Fingerprint Cards AB: Year-End Report January - December 2018
Highlights of the quarter
- Favorable volume trend for FPC1511, the fourth generation of capacitive sensors
- New areas outside capacitive sensors for mobile phones accounted for approximately 10 percent of sales, both in the fourth quarter and for full-year 2018
- Net cash assets amounted to SEK 540.5 M at the end of the quarter, compared with SEK 454.9 M at the end of 2017. Fingerprints is now debt-free.
- The consolidated equity/assets ratio amounted to 77 percent at the end of the period, compared with 66 percent at the end of 2017
- Cost reduction programs executed according to plan. OPEX reduced by two-thirds from highest 2017 level.
Fourth quarter of 2018
- Revenues totaled SEK 424.3 M (615.3)
- The gross margin was 21 percent (21)
- The operating result was negative SEK 25.5 M (neg: 40.6)
- Earnings per share before dilution amounted to a negative SEK 0.06 (neg: 0.05)
- Cash flow from operating activities was a negative SEK 26.1 M (neg: 1.7)
- Revenues totaled SEK 1,535.1 M (2,966.0)
- The gross margin was 0 percent (33)
- The operating result was negative SEK 771.6 M (pos: 154.6)
- Earnings per share before dilution amounted to a negative SEK 2.01 (pos: 0.38)
- Cash flow from operating activities amounted to SEK 274.6 M (376.9)
- The Board proposes to the Annual General Meeting that no dividend be paid for the 2018 fiscal year
Fingerprints' fourth-quarter sales were marginally below the figure reported for the third quarter. Since the beginning of 2018, Fingerprints has largely succeeded in defending its market share and we remain the leading supplier in the mobile market.
The implementation of the cost reduction program that we launched in June 2018 has been executed according to plan. Given the margin pressure that prevails in our industry, Fingerprints will continue to place major focus on cost efficiency and cash flow.
Fingerprints' financial position is solid, with cash assets that amounted to SEK 540 M at the end of the year. Net cash assets grew from SEK 455 M to SEK 540 M in 2018. In the fourth quarter, we repaid the remaining portion of the acquisition loan for the purchase of Delta ID. As a result of this, Fingerprints is now debt-free.
I expect the situation in the global mobile market to remain challenging, which will have an impact on Fingerprints' sales performance in the first quarter of 2019. Q1 is also generally a seasonally weak quarter. Several global mobile phone manufacturers have recently issued warnings of poorer financial results due to the market situation. One of the key factors behind the negative trend is that consumers are replacing their devices less frequently than before.
But if we look at the wider perspective, it is evident that biometric solutions for smartphones will remain an attractive and growing market. Today, four years after biometrics had its commercial breakthrough in the mobile segment, about 60 percent of all smartphones sold in the world have some form of biometric sensor. I am convinced that the penetration rate will continue to increase. At the same time, the market is becoming increasingly fragmented, with several competing biometric technologies. Fingerprints is active to the highest degree in the development of the next generation of sensors. Our starting point is strong, with a market-leading position in the mobile segment in which Fingerprints is recognized for its high quality, functionality and security. As previously communicated, Fingerprints intends to launch an in-display product based on our optical sensor technology in 2019. The project is proceeding according to plan, and we conducted prototype demonstrations for customers at the beginning of 2019.
Fingerprints is also well positioned to capture a significant share of new, emerging global markets for biometric solutions, in particular, biometric smart cards. Seventeen market tests of contactless biometric smart cards have been published in the world to date, of which sixteen during 2018. The most recent test was initiated in Italy in November 2018 by Mastercard and Intesa Sanpaolo, together with Gemalto and Zwipe. Fingerprints' biometric sensors are used in all seventeen tests of contactless payment cards that have been published to date, which is testimony to the strength of our offering.
The number of market tests is set to increase significantly in 2019, since a number of card brands are on the verge of establishing specifications and standards for biometric debit cards. The next step in this process is a certification of established standards.
One of our goals for 2018 was to generate 10 percent of our sales outside capacitive sensors for smartphones, which we achieved. The interest in biometric solutions is extensive and increasing within several areas where secure and user-friendly authentication are important. For example, I expect to see continued rapid growth in locks and access systems, as well as in fintech, i.e. financial services based on new technological innovations.
Fingerprints' strategy for the coming years is based on continuing to diversify and broaden the business into new areas outside the mobile segment, at the same time as defending and building on our strong position in the smartphone segment.
Christian Fredrikson, President and CEO
Today at 09:00 CET Fingerprints' CEO Christian Fredrikson will present the report together with CFO Per Sundqvist in a combined webcast and telephone conference. The presentation will be held in English.
The report will be available at fingerprints.com
The webcast and the presentation material can be accessed through https://engage.vevent.com/rt/fingerprints/index.jsp?seid=141
For analysts and media: The telephone conference dial-in is +44 (0) 2071 928000 (international participants) or 08-506 921 80 (Swedish participants). Please state conference ID 6734537.
| For information, please contact: |
Christian Fredrikson, CEO
Per Sundqvist, CFO
Stefan Pettersson, Head of Investor Relations:
+46(0)10-172 00 10
+46(0)10-172 00 20
This is the type of information that Fingerprint Cards AB is obligated to disclose pursuant to the EU's Market Abuse Regulation and the Swedish Financial Instruments Trading Act. The information was submitted for publication, through the agency of the contact person set out above, at 7:00 a.m. CET on February 15, 2019.
| About Fingerprints |
Fingerprint Cards AB, Fingerprints, with its Swedish roots, is the leading global biometrics company, whose mission is to spearhead the development of biometric interaction that facilitates the convenience and integrity of the individual. Its value is proven daily by users in millions of devices, through billions of touches, who are their own key - quite simply, with a human touch. Fingerprints develops biometric systems comprising sensors, algorithms, software and packaging technologies. The success is based on product development at the cutting edge of technology, which results in world-leading products in terms of security, convenience and performance. The current product range consists largely of fingerprint sensors and customers are primarily manufacturers of smartphones and tablets, where the company is market leading. As the use of biometric solutions increases, Fingerprints is working to broaden its offering by using different biometric techniques, or modalities, and to identify other market segments where the solutions can be used, such as smart cards, PCs, automotive and online devices (IoT). Fingerprint's shares are listed on Nasdaq Stockholm (FING B).