BIO-key International, Inc. Q3 FY2025 earnings call

• Revenue in Q3 '25 was approx $1.55 million, roughly in line with first two quarters, year-to-date revenue under $5 million. Largely due to timing of larger customer orders. - Strength in last year's Q3 from large orders with banking and defense customers, both still active. - Expect banking customer to renew contract in early 2026 with potential $1M to $3M business. - High renewal rates over 90%, low churn. - Focused on channel sales in EMEA, developing new marketing messaging and website overhaul. - Finalizing PortalGuard identity platform version 7 update, expected GA late Q1/early Q2 2026. - Launched FBI FAP 20 certified EcoID III fingerprint scanner for regulated industries, delivered initial orders for defense/govt. - Expanding cyber defense initiative due to global defense spending, adding resources to engage contractors. - Reduced operating expenses by over 10% in first 9 months of 2025. - Raised approx $3M net via warrant exercise, expanding cash liquidity.

In Q3 '25, BIO-key's revenue was $1.5 million. License fee revenue was $918,000, service revenue was $268,000, and hardware sales were approximately $364,000. Gross margin remained strong at 77% in Q3 '25. License fee revenue in Q3 '25 was $918,000 (approx 61.2% of total revenue), service revenue was $268,000 (approx 17.9% of total revenue), and hardware sales were $364,000 (approx 24.3% of total revenue).

• Expect strong close to 2025, good financial position to grow business. - Pipeline is solid, more predictable guidance expected as deals become clearer. - Anticipate growth from partner network and new deployments, including in EMEA and Asian markets.

• Quarter-to-quarter revenue variability due to timing of larger customer orders. - Market variability affecting business performance. - Dependence on timing of renewals and new deployments for revenue.

Q: Was the Bank of Egypt win a recurring revenue deal and expecting similar revenue in 2026?

A: Yes, it was an initial deployment with expectation of expanded deployment including in 2026.

Q: Do partners like Raya lower margins on Bank of Egypt project?

A: No, software gross margins remain 90+%. Partners in Channel Alliance Program bring deals and are key for growth.

Q: Non-employee expansion for Bank of Egypt, target year?

A: Employee expansion ongoing, CIAM deployment expected in 2026.

Q: Defense contract scale compared to largest defense ministry?

A: New defense contract is even bigger with large potential and long tail.

Q: Current ARR?

A: ARR is growing, including renewals in traditional contracts, in $6M to $7M range.

Q: EcoID III price relative to EcoID II?

A: EcoID III competes with higher-quality device at lower price point, has liveness detection and encryption unlike EcoID II.

Q: Boomerang stock value update?

A: Value intact, will be reviewed in audit for fiscal 2025.

Q: Stock trading volume spike reason?

A: Likely due to announcements, interest in security space, and undervalued position.

Q: Decision to provide formal guidance?

A: Confident due to solid pipeline from partner network and investments, expect more predictable guidance in future.

Q: U.S. government shutdown impact?

A: No impact on business.

Q: Major renewals in 2026 besides banking?

A: Multiple renewals and expansions in defense, banking, health care due to growing pipeline.

Q: Channel Alliance Program status?

A: Focus on quality partners, some exclusively sell BIO-key, others sell other solutions too.

Q: Reason for flat revenue year-over-year?

A: Transition from third-party to BIO-key product and timing anomaly with banking customer order last year.

Q: Take on BKY as investment?

A: Fundamentally undervalued, potential for unlocked value in near term due to strong market position and solutions.