leadership additions. I'm very pleased by the progress we have already seen since August when Sandra Bauer came on board to lead this customer success team. She has hit the ground running for sure. Through Sandra's efforts, we have bolstered our relationships with our key accounts and have substantially improved the process for implementations. On the marketing front, we have refreshed much of our customer-facing materials and key message points as part of our ongoing efforts to critique and improve how we are communicating with both current and prospective customers. We've also continued to refine the look and feel of our website to build engaging content and customer support. In addition, all of our materials, the website, the blogs, and the videos have been properly optimized for search. This has resulted in a 15% increase in both followers and impressions since December. Brand awareness has been a focus, and I believe we are on our way. Our staffing changes include customer-facing positions as well. We have added three new sales associates that we believe are a solid fit for the organization. We believe that we should start seeing contributions from them in the back half of the year. We are very excited about our differentiated product technology and the efficacy that we have for helping our clients onboard better customers faster and address stopping fraud. Accelerating revenue growth and achieving increased productivity are that much more attractive when viewed with the understanding of how damaging the problem of fraud continues to be. As reported by Javelin Research, businesses and consumers suffered a $43 billion cost from fraud in 2023 alone. Breaking it down further, the Federal Trade Commission said that self-reported consumer losses alone in 2024 were about $12.5 billion. And remember, that's only people who self-reported to the FTC, but even that was a 25% increase over '23. The bottom line is clear; credit card, loan and lease, bank account, employment, and government program-related fraud remains an explosive problem that shows no sign of diminishing. The most recent data from Bankrate indicates that about one in three adults have experienced national fraud or a scam in the past 12 months, since January 2024 alone. Among them, nearly two in five lost money, and the generations viewed as tech-savvy aren't immune. 63% of Gen Zers, those aged 18 to 28, and 64% of millennials aged 29 to 44 have been victimized. Bankrate's U.S. economic analysts summed it up well. She noted that their survey shows fraud can happen to just about anyone, even those who appear technologically savvy and for those who have taken steps to safeguard themselves. And I get it. In fact, this hit home for me recently. My wife was just last month the target of fraudsters. She had somebody try to open up online three different credit cards, and they successfully changed personal information with one of the credit bureaus. I have now seen firsthand how long it takes and how difficult it is to correct anything related to identity theft. And it's even worse for the victim when they are able to successfully open accounts. It is happening with increased frequency. Generally, when I talk to someone, they are personally aware of someone else who has been a victim of attempted fraud. So before turning the call over to Adam, here's some color on our first quarter outlook: coming off of a solid Q4 that was propelled by the additional scan volumes driven by the holiday. The first quarter sees a natural retraction. Of note, our retail customer transaction volumes in Q4 were down more than our current outlook would indicate because they were offset by the growth we are seeing in our new verticals that typically have a higher price per transaction value. We believe our diversification strategy is working, and our focus on longer contracts with minimums and guarantees are starting to bear fruit. Many of you have probably seen reports with cautious outlooks for the consumer as we start 2025. Recent reports show that while U.S. consumers opened their wallets during the holiday season, that quickly changed as 2025 got underway. Recent research shows consumers are now focusing on needs-based spending with drivers cited such as lower consumer confidence numbers, macro and inflation concerns, the continual rise in prices on grocery items and other basics, as well as products across the board. All against the backdrop of uncertainty around tariffs and program changes at the federal and state level. This has driven a cautious outlook for many retailers, some of whom are our customers. Although we continue to diversify away from retail, it still represents approximately 75% of our scan volume, either through the retailers directly or through one of our bank or credit card partners. While we remain excited about our growth for the year, particularly in the back half, we anticipate that our first quarter will approximately be in line with the sell-side consensus estimate that at the time of this call was $4.78 million. Another thing to note, all of our Q1 renewals resigned and including upsells and guarantees; these renewals have an ACV that exceeds $10 million, giving us a solid base to build upon as we focus on growth in 2025 and the other renewals that we have coming throughout the year. Finally, I want to remind everyone that we will be presenting at the iAccess Alpha Virtual Conference next Tuesday at 2 p.m. Eastern, and I will be hosting one-on-one meetings on Wednesday. We issued a press release earlier this week with the details; you can find the press release posted in the newsroom on our website. Additionally, we will be presenting at the Planet MicroCap Showcase on April 23 and 24 in Las Vegas. We look forward to seeing you there. I will now turn the call over to Adam, who will discuss our financial results in more detail.
Adam Sragovicz, CFO
Thank you, Bryan. 2024 was an important year for Intellicheck on the financial side as well as on the business side, where the initiatives that we have talked to you about in the past are now bearing fruit. As you just heard, our fourth quarter revenues were 15% higher than the prior year. We also saw new business pricing firming, growing at 5% versus 2023. We achieved an important goal that we have mentioned of adjusted EBITDA positive results for the year in the amount of $520,000 for 2024. As Bryan also mentioned, we are pleased to see the continued growth progression of SaaS revenue. As we previously discussed, we are continuing to maintain our focus on our operating expenses to ensure that we achieve the expected return on our investments in this area as we migrate customers from Azure to AWS. Starting first with some quarterly results. Revenue for the fourth quarter of 2024 reached $5,936,000, which is a 15% increase compared to $5,176,000 in the same period of 2023. Our SaaS revenue for the fourth quarter of 2024 grew 17% to $5,913,000, compared to $5,069,000 during the same period of 2023 and represented over 99% of our fourth-quarter revenue. Gross profit as a percentage of revenues was 91% for the fourth quarter of 2024 compared to 95% for the same period of 2023. Cost of goods sold in Q4 of 2024 was a bit higher at about $528,000 versus $263,000 in 2023, partly due to cloud computing costs as we ran both AWS and Azure in parallel for a period of time to ensure stability of the customer experience during migration. We expect to largely complete this customer move to AWS around the middle of 2025. Operating expenses, which consist of selling, general and administrative, marketing, and research and development expenses, increased $864,000 or 41% to $4,928,000 for the fourth quarter of 2024 compared to $4,064,000 for the same period of 2023. On an accounting basis, R&D expenses were higher in Q4 of 2024, driven largely by the fact that we have put many development projects into production and are now only capitalizing very few of our ongoing engineering expenses. We've also started to amortize previously capitalized software development expenses. Going forward, we expect our cash R&D spend to be flat to only modest growth. In any case, we expect such spending to grow at a rate less than the growth rate of revenue. Broader context, I would mention that you'll shortly hear about how our overall G&A expenses fell for the year in 2024 versus 2023. While we realize the benefits of our cost-conscious efforts in the period, we are capitalizing $416,000 in costs tied to software projects in the quarter. We anticipate that we will see de minimis levels of capitalization of software going forward as the migration of other projects we've been sharing with you has moved into production. The weighted average diluted common shares were fairly stable at $19.3 million for the fourth quarter of 2024 compared to $19.2 million for the same period of 2023. Now turning to our full-year 2024 results. Total revenue for the full year of 2024 increased $1.1 million or 6% to $19.997 million compared to $18.9 million for 2023. Excluding equipment, our SaaS revenue for the full year for 2024 was $1.2 million or 7% higher, totaling $19.8 million, compared to $18.6 million for 2023. Gross profit as a percentage of revenues was 91% for the full year of 2024 compared to 93% for the full year of 2023. The gross margin profit percentage was impacted mostly by Q4 R&D costs, as previously mentioned. Operating expenses, which consist of selling, general and administrative, marketing and research and development expenses, decreased $473,000 or 2% to $19.3 million for the full year 2024 compared to $19.8 million for the full year of 2023. The reduction was primarily driven by lower R&D costs over the course of the 2024 year. Another item to note in 2024 was stock-based compensation expense, which decreased by $720,000 versus 2023. As discussed on our last call, we expect our total noncash expenses will continue to decrease and comprise approximately 10% of our operating expenses, with stock-based compensation comprising 90% of that figure. This compares to our prior historical trend of 13% to 15%. The company reported improved net income, a GAAP loss of $918,000 for the full year of 2024 compared to a net loss of $1.98 million for the same period of 2023. Net loss per diluted share for the full year of 2024 improved to $0.05 compared to the net loss per diluted share of $0.10 for the full year 2023. The weighted average diluted common shares were $19.3 million for 2024 compared to $19.2 million for 2023. Adjusted EBITDA for the full year of 2024 improved to a positive $520,000 from $377,000 for the same period of 2023. Regarding the company's liquidity and capital resources at December 31, 2024, the company had cash equivalents that totaled $4.7 million. At year-end, there was working capital, which is current assets minus current liabilities of $6.7 million, total assets of $21 million and stockholders' equity of $17.7 million. The first quarter of 2025 is not yet complete, but we expect to finish the first quarter with a cash balance of approximately $5 million, at least a few hundred thousand higher than at the end of 2024. This shows the business's ability to generate cash even in a seasonally weaker first quarter. On another liquidity note, the company has a $2 million revolving credit facility with Citibank; that credit line may be secured by accounts receivable. There are no amounts outstanding under this facility, and the facility was not utilized during 2024. In 2024, we executed on a number of key initiatives that we believe set us up well for continued strong performance in 2025. We believe that our more efficient new marketing approaches are already yielding dividends for the sales pipeline, and we anticipate that we will be able to generate significantly better results with the same or even slightly lower spending. We have remained committed to achieving adjusted positive EBITDA for the year, which we did in 2024, and it now puts us in a position to improve on that result in 2025. We believe that we have discipline in executing on our revenue plans, and we'll keep a close eye on operating expenses, which should help us achieve this very important EBITDA goal. For 2025, we expect to see continued gross margins of approximately 90%, while we improve our architecture and data intelligence capabilities. We also expect to see continued leverage in our operating expenses as a result of the initiatives we implemented in 2024 and do not expect that expenses will grow as quickly in 2025 as our revenue. I will specifically mention two of the initiatives that I'm most excited about to drive results in 2025 and beyond. As Bryan alluded to, improving marketing strategy and tactics and a revamped holistic approach to the customer experience. I see these areas of focus as being critical for new customer acquisition as well as for boosting existing customer satisfaction. I'll now turn the call over to the operator who will take your questions.
Operator, Operator
Thank you. We will now start the question-and-answer session. Our next question comes from Scott Buck with H.C. Wainwright. Please go ahead with your question.
Scott Buck, Analyst
Hi, good afternoon, guys. Thanks for taking my questions. I'm curious, Bryan, you mentioned the stronger back half. Could you give us a little color on your visibility there? And is it just simply that's what the rollout schedule is telling you? Or is there something more to it?
Bryan Lewis, CEO
Yes, I apologize to everyone for the technical difficulties we are experiencing. Regarding the rollout schedules, we are closely watching them, particularly with respect to the proof of concepts and their timelines. A proof of concept is essentially a full implementation that includes an exit clause if we do not meet our commitments. This is why we are referencing the latter half of the year for potential progress. I believe things could have moved faster, but one bank's decision to delay due to IT considerations has impacted us. While this is challenging, it could be beneficial in the long run since they are developing new middleware that will allow us to connect to all areas of the bank, contrasting with the previous limitations where we had separate developments for online and in-branch use. I am hopeful that while this delay is difficult now, it will lead to smoother processes in the future. So, yes, all of this relates to the timing of rollouts and proof of concepts.
Scott Buck, Analyst
Great. I appreciate that. And then second, you mentioned some of the uncertainty that's out there in regards to the retail customer. But I'm curious whether or not your sales conversations have seen any kind of disruption due to the current macro.
Bryan Lewis, CEO
No, nothing from the sales side because it doesn't really matter. The fraud has been so consistent; the percentage of transactions that happen is so consistent across every industry. They all have their number. That doesn't change. So, it's the same impact on profitability. And what I'm also seeing, and part of what's really been resonating with our sales pitch is that people get a pat on the back for cutting the fraud losses and they get a bonus based on bringing on new clients. One of the things that they are all noticing about us is the speed and ease of bringing on a new client, and they're almost looking at stopping the fraud as a byproduct of getting all those new clients. So that seems to be resonating well in the sales process. I just look at the consumer right now, as I said on the call, 75% still of the transaction volume is retail. So that is still significant, and that's down about 2.5% from '23, but it is a component, right? If people don't want to go get credit, if people don't want to use their credit card, the retail location, that does impact us. Hopefully, most of the bankruptcies are over with. But again, retail is still a portion of our business. So, it's something that we watch closely.
