Thank you, and good morning, and warm welcome to Precise Q3 2021 presentation. I will, together with our CFO, Annika Freij, present the financial results and also give you some highlights on how we see the next coming quarters. Now turning to page number two, please. Despite the tricky situation for our customers, such as Addetech, due to issues in the supply chains and lack of components during part of Q3, we have been able to, with a very good cost control and agile way of working, keep a positive EBITDA. We can also now see a very good trend both in the Algo area and the Digital Identity, which means we will end the second half of this year in a good way. The foundation for growth in DI is based on that we utilize earnings from the Algo business.
Our DI sales will increase a lot in 2021 compared with 2020, and the growth will continue. Now after Corona, we have seen a lot of new interest and installation continue, and more customer interest accelerates right now. The important part is to get up the ARR, annual recurring revenue, the ARR SaaS model. We have a lot of activities in this area, and we will build a very good foundation for coming period 2022. June and July were the months so far during the year with the lowest order intake from our customers. September was the month that performed best so far in 2021. This is a clear indication that the negative effect due to the component shortage decreased, and that we have a good opportunity in the future to return to previous volume.
The whole strategy for 2021 has been to stabilize the profitability Algo business and accelerate the DI opportunity, and we follow that with 100%. We're targeting a ±0 EBITDA 2021. Our setup for the future is now perfect. We can easily handle ramp up, but also changes from a customer due to issues. We are 100% agile in our way of working. Now with the focus on acceleration of DI, we have created the perfect base with integration with all major platforms as Integra, Axis, ASSA ABLOY, Paxton, S2 Lenel, Genetec, and there will come more. This means all major platform suppliers can sell our product with the system, and we can easily upgrade all existing platforms in the market with our technology. This is key for scaling the business.
We also have a contract with a major distributor, which means that we easily can get out a product to customers. It also means that we keep a very lean and fast organization with the support from our distributors, and we don't need to keep any stock in-house at Precise. Also, the cooperation with all major installation firms means that our sales force is huge, and we can, with existing product, scale fast and easily. We continue to look for cooperation and investment opportunities in all relevant areas for faster growth, and we have several interesting ongoing discussions. Platform is there now. We have to scale and grow as fast as possible. Our sales landed on SEK 16.9 million due to the component situation for our customer, far from where we will be in the future. As earlier described, we landed on a positive EBITDA.
Now turning to page number three, the vision. Our strategy and vision, no matter who you are, where you are, and what you do, you should always have access to a digital identity, owned and controlled by you in a safe way. This is what we communicate in all forums, build our solution around, and execute accordingly. You Are The Key. You Are The Key for all applications and resources, and everything is owned and controlled by you. Now, after some hard work done by our marketing team, we also received official approval that Precise own the trademark of You Are The Key. Stronger and crisper than ever. We own this area, and we'll continue to build it. You Are The Key. Next slide, please. The Digital Identity. The growth in the Digital Identity product area continue and was 133% compared to Q3 2020.
The SaaS, Software as a Service, means the stable recurrent revenues with high margins. It's also nice to see the churn rate equal with zero. Number of customer losses is zero. All the customers who are choosing YOUNiQ access are very satisfied, and we have multiple cases of upsells through additional installations. After the Q3, we also attend the Sectech in Stockholm, a fantastic event where we present our products in our own booth, but also by other platform DI and distributors. A lot of good feedback, and visitors were very impressed about the solution. Best innovation in many years in this area. Due to our participation, we now have several leads with our partners. This is the way to scale. We will also attend Fastighetsmässan in Stockholm, 2021, now in November, 24th and 25th. Please take the opportunity and meet us and see our products.
Also in November, we will attend ISC East in New York, seventeenth and eighteenth of November. Focus is on marketing and sales. Go to market via partners, distributor, installation affiliates, and own resources. The market is huge. Just in Sweden, addressable market more than SEK 1 billion, and in Nordic, more than SEK 2.5 billion. This means focus now on push to create the pull in the market in Nordic. The journey just started. We can also see that our YOUNiQ product contribute to a sustainable societies. We have ongoing pilots projects with Algeco to control electricity and energy consumption through YOUNiQ. This will help our customer to achieve their environmental targets. More to come during first half next year. We also announced the collaboration with Doro to develop innovative solutions in the field of technology-enabled care.
We plan joint pilots to open up a very interesting area. Finally, a significant ARR growth with 100%, and we can already now see indication of continuous growth in Q4. Please turn to page five, the Algo. Continue to see extremely high margins in the Algo area. Despite the COVID situation, we have been able to keep the momentum and create healthy cash from the Algo area. The effects on semiconductor availability have impacted our customers, but we hope now that it has changed and that Idex and Qualcomm among other customers will return to a healthy business. Many integrations of our fingerprint software in a variety of mobile devices in collaboration with partners ongoing, and the introduction of large sensor area seems to take off now. We have also started some very interesting new pilot projects to control vehicle settings through fingerprint recognition.
This means when it will go off to real product, it will be sustainable, healthy revenue. The car industry is always long product lead time, but then the business continue for many years. No major changes in the smart card area. We still have a very good dialogue with our key partners such as KONA I, for instance. As we already communicated, no real volume yet. The cash generating Algo area is key, and we don't see any changes coming in this area. By that, I hand over to our new CFO, Annika Freij.
