BKYI - Earnings call transcript Q4 2018 | BIO-key International, Inc.

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to BIO-key International's Fourth Quarter and Full Year 2018 Conference Call.

During the presentation, all participants will be in listen-only mode. After the speakers' remarks you will be invited to participate in a question-and-answer session.

and XXXX. conference ladies today, being reminder, X, April a gentlemen, is this recorded As like now of would Scott I to Mahnken, today's over BIO-key's host, to Vice President Marketing. turn the conference

You may begin, sir.

Scott Mahnken

that materially Such The are Financial may today's and Good cause similar differ of that expressions Ceci those Lisa. projects, forward-looking Officer; basis are you Chief to believes, the these BIO-key's us this and statements words forward-looking Thank Corsentino, management's subject call. and identify BIO-key's BIO-key's by today's contain statements and the you, Officer. to webcast me call intended Private Chairman statements. morning, With DePasquale, on and XXXX. are Act statements. and assumptions based Fred projected for intends, pursuant actual thank information harbor from joining of to currently on CEO; on beliefs, estimate, Securities risks expects, provisions Mike as as to everyone Revenue Welch, certain to I'd morning remind of conference the may forward-looking management, anticipates, and are Reform to safe that well like made uncertainties results made Chief Litigation available

are forward-looking reflect or date XX-K, this For Form turn affect and a made. factors to Annual over its like Factors any not Risk undertakes time, of filings obligation of the place the cautioned which speak other disclose to made. Mike The the only BIO-key see events to these company to on on I'd statements, that DePasquale. these as and other also the after to the risk At to complete description date these forward-looking may of call International, performance undue circumstances revision no company's Listeners statements SEC. future in Report reliance with the

Mike DePasquale

everyone, and for Good thank joining Scott. today. Thank you you, morning, us

visibility review to XXXX but outlook opportunities, reported like beyond. substantially altered our for that and Before XXXX and our I'd a XXXX. shaping we to few favorable XXXX see results greater for factors reviewing contributed

were the were full-year fiscal reduction the in of implementation to our revenues amount revenue and fourth expectation guidance. we approximately record our to GAAP revenue XXXX recognition Our which quarter impacted in year XXXX revenue the resulted $X of million able in standards, by the new compared and full

in installment in our As ordered called software with services the QX to-date, agreement in had XXXX book revenue you million we at and The of monthly financial $XX XXXX largest in in over customer recall, license XXXX. out per engagement, the closed sectors. XXXX. month valued million revenue payments so from a standpoint, ever a contract commence technology February equal for Chinese-based recognition From we and $X QX to to $XXX,XXX structured under the $X as million

first ASC standards million the two under contract, able we result the recorded However, were the in recognition as the receipt revenue, of revenue from we under XXX Instead, was received fourth XXXX, guidelines, $X.X the cash new accounting reflects to only cash we the have have this as and possible. payments treatment we a codification, not quarter of which contract payments received. record

through received up or quarter. book received quarter of reporting will the time each each We payments payments

book revenue April we QX, for May. to So, expect received in and

quarter we're payments as able revenue. each received book future forward, Going to

and Asia. accounting this XXXX treatment, we the deals in this marketing recognized, to predictable build approximately revenue with strong align $X.X of So, cash quarterly view Cutting large performance. and payments confirmation license assuming to per will payment, allow for as in timely our sales strategy, through a treatment importantly, million future that quarter; a consistent launched equate would the and more received presence

markets the potential largest in the world. of security One

incorporate to seek to continue software OEMs their solutions. capabilities biometric On the we front, domestic with into partnerships and hardware