Scott Buck, Analyst
Great. And if I could squeeze one more in. I don't know if you've disclosed it or not, but potential operating expense savings from switching to AWS?
Bryan Lewis, CEO
Here's what I'd say, my IT guys gave me a big number; I cut it in half. I think we're probably exceeding what I was hoping. It's becoming really a bit of a battle out there between the different providers of cloud hosting because once we get this move done, we're basically cloud agnostic. And I can tell you some of the other big cloud vendors are coming to us and saying, 'All right, we'll buy out your contract. We'll give you rates like this.' So, I think we're going to continue to see reductions. Now I also want to be clear; part of what we have to do, and when I was discussing AI and all those things, that requires extensive computing power. So, it's going to be a balance between what we're saving on our normal transactions and then what we're doing to truly enhance our product through AI and machine learning.
Scott Buck, Analyst
Great. Well, I appreciate the time, guys. Congrats on the quarter.
Operator, Operator
Our next question is from Rudy Kessinger with D.A. Davidson.
Rudy Kessinger, Analyst
Thanks for taking my question, guys. I want to start maybe just understanding the big Q4 revenue number. I mean, the sequential was much stronger than past years. And I mean, SaaS revenue growth went from, I think, 1% year-over-year last quarter, 17% in Q4, then you're kind of indicating back low single digits in Q1. So, was there any one-time revenue or true-ups or anything in Q4 that drove that? Or I guess why, if not, then why it's such a drop-off in Q1?
Bryan Lewis, CEO
I think you know how we look at the transaction volumes very closely. And I looked at for Q1, for the first two months and then extrapolated out what the quarter would be. The major retailers are not seeing anywhere near the transaction volume that they did before. So again, that's why I think consumer credit works and things like that are impacting it. There are, on average, we saw that they're down transactional volume, 45% from Q4 last year; normally that would be about a 15% drop, so that's why we're seeing what I'm looking at. And it seems consistent. We looked at our top retailers, and then the 1 top three company we have that does nothing but retail credit cards, and they're all down fairly consistently.
Rudy Kessinger, Analyst
Okay. That's helpful. So, I guess if I read it back, I mean, the strength in Q4 sounds like you came from non-retail improvements in scan volumes there. And then the reversal in that growth rate in Q1 is retail getting worse on a year-over-year basis?
Bryan Lewis, CEO
Yes, a little bit, yes. I mean and certainly, I think you look at credit and credit card spending and other things during the holiday season; people did go out there and spend money. I think that they're just being very, very cautious now.
Rudy Kessinger, Analyst
Okay. And then one last one, if I could. I don't believe I heard any update about the large social media customer. Any update you can provide there? And then Adam, just to clarify, I believe you said in EBITDA you expect to make further progress on the EBITDA you did in '24. Just to make sure I'm hearing that right, you expect EBITDA to be higher for the full year in '25 than '24? Or no?
Bryan Lewis, CEO
So, I'll start. The joy of big companies is there's usually big deals. They're paying big companies; it means procurement and everything gets into it. I think if you all recall, one of the things that they wanted to do was to use another one of our products, which meant they wanted to be able to do OCR on the front of the license and that kind of stuff. So, they needed to test it. Once it was tested and they said that they were good with it, then procurement comes in, and that can drag on. So that's what's happening now. We're just going back and forth on some final language on what a successful transaction is with procurement, and then we should have further updates after that.
Adam Sragovicz, CFO
Rudy, thanks for your question. Yes, I think that we're going to be seeing continued improvement in 2025. But again, if you've been following us for a while, you know that our really great quarter in terms of cash generation and adjusted EBITDA comes down to Q4. So, the magnitude of the increase will probably be how we see Q4 2025. But I expect the number to be positive, and I do think we'll improve on 2024.
Operator, Operator
Our next question is from Mike Grondahl with Northland Securities.
Mike Grondahl, Analyst
Thank you. Bryan, the three new salespeople, how many total people do you have in sales now? And what do you focus the three new salespeople on, like a specific vertical? Or how did you kind of point them in the right direction?
