Sign in

You're signed outSign in or to get full access.

VI

VerifyMe, Inc. (VRME)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue declined 23% year over year to $4.46M, driven by the previously disclosed discontinued premium-services contract and softer customer shipments; gross margin fell to 33% from 39% .
  • EPS of ($0.05) beat consensus ($0.07) while revenue missed ($4.46M vs $5.09M); Adjusted EBITDA was $0.0M, below consensus EBITDA, reflecting tougher mix and premium customer loss . Values retrieved from S&P Global*.
  • Management reiterated no formal 2025 guidance; they expect Q2 2025 comps to remain challenging, with OpEx modeled “relatively flat,” and anticipate easier comparisons in 2H (organically not positive) .
  • Balance sheet strengthened: cash $5.7M, no bank debt, remaining $0.8M convertible notes held by insiders/affiliates, supported by January warrant-inducement proceeds and debt retirement—providing strategic flexibility for tuck-in or transformative M&A .
  • Potential stock catalysts: progress on e-commerce platform integrations (Shopify/WooCommerce), additional freight-carrier relationships, and strategic transaction updates; CFO transition announced, with incoming VP Finance/CFO-designate Jennifer Cola .

What Went Well and What Went Wrong

What Went Well

  • Proactive services gross margin improved despite mixed macro; management underscored proactive services as best organic growth opportunity .
  • Costs were aligned with lower revenue: Operating expenses fell 28% YoY to $2.08M, offsetting gross profit pressure .
  • Balance sheet resilience: cash increased to $5.7M; term note retired; convertible notes reduced to $0.8M, with line-of-credit availability—supporting strategic optionality .
  • Quote: “The annual cash flow from the operating business, coupled with our elevated cash level on the balance sheet, provides a strong backdrop to create shareholder value.” — CEO Adam Stedham .

What Went Wrong

  • Premium services revenue declined 47% YoY on customer in-sourcing; overall revenue fell 23% YoY and gross margin compressed to 33% (from 39%) .
  • Authentication (codes) remains immaterial and was divested (Trust Codes) in Q4 2024; Q1 2025 authentication revenue was only $26K, limiting diversification .
  • Near-term demand softness across e-commerce-tied customers; management guides to difficult Q2 comps and only easier (not positive) organic comps in 2H 2025 .

Financial Results

Quarterly performance vs prior periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD)$5.435M $7.661M $4.455M
Gross Profit ($USD)$1.895M $2.417M $1.490M
Gross Margin (%)35% 32% 33%
Total Operating Expenses ($USD)$4.765M $2.754M $2.083M
Net Loss ($USD)($2.424M) ($0.501M) ($0.571M)
Diluted EPS ($)($0.23) ($0.05) ($0.05)
Adjusted EBITDA ($USD)$0.174M $0.509M $0.000M

Year-over-year comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025YoY Change
Revenue ($USD)$5.759M $4.455M ($1.304M)
Gross Profit ($USD)$2.260M $1.490M ($0.770M)
Gross Margin (%)39% 33% -600 bps
Net Loss ($USD)($0.553M) ($0.571M) ($0.018M)
Diluted EPS ($)($0.05) ($0.05) Flat
Adjusted EBITDA ($USD)$0.114M $0.000M ($0.114M)

Results vs Wall Street Consensus (S&P Global)

MetricConsensus (Q1 2025)Actual (Q1 2025)Surprise
Revenue ($USD)$5.0915M*$4.455M —$0.6365M (miss)*
Primary EPS ($)($0.07)*($0.0486)*+$0.0214 (beat)*
EBITDA ($USD)($0.0565M)*($0.307M) —$0.2505M (miss)*

Values retrieved from S&P Global*.

Segment breakdown (Q1 2025)

SegmentQ1 2025 Revenue ($USD)Mix
Precision Logistics~$4.429M (calc: total $4.455M – authentication $0.026M) ~99.4%
Authentication$0.026M ~0.6%

Reference mix: Precision Logistics accounted for 99% of revenue in Q4 2024 and 98% in Q3 2024 .

