BIO-key International, Inc. (BKYI) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to BIO-key International's Full Year 2021 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Tuesday, March 29, 2022. I would now like to turn the call over to Kimberly Biddings, BIO-key's Vice President of Product. Please proceed.

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 Rocha, BIO-key's newly appointed President of BIO-key-EMEA; and our CFO, Ceci Welch. I will 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. 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 obligation to revise or disclose revisions to such forward-looking statements to reflect future events or circumstances that occur after today. With that, I will turn the call over to Mike DePasquale. Mike?

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. 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 mans a 24/7 security operations center in Lisbon, Portugal. 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 appointments 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 multifactor-authentication methods, including BIO-key's advanced biometric solutions or identity-bound biometrics. We are 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. PortalGuard IDaaS revenue currently accounts for approximately 80% of our total software and services revenue. Our continued investment in innovation and new product development enabled 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 mis-tested algorithms. 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 a 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 CRN's 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. We are currently supplying our Pocket 10 biometric fingerprint readers in a partnership with Specta, an online lending platform owned by Sterling Bank Nigeria. These departments are part of Nigeria's National Identity Management Commission's 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 Roha, has joined BIO-key to lead our EMEA business. And shortly, he will discuss the significant growth opportunity for our company. The war in Ukraine and resulting sanctions have increased fears of significant potential cyber attacks on U.S. critical infrastructure. The U.S. Cybersecurity and Infrastructure Security Agency, or CISA, which is part of the U.S. Department of Homeland Security, recently issued an unusual shields up warning to businesses that says they should be prepared to defend against cyberattacks 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 crosshairs of the attackers. This continues a history of CISA warnings about vulnerable password and other nonbiometric credentials. Also in the past few weeks, 2 competitors in the IAM and 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-bound biometrics, or 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. 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 Secure's 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. Excluding Africa and 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 multifactor-authentication companies are some of the highest in the security sector. As we execute our growth strategy, we believe the market will recognize our progress. My focus is ensuring that the momentum we have built continues into 2022 and beyond. With that, I'll turn the call back over to Kim.

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. 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 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 customers. 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. I did point out that just this month, we showcased our IAM 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 expanded relationships with others. Customers include a U.S. Department of Justice division, a foreign defense ministry, a West Coast state, several election boards and county government customers in New Mexico, South Dakota, Missouri, New York and Florida. 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 Lawrence County, South Dakota. Importantly, county government decision-making is being driven both by the need to enhance data and cybersecurity and also for compliance with cybersecurity insurance requirements. Considering 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. To support this end market, in March, BIO-key sponsored a cybersecurity 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 Officers, or NASCIO, Annual Conference in Seattle. Other Q4 customer wins included America's Auto Auction and Orange Bank & 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 banks, and we expect this vertical to represent a significant portion of our growth in 2022. In terms of marketing, which is my focus, we completed more than a dozen media interviews in 2021 and placed our byline submissions in key publications such as security boulevards, security magazines, payments journal, CCN and Health Net Security. We also are expanding our social media presence, resulting in both increased and higher quality traffic to our website, biokey.com. 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 an integral part of our future growth. 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. 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 enthusiast who's lived and worked in several countries, and he speaks 4 languages. This is Alex's first public call since joining the BIO-key team. Alex, over to you.

