Continued growth and positive market development
Interim report Jan-Sep 2016Published November 15th, 2016
INTEGRATED IN 24 MOBILE DEVICES
24 mobile devices was launched with Precise BioMatch Mobile in the third quarter
Precise BioMatch Mobile was integrated in Xiaomi Mi 5S, the first commercial smartphone with a fingerprint sensor under 400 µm (microns) of glass. The device uses Qualcomm ultrasound sensor Snapdragon Sense ID
NEW LICENSE AGREEMENTS AND ROYALTY CUSTOMERS
License agreements with Qualcomm and Betterlife
License agreements with partners targeting the Embedded-market
Royalty revenue from eight customers
TACTIVO SALES LOWER THAN ORIGINALLY ANTICIPATED
Sales continues to develop slower than originally anticipated
Impact on sales to US government due to discussion of digital alternatives
Order for a comprehensive pilot project with Gothenburg city
MAIN EVENTS AFTER THE THIRD QUARTER
15 mobile devices with Precise BioMatch Mobile has been launched so far
License agreements with Image Match Design, InvenSense and Samsung System LSI Business, a division within Samsung Electronics Co., Ltd.
Kona-i demonstrated credit card with Precise BioMatch Embedded
Göran Thuresson recruited as CFO
INCREASED NET SALES & STEADY GROSS MARGIN
(MSEK)
Net sales increased to 25.5 (18.3) MSEK in Q3 – up 39 % from last year
Sales increase in Fingerprint TechnologyBusiness Area – up72 % compared to Q3’15
Gross margin increasedto 77% (71%) in Q3
0
5
10
15
20
25
30
Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16Gross marginNet salesNet sales
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
NET SALES - 12 MONTHS ROLLING
(MSEK)
Net sales 12 months rollingincreased to 95.0 (42.7) MSEK – up 122 %compared to Q4’14 – Q3’15
0
20
40
60
80
100
Q4'14-Q3'15 Q1'15-Q4'15 Q2'15-Q1'16 Q3'15-Q2'16 Q4'15-Q3'16
0
2
4
6
8
10
Q3 15 Q4 15 Q1 16 Q2 16 Q3 16
INCREASE IN OPERATING PROFIT & EBITDA
(MSEK)
Operating profit for Q3 2016 increased to 4.6 MSEK from 2.8 MSEK in Q3 2015
EBITDA for Q3 2016 increased to 6.7 MSEK from 5.4 MSEK in Q3 2015
0
2
4
6
8
10
(MSEK)
Operating profitEBITDAEBITDA
(MSEK)
-20
-10
0
10
20
30EBITDA 12 months rollingincreased to 27.7 (-12.5) MSEK
Q4’14-Q3’15 Q1’15-Q4’15
Q2’15-Q1’16 Q3’15-Q2’16 Q4’15-Q3’16
EBITDA - 12 MONTHS ROLLING
-2
0
2
4
6
8
10
(MSEK)
Cash flow from operations increasedto 8.4 (-1.9) MSEK in Q3Available cash amounted to 75.0 MSEK (45.2)
Q3 15
Q4 15 Q1 16 Q2 16 Q3 160
10
20
30
40
50
60
70
80
Cash at BankCash flowCash flow
INCREASING CASH FLOW & CASH AT BANK
-30
-20
-10
0
10
20
30
40
(MSEK)
Cash flow from operations 12 monthsrolling increased to 34.7 (-21.1) MSEK comparedto Q4’14 – Q3’15
Q4’14-Q3’15 Q1’15-Q4’15
Q2’15-Q1’16 Q3’15-Q2’16 Q4’15-Q3’16
CASH FLOW - 12 MONTHS ROLLING
Compound Annual Growth Rate of 35 % to 2020
Addressable market of 800 million smartphones, tablets & laptops with fingerprint technology in 2017
Growth opportunities as more sensor manufactures gain market share
Source: Redeye0
200
400
600
800
1000
1200
1400
2014 2015 2016 2017 2018 2019 2020
(Million Units)
CAGR2015-2020
Total Mobile handsets, tablets,laptops (excl Apple)
CAGR 35 %
GROWTH OPPORTUNITIES IN MOBILE MARKET
EMBEDDED MARKET TO GROW IN 2017
Fingerprint technology is entering new product areas, smart cards and payment cards in particular, but also wearables, cars and IoT
Annual addressable market of one billion credit cards
Demand for efficient and light algorithm solutions with high performance
We are collaborating with customers on several end-customer projects related to smart cards, wearables and cars
First commercial products next year, long termthe embedded market can become as largeas the market for mobile devices
BROAD CUSTOMER BASE CREATE GROWTH OPPORTUNITIES
Continued positive development with new customer agreements
23 license agreements with sensor manufacturers, security companies and resellers
Well positioned to benefit from market growth and to capture a considerable market share
Continuous evaluation of new potential partners
TECHNOLOGY LEADERSHIP
Continued investment in research and development, small sensors, new sensor technologies, liveness and under glass
New features in Precise BioMatch Mobile may improve performance up to 40 % on certain sensors
Significant performance improvements on very small sensors – up to 70% faster match
Reference implementations and integration support to make integration of fingerprint software more efficient
Investigating new specifications and requirements for future mobile payment solutions
Development in third quarter confirms strategy and position as the leader in fingerprint software
Revenue increase of 21 % for Fingerprint Technology business area
Positive long-term revenue trend, but royalty revenues will fluctuate quarter to quarter
Fast market growth, industry leading algorithm solutions and scalable partner business model with good cost control
Well positioned for profitable growth
SUMMARY & OUTLOOK
precisebiometrics.com
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