AAC Clyde Space AB

Hello and welcome to quarterly reports with Investor Studio. Today with AAC Clyde Space. You who are watching live can as always ask questions and interact with management by asking questions in the chat. I see that we have already received questions here and as usual we will handle the questions after the presentation. If you feel that you do not have time to get an answer to your question, we will refer you to IRH Cantibel on the company. On the link we have Luis Gomez, CEO of AAC Clyde Space. Luis is still speaking English. The presentation will continue in English. Luis, nice to see you again. How are things? Nice to see you, Carlo.

Things are going well. with normal challenges, but with a good outlook for the year.

Yeah. So, Luis, a busy year, one we might ask. So please walk us through the highlights and what the future might hold.

Surely. So. So the year 2025 was a year that did not meet our expectations. We were I was personally disappointed with the outcome of the year. But at the same time, quite encouraged by some of what we achieved and some of what we have actually prepared for the future. So our net sales were below what we expected. They were below what we had really forecast, mostly down to two programs, one which is delayed in terms of being started and the other one which has a few issues. That's our external to us, but that has actually affected our net sales quite substantially. Despite these, we were still able to deliver a positive habitat. That was one of our objectives for the year. Even if the other objective originally that was to actually have a positive operational cash flow could not be fulfilled, mostly because of that delay in the start of a very large project. And that has affected us in terms of our cash flows. But as I say, it's a year of mixed results, disappointing in terms of our growth. But we still managed to actually deliver a positive EBITDA, showing that we could adapt to the fact that we had lower than expected revenues. And particularly, there are some interesting aspects. And one important aspect for us is that our data and services business, something that we have been investing in and we have been growing over the last few years, is actually performing quite well. So it grew year on year about 78.5%. And that was good to see. It's not just in terms of the sales of that increase in net sales. But it's also the fact that this is a high EBITDA part of the business. And as such, it has actually delivered the kind of growth, the kind of expansion that we wanted and expected. But of course, the reverse of that is our products and missions had some challenges. And as I mentioned, that comes down to the fact that we had delays on an existing project that delayed our revenue recognition. Now, this is not revenue that disappeared. It's revenue that has been moved into 2026. And then also one large program, EPS Sterna, that we expected six months ago, that is delayed in its start. We already expected to have some revenue in the year, but we didn't. So that has affected our mission and products business line. We still expected those. We expected to improve in 2026 quite substantially. But 2025, we did have some challenges there. And those affected our overall performance. Now, in terms of our business, as I say, this is why I'm encouraged by what we have done in 2025. So we brought in a new, important, large investor, long-term investor for our stock, that is Bonia Capital. It is great to have them on board, not only because it allows us to actually do the developments we want to do, but also because they are an important investor And as I say, with a long-term strategy to invest in us. And that is a good feeling. It's a feeling that the investment community is looking at us and saying, our strategy is appealing. At the same time, we started also building Sedna 3 and 4. These are our next satellites for the maritime business. They will be launched early next year. Virion 1 and 2 for our Earth observation business, for our land monitoring business are now on their way to the launch sites. They might already be there today, getting ready for a launch in the end of March. What is quite an exciting period for the company. And this will be quite an important tool for us to expand our data and services business. And we are already building number three and number four for launch later this year, beginning of next year. And over the next six months, it's a number that I find interesting. It's important for us to see these. We are expecting to launch or there to be launches of 15 satellites built by AAC Clyde Space. Some are for ourselves, like the Virion. