NEW LICENSE AGREEMENTS CREATE ADDITIONAL GROWTH OPPORTUNITIES

PRECISE BIOMETRICS AB (PUBL), CORPORATE IDENTITY NO. 556545-6596, INTERIM REPORT FOR THE PERIOD JANUARY-JUNE 2016

SECOND QUARTER

• Consolidated net sales increased to SEK 21.9 (10.0) million.
• EBITDA increased to SEK 6.2 (-5.2) million.
• Profit after tax increased to SEK 4.4 (-7.9) million.
• Earnings per share for the period increased to SEK 0.01 (-0.02).
• Cash flow from operations increased to SEK 10.0 (-5.6) million.

FIRST HALF-YEAR

• Consolidated net sales increased to SEK 46.1 (14.6) million.
• EBITDA increased to SEK 14.4 (-11.6) million.
• Profit after tax increased to SEK 10.7 (-16.7) million.
• Earnings per share for the period increased to SEK 0.03 (-0.05).
• Cash flow from operations increased to SEK 17.5 (-11.9) million.
• Cash and cash equivalents were SEK 67.4 (47.0) million at the end of the interim period.

SIGNIFICANT EVENTS IN THE SECOND QUARTER

• Precise BioMatch Mobile was included in over 40 different smartphones, tablets and laptops that was launched during the quarter.
• Licensing agreements were signed with sensor manufacturers IDEX and EOSMEN as well as the digital security company, Oberthur Technologies.
• Precise Biometrics, won a framework agreement for Tactivo from the Defense Logistics Agency within the US Department of Defense.
• Precise BioMatch Embedded was integrated in Fingerprint Cards (FPC) embedded biometric module solution FPC-BM.
  

SIGNIFICANT EVENTS AFTER THE SECOND QUARTER

• Precise BioMatch Mobile has so far been included into seven different smartphones and tablets that was launched after the end of the second quarter.
• Licensing agreements after the end of the quarter were signed with the sensor manufacturers Betterlife and Qualcomm Technologies, Inc.

CONFERENCE CALL

On the occasion of today’s interim report, we are pleased to invite investors and journalists to a conference call today at 10.00. More information can be found at the last page of the report.

CEO´S COMMENTS

The second quarter was another good quarter for Precise Biometrics. The company has had a fantastic development during the past year. During the last 12-month period net sales increased with 176% to SEK 87.9 million (SEK 31.8). Corresponding EDITDA was SEK 26.5 million (- 27.3), an increase with SEK 53.8 million on an annual basis. I am of course not satisfied with the discontinued net sales growth compared to the first quarter, but I am convinced that we will have continued growth ahead.  

However, I am pleased that the positive trend of new customer agreements continued during the second quarter, and that we signed an agreement with Qualcomm at the beginning of the third quarter. This is a partnership that we feel holds great potential. Qualcomm is one of the leaders in the mobile industry and has an exciting sensor technology based on ultrasound. During the quarter we also signed licensing agreements with the sensor manufacturers IDEX and EOSMEM, and with the security company Oberthur. We now have a total of 18 licensing agreements, giving us great opportunities to win a significant share of the market growth. We are continuously assessing new partners to further enhance our market position and competitive edge, in line with our strategy.

The market for fingerprint technology continues to grow, and more and more manufacturers are also choosing to integrate the technology in mobile phones in the low- and medium-price segments, as well as in tablets and laptops. Leading market analysts project a compound annual growth rate of 35% in the fingerprint market until 2020. I expect that already next year our addressable market will reach almost 800 million mobile phones, tablets and laptops with fingerprint technology. This is an amazing market trend, which provides us with opportunities for growth in both the short term and the long term.

We have further enhanced our position as the leading supplier of fingerprint software. Our software is now included in more than 130 mobile devices from over 35 different manufacturers. Precise BioMatch Mobile was included in a total of 40 different mobile phones, tablets and laptops that was launched during the quarter, 15 more than in the first quarter, five of which were for customers other than Fingerprint Cards AB. We expect sales and volumes to increase from several of our other sensor customers, which will drive growth and compensate for the effects of Fingerprint Cards having implemented their own algorithm solution with some key customers.

In recent months many of our customers have undergone comprehensive qualification processes with leading mobile phone manufacturers. The customers are now involved in final evaluations and integration projects that may generate volume shipments towards the end of the year. During the quarter sensors from Synaptics and Elan Microelectronics were delivered with our software in several mobile devices, an indication of increasing competition in the market. We are increasingly collaborating with our customer on site at the premises of mobile phone manufacturers. This way, we can achieve faster, more efficient evaluation and integration processes and thus create the conditions for earlier and increased royalty revenues.

We have continued our investments in research and development to secure our competitiveness by having the market’s best performance in terms of user experience and security. We are furthermore developing our offer with software and reference implementations for different platforms as well as integration services to be able to offer broader solutions that enable quicker integration of our fingerprint software in mobile devices. In order to get closer to and better support our customers in critical integration projects in our key markets, China and Taiwan, we have also established a local organization for support and integration in Taiwan that also covers the Chinese market.

Sales in the Mobile Smart Card Solutions business area was weaker than expected, primarily because of lower sales to the US government agency market and the Defense Logistics Agency.

However, we expect continued growth over time in this business area. Beyond the US, several interesting projects are showing progress, primarily in Sweden, Germany and the UK. The City of Gothenburg is planning to introduce a mobile solution featuring Tactivo to 10,000 employees over the next year. This is a wide-ranging project that is progressing according to schedule, and we expect initial orders for Tactivo as early as this fall. Many stakeholders in the Swedish healthcare sector are monitoring the development of this project, which may have a positive impact on other organizations’ decisions to introduce mobile solutions using Tactivo. Pilot projects with German authorities are also progressing in the right direction, which may generate revenues in 2017.

The first half of 2016 has been eventful, and I am satisfied with our overall development. We have strengthened our position as the leading supplier of fingerprint software. As more and more of our customers becomes qualified as suppliers, we are also reducing our reliance on individual partnerships. Through our broad customer base of 16 sensor manufacturers and two security companies, we are well positioned for profitable growth and I am confident that Precise Biometrics’ positive development will continue.

Håkan Persson, CEO

FOR MORE INFORMATION, PLEASE CONTACT
Håkan Persson, CEO, Precise Biometrics AB
Tel. 46 46 31 11 05 or 46 734 35 11 05 
E-mail hakan.persson@precisebiometrics.com 

ABOUT PRECISE BIOMETRICS
Precise Biometrics is a market leading supplier of solutions for convenient and secure authentication of people’s identity. We develop and sell fingerprint software and mobile smart card readers that provide the market’s best user experience and security. Our solutions are used hundreds of millions of times every day by people all over the world and are marketed together with strong business partners. For more information, please visit www.precisebiometrics.com

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