Intellicheck, Inc. (NASDAQ:IDN) Q4 2023 Earnings Call Transcript

Intellicheck, Inc. (NASDAQ:IDN) Q4 2023 Earnings Call Transcript March 21, 2024

Intellicheck, Inc. beats earnings expectations. Reported EPS is $0.04, expectations were $-0.02. IDN isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the Intellicheck Fourth Quarter and Year-End 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gar Jackson with Investor Relations. Thank you. Mr. Jackson, you may begin.

Gar Jackson: Thank you, operator. Good afternoon and thank you for joining us today for the Intellicheck fourth quarter and full year 2023 earnings call. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. When used in this conference call, words such as will, believe, expect, anticipate, encourage and similar expressions as they relate to the company or its management as well as assumptions made by and information currently available to the company’s management identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on management’s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. And the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes, new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor Statement and Risk Factors listed from time to time in the company’s filings with the Securities and Exchange Commission. Statements made on today’s call are as of today, March 21, 2024. Management will use the financial term adjusted EBITDA in today’s call.

Please refer to the company’s press release issued this afternoon for further definition, reconciliation and context for use of this term. We will begin today’s call with Bryan Lewis, Intellicheck’s CEO; and then Jeff Ishmael, Intellicheck’s COO and CFO, who will discuss the Q4 and full year 2023 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today’s call will be limited to 1 hour. And I will now turn the call over to Bryan.

Bryan Lewis: Thanks, Gar, and thank you all for joining us today for the Intellicheck Q4 2023 and fiscal year 2023 earnings call. One of the things Jeff and I have been emphasizing throughout previous calls and meetings is that we were going to end the year with adjusted EBITDA breakeven or better. I’m excited to point out that we delivered on that goal. For Q4, we achieved net income of positive $757,000, adjusted EBITDA of a positive $1.17 million and the adjusted EBITDA for the full 2023 year of a positive $377,000. Our gross profit margins continue to remain strong, running at 92% for the year. Given our growth expectations, we expect this trend will continue into 2024 and anticipate that we will also end 2024 adjusted EBITDA positive.

Before I get into some of the wins for the fourth quarter and recap some highlights from 2023, I’m first going to share with you some of the substantive changes we have made to the organization. Driven by the changes we made in the engineering team, we reduced year-over-year IT costs by approximately 10%. At the same time, we have realized some significant upgrades to our software. We are now cloud-agnostic, which throughout 2024 will further reduce our cloud expenses as we move clients off of Azure. This improvement is an important milestone. Not only does it provide more security to data in transit, but it will essentially eliminate downtime as we are now active-active on parallel platforms. This is a noteworthy distinction because active-active means we have redundancy and can switch over immediately if the cloud provider has an issue.

This advancement has also led to a complete rewrite of our API. This too is another distinctive step forward because it makes them much simpler to integrate. Anyone can go through our website and program against our test bed and get simulated results. We’re already seeing the positive impact. For example, we had a prospect integrate in 1 day and call us the next day and tell us they were ready for the production keys. We love how excited they were with — at the ease of integration. We had to tell them we were happy to give them the keys, but in their excitement, they had missed a key step. We needed the contract signed, which they promptly did. Our technology improvements don’t stop there, thanks to our revitalized IT organization. We also released a new and much simpler way for our digital clients to capture documents and facial biometrics if needed.

Previously, our clients built their own proprietary remote capture screens. While we still allow clients to do so if they choose, we now offer a tool that can be white labeled and can be integrated into the client’s existing system with 2 simple web hooks. This has been extremely well received, and we currently have 7 either existing clients switching over to this tool or new clients integrating it. We have seen with existing clients that they experience an increase of 20% in completed transactions with the new tool. This is important to highlight because we believe that this new tool will substantially decrease time to revenue for new digital clients. Data science and machine learning began in earnest in Q4. The data lake is complete, and our data team has already come up with new methods to make our ability to spot base even more accurate.

