Fastned B V

Hello and welcome to the Fastened Q3 Trading Update conference call. Please note, this call is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host, Mr. Mikhil Lan Guzal, CEO, to begin today's conference. Thank you.

Thank you, operator, and welcome to everyone on this call, as well as to our webcast viewers. The presentation used during this call is also available at our investor relations website, which is ir.fastnetcharging.com. This brings me to the title page of the presentation. This is a photograph taken by a photographer that specializes in architecture. We've recently been working on such images to show FastNet in prime architectural editorials. You might think, why would we have put so much effort in architectural magazines? Well, that's because we have an ambitious hiring target for architects. They're incredibly important to ensure we design charging stations that deliver an outstanding customer experience and brand recognition at each new location, every single time. We want to show architects that working at FastNet means working for a company with a mission where you can play an important role in making our brand visible and recognized by electric drivers. Architects at Fastnet operate at the interplay of branding and user experience, and that's quite unique, especially in our industry. Great design is just another example of why Fastnet stations have much higher visitor numbers than all of its competitors. Slide two, please. With reference to the information provided in these slides and discussed during this call, please take note of the disclaimer. Slide three, please. My name is Michiel Langezaal. I'm the CEO and one of the founders of Fastnet. Victor van Dijk, our CFO, is also present in this call. Together, we will present this webcast today. Today, I will elaborate on the highlights of the third quarter of 2023. Also, we will give you an update on the developments in the car and charging market. Furthermore, we will give you an overview of the station rollout for the rest of the year, as well as insight into major strategic wins from this quarter. after that victor will take over and take you through the top line financial results of the third quarter of 2023 and as always we will update you on station metrics after our presentations we will answer your questions please i would like to ask you to limit them to two questions per analyst to give everybody the opportunity we intend to end this call at 12 noon slide four please let's start with the highlights of the quarter about revenue growth as always revenue and kilowatt hour delivered grew rapidly in line with our expectations revenue related to charging reached 15.2 million euro in q3 up 51 versus q3 of last year the main driver behind this development is the growing number of electric vehicles on our roads it's important to mention here that fastnet continues to outgrow the electric vehicle market Because that is quite unique. Not many charging companies do that. For example, let's look at the Dutch market. The BEV fleet grew by 33% in the Netherlands, while at the same time, Fastnet sold 62% more electricity in this country. And we've seen in every country that our volume growth outpaces the growth of the fleet of electric vehicles. And that's a very good thing, because this Strong revenue growth supports our growth profit growth. Let's have a closer look at this growth of gross profit. Gross profit for the quarter was 11.4 million, which is 140% more in comparison to Q3 2022. Gross profit equals kilowatt hour volume times gross margin per kilowatt hour. Both parameters in the equation contributed to the strong growth in gross profit past quarter. First, as I mentioned, we grow our volumes significantly faster than the market. This is because of Fastnet's focus on building large fast charging stations where people come to charge quickly and be on their way again. At Fastnet stations, charging spots are freed up as soon as the battery is full again. What you see with chargers installed at places like IKEA, shopping malls and restaurants is that customers leave their cars longer than it takes to charge. And therefore, a charger is not being used optimally. The capacity of this infrastructure is linked to parking and the dwell time at the location, one could say. This difference puts Fastnet at an advantage in terms of capturing market growth versus other market players, and in turn accelerating the growth of gross profit. Second, the gross profit margin was exceptionally low during the third quarter of last year. When we reached the peak of the electricity prices on the wholesale market, While at the same time, price adjustments to our customers were made with a time lag. A year later, with electricity prices back to more normal levels, our growth profit margin is again at a sustainable level, even though we've lowered prices earlier this year. So the strong increase of 140% in our gross profit is the result of larger volumes as well as profit margin that is back at a healthy level. Additionally, last quarter we benefited a lot from the fact that we currently buy the majority of our electricity directly on the wholesale market and sell most of our kilowatt hours