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Operator: Good day, and thank you for standing by. Welcome to the Fingerprint Cards AB Q4 Results 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stefan Pettersson, Head of Investor Relations. Please go ahead.
Stefan Pettersson: Thank you very much, and good morning, everyone, and welcome to FPC's earnings call following the release of our Q4 and year-end report this morning. So we'll start by a presentation of the report by our CEO, Adam Philpott; and then by our CFO, Fredrik Hedlund. And if you're following this call on the web, you can post questions throughout the call. And with that, let me now hand over to our CEO, Adam Philpott.
Adam Philpott: Thank you very much, Stefan. Good to be here. Let me just start on the agenda. So fairly typical agenda that you would expect from us over the last few quarters. We'll start with an executive summary of the financial performance and highlights. A couple of key focus areas that we'll have is really digging into AllKey. You will have seen us talk a lot about AllKey in the report, and we started talking about AllKey over the last few earnings calls. And we'll also talk about asset and licensing deals, which you've also spoken a lot about as well. Then I'll ask Fredrik to help me out on the key figures before we summarize and spend some time answering your questions. So let me move then to the summary of the quarter. So firstly, for the quarter alone, and then I'll talk about the year, down slightly, 4% year-on-year down for revenue, but actually in constant currency up. So FX started to make a bit of an impact. But I think what it shows is quite stable revenue given the transformation that we've driven as a company as we migrate and evolve some of our customers up the value chain towards AllKey. Not only that, but you can see that same stability in terms of the gross margin. So really strong performance in maintaining gross margins at very high levels compared to our history, of course, also. And then for the year, 1 quarter could be a trend -- can be a data point rather, a year, of course, is a trend. And so as you look at the full year, up 30% year-on-year, 40% if you account for FX as well. So I think that paints a really clear picture on the direction and trending of the company as well. So really pleased with that overall performance also. But as you know, we've been going through a transformation as a company. And a big part of that is how we transition or evolve beyond sensors into systems. We will, of course, continue to drive a strong sensor product line with some of our key customers there. We've got some great customers in the sensor business. That's our bread and butter. We'll continue to develop that business. But of course, we have many customers who get greater value from us as we move into systems. And that's evidenced not only by some of the customer sentiments that we've shared in the past, and we'll share a bit more of that today, but also evidenced in our pipeline. We know that 50% -- around 50% of our existing customers see the value in AllKey for their products and are on an upgrade path going through evaluation into productizing and then shipping AllKey as part of their products. So really pleased, that's been our primary focus is on our existing customers, those for whom AllKey makes a lot of sense. And as you can see about 50% of our customers are involved in that. But at the same time, AllKey opens up opportunities for us to acquire new clients, really important to build out the customer base. And so as we look at our pipeline for the future, 50% of our pipeline is made up of new clients, and that's driven largely by AllKey. So really pleased to see that, and we'll spend a bit of time on that a little bit later, too. And we also continue to launch new AllKey products. We're seeing that bet really playing out strongly, so we're continuing to add to that portfolio, opening up different markets. Most recently in December announcing the AllKey Ultra product, expanding our lineup with the Secure Element variant, very differentiated for us as a company as well. So really pleased on how that bet is playing out. And of course, we've done some good asset monetization deals throughout the last year or 2, and that's something we see a great opportunity to continue as biometrics continues to be super important to organizations looking to ascertain identity, stay ahead of cybersecurity and move away from password. So iris has a big part to play there as to some of our other IP. And so we see a great opportunity to leverage those sorts of models into adjacent verticals also. So really pleased with the performance, resilient revenue during Q4, great performance for the year as we expand into AllKey. And so what I also want to do is, kind of take you back. Take you back to where we've come from and where we're going this year. This is our first earnings call of 2026, and that means that we're now in the third year of our transformation, the transformation program that I put in place when I joined the company. And so just to take you back briefly, when I joined, the first thing we needed to do, we had a burning platform. We needed to look at how we stabilize the company. We needed to rearchitect the company because the world around us had changed. And that meant a number of things. You may remember the 6-point plan, you can see on the left here, and that was a few key elements, really about cutting costs, getting OpEx to the right level, leaving some of those markets that were just taking money out of the company rather than putting money in because they were so unprofitable, tidying up the balance sheet and a few other fundamental elements. So that was year 1 in stabilizing and rightsizing the company. The second year was then about saying, well, what are the vectors we have for growth, looking at a few growth opportunities, and that was last year, our second year. And those growth opportunities were looking at cloud identity, looking at our iris assets and of course, moving up the value chain in the product that is AllKey. And so those were the bets that we placed last year to open up new growth avenues for