Norwegian biometrics outfit IDEX ASA this week presented at an investing conference. The DNB Small and Medium Enterprises Conference was held in Oslo, Norway. The event was a chance for management to meet investors and analysts and update them.

IDEX, of course, develops fingerprint sensors and system solutions for a range of biometrically-enabled applications. According to management this sensor market is at an ‘inflection point.’ Fingerprint-enabled smart cards are now being rolled out to the mass market. Issuers of cards are looking for new security products to reduce fraud. Governments are introducing regulations requiring higher levels of security. A report from Mastercard and University of Oxford said 93% of consumers prefer biometrics to passwords. All in, the type of sensors made by IDEX are going to be in high demand in the years to come. Or so goes the story management was telling this week.

There are good reasons to buy into the optimistic outlook. Mastercard has been pushing the adoption of biometric-based cards. According to the presentation, “The world is quickly moving toward a future that will be free of passwords, as consumers realize how biometric technologies can make their lives easier.”

Interestingly, when it comes to fingerprint sensors the market has developed so that European players dominate, which is different from the smartphone market. Getting down to specifics IDEX management notes that the commercial roll out of biometric cards by Mastercard will see the company take part in a “complete certification process for contact-based solution occur in the second quarter 2018.” Additional customer trials will take place through the first half of 2018. Commercial bidding processes for end customers should commence in the second quarter of 2018 according to the presentation. Orders from Asian card integrators are expected to follow on the successful integration in Europe and North America.

The potential size of the market according to IDEX is “several hundred million” units, so this is a huge opportunity. The company also explained that the product is competitively priced. IDEX is also sitting on a valuable stack of 235 granted and pending patents in capacitive fingerprint sensing. As well, the company also has a strong balance sheet with with about NOK 302 million on the books and no debt. It’s a good story. Shares in IDEX have been trading off over the last month, but have gained over the last week and are now trading around NOK 4.18.

Last week ImageWare released an update on the company’s business. ImageWare didn’t release its full-year financial results at the time, deciding to wait until after market close on Friday. Checking in on the official numbers it’s clear why: The company has registered another loss on the year.

According to the earnings report ImageWare earned more than $4.3 million in 2017, which is an increase of 14 percent from the $3.8 million earned in 2016. In 2017 the company entered the large and potentially lucrative healthcare market. And no doubt that will help bump up the numbers. But ImageWare still announced a net loss of $13.7 million in 2017. That’s a larger loss than 2016 when the company lost $10.9 million.

But while the company registered a loss there is also reason for optimism. According to the numbers in the fourth quarter losses decreased from $2.7 million in 2016 to $2.4 million in 2017. As well, in this latest quarter ImageWare pulled in just over $1.2 million in revenue, which is a gain of 32 percent from the fourth quarter a year earlier. Does this late-year uptick presage a shift in trend? Management sure thinks so.

In a conference call held to discuss the earnings report the chairman and CEO of ImageWare, Jim Miller, hosted the call explained to analysts that the revenues in 2017 continue to reflect the company’s legacy business, which is rapidly being replaced by a new strategic direction. According to Miller, “… we made great strides in the year toward transitioning the company to a recurring revenue model. We look forward to seeing meaningful revenues begin from the recurring model as early as the second quarter of 2018. Feedback we are receiving from our sales partners show they have every expectation of sales beginning to ramp in that timeframe.”

Miller went on to comment on some recent wins around deals with software seller CDW and tech giant Fujitsu. “We saw our first sales under [our new] model in Q1 from CDW. Fujitsu is building its sales force along while developing its customer support capability… Thus far, we have trained more than 150 Fujitsu employees in these functions. These milestones, when combined with other initiatives and healthcare’s higher per-user/per-month price point, give us a high level of confidence that we are on the right track toward profitability and cash flow breakeven,” said Miller.

It was a long four years ago that ImageWare made the critically important decision to partner with major companies to bring its products to market rather than attempting to do so on its own. “Because our addressable market is so vast and because the potential customers are so large, we came to believe that attacking the market on our own would be inefficient at best. We recognized that we were just too small and had nowhere near the necessary capital and resources to go after the broader and diverse biometric markets on a direct sale basis. Instead, we turned our efforts to attracting leading companies as partners, initially as technology partners who would then become marketing and sales partners,” said Miller. He admits the company was a bit naive in estimating that the timeline between signing a partner and having that partner begin generating sales would be just two years. “Now, armed with 2020 hindsight, we see how off we were,” Miller admitted.

