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VerifyMe Inc. reported its fourth-quarter 2024 financial results, missing both earnings per share (EPS) and revenue forecasts. The company posted an EPS of -$0.05, falling short of the expected -$0.01. Revenue was $7.7 million, below the forecasted $8.76 million. The stock reacted negatively, with a 17.27% drop in pre-market trading. According to InvestingPro data, the company’s market capitalization stands at $10.13 million, with technical indicators suggesting the stock is currently in oversold territory.
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Key Takeaways
- VerifyMe’s Q4 2024 EPS of -$0.05 missed the forecast of -$0.01.
- Revenue for the quarter was $7.7 million, below the forecast of $8.76 million.
- The company’s stock price fell by 17.27% in pre-market trading.
- Full-year gross margin improved to 36% from 32% in 2023.
- The company divested its TrustCoast global business to streamline operations.
Company Performance
VerifyMe faced a challenging fourth quarter in 2024, with both revenue and earnings per share falling short of expectations. Despite these setbacks, the company reported a year-over-year improvement in gross margin, rising to 36% from 32% in 2023, with InvestingPro data showing a trailing twelve-month gross profit margin of nearly 40%. The net loss for the quarter was $500,000, translating to a loss of $0.05 per diluted share. The company maintains a healthy liquidity position with a current ratio of 1.74, indicating sufficient assets to cover short-term obligations.
Financial Highlights
- Revenue: $7.7 million, down from $8.7 million in Q4 2023
- EPS: -$0.05, compared to -$0.01 forecast
- Gross Margin: 36%, up from 32% in 2023
- Adjusted EBITDA: $1 million, up from $400,000 in 2023
- Cash Balance: $2.8 million, down $300,000 from the previous year
Earnings vs. Forecast
VerifyMe’s actual EPS of -$0.05 missed the forecast of -$0.01 by 400%. The revenue of $7.7 million was 12% below the expected $8.76 million. This shortfall marks a significant deviation from anticipated results and reflects the company’s struggle to meet market expectations.
Market Reaction
Following the earnings announcement, VerifyMe’s stock price dropped by 17.27%, reflecting investor disappointment with the company’s financial performance. The stock’s last closing value was $0.955, with a 52-week high of $5 and a low of $0.578. The decline positions the stock near its annual low, signaling negative market sentiment. InvestingPro analysis indicates the stock is currently undervalued, with a relatively low beta of 0.51 suggesting lower volatility compared to the broader market. For a complete analysis of undervalued opportunities, visit our Most Undervalued Stocks list.
Executive Commentary
CEO Adam Stedham emphasized the company’s strategic focus, stating, "2024 was quite the transition year for the company. And I think we’ve successfully navigated that transition." He also highlighted the company’s strong cash position, noting, "We have a strong balance sheet and $0.46 per share of cash on hand."
Risks and Challenges
- Market Conditions: Continued soft market conditions pose a risk to revenue growth.
- Customer Retention: The loss of a significant customer could impact future earnings.
- Operational Costs: Despite cost-cutting measures, maintaining profitability remains a challenge.
- Strategic Divestments: The recent divestment of TrustCoast may affect revenue streams.
- Competition: Intense competition in the logistics segment may pressure margins.
Q&A
During the earnings call, analysts raised concerns about Q1 2025 trends. Management acknowledged the challenges posed by a lost customer but emphasized the stability of its core business. The company remains committed to careful capital deployment and optimizing its sales strategy. Access the complete VRME Pro Research Report, along with 1,400+ other detailed company analyses, exclusively on InvestingPro, transforming complex financial data into actionable investment insights.
Full transcript - VerifyMe Inc (VRME) Q4 2024:
Conference Call Moderator: Good morning, everyone, and welcome to the Verify. Me Fourth Quarter twenty twenty four Financial Results Conference Call. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask Please also note today’s event is being recorded. At this time, I’d like to turn the floor over to Nancy Meyers, CFO.
Ma’am, please go ahead.
Nancy Myers, CFO, VerifyMe: Good morning, everyone, and thank you for joining us today for our earnings call presentation. On the call today, I am joined by Adam Stedham, CEO and President, who will give an operations and strategic update. Following our management presentation, we will have a Q and A session. I would like to bring your attention to the note on forward looking statements on Slide three. Today’s presentation and the answers to questions include forward looking statements.
It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward looking statements caption and on the Risk Factors of the company’s annual report on Form 10 K and quarterly reports on Form 10 Q. I will now turn the call over to Adam Stedham for some opening remarks.
Adam Stedham, CEO and President, VerifyMe: Thank you, Nancy. So 2024 was a significant year for VerifyMe. During the year, we invested significant time, energy and resources into the code portion of our authentication segment. As we discussed on our last earnings call, these investments did not yield the returns we desired and the investment revenue in 2023. However, we did experience year over year improvements in gross profit, gross margin and adjusted EBITDA.