the company. Cloud was a really promising one, and it was evidenced by things like a lot of M&A in that cloud identity segment. But what we found with cloud with is quite a long-term development cycle and therefore, quite asset intensive. And so for us, we still very much have our eye on that opportunity, but we're monitoring it rather than investing heavily in that. What we are focused on because of the bet that's taken off is AllKey. AllKey has shown huge promise throughout last year. And therefore, we are really focusing our investments, our attention on AllKey to really get behind the genuine and real demand that we're seeing for that product. We had a few bets. We looked at the ones that were really taking off, and we're focusing exactly on those. It's showing huge potential with existing customer demand. And as you remember, AllKey is about 3x the ASP of traditional sensors. It's showing new customer demand as well, so our job is to feed that demand. So as we look at year 3, it's really about focused growth. Looking at those bets we placed, focusing on the ones that are paying off and really doubling down on AllKey. The beautiful thing about AllKey is it absolutely leverages our core competence. The things that made us great in the first place, it really builds upon those. And therefore, it's a near adjacent, it's got less risk and it's got genuine demand from our clients. Of course, we saw the asset bets that we've placed pay off as well. Those are more episodic deals. They happen here and there, but we believe there's a lot more gas in the tank on those also. Those are like big deals. They happen occasionally. And so we're really focused on where are we going to get the next ones from. We've proven the model out and so continuing to get additional ones, which then also funds the business as we drive this transition up the food chain and into the segments that we're focused on. And then as we now dig into a couple of those focus areas. So I said AllKey and assets, those are the key things we want to focus on, particularly AllKey for our core business. So let's spend a bit of time on those 2 items. And so on the right here, you can see some demo products that we created. This is based upon AllKey and AllKey Ultra as well. You can see in those photographs, the little bit sticking out. That's a USB-C. So that gives you a sense on how small these are. They're incredibly elegant devices. We were at TRUSTECH, which is a fintech show in Paris in December. We have these with us and just the buzz around them was phenomenal. So really exciting product, really exciting market, obviously ties to FIDO market access or number of different markets, and I'll touch on some of those markets a little later. But a real buzz around these products from lots and lots of customers. And you can see the 2 different form factors there as well. And so our focus with AllKey was to, first of all, talk to our existing clients. We know that there's a lot of benefits for them in simplifying and taking complexity out of their products and also making it easier for them to integrate. And so our focus was to work with existing clients. I'm going to show you some pipeline in a second about how that's going. But really pleased. I talked a minute ago about 50% of our existing clients are upgrading to AllKey. So real demand, real pipeline for that product there. At the same time, because it's easy to use, easy to consume, it doesn't mean that we, as a company and the few engineers that we have, have to be involved deeply in every single deal, which means that we can scale the business without having to be a bottleneck based upon our internal capacity. And so we're starting to see a lot of new clients come on board. And again, I'll show you some data on that in a second. And in my opinion, we're only just getting started with new clients. We've been very opportunistic about incoming leads. The sellers have focused -- been opportunistic about a few clients that they've approached. We are now ruggedizing and doing campaigns at scale. So we'll start to see more new clients come into our pipeline as well. And then the third great thing about AllKey is because it's very simple to consume and adopt for a client, it's perfect for the channel because they don't need to come back to us for every question. They can be self-sustaining. They can go out and drive the market. And we're starting to see a lot of leads come from the channel that we specifically set up because of our AllKey product. So those are 3 key focus areas. We're actually going to focus more on the channel with some coverage in 2026 as well to unlock additional source of new customers there, too. Here's another interesting one, though. We see the potential to develop AllKey into the smart card because we're actually starting to see some early smart card demand. You may remember, it was probably 3, maybe even 4 earnings calls ago, you may not remember, that we talked about Payment that the company has been in for a long time and actually seeing that evolve into multifunction cards. We're seeing a bit of demand for that. Now I'm not going to stand here today and say it's going to take off, it's going to be the next big thing, because I think we hoped that Payment was going to be a bigger market than it has so far become. But we are starting to see some early demand. I'm not going to talk boldly about it today, but I will talk about it some more if we start to see some of the demand that we're starting to see manifest in genuine opportunities and real converted deals. So we're going to keep an eye on that. I didn't want to say nothing about it today because I want to be transparent about what we're seeing in the market. But at the same time, I'm not going to double down and say this thing is going to be huge because I think we've seen some false signs in the past, and I want to make sure we're really focused on real evidence and real conversion on the smart card. But we are seeing some demand. We do see that as a future vector for AllKey, particularly AllKey Ultra with a Secure Element on there, too, and it's something we're keeping our eye on. And of course, we have a volume center business. We're going