authID Inc. (Nasdaq: AUID), a leading provider of innovative
biometric identity verification and authentication solutions, today
reported financial and operating results for the full year ended
December 31, 2023.
Commenting on these results, Rhon Daguro, authID CEO,
said,
“Our efforts in 2023—the strengthening of our financial
foundation, addition of new identity domain sales and engineering
talent, and application of a proven sales discipline to our
engagements that generated a robust sales pipeline—have positioned
authID for growth in biometric identity verification and
authentication. Our momentum in booking contracts with bARR of $3
million in only six months, and not 12 months as originally
planned, attests to the demand for our fast, accurate and
user-friendly solutions that fight rampant authentication fraud
attributed to compromised passwords and devices. Our patented
identity life-cycle platform unleashes the speed and power of
biometrics to ensure cyber-savvy enterprises “Know Who’s
Behind the Device” for every customer or employee login
and transaction, with seamless user convenience, in a
market-leading 700 milliseconds.
“With generative AI predicted to increase the effectiveness and
frequency of relentless phishing schemes, deepfakes and fraud
attacks, authID’s multi-layered authentication platform defends
against these attacks with best-in-class deepfake detection and
seamless, trusted biometric authentication that together outperform
the competition. Looking ahead, I am confident that authID will
reward the trust of our valued investors with continued market
momentum by growing our sales pipeline and realizing our 2024 bARR
target of $9 million, a triple target over 2023.”
Financial Results for the 12 Months Ended December 31,
2023
The following highlights comprise results from continuing
operations, including certain Non-GAAP measures:
- Total revenue for the twelve months
ended December 31, 2023 was $0.2 million, compared with total
revenue for the twelve months ended December 31, 2022 of $0.5
million. The reduction was primarily attributed to revenue from a
legacy authentication product that was discontinued in April 2022.
Verified license revenue was unchanged at $0.2 million for both
2023 and 2022.
- Operating
expenses for the twelve-month period in 2023 declined by 52% to
$10.9 million, compared with $22.8 million for 2022. The reduced
expenditure reflects the Company’s cost-saving measures taken in
the first half of 2023, resulting in lower headcount costs and
lower third-party vendor costs.
-
Loss from continuing operations, for the twelve-month period in
2023 improved to $19.6 million, of which non-cash and one-time
severance charges were $10.9 million. This compared with a net loss
of $23.7 million, of which $12.3 million were non-cash and one-time
severance charges, for 2022.
-
Net loss per share for continuing operations for the twelve months
ended December 31, 2023 improved to $3.19, compared with $7.72 per
share for the prior year.
- Cash and cash
equivalents as of December 31, 2023 were $10.2 million.
-
Adjusted EBITDA loss (Non-GAAP, as defined below) for Fiscal Year
2023 improved to $8.7 million, compared with $11.4 million, for
2022.
- For the twelve months ended December
31, 2023, the Company secured gross and net amount of Booked Annual
Recurring Revenue (bARR, Non-GAAP, as defined below) of $2.94
million compared to $0.23 million of bARR signed in 2022.
- The Company’s Remaining Performance
Obligation (“RPO”) as of December 31, 2023 was $4.03 million,
representing the contractual commitments of signed customer
contracts, which we anticipate recognizing as revenue over the next
3 years, as they go live. This represents a 4,800% increase
compared to the $0.08 million of RPO (Deferred Revenue) of
contracts signed in 2022.
- The company also
bolstered its financial position in 2023 by completing financing
rounds in May and November 2023, securing a combined
$17.6 million in gross proceeds and a debt-to-equity conversion of
almost $9 million. These measures, combined with cost-cutting
efforts and a July reverse stock split, helped authID regain
compliance with Nasdaq listing rules and provided the capital
needed to secure critical identity-domain experts and deliver on
product innovation. The impact of the stock split on capital
structure has been retroactively applied to all periods presented
herein.
Refer to Table 1 for reconciliation of net loss to Adjusted
EBITDA (a non-GAAP measure).
