BIO-key reports strong cash position despite soft earnings, Precise Biometrics earnings surging
BIO-key and Precise Biometrics have reported their results for the second quarter of 2020, and as COVID-19 lockdowns are eased in many countries, each has good reasons for confidence.
Biometrics contracts and a public offering pushed BIO-key’s cash position following recapitalization efforts to approximately $18 million, the company announced in its second quarter results for the fiscal 2020 year.
In Q2, BIO-key reports revenues of $307,000, down from $728,000 a year earlier, mostly due to the interruption caused by COVID-19 and the company’s exit from the retail lock business. Gross margin surged to 52 percent from 7 percent in Q2 2019, which had been largely a result of non-cash software license amortization expenses. Net loss was $1.6 million, or $0.08 per basic share, compared to $1.4 million, or $0.10 per basic share in the same period a year ago.
The acquisition of PistolStar, which has led to a series of contract wins by BIO-key since the quarter closed, was completed, but the big news for the company from a financial perspective was the success of its underwritten public offering, which raised $24.8 million. During Q2, BIO-key won a contract to provide biometrics to secure access to voter registration data in a Western U.S. state, and its fingerprint technology was deployed for worker time and attendance processes by a multinational agriculture company.
“As anticipated, Q2 was a very challenging period from a revenue standpoint as most software and hardware procurement decision-making was put on hold as government and enterprise customers responded to the COVID-19 pandemic,” explains BIO-key CEO Michael DePasquale. “BIO-key used this period to advance our strategic goals of expanding the breadth of our software solutions, building out our team and infrastructure in Africa, and laying the groundwork for a complete recapitalization of our Company which we completed in July. We believe these initiatives have positioned us well for long term success.”
Some of the capital has already been spent boosting BIO-key’s operations in Africa, where it has won two contracts with total anticipated revenue of $75 million, though the initiation of each has been delayed by COVID-19 shutdowns.
“The recapitalization allowed us to repay short-term note financings, fully-fund the PistolStar acquisition, and make focused investments in personnel and resources in our most promising areas, including BIO-key Africa,” DePasquale continues. “It has also put BIO-key on a very strong financial footing upon which to build our business allowing us to focus our full attention on growth initiatives rather than on working capital, while clearly demonstrating our financial strength to large customer prospects. Finally, during these periods of economic uncertainty, we recognize the importance of being well funded so that we are not only able to endure any challenges but also well positioned to take advantage of potential opportunities that might arise.”
Precise Biometrics revenue up over 80 percent for first half of 2020
Revenue for Precise Biometrics surged to SEK 23.6 million (roughly US$2.7 million) from SEK 13.4 million ($1.5 million) in the second quarter a year earlier, net sales growth of higher than 75 percent.
EBITDA came in at SEK 2 million ($230,000), compared to a loss of SEK 4.1 million ($471,000) in Q2 2019. The company trimmed it operating and overall loss to SEK 1.1 million ($126,000) and SEK 1.5 million ($172,000), respectively, from SEK 7.3 million ($839,000) and SEK 7.6 million ($873,000), and earnings per share were flat, following a loss of SEK 0.02 last year. Cash flow also reached positive territory, with a gain of SEK 2.3 million ($264,000) after an operating cash loss of SEK 1.1 million ($126,000) in last year’s Q2.
Precise’s first quarter results likewise showed dramatic improvement, partly from the revenue provided by its deal to supply biometric fingerprint software to Egis Technology. The company also reached an agreement to provide its Precise YOUNiQ to Temporary Space Nordics for access control with facial recognition, which CEO Stefan K Persson identifies as an area of increasing demand.
For the first half of the year, Precise is now up to SEK 46.7 million ($5.4 million) in net sales, up over 82 percent from SEK 25.6 million ($2.9 million) in 1H 2019, with similar swings in other results.
“In summary, it has been an eventful first six months of the year for Precise, naturally dominated by the ongoing pandemic,” Persson says. “We have reorganized the business and can efficiently manage sales, product development and marking digitally. Our absolute focus for the rest of the year on sales, and our vision of secure, convenient identification wherever you are, whoever you are and whatever you are doing is more relevant now than ever.”