Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Q1 2019 report conference call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday the 15th of May, 2019. I'd now like to turn the conference over to your speaker today, Christian Fredrikson. Please go ahead, sir.
Yes. Good morning, everyone, and welcome to the call. As usual, let me begin by giving the main highlights of the quarter as well as an update on the business before Per, our CFO, will go more into the financials. We reported sales of SEK 343 million, which is 18% higher than in the same quarter last year. Order inflow has been quite strong even though Q1 is generally a seasonally weak quarter for us and for the mobile phone industry. The order inflow has continued well also into the beginning of Q2. We also saw strong sales from our embedded area, particularly in door locks where Fingerprint's position is strong. Our revenues also from new areas continued to increase in the first quarter.
Looking at the gross margin, it improved by eight percentage points compared to the same period last year, and we also saw a slight improvement compared to the previous quarter. Still, the 23% gross margin we reported is not satisfactory. We have work to do here. Profitability was impacted by the fact that low-margin products from our inventory accounted for a relatively large share of sales this quarter. This is also positive in a way, since our inventory has now come down to more acceptable levels. Also, the introduction of the latest fingerprint sensor generation at our OEM customers is in good progress, although it has taken a bit more time than initially expected to go into all the different versions of that product.
We should be able to deliver higher profitability, I expect that the positive impact on margins of the sensor generation shift will continue going in this year. Also, we plan to further sharpen our offering in cost-effective capacitive sensors by launching a new sensor generation based on FPC1511 later this year. Basically, these sensors will be even smaller and therefore more cost-effective, but with high biometric performance. We continue to innovate also still in capacity. They will also have the potential to expand our addressable market by enabling fingerprint sensors to be included in the low-end smartphone models in mobile business. Next slide, please. Looking at market launches and business development activities, 11 smartphones equipped with our sensors were launched in the quarter by five OEM customers. If we look at the global smartphone market, it declined by about 4% compared to Q1 last year.
There seems to be signs that some of the shipments are stabilizing, although we do not know what impact the possible trade war will have in the consumer behavior. If we look at how Fingerprint's key clients in the smartphone industry are doing, we see a little bit different picture. Our customer base has increased their market share despite the challenges in the mobile phone market. Clearly, the mobile phone replacement cycle is getting longer in Asia, and this has been seen in the decline, as I just said, in the overall volumes. It seems that Asia and China is coming closer to the European and U.S. replacement cycles, which are a bit longer. We did well in the quarter and have increased our volumes even despite the ASP decline.
In our capacitive sensors, the situation is now more stable, and we can see even a slight market share increase continuously in our business. Looking at the smart cards business, our biometric technology is featured in a new all-in-one card by FEITIAN. The card combines multiple security technologies and has a built-in fingerprint sensor from Fingerprint, enabling easy and secure identification. We also celebrated an important accomplishment in the smart card area during Q1. In February, we signed a partnership agreement with Gemalto and secured the world's first volume order for biometric sensors for dual-interface payment card. This initial order is for a few hundred thousand sensors to be delivered during 2019 and 2020. Gemalto will offer biometric EMV payment cards to its bank customers using our T-Shape sensor.
Gemalto is also licensing Fingerprint's recently launched biometric software platform for payments. This platform has been tailored to optimize the performance of our small and power-efficient biometric sensors for payment, which includes the FPC1300 series and a T-Shape module. We can now offer card and device makers a complete hardware and software solution to secure biometric authentication and maximize the user experience and convenience as well as once again, the security. This solution is already being tested in two new market trials of dual-interface biometric payment cards by RBS, the Royal Bank of Scotland, and NatWest in the U.K. The card for both trial is provided by Gemalto and is using Fingerprint's T-Shape sensor module together with our software platform for payments.
These two market trials announced in April bring the total number of dual-interface biometric payment card trials in the world to 19, and Fingerprint's technology has been used in all 19 of them. Next slide, please. We continue to make good progress step by step against our strategic priorities in Q1. An important priority is to continue defending and leveraging our position of strength in the smartphone segment as the mobile phone industry continues to evolve. In February, we could tell you about the launch of our first in-display sensor based on our optical technology. This new FPC1610 sensor brings superior image quality, which also means higher biometric performance. It is a second generation of optical sensors. In addition, it features a very slim form factor, enabling a sensor to be placed between the battery and the display.
This gives our customers more design freedom without impacting the thickness or battery size of the device. This FPC1610 is currently being tested by our OEM customers, and the feedback so far has been good. I'm pleased that the project is progressing according to plan. We look at the capacitive sensors, we continue to see good volume development for our new fourth generation sensor with strong volumes in Q1. This cost-effective product, the FPC1511, will be an important part of our capacitive sensor portfolio going forward. We are also taking the next step by developing a new sensor generation based on FPC1511, which will be even smaller and thus more cost-effective. These sensors will have the potential to expand our addressable market by making it possible to include fingerprint sensors even in the lowest-end smartphone models.
An equally important area of focus for us is to position fingerprints for future growth in new markets. We saw very positive progress in Q1. I have already mentioned the fact that we received the world's first volume order for biometric sensors and software for dual-interface payment cards. This initial order for a few hundred thousand sensors to be delivered during 2019 and 2020. While this order is not in itself financially significant in relation to Fingerprint Cards' total revenues, the fact that this is the first volume order in the biometric smart card industry strengthens our view that the global market for biometric payment card is about to take off, even if 2019 will still see modest numbers in smart cards. I'm also happy to report that sales in our embedded area were good in Q1, not at least in the door lock area where our position is strong.
Next slide, please. As a company, this month, we reached a major milestone. Since the company started, we have now delivered 1 billion sensors. We are proud of the central role we have played in bringing fingerprint sensors to the mass market. Having led major advancements to the technology, Fingerprint Cards was responsible for driving the first integration of Fingerprint Cards touch sensor into an Android handset in 2014. Our sensors are now integrated into more than 330 smartphone models globally. Fingerprint biometrics has already replaced the pins and passwords on smartphones, and as devices diversify, our expertise will also bring trust to a range of new next-generation form factors, cutting across a variety of applications, including access control, smart cards, and IoT. We believe this is just the beginning, just the first billion.
We are continuing to invest in hardware, software, and algorithms. We are continuing to drive new innovative solutions to market while increasing performance and enhancing the user experience, as I've just explained with some of the new launches. As the applications continue to rise and new technologies emerge, we are, as a company, committed to realizing our vision of truly seamless all-in security, where you, as an individual, are key to everything. It is interesting to note that today with these over 1 billion sensors delivered, consumers interact and touch our products more than 120 times every second. We deliver more than seven sensors every second. Next slide, please. Before I hand over to our CFO, Per Sundqvist, let me summarize the key points.
I am very happy about the launch of our first in-display sensors, which signifies that we are now entering into the highest growth segment in the smartphone area. In-display sensors, which were introduced in 2018, are going to overtake capacitive sensors in market value, in terms of value, already during 2019. Our goal is to capture a considerable portion of this market, and the project is proceeding according to plan, and the FPC1610 sensor is now currently undergoing test with our OEM customers and the response to date has been positive. If we look at the capacitive sensor business, which accounts for the bulk of our revenues, we are also making very good progress. The positive volume trend for our latest generation sensor continued.
The shift to this new generation of more cost-effective sensors will continue during Q2 and into the year. We expect, as I said, that this will contribute to our improved profitability. I am very pleased that we are still innovating also in capacitive, and we are further bringing out a new sensor based on the FPC1511 already later this year, which will be able to expand overall market with capacitive sensors. We also saw good growth in the quarter outside of mobile. I'm very pleased to see that progress continuing. As we have said many times, we believe this biometric smart cards will be a key area of growth for us in the coming years. We had some encouraging news in Q1 with the Gemalto deal, which gives us confidence that this is moving.
