Regulatory News:
All variations in this press release are stated at constant exchange rates, unless otherwise noted, and are comparing the adjusted third quarter 2008 revenue, unaudited, to the third quarter 2007 revenue, unaudited. Comparisons at historical rates are presented in Appendices 2 and 3. IFRS revenue, unaudited, is presented in Appendix 5.
Gemalto (Euronext NL0000400653 – GTO), the world leader in digital security today announced its revenue for the third quarter of 2008.
| Third quarter 2008 revenue and year–on–year revenue variation at constant exchange rates, by segment: | ||||||||
| Mobile | Secure | Security | Others 2 | Total | ||||
| 236 M€ | 113 M€ | 54 M€ | 16 M€ | 418 M€ | ||||
| + 6% | + 18% | + 30% | (26%) | + 10% | ||||
Olivier Piou, Chief Executive Officer, commented: "Gemalto delivered another quarter of strong growth. The three main segments together posted 12% increase, highlighting our balanced portfolio of business activities. We continued to win new contracts, and increased our software and services activities by 60%. The Company is on target to deliver around € 160 million in adjusted operating income for the full year."
Third quarter 2008 revenue analysis
Total revenue for the third quarter of 2008 was € 418 million, up by 10% compared to the same period of 2007. The three main business segments together grew year–on–year by 12%.
Segment information 3
Mobile Communication
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | |||
| Mobile Communication | 234.2 | 235.6 | + 6 % |
Mobile Communication revenue increased by 6% in the third quarter of 2008, driven by growth from emerging markets and continued product mix improvements in all regions. In addition, software and services activity doubled when compared with the same period of last year.
Average SIM card selling price increased 5% compared with the second quarter of 2008. When compared with the third quarter of 2007 the ASP decrease was contained to 6%. The effect of the increase in shipments to entry–range markets was offset by the positive impact of the product mix improvement.
Gemalto continues to develop, pilot and commercialize new digital security solutions across a diverse range of mobile applications. In Singapore, a breakthrough trial was achieved for the world´s first mobile TV solution compliant with the standard set by the Open Mobile Alliance (OMA). This collaboration between leading mobile eco–system players such as SingTel, MobileOne, MediaCorp, and Alcatel–Lucent confirms the central role that advanced SIMs play in the development of consumer mobile TV. Gemalto´s solution incorporates an advanced live measurement platform which enables operators to securely analyze consumer patterns and facilitate service improvements in any combination of post–paid, pre–paid or pay–per–use models.
Secure Transactions
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | |||
| Secure Transactions4 | 100.7 | 113.0 | + 18 % |
Secure Transactions posted strong revenue growth of 18% in the third quarter of 2008 driven by continued progress in global EMV migration. Large–scale EMV and contactless payment roll outs, especially in EMEA and the Americas, as well as Pay–TV shipments in EMEA more than offset the selective approach practiced in the Transport activity. Personalization services were up 33%, with all regions contributing to the expansion.
In parallel with the global rollout of EMV, Gemalto is pursuing its strategy of expanding its personalization services and further developing the use of contactless technology. In Poland, Gemalto was recently chosen by ING Bank Slaski to provide a turnkey solution that will kick start local personalization and deployment of EMV cards. Also, in Turkey Gemalto was selected by Garanti Bank to provide an issuance system for in–house personalization and ensure deployment of the latest generation of contactless EMV cards. This multi–application credit card carries a range of features including bonus loyalty schemes and contactless e–ticketing on top of the traditional EMV payment applications.
Security
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | |||
| Security | 43.4 | 53.7 | + 30 % |
Sales and Marketing investments in the Security business continue to deliver strong growth, with revenue up by 30% compared with last year.
Government Programs revenue expanded by 22% with deliveries being especially strong in Europe and the Middle East. Identity and Access Management (IAM) revenue grew by 50% on the back of continued momentum in e–banking and enterprise authentication solutions deployment.
During the quarter, Gemalto added several new references to its already unrivalled market leadership in Government Programs. India, the world´s second most populous country, recently announced the first stage in the deployment of its ePassport program beginning with the issuance of documents for Indian officials and diplomats. This marks a major step for India where Gemalto is assisting to bolster national security and improve immigration processing at airports and border control points.
Public Telephony
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | |||
| Public Telephony | 10.6 | 7.9 | (21 %) |
The memory card market for Public Telephony continues to decline as mobile telephony expands worldwide.
Point–of–Sale Terminals
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | |||
| Point–of–Sale Terminals | 11.8 | 7.6 | (32 %) |
This segment is progressively returning to normal level of activity, after solving an issue related to a faulty component detected in Gemalto´s contract–manufacturer´s supply chain.
Outlook
Revenue growth at constant exchange rates for 2008 is anticipated to be within the 8% to 12% range. Our business has strong fundamentals and prospects, at the same time short–term visibility is limited by the current global environment. We confirm our 2008 profit outlook of around € 160 million in adjusted operating income, and our 2009 objective of above 10% adjusted operating margin remains unchanged.
Reporting calendar
Fourth quarter 2008 revenue will be reported on January 29, 2009, before the opening of Euronext Paris.
Conference call
Gemalto will hold an analysts and investors conference call in English 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 dialling:
+44 207 806 1968 or +1 718 354 1385 or +33 1 70 99 43 03.
The presentation slide show will be available for download on our Investor Relations web site (www.gemalto.com/investors) at 1:00 pm Paris time (12:00 am London time, 7:00 am New York time).
