A message from our CEO – Q4 update


Last week we published our financial report for the fourth quarter and the full year 2022. I am proud of the Precise team’s achievements. We have during the quarter been able to present strong progress in both our business units. In the business unit Algo (fingerprint software) we have signed important agreements with the French company Isorg and the Korean company CanvasBio, and in the business unit Digital Identity (biometric access and visitor management) we have been able to increase our annual recurring revenue with 25% to 16.2 MSEK during 2022. Overall, revenues for the full year increased by 9 per cent to 91 MSEK (82), with an EBITDA of 1.1 MSEK and a positive cash flow from operating activities of 3.9 MSEK.

The end of 2022 did unfortunately show a low end-customer demand in the mobile phone market in combination with oversupply at mobile manufacturers and module houses. This meant that Precise’s variable revenues were affected negatively compared to last year. Total revenues for the quarter were 19.3 MSEK (27.4). This is temporary decline in royalties as Precise has strong strategic partnerships, and as soon as the mobile market recovers, we expect normalization of royalty revenues. However, the macroeconomic situation remains uncertain and difficult to predict, our assessment is that we will see a slow gradual recovery during the first half of the year, and a return to more normal levels in the second half of 2023.

In the Algo business area, we have built up a world-leading expertise in fingerprint reading in e.g. mobile phones, laptops, and smart door locks. Today, we work methodically according to a clear growth strategy for the business area. In accordance with this strategy, we are focusing on our existing key customers to win new mobile projects. Beyond that we are supporting selected new sensor vendors in both the mobile phone vertical as well as in new verticals ie automotive and laptops. It is therefore encouraging that we entered a development partnership with the Korean company CanvasBio to deliver fingerprint technology for portable computers and an agreement with Isorg, a French sensor vendor with a new type of sensor for mobile phones. The deal with Isorg will generate a total of at least 11 MSEK in fixed license and support fees for Precise until the end of 2024. To summarize business unit Algo’s strategic progress I can conclude that our present key partnerships are in good shape, and that we are delivering on our strategy of building new ones. Going forward, we will continue to explore new adjacent verticals, such as the automotive industry, and evaluate new types of sensors that over time could give Precise a larger market for our world-leading competence in advanced image analysis.

The Digital Identity business area, where we offer system solutions for physical access through facial recognition and visitor management, delivered a strong end to the year. In terms of sales, 2022 was a strong year. Our annual recurring revenues (ARR), which constitute the core of Digital Identity business, increased from around 13 MSEK at the beginning of the year to 16.2 MSEK at the end of the year. This is important for us, as it shows a development of a customer base that generates recurring revenues. In order to speed up commercialization of the YOUNiQ service, we have decided to integrate EastCoast’s and YOUNiQ’s respective organizations. This means that the entire sales force can now reach out to the market with both our products.

The strategy for Digital Identity in Sweden is clear; we are building up sales channels through partnerships with access system suppliers and with the most important system integrators. Furthermore, we are continuing to focus our sales efforts on the US market. It is therefore promising that we in February were able to announce that YOUNiQ is integrated into Genetec’s market leading access platform. This is an important step in building up sales channels in the USA, following our first contract for YOUNiQ in the US market in Q4 2022.

The macroeconomic situation remains uncertain, which means that we have a strong focus on cost control, by reducing the number of consultants in favor of employees and by optimizing our R&D initiatives. These savings are expected to have a clear impact in 2023 and we expect operating costs to reach the same level as in 2021. These efficiency increases are fully in line with our strategy of increased commercial focus.

During the quarter I have continued to meet our customers around the world, and I am pleased and impressed by the good partnerships we have been able to build up with leading HW-suppliers in the market. Precise is well positioned to take advantage of the global underlying trend of increased use of biometrics and I am therefore looking forward to continuing to capitalize on our leading position in identification software and growing positions in access solutions and visitor management.

Patrick Höijer, CEO