NEXT Biometrics Group ASA (NEXT) Earnings Call Transcript & Summary

Okay. Good morning, good afternoon and wherever you are in the world. I would like to welcome you to the NEXT Biometrics Capital Markets Day, February 14, 2024. I would like to start going through a little bit of the agenda and the context we have here. I will then present the speakers and then I will go into the slide set here. We can take 2 slides down, please. So we are now at 11:30. Yes, yes, yes, of course. No, I remember. I can do this again. It's here, but I don't see. Yes. So I'm starting with some opening remarks. A little bit of history, a little bit where we're coming from and where we're heading. We will have the company overview, brief outlook, similar to what we saw in the Q4 presentation. We'll have a quick lunch. And after that, I will introduce you to a few members in the management team. So I will have Marcus. He will be heading up -- or he will present the product technology and product innovation road map. We will then go into what I see a little bit more deeper on the market analysis, where I will present the different -- why we have selected the different market segments. We will then have Joshua, who is heading up China, present the China business on Link. And after that, we will have Digvijay, India -- heading up India and remaining of the world for going through the Indian market. I will finishing off with closing and the remarks, and we'll finishing off with a Q&A. So Q&A session for company overview and closing remarks. After Josh and DJ session, we will have a short Q&A, especially about India and especially about the China. So if you have just prepared a few questions for them. So I mean, NEXT Biometrics is -- we're a true global company. We're everywhere where the customers are. So the dots are representing where we have people today. So of course, there's a lot of people in this region because we are talking a lot about India, we're talking about China. So we have people in Delhi. We have people in Chennai. We have people in Shenzhen, Taipei as you know, Shanghai, Tokyo. So we are close to where we see -- where we have our customers. And that's mandatory in this industry. You need to be very, very close to the customers. You need to support them very well. And that's why we are here. We also, of course, have our development -- the hardware development team in Seattle, and we have the sales person in Houston for the U.S. Americas. I will move over and present today's speakers. So 5 dots or circles. So yes, Ulf Ritsvall, CEO. I think most of you know me. I would like to -- and I think, Eirik, you know, you can just stand up for the audience, I think, online. And then we have a person that maybe it's a new introduction to all of you. It's Marcus. Maybe you can say a few words.

Hi, Marcus Lauren. I'm from Sweden and I have stepped into this company now in October. Should I come -- now you can see me. I started in October and have been working here, and it's been really super great. I've been working with biometrics before, so I have a little bit of experience of what the biometrics world looks like and how it works and the hurdles and the challenges and everything. And when I came here, I really understood that this is some really great technology. So we've got some really good products, and it also in the phase that we're in, well, it's looking super great. So I'm super excited to be here. Really great. I've got to talk more about the products later on after lunch. And also, just a reminder that outside we have a table with just a few samples, just so you can look and feel at the products we actually have. So it's not only numbers, but it's actually things you can look and feel. All right, thanks a lot.

Thank you. Do we have DJ online? Yes, we have. Yes, DJ, why don't you go ahead?

Hello. How are you NEXT investors? Hello from sunny India. I thought I'll just come across and say, hi to you guys and been listening to this great presentation by Ulf. I've been in this industry for quite some time now. I think so -- semiconductor, has been last 10 years and been working within the biometric space and technology space for quite some time. I'm really happy to be here with this team. We've got exciting products as well as new markets to overtake and conquer. So that's a quick hello from my side, and I hope you have a great day ahead.

Thank you, DJ. We move over to Josh. Joshua?

Hello? Are we on right now?

Yes.

Hello, guys, and Josh. I'm heading the sales of South and East China -- East Asia, and I'm actually based in Taiwan and I travel to China and Japan frequently to take care of my market. And I had actually been in the fingerprint market for like 10 years. So I know Ulf, know DJ, know Marcus for quite a long time, for over 10 years. So we -- I know on the first day when I joined this company on November 1, it is a great team and great product. We have a fantastic product. So I believe that we will work great together, and we will achieve some great achievements together. Thank you. That's it.

Thank you, Josh.

Thank you.

So you will hear more about them speaking later on for their respective regions. So -- yes, yes, yes. So I mean, we believe to enable the best biometric technology, protecting data, very important in today's society, protecting information, protecting people in this digital society. That's our vision. And that's where we work every day when we make the highest security sensors out there. Of course, our mission is to provide these advanced fingerprint sensors with uncompromised security to enable user-friendly, still needs to be able to use them, and still needs to be able to authenticate yourself, verify yourself, but it's also very important that it actually works together with a system so you can actually protect your data and information. That's what the company is aiming for. And that's what -- why we are in, for example, India; for example, China. That's why we are in biometrics. So we actually secure that. I think many of you know the history better than I do. I've been in the company 2 years. But I think if we look at where we're coming from, I think the company was founded in year 2000. And of course, there was a product ID and there's a product definition and making the product. But I would say between 2010 and 2019, you actually were in ID and product phase. So very important steps in making a great company and a great product. There were product and prototype development being made. It was engineered in Seattle with a software attached to it. The revenue growth was there in the beginning because we -- NEXT Biometrics, so we had a laptop manufacturer called Dell as where we delivered very good products too. And this learned -- how learned -- teached us to actually get a product that can be manufactured. It has a high yield, so we don't waste, and optimized in cost. So we actually -- this -- and during this phase, I believe, the products were sold in millions of units, which actually helps and is a prerequisite to actually take the next step, which is more a turnaround phase, I would say. So the FAP20 were launched, fantastic product, and that's where we based our most sales of today. We looked at being a bit more customer focused, and we start measuring the design wins, as you see. We are now at 46. We are taking one customer every month, every month. We don't stand still, all the sales. Even if we are -- we have a good base, they don't stand still. It's very important. During this phase, we reduced the OpEx, and we believe that we see that we have a stable OpEx today. We don't see -- with the pipeline and the contracts we have today, we don't need to increase OpEx. So very good fundamental in the beginning in this turnaround phase. Company also focused on fingerprint sensors only, not doing end user products, not doing payment cards or smart cards. That is low margin, very low revenue. And we revised the go-to-market to India and China, which has been playing out quite successful and we see the foundation right now. So where are we now? We are in a scale-up phase in 2024 and ongoing. We have the disruptive FAP20 sensor. It's totally different from anything out there. Marcus will explain a bit more. But it's in between an optical sensor and the capacitive sensor. It has some unique features, which is very, very key for the success of this company and we have those parameters. We'll go through that a bit more. Now it's time to realize the revenue potential we have in the contract. Now it's time to start delivering on those contracts. That's where we are in the verge of that. That's the scale-up. We will, of course, see increased revenue from the others. We have 4 to 6 design wins. Some of them, even more, will actually start taking up more orders. Then of course, it's mandatory to -- have the first step. I mean if we can't produce it at high yield, if we can't produce it with low power consumption with the best coating material, I mean the scale-up phase will not work. We have all the technical parameters that we can scale up this company, and it's starting -- I would say starting last quarter because actually, we see -- saw the first orders coming in from both India and China in that area. That's where we are. So just a little bit how I see it. Now I'd like to turn over to Eirik going -- yes, you can do the green -- yes.

