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As a reminder, this conference is being recorded. It is now my pleasure to introduce our host, Gar Jackson of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for Intellicheck's 1st quarter 2026 earnings call. Before we get started, I will take a moment to read our forward-looking statement. Certain statements on 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 call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company or its management identify forward-looking statements. These 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 update or alter its forward-looking statements, whether resulting from new information, subsequent events, or otherwise.

Additional information concerning forward-looking statements is contained in the company's filings with the SEC. Throughout this call, we may reference certain financial metrics that have been rounded for ease of discussion. Statements made today are as of May 12th, 2026. Management will use the financial terms adjusted EBITDA and adjusted gross margin.

Please refer to our press release issued this afternoon for further definition, reconciliation, and context for the use of these terms. We'll begin today's call with Bryan Lewis, Intellicheck's President and Chief Executive Officer. He will be followed by Adam Sragovicz, our Chief Financial Officer. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour. I will now turn it over to Bryan.

Thanks, Gar. Good afternoon to everyone. Thank you for joining us today. I'll start by doing something I always try to do, be direct about what drove the quarter, which was impacted in part by the macro environment. I will get to the numbers that showed significant EBITDA growth, marking our fourth quarter in a row of positive EBITDA and our third quarter in a row of positive net income. The first quarter of 2026 played out against one of the more challenging macroeconomic backdrops that we have seen in several years. The military conflict in Iran, which intensified in the first quarter, created a genuine economic ripple effect across virtually every sector of our economy. Oil prices surged, pushing gasoline prices toward $4 and above in many markets. This is one of the factors that impacted consumer confidence and consequentially affected our retail customers.

Additionally, as evidenced by reporting on multiple news outlets, mortgage rates climbed to their highest levels in seven months as financial markets absorbed the geopolitical shock. Consumer confidence, which I just noted was already trending in the wrong direction, deteriorated further. Inflation, which had appeared to be normalizing at around 2.4% early in the quarter, re-accelerated sharply to 3.2% year-over-year in March. For Intellicheck specifically, these forces created headwinds in three of our verticals. In retail, that is now approximately 30% of our revenue, consumer belt-tightening continued to weigh on transaction volumes. Our retail clients scan fewer IDs when foot traffic declines, and foot traffic clearly slowed in Q1 for our customers as consumers pulled back in addition to the normal Q4 to Q1 holiday decline. In automotive, U.S.

Auto sales are estimated to have fallen 5%-6% year-over-year in Q1 as high borrowing costs, record vehicle purchases, and economic uncertainty kept buyers on the sidelines, impacting scanning volumes at some of our auto dealer clients. On the title insurance side, the combination of rising rates and geopolitical uncertainty slowed mortgage origination activity. Despite all of these economic factors, I am pleased to report that Intellicheck continued its growth trajectory with growth of approximately 13% year-over-year. I believe this underscores the wisdom of our decision to expand into other verticals. Our first quarter revenue was approximately $5.5 million versus $4.9 million in Q1 2025. We delivered adjusted EBITDA of $935,000, representing EBITDA margin of approximately 17% versus our adjusted EBITDA of negative $17,000 one year ago.

This marks our fourth consecutive quarter of positive adjusted EBITDA. This is a milestone that I believe speaks directly to the operating leverage we have built into this model. We had earnings per share of $0.03, marking our third quarter in a row of profitability, and ended the quarter with over $10 million in cash and zero debt. I will tell you delivering 13% revenue growth in this macro environment with 17% EBITDA margins is something I am genuinely proud of. Now let's walk through our vertical performance. Banking and lending remain our core growth engine and represented over 50% of our quarterly revenue growing strongly in Q1. This mix shift has fundamentally changed the resilience of this business. Our largest regional banking client with a 3-year contract valued in the very high 7 figures is now fully implemented throughout all their bank branches.

Their team is not just ramping volumes. They are in active conversations with us about expanding the use of Intellicheck's top technology in additional use cases and departments. The ROI and fraud prevention at these banks is not subtle. Account takeover losses average approximately $2,300 per incident. Some clients tell us they experience monthly fraud losses north of $40,000 before they implemented Intellicheck. The payback on our technology is often measured in days, not months. In addition to stopping fraud, we also help them onboard good customers faster, a significant and valuable attribute that I believe is frequently overlooked. Beyond our major bank relationships, our new desktop delivery method is opening meaningful new doors with smaller banks and credit unions. This clearly reflects the benefits of our desktop delivery of our core services.

This delivery services requires no integration with the bank's core platform, and implementation is immediate. You may recall that credit unions and smaller banks have historically been hampered by long technology integration queues with their core technology providers. I am pleased to report that we are seeing strong inbound interest for our desktop product that is designed to address this issue. We believe this product has the potential to materially expand our addressable market without requiring a third party to facilitate the growth. Implementing this desktop technology, we have signed three new clients with several others in review. While these are smaller deals, they can get up and running quickly. That being said, bank platform partnerships are also very important. I am also excited to share that our new partnership with Alloy is starting to generate early traction.

Our partnership here is a valuable one, given it is one of the leading identity and fraud prevention platforms in the banking and fintech space. Their customer network is substantial. We believe being embedded in their platform significantly reduces buying friction for institutions already operating within the Alloy ecosystem. These kinds of strategic partnerships are an important element in how we grow this component of the banking vertical from here. Retail represented approximately 30% of 2025 revenues, and as I discussed earlier, was certainly challenging during the first quarter. We saw year-over-year declines in scanning volumes that was similar to the sequential period last year, and we believe that it is entirely consistent with the consumer confidence and macro headwinds I described. Through our active diversification efforts, we are no longer dependent on retail for growth.

If consumer sentiment improves as the macro picture settles, any recovery in retail volumes will be an incremental upside for us. As I previously discussed, our title insurance vertical was impacted in Q1 by the mortgage rate environment. I want to call out a milestone that I am genuinely excited about. First American Title successfully launched their digital e-commerce identity verification capability in Q1. You may remember we told you this was coming on the last quarter's call. This is a meaningful expansion of how our technology is embedded in their platform. It is exactly the kind of deepening of the relationship that drives long-term value. When rates normalize and real estate volumes recover, we believe this vertical has substantial upside potential. We're also seeing growth in our other verticals. Our age-related and background check verticals continue to grow steadily.

The nationwide rollout with our food manufacturer client addressing cargo freight fraud is showing good progress as well. That account is now running in the low 6-figure annual contract value range. Additionally, our foreign auto manufacturer clients and their supplier networks continue to expand. In the stadium concessions market vertical, we added a few additional clients, although these are starting at very low volumes. While this remains a long-term opportunity, we are building the foundation for further growth. On the product and technology front, our team continues to execute at a high level. As I shared with you, our desktop app-application is gaining solid traction. We are also seeing progress with our mobile SDK, hub reporting console, and portal delivery method. As a reminder, our customers like our hardware-free solutions that are quick and easy to implement.

