Fingerprint Cards AB's Strategic Transformation and Path to EBITDA Positivity

Fingerprint Cards AB (FPC) is navigating a high-stakes transformation in the biometrics sector, pivoting from a struggling provider of low-margin mobile and PC sensors to a focused player in secure digital identity and passwordless authentication. For investors, the critical question is whether this strategic overhaul can deliver EBITDA positivity and sustainable cash flow in a market poised for explosive growth.

The Strategic Shift: From Commodity to Premium

FPC's 2024 financials painted a grim picture: revenue plummeted to SEK 403.2 million, and EBITDA remained negative at SEK -143.2 million. However, the company's decision to exit non-core segments like mobile biometrics and refocus on high-margin areas such as enterprise access control, payment solutions, and decentralized identity has begun to bear fruit. By Q1 2025, FPC achieved a 100% year-over-year revenue increase to SEK 18.2 million, with a gross margin of 56.6%—a stark contrast to the 11.3% margin in 2024. This shift reflects a deliberate move toward markets where FPC's technology can command premium pricing, such as FIDO2-certified platforms and AI-driven liveness detection.

The monetization of legacy assets has also provided critical liquidity. In August 2025, FPC licensed PC-related assets to Egis Technology for SEK 24 million, with potential royalty payments tied to Egis's shipment volumes. This deal not only reduced operational drag but also injected capital to fund R&D and strategic partnerships. Meanwhile, a licensing agreement with Smart Eye in Q1 2025 generated SEK 29.5 million in non-cash revenue, further underlining FPC's ability to extract value from its IP portfolio.

Lean Operations and Cost Discipline

FPC's transformation has been underpinned by aggressive cost-cutting. Headcount in continuing operations dropped by 70% year-on-year in Q1 2025 and 59% by Q2 2025, reducing fixed costs and improving operational flexibility. These measures have helped narrow operating losses: Q1 2025 saw a SEK -0.3 million operating loss, compared to SEK -67.3 million in Q1 2024. While EBITDA remains negative (SEK -9.7 million for H1 2025), the trajectory is encouraging.

The company's lean structure now supports targeted investments in high-growth areas. For instance, FPC's partnership with Ping Identity to integrate its biometric solutions into the PingOne DaVinci™ platform has opened access to enterprise clients seeking passwordless authentication. Similarly, collaborations with Anonybit and jNet are expanding FPC's reach in decentralized identity and secure crypto wallet solutions. These partnerships align with the broader market shift toward FIDO2/WebAuthn standards, which are projected to dominate the passwordless authentication landscape.

Market Dynamics and Competitive Positioning

The global biometric and passwordless authentication market is expected to grow at a 16.8% CAGR through 2030, driven by rising cybersecurity threats and regulatory demands for stronger authentication. FPC's focus on privacy-first, multimodal solutions positions it to capture a slice of this growth. Its low-cost, sub-USD 2 biometric sensors are particularly attractive for mid-range smartphones and emerging markets, where adoption of digital banking and micro-insurance is accelerating.

However, FPC faces stiff competition from established players like IDEMIA and Yubico. Its mid-tier status means it must differentiate through innovation and agility. The company's recent foray into behavioral biometrics and sensor-fusion strategies—combining fingerprint, iris, and facial recognition—could provide a competitive edge. Additionally, FPC's debt-free balance sheet and streamlined cost base offer flexibility to outmaneuver rivals in niche markets.

EBITDA Positivity: Feasibility and Timing

FPC's path to EBITDA positivity hinges on three factors: sustained revenue growth, continued cost discipline, and successful monetization of IP. While Q2 2025 EBITDA remains negative at SEK -20.3 million, the first half of 2025 saw a 66% revenue increase to SEK 33.9 million, with gross margins averaging 53.0%. If FPC can maintain this growth rate and reduce operating expenses proportionally, EBITDA breakeven could occur by mid-2026.

Key risks include the capital intensity of R&D and the need for further asset monetization. FPC's recent rights issue (boosting cash reserves to SEK 52.6 million) provides a buffer, but sustained profitability will require scaling core operations without re-incurring past losses. The company's focus on enterprise clients—where margins are higher and contracts more stable—mitigates some of these risks.

Investment Thesis

FPC's transformation is still in its early stages, but the company has laid a solid foundation for long-term value creation. Its strategic pivot to high-margin markets, lean operations, and IP monetization efforts align with favorable industry trends. For investors, the key is to assess whether FPC can scale its core business while managing short-term cash flow challenges.

The stock's valuation remains speculative, given its ongoing losses, but the potential rewards are significant. If FPC successfully executes its strategy, it could emerge as a key player in the passwordless authentication market, capitalizing on the shift toward secure, identity-first digital ecosystems. Investors with a 12–18 month horizon may find FPC compelling, particularly if the company achieves EBITDA positivity and expands its enterprise partnerships.

In conclusion, FPC's journey is a high-conviction bet on the future of digital identity. While risks remain, the company's strategic clarity, operational discipline, and alignment with market megatrends make it a candidate for long-term outperformance in the biometrics sector.