Throughout the course of 2024, they will continue to enhance our product, while in conjunction with our clients, we will continue to build and create new ones. Across all of our use cases, the number of people in North America that are processed through Intellicheck is impressive, continues to grow and we believe provides value to our clients. We also had notable changes in marketing. I’m happy to say that in Q4, we hired Christine Elson as our new VP of Marketing. She has a fantastic track record of helping to ignite sales at several high-growth cybersecurity and technology companies. I am pleased to report that she is already making an impact. As previously discussed, we hired a branding and design company to help with our branding to make our message clear.

Through interviews with our clients and the collaborative work with the branding and design team, we think we succeeded. Our clients reinforce 2 important distinctions that we are certainly calling out: no hardware and the ease of use and simplicity of the process for their clients. We truly are the hardware-free, go-anywhere identity validation platform that we believe provides the best identity experience for their customers that their customers never knew they had. We said we would be upping the Intellicheck profile in 2024, and we have moved forward. Christine has Intellicheck lined up with speaking engagements in some of the most important industry conferences and trade shows. We had a strong presence at Fintech Meetup a few weeks ago.

Fintech Meetup is a high-profile event that brings together more than 4,000 liters from fintech, banking, payments and lending to discuss, shape and create the future of fintech. The agenda there is designed to focus on the biggest issues, challenges and opportunities facing the industry. Our SVP of Sales, Chris Meyer, delivered a well-attended tech talk on next-gen fraud prevention and how it increases conversion rates by 20%. He and enterprise account executive, Joshua Baker, held a number of one-on-one meetings during the event. Previously in February, Chris attended a Stadium Managers trade show. This event brings together personnel from teams, colleges and universities, facility managers and public sports authorities and suppliers to the industry.

It was yet another important opportunity to build brand awareness and connect with influencers. These are just the first of many trade shows that we’ll be attending this year. Coming up, we’ll be attending Datas Insights, which focuses on financial crime and cybersecurity and provides a forum for senior-level executive to focus on fraud, AML, cybersecurity and risk. So turning now to Q4. We saw new client wins in addition to an expansion of use cases with our long-standing financial services company clients that are also bringing on additional retailers. One of the things we as a management team foresaw was that retail was potentially running into challenges. So focusing on diversifying our portfolio of verticals served became a focus. Given the fact that major retailers are shutting down locations, we were correct in our assumptions as Q4 transactions at our largest retailers were off 15%.

You will see that by the — our wins with new banking clients and new banking use cases in addition to clients in new verticals not tied to traditional retail that we are confident that this pivot is working. We believe that over time, these new channels should more than offset the retail reductions we are currently seeing, and we believe that we made the right decision. That being said, we continue to expand our retail penetration and anticipate more than 3,000 new retail doors by the end of the year. During the fourth quarter, financial services company #2 brought online a 565-location wholesale beauty supply company. In addition, they launched a branded credit card, utilizing Intellicheck as a first step in the digital application. They have also begun integrations with 2 additional retailers they expect to bring live by year-end: one is a clothing store with over 1,000 locations for new account openings and account lookup, and the other is 170-location hotel and gaming company for new card account openings.

Financial services company #3 is expanding in-branches cases with the addition of wire transfers and new account openings in addition to the current use cases of transaction over a certain count, no debit card present and account lookup. They anticipate volume for the new use cases to be about 100,000 transactions in a month. They are also working on the integration to bring live a retailer with over 2,200 locations throughout 49 states that provides home improvement, lawn and garden products and farming equipment and supplies. They expect to go live in Q3 of this year. The 2 regional bank pilots were completed in Q4 and were fully implemented and revenue-generating in February, a bit behind schedule, but they are now up and running. If you recall, the first bank with 1,300 locations had an in-branch proof of concept.

This runs so well that they are now viewing the work to incorporate Intellicheck into their digital use cases. They expect rollout in late Q2 or early Q3. The other regional bank with over 2,000 locations started the other way around with a single digital use case, opening new accounts. Because of how Intellicheck simplifies account opening, they had hoped for a 2% increase in new account openings after we were implemented. But because of how Intellicheck simplifies account opening, they realized an impressive 20% increase. They are now expanding to other digital use cases and are working to incorporate Intellicheck into their bank branches. You may remember, we have been working to secure an agreement with a top 3 bank. I am very pleased to report they completed their security audits in Q4, and we now have a signed contract with them.

