Intelli-Check (IDN) Q4 2021 Earnings Call Transcript

Intelli-Check (IDN 4.29%)
Q4 2021 Earnings Call
Mar 09, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Intellicheck fourth quarter and full year 2021 earnings conference call. [Operator instructions] At this time, it is my pleasure to turn the floor over to your host, Mr. Gar Jackson. Sir, the floor is yours.

Gar Jackson -- Investor Relations

Thank you, operator. Good afternoon, and thank you for joining us today for the Intellicheck fourth quarter and full year 2021 earnings call. Before we get started, I will take a few minutes to read the forward-looking statement. Certain statements in this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended.

When used in this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company or its management, as well as assumptions made by and information currently available to the company's management identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether resulting from such changes, new information, subsequent events or otherwise. Additional information concerning forward-looking statements is contained under the headings of Safe Harbor Statement and Risk Factors listed from time-to-time in the company's filings with the Securities and Exchange Commission.

Statements made on today's call are as of today, March 9, 2022. Management will use the financial term adjusted EBITDA in today's call. Please refer to the company's press release issued this afternoon for further definition and reconciliation, and context for the use of this term. We will begin today's call with Bryan Lewis, Intellicheck's chief executive officer; and then Bill White, Intellicheck's chief financial officer, who will discuss the Q4 and full year 2021 results.

Following their prepared remarks, we will take questions from our analysts and institutional investors. Today's call will be limited to one hour, and I will now turn the call over to Bryan.

Bryan Lewis -- Chief Executive Officer

Thank you, Gar. As you saw in the press release, Q4 SaaS revenue was $3,715 million, up 23% over the same period in 2020, with the gross profit as a percentage of revenues at 92%. SaaS revenue for 2021 was $12,970 million, up 30% over 2020. The year-over-year percentage change was significant, but as always, I want more.

So what do we need to do to continue to accelerate our growth? What we have learned over the past few years is that because we have the most accurate validation technology solution, we have pricing power when it comes to both initial contracts and renewals. That said, we are very much aware that it's imperative that we continue to grow a substitute client base. We believe that we are well-positioned to achieve this goal. I'll start with recapping the transformational changes we made in 2021 that we believe will serve us well going forward.

First was the build-out of a proper marketing department. This team has done a number of things to raise both awareness of Intellicheck and generate inbound leads. During the year, this team updated our branding, rebuilt the website to truly optimize or being picked up in searches, created marketing collateral for the sales team, and most importantly, created targeted online marketing campaigns to if not create an inbound lead at least have our name known to make it a warm, not a cold call. And the marketing campaigns have certainly paid off.

Prior to the launch of these campaigns in April, we basically had zero leads coming in. The inbound leads have been steadily growing with now over 100 a month plumbing in and increasing. While most of these have been for age-restricted products, we have been across all sectors, banking, age-restricted, automotive, online notaries, delivery companies, you name it. The smaller age restricted deals closed quickly while the financial services and banking prospects take longer.

The inbound age-restricted leads closed in 2021 had a total ACV of $230,000 with minimal cost of acquisition. That solid growth in a vertical considering that we did approximately $1 million in the age-restricted revenues in 2021. The most important thing about all these leads is, they show that the market for identity verification is enormous across multiple and varied sectors. The other thing to note about many of these leases is that, they are from companies using the OCR firms, some consider our competitors.

The companies are unsatisfied with OCR accuracy, have heard of us, and want to give us a shot. Knowing that we have such a large addressable market and the resources to increased headcount of the sales force. In 2021, we expanded the sales force, and we've seen a positive effect in two ways. First is that smaller deals are not falling through the cracks and are closing quickly.

While each of these deals alone aren't game changing for the company, they are quick and easy to close and the ACV will add up over time. Second, the number of deals progressing through the pipeline at mid- to large-sized prospects is continuing to increase. However, like I've always said, it isn't about the pipeline, but our ability to close the deals in the pipeline. And let me be candid.

I'm not happy with how some of the sales force has been performing, and we are in the process of making the necessary changes. We are going to continue to grow the sales force as we find the right candidates. As I've said on multiple calls, hiring salespeople is always difficult as they are always very good at selling themselves, but not -- sometimes not so good at selling your product. So some of our hires are no longer with us.

