authID - Earnings Call - Q2 2025

Executive Summary

• Record quarter: Revenue rose to $1.44M, the highest in company history, driven by multiple go‑lives from 2024 signings; net loss was $(4.38)M and adjusted EBITDA loss improved sequentially to $(3.36)M.
• Strategic momentum: Launched Identity Exchange (IDX) with NEC to expand TAM into supply chain identity; signed partnership with Prove, with initial joint customer expected to contribute from Q3; integrated with Ping Identity’s DaVinci to ease enterprise adoption of biometrics.
• KPIs inflecting: ARR reached $5.8M vs $1.2M in Q1 and $1.1M in Q2’24; RPO remained robust at $13.8M (~3‑year terms typical), supporting forward visibility despite a credit loss provision impacting Q2 opex.
• 2025 bookings target reiterated: Management remains on track for $18M bARR in 2025; Q2 gross bARR was $2.2M (cARR $0.9M, UAC $1.3M), with acceleration expected as large enterprise/channel deals progress.
• Near-term stock catalysts: Evidence of Prove revenue contribution in Q3, additional Fortune 500 expansions/go-lives, and early IDX pilots converting to bookings could reset expectations and estimate paths despite limited current sell-side coverage.

What Went Well and What Went Wrong

What Went Well

• “Highest quarterly revenue in the history of our business,” supported by successful implementations and market expansion efforts (CEO).
• Major strategic launches/partnerships: IDX with NEC (global identity exchange), Prove agreement with first joint customer imminent, Ping DaVinci integration to accelerate enterprise adoption.
• KPI traction: ARR climbed to $5.8M vs $1.2M in Q1; gross bARR of $2.2M in Q2 (cARR $0.9M; UAC $1.3M) and RPO of $13.8M (~3‑year contracts) provide revenue runway.

What Went Wrong

• Operating expenses rose to $5.9M (vs $4.7M in Q1 and $3.6M in Q2’24), driven by headcount investments and an ~$0.8M provision for estimated credit losses; adjusted EBITDA loss widened YoY.
• Net loss increased YoY to $(4.38)M (vs $(3.26)M in Q2’24) despite record revenue, reflecting higher opex and credit provisioning.
• Limited sell-side coverage and absence of consensus estimates constrain external validation and may increase volatility around execution milestones [functions.GetEstimates].

Transcript

Speaker 6

Good afternoon, everyone, and thank you for participating in today's conference call to discuss authID's second quarter 2025 financial results. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I would now like to hand the conference over to authID's General Counsel, Graham Arad. Graham, please go ahead.

Speaker 1

Thank you, Operator. Greetings and good afternoon. This is Graham Arad, General Counsel of authID. Welcome to the authID second quarter 2025 results conference call. As a reminder, this conference is being recorded. Joining me on today's call are our CEO, Rhon Daguro, our CFO, Ed Sellitto, and our Founder and CTO, Tom Szoke. By now, you should have access to today's press release announcing our second quarter 2025 results. If you have not received this, the release can be found on our website at investors.authid.ai under the news and events section. Throughout this conference call, we will be presenting certain non-GAAP financial information. This information is not calculated in accordance with GAAP and may be calculated differently from other companies' similarly titled non-GAAP information. Quantitative reconciliation of our non-GAAP adjusted EBITDA information to the most directly comparable GAAP financial information appears in today's press release.

Before we begin our formal remarks, let me remind everyone that part of our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's press release, but others are discussed in our Form 10-K and other filings which are made available at www.sec.gov. Finally, if you are listening to this call via the webcast, you will be able to see the results presentation and advance the slides yourself as prompted by our speakers. I'd now like to introduce our CEO, Rhon Daguro.

Speaker 0

Thank you, Graham, and thank you all for joining us today. I am very excited about the progress we have made through the first half of 2025. We recorded, by far, our highest quarterly revenue in authID's history, $1.4 million. This is a testament to our team's plan to sign clients and bring them live. We are starting to reap the benefits of our strategy, and we will cover our financial results momentarily. First, I'd like to provide updates on the business. Since joining authID, I have had the belief that every single identity management strategy will require facial biometrics in order to combat the advancements of AI being used and abused by fraudsters. No CISO on their own can defend against the current threats they face today with the identity systems they installed even just a year ago.

