Intellicheck, Inc. (IDN) Q1 2019 Earnings Report, Transcript and Summary

Greetings, and welcome to the Intellicheck’s First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Gar Jackson, Investor Relations for Intellicheck. Please go ahead, sir.

Thank you, Kevin. Good afternoon, and thank you for joining us today for the Intellicheck First Quarter 2019 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 uncertainties 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, May 1, 2019. 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 the use of this term. We will begin today's call with Bryan Lewis, Intellicheck's Chief Executive Officer; and then Bill White, Intellicheck's Chief Financial Officer, who will discuss the Q1 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour and I will now turn the call over to Bryan.

Good afternoon, everyone and thank you for joining us for the Q1 2019 Intellicheck Earnings Call. We continue to make progress towards the goals we've set for ourselves and I continue to be excited every day that I walk through the door to our office. I would like to start with some general comments about our growth. Our SaaS revenue continues to grow. SaaS revenue was up 45% quarter-over-quarter and 4% sequentially. We are off to a solid start after our first month of the second quarter and we will believe – we believe we will see our sequential SaaS revenue growth accelerate leading into the third quarter. Notwithstanding the non-cash expenses in Q1, operating expenses were up slightly over Q4, but as we have previously explained, it is largely driven by investments we have made in the business. We needed to expand our implementation team to make sure we had the right number of people with the right skill set to be able to capitalize on the opportunities presented to us. We believe that we are well-positioned to drive solid growth numbers throughout the remainder of the year, which will become clear when I discuss the onboarding process and our current status with a number of key accounts. Although we do not typically onboard new retail customers in Q4, because of the holiday shopping season, the shift to the per-scan revenue model will bake in a bit of seasonality moving forward, given the high volume scans retailers experienced during Q4. Also, we discussed on several of our earnings calls that we no longer do custom development for free. We are in the process of developing a systems integration with a large financial institution that we signed in Q3 and recognized the first of two $185,000 development payments last quarter. We expect the second payment, reflective of our completion of developments by early Q3. I have spoken many times about the numerous and significant recent data breaches with good reason. There has been an unrelenting recurrence of these incidents. The Identity Theft Resource Center reported a 120% increase in personally identifiable information breached in 2018 versus 2017. In the six weeks since our last earnings call, a quick Google search reveals seven major breaches and a report by Symantec that two out of every three hotel sites exposed people's names, addresses, e-mail addresses, passport numbers and payment info. On April 29th, an online unprotected database storing the names, addresses, marital status, dates of birth, income brackets, homeownership status and more data for 80 million American households was discovered. To put the size of this open data cache in context, it represents 65% of all households in America. The scariest part, the researchers could not determine who the database belongs to and it's just sitting there for identity thieves to access for free. The problem of identity theft is not going away. It is growing. There are a few topics I would like to discuss today to help everyone understand the opportunity in the financial services space and how we are capitalizing on it. To give you an idea of the addressable market and provide a better understanding of the onboarding process and its timing, we will first look at the specific use cases where we stop fraud and the size of the opportunity that a single credit card issuer represents. Then I will discuss the progress on implementations and some recent wins. I will also provide some of the usual metrics on scans and fraudulent transactions stuff. So let's move to the opportunities starting with the use cases. I often get asked by people how we stop stolen credit cards from being used or why do people need authentication if the EMV chip and the credit card ensures that the card is real. Simply put, we don't. That's not our market. There are three main areas for retail in addition to retail branch banking, where we stop fraud. The first is new account openings. This is where a criminal uses a stolen or synthetically-created identity to open a new charge account. Fraud involving new accounts opened with the victims' stolen personal data in 2018 accounted for an estimated $3.4 billion in losses. This loss is actually greater when you look beyond the initial theft. The bank loses the money on the transaction. The customer loses an average of 300 hours of their time to clear up their name and studies show the consumer blames the retailer. Interesting and significant is that 69% of consumers change their shopping habits and reduce their spend with the retailer where the trouble occurred. So we have the initial loss, the loss of time and the loss of future revenue. The simple solution that is frictionless to the consumer, and I would say actually makes it easier for the consumer is to authenticate the license at the beginning of the transaction. I recently went to one of our retail clients and opened a private-label credit card account. This was on a busy Saturday morning. This retailer is typical with a line to checkout funneling you to a bank of registers. A sign behind the register said save 10% when you open a charge account. When