during the day. Especially in summer, it is around the middle of daytime that the electricity is cheapest. This is a consequence of the rapidly growing amount of solar generation capacity over the last couple of years. Other important highlights. In addition to building eight new stations are, of course, the winning of two prime lots in the Deutschlandnet standard and the adding of new locations to our portfolio. I will talk about each of these in more detail later. Which brings me to utilization. During the third quarter of 2023, our network was utilized 11.4% of the time versus 10.8% in the same quarter of the previous year. This number logically goes up as a consequence of more people charging with us, but at the same time going down as a consequence of FastNet adding new stations and more chargers to existing stations. even more so as many new stations are in countries with lower EV penetration than the Fastnet average. Therefore, it's also interesting to note the like-for-like utilization. In Q3 of this year, this was 14.3% compared to 11.4% in Q3 of last year. This metric better shows the massive growth in number of customers visiting our stations. Slide five, please. Last year around this time, we were working on the construction of more than 30 new fastnet stations across France. This summer, for the first time, we could offer electric drivers a Fastnet-only experience on their route from Belgium or the Netherlands to the south of France. Given the significant difference in electric car adoption between France and the Netherlands, we were much looking forward to see how our French locations would perform with summer traffic. Many electric cars from the Netherlands would choose to drive southwards towards their holiday destination boosting the number of electric cars on French railways. This gave us a glimpse into a future with higher French electric vehicle adoption levels. On the right side of the slide here, you see the top 10 stations in our network on the 22nd of July. One of the typical Black Saturdays with a lot of holiday traffic. The stations in the top 10 that day are almost all along the major holiday corridors. Limburg-Zut on the route from the Netherlands to the Alps, Groot-Mackenstedt on the route to Scandinavia, and the French stations serving the north-south corridor to the Mediterranean. The average amount of megawatt hours sold per station per day during that month is one. In May, when the French stations were largely dependent on the electric cars registered in France, these stations delivered 0.6 MWh in line with the lower electric vehicle adoption compared to some of the other countries we operate in. In July, the average daily MWh sold on our French stations was 1.2 MWh. This is significantly above the Fastnet average and more than double that of May. And to take Aire de Weimar Est, north of Paris, the 22nd of July, this station was operating at a run rate revenue of more than a million euro. This boost of summer traffic shows us what will happen every day at these stations in a year or two when French EV adoption has grown. All in all, you can see we were very happy seeing these results in France at such an early stage in the French market. This shows once more the importance of building stations at the right locations and delivers the first proof of having done so in France. Flight 6 please. But not only in France is the number of electric vehicles rising, it occurs across the board in all the countries we operate in. Let's take a quick look at some of the key trends we see. Lower tax incentives for electric cars, on the one hand, are currently slowing down the switch to electric cars for company fleets. But at the same time, sustainability targets that companies need to make as part of their sustainability reporting are accelerating the switch to electric. Competition from Chinese EVs, such as the MG4, the BYD Dolphin, are driving down prices. This is starting to debunk the myth that electric cars are only an option for rich people. Here one really sees forward pricing and the advantages of investing in large scale production capacity at play. New car models arriving to the market give buyers more choice and as a consequence are enlarging the market. Currently it is the cheaper EVs in the middle segment driving market scale. In the coming quarters, it will be the rival of the large family vans and SUVs. But also the small car segment will be playing a more serious role in driving market growth in the coming year. What kind of cars am I talking about? For the opening up of the large family SUV and MBV segments, think about the Volvo EX90, the EM90, the Kia EV9, and so on. These cars have seven seats, 400 kilometers real world range, and 250 kilowatt charging. For the opening up of the lower segments, I'm thinking of the Renault 4 and Renault 5, or the Volkswagen ID.2, cars with 350 kilometers real world range. and proper fast charging as well. This is just a handful of examples, but it shows the electric vehicle market is continuing to grow fast. Slide seven, please. Which brings me to the development of FastNet. Let me start with an update on construction. When looking at our target for year end, one could pragmatically