ImageWare Systems, Inc.
Q4 2020 Earnings Call Transcript
Published:
- Operator:
- Systems Fourth Quarter and Full Year 2020 Financial Results and Corporate Update Conference Call. Joining us today are ImageWare's Chair, President and CEO, Kristin Taylor; Vice President of Product Management; Mark Blackman; and Vice President of Go-to-Market Portfolio Strategy and Interim Head of Sales, AJ Naddell. Before we begin, I would like to remind all parties that any statements made in today's discussion that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as anticipate, believe, estimate, expect, forecast, intend, may, plan, project, predict, if, should, will and similar expressions as they relate to ImageWare are intended to identify such forward-looking statements.
- Kristin Taylor:
- Operator:
- Pardon for interruption. We are currently unable to rejoin Kristin Taylor’s line, however at the other speakers your lines are now open.
- Kristin Taylor:
- Okay. I'm sorry, folks. Let me step back then. So the past year has been nothing short of transformative for our business for reasons good and challenging. We'll certainly take the good, and that comes from the process so far, but we're also cognizant of the fact that our vision for ImageWare 2.0 still has a ways to go. The fourth quarter presented its own unique challenges. Both from an internal execution standpoint as well as the external economic environment, but I'm confident we have and are taking the necessary steps to keep moving in the right direction. ImageWare is a biometric first cybersecurity company. Put it another way, we believe that by incorporating a greater number of biometric specific touch points into our current security system, we can provide greater accuracy, speed and transparency to the identity verification process, along with the user enhanced experience. Throughout our history, ImageWare has been focused on distinguishing itself through this biometrics-first approach. Today, that means employing a system agnostic platform, giving users a full variety of use cases, both authentication and re-authentication capabilities. We've spent significant time and effort in recent months, taking our comprehensive offering fleet and updating the back end to meet today's modern access needs. When realized, our vision to have a fully integrated cloud platform, offering a suite of solutions that are unique yet interoperable from the world's top government organizations, Fortune 500 businesses and even private individuals. Beyond building great products, we also have to improve the way we market and sell them. With the proceeds from our most recent capital raise this past December, our teams have been hard at work to deploy these funds on high-value opportunities which should translate into meaningful growth in the coming quarters. We'll get into this more in a minute.
- Mark Blackman:
- Thank you, Kristin. Over the past several months, we've made significant updates and enhancements to our platform with the goal of implementing greater levels of integration and automation to unlock broader product value. As a general rule with software, solutions need to be updated on a consistent basis to ensure there compatible with the latest platforms and cloud services being leveraged in the marketplace. And while our legacy products certainly have delivered their intended value, we recognize there are changes that need to be made as technology continues to shift to the cloud-based mobile applications and remote onboarding with contactless authentication. Over the last year, we've been focused on the foundational lifting required to take our legacy solutions and biometric platform to this cloud-based mobile-friendly world. This migration will not only bring down development and operational costs, but will also provide a foundation to build new solutions for problems our customers encounter. As we modernize this platform, we continue to upgrade our existing products which provides sales continuity and new value to our existing customer base. To help guide the discussion, I'm going to spend a minute recapping some of the major milestone achievements from this initiative as well as explain the purpose behind each. First and most importantly, in August of last year, we completed the modernization of our Biometric Engine. This scalable, multimodal algorithm agnostic biometric database has and will continue to underpin all other ImageWare solutions. It's the platform upon which all updates are being built on. As part of the upgrade, we have integrated various open-source software to reduce the development cost, while also greatly improving performance and efficiency.
- AJ Naddell:
- Thank you, Mark, and hello to everyone joining us today. I'm looking forward to sharing some of the new and exciting initiatives we have on the sales and marketing end. I'll be elaborating on our current go-to-market strategy and providing additional color on some of the key verticals we're looking to tackle. To begin, I'd like to acknowledge that we did encounter various sales and execution-related challenges in the fourth quarter, which impacted our results to a degree. Though this was not the result we were hoping for, we are proactively implementing changes to adjust these areas and believe we have a solid foundation on which to build going forward. These changes include upgrading our sales force and leadership team, we're finding our focus to expand market share and product footprint, implementing a business partner program, creating hyper local events and having a targeted business development to senior executives in specific industries and regions. With these initiatives in place, we expect to see improved bookings and sales results beginning in the second half of 2021. As Kristin mentioned at the outside of this call, thanks to our recent capital infusion, we have more funds to allocate the sales and marketing for the first time in recent which is a great first step. As I just noted, we believe the latter half of this year will be the time to show these efforts starting to bear fruit. From the time we received the actual funds to building the team and strategy to execute on these plans to attracting targets and ultimately closing sales, these programs will take time. Another example of our enhanced sales efforts is through our newly revamped business partner program. In addition to increasing our partner selectivity to support greater input and adoption, we're actively targeting groups and organizations that can provide value beyond the simple reseller arrangement. A prime recent example of this is with Safety Group's subsidiary, Israeli-based safety data, which we announced via press release last month. A reason why we chose to work with Safety is because they are who have been previously featured in 2 Gartner Market Guides, 1 for Zero Trust and second for Emerging Technologies in the Zero Trust Network access space, in addition to a Forrester Now Tech for cloud security gateways. Within the Zero clouds -- Zero Trust space, Safety is a truly prominent group that we are excited to work with. In our collaborative effort to develop a joint Zero Trust Network Assets or ZTNA, we combined their Zone Zero solution with ImageWare Authenticate to create the first ever biometric based ZTNA solution. Zero Trust is a security concept that centers on the notion