Fingerprint Cards AB (publ) publishes interim report for January –
March 2024
Highlights
Q1 2024
- Positive momentum in PC continued,
with an 80-percent year-on-year growth
- Slight increase in gross margin
compared to the previous quarter, as profitability in non-Mobile
areas continues to be strong
- Continued execution of cost
optimization program, with a nine-percent reduction in the number
of employees since the end of 2023
Post-Q1 2024
- By winding down the loss-making
operations in Mobile, we will have a focused and profitable growth
business
- Announced partially guaranteed
rights issue of up to approximately SEK 310 million, strengthening
balance sheet by reducing debt and increasing equity through an
early repayment of outstanding convertible bonds
First quarter of 2024
- Revenues amounted to SEK 146.4 M
(117.0)
- The gross margin was 11.1 percent
(17.3)
- EBITDA amounted to negative SEK 50.5
M (neg: 60.2)
- Adjusted EBITDA amounted to negative
SEK 50.5 M (neg: 60.2)
- The operating result was negative
SEK 74.9 M (neg: 75.7)
- Earnings per share before and after
dilution amounted to a negative SEK 0.14 (neg: 0.17)
- Cash flow from operating activities
was negative SEK 60.1 M (neg: 42.3)
CEO’s comments
Our PC Product Group, along with mobile, has driven a 25%
increase in overall revenue compared to last year, a significant
performance that underscores our positive revenue momentum. A
highlight of this is an 80% surge in the higher-margin PC Product
Group, in a quarter in which we announced the launch of the Asus
Expertbook B5 laptop featuring our Match-on-Chip biometric
solution. With our technology now adopted by four of the top five
Windows PC manufacturers globally, we expect sustained growth in PC
adoption with fingerprint sensors, reinforcing our strategic
direction. Additionally, despite challenges in the Chinese
residential real estate market affecting biometric door lock sales,
the rising demand for FIDO-related logical access solutions in
North America and Europe signals our successful pivot towards
higher-margin markets and system-level expansions.
Gross Margin Performance
This quarter, we observed a slight improvement in our gross
margin from the previous quarter, primarily due to robust
profitability in our non-Mobile Product Groups. However,
year-on-year comparison reveals a six-percentage point decline in
our gross margin. This reduction is mainly due to challenging
market conditions within our Mobile Product Group, which remains
our most significant revenue contributor. Despite inventories
stabilizing at more typical levels, substantial price pressures in
the Mobile sector continue to challenge us, and we expect these
pressures to persist in the upcoming quarters.
Completing the Transformation Plan
We launched our Transformation Plan in October 2023, targeting
significant financial improvement by the second half of 2024
through a phased implementation. This comprehensive plan has six
key elements:
1. Devising a new
strategy,
2. Strengthening
the balance sheet,
3. Refreshing our
portfolio,
4. Optimizing
costs,
5. Enhancing
talent and organization, and
6. Improving
governance and incentives.
We are currently progressing through the Stability phase of this
plan, effectively halting losses and strategically repositioning
the company towards sustained profitability and enhanced cash flow
in our core business areas.
Portfolio Refresh: Winding down the loss-making Mobile
business
In our year-end report for 2023, we announced our decision to
redirect capital and investments away from mobile sensor hardware
toward more profitable business areas. We are accelerating this
pivot by phasing out the loss-making Mobile business to safeguard
our company's financial health and future viability. As a result,
revenue from Mobile will decrease as we concentrate on more
profitable sectors. We expect significant improvements in
profitability as our focus shifts toward non-Mobile areas.
Continued Cost Optimization
In October 2023, we set a target for our operational expenses
(OPEX) to reach approximately SEK 180 million annually, taking full
effect in the second half of 2024. We are currently implementing
restructuring measures aimed at achieving these savings. Through a
dedicated focus, we have identified an additional SEK 30 million in
savings, lowering our targeted annual OPEX to SEK 150 million by
the end of this year— a significant reduction that is now fully
underway.