Like all very large organizations, bringing on a new initiative takes time. And our sense is that just like the audits were an extensive time-consuming effort, so will be the implementation. Right now, they are targeting Q4 this year to go live with their digital mobile banking app. We will continue to provide updates on the integration progress on future calls. We are excited by the win. We believe that when a bank of this size goes with Intellicheck, this is a tremendous validation of what we do and provides a great foundation for 2025 and beyond. We are very excited by another step forward. Our products are now being utilized outside of North America. Our client is a renowned global media and tech company reaching nearly 1 billion people worldwide is now using Intellicheck in the U.K. to validate people.

We believe that we will see more multinational clients that need to validate people in North America turn to Intellicheck for their international needs. We are also continuing to expand in the automotive space both directly and with resellers. The reseller that is working with one of the largest auto manufacturers reached a deal with them to fully roll out to all 2,600 locations with expected minimum annual volumes of approximately 750,000 transactions. We anticipate that full rollout should occur in Q2. Between Q4 of ’23 and Q1 of this year, we have either signed or in the process of signing an additional 4 resellers in the automotive space. Title insurance is another market vertical where we continue to see expansion, again, either through direct sales to inbound needs or through resellers.

Between Q4 and Q1 of this year, we signed 4 of the largest title companies. We have also signed one of the largest providers of software that small title companies use to run their business. We are fully incorporated into their platform now, and they are looking to really expand the rollout in Q2. We believe that being an integral part of a larger platform creates an incremental growth opportunity in the real estate transaction space that is seeing a significant pickup in fraud. Our growth in the age-restricted space in both unattended and in-person use cases continues to grow. During the fourth quarter, we signed an additional 2 vending machine companies. Also in Q4, we signed a company that provides the access to unattended liquor distribution and loyalty lounges at hotels.

They’re going live with a proof of concept with a very large hotel chain in Q2 of this year. A deal that we closed a long time ago but will finally be going live is True Age, which was developed by the National Association of Convenience Stores and Conexus to provide a simple way for convenience stores to stop sales to the underaged. Intellicheck will be used to authenticate the user before they are given access to the app. They expect to begin nationwide deployment in Q2 of this year, starting slowly and ramping up throughout the year. We continue to expand in new markets. In Q4, we signed 2 crypto wallet companies. The use case will be to validate people as they open an account for the wallet. We believe that cryptocurrency could be another meaningful market vertical for Intellicheck.

In Q4, we also signed a wire transfer payments company. They see so much fraud that they are going to make validation mandatory on all transfers. Integration is underway, and they will be working to be live by the end of Q2. I am happy to say that our pipeline of pilots all are going extremely well, which I believe bodes well for future quarters. In closing, with the current wins going live over the next 2 quarters as well as the robust pipeline that the sales team has created, we see significant growth throughout the rest of the year and look forward to keeping you updated as clients go live and we report our Q1 results in May. With that, I’ll turn it over to Jeff, who will provide more details on the financials.

Jeff Ishmael: Thank you, Bryan. I’m pleased with the continued progress we have been making across all levels of organization as we continue our efforts to recalibrate our spend and redistribute investment into the areas that will fuel our growth and profitability. Our fourth quarter revenues were 13.7% higher versus the prior year. We continue to report a higher average price per scan versus the prior year. And we now have achieved our committed goal of adjusted EBITDA-neutral results for the year, where we finished the year with a gain of $377,000 or $0.02 per share on an adjusted basis. As Bryan mentioned earlier, we are also pleased to see the continued trailing 12-month growth progression in SaaS revenues each month, which has been achieved consecutively for the last 4 years.

