FIRST QUARTER 

• Turnover totaled SEK 19.2 (28.3) million.  
• EBITDA totaled SEK -0.6 (4.0) million.  
• The operating profit/loss totaled SEK –6.9 (-0.8) million.  
• Earnings for the period totaled SEK -6.9 (-1.2) million.   
• Earnings per share totaled SEK -0.15 (0.00).  
• Cash flow from operating activities totaled SEK -5.8 (7.1) million.  

  
SIGNIFICANT EVENTS DURING THE QUARTER 

• On January 1, 2023, the strategic reorganization of Digital Identity was initiated in order to strengthen sales channels and optimize the organization.  
• Precise joined the Genetec Technology Partner Program to strengthen its presence in the US market with its YOUNiQ Access solution.  
• Precise appointed Joakim Nydemark as EVP and CCO Algo. Joakim comes from tech company Crunchfish and the role of COO and CEO of subsidiary Crunchfish Gesture Interaction AB.  

 
SIGNIFICANT EVENTS AFTER THE END OF THE INTERIM PERIOD

• Precise Biometrics decided on a fully secured rights issue of approximately SEK 50 million. The record date for participation in the rights issue is May 12, 2023. Under the terms and conditions of the rights issue, three (3) existing common shares in Precise Biometrics entitle holders to subscribe for two (2) new shares at a price of SEK 1.6 per ordinary share. The rights issue is 100% guaranteed through subscription undertakings and guarantee undertakings in the form of a bottom and top guarantee.
• Precise Biometrics entered into an agreement with Flowscape Technology for visitor management systems in the USA. The partnership means that Flowscape Technology will market and act as a reseller of Precise Biometrics’ visitor management system for office customers and for public operations in USA. This cooperation is in line with Precise Biometrics’ strategy of establishing new sales channels and taking market shares in USA. 

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

KEY INDICATORS

* * Annual Recurring Revenue lacks comparative figures from Q1 2022. At the end of 2021, ARR was estimated at approximately SEK 13 million.

See the Financial Glossary for definitions.

INVITATION TO PRESENTATION OF THE YEAR-END 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), May 9, 2023. 
 
Link to webcast: 
https://financialhearings.com/event/45969 
 
To take part, click on the link above to listen and follow the presentation online. 
 
Please send any questions to investor@precisebiometrics.com. 
 
The conference call will be held in English. 
 
A recorded Q&A with the company’s CEO and CFO is also published on Precise Biometrics’ website at 12 noon. 
 
Participating on behalf of Precise: 
Patrick Höijer, CEO  
Annika Freij, CFO 

CEO COMMENTS
I am confident about the future. We have made progress in the new phase of the company’s development, which is characterized by commercializing our world-leading position in the field of biometrics. Although we saw continued weak demand in the mobile phone market in the first quarter, which affected the Algo business area, we have continued to increase our recurring revenues (ARR) to SEK 17.3 million and have begun to advance our position in the US market in the Digital Identity business area. After the end of the quarter, we have also communicated proposals for a fully guaranteed rights issue of SEK 50 million. The issue is a well-balanced decision based on market conditions, established payment obligations and, above all, to give the company and its shareholders the conditions for a significantly better return in the future. Most estimates are that the mobile phone market is expected to recover in the second half of 2023. Along with the upcoming preferential rights issue, I feel confident in Precise ability to develop according to our long-term growth plan.

 
ALGO BUSINESS AREA 
The Algo business area includes our world-leading expertise in algorithms for fingerprint scanning, a technology based on advanced image analysis. Our solutions are used by leading global sensor manufacturers, primarily for mobile phones, but also in other verticals such as door locks and the automotive industry.
 
The last nine months have been characterized by a mobile market with lower end-customer demand and excessive stock levels. This naturally means that Precise’s variable income has been adversely affected, even though we see a slight improvement during the quarter. Like other players in the industry, we believe that the market will continue to recover in the second half of 2023. License revenues have shown more stable development, even though they have fallen slightly compared with the same period last year. This is mainly due to non-recurring income last year related to a transaction in the automotive industry. Furthermore, certain agreements have been renegotiated and some customers who have not achieved commercial success paused or ended their production of fingerprint sensors. Overall, this has led to a slight reduction in license revenue compared with the same period last year, even though customers have also been added. 
 
Our strategy and ambitions for long-term growth in Algo remain unchanged. We continue to support and deepen our existing key customers to win new mobile projects but are actively working to broaden the business through partnerships in new, growing verticals such as cars and door locks. We also have development projects to evaluate new types of sensors that can over time give Precise a larger market for our world-leading image processing expertise.
 
DIGITAL IDENTITY BUSINESS AREA 
For the Digital Identity business area, where we offer system solutions for physical access through facial recognition and visitor management, revenues decreased slightly, which is, however, dependent on our decision not to focus on hardware in order to achieve better scalability. An important KPI is instead ARR (Recurring Revenue) where the trend is rising and increased during the quarter to SEK 17.3 million. 
 
The quarter has been characterized by increased focus on the American market, especially for our face recognition system YOUNiQ. We gained the status of a technical partner with Genetec, which gives us access to their sales force and partners. During the quarter, we installed around 20 demo systems at Genetec and system integrators to create further maturity in our sales channels. This is fully in line with our strategy of strengthening sales channels in USA through partnerships over time. 
 
In Sweden, sales for EastCoast continue to perform well, with favorable conditions for further developing our recurring revenue. During the first quarter, we conducted 40 customer installations, including a continued rollout of EastCoast Visit at Atea, a leading supplier of IT infrastructure in the Nordics and Baltics. 
 
COST CONTROL AND LONG-TERM GROWTH FOCUS 
Precise has a clear ambition to grow in both business areas in the long term, within Digital Identity by introducing our services in new markets and within Algo by broadening our business. All in all, we are in a good position, as the focus is on profitable growth through commercialization of the solutions we have. 
 
The proposed issue means that the company will receive net proceeds of approximately SEK 50 million. Net liquidity is intended to be allocated to the following areas of application, in order of priority:
 

• Geographic expansion to USA
• Targeting and deepening collaborations in new verticals for the Algo business area
• Product development towards new customer groups within Digital Identity
• Continued improvements in the company’s algorithms to ensure our world-leading position in Algo in the mobile phone market
• Increase in working capital, operating activities

 
In parallel with the issue, Precise has previously announced an increased cost focus. The savings that have been initiated are expected to take effect gradually during the year. 
 
I would really like to emphasize that I am proud to lead a strong Precise team and feel that I have their and the board’s full support now that we are initiating the efforts I have been given to carry out. We have a good market position and with this new issue of shares secured, we are well equipped to capitalize on the global trend, with increased focus on cyber security and the growing use of biometrics in many areas of society. As a shareholder, I will of course also be taking part in the forthcoming issue and other members of the management group and the Board of Directors have also announced their intention to participate. 

All in all, the company is well equipped to take on the major opportunities ahead of us. I look forward to continuing to commercialize our position as a leading global supplier of identification software. 

Patrick Höijer, CEO