BIO-key International (BKYI) 31 Mar 232022 Q4 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the BIO-key International Fourth Quarter Conference Call.

During management's prepared remarks, all participants will be in 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, Friday, March 31, 2023.

to call like Jones, to would Relations. Investor I turn over the Bill Now proceed. Please

of you thank are Mike Welch. Galen and you, joining myself. BIO-key's CEO, North VP Rodgers, Cecilia and CFO, Thank DePasquale; for Chairman today todays for America, Channels call. Participating

everyone projected. conference may certain to those will differ answers uncertainties webcast that as actual call risks as results from subject remind I questions which may are and well cause to to include that today's forward-looking statements, and

Words believe, and and forward-looking beliefs XXXX. are Litigation anticipate, Safe using such words statements. similar provisions the on to today, based Harbor statements Securities plan Reform as information of and Act expect estimate, pursuant Private currently forward-looking typically of management's express identify assumptions made available and These the

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

that, with Mike. I And will turn to the over Mike? call

questions. and new open one and our for provide channel call call himself, highlights, then After today. and for of I Sales Rodgers you to investor our the and Ceci joining initiatives Bill. thank let morning, we'll will sales to Thanks, Good my remarks, Executive, financial review want XXXX. introduce Senior Galen

million, year, of strong a From year of a guidance. low end the we the revenue met to high achieving which level, full our revenue close had $X

our and margin of More reach importantly, while in recurring expand to base annual tremendous global brand, high continuing our XXXX, solidifying revenue. made progress we

America in to service a our in and East. globally, evolved based refer serve to XXs SaaS users IDaaS. as across customers the a XXX precisely more or Middle platform end now as-a or PortalGuard service ID software-as-a Europe We and or of North leveraging We've Swivel business model, we what of millions our Secure

Our expenses built, our PortalGuard, the of the enhanced Secure, active sales and of acquisition to Swivel added from XXXX due increased net IDaaS solutions, MobileAuth. features our and loss marketing development including for

inflation Additionally, experienced that general by and costs companies XXXX. reflected based in our were personnel other most increases

response, hardware by we to to We're wherever In and and back inventories, been streamlining late reduce supply XXXX overhead. possible, looking have our chain early working XXXX. we costs also to which were reduce in liquidity challenges financial our steps headcount taking potential increased to including enhance navigate

of goal $X.X had least year We quarters reduce of that have the at XXXX. we first to in two at end, and million inventory a half by

XXXX, higher North Africa, ongoing and during Importantly, Middle that growth. did for Europe, the achieve in and was region BIO-key programs rollout East, America, in software South give not America government an funding revenues civil achieved one ID sponsored the it delays Asia,

in Africa, that we are begin Nigeria, particular to progress and we turn cautiously optimistic XXXX. could around through However, things as

and password our proprietary competitive solutions, our which bound include lists XXXX and to solutions, and expanding critical our position. or remains progress Innovation enhancing during biometrics, growth significant made including capabilities. IBD BIO-key’s mobile we And identity

also and users. we feedback delivers PortalGuard for prospects. Authenticator improved user panel, updated our from Mobile enhancements an launched app successful QX launches Admin developed and and to that launched customers in received We XXXX. And These excellent experience

verticals, while ease PortalGuards for Customers XXXX, proposition. scalability effective look will In these new prefer to increase adjacent a its continued in pursuing franchise markets. value XXXX. business security, IDaaS of customers of penetration Further PortalGuard also county build opportunities governments and to momentum expanding across and education, we PortalGuard use, Our higher attractive in penetration of enterprises.

