Identity and Access Management Cyber-Security Provider BIO-key’s Q1 Revenue Improved to $1.9M, Driven by 205% Increase in Software License Fees; Investor Call Today at 10am ET

Rhea-AI Summary

BIO-key International, Inc. (Nasdaq: BKYI) reported Q1 2022 results with revenue at $1.94M, up 3% year-over-year, driven by a 205% growth in software license fees. The company acquired Swivel Secure Europe, adding $368K in revenue in March. Despite a gross profit increase to $1.6M, operating loss widened to $1.0M due to higher expenses from R&D and acquisition costs. The firm maintains a strong outlook, projecting 2022 revenue between $10M and $13M, largely from recurring software licenses, supported by its successful PortalGuard platform and market awards.

Positive

• Revenue increased 3% YoY to $1.94M in Q1 2022.
• Software license fees surged 205% YoY, boosting predictability and margins.
• Acquisition of Swivel Secure Europe expanded customer base and revenue potential.
• Gross profit improved to $1.6M due to higher-margin revenue growth.
• Revenue guidance for 2022 projected between $10M and $13M, reflecting potential growth of over 100% from 2021.

Negative

• Operating loss increased to $1.0M in Q1 2022 from $0.8M in Q1 2021.
• Total operating expenses rose to $2.6M, outpacing revenue growth.
• Hardware revenue decline impacted overall revenue despite software growth.

WALL, N.J., May 16, 2022 (GLOBE NEWSWIRE) -- BIO-key^® International, Inc. (Nasdaq: BKYI), an innovative provider of workforce and customer identity and access management (IAM) solutions featuring Identity-Bound Biometrics (IBB) and large-scale identity solutions, today reported results for its first quarter ended March 31, 2022 (Q1’22). BIO-key is hosting a conference call today at 10:00 a.m. ET (details below) to review its results and outlook.

BIO-key’s revenue improved 3% to $1.94M in Q1’22 from $1.89M in Q1’21 and 108% from $935K in Q4 2021 driven by a $981,000 increase in software license fees year over year. BIO-key is focused on growing its base of annual recurring software license fees which provide more predictable revenue trends and higher margins than its more episodic hardware revenues.

Recent Highlights:

• Expanding PortalGuard Penetration with Local Government Customers, including New Deployments in Missouri, New Mexico, New York, South Dakota and Texas counties and municipalities.
• March 8^th acquisition of Swivel Secure Europe, an IAM solutions provider in Europe, the Middle East and Africa (EMEA) that generated approximately $3.1M in revenue and $578K in operating income in 2021. contributed $368K of revenue during the remainder of March, and substantially expands BIO-key’s global customer base, geographic reach, and long term growth potential.
• Added New Enterprise Customers and Channel Alliance Program partners
• Initial Hardware Deployments for Nigeria’s National Identity Management Commission’s National ID Enrollment Program in partnership with Sterling Bank Nigeria’s Specta online lending platform - BIO-key’s Pocket10 device for mobile biometric enrollments for agent banking is being deployed to support increased adoption and use of the National Identity Number and mobile banking and payments across the country.

BIO-key CEO Michael DePasquale commented, “As anticipated, we are off to a solid start in Q1’22, with software license sales increasing 205% year-over-year and 168% over Q4’21. This strong performance reflects growing momentum in our Annual Recurring Revenue (ARR) base from software licenses, which is a core focus and value driver for our business. While hardware remains an important component and differentiator in our business, its episodic nature can create some variability in our quarterly operating performance. Our Q1’22 performance included just 22 days of operating results from our Swivel Secure Europe operations acquired in March.

“Looking forward, we see an expanding worldwide opportunity to grow our software license revenue base, driven by the compelling security, scalability, ease of use and deployment, and customer value proposition of our PortalGuard IAM platform, along with an expanding array of security solutions. Customers are increasingly recognizing PortalGuard’s, flexibility and differentiated multi-factor authentication capabilities, with support for sixteen different factors including BIO-key’s industry-leading Identity Bound Biometric capabilities.

“PortalGuard continues to gain momentum in the higher education and municipal government verticals and with enterprises as a high-value, easy-to-deploy solution for hybrid access needs. The industry continues to recognize BIO-key as we recently earned four recent 2022 Cybersecurity Excellence Awards and a Security Today magazine 2022 Govies Government Security Award for PortalGuard, in the User Authentication/ Identification/Credentialing and Management category.