asked, I said sure, and the clerk asked for my driver's license. She scanned it, Intellicheck authenticated it and pre-populated the application. All I had to do was enter in my Social Security Number and income on the debit card pin pad. In seconds, I was approved. That's all it takes to protect consumers. Authenticate; don't just scan. A crook can easily buy my Social Security Number for $1 and a fake license for $100 with my address and his photo on it. He'd walk into a store, open a charge account at a retailer who only scans, make a huge purchase and walk out just as quickly as I did leaving me a 300 hour headache and a retailer or bank on the hook for the money. You’ve heard me talk about private-label credit cards versus non-private-label. On the last call, I told you we were working with a new bank authenticating new account applications for their non-private-label cards. A private-label card is one with the retailer's logo, like the one I applied for in the previous example. It has the retailer's branding on it but it's backed by the bank funding the program. Non-private label is the bank's card, with its own branding. The second use case is referred to as card not present. Retailers are expected to lose about $130 billion in revenue between now and 2023 in fraudulent card not present transactions. Given all the data breaches, criminals know where you have charge accounts. All they need is a standard credit report that is used like a roadmap. So instead of opening an account, they charge to your existing account. I am sure many of you at one time or another have forgotten your charge card for a particular retailer. When you go to check out, you let them know you forgot your card. They will ask you for your license and the last four digits of your Social Security number. The clerk visually inspects the license, enters in the four digits and as quickly the perp impersonating you successfully makes the purchase and their getaway. Given that trained law enforcement officers will say these fakes are so good they can't detect them with the naked eye, the sales clerk doesn't stand a chance. The third area in which we help retailers are non-receipted returns. In a recent study, receiptless return fraud was costing the retail industry $9.7 billion a year. Most often, this is perpetrated by organized retail crime rings who return stolen goods for a gift receipt or loaded gift card. These are easily turned into cash. The National Retail Federation recently released a study in which retailers said their average loss under this crime was over $1,700 per incident. In retail branch banks, we help authenticate people for everything from Anti-Money Laundering Know Your Customer or AML KYC requirements for things like account opening and check-cashing. When we look at market sizing, I think it's best explained with an example. So let's talk about one credit card issuer we are currently working with. We reviewed all the private-label credit card programs they run and took a very conservative approach to determine their clients who we thought would benefit from our services. For example, we didn't consider dental practices or gas stations as a viable target. This very conservative list totaled 55 companies. You’ve heard us say that a small client be worth $250,000 per year, and a large client, $800,000 to over $1 million annually. We researched the number of locations for each of these 55 retailers and put them in three buckets, below 500 locations, 500 to 1,500 locations and greater than 1,500 locations. So basically, small, medium and large. The number was 28, 20 and 7 respectively. If we take a conservative average revenue from the three buckets it is say, $200,000 per year, $500,000 per year and $900,000 per year, this would represent almost $22 million in annual SaaS revenue from this credit card issuer alone. The market is very large and we believe that we are just scratching the surface with the banks we have contracts with. As we have reported, we have been working with 16 retailers in various stages of the onboarding process and several have asked for clarity on the process and the length of time it takes to onboard these customers. The simple answer is, it depends, but I will give some guidance around the process. We have made the customer required coding to incorporate our authentication system very simple by providing integration tools and sample code. The actual time it takes simply depends on the resources available at the retailer and/or the bank. Generally, the coding can be done in anywhere from one to three months. Once the coding is done and approved in the retailer's tech systems, they will do a limited rollout to their stores to ensure it works in production and that they have their training on the new process in order. This limited rollout generally lasts between one and two months and then they rollout system-wide. The speed of the system-wide deployment generally depends on the training resources available. Remember, they need to train all full and part-time staff. We have had clients rollout to thousands of stores in six weeks and some that do that same number over a period of months. In all cases, rollouts typically stop in early October. No retailer wants to change systems and procedures during the holiday shopping season. They generally pick up the rollouts again in mid-January after the returns season is over or in early February, often the beginning of their fiscal year. Most of our retailers are pushing to get as many stores up and running by the October cut-off, so that they are well prepared for the high volume holiday season. Given this cycle, you can see that some retailers will be potentially fully implemented in 2019 and others won't be fully implemented at every location until 2020. Given the retailers push to get as many stores live by October, coupled with more of our customers being charged under our per-scan model, we