BKYI - Earnings call transcript Q3 2020 | BIO-key International, Inc.

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Operator

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to BIO-key International’s Third Quarter 2020 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.

As a reminder, this conference is being recorded today, Thursday, November 12, 2020. turn of over Channel to BIO-key’s Scott like President Vice Sales. now the to conference Mahnken, I’d Please begin.

Scott Mahnken

made results Thank may projected Private you Fred project, that Such forward-looking on BIO-key’s management, Financial today’s to Chairman risks similar believe, Revenue Securities XXXX. for or conference The today certain made and are Officer. well the and cause the me basis joining Officer; the from and to uncertainties statements. provisions those of to of pursuant webcast assumptions of management’s remind and and CEO, subject statements forward-looking these Litigation plan, us information Harbor I’d this call like estimate, statements. differ to words on Mike everyone Welch, and materially currently expressions will statements Act forward-looking as based anticipate, available DePasquale; Ceci Corsentino, intend, actual to identify Reform Chief Safe are generally morning. expect, our that Chief With beliefs, that may, as are contain may

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

Mike DePasquale

good you and everyone, Scott, today. call joining for you, thank our and Thank morning,

President very able and pandemic for the just commitment of important statement pivotal our work the BIO-key. revenue PistolStar effects continues quarter only build read past particularly our the BIO-key, of variety was colleagues new as As of a assuming times. challenging of Sales were I Harbor off thanking at months, new during to by business to for pandemic also momentum congratulate to we the role ways, with the this Though, completed of all Safe we period been dealing the who our their the a PortalGuard Channel to BIO-key Vice several solution. third Mahnken, entire our team, company, I want in impact for with wanted COVID-XX coronavirus integrated hard start we’ve these but not recapitalization for including Scott

QX. quarter, the these meetings XX, a are traction streamline and gradual IT During to students, access we or business. have purchase resources of dialogues. the had administration with yet growing financial a Though of proceeds significant company on many during in has the institutions with to public third in to the strategic and Identity an formerly put made In many from successfully those customer In access remote the common decade. faculty, access. vision warrants. higher user-friendly results began PortalGuard the over and first mark additionally, QX online incorporating quarter has PortalGuard pandemic quarter. normal by and PistolStar dialogues, sinking to reopen challenges now funding the our return we to for marketing we’ve recapitalized and the footing for and demonstrated the provide event prospects has company of stock particular PortalGuard advancing And see institutions to closed educational offering last grappled requirements. its as steps fully spike our more to June proven of strongest in businesses remote we the to day a This and July, IAM BIO-key multifactor, education sales as and strengthen for created manage remote PortalGuard ideal institutions on Access be Management solution to still

just of financings, removes company factors to repaying to on it note business company related transaction. risk ended a from with short-term possible and economic or allow our million affect any initiatives. or other and third note could related cash quarter disruptions $XXX,XXX After growth the that to attention full Importantly, capital customers, or bulk other our addressing acquisition political the needs, our payable focus in to funding the the PistolStar BIO-key our PistolStar us and $XX.X working remaining COVID-XX on

team when Our strength us seek long-term out solutions. when critical financial well and allows and initiatives. mission make us for choosing to prospects, in sales marketing building as as also our as customer BIO-key serves government It strength who investments our enterprise of prudent partners our assurances well also enhancing subsidiary business dealing large and with such partners Africa

lucrative growth year access line security financial over and XXXX over solid well-positioned and our review million identity QX in in third showed and results, fully QX the of which expanded for tap of We’re visibility sales portfolio, Ceci market product ago improvements will expanded our on the to customer top network $XX execute growing and now solutions, relationships to backlog enhance management. improved including the authentication, our extremely potential contracts quarter. team,

to for QX particular Africa with America, backlog trend contract supported on emphasis XXXX on this global and solutions our expect our continue basis and Asia. by strong North We a a and into outlook

large of These projects in the then mentioned to Nigerian traction in more as are concerns. the achieving due work police economy today’s activity forward. as release, unrest recently initial now to two are our civil we is we delayed to as the to the well Nigeria. and were reformed following beginning we As in contracts, on Business African commenced The projects return press pandemic, projects first related our COVID-XX open. is and move have beginning

