Precise Biometrics: Algo increasingly closer to its trough - ABG
Sales SEK 17.9m, -13% vs. ABGSCe SEK 20.5m
EBITDA SEK -0.6m vs. ABGSCe SEK -0.1m
We anticipate slightly neg. cons. est. revisions
Q2'23 outcome
Sales came in at SEK 17.9m (-13% vs. ABGSCe 20.6m), implying a y-o-y decline of -27%. The company delivered an EBITDA of SEK -0.6m (vs. ABGSCe -0.1m), and an EBIT of SEK -6.9m (vs. ABGSCe -5.4m). The second quarter results were somewhat below what we had expected with respect to sales but only marginally below EBITDA thanks to continued cost control. Algo royalties were somewhat weaker than we expected, explaining almost the entire deviation. The Digital Identity segment achieved an ARR of SEK 17.8m, implying a q-o-q growth rate of 3%, which is solid given present market conditions.
Thoughts and outlook
The company has again reiterated its assessment that consumer electronics, and thereby Algo, should start a recovery toward the end of '23e, as smartphone deliveries recover. In the longer-term, the Algo offering could be bolstered by increased exposure to the automotive segment as vehicles may facilitate integrated payments solutions. With respect to the Digital Identity segment, the company continues to benefit from evidently positive business momentum and a continued successful commercialisation of its offering. From a long-term point of view, the Digital Identity business should be a beneficiary of increased global, physical and digital security concerns.
Cons. est. changes and implied valuation
The share is down 65% YTD and is trading at ‘23e-‘24e EV/EBITDA of 27x-5x, based on our unrevised estimates. Based on the Q2 report, a mechanical deviation calculation shows that consensus sales estimates could come down by low single-digits for ‘23e-‘25e. The company will host a live Q&A at 10.00 CET at https://precisebiometrics.com/investors/.
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/Precise-Biometrics/Equity-research/2023/8/precise-biometrics---algo-increasingly-closer-to-its-trough/
