BIO-key International (NASDAQ:BKYI) CEO Mike DePasquale told investors at the RedChip Future Tech Investor Conference that the identity and authentication technology company is aiming to reach profitability in the current quarter as it expands in regulated industries and grows recurring revenue.
DePasquale said BIO-key, which he described as currently trading on the OTC markets under the symbol BKYE, has been operating for more than 30 years and provides identification and authentication solutions designed to replace or supplement passwords, PINs, tokens, cards and keys. He said the company’s differentiator is its biometric technology, including fingerprint, facial and palm authentication.
Focus on phoneless and tokenless authentication
DePasquale positioned BIO-key’s platform as a response to growing demand for phishing-resistant, zero-trust and phoneless or tokenless authentication technologies. He said the company supports 16 to 17 authentication factors, allowing customers to authenticate users in environments where phones or tokens may not be practical, such as call centers or manufacturing floors.
In response to a RedChip analyst question, DePasquale said the industries that most quickly recognize the value of phoneless and tokenless authentication are those with regulatory mandates or strict access-control requirements.
“Industries like banking, finance, healthcare, and of course, government, those are the ones that really benefit the most from this technology out of the gate,” he said.
DePasquale said regulatory requirements are becoming a catalyst for adoption, alongside security and operational efficiency. He cited cyber insurance requirements, NIST standards for government contractors and HIPAA requirements in healthcare as examples of mandates that are pushing enterprises toward multi-factor authentication.
Customers across defense, banking, healthcare and education
DePasquale said BIO-key serves customers across many sectors, with its “real sweet spot” in regulated industries. He highlighted several customer categories during the presentation:
- Defense: DePasquale said three of the top four global defense ministries use BIO-key technology to access intelligence information.
- Banking: He said Capitec Bank in South Africa has more than 30 million customers enrolled in BIO-key’s solution for branch or ATM authentication.
- Healthcare: He cited the Cleveland Clinic and Nationwide Children’s Hospital as users of BIO-key biometric technology for access to electronic medical and health record systems.
- Education: He said nearly 200 colleges and universities use BIO-key’s solution, though not necessarily biometrics, for access to information and student and instructor portals.
Asked why regulated organizations are well suited for biometric authentication, DePasquale said they typically have high-value assets to protect, including bank accounts, large transactions, patient privacy and sensitive government information. He said biometrics offer both security and ease of use compared with long passwords or hardware tokens.
Revenue growth, margins and profitability outlook
DePasquale said BIO-key’s annual recurring revenue base is growing and that gross margins generally remain in the 75% to 80% range, depending in part on the mix of hardware and software sales. He said more than 45 million global users authenticate with BIO-key on a daily basis.
During the question-and-answer session, a RedChip analyst noted that Q1 software license revenue increased 24% to $1.4 million and that gross margin was 82%. The analyst also referenced a guided first-half revenue target of $5 million.
DePasquale said expenses are expected to remain relatively steady through the year, with R&D spending largely flat after prior investments in the company’s PortalGuard and WEB-key platforms. He said SG&A may rise slightly with sales-related commissions but indicated that the company expects operating leverage if revenue grows.
“With the pipeline that we’re certainly capable of sustaining that level of growth through the second half and into the full year,” DePasquale said. He added that if gross margins hold near current levels, the company expects to achieve profitability and continue doing so through year-end, while noting that the third quarter can be variable because of slower European business during summer vacations.
Nasdaq appeal and filings
Asked about the company’s Nasdaq hearings panel appeal scheduled for June 16 and delayed filings, DePasquale said BIO-key expects to file both its Form 10-K and Form 10-Q “shortly.”
“We are confident that the hearing panel will recommend our relisting onto the Nasdaq Capital Market,” he said.
Defense budgets and cybersecurity demand
DePasquale also pointed to increased government defense spending as a potential business opportunity for BIO-key. He said the geopolitical environment has changed significantly, particularly over the past six months, and that defense budgets are increasing in the European Union, the Middle East and other regions.
He said BIO-key’s existing defense customers provide references that could support future opportunities in secure access to highly confidential information.
On customer return on investment, DePasquale said BIO-key’s solutions can reduce password-reset and IT support costs, improve security and avoid the continuing costs associated with individual hardware tokens. He said biometric devices require a one-time hardware purchase and can be used by multiple individuals over time.
Addressing identity management for autonomous systems and connected devices, DePasquale said BIO-key’s systems are highly encrypted and include liveness detection to help prevent spoofing attempts, such as synthetic or fake fingerprints. He also said the company is evolving its technology as quantum-related risks develop.
About BIO-key International (NASDAQ:BKYI)
BIO-key International, Inc is a developer and provider of fingerprint biometric identity and access management solutions, serving enterprise and government customers. The company’s core offerings include a range of fingerprint readers and authentication software designed to verify user identity across physical and digital environments. By leveraging proprietary template-on-card and template-on-device technologies, BIO-key seeks to enhance security and streamline user access without reliance on traditional passwords.
In addition to hardware sensors, BIO-key delivers software platforms that integrate with existing IT infrastructures such as Microsoft Active Directory and major workforce management systems.
