Signs of a COVID hangover in results as China lockdowns dampen biometrics boom
Company financials bring an update on the state of the biometrics and identity sectors with positive figures as GBG releases its pre-close trading update for its year just ended and Telesign for its Q1 2022. Whereas Fingerprints Cards’ Q1 highlights reveal momentum but also disruption from lockdowns in China.
GBG expects revenues of US$315M, 24 percent profit growth
GBG is including around £13 million (US$16.9 million) of initial revenue from its acquisitions of Acuant and Cloudcheck to deliver what it expects to be revenue of £242 million ($315 million) of revenue for its year ended 31 March 2022.
The company’s organic constant currency growth calculations are expected to come out at around 10.5 percent for the year.
Profit growth is predicted to have been 24 percent yielding operating profits not less than £58 million ($75.4 million)
The statement describes the growth as “pleasing given the substantial one-off benefit in the prior year related to the US (sic.) government’s stimulus programme; adjusting for this, underlying growth was c.15 percent.”
Its Identity, Location and Fraud divisions all experienced growth. Identity due to more projects requiring identity verification and demand from the fintech sector; Location due to continued consumer shift to online and brands pursuing direct-to-consumer strategies; Fraud as people returning to the workplace meant new contract wins as well as strong retention.
“We carry momentum into our new financial year with real enthusiasm for what we can achieve despite some significant macro uncertainties, including ongoing pandemic restrictions, geopolitical uncertainties and the backdrop of rising inflation,” comments Chris Clark, CEO of GBG.
“The acquisition of Acuant accelerates our product and market strategies and we are confident that, together, we have more resources and opportunities than ever before to achieve our significant potential.”
GBG is undergoing something of a global expansion. It recently created its Americas and Global Product groups to assemble its recent acquisitions in the biometrics space. The company claims it is now the largest pure-play digital ID verification and fraud prevention technology provider in the Americas.
Tough financial Q1 for Fingerprints Cards, new deals announced
Sweden’s Fingerprints Cards AB has released its interim report for Q1 2022 which summarizes new deals, but also the dampening effect on sales development due to COVID-19 lockdowns in China and negative headline figures. The firm stands by its previous sales predictions for 2022 of SEK 1.6 to 2 billion ($169 million to $211 million).
Revenues tumbled to SEK 300.2 million from 354.7 million the year before ($31.7 million, $37.8 million), EBITDA fell to negative SEK 10.1 million from a positive 17.2 (negative $1.06 million, positive $1.8 million), the operating result was negative SEK 31.7 million down from a positive 1.7 million (negative $3.3 million, positive $180,000) and cashflow from operating activities fell from positive SEK 36.3 million to negative 90.3 million (from positive $3.8 million to negative $9.5 million).
“For component suppliers to the mobile industry, such as Fingerprints, volumes in the first quarter tend to be the weakest seasonally. However, during 2021, we did not observe this seasonal effect, possibly due to the global economic recovery in the first quarter after a tough 2020 that was dominated by the coronavirus pandemic,” comments Fingerprint Cards president and CEO Christian Fredrikson.
“This means, however, that we have relatively strong comparative figures this quarter.”
COVID-19 disruptions to logistics chains in China plus reduced smartphone sales in China due to lockdowns have impacted the firm and it remains unclear how the situation will develop in China.
Gross margin also fell from 28.8 to 20.4 percent, attributed to an unfavorable product mix which will be resolved steadily during the year.
The company has recently announced that its fingerprint sensors are now in 600 smartphone models, that Lenovo is integrating its biometrics into two new laptops and that its optical under-display solution for smartphones has passed initial testing at a major Asian smartphone OEM.
Fingerprint Cards’ latest update on biometrics in PCs is that Lenovo has announced six new models that will incorporate its biometrics.
In FPC’s mobile business line, its optical under-display biometric solution has passed qualification testing from a major smartphone OEM based in Asia. The first commercial projects are expected to launch this year, bringing Fingerprint Cards into a new market segment. The company estimates that 600 million devices a year will be sold with under-display fingerprint biometrics by 2026.
The company has also been constantly announcing the rollout of biometric payment cards bearing its sensors. Its latest update here are at least two new commercial biometric payment card launches in Morocco, as announced by two of the country’s largest banks. The banks are not identified in the announcement. This follows its December 2021 announcement for Jordan as the company continues to develop its MENA activities.
Over 20 percent Q1 total revenue growth for TeleSign ahead of potential IPO
Digital identity and communications solutions provider TeleSign announces consolidated revenue and gross profit increased by 20.8 percent for Q1 2022 and 17.5 percent year-over-year. Its first quarter revenue for Digital Identity increased 29.1 percent to $9.5 million and direct margin by 31.6 percent year-on-year, strong than the equivalent figures for Communications of 20.1 and 13.1 percent.
The business combination with North Atlantic Acquisition Corporation (NAAC) has been approved by both boards and a special meeting of NAAC shareholders is scheduled for 18 May ahead of a planned public listing.
“We’re very pleased with TeleSign’s first quarter results, which represent further confirmation of the company’s execution and market opportunity,” comments Gary Quin, NAAC’s Chief Executive Officer. “We look forward to the next stage of TeleSign’s journey of becoming a public company.”