Biometric Technologies delivered sales of SEK15.1m, 11% below our estimates but 24% higher than last year. The reported figure represents a sequential decline, although quarterly variations are inevitable given the structure of the company's business model. The gross margin was 85% in the quarter, flat q/q and up an impressive 6pp against last year.

Digital Identity had sales of SEK5.5m in the quarter, against our forecasted SEK6.0m and 2% below last year's SEK5.6m. Nevertheless, the ARR reached SEK18.6m in the quarter and now represents a larger share of revenue through a sequential uptick from SEK18.3m in the first quarter. We continue to view growth in the ARR to be one of the primary components of the investment case. Increasing ARR provides a base around which other, relatively lumpy, revenue can oscillate.

Following the report, we make only smaller estimate changes. This includes a slight decrease of sales for both segments over the 2024e-2026e forecasting period. We maintain our ARR forecast, given that there seems to be a shift within Digital Identity, where more of the sales are becoming subscription based. We also maintain our gross margin and make a few other minor estimate changes. Our fair value range is SEK1.0 (1.0) to SEK4.6 (4.6), with a Base Case of SEK2.6 (2.7) per share.