BIO‑key International reported third‑quarter 2025 revenue of $1.55 million, a 27 % decline from $2.14 million in the same period last year. The drop reflects a reduction in orders from two long‑standing customers in banking and defense, whose contracts were smaller than the previous year. Analysts had expected $1.80 million, so revenue fell short by $0.25 million, a miss of roughly 14 %.
The company posted a net loss of $964,849, compared with a $738,959 loss in Q3 2024. The widening loss is largely attributable to the revenue decline, even though operating expenses were trimmed. Gross margin held at 77 %, slightly below the 78 % margin recorded in Q3 2024, indicating that the mix shift toward lower‑margin license fees and services weighed on profitability.
Cash and cash equivalents increased to $2.28 million at the end of September 2025, up from $437,604 at the end of 2024. The boost is driven by $1 million in proceeds from warrant exercises in September, and a subsequent $3.1 million raise in October, which together strengthen the balance sheet and provide a cushion for future investment.
Management reiterated full‑year revenue guidance of $6.5 million to $7 million, unchanged from the prior outlook. The guidance signals confidence that the company can recover from the current quarter’s headwinds, while maintaining its focus on expanding annual recurring revenue and launching new products in early 2026.
CEO Mike DePasquale noted that the year‑over‑year revenue variance was largely due to the loss of large, non‑recurring orders from the banking and defense customers, which accounted for about $665,000 of the difference. He emphasized the company’s unique biometric component and its ongoing cost‑control initiatives. Investors reacted negatively to the earnings, citing the revenue miss and widening loss as primary concerns.
Segment analysis shows that license fee revenue fell, while services and hardware revenue remained relatively flat. The company’s gross margin compression reflects a lower mix of high‑margin license contracts and a higher proportion of lower‑margin service work. Despite these challenges, BIO‑key’s focus on high‑margin biometric solutions and strategic expansion into new markets positions it to regain momentum in the coming quarters.
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