Intellicheck Posts Record Quarter as Identity Fraud Continues to Run Rampant

As identity fraud continues to plague business verticals from banking to automotive and even higher education, verification company Intellicheck posted record Q1 earnings Monday (May 13).

“The landscape of the market for identity verification is evolving against the backdrop of a growing sense of urgency being fueled by across-the-board incidents of identity theft and fraud,” Intellicheck CEO Bryan Lewis told the company’s earnings call.

“This has led to a significant new focus on security and the consumers’ user experience, and businesses in every market vertical are feeling the effects of identity theft.

“Consumers are sending a clear message to businesses of every size in every market vertical. They want better protection. They do not want to be burdened with time-consuming, arduous processes to get that protection, and they will take their business elsewhere if they don’t get what they want in a user-friendly process.”

By the numbers, the company reported a 10% increase in Q1 revenue, reaching $4.68 million, up from $4.25 million in the same period last year. Software-as-a-service (SaaS) revenue also saw a 9% rise to $4.61 million.

Lewis attributed the growth to heightened demand for robust yet user-friendly identity verification amid escalating identity theft and fraud incidents. Gross profit margin remained high at 90.7%, slightly down from 92.2% in Q1 2023. Operating expenses dropped by 10% to $4.77 million, bolstered by reduced non-cash equity compensation. Net loss improved significantly to $442,000, or $0.02 per diluted share, compared to a loss of $1.39 million, or $0.07 per share, a year earlier.

During the earnings call, Lewis detailed the company’s strategic initiatives and new ventures, emphasizing the rise in identity theft and fraud across various sectors.

In the banking sector, PYMNTS Intelligence data revealed, 95% of anti-money laundering (AML) executives are focused on advanced technologies to combat money laundering and other schemes, and 85% of these executives are concerned about the complexity of integrating new technologies. Only 38% of businesses are using document and identity authentication tools, validating Lewis’ comments about a user-friendly experience.

One of Intellicheck’s new ventures is tackling financial aid fraud. This initiative comes in response to the number of fraudulent applications for financial aid, particularly Pell grants. Lewis name-checked a study by the California Community College Chancellor’s Office that revealed that 25% of financial aid applications were fraudulent, a problem extending to state and local aid as well.

To combat this, Intellicheck has partnered with an unnamed university to deploy its identity verification technology. This initiative aims to prevent fraudsters from posing as students to obtain financial aid, only to disappear with the funds, depriving legitimate students of resources. This venture is among the first to be implemented under Intellicheck’s new pricing model, which requires customers to commit to a set monthly minimum rather than purchasing transaction bundles.

Intellicheck’s expansion into financial aid fraud prevention is part of a broader strategy to enhance market reach and visibility. The company’s new sales and marketing team, Lewis said, are spearheading efforts to support the sales team with updated tools and refined messaging. Initiatives include a new sales presentation, a relaunched website, and a lead generation plan to secure new accounts and expand relationships with existing clients.

In addition to its focus on financial aid fraud, Intellicheck continues to expand its Public Private Partnership Program. Recent partnerships with municipalities like Clemson and Charleston, South Carolina, aim to combat underage drinking and related identity fraud issues. These initiatives have demonstrated significant success, leading to interest from other cities and states seeking similar solutions.

Intellicheck is also exploring new applications for its technology, including a pilot program with a technology-enabled consumer credit platform and collaborations with large financial services companies.