VerifyMe, Inc. (NASDAQ:VRME) is a traceability and customer support services provider using specialized software and process technology. The company operates two reportable segments: Precision Logistics and Authentication. In the first quarter of 2024, VerifyMe reported revenue of $5,759,000, a 2% increase from the prior year period. The company's net loss for the quarter improved to $553,000, or $0.05 per diluted share, compared to a net loss of $1,580,000, or $0.17 per diluted share, in the first quarter of 2023.
Business Overview
VerifyMe's Precision Logistics segment specializes in predictive analytics for optimizing delivery of time and temperature sensitive perishable products. The company manages complex industry-specific shipping logistic processes that require critical time, temperature control and handling to prevent spoilage and extreme delivery times and brand impairment. Through its proprietary PeriTrack® customer dashboard, VerifyMe provides real-time information and analysis to mitigate supply chain flow interruption, as well as delivering last-mile resolution for key markets, including the perishable healthcare and food industries.VerifyMe's Authentication segment specializes in traceability to connect brands with consumers through their product. The company's custom suite of products offer clients traceability and brand solutions, including VerifyMe Engage™ for brand enhancement, VerifyMe Authenticate™ using rare earth-based ink taggants for instant authentication, and VerifyMe Track & Trace™ for unit level traceability and supply chain control.
Financial Performance
In the first quarter of 2024, VerifyMe reported revenue of $5,759,000, a 2% increase from $5,661,000 in the prior year period. The Precision Logistics segment generated revenue of $5,614,000, a 4% increase from $5,414,000 in the first quarter of 2023. The Authentication segment reported revenue of $145,000, a decrease from $247,000 in the prior year period.Gross profit for the first quarter of 2024 was $2,260,000, a 49% increase from $1,521,000 in the first quarter of 2023. Gross margin improved to 39% from 27% in the prior year period. The increase in gross profit and margin was primarily due to a shift in customer mix and service offerings in the Precision Logistics segment, as well as process improvements.
Operating expenses decreased to $2,907,000 in the first quarter of 2024 from $3,025,000 in the prior year period. The decrease was primarily due to lower general and administrative expenses, which declined $292,000 to $1,121,000. This was partially offset by a $238,000 increase in segment management and technology expenses to $1,343,000.
VerifyMe reported a net loss of $553,000, or $0.05 per diluted share, in the first quarter of 2024, an improvement from a net loss of $1,580,000, or $0.17 per diluted share, in the prior year period. Adjusted EBITDA increased to a positive $100,000 in the first quarter of 2024 compared to a loss of $500,000 in the first quarter of 2023.
Liquidity and Capital Resources
As of March 31, 2024, VerifyMe had $2,818,000 in cash and cash equivalents, including restricted cash, compared to $3,095,000 as of December 31, 2023. The company used $60,000 in cash from operations during the first quarter of 2024, an improvement from $126,000 used in the prior year period.VerifyMe has $1,300,000 remaining on its loans and $1,100,000 on its convertible note as of March 31, 2024. The company has no borrowings under its $1,000,000 revolving line of credit and has $1,000,000 available.
Outlook
For the full year 2024, VerifyMe continues to expect double-digit revenue growth in both its Precision Logistics and Authentication segments. The company believes its second half 2024 growth rate will exceed the first half growth rate, driven by seasonality in the Precision Logistics business and an expanding sales pipeline in Authentication.Management noted that the company is adding two additional sales representatives in the Precision Logistics segment, focused on the region between Maine and Pennsylvania, to drive new customer acquisition. In the Authentication segment, VerifyMe is seeing positive trends in its APAC business, strategic relationships, and ink sales. The company is also working to convert its growing pipeline of opportunities, particularly related to its integration with Amazon Transparency.