We see this playing out in the news almost every day, with data breaches taking place at incredibly high rates. Every identity stack will have to incorporate facial biometrics as either an additional signal or as the main signal to determine who is behind the device. I believe that authID can solve this problem for companies who have to manage multiple identities from contractors, vendors, and suppliers. In response to this pressing issue, we recently launched our IDX platform in late July. We believe IDX is one of the biggest advances in the identity industry that will eliminate identity fraud, specifically within supply chain workforce. We do this by integrating our highly accurate biometric authentication with a platform developed from the most comprehensive, accountable, and reusable identity management standard for a working end-to-end supply chain identity management solution.

The IDX identity solution will be able to exchange an identity that is accountable, deterministic, accurate, and compliant without having to abandon existing identity management infrastructure already in place in a manner that meets regulatory and compliance requirements so that CISOs will ultimately know every single identity in their system. More to come on IDX, but now let me cover our second quarter 2025 highlights in comparison to our last earnings call. During our Q1 2025 earnings call, we stated our ambition to sign another major Fortune 500 customer this year. This earnings call, I am pleased to report that we have gone live in production with a UK-based Fortune Global 500 customer that is using our PrivacyKey product.

After a successful pilot pushed out to thousands of employees for proofing and password reset, we were able to take that deployment live, leveraging the integration already in place from the pilot. We hope to greatly expand this deployment as we work toward the long-term partnership with significant financial upside. Additionally, last quarter, I discussed our potential partnership with a major global biometric hardware provider in which we were in advanced discussions to implement joint product development and sales. This quarter, I'm excited that I finally get to share that major global biometric hardware provider is NEC, a multinational leader in IT and technology solutions, which has over 100,000 employees in over 50 countries who have been a leader in biometric solutions since 2007.

With the support of NEC that introduced a similar product known as Symphonic Trust in Japan, we will be able to successfully demonstrate interoperability of a reusable identity between two companies over two countries, the United States and Japan, without any changes to the incumbent identity management systems that were in place before IDX. This has never been done before. To further our relationship with NEC, we are very excited to add Rahman Ghani, a former NEC executive, as a critical member of our Board of Directors. We are excited about our partnership and growth opportunities ahead of us. Also, last quarter, I had shared that we had been confirmed as the vendor of choice for a major identity fraud prevention platform. This earnings call, I am very pleased to finally say their name, authID signed an agreement with Proof, one of the largest identity fraud platforms in the world.

In fact, we are actively working towards the go-live of our first joint customer in the coming weeks. We've been very active with Proof through our joint thought leadership webinars, where we have met with customers to share Proof's newly enhanced capabilities with authID's platform. This collaboration is not just a customer story. It's a clear vote of confidence from one of the largest independent fraud platforms in the world. I know our investors are eager to understand the financial benefits of our agreement with Proof. While I wish we could be more specific, our partnership terms are required to keep that confidential. However, investors will begin to see the revenue impact from the partnership through our financials starting in Q3 of this year.

We continue to advance our contract negotiations with a very large Fortune 500 international human capital company in preparation for a global rollout, where we remain confident that we will sign a long-term commitment soon, and we will provide an update again when we have news to share. These achievements further illustrate how our technology investments and innovations are in demand from major enterprise customers and partners. Let me now cover the recent progress made across our platform and existing partnerships. One practical shift to note is that we are emphasizing performance-based production-level pilots to showcase our capabilities to prospects. This has been an effective strategy rather than just relying on proof of concept. Once the pilot is completed, it is far easier to transition their environment from pilot to full production since the integrations have already been in place.

This requires a full level of effort on our teams early in the sales cycle and demands a lot of attention, but it has been proven to be an effective way to earn customer trust, shorten our go-live time, and time to revenue. With regard to our technology improvements, I note that just after launching PrivacyKey, we immediately began improving the technology in order to better serve our customers. In this case, we have upgraded PrivacyKey with a one-to-many search capability, which has already been put into place in production pilots. This update gives companies the ability to scan multiple faces and return the results lightning fast with the highest accuracy in the marketplace. As a result, our channel partners have been happy to introduce us to additional target customers, which represent an increase in sales pipeline.