Thank you. And good morning to everyone, if you didn't follow the first Q4 presentation. So Ulf mentioned that in -- from the period in 2010 to 2019, there was a lot of activities going on, product development. And as the OpEx spending was very high, it was difficult to see a clear path to breakeven or profitability. And also, Dell, late in the period towards 2019, they announced their decision to reduce the spending on NEXT sensors, which brought revenues down during that year. So that's when I came in, in December 2019 and then we really needed to see a strong reduction in the OpEx. And if you see this graph, so -- which represent the last 12 months' OpEx spending from 2018 to 2020, the average level per 12-month period was around NOK 155 million. So obviously, this is unsustainable and we saw that, and we needed to cut the OpEx. We did that, and we did it in a big way. And the smart card R&D was reduced and also the number of employees and also kinds of business and service costs. So now we have this OpEx level, which have been ranging around -- below NOK 60 million per year on the last 12 months basis. And now we're going to bring it slightly up to NOK 65 million. That's the target. And -- but if you look back in that period, there is another problem. The gross margin was too low. And in fact, the average gross margin during that period was slightly above 20%. And as you can see in this last quarter, we have brought it to 45%. And we already explained in the quarter 4 call that how important the FAP20 product is for us. And now we're also looking into the FAP30 product. And this obviously is very important from the financial perspective. And with this, we turn to EBITDA or adjusted EBITDA, earnings before depreciation, interest and taxes. And during that period, there was a large spending on product development. And as you can see, both the -- bringing down the OpEx and improving the gross margin has brought the EBITDA from more than NOK 30 million per quarter to now at NOK 8.3 million. So there has been a substantial improvement. But as we will talk about more, in this presentation is actually the revenues. We haven't had that large improvement in revenues yet, but that's to follow now. And then you really see the effect also on the EBITDA because we're not going to increase our OpEx by -- maybe it's going to be up to the -- it's going to be up to the NOK 65 million in the last 12 months. We're a little bit below that right now. But then every revenue dollar coming in is -- you just multiply by 0.5, and then that's adding to the bottom line and the EBITDA, adjusted EBITDA. And also, if you look at the depreciation and the other costs down below the EBITDA, then we don't have a lot of cost. There is not a lot of depreciation in our company, and we don't need to invest. We have the capacity we need. So I think this is -- what we're seeing in this graph is really the analysis of the past. And obviously, the future is the most important for NEXT and of course, for you, investors as well to look at the possible scenarios that could develop. And particularly the market segments, the potential and the market position of our product in the different markets. That's what's going to form the basis for the future revenue, gross margin and EBITDA. And this is what we will present today going forward. And I think really the investors saw our progress. And there was a totally different sentiment from -- in the -- you can see it in the share price graph from, let's say, December 2020. That's when things turned. And we have had some quarters where we didn't progress a lot on the revenues. But I think that's both on the revenues and the gross margin. That's where we need to follow going forward. And then I think that will be very interesting -- also on the contracts and the new announcement that we do. And with this, I will turn back to Ulf.

Thank you, Eirik. So yes, where are we? I think we are in a biometric market with double-digit growth. And I've been so -- I've been enjoying the biometric market last 10 years, and I continue to enjoying this growth, and that's why I'm here. Today, it's dominated by a few major players. If you look at total biometric market. So -- and many midsize, which -- where we are one player of that. We, of course, are looking at the high-end segment of the biometric. There's a lot of -- there's a 1 billion sensors sold to the mobile phones, very convenient, not so high security. We are in the opposite scale of the security part. We have a high security, and we are competing with sort of the [ iris ] part of the security. So maybe just a small recap. The most secure part of your body is the DNA. If you have 9 billion people in a row, there's one person that has similar DNA to yourself. With iris, if you have 1 billion people in a row, one of that 1 billion will have the same iris as you. With fingerprint, if you put 1 million people in a row, there will be one representing the same fingerprint as you with the minutiae points that we're looking at. If you take voice, it's 100,000 maybe. If you take face, even less. That's the security level you have in biometrics. Even in your walking style or the heartbeat is unique for you. It's biometrics. Everything is biometrics. It's just a matter of measuring and calculate. Of course, it takes a bit time to present your DNA to enter the door, right? So that's why it's more convenient with the fingerprint. Where we are competing is with the iris because it's a high security part of the scale. And it's used for high security, like in India. They -- when you enroll an Indian person into the Aadhaar system, you represent 10 fingers, 2 eyes, the iris of the eyes; not face, not voice, no, nothing else; 10 fingers, 2 eyes in the database, highest security. That's where we are in the market. And of course, the global trend in security is always increase security, no matter if you go to the airport or whatever, increase the security, all the time. Spending will increase. That's why it's a double-digit market growth. There are alternative technologies like optical, but is a higher cost, slightly lower security. If you compare it to -- in this market where we are, compared to the consumer segment like your mobile phone or so, you have 18 to 24 months cycle -- replacement cycle. That's not possible in a border control system. They will not replace that for 3 years, 5 years; same as the Aadhaar system. I mean, they will not replace this sensor in this kiosk. They will not replace it after 18 months. They will replace it if it's broken or if it's actually tampered with, then they will increase -- replace it. But the -- once you're there in our high security industry, the stickiness is far better compared to the other technologies and the other consumer electronic markets. That's the market dynamics we are acting in. And I think the Q4 was just announced. We are growing as we see in quarterly revenue. We still had a negative EBITDA, yes. But gross margin and revenue is growing and OpEx is on track. And with the outlook we see, India is ramping up. We have the first orders. We have China ramping up in Q1 and continuation of adding design wins with high-end security means high gross margin. Those are the customers we are targeting. We are not targeting a door lock manufacturer in China who is buying a sensor for $1.50. That's not us. We are looking and targeting high-end markets. And repeating, we are targeting EBITDA-positive 2024 and breakeven Q2 this year. If you look more -- okay, we're here now. Where are we heading? Of course, my job was to -- since I was heading up the sales and marketing, I set the foundation. Now the foundation is set. I have sales guys out in the regions, bringing orders because we have the contracts. Strategic direction, of course, we would like to establish ourselves in China even more. We would like to increase not only health care, police, e-locks. I think, Josh will explain more about the different use cases that are available in China. We -- of course, I had got a question in the Q4 call. Where are we heading? Africa, for sure, and Southeast Asia, where we have -- Indonesia, it's the fourth largest populated country in the world. They are looking at implementing a Aadhaar-like system. There will be quite a few sensors. Nigeria, they have a few sensors. They have a specification called NIBSS. We are compliant to that. We are, of course, targeting to enter Nigeria. It's a large population. We have a partnership with a face company called Paravision. Of course, we would like to extend that because there is multi-modality biometrics. Once you go from selling a sensor to a solution, which we do in China, maybe like in border control. Last time I entered Japan, yes, you present your face as a picture. They're verifying that against the passport. You're representing 5 fingers. That's it. But if we could be the provider of both of those systems, of course, our ASP will increase. Of course, that's one direction. I also see other business models. Today, we sell sensor only. But there's, of course, room to sell solution. We can collaborate with another partner doing a bit more integration. So we're actually going to the table to a customer with a higher ASP. We take a bigger part of the margin. And of course, into other segments, and we will present the product road map later on. We can explain a bit more on new segments and so on. This is the baseline, and we are ready to expand from here. And I think, yes, that's -- let's go out and grab a snack. 15 minutes, I think. 20?

So we will reconvene in this room in 15 minutes, which is like slightly, yes, 12:17 or something. [Break]

All right. Okay. Let's go -- the green lights. I hope the ones online still are online. There's a Q&A in the end. And the ones that are online, you can type in your questions, so we can answer them after this part. I would now introduce Marcus Lauren. He will -- he has a lot of gadgets with him. He is the Chief Product Officer. So he is responsible for the product, as we said before. So he will start the presentation with -- whatever. I don't know how -- yes, exactly, with his introduction, I don't know. Let's see where do we start. And here, do we start.