to continue to do that. AllKey isn't about moving away from that. It's about expanding beyond that so that we can offer a broader portfolio and different value based upon our different -- based upon our clients and what they're really looking for. So huge opportunity for us, really nice to see how that is developing. And so let's talk about some evidence. We've talked about where the market is going. We've talked about AllKey a bit, and we've introduced it for a few quarters now. But I want to talk a little bit about pipeline. Now pipeline isn't something we've really shared on earnings calls before. So it's quite a new thing to start sharing. Pipeline isn't equal to revenue. It's not equal to invoicing. It's not equal to budget. It's simply an indicator of the opportunity we see out there. Here's what I will tell you, we run strong pipeline rigor. As a CEO, I used to be a Chief Revenue Officer for a $1.8 billion company. So I've kind of got some capabilities in pipeline management. And so pipeline is something I'm really focused on because it tells us where -- as long as we've got the right rigor, it tells us where the opportunity is that we need to invest behind. So we're really confident that we've got good pipeline. But it doesn't mean it's all going to close, of course, but we're pretty confident about some of the signals we get from our pipeline. And let me just talk to you quickly about the 2 charts here then. So the chart on the left is product mix by revenue. So of the total pipeline we have for '26 or '27 or '28, we split that by how much is AllKey and how much is sensors. And what you can see here is that we are really starting to grow the mix of our pipeline that is coming from AllKey. We're shifting customers to AllKey, but we're also acquiring new customers in the pipeline that are AllKey. And of course, 100% isn't flat. We're growing the pipeline at the same time. So from '26 to '27, the pipeline growth is greater than 20%. So we're getting more pipeline in, as you would expect, as we shift customers from sensors to systems, it's greater ASP. You would expect the pipe to grow. And of course, we're bringing new customers in as well. I won't talk about growth for 2028 because that pipeline is immature. We're still building pipe for 2028, but it gives you an indication of what's going on there. So really pleased to see the mix increasing significantly. Does it mean that 60% of our business in 2027 will come from AllKey? Not necessarily as this is about conversion, but it gives you directional insights into how we see the mix evolving. And then the chart on the right, I talked about we're bringing new customers into the pipeline as well because of AllKey. The chart on the right shows our total pipe for each of those years and how much of that pipe is from new customers versus existing. That's on quantity, so how many customers in our pipeline are new versus how many are existing. Historically, we've run at less than 20% of our pipeline from new customers. We've really been farming existing customers once we settle down in the access space. Now we're really starting to grow that customer mix as well. And that's obviously something we're very focused on. So great to see that already increasing in the pipeline. Of course, we need to convert and you would have a lower conversion on new customers than you would have on existing. But again, it gives you some direction around how we're growing or planning to grow our customer base. So exciting data for us to look at. And of course, as we think about what we're doing here, 3x the ASP, sustaining our margins at 50% to 60%, we track gross margins in our pipeline as well so that we can intervene should there be a low-margin deal, but really sustaining those margins as we move up the value chain and offer greater value to our clients, too. So a very exciting view on the pipeline. And then the other thing I said is, we have lots of good customer feedback as well. I talked to not all of our customers, I talk to most of our customers, and the team are deeply engaged both on the sales, of course, and on the engineering side as well. And so the interesting thing about the feedback we get from our customers, and we haven't had negative feedback, by the way. Sometimes people don't always like price, but we offer great value, and we're able to sustain our margins. But you can see the breadth of verticals that we're serving, fintech, crypto wallet providers, FIDO providers, software companies -- big software companies for that matter, IoT and wearables, access control, more of the traditional market. And then you can see there the blend of existing and new that we're seeing in those different segments with those different types of customers. And at the end, you can see the value drivers. So really broad range of feedback from different types of customers for some of the different levels of value that AllKey provides. So if you look at the fintech example, that kind of talks to where we're taking AllKey. I mentioned it in the smart card form factor earlier, but it doesn't just have to be smart card, it could be any type of device where that client, in particular, is really interested in putting their own custom applications on top of our MCU on the AllKey platform so they can use identity through fingerprint biometrics to do other types of tasks within their organization, too. So again, thinking of it as more of a platform that you can use biometric identity on for other software applications as well as some of those that we've spoken about previously, physical, logical access, Payment, et cetera. So that's a really exciting one. As we think about the crypto providers, the hardware wallet providers, obviously, security is really critical for those guys. So they love the MCU that we're using. And they also look at as a really trusted player because we're a European with a long track record of a credible company in this space. And they meet our people. They meet our engineers, and they love what we're able to do and the level of capability that we have in the organization. On the FIDO side, because it's a turnkey solution that we offer rather than the customer themselves having to