A constructive boost to focus on hiring seasoned sales executives with identity experience. To that end, two more senior salespeople with the industry experience started earlier in March. I've also directed Bruce to institute a series of changes to upgrade our sales training program. Another significant step we took in 2021 was changing our billing to focus primarily on prepaid buckets of transactions that expire after 12 months or a monthly minimum with overages billed in arrears.

Prior to this, all billings was in arrears with minimum monthly commitment that did not come close to representing a total transaction volume. Both of the new models have financial incentives for our clients not to estimate the number of transactions. The larger the bucket of guarantee, the better the price. Two notable examples of this are financial services company No.

4, who in August prepaid for what they thought would be a year's worth of transactions. At best, we estimate that they have 90 days left in that bucket. So basically, what they estimated would be a year's work it scans lasted about nine months. The second was a reseller that sells an omnichannel multi-biometric platform to banks, marketplaces and healthcare systems.

They pre-purchased 125,000 transactions with the expectation that it would last for a year. After going live in January, they are already halfway through that bucket. We have been able to continue to raise prices, both at renewal and as we add new clients. As we targeted the age-restricted space harder than we did before, we also took a hard look at the pricing first transaction.

Typically, this was sold via an app on a smartphone or tablet with pricing per device. When you look at the price per transaction, we determined it was far too low and moved all new age focused clients to either the transaction bucket or at the monthly minimum. The results of our efforts is that the transactional price for age folks to its clients signed in 2021 are on average 6 times higher than in previous years. We've also modified our sales approach in the age focused space by creating a dedicated team.

This group has been passed with renewing all existing clients at the higher rates. As I said, age-restricted SaaS revenue accounted for approximately $1 million of our 2021 total SaaS revenue, and we believe we will see a continued increase in traction through both new customers and price increases going forward. To further aid the efforts in the sales restricted market, we spent significant time in 2021 on education efforts with legislators in many states. We believe these meetings are extremely important, because most state of specials do not know how easy it is to get a fake ID.

When I speak with the state attorney general or a legislator member and show them a fake premise stay, scan it with one of the readily available scanning programs used by many POS systems or handhelds and that fake passes, they suddenly realize why visual inspection and simply scanning do not work. Seeing our technology solutions that have worked, shows them the need for validating and then they recognized that their laws have not kept up with the technology. We've also been meeting incredible organizations that are active on national and multi-state level on key issues surrounding underage access to age-restricted products. I'm pleased to tell you that we've now formalized the partnership with responsibility.org.

This organization plays a leading role in the fight to eliminate underage drinking. It is active in all 50 states, as well as at the national and local level. This organization is supported by 11 of America's distillers, who have expressed a commitment to responsible drinking. We expect to announce additional partnerships resulting from these endeavors.

Thankfully, more and more companies are looking to do the right thing, but there are still many major corporations out there that profits ahead of actually doing the right thing. Hopefully, the period the $60 million-plus lawsuits for wrongful death move them to do the right thing. And if not, we believe that legislative changes should mandate it. So returning to rate increases, it is important to note that these rate increases on renewals continue to be robust with many of them starting in Q2 of this year.

For example, during Q4, we renewed our department store chain client with just over 1,100 locations with a 33% increase effective in Q2 of 2022. In that same period, we will move to 1,000 location off-price department store chain where we parse not authenticate for applications to a three year deal. Year one is at the same price and now includes the no receipt return use case, which should substantially increase transaction volumes. In year two, the price increase is 87%, and in year three it increases 33%.

Another growth area in both 2020 and 2021 has been digital adoption. This has increased dramatically and the data barriers is out. From the initial beta clients in early 2019, the number of clients using us exclusively for the digital channel or for both physical and digital has grown 550% with more than 50 digital clients across multiple market verticals, including online banking, credit card issuers, background checks, delivery service and automotive dealers. And as a testament to our digital capabilities, in Q4, we signed a California-based online bank.

This was notable as it was a direct steel from an OCR competitor. Development has begun, and we anticipate Q3 implementation. The initial use case will be for account opening. Another exciting development in late Q4 is that we began a security audit necessary to start a pilot with another top five bank.

As I've said many times, these can often take six months or more to complete before their information security teams allow our computers to connect. I'm not worried about passing the audit as all of our banking clients put us through on every year. The initial use case for this client is retail banking, but their teams are already discussing additional physical and digital use cases with us. Now for what I consider the most transformational step forward as we enter 2022.