Outlook

“There is a clear and growing global need for enterprises of all kinds to protect their data and systems with stronger cybersecurity solutions. BIO-key has built a strong base of products, services and partnerships to address this substantial opportunity. Given the growing momentum in our business, complemented with the addition of Swivel Secure Europe and further progress advancing our opportunities in Africa, we remain confident in achieving our full-year 2022 revenue guidance of $10-13M. Approximately 70% of the lower end of this guidance range relates to contracted recurring software license revenue.

“Our revenue guidance represents growth of more than 100% over 2021, benefitting from continued growth in software license revenue, along with hardware and services revenue contributions that are generally tied to specific projects. Our positive outlook is supported by our strong capital position, talented global management and product development teams, and expanded global sales, marketing and channel partner footprint. Further, we believe BIO-key is positioned to achieve break-even operations starting at the lower end of this range, subject to our mix of hardware and higher-margin software revenue.”

Financial Results

Q1’22 revenue increased 3% to $1.94M from $1.89M in Q1’21, driven by a 205% increase in software license fees and a modest increase in services revenue, which more than offset a decline in hardware revenue. The year-ago period included $680,000 in hardware revenue related to the initiation of product shipments for one of the Company’s large scale ID projects in Nigeria.

Gross profit grew to $1.6M in Q1’22 from $1.1M in Q1’21, due primarily to the increase of higher-margin license fee revenue as a percentage of total revenue in the current-year period.

Total operating expenses increased to $2.6M in Q1’22 from $2.0M in Q1’21, reflecting a $0.4M increase in research, development and engineering expense related to our recently announced MobileAuth and IDaaS solutions and a $0.3M increase in selling, general and administrative expense reflecting acquisition expenses associated with Swivel Secure Europe.

BIO-key reported an operating loss of $1.0M in Q1’22 vs. $0.8M in Q1’21, as the Company’s increase in gross profit was more than offset by higher operating expenses intended to support long term growth. BIO-key reported a Q1’22 net loss available to common stockholders of $1.0M, or $0.12 per share, compared to a Q1’21 net loss of $0.9M, or $0.11 per share. Weighted average basic shares outstanding were approximately 7.9M in Q1’22 and 7.8M in Q1’21.

Financial Strength
BIO-key ended the first quarter with working capital of $10.1M, including $5.8M of cash and cash equivalents and $5.0M in inventory, and a book value of $15.3M.

Conference Call Details
Date / Time:	Today, Monday, May 16th at 10 a.m. ET
Call Dial In #:	1-877-418-5460 U.S. or 1-412-717-9594 International
Live Webcast / Replay:	Investor Webcast & Replay – Available for 3 months.
Audio Replay:	1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 3884798

About BIO-key International, Inc. (www.BIO-key.com)
BIO-key has over two decades of expertise in providing authentication technology for thousands of organizations and millions of users and is revolutionizing authentication with biometric-centric, multi-factor identity and access management (IAM) solutions, including PortalGuard that provides convenient and secure access to devices, information, applications, and high-value transactions. BIO-key's patented software and hardware solutions, with industry-leading biometric capabilities, enable large-scale on-premises and Identity-as-a-Service (IDaaS) solutions as well as customized enterprise and cloud solutions.

BIO-key Safe Harbor Statement
All statements contained in this press release other than statements of historical facts are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the "Act"). The words "estimate," "project," "intends," "expects," "anticipates," "believes" and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are made based on management's beliefs, as well as assumptions made by, and information currently available to, management pursuant to the "safe-harbor" provisions of the Act. These statements are not guarantees of future performance or events and are subject to risks and uncertainties that may cause actual results to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include, without limitation, our history of losses and limited revenue; our ability to raise additional capital; our ability to protect our intellectual property; changes in business conditions; changes in our sales strategy and product development plans; changes in the marketplace; continued services of our executive management team; security breaches; competition in the biometric technology and identity access management industries; market acceptance of biometric products generally and our products under development; our ability to execute and deliver on contracts in Africa; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of PistolStar and Swivel Secure into our business; the duration and severity of the current coronavirus COVID-19 pandemic and its effect on our business operations, sales cycles, personnel, and the geographic markets in which we operate;  the duration and extent of continued hostilities in Ukraine and its impact on our European customers, delays in the development of products and statements of assumption underlying any of the foregoing as well as other factors set forth under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021 and other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to disclose any revision to these forward-looking statements whether as a result of new information, future events, or otherwise.

