BIO-key International, Inc. Q4 FY2025 earnings call

• 2025 had a range of achievements that positioned BioKey for better performance in 2026. There is an anticipation of Q1 26 revenue of $2.2 million, which is a 37% increase compared to Q1 2025. The 2025 revenue was influenced by factors like the timing of a foreign bank license renewal and the strategic transition in the EMEA region. Customers and prospects are showing more urgency in securing access to mission - critical systems. The Defense and Intelligence Cybersecurity Initiative was launched in 2025. In Q4 2025, the EcoID3 fingerprint scanner was formally introduced. Work is being completed on the Portal Guard identity platform version 7.0. The business is subscription - based and follows a partner - centric model. SG&A and operating expenses were reduced in 2025. There are strong trends in the enterprise authentication market that support optimism for 2026, with growth expected in the authentication solutions market.

In 2025, total revenues decreased 12% to $6.1 million versus $6.9 million in 2024. Hardware revenues saw an over 100% increase to $1.3 million due to increased purchases of biometric solutions. Service revenue rose 6% to $1.2 million. License fee revenue was affected by factors such as the timing of a foreign national bank license renewal. Gross margin on license fee improved to 91% in 2025 from 88% in 2024 because of selling branded products in the EMEA region. SG&A costs were reduced by 11% in 2025. R&D engineering costs increased by 4% in 2025. Q1 26 revenue is anticipated to be approximately $2.2 million, representing a 37% increase over Q1 2025 and with a substantial improvement in the bottom line.

• Anticipate Q1 26 revenue of approximately $2.2 million, a 37% increase over Q1 2025 and a significant improvement in the bottom line. 2026 is expected to be an exciting and productive year with growth plans supported by the company's financial liquidity. The goal is to reach breakeven and profitability in 2026.

• Forward - looking statements are subject to risks and uncertainties that may cause actual results to differ materially from current expectations. Risks and uncertainties that affect future performance are detailed in the company's annual report Form 10 - K with the SEC. The geopolitical scenario can have an impact on the stock market and business operations.

Q: Jack Vanderaarde inquired about the softer 2025 revenue, details regarding the foreign bank customer, and the mix of revenue in the first quarter.

A: Mike DiPasquale explained about the timing of the foreign bank customer's license renewal, the first quarter revenue mix being mostly licensed with some hardware and good margins.

Q: Dan Kamis asked about first quarter expenses, R&D expenses in 2026, details on the PortalGuard platform version 7, the 30% increase in the foreign bank renewal, breakeven in 2026, U.S. businesses adopting passwordless, ARR, the Boomerang asset, and stock price and reverse split.

A: Mike DiPasquale responded that first quarter expenses are stable with possible website relaunch expenses, R&D expenses are relatively stable with AI assessment, the PortalGuard platform version 7 has significant features like multi - tenant licenses management, there is excitement about the growth potential of the foreign bank renewal, the goal is to reach breakeven in early 2026, U.S. businesses are purchasing from BioKey, ARR is in a certain range, there has been no change in the Boomerang asset, and there are considerations regarding the stock price and reverse split