Fingerprint Cards (FING) Q2 2024 earnings summary

Executive summary

• Core business revenue grew 10.5% year-over-year, driven by strong performance in Access and PC segments, while total revenue fell 45% due to the planned wind-down of the Mobile business.

• Transformation plan progressing, focusing on portfolio refresh, cost optimization, balance sheet strengthening, and expansion into software and identity solutions.

• Significant cost reductions achieved, including a 31% sequential and 51% year-over-year headcount reduction, improving operational efficiency and reducing cash burn.

• Gross margin, excluding non-cash R&D depreciation, improved to 25.4% from 19.7% year-over-year.

• Rights issue in June 2024 raised SEK 169M, strengthening the balance sheet and enabling early redemption of convertible bonds.

Financial highlights

• Q2 2024 revenue was SEK 112.4M, down 45% year-over-year, mainly due to the Mobile business wind-down.

• Adjusted EBITDA improved to SEK -47.6M from SEK -57.7M year-over-year, and free cash flow improved by SEK 42M sequentially.

• Cash and cash equivalents at quarter-end were SEK 189.5M, down 25% year-over-year but up from Q1 2024.

• Cost optimization led to a reduction in employees to 95 at June 30, 2024, from 159 at year-end 2023.

• Gross margin in Q2 2024 was 3.7%, but adjusted gross margin (excluding R&D depreciation) increased to 25.4%.

Outlook and guidance

• Management targets positive cash flow and self-funded profitable growth, with further cost reductions possible.

• Mobile product group to be fully phased out by year-end 2024; focus shifting to higher-margin and digital identity areas.

• OPEX run rate targeted at SEK 150M or lower by end of 2024.

• Expects further volatility in financial results as transformation and cost optimization continue.

• Anticipates substantial improvements in gross margin as low-margin mobile revenue is phased out.