BIO-key International, Inc. (NASDAQ:BKYI) Q4 2021 Earnings Conference Call March 29, 2022 10:00 AM ET

Company Participants

Kimberly Biddings - Vice President of Product
Mike DePasquale - Chairman and Chief Executive Officer
Alex Rocha - President, BIO-key EMEA
Ceci Welch - Chief Financial Officer

Conference Call Participants

Jack Vander Aarde - Maxim Group

Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. The machine-assisted output provided is partly edited and is designed as a guide.

Operator

00:03 Good morning, ladies and gentlemen, thank you for standing by and welcome to BIO-key International's Full-Year 2001 Conference Call. During management's prepared remarks all participants will be in listen-only mode. Afterwards listeners will be invited to participate in a question-and-answer session. As a reminder, this conference is being recorded today, Tuesday, March 29th 2022.

00:31 I would now like to turn the call over to Kimberly Biddings, BIO-key’s Vice President of Product. Please proceed.

Kimberly Biddings

00:39 Great, thank you and thank you for joining our call this morning. With me today are BIO-key's Chairman and CEO, Mike DePasquale; Alex Rocca BIO-key's, newly appointed President of BIO-key EMEA and our CFO Ceci Welch.

00:54 I will like to remind everyone that today’s conference call and webcast contain forward-looking statements that are subject to certain risks and uncertainties that may cause actual results to differ materially from those projected on the basis of these statements. Words such as, estimate, project, expect, anticipate, believe, think, plan, may, will or similar words typically identify and express forward-looking statements. Such forward-looking statements are made based on management’s beliefs and assumptions using information currently available pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

01:37 For a complete description of these and other risk factors that may affect the future performance of BIO-key, please see Risk Factors in the company’s annual report filed on Form 10-K with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on forward-looking statements, which speak only as of today’s date. The company undertakes no obligations to revise or disclose revisions to such forward-looking statements to reflect future events or circumstances that occur after today.

02:08 With that, I will turn the call over to Mike DePasquale. Mike?

Mike DePasquale

02:13 Thanks, Kim, and good morning and thank you for joining today's call. After my prepared remarks, I will turn the call back to Kim to review some of our sales and marketing initiatives, followed by Alex Rocha to discuss our expanded opportunity in Europe, the Middle East and Africa. Following our acquisition of Swivel Secure Europe earlier this month, and then Ceci will close with financial highlights.

02:41 In 2021, we grew our revenues 80%, reduced our net loss by approximately 50% and substantially strengthened our suite of product offerings and our global reach. With the Swivel Secure acquisition, we now have 60 employees and management to support our growth around the globe, including a multicultural team that speaks 12 languages and manages a 24/7 security operation center in Lisbon, Portugal.

03:13 We advanced our core Identity and Access Management business launched a range of new solutions, expanded our Channel Partner program to over 100 partners and commenced deployments for our large-scale Civil ID related contracts in Africa. Additionally, we forged a master agent referral program with Intelisys to offer PortalGuard as the first IAM platform in their extensive network. We also expanded deployments of our cloud-hosted PortalGuard IDaaS solution, which supports 16 multi-factor authentication methods, including BIO-key's advanced biometric solutions or Identity-Bound Biometrics. We were achieving solid new customer engagement in higher education, enterprise, finance and government verticals, forming a growing base of recurring software subscription revenue that we will look to build on in years to come.

04:14 PortalGuard IDaaS revenue currently accounts for approximately 80% of our total software and services revenue. Our continued investment in innovation and new product development enable the launch of several new products and upgrades, including MobilePOS Pro, a handheld point of sale mobile commerce terminal with biometric ID verification targeted for deployments in Africa. We also introduced a line of FIDO2 compliance security keys for expanded authentication options and launched our new EcoID II compact USB fingerprint scanner with NISTtested algorithms.

04:56 Additionally we debuted our single sign-on or SSO Concierge Solution, which eliminates the need for passwords for thick client applications. These enhanced solutions position BIO-key to address a broader array of customer needs with state-of-the-art technologies. Bio-key also earned the number of industry awards and accolades in 2021 for our technology and solutions. Our company was also certified as a Great Place to Work for the first time in our history. And also for the first time Kim Biddings, who will speak momentarily and who gave the intro was included in CRNs 2021 Women of the Channel Power 100 list. We began initial hardware shipments on our large-scale Africa projects in 2021 after a range of external delays. These projects continue to represent very large revenue opportunities for our company and there are increasing signs of growing momentum in 2022.

05:59 We are currently supplying our Pocket10 biometric fingerprint readers in a partnership with Specta, an online lending platform owned by Sterling Bank, Nigeria. These deployments are part of Nigeria's National Identity Management Commissions mandated citizen enrollment program. Subsequent to the end of the year, we acquired Swivel Secure Europe for approximately $2.25 million, the transaction substantially expands our international team operations, customer base and growth potential and should make an important contribution to our 2022 performance and beyond. The CEO of Swivel Secure, Alex Rocha has joined BIO-key to lead our EMEA business and shortly he will discuss the significant growth opportunity for our company.

06:54 The war in Ukraine and resulting sanctions had increased fears of significant potential cyber attacks on US critical infrastructure. The US Cyber Security and Infrastructure Security Agency or CISA, which is part of the US Department of Homeland Security recently issued an unusual shields up warning to businesses that says they should be prepared to defend against cyber-attacks, potentially originating from Russia. The agency said every organization large and small must be prepared to respond to disruptive cyber activity. The warning also indicated that state and local government entities were in the cross hairs of the attackers. This continues a history of CISA warnings about vulnerable password and other non-biometric credential's.

07:48 Also in the past few weeks two competitors in the IAM in authentication space were themselves hacked. What differentiates BIO-key from these competitors is our expertise and our patented biometric technology. We have long-held the belief that identity down biometrics to our IBB must be part of a robust multifactor and holistic cyber defense. These recent breaches underscore the importance of IBB, which remains the only method of verifying the actual individual behind a transaction or data inquiry.

08:30 Considering this backdrop, and the progress we have made, we have never been more optimistic about our company's prospects. Between our PortalGuard business and Swivel Secure, we now serve an installed base of over 500 valued IAM customers. Our business is now predominantly recurring subscription-based revenue. In 2021 40% of our new PortalGuard business was sold through partners and virtually all of Swivel Secures business is sourced via partners. In 2022, we expect more than 50% of our revenues to come from the channel and this partner-centric trend should continue going forward.

09:13 Excluding Africa in hardware equipment, we expect 70% of our 2022 revenue will be contracted annual recurring revenue. Reflecting the growth drivers, we are initiating full-year 2022 revenue guidance in the range of $10 million to $13 million, which would represent approximately a doubling of revenue relative to 2021. Within this range, we anticipate potentially breakeven operations depending on our mix of hardware and higher margin software revenues. Valuations for IAM and multi-factor authentication companies or some of the highest in the security sector, as we execute our growth strategy, we believe the market will recognized our progress, my focus is in ensuring that the momentum we have built continues into 2022 and beyond.

10:11 With that, I'll turn the call back over to Kim.

Kimberly Biddings

10:15 Great. Thanks, Mike. And so our PortalGuard Solution provides secure and efficient identity and access management for applications on an enterprise-wide basis. Our cloud solution addresses significant IT security challenges, posed by remote work or study, while also supporting a broad range of authentication factors. Our solution also allows customers to move their IT off premises, eliminating the capital expenditures and resources required to host and maintain a secure authentication system.

10:48 In today's release we highlighted recent customer wins, primarily within the verticals of higher education, government, finance and enterprise. In higher education, we added new clients in 2021, including the University of Denver, Oklahoma Wesleyan University and Grand Rapids Community College [Technical Difficulty] in the fourth quarter. As of March of this year, we now support over 2.5 million students at over 200 institutions across 12 states, including 30 cloud-based or what we call IDaaS or Identity-as-a-Service customer. Existing customers continue to migrate from our earlier on-premises solutions to our cloud offering and many also are expanding their adoption of our solutions.

11:36 As you point out that just this month, we showcased our IM Solutions at the California Community College Tech Summit, where several customers hosted sessions demonstrating the success they've had with our platform. In Q4, we also showcased our solutions at the 2021 EDUCAUSE Annual Conference in Philadelphia. In the government sector, we added new customers in 2021 and expanding relationships with others, customers include US Department of Justice division, the Foreign Defense Ministry, a West Coast States, Several Election Boards and County Government Customers in New Mexico, South Dakota, Missouri, New York and Florida.

12:17 Our large-scale biometric projects in Africa are also government-related projects. Recent wins include the Orange County; Florida Supervisor of Elections; Herkimer County, New York; Audrain County, Missouri and Warren County, South Dakota. Importantly, county government decision making is being driven both by the need to enhance data and cyber security and also for compliance with cyber security insurance requirements. Since that are in the increasing pace of data breaches and compliance requirements, we expect more counties and government agencies will look at PortalGuard’s frictionless and secure solutions.

12:55 To support this end market in March BIO-key sponsored a cyber security workshop at the New York State Association of Counties or NYSAC, legislative conference in Albany. And in Q4, we were at the 2021 National Association of State Chief Information Officer or NASCIO Annual Conference in Seattle. Other Q4 customer wins included Americas Auto Action and Orange Bank and Trust Company, who selected PortalGuard IDaaS with biometrics to secure network and data access across all of their branch locations. We are targeting 1,200 of the largest credit unions and regional bank and we expect this vertical to represent a significant portion of our growth in 2022.

13:41 In terms of marketing, which is [Technical Difficulty] we completed more than a dozen media interviews in 2021 and placed our BIO line submission in key publications, such as Security Boulevard, Security Magazine, Payments Journal, DPN and Help Net Security. We also are expanding our social media presence, resulting in the increase and higher quality traffic to our website BIO-key.com.

14:08 Touching for a moment on our Channel Alliance Partner or CAP program, Mike mentioned that we added over 100 channel partners in 2021. 2021 partner additions included: NGEN, Appsian, Cyberlitica, Kristel Communications and UVS Infotech along with our master agent referral partner program with Intelisys. Channel partners represented nearly 50% of the net new bookings in Q4 and we expect the CAP program to continue to be integral part of our future growth.

14:41 To support these efforts, we launched our Partner Web Portal in mid 2021. This portal provides a central location for resources, training, and a new deal registration process and we also exhibited at the 2021 Channel Partners Conference and Expo in Q4. In summary, our marketing efforts continue to expand our brand and position BIO-key for further expansion in 2022.

15:07 At this time, I would like to introduce and welcome Alex Rocha, the Former CEO and sole stockholder of Swivel Secure Europe, who now heads our European, Middle East and African effort. Alex is an innovation enthusiasts, who has lived and worked in several countries and he speaks four languages. This is Alex's first public call since joining the BIO-key team.

15:30 Alex, over to you.

Alex Rocha

15:34 Thank you, Kimberly. I'd like to give my comments briefly, but I'd like to express my sincere optimism about the business opportunity in the EMEA region. First, Swivel Secure is the industry leader in authentication solution in Europe, it is a award winning, outcome to all solution believer, multi-factor authentication, single sign-on and risk base authentication to secure cloud and on-premise application. Our solution can authenticate access for employees, customers and supply to log-in onto Office 365, transacting to their commerce B2B or B2C all accessing ERP or CRM.

16:24 Our existing business Swivel Secure Europe has over $3 million in revenue in 2021 and was profitable. We currently have three offices, 28 staff members and three MFI focus product and our flagship out control brand, designed for small and large enterprise and management service provider MSPs. We have approximately 300 established active customers also counting with the channel network of more than a 100 partners, as we employee a 100% channel strategy in the EMEA region. Our technology partners, including SAP, Red Hat, Samsung, Seafricks, Microsoft, SailPoint and Oracle.

17:22 Marquee clients include Vodafone, Telefonica, Toyota, Maersk, DB Schenker, DHL, IBM and AMD Techs, more well known as the owner of Zara. In this guys we protect more that a quarter of million of employees spread over 93 countries every day with the operation of 24/7. I will say that we know too and we have proven how to build brand awareness in the region and you will hear from us as quickly a rollout of our strategy of the combined business over the next 90-days.

18:10 One example, one special project that will be a rollout in -- is BIO-key University, which involve an on-demand online training platform to help launch the brand and build awareness in those new markets and knowledge channel allows us to multiply our brands and look alike the strategy, whilst we build the awareness, we see significant opportunities for BIO-key’s innovated products, employee identity, biometrics, IBB in the market that we serve. I look forward to address you on the future call and discuss our progress in the EMEA region, as well as answering any questions.

19:04 At this time I will pass the call over to Ceci Welch to review BIO-key financial through December, which not includes Swivel Secure as the deal closed in March, but short beneficiary future quarters.

Ceci Welch

19:23 Thank you, Alex. BIO-key’s revenue increased to $5.1 million in 2021 from $2.8 million in fiscal year ’20, mainly due to the revenue derived from PortalGuard’s IIM Solutions and increased sales of biometric fingerprint meters. Q4 revenue was $0.9 million versus $1.1 million in Q4 ’20, and prior-year period benefiting from the launch of the PortalGuard IDaaS and the strength in services and hardware sales.

19:54 Gross profit grew to $3.4 million in fiscal year ‘21 from $2 million in fiscal year ’20, primarily due to a 166% increase in higher margin license fee revenue in fiscal year ’21. Gross margin on the license fee revenue was 93% in fiscal year ‘21 versus 95% in fiscal year ’20. Q4 ‘21 license fee revenue increased 52% to 544,000 and represented 88% of the total gross profit in Q4 ‘21 versus 69% in Q4 ‘20.

20:34 Operating expenses increased to $8.4 million in FY ‘21 from $7.2 million in FY ’20. The increase reflected higher investment in research, development and engineering expense related to our active slate of new product introductions, as well as the full-year of expense related to the PortalGuard operation in FY ‘21.

20:58 The company reduced its operating loss by 5% to $4.9 million in FY ‘21 versus $5.2 million in FY ‘20, as the revenue growth surpassed expense growth. BIO-key report, excuse me, a reduced net loss available to common shareholders of $5.1 million or $0.65 for FY ‘21 versus $9.8 million or $2.08 per share in FY ’20, due to a successful capital raise in Q3 ‘20, interest expense was reduced to 18,000 in FY ‘21 versus $4.3 million in FY ‘20.

21:38 In Q4 ‘21 net loss to shareholders increased to $2 million from $1.4 million in Q2 -- Q4 ’20, primarily due to the lower operating income. Bio-key ended the year with $1.4 million in current assets; $7.8 million of cash and cash equivalent and one -- sorry $14 million of current assets; $7.8 million of cash and cash equivalents; $12 million of working capital; and $15.6 million of stockholders' equity. For comparative BIO-key had $18.9 million of current assets, $15.4 million net working capital and $20.3 million stockholders' equity at the end of 2020.

22:22 In 2021, we invested $5.2 million of net working capital to support our growth. These investments were primarily in inventory as we have -- thus have managed our supply chain without any significant negative impacts to our business, while also prepping for an anticipated increase in business volume in the coming quarters.

22:42 And with that, we can turn the call back to the operator for any questions from investors.

Question-and-Answer Session

Operator

22:48 Thank you. We will now begin the question-and-answer session. [Operator Instructions] And today’s first question comes from Jack Vander Aarde with Maxim Group. Please go ahead.

Jack Vander Aarde

23:22 Great. Good morning, guys. Appreciate the quarterly update, congrats on the lease acquisition as well. Couple of questions from me, I'll start with a housekeeping question, I'm not sure I saw the 10-K filed or if you mentioned it, but will that be filed today? Or when will it be?

Ceci Welch

23:40 We filed in the next day or so, yes. It has not been filed yet.

Jack Vander Aarde

23:47 Okay, so it sounds imminent though. Okay, that's helpful. And then, Michael, you mentioned in your prepared remarks that you're seeing increasing signs that business is starting to pick up and likely to ramp throughout 2022, specifically regarding those two large initial Africa contracts. I heard some of your points, but maybe can you just help me better understand or just clarify what the key points are that suggests this building momentum and gives you confidence for these two Africa contracts?

Mike DePasquale

24:21 Yes. Thanks, Jack, absolutely. So I think it was probably early in or mid-Q4, we made some announcements that financing for our equipment that we were delivering into Africa was starting to process through the banks. And we made a formal announcement, we issued a press release late February, early March, that we have a relationship with Sterling Bank and a product they have called Specta, which basically finances the purchase of equipment, software and hardware, that's necessary for the agents that are going to go out and do all of these enrollments in the remote locations to get into business in essence. And so that's very encouraging for us right now. And we have a number of financial institutions that are going to be coming on board, doing the same thing. So we're encouraged by that, because the biggest issue that we've seen is the money at a very high level through the World Bank and the International Monetary Fund and even the government is available, but getting that money down to the street level to actually get something done has been the challenge. So now that the banks are on board, we are encouraged and believe that the deployments will accelerate.

Jack Vander Aarde

25:57 Okay, got you. No, that makes sense. And are you still expecting, let's say, it does accelerate -- are you still -- would you expect the initial batch or upfront revenue mix related to those contracts to be related to hardware sales? And have, you know, some sort of lumpy batch deployments of those hardware sales? Or I mean, just any comments there would be helpful in terms of the mix? And how you would deploy things at once, it really starts getting going?

Mike DePasquale

26:31 Yes. So what we've done, if you look at our guidance, for example, we’ve took a very conservative approach as it relates to the hardware. We did that because again over the last 18-months, we had been anticipating that things were going to start up, they were going to happen more quickly and they obviously did, so we took a very conservative approach. So the hardware will be episodal, we do believe there is still significant, significant upside for the sale of product. But what's also happened over the last six to nine months is our software platform, which again will be a recurring revenue stream for securing access to the devices and to authenticate to applications, for example, in finance and banking and healthcare that has also started to come into play.

27:22 So we're going to see a combination of hardware and recurring revenue, software revenue, subscription revenue, transaction revenue begin to get deployed in the second quarter and beyond. So it's going to be a combination of both. But our guidance takes into consideration a very, very, very conservative approach on the hardware side for Africa.

Jack Vander Aarde

27:52 Okay. And then I guess if I'm looking at your fourth quarter revenues and I appreciate the comments on the channel, I mean, it's something new bookings are heavily weighted to the channel as well over 50% or nearly 50%. You know, that’s going to represent the channel represent a big portion of your 2022 revenue over 50%. But if I look at just like from a segment perspective fourth quarter license revenue and services revenue was down sequentially. I would imagine with the building momentum and traction with the channels and, you know, PortalGuard being in the mix now for four quarters at least, that license fees would be linearly increasing sequentially, but can you help me understand the disconnect there?

Mike DePasquale

28:46 They are absolutely going to increase sequentially. What you saw was a -- we had a very, very large one single large contract that renewed, kind of, off cycle. And so that's why we saw the fourth quarter license revenue off a little bit, that's going to change dramatically, even as we approach and finish out the first quarter this week. So you will see growth across the board. What you will also see, keep in mind the Swivel Secure transaction closed in March, so in our first quarter we’ll pick up a little bit of revenue for that transaction in the first quarter, and then obviously every quarter beyond into and through 2022.

29:35 As you know Swivel Secure Europe as we acquired it generated a little over $3 million in revenue and over $0.5 million in net income, so it was accretive, it's profitable and it's going to have a significant impact on our financial picture going forward. That business is also nearly 100% channel related. So the bulk of that business, if not all of it is channel related, all of it is -- the majority of it is all software, so it's high margin and that's going to certainly support our financial picture in 2022.

Jack Vander Aarde

30:17 Okay, great. That's helpful, and then so in speaking of Swivel just -- so they generated about $3.1 million of revenue and pretty solid profit of 578K or operating profit during 2021. Do you expect Swivel’s revenue, so that $3.1 million to grow in 2022, just any, can you quantify it -- maybe provide a range any added color would be helpful? And then [Multiple Speakers] understand I tied back to you, okay.

Mike DePasquale

30:50 Yes, yes, we're not breaking things down at that level at this point, we are providing guidance on an overall basis. I will say this, we expect all of our business to grow and obviously there is another component here. There is the cross-sell opportunity for our IBB or our Identity Bound Biometrics, which is becoming more of a mandate now with everything that's going on in the geopolitical scenario across the globe. So that in and of itself will create an up-sell opportunity throughout that installed base of over 300 customers. So we do expect that business to grow and we expect it to grow as a result of, again integrating and making available immediately the biometric option for all of those clients.

Jack Vander Aarde

31:41 Okay, got you. And then in terms of just you mentioned something about headcount, the combined head count, I think, I heard was over 60 employees --

Mike DePasquale

31:51 Correct.

Jack Vander Aarde

31:52 What does this mean for OpEx? And what does that mean for I guess your operating expense? How do I think about gross margin, sounds like Swivel’s all software and high margin? And how do I also think about the impact -- obviously the first quarter is different, because just partial contribution from the acquisition? But on a normalized full-quarter basis, what it is due to your gross margin profile, I mean, it's going to vary because of mix, probably, but imagine gross margin goes up, and I imagine operating expenses go up as well. But just how much, I guess, just any color would be helpful?

Mike DePasquale

32:22 Well, again, you know, we’ll -- as we get in and announced our first quarter, I think, we'll put -- there'll be a lot more color on that right now, I can't provide those numbers. But I will say this, again, Swivel is profitable, it will continue to be profitable, and so there will be no drag only upside. And so you'll be able to model, I think, you'll be able to model the year a little bit better as we announce our first quarter.

Jack Vander Aarde

32:54 Okay and then just, you know, another, kind of, tough question just in terms of -- if I can try to understand the guidance a little better from the revenue side, so 2022 revenue guidance $10 million to $13 million, if I were to back out Swivel and just assume it was flat of $3 million, right, so it’s on that $7 million to $10 million. At the low end of that guidance range of like $7 million from the core BIO-key business for [indiscernible] or PortalGuard? Is there any Africa baked -- is that like a -- the worst-case scenario is like, no Africa contract revenues really recognize, it’s more of the core channel business picking up and driving that growth from like a worst-case scenario? And then at the top of the range, obviously, it's going to incorporate Swivel, and it probably still doesn't include all of the Africa potential that could happen, but just trying to understand the lower end and then the upper bound of those ranges?

Mike DePasquale

33:50 I think you figured it out, I think you said it, I was pretty clear and articulate in saying that we took an ultra conservative approach on Africa. So for sure we're taking a minimalist approach saying it's episodal, if it happens when it happens and we believe it will happen, we have quite a few significant opportunities again now that the funding is starting to roll, but we've taken a very conservative approach in our guidance. There is another element here, and I mentioned in my prepared comments, and I've been speaking about this is I make the conference rounds. It's pretty clear, if you’d look at the valuations in the Identity and Access Management space, in particular in the authentication privileged access management governance space, a big companies like for example OKTA and SailPoint larger companies like there is, do well which is a division of Cisco.

34:47 When you look at the multiples in that sector of the security space they are amazing. And if you look at BIO-key's revenue, especially now 70% of what we described there will be contracted in subscription-based and recurring. Our valuations in multiples centered just solely around the Identity and Access Management space, really put us in my opinion a good position and our investors in a very good position for upside. So I'm not been I'm trying to change the narrative here, but at the end of the day, the real value for BIO-key going forward centers around our Identity and Access Management business, because again it's recurring, because it's high margin, because the way, the world unfortunately has changed over the last six months in particular over the last 90-days. There is going to be an incredible demand for super strong MFA. And we are one of the few, if may be the only company back in offer with our Identity Bound Biometrics positive identification of an individual, who is sitting behind the computer, accessing information or consummating a transaction.

36:03 We announced the product halfway through last year called mobile off with palm positive, which is a mobile authentication solution first method of biometric authentication was palm, you will see some additional announcements from us in the near-term and expanding that product that will give us the ability to go CIA again meaning to go to the customer to go B2C. So to have some of our enterprise customers, who house consumer data and information to without them to be able to use biometric authentication for their customers coming into their portals. So we think we are in a very, very good position to take advantage of that. And again, our guidance is based predominantly on that mantra and growing our IAM business and growing it profitably, my focus is absolutely going to be getting the company to profitability this year and doing it sooner rather than later.

Jack Vander Aarde

37:09 Okay, fantastic. Well, I appreciate the color and I appreciate the time. Thank you.

Operator

37:14 [Operator Instructions] Today's next question comes from Dan [indiscernible], a Private Investor. Please go ahead.

Unidentified Analyst

37:29 Good morning.

Mike DePasquale

37:30 Good morning, Dan.

Unidentified Analyst

37:31 Yes. I was wondering if -- so is the long-term plan to transition all of Swivel customers to PortalGuard?

Mike DePasquale

37:43 I would say that many of those customers will ultimately move to PortalGuard, because of the enhanced security capability with biometrics. But some of those customers will stay with the product that they have and we have the ability to begin that to continue to sell and to market and support that product as well. But ultimately, there will be a shift, because of the nature of our PortalGuard platform.

Unidentified Analyst

38:14 Okay. So the next question will be -- are there technical difficulties in Swivel customers switching to ProGuard, they require additional development in your part? Or is it pretty much turnkey?

Mike DePasquale

38:28 Pretty much turnkey. Those customers can utilize the cloud, they can utilize our on-prem solution, if that's what they Swivel desire they can take advantage of the 16 factors of authentication that we provide today. And of course our integrated and identity bound biometric solutions, which again provide strong authentication options, as well as our mobile off. So there's really no technical hurdle for them to go one or the other.

Unidentified Analyst

39:02 Okay. I just have a question for Mr. Rocha, I guess if he can answer the question. I'm just wondering, why he believes that he can double his earnings from 500K to $1 million, I'm wondering, if you could give me some color on that? Or if you can't that's okay, too.

Alex Rocha

39:26 Of course. First of all, thank you for the question. I think what we're going to see here is the combined effort going to make that happen. Okay, again today in Swivel Secure we have three products, but we don't have the IBB platform. IBB platform is going to make a difference also be associated with NYSAC brand going to make the difference. Everything is positive right now. Again, we're going to present the numbers, that's going to be in line what we agreed, and you're going to see already a growing of that revenue. The strategy behind is very simple continue what we have been doing for this years. But if you see, we have been doubled our revenue and our profit year-over-year. That means, I think, this is the normal process right now and what we expect to present.

Unidentified Analyst

40:35 Okay, thank you. Let me switch to Nigeria. Has Nigeria paid any more of the 500K hardware delivery yet?

Mike DePasquale

40:46 Yes, they paid some. It’s slow, but they paid some setting up these banking relationships that I described before in my prepared comments, and then in my answers to Jack are really going to help. And we're hoping that, that's going to accelerate that significantly in the near-term. That's been the hold up all along quite frankly.

Unidentified Analyst

41:10 Okay. Should we expect the revenue guidance to be pretty much back-end loaded in the back half of 2022?

Mike DePasquale

41:21 No, no, absolutely not. I think as I've described, I think extensively with the subscription-based recurring nature of our revenue stream right now, we expect it to be more even and more predictable. So I don't believe that it will be back-end weighted.

Unidentified Analyst

41:46 Fantastic. Have there any revenues been received so far, based on the Sterling Bank deal, I know it's early.

Mike DePasquale

41:54 Yes, yes. Yes, we’re making progress, it’s slow. The biggest challenge for them, it’s kind of a little side note is KYC, so when you on-board for example you open a bank account here, the bank needs to know who you are, they need to get some background information on you. They'll do a credit report, they can use knowledge based questions to ensure that you really are who you say you are. That's a significant challenge in the third world, because for example, the experience or TransUnion's or Equifax's of the world don't operate there. And so that's a big challenge for them, so knowing who they're doing business with, it takes a lot longer than it would take for example here in the US or in Europe or in the developed world.

Unidentified Analyst

42:47 Like chicken and the egg.

Mike DePasquale

42:48 Yes, it's -- it really, it's kind of amazing and that's why tying an identity to an individual is so critically, critically important, because here again you can run a credit report on anyone as a business on an individual you can do it 5 times a month, if you want. And you can continually monitor that individual. But in the third world, that's almost impossible. So once you have a Bound Identity, then you really know who that individual is as they travel from one place to another or they access one system or another. So now batch what again in essence the World Bank is trying to accomplish here, right. Knowing that the only way that they're going to be able to pull people out of poverty right is to create an ecosystem that has credibility and that's what we're doing with all of the enrollments and beginning phases of the digital transformation in Nigeria and other countries in Africa as well.

Unidentified Analyst

43:51 Okay, I understand. If, let's say, let’s assume that Africa really starts to roll this stuff out and the revenues start to flow. What's to stop major competitors from coming in and knocking out of the market?

Mike DePasquale

44:08 Well, I would say two things: number one, we have some pretty good inventory and access to manufacturing to be able to produce and to source a lot of equipment, very quickly, that's number one. Number two, we are -- as I described also before, we are now pretty far along in incorporating our software and our identity management solutions across those platforms, which will create, you know, a pretty strong barrier to entry. Our biometric technology, especially our mobile biometric technologies will provide a pretty significant barrier to entry. Look at -- across the board at all of the IAM players that I mentioned a number of them before, I won't go through it again. They have and support all the traditional factors of authentication that are getting hacked, that are getting compromised.

45:15 We are the only one that really has the innate integrated biometric solutions that can be automatically and immediately dropped in by any customer, if they want to strengthen their cyber defenses. That's why Kim mentioned banks, many of our banking customers, many of our county government customers are going biometrics, because that is the strongest form of authentication that's available, and it's the only way again to positively identify an individual behind the transaction. So I think that's the barrier to entry for us, right? It’s that we provide a full and complete solution, not just one component of it. And look, we're not going to go and spend $50 million sourcing hardware, but at the end of the day, if we can do it in a managed way, if we can grab the margin and we can remain in control of the solution, it makes sense for us to do that as long as it continues to make sense for us to do it, we'll do it if it doesn't, we won't.

Unidentified Analyst

46:22 Okay, last question here too. Would you say you're in the bulls-eye of this 2021 security executive order or just in the periphery?

Mike DePasquale

46:36 You know, I probably will let Kim comment on that, because we've been doing an awful lot of work around that area. I would say we're in the bulls-eye, but we're also, you don't have tremendous advantages, as I just described. But maybe Kim will have some additional comments.

Kimberly Biddings

46:56 Yes. Sure, Dan and so I agree, I think right in the bull's-eye of it. Looking at even the past 10-years of what companies have been even to do security, authentication there's never been a more compelling time at this point to use as we mentioned Identity-Bound Biometrics and really help especially government, what we've seen the county government strengthening their defenses and finally bring their cyber security posture to where it needs to be to handle the attacks in the effects that are happening today. So adding square within the bull's-eye of it, in terms of the executive order with zero trust strengthening defenses in multi-factor authentication that is what we have our government customers coming to us for, and we are square in a position to offer them something that a competitively speaking is not available other places. So right in the bulls-eye and very excited to go into this year in that position.

Unidentified Analyst

47:54 Okay. Kim, do you have any like is that showing up statistically at all yet in reaches or calls or website or you have any statistical evidence for that?

Kimberly Biddings

48:08 In terms of the traction with the actual government implementations or customers?

Unidentified Analyst

48:14 Yes, in terms of that or around.

Kimberly Biddings

48:16 I mean -- from the mentions that I had in the part that I read through the influx of county government is a great example there and our continued participation with the National Association of Counties at the national and now actually at the state level is New York State Association of Counties and they're really leaning in to partners like us and that traction is seen not only in customer acquisition, but and also our participation in those events, speaking engagements, spot leadership, they really are leaning into to provide the guidance there.

Unidentified Analyst

48:53 I see, that's great, that's great. Last question, yes, go ahead, Mike.

Mike DePasquale

48:57 No, I was only going to make one other comment, Dan it's interesting, we’ve also seen a sales cycle on the county government side that almost really has amazed us that from start to finish a number of these counties that we closed, we were in a cycle of less than 90-days, which is amazing. So I think that's a good example of the heightened awareness and needed requirement to get something done, and get it done quickly. And then we're also as money available to make it happen and money can also be allocated on an emergency basis to make it happen. So it's a good place to be right now.

Unidentified Analyst

49:35 Well, that must have been competitive. Why did they pick you in 90-days or how could they pick you in 90-days. Sorry to ask you, I'm just curious?

Mike DePasquale

49:43 Well, I think it's pretty straightforward. You know, they have a need, they have a requirement, they have heightened awareness and compliance issues that they face. And they can move very, very quickly as long as we are available under the buying vehicles that we participate in, with our partners, it’s very easy for them to buy. And so that's the trick what people don't understand is that you really, even though you're selling directly to the county, they are not procuring directly through you, they are procuring through a buying vehicle that is a partner that we work with our support like an SHI and there are millions others, so that's how they can buy so quickly.

Unidentified Analyst

50:29 Last question, can you say who were the competitors that were hacked?

Mike DePasquale

50:35 I think, it's public information, the Okta 1 was so broad, it was all over the news. So that one pretty clearly I guess was announced, maybe a week or so ago. So that one I can clearly talk about the other, I won't.

Unidentified Analyst

50:56 Okay, thank you very much guys for answering all my questions.

Mike DePasquale

50:59 You're welcome.

Operator

51:02 [Operator Instructions] Again ladies and gentlemen, this concludes the question-and-answer session. I’d like to turn the conference back over to Mike DePasquale for any closing remarks.

Mike DePasquale

51:21 Thank you. I just want to thank everyone for joining today's call. We look forward to updating you on our Q1 call in May, which will come around pretty quickly now. In the meantime, we will participate in the H.C. Wainwright Conference, which is May 23rd to the 26th and we will continue to provide regular news and updates and press releases as developments occur within the business. Again, thank you for your time and have a great day.

Operator

51:49 Again, ladies and gentlemen, this concludes today's conference call. We thank you all for attending in today's presentation. You may now disconnect your lines and have a wonderful day.