Precise Biometrics AB

STO:PREC

Earnings Call Transcript 2020-Q3

[Stefan Kenth Persson, Chief Executive Officer]

Good morning, and warm welcome to Precise Q3's 2020 presentation.I will, together with our CFO, Ulrik Nilsson, present the Q3 financial results. And also give you some highlights on how we see the next coming quarters and also more details about the potential in the YOUNiQ access market.Next slide, please. So I am happy to present another quarter with a positive EBITDA. The sales is in line with our earlier communication, and we generated SEK 23.1 million in this third quarter. We have a very good cost control. We have been able to continue our investment in the YOUNiQ, with clear focus in the access area. We can also report that the sales for the total period increased with more than 30%, up to close to SEK 70 million.The acceleration in the YOUNiQ area continue, and we have now been able to get the first cooperation in place with access platform suppliers such as RCO and Telcred. This is a key area for us in the go-to-market strategy to be able to accelerate the rollout of the YOUNiQ access product. We can also see that our strategy in the mobile area continued to generate a positive EBIT. We are now supplying software for optical sensors to all major android OEM, together with the partners such as EgisTec. Even if the industry has been hit by the corona situation, we have been able to continue to deliver our software to our partners, and we have today a very stable way of working with strong teams in Asia, Europe and U.S. So we don't foresee any major changes in our sales for Q4. We have a stronger financial situation today compared to 1 year ago.Next slide, please. The vision. We continue to drive our daily operation in line with our strategy and vision. No matter who you are and where you are and what you do, you'll always have access to your digital identity, owned and controlled by you in a safe way. And we have now started to communicate even more about the benefit of that vision. You are the key.Next slide, please. Digital identity. The trend is clear. We use more and more digital products and services that need identification and verification of the users. We can also see that it is complicated to remember all passwords, codes, et cetera. And we don't want to carry around with cards, tags, et cetera. We are clearly moving towards the situation where the technology should help and make the life easy and safe. We have a solution. You are the key. It's also very clear that due to the pandemic situation, people are reluctant to touch public devices and therefore, we strongly believe that touchless interaction in public areas will increase. That means our YOUNiQ access solution with face is perfect in public areas. Fingerprint sensors are perfect with private devices, such as mobile phones, tablets and private computers. So for face in public areas and fingerprint sensors in private areas is the way forward.Our YOUNiQ solution is a fantastic combination of ease of use and high security. We can see a huge potential in the access area, which is the focus area for us right now. Even if we have had some customers and trials outside Nordics, our main market focus now is Sweden. The addressable market for biometric solution for apartment blocks, commercial building, constructions, gyms, industrial and public areas just in Sweden is around SEK 1 billion. The trend is very clear. There is a need of secure and convenient access solutions. Ulrik will later give you more information about the addressable market in Sweden.Our go-to-market activities are divided into 3 areas: wholesale resources, key account where we drive sales via large account and create an interest in the market. Affiliate program where our selected people gives us information about opportunities. And then finally, the major part where we have integrated with key platform players such as cooperation with RCO. We have also, after the quarter, communicated the integration done with Telcred, where we also combine a solution with Axis Communication's system.We have today more than 40 installations up and running and more than 1,000 people registered for YOUNiQ. We started this year to roll out the product and we continue to accelerate the rollout with more partnership and more users. Acceleration is key. The market is there. We have now business setup where we have direct contact with the end consumer, and the contract is based on number of users. A normal contract is over 3 years, which means we have been able to move the company closer to the end users and with long-term contracts.Ulrik will now give you more details in terms of the addressable market potential in our focus area.Please, Ulrik?

