This morning authID ($AUID) announced a $10MM contract with an Indian AI company. Let’s go through the details:

 

• The Indian company has an AI solution for writing new applications and code. They will use $AUID’s technology to provide biometric authentication to their customers in the banking, financial services, emergency services, and transportation industries. There is clearly an end market for authID’s biometric security solution in multiple industries.

 

• I like seeing new technology and banking customers. When technology customers choose authID, it makes me think that companies focused on tech solutions (and with employees who understand technology) see the value in what $AUID is doing. Banking has a higher need for customer account security than most industries. Seeing them choose authID is also encouraging given the amount of money at risk and the regulatory requirements they face.

 

• Previously, CEO, Rhon Daguro, gave 2024 bookings guidance of $9MM. You might be tempted to see this contract specifying a $10MM commitment as an indication the company beat guidance by 11%. That would be inaccurate.

 

• That $9MM in bookings guidance is made up of contractual commitments (RPO) and usage above commitment (UAC). The $10MM figure announced today is solely the contractual commitment. However, UAC typically makes up about 50% of the revenue of a contract. Today’s $10MM RPO announcement really means $20MM of bookings. The correct comparison is $20MM in RPO and UAC vs $9MM of bookings guidance. The company just crushed the guidance number by more than 100%.

 

• Given that the primary customer will be using authID’s solutions across its customer base, the actual amount of UAC could be much higher than I’ve estimated here. For now, we’re using $20MM as the bookings number, but it wouldn’t surprise us if this contract ends up being worth more than 3x the initial $9MM guidance for this year.

 

• Even with no UAC, today’s press release specifies that authID will be receiving a minimum of $3.3MM per year for each of the next three years. $AUID did about $200k of revenue in 2023 and about $440k of revenue in 1H ’24. My model assumes $1.5MM in revenue in 2025. This one contract alone means the company will beat my revenue estimate by more than 100%. I’m going to need to revise my estimates upwards by a material amount.

 

• When I wrote my initial report on $AUID, I noted that the company needed to do three things to succeed. I thought they should improve the clarity on reporting of bookings (this is done), get a secondary offering done to eliminate the risk of running out of money (also completed), and start signing new customers to meet/beat the $9MM of bookings guidance. That last one is now done, at an amount more than double previous guidance.

 

• Congratulations to the team at authID who just delivered everything they said they would for this year. We’ll keep our eyes open for additional customer contract announcements later this year.

 

IR@DeepKnowledgeInvesting.com if you have any questions.

 

 

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