We base other their and and such markets, capabilities where healthcare, provide authentication equipment. partners applications to at and security have a services, growing regulated we support of financial

its the only a a protects unit, a truck container the create storage distribution of processes to For individual This the their on and compliance or advancing to members counties contents Lock. reports example, notable further We're during XXXX, identification multi-factor also the in the in area solutions staff were board but with able of with including debuted this requirements. In in election users. builds not access things Internet to major authentication our of recently locks. products, of applications, contents security and commercial its and our Brookstone. our of location the with line significant Smart lock capabilities achievements, Globally, made Buy solution of which election, services to biometric-enabled our to Best Japanese also consumer interconnected We made unique incorporate IoT leading Things TouchLock the with on we of At and to we Commercial in headway management action TouchLock seeking recent a biometric line enhance throughout lock BIO-key recurring Florida, also with address forward. which an for hope globally enable certain solution own XXXX, to strategy to applications ongoing bicycle to Bike XXXX, data CES line organizations recognized significant extend retailers manufacturer, along into revenue the Bluetooth our build tracking challenges, We've developing offers we've locks such enabled device Asahi with going taking in regional our solutions. companies developed by offerings and we capabilities and into add advancing January, security biometric security authentication biometric for their use BIO-key's biometric with the and already This financial location helped distribution Japan. Smart XXXX, monitoring and entered inventory displace value related placed high-value and opportunities agreement as bicycle protect Cycle, a of basis. incorporating solution. Peering

and one internal Dubai fingerprint the Police The Police for ID personal progressive East. secure deployed critical enforcement scanners to in of to Force new total XX% Dubai we our several forward and of contract for with contract thinking We're year to in off Our recurring in most online XXXX with Director customers. service the also service EcoID service kicked as law recurring the XXXX. growth compared critical extend maintenance Windows is Middle secure of a from revenues large a Force The to the of their Force access access solution to was revenue working considered of orders result total to contributed to revenue, data. network This Police log-on and the revenues information. XX% three-year Singapore several organizations

authentication an Language. hosted Markup SAML enabling integration for for in across SAML available solutions Director tomorrow's provider We is are highly with BIO-key secure security ID potential, we compatible a and applications. are organizations launched of SAML ID is authentication be on-premise service and authentication a of technical remain fingerprint to services Assertion enabled standard proud provide BIO-key's to crucial Targeting visible needs identity solution anticipate providers. their or revenue that X.X framework. and networks is such which all Director requirements. a area developed providers, ubiquitous Security multiple police means solutions entrusting for It a changing that streamlined, our as new SAML, devices. SAML identity shared cost BIO-key effective

which technology security our market Our to to user simple-to-implement, leverage key solutions, end web goal of growing a the power and of authentication SAML-enabled is into scenarios. bring set

networking widely Turning be Hello deployed for support marketing for Microsoft. to of our and Windows supporter partner, continue given Business, to They Directory. protocol BIO-key, key a our native Active

from to all on our work place, combined utilize with prospects BIO-key of and in fingerprint with and development enterprises revenue Business Windows and well efforts, scanners improvements from Directory our as interchangeably believe based to summary, In devices is enabling favorable business deliver well integration. authentication for Additionally, XXXX, cash our bottom-line Microsoft thereafter. sustainable applications, we in Hello flow as positioned top for contracts Active reading with

sales and income BIO-key would a two million the net As XXXX XXXX. flow period. combined. Fred? Corsentino $XX result, to revenue significant I guidance cash range, growth for we expect million, and revamped revenue for representing full-year the like and initiating strategies this invite positive over achieve our full-year between of Within past channel guidance years is $XX will Fred to review BIO-key now other

Fred Corsentino

Mike. Thanks,

software government and services, we As several cater working mentioned, are financial sectors, target with and which to partners, markets. customers hardware Mike other healthcare, in including various

overarching sell security customers, Our and to diverse end-to-end needs. to objective sales is authentication security such common and supporting and authentication their solutions unique both

meeting is Our approach three-fold. this to objective

our in invest to Microsoft. continue to relationship with is First,

applications Technology is partnership Microsoft XX% Recent applications. Microsoft Microsoft reaching of on rely done. Enterprise survey for found customers operating crucial getting work Our enterprise enterprises large that Office to

service drive to Cloud and of with platforms. for within full classic solutions the enterprises, and customers Operating authentication with productivity is to Azure new are for and more and their Windows ID significant hardware System has including platform. our most Microsoft their Active Microsoft resources our latest adoption operate a and devoted compatible Office While enterprises the goal provides Cloud our Microsoft enterprise applications, target Windows Solution, suite Microsoft's solutions, multi-factor Windows of Hello that and Windows ability Both to which the Azure all Director Directory XX has software for implement solution their been Business