You may have seen the press release last week about Platform 2.0. This new platform allows our clients to do more than just authenticate a person. We now have the tools in place to take it to the next level, whether they can not only be sure that their person is who they say they are, but also determine if the authenticated person is someone they want to do business with. As I said, this transforms us from a company doing strictly, is it really John Doe, two, is it really John Doe, and I know that he is someone I want to do business with, do multiple validation signals and I know it internationally, as well as domestically.

We currently have two clients live on the platform and seven new and existing clients on-boarding, and additional clients are now planning on migrating to the platform. Keep in mind that Platform 2.0 now incorporates multiple facial biometric spenders, allows for OCR validation of international documents. And in the next few weeks, we will be releasing sanctions lookups, PEP, address lookups, social security lookups with more signals to come. All of these are upsell opportunities.

Why is this new platform important? Identity, especially in the digital world is about more than an ID. All of our clients perform additional diligence before doing business with the person, whether it's opening a bank account, providing a loan or credit card or opening an investment account. We also know that our clients were forced to choose another ID validation vendor for international documents. Intellicheck was one very accurate and important step in that process, again, just one step for one region in the world.

We believe that Platform 2.0 allows Intellicheck to move from simply a North American ID validation company to a global identity company, which is crucial as the world evolves and becomes more digital. We built Platform 2.0 in collaboration with our clients and input from prospects. By providing them multiple global steps in the identity process through one connection, we reduce their cost and friction something every company is looking for. We believe the number of clients migrating to this platform proves this point.

I was speaking with a rather smart person the other day, he said to me, it is a hostile world out there, and he was right. Hostile actors continue to increase the amount of identity theft under its drinking, vaping and cannabis use continue to be a problem. We believe that we are uniquely positioned to address all of these problems. Now is about pressing the right levers to drive continued and increasing growth, and we believe the changes we put in place in 2021 are the right levers.

Brand awareness has improved due to its quick revenue in the age-restricted space, along with a growing pipeline of financial services company. We believe of our lobbying efforts to update ID validation lives in the age-restricted space will bear fruit over time. We believe that our ongoing refinement of our sales team will allow us to capitalize on both existing markets, as well as new verticals where we are just beginning to penetrate. The build-out of Platform 2.0, featuring additional multinational ID and KYC capabilities, we believe provide significant growth opportunities ahead both with new and existing clients.

With all of these exciting developments, tampering this as financial services company No. 2, which recently began a project that will enable them to extend credit to 10s of 1,000s of additional merchants. This required financial services company No. 2 to put a code freeze on all other development, which meant multiple retailers that have been expected to go live in the first half of the year will not.

The above described projects should be interim delay to our short-term growth as they expect to resume integrations in the September timeframe. We believe the short-term pain now represents a likely long-term gain as these new additional applications will need validations. This is very likely going to impact our Q1 results. And although we still have a few weeks remaining in the quarter, we currently anticipate our first quarter SaaS revenues will be in the range of $3.2 million to $3.35 million.

Moving forward, I'm happy to say as part of the general business review, we analyzed churn rate. And since 2018, the company has not lost a single major client to anything other than bankruptcy, and all the financial services clients have grown their use cases. I believe the reason for basically zero churn is the certainty we provide, and I always think it's best when your clients save it for you. So as Lieutenant Joe Jewell of the new Hanover County, North Carolina Sheriff's office told the Port City Daily news about our technology solutions, he said it worked flawlessly.

He went on to say the Sheriff's office tested 12 companies that claim to be able to stop fake IDs and Intellicheck was the only one that worked accurately. I've never heard anyone say that about the competition. I will now turn the call over to Bill, who will go over our Q4 financials.

Bill White -- Chief Financial Officer

Thank you, Bryan, and a good day to our shareholders, guests and listeners. I'd like to discuss some of the financial information that was contained in our press release for the fourth quarter and full year ending December 31, 2021. I'll begin with the fourth quarter results. Revenue for the fourth quarter of 2021 grew $824,000 or 27% to $3,902 million, compared to $3,078 million in the same period of 2020.