put pieces together, it allows different types of FIDO players to come to the market and have a much less complex product, but also integrate our product far more quickly so they can get to market quickly. On the software side, you saw the design earlier in the photos that I shared. That really resonates as you think about how you plug this into a PC, FIDO, for example, or do other things on Windows Hello for authentication. So the design piece is critically important also. And then finally, a couple of other things. I talked about reduced complexity in our traditional customers, particularly for those customers who are slightly up the volume chain as well and therefore need an all-in-one solution. Having something less complex takes a lot of cost out, not just in creating the product, but in not having returns and things like that because it's a high-quality, durable, reliable product. And then on the wearables side, some of the feedback we've got is, these are consumer wearable companies who often want their consumers to be able to use their product for enterprise security because we offer enterprise-grade security as a company, particularly as it relates to our AllKey Ultra, they are able to access new markets or be able to offer new services in existing markets in extremely credible way. So really good feedback across the board from our customers that substantiates the quality of pipeline I shared previously. So there's a lot going on, on AllKey, very excited about it, very focused on getting behind that demand to ensure we capitalize and convert it, but that's obviously a very key focus for us for 2026. The other focus I did want to touch on is assets and licensing deals. We've done quite a few of these now, built a track record and some credibility around that. I wanted to talk quickly about one of those deals, and then I'll talk about how I see us replicating that. And so on the left, you can see a photograph. This is from Smart Eye booth at the Consumer Electronics Show just a month ago in Las Vegas. And so we signed a deal with Smart Eye in early 2025. They've been busy working on the developing the product, integrating it with theirs, working with our team as well. And I think what they demonstrated at CES proves what's possible with the iris asset. I wasn't at CES, some of our team were there. But I went over to meet the Smart Eye team and go through the demo myself recently. And they're now productizing this demo just for our reps to be able to go out and resell as well. As you know, from that deal, we have a 50-50 revenue share as we take that to market jointly. But looking at the product, it's extremely long range. You can approach from a few meters away. And even before you get within a meter, the camera starts to authenticate you. That's very different to every other iris asset on the market. Every other iris asset, you're pretty much going up to some binocular, either one eye or both eyes. It's not a very nice user experience. So this is much more intuitive, much easier, much less invasive for the user. And so it's quite unique on the market. So it works at a longer range. I think when I did it, I was authenticated about 70 centimeters. So just within a meter, longer range, really powerful. Also very easy to use. That's a big part of biometrics is if it feels invasive, it doesn't always work for users. But at the same time, very, very high efficacy. There's no point in being able to authenticate a distance if you can't do so with high efficacy. And iris is right up there at the highest efficacy along with Fingerprint. And at the same time, what the team have been able to do is be able to do that, but on ever lower cost hardware. That's a really important part of unit economics so that it makes it much more viable in the market as well. So Smart Eye have really proved out what's possible when we partner on iris, and we see many other areas where we can go and do that. Physical access is a really obvious one. Logical access is another obvious one. Health care comes up a lot because of the unique environment, and PPE, et cetera, the operators are working within there. And those are just a few. We see about 15 or so global markets that we're actively engaged in to look at where there's partnerships that we can do to jointly develop that asset for those markets where we otherwise couldn't fund it on our own, but also, of course, licensing that asset out in order to fund the business and get additional income in. So really powerful opportunity for us, big deal approach to that one, highly strategic, and we have some folks focused on doing exactly that. So with that, that's a bit of a round of ground on where we've come from, how we've performed, but also where we're going this year as we continue to execute the transformation plan with a real focus on AllKey and on our assets. And with that, let me hand to Fredrik Hedlund, our CFO, just to do a slightly deeper dive into the Q4 and 2025 numbers. So Fredrik, over to you.
Fredrik Hedlund: Yes. Great. Thank you, Adam. So let's walk through the fourth quarter numbers. So in the fourth quarter, our revenue was down 4% year-over-year. But if you look at revenue from a constant currency perspective, our revenue increased by 9% year-over-year. And from a total year 2025 perspective, our revenue was up 30%. And from a constant currency perspective, revenue was up 40%. And if we turn to gross margins in the fourth quarter, our gross margin was 65.8%, which is in line with the fourth quarter of 2024. And if you look at our gross margins for the total year 2025, we ended up with a gross margin of 60.7%. And from an EBITDA perspective, we were slightly positive. And from a free cash flow perspective, we were also slightly positive in the fourth quarter. And when we look at cash, we ended our cash balance at SEK 27.1 million, which is SEK 1.2 million lower than the third quarter of 2025, so last quarter. And if you look at headcount, our headcount was down 31% year-over-year, and it kind of started to flatten out. So our headcount was flat versus last quarter. And as Adam mentioned, we managed to close the PixArt deal in the fourth quarter. And with that, Adam, back to you.
