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IDEX H1 Webcast Presentation - August 2014
IDEX ASA is focused on enabling the mass market for secure identification through their proprietary smartfinger® technology, which includes fingerprint sensors and solutions catering to growing mobile adoption and payment trends. The company boasts a strong patent portfolio and strategic partnerships, positioning itself as a competitor in the billion-unit market. With anticipated product launches and increasing customer interest, IDEX aims to capitalize on the rapidly evolving biometric technology landscape.
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IDEX H1 Webcast Presentation - August 2014
- 1. ENABLING THE MASSMARKET FOR SECURE ID August 2014 Dr. Hemant Mardia, CEO www.idex.no 1 13.08.2014
- 2. IDEX ASA ATA GLANCE SmartFinger® sensors SmartFinger® algorithms SmartFinger® solutions Fingerprint sensors for mass markets Secure, convenient and user-friendly personal ID 214 granted and Apple cross licence HQ Oslo, Norway; Silicon Valley, Boston and Far East offices with >40 FTE staff Oslo Axess exchange, >1500 shareholders Include INVESCO and World Wide Touch PRODUCTS VISION STRONG PATENTS GLOBAL OPERATION PUBLIC LISTED STRATEGIC INVESTORS 13.08.20142
- 3. • Addressing threeattractive mass markets driven by rapid mobile adoption and payment • One of three capacitive sensor vendors with established IP in a billion unit opportunity • Unique strength in fundamental patents, differentiated sensors and Apple x-licence • Highly competitive product roadmap with swipe, touch and unique sleek glass sensors • Solid industrial partners provide competitive manufacture and major customer channels • Experienced leadership team with strong commercialisation track record • Attractive outlook - well funded, strong customer interest, commercialisation in 2H 2014 IDEX STRONG VALUE PROPOSITION IDEX: SMARTFINGER® LOW COST ACCURATE & SECURE THIN & FLEXIBLE 3 13.08.2014
- 4. IDEX SENSORS ADDRESSINGTHREE MASS MARKETS GROWING WITH MEGATRENDS 4 Supporting mega trends • Password replacement • Mobile payment • Personalisation • Access control • Security Cards ID & smart Internet of Things (IOT) Mobile devices 4 13.08.2014
- 5. UET 5 SMARTPHONES RAPIDLY DOMINATINGTHE MOBILE DEVICE MARKET • IDEX target billion unit non Apple mobile device market ‒ Others: large market dominated by growing Chinese OEMs ‒ New segment: Mobile payment driving tech titans to biometric devices (e.g. Google, PayPal, Amazon) • IDEX strategy to leverage scale and cost into high value non mobile mass market: card/IOT 77 98 106 111 74898485 35 4451 34 31 20 17 16 135117 10 295 14 12 Q3 13 Q4 13 Q2 14 288 13 Q1 14 15 13 +23% 14 290 261 Q2 13 14 11 240 12 12 12 Huawei SamsungAppleLGOthers Lenovo Units shipped by top smartphone vendors Million units shipped Source: IDC; Gartner Top 10 mobile phone manufacturers in 2013 Million units shipped 614 (34%) Others 69 (4%) LG Nokia 251 (14%) TCL 50 (3%) 53 (3%) Huawei 151 (8%) Apple 33 (2%) 60 (3%) ZTE Yulong 38 (2%) Sony 444 (25%) Samsung 45 (3%) Lenovo Total: 1 807.0 13.08.2014
- 6. RAPID ADOPTION OFFINGERPRINT SENSORS IN MOBILE DEVICES TOWARDS A NEW MULTIBILLION DOLLAR MARKET 6 185 348 629 879 370 675 1257 1706 2014E 2015E 2016E 2017E FP Sensors (non Apple) m units FP Sensors market $m Forecast mobile devices with fingerprint sensors Penetration rate of 50% 2017 Source: N+1Singer, IDEX January 2014 High touch screen penetration in mobile catalysed by Apple in 2007 21% 15% 2% 3% Notebook 12% 13%12% Mobile phone 66% 77% All-in-one 84% 50% 18% 2011 2013 20142012 +360% • 2014: Flagship demand shifted from swipe to touch sensors for Apple like user experience • 2015: Expect low/mid end smartphone penetration with low cost swipe sensors Source: DisplaySearch, Macquire Research, June 2013 Now that Apple has shown the way, competitors are in a race to enter the market with similar systems IHS Press Release, November 2013 13.08.2014