Replays of the conference call will be available from approximately 3 hours after the conclusion of the conference call until October 29th midnight Paris time by dialling:
+44 207 806 1970 or +1 718 354 11 12 or +33 1 71 23 02 48
access code: 6704829#.
About Gemalto
Gemalto (Euronext NL 0000400653 GTO) is the leader in digital security with 2007 annual revenues of over €1.6 billion, more than 85 offices in 40 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, subscribers´ identification modules (SIM´s), e–passports and tokens to the deployment of managed services for its customers. More than a 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. 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 company, 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 company 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 its 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 company´s share prices; and changes in global, political, economic, business, competitive, market and regulatory forces. Moreover, neither the company 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 company 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 (unaudited) | ||||||
| In millions of units | Third quarter 2007 | Third quarter 2008 | % growth | |||
| SIM cards | 238 | 262 | + 10% | |||
| Secure Transactions | 53 | 76 | + 42% | |||
| Security | 9 | 12 | +36% | |||
| Total | 301 | 350 | +16% | |||
| Appendix 2 | ||||||||
| Third quarter adjusted revenue (2008) and revenue (2007) | ||||||||
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | Year–on–year variation | ||||
| EMEA | 215.4 | 231.1 | + 7.3% | + 12.9% | ||||
| North & South America | 106.1 | 113.4 | + 6.9% | + 12.5% | ||||
| Asia | 79.1 | 73.3 | (7.3%) | (2.5%) | ||||
| Total revenue | 400.6 | 417.8 | + 4.3% | + 9.7% | ||||
| Third quarter adjusted revenue (2008) and revenue (2007) | ||||||||
| € in millions | Third quarter 2007 | Third quarter 2008 | Year–on–year variation | Year–on–year variation | ||||
| Mobile Communication | 234.2 | 235.6 | + 0.6% | + 5.9% | ||||
| Secure Transactions | 100.7 | 113.0 | + 12.3% | + 17.6% | ||||
| Security | 43.4 | 53.7 | + 23.6% | + 30.3% | ||||
| Public Telephony | 10.6 | 7.9 | (25.2%) | (20.6%) | ||||
| Point–of–Sale Terminals | 11.8 | 7.6 | (35.6%) | (31.8%) | ||||
| Total revenue | 400.6 | 417.8 | + 4.3% | + 9.7% | ||||
| Appendix 3 | ||||||||
| First nine month adjusted revenue (2008) and revenue (2007) | ||||||||
| € in millions | First nine months 2007 | First nine months 2008 | Year–on–year variation | Year–on–year variation | ||||
| EMEA | 643.4 | 673.7 | + 4.7% | + 8.4% | ||||
| North & South America | 273.4 | 290.4 | + 6.2% | + 14.8% | ||||
| Asia | 243.7 | 244.9 | + 0.5% | + 8.5% | ||||
| Total revenue | 1´160.5 | 1´208.9 | + 4.2% | + 9.9% | ||||
| First nine months adjusted revenue (2008) and revenue (2007) | ||||||||
| € in millions | First nine months 2007 | First nine months 2008 | Year–on–year variation | Year–on–year variation | ||||
| Mobile Communication | 652.0 | 678.5 | + 4.1% | + 10.5% | ||||
| Secure Transactions | 304.3 | 327.9 | + 7.8% | + 12.7% | ||||
| Security | 130.7 | 154.9 | + 18.5% | + 23.2% | ||||
| Public Telephony | 32.5 | 24.4 | (24.9%) | (19.8%) | ||||
| Point–of–Sale Terminals | 40.9 | 23.2 | (43.2%) | (39.9%) | ||||
| Total revenue | 1´160.5 | 1´208.9 | + 4.2% | + 9.9% | ||||
| Appendix 4 | ||||
| Average exchange rates between the Euro and the US dollar | ||||
| EUR/USD | 2007 | 2008 | ||
| First quarter | 1.31 | 1.48 | ||
| Second quarter | 1.35 | 1.56 | ||
| First half | 1.33 | 1.52 | ||
| Third quarter | 1.36 | 1.54 | ||
| Fourth quarter | 1.44 | – | ||
| Full year | 1.37 | – | ||
| Appendix 5 | ||||||||
| IFRS financial information | ||||||||
| € in millions | Third quarter 2007 | Third quarter 2008 | First nine months 2007 | First nine months 2008 | ||||
| Mobile Communication | 234.2 | 235.6 | 652.0 | 678.5 | ||||
| Secure Transactions | 100.7 | 113.2 | 304.3 | 328.0 | ||||
| Security | 43.4 | 53.7 | 130.7 | 154.9 | ||||
| Public Telephony | 10.6 | 7.9 | 32.5 | 24.4 | ||||
| Point–of–Sale Terminals | 11.8 | 7.6 | 40.9 | 23.2 | ||||
| Total revenue | 400.6 | 417.9 | 1´160.5 | 1´209.1 | ||||
The difference between IFRS and adjusted revenues relates to the reversal in the third quarter of 2008 of 0.2 million of reserves booked in 2007 against the IFRS revenue, and excluded from the 2007 adjusted revenue.
1 Third quarter 2008 financial information has been prepared on an adjusted basis (unaudited).
2 Public Telephony plus Point–of–Sale Terminals (together accounting for less than 5% of total revenue).
3 Third quarter 2008 financial information has been prepared on an adjusted basis (unaudited).
4 I
