(Denna FAQ publiceras på engelska)
Question: When do you expect inventory levels in the industry to normalize and what do you expect in terms of impact on ASP and gross margin in Mobile?
Answer: In Q3 2023, we continued to decrease our own inventory, to SEK 156 M compared to SEK 203 M in the previous quarter, and down from SEK 274 M at the end of Q1 2023. We expect that we will be able to reach an acceptable inventory level by the end of 2023. However, we anticipate that it will take a bit longer for the whole industry to reach balance. Once this happens, we expect selling prices and margins to improve. Profitability will be the overriding consideration in our evaluation of new projects, focusing on those projects where our premium capabilities are valued.
Question: What is the status regarding biometric payment cards? Is the industry moving?
Answer: Yes, we view the biometric payment market as a very large emerging market for our technology. Although the market is still nascent, we are seeing a lot of interest and continued investment throughout the value chain. We are currently supporting ten commercial launches globally, and are making progress within the framework of our strategic collaborations with central players in payment card manufacturing. One recent example is our joint development and commercialization agreement with Infineon regarding a plug-and-play solution for biometric payment cards: SECORA™ Pay Bio. By combining and integrating Fingerprints’ FPC1323 sensor and Infineon’s SLC39B Secure Element into one system package, we will be able to offer leading biometric performance executed in a single chip. This will simplify the manufacturing process for biometric cards considerably, a crucial condition for facilitating launches on a truly large scale. At the same time, card issuers are now taking steps to promote the acceleration of this new global market for biometrics. One example is that several banks are now simplifying the enrolment process so that this can be done at home without needing to visit the branch of a bank. We are also now seeing examples of banks that have begun issuing biometric payment cards automatically to certain customer segments, and not only to the customers who actively order such cards.
Question: What kind or opportunities do you see in the automotive space?
Answer: We are actively engaged with a number of providers in the automotive industry, and we are looking at DMS in particular. This is clearly a very interesting area for our leading iris recognition solution, as we anticipate a significant deployment of affordable infrared cameras in cars, driven by legal requirements.
We recently signed an agreement with a tier 1 automotive supplier to implement Fingerprints’ iris authentication software in an existing DMS, and to promote it to automotive OEMs as an add-on feature. Forthcoming legal requirements for Driver Monitoring (DMS), using infrared cameras to detect the status of the driver create a strong case for integrating iris recognition technology in cars. The same infrared camera that is used in the DMS can be used to illuminate the eye with infrared light to take a picture of the iris and use Fingerprints’ authentication software without adding any additional hardware.
Over the past year, our technical team has managed to implement significant improvements to our iris authentication asset, both in terms of performance and convenience. This means that our system now performs well even with low-resolution infrared cameras in noisy environments, and with a significantly larger field of view than before.
In addition, there is potential for integrating our fingerprint sensor technology in cars. The use cases are similar to iris, e.g. authenticating in-car payment system transactions and enabling other advanced features, such as driver personalization and preventing the vehicle from starting unless the driver has been successfully authenticated.
Question: As part of your Transformation Plan, announced in connection with the Q3 report, you are planning to reduce OPEX by around half, while also launching a new strategy. Given these significant cost reductions, will you be able to deliver on the strategy and generate profitable growth?
Answer: We are reducing our cost base in order to meet our short-term challenges, but we are also making organizational changes in order to significantly reduce organizational and operational complexity, with a streamlined and engaging model that injects more speed and efficiency into our company. We must deploy our talent efficiently, aligning our people with strategic projects quickly as market opportunities evolve. To achieve this goal and create an empowered, efficient organization, our plan is to transition to a functional organizational model, enhancing accountability and enabling agility. The two primary pillars of such a structure will be Product and Sales, with support from Finance, HR and other operational functions. Both the new organization and our new strategy will be underpinned by enhanced governance, accelerating throughput and conversion from innovation through to sales.
Question: What does the refinancing mean for the company?
Answer: Following the rights issue and the convertible bond issue, completed during September, we repaid our SEK 300 M bond loan. This means that we will lower our annual interest expense by approximately SEK 30 M, a 75% reduction. Also, repaying the bond loan entails that we no longer have any restrictive financial commitments. As a result of this, our ability to execute on our growth and diversification plans has significantly improved.
(Updated on November 6, 2023)
We will update this list of FAQs after the release of interim reports, and also following any significant news or events. Welcome to listen to the Q3 2023 earnings call, including a Q&A session.