- 7. IDEX IS ONEOF ONLY THREE INDEPENDENT VENDORS WITH CORE IP IN MASS DEPLOYED CAPACITIVE FINGERPRINT SENSORS 7 Mobile Device Providers Semiconductor Integrators Sub-Module & Packaging Integrators Capacitive Fingerprint Sensor Component Vendors Silicon ASIC Semiconductor Manufacturers DreamTech Sold to Synaptics for $250M Sold to Apple for $350M 13.08.2014
- 8. 22 registered families 214registered patents 8 pending families 41 pending patents 8 OEMs critically evaluating vendor patents • IDEX owns strongest, core IP portfolio in fingerprint sensing outside Apple • Low cost sensing, algorithm, two part sensors in any material, single chip sensors, in glass implementations • Patent landscape highly constrained due to vendor consolidation • Unique protection from cross-license with AuthenTec/Apple: 8 US patents • Apple strengthened the core ‘381- patent’ adding 118 claims after recent challenge • Touch sensor IP expanded acquiring Picofield patents 2013 IDEX OWNS UNIQUE IP IN CAPACITIVE FINGERPRINT SENSING AND APPLE X-LICENCE SETTING HIGH BARRIER TO ENTRY 8 13.08.2014
- 9. PRODUCTS SWIPE FIRST GENERATION SILICONTOUCH SECOND GENERATION FLEX TOUCH FUTURE UNIQUE GLASS SWIPE & TOUCH BEST IN CLASS MOBILE SENSORS COMPETITIVE ADVANTAGE • Best in class image and angle • Large image from small button • Lowest cost (<$3) • Small size needed for mobile • 3x iPhone 5S capture increases biometric security • Disruptive cost • Flexible form factor • Bezel free design eases packaging • Durable • No loss of performance SAMPLING • NOW • NOW • H1 2015 SWIPE: 2015 TARGET IDEX DIFFERENTIATED ROADMAP LEVERAGES CORE PATENTS TO OFFER A UNIQUE PRODUCT RANGE 9 13.08.2014
- 10. 10 IDEX TWO PARTTOUCH SENSOR WILL PROVIDE A MAJOR COST ADVANTAGE OVER THE LATEST SILICON SENSORS 4x 13.08.2014 Traditional touch sensor Apple 5S sensor First generation mobile touch sensor IDEX second generation touch • 12 x 18 mm • Silicon (240mm2) • USD ~30 • Too large and costly for mobile • 4.5 x 4.5 mm • Silicon (>30mm2) • USD 8+ • Image area small for optimal recognition • Costly sapphire cover • Drive bezel needed • 8 x 8 mm • Silicon (80mm2) • USD 6 – 8 • Optimised size and lower cost for mobile • Drive bezel and thick coating needed • 8 x 8 mm • Polymer sensor • Silicon IC <20 mm2 • >30% lower cost • Sensor shape can be rapidly adapted • No drive bezel and thin coating Area Sensor ASP Comment
- 11. • IDEX sampledfirst generation small touch and swipe sensors to over 10 consumer device customers with CrucialTec partnership ‒ CrucialTec established fingerprint module vendor into mobile ‒ Samples supplied Selected for qualification in specific mobile programs ‒ First Design Win for touch sensor with an Asian Tier 2 OEM flagship phone • Partnership with Cypress to deliver second-generation two-part touch sensors ‒ Cypress a leading semiconductor solution vendor to tier 1 mobile customers ‒ Lower price than silicon sensors being used today ‒ Combined development to achieve superior performance and security features • Secured order with World Wide Touch for 300k units for mobile accessories • Increased customer activity for secure card products for ID, access control and payments. IDEX flexible sensor is ideal including CardTech order for initial customer samples backed by a global tier 1 manufacturing partner • Unique development to implement third-generation sensor family in glass - Strong interest for sleek in-glass solution - Industry first swipe demonstration at Mobile World Congress this year - Inactive display area “soft button” BROAD PROGRESS IN IDEX PRODUCT AND MARKET DEVELOPMENT IN 2014 INCLUDING FIRST MOBILE FLAGSHIP DESIGN WIN 13.08.201411
- 12. SOLID INDUSTRY PARTNERSHIPSENABLING COMPETITIVE SUPPLY CHAIN 12 13.08.2014 IP Licence Silicon design and algorithm Silicon ASIC Manufacture Fingerprint Module Manufacture Assemble ASIC with substrate Sensor Substrate Low cost flex/glass Module supply Customer sales & application support Mobile device IDEX monetises through IP licensing of algorithm & silicon and via sales of sensor component for the mobile market IDEX delivers complete sensor solutions for non mobile markets
- 13. Strategy Advisory Council •Formerly CEO of AuthenTec Inc., leading supplier of fingerprint sensors, responsible for sale to Apple Inc. Successful track record of growing private and public businesses. • Chairman FIDO Alliance, Ex CISO PayPal, formerly VP Security American Express, highly influential in mobile security EXPERIENCED LEADERSHIP TEAM WITH STRONG COMMERCIALISATION TRACK RECORD • CEO of IDEX since May 2013 • Track record of commercialising high technology growth businesses over 30 years. • Formerly CEO of Filtronic Plc, a technology telecoms business listed on the London Stock Exchange (FTSE) • Innovative technologies and products in multiple markets including semiconductors, mobile & aerospace Hemant Mardia CEO (PhD) • Joined IDEX in 2006 as CTO and was also CEO in 2008-2013 • Expertise in nanotechnology/MEMs at SINTEF, the leading R&D institute in Norway. • Holds international patents in the field of sensors and fingerprint technology. Ph.D. in semiconductor physics Ralph Bernstein CTO (PhD) • CFO of IDEX since 1 August 2014 • Prior to joining, he was a Director at the private equity firm Herkules Capital and consultant at McKinsey Henrik Knudtzon CFO • Formerly CEO at PicoField Technologies, Inc. a fingerprint sensor technology start up in Silicon Valley • Veteran entrepreneur with operations, finance experience in developing leading technology based companies Thar Casey President - IDEX America • Over 30 years of experience in the semiconductor technology and biometrics industries • Founded Picofield Technologies in 2010 and developed a disruptive touch fingerprint Sensor technology. • Founded Validity in 2002, patented world’s first off-chip flex swipe sensor. Acquired by Synaptics in 2013 $255M Fred Benkley CTO - IDEX America Larry Ciaccia Michael Barrett 13 13.08.2014
- 14. • $315M (1970MNOK)market capitalisation August 2014 • Opex $4.2M Q2 2014 (25.4MNOK) • Cash balance Q2 2014 $48M (295 MNOK) ‒ $49M (300MNOK) Invesco funding ‒ $37M (225MNOK) Invesco warrants at 7.5NOK can be exercised within 2 years • Unique patent breadth & protection with Apple X licence • Highly differentiated mass market product roadmap • Low opex through fabless model and licensing to partners to exploit multiple markets concurrently • Strong balance sheet to support tier one partners ATTRACTIVE INVESTMENT PROPOSITION 14 Inflection point for $ multibillion opportunity for biometrics 13.08.2014 IDEX ASA (NORWAY LISTING) SHARE PRICE (NOK)
- 15. 15 10 (60.5) Cash balance $M (MNOK) 56 (342.5) 8 (46.5) 4.5 2.0 1.0 4.0 3.0 0.5 1.5 2.5 0.0 3.5 5.0 Quarterly OPEXrun rate $M (MNOK) Q1 2014 0.7 (4.3) Q2 2014 0.5 (3.1) 4.2 (25.0) 3.0 (17.7) 2.8 (17.0 3.5 (21.1) 3.2 (19.3) 0.7 (4.0) 0.6 (3.9) 0.4 (2.6) 2.1 (12.7) Q4 2013 0.5 (2.7) 0.6 (3.8) Q3 2013 0.8 (5.0) 3.9 (23.5) 4.9 (30.0) Other Sales and marketing R&D 48 (294.7) 13.08.2014 STRONG CASH BALANCE SUSTAINING INCREASING ACTIVITY
- 16. • Devices withIDEX 1st generation sensors to launch H2 2014 for initial revenues • 2nd generation developing with Cypress for 2015 SECURE MARKET TRACTION Mobile ATTRACTIVE OUTLOOK - STRONG CUSTOMER INTEREST AND COMMERCIALIZATION OF PRODUCTS EXPECTED DURING H2 2014 • Integration & launch in devices mid 2014 • Several OEMs sampling sensors • Volume H2 2014 from WWTT order INITIAL PRODUCT SHIPMENTS IOT/Peripheral • Card prototypes H2 2014 to OEMs • First order secured with CardTech • 2015 OEM product launch DEMONSTRATOR PHASE ID/Smart Cards • Tier 1 partner activity • Global recruitment • Patent, ASIC, glass & algorithm investment EXPANSION OF STRATEGIC PARTNERS Business Operations 16 13.08.2014
Editor's Notes
- #2 Good morning, welcome to IDEX Half one webcast I will provide a business update on IDEX, brief financial summary of Half one and the outlook for our business
- #3 IDEX is focused on commercialising our fingerprint sensors to secure mass market opportunities IDEX offers a broad range of low cost sensors, with our own algorithms and solutions for these markets
- #4 We have a strong value proposition Read above
- #5 Our sensors address three massive market opportunities developing due to megatrends of password replacement, mobile payment and access control These markets are mobile devices, ID and smart cards and IOT
