Fingerprint Cards AB (publ) publishes year-end report for January – December 2023 - Seite 2

The cost optimization program is progressing according to plan, and we incurred SEK 37.5 M in costs related to restructuring measures implemented in the fourth quarter. As previously announced, our cost optimization program is expected to yield savings of approximately SEK 204 M on an annual basis with full effect from the second half of 2024, resulting in an OPEX run rate of approximately SEK 180 M on an annual basis. We continued to decrease our inventory in the fourth quarter, from SEK 156 million at the end of September 2023 to SEK 134 million at the end of December 2023. This means that we are entering 2024 with an acceptable inventory given current industry demand. However, there is still excessive stock at a sector level, and we continued to see aggressive destocking measures by several suppliers during the quarter.

We also made some important organizational changes during the quarter, transitioning to a functional organizational model and appointing world-class talent. This focus enables the timely execution of our pivot from a mobile biometrics component provider to a broader biometrics platform player.

Revenue growth and continued diversification
I’m pleased that revenue grew by 5 percent in the fourth quarter compared to the corresponding period last year and by 8 percent sequentially (both of which were an increase of 10 percent on a constant currency basis). This increase was driven by higher sales in our Mobile and PC product groups as well as in our Access business outside of Asia. Our Payment business, however, has yet to show a meaningful revenue ramp-up. This is despite us maintaining a market leading position with very high performance in terms of transaction speed, power efficiency and security, as proven in several commercial launches. Our primary focus in 2024 in the Payment area will be on targeted go-to-market activities, as the market requires more time to achieve widespread adoption of biometric payment cards.

At the same time, we are already seeing our diversification bets start to bear fruit. PC is showing a reliable growth and profitability profile, delivering considerably higher gross margin than Mobile. Biometric solutions for PCs have quickly emerged as an important new product area for Fingerprints, and we anticipate continued market growth since the share of computers with fingerprint sensors is expected to continue rising and our premium offering is valued. We also made significant progress in further enhancing our highly competitive offering to PC OEMs by launching our newly developed, complete biometric system for PC makers in October 2023. The development project has been endorsed from the start by our key PC customers, as total system ownership by Fingerprints will allow for better overall system performance. Customer feedback has been very favourable, especially in terms of the enhanced speed that our biometric system offers. This results in much quicker unlocking, providing a seamless, secure means of accessing PCs. Selectively expanding the scope of our solutions to capture a bigger portion of the value in the industry is a key part of our Platform Strategy, and I believe that our biometric PC system illustrates this approach - we are no longer just selling biometric sensors to our PC customers, but a complete system solution which also integrates Fingerprints’ in-house microcontroller unit (MCU).