Fingerprint Cards posts 2018 results; challenging mobile market to impact sales
Fingerprint Cards today reported a Q4 loss and said that a challenging mobile market would impact Q1 2019 sales for the Swedish biometrics firm as consumers are replacing their devices less frequently.
Fourth quarter revenues were SEK 424.3 million (US$45.7M), down 31 percent from the same quarter in 2017, and full year 2018 revenues fell 48 percent to SEK 1,535.1 million ($165M), with a gross margin of 0, down from 33 percent a year ago. This led to an operating loss of SEK 771.6 million ($83M), as the company’s operating margin went from 5 percent in 2017 to -5 percent in 2018. The consolidated equity/assets ratio amounted to 77 percent at the end of the period, compared with 66 percent at the end of 2017 and net cash assets grew from SEK 455 million ($49M) in 2017 to SEK 540 million ($58M) in 2018.
In the fourth quarter, Fingerprint Cards repaid the remaining portion of the acquisition loan for the purchase of Delta ID, making the company debt-free. Other highlights from Q4 include: a favorable volume trend for the FPC1511, a fourth generation capacitive sensor; meeting its goal to generate 10 percent of sales outside fingerprint sensors for smartphones, both in the fourth quarter and for full-year 2018, and; its cost reduction programs resulted in a two-thirds reduction in OPEX from the highest 2017 level.
In the year-end report President and CEO Christian Fredrikson said that while he expects the global mobile market to remain challenging, it is evident that biometric solutions for smartphones will remain an attractive and growing market. He notes that about 60 percent of all smartphones sold in the world have some form of biometric sensor and he is convinced that the penetration rate will continue to increase.
Fredrikson also noted that the company’s goal for a 2019 launch of an in-display product based on its optical sensor technology is proceeding according to plan, and that prototype demonstrations for customers were conducted earlier this year.
“Fingerprints is also well positioned to capture a significant share of new, emerging global markets for biometric solutions, in particular, biometric smart cards,” Fredrikson explained. “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.”
Market tests of biometric banking cards will continue to increase significantly in 2019, as a number of card brands are close to establishing specifications and standards. The next step in this process is a certification of established standards.
Fredrikson concluded his comments saying, “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. I expect to see continued rapid growth in locks and access systems, as well as in fintech. 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.”