Three months ago Intellicheck went from talking about double-digit growth to talking about damage control. The company's largest customer, responsible for roughly 29% of first-half revenue, opened a multi-vendor review of its identity verification suppliers tied to a merger, and management responded by guiding full-year revenue to come in slightly below 2025. The third-quarter report, due after the close on November 12, is the first full look at what that review is actually costing, and whether the rest of the business can absorb the hit.
The Street is bracing for contraction. Consensus calls for revenue of about $5.5 million, down roughly 9% from $6.0 million a year ago and below the $5.9 million posted last quarter. Earnings are expected at a penny per share, flat with the prior-year period and well off the $0.03 earned in the second quarter. Those figures fit management's revised outlook. After growing 13% in the first quarter and 7% in the second, the company needs a weaker back half to land slightly below last year's total, so a 9% decline is less a surprise than a recognition of the math. The real question is whether $5.5 million proves to be a floor or a waypoint on the way lower.
That hinges mostly on transaction volume from the anchor customer. Management said the volume shift so far had landed short of the customer's worst-case scenario and that the same customer had signed a new purchase order and planned to adopt the company's newest API with additional risk signals. If third-quarter revenue holds near consensus and management describes the evaluation as stabilizing, that would suggest the guidance cut captured most of the damage. A miss, or fresh language about volumes slipping across more use cases, would challenge the idea that the worst is known. Management also noted the situation was shifting rapidly, so any update on the timeline of the review may matter as much as the quarter's numbers.
The offset is diversification. Banking and lending climbed to 48% of revenue from about 40% a year earlier, the company signed three new desktop clients in each of the first two quarters, and revenue excluding the largest customer grew about 19% in the first half. Continued wins at that pace, plus help from stronger mortgage originations in title, would validate the claim that the base is broadening. Retail slipped about 2% last quarter and automotive scanning volumes were drifting lower, so further softness there would make the arithmetic harder. Upside optionality rests with a large global social media customer that has resolved its image capture problems and returned, though management keeps it out of the forecast. Any sign of revenue there would be a genuine surprise.
Profitability deserves equal attention. Adjusted EBITDA fell to $1.1 million, around a 19% margin, from a record $1.9 million in the fourth quarter, and management expects operating cash flow to decline in the second half. Cash rose to $11.8 million with no debt, which gives the company room, but evidence of cost discipline protecting margins on lower revenue would help restore the operating leverage narrative.
The market has already delivered a harsh verdict. Shares have fallen nearly 29% since the last report, trailing the S&P 500 by about 26 points, and at $2.13 they sit close to the post-earnings low of $2.07 and far beneath the 200-day average of $4.49. Bearish sentiment has deepened sharply from the prior quarter. That pessimism lowers the bar somewhat, but it also shows how little patience remains. The report will ultimately be judged on one issue: whether growth outside the largest customer is strong enough to show that the concentration shock is a bounded setback rather than an open-ended erosion.