Precise Biometrics: Highlighting US potential - ABG

Sales and EBITDA below ABGSCe in Q3
Digital Identity up-and-coming, Algo hit by macro
Share trades at ’23e-’24e EV/sales of 2.6x-2.0x


Q3 summary

Precise Biometrics generated Q3 net sales of SEK 18.8m, 35% below our estimate of SEK 28.9m. The miss was due to a drop in royalty revenues, which came in at SEK 1.9m versus our estimate of SEK 10.9m. This was, yet again, due to the seemingly temporary low demand for mobile phones. License revenues missed our estimate by only 9%, as the company generated SEK 14.8m in License fees versus our estimate of SEK 16.2m. Digital Identity delivered approximately in line with our expectations: we note that further projects and contracts have been won, e.g. for the St Lawrence Health Hospital in New York. Given that the sales cycle makes up most of the total ramp-up period, we would expect a positive contribution from the new projects and contracts in Q4’22e. EBITDA adjusted for provisions for bad debt, which we deem non-recurring, was SEK -0.3m versus our expectation of SEK 3.8m. Overall, the quarter was challenging, but we believe that the prospects for the company continue to be positive given the seemingly successful commercialisation of Digital Identity and a likely rebound of Algo.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/Precise-Biometrics/Equity-research/2022/11/precise-biometrics---highlighting-us-potential/