Operational Highlights for 2023 and
recent months
Continued Daguro, “Our best of breed team for sales and
execution, steeped in identity knowledge, has continually set and
surpassed high sales goals, validated strong market demand and fit
for our biometric identity products. We have delivered significant
customer wins for both workforce and consumer use-cases, across
financial services, healthcare, and the digital economy,” said Rhon
Daguro, CEO of authID. “We remain committed to delivering product
innovation that stays ahead of fraud trends and amplifies our
thought leadership with our customers.”
- Strengthened its
management expertise with the appointment of Rhon Daguro as CEO,
the reconstitution of its Corporate Board of Directors, and the
August appointment of Ed Sellitto as CFO.
- Positioned for
strong growth in biometric identity verification and authentication
by adding new identity domain talent with the appointment of new
Sales leaders in July 2023 and additional expertise in sales,
customer success and engineering in January 2024. Hiring proven
expertise in sales management and deep identity domain knowledge
will be instrumental in strengthening our market position,
accelerating authID’s growth trajectory, and increasing shareholder
value.
- Signed new
customer contracts valued in the aggregate at $3 million in
bARR including:
- ABM Industries, a Fortune 500
company and one of the world's largest providers of facility
services and solutions, is deploying authID’s biometric
services for shared enterprise devices for their more than 100,000
employees. In October, ABM was presented with the CSO50 Award
for innovation in passwordless biometric authentication, reflecting
independent affirmation of the value of authID’s solutions.
- Various financial services companies
including an international digital wallet provider, a
multi-national money remittance and lending services company and a
digital bank using authID’s biometric authentication platform to
stop identity fraud and account takeover with automated digital
customer onboarding and passwordless authentication.
- An international recruitment
platform and a healthcare services provider to gain higher identity
assurance during the onboarding of trusted candidates and
patients.
- Leading digital technology
companies, including an entertainment social commerce platform, a
mobile application provider committed to advancing responsible
firearm ownership, and an online service provider of verified
identities to ensure safe online interactions, partnered with
authID to stop fraud and eliminate account takeover.
- Advanced our market positioning at
the forefront of accuracy and speed with investment in our
life-cycle identity platform that fortified our document-based
identity verification, streamlined the document and selfie capture,
and delivered easy to use self-service onboarding workflows for our
workforce customers.
- Selected for the second straight
year as “Best ID Management Platform” in the annual awards program
conducted by FinTech Breakthrough, an independent market
intelligence organization that recognizes the top companies,
technologies and products in the global Fintech market today.
- Renewed our ISO 27001:2013
Certification for Information Security Management Systems
(ISMS), providing independent validation that authID has met a
rigorous framework of security management standards for ensuring
the confidentiality, integrity, and availability of its biometric
authentication platform.
Today’s Webcast
The Company will host a webcast today at 5:30 p.m. EDT to
discuss the financial results and provide a corporate update. A
question-and-answer session will follow management's
presentation.
To join the webcast, investors must register here: authID
FY2023 Results Webcast Registration. Please note the webcast will
use the Zoom Events platform. Participants are advised to
pre-register with a validated email address OR your existing Zoom
account. Registrants will receive a confirmation email and calendar
notice to add the meeting to your calendar.
A replay of the event and a copy of the presentation will also
be available for 90 days via authID’s Investor Relations news and
events web page
at: https://investors.authid.ai/news-and-events/events-and-presentations
About authID Inc.
authID (Nasdaq: AUID) ensures cyber-savvy
enterprises “Know Who’s Behind the Device” for
every customer or employee login and transaction. Through
its easy-to-integrate, patented, biometric identity platform,
authID quickly and accurately verifies a user’s identity,
eliminating any assumption of ‘who’ is behind a device and
preventing cybercriminals from taking over accounts. authID
combines digital onboarding, FIDO2 login, and biometric
authentication and account recovery, with a fast, accurate,
user-friendly experience – delivering identity verification in
700ms. Establishing a biometric root of trust for each user
that is bound to their accounts and provisioned
devices, authID stops fraud at onboarding, eliminates password
risks and costs, and provides the faster, frictionless, and
more accurate user identity experience demanded by
operators of today’s digital ecosystems. For more information,
visit authID.ai.
