Fingerprint Cards AB (publ) publishes interim report for January – June 2024 - Seite 2

Positive revenue momentum in our Core product groups

We delivered solid revenue performance in our Core product groups outside of Mobile, achieving 10.5 percent revenue growth in these areas. Revenue development in our Access product group was particularly encouraging, with a sales increase of 64% compared to the second quarter of last year. The continued positive demand trend for biometric authentication for logical access control, especially in FIDO-certified products, is evident from the purchase order we received in July from a global FIDO solutions provider, valued at over USD 1M.

Sales in the PC area also increased compared to the corresponding period last year, albeit lower than the previous quarter. Our position in the PC market remains strong due to our best-in-class capacitive technology, support, and team. As a relative newcomer to the PC industry, we are still establishing our position. This ongoing process of building our market presence, while executing on our Transformation Plan, may lead to short-term revenue fluctuations, particularly as significant models featuring our biometric technology reach the later stages of their product lifecycle.

Gross margin performance

Intense price pressure in our remaining Mobile product group continued to negatively impact the gross margin, reinforcing our decision to accelerate the winding down of Mobile operations. This allows us to focus capital and investments on higher-margin existing product groups and new diversification areas.

Additionally, the decrease in revenue from the ongoing wind-down of Mobile has led to an increase in the ratio of planned depreciation of previously capitalized R&D expenses to revenue, significantly impacting gross margin (though not cash flow). If we exclude the non-cash impact of this depreciation, gross margin was 25.4% in Q2 2024, an improvement from 19.7% in Q2 2023.

Transformation progressing according to plan

We are making steady progress with our Transformation Plan, targeting significant financial improvements in the second half of this year. Although still negative, our cash flow from operating activities has improved significantly compared to the first quarter of 2024, moving us closer to achieving positive cash flow and enabling self-funded profitable growth.

Strengthening financial position

The rights issue in June 2024 strengthened our balance sheet. After repaying a SEK 60M bridge loan, proceeds from the rights issue in Q2 amounted to SEK 169 M, with an additional SEK 44.9 M forthcoming upon HCM, the largest guarantor of the rights issue, receiving a favorable FDI decision from the Inspectorate of Strategic Products (ISP). We will publish a press release once HCM has obtained this FDI decision.