- #6 The mobile device market is our immediate focus IDEX target the billion unit non Apple smartphone market which is segmented into around 5 tier one OEMs and rapidly growing newer Chinese vendors We are also seeing significant activity from Internet giants to couple biometric security hardware into their ecosystem Our strategy is to leverage scale and cost from mobile volumes into the non mobile mass markets to maximise value
- #7 The adoption of fingerprint sensors is extremely rapid since the Apple Iphone 5S and now Android adoption including Samsung. This will lead to in the region of 200 million deployed in 2014 and a multibillion dollar market opportunity in the near future for fingerprint sensors we expect high penetration rapidly due to the megatrend of secure mobile payment and password replacement The touch sensor deployed by Apple has shifted demand from other mobile customers to small touch sensors rather than swipe for flagship phones. This has increased the revenue opportunity but also required the development of new sensors
- #8 IDEX is one of ONLY three INDEPENDENT vendors with core IP IN MASS DEPLOYED CAPACITIVE SENSOR TECHNOLOGY. We therefore have an unprecedented market opportunity to share in a mutlibillion dollar market What differentiates idex is our partnering strategy to outsource manufacturing and supply to integrators combined with a unique patented product roadmap Which is attractive to the mobile device providers
- #9 IDEX OWNS UNIQUE IP IN CAPACITIVE FINGERPRINT SENSING AND APPLE X-LICENCE SETTING HIGH BARRIER TO ENTRY Patent protection is paramount for mobile OEMS selling globally IDEX owns strongest, core IP portfolio in fingerprint sensing outside Apple with 22 patent families and x licence with Apple Patent landscape highly constrained due to vendor consolidation
- #10 IDEX DIFFERENTIATED roadmap LEVERAGES CORE PATENTS TO OFFER A UNIQUE PRODUCT RANGE IDEX Best in class swipe due to patented technology. Swipe will be used in cost sensitive devices - <$3 sensor To meet the market shift for flagships in 2014 for small touch, idex accelerated a silicon touch sensor with Crucialtec Sampling now with multiple oems Idex second generation touch uses idex two part sensor design which offers significant lower cost than silicon competitors and easier integration into a phone Idex uniquely can integrate our sensor into glass – eliminates buttons/ultimate aesthetics
- #11 IDEX TWO PART TOUCH SENSOR WILL PROVIDE A MAJOR COST ADVANTAGE OVER THE LATEST SILICON SENSORS Silicon sensors have large chips the size of the sensor. If the size is reduced the fingerprint image becomes too small for accurate recognition The optimum size is around 8x8mm and idex is sampling this as first generation to provide a solution in the market this year Idex second generation disrupts cost leverages our two part sensor which senses in a low cost flex and has ¼ silicon area Therefore we can provide optimal size whilst still reducing cost
- #14 EXPERIENCED LEADERSHIP TEAM WITH STRONG COMMERCIALISATION TRACK RECORD Attracting key industry veterans including founders of Validity, key staff from AuthenTec, Advisory council Larry Ciaccia who was CEO of AuthenTec and Michael Barrett ex CISO Paypal, Chairman FIDO Alliance for online biometric security including Paypal, Google, Mastercard
- #16 Opex run rate ramping up to support large partners and customer engagements. Expect circa $5-6M per quarter, pre revenue
- #17 SECURED FIRST DESIGN WIN IN THE MOBILE MARKET HAVE FURTHER MULTIPLE MOBILE CUSTOMER ENGAGEMENTS THIS WILL LEAD TO REVENUES STARTING IN H2 2014 WE ARE ALSO INTEGRATING OUR SENSORS INTO A VERY EXICTING RANGE OF CONSUMER ACCESSORIES FOR THE WORLDWIDE TOUCH ORDER WE CONTINUE TO DEVELOP PROTOTYPES FOR LOCK AND ID CARD CUSTOMERS WHICH ARE EXPECTED TO LEAD TO PRODUCT LAUNCHES IN 2015 WE ARE VERY WELL FUNDED FOR TO EXECUTE ON OUR GLOBAL EXPANSION AND TO DELIVER TIER ONE CUSTOMER TRACTION IN 2014 IMPORTANTLY I EXPECT TO PROGRESS ON FURTHER KEY STRATEGIC PARTNER AGREEMENTS, ESPECIALLY IN MOBILE WHICH WILL PROPEL IDEX TO THE FOREFRONT OF THE MARKET THANKYOU VERY MUCH THIS CONCLUDES THE H1 PRESENTATION FOR IDEX