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ANNUAL GENERAL MEETING 2017
Håkan Persson | CEOMay 16th, 2017
Convenient and secure identityauthentication, for everyone, everywhere
Founded in 1997
Head Office in Lund, Sweden
USA, Asia, Europe
40 employees & consultants
Nasdaq OMX Stockholm Small Cap
Market Cap: SEK 1 billion
COMPANY OVERVIEW
MOBILE SMART CARD SOLUTIONS(14 % of sales)
Tactivo - Smart card readers for smartphones and tablets that enables convenient and secure login to IT systems with smart cards from mobile devices
PRODUCTS:Tactivo™ for iOS (iPad and iPhone)Tactivo™ for Android
FINGERPRINT TECHNOLOGY(86 % of sales)
Software for convenient and secure fingerprint recognition in mobile devices, smart cards, products with small fingerprint sensors and ID cards
PRODUCTS:Precise Biomatch™ MobilePrecise Biomatch™ EmbeddedMatch-on-Card™
PROVEN
STRONG PATENTS
USER EXPERIENCE
TECHNOLOGY INDEPENDENT
WORLD-LEADING R&D
THE LEADER IN FINGERPRINT SOFTWARE
Precise Biometrics is the leading independent supplier of fingerprint software – Our software has become a de facto standard among sensor vendors
INTEGRATED IN OVER 180 DIFFERENT MOBILE DEVICES FROM +40 VENDORS
Precise BioMatch Mobile is used by leading mobile device manufacturers such as Coolpad, Google, Huawei, HTC, Lenovo, LG, Oppo, Sony, ZTE and Xiaomi.
PORTUGAL
THAILANDQATAR
BAHRAIN
VENEZUELA
BRAZIL
Over 160.000.000 licenses of Precise Biometrics’ fingerprint algorithm solution Precise Match-On-Card issued to citizens worldwide
NATIONAL E-ID CARDS
BUSINESS MODEL & CUSTOMERS
Primary customers – sensor vendorsMarket solutions directly to OEM:s, other suppliers in the mobile eco-system and security companiesRevenues:
► Royalty► Annual license fee► Support and maintenance
SUMMARY OF 2016
INCREASED NET SALES AND PROFIT
Increased net sales by 73% and an operating profit of SEK 24.8 million - the company’s best year so far
110 mobile devices with Precise BioMatch Mobile were launched in 2016 – double the amount in the previous year
14 licensing agreements for the distribution of our fingerprint software – Qualcomm and Samsung LSI
Acquisition of NexID Biometrics for spoofdetection and liveness
Reinforced our position and developed our product range in the field of fingerprint software
Sales of Tactivo fell short of our expectations –sales primarily to US government agencies
ACQUISITION OF NEXID BIOMETRICS EXPANDS OUR OFFERING TO INCLUDE LIVENESS DETECTION
Acquisition of NexID Biometrics, a specialist in solutions for spoof detection and liveness
Expands our offering with a software-based solution for spoof and liveness detection that enhances security and meets customer demand to prevent fraud
Access to academic research and senior experts
The acquisition was financed by a private placement of shares, which raised SEK 47.2 million for the company
2016 IN NUMBERS
INCREASED NET SALES AND GROSS MARGIN
(SEK million)
Net sales increased by 73% to SEK 97.2 million
Sales in the Fingerprint Technology business area increased by 95.7% to SEK 83.3 million
Gross margin increased by 9.1 per cent to 78.8 per cent
Gross marginNet salesNet sales0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0,0
20,0
40,0
60,0
80,0
100,0
120,0
2014 2015 2016
IMPROVED OPERATING PROFIT
(SEK million)
The operating profit improved to SEK 18.0 million, an improvement of SEK 27.4 million
Operating lossOperating profit-50,0
-40,0
-30,0
-20,0
-10,0
0,0
10,0
20,0
30,0
2014 2015
2016
(SEK million)
IMPROVED CASH FLOW FROM OPERATING ACTIVITIES
(SEK million)
Cash flow from operating activities improved to SEK 37.7 million
Cash and cash equivalents available of SEK 135.8 million at the year-end –includes SEK 50 million from new share issue
Acquisition cost of SEK 31.4 million was paid in February
Cash and cash equivalentsCash flowCash flow-40,0
-30,0
-20,0
-10,0
0,0
10,0
20,0
30,0
40,0
50,0
2014 2015
20160,0
40,0
80,0
120,0
160,0
SUMMARY OF THE FIRST QUARTER 2017
NEW CUSTOMER AGREEMENTS & CONTINUED INVESTMENTS
FINANCIAL
Net sales for the period totaled SEK 19.2 (24.2) million
The operating loss for the period totaled SEK -2.7 (6.3) million
