SECOND QUARTER

• Net sales totaled SEK 17.9 (24.6) million. 
• EBITDA totaled SEK -0.6 (0.9) million. 
• The operating profit/loss totaled SEK -6.9 (-4.1) million. 
• Earnings for the period totaled SEK -6.8 (-4.3) million.
• Earnings per share totaled SEK -0.09 (-0.11). 
• Cash flow from operating activities totaled SEK 5.4 (3.0) million. 
• ARR (Annual Recurring Revenue) SEK 17.8 million (comparative figure from the end of 2022: SEK 16.2 million). 

 
INTERIM PERIOD 

• Net sales totaled SEK 37.0 (52.9) million. 
• EBITDA totaled SEK -1.2 (5.0) million. 
• The operating profit/loss totaled SEK -13.8 (-4.9) million. 
• Earnings for the period totaled SEK -13.7 (-5.5) million.
• Earnings per share totaled SEK -0.18 (-0.14). 
• Cash flow from operating activities totaled SEK -0.4 (10.1) million. 
• ARR (Annual Recurring Revenue) SEK 17.8 million (comparative figure from the end of 2022: SEK 16.2 million). 

 
SIGNIFICANT EVENTS DURING THE QUARTER 

• Precise Biometrics decided on a fully secured preferential share issue of approximately SEK 50 million to current shareholders, which was approved on the Annual General Meeting held on May 10 2023, where it was also decided to approve the preferential share issue and authorize the Board of Directors to decide on the issue of ordinary shares and authorize the Board of Directors to decide on the issue of ordinary shares and/or convertibles. 
• The outcome of the preferential share issue was that 13,662,355 shares, corresponding to 44.1% of the issue, were subscribed with or without the support of subscription rights. The guarantors were thus allocated approximately 55.9% of the preferential share issue. 
• In connection with the completion of the preferential share issue, the number of shares and votes in Precise Biometrics increased by 30,951,730. All members of the Board of Directors and the group executive participated in the preferential share issue in proportion to their holdings. 
• On June 14, Precise Biometrics received approximately SEK 49.5 million before deductions for issue costs of SEK 9.8 million, and the share issue was registered with the Swedish Companies Registration Office on June 22. 
• Joakim Nydemark took up the role of EVP & CCO of Algo. Joakim has many years of experience from the tech- and telecom industry and comes from a role as CEO at tech company Crunchfish Gesture Interaction AB. 
• Precise Biometrics entered into a reseller agreement with Flowscape Technology for visitor management systems in the USA. This collaboration is in line with Precise Biometrics’ strategy of establishing new sales channels and acquiring market shares in the USA. 

SIGNIFICANT EVENTS AFTER THE END OF THE INTERIM PERIOD

• Precise Biometrics (Precise) entered into a 12-month development license agreement with RECO Biotek Co., Ltd. (RECO), a Taiwan-based provider of bio-sensing system integration solutions. Under the terms of this agreement, Precise will provide its groundbreaking sensor algorithm solution BioMatch® for integration into RECO’s fingerprint systems.
• Precise Biometrics signed a 12-month evaluation license agreement with CanvasBio, a Korean manufacturer of fingerprint sensors. The aim of the agreement is to jointly develop a fingerprint module for use in mobile phones. The agreement is an important step in the continued commercialization of Precise Biometrics’ algorithms on the Asian market. 

 
FINANCIAL DATA AND KEY INDICATORS 

Amounts in SEK thousands unless otherwise stated. 

* Annual Recurring Revenue lacks comparative figures from Q2 2022.

See the Financial Glossary for definitions.

INTERACTIVE PRESENTATION OF INTERIM REPORT AND INVITATION TO Q&A

Precise Biometrics has published an interactive video in connection with today’s interim report, which includes interviews with CEO Patrick Höijer and CFO Annika Freij, and is available on the Investor Relations page here:
https://precisebiometrics.com/investors/

The material in the interactive video is designed to complement the report and provide additional depth and better understanding on the stock market for the company’s business operations.

The company also invites you to a live Q&A that starts at 10:00 AM (CET) on August 15th, 2023.