In addition, the company grew our total cash net of debt in 2024. So during our last earnings call, the company shared that we’re taking steps to reduce investments in areas that are not providing the desired returns and we’re diligently working on strategic investments to deliver shareholder value. During January of twenty twenty five, we further expanded our capabilities in this area by completing a $4,700,000 warrant inducement capital raise and retiring the company’s bank debt. In addition, our convertible debt reduced from $1,100,000 to $800,000 The remaining holders of convertible notes are all affiliates and members of the Board of Directors. So after adding further to verify these options to generate additional capital and liquidity, we’ve also filed a $15,800,000 at the market sales offering to be used at our discretion.
So as a result of all of these steps, the company is sufficiently capitalized to pursue strategies aimed at rewarding the shareholders. We continue to actively work with bankers and advisors evaluating multiple options and defining our plans. So let me shift the conversation to our existing operations. So first, I’d like to discuss our Precision Logistics segment. It’s important to note the Peri Ship business in this segment is a positive cash generating business that provides a valuable service to the marketplace and we’re continuing to optimize our sales strategy.
In 2024, we increased the number of proactive customers by 6% over 2023. However, the shipments by existing customers in the proactive service line were down 6% in ’twenty four versus the previous year. So we’ve hired additional sales resources in ’twenty four and we’re also piloting various marketing strategies to optimize our approach to marketing and sales. So we will we believe that we’ll define the optimum sales strategy for this business. So at this point, I’d like to mention our authentication segment.
The company divested the TrustCoast global business on 12/08/2024. During 2024, this business had an operating loss of $1,200,000 excluding impairments. Our authentication segment also includes our ink business. We’re continuing to review our strategy for the ink business, but it’s important to consider that this portion of the company represents less than 1% of overall company revenues. So overall, I feel that we’ve taken the steps to position the company to create value for shareholders going forward.
So at this point, I’d like to turn the call back over to Nancy Myers, our CFO, and she’ll review the specific Q4 financials.
Nancy Myers, CFO, VerifyMe: Thank you, Adam. Fourth quarter revenue was $7,700,000 versus the prior year of $8,700,000 a decrease of $1,000,000 The decrease in our Precision Logistics segment primarily relates to a discontinued contract with one customer in our premium services and has already been disclosed. In addition, with Thanksgiving arriving later than usual this year, there were fewer days from Black Friday to December 31, making this the shortest peak season since 2019. The growth in the authentication segment did not materialize in 2024 and as Adam mentioned, we divested Otrusco’s global business on 12/08/2024. Gross profit decreased $500,000 to $2,400,000 in Q4 twenty twenty four versus $2,900,000 in Q4 twenty twenty three.
As a percentage of revenue, gross margin was 32% in Q4 twenty twenty four versus 33% in Q4 of twenty twenty three. While the quarter did result in a decrease in year over year gross profit percentage, the loss of the one customer in the premium services was partially mitigated by other process improvements made. During our last earnings call, we stated that we anticipated our full year 2024 gross margin to exceed full year 2023, even though we expected Q4 gross margin percentage to be below Q3 due to the seasonality associated with our proactive revenue. Our full year gross margin was 36% compared to 32% in 2023. Operating expenses were $2,800,000 in Q4 of twenty twenty four and in Q4 of twenty twenty three.
Segment management and technology expenses decreased $100,000 for the quarter. However, this was offset by an increase in sales and marketing spend. Our net loss for the quarter was $500,000 or a loss of $0.05 per diluted share compared to net income of less than $100,000 in the fourth quarter of twenty twenty three. Again, the main driver is the loss of one customer in our premium services. Although our adjusted EBITDA was lower in Q4 of twenty twenty four versus Q4 of twenty twenty three, it was positive for the sixth quarter in a row and improved to $1,000,000 for the year twenty twenty four versus $400,000 for the year 2023.
On the last slide is our balance sheet as of 12/31/2024. Our cash as of December 31 was $2,800,000 a decrease of $300,000 from $3,100,000 on 12/31/2023. During the year, our use of cash included $600,000 in repayment of debt and interest. Due to the seasonality of our Precision Logistics segment, our AR unbilled revenue and accounts payable are higher at year end compared to the other three quarters. As of 12/31/2024, we had $900,000 remaining on our loan and $1,100,000 on our convertible note.
There are no borrowings under our line of credit and we have $1,000,000 available to us. In January, we entered into an inducement letter agreement and approximately $1,500,000 warrants were exercised for $4,700,000 In consideration for the agreement, a new unregistered warrant for approximately 1,500,000 at a price of $4 was issued. As Adam mentioned, with the proceeds from this transaction, we paid down the remaining debt on our term loan and in addition, we have converted about a third of the convertible notes. With that, I would like to turn the call back to Adam.
Adam Stedham, CEO and President, VerifyMe: So, thank you, Nancy. Before we open the call for questions, I’d really like to review the current situation for So the company operates a cash flow positive business that provides a differentiated service for shippers of time and temperature sensitive goods. We’re increasing our efforts to identify and pursue avenues for expansion of our Precision Logistics segment. We have a strong balance sheet and $0.46 per share of cash on hand. Also, the company has access to additional low cost capital to pursue avenues for meaningful shareholder value creation.
