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VerifyMe (VRME)
NASDAQ:VRME

VerifyMe (VRME) AI Stock Analysis

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VerifyMe

(NASDAQ:VRME)

43Neutral
VerifyMe's overall score is primarily driven by its financial challenges, including net losses and inconsistent cash flow. Technical indicators signal weak momentum, and valuation metrics are unappealing with a negative P/E ratio. Although there are some positive aspects from the earnings call, like debt reduction and adjusted EBITDA improvement, the company still faces significant headwinds.
Positive Factors
Cost Efficiency
G&A expenses were significantly lower than estimated, which positively impacted the company's financial performance.
Debt Management
VRME generated $4.7M cash from a warrant inducement, retired its term debt and non-affiliate convertible debt, and announced an ~$15.8M ATM; which enables the company to actively pursue strategic alternatives and new growth initiatives to maximize shareholder return.
Financial Performance
Adjusted EBITDA of $1.0M, up 128% year-over-year, beat the estimate and was in line with management's guidance for positive EBITDA improvements.
Negative Factors
Impairment Charges
A goodwill and intangible asset impairment charge of $2.3 million was incurred, affecting the Authentication segment.
Industry Challenges
The company's logistics business performance was weak due to factors such as the loss of the FedEx direct premium business and a soft industry backdrop.
Revenue Decline
4Q24 revenue of $7.7M was down 12% year-over-year and slightly below the estimate of $7.8M.

VerifyMe (VRME) vs. S&P 500 (SPY)

VerifyMe Business Overview & Revenue Model

Company DescriptionVerifyMe, Inc. (VRME) is a technology solutions company specializing in brand protection, authentication, and anti-counterfeiting services. The company operates within sectors that include security, technology, and supply chain management. Its core products and services consist of proprietary security printing solutions, digital tools for product verification, and software applications that help businesses track and authenticate their products across various points in the supply chain.
How the Company Makes MoneyVerifyMe makes money through a combination of product sales, service contracts, and licensing agreements. The company generates revenue by selling its patented security inks and pigments that are used in printing secure labels and packaging. Additionally, VerifyMe earns income from subscription-based services for its digital authentication tools and software platforms, which allow businesses to track and verify the authenticity of their products in real-time. Significant partnerships with label and packaging companies enhance its market reach, and its collaboration with technology firms helps integrate its solutions into broader security and supply chain systems, further contributing to its earnings.

VerifyMe Financial Statement Overview

Summary
VerifyMe faces significant financial challenges, including consistent net losses and negative margins. While there has been some improvement in cash flow and debt reduction, the overall financial health is concerning due to fluctuating cash flows and persistent unprofitability.
Income Statement
40
Negative
VerifyMe has shown inconsistent revenue growth over the years, with a significant drop in 2024 compared to 2023. The company has faced persistent negative net and EBIT margins, indicating ongoing profitability challenges. Despite some gross profit, the company’s inability to convert revenue into net income remains a concern.
Balance Sheet
55
Neutral
The balance sheet reveals a decreasing trend in stockholders' equity and total assets. The debt-to-equity ratio has improved slightly due to reduced total debt, but the return on equity remains negative due to net losses. The equity ratio suggests a moderately leveraged position, but the consistent net losses could pose future risks.
Cash Flow
50
Neutral
VerifyMe exhibits fluctuations in operating cash flow, with a positive free cash flow in recent years. However, the operating cash flow to net income ratio is unfavorable due to persistent net losses. The company’s ability to generate cash from operations remains inconsistent, posing potential liquidity concerns.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
24.21M25.31M19.58M867.00K343.00K
Gross Profit
8.66M9.00M6.49M599.00K281.00K
EBIT
-4.39M-2.93M6.08M-13.39M-3.57M
EBITDA
-863.00K-1.79M-13.54M-4.71M-3.44M
Net Income Common Stockholders
-3.82M-3.39M-14.49M12.17M-7.96M
Balance SheetCash, Cash Equivalents and Short-Term Investments
2.82M3.10M3.41M9.42M7.94M
Total Assets
16.07M20.70M20.75M21.69M8.77M
Total Debt
247.00K2.95M2.35M0.0072.00K
Net Debt
-2.58M-143.00K-1.06M-9.42M-7.87M
Total Liabilities
5.85M8.17M7.17M521.00K455.00K
Stockholders Equity
10.21M12.53M13.59M21.17M8.32M
Cash FlowFree Cash Flow
871.00K209.00K-2.83M-3.51M-2.41M
Operating Cash Flow
871.00K244.00K-2.55M-3.25M-2.28M
Investing Cash Flow
-575.00K-1.20M-7.88M-2.85M-125.00K
Financing Cash Flow
-616.00K634.00K4.42M7.59M10.09M

VerifyMe Technical Analysis

Technical Analysis Sentiment
Negative
Last Price0.67
Price Trends
50DMA
1.08
Negative
100DMA
1.16
Negative
200DMA
1.23
Negative
Market Momentum
MACD
-0.10
Negative
RSI
35.11
Neutral
STOCH
28.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRME, the sentiment is Negative. The current price of 0.67 is below the 20-day moving average (MA) of 0.77, below the 50-day MA of 1.08, and below the 200-day MA of 1.23, indicating a bearish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 35.11 is Neutral, neither overbought nor oversold. The STOCH value of 28.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VRME.

