Gemalto reports for the third quarter that revenue was up 6% at constant exchange rates to EUR 401 million; it had growth in all main segments; the SIM card average selling price was up 4% compared with prior quarter; and there was a 39% revenue increase in Government Programs.
All revenue and average selling price variations are by reference to 2006 third quarter revenue and are stated at
constant exchange rates unless otherwise mentioned. All the figures
presented in this press release are unaudited. Revenue for the third
quarter of 2006 and pro forma revenue for the first nine months of 2006
are presented in Appendix 2. IFRS revenue figures for the third quarter
and the first nine months of 2006 are presented in Appendix 3.
Gemalto (Euronext NL0000400653 – GTO), the world leader in digital
security, today announced its revenue for the quarter ended September
Olivier Piou, Chief Executive Officer, commented: “Revenue for the third
quarter marked the return to year-on-year growth, with a good product
mix in Mobile Communication and strong Government Programs deliveries.
Secure Transactions was affected by operational difficulties related to
the rationalization of our manufacturing footprint in Western Europe,
but nevertheless recorded strong improvements in personalization
activities. Market demand remains robust in all our main segments. In
completing the year, we will benefit from the usual favorable seasonal
pattern, as well as from the ongoing synergy realization.”
Changes in the financial reporting
Effective July 1, 2007 the Identity & Security segment is renamed
Security in all financial reporting. This Security segment comprises
Government Programs, Identity & Access Management, and patent licensing
To align external reporting with the new operational organization put in
place, also effective July 1, 2007, the Transport business activity is
now being reported under the Secure Transactions segment. Previously, it
had been reported as part of the Security segment. Relevant 2006 and
2007 revenue figures reflecting this modification are detailed in
Appendix 4. Transport FY 2006 and H1 2007 revenue represented
approximately 1% of the Gemalto total turnover.
Third quarter 2007 revenue analysis
Total revenue for the third quarter of 2007 was EUR 401 million, up by 6%
at constant exchange rates, and up by 3% at historical exchange rates.
Top-line growth was recorded in each of the main business segments.
Mobile Communication reported continued improvements due to targeted
offerings and a focus on value. The segment returned to year-on-year
growth on the back of a good product mix across all geographic areas,
highlighting the market demand for higher-value offers. Software and
services also recorded continued revenue growth.
Quarter-on-quarter, average selling price was up by 4%. The year-on-year
average selling price decrease was contained to 4% at constant exchange
rates (8% at historical rates), a very meaningful improvement when
compared with the 32% drop recorded a year ago and an indication of the
success of our pricing recovery program.
During the quarter, Gemalto recorded customer successes that leveraged
the broad installed base of SIM cards to deploy data and value-added
services. One example was the Brazilian operator Oi which partnered with
Gemalto during the Pan-American Games to deploy mobile content services
including trivia games, news alerts, downloads and e-auction, to more
than 13 million of its subscribers, encouraging more data usage.
In October, Gemalto and Far Eastone Telecommunication announced their
partnership in Taiwan’s first mobile contactless SIM-based NFC (Near
Field Communication) trial, allowing users and partner merchants to
experience mobile payment and interact with smart posters using Gemalto
technology. Taiwan’s rapid adoption of contactless payment and appetite
for new technology make it an attractive market to demonstrate the
potential of mobile contactless, with a series of trials leading to
possible commercial rollout during 2008.
Revenue in this segment was up by 7% year-on-year, driven mainly by
strong growth in personalization activities, and to a lesser extent
growth in pay TV and Transport activities.
A comprehensive program of manufacturing restructuring initiatives is
being implemented in Western Europe. Some related production and labor
difficulties were encountered during the period which adversely affected
deliveries in this segment during the quarter.
In addition to assisting with EMV migrations around the world, Gemalto
is supplying banks with an innovative offer that allows their customers
to customize and order new credit cards via secure access to an online
design portal. The recent adoption of Gemalto’s CardLikeMeTM solution by
SEB Germany, a North European financial group with over 5 million
customers, highlights the completeness of Gemalto’s banking solutions,
from software development through card personalization to fulfillment.
The Security segment posted a strong performance driven by growth in
Government Programs. Progress was partly offset by weakness in Identity
& Access Management (IAM). Overall segment revenue was up by 15%
including marked growth in personalization revenue.
Government Programs reported a very substantial growth of 39% on the
back of deliveries on large volume contracts such as the US e-passport,
and for the Oman e-ID program. This increase was slightly offset by
lower revenue from e-healthcare activity due to slower activities in
IAM revenue was down 19% due to lower deliveries of microprocessor
devices in the Americas and slower sales in EMEA, partially offset by
initial deliveries of online banking authentication solutions to
Barclays in the UK and shipment of secure USB tokens to customers in Asia.
The IAM business was strengthened by the signing of a number of new VARs
(value-added reseller) and distributors. Gemalto’s growing indirect
sales network greatly enhances the Company’s market reach and ability to
deliver enterprise security offers such as the Microsoft Vista
compatible .NET solution.
Similar to last year, no significant patent licensing activity was
reported in the third quarter.
The Americas reported a 15% revenue growth at historical exchange rates,
driven by Mobile Communication and Security. Taking into consideration
the weaker US dollar relative to the Euro in 2007, revenue growth was
23% at constant exchange rates. The Americas accounted for 26% of third
quarter 2007 revenue, up two percentage points compared to the previous
In the second half of 2007, operating margin2 will reflect the usual
favorable seasonal pattern and the increasing contribution of our
digital security solutions deployments. It will also benefit from
additional cost synergies from the combination.
Gemalto continues to anticipate sustained demand in all of its key
markets. It will continue to proactively make the necessary adjustments
to its cost base and remains determined to reach its stated objective of
an operating margin2 above 10% in 2009.
Fourth quarter and full year 2007 revenue will be reported on January
30, 2008, prior to the opening of Euronext Paris.
Gemalto (Euronext NL 0000400653 GTO) is the leader in digital security
with pro forma 2006 annual revenues of EUR1.7 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 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.
Gemalto was formed in June 2006 by the combination of Axalto and Gemplus.
For complete details on Gemalto’s latest performance visit CardData (www.carddata.com).