So overall, I’m pleased by the foundation we’ve created to move the company forward and reward our shareholders. So at this point, let’s open the call up for questions and answers.
Conference Call Moderator: And our first question today comes from Michael Cetuskchi from Barrington Research. Please go ahead with your question.
Michael Cetuskchi, Analyst, Barrington Research: Hey, good morning.
Conference Call Moderator: Hey, good morning. Hey, good morning. Hey, good morning. Hey, good morning.
Michael Cetuskchi, Analyst, Barrington Research: Hey, good morning.
Conference Call Moderator: Hey, good morning.
Adam Stedham, CEO and President, VerifyMe: Hey, good morning.
Michael Cetuskchi, Analyst, Barrington Research: Hey, good morning. Hey, good morning. Hey, good morning.
Conference Call Moderator: Hey, good morning. Hey, good morning. Hey, good morning. Hey, good morning. Hey, good morning.
Hey, good morning.
Michael Cetuskchi, Analyst, Barrington Research: Hey, good morning. Hey, good morning. Hey, good morning. Hey, good morning. Hey, good morning.
Hey, could
Nancy Myers, CFO, VerifyMe: Yes. So we’re going to it will be about $12,500,000
Michael Cetuskchi, Analyst, Barrington Research: Great. And then in terms of, Adam, I would assume in terms of logistics in Q1 trends, I would assume that probably soft just sort of from a macro perspective and I’m assuming in terms of company specifics. Any commentary around what you’re getting back there?
Adam Stedham, CEO and President, VerifyMe: Sure, sure. I think that there’s a couple of factors to it is first off, the previously announced loss of the one customer will continue to be a drag on comparatives in Q1 and Q2. That event happened at the end of Q2 last year. So from that perspective on the premium side, that will continue to be a drag. We have had some growth in our direct premium business, but that’s not large enough to offset that one large customer.
On the proactive business, the business is the business is relatively stable not even relatively, it’s very stable. With that said, overall market conditions do seem to be down a little bit. The total number of shipments are down a bit. As we pointed out, we try to give our effectively a same store sales number for you. So last year, we did see that down slightly.
That trend continues to be prevalent. We are adding more customers. And so hopefully that’s balancing out the increase in number of customers and the reduction of shipping with existing customers.
Michael Cetuskchi, Analyst, Barrington Research: Okay. And really the last area I just want to touch on it. It doesn’t appear to me that you guys have really provided any guidance around what you 25. Any comment on that and any help you could give on that?
Adam Stedham, CEO and President, VerifyMe: No. We haven’t given any guidance and we don’t plan on giving guidance. So I think overall, I would look at the business and assume it’s relatively stable. We are very stable other than the one customer that we lost last year. On top of that, we made significant efforts last year to align our cost with the changes that were associated with the loss of that customer.
So at this point, we’ve aligned costs with revenue, with that customer and now we’re continuing to look to optimize our sales, which should lead to new customers and continue to add our proactive customer base. With that said, we’re also going to be subject to the same market conditions as everyone else, which I think are a little bit unpredictable right now. So our inability to predict the external market, in combination with the fact that much of our twenty twenty five will be based upon how effectively we deploy the resources that we have available to us, which is difficult to predict the timing of anything like that. The money is not burning a hole in our pocket. We are adamant about diligently working very hard to identify options that can provide meaningful shareholder return with minimal risk.
And so it’s hard to predict the timing of those types of events. And that’s why overall, that’s why we’re not giving guidance for the year.
Michael Cetuskchi, Analyst, Barrington Research: Can I just sort of ask a Part B to that last question and then I’ll get off here? The fourth quarter came in softer than I had expected. I had expected you guys would be able to mitigate more of that FedEx loss than you ended up doing. Is it reasonable to model the past the last test that, hey, sort of that low double digit decline on the top line really should be sort of assumed at least through the first half given the way that comps roll through due to that loss?
Adam Stedham, CEO and President, VerifyMe: I don’t think I think that’s a very reasonable modeling assumption given all the factors. As we said, we live in a somewhat unpredictable world right now. Right. And there’s some very exciting things happening and then there’s some things that are not exciting happening in the world. But from a modeling perspective, I think that’s a smart move on your part.
Michael Cetuskchi, Analyst, Barrington Research: Okay, very good. Thanks.
Adam Stedham, CEO and President, VerifyMe: Not a problem.
Conference Call Moderator: And ladies and gentlemen, at this time, I’m showing no additional questions. I’d like to turn the floor back over to management for any closing remarks.
Adam Stedham, CEO and President, VerifyMe: Perfect. Thank you. So appreciate everybody joining the call. As we said, 2024 was quite the transition year for the company. And I think we’ve successfully navigated that transition.
The company has set a strong foundation for growth. And we look forward to continuing to communicate with you throughout 2025. So, thank you.
Conference Call Moderator: And with that, we’ll be concluding today’s conference call and presentation. We do thank you for joining. You may now disconnect your lines.
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