look at this as follows. We have already built 36 new stations this year. Two, at this moment, we have 17 sites under construction, meaning fenced off sites where contractors are currently building. Normally, construction of a charging station takes around four to six weeks, depending on its size and location. Three, in the rest of October, construction will start for another nine new stations. Combined, this is expected to deliver at least 25 new stations on top of our existing network before year end. That's in line with our guidance of building more than 60 new charging stations in 2023. Obviously, we'll also start construction of new stations in October and December. Many of those are expected to open in the new year. In order to continue to scale up our build base, we will also need to grow our pipeline of locations, which brings me to our tender wins. I'm very proud that last quarter the team got the news that the massive amount of work had paid off. We won two of the best lots in the Deutschlandnetz tender. I checked when we first started reporting in our regular analyst goals about the market developments regarding the Deutschland Debt Standard. This was in the summer of 2021, so more than two years ago. Two years of hard work. We went through the qualification process, while in parallel we started to work on evaluating the search areas and focusing our efforts on what we consider the most interesting ones. at the same time we also have to think for some of the political discussions that were ongoing regarding some tender aspects for example whether or not the price cap will be the right thing finally we also needed to make the call and hand in a winning bid some market players gave up along the way we didn't and the outcome is one i think we can be very proud of let me mention the important characteristics of this tender and why its outcome is so important to Fasnet in the charging market. The tender allows municipalities to swiftly contract charging companies to build charging infrastructure on lands they might have available. This by simply going into bilateral agreements. Tender selection has already happened, so they no longer need to set up a selection process to choose between interested parties. The tender embraces an open charging market without any price caps. The tender puts a lot of emphasis on quality, putting Fastnet at an advantage and the charging experience for EV drivers first. Fastnet receives significant funding from the German government to build the charging stations in these areas. This funding can be seen as a friendly loan, as it is repaid by a portion of the revenue stream that is capped to apply for the first eight years of operations. Looking back, FASAT was able to walk away with the two best lots in the Deutzlotnet standard because of, one, we offer the best charging experience in the market. Two, we put in a competitive bid thanks to our efficient and reliable concepts. This brings me to slide nine. This win of the Deutschlandnetz tender is again another big win in our already very well-filled and industry-leading trophy cabinets. Last quarter, we also won our first motorway locations in Denmark. And in Q1, we won Europe's first tender for zero-emission service areas with the Gentbrugge tender in Belgium. Many of the tenders organized by governments today are focusing a lot on quality. This is incredibly important as consumer research again and again shows that this is one of the key bottlenecks for people to choose to go electric. Being quality, the presence and the ease of use of proper fast charging infrastructure. The experience we have in delivering a top quality service to go electric The experience we have in delivering a top-quality service to electric drivers is giving Fastnet top scores in tenders and is allowing us to win the prime loss. This is what made us the winner in the French motorway tenders two years ago. It is also what made us win tenders such as the Canberra tender more recently. This head start is the result of investing early and honing our concept in a front-runner market. All of this we talked about before, but the German tender is also teaching us something else. The final competition amongst a small group of qualified bidders was largely on financial terms. More than half of the scoring was based on the bids. So you might ask why as a startup with potentially less deep pockets than, for example, some of the big utility companies, is FATEN able to put in also a very competitive financial bid? From all we learned, it is for three reasons. One, the best concept leads to higher revenue, improving our business case, and allowing for a more competitive bid by Fastnet. This is the most important one. Two, as mentioned earlier, we build very efficiently and do a lot in-house, which saves overhead and expensive construction companies many competitors pay for. Three, Without the quality concept, you will not take part, or you might not have, or you might have to pay penalties for not living up to the requirements. All in all, we see more and more signs that with the market maturing, Fastnet continues to have great cards to win tenders, also on financial metrics.

This brings me to slide 10.