• Revenue: $5.4 million in Q2 2024, compared to $5.3 million in Q2 2023.
• Gross Profit: Increased by $0.5 million to $2.1 million in Q2 2024.
• Gross Margin: Increased to 39% in Q2 2024 from 30% in Q2 2023.
• Net Loss: Improved to $0.3 million loss in Q2 2024, from $0.9 million loss in Q2 2023.
• Adjusted EBITDA: Increased by $0.6 million to positive $0.2 million in Q2 2024.
• Cash: $2.9 million as of June 30, 2024, down from $3.1 million on December 31, 2023.
• Debt: $1.1 million remaining on loan and $1.1 million on convertible note as of June 30, 2024.

• Warning! GuruFocus has detected 5 Warning Signs with VRME.

Release Date: August 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• VerifyMe Inc (NASDAQ:VRME) reported a fourth consecutive quarter of positive adjusted EBITDA.
• Gross profit increased by 32% to $2.1 million in Q2 2024 compared to Q2 2023.
• The company has a healthy balance sheet with sufficient cash flow to execute organic growth plans.
• The relationship with Amazon is expected to be transformative for the authentication segment.
• The company has increased its customer base within the proactive service line by 7% in H1 2024 compared to 2023.

Negative Points

• Q2 2024 revenue remained flat compared to 2023, indicating stagnant growth.
• The company anticipates a slight negative adjusted EBITDA for Q3 2024 due to changes in a large FedEx contract.
• Parcel shipping volumes with existing customers are down 9% year-over-year in H1 2024.
• The adoption of authentication and traceability services is slower than desired, impacting revenue growth.
• The formalization of the relationship with Amazon is taking longer than anticipated, delaying potential revenue.

Q & A Highlights

Q: Adam, can you share your experience and expectations following the GS1 conference? A: Adam Stedham, CEO: The adoption of regulations like the Food Safety Modernization Act and the shift from barcodes to intelligent codes is slower than expected. Companies are cautious due to the election year, with full adoption required by 2026. This delay impacts revenue growth, but there's optimism for 2025 as companies plan for these requirements.

Q: How do you feel about the 5-year target plan outlined at your Investor Day? A: Adam Stedham, CEO: We feel good about the targets, assuming no significant regulatory changes. The FedEx subcontracting model's impact was anticipated, and growth is expected from our proactive business. While 2024 revenue is flat, we remain confident in our long-term strategy.

Q: Can you clarify the impact of FedEx Premium business on the quarter? A: Adam Stedham, CEO: The FedEx Premium business did impact the quarter, transitioning midway through. However, we haven't publicly quantified the impact.

Q: Regarding the Amazon relationship, what gives VerifyMe a competitive advantage? A: Adam Stedham, CEO: We believe we are currently the only company working on this relationship, based on our conversations. We've demonstrated a proof of concept with a customer, which gives us confidence. The relationship is transformative for our authentication business.

Q: Can you provide more details on the margins for the Amazon business? A: Adam Stedham, CEO: Margins will align with our current authentication margins. The product mix between label and non-label will affect margins, but we expect them to remain consistent with existing authentication business margins.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.