Fingerprint Cards AB (publ)

Thank you for standing by. Welcome to the Fingerprint Cards Q1 Results 2026 Webcast and 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 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Alternatively, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stefan Petersen, Head of Investor Relations. Please go ahead.

Thank you, Magdalene, and good morning, everyone, and welcome to FTC's earnings call following the release of our Q1 report this morning. So we'll start by a presentation of the report by our CEO, Adam Philpott. And with that, let me now hand over to our CEO, Adam Philpott.

Thank you very much, Stefan, and good morning, everyone. Thanks for joining Frederick and I for the Q1 2026 earnings presentation. Just in terms of the agenda, I'll go through a quick summary of the financials for Q1, and then we'll spend a bit of time, as always, we'll talk about all key. We'll talk about how that really important high-value premium product is developing. And then third, we'll talk about the merger itself that we announced recently, and it was recently voted through at our EGM. So we're going to spend a bit of time on that before I hand to Frederick Hedlund, who will talk in a bit more detail about some of the key figures from Q1 2026. So let me get into the summary of our performance. Overall, if we look at the top line, continued growth on our top line, 4% year-on-year growth in real terms, 21% up in constant currency. So another strong constant currency quarter in terms of revenue performance. Really pleased with the team and those results. From a margin perspective, also very happy with the margin performance. You can see here 62.3% gross margin. That was just on our core product. There were no licensing deals or other types of deals in there. Really strong core performance on the core portfolio. So really pleased to see that our premium is well recognized by our clients and we thank them for exactly that. So great performance on the gross margin. As I mentioned, Two of the key elements that I want to touch on today relate to AllKey and the merger. In terms of AllKey, we spent a number of calls now talking about how we're migrating from lower-end sensors to high-value, moving up the value chain with systems, and our product family name for that is AllKey. As we continue to monitor our progress and the development of that business, of all the new pipelines, so new deals that we brought into the pipeline in Q1, 75% of new pipeline is for Allkey. So really seeing momentum in that product family. Not only that, but as we look at that Allkey pipeline that we added in Q1, 60% of that pipeline was for a new client as well. So continuing momentum to bring new clients into the company with new pipeline based on being able to reach them in new ways with the Aukey product family. Much, much simpler for them to be able to go and integrate that into their product as a turnkey solution. But we also continue to innovate in Aukey as well. We launched the Aukey software platform. I'll spend a bit more time on that just shortly. And then big news, of course, it was announced after the end of the quarter was the merger with Precise Biometrics. The EGM was held and approved that on the April 30th, a few weeks ago. What that means is that we're building an incredibly powerful European biometrics platform. So, a really important company in that space. And there's great synergies. There's great synergies from a go-to-market perspective. There are great synergies from a portfolio perspective. But there are also great cost synergies as well that allow us to get to an EBITDA-positive position and a much stronger company fundamentals there as well. So overall for the course, a really strong margin profile, good top-line growth as well, and continuing that premium focus where we have great skills that are unique in the markets. So let me spend a bit more time on all key. On the left, you can see the exact charts that we used last quarter. And the reason I've used those again is they remain very consistent with what we're seeing in terms of both our product mix by revenue, but also our new customer mix. I mentioned from data points earlier that we're seeing 60% of new pipeline for new customers. That hasn't changed the overall pipeline, but we expect to continue to see that moving forward. I talked about the product mix, of course, as well. For all new pipes it was added in Q1, all of that product, 75% rather, of that new pipeline by revenue was for Aukey. So, again, you can see how we're continuing to bring more Aukey into the mix in our pipeline. And, of course, over time, that then converts through the sales cycle into revenue. And we're seeing continued strength in the all-key product family business development too. It's not just bringing new pipe in. We're seeing the pipe shift through the sales stages, through evaluation, into design wins and into business wins. So we're seeing real progress as that moves through the funnel as well, having launched that just over a year ago. We also have talked a lot about why this is important for us moving up the value chain, not just for margin, but also as we offer a greater system to our customer. It means they need to buy less pieces or fewer pieces from other players, which means that we can get greater wallet share. And this gives rise to the three times average selling price economics. And we continue to see that in our pipeline. for the value of our all key deals per unit versus the value of our sensor deals per unit. So we keep a very close eye exactly on that. And we have maintained and expanded our sensor partnerships as well. We continue to see new opportunities for our sensor business, particularly in the card form factor like ID. There are lots of interesting things going on. We're not walking away from that business. We're protecting and maintaining that business, continuing to expand and grow it into new segments as well, whilst also building out this premium side of our portfolio. And as I talked earlier about building that premium side out, we launched the all-key software platform in Q1. What that means is that not only do we offer the full technology stack including MCU, sensor, et cetera, but also allow customers to write custom apps to that platform as well. So even more flexibility, particularly on the software side, again, opening up new use cases for our clients. And we'll continue to innovate. We launched the Aukey software platform in Q1, but we also continue to see more opportunity, particularly on the card form factor for Aukey Ultra. Today, we offer sensors and our partnerships there. Tomorrow, we believe we can offer more value, including software, taking the Aukey Ultra platform with a secure element. into the smart card form factor as well. So lots going on in Aukey, lots of demand, but continued innovation to serve that demand as well as we push it through our pipeline. So that's a little bit on Aukey. Let's talk a little bit about the merger as well, because we believe the merger forms a very, very strong combined company. in terms of what it offers is great meaningful cost synergies, so really, really powerful cost synergies, a much stronger financial profile. We achieve this by streamlining some of the overlapping functions and optimize the combined organizations. And we've identified