Here's the one thing I keep coming back to: Our core differentiation is unique, and it is durable. We can verify the authenticity of a government-issued ID in less than a second with 99% decisioning. We do this by checking against the exact barcode specifications embedded by each state DMV at the time of issuance. Keep in mind that no competitor has access to these specifications. This is because we continue to be the trusted test lab for state DMV systems, a relationship we've had for more years than I can count. This exclusivity is key as we see threats continue to evolve at an extraordinary pace. AI-generated fakes are becoming more sophisticated every quarter, which I believe will become an increased problem for our competitors. Synthetic identity fraud skyrocketed 300% in just the first quarter.

deepfake-driven fraud was up over 1,000%. Visual template checks, which is what most of our competitors rely on, cannot stop these fakes. We can. That is not going to change, and it gets more valuable every year. Our marketing initiatives are continuing to make a difference as they continue generating lead activity. The agency we brought on board is sharpening our messaging and building brand awareness. Our IDM Threat Report has been an effective thought leadership piece across banking, title, automotive, and the cargo freight audiences. This original data documenting the fraud trends we observed in 2025 positioned us as a credible source of industry data and intelligence. Our podcast content, white papers, and industry conference presence continue to build Intellicheck's brand as the definitive authority in real-world ID verification. In closing, I'm continuing to be mindful as to how 2026 is unfolding.

Clearly, the macro environment remains uncertain. The Iran conflict, elevated interest rates, and consumer caution are real factors that will continue to influence some of our verticals in the near term. We are watching that carefully every day. Here's what gives me added confidence. Our banking and lending vertical is driven by fraud prevention. This is mission-critical, non-discretionary spending for every bank and credit union we work with. This category does not soften in a difficult economy. If anything, it becomes more urgent. Keep in mind, this is now more than half of our business. We believe that we have opportunities to continue growth with our existing clients in addition to signing new clients. We believe that we are at the inflection point in our business model to profitability. At our current run rate, virtually every incremental revenue dollar flows meaningfully to the bottom line.

We have over $10 million in cash, no debt, and a product that we believe genuinely cannot be replicated. Without providing formal guidance, we believe EBITDA margins will remain positive, and we see potential acceleration in the back half of the year. Looking forward, we believe that we are well-positioned to deliver positive net income for the full year 2026. This would be a significant milestone for this company. We also continue to advance our investor relation initiatives and expect to participate in a number of upcoming investor conferences, including the Sidoti Micro-Cap Virtual Conference next week. In June, we will be participating in the RBC Financial Technology Conference in N.Y., the D.A. Davidson Conference in Nashville, and the Planet MicroCap Showcase in Las Vegas. These events provide valuable opportunities to further expand awareness of Intellicheck and communicate our strategic priorities and long-term growth objectives.

In addition, they provide valuable platforms to keep you, our shareholders, informed while at the same time engaging with the broader investment community. The headwinds we face in Q1 are real, but so is the trajectory we are on to maintain and expand profitability. We are a fundamentally different company than we were 24 months ago, and I am confident in where the business is going. Now I will turn it over to Adam.

Thank you, Bryan. We are off to a strong start in 2026, and I want to take a moment to put that in context. Bryan described the macro backdrop, and against that backdrop, I'm genuinely pleased with what we have delivered. Total revenue for the first quarter of 2026 increased $630,000 or 13% to $5,524,000 compared to $4,894,000 in the first quarter of 2025. SaaS revenue grew $646,000 or 13% to $5,514,000 from $4,868,000 in the same period of 2025. The growth was driven especially by financial services and banking, where identity fraud pressures remain elevated and customers continue to deepen the use of our platform.

Gross profit as a percentage of revenues was 91% in the first quarter of 2026 compared to 89.7% in the first quarter of 2025, a 130 basis point improvement. On an adjusted basis, excluding non-cash amortization of capitalized software costs, adjusted gross profit margin was 93.4% compared to 91.8% in the prior year period, representing a 160 basis point improvement. Both measures reflect the continued operating efficiency we have achieved with our cloud infrastructure. Our cost of revenue, excluding amortization, was $362,000 in Q1 of 2026, down from $399,000 in Q1 of 2025, even as revenue grew 13%.

Non-cash amortization allocated to cost of revenues was $137,000 in Q1 of 2026 compared to $103,000 in Q1 of 2025. As previously capitalized software development costs continue to amortize through the income statement. As we noted on our last call, our capitalization of new software costs has declined to near zero levels, which means this amortization headwind will diminish over the next several years as earlier vintage capitalized assets roll off. Operating expenses decreased $257,000 or 5% to $4,483,000 in the first quarter of 2026, compared to $4,740,000 in the first quarter of 2025. In 3 of the past 5 quarters, including the last two, operating expenses have declined year-over-year, while revenue grew at double-digit rates.

SG&A expenses decreased $211,000, or 6%, to $3,242,000, compared to $3,453,000 in Q1 of 2025. The reduction reflects continued discipline across personnel costs, marketing spend, and professional fees. R&D expenses decreased $46,000, or 4%, to $1,241,000 from $1,287,000 in Q1 of 2025. I would note that R&D costs are now almost entirely cash expenses, given the near elimination of software capitalization. The GAAP number and the cash number are effectively the same, which makes our R&D line more straightforward to interpret than in prior years.

As a result of these dynamics, we reported operating income of $542,000 in the first quarter of 2026, compared to an operating loss of $348,000 in the first quarter of 2025, an $890,000 year-over-year improvement at the operating line. Other income was $94,000, primarily consisting of interest earned on our cash balances compared to $30,000 in the prior year period. The increase reflects both the higher average cash balance we carried and favorable short-term rate positioning.

Net income for the first quarter of 2026 was $636,000, or $0.03 per diluted share, compared to a net loss of $318,000 or $0.02 per diluted share in the first quarter of 2025, a swing of nearly $1 million year-over-year. This marks our third consecutive quarter of positive net income. The weighted average diluted share count was 20.9 million for Q1 of 2026, compared to 19.8 million for Q1 of 2025. Adjusted EBITDA for the first quarter of 2026 was $935,000, compared to a loss of $17,000 in the first quarter of 2025, representing a year-over-year growth of $952,000.

This is our 4th consecutive quarter of positive adjusted EBITDA, and I want to remind everyone that Q1 is seasonally our softest quarter, given the absence of a certain holiday retail uplift we see in Q4. To put that in perspective, one year ago, we were essentially at breakeven on an adjusted EBITDA basis in Q1. This quarter, we generated nearly $1 million and delivered an adjusted EBITDA margin of approximately 17%. Depreciation and amortization was $193,000, and stock-based comp was $200,000 in Q1 of 2026, consistent with recent trends. For the first quarter of 2026, we recognized no income tax provision. We continue to carry a full valuation allowance against our net deferred tax assets of approximately $6.7 million, which GAAP requires as long as our three-year cumulative taxable income position remains negative.

As I mentioned on our last call, the prior year's losses keep that cumulative test negative for now, but the window is improving as each profitable quarter is added and loss periods roll off. At March 31, 2026, the company had cash and cash equivalents totaling $10,062,000, an increase of $412,000 from $9,650,000 at December 1, 2025. The first quarter is typically a period of cash usage given the seasonality of our business, so generating operating cash flow of $444,000 in Q1 is a strong result. We have no outstanding debt, which means our balance sheet is entirely equity and business financed. Working capital at March 31, 2026 was $11,119,000.

Total assets were $27,109,000, and stockholders' equity was $21,533,000. Accounts receivable grew to $5,740,000 at March 31st, compared to $3,365,000 at December 31st. This increase is largely a timing artifact of our Q1 billings pattern. Annual contracts that renew in the first quarter generate substantial invoicing in the first weeks of the year, with collections sometimes completing in Q2. Our allowance for credit losses remains stable at $157,000. Our capital requirements remain modest. Capital expenditures were only $33,000 in Q1 of 2026. Our product improvements are expensed as incurred rather than capitalized, and our infrastructure runs on major cloud platforms rather than owned hardware. We are encouraged by how the year has started.