Our channel partners also add the benefit of bringing us into their key verticals, which helps expand our total addressable market. Before handing it to Ed, let me revisit IDX, our major technological new product milestone. The IDX platform is a global platform built on a fast-adopted standard of the Accountable Digital Identity Association, or ADIA, founded by Ramesh Kasanepalli. Along with NEC, no one else has leveraged this new standard into working software. In fact, the ADIA is merging with the Secure Identity Alliance, which includes ZoomInfo, IDEMIA, the FBI, and other security-minded organizations. This puts authID in good company and gives us greater visibility and credibility when prospecting customers across the globe. Many large enterprises use contractors who in turn use other contractors for a variety of business operations.

Supply chain identity management is a big problem for large companies since they cannot properly vet the identities of their vendor contractors because of various rules and compliance regulations. From an investment perspective, the identity management market is estimated to be $61 billion by 2032 by Fortune Business Insights. authID can only participate in the authentication subset of this market, but with IDX, authID is now able to play in the entire market space. Our CAM has dramatically increased, and our launch partner, NEC, is one of the largest biometric hardware providers in the world. We are still in the early stages of IDX, and we look forward to sharing more about our expectations for this new product once we're in a position to provide a well-informed financial forecast. Currently, we partner with identity management companies and rely on them to try to solve supply chain identity management problems.

When we go into a new engagement and our customers want to implement capabilities like IDX, we are not limited to their existing identity management provider anymore, which will allow us to close larger deals faster. I'm very pleased with our second quarter results and progress made through the first half of the year. Ed will now take us through the financials in greater detail.

Speaker 2

Thank you, Ram. Thank you all for joining us today. I look forward to walking you through our Q2 results. Looking at our Q2 2025 GAAP results, total revenue for the quarter increased significantly to $1.4 million compared to $0.3 million last year and $0.3 million in Q1. The strong revenue growth in Q2, both sequentially and year over year, was primarily driven by the go-live of several contracts signed earlier in 2024. These implementations have now been successfully delivered and are contributing meaningfully to top-line results. Operating expenses for Q2 were $5.9 million compared to $3.6 million a year ago and $4.7 million last quarter. The year-over-year increase is primarily due to increased headcount investment in Sales and R&D. The sequential increase is primarily driven by a $0.8 million impact related to provision for estimated credit loss expense. This represents a credit risk assessment related to certain customer contracts.

While this provision reflects our estimated risks, we continue to have a strong confidence in our ability to collect on these customer contracts. Net loss for the quarter was $4.4 million, of which non-cash charges were $1.1 million. This compares to a net loss of $3.3 million for the same period last year, which included $0.8 million in non-cash and one-time severance charges and a net loss of $4.3 million in the previous quarter. Net loss per share for the quarter was $0.33 compared with $0.34 a year ago and $0.40 last quarter. Turning to RPO on the next slide, remaining performance obligation or RPO represents the minimum revenue expected to be recognized from our signed contracts based on our customers' contractual commitments.

As of June 30, 2025, our total RPO was $13.8 million, a decrease of approximately $0.1 million over the prior quarter as we recognized contracted revenue in Q2 and also added new contracts signed in the quarter. Our RPO for Q2 compares favorably with the RPO at the same period last year, which was $4.2 million. We expect to recognize the full RPO of $13.8 million over the entire life of our contracts, which are typically signed with a three-year term. Turning to our balance sheet highlights, as of June 30, our cash balance totaled $8.3 million, which includes approximately $8.5 million in net proceeds received from our successful capital raises in April and May 2025. Our common shares outstanding stood at 13.4 million, with 2.2 million shares added from our fundraise.

We will use these funds for a number of priorities, including closing key deals with Fortune 500 prospects, generating revenue growth through our recent IDX platform launch, as well as by implementing and ramping our customer base. Onto our non-GAAP results on the next slide. Adjusted EBITDA loss was $3.4 million for Q2 compared with the $2.5 million loss for the same period last year and a $3.9 million loss last quarter. As described with our operating expense results, the year-over-year increase in EBITDA loss is primarily due to increased headcount investment in sales and R&D, as well as the Q2 provision for estimated credit loss expense. We also monitor and report on annual recurring revenue, or ARR, which is defined as the amount of recurring revenue earned during the last three months of the relevant period, as determined in accordance with GAAP multiplied by four.