To enhance announced as Channels, supported management and sales America. is Rodgers as both both have we and VP team, the we XXXX, digital VP our Chad traditional of direct sales, in global in January Galen our which the and conjunction of North by transition with expanded recruited solutions marketing of reach Sales, campaigns. In Carter,

I experience organizations bring Galen they and turn our the will excited that company, industry me in as to valuable in skill to very a call moment. sets each let decades are over of But leadership within in experience, say larger our we sales to space. first have their

unnoticed BIO-key another trend, challenges their this severity. to continue level in and date, have launched we forecasters a number episodes nearly is cybersecurity passwordless but table. go from all third in cybersecurity still is a XXXX. cannot organizations sales the positioned that very of XX% which well solutions, substantial opportunity last believe It of And expect to leaves record industry of counter authentication To grow both year, spending the on benefit. up To

identity solutions zero solutions, solution offer a effective verticals, those or with factor unique organizations trust most and cost think especially across use for are today's cases, critical in to and multi biometrics passwordless We implement bound which for our looking environment.

on, I substantial me believe just let that say direct we sales us footprint around and globe. distribution our the but could well positions partner go

very of pipeline including We scale. opportunities, customer working and several are are substantial a solid that

our continue sales and also this build through we marketing to While pipeline outreach.

Channel our spearheaded by America That force being is Galen. or by is EMEA in us Director true in multiplier Alliance CAP. North and Rocha, Alex for our here Program The Managing

off beyond. strong getting confident year. today result, and the to for record expect a be continued XXXX to we disclose XXXX a that As growth in feel QX start level, will we a a revenue We us at

growing substantial in $X we've XXXX This line will strong estimate indicated project margin our XXXX, be base specific a top by rate. to be along period rather bottom our for run to attempt that revenue than line of instead we range annual improvement. and a expect And of outlook we million supported is which revenues, at high contracted with start recurring QX, currently approximately in

exceeding confident, cash Based on our bottom feel and line that substantially top profitability. and XXXX reducing towards performance, and moving these factors, breakeven we burn our very

Houlihan Before multiples range depending note to over, three basis, the of a Lokey call report growth. median or an I for from low industry, recent and in showed by eight public a software cybersecurity seven expected upon companies on times enterprise turn valuation the I'll revenue that

Obviously trading are of appreciation BIO-key is all XXXX that at And to solid start strong we than off in meet much XXXX on stakeholders. for results. our less a which can based

reach Galen to turn XXXX. who the he XXXX, over briefly early working Galen? sales joined now higher levels review is I'll call to in BIO-key in us to take to how Rodgers,

you Thank very much, Mike.

is technology business globally. our perspective, my that of of years in Ping Identity. Strategic I market XX collaborative the in contribute Channel growth and revenue Most our have avenues building a has majority about recently, this and was dependable, sales, First From with with expanding myself. scalable, at XX I presence in time been Sales. value, to years channel mission Director Channel while

core continue our systems and performance. we enhance there resellers, reaching pipeline, opportunities. specific we what's this things partnerships, specifically, such markets, More means cybersecurity our generating would and not and established what and value size, building working on include deal and increasing cybersecurity is objectives in that value higher process focused can opportunities of tacking have technology manage analyze and to From integrators, Higher account so partnerships. new the large we then working, as, that

Alliance Program, great over globally. partners a our have currently base of partners in Partner with XXX Channel We

We such sled TD DLT, Intellisis, SYNNEX have as Xi, company key our distribution partners and and a partner.

ForgeRock. We that and like value we tech AWS, firms Beyond alliances Trust have added with reseller key relationships important have certain

roll have also my evangelize, This will cyber licenses, is partner and to key services We service the program of managed relationships, provider enhanced incentives and sell provide security our provide to and and to current new out one new in structure curtain market. XXXX, initiatives to partners.

reward and sourced partners business. channel our million implement to and differently addition channel of program cybersecurity includes future of from a low from the in sales million will numbers which in opportunities, program bookings pipeline, the From is believe by additional previous source X.X hanging XXXX, in fruit to This perspective, the I drive solution plan turn opportunities partners deals. in our to to sourced training X provide

are We obviously have reasons. we competitive discuss new for partners those of targeting. a And won't number I

list looking next level. the very opportunity BIO-key of for However, the and excited to part productivity the comprehensive forward of I'm to I'm taking we to prime and targets. a our team, be have development channel

self-sufficient. network With people the overview, joined software That update was VP I'll the years that BIO-key team. sales. brief a in up in six with recently security the eight has an cybersecurity He been building and of and provide team from their primarily UST. XX to Wallex, Sales. European specifically provider, who years, Carter, has industry for finished Chad Chad

market and because He he made their was challenge. new liked opportunity, for he products, differentiation, the a ready to really and BIO-key, biometric move

for work of enterprises needs be size, focused channel average early. importantly, XXXX, how selling This goals include field the which with budgets, involved that and believe better on is together. Our deal most enablement. team We almost bigger channel in is some increasing involved to targeted every prospecting, channel core a deal and sales

often when the you share be to and gain relationship mind assign need works in will We makes focus, return. to get really their it deals best. as a It's deals partner symbiotic and the feeding possible channel when into as a it Because sense.