We can see it as across the trials and all the banks and schemes in the world. In summary, I'm very pleased that after a tough year, we have stabilized our business. We show growth again in volumes and business. Our cost structure is now very different than last year, and we are very competitive. We have a lot to do. We are not satisfied with our margins, but we are back to innovating and launching new products with a positive trend in the gross margin and more stable finances. With that, I'd like to hand over to CFO, Per, go ahead.
Thank you, Christian, and good morning, everyone. Let me now take you through the financial results for the first quarter. Our revenue came in at SEK 343 million, which is an increase of 18% compared to the same period last year. Our order inflow was strong, and this has continued into the beginning of Q2. Our gross margin also improved from 15% last year to 23%. However, the gross margin should be higher than this, as Christian mentioned earlier. We expect to see a positive impact on profitability of the sensor generation shift continue into Q2. We reported an operating profit of negative SEK 2 million, which should be compared to a negative SEK 175 million in the same period last year. Next slide, please. As Christian pointed out, we've just gone through a very tough year, a year in which we took down our costs by two-thirds.
At the same time, we've managed to keep our focus on innovation and product development, which should be evidenced by the launch of our first in-display sensor, as well as our latest generation of cost-effective capacitive sensors. If we look at the development on a rolling 12-month basis, as shown in the diagram of this slide, we can see a positive trend shift both in terms of revenue as well as margin. Next slide, please. On this chart, in particular, you can clearly see the dramatic change in the cost structure that has occurred in the last quarter. Excluding our other operating income and expenses, our operating expenses for the fourth quarter totals SEK 81 million, which should be compared to SEK 218 million for the same quarter last year and SEK 117 million last quarter.
It should also be mentioned that the SEK 218 million in OPEX in Q1 last year included SEK 40 million in restructuring costs, which are excluded in this diagram on this particular slide. Moving our focus to the development cost, that has landed at SEK 21 million that were capitalized during the third quarter, which corresponds to around 47% of our total development cost, versus 30% in Q1 2018 and 19% in Q4 2018. In relations to revenues, our operating expenses represented some 23%, compared to around 61% in Q1 last year. Still excluding the SEK 40 million in restructuring costs that we recorded in that quarter. Next slide, please. Our working capital was SEK 322 million at the end of the quarter, which should be compared with the SEK 592 million in the same period last year.
The increase in working capital compared to the previous quarter is partly a result of increased receivables due to positive sales trend. Next slide, please. Our cash flow from operating activities was a negative EUR 165 million in the first quarter, compared to a negative EUR 204 million in Q1 last year. As you can see on this slide, the development of cash follows a similar seasonal pattern as last year. The cash flow from investing activities was a negative EUR 43 million, which should be compared to a negative EUR 57 million in the same period last year. Capitalized development expenditure accounted for a negative EUR 21.4 million, compared to negative EUR 36.2 million last year. The final payment of the withheld purchase consideration for Delta ID accounted for an expense of EUR 21 million. Next slide, please.
The negative cash flow in the quarter is due to seasonal effects concerning accounts payable, as well as some large delayed receivables. These receivables were settled already during the first week of April. If we look at the cash position since the end of the quarter and the change therein, it has increased by EUR 108 million since March 31, and is now amounting to EUR 446 million as per Friday of May 10th. To summarize, we see a positive trend shift in terms of revenue and gross margin. The order inflow continued to trend favorably at the beginning of Q2, the shift to our fourth-generation capacitive sensors continued in Q2 with a positive impact on the gross margin. If you look at then the cost structure, we have reached our targeted OPEX on an annual basis run rate of less than SEK 400 million.
Finally, our EBITDA continued to improve and our financial position is strong. Thank you, everyone, and we are now ready to take questions.
If you would like to ask a question, please press star and one on your telephone keypad. That is star and one should you wish to ask a question over the phone lines. We have had some questions come through. The first question on the phone lines comes from the line of Francois Provistine. Please go ahead, your line is now open.
