Trust Stamp (OTCQX:IDAI, EURONEXT:AIID) CEO Gareth Genner expects the company, a global provider of AI-powered, privacy-first trust and identity services, to maintain the strong growth trajectory it has enjoyed over the past year as it expands its core client base and adds additional products.
While there was already pressure on many businesses, both economic and logistical, to change how they operated before coronavirus (COVID-19), he said that the move towards digitization and remote services has been accelerated by the pandemic.
That in turn has created a greater need for secure methodologies that allow companies to identify customers and other stakeholders on a remote basis, increasing demand for Trust Stamp’s services and it is expanding its workforce and preparing for a Nasdaq listing as it enters its next stage of growth.
Proactive sat down with Genner to find out what’s next for Trust Stamp.
What is it about Trust Stamp’s technology that sets you apart when it comes to biometrics and the data protection that is needed for digital and remote transactions?
When we started Trust Stamp, we were really doing two things in parallel. We built a facial biometric system while also working on the next-generation replacement of conventional biometrics. We believed that there would be concern over the use of biometrics in terms of their inevitable loss and potential for misuse. If you lose usernames and passwords they can be changed, but you cannot change your biometrics.
With the increased ubiquity of biometrics, any exposure can have devastating consequences for both individuals and organizations. There is also the potential for biometric data to be used for reasons outside of the scope for which they were provided, including for surveillance.
Everyone who uses biometrics says “we encrypt” but the reality of the risk is demonstrated by the well-publicised data losses by the US Office of Personnel Management, the Australian Government and the Indian Adhar program, among many others.
To address those legitimate concerns, we invested many years and millions of dollars to create a system that destroys much of the original biometric data, injects noise and then encrypts what is left, leaving behind an irreversibly tokenized identifier that is safe to store and share.
Unless it is required for a regulatory purpose, all that ever needs to be stored or shared is what we call an IT2 – an Irreversibly Transformed Identity Token - which simply cannot identify you and is of no use outside of the environment for which it is created.
Our tokenization technology works with facial biometrics in addition to third-party biometric systems of all types including finger and palm, and even with non-biometric personal information. This is a privacy-first solution.
How does this all filter through to stable revenue streams for Trust Stamp? What percentage of your revenue is now recurring revenue?
We have never lost a client. From a practical perspective, that means all of our revenue other than onboarding fees for new clients is now recurring revenue.
You're preparing for a listing on the NASDAQ capital market, including a $5 million round of funding. How do you plan to use those funds to help grow the business?
The raise that we have been conducting in the second half of 2021 is really a mezzanine round aimed to meet the technical equity requirements for a Nasdaq listing. The round for future growth will be substantially larger than that.
We recently announced a significant contract with the US Department of Homeland Security, which we believe is the first of many such contracts. Trust Stamp has expanded from a team of 43 to over 90 in the last year, and we need to continue expanding to meet client needs and market opportunities, and that requires capital. This ongoing growth will be primarily focused on business development and client support capabilities, but will also continue to be in the productization of the IP that we have invested heavily in over the last six years.
How much more will you need to raise?
We anticipate that the total raised in this mezzanine round, combined with investment in the raise conducted in conjunction with, or shortly following the listing, will come to a total of $30 million to $40 million.
You mentioned the contract with the US Department of Homeland Security, and clearly, financial services is also a big target for the company. Which other sectors are you entering?
Our clients were initially focused on the financial services space, but businesses of all types need to answer these two questions: "Who are you” and “Should I trust you?”
We are sector agnostic, and the movement of our solutions into other industries is not a heavy lift for us. We get regular approaches, for instance, from the insurance industry, which has a very obvious market opportunity for our identity and trust solutions that we will look to capture as we continue our growth trajectory.
You recently announced a move into the crypto space. Is this a space that’s a natural fit for the company, given the need for identity security?
Yes! We have been working on crypto projects for several years but it is now becoming a higher profile market focus. We developed using Ethereum very early in its lifecycle, delivering an identity and asset tracking system that runs on Ethereum for a client, and we have two current clients who are in the pure cryptocurrency area.
The crypto space is probably the purest example of the need to establish trust in remote and even abstracted relationships. None of us can feel comfortable unless we are able to establish trust with our counterparties.
Apart from the commercial demand for trust, as the crypto space is increasingly mainstreamed, it is going to require the same KYC/AML (know your customer/anti-money laundering) identification requirements seen when we try to open a bank account or conduct any other traditional financial transactions. The industry is particularly receptive to our low friction yet privacy-first approach to authenticating identity, so it is a very large opportunity.
Do you see any opportunities in the travel sector, given the move towards vaccine passports?
We produced a demonstration of a privacy-protected and accessible health passport for an innovation challenge in The Hague earlier this year. It was focused on the bigger picture beyond COVID-19, whereby within a QR code, you can authenticate your identity and store not just access to central medical records, but also have online access to critical data that would be needed in an emergency room, for example.
The technology we are developing is far more sophisticated and secure than the vaccine passports that we're using today, and accordingly has a broader range of use cases. You can expect to see more on that in the next six to 12 months.
Much of your growth has been organic. Are you also looking at acquisitions?
We are. We made our first acquisition as a public company earlier this year, of PixelPin, an image-based “Pin-on-Glass” account access solution.
We have looked at several acquisitions over the course of the year. They need to have synergy, meaning there should be clear benefits for our existing and future clients, there has to be a cultural fit between the teams, and we are not going to overpay. We are not going to make acquisitions just for the sake of accelerating growth.
What are the company's current strategic goals?
Our strategic goals are to continue growing the number and range of core clients, as well as the core services that we are able to offer them.
What would you say is the investment case for Trust Stamp?
For five years we have seen year-on-year growth in revenues and market value. While past performance is not an indicator or guarantee of future performance, the OTCQX closing price throughout the last two trading weeks (October 11 to October 22, 2021) would mean that $100 of investment in our Regulation A offering in July of 2020 would have yielded between $339.53 and $497.43 of shares at those closing transaction prices.
Our total addressable market is huge and growing. We have a very solid business model based upon an innovative IP portfolio that has been developed through substantial investments over the last six years and investors can expect to see that productized and turned into revenue in the coming years.
Contact the author at stephen.gunnion@proactiveinvestors.com