[Ulrik Nilsson, Chief Financial Officer]

Thank you, Stefan. Please turn to Page 5. So I will guide you through how we have worked with identifying the addressable potential in the access market.We have, as Stefan earlier said, identified 6 verticals: apartment blocks, commercial buildings, construction, gyms, industrial and public. For these verticals, we have gathered the fact using databases like Statistiska Centralbyrån, giving us a base in a number of buildings and how this base historically has developed.Please turn to Page 6. From the base described, we have calculated the development and estimate the number of buildings in the fixed verticals to be approximately 450,000 properties. Based on interviews and desktop research, we have identified the current split between mechanical locks and electromechanical locks to be 35% for apartment blocks, commercial buildings, industrial and public, and 80% for construction and gyms.Our focus is on properties using electromechanical locks. Properties using mechanical locks deciding to switch is obviously an upside, which we have not included in the calculation. We have not included any assumptions of that the adoption of electromechanical locks in new properties will increase. We believe it's likely, but we have not used that number in the calculation.The average number of installations per building is assumed to be 1, a number that obviously could be higher when a property contains multiple tenants. The annual revenue per installation from fees were set to approximately SEK 35,000 per year. We've assumed an adoption rate of 15% by 2025. This adoption rate is split as that apartment blocks will have an adoption rate of 10%; commercial buildings, 20%; construction, 20%; gyms, 30%; industrials, 20%; and public, 10%.Please turn to Page 7. Adding this together, there is a market potential of more than SEK 7 billion in Sweden. Looking closer to this for each vertical, we can see that the apartment blocks, there is a market potential of SEK 1.4 billion. We believe that the adoption rate is 10% here in 2025. For the commercial buildings, we see that the market potential is SEK 1.2 billion. The adoption rate we foresee is 20%. On construction, we estimate the market potential to be SEK 1 billion and the adoption to be 20%. Gyms, SEK 116 million and a 30% adoption rate. For industrials, SEK 1.4 billion with an adoption rate of 20%. Public, SEK 1.5 billion with an adoption rate of 10%. We also see that there are customers requesting us to deliver on hardware and installations not being a core of what we do, but we believe that there is a SEK 500 million potential market. And we estimate 9% of this to be addressable. So in total, we look at SEK 7.2 billion, and an average adoption rate of 15% would bring the addressable market to more than SEK 1 billion.Please turn to Page 8. Converting these adoption rates, then we see that this is giving us and at -- the market for apartment blocks, which we can address of SEK 144 million; commercial buildings, SEK 247 million; construction, SEK 192 million; gyms, SEK 35 million; industrial, SEK 283 million; and the public, SEK 148 million. Adding this together gives us a market potential in Sweden stand-alone in excess of SEK 1 billion.Currently, the market for this solution is untapped. The market potential is likely to increase when awareness of the technology arise. Our ambition is to remain a market leader and we continue to invest in this great opportunity. In 2025, we foresee digital density to be the largest business area within Precise.With that, I conclude and hand over the word to you, Stefan.

[Stefan Kenth Persson, Chief Executive Officer]

Thank you, Ulrich, and please page to next slide, the mobile. We continue to deliver a very stable result despite the pandemic situation in the world. A global setup enable a very efficient support towards all our customers, and we continue to win projects with our partners at leading OEMs such as Samsung, for instance. We have also, during the last month, continued to develop our main platform and presented to our key customer a new software product with a very good preprocessing quality. The plan is to launch this merchant OEM later this year and beginning of next year. Our ambition is to deliver a similar result for Q4, which means we have much more stable situation in the company now compared to 3 years ago. The trend is clear that in parallel with more activities and applications are handled via mobile phone and tablet, the need for higher security level is needed. We work together with our partners to provide the requirement for security. We have today an extremely good quality, and we continue to develop it further with our partners.Next slide, please. The activities in the smart card area has increased due to the pandemic situation. The need of contactless payment is actually more relevant than ever. Tests and pilots are running, and we work closely with our partner, NXP, to launch a product as soon as possible. Due to a very complex value chain of several companies' involvement and needed of approval, it takes a long time, longer than most of us had hoped for. We are ready to launch but the volume is not there, and there is no indication of huge volume for 2021 either. We don't need volumes in the smart card area for future success. And if it will happen and when it will happen, it will be a bonus for the company.It's very clear that touchless is the future for devices in public area. And there are unique solution with face match perfect. And then we have private devices such as mobile and computers and cards, where fingerprint is a perfect solution. We can also see that payment with mobile or direct with biometrics such as face is gaining attraction. So there will be different payment methods going forward sometimes with your mobile, sometimes with your card and sometimes with your face. So card and other biometrics will be used when you do payment in the future. You are the key for future payment, which means our digital end-to-end solution is perfect in this physical distancing world we are right now into. Independent, if it is in the digital area, density area or mobile or smart card, is we always need this type of payment methods in the future.By that, I hand over, once again, to our CFO, Ulrik.

