BKYI · BIO-key International, Inc.

BIO-key International's 2025 financial results reflect a transitional year with mixed performance. Revenue declined 12% to $6.1 million, primarily driven by two factors: the timing of a significant foreign retail bank contract renewal that benefited 2024 rather than 2025, and the company's strategic exit from the Swivel Secure distribution agreement in the EMEA region. This transition to selling only BIO-key branded solutions in EMEA caused license fee revenue to decrease by 31% ($1.6 million) in 2025. However, the company noted this shift provides significant benefits to gross margin and growth prospects going forward. Partially offsetting the license decline, hardware revenue more than doubled to $1.3 million due to increased purchases of biometric hardware solutions, while services revenue grew 6% to $1.2 million from a growing customer base. Gross profit declined to $4.7 million with a 77.5% margin, down from 81.4% in 2024, reflecting the lower-margin hardware revenue mix, though license fee gross margin improved to 91.3% from 88.6%. Operating expenses decreased 7% to $9.0 million, with SG&A costs down 11% partially offset by 4% higher R&D spending. The net loss widened to $4.6 million ($0.69 per share) from $4.3 million ($2.09 per share) in 2024, with the per share difference largely attributable to increased weighted average shares outstanding. Despite the bottom-line challenges, the company strengthened its financial position significantly, ending 2025 with $2.7 million in cash (up from $0.4 million in 2024) and increasing book value to $7.7 million from $3.8 million. Management highlighted strong momentum entering 2026, with preliminary Q1 revenue of $2.2 million representing 37% growth over Q1 2025 and 80% growth over Q4 2025. The company sees particular strength in defense and financial sectors, with over $2.2 million in military/defense revenue over the last twelve months including recent $500,000 in orders, and a $1 million annual license renewal with a foreign retail bank. Management expects solid revenue growth and improved bottom line in 2026, targeting break-even results, though they note financial performance may fluctuate quarterly due to the timing of large orders.