and to employment program for on opportunities pandemic solutions its software our graduates underway college This and gained even first recent and has in the program providing the wake support in importance Ministry Labor Nigerian impact of involves the hardware The create project intended Nigeria. greater of employment. get of to

software planning hardware We’re $XXX,XXX deployments this in approximately current with anticipated initial for fourth orders quarter. and

project over substantially expect by approximately $XX quarters ramp total of the to revenue million few next XXXX. We with expected the

have opportunities slated another the of provide million our years. authentication revenue breadth Africa project continent. to next African positions roughly This expected growth business scale well us On We with African large offerings customers the approximately is for our over generate biometric believe start project solutions provider of of $XX major of is two this, and to security Civil year. early a are for government biometric subsidiary we authentication in support that continuing enterprise We coupled top our secure build multifactor telecom opportunity to ID continent. to BIO-key and out burgeoning security across authentication expertise this across to

looking social For for border deliver immigration such with partners channel programs. welfare communications security example, to and needs to are identification security payments, areas in we biometric team and and solutions as mobile

Some funding as are attracting international of these initiatives well.

government. product just verticals a reach, or is solutions higher BIO-key’s not PortalGuard highly across well Additionally, range enterprises Their sales we access and IAM up-selling broader a charge substantial existing and Kimberly existing but becoming our of sign-on now and we multi-factor robust a development Under verticals. to robust technology record management the she as marketing our providing And and of identification brings product improved as and business part and of brand our our are August, that biometric BIO-key efforts her last cross-selling company, new Marketing. of solutions customers. expanded to provide a a clarify our presence at PortalGuard we customer suite, visit also Johnson with opportunity engineering, sure core market VP we multi-factor marketing. regulated product Product To as our state SSO messaging. BIO-key website local where in financial, company It’s corporate track terms enhance provide These government customers. include more more success. a larger an provide to the education can bio-key.com. and be our single cohesive Kimberly’s and is leadership offering product across can marketing integrated week, in business, named to leadership, And site and integrated strong company. Please our unveiled to of

to higher than African our substantially QX to beyond QX. by we with the in core ramp projects. outlook respect of for comments Finally, the our continued be up revenue expect momentum we’ve our growth expect business we XXXX, the And driven made, and of into carrying

call in business. our me over specific few turn to developments the now to a highlight Corsentino Let Fred? Fred

Fred Corsentino

Mike. you, Thank

due in to As and into achieved year-over-year pandemic. Mike was being terms postponed despite XXXX pushed sequential a in of said, revenue improvement was and quarter or projects better our pipeline QX many the both

cloud-based have both offerings, completed subscription made with model, to on-prem progress in migrating is a which or platform as as XXX% well The offerings. includes launch We QX our PortalGuard SaaS product supporting includes as millions that scalable grow. within and is cloud XX,XXX enterprise class, infrastructure currently a to over support AWS, that easily highly can we system scale strategic end-users SaaS

software are who up-sell to stable the SaaS with and revenue. customers which better both many an is BIO-key recurring for budgeting migrating have We of provides also platform, customers

vertical. tailoring integrate key marketing mentioned, effort We head also within Johnson, functions better specific and was and integrating each verticals, to government. marketing financial appointed education, to around three previously sales who our sales tactics overall was services Kim plan, this the

dominant within vertical, Kim��s I and institutions. higher can given ed of believed recognition priorities that base, our the know we a example, more that We to this one For customer really is larger vertical. target that become in player current

align to who plan new well target channel. also We vertically each partners, within

solutions. to platform direction, In the of potential our addition, program PortalGuard of under process we Alliance reach current the expanding partners are thereby Scott’s Channel also onboarding in our

the late hired abroad. we also Middle we’re to Pacific beyond Africa the Alliance the about and there’s the excited working We as large extend U.S. we believe accounts our market strategic opportunity, and a both month. region program East. U.S. the Asian very team in are Channel executive and building And to Obviously, a last

game in trend pandemic and set Mind that with we beyond acquisition should the call, And as XXXX up just starting is you see last Pistol impact we I that the the are for that the revenue for its the us. in said On we our and think to and well are platform PortalGuard Star believe a numbers continue. changer that receipts. opportunity Africa and exciting

