Ipsidy Inc

NASDAQ:AUID

Earnings Call Transcript 2024-Q1

[Graham Arad, executive]

Greetings, and good afternoon. This is Graham Arad, General Counselor ID. Welcome to the authID First Quarter 2024 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. With me on today's call are our CEO, Rhon Daguro; our CFO, Ed Sellitto; and our CTO, Tom Szoke. By now, you should have access to today's press release announcing our Q1 2024 results. If you have not received this, the release can be found on our website at www.authid.ai under the Investor Relations section. Throughout this conference call, we will be presenting certain non-GAAP financial information. This information is not calculated in accordance with GAAP and may be calculated differently from other companies' similarly titled non-GAAP information. Quantitative reconciliations of our non-GAAP adjusted EBITDA information to the most directly comparable GAAP financial information appear in today's press release. Before we begin our formal remarks, let me remind everyone that part of our discussion today will include forward-looking statements. Such forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Some of these risks are mentioned in today's press release. Others are discussed in our Form 10-K and other filings, which are made available at www.sec.gov. I'd now like to introduce our CFO, Ed Sellitto.

[Ed Sellitto, executive]

Thanks, Graham. I'm pleased to report that Q1 2024 has been a pivotal turning point for AuthID's revenue growth. Our sales, engineering and customer success teams have worked tirelessly to launch new customers so that we can begin to recognize revenue from customers booked in 2023. Turning to Slide 4. The following highlights compare our GAAP results from continuing operations for the 3-month period ended March 31, 2024, with the 3-month period ended March 31, 2023, unless otherwise specified. Total revenue for the quarter increased to $0.16 million compared with $0.04 million for the same period last year as the result of the launch of several new customers that were signed in 2023, including both consumer and workforce use cases. Q1 revenue is already approaching $0.19 million in revenue earned in 2023. Operating expenses for the quarter totaled $3.31 million compared with $1.02 million for the same period last year. This increase was driven by a onetime noncash expense reversal in Q1 2023 of $3.4 million from the reversal of certain stock-based compensation related to employee terminations, which was not repeated in 2024. From a quarter-over-quarter perspective, operating expenses for Q1 2024 remained in line with the operating expenses incurred in Q4 2023. Losses from continuing operations for the quarter was $3.06 million, of which noncash charges were $0.77 million compared with a loss of $1.78 million in Q1 of 2023, of which the impact of noncash and onetime severance charges was a negative $0.42 million comprised of the $3.4 million reversal of stock-based compensation noted previously as well as $3.0 million in additional noncash severance charges. Looking again from a quarter-over-quarter perspective, loss from continuing operations decreased approximately 4% from $3.2 million in Q4 2023 to $3.06 million in Q1 2024. Net loss per share for the quarter was $0.32 compared with $0.36 for the same period last year. Moving to Slide 5. As reported on our 2023 annual results call held in March, we also monitor and manage our Remaining Performance Obligation, or RPO, in accordance with GAAP, as noted in our financial statements for the period. RPO provides a measure of the minimum revenue expected to be recognized from our signed contracts based on customers' contractual commitments. As of Q1 2024, our total RPO was $4.03 million, which equated -- which equals the RPO from Q4 of 2023. The quarter-end RPO includes deferred revenue of $0.31 million, an increase over 2023 of $0.18 million, which moves from additional noncanceled loan revenue as a result of customers invoiced in Q1. Deferred revenue represents advanced payments received, which are not yet recognized as revenue. The Q1 2024 RPO also includes $3.73 million in additional noncancelable revenue under contracts that were signed in 2023 and Q1 of 2024, but which has not been recognized. Total RPO remains flat quarter-over-quarter as new contractual commitments signed in Q1 of 2024 were largely offset with revenue recognized in the quarter. We expect to recognize the full RPO of 4.03 million over the entire life of the contracts, which are typically signed with a 3-year term. Over the next 12 months, ending March 31, 2025, the company expects to recognize approximately 40% or $1.6 million of the $4.03 million in RPOs revenue based on contractual commitments and expected usage patents. While the RPO is based on contractual terms as agreed to by our customers, the expected time to recognize revenue is based on our best estimates given the current known facts and circumstances. Of course, our RPO is based only on minimum contractual commitments, we have reason to believe that each of these customers will exceed their minimum commitments. Moving to Slide 6. Before we review our non-GAAP results, I want to take a moment to discuss how going forward, we will provide additional detail to explain our bookings metric known as BARR. In 2023, we reported our metric for BARR or Booked Annual Recurring Revenue, which is the projected amount of annual recurring revenue, we believe, will be earned under contracted orders, looking at 18 months from the date of signing of each customer contract. Starting with this quarter, we're providing additional details by breaking back into 2 components: Committed Annual Recurring Revenue or CARR and Usage Above Commitment or UAC. The chart shown here on the slide illustrates how both measures convert into revenue over a 3-year period. CARR, as shown on the dark purple on the left side of the chart represents the total annual customer contractual commitment through fixed license fees and minimum usage commitments. These commitments are directly recognized as revenue in each contract year after the customer goes live with the service. UAC, as shown in light blue on the right side of the chart is an estimate of annual customer usage that will exceed contractual commitments. By the title customer fully ramps its