Company Overview
authID Inc. (AUID) is a leading provider of biometric identity verification and authentication solutions, empowering enterprises to confidently establish and verify the identities of their customers and employees in both physical and digital environments. With a steadfast commitment to innovation and a deep understanding of the evolving cybersecurity landscape, authID has emerged as a trailblazer in the realm of secure digital identity management.
Founded in 2011 and headquartered in Denver, Colorado, authID has undergone a remarkable transformation in recent years, positioning itself at the forefront of the biometric authentication revolution. The company, originally named Ipsidy Inc., changed its name to authID Inc. on July 18, 2022. In its early years, authID faced challenges in gaining market traction and building a sustainable revenue stream. Despite efforts to expand its product offerings and customer base, the company struggled with generating significant revenues and positive cash flow.
A turning point came in 2021 when authID experienced a leadership change, with new executives brought in to help turn the business around. Under the new management team, the company worked to streamline operations, enhance its technology platform, and target new customer segments. This included signing partnerships and OEM agreements to broaden the reach of authID's solutions.
Products and Technology
The company's flagship products, Proof and Verified, leverage cutting-edge facial recognition technology and machine learning algorithms to deliver lightning-fast identity verification and user authentication, all while prioritizing user privacy and regulatory compliance.
authID's journey began with the development of its proprietary Proof identity verification solution, which enables organizations to swiftly and accurately onboard new customers by verifying their identities against government-issued documents and biometric data. This streamlined process not only enhances security but also significantly improves the customer experience, reducing friction and time-to-onboard.
Building upon this foundation, authID introduced its Verified authentication platform, which empowers enterprises to continuously validate the identities of their customers and employees during critical transactions and access points. By seamlessly integrating biometric authentication into their digital ecosystems, organizations can effectively combat identity fraud, account takeovers, and other cyber threats, all while delivering a seamless and frictionless user experience.
authID's Verified cloud-based platform provides comprehensive biometric identity verification services, allowing enterprises to quickly and accurately verify the identity of new users based on government-issued identity documents, such as national IDs, driver's licenses, and passports. The platform uses advanced biometric matching to compare a user's selfie photo with the reference image on the identity document, while also detecting presentation attacks and spoofing threats.
In addition to identity verification, the Verified platform offers biometric authentication capabilities. Users can confirm their identity for tasks like passwordless login or transaction authorization by simply taking a selfie. This provides a secure, convenient authentication method tied to the user's verified identity. The solution creates a detailed audit trail for each transaction, digitally signed with proof of identity authentication and user consent.
authID's platform also enables users to recover account access that may be lost or blocked, such as due to expired credentials, device loss, or account compromise. By leveraging the user's established biometric identity stored in the cloud, the account recovery process is instant and portable, independent of any specific device.
The company's offerings extend to binding biometrically verified user identities to FIDO2 passkeys. This creates a trusted digital chain between the verified individual, their accounts, and their devices, eliminating the need for passwords and protecting against fraud.
Privacy and Compliance
One of authID's key strengths lies in its unwavering commitment to privacy and compliance. Recognizing the growing concerns around the storage and handling of biometric data, the company has developed innovative solutions, such as PrivacyKey, that enable enterprises to leverage the power of biometrics without compromising user privacy or incurring compliance risks. This pioneering approach has resonated strongly with large-scale customers, who have long sought a reliable and risk-free biometric authentication solution.
Market Adoption and Growth
In recent years, authID has experienced a remarkable surge in adoption, driven by its ability to deliver unparalleled speed, accuracy, and security in identity verification and authentication. The company's Proof solution has seen a staggering 25-fold increase in the number of identities processed per quarter, from an average of 20,000 prior to the current leadership's involvement to nearly 800,000 in the third quarter of 2024. Similarly, the Verified platform has witnessed a 42-fold increase in registered user identities, underscoring the growing demand for authID's cutting-edge technology.
Financials
Despite facing some delays in customer go-live timelines and adjustments to volume expectations, which have impacted the company's near-term revenue guidance, authID remains steadfast in its long-term growth strategy. The company has continued to secure significant customer wins, including a landmark $10 million agreement with a next-generation AI company to enable biometric authentication solutions across a range of industries in India, a market poised for exponential growth in the coming decade.
For the three and nine months ended September 30, 2024, authID reported revenues of $248,920 and $686,740, respectively, compared to $43,390 and $118,390 in the prior year periods. This significant year-over-year growth reflects the company's success in signing new customer contracts and expanding its identity verification and authentication services. The company reported a 475% year-over-year increase in revenue in Q3 2024 compared to Q3 2023.
However, the company continues to operate at a loss, with net losses of $3.36 million and $9.68 million for the three and nine month periods, respectively. The operating cash flow for the most recent quarter was -$2,727,717, while the free cash flow was -$2,712,135.
For the full year 2024, authID now expects revenue in the range of $800,000 to $900,000. This represents a 4x year-over-year revenue growth, which is lower than their original expectation of 7x growth. The reduced revenue guidance for 2024 is due to delayed customer go-live events and adjustments to their volume expectations, which have pushed out anticipated revenue from 2024 to 2025.
Despite the revised revenue guidance, authID remains committed to their previously stated target of $9 million in booked annual recurring revenue (bARR) for 2024, which represents a 3x year-over-year bookings growth. The company now expects to grow their Remaining Performance Obligation (RPO) to a range of $13 million to $14 million by the end of 2024, up from the previously stated target of $12 million to $13 million.
To further bolster its go-to-market capabilities, authID has strategically expanded its leadership team, bringing on industry veterans like Donna Shawhan as VP of Partnerships and Erick Akre as VP of Sales, both with extensive experience in the financial services sector. These strategic hires underscore authID's commitment to accelerating its sales efforts and deepening its partnerships with enterprises across various verticals.
Liquidity
Looking ahead, authID remains laser-focused on driving continued innovation in its biometric authentication solutions, further enhancing their speed, accuracy, and privacy safeguards. The company's unwavering dedication to securing digital identities and empowering enterprises to confidently navigate the modern threat landscape positions it as a true innovator in the ever-evolving world of cybersecurity.
As of September 30, 2024, authID had $11.72 million in cash on hand, providing a strengthened liquidity position following a $10 million capital raise in June 2024. The company's debt-to-equity ratio stands at 0.015, indicating a low level of debt relative to equity. The current ratio and quick ratio are both 6.97, suggesting strong short-term liquidity.
authID had a credit facility agreement with Stephen J. Garchik, which was amended in March 2023. The current status and available credit line under this facility is unclear from the information provided.
Industry Trends and Market Position
authID operates primarily in the United States, focusing on providing enterprises with a comprehensive biometric identity platform to securely onboard new users, authenticate ongoing access, and enable seamless account recovery. The company's solutions aim to eliminate password-related risks and deliver a frictionless user experience backed by a trusted digital identity.
Key industry trends impacting authID's business include growing concerns over identity theft, fraud and account takeover, resulting from the acceleration of digital transformation, growth in the sharing economy, and the increase in electronic payments and alternative money transfer solutions. The company also highlighted the changes in levels of spending on identity verification, management and security methods, and the impact of negative trends in the global economy.
As authID continues to expand its footprint and solidify its reputation as a trusted partner in the realm of biometric identity verification and authentication, the company's long-term growth prospects remain compelling. With a resilient business model, a strong pipeline of customer opportunities, and a steadfast commitment to innovation, authID is poised to capitalize on the growing demand for secure and user-friendly digital identity solutions, cementing its position as a leader in this transformative industry.