Half Year 2017 Idex ASA Earnings Call

IDEX.OL - Idex ASA
Half Year 2017 Idex ASA Earnings Call
Aug 10, 2017 / 07:00AM GMT 

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Corporate Participants
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   *  Hemant Mardia
      Idex ASA - CEO and MD
   *  Henrik Knudtzon
      Idex ASA - CFO

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Presentation
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 Hemant Mardia,  Idex ASA - CEO and MD   [1]
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 Good morning. My name is Hemant Mardia, I'm the CEO at IDEX. Welcome to our Quarter 2 2017 presentation. I'm going to update on the IDEX value proposition and then talk through our progress to date and the outlook for the business. I will hand over to Henrik Knudtzon, our CFO, and then we'll close with question and answers at the end of the presentation.

 First of all, IDEX is a pure play fingerprint sensor vendor and what's unique about our company is our technology that allows low cost and scalable fingerprint sensors. Our target is 3 markets that are 1 billion unit potential: Cards, mobile and IoT. And particularly, over the last period, our focus is increased on the cards opportunity. Our Off-chip technology, which I'll talk about a bit more further in the presentation, allows us a platform play which addresses all of the 3 target markets. And particularly, we are focused on segments which value system performance.

 We've now established a critical mass in the organization. We have now 120 staff with deep biometrics and consumer electronics expertise, with industry veterans that have been attracted from blue-chip companies to IDEX. And we now have the critical mass to deliver commercial execution. We have a very solid financial position with a clean balance sheet and $50 million of cash on the balance sheet. And our technology is extremely well protected with a large portfolio of patents.

 So taking a look at what is the core of IDEX. It's what we call off-chip sensing technology. This is a differentiation. Today, the market for biometrics, and particularly fingerprint sensing, is dominated by a technology called capacitive fingerprint sensing. And this is the technology that we have. What makes us different is that we found a way of creating an Off-chip technology which reduces the silicon content to the absolute bare minimum, and this is independent of the size of the sensor. In doing that, we also maintain high quality, which is necessary for the levels of performance that are demanded today, and this allows IDEX to be very different for our competition. The innovation scope for IDEX is huge, and we are creating pioneering, system-level solutions. This gives great barriers to entry. When we look at the conventional silicon-based technology, it's now become a crowded space. There are a number of vendors that have entered the space and are competing. This year, the market deployment of fingerprint sensors will be 850 million units. Again, dominated by capacitive technology which we have. And to reemphasize, where we are different is we have a lower-cost technology where performance matters.

 Within the silicon space, we've also got traction. We have also a technology, which we've deployed under the Cardinal brand under our partnership. And why we are confident in our success is when we look at the target markets that we have -- cards, mobile and IoT -- we see some really strong trends that are moving in our direction. First of all, on the cards market, which is tremendously exciting, and we are seeing really strong customer pull. This market is at an inflection point. Four years ago, we saw the same inflection point in mobile, when Touch ID was launched with Apple, and today we see the same with Mastercard, and IDEX is front and center with Mastercard. Not only that, we're seeing strong pull across the whole card ecosystem, and I'm going to talk about how IDEX has expanded its footprint. And what plays to IDEX is, first of all, it's very important for the card market to fit with existing infrastructure. So the fingerprint sensor has to fit within the standard credit card. And our sensor is made of a flexible polymer material. So naturally, it lends itself to direct integration, and the standards that have to be met are very tough for durability and longevity of the card. We can achieve those standards and are meeting those standards.

 The second really important point within a card is that a larger sensor is really critical for usability. It's very important for the consumer to get very accurate recognition so a transaction goes through, as it's a payment transaction. And within a card, there's very acutely constrained power. So we have limited power consumption. There isn't the processing that you have in a phone, and that means the sensor size is very critical. And that, again, is a sweet spot for IDEX.

 If we look at the mobile market, that dynamics have changed. I'm going to talk about the dynamics of the mobile market, but what we're now seeing is the new generation of what are known as infinity displays, pretty much edge-to-edge displays seen on the recent Samsung Galaxy S8. That transition is now being adopted across flagships. And that really leads to a couple of things. First of all, this -- the fingerprint sensor is still required, but now there's no space on the front of the device, so either a sensor is mounted on the back of the device -- and for us, a large sensor enhances that performance. So we see OEMs can be attracted to that proposition. And secondly, a longer-term trend to putting the sensor in the display itself. And again, the material that a display is made of is fundamentally a polymer material. That's the same material that we use for our off-chip sensing. So we also have a team of experts working to that. If you like the Holy Grail, which is integration where you can touch the finger anywhere in the screen.