With work Thank will also think the home increased positioned review. trends remote solve. are you. that for that study financial access to the call we endure uniquely management and pass from challenges Ceci ID authentication creating and the I��ll that to that, are We

Ceci Welch

hardware Thank QX acquisition, Star Pistol to less which to retail to the $XXX,XXX in XXXX in and BIO-key’s and in QX and Fred. you, QX license BIO-key’s on locks included to business. XXXX, decreased to revenues closed $XXX,XXX sales mainly the included by higher XX due the due Hardware for from exit related are due orders customer service from results. deployments XXXX increased fees $XX,XXX no June lock

September from XX, QX expenses the amortization XXXX the service – were Star the in associated XXXX $X.X not marketing Pistol offset website QX Star QX $X.X of cost software African costs to XXXX in partially XX% have associated consolidation. expenses million in months QX included comparable would with $X.XX higher QX amortization million Other with staff which increase, of was fees million revenues on XXXX, For million the or license XXXX Star negative in by the that increased costs share license XXXX, period, due to million of also a sales. with of XXXX. $XXX,XXX the versus me, Pistol reduced million QX basis. debt per million the for margin and hardware partially and gross in a share subsidiary. the software versus available as operating to or net expenses discount approximately expense inclusion XXXX. reflecting in excuse included Pistol and license QX related nine and to expenses gross recorded $X.X of XXXX. QX the issuance in other comparable the XXXX, convertible Star loss the ended loss – $X.X due Gross also recur the QX XXXX primarily setup office in non-cash inclusion personnel and in lower $X.X QX incurred to margin primarily $X.X financing. amortization the the million result been primarily QX margin from results, improved during $X.XX the in debt Adjusting XX% $X.X $X.XX stockholders QX per XXXX compared with operating $X.XX in did Pistol Overall, integration million BIO-key’s a the additional versus the the of expenses for to BIO-key new primarily Higher to of resulted debt resulted with operating

questions. the payment call first nine of With and cash to can of versus the for completed Star million XXXX. as well that million proceeds Operator? of notes. offering BIO-key $XX for of has of shareholders operator payable per the the and net million given million per nine overview, months available payable, expenses back and $X.XX the to for note accounts of XXXX, of gross retirement as for for $XX.X investor turn sale the $XXX,XXX some the the convertible a For acquisition. in to loss common share BIO-key or the $X.X the stock In – $X.X BIO-key now Pistol million, the the I effect the reported share months first BIO-key QX, $X.X $X.XX warrants of or

Operator

At Thank the session. question-and-answer we’ll Okay. time, [Operator this begin Instructions] you.

comes first from Jack from Group. Please ahead. question Maxim Our Aarde Vander go

Jack Vander Aarde

Great. and hi Thanks Thank Hi, Good morning. you. team. for my Michael taking questions.

see. Let’s

contributed Pistol So, to exceeded rough my disclosed believe to – you’re the Star this it, a if it’s results. wondering what strong Star like to provide to I definitely that XQ or nicely of revenue. contributed an if you results but see either quarter, don’t explicit expectations able estimate revenue good looks maybe Pistol Wondering the

Mike DePasquale

Ceci, was the… that I’ll to what turn you,

Ceci Welch

in of This was a part the quarter? XX-XX split

Mike DePasquale

Okay.

Jack. XX-XX, So

Jack Vander Aarde

XX-XX.

much could appreciate of the elephants really start generate here, you here those. segment terms one and needle, on and broken Okay, think in granular the the that African some African are I as expect revenue encouraging And expect how that you the large should I to hardware? pretty about one that’s – contracts. would you services How at update obviously at in of them a revenues. level, QX, for roughly? be contract that to how then $XXX,XXX guys the helpful. XXXK Of licensing revenue, two of see next And expecting move room that the look the the these just It’s that quarter deployment you revenue, in out of status to

Mike DePasquale

good start question. deploying resources before, And the hands be it’s that we the think as of indicated one do addressed we’ve what into I hardware of Jack, hardware and will delivering the ground on that we putting much Yes. we as and there.

that look can So to hardware. you to be dominantly

Jack Vander Aarde

you. Got

into then plans And have how deployment I deal great Okay. don’t as and curious, the just of the process insight just with whole are unraveling here.