Our SaaS revenue for the fourth quarter of 2021 grew $703,000 or 23% to $3,715 million from $3,012 million in the same period of 2020 and grew 14% sequentially over third quarter of 2021. Gross profit as a percentage of revenue was 92% for the fourth quarter of 2021, compared to 92.6% for the same period in 2020. Operating expenses, which consists of selling, general and administrative expenses and research and development expenses increased $2,598 million or 109% to $4,987 million for the fourth quarter of 2021, compared to $2,389 million for the same period in 2020. The company is always looking for synergistic opportunities, including merger and acquisition opportunities, including within selling, general and administrative expenses are approximately $454,000 of costs incurred related to this activity.

In addition, the company incurred higher personnel, share-based compensation, consulting and marketing expenses. The company posted a net loss of $1,396 million for the fourth quarter of 2021, compared to a net income of $1,260 million for the same period in 2020. The net loss per diluted share for the fourth quarter of 2021 was $0.07, compared to a net income per diluted share of $0.07 for the same period in 2020. Adjusted EBITDA for the fourth quarter of 2021 was negative $557,000, compared to $635,000 for the same period in 2020.

Now turning to our full year 2021 results. Revenue for the full year ended December 31, 2021, increased $5,658 million or 53% to $16,393 million, compared to $10,735 million for the same period in 2020. Our SaaS revenue for the full year ended December 31, 2021, was $12,970 million, an increase of $3,597 million or 38%, compared to $9,373 million for the same period in 2020. Gross profit as a percentage of revenue was 78.6% for the year ended December 31, 2021, compared to 86.7% for the same period in 2020.

The decrease in gross profit percentage is primarily due to higher 2021 hardware sales, which contained lower margins, partially offset by the continued growth of our SaaS revenue. Excluding hardware sales and related costs, our gross profit as a percentage of revenue was 93.2% and 92.1% for the years ended December 31, 2021 and 2020, respectively. The increase in this percentage is primarily due to continued growth of our SaaS revenue. Operating expenses for the full year increased by $7,475 million or 78% to $17,044 million for the year ended December 31, 2021, from $9,569 million for the same period in 2020.

Selling, general and administrative expenses increased by $5,670 million or 96% to $11,564 million for the year ended December 31, 2021, from $5,894 million for the same period in 2020. Research and development expenses increased $1,805 million or 49% to $5,480 million for the year ended December 30, 2021 from $3,675 million for the same period in 2020. These increases are primarily due to higher share-based compensation costs, higher personnel costs and higher marketing expenses. The company had a net loss of $4,146 million for the year ended December 31, 2021, as compared to a net income of $558,000 for the same period in 2020.

The net loss per share for the year ended December 31, 2021, was $0.22 versus a net income per diluted share of $0.03 in the prior year. The weighted average diluted common shares used in computing the per share amount was 18.7 million shares for the year ended December 31, 2021, compared to 18 million shares for the same period in 2020. Adjusted EBITDA was a negative $925,000 for the year ended December 31, 2021, compared to an adjusted EBITDA of a positive $329,000 for the same period in 2020. Now I'd like to focus on the company's liquidity and capital resources.

As of December 31, 2021, the company had cash of $13.7 million, working capital defined as current assets minus current liabilities of $12 million, total assets of $25.7 million and stockholders' equity of $21.2 million. During the year ended December 31, 2021, the company's cash balance increased by $530,000, compared to a net increase in cash of $9,770 million during the same period in 2020. Net cash provided by operating activities was $1,116 million for the year ended December 31, 2021, compared to a net cash used in operating activities of $19,000 for the same period in 2020. Net cash used in investing activities was $662,000 for 2021, compared to $416,000 for 2020.

And net cash provided by financing activities was $76,000 for the year ended December 31, 2021, compared to $10,205 million for the same period in 2020. The company has a $2 million revolving credit facility with Citibank that is secured by collateral accounts. There are no amounts outstanding under this facility. We currently anticipate that our available cash, as well as expected cash from operations will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.

As of December 31, 2021, the company had net operating loss carryforwards of approximately $18.7 million. I'll now turn the call back over to the operator to take your questions. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from the line of Mike Grondahl with Northland Securities. Please proceed with your question.

Mike Grondahl -- Northland Securities -- Analyst

Yeah. Thanks, guys, and good afternoon. As you talk about 2.0 Platform, what are maybe the three most important features that that offers? Or the couple of things that clients seem to appreciate the most about it?

Bryan Lewis -- Chief Executive Officer

I'd say -- hey, Mike. Good talking to you. I would say the ability to do international is something that a lot of the clients have been asking us about. And then kind of they all come together anyway.

