Biometrics stocks this week: NEXT, NXT-ID

Biometrics stocks this week: NEXT, NXT-ID

Stock markets continue to shed double-digits in just hours. It’s weird, but not unexpected, considering. Trump’s trade war is having precisely the effect economists and policy makers said it would.

Let’s focus on the good stuff.

Executives with NXT-ID Inc. were pleased this past week to announce that revenues had tripled in 2017. Overall, the company enjoyed a huge bump in the amount of cash coming into the company. Revenue climbed from USD $7,736,320 in 2016 to $23,316,969 for the full year 2017. The advance was reflected in gross profit, which advanced to $11,631,522 from $3,301,452 in 2016. Even so, the company still recorded a loss on the year. NXT-ID lost $3,638,947 in 2017. But that’s down from $6,710,088 in 2016. So the trend is positive. The loss in terms of earnings per share was also greatly reduced, declining to $0.70 in 2017 from $2.24 last year. Which is a solid improvement. “Our annual results for 2017 show strong continued growth following the significant progress we reported in 2016. Revenue in 2017 was more than three times the level of 2016,” said Gino Pereira, CEO, NXT-ID.

It helped that NXT-ID combined with FitPay in May of 2017. The revenues from the wearables maker helped out the bottom line at NXT-ID. The company’s mid-2016 acquisition, LogicMark, is also doing well, having posted “record revenues” since the buyout. Like many companies this earnings season NXT-ID reported a slowdown in sales of smartcards. That’s been a common story across the sector of late. Pereira reported that deliveries of the company’s Flye smartcard to a key client, WorldVentures, slowed significantly in the second half of 2017. WorldVentures has sufficient inventory on hand. “We do not expect significant deliveries to them until the second half of 2018,” said Pereira. The CEO went on to explain that the current size of the company means it is subject to volatility at times, but that things are changing rapidly. Said Pereira, “We are at a stage of development where the performance of a single customer can cause choppiness in our revenues, but we expect that to decrease as we onboard more customers in 2018. For the first time in 2017 we recorded positive [adjusted earnings] of almost $2 million after adjusting for non-cash charges.” So things are looking good at NXT-ID.

What might be expected for 2018?

One story to keep an eye on at the company is the performance of the most recent acquisition, FitPay, which is introducing next generation wearables into the market. Many in North America are familiar with wrist-worn devices used to measure performance during, say, an exercise routine. But that’s just the start when it comes to wearables. The next step is allowing payments through smartwatches, and that’s a spot in the market FitPay is already addressing. The potential here is huge, obviously. The ability to use a ring or wristband to process a payment will be an advance over the current practice of fishing through a purse or wallet for a card. Retail outlets are now experimenting with self-checkout. Combining the ability to pay with a wearable and a self-checkout world is like chocolate to peanut butter. There is really interesting potential in this space.

“As pleased as I am with the progress we made in 2017, I am even more excited about the coming year as our technology platforms continue to be commercialized. Our new addition, FitPay, now has two smartwatches in market made by Garmin featuring our NFC payment technology, with several more to come in 2018,” said Pereira.

NXT-ID is also looking forward to blockchain and cryptocurrency markets. The ability to pay for something with a wearable from a crypto account would be really cool. That’s part of the plan says Pereira. “As a credential management and authentication company, we are embracing blockchain technology as part of our product offerings and looking at applications in payments as well as healthcare. Our first product offering ‘Flip’ will be available in the first half of 2018… I expect 2018 to build on the growth of 2017 as our company continues to mature and bring cutting edge technologies to market,” he said.

Another company getting set up for success in the biometric world emerging is NEXT Biometrics, which has just buffed up its executive suite.

The organizational changes were announced this past week by Ritu Favre, CEO of NEXT Biometrics. The company didn’t issue a news release, but a memo distributed to employees noted the new additions.

Among the shifts in personnel: Dan Cronin, previously executive vice president of engineering, moves up to take over as COO. According to the memo he’s charged with “integrating product development and manufacturing into a seamless process [and] streamlining activities,” around the production of NEXT’s fingerprint sensors. The new position gives Cronin more oversight of production, along with his tasks leading the engineering teams. “As COO, Dan’s expertise in end-to-end product development is imperative as we grow NEXT’s capability to drive multiple products across a broad marketplace in a timely and cost-effective manner. Under Dan’s leadership we will streamline our processes and structure,” she said. “I am convinced that seamlessly linking engineering product development together with manufacturing operations will allow us to accelerate our product launches and subsequent profitability. This is necessary to enable us to ramp revenue and profitability in line with our stated aggressive company growth plans.”

A new hire at NEXT is Ravi Jagnanath. He’ll come aboard as SVP Operations, reporting to Cronin, and will oversee quality, operations, planning, purchasing and logistics. He has an impressive resume. Ravi joins NEXT from chip maker Cirrus Logic, where he served in a senior operations function. Earlier, he led and managed product validation and program management teams for NXP’s automotive microcontroller business. Prior to that he was in operations and engineering at Freescale Semiconductor. There was also an early stint working in engineering at IBM over 13 years. It’s interesting that he has some experience in the automotive world.

Rounding out the reorganization is an increase in responsibility for Zehira Sitbon-Dadon, currently chief of staff, HR officer, and senior vice president of business operations. She’ll also handle sales and operations planning. So she’s going to be busy. But it is hoped the changes set NEXT up for a new round of growth.

“I’m pleased to be announcing these changes. They are a clear sign of the company’s growth and potential for greater success in the future,” said Favre.

The memo also mentioned a recent milestone–four million sensors shipped. The company achieved this goal in late March, five months after the company shipped three million sensors.

“I remain incredibly impressed with the core technical capabilities in this company as well as the biometric solutions expertise we’ve gleaned through our learning and experiences,” said Favre. The next step she says is to work on product development and the process for launching new products. “For us to make the leap as a company to a thriving and growing business that takes full advantage of our capabilities, we now need to make fundamental changes to our product development and launch organization,” said Favre. The recent changes will lead to success at this next level according to the relatively new CEO. Favre joined NEXT in just February of 2017. She took over from Tore Etholm-Idsøe, who is now chairman of the board at the Oslo, Norway-based company. Favre is based in Silicon Valley. She has taken several projects to market at companies like Motorola, Freescale and Synaptics. Now she is putting her stamp on NEXT. The story is getting interesting. “The changes we’re making today will enable us to rapidly scale to launch a broad range of products into multiple markets while delivering the highest levels of quality at low cost. As we prepare for the company’s growth, these moves are designed to help NEXT scale as an organization…,” said Favre.

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