WISeKey Reports First Half 2018 Results
Wisekey International Holding SA
Sep. 13, 2018
WISeKey Reports First Half 2018 Results
WISeKey Cybersecurity & IoT Business Soars with Revenue Increase of 35%
WISeKey to host a conference call on Monday, September 17, at 3:00 pm CET / 9:00 a.m. ET
-- H1 2018 total revenue increased by 35% to $25.9 million from $19.2 million restated revenue in H1 2017, driven by higher revenues at Cybersecurity IoT and Semiconductors due to robust new customer acquisition and expansion in existing accounts.
-- Gross profit margin increased by 6% from 44% in H1 2017 to 50% in H1 2018, hence an increase in gross profit by $4.5 million. -- Strong liquidity and financial position with $7.9 million in cash at June 30, 2018, up $1.6 million from June 30, 2017, due to improved operating performance.
-- WISeKey expects to report full-year 2018 revenue of approximately $60 million (of which, WISeCoin is expected to generate approximately $5 million, provided that it is launched before 2018 year-end, pending regulatory authorizations).
ZUG, Switzerland- September 13, 2018- WISeKey International Holding Ltd (SIX: WIHN, OTCQX: WIKYY) ("WISeKey" or the "Company"), a leading Swiss cybersecurity and IoT company announced today its audited financial results for the for the six-month period ended June 30, 2018 ("H1 2018"). WISeKey's revenue increased by 35% to $25.9 million from $19.2 million adjusted revenue in H1 2017, driven by higher revenues for both Cybersecurity IoT and Semiconductors. Within the Cybersecurity revenue growth accelerates, up 30%, outpacing competition. Within the Secure IoT Semiconductors group, half year revenue was $25.9 million, up 35 percent year on year driven by demand for both IoT Semiconductors and IoT applications with new patents in anti-counterfeiting and identity management.
-- New agreements for the smart car, pharmaceutical and fintech industries, and consumer products which, in the aggregate, are broadening the ecosystem for WISeKey IoT chips. -- Stronger cybersecurity offering of proprietary solutions, increased footprint and further new customer acquisitions. -- Continued investments in IoT Security, with strong industry-specific partnerships. -- Further expansion of our vertical platform solution portfolio in Blockchain and Artificial Intelligence ("AI") following the acquisition of QuoVadis for managed cybersecurity and Identity Management services. -- Further enhancements of the vertical Platform for the IoT through the establishment of partnerships with leading players in the IoT domain. -- Expansion of patent portfolio with new IP and patents with the aggregation of 39 IoT / Semiconductors patent families (more than 200 patents in total) to its portfolio (https://www.wisekey.com/patents/).
KEY REVENUE FIGURES
US GAAP H1 2018 H1 2017 (Million US$) Net revenue 25.9 19.2 Gross profit 12.9 8.4 Operating loss as reported (7.3) (3.7) Net loss attributable to WISeKey as reported (11.8) (7.3) Non-US GAAP H1 2018 H1 2017 (Million US$) Adjusted Operating loss (2.5) (0.8) Adjusted Net loss attributable to WISeKey (5.6) (0.6)
Carlos Moreira, CEO of WISeKey, commented, "During the first half of 2018 we integrated the IoT and Cybersecurity offering via a new platform concept with the new developments on Ines and ISTANA. The WISeKey Platform gives customers a simple way to embrace all of these 4IR technologies developed by WISeKey without compromising Trust and Security which is the DNA of the company. WISeKey has packaged its Cybersecurity and IoT technology with AI and Blockchain so instead of just helping customers embrace Microchips, PKI, IoT and AI with individual sets of products licenses WISeKey expanded its platform to the whole spectrum of WISeKey solutions solving customers' needs. Peter Ward, CFO of WISeKey, noted, "Due to our disciplined and focused execution strategy, reinforced by the Quovadis and VaultIC resources team, we were able to drive strong financial results throughout the first half of 2018. With a 35% increase in group revenue and a 53% increase in gross profit, the financial results are starting to show the benefits from the integration efforts. The increase in gross profit margin by 6% also demonstrates that the group synergies will have a favorable impact on margins."