 And then, finally, the third market that we have, which is the development of the Internet of Things, adopting biometrics. We see that starting to accelerate. Mobile adoption and familiarity of consumers with fingerprint sensing as an authentication and convenience is really driving many other applications. In this case, again, these devices have limited power, so they really lend themselves from our card products. And secondly, there's a number of these devices that will have needs for flexibility, like wearables. And again, that's exactly where our technology has advantage.

 I've talked about the Off-chip technology and cost advantage, and I wanted to really put some more depth behind that. And really what happens is the cost of a current silicon sensor scales linearly with the size of the sensor. So the larger the sensing array, directly the cost of the silicon goes up. And therefore, the drive from silicon vendors has been to reduce the size to very small levels. And on this graphic, we can see where the current mobile area is, which is around the 15 to 40 square millimeters, so very small sensors. And in this case, they've been able to drive good performance by using very powerful algorithms that run on the core processors within a mobile device. And you can see in this space, our Off-chip technology still has advantage for certain sizes, and this is the area that we're promoting for the back of the phone. Clearly, as you get to very small devices, which are mainly used now for lock and unlock, then a silicon sensor is more competitive. Now, fundamentally, with off-chip as you go larger, you can see on the right-hand side we have a really significant cost advantage -- materials of cost advantage. And typically, on a card or an IoT device, we're looking at sizes in the range of 100 square millimeters, which is the far right of this graph. And at that point, we have a 2:1 cost advantage. It's huge. So this is really why we are so confident in the proposition that IDEX has. And what IDEX has been investing in over the last years is really driving our cost point. And we've achieved one major step on that journey. The first is, we developed a new ASIC, a new silicon, direct from TSMC foundry, and that gives us the lowest cost silicon. The second part of this journey for us is to drive the sensor packaging cost down, and we're well on the way of that. And we'll be making some announces further across the second half of this year as we're driving that packaging evolution so that we can even compete at the very small sizes. So really across the board, IDEX has an incredible opportunity and proposition.

 And taking that theme a little bit further forward, the platform that we have is common across our 3 markets. So the leverage that IDEX gets by the investment allows us to attract into all 3 markets. The ASIC, that I mentioned as being developed at the leading foundry in the world, which is TSMC, is suitable for all 3 of these applications: cards, mobile and IoT. Together with that, we've now finalized a new software suite which is fully modular, and again, works across these 3 different target applications. So it allows us to adapt that software and reprogram it for any of these 3 markets, which is a powerful position to be now.

 We -- as I mentioned then, in terms of the second half, we're working on 2 major steps for the company. One is, we have a new architecture we've been working on which will drive a simpler packaging. So when we couple up with a low-cost ASIC, we'll have a very enviable cost position. And that's going to be derived by advancing our architecture to simplify the sensor. And simpler means easier to produce and lower cost, and this is being made at the top tier packaging companies in the world.

 And then, we are -- we have some really exciting developments on our road map. Within the card space, I'm going to talk about some of the positions that we've taken. We believe we are in a leadership position. We want to extend that, and we have some new sensors that will be coming out later this year that will allow us to do that. And to support that accelerated product development that is now happening, we have grown the team from specific sectors that are important to IDEX. One clearly is biometrics, the second is cards and the third is mobile. And right now, we're over 120 staff, which is a 64% increase compared to last year.

 Just recently, last few days, we were delighted to announce the launch of a new matcher. So this is a matching algorithm that couples together with our sensor and allows us to work within a very constrained environment. So specifically, if you take a card, where you can only put in very low-end processing, it's very demanding on the algorithm, but it's very important for the user to get successful authentication. Our algorithm is a step change from what has existed. This algorithm has been in development for 10 years. We acquired it 3 years ago, so this is not something that can be done easily. It's a very unique algorithm. We have multiple patents on it. And I'm really pleased to say that we've met the industry needs, which is low single-digit false reject, meaning a few percent of false reject when you use the card at a 1 in 50,000 false accepts. So very high levels of security. This is really a breakthrough algorithm because it fits within that small, powerful print that you get within a card, and low power consumption, security, and good usability of the 3 dimensions that you have to achieve. So this, combined with our flexible sensors, gives us an end-to-end system solution. And the benefit of that is value add. So when we look at the card space, we expect that IDEX can attract very good margins and good selling prices from our products, because we're selling a solution that solves problems where biometric is now the key function. And if you look at a mobile, a fingerprint sensor is one of many features within a mobile. But within a biometric card, the fingerprint sensor is the feature. So this is very important when we look at the value proposition for IDEX and why we're focused on leadership here, is that this is something that we can monetize very much more than in the mobile space.

