Gemalto Reports First Quarter 2008 Revenue
Regulatory News:
-- Revenue up by 12% at EUR 388 million
-- Growth in the three main business segments
-- New contracts in digital security services and solutions
All revenue and average selling price variations in this press
release are by reference to 2007 first quarter and are stated at
constant exchange rates unless otherwise mentioned. For comparisons at
historical rates, refer to Appendix 3. All figures presented in this
press release are unaudited.
Gemalto (Euronext NL0000400653 - GTO), the world leader in digital
security today announced its revenue for the first quarter of 2008:
-0-
*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Mobile Communication
223
+22%
Secure Transactions
101
+5%
Security
47
+14%
Public Telephony
8
(14%)
Point-of-Sale Terminals
8
(46%)
-----------------------------------------------------------------
Total revenue
388
+12%
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*T
Olivier Piou, Chief Executive Officer, commented: "This strong
first quarter gives us a good start for 2008. We are benefiting from
better market conditions. Our three main business segments are
performing well and new contract wins for digital security solutions
illustrate the success of our strategy. We remain determined to
achieve solid growth and profitability improvements in 2008"
First quarter 2008 revenue analysis
Total revenue for the first quarter of 2008 was EUR 388 million
up by 12% compared to the same period of 2007 supported by growth in
all three main business segments.
Segment information
All variations are reported at constant exchange rates unless
otherwise stated.
Mobile Communication
-0-
*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Mobile Communication
223.4
+22%
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*T
Mobile Communication reported particularly strong growth in the
first quarter on 2008. A number of migration projects to high-end SIM
cards capable of more advanced applications and services were rolled
out. In addition software and service activity more than doubled when
compared with the same period of last year.
Average selling price increased by 2% when compared with the first
quarter of 2007, as product mix improved in all regions. When compared
to the fourth quarter of 2007, average selling price was lower by 9%
reflecting the traditional shift in regional mix between the last and
first quarter of every calendar year.
Gemalto continues to be involved in many NFC (Near Field
Communication) trial programs with mobile operators such as Orange in
France and Softbank in Japan. In February, Taiwan Mobile announced
that it had selected Gemalto to provide the world´s first commercial
NFC SIM-based mobile contactless system. This comprehensive digital
security solution will enable Taiwan Mobile to register, issue, manage
and terminate mobile NFC services over-the-air (OTA).
In Europe, Gemalto was selected by Dutch mobile operator KPN to
provide managed services in support of the launch of a European MVNO.
This turnkey solution simplifies handset management, enhances operator
branding and makes value-added services immediately available to
subscribers.
Secure Transactions
-0-
*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Secure Transactions
100.9
+5%
-----------------------------------------------------------------
*T
This quarter confirms the return to growth of the Secure
Transactions segment that had been impacted by a restructuring program
during the second half of 2007.
Growth in 2008 first quarter was driven by continued EMV (Europay
MasterCard Visa) standard expansion with various countries moving
forward in Asia, Central Europe and the Middle East as well as Latin
America. Moreover, dual-interface EMV cards (contact and contactless)
continue to gain market penetration, particularly in Europe and Asia.
The good performance in our Payment activity, up by 12% from Q1 2007
more than compensated for lower Pay-TV and Transport revenue. The
increase in revenue also resulted from a growing contribution in
personalization services, up 29% from a year ago.
The success of Gemalto´s innovative offerings was highlighted this
quarter with a contract signed by a leading Latin American financial
institution for its Instant Issuance solution. It allows secure and
rapid personalization and issue of new payment cards on-site
significantly improving consumer satisfaction.
Security
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*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Security
47.3
+14%
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*T
The investments made in this segment continue to deliver growth
with the top line expanding by 14% compared to the first quarter of
2007. Excluding patent revenue, which declined as anticipated, the
segment´s revenue grew by 26%.
Government Programs was up by 30% when compared to the prior
year´s performance. Deliveries of e-Passports were strong and the
ramp-up of e-ID card shipments in Portugal partially offset a slowdown
in Belgium. Recent contract wins include the e-passport program of
Cote d´Ivoire, while rollout of e-healthcare and social security
programs in Algeria and Azerbaijan are now underway.
Identity & Access Management (IAM) was up by 19% when compared to
the first quarter of 2007 on the back of strong deployments of
e-banking authentication solutions especially in Europe.
At the recent RSA Conference in San Francisco Gemalto showcased a
number of its IAM offers, including the Device Administration Service
(DAS) managed service solution. This Software-as-a-Service (SaaS)
solution is developed and hosted by Gemalto and provides enterprise
customers with a comprehensive online service for device issuance and
administration without having them incur capital costs associated to
the purchase of servers and system software.
Public Telephony
-0-
*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Public Telephony
8.3
(14%)
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*T
The memory card market for Public Telephony continues to decline
as mobile telephony expands worldwide.
Point-of-Sale Terminals
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*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Point-of-Sale Terminals
7.6
(46%)
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*T
In the first quarter, significant shipments were delayed due to a
faulty component detected in the contract-manufacturer´s supply chain.
The issue has been solved and deliveries have resumed.
Outlook
Our 2009 objective of 10% adjusted operating margin remains
unchanged.
In 2008 we will benefit from the robust market demand we currently
experience in our main segments. Our leadership position is generating
commercial and operational advantages and we are encouraged by the
progress in our performance. We currently see no evidence of the
global financial turmoil impacting our activities, aside from the
evolution in the average exchange rates between the Euro and other
currencies. Growth and increased profitability will be driven, besides
higher synergies, by the return to growth in Mobile Communications
the return to profit in Secure Transactions, and the ramp up of our
recent contract wins in Security.