ARR as of Q2 is $5.8 million compared to $1.1 million of ARR as of Q2 2024 and $1.2 million as of last quarter. Turning to BAR, or Booked Annual Recurring Revenue, which is the projected amount of annual recurring revenue we believe will be earned under contracted orders, looking out 18 months from the date of signing of each customer contract. The gross amount of BAR signed in the second quarter of 2025 was $2.2 million, up from $0.6 million of gross BAR a year ago and $0.01 million in Q1. The increase in BAR for the quarter was led by the signing of Proof, the identity fraud platform Rhon called out earlier. As previously explained during our quarterly earnings call, BAR comprises two components, which we refer to as CAR and UAC.

CAR, or Committed Annual Recurring Revenue, represents the total annual customer contractual commitment through fixed license fees and minimum usage commitments. These commitments are directly recognized as revenue in each contract year after each customer goes live with the service. Q2 2025 CAR represents $0.9 million, approximately 41% of reported BAR. UAC, or Estimated Usage Above Commitment, is an estimate of annual customer usage that will exceed contractual commitments. Q2 UAC represents the remaining $1.3 million, or 59% of reported BAR. Turning to our revenue growth stages on the next slide, I will finish off by summarizing the progress we're seeing through our revenue growth stages. The first milestone we use to monitor our growth is bookings, as measured by BAR. In Q2, we realized a total gross BAR of $2.2 million.

We're excited to begin closing the major large enterprise and platform partnership deals that we discussed last quarter and expect to continue accelerating our bookings growth over the remainder of 2025 as we add pipeline and progress our key large enterprise and platform partnership deals. The next milestone is our remaining performance obligation, or RPO. As I detailed earlier, as of Q2, we have secured approximately $13.8 million in RPO, a number that we expect to increase as our bookings continue to grow throughout the remainder of the year. Our third milestone is revenue recognized in accordance with GAAP. Our Q2 year-to-date revenue of $1.7 million already surpasses our 2024 full-year revenue by approximately $0.9 million. We expect this growth to continue throughout the year as our existing signed contracts continue to go live and ramp.

As we've called out in prior earnings calls, we are increasing our focus on customer retention and expansion this year as our customer contracts mature. We continue working to build on our customer expansions and grow our customer relationships by adding tangible value and helping our customers achieve their objectives, as well as expand and identify new use cases. Overall, we look forward to building on our Q2 momentum. As we previously stated, our goal is to deliver $18 million in BAR for 2025. We remain on track to meeting our expectations and look forward to updating our investors again in our Q3 call. With that, Operator, we would now like to open up for questions.

Speaker 6

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for questions. Our first question comes from Gary Brode with Deep Knowledge Investing. You may proceed.

Speaker 4

Hey, guys. I've got a question about the financials. Ed, you might be the right person to answer this. It looks like you took in $1.2 million in deferred revenue in the quarter. First, can you talk a little bit about where that came from? You're showing annual recurring revenue of $5.8 million, which is the quarter's revenue times four. If you took in $1.2 million of deferred revenue in the quarter, is that recurring?

Speaker 2

Hey, Gary. Nice to hear your voice. Thanks for the question. A two-part question. The first was about the deferred revenue, the $1.2 million. That came from invoices that we received from customer contracts that have not yet been recognized as revenue. We have some invoices that have been issued based on our contract terms that come ahead of the revenue recognition. We do expect those invoices and deferred revenue to contribute and roll into revenue over the coming quarters as revenue gets recognized, number one. Number two, you're sorry, can you repeat the second part of your question again?

Speaker 4

I think you've answered. The second part of the question is, is that actually recurring? If what you're saying is that the deferred revenue came from invoices from customer contracts where you guys are about to start providing services, then it is recurring and your $5.8 million of annual recurring revenue is accurate. Am I understanding you correctly?

Speaker 2

That's correct. The amounts that are in deferred revenue results are coming from contract-driven invoices that are recurring in nature and are just yet to be recognized according to our revenue recognition policy.

Speaker 4

Okay. Got it. All right. Can I ask you, do you want me to jump back in the queue or can I ask you a few questions about the Proof deal?

Speaker 2

Go ahead, Gary.

Speaker 4

Okay. On the webinar that Dale did earlier this week with Proof, they said something on the call that implied you guys were very close to, or you had a working combined model and that that was already up and running. They didn't say it, but it was implied. Today, you guys were talking about being very close to launching with Proof and one of their customers. I'm assuming that that's correct, that there is a working model for the combined company, for the combined services, rather, and you guys are about to start providing services to a Proof customer. When would you anticipate, first of all, is that correct? Second, when would you anticipate starting to collect revenue with that contract?