To take part in the Q&A session, access it via the interactive video player on the Investor Relations page here:
https://precisebiometrics.com/investors/

Questions can be asked directly in the chat function in the interactive player or submitted in advance to investor@precisebiometrics.com.

Participating on behalf of Precise:
Patrick Höijer, CEO
Annika Freij, CFO

The interactive video is in Swedish with English subtitles and the Q&A will be held in English.

CEO COMMENTS

As we sum up the first half of 2023, I would like to start by emphasizing that Precise Biometrics is now stronger than it has been for a long time, thanks to hard work in all parts of the company and continued support from shareholders through the preferential share issue that we completed in June. We have improved our cash flow, reduced our costs and streamlined work throughout the company. It is also positive that recurring revenues (ARR) during the second quarter increased.

I have now been CEO for just over a year, and it is my task to commercialize the company’s unique technology. During the second quarter of the year, we signed several important partnership agreements in both our business areas, Algo and Digital Identity. The fact that we strengthened our group executive management with Joakim Nydemark, who took over as EVP and CCO of Algo in June, also marks a milestone in this commercialization phase. It is now clear that Precise Biometrics is a company that not only delivers world-leading solutions to the mobile phone market, but also has extremely significant potential in other areas.

As many people are aware, this has been a major challenge in the mobile phone market in recent years. The consumer electronics market in general, and mobile phones and laptops in particular, have been characterized by weak demand. This has naturally had an impact on us and has contributed to both net sales and earnings in the second quarter falling compared with the same period last year. Most current market assessments now indicate that demand for consumer electronics will gradually recover towards the end of 2023 ahead of 2024. We are also seeing signs of this improvement in our dialogs with the various actors in the market.

Cash and cash equivalents at the end of the period totaled SEK 75.6 (54.6) million, which is a result of the preferential share issue, in which the company received a total of SEK 39.7 million after issue costs, which means that we can now act to invest in growth going forward in this phase of the company’s development.

In the Digital Identity business area, we continue to expand our footprint in the market for our access and visitor management systems for premises and buildings. These are systems that create increased security at workplaces and in public buildings, while at the same time reducing administration for end customers. The biggest market for these kinds of solutions is the USA, and we are therefore continuing work on our geographical expansion to the USA. Our partnerships with American access companies Genetec and Flowscape Technologies put us in a strong position, and we are now working to build up sales channels via system integrators.

I am firmly convinced that the investment in the American market, combined with the fact that we want to continue to expand our fingerprint software in Algo into new verticals, gives us the potential to create more diversified revenue flows and higher earnings for Precise Biometrics in the future.

Why? There are many trends that speak in our favor. Unfortunately, many people feel that the world is becoming increasingly insecure. There is war in Europe, and we often read about companies falling victim to digital sabotage and the fact that cyber-crime is spreading. This creates an increased understanding of the need for both digital and physical security solutions. In addition to this general focus on security, there are a number of other factors that affect our operations.

Mobile devices are expected to revert to fingerprint from facial recognition, or to a combination of these two technologies, for identification. It is primarily under-display sensors that are taking market shares, the kind of sensors that Precise primarily supports. Requirements for more secure identification even when laptops are powered up are being driven by Windows Hello, for example, which is expected to increase demand for biometric solutions in the laptop segment in the coming years.

A great deal is happening in the automotive industry. The process of electrification means that the software in our vehicles is becoming increasingly important. As vehicles also become more autonomous, their passengers will have different needs during the journey. This is one of the driving forces behind the market for fingerprint readers in the automotive industry being expected to double between 2023 and 2024. In the past, these were solutions for convenience, but in the future, for example, it will be important to have convenient payment solutions in vehicles. Identification via fingerprints is expected to be a key issue in that area.

These are just some of the external factors that we believe will have a positive impact on Precise Biometrics’ future. In addition, during the quarter I had the opportunity to visit several customers and partners in Asia, and to see that we have strong relationships with them.

To summarize, during the year, the entire company have taken steps to create a good platform from which to grow and commercialize further in order to maximize market potential. We are now in a good shape to focus on the business, winning new orders, creating shareholder value and contributing to satisfied customers and employees.

Patrick Höijer
CEO, Precise Biometrics