Good morning, everyone. Thank you for taking my questions. I have a couple, Sami. The first one is on your top line. If we look at your performance, you delivered a growth of 18% year-over-year. If we look at constant currency, I know currency had a significant impact year-over-year, if I exclude the constant currency, you grew 5%. What I am trying to understand is, if you were to look at Q1, you had 11 devices launched with five customers, and this is compared to 17 device launch last year in Q1 and seven customers. You have lower devices launch versus last year, and if we assume ASP lower versus last year, which is consistent with your comments, how do you manage to get 5% growth year-over-year at constant currency? I am just trying to understand this.
Yeah, I suppose. Hey, hi, Francois. I think the top line growth, of course, it was a weak quarter in the whole industry last year as a comparison. I think it is very clear that we had very good performance from the new sensor FPC1510 family, which is taking off well, and that has helped us. As I said there, I think our market share is moving positively for us. At the same time, even if the mobile phone industry was in decline, it declined roughly 5% in 2018 from 2017, and it continued decline at roughly 4% in Q1 2019 versus Q1 2018. Despite the mobile phone volume decline overall in the market, there is the fact that our customers are doing relatively better.
Our Asian customers are doing relatively better in that market, so they have gained market share, and also the fingerprint sensor penetration has continued in the mobile phone industry. I think that those kind of three effects explain why we grew the revenues despite the declining market and in capacitive sensors, and also despite the ASP decline. Obviously our volume development has been very good in Q1.
You had lower devices launches, but those models have been more successful than last year, basically. Still the number of launch is lower than last year in Q1. Is that right?
Exactly. That tells you also that it's really a question of which customer launches are out and which customers are doing well in the market and how you are positioning your own market share also.
Of course. There is a discussion on that, at the moment in the market. All Huawei exposed companies have performed particularly well in Q1, Q2, and the discussion is around the trade war. It looks like Huawei is putting a lot of inventory ahead of the trade war deal just to make sure that they are on track for H2 and there is no issue post trade war. Do you share this comment, saying that Huawei has been very aggressive to build up inventories in H1? Are you at risk for you?
I don't want to comment on, of course, and cannot comment on what the customer inventory build-up is. I think we have learned a lot. We have just now gotten our inventory to an acceptable level again. I think there is a big cautiousness in the industry in itself to build inventory, actually. I think there were a lot of companies that burned themselves and still remember that. I don't see ourselves building any inventory. Rather, we are very tight on it. Right? It is rather so that is a pain still in the channel. I can't comment then on Huawei and their own inventory situation. That I couldn't do. I think on the trade war, you are right in the sense that obviously, a trade war cannot have positive impact on anything that happens globally or anything that happens with the consumer.
We're, of course, following that cautiously on what will be any trade war impact into the consumer behavior. We haven't seen that yet, any behavioral change of any kind. Just the normal replacement cycles have gotten longer in Asia. They have gone closer to what it is in Europe and U.S. and the Western world. The replacement cycles. That shows why the volumes have declined in the whole mobile industry. Clearly, the trade war, if it continues and gets worse, I'm sure it will have some, and must have some impact on consumer behavior going forward.
Okay. Thank you. The second question I had is on your capitalized R&D and OpEx. Your capitalized R&D has been very volatile the last few quarters. Can you update us on what we should model for capitalized R&D? It's increased significantly quarter-on-quarter. I just wanted to get the sense of how we should model it going forward.
I'm sorry, Francois. That would mean that we give you a forecast, and I'm sorry, we don't do that. I can't give you any guidance on that one. Sorry.
Okay. Fair enough. On OpEx has been very tightly controlled this quarter. I see that the number of employees as well continue to decrease in Q1 versus December. Should we think of the Q1 as a run rate or further cost control?