Speaker 0

Hey, Gary. I'll take that question. Thank you for that question. Can you hear me loud and clear? I just want to make sure.

Speaker 4

Yeah, crystal clear.

Speaker 0

All right. Fantastic. The Proof partnership is actually almost like two parts. The first part is, you know, authID has capabilities with onboarding. We call it document verification, onboarding a new customer, new client. We have those capabilities that Proof has had other partners for. That piece and that technology where we're partnering with them can be realized very quickly. No integrations. We just perform. We perform better than most in the marketplace. That's kind of like how we won the partnership to be able to work with Proof. That's part number one. There's an integration piece that really is very simple to do.

The second part that's a little more strategic, where Proof is, as the largest fraud platform out there, they are aligning with that previous statement I said in my comment that every identity stack is going to have to either incorporate a biometric signal in part or in whole to add to their service just because fraud is so rampant, especially with AI. The second part is a part that's a little bit more strategic for Proof. That is the part that we are working very closely with them to build our technology close into their stack and to make it an offering within the Proof platform. I don't want to give the name away that they're using, so let them announce that. That is the second part that's a lot more strategic for us. We're very excited about that as well.

We'll temper the announcements with Proof and allow them to do that. Really, it's a two-part partnership, which is why we're excited about it.

Speaker 4

Okay.

Speaker 0

I think you had a second question, right?

Speaker 4

Yeah, the other question on that is, at what point will you start collecting revenue? Because it sounds like you're close, but I don't want to be overly optimistic.

Speaker 0

Yeah. In my comments, I said we were about to take a customer live here in a couple of days. In reality, hopefully it's tomorrow, but we don't know yet. We'll see. We're very close to taking one of our joint customers live on that first part of that partnership that I just described. Like I said, I described the two parts. The first part of that partnership that doesn't require massive integration, that's the first initiative. We're going to be hopefully taking one of those joint customers live here in the next coming days. The main question is, when will we start to see those results? Yes, we're going to see them a heck of a lot sooner than ever before because we're now taking those customers live here shortly.

Speaker 4

Okay. If you do go live within the next day, week, something like that, there will be revenue in this quarter, the third quarter related to that.

Speaker 0

If transactions are being called, which we hope they will be, transactions being called, they should be billed. We should be able to invoice.

Speaker 2

Yes. Once we go live, just to reiterate, once we go live, we will start to recognize the contractual commitment portion of the contract as we normally do.

Speaker 4

All right, guys. That's very helpful. I do have more questions, but I don't want to monopolize the call. Why don't you see if other people have questions, and I'll hit star 11 after and get back in line.

Speaker 0

Thanks, Gary.

Speaker 6

Thank you. As a reminder, to ask a question, please press star 11 on your telephone. One moment for questions. Our next question comes from Gary Brode with Deep Knowledge Investing. You may proceed.

Speaker 4

Okay. Glad to be back. Can we talk about the India contract that you guys signed last November? Have you started providing services, or are you still in ramp-up condition with the company?

Speaker 0

We are working with them, and we're still ramping, but we are engaged with them. Yes.

Speaker 4

Okay. You're working on it, but haven't gone live yet. Is that right?

Speaker 0

That's right.

Speaker 4

Okay. I'm assuming then that you haven't recognized revenue from them at this point. Is that right?

Speaker 2

I'll just clarify Rhon's comment. We are still ramping them, but we did go live and deliver the service to the customer.

Speaker 4

Okay. Have you— Sorry, go ahead.

Speaker 2

Yeah, no, I just wanted to clarify that. Sorry, Gary. Go ahead.

Speaker 4

Thanks, Ed. Thank you. Have you started collecting revenue from them yet?

Speaker 2

Yes, we are starting to recognize revenue as we went live with the customer. That's right.

Speaker 4

Okay. That's great. When you announced the deal, I believe there was a provision in there that you're supposed to collect $3.3 million of revenue each year, 2025, 2026, 2027. Given that you didn't start collecting revenue at the beginning of the year from them, understandably, there's no way you're going to be able to launch in two months. Do you still expect to collect the $3.3 million from them this year that you discussed was a contractual obligation before?