Bryan Lewis, CEO
The three new salespeople have just started, and we are taking a different approach this time. Previously, we hired many experienced individuals, but now we are excited about bringing in young, enthusiastic talent. These individuals have typically worked in environments where they set up meetings for others who reap the financial benefits, which is our focus. I believe the challenge we address is consistent across all industries: the need to know who someone is with certainty. This principle applies universally, allowing us to streamline our sales process. Instead of having varying closing times across different sectors, we will concentrate on a mix of targeted markets. We are emphasizing certain verticals and executing targeted marketing strategies typical of effective modern digital marketing to reach the appropriate contacts and warm up cold leads. People may find a connection to one vertical more than another, but my role is not about selling equity as opposed to fixed income. I am focused on providing identity validation solutions, employing a consultative selling approach to uncover how we can effectively deliver that solution, rather than simply demonstrating a product.
Mike Grondahl, Analyst
Got it. And Bryan, what would you say are your top two priorities now for '25? What are you focused on?
Bryan Lewis, CEO
Sales have been strong, and we've finally brought the right marketing team on board, which has made a significant impact. Despite not increasing our spending, we have seen a 15% rise in both impressions and followers, indicating that our message is resonating. Our finance and IT departments are functioning well, and while there have been some challenges with meeting deadlines, we are making progress. We need to ensure that our sales efforts continue to develop, and we're on the right track with promising leads. Sandra's expertise in customer success and the customer journey is invaluable, so I have confidence that area is being managed effectively.
Mike Grondahl, Analyst
Got it. And then last question. If I heard it right, I think you said in Q1 you resigned about $10 million of ACV?
Bryan Lewis, CEO
Yes.
Mike Grondahl, Analyst
That seems like a huge number relative to your roughly $20 million in sales. A lot of things just came due in? What's kind of the pace of the rest of the year?
Bryan Lewis, CEO
The remainder of the year appears to be more balanced. A few factors contributed to this significant change. One major bank has a three-year contract that is now in its second year, set to expire on December 31. For that contract, they have certain commitments in terms of transaction volumes. Additionally, another bank we previously mentioned had been purchasing buckets, but they ran out of buckets sooner than anticipated. We didn't have the opportunity to renew that contract in December, so we decided to continue billing them on a delayed basis. Come January, they can acquire a new bucket, but they've realized that they won't be able to use that bucket effectively. Therefore, they want to consider a model similar to the first bank, where they commit to a set number of transactions for the year and have the option to adjust if they fall short, with the possibility of a discount for committing to a higher transaction rate in the following year. It's all about timing, and I appreciate that our current approach will allow us to provide better guidance regarding ACV and TCV metrics.
Operator, Operator
Our next question is from Jeffrey Van Rhee with Craig-Hallum Capital Group.
Daniel Hibshman, Analyst
This is Daniel on behalf of Jeff. Briefly discussing the transition from Q3 to Q4, it appears there is still some uncertainty regarding the retail dynamic. Last quarter, we mentioned a double-digit decline year-over-year in retail volumes. It seems that this improved to about a negative 2.5% year-over-year for Q4, which was influenced by stronger-than-expected seasonal performance. However, we anticipate a return to more challenges in Q1 '25. Is my understanding accurate? Where might I be mistaken?
Bryan Lewis, CEO
And just to clarify, if you're saying that was is it a stronger Q4 than in '23? I'm looking at the numbers right now. So, it was not.
Daniel Hibshman, Analyst
In terms of the seasonal impact. It was not?
Bryan Lewis, CEO
In Q4 '24, I'm looking at our top retailers, and one company focused solely on retail experienced a decline of 9% compared to Q4 '23.
Daniel Hibshman, Analyst
Okay. So, but.
Bryan Lewis, CEO
Yes. But, and that's just those volumes. But I think part of what happened is we do have part of it was some things were at a higher rate for some of these customers, right? So, there was a jump. And I'm looking overall. So, I mean, I'm sorry, I'm looking at a few specific ones. Overall, we did see retail was good and strong. But also, there are other areas too that you can consider retail or not, but automotive was very strong. And those are things where again, much, much higher price per transaction than if you're going into a department store.
Daniel Hibshman, Analyst
Okay, that's helpful. I have one last question regarding the results. Last quarter, it was mentioned that the guidance for Q4 indicated there would be year-over-year growth, though it wasn't specified how much. I interpreted that to suggest low single-digit growth. However, we ended up seeing a 15% increase, which indicates that the quarter was stronger than expected. Can you clarify if this was due to some significant wins late in the quarter, or how should we interpret this?
