Intellicheck (IDN) Q2 FY26 earnings call: guidance and Q&A

Intellicheck's diversification strategy, now in its second year, continues to drive results, contributing to four consecutive quarters of profitability. This approach aims to reduce reliance on specific verticals and large customers, fostering a more resilient revenue base. The company's operating discipline behind this strategy has been key to generating consistent positive adjusted EBITDA.

A customer representing 29% of H1 FY26 revenue is evaluating a multi-vendor IDV approach, which is expected to negatively affect transaction levels. Management clarified this is a broader vendor review for redundancy, not a reflection of Intellicheck's performance. While the client communicated a 'doomsday scenario' for volume reduction, the actual traffic shift has been nowhere near that extent, and a new purchase order has been signed. The client also intends to transition to Intellicheck's newest API, suggesting continued engagement.

The banking and lending vertical is a core focus, growing to 48% of Q2 revenue, with 3 new clients signed, primarily smaller organizations that are easier to integrate using the 'Desktop' platform. Retail revenue was down 2% year-over-year, while the title market benefited from a 14% year-over-year increase in mortgage loan originations. Emerging verticals like cargo and freight are also showing growth, with a food manufacturer client's nationwide rollout expected to expand beyond its low six-figure annual contract value.

The fraud landscape is rapidly evolving, with synthetic identity fraud up 300% and deepfake-driven fraud up over 1,000%. Intellicheck positions its technology as the 'gold standard' in identity verification, offering subsecond, 99% barcode-level decisioning through exclusive DMV relationships. This capability differentiates it from competitors who primarily rely on 'templating' or visual checks, which are less effective against sophisticated fakes.

A large global social media customer, previously inactive, has re-engaged with Intellicheck. They have resolved image capture issues, and Intellicheck can now process over 99% of the data they send. While no revenue from this customer is currently included in the forecast, management is excited about the potential for future volumes and is scheduled to meet with them in person.

Bryan Lewis highlighted the strategic advantage of targeting smaller banks (10-170 branches) due to their simpler integration processes compared to large enterprises, which can involve over 100 people on integration calls. He noted that smaller banks face similar fraud rates to larger institutions and are willing to pay more per transaction. An example was given of fraudsters attempting to steal $45,000 from HELOCs in South Carolina and Georgia, a type of fraud Intellicheck's system prevents.