Adam Philpott: Thank you, Fredrik. And so let me just move to summarize and then hopefully, we've got a bunch of questions coming in, and I'll hand to Stefan at the end to help us answer those questions. So as a summary, the fundamentals are stable. Revenue was slightly down for the quarter, but it was actually quite far up in constant currency. So we feel good about the transition that we're managing. And at the same time, we've been able to do that whilst maintaining very strong gross margins, particularly if you compare it to history. And we're doing that whilst having continued operational discipline and rigor around cost. So we took a lot of cost out of the business to right size the company, and we're maintaining that cost level whilst augmenting it with AI. We've got a number of agentic practices in place to ensure that our people are as productive as they're able to be using AI tools. So for us, AI doesn't replace staff, it augments them. And we're teaching people every day and encouraging people every day to experiment with how they use AI in a safe and secure way for our company's data. So pleased about how we're doing that also. And then the other key call out both for Q4, but also throughout this year, I think, is the progress we've made on the AllKey. That it's so encouraging where we have a number of bets and you see one of them, particularly one that's so close to our core competence really taking off and resonating with customers. It's one thing to have a great idea and then to build a product but you aren't always guarantee that, that product is going to take off. And so it's really -- I'm really pleased for our team, honestly, as much as our business there that things that they've done have manifested with our customers so far in such a positive way. Our job, of course, is to see that through and drive conversion, but really pleased about the customer sentiment we're getting, really pleased about the evidenced pipeline that we're getting as we help existing customers upgrade to AllKey, but then also very encouraged about the new customer pipeline that's coming in both direct and through our new channel partners in that space. So that's really exciting to see. So on the strategic focus, that's what it's all about, focus. We're focused on investing in the AllKey demand. We're also focused on expanding our asset deals and licensing deals that we've done to help fund that continued expansion and get more weight behind it. And also, of course, from a business perspective, driving to positive EBITDA and free cash flow through that operational discipline. So with that, I'm going to pause there. Thank you so much for your attention. Bang on half an hour. Stefan, let me hand back to you, and perhaps we can take some questions.
Stefan Pettersson: Yes. Thank you, Adam. I think we'll begin by taking any questions there are from the phone lines.
Operator: [Operator Instructions] We will now take the first question from the line of Markus Almerud from DNB Carnegie.
Markus Almerud: Markus Almerud here from DNB Carnegie. So let me start with AllKey. Obviously, I was going to say. But you look at the -- if I start with the existing customer base where you say that 50% of customers are on an upgrade path. If you talk a little bit about the mix of that customer base, and I don't know what the mix is today. But in terms of volume, is it evenly split? Or do you have any single customers which are particularly large? And can you talk a little bit about that sort of trend?
Adam Philpott: Yes. Do you want me to answer that one, Markus? Or do you want to -- if you got more on that one, sorry, I just jumped in there.
Markus Almerud: No, no, no. I was just elaborating. So I'm just talking about volume basically.
Adam Philpott: Yes. Yes. No, really, no. So I'll tell you how we've looked at it. We've looked at it by revenue. We've looked at the pipeline by quantity of customers, and we've looked at the pipeline by volume, of course, as well. Because exactly where you're going with this is because AllKey is 3x the ASP, you need minus 3x the volume in order to achieve the same numbers. And so as we look at the new customers, which I think your question was specifically about, there are some bigger customers in there. So when you think about revenue, but also to a degree, volume. There are some bigger customers in there, but it's actually spread quite broadly. So the quantity of customers as well is pretty good. That's what I was focused on when I talked about the pipeline data earlier is the number of customers that we're bringing in. Now typically, what you'll find is that we don't, as a company, go and target super small customers because, obviously, that doesn't make sense to get the right return on investment. We tend to target medium and then large customers so that we have a balanced pipeline. Larger customers, obviously, take longer to close and perhaps there's higher risk around those if you depend upon them. And so having medium customers to fill in the peaks between those are exactly the sort of pipeline balance that we look for. So I would say we've got a really balanced pipeline in terms of medium and large customers and the volumes would reflect those size of customer.
