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TS

T Stamp Inc (IDAI)·Q2 2024 Earnings Summary

Executive Summary

  • Net revenue grew 8.6% year over year to $0.50M, while basic and diluted net loss per share improved to -$0.21 vs -$0.32; operating loss was -$2.63M, reflecting higher SG&A amid sales build-out .
  • Orchestration Layer adoption accelerated: 62 enterprise customers (54 financial institutions) as of Q2, with $317k Q2 revenue from OL vs $112k in Q2’23; flagship OL customer MRR >$14k at ~83.3% gross margin, and an S&P 500 bank ARR >$1.2M .
  • Strategic catalysts: AWS Marketplace and NayaOne distribution, Africa POC via largest mobile network provider, and anticipated IP license fees as “other income” beginning Q3’24; Boumarang deal signed Aug 6, 2024 (prepaid warrant for $5.0M) .
  • Liquidity remains tight ($0.66M cash at 6/30/24; going concern flagged; subsequent SPA for up to $2.0M via promissory notes and a $315k secured note provide interim funding) .
  • Consensus estimates from S&P Global were unavailable at the time of analysis; beats/misses cannot be assessed (values from S&P Global unavailable).

What Went Well and What Went Wrong

What Went Well

  • Orchestration Layer scale-up: 62 enterprise customers by Q2’24, including 54 banks via FIS; Q2 OL revenue $317k vs $112k YoY; flagship OL customer MRR >$14k at ~83.3% gross margin .
  • New distribution channels (AWS Marketplace, NayaOne) broaden go-to-market without headcount expansion; initial pilots for wire/transfer authentication in community banks slated for Q3’24 .
  • International expansion: Africa POC with largest mobile network provider and expected branded card network usage in at least two African countries by end-2024 .

Management quotes:

  • “As of June 30, 2024, we had 62 financial institutions enrolled on our SaaS Orchestration Layer… a 100% increase year on year” .
  • “Our first Orchestration Layer customer is in full production and is consistently generating over $14 thousand of MRR with gross margins of 83.30%” .
  • “We established new distribution channels… NayaOne Marketplace and AWS Marketplace” .

What Went Wrong

  • Operating loss widened YoY: -$2.63M vs -$2.38M; SG&A +13.6% YoY in Q2 and +20.2% YTD due to sales investments and stock-based comp timing; cost of services up 21.3% YoY in Q2 .
  • Higher revenue concentration: three customers comprised ~96% of Q2 revenue (67.33% S&P 500 bank; 17.38% Mastercard; 11.50% Triton), increasing dependence on key accounts .
  • Liquidity and going concern risks: $0.66M cash at quarter end, negative operating cash flow (-$3.76M H1), and need to raise capital within six months; subsequent short-term funding helps but uncertainty persists .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Net Revenue ($USD)$460,804 $574,000 $500,395
Basic & Diluted EPS ($USD)-$0.32 -$0.26 -$0.21
Operating Loss ($USD)-$2,382,409 -$2,850,000 -$2,625,366

Revenue by type (Q2 2024):

Revenue TypeQ2 2023Q2 2024
Professional services (over time)$385,804 $414,145
License fees (over time)$75,000 $86,250
Total Net Revenue$460,804 $500,395

Customer concentration (Q2 2023 vs Q2 2024):

CustomerQ2 2023 (% of Revenue)Q2 2024 (% of Revenue)
S&P 500 Bank48.97% 67.33%
Mastercard31.33% 17.38%
Triton10.37% 11.50%

Operating expense components (Q2 2024 vs Q2 2023):

MetricQ2 2023Q2 2024
Cost of services$203,928 $247,435
Research & development$574,397 $564,736
Selling, general & administrative$1,877,616 $2,132,395
Depreciation & amortization$187,272 $181,195
Total operating expenses$2,843,213 $3,125,761

Non-GAAP (Q2):

MetricQ2 2023Q2 2024
Adjusted EBITDA loss ($USD)-$2,072,123 -$2,131,118

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Other income (IP licensing)Q3 2024Not providedManagement anticipates “significant license fees” booked as other income beginning Q3 2024; Boumarang license agreement executed Aug 6, 2024 with $5,000,000 prepaid warrant consideration Introduced
Recurring revenue from Orchestration Layer customersLate 2024 onwardNot providedExpect usage-driven recurring revenue ramp from newly onboarded financial institutions; timing driven by customer rollout Introduced
Community bank wire/transfer authentication pilotsQ3 2024Not providedInitial pilots with four bank customers identified Introduced

Note: The company did not provide formal quantitative guidance ranges for revenue, margins, OpEx, OI&E, or tax rate in Q2 materials .