Strengthening our balance sheet
On April 26, 2024, Fingerprints announced significant measures
to address its financial position. These steps include reducing
debt and increasing equity. The company will repay its outstanding
convertible bonds early to provide greater financial flexibility
and level the investor playing field. Fingerprints has agreed with
Heights Capital Management to redeem these bonds early at their
total nominal value of approximately SEK 105 million, including
accrued but unpaid interest. Additionally, to ensure liquidity
until the completion of the upcoming rights issue, which aims to
raise up to SEK 310 million, a consortium of investors has extended
a bridge loan of SEK 60 million to the company. This rights issue,
offering preferential rights to existing shareholders, is pending
approval at the annual general meeting scheduled for May 28,
2024.
Strategic Focus on Biometrics and Identity
Biometrics and Identity, where we hold a pioneering role,
represent exciting, significant, and growing markets at the
forefront of human-digital interactions.
Our strategic position is unique and robust across several key
market areas. In the PC sector, we have transitioned from supplying
mere components to delivering comprehensive fingerprint recognition
systems, including our in-house microcontroller units (MCUs).
Beyond PCs, we envision a future of multimodal solutions that
seamlessly integrate fingerprint, iris and other modalities. This
innovative approach not only enhances security and usability but
also enables applications like continuous authentication and
deep-fake mitigation. Our technology's versatility extends to
driver monitoring systems (DMS) and augmented/virtual reality
(AR/VR) devices. Recently, we successfully integrated our iris
recognition technology into DMS for authentication, a solution we
are now promoting to automotive OEMs in partnership with a tier-1
supplier.
Our commitment to innovation is evident in our vast patent
portfolio, which boasts over 700 registered patents. These patents
cover a wide range of areas, from algorithms and biometric image
processing to sensors and hardware packaging. This wealth of
intellectual property not only presents numerous opportunities for
monetization but also underscores our dedication to staying at the
forefront of the industry. On May 6, 2024, we announced that we
have signed a patent license agreement with a major global company
as the licensee. This represents a milestone as Fingerprints’
first-ever patent license agreement, arising from the New Business
team initiative which was announced in July 2023 with the aim of
developing new business and driving revenue growth. While this
initial agreement alone will not have a material financial impact,
as Fingerprints’ first-ever patent license agreement it is an
important milestone in pursuit of additional monetization
opportunities. We see an increased potential in this area, and we
work with leading patent law firms to capitalize on this
opportunity.
Our vision for Fingerprints to expand into other segments of the
identity value chain is exciting. While biometric technologies have
been around for some time, their integration into all digital
interactions remains unfulfilled, primarily due to their
complexity. We believe in a platform that ingests our best-in-class
modalities in software, combines it with identity data for a
high-efficacy authentication and authorization outcome, and
orchestrates identity within a client’s workflow for simplified,
ongoing identification. This will simplify consumption, improve the
user experience, provide continuous identity security and mitigate
the rise in deep-fakes. We are excited to lead this
transformation.
Adam Philpott, President and CEO
Today at 09:00 CEST, Fingerprints’ CEO Adam Philpott will
present the report together with CFO Fredrik Hedlund in a combined
webcast and telephone conference. The presentation will be held in
English.
The report will be available at fingerprints.com
The presentation will be webcast, and participants can register
via this link:
https://edge.media-server.com/mmc/p/p3xotyyb
For media and analysts: Registration for the teleconference is
carried out via this link:
https://register.vevent.com/register/BIcea941f6b5fb498aadb3d6e18ba349d6
For
information, please contact:Adam Philpott, CEOFredrik
Hedlund, CFOStefan Pettersson, Head of Investor Relations:
+46(0)10-172 00 10investrel@fingerprints.comPress: +46(0)10-172 00
20 press@fingerprints.comThe information was submitted for
publication, through the agency of the contact person set out
above, on May 7, 2024 at 07:00 a.m. CEST. |
About
Fingerprints Fingerprint Cards AB (Fingerprints) – the
world’s leading biometrics company, with its roots in Sweden. We
believe in a secure and seamless universe, where you are the key to
everything. Our solutions are found in hundreds of millions of
devices and applications, and are used billions of times every day,
providing safe and convenient identification and authentication
with a human touch. For more information visit our website, read
our blog, and follow us on Twitter. Fingerprints is listed on
Nasdaq Stockholm (FING B). |
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