Dan Camas

Dan Camas inquired about the recurring revenue nature and expansion expectations for the Bank of Egypt win, the impact of partner margins, the timeline for non-employee (CIAM) expansion, the scale of new defense contracts, current Annual Recurring Revenue (ARR), the pricing and quality comparison of the new EcoID III scanner, the current value of the boomerang stock asset, and the factors driving recent stock trading volume. He also followed up on the reasons for flat year-over-year revenue and the rationale behind management's personal investment in BIO-key stock.

Answer

Chairman and CEO Mike DePasquale confirmed the Bank of Egypt deal is a growing, expanded deployment with CIAM opportunities starting in 2026. He clarified that software gross margins remain 90+% even with partners, emphasizing the 'force multiplier' effect of the Channel Alliance Program. DePasquale stated that new Middle East defense contracts have even bigger potential than previous ones, with long-term stickiness. He estimated current ARR at $6 million-$7 million with single-digit churn. Regarding the EcoID III, he explained it competes with higher-quality devices at a lower price point, offering enhanced features like liveness detection and encryption, with initial Q3 orders of 7,500-10,000 units. The boomerang stock value appears intact, to be reviewed in the 2025 audit. He theorized that stock volume is driven by announcements, interest in security, and the company's undervalued position. For flat revenue, DePasquale cited the transition from third-party to BIO-key products and a non-recurring $500,000 banking customer catch-up in Q3 2024. He reiterated confidence in the company's undervalued status and future potential.

Dan Camas inquired about the National Bank of Egypt (NBE) win, specifically if it was a recurring revenue deal, the expected revenue in 2026, the impact of the Raya partnership on margins, the timeline for non-employee expansion (CIAM), the scale of new defense contracts compared to existing ones, the current Annual Recurring Revenue (ARR), the pricing and features of the new EcoID 3 fingerprint scanner, the status and value of the boomerang stock asset, the drivers behind recent stock trading volume, the reasons for flat year-over-year revenue, and the rationale for BIO-key as a strong investment.

Answer

Chairman and CEO Mike DePasquale confirmed the NBE deal is an initial deployment with expected expansion and recurring revenue, potentially in Q4 and CIAM in 2026. He stated software gross margins remain 90+% despite partner involvement, highlighting the Channel Alliance Program's role as a force multiplier. DePasquale noted new Middle East defense contracts have even bigger potential than previous multi-million dollar deals, estimating current ARR at $6-$7 million with single-digit churn. He explained the EcoID 3 offers higher quality, liveness detection, and encryption at a lower price point than the PIV Pro, with initial sales to defense customers. The boomerang stock value will be assessed in the 2025 audit and appears intact. DePasquale attributed stock volume to announcements and interest in security, believing the company is undervalued. He cited the transition from third-party to BIO-key products and a non-recurring Q3 2024 banking customer revenue as reasons for flat revenue, expressing confidence in future growth, lower break-even, and market demand.