usage by about 18 of its contract, CARR is expected to comprise approximately 1/2 of the recognized revenue with UAC making up the other half. On this slide, I will illustrate the breakdown of the $3.0 million in 2023 borrow bookings and how we expect that to translate into revenue over a 3-year period. The $3.0 million in bARR was comprised of $1.4 million of CARR and $1.6 million of estimated UAC as shown in the fully ramped year of 2026 at the bottom of the chart. The CARR of $1.4 million is recognized consistently each contract year once the customer is live with the product as shown in the dark purple bar for years 1, 2 and 3. The UAC component begins to show in the second year or 18 months as usage exceeds the annual minimum commitment. This chart illustrates how we would expect around $0.8 million or half the full year UAC to be recognized in the second year of the contract. In year 3, the customers fully ramped for the full year with $1.4 million or 47% from CARR and $1.6 million or 53% from UAC expected to be recognized for a total of $3.0 million in recognized revenue.Turning to our non-GAAP results on Slide 7. Adjusted EBITDA loss for the quarter was $2.39 million compared with $2.20 million in the same period last year, an increase of 9%. Additionally, adjusted EBITDA loss for the current period declined 11% from the fourth quarter of 2023. As noted on the previous slide, we're providing additional details on our bARR or Booked Annual Recurring Revenue. Net bARR reflects the reduction of bARR from contracts previously included in reported bARR, which were subject to attrition during the quarter. The gross in net amount of bARR signed in the first quarter of 2024 was $0.1 million compared with $0.01 million bARR signed in the first quarter of 2023. The $0.1 million in Q1 bARR is comprised of $0.04 million in committed annual recurring revenue, or CARR and $0.06 million in estimated usage above commitment or UAC. From a quarter-to-quarter perspective, Q1 2024 BARR declined from the Q4 2023 bar. Given the size of our sales organization in the latter part of 2023, we recognize the need to build more efficient pipeline through the pursuit of larger enterprise customers that require longer sales cycles and are estimated to return a larger revenue potential and therefore, increase our enterprise value. We also focused efforts on building a strengthened channel partner network that will help us increase the breadth of our sales force and help us more quickly and efficiently acquire new customers. These efforts have shown up in Q1 through newly signed partnerships and strong progression of pipeline with key enterprise prospects, which Rhon will speak to in more detail. We estimate that the car and bar from these efforts will begin to show in Q2 with the majority of growth in the second half of 2024. Based on our sales pipeline, we reiterate that we are on target to realize our previously stated 2024 bar target of $9 million. AuthlD also monitors the reports on Annual Recurring Revenue, or ARR, which is defined as the amount of recurring revenue derived from sales of our biometric identity products during the last 3 months of the relevant period as determined in accordance with GAAP, multiplied by fourth. The amount of ARR as of March 31, 2024, increased by $0.4 million to $0.63 million as compared to $0.15 million of ARR from the same period last year. Turning to Slide 8. Given our strong performance in bringing customers live in the first quarter of 2024, I'm excited to report that we will begin to provide full year revenue guidance on a quarterly basis as well as targets for our booked ARR and RPO measures. Starting with booked ARR. As I mentioned on the last slide, we're reiterating our previously stated target of $9 million for 2024, and we will also provide detail on CARR and UAC as we report our progress. By achieving $9 million in bARR, depending on the level of our customer commitments and term lengths, we expect to also grow our remaining performance obligation to a range of $12 million to $13 million by the end of 2024. Regarding revenue growth, building on our Q1 revenue of $0.16 million, we estimate our total revenue for 2024 will be in the range of $1.4 million to $1.6 million, driven by the recognition of revenue from contracts held in our RPO. At the midpoint of this range, this represents a year-over-year increase of $1.3 million over the $0.2 million in revenue reported in 2023. Turning to Slide 9. As we work to build a sustainable recurring revenue stream, we will continually review our progress through our revenue growth stages. Looking from left to right on this slide, the first milestone we've used to monitor our progress is bookings measured by bARR, which we will continue to measure as we progress through 2024 and remain committed to our $9 million target. Regarding customer financial commitments, we monitor our Remaining Performance Obligation or RPO. As I detailed earlier, as of the end of Q1 2024, we've secured over $4 million in RPO, and we expect this metric to significantly increase to approximately $12 million to $13 million in proportion with the committed Annual Recurring Revenue that we signed in 2024. Our third reporting metric is revenue, which is recognized in accordance with GAAP, when new customers are on board amount to our platform and usage of our service kicks off. To recap our guidance here, we are estimating 2024 revenue in the range of $1.4 million to $1.6 million, a significant year over increase based on our estimates of customer goal progress and revenue commitments. As we move into 2025 and our customer contracts mature, we'll increase our focus in monitoring on customer retention and expansion. Key efforts will include refining our sales and support methodologies to deepen our customer relationships and increase the value added by our services through continued usage growth, use case expansions, renewals and the upsell of new relevant products. In summary, I'm extremely excited that the first quarter of 2024 marks a pivotal turning point in AuthID's revenue growth story. We will continue to build upon and monitor our progress on these measures as we progress into the next stages of market penetration and growth. With that, I'd now like to turn the call over to our CEO, Rhon Daguro.

[Rhoniel Daguro, executive]

