IDEX Biometrics ASA (IDEX) Q4 FY2025 Earnings Call Transcript & Summary

Welcome to IDEX business update here in Oslo on the 3rd of March. It's at the same day as we have our Q4 results. We have prepared some materials that we will walk through about the business. First of all, the disclaimer that -- and the presentation will be put out on the -- on our website for you to review when it's suitable for you afterwards. Today, I bring a big team with me here in Oslo. I'm Anders, the CEO and the CFO. I have Kjell-Arne Besseberg, who is our Chief Operating Officer. I have Thomas Næss, who is a new hire to run our commercial activities as Chief Revenue Officer. I have Didrik Martens, who is our Chief Product Officer. I have [ Ingvill Tempt ] who is VP, Finance; and I have Arne-Olav, our business analyst in the Oslo office; and Daniel Mathiesen, our Marketing Manager, and they will be available to answer questions for these people that are here in the office. Today's agenda, we will go head on with our 2025 objectives that we set out when we started back in March last year. We'll go through a business update, the way forward, open up for Q&A. And also, it will be possible for all the participants here. We will not stream it, but there will be a demo of our products so people can try the power of IDEX product range. So this is what we set out in March 2025. I think most of you are familiar with it. The final goal I have communicated in the materials shared today. And we did not reach our final goal, and I will come back to why we didn't do that. We had a 25% achievement, which was disappointing for me. And there are 1 or there are 2 main factors for that. One is that we expected to be more contracts in the pipeline when we took over back in March. So there will be some kind of certainty on revenues. And the other thing is -- which is fundamental for us, and that is our access products used in security needs to be certified. The target always to be certified during Q4. It was not. It was certified only now in February. The good news is it's certified. It is also white listed with Microsoft. So the customers, we are presenting our solution to, they can deploy cards in their live environment, which is a big, big achievement for us. That is the certification for FIDO that allows you to actually use it for online access. It's not possible to use the card without that. So the card will not talk to the system. So over to the business update. I think this is worthwhile to have a look at. If you can see it clearly, the resolution, but this is what IDEX looked like in 2025. And when you look at that, I at least get some associations. And the obvious one is it's very unclear what we're doing. And there is no call to action. There is nowhere to buy, and there's a lot of duplicates. So it's what I would say, a very unstructured way of presenting the company and what they're doing. Today, I would argue it's slightly different. It's easy to see what the products are. It's easy to get a quote. It's easy to get in contact with us. And we don't try to do -- be a lot of things for everybody. We have one product, biometric cards for access that also can be used for payments. So we're pretty proud of how we have developed the company from left there till today. So I get a lot of calls from shareholders where I am, what I'm doing and I only in one country eating chocolate or not. I haven't had one day off since I took over 11th of March. I am living in a country that has a lot of snow and a lot of Alpine skiing. I haven't been on ski 1 day this year. But -- so I wanted to show you a few milestones that we have reached over the last 12 months. This is important. Not only it is important, but very quickly after we got the certification, we also got paid customers, not only customer, but a proper one. Support for MIFARE DESFire, that's important because that is the standard that supports more than half the doors in the world. It's part of the NXP. It sits on the NXP chip that we are the only company in the world who have integrated with biometrics. OpEx is down. The company has spent a lot of capital over the years. We are benefiting from that, but we have turned it around and making sure that we're not spending $1 that is not bringing value to the shareholders. New website profile you've seen India, we come back to that one. Our outbound reach is up more than 100x in 2026. And you can see here, we have modernized our accounting system. We had an amazing launch of our products at TRUSTECH Expo in Paris, where the inbound traffic after that has been very, very strong. So I'd like to introduce Thomas Næss as our Chief Revenue Officer. He will present himself, but this is -- shows that we are going from a restructuring and there to invest in commercial resources that will take this company forward. Thomas?

Thank you, Anders. My name is Thomas Næss. I've been with the cybersecurity industry for close to 3 decades. And I'm bringing on some experience to IDEX, which I believe is a very, very strong focused company with the right products, with the right -- covering the right demands in the marketplace. So previous roles have been building dynamic and successful sales teams throughout the local and regional areas. And the aim is to do the same at IDEX. So previously, I worked with companies like Trend Micro, Cisco. And lastly, I was Managing Director of Infinigate Norway in Norway, a big Swiss cybersecurity distributor, covering close to 50 countries with sales. So I'm truly looking forward to taking on this task.