Thank you, Stefan. Please turn to page number six. This is my first quarterly reporting, and I would like to start by saying that I'm impressed by the transformation that Precise has done the last three years. Within the Algo business, the organization is much slimmer and more efficient, but still delivers high sales numbers and customer focus. The Algo business is strong and profitable. Compared to last year, we have more big customers, which makes us less dependent on a single customer performance. We are carefully selecting our partners, and there must be a strong business case to select partners. In the last month, we have started to work with new industries, like the car industry, as Stefan mentioned before, which is very interesting for the future. We have suffered from component shortage, but after a weak summer, the trend is improving.
Our strategy continues where the Algo business is funding the development of the Digital Identity business. Also within Digital Identity, Precise has done an impressive journey the last three years. Starting at nothing, we now have a system YOUNiQ that works very well. The upsales to the existing customers show that the product adds a great value. The journey for Digital Identity has just started. After one and a half years of pandemic hindering us from meeting customers, the trade shows this fall is something of a launch for Digital Identity. We have now built up partnerships with distributors, resellers, installers, and we are integrated in several systems, and now we are ready to sell. Please turn to page number seven. Net sales and gross margin. The net sales during the quarter were SEK 16.9 million versus SEK 23.2 million previous year.
Net sales were split between royalty revenues of SEK 6.8 million versus SEK 11.3 million previous year. License fees, including supported maintenance of SEK 9.7 million versus SEK 10.2 million previous year, and other of SEK 0.3 million versus SEK 1.6 million previous year. The component shortage, and therefore lower sales volumes among our customers, resulted in the lower royalties. License fees are just slightly below Q3 last year. The reason for the decrease in other is lower sales of hardware due to fewer new Digital Identity installations during the quarter. The ARR, annual recurring revenue, is the value of the recurring revenue from the Digital Identity subscriptions per year. This has more than doubled compared to the same time last year. Gross margin during the quarter was 76.4% versus 79.8% previous year.
Change is primarily due to lower turnover within Algo and increased amortization of capitalized development expenses. Total amortization of capitalized development expenses was SEK 3.0 million compared to SEK 2.5 million previous year. The increase in amortization of development expenses relates primarily to the Digital Identity. Amortization of acquired intangible assets was SEK 0.2 million, which is the same as Q3 previous year. Please turn to page eight. The profit at the EBITDA level was SEK 1.0 million in Q3 versus SEK 1.1 million previous year. Operating expenses for the quarter fell by SEK 4.8 million and totaled SEK 15.9 million versus SEK 20.7 million previous year. Our cost control is tight. Cost reductions come primarily from reduced research and development costs.
Earnings per share for the quarter was -0.01 SEK versus 0.01 SEK in Q3 last year. The operating loss for the quarter was SEK -3 million versus SEK -2.2 million previous year. The reduction of the operating profit or loss is explained primarily by lower net sales. The Algo business is healthy and profitable, delivering strong cash flow. The component shortage and lower sales volumes among our customers reduced royalty. Information from customers shows that the volumes are increasing after the summer, and this would further increase the profitability within Algo. Digital Identity is at the turning point. We have developed YOUNiQ, which have been received very well in the market. We continue to invest in Digital Identity.
We continue to improve and integrate with other solution and build partner networks, which is an important base to build for future efficient sales. We have built a team of resources in sales, marketing, and customer excellence. During the fall, we've had more opportunities to meet customers again. Please turn to page nine. The cash flow for the quarter from current operations was SEK -2.4 million versus SEK 0.5 million last year. From this SEK -3.4 million is due to changes in working capital, mainly reduction of current liabilities. The group invested SEK 0.5 million in property, plant and equipment during the quarter versus SEK 0.7 million last year. We have structured our business model to reduce the need for incremental working capital. Licenses are invoiced versus prepayment. Royalty invoicing is based on actual usage reported by our customers.
In Digital Identity, we're working with prepayment from monthly to yearly in advance. This business model enables growth without need for incremental working capital. Capitalization and amortization of development work. The development expenses of SEK 3.6 million were capitalized during the quarter, compared to SEK 4.5 million in Q3 last year. Amortization of capitalized development expenses was SEK 3.0 million during the quarter versus SEK 2.5 million previous year. Capitalized expenses are amortized over a three-year period for both Algo and Digital Identity. Our cash position is solid. Cash and cash equivalents at the end of the period totaled SEK 55.7 million versus SEK 71.3 million at the end of Q3 last year. Back to Stefan.
Thank you, Annika. Now we're turning to page number 10, the summary. Once again, positive EBITDA despite the COVID-19 effect on semiconductors and the supply chain. We have a strong indication on return to prior volumes, which will further increase profitability within Algo. We will continue to generate good cash flow in this area, which means our investment in DI will continue. We have a clear expansion of SaaS product area Digital Identity with increased client activity and promising growth. The growth will continue in Q4, and there are clear indication that it will continue in 2022 also. The journey has started to take as much as possible of the addressable markets in DI for YOUNiQ. We're looking forward to finalize this year in a good way. We're now turning to page 11, and thanks for listening in, and now we will open up for questions.
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Okay, thank you. We have not received any questions via email and other social forums. By that, we say thank you for listening in and just have a lovely day and take care. Hope to see you soon again. Thank you very much.