The combination of consistent revenue growth, improving margins, and the first profitable Q1 in company history tells us that the operating model changes we've made are working. Looking ahead, we expect gross margin profile to remain in the 90%-91% GAAP range, with adjusted gross margins continuing to run the 92%-93% range. The non-cash amortization of capitalized software costs will remain a small headwind in the near term but will diminish over time.

On the expense side, we remain committed to growing operating expenses at a rate below our revenue growth rate. That discipline is what drives the operating leverage we are seeing. I want to briefly address capital allocation. Our cash position gives us flexibility. We are investing in the business, especially in marketing and sales capacity, customer success, and in product at a level we believe is appropriate given our growth targets. We will continue to regularly evaluate how to deploy that capital in ways that create long-term value for shareholders. I'll now turn the call over to the operator for questions.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question comes from the line of Mike Grondahl with Northland Securities. Please proceed.

Hey, guys. Thank you. For the retail vertical, do you guys have what revenue was 1Q 2025 and 1Q 2026?

Good question, Mike. I didn't run those numbers, you know, but it roughly runs in line with obviously transactional volume, which was, if you remember, generally we drop at least 10% Q1 to, I'm sorry, Q4 to Q1, you know, just for the seasonality of the holidays. We still have 2 of our major clients, who have a lot to do with retail, who are not on a straight line revenue model yet. You know, they saw the seasonality, but we did see, I'm gonna say, another good 5%-10% drop, which I'm gonna say is probably, you know, economic factor.

Got it. Any trends you're seeing on pricing or transaction volume overall?

That is pricing, we continue to see upticks in pricing, you know, and I think it's also very much dependent upon the market. You know, again, if you think about our largest clients all renewed last year, and they go into three-year contracts with, you know, CPI kind of adjustments every year. In the new markets that we're going to, we continually are able to show pricing power, and those, you know, new sales are, you know, are moving up. We're also really starting to price, you know, a lot of things that we're changing is, you know, minimum to play, you know. Again, one of the things we look at is, for example, the suppliers to some of the automotive companies that we're dealing with.

It's like, "Look, we're not even going to deal with you without paying X," right? That means the price per transaction is relatively high, but we're saying we need to do that to factor in what it costs to support you. Overall, we're seeing, you know, what I feel is people are understanding that we are a differentiated product that deserves a premium because, again, I've said this a million times, just about everybody else does it the same way. Take a picture, compare it to a template. They do not have the authoritative data that we have on the barcode, and that deserves a premium.

Got it. I'll leave it at that. Thanks, guys.

Thanks, Mike.

The next question comes from the line of Rudy Kessinger with D.A. Davidson. Please proceed.

Hey, guys. Thanks for taking my questions. You know, with the kind of headwinds to the scan volumes in a few of your verticals, just if we operate under the assumption that those persist in Q2 and likely throughout the second half of the year, How should we think about, you know, your potential growth profile throughout the rest of the year?

Hey, look, I'm just going to go back to, you know, to some of the numbers that we did. We still grew 13% year-over-year, and I think that has to do with other verticals that we're bringing in. I'd say that desktop delivery method is opening new markets. It's not just banking. I mean, Desktop is working in, you know, the background check part of our business. It's working in the cargo part of our business because those folks generally don't have big IT staffs, and they don't need it. They can get centralized reporting and instant implementation. You know, I think our expansion into new markets and expansion into new delivery methods is going to allow us to have continued growth, you know, throughout the year.

You know, the other thing that I'd say is that, you know, I'm sure maybe your macroeconomic guys have a good idea of where things will go. You know, what we talk about a headwind, and we've seen it, right? When the market got good, all of a sudden we had a tailwind from those markets. Our customers continue to expand and bring on new retailers. Until consumer confidence gets up there and I think interest rates go down, you know, we've got some of our credit card customers are up around 35%-39% on interest rates. That bums people out. When that changes, I think it picks up and in a way just through being good stewards of our customers and the business that they're bringing in, that's a massive tailwind.

I'm happy with what I'm seeing in terms of pipeline, sales progress, and then keep that going plus hopefully the economy turns around in short order. You know, I'm excited.

Okay, got it. Talk to me about the pipeline. What does that look like both from a new logo standpoint? Also, do you have any of your large financial customers that are set to renew this year? If so, you know, any expectations for expansion on those contracts?

The majority of our large customers renew some New York contracts. One of them is still in the, you know, kind of buying buckets, and they are expanding because they have been bringing on new retailers. You know, one of the things that I like about them is part of the way they win business away from their competitors for credit card programs is they can offer better rates, and we know this 'cause we've been on some of their sales calls, offer better rates on the program if they implement Intellicheck, which does two things for the retailer: lower rates and faster adoption of customers.

They've been bringing on more, you know, clients, so that's why part of what they've been doing is, you know, it has been expanding with us, and generally every year they think they buy a bucket that's gonna last them the year, and it never does. Overall, you know, anybody this big is locked in and/or growing. From the pipeline standpoint, like we said on, you know, in the prepared remarks, I'm very, very happy with what the marketing crew we brought in have been doing, really good leads, new RFPs that probably we would not have seen before. You know, I'll be quite honest, through too, through some banking relationships, we're getting introduced to new customers that, you know, or new prospects I should say, that they know could use our product.

You know, all in all, I'd say good team, good prospects, and really good customers.

Great. That's very helpful. Thanks for taking my questions, guys.

Thanks. Talk to you later, Rudy.

The next question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group. Please proceed.

Great. Thanks for taking the questions. A couple from me. First, maybe just in terms of the quarter, how did it play out monthly? You know, if it feels sort of normal, you know, January, February, fell off March, it got ugly April. Just kinda curious. I mean, obviously, we're out into May now, you're well into Q2. Just kinda curious how each of those months has strung together. Have we hit a bottom? You know, you've got pretty good visibility through the scan volumes. Just any commentary there on a more of a real-time month-by-month basis?

You know, I'd say that, banking was growing. Retail was, you know, and when I say retail, you know, consumer credits, so credit cards, in that regard were lower than, you know, we've seen in previous quarters. You know, again, I think that has a lot to do with consumer confidence. Certainly picked up more, when the whole Iranian conflict kinda got heated up and I think, you know, the price of, you know, oil, which runs everything, went up. You know, offset a little bit by, you know, bringing on some new customers or existing banking clients expanding their usage and their volumes. You know, I think, you know, you can look at the numbers. I don't think consumers are any more positive in May than they might have been, you know, in March or April.

Should we think, I mean, if I look at the last three years, I think your average Q1 to 2 sequential growth is 5%. It sounds like from what you're saying, we should be thinking more like flattish. I know you don't give guidance, I mean, we need to get at least in the ballpark. Just are we closer to flattish than your typical 5% growth quarter? Just while you're on that, you mentioned being happy with the pipeline. Any particularly large needle-moving deals, or is it a lot of onesie, twosies? Just a little more color on the pipeline.

Like I said, there's a couple of things. One is, I think I mentioned this on the last call, there is sort of a shortage of scanners out there that banks need. We have, you know, a couple of these banking clients who want to be able to do passports in addition to just driver's licenses, which means they're all looking to upgrade their scanning devices. If you just go look at what it takes and the timeframe to get them, you know, that will be, I think, sort of one of the determining factors on how fast our revenue grows and in which quarter. It'll depend on delivery of those scanners to several of our signed customers who wanna get moving. You know, that's completely out of my control.

