Marking the end of a remarkable winning streak, Fingerprint Cards dipped into the red in its fourth quarter of 2017.
The revelation comes by way of the company’s Q4 and year-end corporate update, which indicates that FPC’s Q4 revenues fell by 62 percent year-over-year, resulting in an operating loss for the quarter of SEK 40.6 million. And while the company still managed to attain an operating profit of SEK 154.6 million, or roughly $19 million USD, for the full year, 2017 still saw an overall drop in revenues of 55 percent, compared to 2016.
The results illustrate the continuation of a trend that took shape over the course of last year. Signs of trouble first emerged with FPC’s revised revenue guidance in March, in which the company predicted a revenue drop due to what appeared to be “short-term challenges”; later, the company’s Q3 update depicted declining revenues due in part to the impact of Apple’s iPhone X, which, with its facial recognition technology, prompted OEM customers to consider pivoting from fingerprint scanners to that modality.
The main issue, though, is a more basic matter of supply, demand, and competition. As CEO Christian Fredrikson explained in FPC’s announcement of the results, the mobile capacitive sensor market “has very quickly developed into a mature mass market with increasing competition and decreasing prices,” resulting in a decrease of 30 percent in FPC’s average selling price over the past year. Fredrikson also cites “independent observers” in noting that “deliveries of smartphones in the Chinese market decreased somewhat compared with 2016,” further dampening demand and prices for sensors. And unfortunately, Fredrikson says the company’s leadership “expect the market for fingerprint sensors for smartphones to decline in 2018.”
Accordingly, the company has taken cost savings measures including a substantial layoffs program, but it’s also aggressively working to bring its technology into new market areas, with Fredrikson highlighting biometric smart cards as the one “offering the greatest potential”. Fredrikson highlighted FPC’s partnerships with other major players in this area including IDEMIA, Gemalto, and NXP Semiconductors, and the company’s involvement in a pilot project with Visa. Fifty percent of FPC’s R&D is going into new areas like this, and while capacitive fingerprint sensors accounted for 95 percent of the company’s sales last year, Fredrikson is hoping that new market areas will account for 10 percent of the company’s business over the year ahead.
(Originally posted on FindBiometrics)