Biokey International Inc (BKYI)

[topseeded]

Biometric ID Provider BIO-key Reports Q2 2016 Results
Mon August 15, 2016 4:48 PM|Marketwire | About: BKYI
Q2 2016 Earnings Summary
News
EPS of $-0.02 misses by $-0.02 | Revenue of $0.42M (- 81.5% Y/Y) beats by $0.42M
WALL, NJ -- (Marketwired) -- 08/15/16 -- BIO-key International, Inc. (BKYI), an innovative provider of biometric software and hardware solutions for stronger user authentication, today reported results for its second quarter ended June 30, 2016 (Q2'16). BIO-key will host a conference call tomorrow at 10:00 a.m. ET to review its results (details below).

Michael DePasquale, Chairman & CEO of BIO-key, commented, "While we made good incremental progress positioning BIO-key for significant hardware and software revenue opportunities later this year and into next year, our second quarter sales performance was disappointing. Revenue declined to $415,000 in the second quarter as several larger scale opportunities did not close during the period for a variety of reasons that were unrelated to BIO-key. We believe these opportunities still have strong prospects for closing, and we remain in active discussions with the customers to that end. At the same time, we are building out our sales, marketing and distribution channels to drive sales of our line of fingerprint readers for enterprise and retail users.

"We have also continued to build upon our strategic partnership with Microsoft to support the use of expanded biometric security capabilities now resident in the Windows 10 Anniversary Edition released on August 2nd. Windows 10 has already been downloaded on over 350 million devices, providing a substantial and growing market opportunity for our biometric solutions. We believe BIO-key offers the the strongest, most convenient, and cost effective authentication solutions for Windows 10 enterprise and retail users.

"To tackle this opportunity, we are establishing enterprise and retail distribution channels, packaging and collateral, and sales and marketing support and expect to see broad availability of our products in September. In summary, despite the slow start to the year, BIO-key is working a robust pipeline of enterprise hardware and software opportunities. Over the next several months we believe we can convert these opportunities into meaningful revenue growth for the full year 2016, which we now expect to range between $6.0M and $8.5M."

Recent Highlights:

Partnered with Access Sales Group to expand distribution and marketing for fingerprint biometric readers and software into high-volume national enterprise and retail channels.
BIO-key worked closely with Microsoft's device team to achieve Windows Hello™ certification of its compact USB fingerprint readers, including web application security extensions to use Windows Hello to sign into Microsoft Edge compatible web sites and apps such as iHeartRadio.
Completed development of its enterprise authentication software for Microsoft Active Directory environments. BIO-key's solution ID Director for Windows allows large and small enterprises to leverage BIO-key fingerprint readers for web authentication envirnoments.
Expanded sales and production of BIO-key's new SideTouch fingerprint reader. SideTouch combines the new IDEX (IDEX.NO) advanced off-chip sensor technology with BIO-key's universal Windows Biometric Framework (WBF) fingerprint engine. SideTouch is a Microsoft tested and qualified Windows Hello device.
Launched availability of SideSwipe and EcoID USB fingerprint readers on Amazon.
Expanded sales reach into the Middle East and North Africa via distribution relationship with Moroccan technology provider, Arthur & Co.
UK-based former Vodafone & Microsoft executive Pieter Knook was appointed to BIO-key Board.

Guidance:
Managment remains confident in the company's pipeline of hardware and software revenue opportunities for the balance of 2016. However, based on delays in the conversion of several significant opportunities into revenue so far in 2016, BIO-key believes it prudent to reduce its full year revenue guidance to a range of $6.0M - $8.5M in 2016, versus revenue of approximately $5M in 2015. BIO-key's estimated breakeven revenue run rate is approximately $7.5M.

Q2 2016 Results:
Q2'16 total revenue declined to $415,814 compared to $2,272,804 in Q2'15, principally due to a $2.0 million software license from an existing customer in Q2'15. Service revenues, principally comprised of recurring maintenance and support, decreased 13% to $220,926 compared to $255,269 in Q2'15, reflecting an increase in maintenance revenue offset by no special software requirements for current or new customers. License and other revenue decreased to $194,888 from $2,017,535, principally reflecting the $2.0 million software license booked in Q2'15. Hardware sales increased 5% reflecting an increase in volume.

Q2'16 gross margin declined to 67% from 94% in Q2'15, due to lower revenue and a change in revenue mix. Q2'16 operating expenses rose 17% to $1,605,352 compared to $1,373,860 in Q2'15, principally due to increased R&D expense for new personnel, temporary outside services, and recruiting expenses.

BIO-key's Q2'16 net loss to common shareholders was ($1,576,114), or ($0.02) per share, compared to net income of $753,146, or $0.01 per share, in Q2'15.

Liquidity and Capital Resources
At June 30, 2016, BIO-key had cash, cash equivalents and net receivables of $4.3M compared to $7.7M at December 31, 2015.

Conference Call and Webcast Replay

Date/Time: Tuesday, August 16, 2016 at 10 am ET

Dial-In number: 1-877-418-5460 (U.S.), 412-717-9594 (Intl.)

Webcast Replay: http://services.choruscall.com/links/biokey160815 - Available for 30 days.

Call Replay: 1-877-344-7529 U.S. or 412-317-0088 use code 10091361