Hello, Marcus Lauren, that's me. I'm working with the products. And to make it a little bit more fun, you might be tired now after the lunch. Let's have something to look and feel on. I want to remind you again, if you want to look and feel more, we have a table just outside here. So if you want to ask some questions, hopefully, I can answer them. In the meanwhile, you can -- it's Valentine's Day, and this is my present to you. So if you want to, you can bring one of these sensors home. It's very difficult to pick them up. So I'll use this -- this cool vacuum tool. So then it's easy to just pick it up like that. So this is our sensors. You don't have to take one if you don't want them. But take them if you want. So you have something to remember from -- [indiscernible] press the vacuum and then you get it up. So this is what it looks like. And now you can see how small, delicate and brittle they are. And I want to just pass them around and can ask questions any time, just interrupt me. I just want to tell you a little bit about some things or so obvious for us that works with it every time, every day. But I realize that that's not a normal world. But this is my normal world. And this is the world that I'm living in. And basically, I want to talk about 3 different kind of technologies that you can use for fingerprint sensors. So if we start from the left, we have the capacity. And those -- you've probably seen in cell phones, like before Apple had facial ID, they had a capacitive sensor, and most other cell phones had the capacitive sensor. They are very small. You can make them super small, and you can also make them pretty cheap if -- at least if they are small, you can make them cheap. They are pretty good. And you can -- they're good enough. They are secure enough for opening up a phone. It's not too much secret on that phone. So -- and it's a lot of high competition in that area. There are a lot of people that are making these capacitive fingerprint sensors. So it's a tough area. Very difficult to get any margins at all. Then we have the optical ones. They are typically big and bulky, but they're also very good. Those are the ones that Ulf talked about when he was traveling to Japan or if you travel to U.S., really big. They're big like a palm. You can take all your fingers. You can take 4 fingers or 5 fingers. So some can even take the whole palm of yours because also not only the fingerprint, but the whole palm has kind of fingerprint. So it can be even more secure. They can be really good. They can be really good and they can be really expensive. And since they are big and bulky, they're not really -- you can't carry them around. So they have pros and cons and everything. You've seen them in border control. They don't change them very often. They're very expensive, high-margin business, but not very big volume, that's traditionally. Then we have Active Thermal, and that's what we are having at NEXT. So of course, now I'm boosting that, but it doesn't mean it's not true. So we have a unique technology. We're not looking for a picture like the optical. We're not looking for how different the capacitance is in the fingerprint ridges and valleys, stuff like that. We are basically measuring temperature. So it has its pros and cons. And we see it very much pros because it's very stable. If you compare to capacitive, it has a lot of signal-to-noise ratio. Basically, if you -- what you want to see and the floods of signals you see. So it can be difficult to see anything from the capacitive. We didn't have that problem with Active Thermal. We have a really good price level. So you can make them -- we cannot make them super cheap. So even if we make them super small, we can't stand a chance to capacitive. So that's not where we want to be. But if we make them a little bit bigger, then ours are really good in price. If you make them even bigger, they're still good in price. And if we make even bigger than that, they are really good in price compared to even optical. So that's where we try to be. Where can we be really good in price? How much does it cost to make them? And how much can we get the margin when we sell them? So that's what I mean with high margin and with mid-volume and we can also have even super high margin for small and low volume where we fight with the big guys, with the big optical guys. I was about the next slide, but than I remember. So just to see, cost related to size. And bigger is better, that is true in the fingerprint technology. And that basically means that the bigger picture you take of the finger, the more security. If you want to recognize me, maybe if you only see one eye, maybe someone can recognize me if you see half of the face, more people even see the whole face, it's even better. And it's the same analogy with fingerprint. The bigger fingerprint sensor you have, the better because the bigger part of the finger, you can compare is really the enrolled finger. Is it the right one? So just start with bigger is better. Then we see also that bigger is more expensive, material cost. That's also -- we can't really go away from that. If you make it bigger, it will cost more to produce it, but how the cost grows is a little bit different. So if we start with -- compared with the silicon base, they are the capacitive. They can be really cheap if they're really small. But if they are getting bigger, they are getting expensive. So that's why you never see any big capacitive sensors. If you look at the optical, they can never be really cheap because just to make it super small, would make it really expensive because you need the cameras. Even if you only take a small picture, you will still need the camera. So they are not competitive in price until you get them really big. But then they don't grow very much in price because the camera is there. And then we have our LTPS, that's a nerdy name. I should have written Active Thermal. This is a low-temperature polymer silicon. This is what we are working with. So we're trying to look where are we competitive. Here, it's cheaper with the capacitive. Let's not go there. And somewhere -- here, it will be more cheap with optical. So let's not go there. So our products are typically here and here. And of course, that's the next step we should be, but I will come to that. So just trying to tell you about how does the cost grow with size and how can we charge because people are more interested in paying more for bigger ones because they are better. Just how this -- how the errors goes. This is a simplified version. It's not super true. There are things with yields. So there are -- it's not a super straight line, but to make it simplified and it's close to the truth. So why is it so good with our Active Thermal? And who else is doing Active Thermal? As far as I know, no one is. We are doing Active Thermal, so that's where we say we have a disruptive technology. It's only we're doing it. It's super great, and it works like a charm. If we look at other -- for example, the capacitive sensors, if you had wet fingers on your iPhone, you couldn't open it. You had to -- I'm a little bit sweaty now, now I cannot open my iPhone. We don't have that problem with Active Thermal, works pretty good. Sunlight, the optical ones, since it's taken a picture, if it's outside in sunlight, it will not work very good either. We're not affected at all by sunlight. It doesn't matter. Liveness or anti-spoofing, and we also have different security levels, so to speak, so we can add and we can remove depending on what the customer wants and how convenient you want it. But even to start the fingerprint sensor, there has to be a finger-like thing on top of it. I say finger-like because finger works in a special way and it reacts to temperature and capacitance and so on. So if you put something else like a spoof or a fake finger, it will not even look and start and look for your fingerprint. So those kind of different security levels we have. Then we also -- if you compare to optical, the big ones in the border control, they take a picture. And the picture is basically as if you had ink in your fingers. You've probably seen it in movies and probably not experienced it yourself, but when you dip the finger in ink and then you take it on police station, they have the fingerprint. And it's either black or white, no gray scales in that ink. And it's the same thing with their optical. You get either black or white. There is a fingerprint and there is not the fingerprint. With our Active Thermal, we can measure the ridge and valley, and it's not like this either black or white. The ridge and valley in the fingerprint, it grows and it's get bigger and smaller. So we can get all the values in between, not only 1, 0. We can get like between 99, 98, 76. So then you can really see that it's 3D. It's not a 2D picture. It's a 3D, which also makes it more difficult to spoof. And then, of course, you can add on top of that different algorithms to really see, oh, okay, does this look like a finger, can that be a spoof? Can we see some anomalies that are not normal in a real fingerprint. Can we see the sweat pores, can we see the sweat pores growing or something like that? So you can really see that this is liveness, this is a live finger. So it's all depending on how you configure the software. And then low power consumption. That's also very good if you want to have something with battery, then you don't want to have it plugged in, then it can be moved. And our fingerprint sensor have a very low power consumption. So it works. There's a portable machine outside there, and it's hardly portable because it's very heavy. But it provides electricity via battery, and it works like a charm. So some of the advantages. How does it work then? Active Thermal, the area you're seeing on that small -- give way for me. It's super small, yes, it is. And it's a super dense and packed with small sensors. And it's so packed that we call it 500dpi, dots per inch. So every inch, 500 dots were actually measured to get a real good picture. And if you convert that to centimeters or millimeters, you get almost 20 pixels per millimeter. So in every millimeter, you measure 20x. So I mean, what I'm saying is, it's a lot. So it can be a really good picture. And that's a standard -- high standard. And to some of these certifications, I will show you them later, they have standards. We have to have 200, 300, 400, 500 -- and we have 500, so we can cope with those high set standards. And of course, the more you have, the more expensive, the more advanced. So we want to be at that high level area. And then what happens is basically that different materials conduct heat differently. So in those 500 dots or 500 measurement points per inches, we can measure the temperature. And we can see how if we send out some heat and then they measure how much is coming back, then we can see the difference that, oh, it's probably air in between there. That's probably where the finger goes like this, then it's air or no, now I have really close to the fingerprint because it's -- it reflects the temperature just like skin usually does. So from that figures, we can figure out I make -- like a value for each of those 500 dots per inch. And then we take the values, and we digitalize it and make a picture. So that is a little bit how it works. You measure in a lot of dots, how it reflects heat and then you get the picture. Does it make sense, a little bit? Okay. So this is nerdy, I know. But it's also kind of interesting and it's a big part of what we do. I said that we are doing Active Thermal, no one else is. Why is that? Is it good? Is it even good then? Why is it just you? Because it's very difficult. It's very difficult to -- not to do it, but to do it good. That's difficult. So what you typically want to do, you want to have this sensor really close to the finger. The closer it is, the better picture you get. So in a perfect world, I would just be touching to the semiconductor layers. That would be the easiest. That would be a super good picture, but they are fragile. So you want some kind of protective coating on top of that. But you don't want a thick coating. You want a super thin. So what -- we can still have it very close to the finger and it still should transfer heat as expected. And so we can't put anything on top of that. And that's -- we have a really great team in Seattle that are working with this. And they've made this fantastic recipe, which we have patents on, that is super good. It works like a charm. And it's also super thin. And if I tell you the numbers, it doesn't say very much. At least it didn't to me. So I asked, how thin is it? "its super thin." So this is a human hair, the big circle. This is a human Swedish hair. That means thin hair, not Asian or -- maybe this thick, they are much thicker, better hair quality. But this is -- yes, my hair, my thin hair. And this is how small things you can see. After that, you cannot see it. And I'm talking about like 20-year-olds, I can see -- hardly see a hair. And then white blood cell, pretty small; red blood cell, even smaller; average bacteria, this small. And this is the thickness of our coating. So it's very thin, but it really works. We have something that we call the DLC, Diamond-Like Carbon. And it's just as it sound, it's super hard. The items are -- it's just carbon. So that's not very hard. But if you have carbon in a special organized way, then it becomes a diamond, and then it's super hard. And it's very close to what is diamond. So it's super hard. And you can make it super thin and still be super hard. So that's really good protection. And this is something we're working on. This kind of -- it's so thin. It's like is it even worth talking about? Yes, because it makes a big difference. And to be honest, we've had a problem with that a couple of years ago. We didn't have that good coating, and it didn't work very well. They were not so robust. So that is the small improvement that makes a big difference in the end. We get a better name and we get better robustness. We don't get any field return, and it works really good. So that's where I want to show you these. Super small things, so small you can't see in, but it makes a big difference for us. And of course, is this the only thing you got? No, we've got other things, too, which are even cooler. And the patents are not ready. The experiments are not completely ready. So let's see when I come back with something even better, even thinner, even better protection. The lineup, the products, maybe you've seen them outside. But basically, it's different sizes. It's the same technology in all of them. We have Active Thermal in these different products. We have different sizes. We have a small size. And then we have actually an even smaller size because there was a customer said, wanted, -- "Can we make it smaller? Can we retrofit in something we already have?" Okay, we can make it smaller. But we prefer to make them bigger. So then we did FAP20. This product has many names. And we save FAP20 because it's easy to remember and it's easy to say. And if I look in the detail, it's called something completely different, which is more difficult to say. But the FAP20, it's not our invention. FAP20 is a standard size, like you have A4 or A3 and those kind of standard sizes on paper. You have the same here in fingerprint sensors. So this is a standard size that is required if you have a certain level of security, okay, this -- we have this level of security. We want to do it for the bank, then we need FAP20. And there can be other standards. Okay, we need higher security, then we need a FAP30 or 50 or 60. There are different standards. And the big ones with the 4 fingers, I think they're FAP60. So that's we adapt to the standards that exist and make something in that segment. This is also -- we can see it outside. This is a -- it's a done deal. It's out-of-the-box products we actually sell. You can buy it online if you want to, plug it into your laptop and use it for opening the laptop with Windows biometric framework. It just works like it's on. But as said, we are moving a little bit away from selling directly to customer. We are trying more to sell this and then make the manufacturer to put it into a box and then sell it to a customer. So that's where we are now. We think it's more profitable actually. A little bit about the lineup, and these are our products. And outside, you see both our products in different stages or from -- you see outside here whatever -- showed you and also from final products from customers that made the final product of our modules. And different certifications. We've talked about it earlier also. To just -- it's not only a door opener, it's like the door is completely close if you don't have these certifications to some rooms. You can -- they won't even talk to you. "Do you have this certificate? No, we don't. Okay, then talk to someone else." So a very big one and a very important one is Aadhaar system in India. They have different levels. They started with L0, Level 0, then they go on Level 1, the L1, and there's coming L2 for next level. Every level, it increases the level of security. The current version is L1. That's the best -- latest and greatest and the best one that is out there. And we have the L1 certificate, which means that even for the most high-end users in India, they can use our products. So we are super happy for that. I don't think we have very much in Europe on the certificate that like a global one, but at least they have in the Americas. So FBI made the PIV certification, which also has a level of security. And we have that certificate too. So we are okay in the U.S. And then as we talked in, Africa is getting -- the market in Africa is getting bigger. Africa as such is not getting bigger, maybe -- the market is getting bigger. So Nigeria has this NIBSS also -- cooperation between banks. So that's also a certificate that we have achieved that we're super happy for. And of course, what I'm -- this is the current one, the newest one, the ChinaID. I can't read very much, but I can read the date, at least. I promised Ulf, I would get this certificate in 2023 before Christmas. I didn't really manage. We were kind of done, but we didn't get the papers until the 12th of January. So I failed there a little bit, but I also succeeded at least getting it. So we're super happy. And the customers were also very happy. We actually got customers on this product even before we got the certificate because they knew that. "I know it's just the paperwork. It takes time in China. We know if you pass this, you pass it, you will get the paperwork." So now we are super happy that we had to have yet another certificate, which is a door opener to not a new world, but a new segment in China. We have been big in China even before, but now we can be even bigger. So I'm very happy. Okay. Product development. You remember the picture I showed before, how the price rises with size. And this is where we have the products we have now, the gray ones and there's a gap here. So this is a new one. That's a new one coming, the FAP30. It's also a standardized product. There is already a market for FAP30. It's a little bit more high-end market. It's a little bit more expensive products. If we look now what we're competing to is basically optical sensors. The optical sensors are, as you see, they are more expensive. They are bigger, but they are also more expensive. So if we can make this cheaper, then we think we can sell them cheaper than maybe that they make them for. So it looks very good. It looks like that is the place to be. So what we're doing is we've been working actually on FAP30 for quite some time. We have been -- we're using the same basic kind of technology as we have before with Active Thermal and it doesn't cost very much more than the smaller ones. Our curve here is pretty good. So we think we're going to do it very competitive price when we make it and with good margins. And if we look at how it looks? This is a FAP20 you've seen, and this is the black. This is the total size. So if you look at outside with the green PCB, this is the total size and this is the size you actually touch the -- this is where you put your finger. And then the FAP30, it doesn't look very much bigger, but it is, it is much bigger. The black area here is actually much bigger. If you look, it's -- I just turned it like this, you don't see it that is bigger, but if we turn it like this, you can see that it's a lot bigger. It's 67% bigger. But if you look at what we pay for? This is the area we pay for, the red also, then it's only 50% bigger. So we pay 50% more in material, yes?

