Intellicheck, Inc. (IDN) Earnings Call Transcript & Summary

Thanks, operator. Good afternoon, everyone, and we appreciate you being with us today for Intellicheck's third quarter 2026 earnings call. Before we get started, I want to point out that this call contains forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Terms like will, believe, expect, anticipate, and similar words are how we identify those statements. They cover the customer transition that we'll be talking about today, what we expect for revenue, profitability, and Adjusted EBITDA, our tax valuation allowance, and the benefits we anticipate from our products and partnerships. These statements reflect management's current expectations as of today, November 12, 2026, and they carry risks and uncertainties that might cause actual results to differ materially. You can find those risks described in our SEC filings, including our latest Form 10-K and Form 10-Q. The company has no obligation to update these statements. Some figures on this call have been rounded. Management will also go over non-GAAP financial measures, including Adjusted EBITDA and adjusted gross margin, which is adjusted gross profit as a percentage of revenues. Definitions and reconciliations to the comparable GAAP measures appear in the press release we issued this afternoon. We'll start today's call with Bryan Lewis, Intellicheck's President and Chief Executive Officer. Adam Sragovicz, Chief Financial Officer, will follow him. After their prepared remarks, we'll open it up for questions. I'll now hand things over to Bryan.

Thanks, Keaton, and hi everyone. Appreciate you being here today. Let me begin by pointing out a few things I'd like you to take from how we performed in the third quarter. To start, we remain profitable, posting $471,000 in net income along with $892,000 of Adjusted EBITDA for Q3. Our cash balance of $13.2 million at quarter end is the highest it has been since the close of 2021. Our balance sheet carries no debt, and that will back continued investment in the growth priorities we have set. Next, Intellicheck keeps adding new customers, and for the most part, those already with us keep increasing how much they use our solutions and how committed they are to them. Third, when competitors come around attempting that "good enough, so we'll lower our price" tactic, we're both winning and keeping the business. I'll get into details on these points a bit later, but in short, growth keeps coming to us from four places: deeper adoption inside accounts we already serve, displacement of competitors, fast onboarding, and M&A activity that our own customers undertake. The fact that our customer base keeps producing more value, I think, demonstrates that our product is valid. With that, we grew six percent across new and existing accounts. Let me briefly speak to the client who opted for a redundancy program, meaning that no single vendor would handle any mission-critical portion of their business. They keep telling us they are in an evaluation period, and I want to be very clear on this point. They keep telling us they are evaluating whether that is the right strategy for them, and I will quote them directly. We continue to see Intellicheck as a key player in our vendor strategy to provide resiliency and redundancy across all of our use cases." As a matter of fact, they signed a new purchase order. They stay committed to implementing our new API, which gives them access to many more risk signals, especially in the digital space, rather than the years-old API they are on right now. Can I promise that we'll retain the same amount of business we previously had? Honestly, no, I can't. Can I tell you we're battling hard to keep what we once held? Yes, absolutely. Because when it comes to accuracy, we beat our competitors head-to-head, so I'm eager for that fight. In my view, the diversification approach we established a few years back is central to our growth and will remain so. There was a time when describing us as a company reliant on retail credit card transactions was accurate—that's no longer true. Today we operate across about 14 different industry groups, and since criminals keep inventing new methods of theft, that base of industries has plenty of room to expand. The nice part is that after we land an account, expansion comes from either fresh use cases or from selling more risk signals to a client. Banking and lending stays at the heart of that push, and these clients are high value. Our customers include banks, credit unions, card issuers, fintech platforms, and alternative lenders. Identity verification for all of them can be done in person, online, and via the call center, so we have multiple paths to deepen the relationship. Our goal is to create additional entry points into an account and give a customer more reasons to use Intellicheck. A new customer might start with just one workflow, and as that relationship deepens, the broader platform enables us to back additional identity verification needs. What we focus on is turning those opportunities into recurring revenue instead of merely growing the number of names on our customer roster—although that remains important to us too. We currently work with five of the top 10—sorry, five of the top 12 U.S. banks and card issuers, our technology operates in over 8,000 bank branches and that number keeps rising, along with thousands of retail sites where our customers extend credit and look up accounts. Building on that footprint, we can pursue additional workflows and locations together with new accounts. The key thing is the revenue potential within each relationship, not merely its initial size. That potential extends beyond the barcode check alone. With our modular services—document liveness, document verification, face verification, international document verification, and Device Confidence—we can address diverse customer needs within a broader relationship. Our focus is on turning those capabilities into additional use cases and revenue, not just putting more products into a presentation. Since our previous call, we've announced developments showing how this approach reaches beyond our existing accounts. In August, a channel partner we recently signed secured a significant deployment with one of the world's largest investment management companies. That brings our technology into wealth management for the first time, aiding in both fraud prevention and the onboarding of legitimate customers. The channel model matters since our partners are able to integrate Intellicheck into services they already provide and extend it throughout their enterprise customer base; we don't need to establish every customer relationship through a direct sale. It moves our technology into yet another high-value financial services market through a partner's enterprise relationship, rather than requiring us to build a direct sales channel into each prospective customer. In October, we secured a partnership agreement with Agility Credit, an approved automotive credit bureau reseller. This positions our identity verification before the credit pull, within a platform that additionally holds credit data, device intelligence, and compliance workflows. We anticipate that this partnership will assist in increasing scanning volumes at our automotive dealers. We also recently formed a partnership with Conmitto, the company behind Dock Optimizer, to help stop fraudulent freight pickups, which provides us with another path for extending our technology into logistics through the workflows these companies already have in place. The integration puts identity verification inside the driver check-in process, tying the verification results to the driver, the carrier, and the load. You may have noticed the collaboration we announced lately with DESKO, which shines a light on a different use case where document capture hardware is combined with our verification software plus an integrated biometric camera. That prototype was unveiled for the Money20/20 showcase held last month, showing how document validation and in-person facial capture could be brought together into a single workflow at a bank counter or another point of transaction. Across the U.S., DESKO has roughly 500,000 scanners deployed. Our view is that this collaboration, together with our desktop delivery method, gives us a highly effective channel for reaching smaller banks and credit unions that we believe are underserved by their captive software providers. A few additional noteworthy items deserve mention. Not long ago, a highly capitalized competitor owned by private equity went after one of our contract renewals. That rival keeps trying to win business by undercutting on cost, but it failed, since we kept the renewal. To my mind, this shows that where client pain—that is, losses—runs high, merely being good won't suffice. The superior offering prevails, not the price. We also gain growth via M&A activity among our customers. During September, a bank client of ours completed a merger with another institution, bringing 300 additional branches into the network, which rely on Intellicheck to speed up customer acquisition and fight identity theft.