expect Q4 to continue to reflect some positive seasonality, moving forward. We continue to be on track with our implementation schedules and dates at this time. Beginning in late Q1 through the end of April, we began the widespread deployment of four retailers totaling 2,900 stores, ranging in size from just under 300 stores to just over 1,500. Later this month, we will begin the deployment of another large retailer with 1,300 stores. The development for the large banks that we signed last year has been completed and turned over to them, so we expect the second half of the development fees to be paid in late Q2 or early Q3. We are on schedule to begin SaaS revenue collection in late Q2 with the anticipated continued rollout of retailers throughout Q3. Last call, I spoke about the four banks we are working with and specifically, about piloting Retail ID for the issuance of their own non-private-label credit cards. One of these banks was a new relationship and after a successful 60-day pilot, they committed to the service and Retail ID is now deployed to every user in their callcenters. It's about 1,600 users. This is an important pilot as it was viewed as a test of the Retail ID solution for their retail branches and retail partners. They have already begun the introductions to their retail partners to begin implementations and we are negotiating a statement of work for their retail branches. The large retailer that was using us for parsing only, not authentication, began their post-holiday season rollout to the last of their three brands. That final brand has over 1,000 locations. More importantly, they have asked for a meeting to discuss their fraud rates and moving to authentication in addition to parsing. We said on previous calls that the reason we offer them a parsing solution is that it would lead us to an upsell for authentication and introductions to their credit card issuer who did not work with us and it did. There are 3,000 locations moving from a parsing to an authentication solution would be a significant additional revenue stream for us. New markets are opening up as well. Hospital groups get hit with insurance fraud and we have begun contracting with hospital groups for authentication. The same for auto dealerships. We are up to six dealer groups that have contracted for Retail ID and have signed an agreement with one of the providers of dealer management software to incorporate Retail ID in their suite of products. I believe this serves as a great indicator of all the markets where authentication is needed and that we are just now tapping into. Retail ID scan volumes were up 7.5% year-over-year and attempted fraud was up 3%. We believe that the increase in fraud did not go up in lockstep with scans because of the delay between the time of a breach and when the data is used to perpetrate fraud. The Accenture study found it takes 18 months from breach-to-fraud, so the major breaches like the Experian data breach are just beginning to become ripe. In addition, organized criminals learned which stores have our Retail ID authentication system and we see fraud attempts migrate away from stores where Retail ID has been in place over time to unprotected establishments. Moving to Age ID. The continued focus by the press, state and local governments including the FDA on vaping is helping to fuel interest in Age ID. We continue to lobby the FDA and other legislators to call for authentication before selling any age-restricted product. And recently commented on the FDA's proposed guideline on the sale of vaping products, specifically calling for authentication as the only sure way to make sure you are not selling to the underage. Our partnerships with the Smoke Free Alternatives Trade Association and the New York Vaping Association are generating great leads. Age ID sales for Q1 2019 were almost double Q1 2018. As we have said, this is a very large market where the law has not kept up with technology. The law states that a visual inspection of a license is all that's needed to sell an age-restricted product. Thankfully, the growing pressure on businesses to do the socially responsible thing and go beyond a visual inspection is making up for the lack of a legal change. More and more retailers are doing the right thing, significantly reducing their liability and buying Age ID. Age ID continues to prove to be much easier to sell to law enforcement than Law ID since it does not requires the time and budget associated with the additional training and security that an officer and associated mobile device are required to have to use Law ID. Three new law enforcement agencies signed up to use Age ID in Q1. Overall, I will reiterate what I said on the call in March. The changes we put in place in how we sell and implement our solutions are generating success. We will continue to focus our efforts on financial services/retail, as we believe it is a massive undertapped market where we are generating great momentum with the fastest path to growth and revenue. It is an over $14 billion pain point for banks, retailers and consumers annually. A pain point that large requires that businesses do something about the problem. ID identification is proving to be the best way to stop identity theft. The problem isn't going away and our clients and prospects are seeing us as the best solution to this massive and growing problem. Our implementation plan is on schedule and we are bringing clients on when we said we would. As long as we execute on the opportunities our clients have set in front of us, we believe that we are well-positioned to have a banner year. In addition, to what is already in front of us, we have new prospects calling us and these prospects are household names and we are winning those deals. I am very much looking forward to the rest of 2019. I will now turn the call over to our Chief Financial Officer, Bill White to discuss the financial results.