So just a quick question. Is it -- so FAP20 cost certain amount of dollars and its increased by 50% FAP30. Is that the direct correlation between the cost producing the 30?

Yes and no. To this cost -- the cost for the red material, yes, that's a direct correlation. But to the total cost, no, it isn't because we also pay for the components around it and they are the same.

Okay. So let's ask it in a different way. So if FAP20 cost x, what's the FAP30 cost is, x plus 50%, 60%, 70% or 2x?

Much lower.

Okay. As far as I can remember, the outprice for FAP20 in the Western market is like $20, $23?

Yes.

But if -- if I just saw some figures on FAP30, it's about $65 to $95. Is that part correct?

Yes, yes, yes. So it's a big deal. It's -- we think it's not going to be that much more expensive. I don't know if I should reveal exactly the figures, but it's not going to do -- it's not going to be very much more expensive. But we think we can sell it for much more expensive. That's a good combination. So we think it's profitable. So that's where we think that's where we want to be. This is a good place to be. And so new market for us. We haven't been in this big size before. That's a new market. We have the connections. We're talking to the customers. The customers we are working already now, are also working with FAP30, but haven't been able to work with us on FAP30. So we already have the connections. So it's not that we're starting from the beginning.

[indiscernible] application?

The difference -- it's for even higher security. It can be, for example, if you want to enroll your finger, maybe they want you to do it on a FAP30. And if you only want to identify yourself, then you can do it on a FAP20. It can be those kind of differences. But it's also a governmental bank, those kind of high end. So it's not going to be on a door lock or something like that. So it's a high end, more -- where they are more used to pay for -- where they are willing to pay for higher security basically.

[indiscernible]

No, no, not that. Not for fat fingers, but it will work for fat fingers, too. All right. So just to summarize the technology. What I wanted to share a little bit, there's a disruptive sensor technology. We are doing it. We are doing really good. And that's why it's unique. We do something really unique that really works good. We have a cost competitiveness. You remember the curves, if you see it in different segments, we are very cost competitive. And that's always a good thing. We have a mature manufacturing. We have millions. We have mass produce. We've seen them -- we sold them in big volumes. We've seen them work in big volumes, and they have been working now for a couple of years in -- I mean, it really push the boundaries, for example, in India and China. So we know that it works. We do big size. Big is better. The bigger, the more secure. So addressing that market -- that segment where you wanted to be more secure. We have a really good protection for liveness and anti-spoofing due to our technology, the 3D print, how it works with the finger and the finger-like way of working -- the mechanics work. We have the major certificates. I was -- when we did China, I thought, okay, what's more certificate? There are no more certificates, okay? Good. Then let's improve our product more. There will be no certificates. So we are prepared for more. But now we have all the certificates we want to. So I have no more certificates on my to-do list yet. They will come. I'm sure, Ulf will find some more. But until now, we haven't found any new certificates for us to fix. We are well positioned. We got a good reputation. We have products that people want to buy. So that also really happy. We see the sales team, going to hear from Josh and DJ, and they have met the customers and they are really happy with us. So that's super. And even for newer products, we already now have customers asking, "That FAP50, is it now?" No, no, no, it's not ready, yes. We just started. It's ongoing. It's coming. So they're really eager to get the first samples of the -- even the coming products. All right. That was short for me. And of course, any questions, you can bring about up now or later, and I will be out by the table also, if you want to see any details or ask me some tricky questions.

[indiscernible]

The IP situation, yes. We are working a lot with patents. Of course, we have patents already. We are filing patents -- I actually approved -- not approved a patent, but approved the continuation of sending in the patent required this morning. So yes, it's ongoing and it's important. So we have a growing patent portfolio.

