Cogent Leaving its prints on the biometrics market
After snipers paralyzed the Washington (D.C.) area for 22 horror-filled days in 2002, a single fingerprint broke the case. The print, left by Jamaican-born teen Lee Boyd Malvo, popped up in a database created for the Immigrant & Naturalization Services by Cogent Inc. (COGT
), a company that was started in 1990 by a onetime electrical engineer from China named Ming Hsieh, 49.
EARNINGS $48.1
million
SALES $108.1
million
RANKING #1
LOCATION
South Pasadena, Calif.
WHAT'S HOT Software that law enforcement
types use to nab bad guys. The
U.S. Homeland Security Dept. is
a top buyer.
Cogent makes software that identifies people using biometrics -- fingerprints, faces, eyeballs, and other personal characteristics. In the post-September 11 security rampup, Cogent has quietly become a hot provider.
The company specializes in providing servers with its software, which uses algor- ithms to identify the 110 or more unique points on a typical fingerprint. In fiscal 2004, it earned $33.4 million on $87.7 million in revenues. Now Cogent has landed solidly at No. 1 on BusinessWeek's list of the fastest-growing companies.
Cogent's calling card is its longstanding contract with federal border control agents. Now it's getting a piece of the Homeland Security Dept.'s $10 billion effort to beef up border security, including a system that will collect fingerprints and snap photographs of everyone who legally enters the U.S.
Cogent's revenues from Homeland Security contracts ballooned from $1.3 million in 2001 to $19.7 million last year. That's part of the reason investors got so excited in September, when Cogent raised $248.4 million in its initial public offering. On May 16, Cogent filed with the Securities & Exchange Commission to sell 11 million additional shares. Because of an SEC-mandated quiet period, Cogent declined to comment for this article.
In an industry that is dominated by heavyweights such as NEC (NIPNY
) and Motorola (MOT
), Cogent is holding its own. Lieutenant Larry Bryant of the Los Angeles County Sheriff's Dept. says Cogent's system matches fingerprints in less than two minutes -- half the average time of other systems. Cogent won a $15.3 million contract with the Sheriff's Dept. in 2002. ``It's all about speed and accuracy, and it's hard to beat these guys,'' Bryant says.
With nearly half its sales coming from federal government contracts, Cogent is working hard to reduce its dependence on the public sector. It's made some progress lately. On May 16, it won a $5 million contract to make terminals for San Francisco-based Pay By Touch, which allows consumers to pay for products with their fingerprints. That moves Cogent into manufacturing, which could cut into the company's robust 49% profit margins. Still, the new venture should help maintain a vigorous run for a company that has seen its fair share of flash -- from helping to catch a sniper to delivering one of 2004's strongest growth performances.
By Ronald Grover in Los Angeles
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