AMSTERDAM - Gemalto, the world leader in digital security today announces its results for the full year 2015.
- Full year revenue of EUR 3.1 billion, up +16%, and profit from operations up +10%, at EUR 423 million
- Revenue in Payment & Identity at EUR 1.8 billion, represents 58% of the total sales
- Platforms & Services revenue reaches EUR 898 million, up +70%
- Free cash flow generation accelerated over the year, with EUR 233 million in the second semester
Olivier Piou, Chief Executive Officer, commented: "2015 illustrates the structural transformation and successful diversification of the Company. Payment is now clearly the largest business of the Company; the Enterprise portfolio is aligned following SafeNet integration; Government Programs is back to rapid growth with a solid win rate; adjustments are supporting the SIM activity evolution; and the Machine-to-Machine business continues to expand rapidly. In a challenging 2015 Mobile environment, Gemalto demonstrated the resilience of its business model with another double digit expansion in profit from operations and strong cash generation. Entering the second part of our multi-year development plan we will focus in 2016 on expanding our gross margin, progressively optimizing our main segments' performance en route to our 2017 objectives."
Total revenue for 2015 came in at EUR 3,122 million. Strong growth in Payment, Government Programs and Machine-to-Machine, coupled with the addition of SafeNet drove the revenue expansion of +27% at historical exchange rates and +16% at constant exchange rates.
The total Company's year-on-year revenue growth was +6% pro forma. SafeNet's combination added 12 percentage points to the 2014 reported sales. The substantial strengthening of the US dollar versus Euro compared to 2014 and the now larger part of the Company's US dollar denominated revenue generated a 9 percentage point difference between revenue growth at historical and at constant exchange rates. This difference was partly reduced by the currency variation protection hedging program that induced a (2) percentage point reduction on the reported sales.
Embedded software & Products (E&P) revenue grew by +3%. Payment cards represented the largest part of the E&P expansion. High demand for connectivity and security modules for the Internet of Things (IoT) and strong deliveries in Government Programs also notably contributed to the E&P revenue increase. E&P activity in the Mobile segment reduced due to lower year-on-year SIM sales following the closure of the major US wireless carriers' payment venture, and to a lesser extent to lower demand in Latin America and Asia in the second semester.
In Platforms & Services (P&S), sales were up by +70%, due to further revenue expansion in payment issuance services, to growth in eGovernment services and to SafeNet's contribution to the Enterprise business. These increases largely exceeded the reduced Mobile Financial Services revenue coming from the United States.
Globally, 2015 revenue growth illustrated the structural transformation and successful diversification of the Company. Gemalto posted a +6% pro forma revenue growth though sales of SIM and Mobile related services declined by an unusual (15%) year-on-year during the period.
Gross profit was up by EUR 264 million, to EUR 1,216 million, representing a gross margin of 39%, up +0.3 percentage point year-on-year. The increase in gross profit in the Payment and Government Programs businesses more than offset the lower contribution from the Mobile segment.
Operating expenses were up by 2.3 percentage point of revenue to 25.4%, at (EUR 793) million. The increase came primarily from the addition of SafeNet, running at a higher percentage of operating expenses than Gemalto's historical business, and from currency translation effects, which outweighed the absence of variable pay-out to management and employees related to profit from operations.
As a result, 2015 profit from operations came in at EUR 423 million, representing 13.5% profit margin and up EUR 40 million, +10.4% year-on-year.
Gemalto's financial income was (EUR 38) million compared to (EUR 12) million for 2014. Interest expense and amortized costs on the public bond, private placements and credit lines facilities amounted to (EUR 13) million and foreign exchange transactions and other financial items amounted to (EUR 24) million.
Share of profit in associates was EUR 2 million for the full year 2015. As a result, adjusted profit before income tax came in at EUR 387 million compared to EUR 370 million the previous year, an increase of +5%.
Adjusted income tax expense increased to (EUR 83) million, compared to (EUR 54) million the previous year, as Gemalto tax rate is progressively converging toward its expected normative effective tax rate level.