 And we're really excited to be working with the world pioneer in this area, which is Mastercard. And IDEX is in a really unique position within this program, and there are so many developments in progress. We recently announced another successful trial, or it was announced with a company called UniCredit in Bulgaria. This was the third customer trial of the biometric card, which is called next-generation by Mastercard, which incorporates the IDEX sensor. And we had said that there would be multiple trials. So this one, the feedback was tremendously positive. We made some comments on that in the press release. Overwhelmingly, users were excited about having the convenience and security of a fingerprint sensor in a card to make a payment. And from these trials, we -- there is very high interest. There's multiple customers now already scheduled for larger-scale pilots, including some of the existing customers, and these larger scale pilots will happen during the second half of this year, and I think continue on, as there are so many companies and banks interested. The next major one we expect is in Asia and that will be a significant trial.

 And all of that is leading to Mastercard's target of setting a commercial rollout at the end of 2017, after the customer pilots are approved. So we're very close now to the commercial rollout. The program has really had a number of strands in it. First of all, a whole end-to-end system has been put together. That means enrollment, the payment infrastructure, the in-country deployment, the fingerprint sensor in a card, and the manufacturing. And that's being developed together with a company called OT-Morpho, Oberthur-Morpho. Morpho was recently acquired by Oberthur. They're now the #1 card vendor in the world and we're very pleased to be working with them. So this is set out now for commercial deployment.

 We are preparing for final card certification, so we're actually in the middle of that now, so a lot of work is now going on for the certification and this is expected to commence in the next quarter.

 And then, finally, the product that has been qualified and developed so far is a contact-based product. There is significant demand for this contact-based product. There's -- part of the demand is also for what's called dual-interface, which involves a contactless payment as well. We're quite advanced now in working on this, and this leverages our new ASIC that we launched this year, which is low power enough to work directly with power harvesting.

 And I'm very pleased to say that one of the targets we set ourselves was then to expand our leadership position from the Mastercard program out to the wider opportunities in the world. And I'm very pleased that we were able to announce our initial order from a leading Asian security and authentication smart card provider. We are targeting, with this customer, initially government identification and access control. Now, this company is a leading player. They have a very strong footprint in China, if not a leading position. They make tens of millions of cards, and as we go through this phase where they integrate our card, we expect to make more announcements and disclosures as to this company. The deliveries are during the second half of this year, and what was exciting for IDEX was as we started to open our customer engagements, was that we got very good validation that the technology we have, meaning the flexible sensor, which is designed for mass manufacture, is much more advanced than anything they've seen. The key thing for them was something they could put into mass production, and that's what they've seen with the IDEX sensor. And when we look at applications like Government ID and access control, these are very high value add. So you can see that the selling prices are going to be very attractive.

 The second important part of our expansion is our sensor, which we launched, which is ready for contactless smart cards. This sensor is low power and it's flexible, and it meets the power threshold that you need to work on a standard contactless terminal. That's a huge deal, and importantly, we have proven in our own demonstrations that it can work without a battery and without other components that boost the power. So this is a huge breakthrough. This is why we said it is a groundbreaking sensor. And our sensor incorporates some intelligent power management which allows this to happen.

 So we are working with multiple companies in the ecosystem, European top-tier card integrators. So in addition to OT-Morpho, there are others that we are working with, and also the leading secure element providers. So we're really embedding ourselves across the ecosystem and working with them to create these dual-interface solutions. And our activities really ramped up across the whole of Asia Pacific. We're seeing really strong interest from Korea, Taiwan and China.

 So taking a look at the market to understand where biometric cards will be used and where our product will go. The first major opportunity is what's called financial inclusion, which is to provide welfare and Social Security to large populations, and particularly in countries in Asia, Africa, South America. So this is exciting part of the Mastercard program. There are 2.5 billion people without debit cards, without access to its credit. So this is an enabling technology. So this is what Mastercard has been really targeting heavily. And you can see that adding identification to payment, it's a high-value proposition. So it's a very attractive way of addressing the issues of distribution of benefits in a secure way, which is a real challenge right now. There's tens of billions of dollars of welfare that has to be distributed by governments, and governments want a safe way of doing that.

