On Track Innovations (OTIV) is a global leader in contactless smart card solutions for homeland security, payments, electronic passports, national IDs, petroleum payments and other applications. From the company’s website:
OTI’s technology offers commercially available, field-proven, contactless solutions, based on OTI’s significant patents and intellectual property covering the entire value chain, including manufacturing techniques, product design and applications. OTI delivers cards, readers, operating systems and complete solutions that are scalable, offering high functionality, security and flexibility.
OTI supplies key components to contactless payments programs developed by the major card associations – MasterCard’s PayPass, Visa PayWave, Discover Zip and ExpressPay from American Express. OTI supplied solutions for more than 20 million cards and 130,000 readers in projects around world in support the MasterCard and Visa’s global contactless EMV applications and the US market.
The company recently released a new NFC product called COPNI (Contactless Payment and NFC Insert) for mobile phones that attaches to the existing SIM card and enables mobile wallet solutions including secure NFC transactions. OTI indicates in the associated press release that it is already in advanced discussions with several mobile operators and that COPNI supports existing contactless payment applications from major card associations, mass transit ticketing (with MIFARE support) as well as loyalty programs and other proprietary programs.
The company has exposure to a variety of other interesting secure wireless microprocessor based markets as well as mobile wallets. These include parking payment solutions, Secure ID and petroleum payment solutions. All of these markets offer growth opportunities for OTI. In the most recent quarter the company reported nine month GAAP profitability on 93% revenue growth to $43.6 million. The balance sheet is solid and projections for next year are for full year profitability on revenues of $60 million. With a market valuation of just over $80 million and 54% gross margins any increased revenue derived from NFC should significantly drive bottom line profitability. If NFC takes off like the big players in the space are betting, OTI’s shares should take off as well.
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