Markus Almerud: And looking at the current customer base that you do have, which are now converting, you talk about 50% -- 50% of the current customer base, which is sort of on an upgrade path. What's the kind of size among those customers? Is it fairly even? Or are there any really large ones sticking out?
Adam Philpott: I would say that actually, the bigger -- some of the biggest customers we have in our pipeline are newer customers to the company. We've got some very high-volume customers who are going to stay as sensor customers. That's why it's really important for me to emphasize that sensors remains a really important business to us. We're not moving out of it. We're not competing with it. We're expanding beyond it. So we've got some really big customers who remain in sensors. We've got some new big customers on AllKey. And then the bulk of our customers who are migrating, I would say, are kind of medium to large customers in that space as well. So it's a real variety of customers we're moving across. I think as we look at it on aggregate, both the quantity of customers around 50%. And then I also shared with you the pipeline data, of course, earlier. So you could see, for example, this year, about 30% of our pipe is AllKey because we only announced it at the end of 2024. The bulk of it really starts to kick in end of this year and definitely into 2027. That's when you see the revenue mix start to shift as well. But to your point, in that 60% in 2027, it's not dependent on one massive customer. I think the risk is relatively well spread.
Markus Almerud: And on Ultra, which you released now in Q4, how is that progressing? And given that there is a Secure Element in there and you're looking at the kind of pipeline on that, or kind of just interest on that, is it mainly the types of FIDO and tokens and crypto? Or does it also tie into the Payment cards and maybe access cards?
Adam Philpott: It's actually -- you're absolutely right. It's across all of those things. I think the thing I'm -- it was interesting. We put this package together called AllKey because we wanted to, A, move up the value chain ourselves, but B, take complexity away for customers to make their life easier, right? And so there was a really nice value equation for our clients. And it was our first foray into doing that. As we then introduce the Secure Element into that, the complexity that comes with the Secure Element is even greater. So taking that burden off our customers has been even more powerful, I think, and actually even more differentiated because to be -- to have the credibility and skills to operate at that level of security is even fewer people who can do that. So the competitive moat around us is even greater as is the value to our customers. So I'm really excited about the AllKey Ultra product. The pipeline is phenomenal, but we're really seeing that resonate as well as the AllKey product. I would say, to answer your question about the segments, definitely FIDO. You have some specialist FIDO providers who are probably going to want to provide their own Secure Element, because that's how they see their value add. That's fine. We'll continue to sell sensors to those guys. You've got others who just want to be quick to market and have a turnkey solution. They'll be more applicable for AllKey Ultra. So there's different types of players out there, but we can -- that is definitely a core market for the AllKey Ultra. You mentioned Payment. Absolutely. I shared with you earlier a feedback from a wearable customer. We're seeing a lot of demand there in terms of wearables as people start to tokenize. And also organizations who provide, whether it be consumer or personal wearable devices, want to add more services to it. They want to be able to start to have Payment. But rather than just have this device on your finger or on your wrist or in your ear or on your body, some other place, I don't know where they can do Payment. Of course, you want to be intention-based Payment where you probably have a step-up level of security using biometrics. So there's real demand in that space for our Secure Element product for Payment also. And then there's other markets around logical access. Of course, that probably ties closely into FIDO, Windows Hello as well. So certainly, Payment and FIDO, I would say, are key markets for AllKey Ultra.
Markus Almerud: And in terms of timing, I mean, you talk about back end of '26 and then 2027 in terms of kind of getting into mass production of this. Is it the kind of timing here depending on your producers? Or is it more the kind of life cycle than the kind of time it takes for your customers to kind of get there? And tied to that, of course, I mean, how easy is it to scale production, is that a bottleneck?
Adam Philpott: That's a really good question. So I think of it like a critical path. What pieces do we need to accelerate to get that business in quicker? It's not our ability to invest. It's not our supply chain. It's the productization cycle. So if you think about it, we go and talk to a customer, we've got this new integrated product. It's going to make your life easier. Okay, I'm interested. I'd like to see it, then we do a demonstration, and we -- then they like to evaluate and we give them an evaluation kit. Then they test us against most of other people. They select us because we're the best. And then they go to design in. So they design that into their product and build a prototype and then they move to full production design. That takes quite a long time. And then they have to start marketing, shipping, et cetera, their products. So it can be an 18- to 24-month cycle. It can be quicker as well. There's a lot of rapid prototypes, a lot of rapid engineering companies out there today. So actually you can come down with AllKey Ultra through even 9 months, but that would be best practice. So that would be, in my mind, what the critical path looks like to get this out. What I would say is, AllKey does accelerate that because they don't have to go and find our products, go and find an MCU, go and find a Secure Element and tie this stuff together, it rapidly simplifies the overall productization cycle. So that's kind of how I see it. What I do think, though, Markus, is that there's an opportunity to invest more behind this to build more pipe and to get more customers on board.