KPIs

KPIQ3 2024Q4 2024Q1 2025
Cash & Equivalents ($USD)$2.610M $2.823M $5.707M
Working Capital ($USD)$2.1M $2.1M $6.0M
Convertible Notes ($USD)$1.1M $1.1M $0.8M
Bank Debt ($USD)$1.375M total (Dec 2024) $0.875M (LT) + $0.5M (current) $0 (retired)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025NoneNo formal guidance; Q2 comps “very challenging”; easier comps 2H, not organically positive Maintained: no guidance
Operating ExpensesFY 2025NoneExpected “relatively flat” vs Q1 baseline Qualitative indication
Gross MarginFY 2025NoneMix headwind from premium loss; proactive growth may lower %; tech/automation to offset Qualitative indication
EPS/EBITDA/Tax/OI&EFY 2025NoneNot provided Maintained: no guidance
SegmentFY 2025NonePremium subcontracted work to shrink as share; focus on proactive/direct premium Strategic mix shift

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
E-commerce integrationsNo specific platforms; proactive growth focus Integrations underway with Shopify and WooCommerce Momentum building
Freight-carrier relationshipsPremium customer loss; FedEx subcontract stability; direct premium growth targeted Expanding to additional airfreight carriers/3PLs to decouple service from single carrier Diversifying partners
Macro demandInstalled-base shipments soft (-6% FY) Overall softening continues; proactive customers tied to e-commerce confidence Persistent headwind
Authentication strategyExit codes; ink focus; impairments recorded Authentication revenue $26K; exploring ink synergies, non-logistics options De-emphasized segment
Strategic alternatives/M&AActive with bankers/advisers; ATM filed Pursuing tuck-in/transformative deals; cash suffices for ops in 2025 Ongoing exploration
Leadership changesNoneCFO Nancy Meyers retiring; Jennifer Cola to transition in Transition planned

Management Commentary

  • “We believe this [proactive] service line presents the best opportunity for growth…we’re pleased with the improvements in gross margin percentage.” — CEO Adam Stedham .
  • “We do not anticipate requiring cash to support the annual operating and public company expenses of VerifyMe in 2025.” — CEO Adam Stedham .
  • “Operating expenses were $2.1 million…versus $2.9 million in Q1 2024…we implemented cost-cutting measures in precision logistics.” — Nancy Meyers .
  • “We continue to have conversations with both transformative and tuck-in potential acquisitions… the strength of our balance sheet…positions the company to provide very meaningful shareholder returns.” — CEO Adam Stedham .

Q&A Highlights

  • Capital allocation and external growth: Management is open to logistics and adjacent/non-logistics deals, with higher hurdle outside logistics; ATM may be used post value creation .
  • Demand trajectory and modeling: Expect difficult Q2 comps; easier comparisons in 2H but not organically positive; OpEx modeled relatively flat .
  • Segment detail: Authentication revenue was $26K in Q1; premium mix expected to shift toward direct premium; indirect premium stable but potential AI substitution at FedEx over time .
  • Customer adds: New customer additions slowed; installed base soft; proactive revenue levered to e-commerce confidence .
  • Strategic positioning: Carrier landscape changes (UPS/FedEx/USPS/Amazon/DHL) create openness to new solutions; VerifyMe sees upside potential amid industry change .

Estimates Context

  • Q1 2025 EPS beat consensus: actual ($0.0486) vs est. ($0.07); revenue missed: $4.455M vs $5.0915M; EBITDA missed: ($0.307M) vs ($0.0565M). Two estimates for EPS and revenue. Values retrieved from S&P Global*.
  • Implications: Expect downward revenue estimate revisions and cautious EBITDA expectations given premium contraction and macro softness; EPS resilience reflects cost alignment but depends on mix and OpEx discipline .

Key Takeaways for Investors

  • Mix shift is the story: premium-service in-sourcing drove margin compression; watch proactive growth and direct premium ramp to stabilize margins .
  • Near-term comps remain tough: Q2 likely weak; management signals only easier (not positive) comps in 2H—position sizing should consider limited organic rebound this year .
  • Balance sheet optionality: cash, no bank debt, insider-held converts, and January warrant proceeds set stage for strategic actions; monitor M&A updates as potential catalysts .
  • Execution focus areas: e-commerce platform integrations (Shopify/WooCommerce), expanding freight partnerships, inside sales funnel—track lead conversion to proactive revenue .
  • Estimates likely reset: revenue miss and EBITDA shortfall could trigger lower near-term Street numbers; EPS beat underscores cost control . Values retrieved from S&P Global*.
  • Leadership transition: CFO retirement and incoming finance leadership—watch continuity and strategy articulation next quarter .
  • Positioning vs industry change: carrier ecosystem in flux may create opportunities; VerifyMe’s ability to decouple service from single carrier is a medium-term thesis driver .
Notes:
- Non-GAAP adjustments in Q1 2025 included stock-based comp ($41K), fair value of RS/RSU services ($292K), severance ($57K), gain on derecognized liability ($100K), among others, reconciling to Adjusted EBITDA of $0.0M **[1104038_20250513NY85583:8]** **[1104038_0001214659-25-007426_ex99_1.htm:6]**.
- Approximately 53% of Q1 revenue decline attributable to the discontinued premium-services contract per press release; total YoY decline $1.3M **[1104038_0001214659-25-007426_ex99_1.htm:0]** **[1104038_20250513NY85583:1]**.