BIO-key International (BKYI) 16 May 222022 Q1 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to BIO-key International's First Quarter 2022 Conference Call.

During management's prepared remarks all participants will be a listen-only mode. Afterwards listeners will be invited to participate in a question-and-answer session.

As a reminder, this conference is being recorded today, Monday, May 16, 2022. to President call of like Biddings, to now Vice BIO-key's Product. would turn over the Kimberly I Please proceed.

the projected Thank materially you, and and certain statements. With remind contain plan, the project, will Act me the of actual and and forward-looking identify on this cause these based CFO, uncertainties everyone today from expect, beliefs assumptions call anticipate, Such Litigation or of Securities thank our to typically are call on XXXX. results Private estimate, of are such that you that for as statements made and today's may BIO-key's and statements. using Welch. basis that risks Words Chairman Ceci words statements CEO, Harbor those forward-looking believe, conference may, and Reform DePasquale; to information Safe provisions joining Mike differ are management's pursuant I'll forward-looking our webcast morning. currently to subject think, express similar available

reflect forward-looking will to DePasquale. Mike I to future only company call that, events revise occur statements, The a factors Commission. circumstances For performance today. such as the to see Securities XX-K Exchange these please the factors obligation With cautioned risk are statements on which or speak undertakes annual BIO-key, of over the or other to risk may with and affect Mike? place the no of date. today's filed that undue forward-looking on disclose future company's and after report Form turn description not reliance Listeners in revisions complete to of that

financial XXXX XXX% and over back marketing for for this I today. the call XXX% and to some to thank we'll will rose initiatives. provide morning turn from then quarter, highlights our and for you Kim. license call remarks revenue QX call the joining morning, sales will of questions. After open Kim your review Ceci the BIO-key's QX. and my Thanks, our Good

from which reflected well growth acquired Secure, March Swivel in base our customers initial in continued performance installed of we as Our contribution as an XXXX.

XX.X% licenses, from XXXX, margin Our software recurring in ARR value to or is from and increase core reflecting million gross revenue a our rose consolidated the the calendar the full will driver in in profit which XX.X% annual quarter, for the generated QX, in QX, in focus year-over-year of which addition results revenue $X.X our benefit BIO-key. Swivel Beginning up quarterly Secure, XXXX. reflect of from

acquisition still working entries for accounting the We on are the balance sheet.

customer this our file us operations, performance make you will XX-K international growth potential. and as contribution later So a our from week. this will little it our our to our I'm important an we today XX-Q bit acquisition see a team, -- acquisition will that The expands our notice sorry, later week. later significantly XXXX The base

We in early effort this of in process are future the provide integration on still stages updates and periods. will

XX% of sales CAP, advance We continue accounts identity call for Alliance as new and inside core our sales. with we it, to approximately Channel growing management both as efforts through well business, Program, access as now our

agencies, continues capabilities, caused solution multifactor methods. recognizing PortalGuard's easy-to-deploy access as municipal solution addresses PortalGuard of distributed from a PortalGuard different and authentication well. higher XX support increasingly network hybrid and that Our anywhere momentum the flexibility study and to as work including resonates demands. high-value, and are county cloud within requirements enterprises institutions authentication Customers by growing and for and government differentiated businesses gain education

that Mexico, for their access Dakota our systems. of appreciation adoption and selected local growing critical to and compliant South New in secure BIO-key's governments PortalGuard biometric Importantly, include industry-leading of we Texas, seeing solutions customer Recent identity-bound New mission capabilities. are because wins Missouri, and York,

PortalGuard choosing counties speaking, generally entities compliance are multifactor authentication, provide for to their Although each unique, insurance management is cybersecurity situation other needs. strong and and access government local

solutions our we biometrics. in provide In As our we to higher such Identity-as-a-Service, or able to enhanced identity-bound biometrics our X.X students, now states. identity-bound increasingly also added in are quarter grows, interest North fingerprint Central serves the as College and of the building and users, Illinois, staff first education, readers faculty security which hardware IDaaS on convenience across footprint, enable XX million including

even the progress Our of most XEye addition value-added new will recent channel are as already, expose the of was we into first solid that is platform IAM their This prospects on only Technologies And a PortalGuard seeing to customer live distributor, on leading-edge an alliance offered a agent larger partnership of been with base distributed partner. developing security BIO-key complementary several master and initiatives solutions financial with marketing within Intelisys the their services our with seeking a users. We're whom Technologies relationship go programs extensive and particular has We're referral to prospects currently joint in in strengths in in building with network collaboration their with solutions. have network. network. IAM their PortalGuard emphasis and and we relationships conversion XEye weeks. governments enhanced on next program plan these also local

events a programs planned underway have for joint and We and XXXX. marketing of number

During with mobile deployments in Nigeria provides Management The support device, increased Sterling program. mobile Nigeria's to BIO-key's enrollment the adoption lending banking with and and QX identity country. number of are biometric Specta PocketXX XXXX, deployments which payments Commission's Identity began program National the across hardware national partnership for and ID online use our National we Bank's enrollment

more authentication and Android empowering our biometrics biometric solution. token with solution, new ID product authentication also in One easier updates. enhancements with our app of on with as is allowing meet enhancements in solution These and products development, as we PortalGuard innovation and that ID solution. with more the the our only multifactor Touch great methods, also a scanning We power identity-bound MobileAuth credibility and Face powerful integrates mobile methods our and increasing push modalities, mobile build and device-based strategy. our important make authentication to coming Apple touch currently has their methods to ramp requirements. updates BIO-key, including of devices customers as complete with supports include the software authentication expect company is and well MobileAuth authentication. including These and MobileAuth recent deploy want authentication transactional to support for integrated build our even biometrics MFA biometric the of launch to and example recognition the I facial to months. FacePositive enhancements BIO-key to palm other At visibility for work shipments security as the to PalmPositive to and MobileAuth customers done products, team for well continue invest solutions.

XXXX Channel continue including build or Award industry four Our to XXXX awards industry news for computer Awards, of list. the Security own of global our Cybersecurity important customers on basis. second the are row team, IT Power year and XXX our and reputation base Today These resellers Kim Women Security in on was partners a magazine to very and building a our recent Biddings accolades named in Government a Govies recognition, Excellence with prospective

proposition with scalability, by platform, revenue see deployment our array the driven and an of software expanding expanding an license base, forward, Looking IAM opportunity customer to along of and of ease use security value security, strong worldwide compelling grow PortalGuard solutions. our we

and address We has solutions. and eye and solution our shareholders. PortalGuard for There order reach, sales in BIO-key substantial systems for this Swivel data to set, Secure we their a look enterprises base expand stronger Europe always M&A greater our services for cybersecurity creating continue to kinds with clear is to with need and with value-enhancing customer all value to as base of marketing have opportunities products, strong growing built and global of protect partnerships opportunity. to and a an

$XX Secure and in our addition Africa, our further progress which of relates to in revenue with Approximately million. of contracted guidance software XX% are full Swivel of momentum year building we Europe license opportunities advancing complemented the million recurring Given $XX revenue. XXXX reiterating the business, our to

guidance revenue services from more or that in of XXX% and growth specific complemented projects. software growth tied license Our hardware represents generally by XXXX, over are and to revenue approximately primarily

and position, by and group supported growth end lower our flow subject of BIO-key the cash Our our range, revenues. is the our development hardware management talented profitability believe positioned marketing capital product free reach partner We teams to strong global sales, our and at channel to is and expanding breakeven global mix outlook software and footprint. of

growth on our execute market will recognize and we we believe to come our reward strategy, As the progress. hopefully

on to Kim. building on the year. positive focused are of We With back balance for I'll the that, this call our turn momentum

thank Mike. Great, you

management and enterprise-wide award-winning IAM PortalGuard Mike provides to and basis. company, to secure efficient identity on those remind our for our new be on, applications touched may and who solution an access As

a supporting by security challenges, IT factors. Our work cloud while authentication solution including range addresses or remote study also posed those of significant broad

to Our integrate authentication MobileAuth the or with only is authentication multifactor app strong biometrics identity-bound new modalities. IBB, improved and mobile other

area today focus one is marketing, messaging developing solutions. of of terms on identity-bound the of about power biometric In our

First, only be the unpredictable people a that constant we as security centered variability. universal should around believe world of in

and for and integrate person, third, solutions, into easy verify ID we anywhere. deliver MobileAuth. IAM the PortalGuard access solutions our which that also including civil and use we are secure Second, to large-scale trusted capabilities these And IBB

In banks. addition target IBB, key content and including and we creation messaging to credit our are to unions guide with developing markets, resonate

Cybernews. with Connect, completed several Magazine, had we've And IDG Mergermarket, Help touch few, recent including QX, submissions as key Security and Magazine. initiatives, and we marketing far Reading, in Authority As in to other industry Dark on Cybernews, Sessions SecurityWeek, a including PaymentsJournal, interviews publications, Net Authority content CTO media

recently on customer banking In one to study lead terms hosted from a why of away including generation, and adopted we two marketing case biometric webinars passwords. move

panel critical a the webinar requirements. Separately move from and continue cloud blog, insurance MasterClass existing a solutions dedicated to relationships, professionals. navigating cyber to highlighted is to customer identity cybersecurity customer we to and our secure XXXX key strengthen other and topics the launched updates, IT why predictions it The including series and monthly of

the where for NYSAC XXXX, Summit Fintech We Association and higher collaboration. Association In is Center meeting Broward National the a Conference, to the industry the partnership we and sponsor potential XXXX. Meetup June, Boston, attend continue April, exhibited for and Convention organizations at Association XXXX, State and we'll events join Privacy financial EDUCAUSE as In Officer payments, virtual or presented Chief York New Counties connected Intelisys Professionals and partners discussions, Conference Counties Alliance and from program. such and Florida Information which community our and NACo or with County connecting The platform Expo be of banking for Partner in we Cybersecurity of dinner. MSP to individuals Technology at a conference education Channel services at conversations and Systems

following, expand overall continue by growing grow our QX. We since our including LinkedIn presence to and followers our social media XXX%

to traffic quality content to website, had Our continues QX website our in audiences target media and higher visitors our new alone. social XX,XXX biokey.com, engage which drive over

our Regarding a part that our Partner, that, efforts on ongoing program, moving an Intelisys These program with represent master Alliance we've XX% effort, CAP Ceci. continue agent Channel as with marketing along further Channel approximately growth will now to integral calls, over in expand and position other our expand. it bookings distributor in or with partner for of brand and discussed continues BIO-key to we'll partners and And Technologies of added I'll XEye and hand to new we forward. growth prior be XXXX. referral our QX,

value as XXXX hardware IDaaS increased revenue. greater loss QX, quarter a net income increase in increase Secure equivalents, a or million XXXX XXXX of grew BIO-key's Secure $X.XX now capital in million of QX, in XXXX. well loss driven XXXX. to our cash an QX as ID with and The shipments million as QX, managed product million XXX% our support per stockholders' Operating ended offset in million by necessary increase net in $X.X in $X call revenue, working QX, a versus of million purchase. Thus expenses In Gross million of a engineering Europe And incurred in initial reported company QX which in for gross to for to revenue XXXX increase of Swivel hardware I higher an in we development license $X.X net revenue was margin operating million QX, from $X.XX to any due and was per was $X.X $X.X than $X back million to XXXX the increased QX, and total in to Total receivable invested million in $XXX,XXX services scale large expense Net without including Africa. to million you, a BIO-key available profit million we to related solution profit the the $XXX,XXX chain mainly BIO-key we assets, by net expenses XXXX, approximately million Swivel from operator of included increasing than current due the $XX,XXX growth. for Kim. project offset percentage turn QX, common negative fee in in QX in $XXX,XXX research, share. the $X the $XX.X our expense revenue our support volume. related $X.XX QX, in to investor in increase in with software for and share and XXXX we $XXX,XXX in and our to as, questions. to operating of $X fees million XXXX expenses $X.XX the reported believe year profit SG&A current - the as per the XXXX MobileAuth growth supply or in of revenue decline $XXX,XXX acquired the XXXX license business, $X of million versus or $XXX,XXX can and higher to $X.XX share have QX, in to invested of the business as more working $XX.X preparations the period. cash shareholders far, $XXX compared and in upgraded other more loss and cash QX, $X.X equity $XX.X was have accounts the from book capital XXXX associated Europe. XXXX, QX inventory. other Thank impact