I guess one of it, would be the ability to do more of the KYC portion of what needs to be done. I think that's certainly also opens up other markets for us like brokerage firms and other things that need to register people. And then the ability to tie into things that, again, is it really me or, am I dead or not. So security databases, firm lookup databases and address lookup databases to tie things all together.

So those seem to be the three things that people are asking about most. And then, again, the other thing I'd say, which is more of a choice factor is some people are particular about who they want to use for facial recognition depending on how well they think that company handles demographic bias in the results.

Mike Grondahl -- Northland Securities -- Analyst

Got it. And then, Bryan, what do you say about clients migrating? I don't know if you set a number or just an interest level. And then is there an average lift in price as the client migrates.

Bryan Lewis -- Chief Executive Officer

So there is initially no lift in price, it says they get in, get tested and then bring in the other services, which we're a reseller of. So currently, we have a brand new client who is live on the system, just hasn't gone live with their clients yet. We've got an existing client who's live on the system. We've got seven in various -- that are in active development of UAT.

And then we've got a bunch more, who are now going through the specifications and planning on for when they roll over. Part of the thing is it does make it easier for them. Prior to this, when we changed things we brought out, say, maybe differently we have switched facial recognition vendors is required programming on their side. Now we've made it much simpler for them because it's sort of a standardized interface to get any of the other products that we would need to be adding to it and potentially selling to them.

Mike Grondahl -- Northland Securities -- Analyst

Got it. Thank you.

Operator

Our next question comes from Scott Buck with H.C. Wainwright. Please proceed with your question.

Scott Buck -- H.C. Wainwright and Company -- Analyst

Hi. Good afternoon, guys. I'm curious, Bryan, do you know off the top of your head, what same-store volumes look like during the fourth quarter versus a year ago? Trying to determine of that 27% or so year-over-year growth, what is actually new business versus maybe a COVID pickup from late 2020?

Bryan Lewis -- Chief Executive Officer

The same-store sales were just slightly below where they were. So it was a decent lift again getting back to normal last year. I'd say that same-store sales were very, very close. So the lift across them would have been the same quarter over quarter, and then the rest would have been new business.

Scott Buck -- H.C. Wainwright and Company -- Analyst

OK. That's helpful. And then I was wondering if you could provide a little bit of additional color on this financial service client who's adding the 10s of 1,000s of merchants. I guess how does one go about doing that?

Bryan Lewis -- Chief Executive Officer

How are they doing it?

Scott Buck -- H.C. Wainwright and Company -- Analyst

Yeah. I mean, I guess it seems like a relatively big number to kind of find in the couch cushions.

Bryan Lewis -- Chief Executive Officer

That's -- I mean, I'm looking at what they are saying in their public statements about what it will do. But basically, it's a play in the virtual credit card space and they are connecting to a system that is used by a lot of small merchants out there, who sell maybe high value, high dollar products where people might want to be able to get an instant credit card, but we just going to give them the -- a white label card, they don't do enough of it. I look at it as very much akin to what financial services company No. 1 does with their merchants, but they don't do any connectivity.

This system is basically the point-of-sale system that so many of these merchants use. And they're going to tie into it to offer credit to all of them through these virtual credit cards. So it's a big risk for them to do this, and they are looking at it as a great way to expand their credit portfolio. And we know for one thing that they really like what we do and being part of that process will be important.

Scott Buck -- H.C. Wainwright and Company -- Analyst

Yeah. No, that's very helpful. And then, Bill, on opex, there was a pretty big jump from '21 -- from 2020 to 2021. How should we think about operating expense growth in 2022 and beyond? I mean are the pieces in place now? Or is there still a fair amount of investment remaining in order to support the top line growth?

Bill White -- Chief Financial Officer

Yeah. Most of the pieces are in place. So I think you could expect in the $5 million a quarter range going forward for opex.

Scott Buck -- H.C. Wainwright and Company -- Analyst

OK. That's perfect, guys. I appreciate your time. Thank you.

Bryan Lewis -- Chief Executive Officer

Thank you.

Operator

Our next question comes from Jeff Van Rhee with Craig-Hallum Capital Group. Please proceed with your question. Excuse me, Jeff, your line is now live.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Sorry about that, guys. So yeah, a couple for me. I think on fin service No. 2, can you put a little finer point in terms of the impact on Q1 of their freeze and certainly early, but any swags at kind of Q4 potential upside from what they're doing? Just trying to put in the few bounds around what the impact of this code freeze is.