Markus Almerud: A couple of more, if I may. On the licensing deals, first of all, I mean, I assume there's more to come. We spoke about that earlier, but our PixArt came in Q4 in October. And I assume there is -- I mean, you were alluding to that in the presentation, but I assume there is more to come and you expect these kind of to continue to come on a sort of ongoing basis, right?
Adam Philpott: Yes. Absolutely, because I think of our company is an organism that produces products that we sell. That's our core business, but has a level of capability that other people want that they will pay for. And if you look at other companies, they actually ground this as one of their business lines. They say it's our corporate services or our design services or whatever. We don't do that because we want to focus on our products. But equally, we go and look out for those opportunities to bring in net income into the company that we can successfully monetize without distracting our resources away from the core business. So we absolutely see more of those. We've got incredible ASIC team. We've got an incredible algo team, and that's what partners, particularly, are interested in because they lack that. So we have a number of partners who want best-in-class talent. So there's a talent aspect to it, but there's also an asset aspect to it as well. I mentioned iris earlier. We're now -- we're seeing more and more demand for sort of biometrics and iris is a high-efficacy modality and people are looking for that. In the world of deep fake, people want high efficacy, not just vanilla access. So we're seeing demand for that. But that's very much a partnership model for us. We don't have so much resource that we can develop the different modalities. We want to focus on where we can make an impact and then partner where we need support, but that would be through a licensing mechanism to allow someone to develop that for their specific market rather than us do it for them. So iris is the second one. And then the third one, I call it assets and licensing deals. There's lots of different ways that we can ensure customers can benefit from our products in their market. We can sell them products and the more they buy, the better price they get or we can license technology to them as well, allow them to use their own supply chain, if that's a core competence of theirs so that they can unlock the right aspects of value that they're seeking. So those are really how I think about the assets and licensing.
Markus Almerud: And the PixArt money, is it all in now? Or is there more to come in...
Adam Philpott: I think -- yes, Fredrik, I would defer to you now. I think it's pretty much all in. But Fredrik...
Fredrik Hedlund: You're correct, Adam. All in.
Markus Almerud: Okay. And then finally, maybe I was excited to read the word inorganic in your release. Maybe you can share some more thoughts on kind of what you're looking for and what should we expect and all that?
Adam Philpott: Yes, absolutely. Here's how I see it. I shared a picture on the last earnings call for those of you who have recognized. And it showed the fragmentation in the markets we serve. There's lots and lots of different vendors doing things that are adjacent to what we do. And so I think there's opportunity for industry consolidation because in isolation, we're all quite small. But when you aggregate it together, there's overlapping capabilities. So there's the opportunity for cost optimization, but there's also the opportunity for upsell revenue growth through cross-selling, for example, because there's kind of some adjacencies in complementary nature. We're not talking about getting the same company 5x integrated, not really about that. There's actually adjacent companies that can aggregate together, realize some cost optimization and deliver some benefits on the top line whilst they do so. So that's how I think about the inorganic opportunity due to the market fragmentation.
Markus Almerud: Okay.
Adam Philpott: Awesome. Thanks very much. As always, I appreciate your questions as well, Markus. Stefan, maybe we'll come back to you, see if there's anything that's come in on the chat.
Stefan Pettersson: Yes. Let's take a couple of questions here. So after the first major JLR cyberattack, have you already observed a significant increase in interest from current customers and potential new customers on spending more in your security solutions?
Adam Philpott: That's a great question. And as a cyber guy, I particularly like that question. So I've been in cybersecurity for probably, I don't know, more than 15 years now. And so I think what really interests me here is that identity has always been the weak link in cybersecurity. I don't know how long we've been talking about passwords is the #1 vulnerability, but it was very slow to change because passwords are free. People have to remember them. So the burden is on the end user, except the risk is on the organization. And so JLR was absolutely an identity-centric attack. It was stolen credentials through help desk account recovery. And so we're seeing not just increased demand in cybersecurity, which is pretty big anyway, but a focus on identity. If any of you follow me on LinkedIn, you'll see recently, I've been posting about identity. There's this phrase in the industry at the moment, which is attackers don't hack in, they log in. So think about it. It used to be hackers come in and they smash the back window or break down the front door. They don't do that. They put the key in the door, turn the lock, and walk straight on in, right? And so our job is to ensure that they can't do that because they can't steal the keys or they can't copy the key or they can't be given the key. They have to be unique to the individual through biometrics. So an answer to that great question, we are absolutely seeing an increase in demand. Is it attributable to JLR? Who knows, right? No one does attribution in cybersecurity because it's such a difficult and thankless and meaningless sometimes thing to do. But we are seeing increased demand, and we're seeing increased focus on identity. So it means we find ourselves in the right space. And so our job is to capitalize upon that.