Overall, the 2015 adjusted net profit for the Company was EUR 303 million, lower by EUR 12 million when compared to 2014.
Adjusted basic earnings per share came in at EUR 3.45, and adjusted diluted earnings per share at EUR 3.41, compared to 2014 adjusted basic earnings per share of EUR 3.64 and adjusted diluted earnings per share of EUR 3.55.
Below is a highlight of new contracts and achievements published by the Company in 2015:
Payment & Identity
January, 08 2015 Gemalto finalizes the acquisition of SafeNet; February, 12 2015 Gemalto Releases Findings of 2014 Breach Level Index; March, 11 2015 Shoreline's off-the-shelf solution speeds up EMV Deployment for U.S. banks; March, 17 2015 Gemalto solution powers a unified national registry for Oman's identity documents; April, 14 2015 Shoreline launches on-the-spot EMV card issuance for U.S. community banks and credit unions; June, 15 2015 Orange Business Services and Gemalto join forces to provide customers with highly secure access to cloud-based applications; July, 09 2015 California selects Gemalto for automated identity document verification; August, 13 2015 Debit Network Alliance selects Gemalto to guide EMV strategy for U.S. debit card issuers; November, 18 2015 Maryland selects Gemalto's complete solution for new polycarbonate driver's licenses; November, 26 2015 BBVA Bancomer and Gemalto announce first commercial rollout of Dynamic Code Verification
February, 17 2015 Gemalto Trusted Services Hub expands deployment to 350 million more mobile devices; February, 25 2015 Gemalto adds new Tokenization options to Its Trusted Services Hub; March, 03 2015 Gemalto enables mobile NFC ticketing for Madrid public transport; July, 02 2015 NTT Docomo selects Gemalto for IoT applications in Japan; July, 15 2015 Gemalto and ZTE jointly present remote subscription management on consumer devices; July, 15 2015 China Telecom and Gemalto present joint innovation for connecting cars and IoT; July, 16 2015 Gemalto demonstrates remote provisioning of consumer devices based on GSMA architecture; September, 01 2015 Gemalto boosts connectivity for the IoT with the industry-first M2M Cat 1 LTE module; September, 03 2015 Gemalto Partners with Samsung for the launch of Samsung Pay in Europe; September, 08 2015 Sprint extends relationship with Gemalto to manage growing LTE deployments across the U.S.; October, 06 2015 Gemalto to provide solution for Samsung Gear S2 with 3G connectivity; December, 04 2015 Gemalto, Orange, RATP and SNCF join forces to create Wizway Solutions
April 2, 2015 Internet-of-Things solutions enabled by Gemalto win 2015 Connected World Awards; July 23, 2015 Gemalto On-Demand Connectivity receives IoT Evolution Product of the Year Award; September 23, 2015 Gemalto receives 2015 Digital Payments Award from Juniper Research; October 13, 2015 Gemalto recognized in Top-100 World's Best Performing CEO's by Harvard Business Review; November 5, 2015 Gemalto recognized in Gartner's Market Guide for Issuer Tokenization; December 16, 2015 Gemalto awarded three times as the global leader in transport ticketing solutions
For 2016, with the positive trends in Enterprise, Government Programs, Machine-to-Machine and the US EMV ramp-up effort completed, Gemalto expects to generate a +1.5 percentage point gross margin increase, accelerating its profit from operation expansion towards its 2017 objectives.
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Gemalto (Euronext NL0000400653 GTO) is the global leader in digital security, with 2015 annual revenues of EUR 3.1 billion and customers in over 180 countries. We bring trust to an increasingly connected world.
Our technologies and services enable businesses and governments to authenticate identities and protect data so they stay safe and enable services in personal devices, connected objects, the cloud and in between.
Gemalto's solutions are at the heart of modern life, from payment to enterprise security and the internet of things. We authenticate people, transactions and objects, encrypt data and create value for software - enabling our clients to deliver secure digital services for billions of individuals and things.
Our 14,000+ employees operate out of 118 offices, 45 personalization and data centers, and 27 research and software development centers located in 52 countries.
For more information visit www.gemalto.com, or follow @gemalto on Twitter.