Intellicheck (NASDAQ:IDN) is a company that provides identity verification software for retail locations and online use cases. The company’s software reads the barcodes on IDs and matches the information with the given name, address, age, and other data, offering a more accurate and cost-effective solution compared to traditional OCR methods.

The stock price of Intellicheck has experienced volatility over the past few years, reaching a high of over $15 and a low of $1.43. The market’s cycle of valuing SaaS companies at high EV/S ratios in 2021, followed by a crash, has contributed to this turbulence. However, the stock has found support as insiders, including CEO Bryan Lewis and CFO Ishmael Jeffrey, have been buying shares, indicating their confidence in the company’s growth prospects.

In terms of financials, Intellicheck reported total revenues of $16.83 million in Q1/2023, with SaaS revenues accounting for $16.61 million. The company has shown steady revenue growth on a trailing 12-month basis, with a 23% increase compared to the previous 12 months. The latest quarter has seen an acceleration of growth to 26%. The company expects growth rates to climb as its newest sales team settles and closes new deals.

Although Intellicheck currently reports a negative EBIT of -$3.56 million for the trailing 12 months, the company’s gross margins are well above 90%, indicating potential for profitability. Operating costs are expected to remain stable, with the primary driver of increased costs being the growing sales team. The company aims to achieve breakeven EBITDA in 2023. Intellicheck has a healthy balance sheet with no outstanding debt and cash and short-term investments totaling around $10 million.

In terms of valuation, the company has a market valuation of $51 million, implying an enterprise value of around $41 million. Given the potential for high growth, the current stock price of $2.65 may not fully reflect the earning potential of the company. A discounted cash flow (DCF) model, considering a growth scenario with an 11% compounded growth rate over a 9-year period, shows a fair value of $4.05 per share, representing a 53% upside from the current price. However, the fair value estimate is highly dependent on the company’s future growth.

There are risks to consider, such as the performance of the sales team, which has undergone significant changes in recent years. The CEO has expressed confidence in the current sales team, but previous growth projections have not materialized fully. The latest quarter’s growth rate of 26% could indicate the beginning of a greater growth trajectory.

In conclusion, Intellicheck represents an investment opportunity with the potential for continued growth. However, the company is at a crucial turning point, and if the sales team underperforms, profitability may be delayed. The insider buying by the company’s board members indicates confidence in the company’s prospects. It’s important to note that the fair value estimate varies based on the company’s future growth, with different scenarios significantly impacting the stock’s value.

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