VerifyMe ((VRME)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for VerifyMe reflected a mixed sentiment, as the company reported efforts to enhance gross margins and cut operating expenses, leading to an improved adjusted EBITDA. However, these positive strides were overshadowed by declining revenues, a substantial one-time impairment expense, and challenges linked to transitioning to a new shipping partner.
Improved Gross Margin
VerifyMe reported a significant improvement in its gross margin, which increased from 35% in Q3 2024 to 41% in Q3 2025. This improvement was attributed to better-negotiated rates with a primary supplier, showcasing the company’s strategic efforts to optimize costs and enhance profitability.
Adjusted EBITDA Improvement
The company achieved an adjusted EBITDA of $0.8 million in Q3 2025, a notable increase from $0.2 million in Q3 2024. This improvement was driven by enhanced gross margins and a reduction in operating expenses, indicating effective cost management strategies.
Cash Flow Positive Outlook
VerifyMe expects to maintain a cash flow positive status for the entire year of 2025. With no outstanding borrowings and $1 million available under its line of credit, the company is well-positioned to support its operations and potential growth initiatives.
Revenue Decline
The company experienced a revenue decline in the third quarter, with figures dropping from $5.4 million in 2024 to $5.0 million in 2025. This decrease was primarily due to the discontinuation of services with two Proactive customers, highlighting a challenge in retaining customer relationships.
One-Time Non-Cash Impairment Expense
VerifyMe recognized a one-time non-cash impairment expense of $3.9 million in Q3 2025. This expense was related to the impairment of goodwill and intangible assets associated with the PeriShip business, impacting the company’s financial results.
Net Loss Increase
The net loss for Q3 2025 increased to $3.4 million, including the $3.9 million impairment expense, compared to a net loss of $2.9 million in Q3 2024. This increase underscores the financial challenges faced by the company during this period.
Challenges with Shipping Partner Transition
The transition from the previous Proactive shipping partner to a new one has presented challenges, causing disruptions and customer hesitancy ahead of the peak season. This transition is a critical area for the company to address to stabilize operations.
Forward-Looking Guidance
VerifyMe’s forward-looking guidance highlighted several key metrics. Despite a revenue decline to $5.0 million in Q3 2025, the company improved its gross profit by $0.2 million, reaching $2.1 million. Operating expenses decreased to $1.7 million, partly due to the divestiture of Trust Codes. The company anticipates a transitional revenue impact due to changes in their Proactive shipping partner but expects to remain cash flow positive through 2025 and 2026. With a cash balance of $4.0 million and no outstanding bank debt, VerifyMe is well-positioned for organic and strategic growth, with specific guidance for 2026 to be provided in the next earnings call.
In conclusion, VerifyMe’s earnings call presented a mixed picture, with positive developments in gross margin and EBITDA overshadowed by revenue declines and a significant impairment expense. The company faces challenges with its shipping partner transition but remains optimistic about maintaining a cash flow positive status and pursuing growth opportunities. Investors will be keenly watching for further updates in the next earnings call.