 In addition to that, the reason why a number of banks -- many banks are signing up and moving to pilots, is really the next step beyond Chip and PIN. And while Chip and PIN is a very attractive product, the next innovation to make life easier for the users, have the convenience of not needing to remember your pin, is really the next step of development for Chip and PIN EMV payment cards. And you can see that, particularly for larger spends, having a card that becomes top of wallet is really important to a bank -- how do they really get their card to be the one that's used. And adding the biometric gives them something pretty unique. And here, we have 3 billion chip cards issued every year, so it's, again, a huge market opportunity. Here we expected to start with the higher-end cards, the cards that are really targeted at the higher demographics.

 So just to summarize what our focus is on. First of all, this is the beginning of a very significant market with multiple verticals, each a billion unit potential. The demand is significant both for contact type of cards and for contactless. And in this market, we expect higher ASPs -- average selling prices -- than in mobile, given the high value add. We believe we have first-mover advantage. We've really been engaged in very complex card qualification, meeting a lot of the standards that are necessary. You can see here, an example of the bending tests that are done, the durability. There's significant established standards that have to be met, and we are the first person to have passed all the way through that. And there's a significant learning and barrier there.

 We're partnered with many Tier 1 integrators, and we have massive momentum with Mastercard. The technology we have here is incredibly suited. It's ideal for cards. And we have low cost with a tiny silicon footprint. The polymer sensor that we have is extremely flexible and robust. It's not fragile silicon. And our product has been designed to work with standard card mass manufacture. That's really important. The way that a card is made is very different to normal electronics, and we've adapted our sensor for that, and that's why the integrators are so excited about our product.

 And finally, we now have an end-to-end solution. We have an ultra compact matching algorithm. We couple out with an enrollment system, so that allows the users to get very solid enrollment of their fingers, and that combination of those things gives the best usability.

 I wanted to talk about the mobile market. As I talked about in the beginning of the presentation, there is a trend change in the mobile market, which is the shift to infinity displays. And that has the effect of eliminating the space on the front of the phone. And that really has 2 impacts for fingerprint sensors: either the sensor has to move to the back of the phone or it has to be integrated. Therefore, companies like ourselves are working on those 2 different approaches. For us, the move to the back of the phone is very beneficial because on the back of the phone, usability is really important. You can't see the sensor and the size is available to make a larger sensor. So we are pushing for a proposition to OEMs, where our larger sensor size is giving them the same cost but a much better performance. And we're seeing that, that market for these type of sensors is continuing. It's a very large market, but clearly it's a very cost-challenged market, and that's being seen across the whole of the ecosystem that, given the volumes, there's significant price decline, especially as the sensors now are going into mid- and low-end phones.

 We're seeing -- and you can see the trend is really happening; we actually talked about this actually over 2 quarters ago, the other solution that people are investing is glass on top and ceramic on top. That's for the front of the phone. Those shipments are declining. And there's been a number of announcements on how to integrate the sensor into the display. And again, the challenges have been significant. So these sensors are basically a fixed position, somewhere in the display so you have to touch in a specific place within the display. There are 2 ways that have been used for that. One is under glass, and then, more recently in -- actually in the display. So the under glass is somewhere in a button or close to the button. The in-display is actually in the active part of the display. What we've seen is people announced these but have not been able to take them to market. The challenges are continuing on performance. And that's why we're very confident that the rear of the phone is going to be a very much more attractive place. So while as people still are pushing to get in-display, we think the opportunities for the back of the phone are going to be lasting for a long time.

 So for IDEX, the current market is mainly dominated by front-mounted, very small silicon sensors. As you can see from the beginning, that's an area which is very crowded. And we have had 8 design wins and 4 handset launches; however, 4 of the wins have not converted to sales because what we've seen is a large inventory build-up which has created soft demand in the industry and across the industry, and that's affected us, as a second source coming in against -- to supply to these large OEMs. So we are focused clearly on the card market opportunity, but continue to focus on the off-chip value proposition within mobile. So we're marketing our new off-chip sensor, really for performance-based applications, on the back of the phone. So we're actually working with some OEMs right now, on sampling our products. We've released the new software to go with this sensor, and over the course of this half, we're aggressively working on new packaging to take our cost position to a better place, where we believe we'll have a very compelling product. And what's really leveraging for us is that this developments on packaging is something we can use in our other applications, like cards and IoT, and also is aligned with the future for a true in-display integrated sensor.