Bryan Lewis -- Chief Executive Officer

Yeah. Because they put this code freeze on, I think kind of in November is when they really told us about it. So a lot -- it impacted two things. It impacted a number of retailers that we're going to go live.

One jewelry company owns a lot of different companies. One got live, but the rest didn't make their cutoff. So I would say that -- was it all of it? No, is it the majority of it? I would probably hazard the answer is, yes. Then it's going to be what can be done, how fast can they get this process done, what they're looking beyond the back end and get back to working with all the other projects.

Certainly, they consider the priority to get us up and running in live, because it's money right to their bottom line. It's just a matter of do they start in August, do they start in September, do they start in late September, because it will depend on when the retailer is going to a point-of-sale code freeze at the end of October or the beginning -- usually the first or second week of November. So at this point in time, I don't have enough color to say what's going to happen on the back end of the year. But it wasn't major, that I wasn't minor, but it certainly could give a portion of the mix that we see from where we thought we could be.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Yeah. Just to be clear on Q1, it's not lost revenue, it's lost -- not lost revenue you already have, it's lost revenue you were hoping to ramp.

Bryan Lewis -- Chief Executive Officer

It was -- you are correct. It was a loss growth, if you will, that I will say that our contacts over there, they're not happy, but just the project that they've been in the works for a long time had been on hold and finally got the green light, so took all their resources. They had quite the list of their account managers talking to our account manager. They had certainly a nice ramp of clients that they had thought were going to be gone, but now they're not until, at least later in the year.

And then I'm also -- and I will say also, I am very excited about the opportunity. I think it's painful now, but we know the business that we see from what we can generate off of financial services company No. 1, where they pay us directly for the service. This is going to be, I'm hoping, one system integrated to all of these people's point-of-sale systems that will allow for a lot more credit apps coming through the system.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Yeah. Yup. That's helpful. Two quick housekeepers.

In terms of implementations in the quarter, how many implementations? And then can you give us an update on digital? It sounds like -- I think you mentioned 50 customers. Give me a sense of what percent of revenues is now digital.

Bryan Lewis -- Chief Executive Officer

Sort of back of the envelope. And this is -- and again, I always point out, this is always low, because one of our big client, they've got one type to us that goes to all of their processes in the place. So we don't know if it's the digital or not digital. They are going to put a tag on it one day for us, so we know what is what.

So it excludes this client, he's a very good client. But it's about 10% of the revenues right now of -- and I should clarify, 10% of the non age-restricted revenues is really very, very little that's doing anything age-restricted digitally at the moment other than some delivery clients here beginning to grow. Implementations for the quarter, generally, Q4 is a year zero implementation quarter anyway for anything in size because we're hitting that code freeze where nobody's going to do anything. We did have one of the multiple jewelry stores -- jewelry chains by that one holding company, did go live and then a number of smaller things like some automotive deals and other things like that, but the one of size would be that one jeweller, which normally, again, Q4 we really don't do major implementations.

One other quick thing, though, it is also, I forgot that. In that quarter, financial services company No. 4 really did began their rollout to their retail branches in earnest. And they're rolling it out in waves every week, and we expect that to be down in some time in May.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

OK. That's helpful. Then just one last for me. You commented several times about sales.

And certainly, we're hearing that across the board very, very hard to find sales talent. And -- but can you put a finer point on what just -- I think last quarter, you had a rep count of 11, eight seniors, three juniors. And I know you're adding reps, and it sounds like you kind of did a stop and a reset. Just put a little finer point on what does the reset look like? Like how many heads did you let go? How many -- you said you just added a couple.

Where do we stand? And then how long until those new reps really ramp to productivity?

Bryan Lewis -- Chief Executive Officer

We stand at 10 right now. I think that the reps that we just started, I think, because of their experience and where they came from would probably be productive a lot sooner than reps who didn't come from this industry. So normally, I would say that if you're not seeing productivity out of a rep within, say, six months, that it needs they're getting meeting, booking meetings and those types of things that other people can come help them with, they're probably not going to make it. I would expect these guys are going to see something quicker than that.

