March 31, 2017 -
BIO-key International, Inc. issued the financial results for its Q4 2016 and year end, in which its Q4 2016 revenue increased to $1.7 million compared to $1.67 million in the same period one year ago.
The company saw a decline in service revenues of $47,080, however, this was more than offset by an increase in license fees, hardware and other revenue of $75,218. This can mostly be attributed to a $1 million software subscription recorded in Q4 2016, the company said.
Meanwhile, the company’s gross margin increased to 81.8 percent in Q4 2016 from 62.9 percent in Q4 2015, due to a greater concentration of higher margin software subscription revenues in Q4 2016.
Bio-key’s Q4 2015 operating expenses increased as a result of a $500,000 year-end reserve against a non-current receivable and slightly higher research and development costs, offset by $67,187 lower selling, general and administrative expenses.
The company’s Q4 2016 net loss was ($516,580) compared to ($606,766) in Q4 2015. Overall, BIO-key’s bottom line performance improved in Q4 2016 due to the previously-mentioned higher gross margin as well as the elimination of $183,285 in interest expense recorded in Q4 2015.
Revenue for the full year 2016 declined to $3.0 million compared to $5.3 million in 2015, as a result of a slower than expected pace of software and hardware deployments as well as the impact of the growing customer preference for the software as a service (SaaS) license model.
BIO-key and third party hardware represented 33 percent of total revenues in 2016, compared to 25 percent in 2015. Meanwhile, its gross margin remained consistent at approximately 76 percent in 2016 and 2015.
Operating expenses increased to $6.4 million in 2016, largely due to a $500,000 spike in research, development and engineering expense and the $500,000 reserve. This was partially offset by a $200,000 decline in selling general and administrative expense.
BIO-key’s 2016 net loss increased to ($4.2 million), compared to a loss of ($2.0 million) in 2015.
The company said it followed through on several strategic initiatives that “should contribute to our growth and solidify our position in the biometrics technology market,” while continuing to invest in product development to expand its software and hardware biometric products to meet a wider range of security needs.
BIO-key also expanded the scope of its distribution reach — both in retail (Microsoft Stores and on Amazon) and in new international markets — which should further the company’s opportunities to “participate in the expected ramp-up in adoption of biometric technologies.”
“While we have substantial confidence in our hardware and software growth initiatives, including several large enterprise opportunities currently in pilot stages, our experience has demonstrated the challenge of accurately predicting the timing or ultimate license model that will drive revenue recognition,” Michael DePasquale, chairman and CEO of BIO-key, said. “As a result, we are initiating a wide 2017 revenue guidance range of $6M to $12M, with a gross margin range of 68% to 82% depending on the mix of software and hardware sales.”
Previously reported, BIO-key CEO Mike DePasquale will be presenting at the MicroCap Conference on April 4 in New York City.