[Ulrik Nilsson, Chief Financial Officer]

Thank you. Turning to the financial development and please turn to Page 12. The execution of our strategy continue. Our mobile business is healthy and profitable, and we work towards expanding our role with taking responsibility for larger parts of the delivery. Precise YOUNiQ has received a very good reception in the market. And we already have more than 40 installations throughout Sweden, and we expect to continue to accelerate the pace in which we add new customers.Net sales in the quarter totaled SEK 23.2 million versus SEK 27.5 million previous year. The net sales were split between royalty revenues, SEK 11.3 million versus SEK 8.2 million previous year; license fees of SEK 9.0 million versus SEK 15.9 million previous year; support and maintenance of SEK 1.2 million versus SEK 2.0 million previous year; and other of SEK 1.6 million versus SEK 1.5 million previous year. The increase in royalty was primarily attributable to the customer Egis Technology. The fall in license fees is a result of previously communicated strategy in which we focus on deeper collaboration with fewer customers.The gross margin in the quarter totaled 79.8% versus 89.2% previous year. Change is primarily related to the change in product mix. Amortization and write-downs of capitalized development expenses was SEK 2.5 million versus SEK 2.6 million previous year. The amortization of acquired intangible assets totaled SEK 0.2 million, which is the same amount as last year.Please turn to Page 13. As said previously, our mobile business continued to deliver healthy profit. We continue executing our strategy working in deeper collaboration with key customers, which is allowing us to have full leverage on scalability. The Digital Identity potential has further confirmed our strategy of investing in future growth. Continued investments, primarily in the area of Digital Identity accounted for the biggest cost increase. We continue to invest in Digital Identity, which is primarily reflected in the increase of spend in R&D before capitalization. We continue to improve our ways of working, driving both efficiency and effectiveness.The overall operating expenses for the quarter decreased by SEK 0.6 million and totaled SEK 20.7 million versus SEK 21.3 million previous year. The operating profit loss for the quarter totaled minus SEK 2.2 million versus SEK 3.3 million previous year. The decrease in operating profit/loss is explained primarily by lower net sales and the lower gross margin. The earnings for the period totaled minus SEK 2.2 million versus SEK 3.2 million previous year. Total depreciation and amortization totaled SEK 3.3 million, which is on the same level as previous year. The EBITDA is positive for the fifth consecutive quarter and totaled SEK 1.1 million versus SEK 6.6 million previous year.Please turn to Page 14. Cash flow and investments. The cash flow for the quarter from operating activities was strengthened and totaled SEK 0.5 million versus minus SEK 3.4 million previous year. The working capital is stable versus previous quarter. The investment in the quarter totaled SEK 5.4 million, which is primarily coming from development expenses. And development expenses totaled SEK 4.5 million versus SEK 1.0 million previous year.Looking at the financial position and the liquidity. Cash and cash equivalents increased year-over-year by SEK 10.4 million, and at the end of the period totaled SEK 71.3 million versus SEK 60.9 million previous year. This strong and healthy cash flow from our mobile business funds the investments in Precise YOUNiQ, and we're building a foundation for continued growth.Back to you, Stefan.

[Stefan Kenth Persson, Chief Executive Officer]

Thank you, Ulrik. And then please turn to Slide #15, the summary. We have now 5 quarters in a row where we delivered positive EBITDA generated from a stable and healthy mobile business. We continue to invest in YOUNiQ product, especially now in the go-to-market with our affiliated program, internal key account sales and cooperation with key platform companies such as RCO. Also, our end-to-end digital solution with cloud, we have now launched and our first product with Telcred and an access solution. We see an addressable market is in access that is huge, and we're driving the market and building it with an ambition to remain as market driver for this segment. We have launched our new market communication strategy focusing on the end users' benefit, and there as we clearly communicate, you are the key, no matter who you are, where you are and what you do.And finally, we have a very stable and healthy mobile setup despite the COVID situation, with operations in Asia, U.S. and Europe.Please then turn to next slide. And now we are open up for questions. We have received a lot of questions via mail, but we start to open up for telephone questions.