Thank you, Ed. I'm also very excited and I'm very proud of our team's accomplishments. In just under 1 year, our new team has laid a strong foundation for continued growth and market leadership. We are laser-focused on our mission statement to help our enterprise customers eliminate authentication fraud and deliver 100% Zero Trust identity assurance across their workforce and consumer platforms. Today, too many organizations rely on outdated authentication strategies that nearly assume the correct user is accessing a system or resetting an account. AuthID helps our customers defeat today's rampant fraud and malicious AI-generated cyber attacks with strong identity assurance to know who's behind the device every time. The value proposition of our biometric technology continues to resonate strongly in the market. Let's look at our continued market momentum and progress. A little less than 1 year ago, I joined authID CEO. Excited by the strength and value of authID's technology and the opportunity to build a high-performance sales machine. Along with the newly reconstituted Board of Directors and a small team of identity domain experts, we have launched a turnaround of authID, and I am pleased that in every quarter, we have made progress across multiple facets of the business. By shifting the company to a sales-focused mindset in 2023, we secured a record $3 million in booked contracts that supported use cases for identity verification and authentication across financial services, fintech, social commerce and workforce authentication on shared devices. Turning to Q1 of 2024, we focused our efforts in 3 key areas: first, technology hardening and feature enhancements. Second, securing Fast 100 customer go-lives for revenue; and third, refocusing our sales strategy to concentrate our efforts on building Fast 100 and channel partner opportunities. During the first quarter, our highly talented engineering team worked on to harden our biometric platform to ensure the high availability and absolute stability required to efficiently manage the increased volume and throughput of identity transaction processing that our sales bookings predict. As we learn more about what our customers need and want versus what they had before with other vendors, our engineering team has enhanced our platform with new product features. A highly demanded feature that we are happy to preannounce today is our recently signed agreement with Equifax. AuthID's strength relies in biometrics of a live person, but our customers currently use many signals to help them determine other business and compliance decisions, including phone and address verification and KYC checks. Building on relationships with Equifax, it only made sense that we would partner up to bring to the industry a broader world-class identity verification and authentication service for our customers. Adding the Equifax product set to our platform will allow our customers to be serviced through a single authentication platform for a variety of use cases. We are excited about this additional feature and more details on the service will be shared later through a press release. Another key achievement in Q1 2024 was the efforts of our sales, customer success and engineering teams in realizing the go-live of 3 customers that were signed in 2023. Those customers, including a lending fintech company, a digital wallet provider and a Fortune 500 facility services provider directly contributed to our record first quarter revenue of $0.16 million. This is a pivotal business milestone as in just 1 quarter, we earned revenue approximately equal to all of the revenue earned in all of 2023. Looking ahead, we continue to make progress on customer launches as we are in the process of taking another 6 customers live in Q2. We are also in the middle of our largest go live with a very large customer, and the early performance results are better than they have seen with any other vendor. While still in a phased rollout, we are excited to see the results when it go full user volume. Our ability to earn revenue in Q1 based on contracts booked last year, combined with our Q1 2024 revenue performance obligation metric of $4 million is a strong market proof that our team, our processes and our technology are delivering on our promises to our customers. As Ed announced earlier, this progress allows us for the first time to provide guidance on 2024 revenue with an estimated range of $1.4 million to $1.6 million. Note that this estimate does not account for any new deals that we will book in 2024 and may bring live this year. I am especially positive at in less than 1 year of leading this business under our new business offering, our team secured the most deal bookings, brought the most customers live, earned the most revenue in a single quarter and projected higher revenue in a single year in authID's entire history. Turning to our third focus, our sales pipeline generation and book deals. I am pleased to report that in the first quarter, our sales team secured almost $9.5 million in pipeline, slightly ahead of our targeted $9 million per quarter, and we have made significant progress in realizing our target of additional $36 million in sales pipeline for the year of 2024. While our Q1 bARR of $0.1 million was lower than our Q4 2023 bARR, these results were anticipated as we aggressively work to close a number of both small and large opportunities in Q4 of 2023, while at the same time, we began to progress our go-to-market strategy and renew our sales pipeline to focus on signing larger enterprise clients and new channel partners who would sell on our behalf. Let me illustrate the progression of our go-to-market strategy. When we started this journey in June of 2023, we focused our small direct sales team on our Fast 100 generally smaller logos, meaning smaller opportunities that can be closed more quickly given their smaller layers of management and decision makers. We focused on these Fast 100 opportunities to provide reference customers to drive quicker sales closings, earlier go-lives and quick growth. And we had success as our Q1 revenue was derived largely from the Fast 100, including a lending fintech provider, a digital wallet start-up and a workforce facility services provider. As our team knows from previous experience, while some of our Fast 100 companies may be small right now and possibly in early stage, these companies can grow significantly. Additionally, authID's help in onboarding valid users while reducing fraud costs and reputational risk will help accelerate our customers' growth. And the more they grow, the larger their user base becomes, resulting in a larger opportunity for authID. Signing a lot of small deals, however, is not a sustainable long-term growth strategy. Accordingly, in late 2023 and into this year, we began to progress our go-to-market strategy. First, we leveraged our proven use cases to successfully begin the expansion of our channel partner program. Channel partners are a force multiplier with more feet on the street, more exposure and more market validation and the ability to sign more Fast 100 deals at a quicker pace. Channel partners accelerate our entry into the verticals they service and introduce us to their customers who need authID. Our team has many many combined years of working with partners of various types. Value-added resellers that we have