Third quarter, 2015:
- Revenues amounted to SEK 964.0 M (66.2), an increase of 1,358% compared with the third quarter of 2014
- Gross margin was 45% (32).
- Operating profit amounted to SEK 346.1 M (neg: 43.9).
- Earnings per share increased to SEK 5.58 (neg: 0.76).
- Order backlog at the end of the period was SEK 1,788.0 M (50.0).
- Cash flow from operating activities was SEK 299.8 M (neg: 40.6).
January to September 2015
- Revenues amounted to SEK 1,549 M (128.6), an increase of 1,105 % compared with the third quarter of 2014
- Gross margin was 40% (30).
- Operating profit amounted to SEK 393 M (neg: 115)
- Earnings per share increased to SEK 6.36 (neg: 2.02).
- Cash flow from operating activities was SEK 370.5 M (neg: 99.5)
Outlook
- Revenues for the fourth quarter of 2015 are expected to be SEK 1,200-1,300 M, corresponding to a year-on-year growth between 1,043-1,138 %.
- The revenue guidance for 2015 is thus specified at SEK 2,750-2,850 M compared to more than SEK 2,500 M, which was communicated earlier. This corresponds to an annual growth between 1,075-1,118% compared with full-year 2014.
CEO'S COMMENTS
Strong market imprint resulted in record quarter
I am proud to report another strong quarter for Fingerprint Cards (FPC). Our revenues have continued to grow strongly and for the second consecutive quarter, we have recorded an operating profit. Revenues of SEK 964.0 million correspond to sequential growth of 117%, which demonstrates strong growth in the market and that we have assumed a leading position.
Our primary market, touch fingerprint sensors for smartphones, is expanding rapidly. The rising number of smartphone launches that include FPC's sensors implies continued substantial growth in the delivery of sensors and related revenue increase. During the third quarter, 26 smartphone models were launched with FPC's touch fingerprint sensors by 14 manufacturers. To date, 20 smartphone manufacturers have launched smartphones with touch fingerprint sensors from FPC. During the period, a tablet solution with a touch fingerprint sensor from FPC was also launched on the market.
Gross margin improved from 36% in the second quarter to 45% in the third quarter. This improvement is attributable to a changed product mix. The positive earnings trend is also reflected in our cash flow from operating activities, which corresponded to 87% of our operating profit in the third quarter. The third quarter and the period up to the interim report was characterized by a strong order inflow from FPC's module partners and, at the end of the quarter, the order backlog amounted to SEK 1,788.0 million.
At the end of September, Google launched the market's first two smartphones with Android 6.0, the new release of the Android operating system, which has built-in support for fingerprint sensors. Our FPC1025 touch fingerprint sensor has been integrated into Nexus 5X and Nexus 6P manufactured by LG and Huawei respectively, thereby highlighting FPC's market-leading position. The launch of Android 6.0 and its built-in support for fingerprint sensors is expected to contribute to a continued rapidly expanding penetration of fingerprint sensors in smartphones.
FPC's new touch fingerprint sensors FPC1140/FPC1145 and FPC1022/FPC1035 are now integrated into smartphones that are being launched by globally leading smartphone manufacturers. As a complete systems supplier, our technology comprises both sensor hardware and proprietary algorithms. The former generates the market's best image quality, which our algorithms capitalize on to be able to provide the market's smallest sensors. This unique combination enables us to offer market-leading biometric performance with retained security and makes our new sensors highly competitive, which is strengthening our position entering into 2016.
During the third quarter, we launched the new FPC OneTouch® FPC1200 product series, our first offering in which FPC's touch fingerprint sensors can be installed under a sheet of glass or ceramics. This makes it possible to change the appearance of the sensor and allows for new industrial designs. The first touch fingerprint sensors of the FPC1200 series are now ready for mass production and are planned to be integrated into smartphones for market launch in the next few months.
In cooperation with our suppliers, we have strengthened our delivery capacity and this is a strong contributory factor to the increasing revenues in the second half of the year. We are well prepared to further strengthen the company's delivery capacity in 2016 in view of the growing demand for the company's products.
In addition to the growing touch fingerprint sensor business for smartphones, we are continuing to develop our offering for smart cards and to adapt the sensors for the special requirements arising from integration into future card solutions. Developments are proceeding to plan and our sensors can now be made so thin that they allow for integration into smart cards. This market is still in its infancy, but we expect the first commercial deliveries of touch fingerprint sensors for smart cards to occur during 2016. We are now accelerating our investments to further drive the penetration of fingerprint sensors in smart cards and we have a competitive advantage in our knowhow of how the manufacturing cost of touch fingerprint sensors in smartphones can be reduced. We deem that our technology leadership in touch fingerprint sensors for smartphones gives us a head start as this new market is created. Our ambition is to establish the same leadership in this segment as we have in smartphones.
I am confident about the future, which is expected to be characterized by successive growth in deliveries and a large number of further product launches in which FPC's touch fingerprint sensors are included.
Jörgen Lantto, CEO
Outlook Revenues for the fourth quarter of 2015 are expected to be approximately SEK 1,200-1,300 M, corresponding to a year-on-year growth between 1,043-1,138%. The revenue guidance for 2015 is thus specified at SEK 2,750-2,850 M compared to more than SEK 2,500 M, which was communicated earlier. The reason for this is the growing market interest in integrating touch fingerprint sensors and the company's strong product portfolio.
Due to the continued increase in gross profit, operating profit in the fourth quarter is expected to further improve compared with the third quarter.
Revenue guidance for 2016 will be announced in December.
For further information, contact: Jörgen Lantto, CEO, Fingerprint Cards AB (publ), +46 (0)31-60 78 20, investrel@fingerprints.com Internet: www.fingerprints.com/corporate/
Welcome to Fingerprint Cards' Q3 Financial Report Webcast on Thursday, November 5, at 10:00 a.m. Participants can enter using this link and register: https://engage.vevent.com/index.jsp?eid=3483&seid=46
Fingerprint Cards AB (publ), Corp. Reg. No. 556154-2381, discloses this information pursuant to the Swedish Securities Market Act (2007:528) and the Swedish Financial Instruments Trading Act (1991:980). This information was issued for publication on November 5, 2015 at 8:00 a.m. CET
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