Forward-looking Statements
This Press Release includes “forward-looking statements.” All
statements other than statements of historical facts included
herein, including, without limitation, those regarding the future
results of operations, growth and sales, booked Annual Recurring
Revenue (bARR), Annual Recurring Revenue (ARR), cash flow, cash
position and financial position, business strategy, plans and
objectives of management for future operations of both authID Inc.
and its business partners, are forward-looking statements. Such
forward-looking statements are based on a number of assumptions
regarding authID’s present and future business strategies, and the
environment in which authID expects to operate in the future, which
assumptions may or may not be fulfilled in practice. Actual results
may vary materially from the results anticipated by these
forward-looking statements as a result of a variety of risk
factors, including the Company’s ability to attract and retain
customers; successful implementation of the services to be provided
under new customer contracts; the Company’s ability to compete
effectively; changes in laws, regulations and practices; changes in
domestic and international economic and political conditions, the
as yet uncertain impact of the wars in Ukraine and the Middle East,
inflationary pressures, increases in interest rates, and others.
See the Company’s Annual Report on Form 10-K for the Fiscal Year
ended December 31, 2023 filed at www.sec.gov and other documents
filed with the SEC for other risk factors which investors should
consider. These forward-looking statements speak only as to the
date of this release and cannot be relied upon as a guide to future
performance. authID expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained in this release to reflect any
changes in its expectations with regard thereto or any change in
events, conditions, or circumstances on which any statement is
based.
Investor Relations Contact
Ed SellittoChief Financial
Officerinvestor-relations@authID.ai
Non-GAAP Financial Information
The Company provides certain non-GAAP financial measures in this
statement. These non-GAAP key business indicators, which include
Adjusted EBITDA, bARR and ARR should not be considered replacements
for and should be read in conjunction with the GAAP financial
measures.
Management believes that Adjusted EBITDA, when viewed with our
results under GAAP and the accompanying reconciliations, provides
useful information about our period-over-period results. Adjusted
EBITDA is presented because management believes it provides
additional information with respect to the performance of our
fundamental business activities and is also frequently used by
securities analysts, investors, and other interested parties in the
evaluation of comparable companies. We also rely on Adjusted EBITDA
as a primary measure to review and assess the operating performance
of our company and our management.
We define Adjusted EBITDA as GAAP net loss
adjusted to exclude: (1) interest expense, (2) interest income, (3)
provision for income taxes, (4) depreciation and amortization, (5)
stock-based compensation expense (stock options) and (6) certain
other items management believes affect the comparability of
operating results. Other items included the following:
- Conversion expense of $7.5 million
in 2023 and $0 in 2022
- Severance cost of $0.9 million in
2023 and $0.2 million in 2022
- Impairment loss of $0 in 2023 and
$1.1 million in 2022
- Loss on debt extinguishment of $0.4
million in 2023 and $0 in 2022
Please see Table 1 below for a reconciliation of Adjusted EBITDA
– continuing operations to net loss – continuing operations, the
most directly comparable financial measure calculated and presented
in accordance with GAAP.