existing more Second, and base to to to clients. expand solutions into leverage channel of new relationships partners we sell to existing reseller their agreements of continue our

created newly channels. Our sales XXXX forecast these sales reflects for

are and while is fingerprint than products easily interoperable our costs. hardware our upgrade with manufacturers and selling application This integrate makes enabling into all technology value-added their Our biometrics minimizing point maintenance, and technologies. more reader resellers fingerprint viable lifecycle and major competing attractive to an developers applications,

and Small Finally, million with over new Director Administration, there set. small sales businesses, to for businesses buyable the we IT across United have According targeting the Solutions Windows $X small a are States. US sized channel an launched Business medium

pool opportunities. of value-added So, utilize of sales services. MSPs provide mean service manage customers a to the providers of overlooking missing them large S&P potential or these services on can out Many

make center our while center accounts, for are demand MSPs in them promoting team, lead adoption to for a provide development enterprise for marketing our best-in-class campaigns. efforts. in these and with on We target solutions The solutions and creating easy generation with targeted keep broad to their track focus specific biometric To working of we are healthcare number especially we'll it fingerprint customers. markets, our via a promoting lead efforts, to authentication these customers of biometrics will

be to thereby will journey individual processes. about customers progress sales improve measure our able enterprise sales and We the

solutions excited We biometric the we more as increased pursue while proactively markets, understand the in biometrics. these remain about identification, as target a our for are opportunistic form of of customers secure demand value we'll customers and

ID for solutions to And solution for earlier, and our Ceci? existing our with opportunity pointed interoperate to partners remarks the provide out Additionally, over positive as XXXX capabilities the Mike biometrics regarding turn new as financial call I the expand SAML customers. to ID that, enterprise performance. for some Ceci most with Director will for

Ceci Welch

Thank you, Fred.

versus over XXXX million in in software in due reflecting revenue of revenue the QX to license full the $X.X XXXX declined million year Our $X XXXX in million primarily the XX% in to versus contracts $X.X in $X.X million million recognition $XX XXXX, from QX XXXX. executed

to in XX, Full-year the share a and million compared XXXX, the XXXX declined revenue BIO-key preferred preferred in increased hardware, expenses XX and with million an year dividends the and of of December XXXX, in XXXX, approximately compared to of in December locks and cash million and related start shares equivalents ended plus million Additionally, XXXX, At expense compared loss included are $X.X the We declined XXXX expenses results or Capital the in XXXX XXXX, $X.X in or revenues share R&D shares $X.X million And to million outstanding. and was equity basic administrative $X.X due X%, million share XXXX. now, total dividend, as compared recorded shares fees in non-recurring readers compared expenses million loss of general receivables XXXX. decreases total on In in Operating lower was and total $X.X write-down license and XX.X $X.X to Per reflecting $X.XX of per weighted NASDAQ selling, margin $X.XX million approximately net software XXXX after stockholders' rates to basic after respectively, to expenses, to receivable by of $X.X average common with operator, including X.X XXXX, in aged offset outstanding, declined of XXXX a million amortization million. XX% million and of $X.X Market. million XXXX. respectively. cash $X.X the million let's per the the current approximately represented versus based and XXXX. Gross XX% XX% $X.X million $X.X to XX.X principally basic in operating and at of question-and-answer of to $XXX,XXX with in uplifting in costs to session. our XX, stock XXXX, million $X.X

Operator

Thank you very much.

[Operator now session. will Josh Goltry from Group. ahead. begin question-and-answer Instructions] Our Please question the We of first go Maxim comes

Josh Goltry

guys. Hi, How a So, few you? questions. are

cited end guidance, the customer how of of over that Given booked? the already been million few the the multiple months revenue low wins much new $XX of has past

Mike DePasquale

Good morning, Josh.

Josh Goltry

Hi. Good morning.

Mike DePasquale

Good, We're $X backlog. would somewhere million approximately I with what $X into and coming good. consider the year in booked million between

So, not forecast pipeline, but backlog.

