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2016-07-22

Fingerprint Cards AB: Interim report, January to June 2016

Second quarter of 2016

* Revenues amounted to SEK 1,666.1 M (445.2), up 274% compared with the
second quarter of 2015
* The gross margin was 49% (36)
* Operating profit amounted to SEK 709.7 M (65.5) and the operating margin to
43% (15)
* Earnings per share increased to SEK 1.72 (0.22).
* Cash flow from operating activities was SEK 530.4 M (54.6)

First six months of 2016

* Revenues amounted to SEK 3,157.3 M (585.0), up 440% compared with the
year-earlier period
* The gross margin was 49% (34)
* Operating profit amounted to SEK 1,298.7 M (46.6) and the operating margin
to 41% (8)
* Earnings per share increased to SEK 3.16 (0.16)
* Cash flow from operating activities was SEK 809.8 M (70.0)

Outlook

* The revenue guidance for 2016 has been updated to SEK 7,200-8,300 M from
the previously communicated SEK 7,000-8,500 M. Revenues in the second half
of the year are expected to grow sequentially in view of the strong growth
in the number of launched smartphones integrating our sensors and in
particular in view of the fourth quarter's relative share of the smartphone
market on an annual basis.
* As previously communicated, the operating margin for 2016 is expected to
exceed that achieved in the second half of 2015, which was 37%.

CEO's comments

Record number of smartphone launches generates strong growth and profitability
I am very pleased that my final report as CEO of Fingerprint Cards is also the
company's strongest report to date. Revenues amounted to SEK 1,666 M, an
increase of 274 percent compared with the second quarter of 2015 and
representing sequential growth of 12%. The operating margin improved compared
with the preceding quarter to 43%, largely thanks to maintaining a strong
gross margin.

We are increasing our market share in line with our previous estimates. Ahead
of 2016, we estimated that we would grow our share of the market for
fingerprint sensors from 45% in 2015 to 50-70% in 2016. Our current estimate
is that the outcome will end up in the upper part of this interval.

Our growth is benefiting from our major Chinese customers continuing to
capture market share. Huawei, Oppo and Vivo in particular are continuing to
show very strong growth. In addition, Xiaomi has become a large customer for
us and has to date launched eight smartphones with our sensors since November
2015.

Growing number of customer projects provides good visibility

A clear measurement of our successes is the large number of smartphone
launches featuring our sensors that occurred during the quarter. In the
second quarter, 42 smartphone launches included our sensors, compared with
nine during the second quarter of 2015 and 55 during the whole of 2015. To
date, 71 mobile devices featuring our sensors have been launched during 2016.
The large number of smartphone launches with our sensors constitutes the base
for the strong revenue growth that is reflected in our plans.

We continue to be the technology leader in fingerprint sensors, which is a
major reason for smartphones manufacturers to use our sensors rather than
those of our competitors. As a result of this, approximately 100 customer
projects are in progress in which manufacturers of mobile devices plan to use
our sensors during the coming three quarters in models that are yet to be
launched. This means that we have good visibility well into 2017 in respect
of our position in the market.

In smartphones, our technology development has to a major extent been related
to our new touch fingerprint sensor FPC1268, which can be mounted under
glass. The first smartphone launches in which FPC1268 will be included are
scheduled for the second half of 2016 and additional models are planned to
follow in early 2017. The work that remains entails completing the mass
production of these new sensors in cooperation with our suppliers and
assisting the smartphone manufacturers in integrating the new sensors into
their smartphones. We can already state that these sensors will offer
excellent biometric performance, which is now being combined with even more
advanced solutions for integrating the sensors into the mobile device.

The penetration rate for fingerprint sensors in smartphones continues to
increase sharply in accordance with our previous estimates. This is resulting
in a more pronounced segmentation of the market for fingerprint sensors, in
which the high tier segment for smartphones integrates the most advanced and
most expensive sensors, such as sensors under glass. At the same time, the
market is being opened for cost-effective fingerprint sensors in the entry
level segment for smartphones. Our latest touch fingerprint sensor FPC1028
was launched during the quarter, with the objective of also establishing a
leading position in this segment.

As a result of the increasing market for fingerprint sensors, additional
companies have ambitions to capture a share of the market. However, our
assessment is that as the market leader, we are very well positioned to be
active in all segments of our market, offering dedicated sensors optimized in
terms of performance and manufacturing costs for the respective segment. We
have the best technology and the strongest patent portfolio in the market,
and we continue to leverage our financial strength to invest aggressively in
our organization and increase our supply capacity. Our intention is to be the
leading supplier in all segments of the fingerprint sensor market as the
market is broadened additionally.

New markets are emerging

Efforts continue as planned to adapt our sensors for new market segments, such
as smartcards, the automotive industry and the Internet of Things. Together
with our business partners and customers, we are continuing our development
work with a view to an initial commercial launch of smartcards during 2016.
During the quarter, we increased our investments in product development,
partnerships and business development to create conditions to capture a
leading position in these segments as they start to gain momentum.

This is exemplified by our launch in the second quarter of a complete
biometric module, FPC-BM, which makes it possible to quickly and easily
integrate a touch fingerprint sensor into various types of devices for
example related to the Internet of Things.

As previously announced, this is my last report as CEO of the company. I would
like to take this opportunity to thank my colleagues for their fantastic
achievements. I am very proud of the growth we have generated during my time
as CEO, which has broken all records, and that our sensors have been
integrated into hundreds of millions of smartphones. I am handing over
leadership of a company that has exceptionally favorable potential for
continued sharp growth and I am convinced that the strong organization and
world-leading technology we have brought forward in the recent years will
ensure that FPC will remain the leading supplier of fingerprint sensors.

Jörgen Lantto, CEO

For further information, contact:

Jörgen Lantto, CEO, Fingerprint Cards AB (publ),
+46 (0)31-60 78 20,investrel@fingerprints.com

https://www.fingerprints.com/corporate/en/financialinfo/financial-reports/

Welcome to the presentation of Fingerprint Cards' interim report for the
second quarter 2016, on July 22nd2016, 03:00 PM CEST. Participants can enter
by using this link and register:

https://engage.vevent.com/index.jsp?eid=3483&seid=68

Fingerprint Cards AB (publ), Corp. Reg. No. 556154-2381, discloses this
information pursuant to the Swedish Securities Market Act (2007:528) and the
Swedish Financial Instruments Trading Act (1991:980). The information was
issued for publication on July 22,2016, at 7:00 a.m.

Important information

Issuance, publication or distribution of this press release in certain
jurisdictions could be subject to restrictions. Recipients of this press
release are responsible for using this press release and the information
herein in accordance with applicable rules in each jurisdiction. This press
release does not constitute an offer, or invitation to acquire or subscribe
for new securities in Fingerprint Cards in any jurisdiction.

FPC Interim Report Q2 2016
http://hugin.info/132202/R/2030064/755039.pdf

---------------------------------------

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Fingerprint Cards AB via Globenewswire

HUG#2030064

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