But it is also the case that four years on products are finally coming to market. In 2017 Fujitsu announced that it had completed its due diligence and had begun the integration of ImageWare’s GoVerifyID technology into its biometrics-as-a-service product. In the third quarter Fujitsu announced that it was beginning to sell biometrics-as-a-service. “So, what we initially thought would be a two-year timeframe turns out to have taken more than double that time,” says Miller. “Having said and lived through that, here we are today. Both ImageWare and several of our partners are now out selling and making sales. CDW is selling, Fujitsu is selling, and IBM is working with us to help facilitate it.” That is, according to Miller, the good times are finally here. “Our sense is that initial IBM security access manager [ISAM]-related sales will start to ramp in the second or third quarter this year. ISAM has been the backbone of IBM security for years and has a huge user base well into the hundreds of millions,” says Miller.

Winding up the conference call Miller thanked investors for being patient with the company. “In summary we want to acknowledge the long and difficult road, this has been for management and for you, our stockholders. The question I’ve been asked most for the past six months is when are your partners going to begin actually selling? And the answer finally is now. As you’ve seen from the many analysts who report and follow the size of the biometric market… the opportunity is as big or bigger than we first envision, and our partners have the ability to deeply penetrate that market in a way we could not. And now they are finally beginning to do so. Consequently, I’m comfortable reiterating our prior guidance that we anticipate achieving cash flow positive run-rates later in this calendar year,” said Miller.

In response to a question from an analyst Miller explained why the introduction of these products to market took longer than expected. “I think really again, it goes back to that broad category of things called education. There are a lot of people who didn’t understand how the technology works, how to roll it out… While we’ve been out educating, the potential customers have all been investing their own time to get educated… So, we’ve seen a lot of folks for example, two major banks here in the U.S. who we talked to two full years ago…they have now come back and said, ‘We understand how the biometric engine platform works, how GoVerify works, how we can just download this off a website and get going.’ We’re interested in re-engaging in those discussions… So, it turns out that, as we thought, those folks never went away in terms of not being interested. They just didn’t know enough to make a decision. You’re replacing 50 years of pins and passwords. That’s a big deal. If you relate that to your life, you usually don’t [have a fifty year trend] get broken in a short period of time. And this is no different… So again, you have a situation now where you’ve got education that is finally winning out. And as people see its simple and it’s easy and it actually can lower their costs… then the buyers of that technology are willing to buy it and in turn send it to their customers [and] not as a choice, but as they are now saying, ‘we’re going to be securing your transactions this way going forward.’ I think you’re seeing now the start of that,” said Miller.

In response to another question about the revenue needed to be cash flow positive Miller said, “We need somewhere between 4.5 million and 5 million on a quarterly basis.” Shares in the company are trading about USD $1.72.

Fingerprint Cards AB (FPC) had an interesting week. Nasdaq Stockholm halted trading in shares of the company as officials at the exchange sorted out a misunderstanding around the business outlook at the company. Stock market officials halt trading on occasion, especially if it seems there is heavy, unexplained trading in shares of a listing. The exchange contacted the company during the halt to see if there is any information that should have been made available to the entire market. In the case of FPC it seemed some analysts had come away from a March 19th meeting with company management that expectations of future business that may have been a bit misguided.

A brokerage firm, Pareto Securities, reportedly distributed a note to clients saying the company had called analysts to warn them that consensus expectations were too high, particularly for the first quarter. FPC quickly distributed a press release stating the company had, “… not communicated price sensitive information in analyst meetings, nor has the company commented on analyst estimates… During the calls that were held on March 19, the company made comments on, for example, the accelerating change in market conditions for capacitive fingerprint sensors for smartphones, as communicated in the year-end report for 2017.” The press release went on to say it was important to note that, “In the company’s assessment, conditions in the Chinese smartphone market slackened additionally in the fourth quarter and the company expects sales to continue to weaken in the first quarter of 2018.” As well, in terms of value, the company expects the market for fingerprint sensors for smartphones to decline in 2018… To achieve a long-term improvement in profitability, the company has launched a number of activities that will generate effects early in the second quarter of 2018.” Amid the uncertainty FPC also announced that Pernilla Lindén has been appointed CFO, replacing interim CFO Hassan Tabrizi, who will leave the company June 6, 2018. Senior vp of strategy and corporate development, Jan Johannesson, will also leave the company by June 30th. FPC also announced that it is working on a face ID product as the company shifts its strategic direction over the year ahead. Shares in FPC resumed trading Wednesday on Nasdaq Stockholm.