Conference Call & WebcastCarlos Moreira, CEO and Peter Ward, CFO will host a conference call on Monday, September 17, 2018, at 3:00 pm CET / 9:00 a.m. ET to discuss these results, recent business developments and growth initiatives. A Q&A session will follow the prepared remarks.
Interested parties may participate in the call by dialing:
United States & Canada 877-445-9755 United Kingdom (fixed): 0 800 756 3429 Germany (fixed) / (mobile): 0 800 182 0040 / 0 800 184 4713 France (fixed) /excl. Monaco: 0 800 912 848 Switzerland (fixed) / (mobile): 0 800 835 525 / 0 800 891 374 Spain (fixed) / (mobile): 900 834 236 / 900 834 876
To access the call, please dial-in approximately five minutes before the start time.
The call will also be simultaneously webcast over the Internet via the following link http://www.investorcalendar.com/event/37549 and such link will also be made available in the "Investor Relations" section of WISeKey's website http://wisekey.com/investors/.
2018 H1 Report Additionally, investors may download the 2018 H1 Report from WISeKey's website at https://www.wisekey.com/investors/reports/annual-reports/.
Non-GAAP Financial MeasuresIn managing WISeKey's business on a consolidated basis, WISeKey management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting WISeKey's business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses related to acquisitions and share-based compensation expense, which may obscure trends in WISeKey's underlying performance. This information also enables investors to compare financial results between periods where certain items may vary independent of business performance and allow for greater transparency with respect to key metrics used by management.
These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The presentation of these and other similar items in WISeKey's non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. Reconciliations of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP are provided in the financial statements portion of this release in a schedule entitled "Financial Reconciliation of GAAP to non-GAAP Results (unaudited)." The business during H1 2018The scalable approach of our platform allows customers coming from different angles and needs to benefit from the complementarity of the platform and it's easy to use licensing model. Customers only using WISeKey for Cybersecurity solutions can now expand their use to IoT, acquire Microchips, add Blockchain and Cryptocurrency technologies, and connect to AI clouds without the need to leave the Platform or compromising their Trust Models. One of the advantages of the WISeKey Platform is that is to get different elements to "talk together". This means that the WISeKey Platform can be integrated with customers' existing systems.
The WISeKey Platform can be used for various use cases in the same deployment. It can be deployed as a Next Generation IoT Platform, allowing deployment of readily off-the-shelf converged objects, allowing extension to as business requires a more sophisticated use of the Platform.
The WISeKey platform currently integrates the ISTANA PKI module operational on the connected car industry allowing mart car manufactures to validate the authenticity of different vehicle components. Certificate-based security also protects onboard communication between vehicle components and enables secure over-the-air software updates. Additionally, authentication certificates can be used by employees, dealers and suppliers to access car components to diagnose mechanical/technical issues and update software, from any location. Finally, the ISTANA PKI platform allows users to securely interact with a car's smart features using smartphones and other devices. WISeKey Identity Management, Managed PKI and Digital Signing ServicesDuring the second quarter, commercial synergies with the Identity Management business of WISeKey QuoVadis commenced and resulted in milestone new wins in securing the connected cars industry, car and automotive component manufacturers, banking and insurance, as well as further eGovernment enablement services.
WISeKey QuoVadis also announced during the quarter the provision of secure e-mail services to more than 200 savings banks in Germany. WISekey QuoVadis Trustlink Deutschland GmbH and Finanz Informatik announced cooperation to provide secure e-mail (S/MIME) communication to the German financial services sector. In Germany alone, WISeKey QuoVadis provides similar PKI services to more than 300 enterprises, such as Allianz, Daimler, VW Financial Services, Siemens, Commerzbank as well as the Volksbankengruppe. Digital Onboarding combined with integrated personal signing services enjoys strong momentum in Switzerland with various new clients in the Cantonal and Private Banking sector. WISeKey QuoVadis EU based digital signing services, leveraging the benefits of European qualified certificates under the eIDAS regulation across borders are helping major global accounting firms, governments and banks to simplify processes and increase efficiencies. Multi-year signing services engagement customers include EY, PWC, KPMG, Dutch Chamber of Commerce as well as the Dutch Ministry of General Affairs.