The successful completion of our 2006-2009 plan will create a
strong foundation for our next phase of development.
Reporting calendar
Second quarter 2008 revenue and first half earnings will be
reported on August 21, 2008, prior to the opening of Euronext Paris.
Conference call
The Company has scheduled a conference call for today at 3:00 pm
Paris time (2:00 pm London time and 9:00 am New York time). Callers
may participate in the live conference call by dialing:
+44 207 806 1967 or +1 718 354 1388 or +33 1 70 99 43 01.
The slide show will be posted on the Company´s web site at noon
Paris time (11:00 am London time and 6:00 am New York time).
Replays of the conference call will be available approximately 3
hours after the conclusion of the conference call until April 30th
2008 midnight Paris time by dialing:
+44 207 806 1970 or +1 718 354 11 12 or +33 1 71 23 02 48 access
code: 4006190#.
About Gemalto
Gemalto (Euronext NL 0000400653 GTO) is the leader in digital
security with 2007 annual revenues of EUR 1.6 billion, offices in more
than 85 countries and about 10,000 employees including 1,300 R&D
engineers.
In a world where the digital revolution is increasingly
transforming our lives, Gemalto´s solutions are designed to make
personal digital interactions more convenient, secure and enjoyable.
Gemalto provides end-to-end digital security solutions, from the
development of software applications through design and production of
secure personal devices such as smart cards, SIMs, e-passports, and
tokens to the deployment of managed services for its customers.
More than one billion people worldwide use the company´s products
and services for telecommunications, financial services, e-government
identity management, multimedia content, digital rights management, IT
security, mass transit and many other applications.
As the use of Gemalto´s software and secure devices increases with
the number of people interacting in the digital and wireless world
the company is poised to thrive over the coming years.
Gemalto was formed in June 2006 by the combination of Axalto and
Gemplus.
For more information please visit www.gemalto.com
This communication does not constitute an offer to purchase or
exchange or the solicitation of an offer to sell or exchange any
securities of Gemalto.
This communication contains certain statements that are neither
reported financial results nor other historical information and other
statements concerning Gemalto. These statements include financial
projections and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, events, products and services and future performance.
Forward-looking statements are generally identified by the words
"expects", "anticipates", "believes", "intends", "estimates" and
similar expressions. These and other information and statements
contained in this communication constitute forward-looking statements
for purposes of applicable securities laws. Although management of the
company believes that the expectations reflected in the
forward-looking statements are reasonable, investors and security
holders are cautioned that forward-looking information and statements
are subject to various risks and uncertainties, many of which are
difficult to predict and generally beyond the control of the
companies, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements, and the companies cannot
guarantee future results, levels of activity, performance or
achievements. Factors that could cause actual results to differ
materially from those estimated by the forward-looking statements
contained in this communication include, but are not limited to: the
ability of the company´s to integrate according to expectations; the
ability of the company to achieve the expected synergies from the
combination; trends in wireless communication and mobile commerce
markets; the company´s ability to develop new technology and the
effects of competing technologies developed and expected intense
competition generally in the companies´ main markets; profitability of
expansion strategy; challenges to or loss of intellectual property
rights; ability to establish and maintain strategic relationships in
their major businesses; ability to develop and take advantage of new
software and services; the effect of the combination and any future
acquisitions and investments on the companies´ share prices; and
changes in global, political, economic, business, competitive, market
and regulatory forces. Moreover, neither the companies nor any other
person assumes responsibility for the accuracy and completeness of
such forward-looking statements. The forward-looking statements
contained in this communication speak only as of the date of this
communication and the companies are under no duty, and do not
undertake, to update any of the forward-looking statements after this
date to conform such statements to actual results, to reflect the
occurrence of anticipated results or otherwise except as otherwise
required by applicable law or regulations.
Appendix 1
Deliveries of secure personal devices (microprocessor-based)
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*T
In millions of units
Q1 2007
Q1 2008
% growth
--------------------------------------------------------------
Mobile Communication
215
254
+18%
Secure Transactions
53
69
+30%
Security
6
9
+47%
--------------------------------------------------------------
Total
275
332
+21%
--------------------------------------------------------------
*T
Appendix 2
First quarter 2008 revenue by region
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*T
Year-on-year
Q1 2008
change
EUR in millions
at constant
exchange rates
-----------------------------------------------------------------
Europe, Middle East &
Africa
214.4
+6%
North & South America
87.8
+25%
Asia
85.4
+18%
-----------------------------------------------------------------
Total revenue
387.6
+12%
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*T
Appendix 3
First quarter revenue by business segment at historical rates
-0-
*T
% change at
% change at
Q1 2007 Q1 2008
historical
constant
EUR in millions
exchange rates exchange rates
----------------------------------------------------------------------
Mobile Communication
194.0
223.4
+15%
+22%
Secure Transactions
100.3
100.9
+1%
+5%
Security
42.6
47.3
+11%
+14%
Public Telephony
10.3
8.3
(19%)
(14%)
Point-of-Sale
Terminals
14.8
7.6
(49%)
(46%)
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Total revenue
362.1
387.6
+7%
+12%
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*T
Appendix 4
Average exchange rates between the Euro and the US dollar
-0-
*T
EUR/USD
-----------------------------------------
First quarter 2007
1.31
First quarter 2008
1.48
*T