On top of that, a delivery client of ours keeps adding regions and use cases, and we expect that trend to carry on. When manufacturers sign with us to verify who is working the assembly line, they then require their suppliers to adopt us too. A single auto customer brought 10 suppliers onto Intellicheck. I should mention as well how varied our product set is, since I think that gets overlooked. Facial biometrics, liveness, deepfake detection, and analysis that determines whether a document was altered or is simply a photo of a genuine document. All of these products help us broaden our client and industry base. They additionally fuel growth inside existing accounts. Consider one of our smaller customers that offers escrow services to the title industry: within a few months of signing, that client doubled its spending as it adopted some of these newer offerings. From where we sit, broadening both our customer base and the range of products we provide has proven to be the right approach. I'm asked all the time about the social media climate, and here's what I can say. They've solved all of their image quality issues, which are within their own control. Prior to the fix they put in place, more than 30% of what they sent us was unable to be processed. After the fix, roughly 0.6% cannot be processed. Once more, I'd rather quote the customer directly. I asked if we were talking to the right folks. The answer came back: "You have found the right person." Engineers and data are the main forces behind their choice to expand, and every figure looks favorable. As I've mentioned, they're still a wild card. I can't offer a definitive prediction, but the data looks good, as they've told us. These opportunities share the same underlying technology; we examine concealed, authoritative security data within ID barcodes rather than judging whether a document looks genuine. Our long-standing AAMVA relationship and experience across more than 250 valid ID types underpin that differentiation; that approach is built first and foremost to help customers onboard good clients faster. I always point to one of our banks that hoped for a two percent uplift in completed online new account openings and actually realized a 23% uplift, 63% of which were the coveted Gen Z demographic. Stopping identity theft is nearly a byproduct of how quickly we enable customer acquisition. Since our platform is software-based, clients can rely on existing hardware while covering in-person, online, and call center channels through a single agreement; from our side, the business goal—beyond bringing in new logos—is to grow deployments across those channels, incorporate whatever identity signals a client requires, and boost the revenue potential in each relationship. Ahead of passing the call to Adam, I'd like to emphasize that our distinctiveness and our growing agility in going to market, new partners included, leave us well placed to tackle the genuine problem of fraud activity on the rise. Synthetic identity fraud in general, along with fraud driven by deepfake detection, remains a major obstacle for commercial activity, and nothing suggests it will ease up at any point in the near future; unfortunate as this pattern is, it makes our technology and product solutions more valuable now than they have ever been. I believe more and more channels will come to recognize that value, which will open up fresh revenue opportunities, and that our technology stands apart from what the majority of our competitors are able to provide. My confidence is equally strong that, once we deliver on execution, this distinctiveness will create fresh avenues for growth, which in turn become increasing revenue and improved cash flow. Having said that, I'll hand things over to Adam, who will walk you through the quarter along with the financial specifics.

