IDEX Biometrics ASA · OSL:IDEX
IDEX Biometrics ASA — Idex — Q3 2018 Earnings Presentation
23 slides from IDEX Biometrics ASA's earnings presentation, Nov 8, 2018
Slide 1: 3rd Quarter 2018 Presentation
3RD QUARTER 2018 PRESENTATION CEO, Stan Swearingen CFO, Henrik Knudtzon Oslo, Norway, 8 November 2018
Slide 2: Disclaimer
DISCLAIMER This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projec
Slide 3: Biometric Card Market at Inflection Point
BIOMETRIC CARD MARKET AT INFLECTION POINT Exponential commercial growth Production Customer Certification order ramps Remote completed End user enroll Volume trials solution supply chain Technology development Ecosystem partnerships Development phase Commercialization phase 3 3RD QUARTER 2018
Slide 4: IDEX's Leadership in Biometric Cards
IDEX’S LEADERSHIP IN BIOMETRIC CARDS • Sensors/modules • Energy harvesting • On-card enrollment FULL BIOMETRIC • Matcher optimized for cards SOLUTIONS • Mastercard • Complete reference design TEAM AND • IDEMIA • Team with fundamental BROAD STRATEGIC • Hengbao SYSTEM innovators PARTNERSHIPS • JINCO U
Slide 5: Recent Highlights Validating IDEX Leadership Position in the Biometric Card Market
RECENT HIGHLIGHTS VALIDATING IDEX LEADERSHIP POSITION IN THE BIOMETRIC CARD MARKET Landmark world first Strong commercial Sensors for dual- Development of market order announced traction interface and contact- enabling remote enroll based ready complete 5 3RD QUARTER 2018
Slide 6: IDEX with Landmark First Order
IDEX WITH LANDMARK FIRST ORDER • IDEX announced world’s first production order of biometric fingerprint sensors for payment cards • IDEX commenced shipping against the order in Q3 • The customer is a major global card integrator • Additional orders expected 6 3RD QUARTER 2018
Slide 7: Market Inflection Driving Expanded Opportunity Pipeline
MARKET INFLECTION DRIVING EXPANDED OPPORTUNITY PIPELINE IDEX customer pipeline growing significantly Number of active opportunities +633% +110% • Strong interest globally from integrators, card schemes and issuers • Broad market interest from multiple verticals, including payment, ID, access control
Slide 8: IDEX's Strategic Partner Mastercard Driving Commercialization of Biometric Cards
IDEX’S STRATEGIC PARTNER MASTERCARD DRIVING COMMERCIALIZATION OF BIOMETRIC CARDS Promotional video of Presentation with value proposition Content about biometric cards biometric card and remote to issuers and end-users posted on Mastercard global enroll released website Source: Mastercard 8 3RD QUAR
Slide 9: Fransabank in Lebanon Launched Biometric Card to Customers
FRANSABANK IN LEBONON LAUNCHED BIOMETRIC CARD TO CUSTOMERS Source: Fransabank 9 3RD QUARTER 2018
Slide 10: Biometric Card Market Expected to Grow to Hundreds of Millions of Units
BIOMETRIC CARD MARKET EXPECTED TO GROW TO HUNDRES OF MILLIONS OF UNITS Payment and banking cards ID cards Government and Healthcare Citizen ID Other smart cards Retail and Loyalty Transportation Enterprise ID and Access Management Million units Million units Million units Other +5% 3,501 3,643 3,311
Slide 11: Biometric Cards with Strong Value Proposition
BIOMETRIC CARDS WITH STRONG VALUE PROPOSITION Low penetration of mobile payments Drivers of biometric card payments Percentage of respondents using mobile wallets • Convenience Walmart Pay 5,9 % ‒ No cap on value/number of transactions ‒ No battery Samsung Pay 1,4 % ‒ Always available – no PIN to re
Slide 12: IDEX Roadmap Enables 'World's Safest Card'