Speaker 2

Yeah. Said differently, we do recognize in the first contract year, given that there's a delay in go-live for contracts of any kind, if we have a commitment for the first year, we do recognize that commitment throughout the remainder of the first contract year. If it's several a month or two or more that's not recognized, we'll recognize it in the balance of the first contract year. By the end of contract year one, we would have recognized the first year's worth of commitment.

Speaker 4

Okay. I just want to clarify something there because I got a little confused with it. If the contractual obligation is $3.3 million, and I'm just going to say for the purposes of this conversation, I'm not trying to back into a corner, but let's just say hypothetically you guys started collecting revenue July 1st. Does that mean you expect to collect $3.3 million from that contract this calendar year or half of that because you'll have been collecting revenue for half the year?

Speaker 2

We would recognize all of it in the first contract year, and we would just recognize it in the period between when they start to go live and when the contract year ends.

Speaker 4

Got it. Okay. You are anticipating collecting $3.3 million from this contract in the second half of this year.

Speaker 2

Yes, that's a fair inference.

Speaker 4

Okay, that's incredible given the revenue number you guys just posted. That's really good news. On the NEC deal, I know with IDX, the implications are enormous. Are you guys able to talk at all about a booking estimate, a guaranteed minimum revenue, term of the contract, or when you might start providing services or collecting revenue? Can you give us any detail on any of those things?

Speaker 0

Yeah, I'll take that. Unfortunately, not at this time. We just released the product. We have the technology looking to go into certain customers for a pilot, and we're trying to still flush that all out and trying to even understand the deal cycle and deal motion and what the pricing terms are. We don't have that all flushed out. I do have my own ambitious goals that I want to achieve, but I need to put some more formula behind that. We'll share that as soon as we can. They're excited to get to that point here shortly.

Speaker 4

Okay. Let me ask a question in a different way. You guys are at $2.2 million in bookings so far this year, and I believe that includes the Proof deal. You've got the Yankee deal with an unspecified number, and you talked about a UK Fortune 500 retailer, a Fortune 500 international benefits company. Are you still comfortable with the $18 million of bookings you talked about the last couple of quarters?

Speaker 0

Absolutely. Absolutely.

Speaker 4

Okay. Got it. The last question I've got for you is, I know last year you guys had some delays and spent a lot of time and money upgrading the software to enterprise-capable. Is it reasonable to assume with the Proof deal and the NEC deal that that work is done to a level that you're satisfied with, or is there still more to do?

Speaker 0

It's done to the level where we can win deals, but there's definitely more to do. We're learning more as we go into these larger enterprise opportunities to see what adjustments and stuff we need to make. It's not anywhere near the major overhaul that was required to release basically two brand new products, two brand new SKUs into the marketplace. It's tough to just do one, but to do two in such a short period of time is obviously really tough. At the same time, it was what our customers needed and wanted, and nobody was fulfilling it. We think we made the right adjustments. I know we made the right adjustments, and that's how we're able to enter these particular large opportunities and have a really high probability of winning them.

Speaker 4

Okay. You're more in the kind of normal R&D phase as opposed to the, "Oh, crap, we have to overhaul the whole thing," phase where you were last year?

Speaker 0

I like the way you worded it. Yes, it's not the holy crap anymore. It's a, "Hey, this is working. It's stable." One of the things we described in my comments was we were in these pilots and POCs, and now we're advancing past them. That's because the product has been showing very, very effective for our customers and clients. If those pilots did not go the way they needed to go, then obviously we'd be in a different situation as opposed to moving to finalizing and moving things to longer-term relationships with these customers. The product is working very well in that regard, but we're absolutely not slowing down on innovation and improving the product sets. Just like for PrivacyKey, you know we wanted that one-to-one billion false match rate. We wanted that 22 milliseconds authentication. We wanted all that speed.

Our customer said, "We want to also scan thousands of faces, and we want you to pinpoint Gary's face out of this entire population. Can you do it?" Of course, we weren't going to say no. We did. We did it, and we delivered it, and the customer's very happy.

Speaker 4

Got it. Okay. Thanks for the clear, straightforward answers, both you and Ed. I'll step back and let somebody else ask questions. Thank you.

Speaker 6

Thank you. Our next question comes from Dean Sederquist with DECA Capital. You may proceed.