The gross margin during the quarter increased to 85.1% (81.8%)
Cash flow improved to SEK 17.1 (7.5) million
Cash and cash equivalents were SEK 119.2 (58.6) million at the end of the period
SIGNIFICANT EVENTS
During the quarter six mobile phones were launched with Precise BioMatchTM Mobile
Integration into mobile phone from a world-leading Chinese mobile phone manufacturer through a partnership with Silead
Extended licensing agreement with existing sensor customer with guaranteed licensing revenue of at least SEK 17.5 million
New licensing agreements with Zeitec and NXP
Completed acquisition of NexID Biometrics
SIGNIFICANT EVENTS AFTER THE FIRST QUARTER
Four mobile devices have so far been launched with Precise BioMatch Mobile
Licensing agreement with Melfas, a South Korean sensor manufacturer
Elan Microelectronics launched a payment card with fingerprint technology with our software – to be supplied to premium customers of a South Korean bank
OUTLOOK
Addressable market of 1 billion units in 2017 Estimated 40 % average annual growth between 2016-2020 with a total addressable market of 2.5 billion units in 2020The market for smart cards and other products expected to grow from end of 2017
CONTINUED FAST MARKET GROWTH - ~2.5BN UNITS IN 2020
0,3
0,6 0,8
1,1 1,2 1,3
0,1
0,3
0,50,6
0,2
1,0
0,2
0,4
0,6
0
1
2
3
2014 2015 2016e 2017e 2018e 2019e 2020e
The number of sensors in smartphones, smart cards and other products (Bn)
Smartphone ex. Apple Smart cards Other Source: Pareto Securities Equity Research
1,6
2,1
2,5
GLOBAL CUSTOMER BASE KEY FOR GROWTH
Larger customer base - 22 new customers the last 18 months
Global reach for distribution of fingerprint software, covering both the mobile and embedded market
Several customers in final stages of the evaluation process
Continue to grow the customer base0
5
10
15
20
25
30
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17
Number of customers
TotalFPCOther customers
Decreasing sales to Fingerprint Cards
Increasing sales to other customers
Royalty revenue from nine customers
ONGOING REVENUE SHIFT IN BUSINESS AREA FINGERPRINT TECHNOLOGY
0,00
5,00
10,00
15,00
20,00
Q1’16 Q1’17
MARKET GROWTH DRIVERS
Increased consumer demand for biometrics for convenient identity authentication and payments
Payment providers see opportunity to increase security and mitigate fraud through biometrics –lowering the cost of fraud
Market growth, increased competition and lower costs enable more price sensitive segments
These factors pave the way for continued market growth and new product segments:
Low-end smartphones
Smart cards, wearables and IoT
Cars and access control
MARKET DEVELOPMENT
Sensors are becoming increasingly smaller to reduce cost – increased requirements on biometric performance
Increased usage and adoption has led to advanced requirements to manage “difficult” fingers
Growing competition is driving differentiation of fingerprint solutions – size, technology, industrial design and use cases
Growth in mobile payments increase focus on security - Spoof detection and liveness will become increasingly important
Adoption of other biometric modalities will increase and become complementary to fingerprint technology
OUR TECHNOLOGY ROADMAP
Continued software development to power very small sensors
Support for new sensor technologies
Spoof detection and liveness for mobile devices to significantly increase security and mitigate fraud through fake finger detection
More resource effective algorithms for smart cards, wearables and other products
Certified algorithms for Secure Elements to provide bank-grade security
Year of customer and revenue transition – creating conditions for growth
Increase investments in product development to ensure technology leadership
Grow the organization to ensure customer success
Continue to grow our customer base
Unchanged view on revenue development
Weaker revenue development during the first half 2017
Gradually increasing revenues during the second half of the year
Revenues for the full year are expected to be in line with 2016 revenues
Positive operating result for 2017
SUMMARY
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