[Operator]

[Operator Instructions] We have a question from Jesper Birch-Jensen from ABG.

[Jesper Birch-Jensen]

Congrats on the strong report. A couple of questions from me. Starting off, you mentioned that you signed several new clients within Precise YOUNiQ. And I was wondering how many buildings would you estimate that these deals will add to your base within Precise YOUNiQ?

[Stefan Kenth Persson, Chief Executive Officer]

Sorry, it's a little bit tricky to get your question. It's something about how many deals...

[Jesper Birch-Jensen]

Yes, how many buildings do you estimate that these new agreements would add to your base within Precise YOUNiQ?

[Stefan Kenth Persson, Chief Executive Officer]

Yes. So as Ulrik presented earlier, the potential market here, the addressable market is approximately SEK 1 billion and an average revenue is, for us, we have been calculated with SEK 35,000 per year and installation. So that will differ a little bit. But what we said is that there will be one installation per facility that we think can have this type of installation as such. Today, we have 40 installations in Sweden, which you remember that we started here in the beginning of the year with 0. So during this year, now we have built the foundation. We have built a platform. We have integrated with other platform suppliers like RCO and also with Telcred. We have also integrated with S2, which is a huge platform in U.S. and we have more platform in Sweden ongoing. So it will, of course, increase over time the number of installations. But of course, we can see a huge interest in the market, then there will be more installations coming months and next year.

[Jesper Birch-Jensen]

Okay. So the annual price of SEK 35,000 per building is representative of the new agreements, which you entered into during the quarter as well?

[Stefan Kenth Persson, Chief Executive Officer]

So the SEK 35,000 is an average we have calculated going forward that then, of course, it depends on which type of installation it is. Sometimes, it's a very high security, where very few people using it. And sometimes, there is a lot of users, for instance, we have gym chains. We have preseason settings and other type of installation that we have another cost structure. But the volume, volume is there, of course. But the average have been calculated on SEK 35,000 per installation a year.

[Jesper Birch-Jensen]

Okay. And just a question on your addressable market here, which you calculated to SEK 1 billion in 2025. I was just wondering, where does it stand today? And what kind of growth rate are you seeing between, let's say, 2021 and 2025 on an annual basis?

[Ulrik Nilsson, Chief Financial Officer]

It's a very good question, and it's Ulrik. When looking at it, we are, as I said earlier, looking at a market that is untapped. But there is today not a solution that really compares with what we're doing. We are providing remote on-boarding, remote off-boarding, touchless entry. So the market is untapped and we are developing the market. You could say that the market today, we have been in market-leading position, given that we are first on the market and we provide what we see as the best solution. We are where we are today. And we are building a market. We're seeing that in 2025, we will have reached an adoption rate of 15% out of the SEK 7 billion.

[Jesper Birch-Jensen]

Got you. And maybe I should touch upon my next question, but I was wondering just what kind of competitors do you see trying to enter this market as well besides your solution? But you kind of touched on it already, but do you see any clear competitor? And how -- are they doing anything different from you than your solution?

[Stefan Kenth Persson, Chief Executive Officer]

So as it is today, there's not -- we haven't found anyone that's actually doing the solution as we're doing, end-to-end digital on-boarding remotely and touchless also, which is extremely strong selling point now in the COVID situation. There are, of course, other solutions like mobile phones and all that, but then you still need devices. With our solution, you only need your own body, so to say. We have seen that in U.S. and in Asia, there are similar solution, but then there is -- it's a very clear link to a specific hardware. We are hardware-agnostic, which means that we can work with all different camera solution and all different computer solutions, which is absolutely unique. So right now, no competitors out there with a similar solution. Of course, that will change. Of course, this is a very interesting market for several players out there. But our ambition is to remain in the leading edge and continue to develop our product going forward.

[Jesper Birch-Jensen]

Got you. And just a final question for me on the gross margin, which was obviously a little bit lower than we've been used to perhaps, driven by a mix -- product mix. But I was just wondering how should we interpret this going forward because royalty revenues were up, licensing royalties were down, should we expect a lower gross margin going forward since you are focusing on royalty revenues?

