Earnings call transcript: Brand Engagement Network Q2 2025 sees stock dip post-call

Brand Engagement Network, Inc. (BNAI) held its Q2 2025 earnings call, emphasizing its strategic focus on cost management and innovation in the AI sector. Despite these efforts, the company’s stock dropped 8.75% to $0.482 in aftermarket trading, reflecting investor concerns over its financial outlook and current performance. According to InvestingPro data, the company’s overall financial health score is rated as WEAK, with the stock already down over 50% year-to-date. With a current market capitalization of just $22.7 million, BNAI operates as a niche player in the AI sector.

Key Takeaways

• Brand Engagement Network reduced G&A expenses by nearly 50% compared to the previous year.
• The company secured a $3.5 million line of credit from Core Capital Partners.
• The stock fell 8.75% in aftermarket trading, with a premarket decline of 5.3%.
• New product launches include the iSky platform, featuring industry-specific training and controlled AI interactions.

Company Performance

Brand Engagement Network has focused on streamlining operations and enhancing its AI offerings across various industries, including insurance, hospitality, mental health, and automotive. The company is preparing for the acquisition of Catanelle and aims to strengthen its financial foundation by rationalizing its cost base. Despite these efforts, the transition from pilot projects to significant revenue-generating contracts remains a challenge.

Financial Highlights

• Reduced G&A expenses by nearly 50% YoY.
• Secured a $3.5 million line of credit.
• Revenue from paid pilots remains modest.

Market Reaction

Following the earnings call, Brand Engagement Network’s stock fell 8.75% in aftermarket trading, closing at $0.482. The stock had already experienced a 5.3% decline in premarket trading. This movement places the stock closer to its 52-week low of $0.231, reflecting investor skepticism about the company’s ability to convert pilots into production contracts and its future earnings potential. InvestingPro analysis indicates the stock is currently trading below its Fair Value, though investors should note that the company is quickly burning through cash with a negative free cash flow yield. Get access to 16 additional ProTips and comprehensive valuation metrics with InvestingPro.

Outlook & Guidance

Brand Engagement Network has set its sights on executing its AI strategy by delivering scalable solutions and expanding into new verticals. The company is particularly optimistic about the healthcare and automotive sectors, where it anticipates converting pilots into production contracts. Future EPS forecasts for FY2025 and FY2026 are -$0.68 and -$0.64, respectively, indicating a challenging path ahead.

Executive Commentary

CEO Paul Cheng highlighted the company’s strategic focus, stating, "Businesses want AI that is purpose-built with deep expertise and designed to solve real problems." CFO/COO Walid Qiari emphasized operational efficiency, noting, "We are getting smarter about our operating costs, gaining financial flexibility."

Risks and Challenges

• Transitioning from pilot projects to production contracts remains uncertain.
• The competitive landscape in the AI sector is rapidly evolving.
• Macroeconomic conditions may impact future financial stability.
• Dependence on strategic partnerships poses a risk if these relationships falter.

Brand Engagement Network’s Q2 2025 earnings call highlighted its ongoing efforts to solidify its position in the AI market. However, the company’s financial outlook and stock performance suggest that investors remain cautious about its future growth prospects. InvestingPro data reveals concerning metrics, including a negative EBITDA of -$28.88 million in the last twelve months and a current ratio of 0.13, indicating potential liquidity challenges. For detailed analysis and expert insights on BNAI and 1,400+ other stocks, access the comprehensive Pro Research Report available exclusively on InvestingPro.

Full transcript - Brand Engagement Network Inc (BNAI) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to Brand Engagement Network, Inc. Q1 twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session.

To ask a question during the session, you would need to press Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Susan Xu, Investor Relations. Please go ahead.

Susan Xu, Investor Relations, Brand Engagement Network, Inc.: Thank you, operator, and good afternoon, everyone. Thank you for joining BEN’s Q1 twenty twenty five earnings conference call. Joining me on today’s call are CEO, Paul Cheng and CFO and COO, Walid Qiari. The company’s first quarter results were disseminated yesterday and are available on the Investor Relations website at www.investors.beninc.ai. During this call, we’ll make forward looking statements, including statements about our business outlook, strategies, and long term goals.

