Lenovo, the world’s largest PC manufacturer, launched its first laptops with Fingerprints’ biometric PC solution.
Fingerprints’ optical under-display solution has passed qualification tests at a major Asian smartphone OEM.
Our latest generation of T-Shape sensor module (T2) met Mastercard’s updated security requirements for fingerprint sensors.
Covid-19-related lockdowns in China had a dampening effect on sales development.
Launch of the first smartphone model that integrates the FPC1552, Fingerprints’ latest generation of ultrathin capacitive sensor with a curved shape: Redmi K50 from Xiaomi.
First quarter of 2022
Revenues amounted to SEK 300.2 M (354.7)
The gross margin was 20.4 percent (28.8)
EBITDA totaled negative SEK 10.1 M (pos: 17.2)
The operating result was negative SEK 31.7 M (pos: 1.7)
Earnings per share before and after dilution amounted to negative SEK 0.09 (pos: 0.03)
Cash flow from operating activities was a negative SEK 90.3 M (pos: 36.3)
CEO’s comments
Quarterly sales declined by 15 percent compared with the corresponding period of the preceding year, and by 16 percent in relation to the fourth quarter of 2021. 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. This means, however, that we have relatively strong comparative figures this quarter.
Our access to production capacity was satisfactory, but the COVID-19-related restrictions implemented in China at the end of the quarter led to disruptions in our logistics chains, with delays to product deliveries as a result. This had a dampening effect on the sales development, since our activity level is usually high at the end of the quarter. The lockdowns in China have also led to reduced sales of smartphones in the country, and it is currently unclear how long the restrictions will continue. However, we foresee a generally positive trend in demand for our biometric solutions, which is reflected in our previously disclosed SEK 1,600 – 2,000 million sales forecast for 2022.
The weakening of the gross margin that we reported for the quarter was attributable to a temporarily less favorable product mix. Our assessment is that the mix will improve steadily during the year, which is also reflected in our previously disclosed forecast for the EBITDA margin, which is expected to be in the range of 14-18 percent for the fourth quarter of 2022.
Despite the challenges in China during the quarter, we have continued to strengthen our market position. We were able to announce during the quarter that 600 mobile phone models with Fingerprints’ sensors have been launched to date. We passed the 400 mark at the end of 2019 and 500 at the beginning of 2021. This new milestone reflects the general growth for capacitive fingerprint sensors in mobile telephony as well as Fingerprints’ continued innovation and product development. At the end of last year, we implemented our first volume deliveries of the FPC1552, an upgraded version of our ultrathin, curved capacitive sensor, intended for side mounting on a smartphone. In February 2022, we were able to announce that the first unit that integrates this new product has now been launched: Redmi K50 from Xiaomi.
I am very pleased that our optical under-display solution has now passed qualification tests at a major Asian smartphone OEM. We expect the first commercial projects this year, which would mark our entry into a completely new market segment offering attractive growth opportunities for us going forward. We also expect the market for under-display fingerprint sensors for smartphones to continue growing and flatten out at an annual TAM amounting to approximately 600 million units in 2026. Our aspiration is to be a significant player in this segment.
The proportion of computers equipped with fingerprint sensors is increasing and we are also continuing to focus on the development of innovative products in this area. In March, we announced that Lenovo, the world’s largest PC manufacturer, had launched its first laptop models that integrate Fingerprints’ biometric PC solution. The fingerprint sensor is integrated in the power button on the ThinkBook 14 and ThinkBook 15 G4 models. Since then, Lenovo has launched an additional six models integrating Fingerprints’ biometric solution. These launches entail that our technology is now integrated into Windows PC computers from Dell, Honor, Huawei, Lenovo and Xiaomi. The fact that Fingerprints’ biometric Match-on-Chip solution was added to Microsoft’s approved vendor list (AVL) for Windows Hello Enhanced Sign-in Security at the beginning of 2022 is significant and means that we can now effectively address the entire PC market: both business computers and PCs for private use. Match-on-Chip solutions for business computers have a higher average selling price (ASP) and currently account for about half of our addressable market in the PC segment.
In 2021, we saw commercial launches of biometric payment cards on a somewhat larger scale with Fingerprints’ T-Shape module and biometric software platform, not least by two of Europe’s largest banks: BNP Paribas and Crédit Agricole. We are continuing to drive development forward by scaling up the business, in collaboration with several of the world’s leading payment card players. An example that was highlighted during the past quarter is STPay-Topaz-Bio, an advanced platform for biometric payment cards developed by STMicroelectronics in collaboration with Fingerprint Cards and Linxens. At the beginning of January 2022, this solution was rewarded with a CES 2022 Innovation Award. It is pleasing that, at the beginning of the quarter, we were able to announce that our latest-generation T-Shape sensor module (T2) meets Mastercard’s updated security requirements for fingerprint sensors.
Russia’s war of aggression against Ukraine, which was launched in February 2022, has caused enormous human suffering. Fingerprints is not directly impacted to any significant extent – since we have no operations in Russia or Ukraine – but this dark development affects us all and has had far-reaching consequences for security in Europe.
Christian Fredrikson, President and CEO
Today at 09:00 CEST 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.
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 3566566.
For information, please contact: Christian Fredrikson, CEO
This is the type of information that Fingerprint Cards AB is obligated to disclose pursuant to the EU’s Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on April 22, 2022 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).