VerifyMe Risk Analysis

VerifyMe disclosed 44 risk factors in its most recent earnings report. VerifyMe reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

VerifyMe Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
62
Neutral
$8.07B13.603.76%3.13%3.60%-14.67%
45
Neutral
$52.42M-37.84%13.37%50.36%
45
Neutral
$11.28M-79.76%19.85%41.89%
43
Neutral
$8.40M-33.62%-4.37%-3.25%
39
Underperform
$35.52M-33.05%-6.51%-117.84%
35
Underperform
$3.45M366.81%-30.19%97.74%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VRME
VerifyMe
0.67
-0.81
-54.73%
INUV
Inuvo
0.36
0.01
2.86%
TTOO
T2 Biosystems
0.11
-2.68
-96.06%
IZEA
IZEA Worldwide
2.10
-0.30
-12.50%
DLPN
Dolphin Entertainment
1.01
-1.37
-57.56%

VerifyMe Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: -30.21% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. The company achieved notable improvements in gross margin, debt reduction, and maintained positive cash flow. However, these positives are tempered by declines in revenue, operating losses in certain segments, and a net loss in Q4. The company is focused on optimizing its strategy and aligning costs with revenue despite challenges.
Highlights
Gross Margin Improvement
The full-year gross margin increased to 36% in 2024 compared to 32% in 2023, indicating improved profitability despite revenue challenges.
Successful Debt Reduction and Capital Raise
The company completed a $4.7 million warrant inducement capital raise and retired bank debt. Convertible debt was reduced from $1.1 million to $800,000, strengthening the balance sheet.
Positive Cash Flow
The Precision Logistics segment remains a positive cash-generating business, contributing to the overall financial health of the company.
Adjusted EBITDA Growth
Adjusted EBITDA improved to $1 million for 2024 from $0.4 million in 2023, marking the sixth consecutive positive quarter.
Lowlights
Revenue Decline
Annual revenue for 2024 decreased by 4% compared to 2023. Q4 revenue was $7.7 million, down from $8.7 million in the previous year, with a $1 million decrease attributed to the loss of a major customer in the Precision Logistics segment.
Operating Loss in Authentication Segment
The Authentication segment, specifically the divested Trust Codes Global business, had an operating loss of $1.2 million in 2024.
Net Loss in Q4 2024
The company reported a net loss of $0.5 million or $0.05 per diluted share for Q4 2024, compared to a net income of less than $0.1 million in Q4 2023.
Decrease in Gross Profit
Gross profit decreased by $0.5 million to $2.4 million in Q4 2024 versus $2.9 million in Q4 2023, with gross margin slightly declining from 33% to 32%.
Company Guidance
During the VerifyMe Fourth Quarter 2024 Financial Results Conference Call, the company provided various metrics and guidance. In 2024, annual revenue decreased by 4% compared to 2023, although there were improvements in gross profit, gross margin, and adjusted EBITDA. The company completed a $4.7 million warrant inducement capital raise and retired bank debt, reducing convertible debt from $1.1 million to $800,000. In the Precision Logistics segment, proactive customers increased by 6% over 2023, although shipments by existing customers declined by 6%. The company divested the Trust Codes Global business, which had an operating loss of $1.2 million, and gross margin for the full year 2024 was 36%, up from 32% in 2023. Fourth-quarter revenue decreased by $1 million to $7.7 million, and the net loss was $0.5 million, or $0.05 per diluted share. The balance sheet showed $2.8 million in cash as of December 31, 2024. The company does not plan to provide guidance for 2025 but anticipates stability barring market unpredictability.

VerifyMe Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
VerifyMe Announces Strategic Shift and Business Closure Plans
Negative
Nov 12, 2024

VerifyMe, Inc. announced plans to close its Trust Codes Global business by the end of November 2024 unless a buyer is found, resulting in a $1.8 million charge in Q3 2024. The company reported a revenue of $5.4 million and a net loss of $2.4 million for Q3 2024, with positive adjusted EBITDA of $0.2 million. CEO Adam Stedham emphasized focusing on Precision Logistics for growth, while discontinuing certain Authentication Segment initiatives, aiming to enhance shareholder value.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.