VerifyMe (VRME) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $5.4 million, down 3% year-over-year, with Precision Logistics accounting for 98% of revenue; Authentication segment underperformed and is being exited unless sold.

• Net loss for Q3 2024 was $2.4 million, including $2.3 million in goodwill and intangible asset impairments, compared to $0.9 million in Q3 2023.

• Adjusted EBITDA remained positive at $0.2 million, matching Q3 2023, marking the fifth consecutive quarter of positive adjusted EBITDA.

• Strategic shift underway: discontinuation of the codes portion of the Authentication segment, ending the Amazon Transparency relationship, and focusing on Precision Logistics and other growth opportunities.

• Year-to-date 2024 adjusted EBITDA improved by $1.1 million compared to 2023, reflecting operational efficiencies.

Financial highlights

• Q3 2024 revenue: $5.4 million (down $0.17 million year-over-year); nine-month revenue: $16.5 million (down $0.05 million year-over-year).

• Q3 2024 gross profit: $1.9 million (35% margin), down from $2.0 million (37%) in Q3 2023; nine-month gross profit: $6.2 million (38% margin, up from 31% in 2023).

• Net loss for Q3 2024 was $2.4 million ($0.23 per diluted share); nine-month net loss was $3.3 million ($0.32 per share).

• Adjusted EBITDA for Q3 2024 was $0.2 million, flat year-over-year; year-to-date improved to $0.4 million from a loss of $0.7 million in 2023.

• Cash and equivalents at September 30, 2024, were $2.6 million; working capital stood at $2.1 million.

Outlook and guidance

• Full-year 2024 revenue expected to be slightly below 2023, but gross profit, gross margin, and adjusted EBITDA are anticipated to exceed 2023 levels.

• Management projects positive adjusted EBITDA for full year 2024 and aims for further growth in 2025.

• Net cash flow expected to be neutral for 2024; company is reviewing capital options.

• No year-over-year gross margin uplift expected in 2025 due to revenue mix shift toward lower-margin proactive services.

• Authentication segment to be closed by end of November 2024 unless a buyer is found.