A strong first quarter for both product segments

INTERIM REPORT FOR THE PERIOD JANUARY TO MARCH 2022

FIRST QUARTER

  • Net sales totaled SEK 28.3 (20.3) million.
  • EBITDA totaled SEK 4.0 (0.0) million.
  • The operating profit/loss totaled SEK –0.8 (–3.8) million.
  • Earnings for the period totaled SEK –1.2 (–3.5) million.
  • Earnings per share totaled SEK 0.00 (–0.01).
  • Cash flow from operating activities totaled SEK 7.1 (–0.7) million.

SIGNIFICANT EVENTS DURING THE QUARTER

  • The Board of Directors of Precise appointed Patrick Höijer as the new CEO of the company, taking office no later than June 1, 2022.
  • Precise entered into a partnership agreement with Infineon Technologies to provide fingerprint technology, Precise BioMatch, to the automotive industry.
  • Precise entered into a partnership with Certego regarding the integration of YOUNiQ in their security services.
  • Additional Digital Identity installations for Algeco in Skellefteå.
  • The first installation of YOUNiQ to control electricity and heating was undertaken for Algeco in Kiruna.
  • Precise entered into an agreement for Digital Identity installations in two of Algeco’s offices in Sweden.

SIGNIFICANT EVENTS AFTER THE END OF THE INTERIM PERIOD

  • There have been no significant events since the end of the interim period.

FINANCIAL DATA AND KEY INDICATORS
Amounts in SEK thousands unless otherwise stated

KEY INDICATORS

202220212021Rolling
Amounts in SEK thousands unless otherwise statedQ1Q1Full-year12 mth
Net sales28,31220,31283,31991,319
Net sales growth, %39.4%-11.9%-9.8%-11.2%
EBITDA4,020221,8725,869
Gross margin, %76.7%77.4%76.3%76.1%
Operating profit/loss-802-3,812-14,073-11,063
Operating margin, %-2.8%-18.8%-16.9%-12.1%
Cash flow from the operating activities7,103-660-1,4776,270
Cash and cash equivalents57,81670,40864,10257,816

See the Financial Glossary for definitions.

INVITATION TO PRESENTATION OF THE INTERIM REPORT

In connection with today’s interim report, Precise invites investors and the media to an informational conference call.

The conference call starts at 10:00 AM (CET) on MAY 13.

Link to all public information such as link to webcast and participant number for the telephone conference:

https://financialhearings.com/event/43358

To take part, click on the link above to listen to and follow the presentation online, or call one of the following numbers to follow by phone.

SE: +46856642692
UK: +443333009271
US: +16467224904

You will be asked to state your name when you connect to the conference call, and there will be an opportunity to ask questions in Swedish. The conference call will be held in English.

Participating on behalf of Precise:
Fredrik Sjöholm, Interim CEO
Annika Freij, CFO

CEO COMMENTS

It has been a strong first quarter for Precise. Within Digital Identity, we have continued to complete installations, which further drives revenues from our SaaS model. We have also signed a number of new agreements for both YOUNiQ and EastCoast products, contributing to future recurring revenues. The Algo business performed well in a quarter that was still impacted by component shortages as well as slightly reduced global sales of mobile phones. Through new phone projects with existing commercial partners, we counteracted the negative effects and saw strong growth in Algo during the quarter. In total Precise grew revenues by 39% to SEK 28.3 (20.3) million, with EBITDA of SEK 4.0 (0.0) million.

Within Digital Identity, we have continued to install new projects and paved the way for the future. We carried out installations for Sodexo’s head office in Stockholm and for Algeco in Skellefteå and Kiruna, with the latter also including our product for control of electricity and heating, and it is expected to become operational during the second quarter. We have also entered into agreements for future installations for two of Algeco’s offices in Sweden. We also continued to expand our network of dealers and installers, with Certego and Granitor Electro as new partners. EastCoast’s sales also developed positively with new customers during the quarter, after a slightly cautious start due to the Covid restrictions that characterized the first part of the quarter. All in all, revenues within Digital Identity totaled SEK 6.0 (0.5) million during the first quarter, which illustrates the strong growth in our SaaS business. All new agreements and installations will make a positive contribution to our recurring revenues within Digital Identity.

In March, we demonstrated the first integrated product of YOUNiQ’s and EastCoast’s respective solutions. The integration enables for visitors to check in and register with EastCoast’s visitor management system using their face and QR code. We are now conducting dialogs with a number of customers, which we expect to be converted into agreements during the second quarter of 2022. During the quarter, we also embarked on more focused work on the Norwegian market, where we are already seeing an increasing level of interest among potential customers and partners.

Within Algo, the component shortage had worsened since the corresponding period last year. Furthermore, the mobile market experienced a slight downturn during the quarter, partly as a result of Covid restrictions in Asia and general macroeconomic uncertainty. Despite these challenges, Algo grew revenues by 12.3% to SEK 22.3 (19.8) million. The component shortage impact on our royalty revenues was largely compensated for by new phone projects with Qualcomm and Egis, and royalty revenues ended up just below the level for the corresponding period last year. Our broadening of the product segment to the automotive industry continued to have a positive effect on license fees within Algo – a result of our two customers in the automotive industry, announced at the end of 2021. Our work with them are proceeding according to plan and we expect these projects to start being rolled out in the first cars by the fall 2022. We are also continuing to work on developing the partnership with Infineon to deliver Precise BioMatch to projects in the automotive industry.

We have begun 2022 in a strong manner in both our product segments. We continue to grow with stable, recurring revenues in Digital Identity. We are also continuing our expansion within Algo, with a continued focus on new projects with established partners in the mobile segment. Algo has shown growth despite a negative impact from component shortages and macroeconomic factors, which paves the way for accelerated growth when market conditions improve. We continue to work in accordance with our strategic agenda, in which we focus on working with strategic partners, focused targeting of new geographies and broadening into new verticals. At the same time, we remain open to new acquisitions. To better reflect and follow up on our business, we have introduced segment reporting, in which Algo and Digital Identity have been our two product segments since January 2022.

Precise is well equipped for continued growth and it is with pleasure that I will be handing over the baton to Patrick Höijer as the new CEO of Precise at the beginning of June. I look forward to working with him and my colleagues in the management team to continue driving Precise towards an exciting future in which You are the key!

Fredrik Sjöholm, Interim CEO and VP Sales