signed recently, including IBM Works and most recently, Centro, who offers services such as consulting and systems integration for particular verticals or technologies, and they help us find our way into their existing client base and pipeline. OEM partners, such as Verified makes us part of their entire offering. Our second progression in our go-to-market strategy involved redirecting our off- sales team to focus on our Fast 100. These accounts generally take longer to sign where deal cycles can extend to 6 to 9 months or sometimes even longer, depending on the customer's buying and contract approvals process. Larger accounts, especially in the financial services space generally have multiple tiers of compliance and regulatory decisioning, whereas in less expansive organizations, the number of people required to make buying and compliance decisions are more concentrated. While typically taking longer to sign, the value of the Fast 100 accounts is that they are larger in deal size, expected to generate higher revenue and thus drive longer-term enterprise value for the company. As you've seen in our recent announcements, we were successful in signing channel reselling partners in the first quarter, and we anticipate signing additional partners shortly. Further, we anticipate seeing our focus on partners and Fast 100 enterprise accounts to come through in Q2, with the majority of our sales being signed in Q3 and Q4. Now that we've shared our current go-to-market strategy, let's look at our progress towards achieving our target sales and revenue growth. Our current total pipeline right now is $21.3 million and has a good mixture of deal sizes, including 52 deals valued at less than $100,000 and greater than $100,000 and 12 at 100 deals value greater than $500,000. These opportunities extend across large banks, payment providers, hotels and payroll providers. We continue to identify more Fast 100 opportunities with large payments companies, credit unions, retail, pharma and insurance. And through our expanded partner network, we have already generated several opportunities that are heading to close this quarter. While our channel partners and direct sales team will continue to identify new prospects and add deal to our pipeline, at this point in the year, we are estimating that we can achieve the 42% close ratio to attain the 9 million bar target for 2024. Now that you've heard about our sales and go-to-market strategy and on that progression, I want to provide you with additional insight on why the world needs authID. The majority of corporate identity services all use one or more of these traditional authentication methods, and we are all too familiar with all of them. And if they all work as advertised, we would all be safe. And yet fraud keeps happening over and over and over again with headlines dominating the news every single day. The proof is in the headlines. Social engineering attack HeartMGM, a deep fake attack tricked an employee and paid out $25 million, an SMS scan hit Chase customers for wire transfers. Uber is trying to prevent body doubles with shared credentials, and PII continues to be compromised over and over again. I highlight this because these security methods are not protecting us. What makes existing security measures so vulnerable? Shown here is a list of all the security measures and why each of them are vulnerable, but I'll quickly summarize. These measures are all based on the assumption that the person in possession of the device is the actual owner and not an imposter. These measures rely on proxies such as telcos who are handling the SMS messages with onetime pins and passwords who are vulnerable to SIM swaps and other mobile device camps. They measure these measures rely on knowledge-based questions that are harvested from the very data brokers whose data breaches have been feeding the fraud in the first place. And they are all dependent not only on each other, but they're all dependent on the weakest link in the chain, which is the password. And finally, they assume that the user's device, e-mail and phone being presented are all in the hands of the rightful owner, probably one of the worst assumptions in any security defense system. These dependencies are fatal embrace. So let's look at a very sophisticated yet easy breach that will track almost every security system out there. Make no mistake, everyone on this call or anyone who listens to this webcast is subject to this kind of attack. Even the least talented fraudster can now launch these attacks because of easy access to Gen AI tools. These deep take attacks will fill any human manual review process as well as any digital process. But with authID, the enterprise can't be fooled. Let me quickly walk you through this. Starting on the left, the first step for a fraudster is to steal your ID or create a deep take ID of you. The next step is for the fraudster to generate a deep fake inpersonation of your picture on the ID. look closely on the screen. This deep take looks alive and can move and can show motions and facial expressions. The next step is for the fraud strict to open a bank account with your information. The fraudster will start by entering your PII and your personal identifiable information, then they will be asked to submit their ID, first starting with the front of the ID using the camera, then the fraud there will be asked to submit the back of the ID, again, using the camera. And then the foster will easily fire up the deep fake tool, hijack the camera sensor and then the fraudster will easily submit the deep biometric by signing the camera window over the deep take an personation of you. One submitted in 700 milliseconds, the authID platform automatically performs over 100 checks and detect the deface using our layered liveness and injection attack defenses and automatically rejects the submission. I can take a picture of anyone on this call, generate a fake ID and open up accounts on your behalf without your permission. This is super scary for everybody and somebody has to step up to protect us. Defects are only getting started. AuthID offers a cutting-edge defense against malicious generated AI fraud. This is just another example of why the world beats authID. In closing, to iterate what Ed started at the beginning of the call, we've been working to accelerate this business over the last 12 months and continue to build pipeline at our intended pace of $9 million a quarter. We are steady in our guidance for triple growth of $9 million in bARR bookings. Increasing our RPO to $12 million to $13 million and guiding towards $1.4 million to $1.6 million in revenue for 2024. Also keeping in mind this does not include anything we opened in the year and bring revenue in year. AuthID continues to work on growing every facet of our business as we continue to bring on the best people, continue to bring on the best customers, continue to build great technology and to continue to produce strong business performance measures, all in contributing to our mission, which is to completely eliminate authentication fraud. I want to thank the AuthID team who've done a great job over the last 12 months. We expect a lot more out of them in the upcoming years and thank our investors for their confidence and support. We would now like to open up for questions. Let's turn it back to Graham, who will moderate the questions.

[Graham Arad, executive]

Thank you, Rhon. [Operator Instructions] I'm going to open the line for Gary Brody.

[Gary Brody, analyst]

Had a really nice job breaking out bARR into committed annual recurring revenue and usage above commitment. That was a great presentation. Rhon, I want to ask you an important question. In my opinion, the 2 key things the company is going to need later this year are new contract signings, which you talked about a lot in the second half and a secondary offering later this year, it's not a secret that the company is going to need additional financing to get to the point where you're self-financing. Would you mind talking a little bit about your level of confidence in being able to achieve each of these goals.

[Rhoniel Daguro, executive]

Well, thank you, Gary, for the question. We definitely like to see quarter-over-quarter growth in Q1, Q2, Q3, Q4 with our business is still being predicted. We're still trying to get really good at predicting that. The leading indicators that I alluded to before was for me, at least as a former CRO is I really measure the ability to build pipeline. And if we can build a pipeline, then we have line of sight of some bigger number over the number that we have to achieve and close. And right now, I think the -- I know that the rate of what we're building pipeline at a $9 million a quarter is very healthy to build on top of the existing $21.3 million that we have in place. So we'll have -- definitely have plenty of pipeline to go close the business by the end of the year. Now the second question then is our ability to close that pipeline and what's our win ratio to do that. In 2023, our win ratio was over in the 90s and coming into 2024, even though it's still early to tell, it's just -- it's lower, right around '25. And so you take an average of the 2 and you say, hey, do we have the ability to close that? And the answer is absolutely yes. That's why I alluded to the 40-plus percent that's required to close the business. We absolutely believe that we will do that and we'll exceed that. So we definitely have line of sight of the pipeline to close. We definitely have the history of the close ratios to be able to do it. And I certainly definitely have the sales team that can achieve that. And so those are the indicators that allow us to know whether we're going to hit that number or not. That's why we're sticking close to our projection there to be able to hit triple bar at $9 million. On the second question, you're asking about the financing. Ed, do you want to take that one?

[Ed Sellitto, executive]

Sure. Yes. So yes, as you mentioned, we do -- while we'll need to raise money in the balance of the year, as we stated in our 10-Q, our balance sheet as of the end of the quarter, starting off pretty strong at $7.2 million, but we will need to raise money sometime this year. We do feel confident in our business model and with the relationships we have with various fundraising resources and do intend and are confident that we will be able to raise money throughout the year as judiciously come as we can.

[Graham Arad, executive]

The next question comes from George Sutton. George, please go ahead and you yourself and ask your question.

[George Sutton, analyst]

Rhon, and I wanted to get a sense of the range of use cases that you were going after. Obviously, the facilities provider, you mentioned is a shared device, I would assume scenario for the workplace. But as you're building up this pipeline, I'm just curious what the kind of the top use cases you're finding to be.

[Rhoniel Daguro, executive]

I'll give you the top 3 core use case, and I'll give you kind of the sub derivatives, which is what's making it kind of exciting, right? So the first use case is account opening and new user onboarding. So when I did the demo, you can see that all the institutions that have any way to apply for a loan or a credit card. They have to try to do it digitally and remotely. And so they have to do that first time check of whether George is really George, or Gary pretending to be George. And so that user onboard identity verification use case is absolutely one that we have been accelerating into our -- helping us create our pipeline. The sub derivatives of that, what's making that exciting is you had your kind of like old school fraud or old school fraudster who would maybe print a paper ID or they would manufacture their own IDs off of Etsy or they would order it on Poshmark. But now with the new Gen AI tools, these people can actually get a printer at their own house, shift to them from Amazon for $600, and they can actually produce the highest quality of fakes and fake IDs, again, at the comfort of their homes. So the increasing rate of technology in Gen AI is actually enabling just a ton more fraudsters, which then obviously is going to overwhelm the existing technology, existing legacy systems that are in place today. So that's one of the use cases where we can try to go fulfill and prevent really the onboarding of fraud users. The second use case that we fulfill is the actual strong authentication. So let's say the account is already open. George, you already have your bank account already established. And I, Ron know that you have a Telco provider and you probably assume have a email account or hopefully baked in the top 5 banks. And I could pretty much determine what your log and ID could be. And I can go ahead and initiate a password reset on any of your accounts. And again, just like I did in the demo, I can even walk into a Telco provider and try to take over your phone so that when I initiated passive reset of those accounts, it will go to my phone, not your phone, and then I can go ahead and proceed into your bank accounts as such, and nobody won't be done the wiser. So the reauthentication of accounts and coming into account, that's another major use case that everybody is worried about. That's actually been a big driver in some of the new things that we've been doing with customers and the clients. Again, authID is a very small company, but they don't have a solution for this, and that's basically allowing them to come talk to us regardless of how big or small or how established we've been. We're the only players that have been solely dedicated to this particular use case around reauthentication, liveness of the authentication and making sure it flows into the accounts. The third one is really around account recovery. So if you think about the MGM breach, people can call into the call center, and they could say, "Hey, I need my password account reset. I need this done, I need this modified. I'm locked out. Please help me, please help me." And if you think about a call center worker, $24 maybe an hour, typically $15 to $18 an hour, you could be a high net worth individual. You are now subject to a $24 hour worker and whether they can determine on the other line without using deep fakes about all these great technology available to them, how are they going to determine that the other person on their line is really who they say they are with all the traditional device checks and all the traditional methods that we're using today. They just won't know. And so again, authID says, listen, we can give you the highest level of assurance at a 700 millisecond response time and give you that ability, don't rely on the 24-hour worker to make this call and put your whole entire enterprise risk put your customers at risk and risk the worth of brand reputation, we can then help the call centers protect that. So those are the high-level ones. Some of the things that you've seen more recently are wire transfer fraud, romance scams where people are being tricked to send money to somebody who's probably not the person they're in love with. There's just such a crazy variety of use cases that demand to know who's behind the device, and those are the ones that we're going to capitalize on in 2024.

[George Sutton, analyst]

Just one other question. I'm curious if you look through your pipeline, how much of it is an organic new application that a company is looking to pursue versus a required competitive replacement.

[Rhoniel Daguro, executive]

They're pretty much competitive replacements right now. Because the current technology in place that they have is really fundamentally rooted in passwords. And everybody knows that they don't work. So that's why they invented this thing called onetime passwords or SMS code to your phone or a stronger authenticator. And again, because those are reliant on a Telco, T-Mobile, AT&T, the bank is relying on the strong authentication on another company. And so, we know the hack right now is that fraudsters will target workers at Telcos and they will pay them $600. That's the going rate right now to be able to do passive resets on people's phones and then to be able to do SIM swaps on phones. And our financial institutions that we're working with are current customers who are sophisticated, yet not everybody understands that they can now protect us with biometrics. So that's why we need to really do our job to be able to show that we can do this. But the ones that are innovators that are seeing this are realizing that they cannot outsource their security to a Telco, a phone system because we don't know how good their security is. So they want to be able to just say, pop up the camera, let me see who's behind the camera and then I'll decide and they don't -- a lot of them are just soon realizing that we can do that pretty darn quickly and so under 700 million.

