Fingerprint Cards AB (publ)

Good day and thank you for standing by. Welcome to the Fingerprints Cards ABQ4 Results 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To whisper your question, please press star one and one again. If you wish to ask a question via the webcast, please type it into the box and click submit. Please be advised that today's conference is being recorded. I will now like to hand the conference over to your speaker today, Stefan Pettersson, Head of Investor Relations. Please go ahead.

Thank you very much, and good morning, everyone, and welcome to FPC's earnings call following the release of our Q4 and the year-end report this morning. So we'll start by presentation of the report by our CEO, Adam Philpott, and then by our CFO, Fredrik Hedlund. And if you're following this call on the web, you can post questions throughout the call. And with that, let me now hand over to our CEO, Adam Philpott.

Thank you very much, Stefan. Good to be here. Let me just start on the agenda. So a fairly typical agenda that you would expect from us over the last few courses. We'll start with an executive summary of the financial performance and highlights. A couple of key focus areas that we'll have is really digging into all key. You would have seen us talk a lot about all key in the report, and we started talking about all key over the last few earnings calls. And we'll also talk about asset and licensing deals, which you've also spoken a lot about as well. Then I'll ask Frederick. to help me out on the key figures before we summarize and spend some time answering your questions. So let me move then to the summary of the quarter. So firstly, for the quarter alone, and then I'll talk about the year, down slightly, 4% year-on-year down for revenue, but actually in constant currency up. So FX started to make a bit of an impact, but I think what it shows is quite a stable revenue given the transformation that we've given as a company as we migrate and evolve some of our customers up the value chain towards all key. Not only that, but you can see that same stability in terms of the gross margins. So really strong performance in maintaining gross margins at very high levels compared to our history, of course, also. And then for the year, you know, one quarter can be a trend, can be a data point rather. A year, of course, is a trend. And so as you look at the full year, up 30% year on year, 40% if you account for FX as well. So I think that paints a really clear picture on the direction and training of the company as well. So really pleased with that overall performance also. But as you know, we've been going through a transformation as a company, and a big part of that is how we transition or evolve beyond sensors into systems. We will, of course, continue to drive a strong transition sense of product line with some of our key customers there. We've got some great customers in the sensor business. That's our bread and butter. We'll continue to develop that business. But of course, we have many customers who get greater value from us as we move into systems. And that's evidenced not only by some of the customer sentiments that we've shared in the past, and we'll share a bit more of that today, but also evidenced in our pipeline. We know that 50%, around 50% of our existing customers see the value in Aukey for their products, and are on an upgrade path going through evaluation into productizing and then shipping Aukey as part of their products. So really pleased. That's been our primary focus is on our existing customers, but those for whom Aukey makes a lot of sense. And as you can see, about 50% of our customers are involved in that. But at the same time, AllKey opens up opportunities for us to acquire new clients. Really important to build out the customer base. And so as we look at our pipeline for the future, 50% of our pipeline is made up of new clients. And that's driven largely by AllKey. So really pleased to see that. And we'll spend a bit of time on that a little bit later, too. And we also continue to launch new Aukey products. We're seeing that bet really playing out strongly. So we're continuing to add to that portfolio, opening up different markets. Most recently in December, announcing the Aukey Ultra product, expanding our lineup with a secure element variant. Very differentiated for us as a company as well. So really pleased on how that bet is playing out. And of course, We've done some good asset monetization deals throughout the last year or two. And that's something we see a great opportunity to continue as biometrics continues to be super important to organizations looking to ascertain identity, stay ahead of cybersecurity, and move away from passwords. So Iris has a big part to play there after some of our other IP. And so we see a great opportunity to leverage those sorts of models into adjacent verticals also. So really pleased with the performance. resilient revenue during Q4, great performance for the year as we expand into all key. And so what I also want to do is kind of take you back, take you back to where we've come from and where we're going this year. This is our first earnings call of 2026. And that means that we're now in the third year of our transformation, the transformation program that I put in place when I joined the company. And so just to take you back briefly, When I joined, the first thing we needed to do, we had a burning platform. We needed to look at how we stabilize the company. We needed to re-architect the company because the world around us And that meant a number of things. You may remember the six-point plan you can see on the left here. And that was a few key elements, really about cutting costs, getting OPEX to the right level, leaving some of those markets that were just taking money out of the company rather than putting money in because they were so unprofitable, tidying up the balance sheet, and a few other fundamental elements. So that was