Eutelsat Communications

Hello and welcome to the UTL SAT first quarter 2024-25 revenues call. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you'll have the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, Press star zero and you'll be connected to an operator. I will now hand you over to your host, Christophe Caudrelier, CFO, to begin today's conference.

Thank you. Hello, everyone. Happy to be here with you today. I am Christophe Caudrelier, Group CFO, and I am joined today by Joanna Darlington, Head of Communication and Investor Relations. On the agendas today, we will cover the highlights of the first quarter, the Q1 performance, as well as the outlook and financial objectives. Let's start with the highlights of the past quarter. First quarter revenues were in line with expectations, enabling us to confirm all our full year 24-25 financial objectives. Connectivity applications continue to see growth, mostly on the back of LEO-enabled solutions. On the operational front, we saw the successful launch of the latest batch of 21 Webb satellites reinforcing the constellation. And we secured a multi-launch agreement with Mitsubishi Heavy Industrial, adding further optionality for access to space. So as stated above, we successfully launched a batch of 21 Webb satellites on October the 19th. Adding these satellites will increase network strength and redundancy. particularly in the context of the end of life of some of the first satellites of the constellation. Let's turn now to the Q1 performance. As a usual reminder, all commentary is on a like-for-like basis, that is to say, at constant currency and parameters. Total revenues for the first quarter stood at 300 million euros, up by 5.9% on a like-for-like basis. They reflected a perimeter effect of €8 million reflecting the acquisition of OneWeb, a €1 million positive currency effect, as well as a €2 million positive swing in other revenues mainly from hedging. Excluding other revenues, revenues of the four operating verticals were up 5.5% on a like-for-like basis. Moving to operating verticals details. Video representing 51% of revenues stood at 152 million euros, a decline of 7.3%. Six connectivity revenues representing 19% of the group total rose 30.1% to 57 million euros. Government services 16% of revenues stood at 46 million euros, a rise of 20.3%. And finally, mobile connectivity revenues representing 14% of the group total stood at 42 million euros, a rise of 18.8%. Starting with video, Q1 video revenues amounted to 152 million euros down 7.3% year-on-year, reflecting the secular market decline in this application. Professional video revenues, which account for under 10% of the video vertical, also decreased, reflecting lower occasional use and despite a small boost from the summer 2024 Olympic Games. On a quarter-on-quarter basis, revenues were down by 4.5%. On the commercial front, UTADSAT secured a number of contracts, notably with the renewal of its agreements with key customers, including Adgesera for broadcast in the Middle East and Cable Color for Latin America. Elsewhere, UTADSAT signed a new partnership with TV+, for coverage of Australia and New Zealand, confirming Eutelsat 172B as one of the new go-to positions for broadcasters in the region. First quarter fixed connectivity revenues stood at 57 million euros, up 30.1% year-on-year. They mainly reflected the acceleration in NEO services driven by the NEOM contract as well as calendar effect of the entry into service of Connect VHTS in Q2 Fiscal Year 24. Quarter on quarter, revenues were down by 30.9%, mainly reflecting a high level of equipment sales, as well as the recognition of catch-up revenues, which boosted Q4 Fiscal Year 24. Commercial wins in the quarter included a deal with Biobab a subsidiary of the MTM Group, which will leverage the OneWeb LEO constellation under a multi-year agreement to deliver connectivity for enterprises and cellular backhaul across Africa, as well as a contract with SoftBank to deliver connectivity for businesses and government agencies throughout Japan and marking UTASAT entry into the Japanese markets. First quarter government services revenues stood at 46 million euros, up 20.3% year-on-year. This rise reflected the contribution from LEO-enabled connectivity solutions. On a quarter-on-quarter basis, revenues were broadly stable. The latest renewal campaign with the US Department of Defense, Fall 2024, resulted in a renewal rate of above 80%. First quarter mobile connectivity revenues stood at 42 million euros, up 18.8% year-on-year. They mainly reflected the ongoing strong growth of LEO-based connectivity solutions, as well as geo-solid performances, notably in aviation. On a quarter-on-quarter basis, revenues were down by 14.6%, notably due to equipment revenues recognized in Q4 fiscal year 24. On the commercial front, Inmarsat Maritime selected UTELSAT's OneWeb Low Earth Orbit Network for integration into its Nexus Wave Managed Connectivity solution. Moving now to the backlog, it stood at 3.9 billion euros at the end of September 2024 versus 3.4 billion euros a year earlier and stable versus end of June 2024 representing 3.2 years of revenues. It reflected natural erosion in the video segment offset by the contribution of OneWeb. Connectivity represented over half of the backlog, accounting now for 55% versus 42% a year ago. Let's now turn to the Outlook. The first quarter performance was in line with our expectations, enabling us to confirm our Fiscal Year 24-25 objectives. That is to say, combined Fiscal Year 25 revenues of the four operating verticals around the same level as Fiscal Year 24, and adjusted EBITDA margin slightly below the level of Fiscal Year 24, and gross capital expenditure in a range of 700 to 800 million euros. We also continue to target a leverage level of around three times in the medium term. With that, I thank you very much for your attention. And together with Joanna, we are now ready to take your questions.

Thank you. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. If you change your mind and want to withdraw your question, please press star 2. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question. The first question comes from the line of Alexandre Petrec from Bernstein. Please go ahead.