IDEX ASA PRESENTATION FOURTH QUARTER 2016 - 23 February 2017 Hemant Mardia, CEO Henrik Knudtzon, CFO www.idex.no - IDEX Biometrics
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IDEX ASA PRESENTATION
FOURTH QUARTER 2016
23 February 2017
Hemant Mardia, CEO
Henrik Knudtzon, CFO
www.idex.no
©2017 IDEX ASA
DISCLAIMER This quarterly presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. Such forward-looking information and statements are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for IDEX ASA (IDEX) and its subsidiaries. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for the IDEX businesses, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time. Although IDEX believes that its expectations and the information in this presentation were based upon reasonable assumptions at the time when they were made, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in this presentation. IDEX ASA nor any other company within the IDEX Group is making any representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the information in the presentation, and neither IDEX ASA, any other company within the IDEX Group nor any of their directors, officers or employees will have any liability to you or any other persons resulting from your use of the information in this presentation. IDEX ASA undertakes no obligation to publicly update or revise any forward-looking information or statements in this presentation. 2 ©2017 IDEX ASA
Leadership through innovation in fingerprint sensors
Differentiated technology enabling growth
3 ©2017 IDEX ASA
COMMERCIALISATION IN THREE MASS MARKETS
Leading
Momentum in Traction in
smartcard
mobile
Off chip emerging IoT
adoption technology
Capacitive sensing platform
4 ©2017 IDEX ASA
ONLY VENDOR OFFERING FULL CAPACITIVE SENSOR PORTFOLIO
Silicon fingerprint sensors Off-Chip fingerprint sensors
5 ©2017 IDEX ASA
OFF-CHIP SENSING DIFFERENTIATION IN PERFORMANCE AND COST
Low cost and highly adaptable Flexibility across markets and applications
form factor ID & Smart
Cards
ID & Smartcards
< 13mm silicon
Mobile
5x smaller IC
Internet of Things (IoT)
6 ©2017 IDEX ASA
INVESTING TO DRIVE TECHNOLOGY LEADERSHIP
Next-generation ASIC platform…. …with lowest cost vs performance in the industry
• Advanced 65nm process with digital intelligence enhancing performance
– Low energy consumption
– On-board microcontroller supporting algorithms
– Encryption engine
• Platform for multiple applications
– Enabler for low cost contactless biometric cards
• Compelling price point
– Small silicon footprint: die size ~12mm2
– Produced on 12 inch wafers
• Direct sourcing from TSMC foundry partner
– High quality production with significant capacity
Sensor products ready for sampling in Q2 2017 - Mass production expected to start in 2H 2017
7 ©2017 IDEX ASA
OFF-CHIP IDEAL FOR NEXT GENERATION BIOMETRIC APPLICATIONS
INDICATIVE ADOPTION*
> 3 billion units
Smartcards
Rigid IoT
Current mobile solutions: glass and coated buttons
2017 2018 2019 2020 2021 2022
Leveraging product differentiation to drive growth and profitability in target segments
*Source: IDEX estimates, Statista and Gartner
8 ©2017 IDEX ASA
FURTHEST STAGE IN MASS DEPLOYABLE BIOMETRIC CARDS
Diverse mass market opportunity
Off-chip sensing technology uniquely
suited for standard cards
End-to-end solution developed with
top tier partners
Advanced commercial status for global
deployment
IDEX targets #1 position in biometric smartcards
9 ©2017 IDEX ASA
IDEX SMARTCARD MARKET OPPORTUNITY
Market verticals Card integrators Market enablers End customers Value driver
Benefits
Financial Government distribution
inclusion
Banking Banking Differentiation
Enhanced
ID Government security
Access Enterprise Convenience
Other Other
10 ©2017 IDEX ASAOFF-CHIP TECHNOLOGY UNIQUELY SUITED FOR CARDS
• Enhanced user experience
Large image size
• Superior biometrics with limited processing
Flexible • Sensor is thin polymer, not brittle silicon
Low cost • Polymer sensor, small silicon footprintEND-TO-END SOLUTION FOR COMMERCIAL DEPLOYMENT
Manufacturing Bank Retail
Compatible Designed into Compatible
with card mass with existing
manufacturing enrolment point of sales
process system terminals
12 ©2017 IDEX ASAADVANCED STAGE TOWARDS COMMERCIAL ADOPTION
Strategic partnerships ISO compatibility End user testing Certification Commercial deployment
Global payment Integrated in ISO Successful live • Secure • Commercial
provider standard cards pilot with global certification deployment at
payment process programme
Card integrators ISO card bending partner with global
tests passed payment
Commercial provider
Proven orders to
compatibility with support
contact POS customer trials
Readiness for card End-customer
production trials underway
ASIC for
contactless
sensor completed • Banking and
financial
inclusion
• ID
• Access control
Level of commercial maturity • Other
Expanded engagement to multiple tier one partners - Multiple market opportunities
13 ©2017 IDEX ASAIDEX STRATEGY FOR THE MOBILE MARKET
INDICATIVE ADOPTION* Coated button Glass button In-display
2017 2018 2019 2020 2021 2022
Current: Coated buttons Interim: Ceramic/ glass buttons Next generation: Flexible OLED
• Commercial momentum with • Q117 launch of Cardinal • Technology development
Cardinal silicon sensor ceramic & glass sensors
IDEX offers solutions to capture market growth now and for the next generation