The customers are signed, the customers believe in us, the customers wanna be up and running as fast as they can, and that's with, you know, this desktop product, which doesn't mean, you know, we don't have to be integrated to any of those core banking platforms that, you know, take forever. It's, you know, that's out of my control. What I can say is the customers have signed and are ready to go.

Just the second part of the question then on pipeline. You commented on good pipeline. What I'm wondering, is there any meaningful assuming volumes stay bleak, the economy stays bleak, oil prices stay elevated, I'm trying to figure out where the growth comes from. If it's not volumes, I'm wondering what opportunity there is in the second half for major, you know, needle-moving customers like what you put up in 2025, and I mean, seemingly every year and a half. Just what does that mega customer pipeline look like?

Yeah. We always have customers in that kind of pipeline. It's just, you know, they take a very long time, and they are, you know, what I'd say, you know, stop and start all the time. You know, what I like about, you know, this new sector that we've really gone into that as we get to a desktop, they're smaller, they're nimble. You know, they might not be worth, you know, $4 million a year, but they might be worth, you know, a quarter million dollars a year. They can be up and running in 3 months. They're much easier. You get 10 of them, you know, I'm just as happy. While we're always going after the whales, we're also looking at the banks that are smaller.

There's a ton of other, you know, different opportunities, different market sectors that are coming to us. You know, I didn't think about cargo, right? You know, the average loss of a tractor-trailer, you know, is $300,000, and it's happening all the time. That's a huge, huge sector for us. We've got some of the biggest names in manufacturing who are recommending us to other people. You know, their competitors, 'cause they all feel it because it's the same companies ripping them off. There's a lot going on. I don't need, you know, I don't need to have 1 whale every year if I can make sure that I'm, you know, hitting a bunch of doubles all the time.

Last for me then, and just in terms of actual signings in the quarter, the bookings of new business versus expectations. How'd you fare?

For Q1, I think that we signed everybody we expected, but one who signed quite shortly after the quarter ended. Just a timing issue on their lawyers and our lawyers.

Okay. Got it. Thank you.

All right. Thanks.

The next question comes from the line of Scott Buck with Titan Partners. Please proceed.

Hey, good afternoon, guys. Thanks for taking my questions. Bryan, if I look at the year-over-year revenue growth, in software, what of that of the $600,000 or so is coming from new logos versus just expansion of service with existing or legacy customers?

I'd say for this quarter. By the way, congratulations on the new spot.

Thank you.

I'd say that for this quarter, the majority of it was expansion of existing clients, you know, which kinda typically is our Q1 anyway. You know, given that almost nobody in banking or retail wants to touch their systems in Q4, which is, you know, even banking has, it's had a seasonality to it, they don't wanna go down. Generally, it has been, you know, we'll sign people, but they're not gonna come up live because they're not doing anything in Q4 that could impact their core system that interacts with their clients. I'd say that, you know, I think that the mix is kind of typical for what we have seen over the years that I've been with the company.

Okay. Perfect. That's helpful. My second question, I just wanted to ask about title insurance. How many partners in that space do you have? I mean, I guess if you were to put a, you're touching X% of the market or have access to X% of the market.

So-

What does that look like today?

The last time I ran numbers on who we have as direct clients, that would represent about 43% of the title market. If you just do a quick search, like who controls the title market, you know, ChatGPT gives you the percentages of the market of each of the major names, that added up to 43%.

Okay. Wow. You already have fairly significant scale in that, in that vertical.

Yeah. You know, talking to the other few big guys that we don't have currently. We have a who's who pretty much at title.

Okay. Perfect. That's all I have, guys. I appreciate the time.

All right. Thank you, Scott.

The next question comes from the line of Logan Hennen with Northland Securities. Please proceed.

Hey, guys. This is Logan jumping back in for Mike. We kinda touched on it a bit already, but if you could just give some additional color into the pipeline opportunity with new and existing customers in the banking and lending vertical, that'd be great. Thank you.

I'm sorry, Logan, can you clarify that question for me? What were you looking for?

Some additional color on the pipeline opportunity with new and existing customers in the banking and lending vertical.

All right. For existing customers, you know, there's always new expansion. Pretty much all of our clients have been talking to us about where else they can use us. I'd say there's one of our clients, I don't know where else they could put us, is probably the way to put it. They're the one that have been growing a lot by taking credit card programs away from some of their competitors. The rest always are talking about how do we expand, what could we do different. You know, Sandra, who now is my Chief Commercial Officer, and I have meetings this week and next week with two of what I call our super regionals so that we can discuss how we get partnered better with them, you know, at their request, right.

They wanna see what we're doing. Through the partnership with Alloy and then also the amount of inbounds that I'm seeing through marketing, again, smaller deals, you know, you know, maybe $100,000-$250,000, but quick to implement, no cost to implement and, you know, basically immediate revenue. That's where I'm seeing a lot of interest and inbound interest as, you know, these smaller credit unions and smaller banks, they get hit at the exact same proportion. Right? I run these stats all the time, and the percentage attempts of fraud are no different at these smaller places than they are at the largest nationwide banks that we have. They get hit, and the losses are the same, you know, and it hurts them probably even more because they have fewer assets.

Got it. That was helpful. Thanks, guys.

Thanks, Logan.

Thank you. This concludes the question and answer session. I'd like to turn the call back to Bryan Lewis for closing remarks.

First of all, thank you all for your time today. I'd say in closing, as I'm sure is the case for every CEO, I am very focused on the macro environment, which is challenging right now. I think we can all agree on that. I wanna leave you with this. We are a fraud prevention company that also at the same time speeds up the acquisition of great customers, and that is in a backdrop of a world where fraud is exploding. Okay? We believe we have the best technology in this space, the right customers, and the financial foundation to execute on our multi-year growth trajectory. I wanna reiterate, $10 million in the bank, no debt. Right? That frees us up to be able to do, I believe, some good things.

We look forward to updating you on our progress when we report on our Q2 results. With that, thank you all, and have a great evening.

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

Greetings, and welcome to today's conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to Gar Jackson. Thank you. You may begin.

Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck Q4 and full year 2025 earnings call. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements on this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company or its management, as well as assumptions made by and information currently available to the company's management, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events.

As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements whether resulting from such changes as new information, subsequent events, or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor Statement and Risk Factors listed from time to time in the company's filings with the Securities and Exchange Commission. Statements made on today's call are as of today, March 19, 2026. Management will use the financial term Adjusted EBITDA on today's call. Please refer to the company's press release issued this afternoon for further definition, reconciliation, and context for the use of this term.

We'll begin today's call with Bryan Lewis, Intellicheck's Chief Executive Officer, and then Adam Sragovetz, Intellicheck's Chief Financial Officer, who will discuss the Q4 and full year 2025 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour, and I will now turn the call over to Bryan.

Thank you, Gar, and good afternoon, everyone. I appreciate you all joining us today to review Intellicheck's Q4 and full year 2025 results. I've been with Intellicheck for about eight years now, and this call today has me the most excited I have been since I joined the company. We've come a long way over that time. To reach the milestone of annual profitability and to be well on our way to being a Rule of 40 SaaS company are significant milestone achievements. We'll talk about more of this in a few minutes. First, I'll share a summary of the quarter, then spend some time discussing how we think about growth, our key verticals, and what we believe to be the pivot point to profitability in our operating model. Then I'll turn the call over to Adam for a deeper review of the financials.

