Fingerprint Cards (FPC) Interim Report for the second quarter, April-June 2015
FPC reports an operating profit and sharply growing revenues
CEO's comments
Revenues for the second quarter of 2015 totaled SEK 445 M, up 912% year-on-year, and 218% compared with the first quarter of 2015. The sharp increase in revenues was due to a broad-based decision by smartphone suppliers earlier this year to introduce touch fingerprint sensors in their smartphones, which accelerated market growth, and to FPC's ability, through our strong market position due to leading technology and a broad product portfolio, to meet customer needs.
In the second quarter, the business generated an operating profit and a continued positive cash flow from operations. Operating profit totaled SEK 65 M during the second quarter of 2015, compared with a loss of SEK 19 M in the first quarter of 2015. The adjusted gross margin was 38% compared with 36% in the first quarter of 2015, and the gross margin was 36% compared with 27% in the first quarter of 2015. The improved gross margin was attributable to a changed product mix.
The second quarter and period up to the interim report has, as continuously communicated, been characterized by an increased order inflow from FPC's module partners and at the end of the quarter, the order backlog amounted to SEK 1,335 M. The reason for this is the growing number of smartphone suppliers who have chosen to integrate FPC's touch fingerprint sensors in smartphones. During the period, Huawei, HTC, Oppo, Newman, LeTV, Coolpad, Meizu, Dazen, ZTE, Oneplus and ZUK launched smartphones with FPC's touch fingerprint sensors, confirming FPC's position as the leading supplier of touch fingerprint sensors to the smartphone market.
A further sign of our strong position is that customers in their marketing of newly launched smartphones are increasingly announcing that they contain our sensors, with the improved features of our new touch fingerprint sensors receiving clear exposure. The performance and other features of the touch fingerprint sensors enable our customers to offer consumers a great user experience, making the touch fingerprint sensor a key component of their mobile.
Another highly significant event during the quarter, from both a market perspective and for FPC, was that Google unveiled the new features in the next version of the Android operating system. The new version, known as Android M and now named Marshmallow or Android 6.0, will feature complete platform support for fingerprint sensors as well as Android Pay, a payment service that uses the fingerprint sensor to verify the identification of the user.
When Google demonstrated the new services at its preview event on May 28, the prototype units used FPC's touch fingerprint sensor FPC1025, which further underlines FPC's industry leadership. Google's introduction of support for fingerprint sensors in Android M, combined with the major interest in secure mobile payments from both consumers and smartphone suppliers, is considered a strong driver for the rapidly increasing penetration of fingerprint sensors in smartphones.
During the second quarter, we launched two new touch fingerprint sensors: FPC1022 and FPC1035. These are primarily intended for rear-mounted integration with smartphones, where we have established a very strong market position, particularly with FPC1025 which has already been integrated with numerous launched smartphones. As part of our ambitious technology development, we can now also enable market-leading biometric performance for our latest touch fingerprint sensors, where the size of the sensor is significantly reduced compared with earlier sensors.
The smaller size makes our sensors highly competitive, since phone integration will be easier. All launched touch fingerprint sensors to date in our product portfolio are now in mass production.
The strong increase in sales means that, together with our suppliers and other partners, we have delivered sharply growing volumes over a short time. This requires a major effort from both FPC and our partners, but due to a variety of measures, our assessment is that we are well-equipped to meet the growing demand for our products.
Apart from the rapidly growing touch fingerprint sensor business for smartphones, we are continuing to develop our offering for smartcards. This is paving the way for new, complementary business opportunities over time in cooperation with Zwipe and other business partners.
We remain confident in continuously growing volume deliveries and a large number of new product launches featuring our touch fingerprint sensors.
Future prospects
Revenues for the third quarter of 2015 are expected to be approximately SEK 860 M, corresponding to year-on-year growth of more than 1200%.
Due to the continued increase in gross profit and effects of operating cost allocation, operating profit is expected to further improve in the third quarter compared with the second quarter.
Considering that forecast third-quarter revenues amount to approximately SEK 860 M, and that we also see sequential revenue growth during the fourth quarter, the revenue forecast for 2015 has been raised from approximately SEK 2,200 M, as previously announced, to approximately SEK 2,500 M. The reason for this is the growing interest from the market in integrating touch fingerprint sensors and the company's strong product portfolio.
At present, the company does not anticipate any additional external capital requirements, despite the sharp volume increase that is expected for the remainder of the year.
Key figures * | Apr-Jun 2015 | Apr-Jun 2014 | Change, % | Jan-Jun 2015 | Jan-Jun 2014 | Change, % | Jan-Dec 2014 |
Revenue, SEK M | 445.2 | 44.0 | + 912 | 585.0 | 62.4 | + 838 | 234 |
Adjusted gross profit, SEK M | 170.9 | 20.8 | + 722 | 221.4 | 30.0 | + 638 | 107 |
Gross profit, SEK M | 159.0 | 13.2 | + 1,105 | 196.3 | 16.7 | + 1,075 | 72 |
Adjusted gross margin, % | 38 | 47 | 38 | 48 | 46 | ||
Gross margin, % | 36 | 30 | 34 | 27 | 31 | ||
Operating profit/loss, SEK M | 65.4 | -44.9 | 46.6 | -71.5 | -145 | ||
EBITDA, SEK M | 74.9 | -24.1 | 68.1 | -46.1 | -84 | ||
EBITDA, % | 17 | -54 | 12 | -18 | -36 | ||
Profit/loss after financial items, SEK M | 65.4 | -44.8 | 46.6 | -71.0 | -144 | ||
Earnings per share, SEK | 1.12 | -0.79 | 0.80 | -1.25 | -2.47 | ||
Jun 30, 2015 | Jun 30, 2014 | ||||||
Cash and cash equivalents, SEK M | 166 | 238 | |||||
Equity/assets ratio, % | 57 | 87 | |||||
Order backlog, SEK M | 1,335 | 63 |
For further information, contact:
Jörgen Lantto, CEO, Fingerprint Cards AB (publ),
+46 (0)31-60 78 20, investrel@fingerprints.com
Website: www.fingerprints.com/corporate/
Welcome to Fingerprint Cards Q2 2015 - Financial Report Webcast. The Webcast starts at 15.00 CET on Thursday August 20th 2015. Participants use this link to register and join the live event:
https://engage.vevent.com/index.jsp?eid=3483&seid=46
Fingerprint Cards AB (publ), Corp. Reg. No. 556154-2381, discloses this information pursuant to the Swedish Securities Market Act (2007:528) and the Swedish Financial Instruments Trading Act (1991:980). This information was issued for publication on August 20, 2015 at 8:00 a.m. CET
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