Josh Goltry

XXXX gives that guidance to what specific just you achieve your follow-up range? with that, metrics can And Okay. confidence you

Mike DePasquale

pipeline that have. just mentioned we're I backlog, year coming forecasted What into the we the and that

position, dramatic us efforts model refocusing last a right alluded out our bold specifically there generation I very there. think and to refining have large even solution it quarters – puts very pretty two strong in which we to seeing have move with we act call unique are a because us our in for shift sales the market a marketing activities. now, very biometric some ago. We're to, option didn't a Fred providers the over multi-factor authentication I'll authentication very year and The

central authentication on names authenticate at corporate biometric, the practices, a of enterprises speaking the have rely multi-factor with not [ph], a to the Cell utilize because positive the of that their Ping device their mobile for want control And identification biometrics You that deploy, mobile they and to the and fact of end like who because They of [ph]. they do phones, phones tokens identification really the get phone generally probably or some have They ease authentication. AXA portals. option. like like authentication soft have know do biometric of and Point, add to solutions not

right the the very build. strong So, and that now forecasted about very bold we would feel pipeline opportunity and

Josh Goltry

much normalizing And Great. accounts flat sequentially. Right. receivable, for write-down age pretty is the of the SG&A

So, that you're why that given not new the momentum ramp more contracts, aggressively? seeing in

Mike DePasquale

ramp for to He's a the going let got that. answer Freddy sales plan. him and answer I'm let that Well, plan

Fred Corsentino

looking So, present we will resources the are at doing be as and create the them. adding additional that opportunities we and incrementally team itself we sales to as

needed the but seeing additional really getting resources far ahead not too of we're So, ourselves, we're adding as and uptick.

as we So, we're adding resources currently speak.

Josh Goltry

period And – for does what marketing investments? it. how – sales new gestation Got the and

Fred Corsentino

Yes.

security, So, ramp on if six-month at, some the so answer. six be rep a hire we three that know, sales it's, would people to that reasonably, technology-oriented the have right you three sales be completely background months in to is to ramp networking and normalized a

Josh Goltry

a forward? number a margin the should like that gross you quarter. And it. about can? would a this more expecting little bit Got that you XX% if that Is XX% had on past range or that – we color just going I be Or,

Mike DePasquale

Remember, higher. by software in our the gross P&L. license line much, be margin it'll think much we the driven Well, is

license the steady, going a total as of a margins across be be sales you higher. are the basis, each portion And on really see consistent to quarter, big mix, revenue software so, the

Josh Goltry

Okay, good, last great. then question. And

the capital So, burn or rate, cash first going operating the cash a markets? XXXX you returning at about large expecting think inflow quarter are to to of during are current you the

Mike DePasquale

capital markets. to right returning We have intention no now

no we we place credit have, have may debt. we equity go markets options raise the So, existing now, million contract, to plans to as we have of obviously other line consider, the to But or that $XX with cash. receivables in as right including contract equity well

Josh Goltry

guys, it. you. thank fair. All I That's right, appreciate Okay.

Mike DePasquale

welcome. You're

Operator

Counsel. Richard Pew Investment comes [Operator question Instructions] from go ahead. Richard Pew Our of Please next

Richard Pew

morning, Good Michael.

Mike DePasquale

morning. Good

Richard Pew

press In mentions secure like customer to help it good will news. Claro sounds – this will and Subsidiary sale release, the with It regard it specifically access your that, data. says to software your

from and the Now, one we've was Target asked in whether even sure. I I've past, not of about or intrusions your I'm used And being reads federal to I clarify? possible. suggested past, wasn't and access not to government people at the getting guess that heard and be release point, block like that can your sound do data notable all I Equifax, that Could thought another, part the software makes the way that. press you've the in in think of it past, invaded not – it data most you the was the you it could

Mike DePasquale

Sure.

