Otovo ASA

And thank you for joining us for OTOVA's fourth quarter 2025 earnings call. Joining me today is Jennifer Santascoy, our chief financial officer. Please submit your questions in the event page, and we will address them at the end. Today we are announcing a private placement, an acquisition of energy aid in the United States, and a joint venture with Green Panel in an OEM partnership in Europe. I will begin with an overview of our strategic transition to Etobo 2.0. Jennifer will then walk through the financial results in detail before I return to discuss outlook and priorities for 2026. In December 2025, Etobo and Envie combined into one company, covering both Europe and the United States. Etobo is now positioned as a global home energy service company rather than a regional installation business. We make energy work the way it should. Let me be clear, this is not the same Etobo as before. From 2016 through 2025, Etobo operated as a solar and battery installation platform in Europe. The business relied on centralized project management a large support organization and was focused primarily on revenue growth through new installations otobo 2.0 represents a structural pivot we are shifting from installation driven revenue to service revenue we are reducing central overhead while empowering field technicians supported by proprietary ai enabled software importantly our financial focus has shifted from revenue growth to profitability and cash generation. Our model now integrates three core components. First, we provide service and maintenance for behind-the-meter assets, including solar, batteries, generators, and EV chargers. Second, we identify and execute system upgrades, such as adding batteries or load management systems. Third, where applicable, we monetize the installed base through retail energy supply and grid participation. We bundle these services because service establishes the long-term customer relationship. Upgrades expand the asset base per account. Retail and grid services then monetize that portfolio at attractive margins. This creates a recurring high lifetime value customer model. Across both Europe and the United States, there are millions of installed systems that are out of warranty and underserved. When equipment fails, many homeowners and business owners do not have a reliable service provider. This service gap creates significant demand for Etobo. We currently have approximately 8,750 total service subscribers including the energy aid acquisition and nearly 550,000 legacy customers across acquired books. Demand for monitoring and service is proven and our opportunity is to scale the operational infrastructure to serve it efficiently. We are building a proprietary automated platform that reduces cost and increases margin across the organization. AI materially reduces development cycles and lowers engineering requirements. The platform manages intake, diagnostics, dispatch, and scheduling optimization. Field technicians scan parts, and the system automatically generates purchase orders and codes expenses. Every truck and job site is tracked, producing data that continuously improves routing and utilization. This is not experimental technology. It directly reduces operating costs per service event. We do not rely on third-party enterprise software platforms. We own the full technology stack. Our system is integrated across CRM, dispatch, billing, inventory, and operations. It is connected to major solar, battery, and generator manufacturers, enabling predictive maintenance capabilities. Integration of acquired customer books is measured in weeks rather than months. Owning the software stack lowers marginal cost as we scale and protects long-term margin expansion. It is important to clarify that OtoboCare is not a warranty or insurance product. The subscription provides access, monitoring, and priority response. Repair events are billed separately, often at discounted rates from members. Each customer generates revenue across multiple streams, subscription fees, repair events, equipment upgrades, retail power supply where applicable, and participation in grid services. This multi-layered model drives diversified margin per account. Residential customers generate revenue across five service lines, with blended gross margins targeted around 45% over time. For each residential customer, we expect to generate an average of $1,400 per year. Commercial customers generate meaningfully higher revenue per account. The objective is predictable recurring revenue supported by high margin service operations. In the last few months, we've ramped up our M&A activity significantly. These acquisitions fall into two categories. customer books that we buy as a cheap customer acquisition channel, and service companies that we buy the way to scale service capacity and customer books quickly. In the first group, we have Solar and Solis portfolios from last year. And in the second, we have SSP, Freedom and Energy Aid, all of which we acquired in the first two months of this year. We will continue doing more of these deals going forward. grabbing opportunities when they arrive. I will now hand over to Jennifer to go through the financial results for the quarter.

