AMSTERDAM - Gemalto, the world leader in digital security today announces its revenue for the first quarter of 2015.
- Revenue at EUR 686 million, up +29% at historical exchange rates and +19% at constant exchange rates, with strong business growth and addition of SafeNet
- Growth came from all main segments and activities, with strong performance in Machine-to-Machine and in Payment
- SafeNet acquisition well received by customers
Olivier Piou, Chief Executive Officer, commented: "The first quarter of 2015 leveraged the investments made, with significant expansion in our businesses. Payment continued to grow vigorously, on-going deployments confirm the improving momentum in Government Programs, and the strong expertise of the SafeNet team complements well our offering. Performance in the Mobile segment was led by excellent Machine-to-Machine growth and a solid SIM business. And we are focused on delivering a steady progression towards our 2017 objectives."
Basis of preparation: Segment information
From January 1, 2014, segment information was modified to report on progress towards the objectives set as part of the Company's new long-term development plan covering the years 2014 to 2017, publicly announced on September 5, 2013. The Mobile segment reports on businesses associated with mobile cellular technologies including Machine-to-Machine, mobile secure elements (SIM, embedded secure element) and mobile Platform & Services. The Payment & Identity segment reports on businesses associated with secure personal interactions including Payment, Government programs and Enterprise.
As of 2014, in addition to this segment information the Company also reports revenues of Mobile and Payment & Identity by type of activity: Embedded software & Products (E&P) and Platforms & Services (P&S).
For the period, Company revenue was EUR 686 million. Revenue from the Payment & Identity segment surpassed the Mobile segment for the first time in Company history at EUR 369 million, representing 54% of total Company revenue.
Embedded software & Products grew by +8%, with strong activity linked to Machine-to-Machine business and EMV payment cards. Platforms & Services activities posted sales of EUR 185 million, an increase of +76% year-on-year. They represented 27% of total Company revenue. Patents & Others brought a limited EUR 1 million contribution this quarter.
Total Company revenue of EUR 686 million was EUR 532 million for the first quarter 2014. Expansion came from the two main segments and from the integration of the acquired SafeNet business. On a reported basis, total revenue grew by +29% at historical rates, and by +19% at constant rates. The substantial strengthening of the US dollar versus Euro compared to the first quarter of 2014 and the large part of Company's US dollar denominated revenue explain the 10 percentage point difference between revenue growth at historical rates and at constant rates. Due to the large and rapid evolution of currencies during the quarter, the Company's hedging program which aims at partially neutralizing the impact of sudden currency variations on the profit from operations also had a significant impact, reducing reported revenue growth by (3) percentage points.
At constant exchange rates and on a pro forma basis (i.e. with SafeNet in both Q1'2014 and Q1'2015), total Company revenue expanded by +7% when including the impact of hedges, and when removing hedge effects for both 2014 and 2015 the Company's year-on-year total revenue growth at constant exchange rates and on a pro forma basis was +10%.
The anticipated profit from operation net exposure to the USD variations is mostly hedged and consequently limited gains on profit from operations from currency translation effects are expected for the year.
At year-end 2014, Gemalto's cash and cash equivalents were EUR 1,057 million including proceeds of a EUR 400 million bond issued in September 2014 in anticipation of the closing of the SafeNet acquisition. In January, Gemalto used EUR 727 million, net of cash acquired, for this transaction, leading to a net debt position as at the end of the first quarter. Since the Safenet acquisition closing, two private placements of EUR 75 million each have been issued with average maturities of 8.4 and 10.2 years, and yields of 1.94% and 2.05% respectively, with no financial covenants.
Payment & Identity
The Payment & Identity segment's revenue came in at EUR 369 million, increasing by +35% compared to the previous year, with growth fueled by a strong performance in Payment and the addition of SafeNet. Embedded software and Products grew by +7% at EUR 241 million and Platforms & Services sales more than doubled at EUR 129 million, including SafeNet's revenue. Platforms & Services growth was +20% year-on-year on a pro forma basis.
The Payment business expanded by +18% year-on-year. The Americas posted the largest growth, with revenue more than doubling compared to previous year on strong sales of EMV payment cards and rapid expansion in issuance services in the United-States.
Improvement in the Enterprise business comes both from the addition of SafeNet, acquired on January 7, 2015, and from the sustained market demand for cybersecurity solutions.
Revenue from the Government Programs business was up +1% compared to the first quarter of 2014. Deployments of previously won projects started, confirming the improving dynamics for this business.
During the first quarter Gemalto announced an agreement to acquire the secure document business of Trub AG, a Swiss provider of identification solutions for governments and banks with world-class expertise in secure identity documents. As the acquisition closed in April, no revenue is recognized for the first quarter.
The Mobile segment posted revenue of EUR 316 million, up +7% at constant exchange rates compared to the previous year.
Embedded software & Products came in at EUR 260 million, expanding by +8% compared to the first quarter of 2014. The Machine-to-Machine business in particular increased by +25% year-on-year due to the expanding global demand of connected devices and embedded secure elements (eSE) for the Internet of Things (IoT). The SIM business grew by +4%.
Platforms & Services was stable at EUR 57 million as Mobile Financial Services revenue decreased year-on-year due to the time necessary for finalizing the developments of new technologies such as Trusted Execution Environment (TEE), Host Card Emulation (HCE) and Tokenization for the mobile contactless ecosystem.