[Graham Arad, executive]

[Operator Instructions] Gary, I think you said you had some other questions. So please go ahead and mute yourself and ask a question.

[Gary Brody, analyst]

I do. Thanks, Graham. I don't know if this question should be directed to Rhon or Ed, either one of you would be great. So you guys did about $200,000 of revenue in the first quarter, which is roughly what you did in all of last year. If we take the low end of your guidance this year of $1.4 million, that means $1.2 million of revenue for the rest of the year, assuming that we're evenly dispersed, which I know it won't be, that would be about $400,000 per quarter, which would be double the rate from this quarter. So first quarter, you matched your revenue for the full year last year, and you're basically saying for the rest of the year, we're going to be at a run rate that's double what you did in the first quarter. What gives you the confidence that the revenue will start to ramp so quickly?

[Ed Sellitto, executive]

A big question, Gary. I could take that one, Rhon. So the main reason why we would see that ramp up the way you described, Gary, is that we are starting to recognize revenue from our contracted customers as they go live with our service. And we started going live during Q1. So we've had several customers with revenue beginning to be recognized in Q1, though it would be a partial quarter, maybe half of the quarter, 1/3 of the quarter is being recognized in Q1, and then we will start seeing full quarters of that revenue going forward. So we will -- as new customers go in, go live with our service, we'll have a lower first quarter than a noble into a steady state as a full quarter of recognized revenue rolls in.

[Gary Brody, analyst]

Okay. And just to reiterate, those -- that $1.4 million to $1.6 million and the run rate that you were just talking about, that's from your existing signed customer base, correct, not assuming additional sales throughout the year?

[Ed Sellitto, executive]

That's right. That's right. We are assuming that it's going to be a recognition of our existing contracted customers as well as a smaller subset of customers that are currently on usage revenue only and don't have broader overarching commitments. So that will add to a smaller degree. But we're not assuming any signings in year to be converted to revenue in '24 when we provided that guidance. So that would be additional upside.

[Graham Arad, executive]

Okay. We've had a question to Rhon. Can you explain a little bit more about the significance of the deal with Equifax and what that offers in terms of new products that we're able to roll out to our customers.

[Rhoniel Daguro, executive]

So traditionally, today, in the compliance world, there's these KYC checks and we play a part in that whole entire KYC process. We play a part in the SIP process, which is a subpart of the KYC process. So we don't go out and we don't -- you look at some of these other passive signals that are required by the appliance team. That's simply not our business. Our business is to focus on the biometrics and to know exactly who's holding the devices. We don't check the phone number associated to the user. We don't check their address associate to user, and we certainly don't check their phone name associated to the user. We simply check if that's really the person who registered and do they match their government-issued ID. This partnership kind of allows us to be a broader service to our customers. Our customers want our stuff and they also say, "Hey, can you also do this? And can I just buy it for me instead of having another vendor to buy it from?" And again, we built a great relationship with Equifax at this company, I've had that experience at other companies. And so it just made complete sense because we know how to win business together and do deals together. So that's -- right now, Phase 1 of this relationship is for us to broaden and expand our capabilities to our clients and customers who need these other things that we just don't simply provide.

[Graham Arad, executive]

I have another question. We've talked about the Fast 100 and the large customers that you -- we are working in the pipeline that we expect to sign. Can you give some indication how large are these customers? Are we talking potential 7-figure revenue numbers for some of these customers?

[Rhoniel Daguro, executive]

So the quick answer is yes. In my presentation, we highlighted over 10 customers over the 500-plus mark. Right now in our pipeline, we're getting volumes from our customers and the use cases. If you can imagine a large organization, a large organization, even just in one line of business could be millions of consumers. Imagine if they then open that to additional lines of business of things that they open to that same customer base can get bigger and bigger. So certainly, those accounts can be in multiple 7 figures. It just depends on how many use cases they're going to go live with on that first particular deal. They go live across the enterprise, answer is absolutely yes. If they don't go live with the entire enterprise and they go live use case, we'll eventually get there, and that's why we like to use the 18-month out metric to allow our technology to be utilized across the organization.

[Graham Arad, executive]

Thank you. George, I see you still have your hand or did you have another question on. I guess not. But if anyone else has any other questions, please do put them in the Q&A or raise your hand. In the mean Ron, perhaps you can talk a little bit about the TAM for our current product and how we look in the marketplace, how you look at the marketplace, I should say.

[Rhoniel Daguro, executive]

Well, this gets me excited because it's just way bigger than I can ever imagine. We're very fortunate that the product that we sell right now today affects the consumers, employees, anybody that does anything digital, we can absolutely provide a solution there to make sure you are who you say you are. Now with that being said, I always look at the market leaders or at least I look at these public companies who are in a similar marketplace, companies that are in the authentication space and people are familiar with Okta and Okta and Gartner and all these people and Forbes. They all put out their numbers and they say that the market has grown from $18 billion to $50 billion, heading to $80 billion in terms of a TAM. Certainly, authID would love a piece of that. And certainly, we believe we've carved out a very specialty niche in this program. We've been far ahead of the game the deep fake demo I showed everybody on the call, Nobody's doing that, the way we're doing it. And we are just notably focused on this next-generation set of authentication and we're trying to figure out how to make the best user experience possible. And we've really been focusing on that, and that story has been resinating which contributes to our ability to build pipeline at $9 million a quarter in that rate. I mean that's -- for those who are in sales, like we're trying to go for -- we try to build a tremendous amount of pipeline in a short period of time for a small company. That's the type of pipeline you build with a larger work, and we're trying to do that with a small org. We've been able to do that. So pretty excited about that. And again, you can't build that pipeline that people don't think you have good use cases and you can't build that kind of pipeline if you don't have a big TAM. So all these are aligning. We're definitely working our bots off, but the TAM is massive. It's too big to Fathom.