[indiscernible]

Different parts. For example, now this one -- this morning, it's not granted yet, but it's on the coating. It's -- the super thin, doesn't look very much for the world, but it's super important. So we're patting in that. So it's a widespread.

[indiscernible]

we have to come back on that one.

Yes, I'm not -- it depends on how you interpret the use of the silicon. I will dig deeper. But I mean, a lot of the part is that -- it's difficult to do. So no one has managed to do it. Even if we're telling what we do, we have managed to do it. I will look into it deeper. It's -- yes. Thank you. Okay. Thanks a lot. And please don't hesitate to ask anything out by the table.

Yes. Okay. I would like to just -- we touched upon it before this lunch on where we -- where the market dynamics are. But I would like to show you a bit more detail on that and why we have selected the 4 different segments that they're in because they require different technologies, different requirements in each area. So I mean this is a graph stolen with pride from Straits Research. So we have a base year, and you see the double-digit growth over the year. And this is for the fingerprint sensor market, which is the -- a big number and growing. So it's USD 3.8 billion. Then that's, of course, it's calculated in certain ways. But it's growing. And with the security, as I said before, it's growing. And it's because of security threats. It's -- people are trying to manipulate with the devices. It could be -- maybe not the border control, but it could be in a more public way. I mean, like there's a reason in India why you moved from L0 to L1. The differences between L0 and L1 is that it's hardware tamper-proof. So they actually -- you cannot unscrew the device and manipulate with it. You cannot read out the -- or you cannot listen with the traffic between the sensor and the hard database. That's now encrypted, and you cannot screw it. So that's rapid growing security threats everywhere in the industry. Same with China. They are now moving from a certain standard to the FAP20 standard size due to what Marcus says, the size, the security, there's higher security. We see that in logical access. So that type of turnstiles, the border control, logical access such as log in to their PC, you have a USB token maybe that you actually need to have your fingerprint on to actually log in to the system, you have a dual authentication system. All that is actually increasing in security. And biometric is a big part of that. It's actually the solution to many of the threats. Same as government. You see, as I explained before, you have dual biometrics, multi-modality biometrics entering, I think it's also U.S., but in Japan, for example, I mean face and fingers. You see these increases all the time. That's one of the reasons why it's improving or growing. But also you see additional biometrics in financial services. You see, take an example again from India, Indian banks, they are now actually mandated to have biometrics to -- for the employee to actually be enrolled in system, of course, but when you do verification of a transaction, you actually need to place the finger on the fingerprint sensor. Same in China. If you go to the bank, there's a fingerprint sensor and the personnel actually log in to the system with the biometrics and authorize a transaction with fingerprint sensor. That's where we are replacing today. If you go to a local branch bank in China, Josh can talk more about that. There's so much biometrics in both India and China. It's everywhere. And when we saw COVID, we saw -- if you look at market trends, you see, okay, then you increase the number of contactless modalities. So you see -- also, if you travel between borders, you see that you actually do facial scans, both with temperature as well as the surveillance type of biometrics that is actually increasing. So that's a part of why it's growing like this. So in these different market trends and market parts, where do NEXT fit? We have selected and pinpointed 4 different segments. I think you've seen on our website. Those are the 4 segments we are in. We have public security. So anything from governmental, we have how you walk into a certain area, restricted area. We have payment and fintech. What you see here is actually the device that a Belgium company is doing, it's a crypto wallet. It has our sensor in the back. But we also have a lot of point of sales terminals out there, both sold so in India. There's a few sold in Ecuador. There's a few sold in Morocco. If you look at the -- so design wins going backwards a bit. All these point-of-sales terminals actually then have a biometric fingerprint sensor and it's making the authorization for a transaction. If you want to go on a train right in India, we actually need to present your fingerprints by ticket, and then you verify that you actually -- it's you that's going on to the train. One way of controlling who is actually going where. Access Control. We have a few -- if you look at the historically design wins, we announced last year, an access system for a Belgium jewelry shop. They actually have an access system for the safety vault or -- sorry, storage as well as for the manufacturing. So the personnel needs to log in with a biometric fingerprint to actually get into the premises and to handle the diamonds or whatever it's in the jewelry. And then we have the -- I think it's the first design win, recognized design win. It's the office and notebooks. So it's the laptop PCs. We have a few models, and we are still having a good basis on that segment. Still not competing with the consumer laptops and consumer convenient sensors, I would say. We're still in the high-end segment for, like I think Japan is example again. The laptops sold or sold to the insurance company. It's mandatory to log into the security systems in the insurance company with biometric fingerprint, you cannot do it with a password. You need to have your fingerprint. Same in the U.S., they have a FAP20 size sensor for the government, logging into the system by biometrics, high security biometrics. Of course, then there's a lot of consumer electronics, maybe which have small convenience sensors. They are not allowed to be in the governmental area. So that's the four segments. So if you -- so our products are tailored for the different ones. So I mean, there's different requirements in the different segments. And we have streamlined and made our sensors available for each and every segment. So starting, I'll just pinpoint a few, presentation is online, you can read. But I mean for public security, I mean, for border control, it's extremely important to have very high security. There will be 0 capacity sensors in that area, 0. Optical, yes. But then again, big and bulky. Liveness, of course, that gets more and more important that you actually see that it's a live person. And if you look at the payment. And of course, then it's very important that you actually have a low power consumption. So we need to optimize the power consumption for the battery-enabled point-of-sales terminals as you -- there's one device outside as well. It's a battery-enabled. It will not be able to contain an optical sensor because that consumes quite too much power. And then we have access control. Of course, then it's more important that it's immune for Sunlight. It's very important that you actually get into your -- yes, like the diamond room or the storage in the Belgium jewelry store. I mean you don't want to stand there trying to get in 5 minutes. I mean it's mandatory to actually open the door immediately. And then special requirements for the office and notebooks most likely that it's actually sleek and it's the right color. It's color matching with the actual design. Still high security level on all the different segments. Now I would like to hand over to Joshua. No? Sorry?

We will have around 7-minute break before we will then after this have the presentation of the China market and India and the rest of the presentation. So there is some more lunch outside there, if any case, someone didn't get it. [Break]

I would like to -- are we online? Yes. I would like to introduce to you, Joshua. He's based in Taiwan, heading up the sales in Southeast Asia, including China, Japan, Korea and so on. He will present a bit more detail than we have done previously on China.

Good morning, ladies and gentlemen. My name is Joshua. I'm the Head of Sales for South and East Asia at NEXT Biometrics. And today, I'm going to introduce our progress in China, why is China so important for NEXT. We foresee that in the coming 3 to 5 years, China will provide the main source of revenue to NEXT. Now, why is that? From demographics points of view, there are 1.4 billion population in China and biometrics is in their everyday life for all kinds of applications, such as mobile device, banks, police station, access control and a lot of IoT applications. The market of Biometrics is huge and the demand is growing year-by-year. Due to the government regulations and policy, the demand of biometrics specifically, the high security demand are increasing. People in China embrace all kinds of new applications of biometrics, which leads to a stable growth of biometric demand even under the economic downturn. China is currently the global leader in biometrics and every China company has a global agenda. In fact, almost all of our overseas customers outsource their production in China. So most importantly, we have identified a niche market for NEXT which is high security and large sensors are needed. Next, please. So what have we done in terms of market? We have identified the right market for NEXT, real live finger verification and large-size sensors are needed. And with the identified market, we prioritize the product development to make sure that our products are competitive for ChinaID customers. So there are two milestones we have recently achieved in China. In after 2 years of how it works, NEXT finally awarded the ChinaID certification, which makes NEXT eligible for the participation in ChinaID market. And with the entry ticket to the market, we have made a new market strategy focusing on the profitable niche market. We have built up multiple target partnership and also signed several large contracts with the OEMs, who will bring us the sustainable growth in the coming years. And in terms of partner, we recently have started to work with the most experienced distribution partner in Asia, in this industry. And we believe that with the partnership, we will acquire a lot more opportunities together. And in some selected areas, we will also improve our position in the value chain, which is to work directly with the end customers. who will bring us net higher margins and higher profitability. And finally, we have decided to increase our local support to the customers. And all of these efforts have make measured that NEXT is ready for the growth in China. Next, please. So for applications acquiring high security, live finger verification and large-size sensors are made mandatory. So next active thermal technology, which requires live finger verification is actually the perfect solution for this market and is the core technology that helps differentiate NEXT from the competitors. And you can see for the comparison below, NEXT has the most competitive sensor produced based on the LTPS process and the market we have identified and focused on its large size sensor of market of ChinaID, banking and police. Where fewer vendors are in and product margins are high. Next, please. So with the core technology and correct market positions, we have made a great market entry strategy. We used to work with the key distributors to have their business with the OEMs. But with the new market entry strategy, we have decided to work directly with the key OEMs and partners in some selected markets. With the approach, we will be able to communicate our most advanced technology with the customers directly and get the opportunity to do designing in the early stage of project. In the case, we will be able to build up the relationships with the OEMs and become a preferred partner for long-term business. So with the new approach, there will be several key benefits to NEXT. The first is that we have access to the ongoing projects. Thus, we have better control over the business. And secondly, we will build out the partnership directly with the key ecosystem partners, and we will strengthen NEXT brand recognition among the ecosystem. And finally, with a stable business, we will further be able to build up a more cost-efficient supply chain in China. Next please. So we have identified the niche market. What we have identified is that with high security needs, where there is higher price and there is competition. But most importantly, the NEXT products are ready for. Below the markets that we have identified. First is banking and fintech, NEXT solution has been qualified by the key OEMs in the industry. They are the Tier 1 vendors, and we expect the strategic partnership will enable the growth of NEXT business in China. And secondly, social security and medical insurance, we have recently signed a strategic partnership with a Tier 1 solution provider in China. And this provider has dominated the market in over 20 programs in China. With the partnership, we will expand the footprint of NEXT to a whole new market, and that will bring us additional revenue in the coming years. And finally, the access and border control. With the excellent performance of wet and dry finger and also the resistance of sunlight, NEXT has also developed a strategic partnership with the Tier 1 vendors of access control and also the border control in China. And we expect to obtain the volume PO within the second half, obviously. Next, please. So let's talk about the partnership that we have recently signed with a biometric provider in Beijing. So NEXT has recently signed an exclusive partnership agreement with a biometric vendor solution. And the partner has, as mentioned, he has dominated in the medical insurance and health care industry over the 20 province in China. And with the agreement, we, NEXT, expect we will be able to expand the footprint in a whole new market. And why NEXT? Because the partner has seen the value of live finger verification of NEXT technology, and they will promote NEXT live finger verification to the Ministry of Healthcare as a national standard. And we see that the market potential for this cooperation is that, for example, the 6 million device to be implemented in the hospitals and also the pharma stores. And also the over 48 million retired military staff, they should be verified every year to enable for us to receive their monthly allowance, and there are a lot more applications here. And we see that we truly believe that the partnership will bring value to both of NEXT and also this company in Beijing. Next, please. Vision and strategy is not enough, the long-term key to success is execution. So we have actually made a plan to execute the market strategy in 3 phases. In Phase 1, we should obtain the certificate, we build up the partnership and prepare for the right product. And actually, this has been done in 2023 and early 2024. In the second phase, our goal is to supply reference samples to the key OEMs of banks and solution vendors of medical care and health care customers in Q1 2024. And also prepare for the ramping up in Q2 and Q3 this year. And then in the third phase, the ultimate goal is to get qualified directly by the banks, also by the governments and we should become the preferred partner for long-term business. So in 2023, we have actually done a lot of good work. In 2023, we have secured contracts with the estimated value of NOK 130 million to NOK 270 million over the 3 years from 2 Asian distributors. In the end of the last year, we got the first stocking orders from one Asian distributors for the ChinaID market. More importantly, we have signed several key MOUs with the OEMs in the banking industry. And we expanded our footprint to medical and health care industry by initiating the commercial agreement with the Tier 1 solution provider in China. Further, we also started the cooperation with our strategic partnership with top-tier companies for the access control and border control. We saw the good works done in 2023, we will have confidence that we will do better in 2024. Even though the macroeconomics in China in 2024 will still be challenging, but we believe that in China, the biometric market will grow compared with 2023. The main reason is that the inventory in the channels has been concerned to a reasonable level and the real demand will bounce in 2024. And we are ready for the increased demand. In the first week of 2024, we have actually got the ChinaID certificate, and we expect more orders to be received in the coming quarters. Now with the introduction of NEXT to the new market, including ChinaID, medical insurance, health care industry, access control and E-lock, we expect to pass qualifications with these companies, and this will contribute to a lot more revenue coming into 2024 for the NEXT. Further, NEXT will improve the position in value chain of Biometrics industry from the sensor vendor to a solution provider, which enable NEXT to directly work with the end customers and become a preferred partners in the ecosystem. We saw the opportunities. We will, of course, strengthen our local support to the key OEMs and partners by increasing our presence in China and get ready for the long-term growth. And that's the end of my presentation. And thank you for your time and I welcome any questions from you guys.

Okay. So do we have any questions from the audience here. Okay. And it's still possible to enter questions in the chat function on the web. We have some questions there. But so far, not so many about China specifically, which we're going to cover now. We had one question earlier, about, we got on e-mail, there's been some geopolitical tension between China and Taiwan. What does that development mean for NEXT manufacturing in Taiwan? Are you evaluating other production sites as well?

All right. Thanks, Eirik. Actually, a large part of the world's microchips and other crucial technology components are actually manufactured in Taiwan today and so are ours. So we are, of course, aware of this geopolitical is connected to this area. But however, NEXT operations remain normal, and it is the business as usual. And actually, we are satisfied with our current setup and partners in the ecosystem. So we would be cautious about this situation, but the current setup is working very satisfactory from our side.

Any more questions from here? No? Okay. Then let's proceed. Thank you very much, Joshua. Then we will go to India.

