authID ($AUID) announced earnings after the close today. The press release read better than prior versions and the call was much better than recent ones. Let’s go through the details.

 

Revenue of just under $300k was almost double 1Q last year and reversed a two-quarter trend of declines. Operating expenses were down a bit from 4Q. I expect them to increase in 2Q due to some high-level hiring from competitors. Booked Annual Recurring Revenue (bARR) was negligible, but CEO, Rhon Daguro, reiterated prior guidance of $18MM for the year. That figure was repeated twice on the call. Previously, management was reticent about giving specific guidance. The fact that they were so clear on this point was a welcome surprise and indicates confidence regarding near-term customer signings.

 

Some of the highlights were impressive:

 

• Have a paid live production trial with a Global Fortune 500 prospect to deliver $AUID’s biometric security in a controlled rollout. “Upon completion, authID expects to secure a longer-term agreement”.

 

• In final stages with a Global Fortune 500 biometric hardware provider to embed authID into a solution for employee credentials.

 

• Selected as the vendor by one of the largest identity fraud platforms and are in the final stages of contract negotiations.

 

• Began integration with a blockchain-based data privacy and security platform to validate identity of data owners through privacy preserving biometrics bringing $AUID technology into smart cities in S. America and India.

 

• Identified new opportunities in the Indian banking sector with the new (previously announced) Indian client to protect high value transactions and account access with PrivacyKey technology.

 

• Delivered proof of concept and entered into contract negotiations with a Fortune 500 prospect to deliver identity verification.

 

These are all fantastic markers of progress. Last quarter, I wrote “If the company delivers on this, in the next quarter or two, the stock is insanely cheap. If we’re still having this conversation a year from now, it would be an indication of a broken business model.” I reiterate that point now. These positive indicators need to result in signed contracts this year.

 

RPO was $13.85MM. That compares to $4.03MM a year ago and $14.26MM last quarter. I believe this small decrease is due to getting paid on existing contracts while not signing new ones in 1Q. Again, they’ll have to deliver new contracts and bookings in 2Q and/or 3Q to change this.

 

The $13.85MM will be recognized over the next 3 years or $4.6MM/year. Last quarter, I wrote that I expected 2025 revenue of $4MM – $5MM without any new contracts so this is consistent with prior analysis.

 

On the conference call, Rhon was more upbeat than on previous calls and said he expects to sign multiple Fortune 500 clients this year. The improved press release and higher energy/higher quality call are an indication that the company is addressing communication problems I’ve mentioned previously.

 

Regarding the reseller partnerships, commentary indicated that it takes some time to onboard and integrate technology. After, they have to make introductions to customers. Still think these are good deals and that they’ll bring authID new business. (Right now, it seems to be prospective customers.)

 

The big deal sizes are in the $2MM – $3MM range meaning they’ll have to sign 4-5 of those to make the $18MM bookings guidance number. However, there are two extremely large potential customers. Signing either of them alone would result in making the $18MM bARR number.

 

IR@DeepKnowledgeInvesting.com if you have any questions.

 

 

Information contained in this report, and in each of its reports, is believed by Deep Knowledge Investing (“DKI”) to be accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied.  DKI makes no representation as to the completeness, timeliness, accuracy or soundness of the information and opinions contained therein or regarding any results that may be obtained from their use. The information and opinions contained in this report and in each of our reports and all other DKI Services shall not obligate DKI to provide updated or similar information in the future, except to the extent it is required by law to do so. 

 

The information we provide in this and in each of our reports, is publicly available. This report and each of our reports are neither an offer nor a solicitation to buy or sell securities. All expressions of opinion in this and in each of our reports are precisely that. Our opinions are subject to change, which DKI may not convey. DKI, affiliates of DKI or its principal or others associated with DKI may have, taken or sold, or may in the future take or sell positions in securities of companies about which we write, without disclosing any such transactions.

 

None of the information we provide or the opinions we express, including those in this report, or in any of our reports, are advice of any kind, including, without limitation, advice that investment in a company’s securities is prudent or suitable for any investor. In making any investment decision, each investor should consult with and rely on his or its own investigation, due diligence and the recommendations of investment professionals whom the investor has engaged for that purpose. 

 

In no event shall DKI be liable, based on this or any of its reports, or on any information or opinions DKI expresses or provides for any losses or damages of any kind or nature including, without limitation, costs, liabilities, trading losses, expenses (including, without limitation, attorneys’ fees), direct, indirect, punitive, incidental, special or consequential damages.