For the Q4 of 2025, total revenue grew 12% to a record $6.6 million, and for the full year, we grew 13% and finished the year at $22.7 million, another company record. The investments we made transitioning over to AWS are working on a number of fronts. Gross margin for this quarter increased to 91.4% compared to 91.1% in Q4 of last year, underscoring the continued strength and leverage of our software-driven SaaS model. The AWS platform is also much more versatile and provides better reporting metrics for both us and our clients. I am very excited to report that we achieved annual operating profitability for the first time since becoming a public company.

We generated cash during the quarter and ended the year with $9.6 million, a clean cap table, and a strong debt-free balance sheet. Since I came on board, I committed to you that we would remain laser-focused on revenue growth and delivering value for our shareholders and stakeholders alike. With net income of $1.3 million for the year and an EPS of $0.06, I am very pleased we have succeeded in delivering on this commitment. We also set a goal to be adjusted EBITDA positive while still investing in the business. We more than achieved this objective with 3 consecutive quarters of adjusted EBITDA positive results for the year. Adjusted EBITDA in Q4 of 2025 was a record $1.9 million, and we finished the year at $2.6 million, another record.

With the realization of this goal, we demonstrated with consistency the operating leverage inherent in the business model and profitability at these revenue levels. I am proud of the Intellicheck team for the hard work and dedication that allowed us to succeed. At the same time, I want to make it clear that our commitment doesn't end with these successes. We're going to continue our efforts to create new opportunities for growth and profitability as we build on our relationships with our clients and expand our presence in an increasing number of market verticals. Our contract renewals over the past two years have been very successful. Sandra Bauer is doing a fantastic job working with our partners to secure renewals along with an expansion of those partnerships' use cases.

A great example of this is the renewal and expansion of our partnership with a leading national U.S. bank that is a top three client. They are using Intellicheck's innovative technology to facilitate customer onboarding, account name verification, and account modifications. We anticipate the year-over-year increase in revenue from this client to be approximately 15%. We exceeded those expectations and grew by approximately 33% when comparing 2024 to 2025. This growth is another testament that our product is effectively stopping fraud and is very appropriate for multiple use cases within the banking environment. More recently, another top financial client that is a recognized preeminent regional bank signed a three-year agreement. It, too, is expanding its use of Intellicheck's technology to include teller workstation transactions in their 1900 branches. This is an area where we continue to see incremental interest.

This client went live with us with this new use case in Q3 of 2025, so the revenue will be up significantly in 2026 with a full year run rate. Additionally, this client is looking at increasing the use cases beyond what they are currently doing. The total contract value over three years is currently in the high seven-figure range. This has made this client a top revenue generator for the company and another significant growth driver. Another area of growth that I believe is often overlooked is via our clients' active M&A and branch expansion growth. 3 of our largely regional banks are expanding their branch presence, particularly in the Southeast region of the country. These are areas that are seeing significant population migration. More branches lead to more transactions and quick and easy implementations for our clients.

We are very pleased that they continue to give us positive feedback on our product offerings. This work to drive record revenues and profitability hasn't come easy. Sandra's efforts have had a significant impact on Intellicheck, and as a result, she was recently promoted into the newly created role of Chief Commercial Officer. In addition to customer success, Sandra will now have sales reporting to her as well. Along with this new alignment, we are continuing to refine our sales team to meet the changes we are seeing in the rapidly evolving marketplace. Our channel partner program remains a strong focus for us. We believe it will drive significant growth across a number of verticals. We are making great progress with providers of third-party services. Our recent partnership with Alloy is an example of how our program is growing with great partners.

They have incorporated our technology into their banking-focused software platform. As a result of this partnership, any of their customers can now utilize us. For those not on the Alloy platform who depend on third-party providers, we have a technology solution that is getting serious market interest. With the rollout of our enriched desktop application, any sized organization can immediately implement us with no system integration needed. You may remember that we shared with you that many industry businesses rely on core provider platforms. This typically results in long deployment delays because these providers have lengthy development queues. We believe that we are ideally suited to serve these businesses, and we know they are solving a serious pain point. Partnerships like this allow us to scale distribution more efficiently, reach new markets faster, and remain true to our capital-light operating model.

Sandra will also be overseeing the growth of these important relationships in her new role. We are very excited about the opportunities they create to stop fraud on a broader level. Throughout the year, we scaled up our marketing and public relations efforts to build awareness of Intellicheck and our state-of-the-art technology solutions. We participated in key industry conferences, including FinovateFall 2025. My keynote presentation was Hidden Threat in Identity Verification: Why the First Step is Everything. I also spoke about the key role of the barcode. It provided a great platform to directly speak to misconceptions, such as why facial recognition alone is not sufficient as an authentication strategy. FinovateFall 2025 is a highly regarded conference hosted by Finovate. Finovate is a leading research and events firm focused on innovation in finance and banking technology.

It consistently attracts a large, high-impact audience, including senior financial and banking executives and investors. At the Association of Certified Anti-Money Laundering Specialists Conference, I presented an innovative session on The Innovation Blind Spot: Why Identity Starts with Real Verification. Here I spoke about why every system is only as strong as its entry point. It also gave me the opportunity to explain why the smartest fight against fraud starts before it begins. Technology with real-time ID verification defeats bad actors at the very first step. Drawing on the latest fraud trends, I discussed rapidly evolving threats, reviewed synthetic identity fraud, and deepfake-driven schemes that are undermining traditional identity verification methods. This was an important event for us because it is recognized as the premier global gathering for professionals fighting financial crime.

The conference brings together thousands of compliance officers, regulators, law enforcement officials, and industry leaders to explore the latest strategies and technologies that are shaping the future of anti-financial crime. We were also very active in building our efforts related to Investor relations. Programs we participated in included the Sidoti Micro-Cap Virtual Conference, the Ladenburg Thalmann Technology Expo 2025, D.A. Davidson's Technology Conference, the Craig-Hallum Alpha Select Conference, and the Planet MicroCap Conference. These interactions are very valuable because they allow us to communicate our strategic goals and ensure that you, our shareholders, and the investment community are kept current as we grow. There was another important sign of the growing recognition we are achieving as a leader in providing ID verification in the financial services market. I hope that all of you have now seen the IDC MarketScape report on worldwide identity verification in financial services.

Their 2025 vendor assessment named Intellicheck a leader. As I said in our press release, and I believe it is worth noting again, we believe this recognition affirms that Intellicheck is not just one in the pack. We are a leader with its state-of-the-art technology solutions that secure trust while preserving a seamless customer experience. Although banking and lending continue to be our primary verticals and growth drivers at this time, we are continuing to focus on new verticals we've been targeting. Many of these new verticals are dependent on interest rates to drive volume, particularly in the automotive and title insurance verticals. While there is recent volatility in interest rates, waning of consumer confidence, and fear of inflation increasingly concerning consumers, we believe we are well-positioned in these markets when the interest rate environment changes. I'm excited to see what will happen when rates go down.

In the meantime, we are succeeding in the banking, which is not so dependent on interest rates or consumer confidence. We all need to bank. As a reminder, over the past several years, we've been very deliberate about diversifying away from lower value transactional use cases such as age verification-focused transactions. We've been targeting verticals where identity theft is expensive, pricing per transaction is stronger, and customer relationships tend to be stickier and grow with additional use cases while generating significantly less churn. Among the targeted verticals, in addition to banking, are title insurance, automotive, specialty finance, background screening, logistics, and digital account security. Driven in part by these new categories and contract renewals at higher rates, our average price per transaction increased 25% in Q4 versus the previous Q4.