Thank you, Bryan, and a good day to our shareholders, guests, and listeners. I'd like to discuss some of the financial information that was contained in our press release for the first quarter ended March 31, 2019. I will begin with our first quarter results. Revenue for the first quarter ended March 31, 2019 grew 20% to $1,279,000 versus $1,062,000 for the same period last year. Our SaaS revenue was approximately $861,000 for Q1 2019, a 45% increase from $595,000 in Q1 2018 and it was a 4% sequential increase from approximately $826,000 in Q4 2018. Gross profit as a percentage of revenue continued strong at 85% for the quarter ending March 31, 2019, compared to 90.5% for the quarter ended March 31, 2018. Operating expenses that consists of selling, general and administrative and research and development expenses increased by 13% or $263,000 to $2,306,000 versus $2,043,000 for the prior quarter. The increase was primarily driven by higher non-cash stock-based compensation costs and an increase in development personnel. The company posted a net loss of $1,213,000 for the three months ended March 31, 2019, compared to a net loss of $1,068,000 for the quarter ended March 31, 2018. The net loss per diluted share was $0.08 versus $0.07 in the prior period. Adjusted EBITDA for the quarter ended March 31, 2019 was negative $787,000, compared to negative $962,000 in the quarter ended March 31, 2018. Now I'd like to focus on the company's liquidity and capital resources. As of March 31, 2019, the company had cash of $3.8 million, working capital, defined as current assets minus current liabilities of $3.4 million, total assets of $13.9 million, and stockholder's equity of $12.1 million. During the three months ended March 31, 2019, the company used net cash of $535,000, compared to net cash used of $244,000 for the three months ended March 31, 2018. Net cash used in operating activities was $542,000 for the three month period ended March 31, 2019, compared to $865,000 for the same period in 2018. Net cash provided by investing activities was $7,000 for the first quarter of 2019, compared to a net cash used in investing activities of $67,000 for the three month period ending March 31, 2018 and we did not have any financing activities during the first quarter 2019, while we generated $688,000 from financing activities in the first quarter of 2018. On February 6, 2019, the company entered into a revolving credit facility with Citibank. This agreement allows for maximum borrowings of $2 million, secured by collateral accounts and bears interest at Citibank's rate, minus 2%. As of today, there are no amounts outstanding under this facility and we currently anticipate that our available cash, as well as expected cash from operations and available under the revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months. As of December 31, 2018, the company had net operating loss carry-forwards of approximately $15 million. I will now turn the call over to the operator to take your questions. Operator?