These comments are based on management’s plans, predictions, and expectations as of today, which may change over time. The company’s actual results could differ materially due to a number of risks and uncertainties. For more information about the risks and uncertainties involving forward looking statements and factors that could cause actual results to differ materially from those projected or implied by forward looking statements, please see the risk factors set in Ben’s most recent annual report on Form 10 ks as supplemented by the risk factors in its most recent quarterly report on Form 10 Q. Forward looking statements represent management’s current estimates, and the company assumes no obligation to update any forward looking statements in the future. As a reminder, this call is being webcast from the Investor Relations website.

An audio replay will be available on the website in a few hours. With that, I’ll turn it over to Paul to share our Q1 update. Over to you, Paul.

Paul Cheng, CEO, Brand Engagement Network, Inc.: Thank you, Susan. Good afternoon, everyone, and thank you all for joining us today. Q one marked another step forward for Ben as a business. As generative AI continues to evolve rapidly, the need for secure, scalable, and cost effective solutions have never been more urgent. This is where Ben continues to stand apart.

While some of the largest models are making headlines for their size, cost, complexity, and unfortunately, for their mistakes, our focus remains on delivering practical AI that businesses can actually use without the risk of unmanaged responses or uncontrolled user interactions. The official launch of our iSky platform this quarter has generated strong early traction across multiple industries. The message from the market is clear. Businesses want AI that is purpose built with deep expertise and designed to solve real problems, not just demonstrate surface knowledge of various subjects. We built iSky to solve the challenges we kept hearing in the market.

Large language models that are difficult to trust, prone to hallucinations, and expensive expensive to deploy at scale. ISky solves all of this. It combines industry specific training, a modular architecture, and a lightweight design that gives businesses the rules and controls they demand to be able to service their customers. A major milestone in the quarter end was the launch of our partnership with Swiss Life Global Solutions, a global leader in cross border insurance and employee benefits. With operations in over 85 countries and more than $280,000,000,000 in assets, Swiss Life partnered with BEN to deliver secure generative AI power solutions across its global network of clients and insurance partners.

Our platform will support a range of use cases, including streamlining sales and enrollment, reducing call center volume, and enhancing member services with self-service tools for coverage details, claims and more. Subsequent to quarter end, we also announced a partnership with Seven Visions Resort and Places, the Dieben, an iconic award winning luxury destination in Eastern Europe. We intend to demonstrate how Ben’s secure human like AI can deliver twenty four seven service in a hospitality setting where personalization, trust, and speed are paramount. It’s a clear example of how our iSky architecture supports rapid configuration and high impact use cases in new verticals. Additionally, our partnership with Valio Technologies has led to an important project with University of KwaZulu Natal to co develop an AI power mental health program for students in underserved regions of South Africa.

The solution is designed to scale with anonymized insights, enabling institutions to better target support while maintaining full privacy compliance. In the automotive sector, we continue to develop use cases not only for the dealers, but now also for large OEMs, further entrenching BEN’s technology with customers who can help scale our solutions. As shared last quarter, we signed a definitive agreement to acquire Catanelle, a Germany based media technology company specializing in ad sales and inventory management for major European broadcasters. With the extension deadline approaching in June, we remain on track and anticipate transforming the ad tech industry. For the time ever, brands can now manage and control their entire customer journey from ads to engagement to conversion.

Waleed will provide an update on the progress we’ve made to date and how this acquisition supports our long term growth strategy. As we move through 2025, we remain focused on executing our strategy, delivering practical, scalable AI solutions, expanding into new verticals, and strengthening our global partnerships. While we have demonstrated market validation, we look forward to adding large household names to our list of customers and begin to deploy our solutions in production environments. We are energized by the traction we’re seeing and confident that our platform, people, and partnership position us well for continued growth. With that, I’ll turn it over to our CFO and COO, Waleed Chiari for a financial update and the latest on the Catanelle acquisition.

Walid Qiari, CFO and COO, Brand Engagement Network, Inc.: Thank you very much, Paul. Hi, everyone. On the financial front, this quarter has been primarily about continuing our efforts to better manage our expenses and rationalize our cost base. We’ve reduced our general and administrative expenses, our G and A, by close to 50% compared with Q1 of last year. This is a testament to stronger operational discipline and rigor on the part of the entire BEN team as we as a company have just celebrated our one year anniversary as a public company and keep maturing our processes.

