Intellicheck, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Intellicheck develops identity-verification products used in areas including retail and banking fraud prevention. Financial amounts below are in thousands of dollars unless otherwise noted.
Financial results
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $4,716 | $4,008 | $8,970 | $7,403 |
| Gross profit / margin | $4,364 / 93% | $3,644 / 91% | $8,286 / 92% | $6,723 / 91% |
| Operating expenses | $5,137 | $4,742 | $10,368 | $9,289 |
| Operating loss | $(773) | $(1,098) | $(2,082) | $(2,566) |
| Net loss | $(777) | $(1,098) | $(2,093) | $(2,566) |
| Basic and diluted loss per share | $(0.04) | $(0.06) | $(0.11) | $(0.14) |
| Adjusted EBITDA (non-GAAP) | $36 | $(583) | $(521) | $(1,389) |
Liquidity, cash flow and debt
- At June 30, 2023, cash and cash equivalents were $4,185 and short-term U.S. Treasury investments were $4,882; working capital was $8,312. Total assets were $21,632 and stockholders’ equity was $17,337.
- For the first six months, operating cash use was $856, versus $1,538 in 2022. Investing cash use was $31, versus $156; financing cash use was $124. Cash declined by $1,011, ending at $4,185.
- No borrowings were outstanding on the revolving credit line; reported availability was $2,000. The company also had $23 remaining on an insurance-premium financing arrangement. The filing reports no material funded debt balance.
Changes and management commentary
- Revenue rose 18% in Q2 and 21% for the six-month period. SaaS revenue, the principal revenue source, increased 19% in Q2 and 22% year to date. Management attributed growth primarily to SaaS.
- Gross margin improved to 93% in Q2 and 92% year to date. Management cited a larger SaaS mix and improved cloud cost structure.
- Operating expenses increased 8% in Q2 and 12% year to date, mainly from higher general and administrative costs, including non-restructuring severance and accounting and professional fees. The company recorded $417 of non-restructuring severance expense in the first half.
- Management expects cash resources, anticipated operating cash and the credit line to meet working-capital and capital-expenditure needs for at least 12 months from filing. It gave no specific revenue or earnings guidance and noted that additional financing may be sought for contingencies or growth, with no assurance of availability or favorable terms.
Risks, contingencies and other notable items
- Three customers generated approximately 48% of first-half revenue; three customers plus one other customer represented 63% of accounts receivable at June 30, 2023.
- The company disclosed that some bank deposits exceed FDIC insurance limits. It reported continued access to its funds but warned that a bank failure or financial-sector disruption could impair liquidity.
- The company reported a net loss and operating cash use for the first half, and an accumulated deficit of $132,841. It maintains a full valuation allowance against net deferred tax assets.
- No material legal or regulatory proceedings, off-balance-sheet financing arrangements, or goodwill or intangible-asset impairment charges were reported. Management said internal control over financial reporting was effective, with no material weaknesses identified.
Important facts for investors to verify
- Whether SaaS revenue growth continues and customer concentration changes.
- Whether expense growth, including severance and professional fees, moderates and the company achieves sustained positive operating cash flow.
- Cash and Treasury investment balances, deposit insurance exposure, and continued availability of the $2,000 credit line.
- The assumptions behind management’s 12-month liquidity assessment and any future financing needs.
- The treatment and comparability of Adjusted EBITDA, a non-GAAP measure that excludes stock compensation, severance and other items.