BIO-key International, Inc. Q2 FY2025 earnings call

Key Points

• Revenue rose 49% y-o-y and 6% q-o-q. SG&A expenses trimmed by 13.5%, offset by increased R&D. Note payable reduced to $447,000 from $1.5 million.
• Secured major IAM deployment with National Bank of Mozambique, extended defense intelligence market presence, and secured follow-on orders for a foreign defense ministry.
• Focus on EMEA regions, refocused on BIO-key branded solutions with good traction. Developed new marketing program. In North America, building on strong positions in sectors like higher ed and health care, revitalizing sales efforts.

BIO-key's Q2 '25 revenue increased 49% to $1.7 million vs $1.1 million in Q2 '24. Hardware revenue saw a $458,000 increase, license fee revenue rose 4%, and service revenue grew 11%. Gross profit was $1.2 million, up $354,000 from Q2 '24, but gross margin decreased to 73% from 77% due to a larger proportion of lower-margin hardware revenue.

No formal guidance provided. Mentioned expense run rate expected to continue as started the year. Encouraged by pipeline and opportunities in defense intelligence and EMEA regions.

• Forward-looking statements subject to risks in annual report.
• Market conditions, especially Europe's summer slowdown, could impact certain segments.
• Uncertainty around specific contract announcements due to security/defense customer engagements.

Q: With increased sales and support costs and R&D, will operating expenses reverse?

A: No, Q2 had a blip, expense run rate expected to continue as started the year.

Q: Color on cybersecurity contract activity in Europe?

A: Significant contracts closed, can't disclose names, but business will grow due to BIO-key's unique capabilities.

Q: When will income from unannounced contracts come in?

A: Some in Q3, ongoing multiyear investments in defense and security sectors.

Q: Expect growth in third quarter?

A: No guidance, but defense sector less impacted by summer slowdown.

Q: How much reserve inventory sold?

A: Selling it every quarter, moving bulk by end of year.

Q: Update on Nigeria/Africa?

A: Still operating, focusing on core products, some banking deals in pipeline.