BIO-key still waiting, Precise Biometrics shifting and Fingerprint Cards reaches 400 mobile devices in Q3 results
A software license payments issue continues to drag on BIO-key’s financial results, as the company reported revenues of $453,000 among its Q3 earnings, down from $740,000 in the same quarter last year.
The anticipated software license payments amounted to $1.65 million in Q3 and $4.4 million for the first nine months of the year, so the impact is very large. The company also says some opportunities were pushed back into Q4. Net loss was $1.8 million, or $0.13 per basic and diluted share, and operating expenses also decreased by 16 percent.
CEO Michael DePasquale remains optimistic, however, saying the company and the industry have reached an inflection point.
“I serve as the Vice Chairman of our industry group, the International Biometrics and Identity Association (IBIA), and I see first-hand the number of opportunities for biometric multi-factor authentication as well as large scale Civil ID projects that are emerging on an international basis,” DePasquale says. “BIO-key is in an excellent position to take advantage of these opportunities with our advanced technology and marquis references across all verticals. Our results this year also reflect our transition from a software license sales model, where historically we were able to book the full value of a perpetual software license, to a software subscription model, where customers pay a much lower fee to access our software on an annual basis, resulting in lower initial revenue.”
BIO-key has now completed the transition to the subscription model.
“Our Q3 and nine months results were also impacted by ongoing U.S. and China trade uncertainty which plays a major role in stalling the resumption of monthly cash payments due to BIO-key under a large software license contract we closed with a Chinese customer in Q4 2018. Fortunately, BIO-key’s outlook for the balance of 2019 and next year is far more favorable, particularly as we are engaged in several large, active customer procurement discussions which we anticipate will close before year-end in order to meet annual IT security and objectives,” DePasquale explains.
“With regard to capital resources, the Company is currently working to close an equity financing with a limited number of investors. This private placement transaction is expected to be priced at a premium to the current market price of the Company’s common stock and be completed in short order.”
Earnings for fiscal 2019 have been adjusted down $1 million by the company to a range between $5 million and $11 million.
New Precise strategy shows gains
Precise Biometrics recorded net revenues of SEK 27.5 million (US$2.85 million) for the third quarter and SEK 53.1 million ($5.5 million) through the first nine months of fiscal 2019.
Net profit in the quarter was SEK 3.2 million ($330,000), up from a loss of SEK 0.7 million ($73,000) in the same quarter in 2018, and for the first three quarters net loss was SEK 12.3 million ($1.28 million), compared to a loss of SEK 7.2 million ($750,000) a year ago.
Highlights in the quarter include further implementation of a collaboration with Egis Technology within the mobile space, receipt of a CAST certificate from Mastercard for a biometric smart card module with Precise’ technology, and an expanded digital identity product for access control based on its YOUNiQ.
“In 2019, we implemented a completely new strategy for Precise, which entailed streamlining measures, primarily in the Mobile area, and the development of the Smart Card and Digital Identity areas,” comments Precise Biometrics CEO Stefan K. Persson. “We have given a new boost to our development power and will keep up this pace in our creation of new products. We continue to work on developing our identification software and also increasing our product range to suit additional application areas. Precise core is based on innovation, with a focus on meeting the demand for smooth and safe identification and enabling people to be their own keyring.”
Persson also calls the company’s recent partnership with Infinity Optics “a good example of our strategic direction.”
Fingerprint Cards integrations surpass 400 mobile devices
Fingerprint Cards reported Q3 earnings of SEK 352 million ($36.5 million), down 18 percent from Q3 2018, mostly from its mobile business, as the company surpassed 400 mobile devices with its fingerprint technology, and looks to consolidate its position in capacitive sensors.
January through September revenues reached SEK 1,077 million ($111.7 million), with EBITDA of SEK 115 million ($11.9 million). While FPC recorded an operating profit in Q3 of negative 1 percent, net profit was positive, and cash flow was SEK 59 million ($6.1 million).
CEO Christian Fredrikson expressed satisfaction with the company’s entry into Samsung’s supply chain, and says the company is experiencing relatively stable demand from Chinese smartphone or OEM customers.
The company has also announced on Twitter that the relaunched classic Motorola Razr 2019 features an FPC1291 sensor, while the Realme 3i and Realme 5 have been launched with the FPC1511. This was shortly after the LG Q70 was declared the 400th mobile device to integrate Fingerprint Card biometrics, as it was also launched with the FPC 1511 sensor. Sensors from the company are now found in devices from all top five Android OEM brands.
“The market for biometric outside of smartphones is growing, but it is still significantly smaller than the mobile market and it is also quite fragmented,” Fredrikson told a conference call, as reported by Seeking Alpha. “And for this reason, there can be significant swings in demand between quarters. Our latest business outside of mobile is being – our largest business outside of mobile is pinging module sales into door locks.”