Last year was the big breakthrough for Fingerprint Cards, the Swedish high-tech company that develops, produces and markets biometric technology that verifies an individual’s identity with the help of that person’s unique fingerprint. The company grew by not less than 1200%. Now, the sight is set towards new biometric products and possibly acquisitions.
Today, Swedish newspaper Göteborgs-Posten published an interview with Fingerprint’s CEO Jörgen Lantto in which he emphasized the importance of listening to what the customer wants. “We have customers that launch new mobile phones basically all the time. So far this year, 19 new mobile phones have been launched and there is a constant flow of new ones. It is always high up on our agenda to help them to release their phones. That’s where the money is coming from“, says Lantto.
Recently, the company announced that it initiated a cooperation with Zwipe in order to develop biometric smartcards, which can be used as payment cards. There are also plans to use Fingerprint’s technology in the automotive industry. Last year, the company worked eagerly to develop fingerprint technology that can be used under glass, something that was demonstrated for select customers during the Mobile World Congress in Barcelona a few weeks ago. It is said that the new products have been received very well by the market.
Despite, or maybe because of, Fingerprint’s successes there has been an ongoing drive by Swedish media as to how and when Asian competition will overtake Fingerprint within a few years time. CEO Lantto comments: “If you look at how many non-Samsung phones have been launched this year, we have been involved in 18 out of 19. You can draw the conclusion that we do not experience a worsening competitive environment during 2016. It takes roughly six months to develop a mobile phone, and we learn rather early whether we are included or not.”
During 2015, Fingerprint Cards estimated that they have around 45% market share. For 2016, the company expects the market to double in value. “We plan to gain share in terms of value and increase value by roughly 130-200%. So we grow faster than the market. We are on top of things.”
“There are possibilities to acquire other technologies which complement what we are developing. We are looking at things that are new and not available on the market today.”
During 2016, the biggest challenges are the fact that many new phones will be launched and that the company wants to broaden its product portfolio, while simultaneously concluding the first phase of smartcards. “We are broadening our portfolio so it is important to not lose focus on business. That is always a challenge.”
Despite the almost unbelievable share price performance during 2015, from SEK 35 to SEK 590, the Fingerprint story seems far from over. On the contrary, looking at consensus estimates for 2016, the Fingerprint share is trading at a PE-multiple of 12.5x. The 2016 EV/EBIT multiple is 10x. Given the tremendous growth, the equally tremendous future potential and very strong market position of the company, we cannot find the current valuation anything else but attractive.
Disclaimer: Nordic Investor owns share of Fingerprint Cards