IDEX ROADMAP ENABLES ‘WORLD’S SAFEST CARD’ • Dynamic CVC addressing both card-present and card-not-present fraud • Sensitive data never leaves the card when enrolling or verifying • End-to-end encryption ensuring data integrity • Matching in the Secure Element • Secure at home/remote enrollment 12 3
Slide 13: On-Card Enrollment Is a Foundational Driver for Mass Adoption
ON-CARD ENROLLMENT IS A FOUNDATIONAL DRIVER FOR MASS ADOPTION IDEX pioneering industry leading solutions “…Simplifying the registration • Through early pilots with Mastercard the need for process will help speed user friendly and cost effective enrollment was adoption of biometrics by identified iss
Slide 14: Expected Market Ramp Up – IDEX Expects Market Leadership
EXPECTED MARKET RAMP UP – IDEX EXPECTS MARKET LEADERSHIP Key drivers PILOT RAMP UP AT SCALE End user pull • Convenience (and unlocking the Banking and payment potential of the contactless payment) Government/healthcare ID and enterprise ID and access • Security • Used to biometrics from mobile Retai
Slide 15: Roadmap Designed to Retain Biometric Card Leadership
ROADMAP DESIGNED TO RETAIN BIOMETRIC CARD LEADERSHIP Objectives 2020+ 1. Significantly reduced cost - architecture and leverage display One-chip technology biometric cards Step change 2. Increased value in physical security Sensor with enhancement for sensor - display cards consolidate smart substra
Slide 16: Fundamental Advantage of Off-Chip Sensing: Cost
FUNDAMENTAL ADVANTAGE OF OFF-CHIP SENSING: COST Indicative cost: off-chip vs silicon capacitive sensors Percent Normalized Cost versus Area 500% • Silicon footprint linear 450% with increase in size 400% Silicon-based • Silicon most costly Sensor component of sensor 350% Silicon Normalized Cost (per
Slide 17: Sensor Size Drives Performance and Usability
SENSORS SIZE DRIVES PERFORMANCE AND USABILITY Illustrative biometric performance in smart cards Small sensor Medium sensor Small sensor Large sensor FRR Large sensor Less data from image More information from image, requires more complex can use compact matcher matcher, higher power processing resou
Slide 18: Fundamental Advantage of Off-Chip Sensing: Card System Integration
FUNDAMENTAL ADVANTAGE OF OFF-CHIP SENSING: CARD SYSTEM INTEGRATION FPS Contacts Pad Discrete silicon FPS Controller IC sensing component Conventional MCU / ASIC • Large number of supporting components silicon sensor RF IC • Design complexity • Complicates manufacturing Secure Flash • Higher total co
Slide 19: Summary and Outlook
SUMMARY AND OUTLOOK Biometric card market at inflection point • Rapidly increasing customer demand following successful pilots • Pioneered and solved ‘remote enroll’ - critical enabler for mass adoption • High capacity supply chain ramping for volume shipments • Leading card ecosystems and payments
Slide 20: Key Financials
KEY FINANCIALS Henrik Knudtzon, CFO 20
Slide 21: 3rd Quarter 2018 Key Financials
3RD QUARTER 2018 KEY FINANCIALS Key financials NOK million 2 70 2,5 Card revenues expected to grow significantly in 2019 63 59 56 58 60 2 2,0 Stable OPEX level – expect similar level going forward 50 – Underlying payroll costs stable and non-cash share of payroll 35 40 1,5 totaling NOK 7.7 million i
Slide 22: Cash Flow
CASH FLOW Stable quarterly cash flow NOK million Cash position of NOK 130 million (USD 16), -59 60 -57 -57 -55 no financial debt 50 Quarterly cash flow fairly close to OPEX level 40 30 Expected to break even at low double digit million units shipped 20 10 0 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Includes C
Slide 23: Q&A
Q&A Welcome back for IDEX’s presentation of fourth quarter 2018 results on 27 February 2019