[Operator Instructions] Our first question today is coming from Shaul Eyal from Oppenheimer.

Hi, thank you gentlemen. This is actually Yi Fu Lee in for Shaul and thank you for providing the deep color on the pipeline for the update for the quarter. My first question is in regards to the gross margin. I know, Bill, you mentioned last quarter that, because, last quarter's gross margin was 93% that it was going to drop-off a bit this quarter. And you guys spoke about the implementation of the team. Can you give us some color on what the implementation of team consists of, like, are they new hiring, new equipment that you guys use?

Good. We had to add personnel, that's the main part of it.

Okay.

So, building the implementation team. Yes.

How big was the add?

The overall engineering salaries are up about $217,000 year-over-year, first quarter versus – this year versus first quarter last year.

Okay. And in terms of like the interest and other income line item, I noticed that the same period of last year, it was like more than double. Were there certain things that led to the drop-off from $13.8 million to $6 million?

That's thousands. That's not millions.

Sorry, sorry, thousands, sorry. I am sorry.

Yes. No, as part of the interest income, our cash balance has been decreasing. So we had less interest income.

Okay. And then, you mentioned about the October rollout, stores tend to stop rolling out the implementations. In terms – and then you mentioned that on 4Q that seasonality-wise, that's still going to be positive. Do – should we expect a drop-off for the fourth quarter?

Yes, what I said was the scans go up significantly in Q4, compared to any other quarter. So, when you think about the fact that people are in a way rushing to get stores live by the end of Q3, we will have what's probably the maximum number of stores going in Q4 during the maximum number of scan quarter. So those two things, as we roll more and more of our clients into the per-scan model, should make that a seasonally high quarter.

Okay. So it's going to net out okay. And then, like last quarter, you mentioned about the four banks, 16 retailer pipeline. Since - for this quarter's update, there is already four retailers, right? As well as one that's going to come in end of this month. Can you give us an update on the pipe for the retailers, as of today?

We still have the 16 that we are dealing with. That basically, there is five that we are in the process of where I have a confirmed date that we are rolling them out. The remainder are, like I said, some have scheduled rollout dates. Until I am 100% certain it's going to roll out, I am not going to talk about it and say it's going to happen if it doesn't. And as I said, the retailers – I am sorry, the banks that we are dealing with, their hope and goal is to get all of their clients up and running. So it's – we are continually talking to additional retailers. But if they don't have a definitive date in which they want to start talking implementation, I am not going to say, throw out the number, I'd rather say that we are still at 16 until I can give more definitive dates on when we think some of these people will be going live.

Okay. And in terms of like the hospital opportunity you mentioned, that the new opportunities with the hospital. Can you give us a little more color on what are some of the products that you are launching and like the opportunities there as well?

It's really no new product. If you think about the core of all of our products, it's what we call ID Check. Is the document you're presenting to me real? Is it your license, State ID or military ID. And the hospitals are using us because people will give somebody their insurance card and then go in and get insured, get their arms set and then they come back to me and say, hey, you didn't pay us for your broken arm and all it takes is an x-ray to prove I never broke my arm. So, the fraud is rather large in that sector. And we are basically just repurposing existing product of Retail ID. Who are you? And now we have a record of you coming into the hospital.

Okay, got it, Bryan. And then in terms of like the pipe for this one, is it still an early stage?

Very early stage, very early stage. But there is some large, yes, there is some large groups that we can be talking to you about.

Thank you. Our next question is coming from Roger Liddell from Clear Harbor Asset Management. Your line is now live.

Bryan, following up on these new opportunities. The auto dealership arrangement, I am interested that a provider of software for that business is the repository of your software, I take it. Can you go into some detail there and give us a sense of what do you think implementation speed might be? And are these large retailers or middle-size retailer kinds of opportunities?

Yes, I'd say that's probably more on the small end. The thing if you think about it, every time you walk into a showroom, the first thing they want to do is get your drivers license, so they can scan it for two reasons. One, they want to get your credit report and two, they want to send your information off to all the banks who then want to bid on a loan should you decide to go through a loan with them. So it's a pretty standard practice in auto dealerships. And the thing I like about being integrated with the software, unlike integrating with a retailer's point-of-sale system where there is a ton of customization, these systems are all off-the-shelf. The auto dealer does not do a lot of – they don't allow them to do any customization. So, once it's in the system, as soon as somebody wants it, they can just flip the switch and we've got somebody that's reselling it for us. So that works out pretty good. And there are plenty of auto dealers out there and when we started looking at this, it happens so much more often than I thought that people do go in and actually lease cars or just take them on a test ride and never come back using false credentials. And the return, the reward is pretty good. If you walk in and walk out with a mid-level Lexus for about $50,000, that's quite significant compared to our average retail establishment. So, early days yet. But it's an interesting area for us to look into. And it's one of those things that just really opened our eyes as to how many other markets are there for this. We've been focusing on financial services. But the one good thing I do like about the auto associations, auto dealers, it's they all know each other and talk really well. So, things like going into the NADA Annual Show might be a great way for us to showcase what we do.

But that presupposes a trained sales force in being able to tell dirty jokes in the parlance of – for customers, not tell if the business runs.

That's very true.

So what is your – realistically, what is your bandwidth for bringing on the hospitals and the autos are totally different cultures, languages. The only common thing is the losses.