[Ulrik Nilsson, Chief Financial Officer]

I think that answering that question is not a one-liner. Looking at the -- when we're selling the license fee and as well with the royalties -- royalty fees, we do see that our business is really having an impact from scalability. So when we can manage scalability, having a higher revenue that impacts the gross margin immediately in the business for mobile and smart cards. We are now entering a new market with digital identity, and we see that we're developing the market and we have a lower margin in the Digital Identity area.

[Operator]

[Operator Instructions] We have a question from [ Jorgen Carlson ], private investor.

[Unknown Attendee]

First, I have some questions regarding the payment card. And I know that Precise Biometrics has an old cooperation with a sensor company called EDEX. Is that cooperation still alive? And can you confirm if EDEX use Precise Bometrics software in any of the payment card solutions EDEX is enrolled in now?

[Stefan Kenth Persson, Chief Executive Officer]

So thanks for the question. So that's correct, that we have had a cooperation with EDEX in the past, but we don't have any cooperations as we speak right now with EDEX.

[Unknown Attendee]

Okay. And also, we know that Precise Biometrics has a cooperation with NXP. How is the progress there? Do you have any cooperations with other secure element companies or fingerprint sensors companies? And a sub-question to that. Can Precise Biometrics be -- have two -- let's say, two software licenses for a payment card, one to the secure element, for example, NXP, and one for the sensor company?

[Stefan Kenth Persson, Chief Executive Officer]

So yes, we have ongoing discussions and collaboration with other companies outside NXP also. Of course, there is no exclusivity between us and NXP. Of course, NXP is our most important customer right now. We have been working with them for a very long time. And we really support them to be able to get out in the market. So that's our main focus. But yes, we have ongoing discussion with other platform and sensors suppliers also, of course. And yes, there is, as you said, there is 2 different ways to handle the matching: the matching in secure element or outside the secure element. And yes, we have 2 different products, so it's possible to have either/or. We're, of course, pushing the market towards the secure element because that one with ID, with this payment card to make sure that it's a very, very safe transaction. But you're right, there are 2 different solutions in the market.

[Unknown Attendee]

Okay. Maybe that explains the next question. I'm not really sure about the technical part here. But there have been rumors of the Fingerprint development of the T2 sensor that Precise Biometrics software is no longer needed. And we know about the cooperation between NXP, Fingerprint and LINXENS. So can you tell us something about that? Does the T2 sensor handle all the stuff? Can they handle all the stuff that Precise Biometrics software did before?

[Stefan Kenth Persson, Chief Executive Officer]

So to clarify your question a little bit. T2 source their sensor from FPC. And we have a cooperation with FPC. But a different way forward when it comes to FPC, and they have been very clear in that communication. Also, they have their own software and sensor and are using our also. And it's a little bit a matter of how the customer want to utilize either our solution or their solution. The important part to remember is that we are hardware-agnostic. So for instance, when we are working with some of our customers, they are really, really interested in to have a solution where they are not directly linked only and fixed to one hardware solution. They want to have the opportunity to change hardware because they know there will be a price erosion, the price drop going forward. And by that, they don't want to just rely on one hardware supplier. So our main focus from day 1 in this area have been to have a software that is hardware-agnostic, and that's our way forward.

[Unknown Attendee]

Yes. Okay. And in the Q2 report, you talked about Precise Biometrics' plan about extending your share of the value chain in terms of software for fingerprint sensors. How has that progressed? Any luck there?

[Stefan Kenth Persson, Chief Executive Officer]

As I said earlier in the presentation, yes. So we have presented it for our partners. We have integrated it together with some partners. And going forward here in Q4 and Q1, we will continue the dialogue with some of our customers to do the integration in their solutions also. We have a strong belief that with this solution, we will, together, have a much better solutions for our customers and the OEMs like Samsung, et cetera. So that's our ambition. In the end, we don't decide upon it, but all the test results so far choose very good progress in this area. And that means, of course, that we take a bigger part of the two value chain in the software.

[Unknown Attendee]

In terms of revenues, is it much more than today if you compare to what you -- your software do today?

