Inside Secure 2011 results

Inside Secure CEO, Remy de Tonnac, declared, “2011 was the take-off year for the NFC market and created substantial benefit for INSIDE Secure. Taking advantage of our position as pioneer of NFC technology, our Group reinforced its position in this fast growing market in 2011, and finished the year with a market share of close to 50% by volume”

Inside focuses on its mobile NFC business unit. The Mobile NFC business unit accounted for 32% of the company revenue in 2012, whereas the same BU just contributed 3% of 2011 revenue. In terms of sales, the Mobile NFC BU generated US$ 1.38 million (EUR 1.04 million) in 2011, and US$ 46.96 million (EUR 35.25 million), which represent a 3290% year on year growth. Inside adds it shipped 17.4 million NFC chips, mainly to RIM, in 2011, and actually the bulk of these chips were shipped in Q4/2011, in line with RIM’s launch of new mobile phones incorporating Inside’s NFC products. Also, Inside posted in 2011 its first revenue from its license agreement with Intel.

Inside says its sales in the Digital Security segment were roughly stable in 2011 compared to 2010 pro forma. The Digital Security activity is in a process of repositioning from identification products towards anti-counterfeiting, smart metering and machine-to-machine.

Inside Secure Payments BU revenues is down sharply between 2011 and 2012. According to the company, this shrink is primarily due to the downturn in the US market for contactless payment solutions, and the fact the market was holding off in anticipation of migration towards a new EMV-type standard and deployment of mobile payment solutions via NFC technology. Also, Inside says the decline is attributable to the absence of “design wins” during the period when Atmel was seeking a buyer for its SMS business. Inside says it gets prepared to take advantage of future US EMV roll-out.

The structure of the company revenue totally changed between Q4/2011 and Q4/2012:

In 2012, Inside Secure anticipates RIM will still represent the bulk of the revenue of the Mobile NFC segment in 2012. The objective of reaching the break-even point (at the adjusted operating profit level) in the last months of 2012 remains partly dependent on the launch of the new platform "BlackBerry 10" for H2/2012, as confirmed by RIM.

Inside is also planning to launch its “NFC Booster” technology in 2012, as well as its own Secure Element that will provide the company with more independence from Infineon.

Inside reaffirms its objectives:

• Circa US$ 400 million (EUR 300 million) in 2014,
• A doubling of NFC market every year between 2011 and 2014,
• Long-term gross margin target: circa 40%,
• Operating break-even (adjusted operating profit) to be reached by the end of 2012.