The managed PKI and Cybersecurity business started to generate new revenues in Europe in relation to the GDPR implementation as more companies required WISekey QuoVadis technology to facilitate their compliance with the new European General Data Protection Regulation (Directive 95/46/EC), known as GDPR (approved by the European Parliament in April 2016; took effect on May 25, 2018), the primary law regulating how companies protect EU citizens' personal data.
WISeKey CyberSecurityWISeKey has joined in June 2018 the Cybersecurity Tech Accord together with ten other companies that have joined the watershed agreement in the last two months to defend all customers everywhere from malicious attacks by cybercriminal enterprises and nation-states. The Tech Accord companies include ABB, Arm, Atlassian, Avast, Bitdefender, BT, CA Technologies, Carbon Black, Cisco, Cloudflare, Cyber adAPT, DataStax, Dell, DocuSign, ESET, Facebook, Fastly, FireEye, F-Secure, Gigamon, GitHub, GitLab, Guardtime, HPE, HP Inc., Intuit, Juniper Networks, KoolSpan, KPN, LinkedIn, MediaPRO, Microsoft, Nielsen, Nokia, Oracle, RSA, Salesforce, SAP, Stripe, Telefonica, Tenable, Trend Micro, VMware, WISeKey. These companies oversee important aspects of the world's communications infrastructure including cloud-based customer relationship management, collaboration tools, telecommunications, endpoint security, datacenter security, and encryption. WISeKey's unique neutrality and position in providing a Trusted and Secure platform for Internet transaction is a real asset to mount a stronger defense against cyberattacks. Intellectual property Enhancements WISeKey's strategy to evolve into a major player on the IoT, Cybersecurity, AI and Blockchain market implies a constant evaluation of potential add-on acquisitions, development of new IP and patents. In just one year, WISeKey has aggregated over 46 patent families to its portfolio ( https://www.wisekey.com/patents/ ) required to integrate the OISTE/WISeKey Root of Trust into IoT embedded devices with problem-solving AI solutions. For WISeKey, adding to its patent portfolio and intellectual property is key to ensuring that the company will remain a major player in the "DeepTech" for years to come. Its patent portfolio allows WISeKey to distinguish itself from other companies that use commonly available technology; WISeKey focuses on integrating unique technology that is differentiated, protected and hard to reproduce based on tangible scientific discoveries or engineering innovations. Internet of Things (IoT) and Industrial Internet of Things (IIoT)A focus area and fastest growing segment for WISeKey this year is the Internet of Things (IoT) and Industrial Internet of Things (IIoT). Revenues generated by this segment continue to increase due to the new generation of IoT Chips, sensor-based identification, authentication and data and creating AI for analytically rich data sets. What has emerged during the first half of 2017 is only a glimpse into how the IoT and IIoT technology used in solving complex logistics, manufacturing, services and supply chain problems, can deliver the most value for WISeKey.
Earlier this year, WISeKey announced a strategic partnership with IBM to secure the IoT using WISeKey's leading technology. The collaboration will provide enhanced security of sensitive data exchanged between devices across the IoT networks and the IBM Watson IoT Platform, by adding extended capabilities to secure IoT devices and the management thereof from a central location. By doing so, customers benefit from an increased trust in the data handled by their application, and a reduced risk of revenue loss due to cyber-attacks of all kinds thus leverage a greater value of their business.
IBM's Watson IoT Platform is a cognitive system that learns from, and infuses intelligence into the physical world. Device manufacturers and businesses can use the power of Watson IoT Platform to build specialized, integrated solutions to solve their business challenges. Watson IoT Platform implements a "messaging broker" that allows the exchange of information between devices and business applications, using a secure Public Key Infrastructure (PKI) technology to bring authentication and data encryption. This implies a seamless integration with the WISeKey concept of Root of Trust (RoT) that delivers the digital identity that can be leveraged later in the Watson IoT platform.
