Identity and Access Management Software Provider BIO-key Preliminary 2023 Results: Operating Loss Trimmed Approx. $3.5M on Approx. 29% Revenue Growth to $9.1M; Investor Call Tomorrow at 10am ET
- Revenue for 2023 increased by $2M (29%) to $9.1M compared to the previous year.
- SG&A expenses were reduced by $2.1M (22%) in 2023, contributing to improved financial performance.
- Net cash used in operating activities decreased by $2.5M in 2023, reflecting better cash management.
- A $2.8M reserve was set against slow-moving inventory for Africa in Q4'23 and 2023.
- A $1.5M cash payment was received in Q1'24 for a 2-year extension/expansion of a biometric technology license.
- CEO Mike DePasquale highlighted the company's progress towards profitability in 2023, driven by revenue growth and cost-cutting initiatives.
- BIO-key aims to focus on top-line growth and cost reduction in 2024 to achieve profitability in the coming quarters.
- The company anticipates increased deployment of enhanced IAM solutions as enterprises shift to the cloud and address cybersecurity concerns.
- BIO-key plans to launch Passkey:YOU, a passwordless authentication solution, to capitalize on the growing trend of passkey authentication embraced by tech giants like Google, Apple, Amazon, and Microsoft.
- The company's business model is predominantly SaaS or subscription-based, with a focus on leveraging channel partners for sales.
- BIO-key remains committed to pursuing cost reduction initiatives in 2024 to enhance cash flow and profitability.
- None.
Insights
The reported 29% revenue growth and the reduction in SG&A expenses by $2.1M (22%) indicates a positive trajectory towards profitability for BIO-key International, Inc. This is significant in the context of investor sentiment, as companies demonstrating effective cost management alongside revenue expansion are often rewarded with increased investor confidence. The ability to trim costs while growing top-line revenue is a strong signal of management's operational efficiency.
However, the mention of a $2.8M non-cash reserve against slow-moving inventory, specifically for African initiatives, raises a flag regarding the company's inventory management and regional sales strategy. Inventory write-downs can be a concern as they reflect on the demand forecasting and market penetration capabilities of a company. It's essential to monitor how the company addresses this issue to prevent recurring write-downs, which could impact future profitability.
The cash payment of $1.5M received for the extension/expansion of a biometric technology license is an immediate positive for liquidity. Yet, investors should consider the sustainability of such payments and whether they represent recurring revenue or are one-off boosts to cash flow.
BIO-key's focus on Identity and Access Management (IAM) solutions and specifically on passwordless and token-less authentication, positions the company within a growing cybersecurity market. The transition to cloud services and the increasing regulatory requirements for robust security practices, such as multi-factor authentication, suggest a rising demand for BIO-key's product offerings. The launch of Passkey:YOU could be a strategic move to capture market share in the evolving landscape of digital security.
With the IAM market expected to grow, the company's strategic partnerships with over 150 Channel Alliance Partners and its SaaS-based business model may provide a competitive edge. The company's 65% blended gross margin on annually recurring services and license fee revenues (ARRs) is impressive, as it indicates a healthy profitability potential from core operations. The focus on asset-light go-to-market strategies is also prudent in maintaining operational flexibility.
The increasing prevalence of cybersecurity incidents and the subsequent regulatory changes are creating a fertile ground for companies like BIO-key that offer enhanced IAM solutions. The shift towards passwordless authentication, supported by industry giants like Google and Microsoft, underscores the relevance of BIO-key's new product, Passkey:YOU. Their approach to solving authentication challenges, such as roving users and unauthorized account sharing, addresses specific pain points within the cybersecurity landscape.
However, the effectiveness of BIO-key's solutions in a competitive market hinges on their ability to integrate seamlessly with existing IT ecosystems and support emerging security standards. The company's ability to convert its slow-moving hardware inventory into cash will also be critical in maintaining a healthy balance sheet and funding ongoing innovation and market expansion efforts.
HOLMDEL, N.J., April 01, 2024 (GLOBE NEWSWIRE) -- BIO-key® International, Inc. (Nasdaq: BKYI), an innovative provider of workforce and customer Identity and Access Management (IAM) solutions featuring passwordless, phoneless and token-less Identity-Bound Biometric (IBB) authentication, announced preliminary results for its fourth quarter (Q4’23) and year ended December 31, 2023 (2023). The independent audit of BIO-key’s 2023 financial statements has not yet been completed and, therefore, the figures included herein are subject to change. BIO-key will host an investor call tomorrow at 10:00am ET (details below).
Preliminary Results Highlights:
- 2023 revenue rose
$2M (29% ) to$9.1M - 2023 SG&A trimmed by
$2.1M (22% ) - Net cash used in operating activities was reduced by
$2.5M in 2023 - Q4’23 & 2023 cost of hardware reflects
$2.8M reserve against slow moving inventory for Africa $1.5M cash payment received in Q1’24 for 2-year extension/expansion of biometric technology license
CEO Commentary
BIO-key CEO, Mike DePasquale commented, “BIO-key made solid progress on our path to profitability in 2023, driven by
“Looking forward, we expect increased deployment of enhanced IAM solutions as enterprises transition to the cloud and respond to a growing array of security incidents that highlight potential cybersecurity vulnerabilities. This trend is further supported by regulatory requirements and increasingly stringent Cyber Insurance underwriting standards that mandate enhanced multi-factor authentication and/or passwordless security solutions that are at the core of our offerings.
“As passwordless authentication gains traction, our solutions are well positioned to provide organizations an integrated approach to managing and securing all of their identities with technologies they already use, while also supporting their future needs with a cost-effective platform. We also expect that passkey authentication, which has been embraced by Google, Apple, Amazon and Microsoft, will continue to expand its penetration in 2024. To capitalize on this opportunity, BIO-key will soon launch, Passkey:YOU, a unique passwordless authentication solution that does not require the use of phones or hardware tokens, with planned enhancements expected later in the year.
Outlook
“The current climate of broad enterprise adoption of MFA to replace passwords presents opportunities for us to leverage our unique differentiators and exploit gaps in existing IAM approaches. Gaps include challenges of authenticating users that ‘rove’ among workstations and preventing unauthorized account sharing and delegation.
“Today BIO-key has more than 600 customers globally. Our business is predominately SaaS or subscription based, and most of our new business is sold through channel partners. We remain focused on an asset light go-to-market plan that leverages more than 150 Channel Alliance Partners, along with our targeted internal sale team. Together, we believe these channels position BIO-key for meaningful top- and bottom-line improvement in 2024, building on our base of annually recurring services and license fee revenues (ARRs) with a blended gross margin of approximately
“We will also continue to pursue cost reduction initiatives in 2024, to help accelerate our path to positive cash flow and profitability. Our Q4’23 bottom line included a
Preliminary Financial Results
Please note that the audit of our 2023 financial statements has not been completed by our independent registered public accounting firm as of the date of this press release and are, therefore, subject to change.
2023 revenues increased
The Company took a
In terms of operating expenses, Selling, general and administrative costs were
On a preliminary basis, reflecting higher revenue and lower operating costs, BIO-key significantly trimmed its 2023 net loss
Preliminary Balance Sheet
At December 31, 2023, BIO-key had current assets of
Conference Call Details
| Date / Time: | Tuesday, April 2nd at 10 a.m. ET |
| Call Dial In #: | 1-877-418-5460 U.S. or 1-412-717-9594 Int’l |
| Live Webcast / Replay: | Webcast & Replay Link – Available for 3 months. |
| Audio Replay: | 1-877-344-7529 U.S. or 1-412-317-0088 Int’l; code 6114035 |
About BIO-key International, Inc. (www.BIO-key.com)
BIO-key is revolutionizing authentication and cybersecurity with biometric-centric, multi-factor identity and access management (IAM) software securing access for over forty million users. BIO-key allows customers to choose the right authentication factors for diverse use cases, including phoneless, tokenless, and passwordless biometric options. Its hosted or on-premise PortalGuard IAM solution provides cost-effective, easy-to-deploy, convenient, and secure access to computers, information, applications, and high-value transactions.
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 to satisfy working capital needs; our ability to continue as a going concern; 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 industry; market acceptance of biometric products generally and our products under development; our ability to convert sales opportunities to customer contracts; our ability to expand into Asia, Africa and other foreign markets; our ability to integrate the operations and personnel of Swivel Secure into our business; fluctuations in foreign currency exchange rates; 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, 2022 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 |
Investor Contacts
William Jones, David Collins
Catalyst IR
BKYI@catalyst-ir.com or 212-924-9800
FAQ
What was BIO-key's revenue growth percentage in 2023?
What cost-cutting measures did BIO-key implement in 2023?
What was the cash payment received by BIO-key in Q1'24 for?
What new authentication solution is BIO-key planning to launch?
How many customers does BIO-key currently have?
What is the focus of BIO-key's business model?
