BIO-key biometric software revenues affected by U.S.-China trade relations
BIO-key reported a decline in revenues in the first quarter of 2019, which it attributes to a pair of payments it did not receive from a Chinese customer, possibly due to worsening trade relations between the U.S. and China.
The decline of over 30 percent from $841,455 in the first quarter of 2018 to $551,623 was primarily felt on the hardware side, but a biometric software license agreement with the Chinese customer, which generated $1.1 million in payments in Q4, 2018, had been expected to more than make up the difference.
“Candidly, the deteriorating state of U.S. – China trade relations the past few months has emerged as a significant impediment in cross border commerce and particularly in the case of intangible goods such as software,” says BIO-key CEO Michael De Pasquale. “We continue to aggressively monitor the timing of these anticipated payments.”
Despite the missed payment, BIO-key’s net loss for the quarter was reduced from $2.3 million a year earlier to $1.8 million, or $0.13 per basic share. The company still expects to make its full-year revenue guidance of $11 million to $14 million.
“Despite payment delays with one large customer, there are many reasons for BIO-key to remain confident in its growth prospects,” according to DePasquale. “Our optimism is supported by a growing number of enterprises that are starting to take action on security initiatives and are interested in biometric solutions. Those that have evaluated our solution have been impressed by the ease of implementation with Microsoft solutions. Importantly, recurring service revenue grew 19% and contributed 99% of total service revenues in Q1’19, compared to 66% of total service revenues in Q1’18, demonstrating traction in our focus on recurring Software-as-a-Service revenue.”
Highlights for the company in the quarter include deployments of its technology by police in Dubai and Singapore, and the launch of a new SMAL solution for large enterprises and IAM providers, which BIO-key Senior VP of Strategy and Compliance Jim Sullivan told Biometric Update will enable customers to use biometrics with third-party applications and avoid relying on user’s mobile devices as tokens.