Ensuring a high level of security for connected carsThe vehicles will feature a secure hardware module that will be a WISeKey microchip that will carry a WISeKey digital certificate. The microchip will allow WISeCoins to be sent in a secure manner. WISeCoin also has digital identification for the electric car as well as for the electric charger and this identification cannot be forged. It is important for the technology used in the autonomous electric cars to be highly secure. Most of the vehicles that are currently in the market have technology that may have vulnerabilities that place them at a high risk of being hacked. Data security, therefore, has to be addressed and this is why WISeKey has taken noteworthy steps towards making sure that the identification system is hack-proof. The number of smart car manufacturers that use WISeKey's PKI Services has been growing steadily. The company plays a key role in the industry and things are only expected to get more exciting with the number of electric cars steadily increasing to approximately 250 million by 2020 compared to approximately 21 million in 2016. It is therefore important to make sure that their security systems cannot be compromised.
Level I American Depository Receipt (ADR) ProgramWISeKey also established a sponsored Level I American Depository Receipt (ADR) Program in the United States in May 2018. WISeKey's ADRs trade in U.S. dollars and provide access to the voting rights and to the dividends attached to the underlying WISeKey shares trading in the U.S on the OTCQX under the symbol WIKYY. Each ADR represents 2 ordinary shares listed on the Swiss Stock Exchange under the symbol WIHN. U.S. based investors can find current financial disclosures and Real-Time Level 2 quotes for the Company at www.otcmarkets.com.
About WISeKey:WISeKey (SIX: WIHN, OTCQX: WIKYY) is a leading global cybersecurity company currently deploying large scale digital identity ecosystems with a patented process. OISTE/WISeKey's Swiss based cryptographic Root of Trust ("RoT") provides secure authentication and identification, in both physical and virtual environments, for the Internet of Things, Blockchain and Artificial Intelligence. The WISeKey RoT serves as a common trust anchor to ensure the integrity of online transactions among objects and between objects and people. For more information, visit www.wisekey.com.
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Press and investor contacts:
WISeKey International Holding Ltd WISeKey Investor Relations (US) Company Contact: Carlos Moreira Contact: Lena Cati Chairman & CEO The Equity Group Inc. Tel: +41 22 594 3000 Tel: +1 212 836-9611 firstname.lastname@example.org email@example.com
Disclaimer: This communication expressly or implicitly contains certain forward-looking statements concerning WISeKey International Holding Ltd and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of WISeKey International Holding Ltd to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. WISeKey International Holding Ltd is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and it does not constitute an offering prospectus within the meaning of article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange. Investors must rely on their own evaluation of WISeKey and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of WISeKey.
WISeKey International Holding AGSupplemental Non-U.S. GAAP Financial InformationU. S. GAAP - Non-U.S. GAAP Reconciliation
Following is a description of the adjustments made to US GAAP financial measures:
-- Stock-based compensation -- Depreciation expense -- Amortization expense on intangibles -- PPA amortization expense -- Fair Value adjustment to marketable securities -- M&A-related legal fees -- M&A-related professional fees -- Gain from the liquidation of subsidiary -- Debt discount amortization -- Deferred tax impact
The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Non-GAAP financial results are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Non-US GAAP H1 2018 H1 2017 (Million US$) Operating loss as reported (7.3) (3.7) Non-GAAP adjustments: Stock-based compensation 1.1 0.3 Depreciation expense 0.7 0.5 Amortization expense on intangibles 1.3 1.1 PPA amortization expense 1.2 0.3 Fair Value adjustment to marketable securities 0.2 - M&A-related legal fees 0.2 0.3 M&A-related professional fees 0.1 0.4 Adjusted Operating loss (2.5) (0.8) Net loss attributable to WISeKey as reported (11.8) (7.3) Non-GAAP adjustments: Stock-based compensation 1.1 2.5 Depreciation expense 0.7 0.5 Amortization expense on intangibles 1.3 1.1 PPA amortization expense 1.1 0.3 Fair Value adjustment to marketable securities 0.2 - M&A-related legal fees 0.2 0.3 M&A-related professional fees 0.1 0.4 Gain from the liquidation of subsidiary (0.2) - Debt discount amortization 0.5 1.6 Deferred tax impact 1.3 - Adjusted Net loss attributable to WISeKey (5.6) (0.6)