CONTINUED EFFORTS ON NEW SENSOR TECHNOLOGIES

INTERIM REPORT FOR THE PERIOD JANUARY TO MARCH 2018

FIRST QUARTER  

  • Net sales for the remaining operation totaled SEK 18.2 (16.6) million.
  • The operating profit/loss for the remaining operation for the quarter totaled SEK -2.0 (-2.7) million.
  • The profit/loss for the period for the remaining operation totaled SEK -2.4 (-3.4) million.
  • Earnings per share for the remaining operation totaled SEK -0.01 (-0.01).
  • Earnings per share for the total operation totaled SEK -0.01 (-0.01).
  • Cash flow from total operating activities totaled SEK -8.2 (17.1) million.
  • Cash and cash equivalents were SEK 105.3 (119.2) million at the end of the quarter.

SIGNIFICANT EVENTS DURING THE PERIOD 

  • Stefan K. Persson was appointed as new CEO. Stefan K. Persson is currently Executive Vice President BO Home in the Bang &Olufsen Group and will take up his new post on August 1, 2018 at the latest.
  • Precise BioMatch Embedded was used in the first pilot project in the USA with dual-interface biometric payment cards, which was carried out by Visa and Mountain America Credit Union.
  • Signed an extended licensing agreement with Crossmatch, a supplier of biometric ID solutions for government agencies, companies and medical care.
  • The disposal of the Mobile Smart Card Solutions business area was completed as planned on January 1, 2018.

SIGNIFICANT EVENTS SINCE THE END OF THE PERIOD  

  • Huawei Honor 10 was launched, in which Precise BioMatch Mobile has been implemented with a Qualcomm under-glass ultrasound sensor.
  • Deepened the collaboration with Kona-i, a leading supplier of for payment card system solutions.

FINANCIAL DATA AND KEY INDICATORS    

As a consequence of the fact that the Mobile Smart Card Solutions business area was disposed of as of January 1, 2018, previously reported figures have been converted in order to improve comparability. The business area has been reported as a business held for sale starting in the interim report for the second quarter of 2017. In order to obtain comparable historical data, previously reported figures have only been adjusted for the expenses relating directly to the discontinued business area, which will no longer affect the company’s remaining operation. The discontinued operation’s impact on the financial position has not been reported separately, as the company does not consider it possible to report the discontinued operation’s impact on cash flow. Cash flow is instead reported for the total operation.

Unless otherwise specified, reported figures in the interim report relate to the remaining operation.
 

KEY INDICATORS 

Amounts in SEK thousand unless otherwise stated  2018  2017  2017  Rolling 
   Q1  Q1  Full year  12 months 
Net sales   18,152  16,617  61,039  62,574 
Net sales growth, %  9.2%  -19.4%  -26.7%  -21.1% 
Gross margin, %  92.1%  94.3%  93.3%  92.7% 
Operating profit/loss  -2,033  -2,661  -13,936  -13,308 
Operating margin, %  -11.2%  -16.0%  -22.8%  -21.3% 
Cash flow from operating activities  -8,226  17,123  22,788  -2,560 
Cash and cash equivalents, total operation  105,297  119,249  116,955  105,297 


PRESENTATION OF THE INTERIM REPORT
In connection with today’s interim report, we issue an invitation to an information event today at 10:00 AM. Please see the last page of the interim report for further information about participation.

THE CHAIRMAN’S COMMENTS 
The market for fingerprint technology in mobile phones continues to change at a rapid pace and we continue to follow our strategy focusing on four key areas. We are working with customers and solutions for optical and ultrasound sensors in the high-price segment and for capacitive sensors in the low-price segment, both of which have growth potential. The fact that our software is in the first phone with an under-glass ultrasound sensor is evidence of our successful work in the field of new sensor technologies. In the field of biometric cards, we continue to strengthen our position through new partnership agreements, and we are involved in several exciting projects in new areas of application.
 

The design trend towards mobile phones with full-screen displays continues in the higher price segments and is driving developments towards optical and ultrasound sensors, in which the sensor is placed beneath the screen or the glass. Fingerprint sensors beneath the display or glass enhance the user experience and reduce the mechanical parts in mobile phones, and we are seeing a constant increase in the market’s interest in these solutions.  

At present we have ten customers in this area, which gives us good market coverage and improves our chances of winning additional orders. One clear indication of this is our announcement after the end of the quarter that our software has been integrated into an under-glass sensor in the Huawei Honor 10 in collaboration with Qualcomm.  

We have extended collaboration with our customers who focus on capacitive sensors for the low-price segment and have a competitive product. Price pressure remains strong on capacitive sensors, yet at the same time it means that the market for mobile phones in the lower price segments has been opened up to capacitive sensors, as they are now at a price level that enables them to be used in the lower price segment too at high volumes.  

The market for biometric cards continues to develop in the right direction. There are more and more actors working actively with biometric cards, which is a precondition for making an impact on a wider scale. Several pilot projects with biometric payment cards were launched during the first few months of the year, and our fingerprint software is being used in the first pilot project in the USA with Visa and Mountain America Credit Union. We have also deepened the collaboration with Kona-i, a leading supplier of payment card system solutions, who delivers the system solution to the pilot project in the USA. 

Our vision of convenient and secure identity authentication for everyone, everywhere, is more relevant now than ever. Biometrics will replace passwords and other forms of authentication for cars, locks and wearables, areas in which we are involved in several projects and intend to drive and continue to be part of developments in the future.

The company is in a strong financial position and we are continuing initiatives in the focus areas we have identified in order to further strengthen the company’s position. All in all, I have a continued positive view of the company’s outlook. 

This information is information that Precise Biometrics AB is obligated to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 08:00 on May 15, 2018.