Continuing to cast a critical eye to the metrics of our SaaS revenue, it’s encouraging to see a 16% increase in our average price per scan versus the prior year as we have continued rightsizing the price of our legacy accounts and enforce internal disciplines on CPI increases. This is especially encouraging as it continues to speak to the testament of the value realized by our customers. We are also continuing to maintain our focus on our operating expenses to ensure that we achieve the expected return on our investments in this area. Within the Q4 period, we started to realize the benefits of our midyear restructuring efforts and the subsequent increase in our adjusted EBITDA. I will share more details after the summary of our fourth quarter results.

We have also successfully launched our channel program, which I also will provide more details on later in the remarks. We expect this program to have a noticeable impact on our 2024 pipeline growth and bookings and to be an important driver of our sales going forward. We believe that this combination of efforts will provide the necessary support for the sales team to drive increases in customer engagement, bookings and revenues in 2024. Turning now to our fourth quarter results. Revenue for the fourth quarter of 2023 increased 13.7% to a record $5,176,000 compared to $4,551,000 in the same period of 2022. Our SaaS revenue for the fourth quarter of 2023 grew [13.2%] to $5,069,000 from $4,479,000 during the same period of 2022 and represented 98% of our fourth quarter revenue.

Gross profit as a percentage of revenues was 94.9% for the fourth quarter of 2023 compared to 94.8% for the same period of 2022. The nominal increase reflected a credit receipt from our cloud service provider, which also occurred in the same period of 2022. We are considering these credits to be nonrecurring as we continue our migration to a cloud-agnostic structure to minimize any downtime and ensuring service availability for our customers. As we discussed during the last few quarters, we’ve been modeling gross margin performance in a range of 90% to 91% as we continue to improve our cloud cost infrastructure. But as the product team has shown, we’ve been able to maintain reoccurring margins of 92% as the re-architecture progresses. We will continue to scrutinize our cost structure with the goal to maintain that level.

Operating expenses, which consist of selling, general and administrative, marketing and research and development expenses, decreased $763,000 or 15.1% to $4,291,000 for the fourth quarter of 2023 compared to $5,054,000 for the same period of 2022. Included within operating expenses for the fourth quarter of 2023 and 2022 were $249,000 and $687,000, respectively, of noncash equity compensation expense. While we realized the benefits of our restructuring efforts in the period, there were 2 notable increase for the fourth quarter. First, in support of our re-architecture efforts, we are capitalizing $407,000 in costs tied to this project. We anticipate that we will see similar levels of capitalization in Q1, and we’d like to see the amount decreasing in the Q2 period.

Second, while we have historically invoiced for and limited sales taxes on required transactions, it was determined that sales taxes for certain customers were not being collected for the periods of 2018 through 2023. The company initiated and finalized the voluntary disclosure agreement with the primary state in question and has recorded the necessary liability of $227,000 within the Q4 period as well as $308,000 for the Q4 2022 period. While the amounts are not material to any 1 year, it was necessary to record the tax liabilities for the entire amount within the fourth quarter periods. Adjusted for these 2 entries, our operating expenses would have decreased by 5.8% on a constant basis. The most notable reduction is in stock-based compensation expense, which decreased $438,000 versus the same period of 2022.

As discussed in our last call, we expect our total noncash expenses will continue to decrease and comprise approximately 10% of our operating expenses with stock-based compensation comprising 90% of that figure. This compares to our prior historical trend of 13% to 15%. Turning to net income and adjusted EBITDA. The company reported a gain of $757,000 for the fourth quarter of 2023 compared to a net loss of $869,000 for the same period 2022. Net gain per diluted share for the fourth quarter of 2023 was a gain of $0.04 compared to a net loss per diluted share of $0.05 for the same period of 2022. As noted above, the Q4 periods reflect the adjustments of the sales tax liability entries. The weighted average diluted common shares were 19.3 million for the fourth quarter of 2023 compared to 18.9 million for the same period of 2022.

