Biometrics industry stocks this week
As the biometrics industry continues to grow Biometric Update is bringing a new focus to the stories around the stocks in the sector. Check in with this space each week for a rundown of the financial news and interesting ideas from the week that was.
-Technology stocks have been the big story in North American markets this year. The so-called FANG stocks (Facebook, Applie, Netflix and Google) have gained solidly over the year. But the tech shares that have really taken off this year are in China. Several reports this past week pointed out that MSCI China Information Technology Index is up almost 60 percent this year. This is more than double the return of the S&P 500 tech index, which is up a bit over 20 percent on the year. And while the single best performing North American company in the FANG group is Facebook, up about 50 percent this year, the Chinese tech giant Alibaba has soared 80% so far in 2017.
-Earnings season has wrapped up for this quarter. Now the financial types along Wall Street are coming back from summer vacation and scheduling their fall investor presentations. One company appearing at an upcoming conference is SuperCom, a provider of security solutions for the e-government, public safety, healthcare, and finance sectors. SuperCom will make a pitch to investors at the 6th Annual Liolios Gateway Conference, September 6-7, 2017 at the Four Seasons Hotel San Francisco. The company recently reported second quarter numbers. The Israeli company generated revenue of $7.5 million, a gain on the $5 million raked in over the same period last year. The company also recently announced it has been chosen by an African country to implement a new national e-ID program.
-Another company making investor presentations this season is Idex ASA, the Scandinavian producer of biometric sensors. According to a presentation prepared by the company’s CFO for the DNB Nordic Telecom, Media and Technology Conference, Idex is focused on three target markets, cards, mobile and IoT. The company thinks demand in this sector has a “billion unit” potential. At the heart of Idex’s product lineup are its “off-chip fingerprint sensors”, which separate the sensor chip from the sensing substrate resulting in higher, “…image fidelity, superb noise immunity and market leading wet – dry finger usability”. Designing sensors this way results in a greater flexibility when it comes to sensor design. As well, different materials can be used for the sensor substrates, allowing product designers to tailor the sensors to specific applications. The company also boasts 221 granted and pending patents. The pitch to investors is that the company has a market-leading technology that is protected by a ‘moat’ of patents. The company also brags that it now employs 120 staff with, “… deep biometrics and display integration expertise.” Employee count at the company has grown a remarkable 64% over just the course of the last year. According to the CFO’s presentation, Idex has a a greater goal of moving beyond simple sensor design and towards the manufacture of full biometric systems. The company also claims it has a roadmap for the development of a “breakthrough” anti-spoof application.
-Earlier this year NXT-ID released preliminary results from the second quarter. Although the company still registered a loss on the quarter it did boast a huge jump in revenue. As a way of generating some investor interest in that good news, shortly after releasing the results the company’s CEO Gino Pereira and the COO (Fit Pay president) Michael Orlando were interviewed on a podcast, investorideas.com. The two executives took some time to talk about where it is the organization is going. NXT-ID, of course, recently acquired Fit Pay, which is now a wholly-owned subsidiary. On the podcast Pereira and Orlando explained how that acquisition will enable the company to expand into the IoT market. “We’re excited about the technology of Fit Pay. I think it mirrors what we have at NXT-ID. There’s not a lot of overlap, and I think as a combined entity, it is extremely synergistic. It’s really a case of one plus one can equal five. The combination of our technologies really enables us to be a major player in the wearable IoT space. So, we’ll be focused on that moving forward, particularly in two major areas: payments and healthcare,” said Pereira. He went on to say that, “The relationships and additional management that Fit Pay brings to the group are incredibly valuable. The management team is very talented. They have experience building businesses and managing very large portfolios, so I expect that to be very accretive to the company.” Also on the podcast was Orlando, who recently took up a position on the board of NXT-ID. According to Orlando, the recent announcement that Fit Pay was approved as a ‘Visa Token Service Provider’ is a big step forward for the product. “The accreditation and certification of the Visa Token Service was the next layer in the commercialization of our platform. We’ve received similar accreditation from MasterCard earlier in the year, so now we’ve got the two largest global networks on our platform. We’re the first to achieve that globally, so it’s a unique position in the marketplace to bring our services to the market in that way,” said Orlando. He also noted that Fit Pay will be providing payment capabilities for Token, a biometric identity ring. As a result revenues will begin to flow into the company over the balance of 2017 and into 2018. “We’ve got 15 companies that we’re working with at various levels of integration. A big chunk of those will launch products later this year or early in 2018. So, a lot of the work that we’ve put our blood, sweat, and tears into over the last three years, is about to come to fruition here in the coming months,” said Orlando. The company’s shares were recently trading around $1.75. Time to get in?
