FINGERPRINT CARDS AB ANNUAL GENERAL MEETING CHRISTIAN FREDRIKSON, CEO GOTHENBURG, SWEDEN APRIL 20 2017
Agenda Inledning Kortsiktiga utmaningar 2016 i perspektiv Långsiktiga möjligheter 2
3 INTRODUCTION
We are highly competitive and fight for our market shares OEMs implement dual sourcing which fuels competition Our products are competitive and so are our cost levels Market share from 55-60% in 2016 to around 50% in 2017 Unique system knowledge Biometric algorithms Asic/silicon chip development Software development Packaging expertise 4
5 SHORT TERM CHALLENGES
6 Short term congestion in our value chain
We are part of a long value chain Fingerprints Sell-In Fingerprints Revenue recognition Fingerprints market share measurement Fingerprints Sell- Through Packaging, SW Fingerprint Cards AB Distributor (~ 5) Mod House (~ 10) OEM (> 20) Distr&Retail (100.000s) wafers wafers modules Smartphones Approximately 4-6 months lead time 7 Note: Illustrative. Applies to mobile devices
Inventory levels are a short term challenge Inventory levels are expected to normalize during Q2 Consumer demand remains as expected and fingerprint sensor penetration is still increasing 8
9 2016 IN PERSPECTIVE
Fingerprints value creation 55-60% Market share 579 MSEK in taxes* #1 Innovative Swedish Company Employee sat 80% 136 Devices launched in 2016 >10 Billion touches per day 20 Sensor models 186 new talents in Fingerprints 10 *From Income Statement. 498 MSEK cash-flow wise
Value creation Key financials Revenues of SEK 6,639 M (2,900), up 129% YoY Gross Margin 48% (43) Operating Profit of SEK 2,613 M (910), up 187% YoY Operating Margin of 39% (31) Earnings per share SEK 6.50 (2.52) Cash flow from operating activities of SEK 1,130 M (910) Net Cash SEK 1,162 M (1,031) 129% Rev increase 187% Profit increase 11
Fine from Nasdaq Stockholm Disciplinary Committee Why? Nasdaq s critique: company s information disclosure routines The specific reasons for the fine: Disclosure of 2016 guidance at CMD 2015 and incorrect statement from chairman in conjunction with the events that followed (December 2015) Twitter statements from non appointed Company spokesperson (September 2015, March 2016) What? Fine corresponding to two annual fees (SEK 916 496) (To be commented later on in the agenda 23) Actions: More proactive in communication with Nasdaq Establish a Communication department and IR function 12
136 mobile devices launched in 2016 All in all 14 OEM-customers 10 launches by new OEM-customers Launch Google Pixel Smartphone 12 mobile devices launched in India by Chinese OEMs Rear mounted FPC1035 most frequent sensor - in 54 launches Huawei Mate 9 Pro with FPC1268 under glass 13
Progress in new segments Samsung PC Notebook 9 launched PC-offer presented at CES (in Q1) Ultra thin Smart Card sensor series launched Smartcard prototypes at Money 20/20 Biometric module launched for IoT Partnerships established 14
15 LONG TERM OPPORTUNITIES
Megatrends that affect us Biometrics Security and convenience Cloudification Online payment/banking Digitalization (IoT) CSR awareness 16
17 #1 BIOMETRICS COMPANY
The change we will face #1 FINGERPRINT SENSOR COMPANY Market of 1.5 B units 10s of customers 3-5 major competitors One technology Focus on device Business model: HW focus One Business Line Innovate or die Customer focus Entrepreneur #1 BIOMETRICS COMPANY Market of 10-15 B units 100s of customers 10-15 major competitors Several technologies Focus on cloud and device Business model: SW/system/HW Several Business Lines Innovate or die Customer & stakeholder focus Innovative biometric company 18
Strategy for continued profitable growth Segments New Other segments PC Internet of Things Automotive Industrial and medical Smartcards Sensor adaptation Utilize scale advantages Strong growth potential Existing Grow with the existing customer base Add new customers Extended biometric scope Trackpad Higher security More features New offerings Other sensors M&A opportunities Existing New Offering
The big picture of biometrics Biometric modalities Technologies Touch sensors Capacitive 1 st generation Spray coated Facial Iris Voice Ultrasonic 2nd generation Under glass Optical 3rd generation Under thicker glass Palm vein Finger vein Fingerprint 20
THE PERFECT MATCH Fingerprint Cards acquires Delta ID 21
22 Long term financial objectives
Fingerprints Sustainability 2016 Highlights Several policies issued Code of Business Conduct for employees as well as for Suppliers Created a Sustainability Forum to bring management attention Sustainability Created a Sustainability Framework aligning our efforts and goals ISO14001 certified and reported to Carbon Disclosure Project 23
24 Talented people create results
Summering Vi är konkurrenskraftiga och slåss för våra marknadsandelar Vi har den bästa systemkompetensen inom biometri Kortsiktiga utmaningar Alltför stora varulager i värdekedjan har försvagat efterfrågan från OEM Normaliserade varulager i värdekedjan under Q2 Vi förblir konkurrenskraftiga i en mycket tuff marknad 2016 i perspektiv Stabil ekonomi, men på en krokig väg Marknadsledande med 55-60% av marknaden En bred och växande produktportfölj Långsiktiga möjligheter Tillväxten kommer från nya segment och av ny teknologi Ökad ambition kring hållbarhetsarbete 25 Vår ambition är att vara det ledande biometribolaget
Stay in touch & connect E-mail: investrel@fingerprints.com For more information, visit us at www.fingerprints.com