combined, they they Our that what software they authenticate the information and so our our forth accessing and that. is authorized company general, technology finger or scanners, validate to individual the that is who by is do software, do in

not we're of hackers set generally authorized that access There's that's which outside first, focus from technologies, preventing And, information. context, who access a people the preventing people detection speaking We're the obviously, information. for intrusion So, to of them different to network are called right. you authentication accessing in the on whole side really on that that what work technologies information. know,

to they network First, they secure helping we're those particular, And into and to have then serve authorized in information specifically, we their to that to very in break act where try an access access point centers. the call the company's Claro That's to customers. them it agent as information. as customer to relates have

representative We're customer because reason So, information they're the helping have access. the accessing takes call for there a helping you place. customer secure the whatever center that call

Richard Pew

have data from market me intrusion huge Well, to like all had just people problems? a for you've these sounds you what said, must who it

Mike DePasquale

biometric individuals contractors, And the that's do. or identifies they access significant the medium, have They levels, seeing from to uptick authentication that large, their we just all is option that their Well, to in customers of the we're and recognize what that. they've small, authorized technology a for requests at reason multi-factor that form portals. for whoever in have more their positively some company

Richard Pew

was to good Sounds me. very

Now, far? Do any is the have first color so on to you've achieved quarter you add complete. what

Mike DePasquale

quarterly We I you know, annual do provide guidance. think, as not guidance. we provide

quarterly going the performance this we So, provide for have consistent, is discussed. morning, we going as stated to coming guidance just that in that we made this into we're year we and backlog not be our with we're comments, in year. that the our press But release more because feel to

Richard Pew

That the you're like avoiding me sounds question. to

is The first over. quarter

idea you the standards, You really talking or you the not how you've quarter like it first a or have in must done some quarter about weak quarter? know but it by whether No, can a report was something what good in I'm financial of that?

Mike DePasquale

I'm we really – know, that I go we back I on right form, couldn't now or true. weekend going quarterly way quarter any Yes, and We going you guidance. the And say also to make think we very is again not do any another statement, am the provide just closed that. shape very, give in to and over which perspective

Operator

ahead. [Operator comes Instructions] question Investor. Dan go next Our Please Camus, from

Unidentified Analyst

it OpEx OpEx I Hi, for that to number What's was in know $X.X expected indicated decreased XXXX? your million.

Mike DePasquale

expenses think we about selectively. sales relatively We our adding it few Fred, be spoke, as business, are resources, ramp comments made doing we're but flat. going the to a

what we're be we quarter. are he so five to for incrementally to not, people but sell grow, is, add describe flat, there see tried it operating business think as incrementally our we as I general this example, rise, expenses going to more. we resource the in think new just doing and We're hiring,

of you the to half, And obviously at in that. numbers carry good the then deal second first the now obviously numbers ramps, are the with the the that in forward pretty we'll – in year. half if So, business think I see least

Unidentified Analyst

high for would think, end it you half? do What second ramps, Okay. the be the if

Mike DePasquale

$XX provide know, our... and was We again, annual guidance. somewhere we you million $XX million, said that Well, between

Unidentified Analyst

mean I no, No, revenue, OpEx. not the

Mike DePasquale

bring take year. rep cost OpEx? let it a I or me a $XXX,XXX give mean, to fully us on, loaded right, full-in –

it's a expense per take or give So, right. $XX,XXX quarter,

or expense? if resources you talking adding you'd about about, So, three add $XXX,XXX in in quarterly be two under

Unidentified Analyst

down so left write-down and has How written Okay. Can to essentially on much far? is to color write-down? you How the chances is give us more the down collection zero? much been

Mike DePasquale

Yes.

is here – and So collecting money viable. We've in been and continues that. the to with be project we drabs, are dribs

probability fact, we'll that In all back that XXXX in early or there's we reasonable get think a XXXX.

not just decision we to and that made carry So, a receivable to the anymore clear debts.

So, been money, given right situation though in enough the collecting just not again, now. substantial it's we're even Africa

Unidentified Analyst

you'll you get have the Okay. that on it a Do or? number probability

Mike DePasquale

Well, it's a...