year one in stabilizing and right-sizing the company. The second year was then about saying, well, what are the vectors we have for growth? Looking at a few growth opportunities, and that was last year, our second year. And those growth opportunities were looking at crowd identity, looking at our iris assets, and, of course, moving up the value chain in the product that is all key. So those were the bets that we placed last year to open up new growth avenues for the company. Cloud was a really promising one, and it was evidenced by things like a lot of M&A in that cloud identity segment. what we found with cloud was it's quite a long-term development cycle and therefore quite asset intensive. And so for us, we still very much have our eye on that opportunity, but we're monitoring it rather than investing heavily in that. What we are focused on because of the bets it's taken off is all key. All key has shown a huge promise throughout last year. And therefore we are really focusing our investments, our attention on, on Aukey to really get behind the genuine and real demand that we're seeing for that product. We had a few bets, we looked at the ones that were really taking off, and we're focusing exactly on those. It's showing huge potential with existing customer demand, and as you remember, Aukey is about 3F the ASP of traditional sensors. It's showing new customer demand as well, and so our job is to feed that demand. So as we look at year three, It's really about focus growth. You know, looking at those bets we've played, focusing on the ones that are paying off and really doubling down on all key. The beautiful thing about all key is it absolutely leverages our core competence. The things that made us great in the first place, it really builds upon those. And therefore, it's a near adjacent, it's got less risk, and it's got genuine demand from our clients. Of course, you know, we saw the asset bets that we've placed pay off as well. Those are more episodic deals. They happen here and there. But we believe there's a lot more gas in the tank on those also. Those are like big deals. They happen occasionally. And so we're really focused on where are we going to get the next ones from. We've proven the model out and so continue to get additional ones, which then also funds the business as we drive this transition of the food chain and into the segments that we're focused on. And then as we now dig into a couple of those focus areas, so I said Aukey and assets, those are the key things we want to focus on, particularly Aukey for our core business. So let's spend a bit of time on those two items. And so on the right here, you can see some demo products that we created. This is based upon Aukey and Aukey Ultra as well. You can see those photographs, the little bits sticking out. That's a USB-C. That gives you a sense on how small these are. They're incredibly elegant devices. We were at Trust Tech, which is a fintech show in Paris in December. We had these with us, and just the buzz around them. was phenomenal. So really exciting product, really exciting market, obviously ties to FIDO market, access all number of different markets, and I'll touch on some of those markets a little later. But a real buzz around these products from lots and lots of customers, and you can see the two different form factors up there as well. And so our focus with Allkey was to first of all talk to our existing clients. We know that there's a lot of benefits for them in simplifying and taking complexity out of their products and also making it easier for them to integrate. And so our focus was to work with existing clients. I'm going to show you some pipeline in a second about how that's going. But really pleased, I talked a minute ago about 50% of our existing clients are upgrading to Allkey. So real demand, real pipeline for that product there. At the same time, because it's easy to use, easy to consume, it doesn't mean that we as a company and the few engineers that we have have to be involved deeply in every single deal, which means that we can scale the business without having to be a bottleneck based upon our internal capacity. And so we're starting to see a lot of new clients come on board. And again, I'll show you some data on that in a second. And in my opinion, we're only just getting started with new clients. We've been very opportunistic about incoming leads. The sellers have been opportunistic about a few clients that they've approached. We are now ruggedizing and doing campaigns at scale. So we'll start to see more new clients come into our pipeline as well. And then the third great thing about Aukey is because it's very simple to consume and adopt for a client, it's perfect for the channel because they don't need to come back to us for every question. They can be self-sustaining. They can go out and drive the market. And we're starting to see a lot of leads come from the channel that we specifically set up. because of our Allkey product. So those are three key focus areas. We're actually going to focus more on the channel with some coverage in 2026 as well to unlock additional sources of new customers there too. Here's another interesting one though. We see the potential to develop Allkey into the smart card because we're actually starting to see some of the early smart card demand. You may remember, it was probably three, maybe even four earnings calls ago, you may not remember, that we talked about, you know, payment that the company has been in for a long time, and actually seeing that evolve into multifunction cards. We're seeing a bit of demand for that. Now, I'm not going to stand here today and say it's going to take off, it's going to be the next big thing, because I think, you know, we hoped that payment was going to be a bigger market than it has so far become. But we are starting to see some early demand. I'm not going to talk boldly about it today, but I will talk about it some more if we start to see some