[Stefan Kenth Persson, Chief Executive Officer]

So that's, of course, nothing we know anything about. What we said in the presentation is our ambition is that the Q4 should be on a similar level as Q3. What will happen next year, we don't know. Of course, there is a huge price pressure in this area in general. And we can also see that companies that have not been able to enter this market have huge problem to enter here. So our ambition is to, of course, to keep the level for the coming year. But it's too early to do any forecast prediction for 2021.

[Unknown Attendee]

Okay. I also have a question about -- yes, I'm not sure if you remember it, but 19th of October, you posted on Twitter, payment with verification done by Precise Biometrics' software, touchless, no limit, no PIN. I'm curious about what kind of solution that is. Is that Samsung Pay? Or is it something else?

[Stefan Kenth Persson, Chief Executive Officer]

That's correct. So we utilize social media to communicate interesting things that happen in the market that is relevant for us, and also to give our shareholders a little bit more information on what's happening out there. So that's correct, it's Samsung Pay. And if the payment is done via an A71, a phone from Samsung, which utilizing our fingerprint sensor. And that is a fantastic solution where you do the verification on your own device, with your own fingerprint. You don't need to touch any payment devices and there is no limitation, and it's very secure because there's no PIN involved. So that's correct.

[Unknown Attendee]

Okay. And now about something completely else, that is very interesting. Can you please tell us a little bit about the progress with Infinity Optics? We know that there are ongoing pilots there, but how does it progress?

[Stefan Kenth Persson, Chief Executive Officer]

So we continue to do proof-of-concept with Infinity Optics. And interesting part is, of course, in our overall strategy to have the possibility to do enrollment in one place and then do the verification and access in a different place. That's ongoing. It's, of course, a research program. And we don't know today if it will happen and when it will happen, but the idea is actually supporting our vision to be able to distribute the access possibilities for all users, so you are the key. We don't know today if we will be successful. And so this is part of a bigger research program we are running right now.

[Unknown Attendee]

Okay. So yes, are you closer than the last Q report, the Q2 report?

[Stefan Kenth Persson, Chief Executive Officer]

We are always getting closer to it, the end result.Here, we need to bear in mind that this is a research program, and there are a lot of ideas in this area, how to build that. And we don't know when it will happen, but for sure, we continue to invest in this area because that's important for us.

[Unknown Attendee]

I also have a question regarding the cooperation with Covr Security. I read in their news mail about their involvement in government ID implementations in Africa, it's Kenya and Ghana, and also a European banking platform. Can you tell us if Precise Biometrics are involved in any of Covr's business here?

[Stefan Kenth Persson, Chief Executive Officer]

So as earlier communicated, we have a cooperation with Covr, yes. What we saw here in the beginning of the year when the COVID situation hit the market, then especially in the financial and bank area, everything gets much, much, much slower, and that was the reason why we focused on the access area. What we have together with Covr is that they have their own solution. We have our own solution. And together, this is a very strong solution, but they are able to sell their own solution without us and we are able to sell our solutions without them. Right now, we are not part of any program in Africa. Our focus right now is actually Sweden and Nordics for the access. And then, of course, the mobile is in, a little bit in U.S., but in Asia. So -- but the cooperation is still up there. And we are selling in their solution when it's relevant and they are selling in our solution. And when we will have the first customer there, then, of course, we will communicate that.

[Unknown Attendee]

Okay. Then we have -- I'm not sure if you will tell anything about this, but there is a cooperation between the sensor company, Betterlife, where Precise Biometrics has a cooperation. And yes, the cooperation between Betterlife and China Semiconductor Industry Alliance. Do you know if they have any products yet or any services where Precise Biometrics software is used?

[Stefan Kenth Persson, Chief Executive Officer]

No. I mean we -- as you said, we have a cooperation with Betterlife but other than that, I will not answer any question in this area. It's too early. So of course, we're monitoring what's happening there. But right now, it's nothing that has any impact on our financial situation.

[Unknown Attendee]

Okay. Also, I'm interested in Egis. Egis has filed a patent lawsuit against Goodix. And yes, Egis is seeking for around USD 13 million in damages. If that lawsuit is successful, do you see that Precise Biometrics can have a share of that money because of all the lost income that Goodix has taken?

