BIO-key reiterates full year revenue guidance after slow Q2 sales
BIO-key reiterated its full year revenue guidance range for 2018 of $8 to $12 million as it reported a sight drop in Q2 earnings. Q2 revenue fell by just under $139,000 from the same quarter a year earlier to $748,141, while gross margin was negative 38 percent, due largely to increased non-cash amortization of software licenses and what the company calls an unfavorable mix of products and services sold.
Operating expenses were 27 percent lower for BIO-key in Q2 2018 compared to Q2 2017, leading to a $133,864 decrease in net loss.
CEO Michael DePasquale said the company is working on a range of business development initiatives, and is encouraged by the growth of its distribution partnerships. He says that protecting customer data in call center environments is an area BIO-key has made sales in with substantial potential for more in the near-term. It is also building its biometric Bluetooth-enabled lock business in Asia and North America, and continues to expand its presence in Asia, including a new partnership in India, Europe, and North Africa.
Among the highlights of the recent quarter, BIO-key secured a patent for an adaptive indexing method to accelerate biometric searches.
“While the most visible use of biometrics is principally focused on device-based authentication for mobile devices, our patent for accelerating one-to-many biometric authentication searches in the cloud, enables a far more secure and value-added solution, that can prevent duplicate enrollments, fraud and identity errors,” DePasquale says. “Such protections are just not possible in the device-only authentication world. This technology is already in use in our enterprise biometric solutions, and the patent issuance may eventually present additional revenue opportunities.”
Other highlights in the quarter for the company include a deal with Latin American telecom provider Claro, a deal to provide multi-factor authentication for a Hungarian law enforcement agency, and a partnership with Aluratek which brought its locks to Best Buy and other consumer retailers.
“As continues to be the case given that we are still in the early stages of market adoption of many of our products, BIO-key’s quarterly performance will fluctuate based on the timing of larger software and hardware agreements, which in the past two years have been heavily weighted to the second half of each fiscal year,” says DePasquale. “For that reason, we continue to focus investors on full year results, which represent a more relevant performance metric for our business.”