As biometric devices move into the mainstream it seems more news reports than ever contain mention of the technology. This week was no different. Several different stories highlighted how biometrics devices are being used in many different ways.
-One interesting story on the use of biometrics noted this week: A newspaper story from the US notes that a, “… high school in Missouri will start its semester by scanning the fingerprints of its students as part of a new program designed to allow students to control their own schedules.” A high school of 800 students near Kansas City will use biometrics to check the students into certain rooms throughout the school day. The school is moving to a schedule that sees students choose their own electives and work-study periods (some of which won’t have teachers present). To prevent students from having someone else check in for them in the study periods, the school is adopting a biometrics-based attendance system. The principal of the school was quoted as saying that, “… the decision to embrace biometrics is a move done to prepare students for the future, including the work force.” The story went on to note that a recent survey showed, “… six in 10 businesses have started to use some type of biometric measure for authentication in the workplace.” The mainstreaming of biometric scanners is happening.
-Another news report this week comes from Singapore where a school system is set to begin using biometric readers as well. According to the report the biometric readers will be be part of a program called Touché, which will allow students to register two fingerprints and then use this data to access an existing payment system linked to accounts controlled by the parents of the students. The CEO of biometric service provider Coolpay (the company providing the device) was quoted as saying the program, “is in line with our Prime Minister’s focus on making Singapore a Smart Nation.” It’s a brave new world out there.
-It seems as if a new report emerges weekly about the expected growth in the biometric market. But one of these reports was interesting in that it measured the growth in the military biometric market. This specialized sector is expected to grow at an annual compound rate of 7.4% out to the year 2025, when the market will be worth a massive USD $10.6 billion according to the report. A press release suggests, “The ongoing threat for terrorism and the rising concern for illegal migration in countries such as the U.K. and the U.S. are resulting in a government focus on upgrading the military and defense facilities with biometric authentication.” According to the report if there is one reason that growth could lag it will be as a result of a lack of qualified people. “The installation of biometric authentication systems is complex and needs skilled personnel,” says the report. Without people, growth can’t happen. In June 2016 the CIO of the Pentagon announed a two year plan to replace, “.. the functions of common access cards with biometric systems such as iris scanners and behavioral analytics.” Demand for biometric devices in this sector will expand rapidly. The same technology will be used by U.S. allies including Australia, Britain, Canada and New Zealand according to the report. North America will be the biggest military biometrics market as a result of the, “… ongoing threat of illegal migrations from Mexico [that] has resulted into the U.S. government upgrading their authentication systems in border security.” The Asia Pacific region will boast the fastest growth in this sector during the period out to 2025.
-Backing up the claims of the above-mentioned report is a news story from this past week noting that a second division with the US Department of Defense (DOD), the U.S. Army Network Enterprise Technology Command (NETCOM), has adopted the same device that the Defense Innovation Unit did in June. Both divisions are using systems provided by Vancouver-based Plurilock Security Solutions. The company’s product is called BioTracker, and according to a news report, it works by, “… logging per-user keyboard typing speed, keystroke style, and mouse use. It then creates a unique fingerprint for each user and uses it to continuously authenticate the DOD employee while using a computer.” This so-called behavioral approach to biometrics is an emerging trend that can provide “proof-of-presence” (that is, can’t be spoofed). Are behavioral-based biometrics the new big trend? Behavior-based biometrics popped up in another couple of articles recently. The major business magazine in America, Fortune, ran a feature on a biometric firm, BioCatch a couple weeks (as mentioned in this space). The company uses behavioral biometrics to help credit bureau spot fraudsters applying for credit cards. The phrase also popped up in a recent story (also reported here) about an Israeli start-up, Unbotify, which is using a machine-learning system for to catch bots on gambling and travel websites. According to the story Unbotify’s, “… system tracks users to create their behavioral fingerprints that would then be analyzed by a machine-learning system to detect and block bots in real time.” Is this the next big trend in the industry? Arguably, so.