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The slide in fingerprint biometrics revenue continues as vendors fight for momentum

Zwipe and Next report first half results
The slide in fingerprint biometrics revenue continues as vendors fight for momentum
 

The landscape of fingerprint biometrics developers looks like a scout jamboree the morning after a heavy rain. A lot of hands furiously waving at soggy wood to start fires.

That was as true for mobile fingerprint platform and software-maker Zwipe and sensor-maker Next Biometrics during the first half of 2023 as it was for anyone.

Zwipe Group, which includes Zwipe AS and subsidiaries in the U.S., the UK, Germany and Singapore, reports a widening loss in the first half, ended June 30.

Its net loss was NOK 55.7 million (US$5.4 million), or NOK 1.14 per share ($0.11), on revenue of NOK 1.7 million, ($160,000) compared to a net loss of NOK 47.6 million ($4.5 million), or NOK 1.28 ($0.12), on revenue of NOK 815,000 ($76.2 million) for the first half of 2022.

Unhappy news, although Zwipe’s gross margin tripled, from 10 percent a year ago to 30 percent in this report.

Unhappy, too, is adoption in the market of its fingerprint smart cards. The company maintains that its products aren’t facing headwinds alone, that the sector is struggling.

Executives took two difficult steps during the half that probably feel like gulps of fresh air in a fire right now. It sold off more equity, raising NOK 100.1 million ($9.4 million) but also diluting its stock. Shareholders no doubt were assuaged in part by cost-cutting that included layoffs.

Together, the moves were designed to slash operating costs in fiscal 2023 by NOK 14 million ($1.3 million) compared to last fiscal year.

The company managed forward moves during the first half.

Zwipe announced its first commercial launches with MasterCard and Visa. It released what executives said is the “market’s first mobile enrolment” code with a software development kit for card issuers. They also said partnerships were signed with eight smart card makers and personalization bureaus. Most are in the Asia-Pacific region.

Next Biometrics also is finding it difficult to maintain substantive momentum with the added weight of “key customers” who the company says are delaying projects.

Executives report that their operating loss for the first half was NOK 33.4 million ($3.1 million), or NOK 0.36 ($0.034) per basic and diluted share, on operating revenue of NOK 13.7 million ($1.3 million). This compares to an operating loss of NOK 24.8 million ($2.3 million), or NOK 0.26 ($0.0024), on operating revenue of NOK 20.6 million ($1.9 million).

The company is boasting about three design wins registered in the first half. In fact, according to the report, the 41 design wins notched since the end of 2019 have “the potential to make Next profitable.”

And its sensors are now available, through EOD Gear, for use by the U.S. federal government.

Contracts were signed independently with two Asian outfits that together could bring in NOK 175 million ($16.4 million) over three years, according to the company.

The backdrop are delays in developing the FAP20 sensor-chip market in India. Next is waiting for OEM buyers to gain needed certification, a bottleneck executives say should be relaxing.

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