Fingerprint Cards AB

Interim report, January-March 2017 - Seite 2

If we leave the matter of inventories and instead look at what is happening in the market, I see a number of positive aspects. Despite the intense competition, our products were included in 18 launches of new mobile devices during the quarter. Huawei P10 is an important milestone as it was the first smartphone where our sensor was placed under a continuous glass plate. We have a competitive offering and, specifically, we can see that our new sensor for entry level smartphones, the FPC1028, helped us to close important deals during the quarter. The product is vital to our efforts to initiate penetration of our sensors in entry level smartphones and thus also for volume growth. It is also suitable within IoT applications since it is compact, offers good performance and is cost-effective.

We are also receiving distinct signals that our offer to acquire Delta ID was strategically correct. There is keen interest among our customers in using multiple modalities, specifically fingerprint and iris recognition, in the same device and, thanks to a licensing model with Delta ID, we can already offer this. The acquisition is currently subject to approval by the US authorities and, as previously stated, we expect to be able to close the deal during the second quarter.

In 2018 and thereafter, we see, as previously stated, opportunities to grow in new segments. For our part, 2017 is therefore primarily about establishing partnerships, mobilizing the ecosystem, marketing and demonstrating our products.

Our participation in the FIDO Alliance and at the CES and MWC, for example, has served as an important platform for these efforts. At the CES, the main focus was on our PC offering but our sensors were also included in both "wearables" and cars. During the MWC, we met all our mobile customers and partners as well as the key players in the smartcard segment and received a lot of positive feedback for our battery-and contact-less offering.

Despite short-term issues concerning excess inventories and tough competition in the mobile segment, I still view the future with confidence. Biometrics create considerable value globally, for both individuals and businesses, and we are exceptionally well positioned to be the company that best leverages this potential and to become the leading company in biometrics.

Christian Fredrikson, President and CEO

For further information, contact:

Christian Fredrikson, CEO, Fingerprint Cards AB (publ),