Allocating as many of our dollars to our product and go to market focus is a priority for me and for the team. Additionally, as you may have noticed, out of our eight k file this morning, we recently secured a $3,500,000 line of credit from Core Capital Partners, a Texas based investment firm. This facility provides Ben with additional financial flexibility going forward. On the strategic front, we continue to see market validation for a combination of Ben and Kath Nail. For end customers in the media and advertising space, the combination would provide the ability to create awareness for their products and services and help them engage naturally with their targeted audiences.

From an operational standpoint, among many features on CapNeuro’s platform, one product set is particularly valuable. It’s ad inventory management solution, which could feed Ben’s engagement platform with a ready content with which to engage customers. In summary, Ben is getting smarter about our operating costs, gaining financial flexibility, and continuing to prepare to integrate its planned acquisition. Together these initiatives are strengthening our financial foundation, expanding our product capabilities and positioning us to create long term value for customers and shareholders. With that, I’ll turn it back to the operator for Q and A.

Thank you very much.

Conference Operator: Thank you. And I show our question comes from the line of Jack from Maxim Group LLC. Please go ahead.

Jack Codera, Analyst, Maxim Group LLC: Hi, thanks. This is Jack Codera calling in for Jack Vander Aard. Thanks for taking my questions. And I just wanted to start, I know it’s small to date, but what actually contributed to revenue in the quarter? Was this pilot program or a small actual production contract?

Paul Cheng, CEO, Brand Engagement Network, Inc.: Yep, so I can take that. Yes, all of our pilots are while they’re, you know, early in testing for our customers, they are paid pilots. But the scope of the pilot and the duration is somewhat short. So they are contributing to to revenue, although not not significant just yet.

Jack Codera, Analyst, Maxim Group LLC: Okay. And then, if I could get a little bit more broadly speaking, of the various collaborations and you guys kind of highlighted some in the pilot programs across auto, healthcare, pharma, etcetera. Do you have any visibility into which these may lead to say initial production contracts in the near term?

Paul Cheng, CEO, Brand Engagement Network, Inc.: Well, I would say both in healthcare and life sciences where the pilots have been going on for quite some time. We anticipate some of those to convert into production deployment. And in auto, we got somewhat of a late start in the auto space, but our strong relationships with an OEM, our strong relationship with several large dealership networks, and our current integration with dealer.com. We are actually quite bullish on the automotive space and our ability to launch pilots quickly and then convert those pilots into production. We have a high level of confidence that that could actually occur this calendar year.

Even though as mentioned, we got a bit of a late start. We have a lot of momentum behind us and our technology and our offering has been well adopted by some of those early customers.

Jack Codera, Analyst, Maxim Group LLC: Okay. That’s super helpful. And if I could ask one more clarification question. It was positive to hear that you’ve kind of extended beyond dealers and you’ve found an OEM as well. But can you give a little bit more clarity?

I think in a dealer.com partnership announcement, you mentioned you were finalizing preparation for automotive rollout. Can you give a little bit more granularity as to like what that means and like what the status of that vertical is?

Paul Cheng, CEO, Brand Engagement Network, Inc.: Sure. Yes. So when we say finalizing our rollout, what we’ve done is we’ve zeroed in, on a use case, that is high value to the dealerships, and also, highly relevant and beneficial to the consumers. So some of those functionality have been already tested. We’ve demoed that solution to dealerships.

We’ve done technical integration, which requires live data feed from other sources such as dealer.com. So all of those components needed to deploy the solution at scale has been tested. Are now in the process of deploying it for handful of dealers as pilot. So that is in a great position. And then working with a very large OEM, they’re looking at slightly different use cases that provide benefit for themselves and the dealerships across the regions.

And they are very excited about moving those use cases forward as well, which would benefit the the OEMs, but ultimately benefit the dealers as well.

Jack Codera, Analyst, Maxim Group LLC: Okay. That’s super helpful color. Thank you.

Conference Operator: Thank you. I’m showing no further questions in the queue. At this time, I’d like to turn the call back to Paul Chang, CEO for closing remarks.

Paul Cheng, CEO, Brand Engagement Network, Inc.: Thanks very much. Thank you everyone for joining us today. We are incredibly excited about our accomplishments to date, but more so about the upcoming future opportunities. We look forward to continuing to keeping you up to date on our progress in this exciting market. Thank you very much.

Conference Operator: Thank you. This concludes our conference call today. Thank you for participating. You may now disconnect.

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