BIO-key International, Inc. (NASDAQ: BKYI) Financial Performance and Outlook

• BIO-key International, Inc. (NASDAQ:BKYI) has a Return on Invested Capital (ROIC) of -50.67%, indicating poor capital utilization compared to its Weighted Average Cost of Capital (WACC) of 10.09%.
• Similar companies in the sector, including Boxlight Corporation and Safe & Green Holdings Corp., also exhibit negative ROICs, suggesting a common challenge in generating returns above their cost of capital.
• SuperCom Ltd. stands out with a ROIC of 2.63% and a WACC of 7.11%.

BIO-key International, Inc. (NASDAQ:BKYI) specializes in providing biometric authentication solutions to enhance security and identity verification across various industries. Despite its innovative offerings, BIO-key faces challenges in effectively utilizing its capital, as indicated by its financial metrics.

BIO-key's Return on Invested Capital (ROIC) is -50.67%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 10.09%. This negative ROIC suggests that the company is not generating enough returns to cover its cost of capital. The ROIC to WACC ratio of -5.02 further highlights this inefficiency in capital utilization.

When compared to its peers, BIO-key's performance is not unique. Boxlight Corporation (BOXL) and Safe & Green Holdings Corp. (SGBX) also report negative ROICs of -30.16% and -34.34%, respectively, with WACCs of 20.91% and 22.78%. Their ROIC to WACC ratios of -1.44 and -1.51 indicate similar struggles in generating returns above their cost of capital.

Senmiao Technology Limited (AIHS) and Sintx Technologies, Inc. (SINT) face even greater challenges, with ROICs of -622.64% and -175.44%, respectively. Their ROIC to WACC ratios of -86.80 and -34.06 reflect significant inefficiencies in capital utilization, suggesting that these companies are far from covering their cost of capital.

In contrast, SuperCom Ltd. (SPCB) stands out with a positive ROIC of 2.63% and a WACC of 7.11%. Its ROIC to WACC ratio is 0.37. This positions SuperCom Ltd. as a more effective user of capital, highlighting its potential for growth compared to its peers.

BIO-key International, Inc. (NASDAQ:BKYI) is a company that specializes in biometric authentication solutions. It provides fingerprint identification and identity verification technologies to enhance security for enterprises and government agencies. Despite its innovative offerings, BIO-key faces challenges in capital efficiency, as reflected in its financial metrics.

BIO-key's Return on Invested Capital (ROIC) is -50.67%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 9.84%. This negative ROIC indicates that the company is not generating enough returns to cover its cost of capital, suggesting inefficiencies in how it utilizes its capital.

When comparing BIO-key to its peers, Boxlight Corporation (BOXL) has a ROIC of -30.16% and a WACC of 20.82%, resulting in a ROIC to WACC ratio of -1.45. This shows that Boxlight also struggles with capital efficiency, though its situation is slightly better than BIO-key's.

Senmiao Technology Limited (AIHS) presents a more concerning picture with a ROIC of -462.44% against a WACC of 6.63%, leading to a ROIC to WACC ratio of -69.80. This indicates severe inefficiencies in capital utilization, far worse than BIO-key's performance.

In contrast, SuperCom Ltd. (SPCB) demonstrates a positive ROIC of 4.85% and a WACC of 7.04%, resulting in a ROIC to WACC ratio of 0.69. This suggests that SuperCom is more effective in generating returns that are closer to covering its cost of capital, making it the most efficient among the peers analyzed.

BIO-key International, Inc. (NASDAQ: BKYI) is a prominent player in the Identity and Access Management (IAM) solutions sector. The company focuses on providing high-margin software solutions, such as PortalGuard IAM and Identity-Bound Biometrics. Despite its strategic focus, BKYI faces competition from other IAM providers, which impacts its financial performance.

On March 27, 2025, BKYI reported an earnings per share (EPS) of -$0.53, which was below the estimated EPS of -$0.35. The company's actual revenue was approximately $1.46 million, falling short of the estimated $2.5 million. This shortfall is partly due to a strategic shift that involved exiting a low-margin services relationship with Swivel Secure.

Despite the revenue decline, BKYI managed to reduce its net loss by 49% to $4.3 million in 2024. This improvement is attributed to a higher gross margin and reduced operating costs. The company achieved a 20% growth in high-margin software license fee revenue, which helped offset the 11% decrease in overall revenue.

BKYI's financial ratios highlight some challenges. The negative price-to-earnings (P/E) ratio of -0.18 indicates a lack of profitability. The price-to-sales ratio of 0.42 suggests that the stock is valued at 42 cents for every dollar of sales. Additionally, the enterprise value to sales ratio is 0.52, implying that the company's total valuation is slightly more than half of its sales.

The company's financial health is further strained by a high debt-to-equity ratio of 18.52, indicating significant reliance on debt financing. The current ratio of 0.78 suggests potential liquidity issues, as BKYI may struggle to cover its short-term liabilities with its short-term assets. Despite these challenges, the company remains focused on strengthening its core solutions and improving its financial performance.