Table 1 |
Reconciliation of Loss from continuing operations to
Adjusted EBITDA continuing operations |
|
|
For the Year EndedDecember
31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
$ |
(19,617,969 |
) |
|
$ |
(23,675,310 |
) |
|
|
|
|
|
|
|
|
|
Addback: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,108,458 |
|
|
|
1,359,954 |
|
Other expense (income) |
|
|
(98,230 |
) |
|
|
37,221 |
|
Conversion expense |
|
|
7,476,000 |
|
|
|
- |
|
Loss on debt
extinguishment |
|
|
380,741 |
|
|
|
- |
|
Severance cost |
|
|
855,279 |
|
|
|
150,000 |
|
Depreciation and
amortization |
|
|
255,858 |
|
|
|
749,900 |
|
Non-cash recruiting fees |
|
|
438,000 |
|
|
|
- |
|
Impairment losses |
|
|
- |
|
|
|
1,101,867 |
|
|
|
|
|
|
|
|
- |
|
Taxes |
|
|
2,864 |
|
|
|
7,670 |
|
Stock compensation |
|
|
487,398 |
|
|
|
8,870,168 |
|
Adjusted EBITDA continuing
operations (Non-GAAP) |
|
$ |
(8,711,601 |
) |
|
$ |
(11,398,530 |
) |
|
|
|
|
|
|
|
|
|
Management believes that bARR and ARR, when viewed with our
results under GAAP, provide useful information about the direction
of future growth trends of the Company’s revenues. We also rely on
bARR as one of a number of primary measures to review and assess
the sales performance of our Company and our management team in
connection with our executive compensation. The Company defines
Booked Annual Recurring Revenue or bARR, as the amount of annual
recurring revenue represented by the estimated amounts of annual
recurring revenue we believe will be earned under such contracted
orders, looking out eighteen months from the date of signing of
each customer contract. The net amount of bARR reflects the
deduction of the bARR of contracts previously included in reported
bARR, which were subject to attrition during the quarter. The gross
and net amount of bARR signed in 2023 was $2.9 million, compared to
$0.23 million of bARR signed in 2022.
The company defines Annual Recurring Revenue or ARR, as the
amount of recurring revenue derived from sales of our Verified
products during the last three months of the relevant period as
determined in accordance with GAAP, multiplied by four. The amount
of ARR as of December 31, 2023 was $0.20 million, compared to $0.18
million as of December 31, 2022.
bARR may be distinguished from ARR, as bARR does not take
specifically into account the time to implement any contract for
Verified, nor for any ramp in adoption, or seasonality of usage of
the Verified products but is based on the assumption that 18 months
after signing these matters will have been generally resolved.
Furthermore, bARR is based on estimates of future revenues under
particular contracts, whereas ARR, whilst also forward looking, is
based on historical revenues recognized in accordance with GAAP
during the relevant period. bARR and ARR have limitations as
analytical tools, and you should not consider them in isolation
from, or as a substitute for, analysis of our results as reported
under GAAP. Some of these limitations are:
- bARR & ARR
should not be considered as predictors of future revenues but only
as indicators of the direction in which revenues may be trending.
Actual revenue results in the future as determined in accordance
with GAAP may be significantly different to the amounts indicated
as bARR or ARR at any time.
- bARR and ARR are to
be considered “forward looking statements” and subject to the same
risks, as other such statements (see note on “Forward Looking
Statements” below).
- bARR & ARR only
include revenues from sale of our Verified and Proof products and
not other revenues.
- bARR & ARR do
not include amounts we consider as non-recurring revenues (for
example one-off implementation fees).