 To summarize on the outlook, what's to be expected in the next half. The momentum that we have on Mastercard continues,so we expect the program rollout to continue, gaining it further momentum. There's additional trials with major end customers and banks in the second half of 2017. The product certification, which is under preparation now, we expect to commence formally in quarter 4. And commercial rollout is still targeted by Mastercard end of this year. We do expect further new card customers. We announced the first orders from an Asian customer yesterday, and we expect other card customers, based on the activities that we have with our sales and front-end teams during the second half.

 The contactless card, a sensor that we have, we expect to be production ready by early next year. And we're very excited that we have some major road map advances. Enrollment in cards is a really important area; an IDEX technology team has been working to develop some real breakthroughs on how to do enrollment. And also, we have some security solutions for anti-spoof that we'll be talking further in second half.

 On the mobile, we're sampling -- we will be sampling the new off-chip sensor, targeting the back of the phone to mobile OEMs, and we expect to launch a cost-optimized version for mobile early 2018. So with that, I'm going to pass on to Henrik Knudtzon to cover the financials and then we'll take the Q&A's at the end. Thank you.

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 Henrik Knudtzon,  Idex ASA - CFO   [2]
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 Thank you, Hemant. In the second quarter of 2017, IDEX booked revenues of about NOK 5 million. This was revenues from sensors sales to all mobile OEMs, Cardinal sensor, as well as off-chip sensors to IoT and card customers. As Hemant said, we were impacted by the industry inventory buildup. IDEX, for some of the design wins, has been a second source, and what we have seen is that OEMs have wanted to deplete their inventory of their primary source, so this has affected our revenues. The gross margin in the quarter was 17%. Again, this is a reflection of the 2 different product lines we have. The Cardinal sensors are sold on the -- of -- on the licensing-like model, with fairly low gross margin, whereas the off-chip sensors are sold in the more normal conventional sales model. It's also impacted by our fairly modest volumes. So obviously, the more volumes you have the better margin we expect.

 The operating expenses in the quarter increased to NOK 64 million. This is driven by an increase in the headcount. So the underlying increase is driven by about an addition of 9 FTEs in the quarter, representing NOK 1.6 million of salary increase. In the quarter, we also had an impact from the share base remuneration of NOK 5.6 million, which impacts the salary or the payroll cost.

 The external R&D spend. That's all the external contractors. It's things like if we need prototyping, et cetera, was at the same level as the first quarter. Other OpEx also the same level as the first quarter.

 IDEX has a very strong balance sheet. As of Q2, NOK 428 million of cash. The cash flow of the quarter was negative NOK 78 million. That was impacted, of course, by our EBITDA and OpEx. The EBITDA in the quarter was minus NOK 63 million. We also had a timing effect, or a one-off effect, in the quarter of NOK 14 million of payables, that's withholding tax. You may recall that in the first quarter this was a positive effect when employees sold shares and the company took a withholding tax on their behalf, so that we have a positive inflow of NOK 14 million, and that money went out in the second quarter. So the effect is neutral, but it impacts the second quarter cash flow, which means it's better to look at the first half to actually establish what is the underlying cash flow of the company. And in the first half, the cash flow was negative NOK 104 million. If we just do the maths on the cash flow from that half and the cash balance of the second quarter, IDEX has more than 2 years of liquidity available. So that concludes the presentation, and we will open up for questions. Any questions?

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Questions and Answers
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 Unidentified Analyst,    [1]
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 The certification -- the certification, is it over?

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 Henrik Knudtzon,  Idex ASA - CFO   [2]
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 Yes. Very well.

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 Unidentified Company Representative,    [3]
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 Yes.

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 Unidentified Analyst,    [4]
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 Certification, you suppose this will end in Q4?

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 Hemant Mardia,  Idex ASA - CEO and MD   [5]
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 The typical timing for certification is around 3 to 4 months. So it's -- but it also, as we talked about before, there's opportunities to accelerate, given Mastercard are behind it. So it's -- it really depends exactly when it starts. That certification is done on -- by a card level, so it really depends on the exact timing. So it could complete in Q4 or it could run into early Q1 of next year, just depending on exactly how the timing starts.

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 Unidentified Analyst,    [6]
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 Is there any possibility to say something about the profit per card? Give us some inter -- interval?