factors you the that customer. When deal before talking involves increasing with really about several size. It start engage even

deals year better are current been focusing spot. and and larger We upfront. targeting that verticals through local sweet achieved near targeting prospects This longer focusing PortalGuards call internally like is we prospects, paid by three of on key prospecting, outside opportunities which counties, state on what municipalities is which sled, companies education, revenue, targeting has are term customers,

as a and and prospects In get deal can Chad's our by billion over marketing, in meaning companies. our price selling much million thinking bigger, and focusing regard, let's size. been has first we we year. to this have foot -- account these larger can relationship meaning always $X can taking based the increase bigger substantially theory been time. the going XX% lead grow we narrower All to average expand, land on quite in deeper door with $XXX the things as focus

versus In with referral partner formal And referral partner a a selling we're align giving implementing doing our with study. more strategy, program, open our to we channel to mapping line that we're to being found teams often as case new a are drive account customers opportunities. sales

This is see be need team this of in that communicated process. some and in we and America. strategies North is basic, executed some we're as the and previously on fruit but low Again, hanging what tactics looking is to mentioned,

will Welch. that, the turn time our over with to I CFO, And Ceci

acquisition Secure rose ‘XX, QX including XXXX. reflecting QX in March $X.X Galen. higher XXXX. review our revenue XX% benefit XX% you, in million license of $X the to the me $X.X Swivel service rose million ‘XX revenue highlights. to of some million software Please versus in fees, Thank financial million from and of XXXX Likewise, let $X.X

lower were million the and current Swivel periods, and higher XXXX, XX% by existing from XX% service increased Both to year licenses quarterback and partially fees Secure hardware software revenue Revenue revenue. contracts. in addition software recurring $X.X QX license year customers ‘XX, and of new fiscal in reflecting offset

Service million revenue to for and year the full in $X.X XX% XXX% increased QX ‘XX, increased XXXX.

and related maintenance service XXXX, Recurring software to and installations, $XXX,XXX to cloud new $X.X revenue increased XXX% in in maintenance largely software With increase due to the and fees increased the conversion customer platform. Non-recurring majority licenses. million representing to Swivel to customer XX% services increase XXXX, recurring due service to support.

revenues continues base customer service to to As to grow, continue we expect our increase.

due ‘XX, increased rollout agency was orders not XXXX Strength sales of to QX government due installations. XX% that to in The expanding sales was to attributable project. did the existing in recur to QX the an decline decreased Nigeria to year. to annual in the government for new addition in $XXX,XXX customer XXXX, in international Our ‘XX delayed in XX% but

QX increased ‘XX. XX% profit ‘XX, realized higher $X.X gross versus QX in better XX% to a margin in Gross the prior million year revenue million period. versus to Due of $X.X for in

in gross in XXXX, from XXXX. improved XX% full profit XX% margins fiscal year, to the For

charges in and year from million $X.X ‘XX. XXXX XXXX operating the and QX and $XX.X engineering and addition in million $X.X the periods to ’XX, million goodwill, expenses. million. of operations, Secure operating million $X.X SG&A impairment expenses Swivel of to Total The QX development $X.X The expenses reflect increased the non-cash increased higher research to full from

ADB capital fees SG&A incurred connection acquisition Swivel debts, Higher professional in accounts. an with and and legal includes of other marketing our bad costs doubtful for the expenses and expenses, loan, allowance

for forward XXXX, do expect Moving bad we recur. and to in not debt doubtful allowance accounts

our launch QX including Higher product updates in expense MobileAuth costs enhancements R&D in increase and the reflected app. and of development personnel significant activity,

We expect lower R&D resources no outside XXXX for longer activities XXXX, as expenses in required. development product are

million operating loss loss BIO-key ‘XX. such of recorded operating million versus an QX ‘XX QX $X of $X.X a As in

exam the increased XXXX $X.X With million -- in increase to the and XXXX to costs to charge. BIO-key’s primarily QX goodwill from $X.X impairment. ’XX, goodwill the due higher non-cash primarily million due loss operating and

a QX reported or $X.XX ‘XX, loss XXXX per loss of ‘XX. $X.XX share net share reported BIO-key in of million per $X.XX Likewise, $X net $X.X in $XX.X net loss XXXX. million versus in loss net a to $X.XX a or $X.X company million, million of The or versus share of per QX

the due BIO-key $X.X had of cash million $X.X inventory. loan current receivable $X.X payable, accounts million assets $X.X of $X.X of BIO-key a current ended and current equivalents, year the million. of including is with note million, portion and the million cash

remarks. my concludes That

to Q&A. turn the going over back operator call to the for Now I'm

first from [Operator Instructions] go ahead, Group. will Please Vander Maxim question Jack sir. The from be Aarde

morning, questions. for great. appreciate the thanks taking And I Good update. guys. Okay, my

this the what I question -- wait with on quarter I'll XX-K? start outlook. what I was I'll the current comp total Ceci, But questions and to as is, stock some quarter the as shares as your finish think and start did I just the in for with I time, last move on outstanding will I fourth with

question Michael. So start the let from then with me

the it on into sequentially expect OpEx, you OpEx First, first as million. you quarter in fourth you the Gut quarter, overhead. quarter, expense mentioned $X.X to obviously the reduced SG&A was be fourth head

from and above quarter well the pretty a quarter. prior substantially third XXXk was any other is up that So

SG&A just basis as So what can as XXXX? kind enter expense you help you normalized me on is understand, quarterly of kind

Good good morning, Jack. question. And good,

for SaaS significant our for solution, But, for We've technology. development remarks our in. areas we two IDaaS, I'll So in and based really scaling a in sure, out just Ceci high have and then made a chime level, also on prepared our and at at level, said high building investments what in here. out MobileAuth

most going you're level area. come and see so lower one know, to a normalize the development that's start initial of So, because down again, expenses to to complete, back is you that,

let her and that's but answer let do question. SG&A think this -- also why again, way now QX don't will address specific Ceci increase, your appropriate We I'll that directly I this I

outlying we substantial didn't the on receivables Yes, fees loan thanks, to we Jack, that as a had Mike. as we some Okay, paid off lot the far of as things goodwill we indicated, for We books off. things wrote collectible. we had acquiring had and been the on we of Swivel. consider some wrote due factors, that for And then the

you million, were loans there over were another that just other book. miscellaneous had that then see, you consider we some the could can just as assets and $X.X basically we non-cash million So, and not on goodwill viable know, expenses $X

that normal million book million to baseline or X:XX:XX that, I Okay. about of guess, third the roughly. quarter? it quarter in I'm $X.X impairment not expense, value Is was excluding no, highest $X.X referring SG&A that talking of [ph] kind actual the your I'm the charge, just a

Mike No. Right. going yes, forward expect was will that, under it R&D per SG&A, $X and we've quarter. been That's we million and And as what streamlining are -- budgeting towards. be we

I appreciate Excellent. color Okay. there. the

and Or revenue of your switch just hear first growth. recurring for Let from the license what it limited then Michael, anything sequential as African like in is XXXX. and African But those contracts? ’XX full first strength mostly in sequential that just to the Does quarter outlook. expect revenue two your Thanks. from visibility it's gears good despite quick clarity, this growth into you your me sounds growth for for to the be may of year as substantial business? quarter ‘XX contribution. outlook contract far assume Even

mainly two I really stream, consists our Right now items, going from was of -- for is What the customers us, of second release strength it's recurring pay of in revenue, which and revenue. maintenance to is call business. licenses that's that annual two revenue our our subscription our support forward. traditional core kind press that items, mentioned perpetual have I'll current maintenance but the bought what it subscription And and from

right meaning take revenue. approximately contracted, So million two those is $X it business it's you now, will committed. if generate in buckets, And that

So that's our base.