Bryan Lewis, CEO
Yes. A few things do go live in that quarter, not that I would consider them really big wins that would impact it. I think what we saw is across where consumers are spending money, right? So that's not just retail, but it's also in the automotive space and other places like that; we saw increased demand and usage. The other thing is we certainly saw, surprisingly, in the e-mail recovery, it went up. So, there were different sectors. Part of that's part of the reason that I want to get out of things that aren't tied to somebody doing an economic transaction. One of the things I'm looking forward to is we announced it a while back; they're doing the development now, but that company that provides background checks to tons of independent background check companies, they're excited, and I'm excited because jobs happen all the time, and background checks happen at all levels. To me, that's going to be a great way to ensure that we're further distancing ourselves from user consumer making a transaction.
Operator, Operator
Our next question is from Neil Cataldi with Blueprint Capital. Please go ahead with your question.
Unidentified Analyst, Analyst
Bryan, great quarter. Thanks for taking my question. If I could ask, identity verification across social media seems to have really strong tailwinds right now. I'm curious if you could talk about the role you think Intellicheck can play as age verification possibly comes to the norm? And are you guys seeing any activity in your pipeline to support your role expanding in that vertical?
Bryan Lewis, CEO
Yes. I think the main thing is the discussions we've had about where else this current client can use us. When you look at where they are talking about, they know they have issues. Certainly, you mentioned one, age verification. That's becoming important not only for what they're doing, but now you've got many states that are passing laws for pornographic websites that you need to age verify there. So that's just a whole other area. But if you think about there's marketplaces on these things where people are buying and selling, and there's a lot of crime that takes place because people are pretending to be people who they're not or it's a front for selling stolen goods. They need to ensure that people are right there. One of the things that they've said is they want to ensure that people are not asking, and how do we do that? So, to me, social media is kind of the wild, wild west of where people hadn't thought about proving who you are. You pay your $8 or whatever it is, and you get a blue check; it doesn't mean you're real. And the important thing is those are the ones that usually get the most clicks in the most credibility. Now what they're talking about is how do we ensure that credibility is deserved.
Unidentified Analyst, Analyst
Got it. Okay. And just a follow-up on the one customer that you referenced. I completely understand why it's hard to forecast. You mentioned procurement, which seems like you're finalizing pricing on the new applications and whatnot. If I could ask, are they finished testing? Or are there other testing steps that also still occur?
Bryan Lewis, CEO
No. Right now, we are fully integrated. They're running transactions through the system, not just at the volumes that they said they will just to keep the pipeline, if you will. Fully tested, fully vetted. They gave us great marks on what we did and the results we produced. I think it's interesting; too, when you work with companies like that, it helps us think about new ways to work with our products. Part of what we did with the expense of like AI machines, we were like there was a success that everybody usually has take the front, take the back of the document. We now have a detector. We don't care what the customer on the end does, which means I look at that as we can do that across every single one of our customers and hopefully get more volume out of it. If somebody in the past sent the front when it should have been the back, we couldn't process it, give them results, and charge for it. Sometimes, delays can help you build products that get you revenue across the board.
Operator, Operator
Thank you. There are no further questions at this time. I would like to hand the floor back over to Bryan Lewis for any closing comments.
Bryan Lewis, CEO
Great. So, thanks, everybody, for joining us. You may remember at the close of the last earnings call, what I said is that our new strategic plan and the implementation of that, I think, was going to be the key to us handling some of the marketplace challenges, particularly what I was seeing in the economy, in consumers and how they're feeling. I think that decision to move into new market verticals continues to be key in us growing. I think you'll see that this has helped us in some of these downturns. We believe we'll continue to show progress in 2025. We're going to remain focused on expanding our customer base, growing within our existing customers through the efforts of Sandra and her team, and getting much stronger in some of these new market verticals. One thing we really didn't talk about, but I am excited about is our partners that are really beginning to show real growth and benefit, and we're going to focus on that more. I look forward to discussing our Q1 results with you in Midway mid-May. So, thank you, and have a great evening, everyone.
Operator, Operator
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.