of the demand that we're starting to see manifesting genuine opportunities and real converted deals. So we're going to keep an eye on that. I didn't want to say nothing about it today because I want to be transparent about what we're seeing in the market. But at the same time, I'm not going to double down and say this thing's going to be huge because I think we've seen some false signs in the past and I want to make sure we're really focused on real evidence and real conversion on a smart card. We are seeing some demand. We do see that as a future vector for Aukey, particularly Aukey Ultra with a secure element on there too. And it's something we're keeping our eye on. And, of course, we have a volume-centered business. We're going to continue to do that. Aukey isn't about moving away from that. It's about expanding beyond that so we can offer a broader portfolio and different value based upon our clients and what they're really looking for. So huge opportunity for us. Really nice to see how that is developing. And so let's talk about some evidence. We've talked about where the market's going. We've talked about Aukey a bit, and we've introduced it. for a few quarters now. But I want to talk a little bit about pipeline. Now, pipeline isn't something we've really shared on earnings calls before. So it's quite a new thing to start sharing. Pipeline isn't equal to revenue. It's not equal to invoicing. It's not equal to budget. It's simply an indicator of the opportunity we see out there. Here's what I will tell you. We run... strong pipeline rigor. As a CEO, I used to be a chief revenue officer for a $1.8 billion company. So I've kind of got some capabilities in pipeline management. And so pipeline is something I'm really focused on because it tells us As long as it's got the right rigor, it tells us where the opportunity is that we need to invest behind. So we're really confident that we've got good pipeline record. It doesn't mean it's all been exposed, of course, but we're pretty confident about some of the signals we get from our pipeline. And let me just talk to you quickly about the two charts here then. So the chart on the left is product mix by revenue. So of the total pipeline we have, the 26th or 27th or 28th, We've split that by how much is Aukey and how much is Census. And what you can see here is that we are really starting to grow the mix of our pipeline that is coming from Aukey. We're shifting customers to Aukey, but we're also acquiring new customers in the pipeline that are Aukey. And, of course, 100% isn't flat. We're growing the pipeline at the same time. So from 26 to 27, the pipeline growth is greater than 20%. So we're getting more pipeline in, as you would expect, as we shift customers from sensors to systems. It's greater ASP. You would expect the type to grow. And, of course, we're bringing new customers in as well. I won't talk about growth for 2028, because that pipeline's immature. We're still building pipe for 2028, but it gives you an indication of what's going on there. So really pleased to see the mix increasing significantly. Does it mean that 60% of our business in 2027 will come from Halti? Not necessarily, because this is about conversion, but it gives you directional insights into how we see the mix evolving. And then the chart on the right, I talked about we're bringing new customers in. into the pipeline as well because of Allkey. The chart on the right shows our total pipe for each of those years and how much of that pipe is from new customers versus existing. That's on quantity, so how many customers in our pipeline are new versus how many are existing. Historically, we've run it less than 20% of our pipeline from new customers. We've really been farming existing customers once we settle down in the access space. Now we're really starting to grow that customer mix as well. And that's obviously something we're very focused on. So great to see that already increasing in the pipeline. Of course, we need to convert and you would have a lower conversion on new customers than you would have on existing. But again, it gives you some direction around how we're growing or planning to grow our customer base. So exciting data for us to look at. And, of course, as we think about what we're doing here, 3X the ASP, sustaining our margins at 50% to 60%. We track gross margins in our pipeline as well so that we can intervene should there be a low margin deal. But, you know, really sustaining those margins as we move up the value chain and offer greater value to our clients too. So a very exciting view on the pipeline. And then the other thing I said is we have lots of good customer feedback as well. I talk to not all of our customers. I talk to most of our customers. And the team are deeply engaged both on the sales, of course, and on the engineering side as well. And so the interesting thing about the feedback we get from our customers, and we haven't had negative feedback, by the way. Sometimes people don't always like price. But, you know, we offer great value and we're able to sustain our margins. But you can see the breadth of verticals that we're serving. fintech, crypto wallet providers, FIDO providers, software companies, big software companies for that matter, IoT and wearables, access control, more of the traditional market. And then you can see there the blend of existing and new that we're seeing in those different segments with those different types of customers. And at the end, you can see the value drivers. So really broad range of feedback from different types of customers for some of the different levels of value that Allkey provides. So if you look at the FinTech example, that kind of talks to where we're taking Aukie. I mentioned it in the smart card form factor earlier, but it doesn't just have to be smart card. It could be any type of device where that client in particular is really interested in putting their own custom applications on top of our MCU on the