XXXX. revenue we fundamentally starting we're in at where So were our picture full

is it $X very a will So that, for our record right results quarter QX above base about million. said and and Anything beyond strong we now. you'll that predicting And our am again, I when us. be report see

That is now. from not including business the right anything African

election the to was to Commission Bank payments that of an We enrollments are the making that February, been optimistic that in and down doing Nigeria up ramp again. that has were Identity of start held all was in is the that going Management shut cautiously fundamentally There World business for the National agents context in initiatives.

is that of again, All up again. starting to bubble

Bank enrollments it's at World the to it paying want debacle moving there for see fact, were because get been move. In a enrollments the and agents the the they just the contemplating who doing paying is that the directly to pace project

general, So now. everything upside us that projecting is right now, we're And consider for less in Africa. Africa I

Now, that's one piece.

announcement is Director is, PortalGuard group, piece by solutions. Africa our partners on our our just in Managing in We Europe, Rocha, second to has which sell The signing been EMEA Alex Thursday, made on managed brought government strengthen a Wednesday, or infrastructure. them enterprises a has Thursday to new that practice and that Ethnos help support on across about focuses Board and partner security to their we cybersecurity, just Africa agencies an

on clearly our which we selling we're PortalGuard, the to products now focus biometrics. be But our Africa. including going that So, core of do and bulk believe our is is globally, you traditional right know, our business,

baseline the of is know, where you margin revenues, well. Very your with helpful you it. revenue recurring is of you're million very high mentioned kind of kind And starting course, $X as got Okay, color. which

moving So that's moving speaking on towards a which, And -- in you're positive. profitability. of mentioned, you're working certainly then you

given of, growth comments, do you? you overhead I for in your profitability and make unexpected guess kind XXXX. of have Just reassess sense and revenue just breakeven of is it substantial revenue cost or yet an sort represents line bottom reductions, improvement idea what to

right, on or at $X.X now, the if think rate, expense run right high level, we're be expense, a in I current million profitability. certainly to going with Well, we're at the current range, breakeven

basis, at look annualized to want take. it's around or you if $XX give it on an So, million, probably

that we traverse savings see may well. course the we're Now, and to our as year, through advantages see, there's as some the we and cost going revenue of grow

perhaps point think But that now, to give. So best right change. probably perspective, will that's the I

And the Okay, color. that's comp I total current the what in that as outstanding? just quarter, very and fourth was beginning, I what I maybe helpful. the mentioned, the Ceci, reflect at if total then, appreciate could shares stock

Yes, K, gives the so just I'm me from going annual. which

was $XXX,XXX, are comp outstanding shares little million. stock So over the a a $X.X

don't But be Great. going And file imagine seen is coming today? it'll I XX-K to it I've for out the quite clarity, just be think yet. today? I

auditors out next today. the been as filed with you for resources filed just Jack, it for the very it Unfortunately, process number week. and lack through have. well shortage We'll board, the of seeing not I they resource, suspect of you're across this it's clients the to of see get get difficult found will -- unfortunately, get unfortunate, that we yesterday likely our and auditors

year. purchased last by mid was firm audit Our Marcum,

just some And two the of time taken been work and the transitioning new And extra done resources. so we quarters with transition have last get firm. all it's to the the again into

will So, we file late. but will we file,

well. across -- as emerging lot seen seen have I that to confirm, have yes, I just And understand. of a companies growth Okay,

me. your So That's happy for to about for sense. that good. Well, for the growth. Thanks questions. outlook it makes I'm robust hear

Jack. you, Thank

no I'm Q&A time more has ended. call Instructions] DePasquale, closing the will [Operator to I questions. And session Mr. turn for over Mike the showing This back remarks.

be QX call. you in to which updating May. joining We you on Thank today's forward held will everyone for look call, our

taking press too weekend And the time not we usual, you for as everyone. to releases us they Once have a for So as via away. regular And thank happen. far newsworthy to great provide morning. we'll join updates this it's continue developments again,

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

You may now disconnect.