[Operator Our Vander comes go question Aarde Group. ahead. first Instructions] Jack from with Maxim Please

It an a Great for that on really what results. But quarterly if I you and you I with quarter, my sorry, questions. line as guys the is quarter a with for Ceci, Thanks we few with will closed picking for I'll me Michael, week partner let March. the next to a believe, well. the first That revenue But was good start that this stock questions. collect taking - strong question up. late this out go, sounds top see positive. [ph], acquisition wait was so XX-Q later let as week? start see acquisition there. like early compensation I a FYI great Hey just update the mute Secure morning, to playing on or is So did the come finish and can Swivel maybe appreciate question in in great

you, how So bit can would quite revenue it quarter? Secure on - have versus that how seems It of from about first you if much be the organic? was you maybe much it Swivel like in licensing talk a was

Yes good can. morning I Jack, think I

- early first we March. first, So in the closed of the transaction, Swivel second late week

about XX that So from take. represented days we And give to were able about or grab of Swivel. $XXX,XXX, revenue

- Swivel. well, course, revenue small a So in license contribution of medium-sized a software growth organic very strong and from

encouraging and hear happy that's hear there. no, the color to to Great,

the - second guess, uptick, we'll of shipped event? follow-ups be quarter, then half which couple Secure the another full the on in was an is Swivel guess, Do a the ramp begin of coming second of in closed if just quarter more Nigeria that ramping second as a And then in you shipments of just eventually, believe, further you of this would first or And do impact of helm, get I to comments quarter did it hardware speaking. your there, XXXX of shipments part? get expect under XXXX to I the mechanically anything I expect increasing software, of Nigeria, - down or the kind good to get and a gears months? first we'll Just the switch Nigeria? I So - in

significantly to in sales generated ramp QX, half. do again Okay, We've so small that second already more the in expect revenue significant. contribution revenue in hardware We and nothing expect QX. of we some QX, in

So at, this that's point. where we're at

helpful. that's Great,

alliance currently? partners XX%, alliance that new channel targets heard and over you then you from program? remind growth me how have are many of channel you for coming just of remind me Okay program. the any bookings can I And Can channel

the all partner Well, you through in XXX% if the our company, Swivel program sure. business will of given probably business next their expect we're majority, - Europe partners, can we of expect the into end that through the channel generates that of year our that for nearly not beginning of come through this year

It and is multiplier. across And greater be phenomenon. to and in levels So coverage market the a the that expect this direction. global for efficient we of to more force It's we're get greater us much visibility a become a to heading board. in way

number So one. that's

For heading sure, we're in that direction.

that in the continues of number vendor to has Intelisys of terms In participants grow because X,XXX program. alone their number partners, significantly

get So could solutions integrated are is X,XXX country and our that number across engaged XXX that globe. products XX,XXX. again, partners, to if the touched have you with and MSPs I more them, representing as today, the some upwards connected, believe we to our of partners we XXX now across the now, Right add of potentially Swivel representing in including be

quarter? if remind then stock to see, And comp just on any - total That's in update I myself was fantastic back to to what hear, is maybe great. Ceci, Ceci. let's go the I first

thanks up, the for Yes, heads Jack.

As for compensation was the approximately share-based $XXX,XXX quarter. the

both if - for that the R&D allocate SG&A, and about total that's to that's you And $XXX,XXX?

That's total, yes. the

excellent. Okay

results. in And really to it from see that's queue. back guys. I'll me well happy Congrats guys these the you Okay to hop

you thank you, Jack. Thank

closing any the At I Instructions] to to call Q&A the like session Mike would turn this over remarks. time, now for ended. has [Operator DePasquale back

come QX will May want May, of updating forward for call each in August, our we Conference, occurring which Thank which in We XX. pretty you every meantime, come In in you to will both today's - joining after Conferences call. you. in look will and one Conference Inflection Well, thank I the virtual in May, Investor and on of the around the Partners to participate just quickly. May week Wainwright H.C. two the

to As news updates for developments again, today. will releases always, Once business. regular provide your thank you the continue we with time press with as occur

for concluded. attending The now you conference presentation. Thank has today's

disconnect now may your You lines.