Benzinga | Apr 30, 2021 07:18AM EDT

WISeKey Shares Fall As Pandemic Hits FY20 Earnings

* Cybersecurity and IoT company WISeKey International Holding Ltd (NASDAQ: WKEY) reported an FY20 revenue decline of 34.8% year-on-year to $14.8 million.

* The pandemic induced global supply chain disruption, and political and trading tensions between the U.S. and China led to the decline.

* North American revenue of $8.26 million fell 14.7% Y/Y, rest of EMEA's revenue of $4.32 million decreased 46.2% Y/Y.

* Asia Pacific revenue of $1.53 million fell 39% Y/Y, and Switzerland's revenue of $0.59 million had a notable decline of 72.3% Y/Y.

* The company made a significant investment in R&D to enhance its Artificial Intelligence capabilities and expanded its product portfolio, CEO Carlos Moreira said.

* The company also built up its sales force in the U.S., Europe, and Asia, to tap the higher demand for strong security, authentication, brand protection, and anti-counterfeiting services for segments such as connected devices, connected cars, luxury products, pharmaceuticals, and banking/financial sector, added Moreira.

* The acquisition of a controlling interest in Arago has provided the company with a new, higher-margin revenue source for AI-based Knowledge Automation, said Moreira.

* A 33% increase in the cost of sales led to a gross profit decline of 42% to $5.5 million. The margin contracted 477 basis points to 37%.

* Operating expenses declined 20%, leading to a 10% operating loss decline at $18.5 million.

* Net loss amounted to $28.9 million.

* The company held $21.8 million in cash and equivalents. It used up $12.6 million in operating cash flow.

* Price action: WKEY shares are trading lower by 6.15% at $9.15 in the premarket session on the last check Friday.