VerifyMe, Inc. (NASDAQ:VRME) Q2 2023 Earnings Conference Call August 10, 2023 11:00 AM ET

Company Participants

Nancy Meyers - Senior Vice President of Finance & Investor Relations

Adam Stedham - President & Chief Executive Officer

Conference Call Participants

Jack Vander Aarde - Maxim Group

Operator

Welcome to the VerifyMe Second Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Nancy Meyers, Chief Financial Officer. Please go ahead.

Nancy Meyers

Good morning, everyone and thank you for joining us today for our earnings call presentation. On the call today, I'm joined by Adam Stedham, CEO and President, who will give an operations and strategic update. Following our management presentation, we will have a Q&A session.

I would like to bring your attention to the note on forward-looking statements on Slide 3. Today's presentation and the answers to questions include forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and on the Risk Factors of the company's annual report on Form 10-K and quarterly reports on Form 10-Q.

I will now turn the call over to Adam Stedham for some opening remarks.

Adam Stedham

Thank you, Nancy and welcome, everyone. In the last 1.5 months since becoming CEO, I've worked with the VerifyMe leadership team to refine and clarify the strategy across our business segments.

We announced in July, we've streamlined our company into 2 business segments, the Authentication and Precision Logistics segments. This is intended to accelerate growth by leveraging our technology, expanding our marketing capability and optimizing overhead expenses. These segments fit together to enable our mission of ensuring real products are in the right place, in the right condition, at the right time. I'm excited to share our strategy with you. But first, let me discuss Q2 a little bit.

Nancy will give specific details but I want to provide an overall context. During the quarter, our revenues came in slightly below our expectations, partly due to the timing of customer orders and the temporary impact of the business due to the acquisition integration and reorganization. In addition, within our Precision Logistics business, we're seeing an emerging shift in service mix from our proactive services to our premium services.

As a reminder, our premium services generate significantly lower revenues since they only incorporate the service component of our offering but they don't include the freight charges. Therefore, they have a much higher gross margin. Our proactive services do include the associated freight charges and freight component of the service. As a result of this, we anticipate our overall business will achieve revenues of $26 million in 2023 and we continue to anticipate positive adjusted EBITDA for the year. Our revenues could exceed this level but this is my first call with all of you and I want to set expectations correctly. Obviously, to achieve this revenue, we'll need to experience significant increases in revenue in H2.