LAKE MARY, Fla. - VerifyMe, Inc. (NASDAQ: VRME), a provider of specialized logistics and brand protection services, today announced a revision to its 2024 revenue forecast due to the upcoming termination of a subcontract with a significant global carrier customer. The contract, pertaining to Premium logistics services for one of the carrier's clients, will conclude in June 2024 following the carrier's strategic realignment.
The cessation of this subcontract is not linked to any service quality issues from VerifyMe's Precision Logistics segment but is a result of the carrier customer's new strategic direction. This change is not expected to affect the segment's Proactive services or the remaining Premium services. However, the loss of this contract represents a substantial portion of the segment's revenue.
As a consequence, VerifyMe has adjusted its 2024 revenue growth expectations from double digits to mid-single digits. Despite the anticipated reduction in gross margin percentage for 2024, the company still expects to exceed the gross margin percentage achieved in 2023. Strategies are being actively developed to mitigate the impact of the gross margin reduction on the company's adjusted EBITDA.
The company's five-year outlook, presented on February 6, 2024, is principally based on growth initiatives not related to the Premium services within the Precision Logistics Segment. Adam Stedham, CEO and President of VerifyMe, expressed confidence in the company's strategic progress and commitment to executing the five-year plan despite the recent setback.
VerifyMe operates globally, offering logistics for time-sensitive products and technologies for product traceability, anti-diversion, anti-counterfeit, and brand enhancement. The update on the company's financial outlook is based on a press release statement and reflects the dynamic nature of business strategies and customer relationships.
InvestingPro Insights
VerifyMe, Inc.'s recent adjustment of its revenue forecast following the termination of a key subcontract highlights the importance of staying informed on the company's financial health and market performance. Here are some insights from InvestingPro that could provide additional context to the company's situation:
InvestingPro Data shows a market capitalization of $20.76 million, which, while modest, reflects the size and current market valuation of the company. Despite a challenging outlook, the company has shown a significant return over the last week with a 17.24% price total return, indicating a responsive market sentiment to recent developments or potentially other market factors.
The short-term performance has been even more impressive, with a one-month price total return of 31.61% and a three-month return of 65.85%. This suggests that investors have been reacting positively to the company's performance or strategic moves over these periods.
An InvestingPro Tip worth noting is that analysts do not anticipate the company will be profitable this year, which aligns with the company's own revenue forecast revision. This insight is crucial for investors considering the potential for future profitability and the impact of current strategic challenges.
Moreover, it is important to acknowledge that, according to another InvestingPro Tip, the company's liquid assets exceed its short-term obligations, providing some financial flexibility in the face of current challenges.
For readers looking to delve deeper into VerifyMe's financial metrics and strategic outlook, InvestingPro offers more detailed analysis and additional InvestingPro Tips. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a total of 9 additional InvestingPro Tips for VerifyMe, which could further inform investment decisions and understanding of the company's trajectory.
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