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Q4 showed good progress in orders and shipments. Revenues in Q4 were generated by Bloomberg, IDEMIA, and a small amount by Zwipe, a fintech company, and others. Bloomberg revenues were down sequentially as its assembler was unable to get other parts to finish products. IDEMIA has placed IDEX's (NASDAQ:IBDA) largest order to date, and has indicated how much product it expects to take in the next four quarters, but how much and when, is still an unknown. We expect IDEMIA to be the largest customer for IDEX this year.
To support this thesis, today Rocker, an innovate fintech based in Stockholm, announced it was offering "Rocker Touch", a fingerprint card from IDEMIA using IDEX. This announcement was the first for IDEX in which the end user customer was revealed and could be the first IDEX-based payment card seen in the wild. The biometric card is offered as an option in a growing range of financial services for individuals. Rocker offers three levels of service with the basic being free. The fingerprint card will be part of the Premium service, which costs SEK 99 (US$10.54) a month. The Premium level also includes a virtual card, full control of finances in one app, up to 1.20% in savings interest, up to 10% cash back, no withdrawal fees or currency surcharges, and travel insurance. Rocker claims to be building the market's best platform for everyday financial services and sustainable payments. It offers services for savings, payments, loans, and credits via an app. Rocker is licensed as a payment institution in Sweden and is supervised by the Swedish Financial Supervisory Authority. In October Rocker announced it had 200,000 active customers and had grown 48% as of that date in 2021.
Zwipe took a small amount and is beginning to roll out product to customers. Current estimates are that Zwipe will generate US$7.2 million in 2022 ramping to $49 million in 2023. We believe that at least 25% of Zwipe's cost of goods sold will go to IDEX, so on $49 million, at Redeye's 28% gross margin estimate that would be $8.8 million in sales to IDEX. As of February 2022, Zwipe has orders on the books of US$2.3 million most of which is to be delivered in 2022 from three different card manufacturers. It has 14 pilots announced already and is awaiting certification by both Visa and Mastercard.
In general, IDEX expects to generate between $3 and $5 per payment card and $10 to $15 per crypto wallet type application.
IDEX announced its first design win for its turnkey solution in partnership with Infineon in Q4. The customer was unnamed, but is a leading global smartcard manufacturer. It expects its card to be certified in Q3 2022 with initial shipments to follow in Q4.
Hengbao received certification in the quarter for a smart card that uses IDEX sensor solution and the THD89 secure element from Tongxin Microelectronics. This is the second card design using this combination with UnionPay certification. The first was with Goldpac at the end of 2020. According to a 2021 Nilson Report, Goldpac is the largest supplier of UnionPay cards at 150.9 million per year.
The company has good visibility for the first half of 2022 and rollouts seem to support revenues for the year under $10 million although they have not changed expectations for 2025. At some point the market will take off, but how we get there between now and then is hard to project.
IDEX is particularly excited about customer solutions that incorporate multiple applications in their cards-- for example physical security access plus a payment solution. Leading edge vendors are likely to be innovative start up fintech businesses including those incorporating cryptocurrency.
After the Quarter Ended
On January 28 IDEX Biometrics announced its second design win for its turnkey solution with its first named customer. It now has a development agreement with MKSmart based in Hanoi who is a top ten provider of smart cards.
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