I think that for the auto dealers, that's the reason that we are – for my preference for that, is that there are really three main dealer management systems, DMS as they call it. My preference is to sell it to them to then sell it out, because they have got an incentive to do it both ways, because they can now prove because most of these DMS systems make money on – there is like a lending tree model. They get paid for every application that they send to a bank for credit. So, they now know that they are sending only good applications, because it's a real card. The auto store owner knows that they don't have to worry about having an expensive car drive off the lot and never come back. So, this is one where we think. I am not always a huge fan of reseller arrangements, because it's not always aligned. This is a really good enhancement to their products and they seem excited to go out and sell it.

And what kind of losses get experienced? I take it that some of these who makes off on a test drive, there is at least a few thousand that one would expect of wear-and-tear or fender benders. So, what are the losses that the dealerships are eating or the financial institutions eating when you are talking cars?

It's generally total. More often than not, it's gone to a chop shop or taken for a demolition derby joyride.

Okay, big bucks then.

Yes. Yes.

Okay, thank you.

Thank you. Our next question is coming from Michael Samuels from Berthel Fisher. Your line is now live.

Hi, Bryan. Just one quick question. The last two conference calls we seem to be focusing on retail. And my question is, what's going on with likes universities, law? I mean we haven't heard much about that. Is that still growing this fast as it should be?

Well that's Age ID, right? So, and in this quarter, we at grew almost double what we did in Q1 2018. So that is – I am going to say, we are seeing very good growth in that area. The one thing you got to find is socially responsible guys. Universities are really good for us. Especially universities that are beginning to sell alcohol at their stadiums. They want to make sure that they are selling to only the right people. So it is growing. Law ID is not growing as fast. And I think it has a lot to do with what I said. There is the officers after go through additional training. There is additional software that they have to buy to put it on the phone. There is annual reviews and what they are finding is Age ID pretty much does the exact same thing without having to have all of that additional training and cost. They will know right away that they are dealing with the right person. And they also can go in and raid bars and do all those things. I think New York State is a great example. They are always putting out press releases about, we raided this bar and we found 80% of the people in it were underage. And they're using our tool to do that. They are using Age ID. The SLA, the State Liquor Authority is using Age ID. So that's the sale that seems to be that's resonating very much with law enforcement. As I said, we brought on three new law enforcement agencies in Q1 and they are our best salespeople. Because they raid a bar. The bar owner usually says, what did you use? They say Age ID from Intellicheck, and we get a phone call. And it’s out. So it's, they are good for us.

So I guess you're just not announcing it like we used to? Because we used to – that was the big thing back then. Now we are not seemed to announcing. Like you just said we signed three up in the first quarter. We haven't seen an announcement on them, that's why I was just curious.

Yes. We'll probably start putting out more press releases on it than we have. There – it's nice when you sell to a law enforcement agency. But, as I said, one of the reasons we are focusing on the financial services area. It is, instead of selling, I am just thinking of how many police departments are there here on Long Island. How many in New York State. Each and every one of those is an individual sale, where an individual chief of police has to sign off on it and all those types of things. Our resources are certainly better focused on – we sign up a bank. As I said, that's a $20 million, in a very conservative estimate, opportunity and I am focusing our resources on bringing in those opportunities. I do have – the way that I teach the young kids to sell is they start working on cold calling police departments and bar owners. And it's a good way to get them out there while they are keeping my senior sales people out in the field, dealing with the financial services groups.

One last question. Going forward for the next as we keep closing these retailers and all that, do you expect revenue to grow exponentially in a 50%, 100% a quarter, coming up?

Yes, I can't say how much it would grow and I can't give those kind of numbers because, quite frankly, it depends on which retailer we bring on. And there are some surprising, some small retailers with not a ton of stores who do very large amounts of scans and then there is large guys who don't do as many scans. So, I can't really give guidance on that, because it depends on the mix of who we are bringing on when.

Right. And once we get retail on, then obviously, the fourth quarter, around the Christmas time, should probably be the biggest quarter for us then.

I think going forward, that will be very – you could probably bet on that. We know, looking back historically, the jump that we see in scans versus the average scans for the first three quarters is significant.

Right. Thanks a lot. Good job.

Thank you.

