Continued growth and positive market development

Interim report Jan-Sep 2016Published November 15th, 2016

INTEGRATED IN 24 MOBILE DEVICES

24 mobile devices was launched with Precise BioMatch Mobile in the third quarter

Precise BioMatch Mobile was integrated in Xiaomi Mi 5S, the first commercial smartphone with a fingerprint sensor under 400 µm (microns) of glass. The device uses Qualcomm ultrasound sensor Snapdragon Sense ID

NEW LICENSE AGREEMENTS AND ROYALTY CUSTOMERS

License agreements with Qualcomm and Betterlife

License agreements with partners targeting the Embedded-market

Royalty revenue from eight customers

TACTIVO SALES LOWER THAN ORIGINALLY ANTICIPATED

Sales continues to develop slower than originally anticipated

Impact on sales to US government due to discussion of digital alternatives

Order for a comprehensive pilot project with Gothenburg city

MAIN EVENTS AFTER THE THIRD QUARTER

15 mobile devices with Precise BioMatch Mobile has been launched so far

License agreements with Image Match Design, InvenSense and Samsung System LSI Business, a division within Samsung Electronics Co., Ltd.

Kona-i demonstrated credit card with Precise BioMatch Embedded

Göran Thuresson recruited as CFO

INCREASED NET SALES & STEADY GROSS MARGIN

(MSEK)

Net sales increased to 25.5 (18.3) MSEK in Q3 – up 39 % from last year

Sales increase in Fingerprint TechnologyBusiness Area – up72 % compared to Q3’15

Gross margin increasedto 77% (71%) in Q3

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Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16Gross marginNet salesNet sales

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100%

NET SALES - 12 MONTHS ROLLING

(MSEK)

Net sales 12 months rollingincreased to 95.0 (42.7) MSEK – up 122 %compared to Q4’14 – Q3’15

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Q4'14-Q3'15 Q1'15-Q4'15 Q2'15-Q1'16 Q3'15-Q2'16 Q4'15-Q3'16

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Q3 15 Q4 15 Q1 16 Q2 16 Q3 16

INCREASE IN OPERATING PROFIT & EBITDA

(MSEK)

Operating profit for Q3 2016 increased to 4.6 MSEK from 2.8 MSEK in Q3 2015

EBITDA for Q3 2016 increased to 6.7 MSEK from 5.4 MSEK in Q3 2015

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Operating profitEBITDAEBITDA

(MSEK)

-20

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30EBITDA 12 months rollingincreased to 27.7 (-12.5) MSEK

Q4’14-Q3’15 Q1’15-Q4’15

Q2’15-Q1’16 Q3’15-Q2’16 Q4’15-Q3’16

EBITDA - 12 MONTHS ROLLING

-2

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2

4

6

8

10

(MSEK)

Cash flow from operations increasedto 8.4 (-1.9) MSEK in Q3Available cash amounted to 75.0 MSEK (45.2)

Q3 15

Q4 15 Q1 16 Q2 16 Q3 160

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Cash at BankCash flowCash flow

INCREASING CASH FLOW & CASH AT BANK

-30

-20

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(MSEK)

Cash flow from operations 12 monthsrolling increased to 34.7 (-21.1) MSEK comparedto Q4’14 – Q3’15

Q4’14-Q3’15 Q1’15-Q4’15

Q2’15-Q1’16 Q3’15-Q2’16 Q4’15-Q3’16

CASH FLOW - 12 MONTHS ROLLING

Compound Annual Growth Rate of 35 % to 2020

Addressable market of 800 million smartphones, tablets & laptops with fingerprint technology in 2017

Growth opportunities as more sensor manufactures gain market share

Source: Redeye0

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2014 2015 2016 2017 2018 2019 2020

(Million Units)

CAGR2015-2020

Total Mobile handsets, tablets,laptops (excl Apple)

CAGR 35 %

GROWTH OPPORTUNITIES IN MOBILE MARKET

EMBEDDED MARKET TO GROW IN 2017

Fingerprint technology is entering new product areas, smart cards and payment cards in particular, but also wearables, cars and IoT

Annual addressable market of one billion credit cards

Demand for efficient and light algorithm solutions with high performance

We are collaborating with customers on several end-customer projects related to smart cards, wearables and cars

First commercial products next year, long termthe embedded market can become as largeas the market for mobile devices

BROAD CUSTOMER BASE CREATE GROWTH OPPORTUNITIES

Continued positive development with new customer agreements

23 license agreements with sensor manufacturers, security companies and resellers

Well positioned to benefit from market growth and to capture a considerable market share

Continuous evaluation of new potential partners

TECHNOLOGY LEADERSHIP

Continued investment in research and development, small sensors, new sensor technologies, liveness and under glass

New features in Precise BioMatch Mobile may improve performance up to 40 % on certain sensors

Significant performance improvements on very small sensors – up to 70% faster match

Reference implementations and integration support to make integration of fingerprint software more efficient

Investigating new specifications and requirements for future mobile payment solutions

Development in third quarter confirms strategy and position as the leader in fingerprint software

Revenue increase of 21 % for Fingerprint Technology business area

Positive long-term revenue trend, but royalty revenues will fluctuate quarter to quarter

Fast market growth, industry leading algorithm solutions and scalable partner business model with good cost control

Well positioned for profitable growth

SUMMARY & OUTLOOK

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