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BIO-key(BKYI) - 2024 Q4 - Earnings Call Transcript
BKYIBIO-key(BKYI)2025-03-27 21:15
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Financial Data and Key Metrics Changes - The company reported a revenue decline of 11% to 6.9millionin2024,primarilyduetotheexitfromalow−marginserviceagreement[10][25]−High−marginsoftwarelicensefeerevenueincreasedby206.9 million in 2024, primarily due to the exit from a low-margin service agreement [10][25] - High-margin software license fee revenue increased by 20% to 5.2 million in 2024, contributing to an adjusted gross margin of 78%, up from 64% in 2023 [10][30] - Operating expenses were reduced by 6% to 9.7millionin2024,leadingtoanetlossimprovementto9.7 million in 2024, leading to a net loss improvement to 4.3 million or 2.85pershare,comparedtoanetlossof2.85 per share, compared to a net loss of 8.5 million or 21.21persharein2023[11][30]BusinessLineDataandKeyMetricsChanges−LicensefeerevenueinQ42024increasedby7721.21 per share in 2023 [11][30] Business Line Data and Key Metrics Changes - License fee revenue in Q4 2024 increased by 77% to 1 million, while lower-margin services revenue decreased by 28% to 344,000[27]−Hardwarerevenuedeclinedsignificantlyby88344,000 [27] - Hardware revenue declined significantly by 88% to 94,000 in Q4 2024, reflecting a lack of large expansion orders compared to the previous year [27][30] Market Data and Key Metrics Changes - The company is seeing increased demand for its passwordless, phoneless, and tokenless authentication solutions, particularly in the Middle East and Asia [14][20] - A notable contract was secured with a foreign financial services client worth 910,000, enhancing the company's presence in the financial sector [15] Company Strategy and Development Direction - The company has exited low-margin software and services relationships to focus on core solutions like PortalGuard IAM and identity-bound biometrics, which offer higher gross margins [9][10] - There is a strategic focus on expanding into emerging markets, including IoT solutions and partnerships with innovative technology developers [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing encouraging order activity and customer interest in their solutions [12][20] - The company anticipates a return to growth and improved profitability in 2025, with a focus on managing operating costs and investing in R&D [23][49] Other Important Information - The company reduced its outstanding debt to approximately 730,000 from 1.5 million at the end of 2024, strengthening its financial position [7] - The company launched PortalGuard IDAS on the AWS marketplace, enhancing its subscription-based business model [22] Q&A Session Summary Question: Clarification on 10-K filing and restatements - The company confirmed that the 10-K is expected to be filed on Monday and that there are no new restatements beyond those previously disclosed [34][35] Question: Changes in revenue expectations for 2024 - Management explained that the exit from the Swivel Secure business resulted in a revenue delta of about 800,000 to 900,000forthefullfiscalyear,impactingoverallrevenueexpectations[39][41]Question:Outlookforhardwareandservicesrevenue−Managementindicatedthatgrowthisexpectedinbothhardwareandservicesrevenuein2025,withhardwaresalesbecomingmoreintegratedintocontracts[55]Question:Detailsonthe900,000 for the full fiscal year, impacting overall revenue expectations [39][41] Question: Outlook for hardware and services revenue - Management indicated that growth is expected in both hardware and services revenue in 2025, with hardware sales becoming more integrated into contracts [55] Question: Details on the 910,000 contract - A significant portion of the 910,000contractwillberecognizedinQ12025,withabout910,000 contract will be recognized in Q1 2025, with about 250,000 recognized in Q4 2024 [57] Question: Update on Nigerian ID plans - Management noted ongoing discussions with the World Bank regarding ID plans in Nigeria, with potential for future sales of hardware [68][72]