Engage with BIO-key
Facebook – Corporate:	https://www.facebook.com/BIOkeyInternational/
LinkedIn – Corporate:	https://www.linkedin.com/company/bio-key-international
Twitter – Corporate:	@BIOkeyIntl
Twitter – Investors:	@BIO_keyIR
StockTwits:	BIO_keyIR

Media Contact	Investor Contact
Erin Knapp	William Jones, David Collins
Matter Communications	Catalyst IR
BIO-key@matternow.com	BKYI@catalyst-ir.com
914-260-3158	212-924-9800

BIO-key International, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2022											December 31, 2021
		(Unaudited)
ASSETS
Cash and cash equivalents		$				5,846,798							$	7,754,046
Accounts receivable, net						2,668,147								970,626
Due from factor						51,850								49,500
Note receivable, net of allowance						82,000								82,000
Inventory						4,956,472								4,940,660
Prepaid expenses and other						363,209								216,041
Total current assets						13,954,691								14,012,873
Resalable software license rights						46,247								48,752
Investment – debt security, net						452,821								452,821
Equipment and leasehold improvements, net						134,929								69,168
Capitalized contract costs, net						279,789								249,012
Deposits and other assets						8,712								8,712
Note receivable, net of allowance						110,000								113,000
Operating lease right-of-use assets						202,513								254,100
Intangible assets, net						2,768,067								1,298,077
Goodwill						1,648,481								1,262,526
Total non-current assets						5,651,559								3,756,168
TOTAL ASSETS		$				19,606,250							$	17,769,041
LIABILITIES
Accounts payable		$				1,084,452							$	427,772
Accrued liabilities						896,702								828,997
Government loan – Swivel						580,992								-
Deferred revenue - current						798,830								565,355
Operating lease liabilities, current portion						156,730								177,188
Total current liabilities						3,517,706								1,999,312
Deferred revenue – long term						54,699								67,300
Operating lease liabilities, net of current portion						54,710								86,974
Total non-current liabilities						109,409								154,274
TOTAL LIABILITIES						3,627,115								2,153,586
Commitments and Contingencies
STOCKHOLDERS’ EQUITY
Common stock — authorized, 170,000,000 shares; issued and outstanding; 8,406,451 and 7,853,759 of $.0001 par value at March 31, 2022 and December 31, 2021, respectively						841								786
Additional paid-in capital						121,509,367								120,190,139
Accumulated other comprehensive gain						43,800
Accumulated deficit						(105,574,873					)			(104,575,470	)
TOTAL STOCKHOLDERS’ EQUITY						15,979,135								15,615,455
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$				19,606,250							$	17,769,041

BIO-key International, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		Three months ended March 31,
		2022				2021
Revenues
Services		$	395,804			$	380,022
License fees			1,460,183				478,958
Hardware			85,184				1,029,658
Total revenues			1,941,171				1,888,638
Costs and other expenses
Cost of services			210,913				175,944
Cost of license fees			73,230				38,969
Cost of hardware			53,298				551,722
Total costs and other expenses			337,441				766,635
Gross Profit			1,603,730				1,122,003
Operating expenses
Selling, general and administrative			1,797,998				1,516,398
Research, development and engineering			805,266				441,651
Total operating expenses			2,603,264				1,958,049
Operating loss			(999,534	)			(836,046	)
Other income (expense)
Interest income			131				2,615
Interest expense			-				(18,000	)
Total other income (expense)			131				(15,385	)
Net loss		$	(999,403	)		$	(851,431	)
Comprehensive loss:
Net loss		$	(999,403	)		$	(851,431	)
Other comprehensive gain			43,800				-
Comprehensive loss		$	(955,603	)		$	(851,431	)
Basic and Diluted Loss per Common Share		$	(0.12	)		$	(0.11	)
Weighted Average Shares Outstanding:
Basic and Diluted			7,885,008				7,773,688

FAQ

What were BIO-key's Q1 2022 financial results?

BIO-key reported Q1 2022 revenue of $1.94M, a 3% increase from Q1 2021, and a gross profit of $1.6M.

What factors drove BIO-key's revenue growth in Q1 2022?

The revenue growth was primarily driven by a 205% increase in software license fees.

How did the acquisition of Swivel Secure Europe impact BIO-key?

The acquisition added $368K in revenue for March and expanded BIO-key's global customer base.

What is BIO-key's revenue guidance for 2022?

BIO-key projects revenue between $10M and $13M for 2022, indicating over 100% growth from 2021.

What were the main challenges BIO-key faced in Q1 2022?

BIO-key faced an increased operating loss and rising operating expenses, which outpaced revenue growth.