Speaker 5

Hi. Congratulations on the quarter. It looks like you're making good progress. I was wondering if you could elaborate on the pilots. It would be nice to have some idea of the scope. Can you comment on that? You know how many customers or employees are part of some of these pilots? That's one. Number two, how quickly can these get scaled up? What's the go-live process and the time to revenue compared with the normal, you know, 12 to 18 months? How short is it once you sign a contract with these that you've already piloted to actually going live and getting revenue?

Speaker 0

I'm just trying to remember all those parts, Dean, so thank you for the question. This is an area that I'm super fired up about because right now, when we were doing traditional, let's say, sales motion with large enterprises, they have a committee that says, "Hey, you need to go through vendor-supplier." What we need to do is put you in a sandbox. Then we're going to do a proof of concept with maybe 5 to 10 users. We're going to probably run a couple of tools, make sure you don't crash. Based off of the POC results, which is usually unlimited data, they're going to go ahead and make a decision, and they'll either go for authID or not. We've been successful with those POCs. That time period can go anywhere between, you know, three to six to nine months just because you're in a large enterprise.

We made a change, and I want to take full credit for it, but I also want to recognize what's happening in the marketplace. The marketplace has been very good to us with AI causing all kinds of problems and havoc. For these companies to evaluate the technology faster, instead of doing that POC that I just described, they're saying, "Hey, you know what? Instead of putting you in a sandbox, let's put you in the real production live environment. Let's put you in a full-blown production live environment on live data centers that are operating our current existing systems today.

What we'll do for the test, instead of rolling it out to, let's say, 100% of the population within that organization, we're going to roll it out to 1%, then 5%, then 10%." Right now, for our customers, that could be tens of thousands of people, which is why we're pretty fired up. When they see the performance live, that means that if they want to move forward with authID, it's a flip of the switch to go live. It's a flip of the switch for us to go time to revenue. It's a flip of the switch for us to be able to not have to worry about, you know, making sure the integrations work, all the testing work, or any of that stuff. For us, that's the right way to go. We've been trying that. We've been successful.

We don't know if that's going to be the standard moving forward, but heck, we're going to darn try. It does require our team to be 100% staffed for that customer upfront on the deal, as opposed to typically they're 100% staffed after we close the deal. If we have a forecast to close the deal, we then know how to staff up and ramp up. If we're trying to put all these resources in the beginning, it's going to be a lot tougher. We're going to spend a little bit more money. We're finding that that's the faster way for time to revenue. We're sorry for the long-winded answer, but we're figuring that out. We believe the shift to pilots is going to be a good way for us to go to a time to revenue faster.

Speaker 5

That's great. It sounds like you've done a lot of the plumbing work already that you would normally have done over that 12-month period or even more in some cases to get to the full BAR number.

Speaker 0

You nailed it. You absolutely nailed it. Those pieces and areas where you all have been asking us to figure out how to go live faster, this was one of those key ways that allowed that to happen. I like to take full credit for it, but no, because a lot of our customers are getting hit right now. They don't have that time to do the POC way. They need to figure it out now. I think in combination of AI rising, if the bet is AI is going to get better and better and better to help these fraudsters perform more damage faster and faster and faster, we should be able to accelerate our side. The danger on our side is that we have to staff up.

We have to be able to make sure that we can do that and do that and predict that and, again, be mindful of our spending. That is a shift in our process. It may require, hopefully not, but it may require a little bit more resources upfront.

Speaker 5

Okay, that was going to be my next question. Actually.

Speaker 0

Because you're asking about scale, right?

Speaker 5

It sounds like you're on the cusp of being able to really get some revenue in here, or at least convert this to real ARR very quickly between these pilots converting to contracts and going to revenue much faster. Number two, the Proof deal, and this is without even really getting into the NEC deal, which sounds huge, but a little earlier stage. Are you also in pilot with anybody with that technology, or not really yet?

Speaker 0

Okay. There's two parts there, but I'll answer the last one. On the IDX side with NEC, we're not yet, but we're moving into those, and we're working diligently on that. When you're talking about Proof, were you asking whether we're integrated there? I'm not sure.

Speaker 5

My understanding, or at least my interpretation, is that that could be almost plug and play with the Proof customer database that's already there since you, I think I heard, have essentially integrated with their system. I don't want to put words in your mouth. That was just my interpretation.