AUTHID INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
|
|
For the Year EndedDecember
31, |
|
|
|
2023 |
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
Verified software license |
|
$ |
186,171 |
|
|
$ |
156,646 |
|
Legacy authentication services |
|
|
4,118 |
|
|
|
370,769 |
|
Total revenues, net |
|
|
190,289 |
|
|
|
527,415 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
7,882,194 |
|
|
|
14,676,938 |
|
Research and development |
|
|
2,800,373 |
|
|
|
6,269,175 |
|
Depreciation and amortization |
|
|
255,858 |
|
|
|
749,900 |
|
Impairment losses |
|
|
- |
|
|
|
1,101,867 |
|
Total operating expenses |
|
|
10,938,425 |
|
|
|
22,797,880 |
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(10,748,136 |
) |
|
|
(22,270,465 |
) |
|
|
|
|
|
|
|
|
|
Other (Expense) Income |
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(1,108,458 |
) |
|
|
(1,359,954 |
) |
Other income (expense), net |
|
|
98,230 |
|
|
|
(37,221 |
) |
Conversion expense |
|
|
(7,476,000 |
) |
|
|
- |
|
Loss on extinguishment of debt |
|
|
(380,741 |
) |
|
|
- |
|
Other (expense) income, net |
|
|
(8,866,969 |
) |
|
|
(1,397,175 |
) |
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes |
|
|
(19,615,105 |
) |
|
|
(23,667,640 |
) |
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(2,864 |
) |
|
|
(7,670 |
) |
|
|
|
|
|
|
|
|
|
Loss from continuing operations |
|
|
(19,617,969 |
) |
|
|
(23,675,310 |
) |
|
|
|
|
|
|
|
|
|
Gain (loss) from discontinued operations |
|
|
1,524 |
|
|
|
(366,663 |
) |
Gain (loss) on sale of discontinued operations |
|
|
216,069 |
|
|
|
(188,247 |
) |
Total gain (loss) from discontinued operations |
|
|
217,593 |
|
|
|
(554,910 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(19,400,376 |
) |
|
$ |
(24,230,220 |
) |
|
|
|
|
|
|
|
|
|
Net Loss Per Share - Basic and Diluted |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(3.19 |
) |
|
$ |
(7.72 |
) |
Discontinued operations |
|
$ |
0.04 |
|
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic and Diluted |
|
|
6,153,881 |
|
|
|
3,065,365 |
|
|
|
|
|
|
|
|
|
|
AUTHID INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
December 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
ASSETS |
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
Cash |
|
$ |
10,177,099 |
|
|
$ |
3,237,106 |
|
Accounts receivable, net |
|
|
91,277 |
|
|
|
261,809 |
|
Deferred contract costs |
|
|
157,300 |
|
|
|
- |
|
Other current assets |
|
|
476,004 |
|
|
|
729,342 |
|
Current assets held for
sale |
|
|
- |
|
|
|
118,459 |
|
Total current assets |
|
|
10,901,680 |
|
|
|
4,346,716 |
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
- |
|
|
|
250,383 |
|
Intangible Assets, net |
|
|
327,001 |
|
|
|
566,259 |
|
Goodwill |
|
|
4,183,232 |
|
|
|
4,183,232 |
|
Non-current assets held for
sale |
|
|
- |
|
|
|
27,595 |
|
Total assets |
|
$ |
15,411,913 |
|
|
$ |
9,374,185 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
1,408,965 |
|
|
$ |
1,154,072 |
|
Deferred revenue |
|
|
131,628 |
|
|
|
81,318 |
|
Deferred contract
liability |
|
|
124,150 |
|
|
|
- |
|
Current liabilities held for
sale |
|
|
- |
|
|
|
13,759 |
|
Total current liabilities |
|
|
1,664,743 |
|
|
|
1,249,149 |
|
Non-current Liabilities: |
|
|
|
|
|
|
|
|
Convertible debt, net |
|
|
224,424 |
|
|
|
7,841,500 |
|
Deferred Severance |
|
|
325,000 |
|
|
|
- |
|
Total liabilities |
|
|
2,214,167 |
|
|
|
9,090,649 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
(Note 12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
Common stock, $0.0001 par
value, 250,000,000 shares authorized; 9,450,220 and 3,179,789
shares issued and outstanding as of December 31, 2023 and 2022,
respectively |
|
|
945 |
|
|
|
318 |
|
Additional paid in
capital |
|
|
172,714,712 |
|
|
|
140,257,448 |
|
Accumulated deficit |
|
|
(159,530,535 |
) |
|
|
(140,130,159 |
) |
Accumulated comprehensive
income |
|
|
12,624 |
|
|
|
155,929 |
|
Total stockholders’
equity |
|
|
13,197,746 |
|
|
|
283,536 |
|
Total liabilities and
stockholders’ equity |
|
$ |
15,411,913 |
|
|
$ |
9,374,185 |
|
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