This further illustrates that we continue to have pricing power for our unique product, a product that delivers a decision our customers can rely on for their business processes greater than 99% of the time in under a second. Typically, our software works with the existing hardware a prospect has for in-person validation and on any person's phone or device for digital validation. With this in mind, I want to reiterate the benefits of our operating model. We continue to operate with very high gross margins and limited incremental costs to support additional revenue growth. Our platform today is capable of handling significantly more activity than it does currently, which provides structural operating leverage as revenue scales.

While we don't provide formal revenue or earnings guidance, our objective remains straightforward. To build a durable, differentiated, high-margin business by expanding with our existing customers and onboarding new customers, improving our revenue mix, and maintaining disciplined execution. I also want to respond to those of you who've been asking about AI. AI can mimic an ID. AI is no match for a barcode. AI can figure out how an ID is supposed to look, making visual inspection and templating outdated and ineffectual. We do not rely on AI to authenticate an ID. We use AI to make our client's customer's journey easier. We use intelligence to see what our client's customers are doing. If they do it wrong, we correct it. Our clients tell us we help them onboard good customers faster. At the same time, a byproduct of speedy onboarding is we stop fraud.

One simple process, two great solutions. With that overview, I will now turn the call over to Adam to walk you through the financials in more detail.

Thank you, Bryan. 2025 was a transformational year for Intellicheck, both financially and operationally. The initiatives we have been discussing with you over the past several quarters are now delivering meaningful results. As Bryan mentioned, our Q4 revenues were 12% higher versus the prior year, and for the full year, we grew revenue 13% to a record $22.7 million. We also achieved a milestone that I am particularly proud of. Our first full year of GAAP profitability from operations, with net income of $1.3 million compared to a GAAP net loss of $918,000 in 2024. Our Adjusted EBITDA for the full year was $2.6 million, nearly five times the $520,000 we reported in 2024.

This reflects the operating leverage we have been building in this business and the discipline we have maintained around expenses. We are also pleased to see the continued growth of SaaS revenue, which represented 99% of total revenue in 2025. New business pricing continues to hold firm, and we believe the demand environment remains strong, particularly in financial services and retail, where identity fraud continues to escalate. Our recently published North America Identity Verification Threat Report, based on nearly 100 million verification transactions in 2025, underscores the critical nature of the problem we solve and the scale of our platform. Starting with quarterly results, revenue for the Q4 of 2025 increased 12% to a record $6,635,000 compared to $5,936,000 in the same period of 2024.

Our SaaS revenue for the Q4 of 2025 grew 12% to $6.62 million from $5.913 million during the same period of 2024 and represented over 99% of our Q4 revenue. Gross profit as a percentage of revenues was 91.4% for the Q4 of 2025 compared to 91.1% for the same period of 2024. On an adjusted basis, excluding non-cash amortization of capitalized software costs, our adjusted gross profit margin was 93.5% in Q4 of 2025 compared to 93% in the prior year period. The improvement in adjusted gross margin reflects the efficiency we are achieving in our cloud infrastructure.

Azure spend has declined more than 55% from its peak levels in mid-2024, and AWS is now our primary hosting platform, which positions us well for maintaining strong margins going forward. Operating expenses, which consist of selling, general and administrative research and development expenses, decreased $357,000 or 7% to $4.6 million for the Q4 of 2025 compared to $4.9 million for the same period of 2024. SG&A expenses decreased $604,000 or 15% year-over-year, reflecting the benefits of our continued cost discipline and the efficiency initiatives we implemented over the course of 2024 and 2025. On an accounting basis, R&D expenses were higher in Q4 2025 at $1.3 million compared to $1 million in Q4 of 2024.

However, I would like to provide some context on this. Cash R&D spend remains well controlled. The GAAP increase is driven by two factors. First, the amortization of previously capitalized software development costs that are now in production. Second, the fact that we capitalized essentially zero software costs in the back half of 2025. For the full year, we capitalized only $213,000 in 2025 compared to over $2 million in 2024, a 90% reduction as our major platform projects moved into production. Going forward, we expect R&D spend to grow at a rate below our revenue growth rate. The Q4 of 2025 was our strongest quarter of the year, capping a second half in which both Q3 and Q4 were profitable at the GAAP level.

We reported operating income of $1.5 million compared to $480,000 in Q4 of 2024, and net income of $1.55 million or $0.08 per fully diluted share, compared to net income of $488,000 or $0.03 per fully diluted share in the same period of 2024. Adjusted EBITDA for the Q4 was $1,877,000 compared to $860,000 in Q4 of 2024, more than doubling year-over-year. The weighted average diluted common shares were 20.2 million for the Q4 of 2025 compared to 19.3 million for the same period of 2024. Now turning to our full year 2025 results.

Total revenue for the full year of 2025 increased $2.7 million or 13% to a record $22.67 million compared to $19.997 million for 2024. SaaS revenue for the full year of 2025 grew $2.6 million or 13% to $22.4 million from $19.8 million for 2024. Gross profit as a percentage of revenues was approximately 90% for the full year of 2025 compared to 91% for the full year of 2024. This modest compression is primarily attributable to higher non-cash amortization of software costs flowing through the cost of revenue, which increased to approximately $499,000 in 2025 from $181,000 in 2024 as our platform investments moved into production.

Excluding this amortization, our adjusted gross profit margin was approximately 93% for the full year compared to about 92% from the prior year. Importantly, our underlying cloud computing costs grew at a rate below revenue growth, and we expect further efficiencies as the Azure to AWS migration is now substantially complete. Total operating expenses were essentially flat year-over-year at $19.4 million for both 2025 and $19.3 million for 2024. This was a significant accomplishment given our 13% revenue growth. SG&A expenses decreased about $1.4 million, or 9% to $14.1 million for the full year of 2025, compared to $15.5 million in 2024.

This reduction was primarily driven by lower sales and marketing and personnel-related costs, including a reduction of $820,000 in marketing expense in 2025 compared to 2024. Our outsourcing and marketing drove a reduction of almost 40% in marketing spend year-over-year, which, as Bryan has mentioned in the past, has still resulted in substantially better results. As we discussed previously, we expect our total non-cash expenses to comprise approximately 5%-10% of our expenses, with stock-based compensation comprising the majority of that figure. R&D expenses on a GAAP basis increased $1.5 million to $5.3 million, reflecting the near elimination of software capitalization and the amortization of prior year capitalized costs.

To put the capitalization trend in perspective, we capitalized over $2 million of software costs in 2024 and just $213 thousand in 2025. We expect de minimis levels going forward. The GAAP R&D line now more closely reflects our cash engineering spend. The company reported net income of $1.273 million for the full year of 2025, compared to a net loss of $918 thousand for 2024, a swing of over $2.2 million. Net income per fully diluted share for the full year of 2025 was a gain of $0.06, compared to a net loss per fully diluted share of $0.05 in 2024. The weighted average diluted common shares were 20.2 million for 2025 compared to 19.3 million for 2024.

Adjusted EBITDA for the full year of 2025 improved to $2.566 million, nearly 5 times the $520,000 we reported for 2024. Turning to income taxes. We recognized $58,000 in tax expense for 2025, entirely state income and franchise taxes. No federal cash taxes are owed because our NOL carryforwards fully sheltered 2025 taxable income, resulting in an effective rate of approximately 4%. We carry a full valuation allowance of approximately $6.7 million against our deferred tax assets. GAAP requires this allowance as long as our three-year cumulative taxable income position remains negative. Despite our $1.3 million pre-tax gain in 2025, the prior years losses keep that cumulative test negative.