just why know, deployment, XXXK initial kind to curious just only $XX So of revenue, million to the such amount. relative it’s opportunities, minimal hardware a

just Is conservative why small is it’s is such a for of it piece that or kind that room upside just a I’m what that curious, – was too, upfront? expected? So there

Mike DePasquale

startup. initial an It’s

we we our outset what when begin hardware our at it’s So services. and expected the would deploying

slipped. this things expecting were have we obviously in So to QX, back begin

no, So expected, was his in it clearly startup. it purely

Jack Vander Aarde

just sticking be the insight then do of the remainder And to order maybe of expect allocated or uncertain? quarters. deployed contract? into how you that mean, the with the throughout still any Would purchase contract, in you terms just sizable in it is from understood. hit really revenue a will amount Or QX this then, have XXXX Okay, or I particular

Mike DePasquale

No, no.

We expect quarter-over-quarter. sequentially to grow the ramp

$XX is XXXX as this out that begin is number. revenue get the million – expect we deploying, So is we significant going the through meaning ramp each Obviously, grow. we quarter as going, a to a

ramp going deployment and a to to going delivery see we’re quarter forward. each So have significant in

Jack Vander Aarde

Okay, sense. got it. That makes

Mike DePasquale

to other some to we’ll next to the – the then let impact able deployment be the me of ultimately the as Hopefully, what predict and year, and to get schedules and item. provide me we be order guidance to beginning be. year, one let as And able of end will interject revenue

be this I with we’ll able as more through year, And PortalGuard more see subscription. right SaaS to and a business, well on as well, to we customers, SaaS, you full of as Fred know, we get proceed seeing full things be again, prospects. we’re we things So get existing forward, reception predictable. opening our And think, – customers the from as platform. up, as as it’s how described, and great clarity end moving our it’s Ultimately, and our not we’re complete now as complete will

predictable XXXX. be we’ll think I much in more

Jack Vander Aarde

Okay, that fantastic. And too. makes sense

of customers in revenue a relates QX? contributing it to to is those to be model PortalGuard, – really contribution actively SaaS moving active revenue any your for expect or were like As it SaaS – of the kind terms subscription those in and to going to of that has a converted

Mike DePasquale

No.

customers platform. Fred we SaaS As described, the have on

the that solution the end users of been end the to QX have quarter. XX,XXX from the using of have We start

going operating, expect and to continue that’s and This to we in that grow to is place So grow. running dramatically. and

Jack Vander Aarde

when – comments, Okay, say. and great, looking to we on then fourth here if you’re fair the quarter business is, think at the your the positive I the fantastic. – just remove And your of overall outlook I’m giving very

this So Would embedding your Q non-Africa XXX,XXX that outlook confident you Q, would you Africa contract, in the would are or if on QX? exclude related be be confidence over the and that from – I you’re what’s still uncertainty – up up revenue. year-over-year level how

Mike DePasquale

confident. Highly

Jack Vander Aarde

Got it.

yet. third Okay, on hand just Ceci, question Do the have And because the then quick stock-based didn’t I you I just see – great. the XX-Q for a don’t comp for quarter? maybe think is lastly, the out number

Ceci Welch

around that this I third believe $XX,XXX for was quarter.

Jack Vander Aarde

The stock comp. total

Ceci Welch

Yes.

Jack Vander Aarde

Michael, of momentum for great sounds moving needle the I the way. contracts finally data deployment right. the It update. to appreciate All is like on you point. major thank fantastic. building. these It’s it, Ceci, Got see its

back hop in the I’ll the So progress and queue. congrats on update

Mike DePasquale

Thank you, Jack.

Operator

session. call back over to in the concludes are This [Operator for Mike closing our Instructions] I’ll no the DePasquale remarks. question-and-answer queue. turn There questions

Mike DePasquale

Great.

look news participating thank updating next to continue warranted. you stay to Stay safe, for provide and want We forward interim and in quarterly you, of Thank everyone. And call. updates I reports course, we’ll as today’s on call. everyone our to healthy. First,

Operator

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

You may now disconnect.

BIO-key International (BKYI) 12 Nov 202020 Q3 Earnings call transcript