Yeah, I think we said that we will be below SEK 400 million for the year. Now we are, as you said yourself, we're clearly below that looking at the Q1. I've said it before as well, we have had a really forceful movement in terms of cutting our cost base to make us competitive also in that perspective. We have no ambition to cut ourselves to victory. We realize that that's not going to make us great. We need to innovate and run new products, which we are doing. I think this cost base is good for us right now, I would say. You can never say anything else than that. Yeah, I think that that's a good base to be on. Below SEK 400 million, as we have promised.
Having said that, of course, this will put us in a very good position to make a profit at the level we are at right now. We will, of course, continuously drive efficiency throughout the organization and continuously do what we can to improve the cost base. We will always do what's necessary in order to be able to act quickly and keep our competitiveness. That's something we monitor on a daily basis, being it cash or in the form of expenditures, or being it in the form of working capital or anything else.
Yeah. Of course, we need to put a lot of effort, and as we have always done, but even more also on driving costs for us. With increasing volumes, we have to kind of take those benefits as well into the chain.
Okay. Last one from me, if I may, on the in-display. You mentioned that you will, in the release, that you intend to capture a considerable part of the market. I just wanted to clarify, is it medium term, or do you mean as well this year?
We will launch it this year. I think that will happen only when you get into next year, of course. Yes, we are still on track, and the project is progressing as planned. I'm very pleased with that. Yeah, on the kind of midterm, that's what we want to do, and optical will be launched this year. That's the ambition for it.
Yeah. Should we expect a considerable as well market share this year?
No, we don't want to comment yet. First, we want to get out with it, get into mobile phones. We're in those tests and pilots now. When you get to that and into launches, then you can start talking market shares.
Okay. That's it from me. Thank you very much.
Hey, thanks, Francois.
Thank you. The next question comes from the line of Jörgen Wetterberg. Please go ahead. Your line is now open.
Yes. Good morning, Christian and Per. Thank you for taking my call. If I can start with the new sensor, FPC1511. You've said that your margins were hit by a larger portion of low-margin sensors than the capacitive sensors. What is the mix between the older sensors and the FPC1511 right now, and how do you see that evolving going forward? Do you still have a large part of older sensors in inventory that you need to sell or potentially write off that could further burden the margins. Thank you.
Yeah. As you can see, I think our inventory has now come down to more acceptable levels. I'm pleased that we kind of sold out from the inventory. We still have some to do there, but it's really been in. Now, as I said, it's an acceptable level where you should be as an industry. We don't give out which the mix effect is, but there is still a way to go, and we, of course, don't have only FPC1511, but we will have to deliver also other sensors. Those are kind of also, so that we need to produce them as well now, actually. It's not only from inventory to do that.
I might add that if you compare to last year, when we took a fairly large hit of a non-cash inventory write-down of SEK 305 million in Q2 last year, that corresponded to over 40% of the inventory value at that point. That sort of adjusted for a lot of the situations that might have occurred in our inventory. On the risk of further impairment, all I can say is that we continuously do these checks and balances every month to see where we can and what we can do. As Christian mentioned today, we are in a good balance.
Okay, great. Also, I'd like to congratulate you on reaching 1 billion sensors. That's an astonishing number. Do you see the capacitive sensor volumes growing from here, or have we reached a peak, transitioning into touchless and in-display, from here? What's your view on the market?
I think on capacitive in mobile, yes, I think the peak happened already, when it comes to the volumes for capacitive in mobile. It is still going to be very strong volumes in mobile. It seems to be going even more low-end phones. There's a lot of mid-tier phones. It will continue to be very strong volumes, but it has been decreasing. When I look at the capacitive volumes overall, we expect them to be growing, of course, globally when we look at other technologies and other segments such as the smart card and the embedded area. I think that's maybe the answer to it, yeah. The optical volumes are still clearly much, much smaller than the capacitive volumes. There is more value in them per sensor, if you may. That's maybe a conclusion.
