By Amit Chowdhry Today at 5:29 PM

VerifyMe’s gross margin rose 1,900 basis points to 54% in the second quarter of 2026, even as revenue fell 58%, reflecting shifting economics in the company’s logistics business as it transitions customers to a new strategic shipping partner and expands higher-value Premium services.

Q2 revenue was $1.9 million, down from $4.5 million a year earlier. VerifyMe attributed the decrease primarily to the loss of ProActive services revenue after the September 2025 termination of its agreement with its previous carrier partner, which eroded the customer base.

Despite the revenue decline, gross margin increased to 54% from 35%. Gross profit was $1 million compared with $1.6 million a year earlier, meaning absolute gross profit declined while each dollar of revenue generated materially stronger gross-margin economics.

VerifyMe attributed the 1,900-basis-point margin improvement to the mix of ProActive and Premium services delivered during the period. The company continues to transition legacy ProActive customers to its new strategic shipping partner while onboarding new customers.

In June, VerifyMe expanded its service offering by launching Premium services with the new shipping partner. The company is also finalizing its technology integration with that partner and evaluating emerging technologies designed to further improve margins and operating efficiency.

The changes are part of a broader effort to rebuild the economics of VerifyMe’s Precision Logistics business following the disruption caused by the previous carrier relationship. Management said Precision Logistics continues to make progress as the company works through the customer transition.

Adjusted EBITDA was approximately breakeven in Q2 compared with $300,000 in the prior-year period. Remaining near adjusted EBITDA breakeven despite the steep revenue decline further indicates the effect of the changing revenue mix and cost structure.

On a GAAP basis, VerifyMe reported an operating loss of approximately $600,000 compared with $300,000 a year earlier. The higher operating loss primarily reflected increased legal expenses related to the company’s proposed merger, as well as lower gross profit.

Net loss was approximately $500,000, or $0.04 per diluted share, compared with $300,000, or $0.02 per diluted share, in Q2 2025.

VerifyMe ended June with $5.1 million of cash and $4.7 million of working capital. The company is managing that liquidity while continuing the shipping-partner transition, investing in technology integration and working toward its previously announced merger.

KEY QUOTES:

“During the second quarter of 2026, we continued transitioning legacy ProActive customers to our new strategic shipping partner while also onboarding new customers. In June, we expanded our offerings by launching Premium services with our new shipping partner. We are finalizing our technology integration with this partner, as well as evaluating emerging technologies that can further enhance margins and operational efficiency. Our Precision Logistics business continues to make progress, as we simultaneously work towards our previously announced merger.”

Adam Stedham, Chief Executive Officer and President of VerifyMe