Thanks, John. Good morning. Revenue in Q4 declined 4% year-over-year. This reflects lower installation activity compared to Q4 last year, combined with continued soft market conditions and normal seasonality within the new bulk segment. Gross profit decreased by $25 million compared to Q4 2024. The quarter includes a one-time warranty adjustment of approximately $22 million related to cumulative sales to date. Adjusting for this item, the decrease in gross profit would have been approximately $3 million. Parallel expenses total $57 million in the quarter included $20 million in severance-related costs associated with restructuring initiatives. Other operating expenses were $47 million, broadly in line with last year. Depreciation and amortization amounted to $73 million, primarily driven by a $65 million goodwill impairment related to our French entity. This impairment reflects our strategic decision to move away from new bill-driven growth in France and instead prioritize service and recurring revenue streams. As a result, operating loss for the quarter was $164 million, driven primarily by the goodwill impairment, the one-time warranty adjustment, and lower installation activity. We now have three business segments, new build, recurring services, and field service. New build installations are no longer a strategic priority for us. While we will continue to support existing commitments, we are deliberately reducing our exposure to capital intensive lower margin installations. Our future growth will be driven by recurring services and field services. These segments benefit from significantly lower customer acquisition costs, higher gross margins, and more predictable revenue streams. As a result, we expect our revenue mix to continue shifting towards service and subscription-based income, strengthening margin resilience, improving cash flow visibility, and building a more stable and scalable business model over time. In 2025, we implemented several key cost reduction initiatives to strengthen our operating efficiency and enhance long-term profitability. We expect to realize the full impact of these actions in the first half of 2026. Marketing spend was reduced significantly from $11 million in September to $4 million in December, reflecting a disciplined shift in our customer acquisition strategy. As we move into 2026, we anticipate further reductions as we optimize channel mix and prioritize lower customer acquisition cost platforms. Recurring payroll expenses have been reduced by approximately 40%, following our restructuring efforts. Finally, as we pivot from installation heavy projects towards higher margin service and upgrade offerings, we expect working capital requirements to decline. This transition should improve cash flow dynamics and enhance overall capital efficiency. Year-over-year, total assets decreased by approximately $630 million. This reduction was primarily driven by the divestment of the continental subscription portfolio, the repayment of associated financing, and the deconsolidation of subscription SPVs. Liabilities decreased by $408 million year-over-year, reflecting the repayment of financing tied to the divested portfolio. Cash at quarter end was $54 million, and equity stood at $279 million. As a result, our balance sheet is now materially lighter and better aligned with our capital light service-oriented strategy. The company is structurally less leveraged, less complex, and positioned to generate returns with lower capital intensity growing forward. Now back to John.

My team and I have four priorities for the first half of this year. First, we will pivot Europe away from new installations towards service and battery upgrades. Second, We will scale field services in both the United States and Europe, leveraging OEM or global equipment manufacturing partnerships and make opportunistic acquisitions. Third, we will deploy the endurance AI platform more broadly to capture structural cost savings. Fourth, we will prepare the company for potential dual listing in the United States. We're going to turn Europe to profitability through focused battery upgrades on approximately 24,000 installed systems without batteries, continued scaling of EtoboCare subscriptions, and expansion of service capacity to address out-of-warranty systems. Upgrade sales carry high margins and require minimal incremental marketing spend. The energy aid acquisition adds approximately $20 million in annual revenue and 12,000 service jobs per year, 30 active service vehicles, and nearly 2,800 active residential subscriptions. It is a profitable standalone business with additional cost optimization opportunities through integration into the endurance platform. Our proprietary endurance platform integrates CRM, dispatch, procurement, accounting, and operations into a unified system. Industry service margins typically range from 10 to 20%. With endurance, we target net income margins between 20 and 30% at scale. Software ownership is the primary driver of this margin expansion. Our run rate target unit economics for the service business includes gross margins of approximately 45% and net income margins around 25%. These targets assume scale benefits, AI driven cost savings, and recurring revenue expansion across a growing customer base. The rule is 45, 25, and happy customers. And we're totally focused on making this a realization short term. Thank you for joining us on our question and answer session now. The first question is, how should we think about 2026 profitability if Q4 losses had widened? Jennifer, you want to answer that, please?