We also continue to ensure we are properly managing our cash reserves, which generated $83,000 in interest income versus $5,000 in the same period of 2022. Adjusted EBITDA for the fourth quarter of 2023 increased $780,000 or 201%, resulting in a gain of $1,169,000 compared to a gain of $389,000 for the same period of 2022. Now turning to our full year 2023 results. Revenue for the full year of 2023 increased $2,940,000 or 18.4% to $18,906,000 compared to $15,966,000 in the same period of 2022. Excluding equipment, our SaaS revenue for the full year for 2023 grew $2,867,000 or 18.2% to $18,595,000 from $15,728,000 for the same period of 2022. Gross profit as a percentage of revenues was 92.7% for the full year 2023 compared to 92.0% for the full year of 2022.

The increase in gross margin profit percent was primarily driven by our concentration of SaaS-based revenues. The credit we received from our cloud service providers had a negligible impact on our full year gross margin results. Operating expenses, which consist of selling, general and administrative, marketing and research and development expenses, increased $1,086,000 or 5.8% to $19,807,000 for the full year of 2023 compared to $18,721,000 for the full of year 2022. This increase was primarily driven by higher general and administrative costs, specifically severance-related expenses of $984,000. Included within operating expenses for the full years of 2023 and 2022 were $1,596,000 and $2,455,000, respectively, of noncash equity compensation expense.

As mentioned earlier and included in the full year results were the 2 notable entries for the fourth quarter, which included the product optimization entry of $407,000 and the sales tax liability entries of $227,000 and $308,000 for the fiscal year ’23 and fiscal year ’22 periods. Adjusting for these 2 entries, our operating expenses would have increased by only 8.5% on a constant basis compared to our revenue growth of 18.4%. The most noticeable reduction was in stock-based compensation expense, which decreased $859,000 versus 2022. The company reported an improved net loss of $1,980,000 for the full year of 2023 compared to net loss of $4,159,000 for the same period of 2022. The net loss per diluted share for the full year of 2023 improved to $0.10 compared to the net loss per diluted share of $0.22 for the full year 2022.

The impact of these 2 noticeable entries above represented $0.01 within our net loss per diluted share as a result. The weighted average diluted common shares were 19.3 million for the full year of 2023 compared to 18.8 million for the same period of 2022. Adjusted EBITDA for the full year of 2023 improved to a gain of $377,000 versus a loss of $924,000 for the same period of 2022. Turning to the company’s liquidity and capital resources. As of December 31, 2023, the company had cash and cash equivalents that totaled $9.0 million that’s currently on deposit at Citibank and Capital One; working capital, defined as current assets minus current liabilities of $7.8 million; total assets of $23.8 million; and stockholders’ equity of $17.3 million.

The company recognized an adjustment to the beginning balance of stockholders’ equity in 2022 of $529,000 in consideration of recognized sales tax liabilities for the years of 2018 through 2021. The company has a $2 million revolving credit facility with Citibank that is secured by collateral accounts. There are no amounts outstanding under this facility, and the facility was not utilized during the quarter. Turning now to the progress on our internal initiatives. 2023 has certainly represented a year of significant changes for Intellicheck as we executed on a number of key initiatives that we believe set us up well for further growth in 2024. During the Q2 period, we initiated a $2 million expense-savings initiative aimed at rightsizing our expense structure and securing the necessary team and talent to properly drive product, marketing and operational efficiencies.

During the Q2 period, we hired Jonathan Robbins as our VP of Engineering, who was subsequently promoted to the role of CTO in Q4. Jonathan has been recalibrating that team working with the broader team on the re-architecture of our SaaS platform, moving us towards a cloud-agnostic structure as well as bringing in additional talent to drive our data science and reporting intelligence efforts. As Bryan mentioned, in January of this year, we brought on Christine Olson as our new VP of Marketing. We believe that Christine is the right person to drive additional recognition of the Intellicheck brand and to provide the support that the sales team needs to further drive revenues and logo wins. As we executed on expense initiatives, we made significant shifts in our expense structure and moved much of our spend out of the G&A and product areas to our previously discussed investments in sales and marketing.