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 Hemant Mardia,  Idex ASA - CEO and MD   [7]
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 Yes. So maybe I can talk about, just generally, how we see the card opportunity. You saw the cost slide on how off-chip plays and there -- because of our cost advantage, because we're offering a system solution, we expect to achieve good gross margins, meaning at least in the mid-40s gross margin on these products. So for IDEX, this is an area where it has 2 very positive dynamics. One is the cost advantage of off-chip and for the size of the sensor, and the two is that we're providing a system solution. So the value content of what we offer is attractive. So those 2 play to a dynamic of healthy gross margins. And clearly, if you look at the card ecosystem and you're on typically 3-year replacement cycles. If you look at mobile, I mean, today, it's less than 12 months, maybe even 6. So it's a very different dynamic in terms of pricing structures.

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 Unidentified Analyst,    [8]
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 I have another question if no one else. Then competitors, can you say something about the competition, how far behind? Or do you have any competitors that we should mention?

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 Hemant Mardia,  Idex ASA - CEO and MD   [9]
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 Well, clearly, we think this is going to be a huge market, so it's not going to be one company. But we expect to take a leading market share. So that's the first thing I would say. But it would be absolute for the company -- for the industry to be healthy, there's going to be competitors. There are competitors. It's an attractive market. Clearly, you know the competitors. They're well known. The people who are targeting this market particularly are Fingerprint Cards, called Fingerprint Cards for a reason, and NEXT Biometrics. We think that structurally if you look at our technology, it's well set up. So we think we are ahead. The area that you can see that we're ahead is the commercialization and the qualification of the product, because we've been working intensively with mass manufacturers. The area that we are accelerating on is the contactless, and I think there's been shown prototypes of contactless solutions around the world, but what we're focused on, again, is the same thing -- mass manufacturable solutions. And the key that we think we will accelerate past is to eliminate the need for a battery. Once we've done that, we're in a very -- almost unsalable position. And these are things that take -- they're significant time dependency. So I think in terms of timing of our lead, we think we're in a very good position. But I think you can see -- at least you'd expect 2 strong lenders in this marketplace, and we still think IDEX is positioned to be in the leading position.

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 Unidentified Analyst,    [10]
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 One last question. And could you say something about the enrollments, different sort of enrollments?

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 Hemant Mardia,  Idex ASA - CEO and MD   [11]
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 Yes. We're going to talk more about it in -- as we launch the solution. We actually think we have something very powerful, so we want to talk about it at the right point. We're showing it to some of the customers now. There are 2 types of enrollment systems. So first of all, enrollments, as they're traditionally done, where you go into a branch or an office and you would basically enroll your fingerprint and that fingerprint will be then taken and downloaded into the card. So that's the existing enrollment solution. OT-Morpho have a very powerful one. That's been well established. It's been used for ID scans all around the world. The infrastructure is all in place, it's secure, and that's what's being used right now. So when we talk about end-to-end, that's already in place.

 The second level of enrollment is how does someone, like a bank, allow you to enroll in your home, and that's the area that we have -- actually think we have a -- a really exciting solution. We have filed some patents on it. We've developed it, and we're now showing it, and we'll talk more about it later in the year. And I think we talked about this. You asked this question maybe about a year ago, how would we resolve that? And there's not just one way of doing that, of course. There are some other ways that can be done using, say, mobile, but we're very focused on how to make it easy and how to make it secure. And as I say, we think we have something very advanced, and how has that come about? Partly because, one, we control the sensor that's on the card. And two, we've now released our own matcher, so we can control the enrollment in that matcher. So the matcher that we just released includes an enrollment piece. So we're very excited about that.

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 Henrik Knudtzon,  Idex ASA - CFO   [12]
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 And then, it's a very good question, because it also underlines where IDEX is positioned in the ballot. And we're not only a sensor provider, but we're actually a full solution provider on the biometric solution. Enrollment, matching, the sensor, trying to really work with our partners and customers to make sure we have a whole solution, and adding value. Enhancing all that also leads us to expect that we will get -- this will be a high-gross margin segment for us.

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 Hemant Mardia,  Idex ASA - CEO and MD   [13]
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 And actually, it gives an opportunity just to explain that. We have set up a new facility in Europe, actually in the U.K., where we have a systems team, a very strong systems team. Some really great experts from the industry who are basically developing -- have been developing these solutions. So that engine that we put together, thinking at system level, gives us tremendous opportunities.

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 Henrik Knudtzon,  Idex ASA - CFO   [14]
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 Thank you very much.

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 Hemant Mardia,  Idex ASA - CEO and MD   [15]
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 Okay. If there's no more questions, thank you very much for your time.




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