Hello, NEXT investors. How are you doing? I am DJ or Digvijay Kanwar and I'm responsible for sales and marketing for U.S., Europe, Africa and India. And welcome to this presentation. I hope you guys are ready. We will be diving deep into India and the global sales market. and we'll be explaining how things are and what we see them in the future. So here we go. Now we start off with the first slide of us. India, the role model for government ID development projects. Honestly, Aadhaar globally is always viewed as the most sophisticated ID program. It's considered the gold standard. And let me help you understand this region and this program a little bit better. Honestly, India is all about biometrics. We have about 1.4 billion people and 100% of all the adults are already registered into Aadhaar. Biometrics is a part of life here. It's used from anything to even to -- like a small transaction of buying a SIM card to a bigger transaction of buying or selling a house or property for millions of dollars, right? So it's used across the segment. And more so it's been used with a segment, which is of -- which we called the economically weak section, which is around about 400 million people. And they end up using a lot because a lot of government programs are dependent upon those things. The key benefit, obviously, which we have seen across the government has been able to save a staggering $29 billion till 2022 by just spending barely $1.5 billion of investment, right? So -- and before we go ahead, I will just narrate a story on my experience, actually personal experience of how biometrics for good can be used. And it's all -- this company, our partners and investors like you who have actually brought this forward. The incident is of the biometric device, which went for certification and before you get your final certification, they actually invite you to a remote region where they will test the device in front of you and show how it works, right? And lo and behold, I went to a place in south of India, and they invited us. The whole setup was already done and a very old couple from an economically weak section came in, they gave their biometrics. They put the fingerprint. There was an LED, which lit up green and their free ration or their subsidized ration was given to them. Both husband and wife were over joyous. And they felt so surprised that they didn't have to pay -- anybody any money to get this free grains. And honestly till that date, I had never seen it in that sense. There was that -- this technology is actually doing good for the people. It is actually giving to those who need the most, right? And that has definitely been a cornerstone of me working here, and I feel that we -- all of us are doing a great job in doing that. Earlier, there is a very infamous statistics in India that for every $100 spent, only $15 would make it to the end person who was in need. So it's not a 15% of loss, but it's a 15% of actual which was delivered, it's like 85% of loss right there. And I mean this whole mechanism in place, the government, which had the money, which wanted to give to the people, they were able to do it by using this mechanism. So it's a mechanism where everybody is enrolled, now because everybody is enrolled, there's a lot of different kind of use cases which comes up and the government is able to go and provide services to their citizens. Now from whatever we are doing as of today, because the service has done so well, Aadhaar is doing so well, they want to increase it by almost 5x, right? So the transaction requirement is there. We are expecting as much as 20% of the market volume to increase. And another good thing about Aadhaar is that a lot of other countries, especially African nations and Southeast Asian nations, they look towards it and say, you know what, this is where we want to end up at, right? And this is a program which is working for them, and we would love to use this. Which brings it now to me to the next slide right now. The Indian biometric leap, again, where are we and what is set for us for 2024 and ahead? Like I explained, Aadhaar is almost -- it was started in 2009, that was largest database. We did see a little bit slowdown from 2019 to 2023 that was mostly around COVID, and there were some political challenges that the whole system was going through, but that's not the case anymore, right? There is an incumbent initial L0 certified devices, which were there all 4.5 million to 5 million of those devices are set to expire by June of this year, 2024. So a chunk of that will also get exchanged. So -- and as explained, this government's ambition is to increase the AEPS services, which is geared up towards financial payments almost by 5x. Okay. Going to the next slide. Where does that put NEXT Biometrics, right? What are we doing and how are we different from the others. It's very heartening to tell you to all of us that NEXT Biometrics is actually in a pole position. We did a few things right in the last year, and I think so we are reaping this evidence this year and going forward in the future. We have taken a slightly different approach than what we had earlier. We are now not going into -- in Aadhaar for the L1 as a end user company or an OEM, end device company. We're actually going in as a fingerprint sensor company. How does that help us? That actually makes our key partners less scared of us. So this way, we are not cannibalizing the sector. Earlier, when we were selling the sensor and providing the end device, which was a USB device, all the people in the ecosystem, we should get worried and say, hey, these guys will be coming from my market share sooner or later. So what we have done is we said, all right, we've got to concentrate on something that we're good at. We are excellent in making the sensor. So we're going to make the world's best sensor, we're going to do great integrations. And then this way, we actually have access to a much larger audience or a much larger base. So that is one thing that we did. So we went from OEM company to a sensor company. Second thing that we did. We also have positioned us as a more secure sensor company rather than a more economical one. And we played a lot around the security aspect of it. As you already know, thermal sensors by the -- just by the way of physics and definitions have a better anti-spoofing capabilities or liveness check. It's already built in. When you compare it with other optical sensors, which cannot catch the very obvious or basic spoofs, how does that help us? Well, all the financial or banking companies, which are now coming on board, they obviously want to use a more secure sensor vis-a-vis a cheaper sensor, right? In the $800 device, they don't want to compromise over a couple of dollars, right? So we have seen a very strong pull from that -- from the fintech segment saying, okay, we want to work with guys which can give us a better and more secure sensor. So that was the second thing that we did. The third thing we did was we actually figured out which of the key partners may be it distributors or system integrators or value-added resellers for different segments. So essentially, there are 2 to 3 major segments in this, Aadhaar's. One is your single fingerprint sensors. So we have tied up with ACPL there. And similarly, we have tied up with other players for pause and access control. And sooner or later you'll hear about those also. Where are we right now? We already received the first L1 certification from one of our OEMs and who happens to be one of the largest players in Aadhaar, right? And good news -- another good news is that we've got a couple of more OEMs, larger OEMs, which have taken our sensors and gone for certification. We've also been able to secure more than NOK 300 million for the next 2 years. This takes us to my next slide now. Really quickly, I wanted to touch upon the different target segments which exist for Aadhaar just to give you guys an idea and I tried to take as authentic photographs as possible just to give you guys a little bit glimpse. So these are not some stock market, but yes -- so on the first left-hand side top you see is a single fingerprinted devices. These are these USB cable fingerprint devices, which people use for smaller transactions, eKYC, as they are called, anything from doing -- or SIM verification. The reason why they do SIM verification is because every bank account is linked to a phone number. And so if you had -- if you were able to get a fake phone number, technically, you can get a fake bank account and do money laundering, to curve that they did biometric authentication for your phone numbers. The one in the middle top is called the micro ATM or the POS terminal. That is where I actually saw that gentlemen and lady getting their free rice -- bag of 5kg rice at that point. So essentially people queue up, they give their Aadhaar. If they -- and then they are able to buy subsidized like almost free grains from the government. Top right-hand side corner is an access control device. All the government agencies are mandated to use Aadhaar for their attendance and they don't want to use something else. The top -- the bottom right is an ATM machine with an Aadhaar sensor. So the ATM machines in India are actually mandated to carry a fingerprint sensor from Aadhaar so that you are able to do Aadhaar verification and do financial transactions. And left-hand side down is a tablet for child enrollment because essentially children -- there is a concept that you children probably cannot go to all the Aadhaar centers. So the government took the initiative of sending people in our homes with the tablets. And so they would do Aadhaar verification on the kids. And the operators themselves would use their own biometrics to be authenticated. Now why did they -- why do POS or tablets use thermal sensors from NEXT? Because we've got excellent power consumption when it comes to POS terminals. So our -- so the number of transaction a person is able to do using a device, which has fingerprint sensors from us is far more than an optical because optical sensors take more power, so it's a better solution. This takes me to my next slide. What is India overview? Where are we? And what is the outlook for 2024? So 2023, highlights. We've been able to secure large tenders and large orders of NOK 300 million, right, for the next 2 years. We've been able to partner with the right people, for example, ACPL, which has been able to secure an L1 certification. Aadhaar is already evolving from L0 to L1. The old is going out, the new is coming in. So that's -- we are creating a lot of pull in the market. And the same pull we have seen from large banks, large banks which are placing orders and tenders on to our OEMs that we're working with. And we have been able to sign up with top OEMs of different verticals so that we are able to enter each one of them. So we'll have multiple L1 application in the pipeline already. And what can we look forward? What is -- how does 2024 look like? I think so that's why all of us are here to just understand that aspect. So good news is we're going from 1 to 3 or even more OEM, but I feel that we will have 3 OEMs by the end of this year. Who would have a certified L1 with them. This actually -- basically shows how good we are with different OEMs, right? Because it's very rare to see the same sensor being used in -- with different OEMs because they want to essentially not do that. They lose their competitive edge. That's one thing. Second thing that we are seeing is that the largest banks in India is actually going to release its biometric tender. It can be almost like 20% of the whole market share this year, which is going under that tender. So everybody is gearing up for that. As explained earlier, the Aadhaar ecosystem is adding, I believe, almost 93,000 different banks, which would raise the total addressable market share by 20%, which is, again, good for us. We are expanding our market share. Another important point which completely resonates with our technology is anti-spoofing. More and more companies have started asking for anti-spoofing, liveness detection. We fare considerably well when you compare us with the dominant fingerprint sensor, which is there, which is an optical. So when you compare that with -- ours look new and swanky and more secure. So yes, and keeping all of these things in mind, we are of a firm believe that we'll be able to target and achieve 30% in 2024. That brings us to the next slide. All right. Great. I hope I was able to explain a lot around what's happening in India. How well we have executed our strategy for 2023 and what we're seeing in 2024. Similarly, we'll be going through now global demand and global markets. And going to my first slide here, amongst -- across, we are trying to concentrate on these three different regions. The African continent, Europe and the Americas. And in each one of them, I will be going through what kind of market, the type of market that there is, the focus that we will be bringing in into that market and what channel or leverage that we'll be using. It's interesting to note, and it's -- again, it's good to see that the global market -- biometric market is actually on an upward trend. We are actually looking at a 14.5% annual growth, right? So the market is overall growing, but they are very different. All of them are -- Africa, Europe and Americas and India would be very different. And I'm not saying that there are no similarities, but they are very different, and we have to approach them differently. Hence, we have got a different strategy for each one of them. So NEXT is actually focusing on distributors to address all EMEA and Americas. And let me just take each one of them. Let's start with the Americas. Now the type of market that we're seeing there is a system integrator driven market, which basically means the SIs are the big guys in it. They've got a couple of OEMs. They go in, they take bigger accounts, and then they place what they believe is a correct solution. So we have to work with system integrators, hence work with the end user, which is also the OEMs in this. Within this whole segment, what we have chosen is logistics and access control industries. So that's what we are -- that is the two industry that we are targeting. And how do you attack those? Through design houses or value-added resellers or system integrators. So it's not kind of -- so we are picking the supply chain somewhere in the middle and say, okay, design houses, we're going to be working with you because we see a big project with the system integrators and that's how we address the Americas market. Second is Europe. Europe will actually is kind of like a replacement market that we see with the incumbent pattern bigger, lower, more expensive sensors and -- which is kind of going through end of life. So all of these guys are asking for replacement and the changes. Not so much new, but a lot of replacement market we're seeing there. That is one thing we see in Europe. The second thing we see is a lot of innovative smaller companies which are coming out and saying, hey, I want to create something for , for example, hypothetical, for bitcoins or a design, which has not been used earlier. So we've been working with them as well. Our focus mainly in Europe and what we have seen really working well for us is health care and logistics, so these are the two. Again, we are using the design houses and value-added resellers to enter these markets, which brings us to my third market of attention is Africas. Now Africa, I spend a little bit more time. It actually looks towards India a lot. They're going through national ID projects, a lot of them, different countries are in different phases. Most of them are in the enrollment phase. And then second part starts with the authenticating space, and that's where we are. So MOSIP is the body just like how we have Aadhaar or say China has ChinaID. The African countries are tending towards MOSIP. And MOSIP heavily relies on Aadhaar's ecosystem, right? And they take a lot of the same players which are working in Aadhaar are actually working in MOSIP. So what are the type of market? It's a MOSIP market, we are focusing mostly on national ID projects. And again, we leverage the value-added resellers and also the existing players in India, which are also traveling there and selling there. So it's kind of similar in that sense. So it's a one of my favorite saying in NEXT Biometrics, and I say that, for every one minute of any $1 investment, I do it in India, I can find 3 coming back from Africa, from 3 different countries. So that way, we are lucky that we were able to crack into Aadhaar,and now we can replicate similarly in other places. Great. So that's all from my side. I hope I was able to address all these regions. And if you have any questions, please free to ask me, I'm more than happy to address that. Thank you so much.