Speaker 0

Let me go back. With Proof, it's like a two-part partnership. Part one is our stuff that works today out of the box, and their current customers right now. Proof doesn't do what authID does, so the Proof customers can benefit from the authID technology through the Proof platform so that they can take advantage of that today. That's what's about to go live, hopefully, soon. The longer-term strategy for Proof is to incorporate biometrics inside their entire core platform, essentially like an OEM. That has not been completed yet. We're still working on that with them. Again, I'm not going to reveal their strategy with that. From a biometric perspective, we are working with Proof to be their core biometric technology.

Speaker 5

Thank you. I think that's all I have for now.

Speaker 0

Thank you.

Speaker 6

Our next question comes from Kelsey Jones with Verana Capital. You may proceed.

Speaker 3

Oh, it's not Kelsey Jones. It's Philip Ray Broenniman. Kelsey works with me. My question, hey, Rhon, very interesting quarter, clearly. My question, I'm not one who typically asks questions, but I think the question I have is probably a little bit on the forefront of many investors' minds. I'm going to put it out there and see what your response is on behalf of, I guess, all of us. First, shout out to Gary Brode for helping open up the conversation here, asking good, astute questions. Your organization, you and your team have received a fair bit of criticism about their communication or kind of lack thereof evidenced by the company.

Even while understanding that there is tension between your counterparts, your clients, and what you can reveal versus what we want to know as investors, have you guys given some thought about how to upgrade the paradigm so we don't feel so, you know, bluntly, kind of completely lost by rather anodyne press releases?

Speaker 0

Yeah, absolutely. Thank you, Phil. I appreciate the question and certainly empathetic to the request. What we've done internally is we've set a process where we know that there's a blackout period, which the investors don't know about. We haven't set up time to speak with the investors in a dedicated way. Either the investors reach out sporadically to the leadership team, and we then have to figure out how to work that into a schedule because the leadership team is very, we're overstrapped here. We're overworked, and hopefully, you can appreciate that. Sometimes we can't respond in an ad hoc moment. What we are going to do and what we've started to do after this call is that we are reaching out to those folks who have asked questions in the past we could not answer due to the blackout period for our internal policy.

We are reaching out and scheduling time with people like yourself in a dedicated way where you can spend intimate time with me and the leadership team to ask questions and get more details for the questions you have, as opposed to kind of like this, you know, reach out whenever you want to reach out. Hopefully, we respond whenever we can. Maybe we respond quickly, maybe we don't respond depending on what the time period is, whether it's a blackout or not. We want to schedule the time with you all and then have a better cadence in that way so it's more predictable. I can actually spend more intimate time with you when I'm not in a blackout period and answer your questions. We're hoping that we'll alleviate that.

Speaker 3

Some of that is it will be helpful, but bluntly, spending a lot of time answering my questions doesn't help the business grow. I'm not really interested in taking you away too much from your primary duties. I'm speaking more to the press release communications, the information that's provided in these press releases that we're all scrutinizing probably too closely, but nonetheless, it's all we have traditionally gotten. They tend to be quite bereft of helpful insights. That's what I'm really speaking to. I would love to hear the dulcet tones of your voice more often, but really, for everyone's benefit, how do we get more information in these press releases so people can feel at least somewhat satisfied that things are progressing nicely other than, "Hey, we have this, and you know we're not going to tell you what it is, so just take our word for it.

Speaker 0

Phil, if my customers would allow me to tell you the details of the contract for the financial terms that you're looking for so that you can make an investment, I would tell you that. Our customers will not let us do that. To the point where we can get that information so that we can share, we're going to work really hard to get you that, get you what you need while making sure that we adhere to our customers' privacy.

Speaker 3

I understand. There's obviously tension on the other side. I would just ask you guys to pay as much attention to providing that additional information as you can. With that, I'll let it go. I'm sure Gary is back in the queue, and I'd like to hear what he asks. Thank you.

Speaker 6

Thank you. At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Daguro for any closing remarks.

Speaker 4

Thank you, everyone. Certainly, thank you for the question. Thank you for listening today. If you have any further questions about our progress, like I talked about earlier, definitely reach out to [email protected]. We'd gladly set up time to be able to answer any additional questions that came from this call or post-call that we didn't answer. If not, we look forward to speaking more with you when we report our third-quarter results in November. Thank you, everyone.

Speaker 6

Thank you. Ladies and gentlemen, this does conclude today's teleconference.