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Secure Transactions News

Gemalto revenue: EUR 2 billion

Thursday 15 March 2012


Olivier Piou, Chief Executive Officer, commented: “in 2011, halfway through our strategic plan, we clearly outperformed our objectives. Secure Transactions and Security have become double-digit profit margin businesses, with strong growth and scale effects. Mobile Communication is back to revenue and profit expansion, benefitting from our investments in software and services. Consequently, the combined profit from operations of our four main segments grew by 28% in 2011. These results provide a strong base for the second part of our plan. We will continue along our strategy of transformation and expansion in the growing market of digital security, and have confidence in reaching our EUR 300 million profit from operations target in 2013.”

For the full year 2012 Gemalto expects another year of expansion in revenue and profit from operations, with all main segments increasing their revenue and profit, limited revenue from Patents, and less seasonality in Mobile Communication, on its way towards its target of EUR 300 million in profit from operations in 2013.


Gemalto shows each segment contribution to the company’s results:


And contribution to profit margins:


Mobile Communication


Gemalto’s public telephony activity, which is reaching end of life as it is now almost fully substituted by mobile telephony, previously reported in the segment Others, is included in the segment Mobile Communication. The Machine-to-Machine segment mainly includes the activity of Cinterion, which was acquired in July 2010 and consolidated as of August 1, 2010.

Software and Services revenue grew to EUR 161 million in 2011, up +7%. Important additional contracts related to future commercial launches of mobile payment and mobile NFC services were signed during Q4/2011.

Product mix improved gradually in H2/2011 with a few operators in the Americas and Asia launching fourth generation networks (LTE) and contactless services (NFC). This change in trend resulted in +4% year-on-year increase in product revenue recorded Q4/2011.

In Mobile Communication, Gemalto made good progress in Q4/2011 in rolling out its NFC-based Trusted Service Manager (TSM) solutions:

  • Isis selected Gemalto’s TSM solution to secure its open mobile commerce platform,
  • Singapore’s Infocomm Development Authority of Singapore (IDA) also selected Gemalto as the trusted third party to deploy nationwide mobile NFC contactless services such as payment, ticketing, loyalty and other wireless services,
  • Finally, after a trial period for which Gemalto had been selected in July 2010, KDDI, in Japan, announced that it would roll-out mobile NFC services beginning late January 2012. This will enable usage of contactless services through mobile phones compliant with the global NFC standard for the first time in Japan.

As a result of these positive developments, the segment’s gross margin grew +2.3 percentage points over the period to account for 40.3% of 2011 revenue. This increase was driven by the improvement in the product mix and by the surge in profitability of the Software and Services business. Software and Services crossed the break-even point during the second semester after a period of investments done both organically and through several bolt-on acquisitions.

Profit from operations came in at EUR 138 million for the segment, an increase of EUR 18 million on the previous year. Profit margin from operations grew by +2.1 percentage points to 14.1% of revenue.

Machine to Machine


The Machine-to-Machine segment posted revenue of EUR 174 million. This figure was stable when compared to pro-forma 2010 revenue at historical rates despite the adverse effects of unfavorable currency exchange rates, an uncertain global macroeconomic environment, and two natural disasters that affected the key markets and sources of Japan and Thailand in 2011.

On December 20, 2011, Gemalto announced it had acquired SensorLogic, based in the United States. The cloud-based, M2M service delivery platform offered by Sensor Logic will augment Cinterion’s market-leading range of M2M modules, MIM cards, Over-The-Air device management and security solutions. As of December 20, 2011, Sensor Logic activities have been included in the Machine-to-Machine reporting segment.

Secure Transactions


Secure Transactions performance, initiated in H2/2010, was extended to a particularly dynamic H1/2011 as a series of rapidly-developing regions accelerated their migration to EMV and financial institutions in developed economies upgraded to contactless dual interface payment cards. Revenue growth stood at +13% in the second semester, reflecting a more challenging comparative base and the anticipated return towards market-growth averages.

Supported by the current worldwide wave of migration to EMV payment technology, the 2011 results posted by Secure Transactions confirm the sustained improvement of this segment’s performance. The segment’s long-term prospects were considerably reinforced in the second part of 2011 by the positive strategic shifts in favor of EMV in the United States. Gemalto expects the effects of this migration to become material for the segment towards the end of 2013.



Government Programs, which accounts for approximately two-thirds of the segment’s revenue, grew by 11% on the back of new e-Documents and e- Government services deployments, and it substantially increased its backlog at year-end.

Revenue growth in Identity Access and Management (IAM) was slower in the first semester due to security issues not related to the Company that weighed on the whole industry. Growth accelerated over the second semester to +13%, driven by more deployments of security solutions for e-Banking and internet access for cloud computing applications.



Patent revenue settled at EUR 9 million, confirming the anticipated effect of the public patent litigation Gemalto has initiated in the United States to protect its intellectual property. During this litigation period, the company and potential licensees have favored postponing the signing of new intellectual property licenses until fair, reasonable and non- discriminatory terms can be established.


Gemalto also communicates on sales per region: