Executive Summary

Q4 revenue declined 12% year over year to $7.7M with gross margin at 32% (down 1 ppt), as the loss of a premium customer and a shorter holiday peak weighed on volumes; adjusted EBITDA remained positive at $0.5M for the sixth straight quarter .
Full-year 2024 showed improvement in profitability metrics: gross margin rose to 36% (from 32% in 2023) and adjusted EBITDA more than doubled to $0.95M, despite a 4% revenue decline; Q4 cash from operations was $0.6M .
Liquidity strengthened in early 2025 via a $4.7M warrant inducement (term loan repaid) and establishment of a $15.8M ATM; cash stood at $5.7M on Feb 28, 2025; management reiterated no formal 2025 guidance and flagged near-term comps pressure from the lost premium customer .
Stock drivers: margin resilience (proactive services), cash flow discipline, and capital allocation optionality vs. near-term revenue drag from premium contract loss and softer parcel trends around the holiday period .

What Went Well and What Went Wrong

What Went Well

Positive adjusted EBITDA for the sixth consecutive quarter ($0.5M in Q4; $0.95M for FY 2024), aided by process improvements and cost alignment; FY gross margin expanded to 36% from 32% .
Liquidity/capital actions improved financial flexibility: $4.7M warrant inducement in Jan 2025 (retired bank debt), $15.8M ATM established; cash $5.7M as of Feb 28, 2025; “sufficiently capitalized to pursue strategies aimed at rewarding shareholders” .
Proactive logistics sales effort: 2024 proactive customers +6% YoY; management emphasized PeriShip is a “positive cash-generating business” providing a differentiated service .

What Went Wrong

Top line softness: Q4 revenue down to $7.7M (from $8.7M) primarily due to a discontinued premium services contract; precision logistics premium mix loss also pressured margin (-1 ppt YoY) .
Macro/seasonality headwind: 2024 had fewer Black Friday-to-year-end shipping days, making it the shortest peak season since 2019; overall parcel activity below Q4 2023 .
Authentication headwinds and portfolio pruning: divested Trust Codes Global on Dec 8, 2024; prior quarter included ~$1.8M one-time impairment charges; Q4 adjusted EBITDA declined YoY ($0.5M vs $1.1M) .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Thousands)	8,713	5,435	7,661
Gross Profit ($USD Thousands)	2,873	1,895	2,417
Gross Margin %	33%	35%	32%
Operating Income (Loss) ($USD Thousands)	69	(2,870)	(337)
Net Income (Loss) ($USD Thousands)	2	(2,424)	(501)
Diluted EPS ($)	0.00	(0.23)	(0.05)
Adjusted EBITDA ($USD Thousands)	1,111	174	509

YoY (Q4 2024 vs Q4 2023): Revenue -$1.05M; gross margin -1 ppt; adjusted EBITDA -$0.60M, largely driven by the loss of a premium services customer and softer peak season shipping .
QoQ (Q4 2024 vs Q3 2024): Revenue +$2.23M; adjusted EBITDA +$0.34M; seasonally stronger quarter despite premium mix headwind .

Segment mix (share of revenue):

Period	Precision Logistics (% of revenue)
Q3 2024	98%
Q4 2024	99%

Selected KPIs:

Cash from operations (Q4 2024): $0.6M .
Cash and equivalents (Dec 31, 2024): $2.8M .
Cash (Feb 28, 2025): $5.7M; ~$0.46/share .
Consecutive positive adjusted EBITDA quarters: 6 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Financial guidance (Revenue/EPS/EBITDA)	FY 2025	None	None (no formal 2025 guidance)	Maintained (no guidance)

Capital allocation/other disclosures:

ATM equity program up to $15.8M (announced Mar 6, 2025) .
Warrant inducement proceeds ~$4.7M in Jan 2025; term loan repaid .
Share repurchase plan authorization up to $0.5M extended through Dec 31, 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Authentication strategy	Q2: pursuing Amazon Transparency pipeline; improving APAC; inks pipeline . Q3: discontinue “codes” initiatives; impairments recorded; focus capital on logistics/inks .	Divested Trust Codes Global (Dec 8, 2024); inks <1% of revenue; reassessing .	Pivot away from codes; streamline portfolio
Precision Logistics – Proactive	Q2: proactive customers +7% H1; shipments to existing down 9% YoY . Q3: proactive customers +6% YTD; shipments to existing down 4% .	2024 proactive customers +6% YoY; existing shipments -6% YoY; optimizing sales/marketing .	Mixed same-store volume; expanding customer count
Macro/seasonality	–	Q3 noted stable proactive; comps affected by premium loss .	Shortest peak season since 2019; lower parcel activity vs Q4’23 .
Liquidity & capital	Q2: net cashflow neutral target; reviewing options . Q3: cash net of debt improved .	$4.7M warrant inducement; ATM $15.8M; $5.7M cash (2/28/25); “sufficiently capitalized” .	Stronger optionality to fund strategy
Guidance	Q2/Q3: framed expectations for 2024 (no explicit formal guidance) .	No formal FY25 guidance; expect stability ex-premium loss; external conditions unpredictable .	No guide; focus on execution and optionality

Management Commentary

CEO: “The company is sufficiently capitalized to pursue strategies aimed at rewarding the shareholders… We’re increasing our efforts to identify and pursue avenues for expansion of our Precision Logistics segment.” .
CFO: “Our full year gross margin was 36% compared to 32% in 2023… adjusted EBITDA was positive for the sixth quarter in a row and improved to $1 million for the year 2024 versus $0.4 million for the year 2023.” .
CEO on portfolio actions: “We divested the Trust Codes Global business on December 8, 2024… our ink business represents less than 1% of overall company revenues.” .
CEO on near term: “We have a strong balance sheet and $0.46 per share of cash on hand… access to additional low-cost capital to pursue avenues for meaningful shareholder value creation.” .

Q&A Highlights

Near-term revenue trends: management expects Q1 and Q2 comps to remain pressured by the previously announced premium customer loss; proactive business stable but industry shipments somewhat down; adding customers to offset softness .
Guidance stance: no formal 2025 guidance due to external uncertainty and timing of deploying capital; goal is to pursue options with “meaningful shareholder return with minimal risk” .
Modeling takeaway: analyst’s “low double-digit” top-line decline assumption for H1 viewed as reasonable by management, given comps and environment .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 revenue/EPS/EBITDA was not available at the time of this analysis due to data access limits, so we cannot assess beats/misses vs. estimates. We attempted to pull S&P Global estimates but they were unavailable at query time [SPGI request error noted].

Key Takeaways for Investors

Execution: Despite revenue pressure, VerifyMe delivered positive adjusted EBITDA for a sixth straight quarter and expanded full-year margin, underpinned by process improvements and cost realignment .
Mix shift: Premium customer loss reduces higher-margin mix near-term; proactive services margins improved YoY, suggesting structural progress even as parcel volumes softened in the quarter .
Liquidity optionality: Early-2025 capital actions (warrant inducement, ATM) and $5.7M cash as of Feb 28, 2025 provide flexibility to fund strategic initiatives (organic and/or inorganic) without over-reliance on debt .
Portfolio rationalization: Divesting Trust Codes Global and limiting exposure to subscale Authentication initiatives should improve focus on cash-generative Precision Logistics; ink remains de minimis .
Near-term modeling: Management endorsed a conservative view for H1 given comps and macro; look for stabilization and customer additions to offset volume softness in proactive .
Watch items: cadence of new customer wins, any premium mix recovery or replacement, sustained margin improvement, and how/when management deploys capital under the ATM/repurchase authorization .

Appendix – Additional Q4 2024 and FY 2024 Details

Q4 highlights: Revenue $7.7M; Gross profit $2.4M (32%); Net loss ($0.5M), EPS ($0.05); Adjusted EBITDA $0.5M; Cash from operations $0.6M; Cash $2.8M at quarter-end .
FY 2024: Revenue $24.2M (vs. $25.3M in 2023); Gross profit $8.7M (36%); Net loss $3.8M (incl. $1.6M one-time adjustments); Adjusted EBITDA $0.95M .

Non-GAAP note: Adjusted EBITDA excludes items such as stock-based compensation, severance, impairments, change in fair value of contingent consideration, loss on sale, and certain one-time professional fees; see company reconciliation for details .

VerifyMe, Inc. (VRME)·Q4 2024 Earnings Summary