BIO-key International (NASDAQ:BKYI) reported higher first-quarter 2026 revenue and said it expects to be profitable and cash flow positive in the second quarter, as management pointed to growing demand for biometric identity and access management products in defense, financial services, education and public-sector markets.
Chairman and Chief Executive Officer Mike DePasquale said the quarter reflected both new customer wins and expanded deployments with long-term customers. He said BIO-key is benefiting from increased interest in biometric authentication as organizations seek stronger protection for mission-critical applications and data.
Revenue Rises 34% in First Quarter
Chief Financial Officer Ceci Welch said first-quarter revenue increased 34% to $2.1 million, compared with $1.6 million in the first quarter of 2025. She said the quarter benefited from an expanded one-year software license renewal from a long-time banking customer serving more than 30 million clients with BIO-key’s biometric identity solution.
License fee revenue rose 24% to $1.4 million. Hardware revenue more than doubled to about $531,000, driven by higher purchases of biometric hardware solutions, including hardware sales tied to an expansion with a foreign defense ministry, as well as sales from inventory that had previously been fully reserved.
Gross profit increased 33% from the prior-year period to $1.8 million, while gross margin remained at 82% in both periods. Welch said margins benefited from high-margin license fee revenue and sales of fully reserved inventory. Operating expenses were approximately $2 million in both the first quarter of 2025 and the first quarter of 2026, as higher research and development spending was offset by lower selling, general and administrative expenses.
BIO-key reported a first-quarter net loss of $165,036, or $0.15 per share, compared with a net loss of $736,545, or $1.57 per share, in the prior-year quarter. Welch noted that per-share figures and weighted-average shares outstanding reflect the impact of the company’s April 30 1-for-10 reverse split, warrant exercises and other financing activities.
Welch also cautioned that the review of the company’s financial statements had not yet been completed by the independent public accounting firm and that results are subject to adjustment. She said BIO-key planned to file its 2025 Form 10-K during the week, followed by its Form 10-Q.
Company Points to Defense, Financial Services and Public Sector Demand
DePasquale said BIO-key’s defense and intelligence cybersecurity initiative, launched last year and aimed primarily at foreign markets, has helped the company build a customer base that includes several prominent defense organizations. He said international demand is being supported by regional distribution partners and regulatory environments that are more favorable to biometric options.
Outside the EMEA region, DePasquale said BIO-key has added partners in India and Vietnam, where the company sees opportunities as those partners increase marketing and sales efforts.
In the U.S. public sector, DePasquale highlighted a recent partnership with DLT Solutions, a division of TD SYNNEX, aimed at helping BIO-key reach customers that often require pre-approved vendors. He said BIO-key is integrating its PortalGuard IAM and Passkey:YOU biometric solutions into DLT’s platform, creating a procurement path for public-sector customers facing mandates around zero-trust digital infrastructure and multi-factor authentication.
“With our solutions, customers can easily meet these requirements and anchor digital access to a person rather than to just a device,” DePasquale said.
Management Cites Shift Toward Passwordless and Biometric Authentication
DePasquale said several market trends are supporting demand for BIO-key’s products, including the expansion of digital services, increased mobile use cases, more sophisticated cybersecurity threats and growing enterprise interest in passwordless authentication. He said biometric authentication is seeing adoption in higher-value use cases, including military, defense, financial services, healthcare and other regulated industries.
He also said the rise of AI-driven threats increases the need for stronger identity strategies, while the market is moving toward unified access platforms that cover workforce, partner and privileged access.
DePasquale described BIO-key’s business as predominantly subscription-based with recurring revenue. He said about half of new domestic business comes through partnerships, while 100% of international business is sold through channel partners.
Balance Sheet and Nasdaq Status
At March 31, BIO-key had book value of $7.6 million, or $7.04 per share, compared with $7.7 million, or $7.07 per share, at year-end. The company had about $4.5 million in current assets, including $2.2 million in cash and cash equivalents and $1.6 million in accounts receivable. At the end of 2025, current assets were also $4.5 million, including $2.7 million in cash and $1.2 million in accounts receivable.
DePasquale said the company’s shares were recently suspended from Nasdaq and currently trade on the OTC Markets under the symbol BKYI. He said BIO-key has secured an appeals hearing scheduled for June 16 and is working to return to the Nasdaq Capital Market. While he said the company cannot be certain of the timing or outcome, DePasquale said advisers see “reason for optimism” regarding a return to Nasdaq trading by the summer.
Q&A Focuses on Pipeline, Hardware and Competition
During the question-and-answer session, DePasquale said BIO-key has better visibility than in prior years and is pursuing larger opportunities, including transactions of $500,000 to more than $1 million. He said the company has a “very strong pipeline for 2026” and that some contracts have been awarded but still need to be finalized with orders.
Asked about hardware sales, DePasquale said larger license opportunities often include related hardware requirements, particularly for defense customers that need multiple biometric access points. Welch said about $100,000 of hardware sales came from previously written-off inventory.
DePasquale also said financial services represents a significant growth opportunity, particularly with international national banks that need strong authentication. He said BIO-key’s differentiator is its ability to provide biometric authentication alongside other authentication factors through its PortalGuard platform.
Welch said the company expects to be profitable and cash flow positive in the second quarter. In response to an investor question, DePasquale said first-half revenue is projected to be about $5 million, while adding that continued execution will be important to improving the company’s valuation.
About BIO-key International (NASDAQ:BKYI)
BIO-key International, Inc is a developer and provider of fingerprint biometric identity and access management solutions, serving enterprise and government customers. The company’s core offerings include a range of fingerprint readers and authentication software designed to verify user identity across physical and digital environments. By leveraging proprietary template-on-card and template-on-device technologies, BIO-key seeks to enhance security and streamline user access without reliance on traditional passwords.
In addition to hardware sensors, BIO-key delivers software platforms that integrate with existing IT infrastructures such as Microsoft Active Directory and major workforce management systems.