Patents & Others
The revenue generation from patent licensing and other activities is traditionally lumpy. It came in at EUR 1 million this quarter and was EUR 8 million during the same period in 2014.
- Gemalto finalizes the acquisition of SafeNet
On January 7, 2015, Gemalto closed the acquisition of SafeNet, the worldwide leader in data and software protection, after approval by the relevant regulatory and antitrust authorities. SafeNet was integrated with Gemalto Payment & Identity segment and its contribution mainly consists of Platforms & Services activities.
- Gemalto acquires Trub AG's secure document business
On February 10, 2015, Gemalto announced that it has signed a definitive agreement to acquire the secure document business from Trub AG. Trub has a 150 year history of secure printing. Headquartered in Aarau, Switzerland, it has been a pioneer in eco-friendly and highly secure polycarbonate technology. Today, Trub provides identification solutions primarily to governments and banks and is a leading provider of high security identity documents. Known for its innovation capabilities, Trub has also introduced a number of patented security features to the market. The Trub business will reinforce Gemalto's leadership in high security identification documents and will also enable Gemalto to serve the Swiss market of financial institutions.
On a full year basis, the business is estimated to contribute to Gemalto revenues by approximately CHF 100 Million (approximately EUR 95 million). The transaction completed on April 10, 2015 hence no contribution of the acquired business was recognized during the first quarter.
- Gemalto Releases Findings of 2014 Breach Level Index
On February 12, 2015, Gemalto released the latest findings of the Breach Level Index, revealing that more than 1,500 data breaches led to over one billion data records having been compromised worldwide during 2014. These numbers represent a +49% increase in data breaches and a +78% increase in data records that were either stolen or lost compared to 2013.
- Developments in mobile services security
Gemalto Trusted Services Hub expands secure service deployment to 350 million more mobile devices
In February 2015 Gemalto grew again the capabilities of its Allynis Trusted Services Hub that permits an easy deployment of security-sensitive applications by enterprises, banks and other digital service providers, adding the reach to more than 350 million additional mobile devices equipped with Trustonic Trusted Execution Environment (TEE), including the popular Samsung Galaxy range of smart phones and other mobile devices from major handset makers. In practice, enterprises and digital services providers connected to Gemalto's Allynis Trusted Services Hub immediately gain access to 350 million additional potential users, with Gemalto handling all the back-office processes on their behalf.
Gemalto adds new Tokenization options to Its Trusted Services Hub
In February 2015 also, Gemalto added further new key capabilities to its Allynis Trusted Services Hub for tokenization based payment services. For banks and payment service providers that look to create a seamless enrollment and mobile payment experience, Gemalto brings the most complete and integrated solution, from the mobile tokenization gateway all the way to the client-server architecture for provisioning and processing payment security.
For 2015, Gemalto anticipates a steady expansion in annual profit from operations towards its upgraded 2017 objective of over EUR 660 million.
Live Audio Webcast and Conference call
Gemalto first quarter 2015 revenue presentation will be webcast in English today at 3pm Amsterdam and Paris time (2pm London time and 9am New York time).
This listen-only live audio webcast of the presentation and the Q&A session will be accessible from our Investor Relations web site:
Questions will be taken by way of conference call. Investors and financial analysts wishing to ask questions should join the presentation by dialing:
(UK) +44 203 043 2439 or (US) +1 855 402 7762 or (FR) +33 1 7077 0941
The accompanying presentation slide set is also available for download on our Investor Relations web site.
Replays of the presentation and Q&A session will be available in webcast format on our Investor Relations web site approximately 3 hours after the conclusion of the presentation. Replays will be available for one year.
Stock Exchange Listing
Gemalto N.V. is dual listed on NYSE Euronext Amsterdam and Paris, in the compartment A (Large Caps).
Gemalto has also established a sponsored Level I American Depository Receipt (ADR) Program in the United States since November 2009. Each Gemalto ordinary share is represented by two ADRs. Gemalto's ADRs trade in U.S. dollar and give access to the voting rights and to the dividends attached to the underlying Gemalto shares. The dividends are paid to investors in U.S. dollar, after being converted into U.S. dollar by the depository bank at the prevailing rate.
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Gemalto (Euronext NL0000400653 GTO) is the world leader in digital security, with 2014 annual revenues of EUR 2.5 billion and blue-chip customers in over 180 countries.
Gemalto helps people trust one another in an increasingly connected digital world. Billions of people want better lifestyles, smarter living environments, and the freedom to communicate, shop, travel, bank, entertain and work - anytime, everywhere - in ways that are enjoyable and safe. In this fast moving mobile and digital environment, we enable companies and administrations to offer a wide range of trusted and convenient services by securing financial transactions, mobile services, public and private clouds, eHealthcare systems, access to eGovernment services, the Internet and internet-of-things and transport ticketing systems.
Gemalto's unique technology portfolio - from advanced cryptographic software embedded in a variety of familiar objects, to highly robust and scalable back-office platforms for authentication, encryption and digital credential management - is delivered by our world-class service teams. Our 14,000 employees operate out of 99 offices, 34 personalization and data centers, and 24 research and software development centers located in 46 countries.
For more information visit www.gemalto.com, www.justaskgemalto.com, blog.gemalto.com, or follow @gemalto on Twitter.