annual operating cost synergies of at least 45 million SEK. And that really comes from consolidating administrative functions, optimizing systems and tools, streamlining commercial operations. So really it's just a leaner cost base to support the greater organization, leading to a potential double-digit EBITDA margins. But not only that, I mean, that's the economic side of it. There's also very complementary offerings, too. We've got a much stronger, more competitive biometrics identity company as a result of the merger, integrated hardware and software solutions. We span physical and digital security in different ways together. We address the full spectrum of authentication, identification, and access controls. And that means that customers can come to us for different things. It means they can buy more from us, we can increase our wallet share, we can also increase our win rate with those clients also. It gives us expanded commercial reach too. So we have very complimentary go-to-market coverage footprints as well with different customers in different segments to allow us to capture a larger wallet share. But then finally, what this also does as a leading biometrics platform is create a platform for industry consolidation. It's a highly fragmented market. Many, many companies with strong technology, but very limited scale, subscale, if you like. So we believe there's a huge opportunity to play an active role in industry consolidation. so there's not lots of small companies that the customer has to own the complexity to go and engage with, but actually we can aggregate that together to give the customer a more simple value and choice for what they're seeking to improve their identity and security posture. So that's a kind of overview, if you like, on the combined company. I will go a little deeper into some of those elements as well. So let's talk about the cost images, creating a platform for strong growth and profitability. On a pro forma basis, Precise and FPC together generated approximately 160 million in revenue in 2025, but with a negative EBITDA of negative 19 million, 19 million SEK. One of the benefits of the merger is the opportunity to create a much more efficient operating cost base. So we've identified annual synergies, as I said, of at least 45 million SEK, which come from those overlapping functions. and optimization that I talked about. And as these synergies get realized, the combined company is expected to deliver double-digit growth, double-digit EBITDA margins, where the adjusted pro forma shows about 17% EBITDA margins. So a really powerful way of combining resources, optimizing them to deliver a much better outcome. So that's a little bit on the cost base and the financial synergies. Let's talk a bit about the capabilities and how we combine those and what those mean as well. And so together we offer a very, very broad suite of capabilities. And both companies offer high efficacy identity. So that's very complementary from a cultural, from a technology perspective as well. Because as we think about what's happening out there in the world, and I've talked a lot about this, we're now finally starting to see the shift away from passwords. And those alternatives to passwords typically require biometrics, whether it's FIDO tokens, whether it's access, et cetera, it typically requires biometrics. And so it's super important to have a company that's got the right scale to be able to respond to this. And so the initial hypothesis is we can serve these markets very, very well together. The future potential is to unify them. So as you think about physical security today, both companies serve physical security. As you think about digital security, both companies serve that as well. But there's an opportunity over time to bring those two things together in a continuum, in a continuous loop whereby we improve overall security by combining physical access We know I'm in the building with digital security. I'm trying to get access to an application from within that building. And so very, very powerful play for both companies. If you look at how we're complementary today, we also offer a blend of enterprise and consumer markets. Both companies active in different spaces, very complementary to bring that together. We offer a blend of different modalities, for example, as well. Fingerprint, hardware, iris, palm, lots of different capabilities that we can offer there. And so that creates a huge opportunity for upsell, cross-sell, and particularly new logos as we leverage joint expertise and expand what we're offering, but also expand what we're selling to each of our individual clients. So lots of things that are super complementary that we can bring together to offer a greater outcome to our clients. And then the final piece I spoke about was around the sector consolidation. So the biometric industry remains highly fragmented. Many specialized technology companies are typically operating at very small scale. And so the merger between FPC and Precise presents the first step in building a scalable biometrics platform capable of participating and, frankly, enabling that consolidation. And when you talk about consolidation, we see two primary types of acquisition opportunities. There's portfolio consolidation. and there's capability expansion. So let me talk about each of those and forgive all the text on this slide. I wanted to keep some of the detail in there for you. But when it comes to portfolio consolidation, what's that? Well, those are typically well-established niche companies who've got proven products, they've got active customers, market validation, they've got strong technology, and they have a customer base, but they're limited in their ability to scale on their own. And so through those types of acquisitions, we can create value through integrating their products into the combined portfolio, leveraging our combined go-to-market reach and scale, but also realize those cost synergies and operational efficiencies. So really nice opportunity there. Those are some of the slightly larger ones. The dots on this chart are slightly larger. And then on the right side of the chart, we've got capability expansion. Those are typically smaller specialist teams with really good IP, expertise, and complementary solutions that add value to our existing portfolio and customers. And so the value creation from those type of acquisitions comes from strengthening and expanding the platform's technology capabilities, accelerating the development of new solutions, in housing where we may have previously partnered to achieve that and adding expertise in new technology areas. And so in both cases, whether it's, you know, portfolio consolidation or whether it's capability expansion, the objective remains the same. It's to expand what we can do, it's to strengthen our product portfolio, and it's to scale leveraging our commercial capacity and commercial reach. And so we feel this is a really great capability and company that we're putting together with FPC and Precise, but you can also see how this becomes a platform for continuing to build on that with other acquisitions through those other types of consolidation opportunities. So that's a little bit on the merger. Let me come back to you, Fredrik. Let's come back to Q1, and perhaps you can talk us through some of the key figures.