Fingerprint Cards AB: Interim Report January – June 2023

Highlights, second quarter

• Sales grew strongly with a 74-percent revenue increase compared with the first quarter of 2023
• Cash position increased by 20 percent since the end of Q1 2023, to SEK 252 M
• Inventories declined 26 percent since the end of the first quarter of 2023, with a positive effect on cash flow
• Healthy growth in PCs and Mobile
• Continued price pressure within Mobile and weak quarterly sales in Payment and Access had a negative impact on Group gross margin

Second quarter of 2023

• Revenues amounted to SEK 203.3 M (228.1)
• The gross margin was 13.1 percent (31.1)
• EBITDA amounted to negative SEK 57.7 M (pos: 6.5)
• The operating result was a negative SEK 75.7 M (neg: 12.2)
• Earnings per share before and after dilution amounted to a negative SEK 0.18 (neg: 0.03)
• Cash flow from operating activities was SEK 52.4 M (neg: 28.3)

January-June 2023

• Revenues amounted to SEK 320.3 M (528.3)
• The gross margin was 14.7 percent (25.0)
• EBITDA amounted to negative SEK 118.0 M (neg: 3.6)
• The operating result was a negative SEK 151.4 M (neg: 43.9)
• Earnings per share before and after dilution amounted to a negative SEK 0.35 (neg: 0.12)
• Cash flow from operating activities was SEK 10.1 M (neg: 118.6)

CEO’s comments

I am pleased with the strong increase in sales: +74 percent in comparison with the first quarter of 2023 (73-percent increase in constant currency terms). The significant sales increase was predominantly attributable to a bounce-back in our mobile business, as anticipated. PC also contributed to the healthy revenue growth, while sales in Payment and Access came in weaker this quarter.

I am also happy that we made significant progress in terms of reducing our excess inventory, with a positive effect on our cash position, which grew by 20 percent, to SEK 252 M, since the end of Q1. However, we are still facing intense price competition within Mobile, since our inventory levels and those of other sensor suppliers remain too high. We anticipate a return to more normal levels during the fourth quarter, but it could take even longer before the entire industry achieves balance. We do note that the number of suppliers participating in large-scale procurement processes has recently declined, which could be a sign of increased consolidation in the industry, which would be beneficial for us. I am pleased with the fact that we defended our market share in Mobile during the quarter.

Lower sales in the Payment and Access areas in the second quarter also impacted negatively on our gross margin. Revenue development in both Access and Payment tends to be more uneven and can fluctuate in the short term, since these industries are fragmented and more immature regarding the use of biometric solutions. Having said this, our view of the longer-term trend in demand in these areas remains positive. During the quarter, we announced that we had received our largest order to date from an Access customer outside Asia, for more than USD 1 M. This demonstrates the positive trend that we see in this market, particularly outside Asia.

We recently announced the establishment of a new organizational unit – New Business – under the leadership of Thomas Rex, Executive Vice President New Business. This unit is charged with developing new business and driving revenue growth, with a particular focus on the following four areas: New Partners, add-on acquisitions, Automotive, and Monetizing intellectual property rights (IPR). We are very excited about the work that Thomas drives, as we see significant new application areas and monetization opportunities for the company and we look forward to talking more about these initiatives in the near future.

Finally, on July 16, we announced that we have secured new financing amounting to at least SEK 340 M with an option to increase up to SEK 430 M, and that we have decided on an early redemption of the company’s outstanding bond loan of SEK 300 M. This significantly improves the company’s financial position, improving our ability to execute on our growth plans.

Ted Hansson, interim President and CEO

Today at 09:00 CEST, Fingerprints’ interim CEO Ted Hansson 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 presentation will be webcast, and participants can register via this link:    https://edge.media-server.com/mmc/p/yeoz8ops

For media and analysts: Registration for the teleconference is carried out via this link: https://register.vevent.com/register/BI86d5591f6a934bbab1effea63c4b3494

Attachment

• Interim report Q2 2023