Thank you. Our next question is coming from Amy Norflus from Neuberger Berman. Your line is now live.

Hi, Bryan, great job. I think you are doing a really good job growing the retail business and giving us more details about it, which is great. Maybe the next quarter, if you can maybe please give us a slide presentation, because, I feel like I have to go back now and read the transcript, because the numbers were really great and I wrote them down really fast. But if it were something to compare and contrast, that would be really helpful going forward. Can you also talk about the sales force? Do you have enough salespeople? Do you need to add more? You said we have enough money to last us for the next 12 months. But kind of what are you thinking, where you want to be? And what's the sweet spot in ramping up and all that stuff?

Again, here is what I’d say. Paul Fisher, our Head of Sales and I, we're always talking, are we right-sized? Do we need more? Certainly, one thing is if we – we're always looking for good salespeople because they pay for themselves. And so they are usually a smart, easy add. At this point in time, I think we are good. I think as we start to think about some of these new areas and new markets that might represent an easy – again, a sale to one entity that could bring in lot of revenue, we will look to hire people.

Okay. And what is the biggest pushback that your sales people are getting? So you are going in and you are presenting this opportunity, you are saying, we can save you money. We have data. What's the biggest pushback? I mean, why isn't it an easy to sell? Or maybe it is an easy sell.

Part of it is inertia, just the because people – one of the things I believe that we are finding is, in the past, I’ve talked about shiny new toys and all the cool things people thought they could do, which they are finding out they can't. And it's an industry that people are beginning to realize they can solve simply. And I think that we've done a lot of education with our existing clients to have them become clients. And now they are becoming the best references that we have. They are the ones who are talking to the fraud, risk people at other credit card issuers and saying, you need to talk to Intellicheck. So, part of it was educating them on what we could do, educating to the fact that it is legal to do. I think another thing is we did not make it very easy for somebody to integrate with us. We almost made them ask all the questions to get it done. Part of what we changed over the past year was to provide proper implementation packets with everything they need to get going. We've proven ourselves to the bank partners that we know what we are doing. So they are now bringing us to their retail partners so that we can explain it and we are driving the process. So, I think that the fact that we are getting more and more adoption will make it easier to do. When we first started doing this, I would go back to nobody gets fired for buying IBM. Well, we would do something drastically different than IBM, so people were worried and like, is it right, can I do it? Now we are becoming IBM. So people know that it's a simple thing to do. Those are all the things that in the beginning that we had to overcome, it was an educational sale.

Gotcha. Gotcha. And the last question, you stated that the fraudsters are realizing which retailers have this? Is that because they are just going in with this fake ID and just getting turned down?

Yes. They get to know what's going on. We were out, I remember, Paul and I, last fall, we were out visiting some of our clients in the Midwest area and we went into one of the furniture stores and we were talking to the guy who ran that region and he said that they realized that they had been installed and rolled out in some of the stores in the region and they realized nobody was coming in there anymore. But the stores that they had where they didn't have it installed yet, they were getting whacked on fraudulent credit cards. So, they know. This is, again, very organized. Whenever you read about somebody getting arrested for this credit card fraud, where they've opened up 300 new credit card accounts, it's not just one person. It's always a ring.

Is there any chance that we'll be able to find out who some of your retail partners are?

I am doing my best. It's funny, though. They all talk to each other. If I bring in any prospect, we've got people at all the banks and the retailers who are like, sure, have them give me a call. Just give me a heads up that they are going to call. You don't even have to ask for my permission. Just let me know so I take the call. But they also seem slightly reticent to put their name out there and just admit that they are victims of fraud when everybody knows that everybody's victims of this fraud. 14.4 million Americans in 2018, $14.7 billion eaten by banks, right? It's – why they want to pretend, it doesn't exists, I don't know when every research report proves it does.

Got it. All right. Perfect. Well, keep up the good work.

Thanks, Amy.

Thank you. That does conclude our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments.

Just like to thank everybody for dialing into the call. We are happy with the quarter. We are happy with the fact that, as I said, the changes we put in place and the discipline and the accountability and everything that we are doing is showing results. And as I said, we expect to see the continued results and rollouts of the retailers throughout the year. And I look forward to our next earnings call.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.