BIO-key Reports 2018 revenue of $4mn
02 April 2019 11:51 GMT

BIO-key International, a provider of biometric authentication and security solutions, today reported results for its fourth quarter (Q4'18) and full year ended December 31, 2018 and provided initial 2019 financial guidance. 

BIO-key CEO Michael DePasquale commented, "We have closed out 2018 with our most significant software license deployments to date which included a $5M Q4 '2018 license deployment.  However, our 2018 financial statements include revenue of only approximately $1.1M of the $5M as under new GAAP revenue recognition standards, this contract is being recorded to revenue as payments are received.   We expect to record the approximate $4M balance due under this license as revenue in 2019.  On a positive note, the deferral of revenue recognition until payments are received will allow for more predictable, consistent quarterly performance.

"Importantly, 2018 marked a significant year of progress for BIO-key both in terms of new business productivity and developing predictable and recurring revenue opportunities for our core biometric software technology for 2019 and beyond. Case in point, our recurring service revenue contributed to 88% of total service revenues in 2018 compared to 41% of total service revenues in 2017. This was a result of a large three-year maintenance contract, and several new orders from smaller customers. In addition, we received multiple contract awards for our ID Director for Windows from highly visible customers in law enforcement, financial services and manufacturing around the world. These customers were looking to either secure the online activity of remote users and shared workstations or incorporate workflow efficiencies, such as replacing cumbersome passwords with ‘frictionless' biometric authentication, while also adding enhanced  tracking and reporting capabilities to their security infrastructure.

"Based on revenue and cash flow from contracts in place, combined with favorable prospects from our business development efforts, we believe BIO-key is well positioned to deliver sustainable, top and bottom line improvements in 2019 and thereafter. As a result, BIO-key is initiating 2019 full-year revenue guidance of $11 to $14M, representing significant growth over the past two years combined. Within this revenue guidance range, we expect BIO-key will achieve positive cash flow and net income for the full year period."

Mr. DePasquale concluded, "Our strategy remains to position BIO-key as a preferred provider of secure biometric authentication solutions across a growing base of use cases. We made solid progress in this regard over the past few years, and we are confident in our growth prospects for 2019 and beyond. This view is supported by clear and growing global need for enhanced authentication solutions and the clear value, security and user efficiency our solutions provide across various devices and enterprise and mobile networks."

BIO-key's 2018 results reflect the implementation of the Financial Accounting Standards Board's new revenue recognition standards in Topic 606, Revenue from Contracts with Customers. During Q4 2018, BIO-key executed a $5 million order, which includes two annual extensions for an additional $7 million for its biometric authentication platform from a Chinese based company focused on the technology and financial services industries in Asia.  However, pursuant to the new revenue recognition standards, BIO-key recorded $1.1 million of the $5 million license sale deployed in 2018.   BIO-key's revenue recognition under the contract is being driven by the receipt of monthly cash payments of $555,000 which commenced in early 2019.  

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