Precise Biometrics: New contracts will continue to drive metrics - ABG

Sales and EBITDA beat in Q1
New contracts agreed and we expect more going forward
Trades at 3.5x-2.9x ’22-’23e EV/sales, 5Y NTM avg. 3.1x

Good development for both segments in the quarter
Precise Biometrics came in with a strong Q1 2022. The sales came in 12.5% above our expectations for a growth of 39.4% y-o-y, with 19.7% of that growth coming from EastCoast, which was consolidated in December 2021 and is included in the Digital Identity segment. Within Algo, the company was still impacted by component shortages, which affected the royalty sales in the quarter. Total royalty sales in the quarter declined by 6% y-o-y, which was in line with our expectations. However, the number of customers is up y-o-y, and the company has entered new contracts and installed new projects related to the Algo segment. Moreover, in March, the company demonstrated the first integrated product of YOUNiQ’s and EastCoast’s respective solutions, which enables visitors to check-in and register with EastCoast’s visitor management system using their face and QR code. The company expects this new solution to lead to new agreements during Q2’22. Furthermore, the EBITDA came in at SEK 4.0m, up from SEK 0.0m last year and above our expectations of SEK 2.8m.

Raise Licenses, Support & Maintenance revenue stream
We slightly raise the Licenses, Support & Maintenance revenue stream due to the beat of 23% in Q1 compared to our estimates. The Q1 beat and a small rise of the expectations for Licenses, Support & Maintenance revenues gives a 7.8% rise each year in ’22e-‘24e. All in all, this results in a 5-3% rise in group sales for ’22e-‘24e.

Small rise in our fair value range to SEK 0.5-2.4 (0.5-2.3)
On our new estimates, Precise’s share is trading at an EV/sales of 3.5x to 2.9x for ’22e-’23e, fairly in line with FactSet consensus’ 5Y historical average of 3.1x NTM. We slightly raise our fair value range to SEK 0.5-2.4 (0.5-2.3), due to estimate revisions. However, our value range corresponds to EV/sales multi ...
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