Fingerprint Cards AB: Interim Report January - March 2019

Highlights of the quarter

• Fingerprints' first in-display sensor, FPC1610, was launched
• Healthy order inflow with continued strong volume trend for FPC1511, the fourth-generation capacitive sensor
• Sales growth continued in new areas, outside capacitive sensors for mobile phones
• Fingerprints signed a partnership with Gemalto and secured the world's first volume order of fingerprint sensors for dual-interface biometric payment cards
• Fingerprints participated in a further two market trials of biometric payment cards

First quarter of 2019

• Revenues amounted to SEK 342.9 M (289.7)
• The gross margin was 23 percent (15)
• EBITDA totalled SEK 35.8 M (neg: 148.7)
• The operating result was negative SEK 1.9 M (neg: 174.9)
• Earnings per share before dilution amounted to a negative SEK 0.01 (neg: 0.47)
• Cash flow from operating activities was a negative SEK 161.1 M (neg: 203.8)

CEO's comments

Compared with the first quarter of 2018, Fingerprints' sales increased 18 percent, which is satisfying, particularly considering that Q1 is generally a seasonally weak quarter. Order bookings have continued to trend favorably at the beginning of the second quarter.

The gross margin improved, both year-on-year and compared with the preceding quarter. However, the profitability level is not satisfactory and was impacted by us selling a relatively high proportion of low-margin products from our inventory during the quarter. The shift to FPC1511, the latest generation of capacitive sensors, is still under way among our OEM customers. EBITDA was positive and continued to improve strongly in relation the preceding year. Fingerprints' financial position is favorable, with cash assets that amounted to SEK 338 M at the end of the quarter. The negative cash flow that we are reporting for the first quarter is attributable to a seasonal effect concerning accounts payable, as well as some delayed receivables, which were settled during the week following the end of the quarter. As at May 10, our cash position had increased by SEK 108 million since March 31, and amounted to SEK 446 million.

Fingerprints should be able to achieve a higher level of profitability and my assessment is that the positive effect on profitability of the generational change to FPC1511 will continue during the second quarter of 2019. FPC1511 has been very well received by our OEM customers and this sensor will be a substantive part of our product portfolio in capacitive sensors during 2019.

We plan to further refine our offering in cost-effective capacitive sensors by launching a new sensor generation based on FPC1511 later this year. These sensors will be even smaller and thus more cost-effective, but will maintain the same, high biometric performance. They will also have the potential to increase our addressable market by making it possible to include a fingerprint reader even in low-end smartphone models.

Major changes are occurring in the market for biometric solutions for smartphones, where the capacitive fingerprint sensor has dominated to date. In-display sensors, which were introduced in 2018, will probably overtake the capacitive sensor already this year as the largest portion of the market for fingerprint sensors for smartphones in terms of value. Our goal is to capture a considerable portion of this growing market and in February, we launched FPC1610, our first in-display sensor that is based on our optical sensor technology. The sensor is currently undergoing tests with our OEM customers and the response to date has been positive. The project is proceeding according to plan.

Diversifying the business into areas outside the smartphone segment is also a very important strategic priority. As previously communicated, we signed a partnership with Gemalto in February and secured the world's first volume order of fingerprint sensors for dual interface payment cards. This testifies to the strength of our offering. Fingerprints is very well positioned to capture a significant share of this emerging market. If we look at the market trials conducted to date in the world, we can see that Fingerprints' solutions are included in all of the tests of contactless biometric cards. During the first quarter, further market tests were initiated, and I anticipate increased activity during the year with a significant number of tests. However, the business volumes will be modest in 2019, but we expect to see a broader commercial launch in 2020.

Sales in the new areas of application for our technology are continuing to develop well, not least in locks and access systems, where Fingerprints' market position is strong. The share of sales from products outside of the smartphone area is continuing to increase.

I'd like to conclude by highlighting a milestone that we recently passed. Since the start, Fingerprints has supplied more than a billion sensors. We have succeeded in this by maintaining a market-leading position in the mobile segment. The fact is that we deliver seven sensors every second, all year round. This figure will continue to increase as we build on our strong position in the smartphone segment, while at the same time broadening our business into new areas.

Christian Fredrikson, President and CEO

Today at 09:00 CET Fingerprints' CEO Christian Fredrikson will present the report together with CFO Per Sundqvist in a combined webcast and telephone conference. The presentation will be held in English.

The report will be available at fingerprints.com (http://www.fingerprints.com)

The webcast and the presentation material can be accessed through https://engage.vevent.com/index.jsp?eid=3483&seid=145 (https://engage.vevent.com/index.jsp?eid=3483&seid=145)

For analysts and media: The telephone conference dial-in is [phone] (international participants) or 08-506 921 80 (Swedish participants). Please state conference ID 6568745.

For information, please contact: Christian Fredrikson, CEO Per Sundqvist, CFO Stefan Pettersson, Head of Investor Relations: [phone] [e-mail] (mailto:[e-mail]) Press: [phone] [e-mail] (mailto:[e-mail]) This is the type of information that Fingerprint Cards AB is obligated to disclose pursuant to the EU's Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7:00 a.m. CEST on May 15, 2019.

About Fingerprints Fingerprint Cards AB (Fingerprints) - the world's leading biometrics company, with its roots in Sweden. We believe in a secure and seamless universe, where you are the key to everything. Our solutions are found in hundreds of millions of devices and applications, and are used billions of times every day, providing safe and convenient identification and authentication with a human touch. For more information visit our website (http://www.fingerprints.com), read our blog (http://www.fingerprints.com/blog/you-are-the-key-to-everything), and follow us on Twitter (https://twitter.com/FingerprintCard). Fingerprints is listed on Nasdaq Stockholm (FING B).

Interim report_Q119 (http://hugin.info/132202/R/2244413/886305.pdf)

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Source: Fingerprint Cards AB via Globenewswire