These initiatives have already had a demonstrable impact and are reflected in our fourth quarter results, where operating expenses decreased 15.1% versus the prior year compared to a 13.7% increase in revenue, delivering on our goal of adjusted EBITDA breakeven or better. As a percentage of expenses, we are expecting to see our R&D spend continue to decrease year-over-year, while sales and marketing expenses will increase by approximately 8% to 10% to support a broad range of brands and marketing initiatives. Overall, we expect to see significant leverage increases in our OpEx spend against our growth in ’24. While we are significantly increasing program spend on the sales and marketing side of the business, we believe we are profitably structured in our head count and expect a 2024 year-end head count that will be equivalent to the 52-person count we finished with in 2022.

We now have significantly hired a caliber team that has the financial support to drive the growth that we expect this brand should be able to achieve. As mentioned in earlier remarks, we continue to improve our cost structure, which when adjusted for the previously noted adjustments increased to near 8.5% for the full year versus 2022, while revenue increased 18.4%. We have remained committed to the entire year to achieve an adjusted EBITDA breakeven for the year, which we have exceeded and now puts us in a position to start moving that result into a more positive position for 2024. A higher adjusted EBITDA result for 2024 will be the combined disciplines of executing on our revenue plans, ensuring consistency in our gross margins and holding all the team accountable for their FY ’24 operating budgets.

During the prior quarter, we also discussed the early efforts regarding the formulation of our channel partner program, and I’m happy with the results that we are seeing. Since the launch of the program, we have rolled out our partner portal, where we will conduct our deal registration and where our sales team will start accepting registered leads from partners. We have also successfully signed our first cohort of partners. We are excited to see a group of partners that will expand our presence within the automotive, law enforcement and government sectors. One of our top partner signings has a technology ecosystem of more than 10,000 government contractors, value-added retailers, solution providers and system integrators. In consideration to our 2024 outlook, we expect to see continued gross margins of approximately 92%, while we continue to improve our architecture and data intelligence capabilities.

We also expect to see continued leverage in our operating expenses as a result of the expense initiatives we implemented in 2023. As previously discussed, we expect the noncash component of our spend to decrease by 400 to 500 basis points versus 2023 with 90% of that being total stock-based compensation. In closing, we remain committed to the continued improvement of our corporate performance, maintaining our strong balance sheet and driving shareholder value within these new initiatives. We look forward to sharing our Q1 results with you in May. I’ll now turn the call back to Brian, who will discuss our Q1 revenue outlook.

Bryan Lewis: Thanks, Jeff. As I mentioned in my prepared remarks, we have a lot of activity in the pipeline with a number of deals going live in Q2 and Q3 that we believe will drive significant revenue growth in the back half of the year. Like I’ve always said, larger deals take longer to close and longer for the implementation. We are on the cusp of the number of sizable revenue generators that we believe will really move the needle in the back half of the year. These include the new retailers with our long-standing bank partners, additional bank use cases, global media companies, autos, title and now cryptocurrency, our latest vertical. As it stands today, we’ve seen year-over-year declines in scanning volumes in the first quarter at our retail partners that we believe is driven by some of our larger clients reducing door counts and weaker store traffic in general.

Additionally, as I mentioned in my prepared remarks, we have had longer than originally anticipated implementation times to onboard larger customers, for example, the 2 regional banks that are now live. As it stands today, we anticipate Q1 revenues in the range of $4.3 million to $4.4 million with year-over-year growth accelerating sequentially throughout the remainder of the year. With the new hires we have in place, our pipeline and our gross margin and expense structures, we believe that we are well positioned for accelerated growth and to be adjusted EBITDA positive in 2024. I will now turn the call over to the operator to take your questions.

See also 15 Best States for Homeowners Insurance in the US and 25 Largest Insurance Companies in the World in 2024.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Mike Grondahl with Northland Securities.

Mike Grondahl: Bryan, could you talk about pricing kind of overall? I think at one point, like a 16% increase in average pricing per scan was maybe called out. I’m just kind of curious, like are you seeing pricing pressure, pricing power? Trying to understand that a little bit. And then if you could segue into transaction, I think you talked about — I don’t know if you just meant at the big retailers like down 15%. Or kind of what overall are you seeing that with transaction trends amongst all?