Okay, great. Maybe my last question is, you achieved the over 10% revenues from outside mobile capacitive sensors. What's that number now? Do you have any new targets that you're aiming for? Could you talk a little bit about what's biggest, what's growing most in the mix outside of mobile? Thank you.
Yeah, thanks. I think it showed that it is over 10% of our revenues. We haven't given out the new number. We'll have to see where we look at it, we use that as a yearly basis, so I expect it to be over 10% this year. That industry includes everything else, right? It includes the iris in different payment terminals in some border control cases. It includes the whole embedded area, of course, with fingerprint sensors going to hundreds of different devices now. It is also in the volumes designed in the millions. For example, the biggest probably is the door locks, the Chinese door locks, which is now expanding into other markets as well when it comes to the fingerprint sensors in door locks and then also access control, for example.
I think those are maybe the. Different payment devices and terminals. Later on, we can see then the car industry, the airline industry. Also looking both at the fingerprint sensors as well, our iris and a combination of iris and face. That's maybe on that kind of above 10%, the summary of it.
Okay. Thank you very much, Christian. That was all from me.
Thank you.
Thank you. We have one further question on the phone. It comes from Victor Westerlind. Please go ahead. Your line is now open.
Thank you, and good morning. If we talk a little bit about smart cards, where are we in terms of the certification? Are we still on track for end of June? In relation to that, since smart cards are taking so long time, how do you see the risk for the market going more towards mobile solution?
Yes. Okay. I suppose on the certification, it's not in our hands, so can't kind of control that part. I think in this European summertime, that is still a target of the schemes to go with that. You talked about June, I think it's in the summer, I would say, right? We're obviously following that cautiously. I think the specs have been set, and now they're trying to go into the actual work for the certification, the big schemes. That's an important milestone, as we discussed before. You're very correct with the question, because that kind of implies that then it is okay to start buying, to start launching, to start going into real marketing and sales of this with the banks into the consumer market. When it comes to how this has taken time, I can only agree.
We are not controlling that speed as we can do our part of it. We are not the ones who are doing the whole full thing. I think obviously, it has taken quite a long time for the whole industry. It's clear that fintech industry is taking its time to verify, to check, to pilot, to get the whole large chain to work. It is, of course, a massive industry once it moves. We believe very strongly, very clearly it will move. We don't see any trends of any kind that cards will be going less and mobile will be eating out on cards. We see both of them growing, both mobile payments and card payments are growing across the globe. Card payments are growing in China, where actually the mobile payments has been the biggest. The losing out part has been cash.
That is losing out big time, I think, across the world, at the moment at least. I think that for many years, you will have both of those existing, and you will see many other payment methods outside of cash coming in as well. That's at least our belief.
Okay, great. On the sequential drop in smartphone sales, I think the market was down 13% in total quarter-over-quarter. You mentioned your customers were better than that, and you increased your market shares as well. Your decline of 19%, is that just ASP pressure?
Sorry, what 19%?
The drop from Q4 in sales.
Yeah. We have always had a seasonal effect because of the Chinese New Year, where we are. Q1 is always a big drop if you look at every year backwards as well. Q1 is always a weak quarter for the mobile industry. That is more if you look at sequential. If you look at year-on-year, we actually grew 18%. Of course, there was currency impact as well. I think that the answer is that, yes, we are gaining market share in the capacity part, and also our customer base is making the trending better in the decline. I think the mobile phone industry overall decline, as we said here earlier, is roughly minus 4% on volume quarter-on-quarter. Q1 2019 versus Q1 2018 is about minus 4% volume decline.
That tells you roughly what the actual in the mobile. That other drop is very seasonally typical for Q1.
Okay. You mentioned the in-display sensors becoming the majority of the value in the market. Is this a new assessment from you, or is this the same as the one you gave in Q4?
It's the same assessment, yeah. That during 2019, when we get into the year, value-wise, but of course now the price erosion is also coming into optical very strongly, right? The price levels are coming down there as well, right? As an ASP decline hits there.