[Ulrik Nilsson, Chief Financial Officer]

No, no. We are not at all involved in that. That is something between Goodix and Egis. It's -- we are only supporting Egis, our partner, with information and technology and all that. And of course, we are happy if they are successful because then we are successful. But we are not at all involved in that patent lawsuit.

[Unknown Attendee]

Okay. We also heard that when you extended the license agreement with Egis, you expected -- Precise Biometrics expected around SEK 60 million for -- as an income for 2020. Do you have any new estimates for 2021?

[Ulrik Nilsson, Chief Financial Officer]

No. So it's too early. As I said earlier, we are focusing now on the Q4, of course, and the acceleration of YOUNiQ access, and we will be in a similar level for Q4 is our forecast. What's happening in 2021 is too early to have any comments on.

[Unknown Attendee]

Okay. Last question. I'm a little bit curious about, we have seen so many Nordic biometric companies such as Fingerprint, IDEX. And yes -- I wonder, they are thinking that the payment card market will go boom, it sounds like tomorrow. But you are a little bit more cautious about -- I'm going to say, that if there will be any revenues on the -- from payment cards next year, 2021, that is a bonus. How can there be such a difference between what they think and what Precise Biometrics thinks?

[Stefan Kenth Persson, Chief Executive Officer]

I never comment on any other company's forecast and all that. We are utilizing our source in the industry when we're talking with our partners and all that. And that we then have us an input for our estimations. So what other companies estimate and their forecast if there is a possibility, I can't and I will not comment their forecast.

[Unknown Attendee]

So far you have been correct, so it's quite funny to see how they think it will happen so soon, but...

[Stefan Kenth Persson, Chief Executive Officer]

A lot of good questions. Lot of good questions. Any other questions on the telephone or...

[Operator]

No, there are no further audio questions registered.

[Stefan Kenth Persson, Chief Executive Officer]

So then I have -- we still have some questions via mail. So I will try -- most of them are -- we have answered, I think. But there have been a question regarding our pilots at the hospitals and the status there.It's ongoing. We have actually more hospitals now that are interested in this solution. We should remember that this environment takes very long time before any decisions, but we can see there is a huge interest from the people involved. And hopefully, we will get something here during next year. But as I said earlier, it's a huge potential, of course, as Ulrik said earlier, in what we call the public vertical. But it will take some time before we get into that. When it comes to -- overall, when it comes to the verticals that are short term, very interesting. It's, of course, the commercial, building, construction and industrial and some gyms. But public is a long term that we need time to invest more into.Yes. Then I think we have answered more or less all questions or do we have anything else to wait for?

[Ulrik Nilsson, Chief Financial Officer]

We have a question also, it's about the sales to Egis Technology in the quarter.And as we have communicated, we are working very closely with Egis Technology. And looking at the year-to-date figures together with Egis, not exactly released in the report. But when we look at the sales to Taiwan for the period, we have SEK 45 million in sales versus previous year's SEK 23 million. So when we're working together with Egis very closely, and we are seeing a stability that we have not seen in the previous years. So we believe that the increase that we're seeing from SEK 23 million to SEK 45 million year-to-date is very nice, obviously.We see also that the dollar rate as such is working negative to us, given that the Swedish krona has been strengthened against the U.S. dollar. But to answer the question regarding sales to Taiwan for the period year-to-date, we see dramatically higher sales.

[Stefan Kenth Persson, Chief Executive Officer]

Okay. I think that will -- and we have a one more or...

[Ulrik Nilsson, Chief Financial Officer]

Let me see here. We have a few more.

[Operator]

We also do have a follow-up question on the phone from [ Jorgen Carlson ].

[Unknown Attendee]

Sorry. I have a couple of more questions if there are time. So I take the opportunity here. I'm a little bit curious about if Precise Biometrics knows if your software is only used by Egis optical sensors? Or if they also use your software to their capacity sensors?

[Stefan Kenth Persson, Chief Executive Officer]

So a good question. And the answer is that our software is used for their optical sensors. The capacities helps us, they are using their own software.

[Unknown Attendee]

Okay. Is there any ongoing plans of the -- to try to come into the capacity sensor market more?