If profitability continues and the three-year window improves, we could release some or all of the allowance, producing a non-cash benefit of up to $6.7 million. We are not providing timing guidance, but investors should understand this as a meaningful potential future benefit. As to the company's liquidity and capital resources, at December 31, 2025, the company had cash and cash equivalents that totaled $9.65 million, more than doubling from $4.7 million at December 31, 2024. This improvement reflects strong cash generation from operations during the year, with operating cash flow of approximately $4.5 million in 2025. At year-end, there was working capital of approximately $10.1 million, total assets of approximately $24.5 million, and stockholders' equity of approximately $20.7 million.

I would also note that the significant decline in software capitalization from over $2 million in 2024 to just $213,000 in 2025 means that our GAAP operating results and our cash generation are now much more closely aligned. This is a cleaner financial profile that we expect to maintain going forward. In 2025, we executed on a number of key initiatives that we believe set us well for continued strong performance in 2026 and beyond. We believe that our more efficient marketing approaches are already yielding dividends for the sales pipeline. We anticipate that our improved go-to-market strategy, combined with the growing threat landscape that our threat report highlights, including the 158% year-over-year growth in password reset verification use cases, will continue to drive demand for our platform.

For 2026, we expect to see continued gross margins of approximately 90%-91%, with potential for future improvements as we realize the full benefit of our completed AWS migration. We also expect to see continued leverage in our operating expenses because of the expense discipline we have maintained, and we do not expect that expenses will grow as quickly in 2026 as our revenue. Our FY 2026 operating plan targets continued revenue growth and further improvement in profitability. We remain focused on several strategic priorities, continued investment in customer success and the customer experience, disciplined hiring in engineering and sales, and deepening our presence in key verticals, including financial services and banking, where the market data show that fraud rates remain elevated. I'll now turn the call over to the operator who will take your questions.

Thank you. With that, we will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Mike Grondahl with Northland Securities. Please proceed with your question.

Hey, guys. Congratulations on another strong quarter. On the Q3 call, you gave us, like, bank lending channel was 50% of revenue, and it grew 80% year-over-year in the retail channel and a couple others. Do you have that data for 4Q?

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

Got it. I think you said retail grew year-over-year for the Q4.

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

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

You know, I think it's looking really good, and I'm gonna say part of that is due to you know, that new desktop solution, you know, the delivery method that we've been talking about. Because there are a lot of, you know, I'd say mid-sized credit unions and banking institutions that wanna use us, but you know, they have been held bound by their core banking platforms. Now they don't have to worry about that. There is a ton of interest in that. Then also, you know, this partnership with Alloy is already producing, you know, a lot of good names that are saying, "Hey, how do we get this going?

How do we get it on board?" I'm also gonna say that the marketing is truly paying off in ways that we haven't seen, you know, in the past. I love the fact we're spending less on marketing, but getting a heck of a lot more out of it. Like year-over-year, even our followers on LinkedIn is up like 3x. You know, so those are the things that help, you know, drive pipeline, make cold calls warm, you know, and everybody loves a really good inbound lead, and they're getting that for us.

Great. One more question.

Mm-hmm.

You have a relationship or, you know, a commercial relationship with, I think, Ping Identity?

Mm-hmm.

They seem to be connected to a couple, you know, global social media companies. What's the opportunity there? Are they facilitating you guys?

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

Got it. Okay. Hey, thanks, Bryan.

Thank you.

Thank you. Our next question comes from the line of Jeff Van Rhee with Craig-Hallum Capital Group. Proceed with your question.

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

Mm-hmm

Maybe a plateau, a flattening, you know, actually return to some growth? What are your thoughts there?

Like, yeah, 2025 was a down year in terms of, you know, basically, a lot of retail sales, credit card issuance, people maxing out their cards, you know, those types of things. You know, what I always like to point out is even though it was down, right? Like I said, you know, even Q4 of this year, right, was down 13% from Q4 of 2024. Even with that, because we have expanded into a lot of other markets, you know, we still grew. Now, the whole retail world, you know, consumer confidence, consumer sentiment, you know, those types of things are probably gonna drive it.

I like the fact that our customers are bringing on more retailers, and they use us to help bring them on board because they can go and say, "I'm gonna give you better rates on your credit card program if you put this process in place," because they know that the fraud is gonna go away. I look at it as we are building, you know, a pipe for the economy, if you will. You know, so that when, you know, interest rates reduce, you know, 'cause you know, you look at some of the interest rate on credit cards out there running at, like, 39%, that's hard for people. When they come down, I look at it as, you know, what has been, you know, again, a headwind will become a major tailwind.

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

Yeah. I'd say a combination of, in a way, all the above. You know, retail certainly came in stronger, I think, than we were anticipating. You know, again, you know, through our channel partners in automotive, that space is growing a lot. You know, increased, you know, just straight up banking use cases with, you know, new and existing clients. It's sort of like all of the above. You know, I would expect to see. You know, again, there's always the seasonality in retail, and since we still have some folks who are not on the straight line model yet, you know, Q4 retail and Q1 retail, there's always a drop. You know, so, you know, that's how I'm looking at the numbers. You know, we've been like, you know, like Adam said, very smart on costs.

You know, and, you know, I'm excited about where we're going. You know, retail still is one of those things that's just like, ugh, when will it come back to life?

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

Look, they are 100% implemented. They tell us how much they love us. They are one of the strangest companies I've ever dealt with, and I'm hearing that from many other companies that work with them. I have taken the revenue out of our internal forecast, and I think I've said this, you know, on calls before, just because they're too unpredictable. I have no idea. We're in, we have a great contract. They renewed it. Sometimes the pipe turns on really big, and then sometimes it goes away, and they almost can't even explain why that is. I just kinda leave them. To me, they're gravy on our revenue numbers, and we'll just, you know, we'll see where it is.

Fully implemented, 100% contract signed, 100% contract renewed, actually signed on for more services. It's just up to them to figure out when and how they wanna use it.

That's helpful, Bryan. Thanks, and congrats on the quarter.

Thank you very much.

Thank you. Our next question comes from the line of Rudy Kessinger with D.A. Davidson. Please proceed with your question.

Hi there. Thank you. This is Clark Wright on for Rudy Kessinger. Could you provide any additional parameters to frame growth expectations for 2026, given the step-up in revenue from the financial client that went live in 3Q?

Look, you know, we don't give guidance, you know, as sort of company policy. You know, the one thing that, you know, I've tried to make clear to people, you know, for that particular client, remember they rolled out from zero to 100 over the course of a year. What we ended up doing with them is straight lining revenue. You figure year one of what they would spend was 50% of what they'll spend in year two, right? There's built-in growth there.

The rest of it, you know, it's a matter of how fast can we get things implemented, and there's all sorts of things going on, you know, with implementations that I'll point out, you know, to the point that we've got banks that know they wanna use us. They know that they're running on really, really old technology, and they wanna buy, you know, new and better scanners to get it working 'cause they don't wanna have to do two implementations. You know, some of these scanner companies are running on six-eigth-month backlogs on being able to deliver product. You know, you know, I'm feeling comfortable about our growth. I like the amount of built-in growth that we have. The rest of it sort of, again, how fast can we implement and, you know, will supply chain shortages impact us?

Got it. That's helpful. I also appreciated the additional color you provided on the trajectory of gross margins and operating expenses going forward. Should we expect?

