BIO KEY INTERNATIONAL INC Q3 FY2024 earnings call

• Revenue increased 18% y-o-y to $2.1 million in Q3 2024, with high-margin license revenue up 52% to $1.4 million.
• Received large orders from a leading foreign defense ministry, British Columbia province, and a long-time foreign banking and financial service customer. The banking customer is upgrading to BioKey's fingerprint-only ID solution, and the defense ministry has expanded deployment of BioKey solutions with over 33,000 users.
• PortalGuard iDesk platform is available on AWS Marketplace, expanding visibility and reach.
• Trimmed operating expenses by $46,000 in Q3 2024 versus Q3 2023, but research, development, and engineering expense increased by $122,000. Net loss improved in Q3 2024 compared to Q3 2023.
• Cash position improved in Q3 with $1.9 million gross proceeds from a warrant inducement agreement.

BioKey reported revenue of $2.1 million in Q3 2024, which is a 18% increase compared to Q3 last year and a $1 million sequential improvement from the previous quarter. High-margin license revenue rose 52% to $1.4 million in Q3 2024. For the nine months ended September 2024, revenues were $5.5 million compared to $5.9 million for the first nine months of 2023. The increase in Q3 2024 revenue was driven by higher software license fees and hardware revenue from long-term customers, partially offset by declines in recurring and non-recurring service revenues.

• Expect Q4 results to be positively impacted by large customer expansions mentioned.
• Expect 2024 revenue to meet or exceed 2023 revenue of $7.75 million.
• Focus on driving revenue growth and progressing to profitability and positive cash flow in coming quarters.

• Forward-looking statements subject to risks and uncertainties that may cause actual results to differ materially from expectations.
• Impact of international business timing and seasonality on revenue.
• Dependence on large customer contracts and their timing for revenue recognition.

Q: What was the status of the large order from the leading international defense ministry announced on September 10th?

A: That order was recognized in the third quarter.

Q: How will the large order from the long-term financial services customer be recognized?

A: A portion of about $250,000 will be recognized in Q4, and the balance in Q1.

Q: What's the outlook for operating expenses in Q4?

A: It's a fairly good run rate, with focus on cutting certain expenses long-term.

Q: Estimate on recurring revenue from the Defense Ministry?

A: The Defense Ministry is a perpetual customer with a subscription element for support, typically spending between a million to a million and a half a year.

Q: Status of hardware sales in Q3?

A: Inventory was reduced by about $100,000 last quarter, with expectation of more significant orders in Q4.