Transcript of Q2 2025 Earnings Conference for VerifyMe (VRME)

Transcript of Q2 2025 Earnings Conference for VerifyMe (VRME)

VerifyMe, a leading provider of product authentication solutions, has announced its strategic focus for capital allocation and growth in Q2 2025. The company is keen on pursuing strategic acquisitions, partnerships, and prudent cash management to drive long-term shareholder value.

Pursuing Strategic Acquisitions and Partnerships

VerifyMe is actively seeking strategic acquisitions aimed at expanding its logistics network and diversifying its customer base. By doing so, the company aims to accelerate growth and reduce customer concentration risk. However, management remains cautious, emphasizing diligence to ensure acquisitions deliver meaningful returns without overextending the balance sheet.

A major new partnership with a leading U.S. parcel carrier is a cornerstone for organic growth in 2026. This partnership will enhance capabilities in time- and temperature-sensitive logistics, critical to healthcare and e-commerce sectors.

Cost-Cutting Measures and Cash Management

VerifyMe has implemented rigorous cost-cutting measures, including a 27% reduction in operating expenses. This reduction was aided by divesting its TrustCodes segment and streamlining its Precision Logistics operations. The company's capital allocation includes a new treasury strategy, deploying $2 million into a nine-month promissory note with a 16% annual rate, aiming to generate over 8% interest income on cash reserves.

Organic Growth and Acquisitions

CEO Adam Stedham emphasizes a balanced approach: combining organic growth, strategic partnerships, and accretive acquisitions while carefully managing capital deployment for shareholder value without rushing into suboptimal deals. The company is prioritizing the expansion of directly contracted PeriShip customers as a primary driver for future organic growth.

Financial Highlights

• Authentication revenue for Q2 2025 was $27,000.
• Fiscal Q2 2025 revenue was $4.5 million, a decrease of $900,000 compared to Q2 2024.
• Gross profit for Q2 2025 was $1.6 million, down $500,000 from Q2 2024.
• Adjusted EBITDA for Q2 2025 was $300,000, up from $200,000 in Q2 2024.
• Net loss for Q2 2025 was $290,000, lower than the $350,000 net loss in Q2 2024.
• $700,000 cash from operations was generated in Q2 2025, compared to $400,000 in Q2 2024.
• A $2 million loan was entered into with Zen Credit Ventures on Aug. 8, 2025, expected to improve annualized interest income.
• As of June 30, 2025, VerifyMe reported a $6.1 million cash balance, up from $2.8 million at Dec. 31, 2024.
• 201,000 shares were bought back for $153,000 in Q2 2025.
• $1 million remains available in the line of credit, with no amounts currently drawn.

Other Developments

• The addition of a second freight carrier is expected to further reinforce organic revenue growth in 2026.
• Management is looking to deploy capital in other ways, including continued diligence in evaluating both tuck-in and transformative acquisitions.
• The current capital structure provides flexibility, as the company does not depend on borrowings and reports ample access to capital to pursue any strategic options it desires.
• The technology integration with the new freight carrier is expected to take several months and will not impact results until 2026.
• VerifyMe has completed technology integrations with e-commerce shopping carts and shipping management software applications.
• The company continues to evaluate transformative and tuck-in acquisitions.

In summary, VerifyMe's Q2 2025 capital allocation and growth strategy is cautious but focused on using cash flow and liquidity strength to pursue strategic acquisitions and partnerships that broaden capabilities and customer diversity, coupled with operational cost efficiency to stabilize profitability and position for growth in 2026.

1. VerifyMe aims to expand its logistics network and diversify its customer base through strategic acquisitions to accelerate growth and reduce customer concentration risk.
2. The company is looking to deploy capital in other ways, including evaluating both tuck-in and transformative acquisitions.
3. A major new partnership with a leading U.S. parcel carrier will enhance capabilities in time- and temperature-sensitive logistics, critical to healthcare and e-commerce sectors.
4. CEO Adam Stedham emphasizes a balanced approach of combining organic growth, strategic partnerships, and accretive acquisitions for shareholder value while carefully managing capital deployment in the context of the finance industry, personal-finance, wealth-management, business, and the stock-market.

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