Mm-hmm

To see EBITDA margins expand from where they're at currently given some of the dynamics that you previously alluded to with the conversion to the cloud? Or should we expect effectively flat or down from 2025 levels?

Well, the way I kinda look at a lot of the savings that, we got from moving, you know, from one cloud to another, a part of that savings is going into buying, you know, the smart machines, right? That our data team is using and that kind of stuff. I will probably be looking to expand our marketing because it really is doing well, and again, like I said, bringing in prospects and, you know. The thing I love about prospects coming in and us talking to them, we don't lose what I'd call a scan-off. When somebody compares us head-to-head, we win. The more of that I can bring in, the better, you know, for the whole company.

You know, my other thing is, you know, as Adam pointed out, you know, we don't want expenses to grow at the same rate as revenue, and I think that we can easily accomplish that.

Got it. In terms of how we should imply that going forward and with headcount, should we expect headcount to remain relatively flat then going forward based off of the reinvestment of cost savings, or should we expect that line item to increase over time?

Look, I think that we're gonna add just to, you know, help get things out the door. You know, we're gonna swap out some expense that was in the dev team where we were using consultants. We'll probably bring, you know, swap that out for full-time employees, so not a huge increase in that. You know, what I always say is, like, if I see a phenomenal salesperson, we're gonna hire them, right? 'Cause that's hard to find, and they're great, and you bring them on board, and they pay for themselves. You know, we might see a slight increase in marketing expense. You know, the only other stuff is as we start to bring on more clients, we would probably need, you know, more customer success people.

Again, they pay for themselves because, you know, when you spend time with a customer, you find new use cases. You know, again, headcount should go up, but not in any way, you know, that is, you know, at the same rate as revenue.

Got it. Thank you.

Thank you. Our next question comes from the line of Scott Buck with H.C. Wainwright. Please proceed with your question.

Hi. Good afternoon, guys. Thanks for the time. Bryan, I think you mentioned in the prepared remarks that you like the way you're positioned in automotive and once there's a rebound there, you guys should be able to ride that wave. I'm curious, are there any metrics you can give us around that? You know, how many dealerships you have exposure to or, you know, some way for us to, I don't know, kind of wrap our heads around the opportunity?

Yeah. I could say, automotive revenue grew 125% year-over-year. Excuse me. A lot of that is through channel partners, and we have, you know, what it is about, I think 19,000 rooftops out there. We're nowhere near fully penetrated into that. I look at that as a lot of growth. We brought on another channel partner that is now incorporated into one of the largest, automotive software providers out there, and as part of, you know, the F&I experience. I expect that that should bring in, you know, a bunch more rooftops. That gives us a couple of different angles that we're going after automotive. One's compliance, you know, it starts at the front end, and the other's F&I, which is sort of at the back end.

You know, I really like the automotive space because there's so many rooftops out there, but knocking on each individual door, you know, I don't wanna do that. That's why we're doing it with partners.

Right. No, that makes a ton of sense. I appreciate that. My second one, just given the expansion of business with some of the financial institutions, is there anything on the customer concentration front that we should just be keeping an eye on?

No, I don't know, Adam, feel free to chime in on that if you've got a thought on customer concentration. You know, as we bring on more financial institutions of all different sizes, you know, I think the concentration will probably lessen.

Okay.

Yeah, I guess the other thing I would say is that as we've expanded into the different use cases that we have in these various customers, it feels like it's stickier. I mean, there's always risk, right? We can't say there's not risk, but it feels like they're getting more and more integrated using our platform. You know, you feel better when you say, oh, now like Bryan was mentioning, the M&A opportunities when banks are merging, and they say, "Oh, now we have a few hundred more branches to roll you out in." You know, it's on the one hand, it's concentration. On the other hand, it's, you know, expanded opportunities, so.

Right. Yep. No, that's helpful. I appreciate it, guys, and congrats on the year.

Thank you.

Thank you. Our next question comes from the line of Kris Tuttle with Blue Caterpillar. Please proceed with your question.

Hey, Bryan and Adam. Just a couple things that weren't covered yet that I wanted to ask you about are really end market related. You know, one you've talked about in the past was the employment verification area, which still has a lot of fraud in it.

Mm-hmm.

Of course, we hear a lot about, you know, there's some initiatives, a lot of initiatives around reducing healthcare fraud.

Mm-hmm

Maybe least in terms of probability, but potentially size, it would be the opposite, you know, the chances we might get a voter ID law in the next couple years.

Yep.

Just kinda your-

Mm-hmm

thoughts on, you know, the first one's probably the most realistic, but you know, just kinda getting a feel for you on those in addition to the ones that you're already penetrating.

Yeah. Unemployment is, you know, I still love that market almost as much as I love automotive. It's funny because the two of them are kinda interrelated. We have two automotive manufacturers that use us to verify all of their employees and anybody who comes on into the factory. One of them realized that one got shut down because they had undocumented people. One of their contractors had undocumented people working on building out the plant. Then they realized, well, wait a minute, you know, if we were up and running, you know, one of them said to me that they'd lose $49,000 a minute if the assembly line isn't running. They are now requiring their suppliers to use us to authenticate all of their employees. I think we're gonna see more things like that happening.

You know, it's been a great market, you know, and they have 200 suppliers. I'll take every one of those. That's a big area. I think it's also gonna happen more and more, you know, the retail stores or whomever who's hiring people, you gotta prove. We already know in the remote hiring world that, you know, we've got bad actors, you know, from countries like North Korea, you know, pretending to be developers working and living in the U.S. and getting access to systems, and I know that that is scaring people as well. Voter ID has me very excited. I have spoken with multiple states about what they think, what they need to do.

I think we have an elegant solution that works for in-person already and another solution that could do authentication for mail-in ballots. Now it's just a matter of we gotta see where the law goes and who do we talk to. I can tell you that has been a big push within, you know, senior management of the company to figure out, you know, how do we play in this game. Because, you know, the easiest thing is most people have a driver's license or a state ID, and, you know, a lot of places now already have a machine that will take a photo of the license or do some scanning on it, only to parse the data, right? But not to authenticate it. You know, I know that South Carolina does it.

I know that New Jersey does it. Embedding us in that process would be quick, easy, and simple, and then authenticate it as well.

Okay.

Did I answer your questions, Kris?

Yeah, absolutely. Those definitely sound like, you know, not in the numbers, of course, but, you know.

Mm-hmm.

I just love those applications for you because it just makes so much sense, right? So much sense. Thanks a lot for that. Looking forward to seeing you guys soon.

Sounds good. I look forward to it, Kris.

Thank you. With that, ladies and gentlemen, this does conclude our question and answer session. I would now like to turn the call back over to Bryan Lewis for any closing remarks.

Hey, I just, again, wanna thank everybody for joining us today. I wanna highlight that, you know, I believe we're at an important juncture with this historic achievement of annual operating profitability and sustained EBITDA positive growth, right? I wanna be clear, folks, we believe we are positioned to build on these successes, right? We look to expanded opportunities with current clients, and I look at the pipeline, and I go, "Yes, I think we're gonna be doing well," right? Particularly, again, I'm gonna say banks, autos, and title insurance. You know, two, I think, are somewhat dependent upon the economy. One, it doesn't matter because it's a great spot to go rob. That's why there's so many bank robbers, and we can help stop that kind of crime. I look forward to updating you all on our progress on our next call.

Everybody, have a great evening, and thank you again.

With that, ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time, and have a wonderful day.