• Adjusted Gross Margin: Increased to 49.8%, up from 17.9% a year ago.
• Core Business Revenue Growth: Up 12% year on year, 53% quarter on quarter.
• Total Revenue: Lower due to exiting mobile and PC markets.
• Headcount Reduction: Reduced by 62% year on year, from 185 to 71 employees.
• Debt Position: Raised $115 million in February 2025, resulting in a debt-free status.
• Gross Margin (Excluding R&D Depreciation): 50% in Q4 2024.
• Adjusted EBITDA and Free Cash Flow: Both negative, reflecting the acceleration of the turnaround plan.
• Cash Balance: $12 million at year-end, bolstered by the recent rights issue.

• Warning! GuruFocus has detected 4 Warning Signs with FGRRF.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fingerprint Cards AB (FGRRF) reported a significant improvement in gross margin, reaching 49.8% from 17.9% a year ago, reflecting the success of their transformation plan.
• The core business, excluding mobile and PC segments, experienced a 12% year-on-year revenue growth, indicating strong performance in their focused markets.
• The company successfully reduced its headcount by 62% year-on-year, from 185 to 71 employees, demonstrating effective cost management.
• Fingerprint Cards AB (FGRRF) raised $115 million in debt, leaving the company in a debt-free position and strengthening its balance sheet.
• Strategic partnerships, such as with Anonybit and Smart Eye, are expanding the company's capabilities in cloud and edge biometrics, positioning them for future growth.

Negative Points

• Total revenue decreased due to the exit from low-profit mobile and PC markets, impacting overall financial performance.
• Adjusted EBITDA and free cash flow remained negative, reflecting ongoing challenges in the company's turnaround efforts.
• The company is still in the process of transformation, indicating that there are ongoing risks and uncertainties in achieving their strategic goals.
• There is no clear guidance on the revenue ramp-up from new partnerships, creating uncertainty about future financial performance.
• The R&D depreciation, a non-cash item, continues to impact gross margin calculations, and its future treatment remains under discussion with auditors.

Q & A Highlights

Q: How does the Anonybit partnership impact Fingerprint Cards' cloud strategy? A: Adam Philpott, CEO, explained that Anonybit is their core partner in the cloud, providing essential capabilities for ingesting edge biometric signals and integrating them into company workflows to replace passwords. They are co-developing with Anonybit to enter the market and build additional capabilities, focusing on the identity lifecycle from onboarding to offboarding.

Q: What are the revenue expectations from the new partnerships in 2025 and 2026? A: Adam Philpott stated that while they do not provide specific revenue guidance, they are cautiously optimistic about the revenue opportunities from these partnerships. They are balancing investments to avoid additional cash burns while pursuing software ARR opportunities in the cloud and growth in the edge business.

Q: How does Fingerprint Cards plan to commercialize the All Key technology? A: Adam Philpott mentioned that they aim to provide customers with tools to enhance their products with superior identity solutions. The strategy involves reducing dependency on Fingerprint Cards for technical integration, allowing customers to embed the technology independently. They are leveraging partnerships, such as with Future Electronics, to scale globally.

Q: What lessons from the PC and mobile sectors can be applied to the payment market? A: Adam Philpott noted that the payment market is evolving, with biometric payments being a significant area of focus. They are leveraging their existing investments and partnerships to explore payment as a feature on multifunction smart cards, rather than standalone products, and are well-positioned to capitalize on this evolving market.

Q: What is the potential for patent monetization at Fingerprint Cards? A: Adam Philpott highlighted that they are actively working with partners to monetize their patent portfolio. While the process is complex and time-consuming, they have a strategic plan in place and view it as a low-cost, high-potential opportunity.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.