Biometrics stocks this week: venture phase firms, biometric cards and payment solutions
Investment fund managers are beginning to chat about the “late-cycle” market environment firming up in North American stock markets. Several reports popped up this week suggesting that the signs of an end to the current growth phase of this economy cycle are beginning to appear.
Within the biometrics sector a couple of companies still in their venture phase are attracting attention. One of these is Palo Alto-based Jumio, a biometric tech firm that is focused on the financial services, retail, travel, blockchain and online gaming sectors.
Jumio uses computer vision, machine learning and live verification to confirm credentials such as passports and drivers licenses. This week the company announced that it is experiencing astounding growth. According to a press release Jumio just enjoyed its “best sales quarter in company history.”
For the quarter ending June 30 Jumio posted a remarkable 269 percent increase in sales (as compared to the same quarter last year). Much of the growth came from the Asia Pacific region, where the company expanded sales by an amazing 531 percent over the previous quarter. This is stellar growth by any measure. But then there is some buzz around the company.
Jumio was the recipient of this year’s Frost & Sullivan’s North American Entrepreneurial Company of the Year award (in the Biometric Security Solutions category). That’s big. And now the company is cleaning up business wise. According to the most recent financials the company also registered another Q2 milestone: six straight quarters of sales growth. The company also opened a new Singapore office, launched a product for liveness detection on the web and added some new executive hires.
“We’re thrilled that within three months of opening our Singapore office, Asia Pacific has already generated so much in sales and has seen such wide adoption,” said Steve Stuut, CEO, Jumio. “This type of immediate market traction speaks to the opportunity this region represents and the untapped potential, especially within financial services, enterprise and e-commerce markets.”
Jumio may also enjoy a boost in revenues from Europe. This past June Jumio published a blog post noting that most businesses on both side of the Atlantic are “woefully unprepared” for the new European area regulations known as GDPR. The post goes on to suggest that some companies may, “… not even realize their responsibilities to vet certain service providers for compliance.” A study claims that only 13 percent of U.S. companies are fully GDPR compliant. In Britain only 6 out of 10 members may be fully compliant. The company’s products help companies get compliant in terms of GDPR, so there’s a lot of untapped business out there.
Earlier this month Jumio also announced that its Netverify product won a gold and bronze awards at the 13th Annual 2018 IT World Awards. Jumio’s technology is said to have been recognized for its accuracy as well as the capabilities of its machine learning ability. Many of the new digital products coming to market rely on machine learning. This programming approach requires huge databases for computers to learn from. According to Jumio, “Machine learning for online identity verification relies on having a large (ideally massive) database of good and bad (i.e., fraudulent) transactions. The larger the dataset, the smarter the algorithms. Jumio has performed over 120 million online verifications and has the largest database of identity verification transactions training its algorithms.”
Jumio is still in the venture phase. Could the company one day be taken public through an IPO? Could be. For now, the company is being funded by two venture firms, Centana Growth Partners and Millennium Technology Value Partners. Presumably these companies will eventually want to cash in on their investment. One should assume such an IPO would be very well subscribed. The VC firms involved in Jumio seem to have impressive pedigrees. Centana is a relatively new fund focused on the so-called “fintech” sector. It was only last June that the fund raised its first $250 million in capital for its inaugural VC fund. But according to reports in the financial trade press the offering was oversubscribed. And no wonder. The firm that acted as the placement agent on that deal was Lazard, a legendary nameplate and of the oldest investment banks in the world. Lazard traces its origins back to 1848 and is credited with “virtually inventing” the modern mergers and acquisitions (M&A) market.
Another up-and-comer in the biometrics venture space is SenseTime, which recently made news when it raised $600 million in a financing round involving the massive Chinese tech firm Alibaba. At a conference this past week the co-founder of SenseTime, Xu Bing said the company plans on building out its portfolio beyond facial recognition. The company will apply the same AI computer vision algorithms to augmented reality (AR) and autonomous driving. Xu explained its technologies will “enable machines to recognize images both inside and outside cars… ” This is a neat idea. An automated vehicle that can read the expressions on the faces of pedestrians around a car would be a safer car.
That SenseTime received funding from Alibaba bodes well for its future. Alibaba operates the biggest online payment platform in China. The company’s payment app, Alipay, is said to have processed almost 300,000 transactions a second this past Single’s Day, which is a relatively new holiday similar to Valentine’s Day in North America. Single’s Day has rapidly become the single largest shopping day in China. It is said the $600 million that Alibaba threw at SenseTime is a record for the largest venture capital investment in the artificial intelligence sector. The investment values SenseTime at $3 billion.