Earnings Call Themes & Trends

No Q2 2024 earnings call transcript was available. The following themes are synthesized from Q4’23 and Q1’24 press releases vs Q2’24 10-Q and press releases.

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
Orchestration Layer adoption43 integrated institutions by 10-K date (year-end 2023); 51 as of Q1’24 press release 62 enterprise customers (54 financial institutions); Q2 OL revenue $317k (vs $112k in Q2’23) Accelerating
AI/tech initiatives (age estimation, deep fake detection)Age-estimation launched; first engagement contracted; patents progressing Provisional patent filed for injection attacks incl. deep fakes (June 24); AI-powered age-estimation product released with new patent application Expanding
Distribution channelsFocus on FIS; ThinkTech program engagement AWS Marketplace and NayaOne Marketplace go-to-market Broadening
Geographic expansionAnticipated international usage via branded card network Africa POC with largest mobile network; planned usage in at least two African countries in 2024 Advancing
Revenue concentration riskHistorically reliant on S&P 500 bank and Mastercard Top three customers ~96% of Q2 revenue (67% S&P 500 bank) Elevated
R&D execution & IP20 issued patents at YE’23; strong pipeline 22 issued patents and 15 pending/provisional by Q2; lower outsourced dev spend Strengthening
Licensing/IP monetizationDiscussions, anticipated opportunities Anticipated Q3 license fees; Boumarang license signed Aug 6 Materializing
Liquidity/financingEquity raises across 2023 Going concern risk; SPA for $2.0M in promissory notes; $315k secured note Constrained but funded near-term

Management Commentary

  • “We had 62 financial institutions enrolled on our SaaS Orchestration Layer… a 100% increase year on year” .
  • “Our first Orchestration Layer customer is in full production and is consistently generating over $14 thousand of MRR with gross margins of 83.30%… our S&P500 bank customer consistently generates more than $1.2 million of ARR” .
  • “We established new distribution channels… NayaOne Marketplace and AWS Marketplace” .
  • “We anticipate booking significant license fees as ‘other income’ in Q3 of 2024” .

Q&A Highlights

No Q2 2024 earnings call transcript was found. The company’s Q2 10-Q and press releases included clarifications on Orchestration Layer revenue ramp timing, customer adoption, and expected licensing income .

Estimates Context

Wall Street consensus estimates (EPS and revenue) from S&P Global were unavailable at the time of analysis; therefore, we cannot assess beats/misses nor quantify estimate revisions. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Revenue trajectory: Q2 net revenue up 8.6% YoY but down sequentially vs Q1; EPS loss improved YoY to -$0.21, with operating loss modestly better QoQ (reflecting early OL scale-up, offset by higher SG&A) .
  • OL adoption/income ramp: 62 enterprise customers and rising OL revenue suggest improving visibility; usage ramp is customer-driven and may be back-half weighted, especially for banks .
  • IP monetization as near-term “other income”: Anticipated license fees starting Q3’24 and Boumarang’s $5.0M prepaid warrant provide potential non-operating uplift and strategic validation of the IP portfolio .
  • Liquidity/watch funding runway: Going concern disclosure and low quarter-end cash necessitate close monitoring of subsequent SPA collections ($1.5M receivable) and secured loan amortization; dilution risk remains .
  • Customer concentration risk: ~96% of Q2 revenue tied to three customers; diversification and broader OL usage are critical for de-risking .
  • Operational mix shift: Lower outsourced R&D spend and continued patent accumulation support margin potential long term, but SG&A scaling for sales and stock-based comp timing lifted OpEx in Q2 .
  • Trading implications: Near-term stock catalysts include Q3 licensing income recognition, AWS/NayaOne channel traction, Africa deployments, and evidence of OL usage scaling; conversely, financing updates and concentration/going concern signals can drive volatility .