[Graham Arad, executive]

Our next question is [indiscernible], please meet yourself and go ahead with your question.

[Unknown Analyst]

Yes. Rhon, great presentation, a good explanation of everything. I have a couple of questions. One, is Equifax going to be marketing our services for their customer base?

[Rhoniel Daguro, executive]

There's 2 phases to this partnership. And so Phase 1 was to be able to bring their services into our components. And Phase 2 is something that we're trying to do, which is the ability to have them resell our products. But we're still working on that, and that was not completed. We just completed Phase 1.

[Unknown Analyst]

Okay. The other question I have is how many users are there active right now that we're servicing, not customers, but the customers that have multiple users. How many users would you say we're at now and where do you see us being in a quarter or two.

[Rhoniel Daguro, executive]

Tom Szoke, can you answer that? I know that we're servicing over 60 customers direct, and we have a ton of customers that are coming through some of our channel stuff, but do you have the volumes in front of you?

[Thomas Szoke, executive]

I don't have exact fine, but yet, [indiscenible]. So as Rhon said, we have about 69 customers currently using it. And because we have a mixture of user types. We have the one that are day 0, where they come through and they onboard. And then those are passed through and handed off to our customer. And then we have what we call the monthly recurring one. So it's a mixture of both. We can definitely provide some more input. But on weekly or monthly, it varies because of that. So you have these ramp-ups on some months where there's a lot of onboarding activity, and then you have those converting over to monthly active users, again, based on which type of customer we have.

[Unknown Analyst]

Well, so do you have any idea how the user base is looking right now, not the customers, each customer might have 10,000, 20,000, 200,000 users. What's that look like?

[Thomas Szoke, executive]

Yes. So I mean, it goes -- again, so customers, we have customers that are ramping up, as Rhon has described in his presentation, they're ramping through the their use case. So the first step is always onboarding, which will then become a monthly active user as we protect and reauthenticate those individuals in their accounts. So that process is ongoing. We had a group of small legacy set of users that we've been working with for the past years in our platform and the new customers we just signed are in that first phase of ramp. So we anticipate those to be growing quite quickly here, and we see a lot of traction. I don't have an exact number, but it is growing quite steadily in the months. So yes, we see a good ramp happening there. But again, it's the early phase of these use cases. They just went live in Q1. So we're seeing -- but we're seeing the growth.

[Graham Arad, executive]

I'll give another minute or so for anyone who would like to ask a question. We have a few more minutes on the call. Perhaps we could talk a little bit whilst we're waiting for additional question, if there is any. In terms of the pipeline and how you see that converting over the period of the remaining quarters.

[Rhoniel Daguro, executive]

Ed, you want to take that?

[Ed Sellitto, executive]

Yes. Sorry, Graham. Can you rephrase?

[Graham Arad, executive]

Yes. The question is how we see the pipeline converting over Q2, Q3, Q4 in order to reach the $9 million of bar that we are targeting.

[Ed Sellitto, executive]

Yes. So this is what Rhon spoken to earlier, we see our pipeline of $21-plus million that we have currently of converting that into one deals over the balance of this year from Q2 to Q4 predominantly. We will see some -- we will expect some of that remaining $9 million to be coming in Q2. And then the majority of it would probably be spread over Q3 and Q4 as we convert that pipeline and the growing pipeline at additional $9 million a quarter to 1 deals. So that's our -- that's the plan I kind of have Rhon just described it in a couple of other questions as well.

[Graham Arad, executive]

Our next question is Andy Stern Andy, please go ahead and on yourself and ask your question. Good to hear from you.

[Andy Stern, analyst]

So first of all, congratulations, you're making tons of progress in doing just what you said. So that is great -- really great to see. I guess it seems to me that sort of at some level, this is a race to get the sales and revenue traction against the need to raise money. And it feels to me like you probably need to raise money by the middle of this year or thereabouts or be raising it. And the sales traction you're projecting really isn't until the second half of the year or the end of the year. And I just wonder, you expressed confidence, but I wonder how much of that is dependent on actually generating the revenue ramp? Or how are you thinking about the confidence you need to raise the next round.

[Rhoniel Daguro, executive]

Yes. Thanks, Andy. And good to hear your voice. I think about it in kind of 2 parts. One is this business and with shareholders who are interested in this business, the first thing you need to see is that we can actually execute and execute on a full plan, not just small stuff, but big stuff and be able to scale and to be able to be in that direction, increasing the value of the company in the sense that you can have high-level confidence to do that. Fortunately, that kind of aligns with our ability to be able to raise money as well. So you need to be able to show these metrics demonstrate the right behaviors, demonstrate the right market conditions and the market response to be able to even convince or be successful in a fund raise. And so first and foremost, our mission has always been, at least with this organization is to prove that this technology has product market fit and not only with the booking, but to be able to go live. And then not only to go live, but be able to start recognizing revenue. And so we've been working on that plan. And unfortunately, we've only had a short 11 to 12 months to be able to do that. And we're doing -- I think we're doing a pretty decent job doing that in very short order. It is no secret we will need money and funding to do that because the revenue will not offset some of those costs. In fact, we're not slowing down in our spend that we actually are trying to double down on our spend because some of these Fat 100 opportunities that want to use us need certain capabilities for us to deliver. And we're making those adjustments and changes now. But if you have a limited amount of engineering and limb resources, then that could delay your opportunity to close some of these Fat 100 opportunities. So we're obviously making the right investments to service our customers. They want us to make those investments so that they can be serviced by us. And so for us, it is absolutely a race to be able to do that, but we're going to have to rely on funding. The timing is up in the air. We'll figure that out because we're being very conscious as well. But it's no secret that we have to raise money.