[Stefan Kenth Persson, Chief Executive Officer]

There is always an ongoing discussion about that, of course, because we have some good software for the capacity sensors also. What we should remember is that the margin is extremely low in the capacity sensors, extremely low. And therefore, the opportunity for us there is very, very limited. We need to have huge volume to enter that area. We have, of course, ongoing discussion with EgisTec and other of our customers in this area. But it's very, very tricky to earn money in that segment right now.

[Unknown Attendee]

Okay. And I'm also a little bit curious about, is it possible to update hardware, a phone, with Precise Biometrics software via OTA, over there, you send over the software. And the use case here I'm thinking of is, for example, the phone's fingerprint sensor has software from, for example, Supreme (sic) [ Suprema ]. And then it's updated with the software from Precise Biometrics. And has it ever happened?

[Stefan Kenth Persson, Chief Executive Officer]

So the answer there is, yes, it's absolutely possible to do that. Of course, it's a little bit troublesome for the end users because they need to do a new enrollment. If you change the software algorithm in the mobile phone, you need to do the registration again with your fingerprint. And it had happened in the past year, it happened several times in the past. And I'm sure it will happen in the future also. So it's absolutely possible, but it's a little bit troublesome for the end users.

[Unknown Attendee]

Okay. And also, I'm a little bit curious about, if you can tell us anything about the difference between, yes, I call it, the normal YOUNiQ access solution and the solution where Precise identification software is integrated in an open cloud-based platform for access control. What is the difference between these two solutions? And will this speed up the sales of YOUNiQ access?

[Stefan Kenth Persson, Chief Executive Officer]

It's a very good question. So I'll try to answer that as easy as possible. It's like this that our solution is both cloud-based and what we call on-prem. Because you need to have, in most cases, on-prem solution if the cloud connection goes down. That's a requirement for many of the access system. The difference here is that some of the system are only cloud-based and we support that. But if you go into the platform that are available right now, then you are integrated into the platform instead, which means that they utilize the system on-prem. We are working with what we call open API, which means that we are open for different systems to integrate towards us. When we started this journey here beginning of the year, we had just realized that we were a very small player and we had to integrate towards the available system out there. And that has been the most challenging part to get access for this and to be able to do it. We have been very successful with RCO. Telcred was very easy and S2 was very easy, and we have more coming around the corner here, the next period. So that's the big difference, that our solution is a cloud-based solution, but it's also possible to integrate it on-prem because we have an open API system available for our partners.

[Unknown Attendee]

I also have a follow-up question. I think Jesper asked about what's the difference between Precise Biometrics' access solution and yes, from competitors. For example, you buy your one -- or one of the solution from Innovatrics. And why don't they do the same thing as you do? What does Precise Biometrics add on to the solution?

[Stefan Kenth Persson, Chief Executive Officer]

So Innovatrics is a pure phase algorithm developer, more or less the same as we are, a fingerprint software algorithm developer in the mobile phone area. What we have done is that we have been able to take their software. We have a very deep collaboration with Innovatrics, of course, that we are supporting each other when it comes to road map planning and all that. And then we are integrating that into our cloud solution. And we are also integrated with another line solution because it's extremely important that you have a high security level in this type of solution. So what we have done is that we have been able to integrate their solutions into a cloud-based solution and also integrate it towards the platform suppliers out there. So they are one component in the total picture. Another thing that is also important that we have added on this is the digital end-to-end solution, which means that we have a remote on-boarding possibility and remote off-boarding possibilities. So they are a face Android provider, and we are the solution provider in this system.Any other questions or...

[Operator]

There are no further audio questions registered.

[Stefan Kenth Persson, Chief Executive Officer]

We have one last question here from -- via mail. And that is, when are you planning to launch and expand the YOUNiQ access outside Sweden?So right now, for sure next year, the focus is Sweden, and it will be. The market potential is huge. We have some activities in U.S. because of our presence in New York State and that we have integrated with S2. We take that step-by-step, but the focus now is Sweden and the access market.Okay. Thanks a lot, and thanks for all the good questions. Have a wonderful Friday and weekend, and talk to you soon again.