Stefan Pettersson: All right. Thank you, Adam. And another question on staff. I see that FPC has the same number of staff in Q4 as in Q3. Do you need to grow staff for more sales to generate more sales in the future?
Adam Philpott: Yes, it's a good question. It's a fine balance, isn't it? We need to maintain operating rigor on our costs. But at the same time, we need to manage the growth lever as well. And if we're too limited in capacity, it can have an effect on that. I think the question specifically mentioned sales, not necessarily sales resources, but getting more sales, i.e., more revenue. Here's what I would say on that. I would say 2 things, and Fredrik, I'll pull you in because you probably got some other views as well. The first thing I would say is that I think there's additional capacity in our sales engine. And the way we think about that is to augment our salespeople with AI. I'll give you an example. We have an AI agentic model where when a lead comes in through our website or if we scan someone's ID at an event or wherever a lead comes from, we have a set of AI engines that will look at that contact, look at that customer and deliver a bunch of consolidated research to the rep on who the customer is, what they're doing, why biometrics might be of value and some of the things that our reps can talk to them about that create value for that company and help us as a company, too. That takes time away from the reps having to do that. That would be quite a lengthy research exercise. So just think about how we can support our reps is really important. So I think there's -- we've created more productivity for our reps. I know they wouldn't agree with me. They probably say they're too busy, but that's good. And so I think that's part of it is augmenting our staff with AI so they can be more productive. We are very active in doing that. We don't pretend we're the best at it. We don't hype it. But equally, we're definitely not doing nothing. So we feel good about our pragmatic approach to AI for capacity augmentation. That's the first thing. The second thing is we have actually expanded slightly. So we had a couple of reps, one who's business development, one who's sales in the U.S., who are looking at the cloud identity piece because that was taking too long and AllKey was taken off, we pivoted those guys towards AllKey. So we've increased our capacity. And what we're focusing one of them on is on our channel. We've got some big disties in North America. And if you don't go and see them and remain top of mind and keep educating them and building relationships with them, they forget about you and go and do something else. When you see them, we instantly see leads coming out of them through their networks. So lighting up that channel is really important, also focusing the business development on more campaigns that can then feed the rest with new leads. Those are some of the things we're doing to ensure that we are growing capacity and focused on putting our investments where the market is taking off.
Stefan Pettersson: All right. Thank you, Adam. Does FPC have the opportunity for new customers in the defense industry, which is growing today due to the uncertainty?
Adam Philpott: Yes. I would love to be more active in that space. I would say that with our ability to invest, that's quite capital intensive in the sense that it takes quite a long time. We do -- we are opportunistic in that segment at times. We approach clients, particularly manufacturers, et cetera. We need to be a little careful about what we can do there because of the nature of that industry and some of our contracts. But I think that is quite a focused undertaking. And so we just need to be very balanced because if we tie up our resources in something long term, it means our short-term funnel starts. So we just need to be a bit balanced about where we focus. Today, we tend to focus on sales cycles that are 12 to 24 months. That's kind of the sweet spot. If we start to get into much longer sales cycles, it means that we're kind of building for the long term, which is great, but not having any bank on the near term. So I do see us over time, expanding our aperture to longer-term deals once we've built out a much stronger base of short-term customers, but it's not something we have a specific campaign or focus on or assets on today.
Stefan Pettersson: All right. Thank you very much. And thanks, everyone, for good questions. And I'd like to hand over to you, Adam, again, for any closing remarks.
Adam Philpott: Yes. Thanks very much, Stefan. So I appreciate all of the questions, really good questions. I really enjoy answering those and hearing what's on your minds by the nature of your questions. As I said, the business is stable. We put some good stability in place on the fundamentals. We do, of course, focus on funding the business, both through accelerating the transition and spread up to AllKey, but also through those asset deals. So that's a key focus on our minds. I think what's really important that we've seen over the last year is proving out which bet is going to take off, observing it and then rigorously investing behind it. And that's really what we're doing on the AllKey bet with additional products to come off that roster as we continue to see proof points of demand such as those in the smart card space. So thank you for everyone. I appreciate you joining us for the first call of 2026. I appreciate you being with us on the journey as we're now in the third year of this transformation and look forward to speaking to you all again soon.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.