BIO-Key International Inc (BKYI) 2023 Q2 法說會逐字稿

Good morning, everyone. Thank you for standing by, and welcome to BIO-key International second-quarter 2023 conference call. (Operator Instructions) As a reminder, this conference is being recorded today, Tuesday, August 15, 2023.

大家，早安。感謝您的支持，歡迎參加 BIO-key International 2023 年第二季電話會議。 （操作員說明）謹此提醒，本次會議將於今天（2023 年 8 月 15 日星期二）錄製。

Now, I would like to turn the call over to Mr. Bill Jones, Investor Relations. Please proceed.

現在，我想將電話轉給投資者關係部門的比爾瓊斯先生。請繼續。

Thank you, everyone, for joining today's call. Participating here today are BIO-key's Chairman and CEO, Mike DePasquale; and CFO, Ceci Welch.

謝謝大家參加今天的電話會議。今天出席的有 BIO-key 董事長兼執行長 Mike DePasquale；和財務長塞西·韋爾奇。

As a reminder, today's conference call and webcast as well as answers to investor questions include forward-looking statements, which are subject to certain risks and uncertainties that can cause actual results to differ from those currently expected.

提醒一下，今天的電話會議和網路廣播以及對投資者問題的回答包括前瞻性陳述，這些陳述受到某些風險和不確定性的影響，可能導致實際結果與當前預期不同。

Words such as anticipate, believe, estimate, expect, plan, project, or similar words typically identify and express forward-looking statements. Such statements are made based on management's beliefs and assumptions as of today, using information currently available, pursuant to the Safe Harbor from liability provisions of the Private Securities Litigation Reform Act of 1995.

預期、相信、估計、期望、計劃、項目等字詞或類似字詞通常會辨識和表達前瞻性陳述。此類聲明是基於管理層截至目前的信念和假設，使用當前可用的信息，根據 1995 年《私人證券訴訟改革法案》的責任安全港條款做出的。

For a complete description of these and other risks that may affect future performance of the company, please see risk factors in the company's annual report as filed on Form 10-K with the SEC. Listeners are cautioned not to place undue reliance on forward-looking statements, which speak as of today's date only. BIO-key undertakes no obligation to revise or to disclose revisions to any forward-looking statements to reflect circumstances or events that occur after today.

有關可能影響公司未來業績的這些風險和其他風險的完整描述，請參閱本公司向 SEC 提交的 10-K 表格年度報告中的風險因素。請聽眾不要過度依賴前瞻性陳述，這些陳述僅代表今天的情況。 BIO-key 不承擔修改或揭露任何前瞻性陳述的修改以反映今天之後發生的情況或事件的義務。

And now let me pass the call to Mike to begin. Mike?

現在讓我把電話轉給麥克開始。麥克風？

Thanks, Bill. Good morning, and thank you, everyone, for taking time with us today. After my remarks, Ceci will review our financials, and then we will open the call to your questions.

謝謝，比爾。早安，謝謝大家今天抽出時間來接受我們的訪問。在我發言後，塞西將審查我們的財務狀況，然後我們將開始電話回答您的問題。

Although our Q2 revenues were roughly flat compared to Q2 '22, largely reflecting the timing of larger opportunities, our first half performance reflects growing demand for our unique set of identity and access management solutions. Our first six months' revenues rose 29%, reflecting solid progress in the growth in our software license and services revenue, which carry higher margins, and we were able to trim our net loss to $0.17 per share versus $0.34 per share in the year ago first half.

儘管我們第二季的營收與22 年第二季相比大致持平，這在很大程度上反映了更大機會的時機，但我們上半年的業績反映了對我們獨特的身份和存取管理解決方案集的需求不斷增長。我們前六個月的收入成長了29%，反映出我們的軟體授權和服務收入成長取得了堅實的進展，這些收入帶來了更高的利潤率，我們能夠將每股淨虧損削減至0.17 美元，而去年同期為每股0.34 美元上半場。

Importantly, we are building a growing base of annual recurring revenue in key verticals, including health care, government, and higher education along with a robust pipeline of highly qualified large revenue opportunities that we expect to benefit our results in future periods.

重要的是，我們正在關鍵垂直領域建立不斷增長的年度經常性收入基礎，包括醫療保健、政府和高等教育，以及一系列高品質的大收入機會，我們預計這些機會將有利於我們未來的業績。

Our internal sales and marketing efforts have generated several significant IAM deployment prospects that we are working to advance to the contract stage. The scope and size of these projects typically involve longer sales cycles, so the timing is harder to predict. We believe BIO-key's growing traction in the IAM space is a reflection of the strength of our flexible, scalable solutions and our leadership in Identity-Bound Biometrics.

