BKYI — BIO-key International, Inc.

Summary of BIO-key International's Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Increased 34% year-over-year to $2.1 million, up from $1.6 million in Q1 2025.
• License Fee Revenue: Grew 24% to $1.4 million.
• Hardware Revenue: More than doubled to approximately $531,000, driven by increased purchases from defense contracts and sales of previously reserved inventory.
• Gross Profit: Rose 33% to $1.8 million, maintaining a strong gross margin of 82%.
• Net Loss: Improved to $165,036 ($0.15 per share) from a loss of $736,545 ($1.57 per share) in Q1 2025.
• Book Value: $7.6 million or approximately $7.04 per share, with $2.2 million in cash and cash equivalents.

2. Strategic Updates and Business Highlights

• Customer Base Expansion: Notable growth in defense and financial services sectors, with several significant defense organizations as clients.
• Partnerships: Collaboration with DLT Solutions to enhance access to public sector opportunities in the U.S., integrating BIO-key’s solutions into DLT's offerings.
• Market Trends: Increased demand for secure digital access and passwordless authentication solutions, particularly in regulated industries.
• International Growth: New partnerships in India and Vietnam, alongside strong traction in EMEA markets.

3. Forward Guidance and Outlook

• Q2 Expectations: Anticipation of profitability and positive cash flow in Q2 2026.
• Long-term Outlook: Confidence in continued growth and improved financial performance throughout 2026, with a strong pipeline of larger opportunities and contracts.

4. Bad News, Challenges, or Points of Concern

• NASDAQ Suspension: Shares were suspended from NASDAQ trading due to a technicality, currently trading on OTC markets. The company is preparing for an appeals hearing on June 16, 2026, with hopes of returning to NASDAQ by summer.
• Financial Reporting: The financial results are subject to adjustment pending review by independent auditors, which introduces uncertainty.
• Market Competition: While BIO-key has a unique offering, competition exists from larger biometric players and other authentication solutions, particularly in the U.S. market where regulatory concerns may hinder adoption.

5. Notable Q&A Insights

• Cash Flow: The company is not experiencing cash flow issues and is positioned to fund growth initiatives despite the NASDAQ suspension.
• Operational Impact: The NASDAQ situation has not adversely affected customer discussions or operational capabilities.
• Growth Segments: Financial services are highlighted as a significant growth area, with ongoing opportunities in education and defense.
• Competitive Landscape: BIO-key differentiates itself through its comprehensive biometric authentication solutions, which integrate various factors beyond just biometrics.
• Future Financial Strategy: While there is interest in share buybacks or dividends, the focus remains on reinvesting in growth and scaling operations.

Overall, BIO-key International reported a strong start to 2026, with significant revenue growth and a positive outlook, despite challenges related to NASDAQ trading status and competition in the market.