It’s also worth noting that a previous financing round for SenseTime included a Chinese retailer known as Suning.com. North Americans may not recognize the brand name but the company is one of the largest non-government retailers in China and has more than 1600 stores in over 700 cities in the country.
Catching up on news at the publicly traded companies in the biometrics sector, NEXT Biometrics announced this week that Alain Faburel has joined the company as chief sales and marketing officer. Fabural comes from French biometrics firm IDEMIA. He brings with him extensive experience in smart card and digital security technologies. Fabural spent time at Gemalto, where he ended up as senior vice president of sales for Southern Europe, Eastern Europe, the Middle East and Africa (in the company’s Secure Transaction business unit). Faburel also built a sales and marketing strategy for smart cards as senior vice president of sales and marketing at CPS Technologies. He also served as vice president and general manager for the security business unit at Crocus Technology from 2011 to 2015. Faburel’s most recent role was as vice president, pre-sales for powered cards at IDEMIA. In this position he was responsible for promoting next generation payment cards (including biometric smart cards). That experience will come in extremely handy at NEXT as the company expands its sales operations. NEXT also announced this week that it is creating an integrated sales organization to cover the Americas, Europe, the Middle East and Africa, Asia Pacific and India. Fabrurel will lead this sales organization.
NEXT Biometrics shares were trading at NOK 33.80 this week.
NXT-ID this week announced that the company’s token-based wearables will find their way into Australia with the signing of a deal with Westpac, Australia’s oldest bank. The agreement will see contactless payment capabilities extended to a range of new devices, including the latest smartwatches from Garmin International. Westpac customers will be able to make secure contactless payments at NFC-enabled point-of-sale locations directly from Internet of Things (IoT) and the wearable devices. NXT-ID’s subsidiary, FitPay, is providing the technology that is making these wearables possible. The COO of NXT-ID (and president of Fit Pay) is Michael Orlando. He recently noted that the manufacturer of the devices, Garmin, has just released a new round of devices, including the Vivoactive 3, which is the next iteration of a device first launched back in November. The Vivoactive is the company’s mainstream smartwatch. But Garmin has also announced the Fenix 5 Plus, which is a high-end athletic watch that will have contactless payment ability. According to Orlando, “We’re in over 20 countries right now, that includes over 130 banks, and they’re the largest banks in those regions…” Chase bank here in North America also recently enabled the FitPay system on its Visa credit and debit cards. This is a big announcement. Chase is a major North American bank. “By adding Chase here in the U.S., we’ve added a huge constituency of consumers that now have access to Garmin Pay and the FitPay platform,” said Orlando. He promises a number of announcements later in the third quarter and early fourth quarter of this year as these new Fit Pay-based devices continue to be rolled out to the market.
It is also worth mentioning that Fit Pay is getting ready to deploy a new tech called Flip, which will allow contactless payment devices for cryptocurrencies. “That’s a really important development because it helps to prove cryptocurrency as a transactional-based currency… So it’s exciting to get that product to market really soon,” said Orlando. Many are still skeptical about cryptocurrencies, but Orlando says Fit Pay is dedicated the market. “We should all have expected that it would continue to be volatile, particularly as the regulatory players figure out how they’re going to define and deal with crypto in general… For us there is no doubt that cryptocurrencies are here to stay. There’s going to be various forms of those and acceptance of those. We feel like we need to be a part of that and ensure that we’re staying in touch and in tune, and looking for ways to innovate around those different currencies and blockchain in general,” he said.
NXT-ID shares were trading up almost four percent on Thursday at USD $1.57.
Diebold Nixdorf announced this week that it has partnered with Mastercard to offer an end-to-end managed solution for the banking and retail sectors which they bill as “industry-defining,” including cardless transactions authenticated with biometrics. The solution brings Diebold Nixdorf’s front-end transaction expertise and AllConnect Services Infrastructure together with Mastercard’s back-end processing services and global network capability. It will be delivered “as a Service,” and provide a range of benefits to banks and retailers, according to the announcement, including operational efficiencies from leveraging Mastercard’s network switching and data analytics and fraud detection capabilities, such as its SafetyNet and Decision Intelligence. It offers options for authentication via mobile device to conduct ATM transactions, and will support the introduction of more payment types and new products with increased speed and agility.
Diebold Nixdorf shares were trading at USD $12.48 Thursday, down four percent.