BIO-key International, Inc. (NASDAQ:BKYI) Q2 2019 Earnings Conference Call - Final Transcript

Aug 15, 2019 • 10:00 am ET


BIO-key International, Inc. (NASDAQ:BKYI) Q2 2019 Earnings Conference Call - Final Transcript


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Good morning, ladies and gentlemen. Thank you for standing by, and welcome to BIO-key International's Second Quarter 2019 Conference Call. During this 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, ladies and gentlemen, this conference is being recorded today, Thursday, August 15, 2019. I would now like to turn the conference call over to Scott Mahnken, BIO-key's Vice President of Marketing. You may begin, sir.

Scott Mahnken

Thank you for joining us on today's call. With me this morning are Mike DePasquale, BIO-key's Chairman and CEO; Fred Corsentino, Chief Revenue Officer; and Cecilia Welch, Chief Financial Officer. I'd like to remind everyone that today's conference call and webcast may contain forward-looking statements that are subject to certain risks and uncertainties that may cause actual results to differ materially from those projected on the basis of these statements. The words estimate, project, intend, expect, anticipate, believe, plan, may or will and similar expressions generally identify forward-looking statements.

Such forward-looking statements are made based on management's beliefs as well as assumptions made by an information currently available to management pursuant to the safe harbor provisions of the Private Security Litigation Reform Act of 1995. For a complete description of these and other risk factors that may affect the performance of BIO-key International, see risk factors in the company's annual report on Form 10-K and its other filings with the SEC.

Listeners cautioned not to place undue reliance on these forward-looking statements which speak only as of the date made. The company also undertakes no obligation to disclose any revision to these forward-looking statements to reflect events or circumstances after the date made. At this time, I'd like to turn the call over to Mike Depasquale. Mike?

Michael W. Depasquale

Yes. Thank you, Scott. And good morning, everyone, and thank you for joining us today. As I've mentioned in the past, given BIO-key's relatively small size and our quarterly performance can be variable on a sequential or a year-over-year basis due to the timing, scope and revenue recognition related to customer orders and factors which are generally out of our control. We're also in the process of transitioning our business largely to a software-as-a-service or a SaaS model. And as a result, rather than recording a large upfront software license fee, we are now recognizing most of our software agreements on a recurring yearly subscription basis.

While investors appreciate the value of more predictable and sustainable annual software license revenues, this approach does reduce the size of initial contracts and spreads the value over longer periods of time. With that in mind, our Q2 revenue increased over that in the first quarter, but declined slightly over the year ago second quarter period. While the pace of adoption of biometric authentication technologies for enterprise continues to progress, we are encountering increasing interest and conversations regarding our solutions. This growing level of interest underscores our continued confidence in our outlook for 2019 and future