BKYI vs YOU: Which Biometric Stock Has Better Prospects?

The share prices of BIO-key International and Clear Secure have seen contrasting fortunes since the start of the year. While both companies could be considered key players in the biometrics and identity and access management markets, BKYI stock and YOU stock present two different trajectories within the theme.

BIO-key International [BKYI] is a software company that develops and provides a range of identity management technologies. Clear Secure [YOU] offers biometric-based travel document verification.

As more companies shift their systems to the cloud, they are becoming more susceptible to cyberattacks. Authentication that uses facial, fingerprint and iris biometrics is a more secure alternative and also helps to reduce the likelihood of identity theft.

This stock spotlight will discuss how BIO-key International and Clear Secure could benefit from a rise in businesses and venues looking to secure their identity and access management systems. It will also look at the two companies’ contrasting fortunes.

BKYI and YOU Secure Deals

If travelers fly out of an airport in the US, federal programs like TSA PreCheck allow them to skip the usual security lane and scanning.

On July 23, Clear Secure announced it had opened six new locations at airports across the US where travelers can enroll in the TSA PreCheck program, taking the total number of locations to 46.

“This is a win-win for US travelers who will have access to more enrollment locations, expanded hours and other benefits,” said Clear Secure CEO Caryn Seidman-Becker in a press release.

Earlier this month, BIO-key International announced it had signed a $500,000 agreement to provide a leading government defense ministry with new orders of its biometric user authentication solution, which will be used to help protect the ministry’s personnel.

BKYI and YOU Stock’s Contrasting Fortunes

The government defense ministry news caused BKYI stock to spike on September 10.
 
Nevertheless, the share price has collapsed from a 52-week high of $10.62 set on September 21, 2023, to an all-time low of $1 set on September 9. BKYI stock is down 88.46% in the past year through September 24 and 64.00% since the start of 2024.

In comparison, as of September 24 the Clear Secure share price was trading just below its 52-week high of $33.85, set on September 18. YOU stock has gained 87.28% in the past 12 months and 60.00% since the start of the year.

BYKI Stock Is Losing Money, While YOU Stock Is Profitable

Although sentiment around BKYI stock has been waning, BIO-key International’s Q2 results, reported in August, showed signs of optimism.
 
Revenue for the three months to the end of June fell from $1.9m a year ago to $1.1m, though $450,000 of this drop is attributed to an order that will now be recognized in Q3. Net loss narrowed from $2.6m in Q2 2023 to $1.7m, while gross profit and margins improved, and operating expenses were reduced by $168,000 to $2.53m.
 
“Despite our lower-than-expected revenues this quarter, we remain very encouraged by the growing enterprise awareness of the importance of implementing secure, zero-trust identity and access management solutions,” said BIO-key International CEO Mike DePasquale in a statement.
 
Clear Secure’s Q2 revenue jumped 24.6% year-over-year to $186.8m. Net income leapt to $38.6m from $8m in Q2 2023.
 
Here is how BKYI stock and YOU stock’s financials stack up:

While BIO-key International’s price-to-sales ratio may make BKYI stock look attractive, this does not reveal the whole story. YOU stock seems to be more stable — it is not too overvalued and exhibits healthy revenue growth over the next year or two.

YOU and BKYI: The Investment Case

The Bull Case for YOU

Clear Secure is benefitting from travelers looking for convenience, adding 2.3 million members in Q2, taking the total number of members to more than 25 million.
 
The strong demand for its services has given the company encouragement to buy back 3.6 million shares in Q2. It has also bought 4 million shares back from Delta Air Lines [DAL], an early investor. Speaking on the Q2 earnings call, Co-Founder and President Ken Cornick expressed confidence in the company’s free cash flow.
 
“We’re going to remain opportunistic and ultimately do what’s best for shareholders,” he said, adding that the company should have $280m in free cash flow by the end of the year and about 139 million shares outstanding. “So, that’s $2 of free cash flow per share.”

The Bear Case for BKYI

BIO-key International has been identified as one of the major players in the biometrics market. According to research firm IMARC, the market is expected to grow at a CAGR of 15.2% between 2024 and 2032, reaching a valuation of $144bn from $39bn in 2023.
 
However, the near-term challenge for BIO-key International will be turning a profit. The company has been doing well to narrow its net losses, but with its share price hovering just above $1, the company is stuck in penny stock territory.
 
As a result, BKYI has low liquidity, especially compared to YOU stock, and the share price can be subject to more volatility, two factors that might not make it an ideal candidate for long-term investing.

Conclusion

BIO-key International and Clear Secure are both playing a role in helping people, businesses and organizations to protect their identity. But the two stocks are on different growth paths. Investors should conduct their own thorough research and familiarize themselves with the risks involved before making any investment decision.

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