Q1 2018 MAY 3, 2018 Q1 2018 Summary Margins & Revenues - - PowerPoint PPT Presentation

FINGERPRINT CARDS Q1 2018

MAY 3, 2018

Q1 2018 Summary

Revenues Margins & profitability Highlights

Revenues: SEK 290 (686) M, a 58% decrease year-

• ver-year

Gross profit: SEK 45 (282) M Gross Margin: 15% (41) Operating profit*: SEK -175 (71) M Operating margin:

• 60% (10)

Operating Cash Flow: SEK -204 (-324) M Shift towards smaller and cheaper fingerprint sensors negatively impacted revenues and gross margin Performance in the Chinese smartphone market remained weak Cost-cutting program proceeding as planned Operating result impacted by restructuring costs of SEK 40.2 M

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*Operating result impacted by restructuring costs of SEK -40.2 M

BUSINESS UPDATE

Cost control and diversification

Result impacted by intense competition, a product mix shift and a declining Chinese smartphone market We are lowering our costs…

Cost reduction program executed according to plan, saving SEK 360m during 2018 High-priority development project with the aim of launching a fingerprint sensor with a lower production cost than the present generation of sensors

… and diversifying our business

Expanding our biometric technology portfolio, e.g. face recognition and in- display We have a strong position in emerging application areas, e.g. in smart cards

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Market launches and business development in Q1 2018

17 mobile devices launched by 7 OEM customers. Launches by Huawei, Xiaomi and Oppo among others. Two PCs launched with our fingerprint sensors FPC1291 launched, the first fingerprint sensor from the third generation A facial recognition solution is being developed. expected to be integrated into customer products in the second half of 2018. Ten-year exclusive agreement with Gentex to bring iris-scanning technology to the automotive industry Partnership with Altran aimed at offering biometric solutions for the automotive industry Biometric smart card market trials in the Middle East and Japan

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Biometric smart card market trials in the Middle East and Japan

Fingerprints is collaborating with IDEMIA

• n Japan’s first biometric payment card
• trial. An FPC1300-series sensor is used,

featuring ultra-low power consumption and superior biometric performance. Biometric payment card pilot with Visa, the first of its kind in the Middle East. The card technology is provided by Zwipe, and is using a sensor from the FPC1300-series.

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Summary

Earnings in the first quarter of 2018 impacted by a continued weakening of sales, as anticipated Shift towards smaller and cheaper fingerprint sensors continued, impacting sales and gross margin Cost reduction program executed according to plan, saving SEK 360 M in 2018 Challenging market conditions, but some stabilization and sequential growth expected in Q2 Cash flow from operating activities expected to sequentially improve during Q2 and be positive, due to a tax refund and an improved operating result. Fingerprints is well-positioned to benefit from the adoption of biometry in new areas: biometric smart cards and automotive/embedded

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* Excluding Apple

Q1 2018 FINANCIAL RESULTS

Q1 2018 Financial performance

9

• 70
• 60
• 50
• 40
• 30
• 20
• 10

10 20 30 40 50 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 Revenues, SEK M Operating profit/loss, SEK M Gross margin, % Operating margin, %

Revenues, s, Ope perating pr profit/loss ss an and Gross ss mar argi gin, qua quarters

Operating expenses development

10

75,2% 29,0% 26,1% 100 200 300 400 500 600 700 800 900 2018 2017 2017 Jan-Mars Jan-Mars Jan-Dec

Ope perating exp xpenses, MSEK SEK, an and in in rel elation to

• revenues

Development costs Administrative costs Selling costs

Weaker profitability in Q1 2018

11

Jan-Mar Jan-Mar 2018 2017 Operating profit, SEK M

• 174.9

70.8 Operating margin (%)

• 60%

10% EPS, SEK

• 0.47

0.17

Working capital development

*Average working capital excluding net cash over 5 quarters/rolling 12 months sales

12

0% 10% 20% 30% 40% 200 400 600 800 1000 1200 1400 2016 2016 2016 2017 2017 2017 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Work

• rking cap

apital (e (excluding cas ash and and tax ite items)

Working capital in % of revenues

Q1 2018 Cash flow and Net cash trend

13

• 400
• 300
• 200
• 100

100 200 300 400 500 600 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 Cash and cash equivalents Cash flow from operating activities

Cas ash and and cas ash eq equivalents s and and cas ash flo flow, MSEK SEK

Q&A

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THANK YOU!