Thank you, Thomas. Thomas, when we met him first time, he was [ effectively knew ] the product, which is a great statement, and that's when the discussion started to join IDEX. So with all of these activities commercially, we want to make sure that our ability to handle inbound traffic from potential customers without us interfering in the way. So when you go to the -- our website today, it should be pretty straightforward to figure out what does the product do? Why is it good? How do I deploy it? How do compare to others? Can I use it on my system? Where is the fingerprint? Is it in the cloud? Do I need a battery? All of these things are easily explained on the website. And that is very important when we are scaling that. And the gentlemen for our website update is Daniel Mathiesen, who has done an amazing job of bringing us from the left part of the page to the right part of the page a couple of slides back. So commercial highlights, Thomas, do you want to do that one?

So we need a strong commercial platform to be able to build and focus on growing the revenue and build a strong revenue engine within the IDEX company throughout the channel. So we need to focus on the end user, strategic customers that we want to close to get some quick wins. We need to also engage with the right system integrators in terms of being able for us to scale our sales organization throughout the local and regional and also global marketplace. And we also need to have distributors to help us eventually to educate and drive those resellers. So with that, we are able to kind of grow a quite dynamic sales organization at scale to drive the performance that we really are looking into. So already now looking at the business coming in on my seventh working day in IDEX, I can see that there are -- there is a materialized pipeline. There is something to work with. We already see that. We have closed some strategic and important contracts that will materialize moving forward. And we're building on that. We're building on existing things that are there. And for sure, we're going to run for new opportunities along the way, building this. Last one is also the OEM part, where we also see that we have traction. There are great interest in this with the phenomenal product and offerings that we have.