我們的內部銷售和行銷工作已經產生了幾個重要的 IAM 部署前景，我們正在努力將其推進到合約階段。這些項目的範圍和規模通常涉及更長的銷售週期，因此時間更難預測。我們相信 BIO-key 在 IAM 領域日益增長的吸引力反映了我們靈活、可擴展的解決方案的實力以及我們在身份綁定生物識別領域的領導地位。

Our suite of solutions offers a wide variety of multi-factor authentication options, to uniquely address customer mandates for passwordless and phoneless authentication and are opening up larger opportunities for our company. I said last quarter that we've done particularly well in generating larger enterprise leads at recent Gartner hosted events proving a number of quality sales engagements with target enterprise accounts.

我們的解決方案套件提供了多種多因素身份驗證選項，可以獨特地滿足客戶對無密碼和無電話身份驗證的要求，並為我們公司開闢了更大的機會。我上個季度說過，在最近 Gartner 主辦的活動中，我們在吸引更大的企業潛在客戶方面做得特別好，證明了與目標企業客戶的大量高品質銷售活動。

Building on this direct sales effort, we also attended Identiverse in June and the NACo CIO Summit in July and are planning to participate over the next few months in a number of security events along with our partners. We are confident that some of these larger scale opportunities should progress to formal deployments in the coming months, including a few that are already in proof-of-concept stages.

在這種直接銷售努力的基礎上，我們也參加了 6 月的 Identiverse 和 7 月的 NACo CIO 高峰會，並計劃在未來幾個月與我們的合作夥伴一起參加一些安全活動。我們相信，其中一些更大規模的機會應該會在未來幾個月內進入正式部署，其中包括一些已經處於概念驗證階段的機會。

Complementing these efforts is our expanding base of global technical alliances and distribution partner relationships, which position BIO-key to participate in a much broader base of opportunities on a global basis. Key partners include Intelisys, which operates on a global basis and 3Eye, which is focused in the financial services and healthcare verticals.

我們不斷擴大的全球技術聯盟和分銷合作夥伴關係基礎是對這些努力的補充，這使 BIO-key 能夠在全球範圍內參與更廣泛的機會。主要合作夥伴包括在全球營運的 Intelisys 和專注於金融服務和醫療保健垂直領域的 3Eye。

In Q2, we added Savvy Info Tech in Ethiopia, Africa's second most populous country and one of the fastest growing economies in the world. Savvy provides Ethiopian banks and government institutions with digital and banking solutions, including end-to-end card personalization, data protection, identity and access management, payment switching, and fraud management services. We also forged the partnership with Pixel Infinito to bring our innovative IAM solutions to their customers across Angola.

在第二季度，我們在衣索比亞增加了 Savvy Info Tech，衣索比亞是非洲第二人口大國，也是世界上成長最快的經濟體之一。 Savvy 為埃塞俄比亞銀行和政府機構提供數位和銀行解決方案，包括端對端卡個人化、資料保護、身分和存取管理、支付轉換和詐欺管理服務。我們還與 Pixel Infinito 建立了合作夥伴關係，將我們的創新 IAM 解決方案帶給安哥拉各地的客戶。

We are also now officially in the AWS ISV Accelerate Program. You'll hear more from us on that later this week or early next week, which is a very large and important ecosystem. This will provide access to all AWS financial services and healthcare selling teams. We are now working with the AWS network in Europe, the Middle East, and in Africa, helping customers to move their IAM deployments to the cloud for greater availability, scalability, resiliency, and reduced overhead costs. Working with AWS plays a critical role, particularly in this region. Due to the AWS Partner Network, we can now effectively extend the scope of marketing our sophisticated cloud-based IAM solutions worldwide through all of their sellers.

我們現在也正式加入 AWS ISV 加速計畫。本週晚些時候或下週初，您將聽到我們更多關於這個問題的信息，這是一個非常龐大且重要的生態系統。這將為所有 AWS 金融服務和醫療保健銷售團隊提供存取權限。我們現在正在與歐洲、中東和非洲的 AWS 網路合作，幫助客戶將其 IAM 部署遷移到雲端中，以提高可用性、可擴展性、彈性並降低管理成本。與 AWS 合作發揮著至關重要的作用，尤其是在該地區。借助 AWS 合作夥伴網絡，我們現在可以透過所有賣家有效地擴大我們複雜的基於雲端的 IAM 解決方案的行銷範圍。

We also have a newer effort that is focused on building technical alliances with other leaders in the IAM industry, such as BeyondTrust, ForgeRock, Ping Identity, and others. This strategy is designed to leverage our mutual strengths to enhance our ability to bring BIO-key solutions to our mutual customers.

我們還有一項新的工作，重點是與 IAM 行業的其他領導者建立技術聯盟，例如 BeyondTrust、ForgeRock、Ping Identity 等。此策略旨在利用我們的共同優勢，增強我們為共同客戶提供 BIO-key 解決方案的能力。

Through these companies, we are also - although these companies are also at times competitors, we have found ways to work together to identify and pursue significant new sales opportunities, some of which would be hard for us to pursue on our own.

透過這些公司，我們也——儘管這些公司有時也是競爭對手，但我們找到了合作的方式來識別和尋求重要的新銷售機會，其中一些機會是我們自己很難實現的。

As partner source sales opportunities are increasing, we are expanding engagement and awareness of integrated BIO-key capabilities with our Channel Alliance Partners. We initiated what we call BIO-key University for online training in BIO-key solutions in the second quarter, and the next phase of the platform is targeted for October release.

隨著合作夥伴來源銷售機會的增加，我們正在擴大與通路聯盟合作夥伴的整合 BIO-key 功能的參與和意識。我們在第二季啟動了所謂的 BIO-key 大學，進行 BIO-key 解決方案線上培訓，該平台的下一階段目標是 10 月發布。

Our Q2 performance highlights included continuing traction with PortalGuard IDaaS in supporting existing healthcare company clients in their migration to the browser-based Epic Hyperdrive patient management solution by November 2023.

我們第二季的業績亮點包括 PortalGuard IDaaS 的持續吸引力，支援現有醫療保健公司客戶在 2023 年 11 月之前遷移到基於瀏覽器的 Epic Hyperdrive 患者管理解決方案。

Recent deployments include the University of Iowa Hospitals and Clinics, Paulding Hospital, and Dayton Children's Hospital both in Ohio. These existing BIO-key biometric authentication customers are tapping the SAML capabilities of our PortalGuard IDaaS platform to leverage their existing use of our Identity-Bound Biometric solutions to provide strong authentication of healthcare personnel that are accessing shared workstation environments.

最近的部署包括俄亥俄州的愛荷華大學醫院和診所、保爾丁醫院和代頓兒童醫院。這些現有的BIO 金鑰生物辨識驗證客戶正在利用我們的PortalGuard IDaaS 平台的SAML 功能，以利用他們現有的身份綁定生物辨識解決方案，為存取共享工作站環境的醫護人員提供強大的身份驗證。

PortalGuard benefits our customers by letting them extend the value of our biometric solutions, while also avoiding user re-enrollment or the adoption of more cumbersome, expensive, or shared multi-factor authentication solutions. PortalGuard's industry standard identity provider or IdP capabilities fully support Hyperdrive's modern authentication approach.

PortalGuard 讓我們的客戶擴展我們生物辨識解決方案的價值，同時避免用戶重新註冊或採用更麻煩、昂貴或共享的多因素身分驗證解決方案，從而使我們的客戶受益。 PortalGuard 的業界標準身分提供者或 IdP 功能完全支援 Hyperdrive 的現代身分驗證方法。

Importantly, BIO-key's unique Identity-Bound Biometric capabilities provide a personalized authentication solution that is both highly secure as well as frictionless for end users. Shared workstations, which are common in healthcare, customer service centers, even in manufacturing and industrial centers; provide security and access risks due to password, token, or card sharing. BIO-key's IBB solutions address these vulnerabilities, supporting strong authentication capabilities in a cost effective manner, balancing strong security, speed, and convenience.

重要的是，BIO-key 獨特的身份綁定生物辨識功能提供了個人化的身份驗證解決方案，該解決方案對於最終用戶來說既高度安全又無摩擦。共享工作站，在醫療保健、客戶服務中心，甚至在製造和工業中心很常見；由於密碼、令牌或卡片共享而帶來安全性和存取風險。 BIO-key 的 IBB 解決方案解決了這些漏洞，以經濟高效的方式支援強大的身份驗證功能，平衡了強大的安全性、速度和便利性。

Turning to product. We recently completed the development of PortalGuard PG Desktop multi-factor authentication for both Windows and Mac environments. We are currently redesigning our authentication engine and introducing certificate-based authentication to deliver an improved experience, also expected to be completed and released later this year. We also expanded PortalGuard's support for managed service providers and introduced an enhanced IDaaS platform with infrastructure improvements and Linux support.

轉向產品。我們最近完成了針對 Windows 和 Mac 環境的 PortalGuard PG Desktop 多重驗證的開發。我們目前正在重新設計我們的身份驗證引擎並引入基於證書的身份驗證以提供改進的體驗，預計也將在今年稍後完成並發布。我們還擴大了 PortalGuard 對託管服務提供者的支持，並推出了增強型 IDaaS 平台，其中包括基礎設施改進和 Linux 支援。

These are all part of continued efforts to build upon the value and functionality of our solutions. Working to strengthen our internal sales effort, we recently unified our sales and channel leadership under Galen Rodgers, to position our team for enhanced success in North America. New sales tactics are being deployed to enhance the quality and size of our engagements. We are starting to see progress in building our sales pipeline and improvements in sales forecasting, all benefiting from his guidance. Our goal is to grow our sales opportunity pipeline by 3x or 3 times in the second half of 2023.

這些都是我們不斷努力建立解決方案的價值和功能的一部分。為了加強我們的內部銷售工作，我們最近在蓋倫羅傑斯 (Galen Rodgers) 的領導下統一了銷售和通路領導層，以使我們的團隊在北美取得更大的成功。我們正在部署新的銷售策略，以提高我們業務的品質和規模。我們開始看到銷售管道建設的進展和銷售預測的改進，所有這些都受益於他的指導。我們的目標是在 2023 年下半年將我們的銷售機會增加 3 倍或 3 倍。

We recently onboarded a new sales engineering resource, who comes to BIO-key with many years of experience, most recently from Okta. He brings a new level of refinement and structure to our sales engineering capabilities that will positively influence our ability to close direct sales and support our channel partners. Our marketing effort also continues to drive demand through channel and partner marketing, supported by the recent launch of our partner channel blog.

我們最近聘請了一位新的銷售工程資源，他在加入 BIO-key 時擁有多年的經驗，最近來自 Okta。他將我們的銷售工程能力提升到了新的水平和結構，這將對我們完成直接銷售和支援通路合作夥伴的能力產生積極影響。在我們最近推出的合作夥伴通路部落格的支持下，我們的行銷工作也持續透過通路和合作夥伴行銷來推動需求。

We are implementing account-based marketing, targeting larger commercial accounts and adjusting our process to incorporate channel marketing and partners. In summary, given our progress to date and the actions we have taken for the future, we remain confident that BIO-key is positioned to deliver significant top-line and bottom-line improvements in fiscal 2023.

我們正在實施帳戶為基礎的行銷，瞄準更大的商業帳戶，並調整我們的流程以納入通路行銷和合作夥伴。總而言之，鑑於我們迄今為止的進展以及我們為未來採取的行動，我們仍然相信 BIO-key 能夠在 2023 財年實現營收和利潤的顯著改善。

With those comments, I'll now turn the call over to our CFO, Ceci Welch.

有了這些評論，我現在將把電話轉給我們的財務長塞西·韋爾奇。

Thank you, Mike. First off, we expect to file our 10-Q this week and to remain fully up to date in our SEC filings. Turning to the recent quarter, our Q2 revenues nearly matched those of Q2 2022 as growth in high-margin service and software license revenue more than offset the decline in hardware revenue. Growth in the service revenue was driven by customer deployments, migrations, and expansions, including Swivel Secure customers in the EMEA region as well as higher deployments in the US higher education sector.

謝謝你，麥克。首先，我們預計本週將提交 10-Q 報告，並及時更新向 SEC 提交的文件。談到最近一個季度，我們第二季度的收入幾乎與 2022 年第二季度持平，因為高利潤服務和軟體授權收入的成長遠遠抵消了硬體收入的下降。服務收入的成長是由客戶部署、遷移和擴展推動的，包括歐洲、中東和非洲地區的 Swivel Secure 客戶以及美國高等教育領域的更高部署。

In the first six months of 2023, BIO-key's revenues rose by 29% to $5 million compared to $3.9 million, also reflecting growth in service and license revenue, partially offset by a decline in hardware revenue. Gross profits grew 8% to $1.3 million in Q2 2023 versus Q2 2022, principally reflecting a gross margin increase of 69% versus 63% in Q2.

2023 年前六個月，BIO-key 的收入成長了 29%，從 390 萬美元增加到 500 萬美元，這也反映了服務和授權收入的成長，部分被硬體收入的下降所抵消。與 2022 年第二季相比，2023 年第二季的毛利成長了 8%，達到 130 萬美元，主要反映了毛利率從第二季的 63% 成長了 69%。

Gross margin benefited from a larger percentage of higher-margin services and software revenue as well as a decrease in third-party software costs due to regional software revenue, more than offsetting a year-over-year decrease in hardware revenue.

毛利率受益於高利潤服務和軟體收入所佔比例的增加，以及區域軟體收入帶來的第三方軟體成本的下降，遠遠抵消了硬體收入的同比下降。

For the first six months, gross profit grew 27% to $3.6 million, again related to the growth in service and license fee revenue, partially offset by lower hardware revenue. Operating expenses decreased 10% to $2.5 million in Q2 2023 versus Q2 2022, due to an ongoing overhead reduction initiative, resulting in lower research and development expenses as well as lower selling, general, and administrative expenses. We are pursuing a number of overhead expense reduction initiatives aimed at improving our bottom-line performance.

前六個月，毛利成長了 27%，達到 360 萬美元，這同樣與服務和授權費收入的成長有關，但部分被硬體收入的下降所抵銷。由於持續的管理費用削減舉措，2023 年第二季的營運費用比 2022 年第二季下降了 10%，達到 250 萬美元，從而降低了研發費用以及銷售、一般和管理費用。我們正在採取一系列削減管理費用的舉措，旨在提高我們的獲利績效。

The completion of BIO-key's MobileAuth application earlier this year helped to enable a decrease in R&D costs. The decrease in Q2 '23 SG&A costs reflects lower marketing personnel costs, offset by increased professional service fees related to regulatory filing delays. Given higher gross profit and lower operating costs, BIO-key was successful in trimming the net loss to $1.4 million or $0.16 per share in Q2 '23 compared to $1.7 million or $0.21 per share in Q2 '22.

今年稍早完成的 BIO-key MobileAuth 應用程式有助於降低研發成本。 23 年第二季 SG&A 成本的下降反映了行銷人員成本的降低，但被與監管備案延遲相關的專業服務費增加所抵消。鑑於更高的毛利潤和更低的營運成本，BIO-key 成功地將2023 年第二季的淨虧損削減至140 萬美元或每股0.16 美元，而22 年第二季的淨虧損為170 萬美元或每股0.21 美元。

Likewise, the first six months of 2023, we reduced our net loss to $1.7 million or $0.19 per share from $2.7 million or $0.34 per share in the first six months of 2022. BIO-key enabled Q2 -- ended Q2 with current assets of $8.5 million, including $600 million of cash and $3.2 million of accounts receivable and $4.4 million of inventory. Our receivables are typically collected on normal terms of 30 to 90 days.

同樣，2023 年前六個月，我們將淨虧損從2022 年前六個月的270 萬美元或每股0.34 美元減少至170 萬美元或每股0.19 美元。啟用了BIO-key 第二季度——第二季末流動資產為8.5 美元百萬美元，包括 6 億美元現金、320 萬美元應收帳款和 440 萬美元庫存。我們的應收帳款通常以正常期限 30 至 90 天收回。

In terms of inventory, some of the excess inventory that we have purchased to avoid supply chain concerns and in anticipation of ramping requirements related to the civil ID projects in Africa, is slowly being sold and liquidated to further strengthen our financial position. That concludes our prepared remarks. And now we will turn the call to the operator to begin Q&A.

在庫存方面，我們為避免供應鏈問題以及預計非洲民用識別項目相關需求的增加而購買的一些過剩庫存正在慢慢出售和清算，以進一步加強我們的財務狀況。我們準備好的演講到此結束。現在我們將電話轉給接線員開始問答。

(Operator Instructions) Jack Vander Aarde, Maxim Group.

（操作員說明）Jack Vander Aarde，Maxim Group。

So Michael, you mentioned some great stats at the pipeline in your prepared remarks, and I think, I just missed some of that, can you -- I think you had some quantifiable pipeline remarks. Can you just remind me of what you said?

所以邁克爾，你在準備好的發言中提到了一些關於管道的重要統計數據，我想，我只是錯過了其中的一些，你能——我認為你有一些可量化的管道評論。你能提醒我你說過的話嗎？

Yeah, I said that our goal and objective is to increase our pipeline size by a factor of 3x in the second half of 2023. And most of that is happening as a result of two factors. Number one, our partner program is exploding. And we, through, again, as I mentioned, AWS and other more strategic players, are going to increase our deal flow and in particular, our partner sourced deal flow, right, that they bring to the table. So that's one.

是的，我說過我們的目標是在 2023 年下半年將管道規模增加 3 倍。其中大部分是由兩個因素造成的。第一，我們的合作夥伴計劃正在爆炸式增長。正如我所提到的，我們再次透過AWS 和其他更具策略性的參與者，將增加我們的交易流，特別是我們的合作夥伴來源的交易流，對吧，他們帶來了這種交易流。這就是其中之一。

The second is, what I mentioned, not just on this call but on our last call, that we've been very successful in creating a number of larger opportunity pipeline inputs from the Gartner events that we attended. So these are much larger customers that have very large populations of employees and customers that are interested in our IBB and our general PortalGuard IDaaS solutions. So that's how we're going to grow our pipeline. That is how our pipeline is going to expand and that's going to continue to grow as we evolve through the second half and into 2024.

第二個是，我不僅在這次電話會議上而且在上次電話會議上提到，我們非常成功地從我們參加的 Gartner 活動中創建了許多更大的機會管道。因此，這些客戶規模要大得多，擁有大量員工和客戶，他們對我們的 IBB 和通用 PortalGuard IDaaS 解決方案感興趣。這就是我們擴大管道的方式。這就是我們的產品線將如何擴展，隨著我們從下半年到 2024 年的發展，這種管道將繼續成長。

Okay. And that goal though was to increase the pipeline by about 3x in the back half?

好的。但這個目標是在後半部將管道增加約 3 倍？

Correct. Correct. That's to triple our pipeline. So that's pretty significant, and we could never do that with, I'll call it, a handful of sales resources that we have. That is clearly -- it's been our goal and objective for the last 1 year to 1.5 years, to really pushing the majority of our business to get it sourced and then to push for fulfillment through our partner network, and that's really starting to expand.

正確的。正確的。這將使我們的管道增加兩倍。所以這是非常重要的，我們永遠無法用我們擁有的少量銷售資源來做到這一點。很明顯，在過去 1 年到 1.5 年裡，我們的目標是真正推動我們的大部分業務進行採購，然後透過我們的合作夥伴網絡推動實現，而這確實開始擴大。

Okay. Great, great. And then let me ask a question on the quarter itself, the second quarter itself. I am still -- I guess, I'm struggling to still understand why your recurring revenue is flat year over year relatively if you're seeing such increased demand and you're adding new customers.

好的。很棒很棒。然後讓我問一個關於本季本身、第二季本身的問題。我仍然 - 我想，如果你看到需求如此增加並且你正在增加新客戶，我仍然很難理解為什麼你的經常性收入比去年同期持平。

Are you giving pricing discounts? Is it just a lumpiness in the business? I know one of the -- like a -- or you had one customer account or contract. I think it was like $0.3 million maybe -- maybe slipped, but just help me understand that. When can we see more of a meaningful ramp -- in more of a smooth growth ramp going forward?

你們提供價格折扣嗎？這只是業務中的一個障礙嗎？我知道其中一個——比如——或者你有一個客戶帳戶或合約。我認為這可能是 30 萬美元——可能滑落了，但請幫助我理解這一點。我們什麼時候才能看到更有意義的成長──未來更平穩的成長？

Yeah. Well, first of all, again the bulk of our business is recurring revenue. So we still do have some legacy customers that buy license from us. But the bulk of our business has really evolved to recurring revenue. And that's a combination of -- on the legacy side, customers that are paying maintenance, right? But its contracted maintenance as well as new sales that are subscription based. So that is our model, and clearly, again, short of some of those legacy customers, that's what we're doing, that's what we sell.

是的。好吧，首先，我們的大部分業務都是經常性收入。因此，我們仍然有一些老客戶從我們這裡購買許可證。但我們的大部分業務確實已經發展為經常性收入。這是一個組合——在傳統方面，客戶支付維護費用，對嗎？但其合約維護以及新銷售都是基於訂閱的。這就是我們的模式，而且很明顯，在缺少一些傳統客戶的情況下，這就是我們正在做的事情，這就是我們銷售的產品。

In the context of this quarter, our business was flat year over year for that one customer that's the Defense Ministry customer, which was about a $350,000 order. They wanted to negotiate a longer-term arrangement, a multi-year arrangement, so it took a few extra weeks to do that. But if that has fallen on the June side of the quarter, we would grew about 15% or so. And on a year-over-year basis, we would have been somewhere around 35% or so instead of the 29% that we're at right now.

就本季而言，我們對國防部客戶（訂單金額約為 35 萬美元）的業務同比持平。他們想要談判一項長期安排，一項多年期安排，因此又花了幾週時間才做到這一點。但如果這個數字在本季 6 月下降，我們將成長約 15% 左右。與去年同期相比，我們的比例應該在 35% 左右，而不是現在的 29%。

Clearly, our business is growing, and it's ramping. You're going to see it again happen because of two things. Our commercial business, our small- and medium-sized opportunities sourced through partners and fulfilled through partners is going to grow. And then the larger, more strategic opportunities, as I described, which are harder to predict in the context of timing, they will have a big impact on our business.

顯然，我們的業務正在成長，而且正在穩步成長。由於兩件事，你會再次看到這種情況發生。我們的商業業務、透過合作夥伴取得並透過合作夥伴實現的中小型機會將會成長。然後，正如我所描述的那樣，規模更大、更具戰略意義的機會在時間上更難預測，但它們將對我們的業務產生重大影響。

So for example, when you're working a large opportunity that could be anywhere from $500,000 to $1 million or more in ARR, right? That's recurring subscription revenue. When you close that in that quarter, it's going to have a big impact on top of the contracted base we have. And so it's -- we're close, but we still have work to do to get both of those engines, the partner engine and close down on some of those larger strategic deals to begin to see more, I'll call it, more significant growth and more consistent growth.

舉例來說，當您正在處理一個 ARR 可能在 50 萬美元到 100 萬美元或更多的大機會時，對吧？這是經常性訂閱收入。當您在該季度關閉該專案時，將對我們現有的合約基地產生重大影響。所以，我們已經很接近了，但我們仍然有工作要做，以獲得這兩個引擎，合作夥伴引擎，並結束一些更大的戰略交易，以開始看到更多，我稱之為，更多顯著成長和更持續的成長。

Okay. Great, great. And then just to that point, let me ask one more thing and then I'll switch gears. But -- so, I guess, and what I want to understand is, what you mean by significant top-line growth? Because I think investors want to know when you talk about your outlook, what is -- what do you mean by significant top-line and bottom-line improvement? So if I look at year to date -- year to date, Michael, your revenue is up 29% for the first six months of the year, it looks like.

好的。很棒很棒。然後就這一點，讓我再問一件事，然後我會換個話題。但是，我想，我想了解的是，您所說的收入顯著成長是什麼意思？因為我認為投資者想知道當你談論你的前景時，你所說的顯著的頂線和底線改善是什麼意思？因此，如果我看看今年迄今為止的情況，邁克爾，您的收入在今年前六個月增長了 29%，看起來是這樣。

Right.

正確的。

So is 29% year to date, is that where you consider significant? Just help us understand just to get a sense of what the back half of the year could look like based on your informal guidance commentary.

那麼今年迄今為止 29% 是您認為重要的嗎？只是幫助我們了解，以便根據您的非正式指導評論來了解下半年的情況。

Well, again, we're not providing guidance. And I could have provided guidance at the beginning of the year and said, look, we're going to do x over -- we did about $7 million last year, what is the number going to be?

好吧，再說一遍，我們不提供指導。我本可以在年初提供指導，然後說，看，我們要再做一些——去年我們做了大約 700 萬美元，這個數字是多少？

I've been very cautious about that because we're trying to be -- first of all, it's very difficult for us to be ultra-predictable while we're in this transition to our partner and our new strategic sales focus. It's very, very difficult because of the timing. The larger deals with larger companies tend to take on a life of their own. Sometimes they slip. Sometimes they just require six months or nine months of selling cycle. So it's very difficult to predict.

我對此一直非常謹慎，因為我們正在努力做到——首先，在我們向合作夥伴和新的策略銷售重點過渡的過程中，我們很難做到高度可預測。由於時間關係，這非常非常困難。與大公司的較大交易往往會產生自己的生命力。有時他們會滑倒。有時他們只需要六個月或九個月的銷售週期。所以很難預測。

So I've been very cautious about that. I did not want to paint the number that the company will not be able to achieve. But I will say this. We have grown annually each of the last two years into this year, and we're going to grow significantly this year again. And I hope and we believe it's going to be well north of where we are today.

所以我對此一直非常謹慎。我不想畫出公司無法實現的數字。但我會這麼說。從過去兩年到今年，我們每年都在成長，今年我們將再次大幅成長。我希望並且我們相信它會比我們今天所處的位置更北。

The third quarter, as you know, is generally our slowest quarter because of our business in Europe, which, as you know, Europe is fundamentally closed in July and August. But we believe this quarter will be a very solid quarter, and we will have, by the end of the year, by the fourth quarter, that partner engine really humming and some of these strategic deals landed. And so significant is -- significant is significant. Let's put it this way, more than we've grown in the last two years.

如您所知，第三季度通常是我們最慢的季度，因為我們在歐洲的業務，如您所知，歐洲在七月和八月基本上關閉。但我們相信這個季度將是一個非常穩定的季度，到今年年底，到第四季度，我們的合作夥伴引擎將真正運轉起來，其中一些策略交易將會落地。重要的是──重要的是重要的。這麼說吧，比過去兩年我們的成長還要多。

Okay. Great. That's helpful. That's helpful. I appreciate the added color there. And just your comment on third quarter, seasonally slower because of the European business and the nature of that. That makes sense. But would it -- do you expect the third quarter to be up year over year since it's against another seasonally slow period last year in the third quarter?

好的。偉大的。這很有幫助。這很有幫助。我很欣賞那裡添加的顏色。只是您對第三季的評論，由於歐洲業務及其性質，第三季季節性放緩。這就說得通了。但是，您是否預計第三季會年比成長，因為去年第三季是另一個季節性淡季？

Yeah, we do. And keep in mind, we have that $350,000 order slip into Q3, so we kind of came over the [trends] with an advantage. So yeah, I think it's safe to say, we believe that, yes.

是的，我們願意。請記住，我們在第三季收到了 35 萬美元的訂單，因此我們在克服[趨勢]方面具有優勢。所以，是的，我認為可以肯定地說，我們相信，是的。

Okay, great. And then just one more question per usual. My favorite question is because it's such a material opportunity. Can you just give us an update again on the two original large [export] contracts, and if and when we could see any sign of meaningful revenue recognition from those? Thanks.

好的，太好了。然後像往常一樣再問一個問題。我最喜歡的問題是因為這是一個物質機會。您能否再次向我們介紹兩份原始大型[出口]合約的最新情況，以及我們是否以及何時可以從這些合約中看到任何有意義的收入確認跡象？謝謝。

Great. Good question. As you know, we came into the year and we totally discounted any business or revenue from Africa from those contracts. We did that because the delays have just been incredible, right? We've been dragging these for 2, 2.5 years. They are still alive and the business is clearly still alive.

偉大的。好問題。如您所知，今年我們完全扣除了這些合約中來自非洲的任何業務或收入。我們這樣做是因為延遲令人難以置信，對吧？我們已經把這些拖了 2、2.5 年了。他們還活著，生意顯然還活著。

In particular in Nigeria, there's a new President that's taken over and there's a renewed focus including from the World Bank now that they've developed a new data privacy commission, and they're starting to put a lot of thought into the identity ecosystem to bring people out of poverty, not just in Nigeria, but across Africa.

特別是在尼日利亞，有一位新總統上任，世界銀行也重新開始關注他們，因為他們已經成立了一個新的數據隱私委員會，並且他們開始對身份生態系統進行大量思考，以確保讓人們擺脫貧困，不僅在奈及利亞，而且在整個非洲。

So we're hopeful. We still have and maintain, I'll call it, resource there to focus on that and to stay on top of things. But once the money flows, we'll be there and we'll be able to take advantage of the investment that we've made over the last couple of years. But it's -- it is -- it remains a very, very difficult environment. And I think, although we're optimistic that, that may change, it's not factored into our numbers this year.

所以我們充滿希望。我們仍然擁有並維持（我稱之為）資源來專注於這一點並掌握一切。但一旦資金流入，我們就會在那裡，我們將能夠利用我們過去幾年所做的投資。但它仍然是一個非常非常困難的環境。我認為，儘管我們樂觀地認為這種情況可能會改變，但它並沒有計入我們今年的數據。

Okay. That's helpful. And then if I may just try to probe again not factored in your numbers this year, it's very difficult to get visibility into it, I understand. Is there -- based on where you see things today, is there a line of sight though or opportunity for these two start moving forward in 2024?

好的。這很有幫助。然後，如果我可以嘗試再次調查，而不考慮今年的數字，我理解，很難了解它。根據您今天的看法，這兩個人是否有可能在 2024 年開始前進？

Actually there is, and hopefully before the end of 2023. But we have an initiative underway in the payment space that is commercial. So it's not directly related in any way to the government, which again, is an opportunity to create revenue flow and margin and profit for us in a commercial business there, which it is the -- I'll call it, the largest emerging market in the world and everybody wants to be there. But it takes a lot of staying power and it takes a lot of time, energy to generate meaningful revenue. But I do believe that it can happen before the end of the year and certainly into 2024.

實際上是有的，而且希望在 2023 年底之前實現。但我們在商業支付領域正在採取一項措施。因此，它與政府沒有任何直接關係，這又是一個為我們在那裡的商業業務創造收入流、利潤和利潤的機會，我稱之為最大的新興市場在這個世界上，每個人都想在那裡。但這需要很大的耐力，需要大量的時間和精力才能產生有意義的收入。但我確實相信這可能會在今年年底之前發生，而且肯定會持續到 2024 年。

Okay, great.

好的，太好了。

And one other comment (multiple speakers) --

還有另一條評論（多位發言者）—

Yeah, go ahead.

是的，繼續吧。

Yeah, one other comment I just want to make. I think in my prepared remarks, I talked about a couple of partners that we had brought on board. So we also are very focused, and not just again in Nigeria, but in Angola and Ethiopia, working with partners who have the cultural business experience and who have the connections in the industries that have money and can spend money not just again the government.

是的，我只想發表另一條評論。我想在我準備好的發言中，我談到了我們引入的幾個合作夥伴。因此，我們也非常專注，不僅在奈及利亞，而且在安哥拉和衣索比亞，與具有文化商業經驗、在有錢、可以花錢的行業有聯繫的合作夥伴合作，而不僅僅是政府。

That's also our target and our goal. And we signed three or so really, really good partners just in the last quarter who are going to help take BIO-key solutions into that market. So that's another way for us to leverage ourselves in Africa.

這也是我們的目標和目的。我們在上個季度簽署了大約三個非常非常好的合作夥伴，他們將幫助將 BIO-key 解決方案帶入該市場。這是我們在非洲發揮影響力的另一種方式。

Okay. I appreciate the added color. That's it for me. Thanks, Michael.

好的。我很欣賞添加的顏色。對我來說就是這樣。謝謝，麥可。

You're welcome.

不客氣。

At this time, I'm showing no further questions. The Q&A session has ended. I'll now ask Mike DePasquale for any closing remarks.

目前，我沒有再提出任何問題。問答環節結束了。我現在請麥克·德帕斯誇萊發表結束語。

Thank you, everyone, for joining us today. We look forward to updating you on future updated calls. And we expect to attend two conferences this fall in New York. Specifically, we expect to participate at the H.C. Wainwright Conference in September and the Maxim Conference in October.

謝謝大家今天加入我們。我們期待在未來的電話會議上向您通報最新情況。我們預計今年秋天將參加在紐約舉行的兩場會議。具體來說，我們希望參加 H.C.九月的溫賴特會議和十月的馬克西姆會議。

Please reach out to your representative there or our IR team whose contact information is in today's press release for details. We'll update you again on our Q3 call in November. And as always, we'll provide interim news updates via press release. Again, thank you for your time this morning and have a great day.

請聯絡您的代表或我們的投資者關係團隊（其聯絡資訊請參閱今天的新聞稿）以了解詳細資訊。我們將在 11 月的第三季電話會議上再次向您通報最新情況。與往常一樣，我們將透過新聞稿提供臨時新聞更新。再次感謝您今天早上抽出寶貴的時間，祝您有美好的一天。

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。