Next Biometrics and Idex: The Skeptical Reality Behind Biometric Sensor Orders

The Skeptical Reality Behind Biometric Sensor Orders

Market Orders: A Closer Look

Next Biometrics and Idex Biometrics have both reported significant orders for their fingerprint sensors, signaling a potential breakthrough in the biometric market. However, a closer examination reveals that the reality may not be as rosy as the press releases suggest.

Next Biometrics secured an order from an OEM distributor in China for its Basalt FAP 20 sensors, intended for biometric banking applications. The deal is expected to bring in 0.8 million Norwegian kroner (approximately US$81,000) annually. While this is a positive development, the relatively small financial impact raises questions about the true significance of the order.

Financial Realities

Next Biometrics has also completed a private placement, issuing 4.7 million new shares to raise NOK 20 million ($2 million). The terms of the placement were revised due to the company’s share price falling below the subscription price, indicating market skepticism. The company’s stock was trading below NOK 3.00 on the Oslo Stock Exchange, a far cry from the initial optimism.

Idex Biometrics, on the other hand, has secured a 45,000-unit order from DigAware, a product division of Emnovate. This order positions DigAware to scale its access control business in America. However, the financial details of this order are not disclosed, making it difficult to assess its true impact.

Market Challenges and Strategies

Both companies are facing significant market challenges. Next Biometrics' stock performance and the need for multiple private placements highlight the financial strain. Idex, while reporting a strong order, is also in the midst of a significant pivot from supplying components to becoming a fully-fledged product company. This pivot is aimed at addressing the markets for Zero Trust security and fraud detection in digital payments, but the success of this strategy remains to be seen.

The Pivotal Role of Partnerships

Idex has launched a new portfolio of products for biometric payments and access control, along with a redesigned website. The company has signed multiple partnerships targeting commercial launches this year. CEO and CFO Anders Storbråten claims that this shift positions Idex at the forefront of the global shift toward passwordless authentication. However, the market is highly competitive, and the success of these partnerships is far from guaranteed.

Hypothetical Scenarios

1. Market Adoption: If Next Biometrics and Idex can secure more significant orders and gain broader market adoption, their financial outlook could improve dramatically. Projections suggest that a 30% increase in market penetration could lead to a substantial boost in revenue.
2. Technological Advancement: Both companies need to continue innovating to stay ahead of the competition. Investing in research and development to enhance the accuracy and speed of their sensors could be a key differentiator.
3. Strategic Alliances: Forming strategic alliances with major players in the biometric and security industries could provide the necessary capital and market access to drive growth.

The Bottom Line

While the reported orders and financial moves are positive steps, the long-term success of Next Biometrics and Idex remains uncertain. The market is highly competitive, and both companies need to navigate financial and technological challenges to achieve sustainable growth. Investors and industry observers should approach these developments with a healthy dose of skepticism.