BIO-key International Inc (BKYI) Q4 2024 Earnings Call Highlights: Strategic Shifts and ...
Revenue: Decreased 11% to $6.9 million in 2024.
License Fee Revenue: Increased 20% to $5.2 million in 2024.
Service Revenue: Declined to $1.1 million from $2.2 million in 2023.
Hardware Revenue: Declined to $632,000 from $1.2 million in 2023.
Gross Profit: Increased to $5.6 million in 2024 from $1.4 million in 2023.
Adjusted Gross Margin: 78% in 2024 compared to 64% in 2023.
Operating Expenses: Reduced by $600,000 to $9.7 million in 2024.
Net Loss: Improved to $4.3 million in 2024 from $8.5 million in 2023.
Cash Burn: Reduced by 23% to $2.9 million in 2024 from $3.8 million in 2023.
Debt Reduction: Reduced outstanding debt to approximately $730,000 from $1.5 million.
Cash and Cash Equivalents: $438,000 as of December 31, 2024.
Warning! GuruFocus has detected 4 Warning Signs with BKYI.
Release Date: March 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
BIO-key International Inc (NASDAQ:BKYI) significantly strengthened its financial position by reducing outstanding debt from approximately $1.5 million to $730,000.
The company increased high-margin software license fee revenue by 20% to $5.2 million in 2024.
Gross profit rose 8% to $5.4 million, with an adjusted gross margin of 78% compared to 64% in 2023.
BIO-key International Inc (NASDAQ:BKYI) reduced operating expenses by 6% and trimmed cash burn by 23% in 2024.
The company secured a $910,000 contract with a foreign financial services client and expanded its deployment with a defense ministry, indicating strong customer interest and growth potential.
Overall revenue declined by 11% to $6.9 million in 2024 due to the exit from a low-margin services agreement with Swivel Secure.
Service revenue decreased to $1.1 million from $2.2 million in 2023, and hardware revenue also declined.
The transition away from Swivel Secure resulted in revenue headwinds, impacting the company's short-term financial performance.
Despite improvements, BIO-key International Inc (NASDAQ:BKYI) reported a net loss of $4.3 million in 2024, though this was an improvement from the previous year.
The company faces challenges in the cybersecurity market, including the need to address growing cybersecurity vulnerabilities and the shortage of cybersecurity talent.
Q: Can you clarify if the 10-K filing is expected by Monday and if there are any new restatements since the last report? A: Yes, the 10-K is expected to be filed by Monday. The restatements refer to the 2023 restatement, with no new restatements this year. - Cecilia Welch, CFO
Q: What caused the revenue expectations for 2024 to not meet the flat or growth expectations compared to 2023? A: The transition and exit from the Swivel Secure business resulted in a revenue shortfall of about $800,000 to $900,000 for 2024. Some opportunities took longer to convert to BIO-key, causing delays into the first quarter of 2025. However, this transition significantly improved gross margins. - Michael DePasquale, CEO
Q: Is the transition away from Swivel Secure contracts complete, and are there any headwinds entering 2025? A: The transition is completely done. We are now focusing on BIO-key products, which has resulted in significant contracts, including a recent one with a European defense agency. - Michael DePasquale, CEO
Q: How is the first quarter of 2025 looking compared to the fourth quarter of 2024? A: While the first quarter is not closed yet, we expect growth in 2025 with improved profitability and a more aggressive path to cash flow breakeven. - Michael DePasquale, CEO
Q: Are there expectations for growth in hardware and services revenue segments in 2025? A: Yes, we expect growth in both hardware and services. Biometrics are increasingly part of contracts, leading to hardware sales, and services revenue is expected to grow through professional services and support. - Michael DePasquale, CEO
Q: Can you provide details on the $910,000 contract secured in the fourth quarter? A: A significant portion of that contract will be recognized in Q1 2025. It was an upgrade for a financial services customer, contributing to recurring revenue. - Michael DePasquale, CEO
Q: Is there any update on the long-stalled BIO-key contracts in Nigeria? A: The World Bank is attempting to accelerate the enrollment of citizens in Nigeria, which could lead to sales of hardware and software. We are monitoring the situation closely. - Michael DePasquale, CEO
Q: What is the focus of the increased R&D spending? A: R&D is focused on integrations with larger partners, APIs, and mobile authentication, particularly in biometrics, to stay on the leading edge. - Michael DePasquale, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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