So just to add to that, I think that -- I wanted to tell you a little bit how we work. When you have a product not known to the customers, you have to work across the chain. We are creating demand with going to end customers directly. They have framework agreements with some resellers or system integrators that they buy these services from. So then we are being introduced to them so they can evaluate whether IDEX is certified and fit for purpose. So that job has been going back and forth. And I do think that we are now in a position where we can say that we are working extremely well across all these parts of the value chain. And that will generate quite a few contracts going forward. So I want to double down on actually what we're doing. This is what we're doing. One card solving a huge problem. What does that mean? When you see a card, everybody say, why -- what's so special with this card versus the card we have in the pocket? Well, a lot of you know about our sensor. We have learned since we came on board that there is no other sensor out there, not -- I won't even mention the names, but our customers are saying, this sensor is by far the best and the preferred one to work with. What's special here is that your fingerprint is stored on the card, not in the cloud. There is no battery, no connection anywhere to hack it. And the biometrics is stored in the secure element, which basically means vault. You have a vault in your pocket with your keys triggered by your fingerprint. And what does that mean today? When we started out here, this opportunity is much, much bigger than we thought. In a world where AI is growing the way it's growing and creating big problems because now, hackers can just activate data centers to take down a company, organization or a person. But if you need a biometric live finger to verify that you're you, it will be very, very hard to track because this card is not online. It cannot be found anywhere. So when we're out with customers, we are asking them, how does your access card work today? Do you use a PIN? Not use a PIN? And most of them say, we only use a PIN after hours because it slows down flow, meaning that today, most companies in all markets we have been, are okay, not using PIN because it's more important that we can go quicker to the coffee machine than making sure that our work environment is safe. I wanted to read on the bottom there, on-card fingerprint verification in less than 250 milliseconds. When Daniel Ek built Spotify, he was relentless of getting the lag down to the bare minimum. This is a Spotify experience. You will not notice the difference of taking a card and tap it without the PIN code or tap it with our biometric card. So that is -- there's no excuse anymore to say we will not use PIN codes because it slows down the flow in the office. And it's quite funny. We are speaking to companies who are regulated or defined as critical for national security, and they don't use PIN codes during office hours. Another area we are being asked a lot about is compatibility. We have readers from HID or MIFARE. How does that really work? It works. It's compatible. We set out to make a card, a card that fits into existing infrastructure, no need to make new software and plug-ins to make it work. On the right-hand side, we are Microsoft, Google, all the major ones, if they configure, log in with FIDO, it works on our card. That means that if you, for example, have an HID door reader and you are running Microsoft for your office infrastructure, IDEX card is all you need. We touched about -- a little bit earlier about compliance. This is a report that if you are an investor in or interested in investing in IDEX, this is a report that you should read. Then you will understand what kind of threats are out there, what the recommendations are, lack of solutions and how IDEX actually resolve and respond to those issues that are addressed in that report. A lot of larger corporations and governmental entities, they are regulated by DORA. That is something which is becoming more and more strict. And again, IDEX is responding by design for any customer who deploys IDEX cards to be compliant out of the box. We are having meetings with the largest customers or the largest corporations in our part of the world. They are desperate to find solutions on this problem. And when we meet them, it's the first time they see a solution. That brings me over to the next page. So the cost of a typical IAM stack. You have a standard access card maybe. These are just approximate costs. You have decided to take security up a notch. So you have a hardware key to protect your computer. But you still haven't solved the password and PIN codes and multifactor authentication. So you need help to maintain that every year. That means that cost per employee is rough numbers, but excludes the cost of a data breach, and it excludes cost of mobile device management. A lot of you I know have HID mobile applications on your phone, which is great. But it's just another part in that cost structure. All of that can be replaced with our card. So depending on what you're using, you can easily calculate how fast, just on the actual spending, the payment back time is for an IDEX card. But as I said, the previous page just excluded the cost of data breaches. Here, just a selection of a few that we have also here in Norway. You're probably aware of this, that most people, they don't want to talk about it. So that's just when you are hacked and it causes havoc for your operation. What it doesn't talk about, and this is probably the most serious one is this one, the hidden cost of data breaches. This is an article coming out of Dagens Næringsliv a couple of weeks ago that shows that out of the companies they reviewed, 1,400 companies of those were infiltrated and 31 of them was Norwegian law firms. We don't have the details about how serious the hacks were. But imagine, you have one door open in the entire organization, and they can listen into everything that is going on in the company. That has a cost that we can't quantify. So if you think back to what the cost of the stack of IAM is and you include insurance against this, the choice to purchase IDEX cards is pretty good. So what's our value proposition? This is a step change in security. I will go as far as to say, if AI hadn't happened, it will be like, okay, but we like to change our passwords every month or every 2 weeks or we have no problems to put in 16 digits and 3 special characters, et cetera. That's cool. We're used to that. In AI world, no. Compliance. If someone wants to know who was around the building, and that is -- the regulator is saying, we need you to have an audit trail about who's been there. If you don't have a biometric card that only you can use, you can't borrow it to someone. You will be unable to explain without having a drone going after you everywhere -- everybody has a drone in the office to basically track which rooms you go into, what you're doing at all times. That's not a proper auditing. Then lightning fast to use and deploy. If you look at historic security solutions, they are complicated. They take lots of time to deploy and not so easy to use. You don't need a manual to use our products. And we just talked about it. Cost is not an issue. So why will it be a success going forward? We have certified products. We are responding in the AI world. And as an investor thinking about where IDEX is in the journey, I would say that we went through a restructuring in 2025. There are a few things that we need to solve still, but there are some minor. We are getting deals signed. And as I mentioned earlier, when it comes to AI, we didn't think that this was an AI company, but we believe it is. The more AI, the more machines that try to take you down, we don't see a better way to respond to that one that if you don't want the chain effects of AI, you want to introduce the human, you don't introduce the human with software, you introduce the human with a fingerprint card from us. We also have unique tech stack and product. We have not seen anyone else doing what we are doing, neither has our customers. There are companies who are doing parts of what we're doing, but they don't have their own technology. So they have to put together based on others. So this is a little bit more like Apple. You have control of the entire card. And the problems that we're solving, they are global and growing. And maybe finally, is that the team that I presented earlier and our team based in the U.K. and around the world, we have learned to work together. So that is also important that -- you need to be able to work well together to make big changes. And I do think that we were given a pretty tough stack of cards to play with when we set out almost a year ago, next week. I have spoken about access. We are also active in this space, the payment, which is the history of IDEX. We do think that what we are doing -- and not only think, what we are doing on access side is compatible with our payment product. So we will be launching the next level payment cards for banks and card issuers where they can fight back the power against fintechs. I won't mention it, but there is clear -- that the fintechs are eating the bank's lunch and they need something to get on the offensive, and we think that we can play a good role in that, right? So this is for you to read, that we are an AI company. The machines are making life more efficient, but to control it, you need humans. And how can you identify there's a human behind everything that happens if you don't have proof of identity online. So this is my -- I think my final slide before we go into Q&A. This is personal. We have delivered what we set out to do. We could all hope for it to go faster. But on the balance, I think what we have done in those -- in that year could have taken much longer. So the favor I would like to ask to all of you, if you understand our product, you want us to succeed, get in touch, give us some introduction to some of the companies that need security, which I think every company is. We are here to help your network and get them safe and secure in this world. Thank you. So then we go into Q&A.

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Thank you for everybody attending online, and see you soon.