Biometrics stocks this week: SuperCom, Nuance, Gemalto, Synaptics, Diebold, VerifyMe, Precise
Author: huifan Time: 2018-05-18
Earnings season continues. This week some of the larger companies using biometric technology are in the spotlight.
One company reporting is Israeli organization, SuperCom. The company reported this week results for the fourth quarter and twelve months ended December 31, 2017. The outfit is a provider of secure digital ID products, such as the monitoring devices used to keep track of people serving home-based sentences. It’s been around since 1988, and it has just announced some solid results. This past year it delivered organic growth of 66% as well as a 200% improvement in its gross margin (a measure of how much of its revenue is being used to produce its products). In 2017 revenue increased to a record USD $33.3 million, up from just $20 million last year. According to the company growth is coming from all three business segments: e-government, IoT and, and cybersecurity. The company is also growing in all of its major geographic markets: Africa, Europe, Latin America, U.S., Israel and Asia Pacific. Another highlight on the year are positive earnings of $188,000, which is way better than a loss of $6.6 million last year. Arie Trabelsi, president and CEO, SuperCom, was happy to report the results. “2017 was a banner year for SuperCom, highlighted by a dramatic transformation in our financial performance… Thanks to the successful integration efforts of the previous year’s acquisitions, we were able to generate record annual revenue, while also optimizing our costs in certain key areas of our business leading to a greater than 400% increase in gross profit. In the fourth quarter specifically, we grew our revenue 93% over the prior year, while also significantly reducing our expenses as a percentage of total revenue across the board.” But while the full year results were solid, the fourth quarter results were a bit less impressive, and so shares in SuperCom (it’s traded on Nasdaq) actually trended down over the past week, settling at USD $1.91 this week. Shares have been trading down for several months. Nevertheless the company has been given a price target of $5.00 by brokerage HC Wainwright.
Nuance Communications announced results this week. The company suggested that estimates for the full year of 2018 need to be tweaked downward to somewhere between 2% and 4% rather than 3% to 5%. The company uses voice biometrics in its medical sector products, which is likely what it’s best known for. But the company operates in other sectors as well. It reiterated its expectation for 5% to 7% growth in new bookings for the full year 2018. The company also reported that non-GAAP revenue for its most recent quarter was $518.3 million, up 1% over the same period last year. Organic revenue growth was also 1%. That advance was led by a big 8% surge in healthcare and an even larger surge of 12% in the hot automotive sector. On a conference call held in conjunction with the release Mark D. Benjamin, the incoming CEO, introduced himself. “I’m excited to be here… As an outsider, I was attracted to Nuance for its reputation, foresight innovation and because I believe the company is at a pivotal point in its evolution… In just three weeks inside the company, my optimism for the business has been confirmed and my conviction for our future has been strengthened. For everyone following this business, you know firsthand that we have real strengths in our technology, customers, channels and markets, all backed by fundamental excellence in conversational AI. Over the long-term, I believe that this expertise and leadership will position the company to deliver compelling value for our stakeholders,” said Benjamin.
Gemalto also released its first quarter results. The company is working through an acquisition by French tech giant Thales, which has issued an offer for all Gemalto shares. The offer has been unanimously supported by the Gemalto board. The CEO of Gemalto spoke on a conference call and said he expects the transaction to close in the second half of 2018. As for results on the first quarter of 2018 Gemalto recorded revenue of €650 million. According to the press release, “… this growth was driven by a solid increase in the identity, IoT and cybersecurity segment [that] more than offset the anticipated revenue decrease in the smartcards and issuance segment.” Gemalto acquired a new identity management business in May 2017, and it’s already contributing to growth. “You can see how fast the share of identity, IoT and cybersecurity has grown in our revenue , accounting for already 45% this quarter but [advancing] six percentage points from the same period of last year. We can expect this trend to continue. Identity, IoT and cybersecurity will represent for more in-house sales in the near future… These evolutions are in line with our expectations… and are the first step resulting from the specific choices we have made for the company. They provide us with a solid foundation to delivery our confirmed 2018 objectives.” Biometric tech is a key part of this shift at the company. To that end, Gemalto also announced that it had won a significant biometric contract in the banking sector this past quarter. “[The project] will enable deployment of commercial biometric solutions on a large scale, increasing consumers’ protection in their day-to-day transactions,” according to a company release. The project reflects the growing demand for commercial biometric projects. “Overall, Gemalto is well positioned to capture the growing opportunities of this market,” said an exec on the conference call. According to the CEO, “In 2018 we expect to continue seeing strong demand for citizen protection solution, e-Passports, border control solutions and biometrics driven by the need for increased security at country borders. Our recent win of the UK passport for a 10-year [period] illustrates our ability to capture the growing opportunities in this market… In cybersecurity, the increased concern in data security and data privacy, as well as regulation enforcement, should continue to drive growth… We confirm our outlook for 2018. Double-digit revenue growth expected in the identity, IoT and cybersecurity segments.” Shares in Gemalto have been trading at about EUR 49.50 since the announcement of the Thales offer. The price is near the offer price from Thales, which makes sense. Traders have bid the stock up to a point just under the offer price.
Shares of Synaptics fell nearly 6% recently after the maker of human interface narrowly beat earnings predictions. Investors were also disappointed by sales that came in below expectations. The company lost $13.7 million, or 40 cents a share, in the quarter. That’s a turnaround from earnings of $4.5 million, or 13 cents a share, in the year previous. But revenue fell 11% to $394 million, down from $444 million the year before.