So now we are available for the questions on India and the markets in Africa and Americas and Europe. Okay. We have some questions from the chat. Yes, there's a question on how large is the Indian market in dollar terms for the coming years in terms of L1?

I can answer that but I don't know if Ulf would want to take that. It's a fairly large market from L0 to L1. In dollar terms -- because the only reason why we say this is because different agencies have pitched it differently and they've got a different calculation around it. And we have done similarly. But that's a more company overview from NEXT. So maybe Ulf, do you want to take this one?

Yes, I think it's very hard to say because it depends on how you measure, right? I mean, if it's -- we are acting a sensor area. And I mean, the complete L1 is including larger governmental projects. So it's kind of hard to get. I mean, this -- as I said -- as DJ said, there's a lot of different market analysts, doing this estimations is very hard to get.

Okay. Let's turn to the next question here. For China, you mentioned you're taking value-added position in the value chain. Could you elaborate a bit more on what kind of role you expect NEXT to have in the value chain in India going forward?

No, that's a good one. See, I think so with the last year's positioning that we did of taking a step back, saying that we're going to be providing the sensor, blah, blah, blah and the final OEM USB, it actually put us into a very good position. We're kind of neutral in the sense that we can work with a lot of players. So what we want to come across is that the market thought leader in security. So in the whole value chain, we look at ourselves as the market leader in security and providing that and bridging the gap between different -- the government to OEM, the banks, right? So we're definitely going up in that sense in the value chain and our positioning is more towards a whole sensor or secure solution, providing with the sensor, not only the sensor and the algo, but also the know-how. Because with this whole anti-spoofing coming in, and we are having a much better idea about how to solve these problems, so banks and other -- the governments actually reach out to us saying that, okay, tell us and explain us a better way of solving this problem. So how early, we were just viewed as maybe a sensor company, and they have plenty. Now they invite us into smaller conversations, and we are able to explain to them how better to up the ecosystem security -- the whole security for the whole ecosystem. So I think so that's our role. We're monitoring that role and we've got the expertise in it.

Okay. One more question now on the Americas. How far have you gotten in terms of your implementing your market strategy in the Americas? And when do you think you will see some high revenue figures also from that market?

Sale, sale, sale, more sales. But Americas is a little bit different than I would say, India and China, globally, the best places. Mostly because of what is the incumbent service side. I'm sure you guys already know every time you guys also must be traveling to the U.S., they still signing things after they do credit card payments. So it's -- they're still -- it's still some -- they have to go through a lot of process before they actually start implementing biometrics at the same space as China or India, right, A that. B, there is an actual legislation issue around catching the biometrics and using it by the government. They are far more -- their risk averseness towards the government having the biometrics is far higher. Hence, you don't actually see a national ID card project with biometrics rolling out in the United States, which is one of the major ones which gets captured. Okay. That doesn't mean there aren't any other use cases. There are. They're in logistics, in health care. We are seeing a lot. We are seeing in bitcoins and stuff. What I'm trying to say that we are laying the foundation -- we've been laying the foundation. Q3 onwards last year, I think it will take this year as well. And then you will start seeing these really unique cases which come out. And I think I've shared this with Ulf and Eirik also, each one of those case can be bigger than Aadhaar, if you think about it, because the potential is there. Because I've seen -- I have worked there earlier. I've seen that if one of the ideas hits big, and then it goes to all the Fortune 500 companies immediately. So the long -- the short answer, I think so by this year end, we should start seeing some good design ins, which would help us ramp up mostly next year on -- next year, Q2 onwards. That's my best estimate.

Okay. That concludes the Q&A for the India and the other markets that you're responsible for. So now it's back to Ulf.

Thank you, Eirik. Thank you. So yes, before we wrap up, I think we have just a few minutes. So I think yes, you read the slides and maybe there was a small typo on the Indian revenue, what we actually -- the contracts value we have. I mean, the NOK 300 million is over a certain time, right? I mean the contracts are over years. It's not something that is delivering tomorrow, just to be super clear. We will correct that on the slides. So it's more clear. Yes. So just some closing remarks. So I think I will -- yes, I think we still have some time. But I think, to summarize, the Capital Markets Day, the takeaways, if you need to remember something out of this day, there's an enormous biometric market, yes. We are extremely well positioned with our disruptive technology and our -- especially our FAP20 product. And we are now following up the turnaround phase, and we have entered the scale-up phase. We have now put the foundation, contracts in place and moving on. And again, the design wins we have today and the contracts we have today will turn this company around. Not saying that the sales is stopped, we are continuing adding design wins every month. With that and with the fantastic almost unheard of gross margin, that's what you need to take away from today. So of course, we need to prove ourselves. I believe we have proved our self in the product segments we have gone through. We have the strong position, we have pole position in India, we heard DJ say. We have the financial margins and we have the cost control. It's a base. Now it's time. Of course, we have not proven this. It grew in Q4? Yes. But of course, we need to prove ourselves, and we will. This is my expectation. That's why I say Q2, we are breakeven. So I think summarizing the outlook, it's similar to what -- of course, what we have in the Q4. But we expect strong growth in FAP20 revenue going forward in the coming quarters, as you've heard. We have already secured contracts and design wins with, now we say NOK 200 million because that's now -- it's not something that starts [ January 1 ], it's gradually starting to ramp up, same as -- I mean, the Asian distributor. It's a contract worth NOK 270 million, but that's not starting from day 1. We see the first design now. And he -- the distributor have 6, 7 different OEMs. So they -- whenever they ran out of the stock, they will replace to a NEXT sensor. So it will gradually grow from this. You need to understand the NOK 200 million is not something that is today. With the gross margin and OpEx said, this is the expectation of 2024. And Again, I repeat, breakeven Q2 2024 and the positive result for 2024. So just final remarks. I think, yes, you've all been waiting and I appreciate that. And it's been taking time, but I'm here standing confident that the market is taking off. I will not say -- I will repeat every quarter, but this is taking off finally. I've been here 2 years, and I see how we have built it up. Yes. And with Marcus, we will add the FAP30 will be even better on the margin side. We have a question maybe. You have a microphone?

What's the cost of bringing FAP30 to the market? And when will it be market ready?

It's actually already covered in the NOK 65 million per -- yes. It's already covered in the OpEx, yes. And we will see revenue out of the FAP30, at least in early 2025, I would say. It's a project that it's a continuation. We have already started it. It's on the map. And why I hesitate? It's because there's a, yes, fluctuation in the development. We need to make sure that it's -- the recipe of the outline of the FAP30 is correct. And you may need one try, two try and God forbid, three, but most likely one, if we're lucky. It's earlier. Yes, I will not repeat anymore. But if you want, of course, you can follow the progress. You can contact me, of course, Eirik and the others, but please subscribe and follow us on LinkedIn and Euronext. Ticker is NEXT. Do we have any final questions?

Any questions here in the audience?

Everything is crystal clear.

I have some more questions from the webcast. So it's about the PC market, do you see any developments there? Is it going to go bigger in the future?

In the security -- high-end security market, in laptops, yes, it's definitely something that we are targeting. We have two paying customers. Of course, I would like to have the third and the fourth in that segment. It's niche markets, but it's high value market. So definitely, we are targeting that market.

There is a question on the gross margin. What's the goal? I think we answered that. So that's 50% for 2024 on average, quarter-over-quarter will obviously fluctuate depending on the gross margin, but average 50%. And then for 2025, I don't know whether we want to provide any guidance, I guess not.

No, I think we have one bullet here. I think as we are actually changing the business model and maybe providing a biometric solution. Of course, the selling price will be higher Therefore, the gross margin could be potentially higher. So yes, be prepared for some surprises. But then, of course, it will fluctuate over the quarters. But again, 50% for the 2024 is the goal.

Thank you. So that concludes the Q&A session. Thank you, everyone, for participating. And see you next quarter.

Thank you.