VerifyMe, Inc. Q4 FY2023 earnings call

• Finished 2023 with $25.3 million in revenue and $0.4 million in adjusted EBITDA, with healthy profits in Q4.
• Reaffirmed expectation for double-digit revenue growth in 2024, anticipating H2 growth to exceed H1.
• Positive cash flow from operations in 2023; Q4 ending total cash was $3.1 million, net cash of $0.6 million.
• Capital strategy includes a share buyback program, with share price primarily trading above the established short-term buyback price.
• Precision Logistics improved gross margin by managing pricing and driving efficiency. Authentication segment integrated Trust Codes technology stack and is now integrated with Amazon's Transparency Program.

Precision Logistics Segment

• Finished 2023 with $24.7 million in revenue vs pro forma fiscal 2022 revenue of $24 million.
• Q1 2023 gross margin was 29%, average gross margin for Q2-Q4 was 36%.
• Q4 2023 revenue in this segment was $8.6 million.

Authentication Segment

• Generated approximately $150,000 in revenue in Q4 2023.
• Impacted by a large order in Q4 2022 not recurring in 2023, but working with the customer for additional orders in 2024.
• Added 3 sales associates to accelerate growth by increasing awareness of the technology stack.

• Reaffirmed double-digit revenue growth in 2024.
• Anticipate majority of convertible notes will be converted rather than repaid with cash at maturity.
• Expect H2 growth rate to exceed H1 growth rate.

Q: Mike Petusky asked about H1 growth and gross margin expansion.

A: Adam Stedham said they expect organic growth in both halves, and gross margin improvement was from pricing and efficiency, with G&A expected to scale better as revenue grows.

Q: Jack Vander Aarde asked about Precision Logistics mix and sales associates in Authentication.

A: Adam Stedham said go-to-market strategies for the two segments are different, and 3 sales associates were hired in Authentication to take advantage of improving market conditions in APAC.

Q: Unidentified Analyst asked about Amazon partnership and gross margin.

A: Adam Stedham said VerifyMe's platform is integrated with Amazon's Transparency Program, and authentication business with higher gross margins could increase overall gross margin as it grows.

Q: Jeff Porter asked about strategic partners and technology features.

A: Adam Stedham said they work with industry-leading companies to integrate their tech stack, and current technology stack is ahead of the market with GS1 integration.

Q: Richard Greulich asked about FedEx integration and 5-year outlook.

A: Adam Stedham said FedEx integration hasn't started yet, and 5-year outlook remains $50-60 million in revenue with EBITDA margin depending on product mix.

Q: Unidentified Analyst asked about pipeline and EPS.

A: Adam Stedham said there's pipeline in authentication, and EPS will be tied to demonstrating consistent organic growth over time to get credit for ARR in share price modeling.