Bryan Lewis: Okay. So in terms of pricing, the only time that we see pricing pressure, I’d say, is if we’re looking at bringing on people in the age-restricted space. And I think there’s a lot of people that want to sell into there. And I also think that there’s a lot of places that don’t really want something as accurate as we are. Because when you’re as accurate as us, you’re cutting your revenue. Where we always win and certainly have pricing power is where it hurts our client financially if somebody gets through and commits identity theft. So overall, I’d say that in our — in the core markets where people really care, title and auto and banking and all those things and even crypto because you get crypto while empty, you’re kind of in trouble.

So where it really matters that you catch the bad guys, we have pricing power in, again, some of the age-restricted spaces. When to walk away from the business? Is it really worth it for what some people are willing to do it, but the systems just don’t work. And I think at the end of the day, they’re going to get caught, they’re going to get fined. So they’ll probably come back to us. In terms of — I think you’re asking, Mike, overall, what are we seeing in transactions. Transaction volumes continue to go up in areas other than retail. I’m looking at some of the numbers now. And if I compare this year to — Q4 this year to Q4 last year, I’m looking at some of our very large retailers down anywhere between 15% to 25% in terms of their transaction volumes.

So everything that I’m reading, we’ve got retailers shutting down 150 stores. People are talking about credit cards getting maxed or people worried about the interest rates. So I think that that’s one of the reasons that we really made sure that we were diversifying and getting into other markets that really aren’t dependent on a transaction. If you need to reach or e-mail or something, it’s really important. You have to do it. Those aren’t subject to economic conditions, and we’re making sure that we’re getting into more and more businesses like that.

Mike Grondahl: Got it. And then, I don’t know, can you call out maybe 2 new wins that really help you in the back half of ’24? And trying to kind of understand the statement in the press release, some sizable revenue growth, some wins that will really move the needle. Trying to figure out which ones we need to track closely.

Bryan Lewis: I think that these automotive partnerships are very important to us, certainly getting 2,600 locations with guaranteed volumes, minimums. I look at — but I think that really could be — certainly should be much higher. I think getting into the other use cases at the regional banks could be significant revenue. It could be the True Age and their partnership with MAX could be significant revenue to the back half of the year. So I think it’s a combination of a lot of things. Some of the things that we’re working on with the retailers could really help us blow up at the back end of the year, some of the pilots that we’ve been working with, with some large organizations. And again, just the larger it is, the longer it takes is — the amount of people that have to give their stamp of approval — it seems everywhere we go, the business people like I wanted yesterday.

And rightly so, DevOps and InfoSec are making sure that everything about us is safe so that they don’t get hacked. And it just always takes longer than we would hope and certainly longer than their business folks would hope. So I think it’s a combination of some of the deals that we signed and then some of the pilots that we have in place really hitting the afterwards.

Mike Grondahl: Got it. And then just lastly, retail customers’ transactions, what percent roughly of revenue are they still?

Bryan Lewis: They’re still the majority, upwards of — Jeff might have better numbers off the top of his head. But I’m going to say there’s still up there, if I look at financial services. And again, number four, everything comes through one fee, so it’s hard to break it out. But the financial service is making that they’re doing probably about 95%. But a greater percentage of financial services overall is also becoming banking, just regular banking transactions. And again, something that certainly is not so much economic-dependent. It’s just that certainly, some of our largest retailers were a significant volume of transactions. But again, they’re hitting headwinds, and that will hit us and again why we’re focusing so much on diversifying.

Operator: Our next question comes from the line of Scott Buck with H.C. Wainwright.

Scott Buck: Bryan, I was hoping you could give — just following up here a little bit on the pricing. I was hoping you could give a little color on $0.75 million of auto transactions look similar pricing-wise to $0.75 million card-not-present? Or do you charge a material difference between customers of that nature?