Q1 2018 MAY 3, 2018 Q1 2018 Summary Margins & Revenues - PowerPoint PPT Presentation

FINGERPRINT CARDS Q1 2018 MAY 3, 2018

Q1 2018 Summary Margins & Revenues Highlights profitability Revenues: Gross profit: Shift towards smaller SEK 290 (686) M, SEK 45 (282) M and cheaper fingerprint a 58% decrease year- sensors negatively Gross Margin: over-year impacted revenues 15% (41) and gross margin Operating profit*: Performance in the SEK -175 (71) M Chinese smartphone Operating margin: market remained weak -60% (10) Cost-cutting program Operating Cash proceeding as planned Flow: Operating result SEK -204 (-324) M impacted by restructuring costs of SEK 40.2 M *Operating result impacted by restructuring costs of SEK -40.2 M 2

BUSINESS UPDATE

Cost control and diversification Result impacted by intense competition, a product mix shift and a declining Chinese smartphone market We are lowering our costs… Cost reduction program executed according to plan, saving SEK 360m during 2018 High-priority development project with the aim of launching a fingerprint sensor with a lower production cost than the present generation of sensors … and diversifying our business Expanding our biometric technology portfolio, e.g. face recognition and in- display We have a strong position in emerging application areas, e.g. in smart cards 4

Market launches and business development in Q1 2018 17 mobile devices launched by 7 OEM customers. Launches by Huawei, Xiaomi and Oppo among others. Two PCs launched with our fingerprint sensors FPC1291 launched, the first fingerprint sensor from the third generation A facial recognition solution is being developed. expected to be integrated into customer products in the second half of 2018. Ten-year exclusive agreement with Gentex to bring iris-scanning technology to the automotive industry Partnership with Altran aimed at offering biometric solutions for the automotive industry Biometric smart card market trials in the Middle East and Japan 5

Biometric smart card market trials in the Middle East and Japan Fingerprints is collaborating with IDEMIA on Japan’s first biometric payment card trial. An FPC1300-series sensor is used, featuring ultra-low power consumption and superior biometric performance. Biometric payment card pilot with Visa, the first of its kind in the Middle East. The card technology is provided by Zwipe, and is using a sensor from the FPC1300-series. 6

Summary Earnings in the first quarter of 2018 impacted by a continued weakening of sales, as anticipated Shift towards smaller and cheaper fingerprint sensors continued, impacting sales and gross margin Cost reduction program executed according to plan, saving SEK 360 M in 2018 Challenging market conditions, but some stabilization and sequential growth expected in Q2 Cash flow from operating activities expected to sequentially improve during Q2 and be positive, due to a tax refund and an improved operating result. Fingerprints is well-positioned to benefit from the adoption of biometry in new areas: biometric smart cards and automotive/embedded 7 * Excluding Apple

Q1 2018 FINANCIAL RESULTS

Q1 2018 Financial performance Revenues, s, Ope perating pr profit/loss ss an and Gross ss mar argi gin, qua quarters 2 000 50 40 1 800 30 1 600 20 1 400 10 1 200 0 Revenues, SEK M 1 000 -10 Operating profit/loss, SEK M -20 800 Gross margin, % -30 600 Operating margin, % -40 400 -50 200 -60 0 -70 2016 2016 2016 2017 2017 2017 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 9

Operating expenses development Ope perating exp xpenses, MSEK SEK, an and in in rel elation to o revenues 900 800 700 600 26,1% 500 Development costs Administrative costs 400 Selling costs 300 75,2% 29,0% 200 100 0 2018 2017 2017 Jan-Mars Jan-Mars Jan-Dec 10

Weaker profitability in Q1 2018 Jan-Mar Jan-Mar 2018 2017 Operating profit, SEK M -174.9 70.8 Operating margin (%) -60% 10% -0.47 0.17 EPS, SEK 11

Working capital development Work orking cap apital (e (excluding cas ash and and tax ite items) 1400 40% 1200 30% 1000 800 20% Working capital 600 in % of revenues 400 10% 200 0 0% 2016 2016 2016 2017 2017 2017 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 *Average working capital excluding net cash over 5 quarters/rolling 12 months sales 12

Q1 2018 Cash flow and Net cash trend Cas ash and and cas ash eq equivalents s and and cas ash flo flow, MSEK SEK 1 800 600 500 1 600 400 1 400 300 1 200 200 1 000 100 Cash and cash equivalents 800 0 Cash flow from operating activities 600 -100 400 -200 200 -300 0 -400 2016 2016 2016 2017 2017 2017 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 13

Q&A 14

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