I think that is to be expected, of course, when new technology comes in as well. It is to say what we said earlier, there is no change in that.
Okay. I've got a last question also on the 1610 sensor. You mentioned that you had a better biometric performance than the competitors there. I guess this is the classic FAR, FRR stuff. Is there any other characteristic of this sensor that is better than competition, cost or user experience or anything other?
I think you just mentioned, and I think the current optical sensors out there are camera based. They are thicker, more bulky. The performance on corner cases has been far from good, when it comes to dry fingers, when it comes to light conditions. When we bring in now the second generation of optical, we come in with that. It is thin, so you can actually place it anywhere. You have much more freedom in terms of the sensor because it is very slim. You can place it anywhere and the battery thickness is not an issue there, right? The phone doesn't get thicker. It is also superior when it comes to security.
We are bringing new security level to the industry, and of course, the performance overall of the sensor when it comes to speed and under water performance, corner case performance is improved, so the consumer experience and security is better. That's of course what we bring the system knowledge, combination of software and hardware, and how we bring into it.
Great stuff. Thank you so much, Christian and Per.
Yes. Thank you very much.
Thank you. There are no further questions over the phone lines. Please continue.
I think we can take a couple of questions from the web as well. The first one is on cash. What's the reason that cash dropped by some SEK 100 million since Q4?
Okay. Well, as we mentioned a little bit earlier
On the cash. First of all, the cash position we have withdrawn. The negative cash flow that we have been reporting is mainly a seasonal effect concerning accounts payable. If you look in the graph I showed earlier, you can see that a similar pattern emerged last year, and it has to do with how we order stuff and in the frequency and how we agree to pay and other things. There is also the fact that we had a very large portion of delayed receivables. The quarter ended on the Friday, and we got some very large payments on the Monday. If you then look from then at the end of March and then also up to where we are right now, we have recouped most of that as per our plan. We recouped more than SEK 100 million.
We are now at the level of SEK 446 million. We are at a very firm base on the cash flow scenario, and we still are very well prepared for the Q2 volume ramp up that usually comes also on a seasonality basis. Still, having said that, we still continue to focus on cost efficiency and of course, what I've mentioned here a lot around cash management and cash flow. Okay.
Okay. Then there's a follow-up question on the optical sensor. Do you expect it to be competitive also in terms of price?
Yes, I suppose we always have to be competitive in terms of pricing a mobile phone industry. Obviously, we want to be competitive. When it comes to efficiency, security, performance, and in front of the consumers as well, of course, cost efficiency. That's kind of a given in the mobile phone industry, I think, as of today. We want to focus a lot on with the generation tool to bring a lot of good value now into in-display sensors.
Lastly on Iris, what is the status in the Iris area? When do you expect to see increased revenue from this area?
We haven't reported on Iris separately when it comes to revenues. It continues to do well for us. It is clear that the touchless part when it comes to mobile, it is not going through into outside of Apple when it comes to touchless. I think that's well known in the industry as well. It is more a lesser part of the market share. Clearly, both touchless, where combination, we are bringing out the new version of Iris, which is a combination of Iris and Face, which will increase the performance and the convenience. It's a combined software with Iris and Face, which we'll bring out this year.
We continue to do very well with iris in the other parts of payment terminals when it comes to different parts of the car industry and the Gentex, of course, but those take time to get into any bigger volumes, obviously. I think touchless is doing okay. Clearly, it is not becoming a big issue as Apple has done with touchless, so all the other customers are going more mainly with fingerprint sensors. Touchless is more of a smaller market share outside of Apple, clearly, when you look at the whole touchless, but it is doing okay. I don't expect it to become a big volume in mobile. With that, thank you very much. I would like everyone, thank you for joining us this morning. Once again, as usual, looking forward to our Q2 report will be published on August 15th.
With that, I thank you for today, and I wish you a nice day, and goodbye for now.
That does conclude our conference call today. Thank you for participating. You all now disconnect.