Aukie platform so they can use identity through fingerprint biometrics to do other types of tasks within their organization too. So again, thinking of it as more of a platform that you can use biometric identity on for other software applications, as well as some of those that we've spoken about previously, physical, logical access, payment, et cetera. So that's a really exciting one. As we think about the crypto providers, the hardware wallet providers, obviously security is really critical for those guys. So, you know, they love the MCU that we're using. And they also look at us as a really trusted player because we're European with a long track record as a credible company in this space. And they meet our people. They meet our engineers. And they love what we're able to do and the level of capability that we have in the organizations. On the FIDO side, because it's a turnkey solution that we offer rather than the customer themselves having to put pieces together, it allows different types of FIDO players to come to the market and have a much less complex product, but also integrate our product far more quickly so they can get to market quickly. On the software side, you saw the design earlier in the photos that I shared. That really resonates as you think about how you plug this into a PC for Fido, for example, or do other things on Windows Hello for authentication. So, you know, the design piece is critically important also. And then finally, a couple of other things. I talked about reduced complexity in our traditional customers, particularly for those customers who are slightly up the volume chain as well and therefore need an all-in-one solution. Having something less complex takes a lot of cost out, not just in creating the product, but in not having returns and things like that because it's a high-quality, durable, reliable product. And then on the wearable side, some of the feedback we've got is, These are consumer wearable companies who often want their consumers to be able to use their product for enterprise security. Because we offer enterprise-grade security as a company, particularly as it relates to our Aukey Ultra, they are able to access new markets or be able to offer new services in existing markets in extremely credible ways. So really good feedback across the board from our customers. It substantiates the quality of pipeline I shared previously. So there's a lot going on on Allkey, very excited about it, very focused on getting behind that demand to ensure we capitalize and convert it. But that's obviously a very key focus for us for 2026. The other focus I did want to touch on is assets and licensing deals. We've done quite a few of these now, built a track record and some credibility around that. I wanted to talk quickly about one of those deals and then I'll talk about how I see us replicating that. And so on the left, You can see a photograph. This is from SmartEye's booth at the Consumer Electronics Show just a month ago in Las Vegas. And so we started to deal with SmartEye in early 2025. They've been busily working on the developing the product, integrating it with theirs, working with our team as well. And I think what they demonstrated is, yes, proves what's possible with the IRS assets. I wasn't at CES, some of our team were there, but I went over to meet the SmartEye team and go through the demo myself recently. And they're now productizing this demo for our reps to be able to go out and resell as well. As you know, from that deal, we have a 50-50 revenue share as we take that to market jointly. But looking at the product, It's extremely long range. You can approach from a few meters away, and even before you get within a meter, the camera starts to authenticate you. That's very different to every other iris asset on the market. Every other iris asset, you're pretty much going up to some binoculars, either one eye or both eyes. It's not a very nice user experience, but this is much more intuitive, much easier, much less invasive experience. for the user. And so it's quite unique on the market. So works at a longer range. I think when I did it, I was authenticated at about 70 centimeters. So just within a meter, you know, longer range, really powerful. Also very easy to use. That's a big part of biometrics is if it feels invasive, it doesn't always work for users. But at the same time, very, very high efficacy. There's no point in being able to authenticate a distance if you can't do so with high efficacy. And Iris is right up there as the highest efficacy along with fingerprint. And at the same time, what the team have been able to do is be able to do that, but on ever lower cost hardware. That's a really important part of unit economics, so that it makes it much more viable in the market as well. So SmartEye have really proved that what's possible when we partner on IRIS. And we see many other areas where we can go and do that. Physical access is a really obvious one. Logical access is another obvious one. Healthcare comes up a lot because of the unique environment. PPE, et cetera, their operators are working within there. And those are just a few. We see about 15 or so global markets that we're actively engaged in to look at where there's partnerships that we can do to jointly develop that asset for those markets where we otherwise couldn't fund it on our own, but also, of course, licensing that asset out in order to fund the business and get additional income in. Really powerful opportunity for us. Big deal approach to that one. Highly strategic. And we have some folks focused on doing exactly that. So with that, that's a bit of a round of grounds on where we've come from, how we've performed, but also where we're going this year as we continue to execute the transformation plan with a real focus on all key and on our assets. And with that, let me hand to Frederick Hedlund, our CFO, just to do a slightly deeper dive into the Q4 2025 numbers. So, Frederick, over to you.