*Source: IDEX estimates, Statista and Gartner
14 ©2017 IDEX ASAMOMENTUM IN MOBILE – MORE THAN 3 MILLION UNITS SHIPPED
D
W Design win
Dec '15 Feb '16 Apr '16 Jun '16 Aug '16 Oct '16 Dec '16 Feb '17 Apr '17 Jun '17
L Market launch
Indicative
L
DW L DW L market launch
Major Asian
mobile customer DW
DWDW
DW DW L L L L L
Chinese mobile
customer DW L
• 8 mobile design wins, 3 launches and 3 customers with Cardinal sensor
• Production orders received in advance of further smartphone launches
• Ongoing qualification of off-chip sensor with tier one OEM
15 ©2017 IDEX ASANEW GLASS & CERAMIC BUTTON SOLUTION LAUNCHED
IDEX expands mobile product portfolio
• Meets OEM demand for ´glass look and feel´ for the front
of smartphone through existing volume supply chain
• New glass and ceramic range based on Cardinal
architecture in partnership with CanvasBio
• Strong biometric performance and competitive cost
• To be showcased at MWC and sampling in Q2
16 ©2017 IDEX ASAIDEX IS INVESTING IN NEXT GENERATION MOBILE SOLUTIONS
IDEX off-chip capacitive sensing ideally suited
• Same architecture as touch panels
• Competitive for large size sensors
• Sensor made of polymer material
Market development towards infinity displays
• Lower cost solutions with larger capacitive
sensors on the back of the handset
• Flagships can support costly in-display
sensors Investment prioritised on intercepting mobile
• New sensor technologies emerging – display evolution
capacitive sensors proven • Appointed VP Product Marketing from
Synaptics
• Hired team of display integration experts
• Re-focus development resources from in-glass
17 ©2017 IDEX ASAIDEX OFF-CHIP SENSOR IN MULTIPLE NEW IOT PRODUCTS
New USB readers
SidePassTM for Windows Q-180 Touch, a Micro USB for Android devices FreePassTM, a wearable for Windows
The TouchLockTM line of padlocks
IDEX’s sensor selected due to strong value proposition
• Biometric performance demands medium to larger sized sensor
• Compelling cost
• Great flexibility in sensor material and form factors
-- Pursuing selected emerging opportunities with current products --
18 ©2017 IDEX ASASCALING TO CAPTURE MARKET GROWTH
UK: Norway:
Card Product Development Head office
US/ Rochester:
Silicon Centre of Excellence Norway
UK
US/ Boston: San Jose
Advanced Sensor South Korea
Boston
Technology & Software
Rochester China China:
FAE Team
Silicon Valley:
Appointed Comtech as
Appointed Paragon
distributor
Technical as sales agent
Strengthened technical team to accelerate product development
• Organisation grown from 65 to 92 over 2016 including outsourced software team
• Strengthening prioritised segments: cards and mobile display integration
19 ©2017 IDEX ASAKEY MILESTONES AND OUTLOOK
• Smartcard payment programme with strategic partners
- Completion of customer trials Q2 2017
- Commercial launch 2H 2017
• Launch of low power flexible sensor for contactless cards in Q2 2017
- Mass production in 2H 2017
• Sampling of silicon-based glass and ceramic sensor products after MWC
• Smartphone launches and additional design wins
• Increased shipments to IoT customers
• Product pipeline from new low power ASIC platform
20 ©2017 IDEX ASAFOURTH QUARTER KEY FINANCIALS
Quarterly OPEX Quarterly revenues
NOK million NOK million
80 14 15 Growth in revenue, mostly from LG
73 programmes
70 12
• 2016 revenues of NOK 38.6 million
60 57 • Q4 revenues of NOK 12.5 million
32 53
10
50 8 47
45
27 Gross margin of 15 per cent in 2016
22
40
17 • Mainly Cardinal sensors
25
30 • Initial volumes of Eagle
5
37 4
20 25 23
21 12 Operating expenses
10
• Underlying salary increasing due to
7 7 10
40 6 staff expansion
0 0
Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 • Q4 R&D cost lower due to
completion of new ASIC platform
Revenues Payroll R&D Other Op.Ex
21 ©2017 IDEX ASASTRONG BALANCE SHEET WITH USD 64M CASH, NO DEBT
Net cash position by quarter
NOK million
800 764
700 683 Fourth quarter cash outflow of
623 NOK 47 million
600 579
533 • EBITDA of NOK -47 million
500 • Working capital increase of NOK 6 million
400
Strong cash balance of NOK 533 million
300
200
100
0
Q4 15 Q1 16 Q2 16 Q3 16 Q4 16
22 ©2017 IDEX ASAIDEX VALUE PROPOSITION
Huge market Three target markets – each with multi-billion unit potential
potential
Unique technology Off-chip technology offers differentiation with flexible sensors and competitive cost
Talented Expanded organisation with extensive industry experience
organisation
Solid financial Strong balance sheet with USD 64 million, no debt
position
Strong IP portfolio One of the industry’s strongest patent portfolios in capacitive sensing
23 ©2017 IDEX ASATHANK YOU
All information is provided “as is” and without warranty or representation.
©2017 IDEX ASAIDEX AT A GLANCE
UNIQUE TECHNOLOGY Fingerprint imaging, recognition and authentication
• Designed specifically for mass-market solutions
STRONG PATENTS Fundamental IP assets in fingerprint sensing
• 45 granted and pending patent families
GROWTH MARKETS Mobile, Smart and ID cards, IOT
GLOBAL OPERATION Oslo, Norway; Silicon Valley, Boston, US; UK and Far East
• Offices with ~100 staff
PUBLIC LISTED
PUBLICLY LISTED Oslo Stock Exchange, ~2500 shareholders
• Market Cap: ~NOK 3,950 million|USD 460 million
• Investors, including Invesco & Funds managed by Woodford
EXPERIENCED LEADERSHIP Executives from Validity, Synaptics and AuthenTec
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