Precise Biometrics: Short-term component shortage pressure - ABG

Q1 revenues of SEK 19m for y-o-y growth of -20.9%
Precise Biometrics’ Q2’21 report was below our estimates in terms of revenues due to the global component shortage resulting in lower-than-expected royalty revenues. EBITDA, however, was more or less in line with expectations. Net sales were SEK 19m, -9.3% vs. ABGSCe, for y-o-y growth of -20.9%, mainly driven by lower royalty revenues of SEK 7m, -31.3% vs. ABGSCe, with the miss due to lower production volumes from Precise’s customers. The company indicates, however, that it sees good prospects of returning to earlier volumes even if the component shortage continues. An even more important factor, in our view, is the continued strong performance of Precise’s Digital Identity segment, where management reports growth of 169% in Q2. This is likely from very low levels, but is still a sign of strength. Given that the Digital Identity segment utilises a SaaS business model, it will result in stable recurring revenues with a healthy margin over time and as it scales. Lastly, Q2 EBITDA was SEK -0.8m, slightly below ABGSCe at SEK -0.4m