Thanks, Bryan, and good afternoon, everyone. Revenue for the third quarter was $5.7 million. That's a drop of five percent versus a year ago and three percent versus the second quarter. The main reason for the year-over-year decrease was that Q3 2025 contained non-recurring engineering revenue. Net income and Adjusted EBITDA for the quarter both exceeded the third quarter of last year, at $471,000 of net income and $892,000 of Adjusted EBITDA. That marks five quarters in a row of positive net income and six in a row of positive Adjusted EBITDA. I'll go through the revenue detail, the remainder of the P&L, and the balance sheet. Revenue for the first nine months of 2026 increased seven percent to $17.2 million, and SaaS revenue was up eight percent. Gross margin came in at 90.9%, versus 90.5% a year ago. Adjusted gross margin, which excludes non-cash amortization of capitalized software, was 93.3% against 92.8% last year, as cost of revenue before amortization declined 11% to $386,000. Operating expenses totaled $4.9 million, seven percent lower than a year ago and flat versus the second quarter. R&D was down 16% year-over-year to $1.2 million. The bulk of that decrease reflected reduced spending on outside development firms and a lower incentive compensation accrual, partly offset by a full quarter of cost for data science hires made in the spring. SG&A was $3.7 million, three percent under last year; we spent less on trade shows and sales headcount and more on customer success staff and professional fees, mostly legal and investor relations work, plus a catch-up in stock-based compensation. Professional fees also explain a $201,000 sequential increase in SG&A. Operating income was $367,000, compared with $238,000 last year. Other income, primarily interest on our cash, doubled to $104,000. Net income was $471,000, or $0.02 per diluted share, versus $290,000, or $0.01 per diluted share, in the third quarter of 2025. Adjusted EBITDA was $892,000, a 15.5% margin, up from $631,000 a year ago. Stock-based compensation increased to $338,000 from $204,000, largely due to catch-up adjustments, and depreciation and amortization was $187,000; for the first nine months of 2026, net income was $1.8 million, or $0.09 per diluted share, against a loss of $279,000 in the prior year period. Adjusted EBITDA reached $2.9 million, compared with $688,000; we recorded no income tax expense. We had roughly 30.5 million of federal NOLs at the end of 2025, and we continue to carry a full valuation allowance against our deferred tax assets. We finished September with $13.2 million in cash and no debt, up roughly $1.3 million from June 30th and $3.5 million from year-end. Cash from operations was $3.3 million for the first nine months of 2026, compared with $2.1 million in the same period last year, which puts the third quarter at approximately $1.1 million. On last quarter's call, I mentioned that we expected operating cash flow to decline, and that we could use some cash in future periods. Q3 actually landed ahead of that, largely due to when customer payments and renewals fell. That same renewal timing pushed deferred revenue to $1.6 million, up from $1.2 million as of June 30th. Accounts receivable stood at $2.7 million, unchanged from June and lower than the $3.4 million we had at year-end. At quarter-end, no receivable balance was owed by our biggest customer. Working capital totaled $13.5 million, while stockholders' equity reached $23.6 million. During Q4, our largest customer may run at a lower volume across all three months, whereas Q3 only felt that for part of the period. As Bryan mentioned, they keep telling us this is an evaluation, and volumes have been somewhat volatile. Our seasonal retail lift typically arrives in Q4 as well, and we'll be watching closely to see how much of that gap it offsets. We continue to expect net income profitability and positive Adjusted EBITDA for the full year of 2026. Costs will be held steady even as we keep funding engineering and the go-to-market effort supporting desktop and our channel partnerships. Raising capital is not something we plan to do in the near term. With that, operator, we'd like to open the line for questions from our institutional analysts.

Hey, guys. Logan here, filling in for Mike. Thanks for taking our question. First off, could you give us some insight into how the rest of the customer base performed this quarter, leaving out the large customer, along with a few other key verticals? Thank you.

So I’d say banking and lending keep expanding. That’s among our main verticals. Automotive is growing too through partnerships, since that’s a market I really enjoy working with partners in: 19,000 rooftops tied to a name brand, and I believe roughly 16,000 rooftops that are independents, reach them via those folks. If you want precise figures, Adam may have some of those, but we are seeing some positive developments at this time of year, since stadiums are packed. Football season is underway, which benefits us. I really like that area. I really like getting into the stadium space, and we’re performing quite well there since it’s, again, no new hardware, really easy to confirm that I’m of age and that I ought to be able to get that beer. Let me know, Logan, did that address your question?

That was useful, yes. What I was sort of after is this: last quarter you said the remaining customer base had grown 19% during the first half of 2026, once that customer was excluded. Do you have a figure for that remaining customer base in 3Q?

Yeah, everything grew six percent in 3Q.

Got it. Okay, I appreciate that.

A quarter like this can often end up being slow, since folks get concerned about handling integrations and similar work as Q4 approaches whenever a retail customer is involved, given that’s the holiday season and they need it finished. So I think the first half, if you look at our historical figures, has consistently been the strongest period for bringing in new names and so on. I also believe diversification will shift that, because we’re adding—say you’re a trucking company or a manufacturer, none of that matters to you. There’s no point of sale system you’re afraid will go down; they can act whenever they like, and that, I think, is the nice part of broadening who we were and, again, moving away from what I mentioned—people reasonably assumed we were merely a credit card company. We are not.

Thanks for that, Bryan, that's really useful. So then we have one final question from our side. On the wealth management front, could you walk us through how the channel partner deployment got to where it is, and perhaps how we ought to view the potential for expansion inside that vertical? Thank you.