[Graham Arad, executive]

The next question comes from Alan [indiscernible].

[Unknown Analyst]

So -- and I'm not sure if Rhon might have answered part of this already with the previous comment. But like if you were to get a customer today, how much -- like how much can you onboard based on your current capacity if everybody will work in full tilt. Is that -- how much stayer quarter would you be able to onboard if everybody were ready to go? Is that part of this delay as far as the -- going from bARR to revenue? Or do you have the people there and it's -- you're just waiting to -- for another milestone to hit.

[Rhoniel Daguro, executive]

Great question because it falls in like 2 buckets that we look at internally as well. So when we look at our Fat 100 opportunities and actually, if you think about the way we separated the Fast 100 versus the Fat, the Fast 100 were accounts that we knew we can close without having a tremendous amount of effort of the company, like recoding things like building features that didn't exist or trying to create capabilities that we just simply didn't have off the shelf. The Fast 100 was our focus to be able to close those deals that didn't need anything special and they could actually use our stuff right off the shelf that we can get them to go live and we can get them to book -- to be able to get them to revenue. And so we saw success with that. We did the bookings in 2023. We signed those customers way faster than we have projected in our model, and we got them live right around the same time that we projected to get get them live. Now with these bigger accounts, these fat 100 of these strategic accounts A lot of them actually are using -- that want to use the stuff off the shelf. we're hoping that we can actually get them live faster than what's in the model and get them using the technology, and we can handle the volume because we actually built our infrastructure to be able to handle that volume. So we can actually try to get those customers live. But then there's the second half of this Fat 100 that says, "Hey, we need to integrate it with this core system." Well, we don't have that core system yet, but our engineering teams will have that in the next 3 months. And so those will actually certainly be delayed in our ability to kind of get that customer onboarded, booked and get them live. And so we're watching those 2 mixtures, but certainly, those are the 2 things that we're trying to predict internally. But those are the 2 types of things that we care about and that's what we're looking at. So obviously, we'd like to onboard more customers that could just use our stuff right off the shelf. But we know that large customers are sophisticated. They want special things. They have way more workflows and departments that we can -- the most typical smaller organizations don't have. And so we're building those enterprise capabilities to be able to service those larger customers.

[Unknown Analyst]

Right. Okay. So then again, if one of those came in and wanted it off the shelf, like how much revenue could you build in a quarter based on the way that you're structured today?

[Rhoniel Daguro, executive]

So when we see customers who have large volumes, if it's like a large fintech and we certainly have one in the pipeline right now that's super large. The way that, that customer moves, the way that fintech moves, they move pretty darn quick, which means they can go live in 3 months. So technically, if we had a very large opportunity and that fintech has a great engineering arm and knows exactly what they're doing, and it's just a swap out. So that was a question earlier. Are we doing brand-new things? Are we just replacing incumbents. The beauty of replacing an incumbent is that all the plumbing is already in place and you just swap out our API with their API and a way we go. So there are certainly capabilities to accelerate that, but we don't have it built in our model. So we have acceleration, that's great. But we don't build it into our model in terms of forecasting.

[Graham Arad, executive]

And we are a little bit over time, but I think we have time for one more question. Dean [indiscernible] has another question, Dean if you'd like to go ahead and ask your question.

[Unknown Analyst]

Yes, real quickly, what is the breakdown roughly by industry category of the pipeline that you have right now?

[Rhoniel Daguro, executive]

I'm sorry, do you want the breakdown of...

[Unknown Analyst]

Yes, by industry type, hospitality, fintech, retail, whatever it is. Just...

[Rhoniel Daguro, executive]

Yes, yes, yes. The predominant vertical right now is financial services. That includes banks, credit unions, payments, it's predominantly financial services. The great news is we are close -- we are closing other opportunities like we have. We have gaming. We just -- just another opportunity that we believe is closing is going to be in the cannabis space around a verification. But predominantly, everything is certainly around financial services. We have hotels as well. But again, we -- in this industry and where we come from and where we see people spending money quicker sooner than later and where, obviously, the urgency drives from is where people are losing money. And financial services is a place for that.

[Thomas Szoke, executive]

I'd just like to add, I was able to go in our system. So in the last quarter, we processed approximately 500,000 users just in the last quarter.

[Unknown Analyst]

That's an impressive number, actually, and it's growing by...

[Thomas Szoke, executive]

That was the early...

[Unknown Analyst]

Geometric factors, I guess, right?

[Thomas Szoke, executive]

Exactly.

[Graham Arad, executive]

Okay. Well, thank you very much, everyone. That's really all the time we have. We've run a little bit over the time, and thank you for your patience and your questions. Rhon, would you like to just wrap up the call?

[Rhoniel Daguro, executive]

Absolutely. Thank you, again, everyone, for the questions and your time. I certainly enjoyed that. I definitely want to thank our investors for their continued support to authID to a high-growth company that it should be. I assure you that we continue to be focused on our mission and to help today's digital enterprises know who's behind the device. Thank you, everyone.

[Graham Arad, executive]

That ends the call. Thank you very much.