Gemalto announces first semester results

04/09/17

Gemalto has announced its results for the first semester of 2017. Total revenue came in at 1,393 million euros, 7% lower at historical exchange rates and 8% at constant exchange rates than the same period of 2016. Gross profit was down by 84 million euros to 502 million euros.

Operating expenses fell by 5 million euros to 409 million euros. Profit from operations was 93 million euros. The acquired Identity Management Business contributed 1.5 million euros in operational profit since 1 May.

The company’s Payment & Identity segment’s first semester revenue came in at 875 million euros, 8% lower at constant exchange rates. The segment’s Embedded software & Products reported sales of 532 million euros and its Platforms & Services sales of 343 million euros, a year-on-year drop of 8% and 6%, respectively.

The Payment business fell by 19% to 414 million euros. Sales in Americas decreased by 37% year-on-year during the first semester compared with an increase of 33% last year. This is due to the ongoing return to normalised inventory levels of US EMV cards at Gemalto’s customers coupled with a soft market environment in Latin America. Payment Embedded software & Products sales dropped by 18% and Payment Platforms & Services revenue by 19%. Gemalto is also regrouping its Mobile Financial Services offers with its eBanking offers to better align the digital banking and payment offers in light of the European Payment Service Directive 2 (PSD2) initiative.

Revenue from the Enterprise business came in at 217 million euros for the first semester of 2017, stable at historical exchange rates and down by 1% at constant exchange rates. The Data Encryption business line grew by 6%. Authentication and Software Monetization revenues fell due to the shift to cloud and software services subscription models. To meet the market demand for cybersecurity solutions, the Enterprise business is increasing its investments to expand its services portfolio in this growing sector.

The Government Programs business was up by 11% to 243 million euros. Revenue in the segment’s Embedded software & Products expanded 15% year-on-year, while its Platforms & Services sales were up 1%. According to Gemalto, the Identity Management Business contributed 22 million euros in the second quarter, more than offsetting the decline in the organic portion of Government Platforms & Services activity, which had grown by 30% in the first semester of 2016. Project backlog continued to expand during the first semester.

Overall, the Payment & Identity segment’s gross margin was 1.9% lower than the first semester of 2016 at 38%.

Profit from Payment & Identity operations for the first semester 2017 hit 81 million euros with 9.2% profit from operations margin.

 

During the semester the Payment & Identity division won contracts in Uganda for visa issuance; in Canada for driving licence cards and issuance; and in Sweden for a digital ID solution.

Gemalto says it anticipates second quarter double-digit revenue decreases in Payment in Americas and the SIM business compared with the same period of last year. These reductions should be offset by the expected revenue acceleration in Enterprise, Machine-to-Machine and Government Programs, including the Identity Management Business, leading to stable year-on-year company revenue for the second semester.

The company estimates it will record a 2017 second semester profit from operations of between 200 million euros and 230 million euros, with full-year profit from operations expected to be between 293 million euros and 323 million euros.

“In the second quarter, Gemalto’s year-on-year base of comparison in the US Payment business was at its most challenging level, reflecting the ongoing adjustments in US EMV demand,” says Philippe Vallée, chief executive officer, Gemalto. “In addition, the removable SIM business deteriorated faster than we expected. As a result, the company’s first semester results were disappointing. Looking ahead, Gemalto expects to generate year-on-year stable revenue in the second semester supported by an acceleration in its Enterprise, Government Programs and Machine-to-Machine businesses, leading to the outlook announced in July. The priorities that I have set for the teams are to rapidly integrate the newly acquired Identity Management Business, successfully execute the first actions of the transition plan and focus our investments on offers that are key to our clients’ digital transformation.” 

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Gemalto announces first semester results
Gemalto announces first semester results

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