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Fingerprint Cards AB: Interim Report January – September 2020
Highlights of the quarter
The demand for Fingerprints’ sensors remained healthy, while earnings were negatively impacted by continued insufficient access to production capacity among the major semiconductor manufacturers.
Design win from a top-tier global PC manufacturer, with product launch planned for Q1 2021 (event after the quarter end).
Launch of next-generation T-Shape® sensor module for contactless biometric cards.
Visa certified a biometric payment card from Thales, in which Fingerprints’ technology is included.
Third quarter of 2020
Revenues amounted to SEK 294.0 M (352.5)
The gross margin was 18 percent (23)
EBITDA totaled SEK 8.7 M (35.6)
The operating result was negative SEK 4.6 M (neg: 3.4)
Earnings per share before dilution were negative SEK 0.01 (pos: 0.02)
Cash flow from operating activities amounted to SEK 67.7 M (59.5)
January-September 2020
Revenues amounted to SEK 886.3 M (1,077.2).
The gross margin was 21 percent (23)
EBITDA totaled SEK 27.0 M (115.4)
The operating result was negative SEK 39.0 M (pos: 0.9)
Earnings per share before dilution were negative SEK 0.09 (pos: 0.02)
Cash flow from operating activities amounted to SEK 111.2 M (78.0)
CEO’s comments
While demand for Fingerprints’ products remained healthy, our result in this quarter was again negatively impacted by the prevailing shortage of production capacity among the major semiconductor manufacturers. The limitations in our supply chain pushed up purchasing prices even further, which had a negative effect on the gross margin. At the same time, our continued focus on working capital and effective cost control contributed to strong cash flow for the quarter. Our assessment is that the situation of insufficient access to production capacity will continue in the short term, but we expect ongoing changes to our product mix to, over time, contribute to improved profitability. As communicated earlier, we are planning for significant volume growth in the next few years, mainly in prioritized areas outside of the mobile phone industry. For this reason, the work to continue to broaden our supplier base is very important and we have intensified our efforts to secure more suppliers of key components, within as well as outside of mainland China.
Our ultrathin FPC1540 sensor, designed for side mounting, is reaping huge successes in the market, with several product launches during the period. These included phones from new customers, such as CAT Phones, Transsion and Vinsmart. We have recently seen a clear upswing in the market for capacitive sensors for smartphones. To date this year, approximately 60 percent of the smartphones launched by the ten largest manufacturers have a capacitive fingerprint sensor, while around 35 percent have an under-display sensor. Both capacitive sensors and under-display sensors are increasing somewhat, while we are seeing a decline in the share of devices without biometric sensors.
In the PC segment, there was also positive development in terms of demand, in line with our expectations. On October 22, we announced that we had secured a design win from a top-tier global PC manufacturer, with a product launch planned for Q1 2021. In addition to this, we secured several design wins from smaller PC manufacturers, which also have launches scheduled during Q1 2021. During the next few years, we expect healthy growth in the market for fingerprint sensors for computers. Our position in this segment is strong. Computers equipped with fingerprint sensors from Fingerprints have already been launched by Acer, Asus, Google, HP, Huawei, Microsoft and Samsung.
The activity level in the payment area was also high during the quarter. Card manufacturers and their business partners in various parts of the value chain have worked for many years to enable large-scale launches of biometric payment cards. The results of these efforts are now beginning to become increasingly concrete. During the quarter, it was announced that Visa has certified a payment card from Thales, which uses Fingerprints’ technology. This biometric card is the first in the world to be certified by both Visa and Mastercard, which makes it possible for card issuers to conduct larger commercial launches. A reasonable cost level is another important requirement for ensuring that this new mass market for biometrics accelerates. In this respect, we took a significant step forward during the quarter with the launch of the latest-generation T-Shape® sensor module for contactless biometric payment cards. This new product gives a higher performance than its predecessor, while it is also world-leading in terms of cost efficiency, with an indicated price of less than USD 3 in volume production. It is also satisfying that we were able to announce partnerships during the quarter with both Infineon and STMicroelectronics, with the goal of developing advanced solutions for biometric cards.
Christian Fredrikson, President and CEO
Today at 09:00 CET Fingerprints’ CEO Christian Fredrikson will present the report together with CFO Per Sundqvist in a combined webcast and telephone conference. The presentation will be held in English.
The report will be available at fingerprints.com
The webcast and the presentation material can be accessed through https://engage.vevent.com/rt/fingerprints/index.jsp?seid=170
For analysts and media: The telephone conference dial-in is +44 (0) 2071 928000 (international participants) or 08-506 921 80 (Swedish participants). Please state conference ID 6729839.
For information, please contact: | |
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