Unidentified Analyst

What's it the get you won't chance or... that

Mike DePasquale

$XX not It's in to backlog. million It's through a the $XX talked – provided We million. our we guidance backlog. not of

of say and our But know, technology not ongoing short-term we'll they're I'd before specific You It's I the because that relying And been for to see. in tenure not probability it's our hard say. have forecast. really is. happen embarrassed on it's to by going it's believe I application. what very project. the a rather

Unidentified Analyst

in ID an developing that you're market. the forces forces law niche your a a interesting are US coming? And I enforcement like in so police foreign Or market? reason there Looks guess, Okay. tougher Director? police Is is are interested

Mike DePasquale

of but threads Yes, question. Okay, well, defense so space, the space there to we've are only couple nice wins law international. your enforcement a of couple not in in the had a as federal

now, and very large business have a some defense we're number prospects agencies. federal national of with doing So, we

one wind have very, is That's did them. one a and very all particular biometrics. prominent key kinds mature, uses web in in finger software evaluate the test very with It's our of world They biometrics, up platform for Because our highly of Why the and BIO-key? technology. they secure. very hardware. most We of that capable

Microsoft their with administrative authentication it's they and of that any all it's So, for generally, environment, deploy. an virtually tailored flexibility their easy And those and attacks. to to built control Windows that And withstand where allows to also that, of various It all for they complexity intrusion kinds integrate configurability, years facility all to that and of encryption. the through been ID customers our with it directory that Director active identities environment, on serve. very applications has for all to of the top the levels It allows has venue. be

think continue will primary not in internationally. And general us, to domestically, you be that we So, good the and know, there. that reason, but see growth just we for market do that's

the about police in Generally States, in part, department? or part of question platform used and to United opportunities second your be The the that business. police say, I for should dispatch communications. in said a domestic the departments third use what speaking, We the

owned, provider data were Aether the Mobile You we solutions mobile largest that in remember when of we for venue. Government we Group the bought XXXX, back XXXX,

So, as that and kind – all access the market CAT. of of evolved, through comes comes fundamentally their system is control and their through dispatch access

integrations previous as and So, At you some least know, had domestically, But our right robust we've experience. we've because of done us. opportunities as some internationally the seem for market doesn't does now. it

Unidentified Analyst

heard there a hardware it. business – $X.X hardware Got tell that about What million million. hardware some to was I there forward? growth, the growth us was decline from going does $X.X

Mike DePasquale

timing. Just

Our selling software hardware alongside a in is robust very our way.

are change just... quarter. will in a the probably see first You It's they

Unidentified Analyst

Great.

released Thank Are Okay. glass help password authentication Galaxy monetize user reader patent? fingerprint question, you. last anything the in Samsung that The SXX. the we working will

Mike DePasquale

the that ultrasound, embedded fingerprint sensor love the glass that idea been has device. under We the ultrasonic in yet. Not

fingerprint are like that confirmation continues choice the preferred only And to It's for meaning do It's consumer technology not connected this a it's have a and in device, that users keep over in it's time a the iPhone, just to few that is, that any says, that's any token think yes, could my it's identification itself just a device closed for touch ID and be or to biometrics the patents enterprises. proliferate. that's consumers particular mind. that application, with on authentication device. as itself. We I access device, that if for providing for for authentication interesting positive releasing the –

devices the I most months. to the XX sensors think under XX we're going in to next glass see over

we'll see. so, And

Unidentified Analyst

Does that include Apple?

Mike DePasquale

a man's sensor the fingerprint. next one I believe But a generation. Apple will that believe premium opinion. fingerprint is put will their Apple in devices do in put I This back

Unidentified Analyst

looking good guys. Well, forward a XXXX. very Okay. Thanks to

Mike DePasquale

Thank you.

Operator

there I [Operator this to conference any would As questions, to Mike for more question-and-answer remarks. closing concludes like are Instructions] over session. no turn DePasquale the our

Mike DePasquale

Please our updates our sure and our media next will ongoing updating provide social where business early to progress website follow blog on which everyone. can forward us take heard to on outlook activities. and Thank We be our on and May. look on you, you be place and products we call, also

media at of in social your interest release. on call. today's you end today's thank is participation Our information and press Again, for BIO-key for the your

Operator

The conference today's concluded. is presentation. for attending now Thank you

may disconnect your You now lines.

BIO-key International (BKYI) 3 Apr 192018 Q4 Earnings call transcript