I'm already seeing, they're getting meetings and which is good. So either just the ability to know the industry and they're calling the right people and they're getting into new prospects or they know people who maybe weren't so happy with the solutions that they sold in previous, and now they can sold in something that they know works, helping a lot better. So I think they'll be quicker. So we're at 10 now.

So I think three ended up not working out. But it's sort of the nature of the beast anymore in hiring people, as you said, across the board issue every one of my friends who is telling me that, they're having a hard time finding people, but we're working hard at it.

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Yeah, yeah. Sounds good. Appreciate the updates. Thanks.

Bryan Lewis -- Chief Executive Officer

Thank you.

Operator

Our next question comes from Rudy Kessinger with D.A. Davidson. Please proceed with your question.

Rudy Kessinger -- D.A. Davidson -- Analyst

Yeah, thanks for taking my questions. I guess, I'll maybe ask it again. On Q1, can you quantify a bit clear, how big of the impact from that code freeze with fin serve two is, are we talking about 100,000, 200,000 on Q1? And then just at this point, do you have any visibility into the potential revenue size of that project once they get it live to those 10s of 1,000s of retailers?

Bryan Lewis -- Chief Executive Officer

Well, what I'd say is, I couldn't tell you exactly what the impact is, because it was -- it's going to be an assumption of what they told us and what we thought. So I don't know, all I can without saying, here's what our targets were for the quarter, which we really don't care. It was, multiple retailers are of decent size.

Rudy Kessinger -- D.A. Davidson -- Analyst

Got it. And then I guess the second part of that question, just on the project to get it into the POS systems with this 10s of 1,000s of retailers. I know it's certainly a new project for them, too. But at this point, do you have any idea just the scope or potential size of that project could be in terms of revenue?

Bryan Lewis -- Chief Executive Officer

Yes. I'm looking at -- this is probably going to be definitely latter half of the year before any of that came in, depending on how fast they get this project done. If I look at how often the smaller retailers that seem to be a similar type as financial services company No. 1, they can do anywhere from five to 50 applications a month.

So any one of them is not that big, but I'm looking at this as, if you can get that across the half of that client base, the numbers could add up.

Rudy Kessinger -- D.A. Davidson -- Analyst

And then you mentioned earlier, you have -- if you could just clarify, you said I think it was a security audit pilot with another new top five bank. Can you just clarify what exactly it was? And then if you look at that top five bank, how does it compare in terms of the total scope of opportunity relative to the other top 10 banks that you already have signed in line?

Bryan Lewis -- Chief Executive Officer

If I look at these guys, they are in the top percentage of banks in terms of accounts, credit cards, all those things. So they're a major top five bank. So I'm pretty excited about it. The thing is, it's just dealing with any bank when I will let the size and it seems to get worse, the bigger they are, is you've got to get through the security audit.

The folks that we're dealing with on the business side are super excited. One of the people who is now very heavily involved in the projects was doing the same thing at one of our other clients before moving to this bank. So the business people are very excited. Now it's just a matter of making sure that we have the information security people comfortable and as excited about us is we are about what we could do for them, and that our security procedures, since they've already passed so many other banks certainly should meet theirs as well.

Let's just say every single one of them asked the same question, just a different way, so it's not like you can standardize, here you go, here is our report, they all have their own little idiosyncrasies.

Rudy Kessinger -- D.A. Davidson -- Analyst

Got it. That's it from me. Thanks for taking my questions. 

Bryan Lewis -- Chief Executive Officer

Thank you.

Operator

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. Bryan Lewis for closing remarks.

Bryan Lewis -- Chief Executive Officer

So I just want to thank everybody for listening to the call. I'm given the opportunities that we have, given the neo bank that we signed, the big, very large banks that we're doing the security audit with, plus what I see my team doing internally. I'm very excited about 2022, and I look forward to speaking to you all again in a couple of weeks about Q1. So thank you all, and have a good night.

Operator

[Operator signoff]

Duration: 50 minutes

Call participants:

Gar Jackson -- Investor Relations

Bryan Lewis -- Chief Executive Officer

Bill White -- Chief Financial Officer

Mike Grondahl -- Northland Securities -- Analyst

Scott Buck -- H.C. Wainwright and Company -- Analyst

Jeff Van Rhee -- Craig-Hallum Capital Group -- Analyst

Rudy Kessinger -- D.A. Davidson -- Analyst

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