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 an award-winning AuthControl solution delivered multifactor-authentication, single sign-on and risk-based authentication to secure cloud and on-premise application. Our solution can authenticate access for employees, customers and supply to log in on to Office 365 transacting to e-commerce, B2B or B2C, or accessing ERP or CRM. Our existing business, Swivel Secure Europe, has over $3 million in revenue in 2021 and was profitable. We currently have 3 offices, 28 staff members and 3 MFI-focused products and our flagship AuthControl brand, designed for small and large enterprise and management service provider, MSPs. We have approximately 300 active customers also counting with a channel network of more than 100 partners as we employ 100% channel strategy in the EMEA region. Our technology partners include ASP, Red Hat, Samsung, Citrix, Microsoft, [ Signpoint ] and Oracle. My key clients include Vodafone, Telefonica, Toyota, Maersk, DB Schenker, DHL, IBM and Inditex, more well known as the owner of Zara. In this case, we protect more that a 0.25 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. For example, one special project that will be rolled out 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. A knowledge channel allow us to multiply our presence and localize the strategy. Once we build awareness, we see significant opportunities for BIO-key's innovative products, employ identity-bound biometric, 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. At this time, I will pass the call over to Ceci Welch to review BIO-key financials through December, which not includes Swivel Secure as the deal closed in March, but should benefit future quarters.

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 IAM solutions and increased sales of biometric fingerprint readers. 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. 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. 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. 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 reported 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. In Q4 '21, net loss to shareholders increased to $2 million from $1.4 million in 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 equivalents, and 1 -- 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. In 2021, we invested $5.2 million of net working capital to support our growth. These investments were primarily in inventory as we 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. And with that, we can turn the call back to the operator for any questions from investors.

[Operator Instructions] And today's first question comes from Jack Vander Aarde with Maxim Group.

I appreciate the quarterly update. Congrats on the latest acquisition as well. A 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?

It will be filed in the next day or so, yes. It has not been filed yet.

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 2 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 suggest this building momentum and gives you confidence for these 2 Africa contracts?

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 onboard 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 onboard, we're encouraged and believe that the deployments will accelerate.

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 some sort of lumpy batch deployments of those hardware sales? Or, I don't know, 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.

Yes. So what we've done, if you look at our guidance, for example, we took a very conservative approach as it relates to the hardware. We did that because, again, over the last 18 months, we have 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's still significant, significant upside for the sale of product. But what's also happened over the last 6 to 9 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 health care, that has also started to come into play. 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.

Okay. And then, I guess, if I'm looking at your fourth quarter revenues, and I appreciate the comments on the channel, it sounds like new bookings are heavily weighed to the channel as well, over 50% or nearly 50%. That's going to represent -- the channels are going to 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 PortalGuard being in the mix now for 4 quarters at least, that license fees would be linearly increasing sequentially. But can you help me understand the disconnect there?

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. 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.

Okay. Great. That's helpful. And then so -- and speaking of Swivel, just -- so they generated about $3.1 million of revenue and a pretty solid profit of $578,000 -- 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...

We're not..

I understand I tie it back to you. Okay.

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's another component here. There's 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 upsell 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.

Okay. Got you. And then in terms of just -- you mentioned something about headcount. The combined headcount, I think I heard, was over 60 employees.

Correct.

What does this mean for OpEx? And what does that mean for, I guess, your operating expense? How do I think about gross margin? It 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 does this do 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.

Well, again, we'll -- as we get in and announce 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 would 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.

Okay. And then just 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 then that $7 million to $10 million. At the low end of that guidance range of like $7 million from the core BIO-key business with PistolStar and PortalGuard, is there any Africa baked -- is that like the worst-case scenarios like no Africa contract revenue is really recognized? It's more just 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 to those ranges.

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's another element here, and I mentioned it in my prepared comments, and I've been speaking about this as I make the conference rounds. It's pretty clear if you look at the valuations in the identity and access management space, in particular in the authentication, privileged access management, governance space, big companies like, for example, Okta and SailPoint, larger companies, like there's Duo, which is a division of Cisco. When you look at the multiples in that sector of the security space, they're amazing. And if you look at BIO-key's revenue, especially now 70% of what we described there will be contracted and subscription-based and recurring, our valuations and multiples centered just solely around the identity and access management space really put us in, in my opinion, a good position and our investors in a very good position for upside. So not that 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 6 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 maybe the only, company that can an offer with our identity-bound biometrics positive identification of an individual who's sitting behind a computer accessing information or consummating a transaction. We announced the product halfway through last year called MobileAuth with PalmPositive, which is a mobile authentication solution. First method of biometric authentication was Palm. You'll see some additional announcements from us in the near term and expanding that product. That will give us the ability to go CIAM, meaning to go to the customer, to go B2C. So to have some of our enterprise customers who house consumer data and information, to allow 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.

[Operator Instructions] Today's next question comes from [ Dan Kimhess ], a private investor.

I was wondering if -- so is the long-term plan to transition all of Swivel customers to PortalGuard?

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 -- 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.

Okay. So the next question would be, are there technical difficulties in Swivel customers switching to PortalGuard that require additional development on your part? Or is it pretty much turnkey?

Pretty much turnkey. Those customers can utilize the cloud. They can utilize our on-prem solution, if that's what they so 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 provides strong authentication options as well as our MobileAuth. So there's really no technical hurdle for them to go one or the other.

Great. I just have a question for Mr. Rocha, I guess, if he can answer a question. I'm just wondering why he believes that he can double his earnings from $500,000 to $1 million. I'm wondering if he could give me some color on that, or if he can't, that's okay, too.

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 3 products, but we don't have the IBB platform. IBB platform is going to make a difference. Also we associate with the NASDAQ 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 these years. But if you see, we have been double 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.

Let me switch to Nigeria. Has Nigeria paid any more of the $500,000 hardware delivery yet?

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 holdup all along, quite frankly.

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

No. No, absolutely not. I think as I 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.

Fantastic. Have any revenues been received so far based on the Sterling Bank deal? I know it's early.

Yes, yes. Yes. We're making progress. It's slow. The biggest challenge for them, just kind of a little side note, is KYC. So when you onboard -- 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 Experians or TransUnions or Equifaxes of the world don't operate there. And so that's a big challenge for them. So knowing who they're doing business with takes a lot longer than it would take, for example, here in the U.S. or in Europe or in the developed world.

Like chicken and the egg, huh?

Yes, it really is. It's kind of amazing. And that's why tying in 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 that's 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 digital transformation in Nigeria and other countries in Africa as well.

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?

Well, I would say 2 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're -- as I described also before, we're now pretty far along in incorporating our software and our identity management solutions across those platforms, which will create 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. We're 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 the 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.

Okay. Last question here, too. Would you say you're in the bull's eye of this 2021 security executive order or just in the periphery?

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 bull's eye, but we're also -- have tremendous advantages, as I just described it. Maybe Kim will have some additional comments.

Yes, sure thing. 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 using 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 with county government strengthen their defenses and finally bring up their cybersecurity posture to where it needs to be to handle the attacks and the threats that are happening today. So I think square within the bull's eye of it. In terms of the executive order with zero trust strengthening defenses and multifactor-authentication, that is what we have our government customers coming to us for. And we are square in the position to offer them something that, competitively speaking, is not available at other places. So right in the bull's eye, and I'm very excited to go into this year in that position.

Okay. Kim, do you have any like -- is that showing up statistically at all yet in reaches or calls or website? Or do you have any statistical evidence to that?

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

Yes, in terms of that order, yes.

I mean, I think from the mentions that I had and the parts 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 as New York State Association of Counties, they're really leaning in to partners like us. And that traction is seen not only in customer acquisition, but in also our participation in those events, speaking engagements, thought leadership. They really are leaning in to provide the guidance there.

I see. That's great. That's great. Last question -- yes, go ahead, Mike.

No, I was only going to make one other comment. 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 there also was 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.

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 was just curious.

Well, I think it's pretty straightforward. 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're not procuring directly through you, they're procuring through a buying vehicle that is a partner that we work with or support, like an SHI and there are a million others. So that's how they can buy so quickly.

Right. Last question. Can you say who were the competitors that were hacked?

I think it's public information. The Okta one 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.

[Operator Instructions] And 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.

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. Wainright Conference, which is May 23 to the 26, 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.

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