Another big tech company with a finger in the biometrics sector is the ATM maker, Diebold Nixdorf. The company missed analyst expectations by a cent, reporting a loss of USD $0.13 per share. Revenues were $1.06 billion, a decline of 3.6% from the year previous. The company is thought to be working out kinks in the recent merger between Diebold and Nixdorf. Remarkably, the company announced it will suspend its dividend payment to shareholders. That sent the stock price tumbling in heavy trading. The company will improve its cash generation and lower debt with the cancellation. But investors like to receive that quarterly dividend payment. Shares closed as low as $12.90 at the time on heavy volume of 1.35 million shares traded. That’s still above recent lows posted earlier this year, however. Gerrard Schmid, the new president and chief executive officer of the company (he joined in February) has been quoted as saying the, “… immediate focus should be to streamline and simplify our business operations… We are more complex than we need to be.” Diebold Nixdorf also announced this quarter it is collaborating with Ecuadorian bank Banco Bolivariano to implement, “… advanced biometric authentication, card management and person-to-person payments with clients from other institutions.” In a vote of confidence Schmid bought 10,000 shares of DBD on May 8th at an average price of $11.85 a share for a total purchase price of $118,500.
VerifyMe Inc. is a smaller technology company that markets, among other things, facial recognition, fingerprint, voice and retina scanning products. It also produces document verification products that utilize invisible printing ink allowing issuers to spot counterfeits. The company holds a large portfolio of patents on its tech. It announced a net loss of $1,123,633 in the most recent quarter. That’s a larger loss than the first quarter of 2017 when the company lost only $304,587. However, the organization has improved the amount of cash it is holding. The company’s cash balance as of March 31, 2018 was $2,341,401, which compares very favourably to the $693,001 held December 31, 2017, and the $23,222 it had in the bank on March 31, 2017. In the press release accompanying the results Patrick White, president and CEO of VerifyMe, noted the company has paid cash to get out of a revenue sharing agreement as the company gets ready to move into a new phase. “We achieved a key objective during the first quarter that will optimize our future earnings as we move the company into the revenue generation phase of our development process. During the quarter, we made a financial strategic decision to end a future revenue sharing program, so that we could benefit entirely from all future revenues. To do this, we paid out cash in relation to the Settlement Agreement [in the amount of] $500,000. We feel that the future savings that will be incurred by this transaction will significantly outweigh the cost.” The company also announced two contracts with new clients representing, “well-known blue-chip global brand owners.” Discussing the hot market for improved digital security products White was quoted as saying, “On the physical goods side, not a day goes by without a news story about fraudulent goods being sold in the marketplace, which not only cause harm to the end users, but are damaging to companies’ reputations and brands. It is these exact reasons which we hear directly from customers why they are searching for verification capabilities. So too is the situation when it comes to digital verification, whereby companies must have comfort in knowing that the person signing on, is actually that person. VerifyMe’s digital biometric verification solution has the capabilities once fully developed to offer multi-factoring verification, which is starting to emerge. We’ve made significant strides with our software verification solution and expect to complete development so it will be ready to go to market in 2018.” White went on to say the company is on track to report improved revenues in the near-term and said that the company’s capital structure is strong. “We ended the first quarter in excess of $2.3 million in cash, significantly reduced our payables and the company has no debt. Our cash burn from ongoing operations in the quarter was minimal. We anticipate that the working capital on hand should give the company enough financial flexibility to implement our strategy and goals for the coming year and beyond,” said White. Shares in VerifyMe are having a good run. The stock is traded on the over-the-counter market and has advanced from USD $0.04 in September of 2017 to $0.26 this week.
Also reporting this week is Swedish firm, Precise Biometrics. The company announced net sales growth of 9.2%, leading to SEK 18.2 million (USD $2.1 million) in net sales revenue for the first quarter of 2018. That’s up from SEK 16.6 million (USD $1.9 million) in the first quarter of 2017. The company also cut its operating loss to SEK 2 million ($0.2 million) from SEK 2.7 million ($0.3 million). So things are looking good at Precise. “The market for fingerprint technology in mobile phones continues to change at a rapid pace and we continue to follow our strategy focusing on four key areas,” said Torgny Hellström, chairman of the board, Precise Biometrics. “We are working with customers and solutions for optical and ultrasound sensors in the high-price segment and for capacitive sensors in the low-price segment, both of which have growth potential. The fact that our software is in the first phone with an under-glass ultrasound sensor is evidence of our successful work in the field of new sensor technologies. In the field of biometric cards, we continue to strengthen our position through new partnership agreements, and we are involved in several exciting projects in new areas of application.” The smartphone with an ultrasonic in-display fingerprint sensor is the Huawei Honor 10. Though, the chairman noted that Precise has nine other customers in the smartphone market, improving the chances of “winning future orders.” The company’s tech was also used in a pilot program run by Visa and Mountain America Credit Union, which is, “… reported to be the first of its kind in the U.S.” According to Hellström, “Our vision of convenient and secure identity authentication for everyone, everywhere, is more relevant now than ever. Biometrics will replace passwords and other forms of authentication for cars, locks and wearables, areas in which we are involved in several projects and intend to drive and continue to be part of developments in the future.” Investors like the story. Shares in Precise have been trending up over the last month, hitting SEK 1.70 this week.