that organizations should not trust anything in or outside its perimeters and instead must verify anything and everything trying to connect to its systems. This means that before granting access, the ZTNA solution collects and matches biometrics, either in the cloud or on-premise to ensure users true identity. With more companies normalizing remote work, it is imperative for data to only be accessed by authorized individuals. By adding biometric authentication to Zero Trust, ImageWare add significant value by verifying the person instead of the device itself, while also improving the user experience with quick contactless authentication. Safety functions as a value-added reseller or VAR that embeds our product into their comprehensive solution. Our combined offering should enable us to expand our universe of addressable opportunities, presenting us with more leads in more industries for more use cases. It's a case of 1 plus 1 equals 3. We'll be looking to announce more partnerships like this in the coming months. I'll now take a minute to discuss our updated go-to-market motion. From a high level, we'll be transitioning from technology sales strategy to a solution sale approach. More specifically, we plan to break this into 2 key areas or use cases. The first being customer onboarding and authentication and the second being law enforcement and public safety, booking and identification. Within the customer onboarding and authentication space, we plan to tackle 4 key verticals
- Kristin Taylor:
- Thank you, AJ. Though we continue to fight an uphill battle in the short term, we are setting ourselves up for long-term sustainable growth. Let me provide some brief HR-related updates. First, as you've heard, AJ Naddell is our Vice President of Go-to-Market Portfolio Strategy and newly appointed Interim Head of Sales. As the focal point of product management, marketing, product design, sales and customer success, AJ will play a pivotal role in collaboratively and strategically developing powerful revenue-driving go-to-market programs. He will be tasked with conducting operations across a number of key verticals within our business and will be responsible for delivering our critical offerings to the marketplace, while also driving future customer needs. AJ has demonstrated success previously, closing 8-figure deals for blue tip organizations and has also played a crucial interim role on the sales end as we continue expanding our team there. To fully maximize our efforts on the front end of our business, we have officially begun the search for a new head of sales to support our expanded growth goals. The growth of our sales and sales leadership team is crucial in our effort to commercialize our ImageWare 2.0 solutions. More recently, we also announced the on-boarding of Lauren C. Anderson to the Board of Directors. This marks an important milestone as Lauren became the first independent female board member in ImageWare history. With nearly three decades of security, counterterrorism, diplomacy expertise, Lauren possesses a truly unique combination of experience and skills that are well suited to our near- and long-term objectives in expanding the law enforcement and public safety sectors in state, local and federal markets. Through her multi-decade career with the FBI, Lauren has established herself as a well-respected global security expert at the highest levels within the federal government, a key market for ImageWare historically and going forward. As we roll out our next-generation products for new and current law enforcement and government agency customers looking to expand internationally, we expect to benefit from her strong relationships in the field to increase our footprint. In her near two months at ImageWare, Lauren has been extremely helpful in making introductions in and outside of law enforcement, participating in our local and state law enforcement focus groups and advising ImageWare on security and ethics. Sticking with the Board, in November, we appointed Iris Biometrics industry leader, Jim Demitrieus; and technical and IP strategists, Douglas Morgan as well. Also these changes bring the total count to 4 members, 3 of whom are independent. As noted in our recent corporate update, former ImageWare Chairman and CEO, Jim Miller, has also left the business effective April 12, 2021. Jim had been operating under consulting agreement since November of 2020. Lastly, we also recently announced the resignation of our CFO, Jay Lewis. We understand and respect Jay's decision to step aside at this point in his career to pursue a better fit for work-life balance. Although his time with us was limited, we are appreciative of his efforts and wish him the very best as he pursues other opportunities. We are also well underway in the search for a new CFO with deep operational and turnaround skills including regulatory, financial reporting, M&A, capital markets and corporate finance experience. We understand that having the right individuals in the correct role will put us in the best possible position for growth. Our team recognizes that tough decisions sometimes have to be made, and it is absolutely vital to move quickly and make sure we have the right people in place to execute our strategic vision. Moving on to elaborate on Mark's previous point, we are continuing to face certain lingering impacts from COVID-19. More specifically, our ability to close deals quickly compared to the pre-pandemic times continues to be impacted. The specific reason for this impact relates to our potential partners inability to properly and thoroughly test software and hardware in proper use environments. What many don't know is how critical this phase is during the due diligence process as customers tend to go through several trials of testing before proceeding to sign a deal. Unfortunately, we are witnessing this trend across each industry segment we serve. Our federal clients are not able to physically go into their labs, police officers or directors of IT within the public safety realm in many states still aren't able to go to work at their office in person. And on the enterprise side, many companies are still working from home, where they aren't able to properly test our solutions. When I first joined the company 13 months ago, we had limited capital, significant debt and major hurdles to overcome. It has taken time and serious grip from our collective team to get to this point. I'm incredibly grateful for the efforts of our combined team and dedicating themselves to the building of our vision for the new ImageWare. And I believe we are well on our way. So I am encouraged by the development of our product offerings, marketing campaigns, internal processes, go-to-market and sales initiatives, there is still much work to be done. Cyber crimes are becoming more prevalent and sophisticated with each passing day. The need for dynamic cybersecurity solutions need to step up as well. ImageWare is strategically positioned to be the primary solution for companies seeking biometric based solutions to address this growing need. That concludes my prepared remarks. Thank you for joining us on today's call. I especially want to thank our employees, partners and our investors for their support. We appreciate your continued interest in ImageWare and look forward to updating you on our next call in May.
- End of Q&A: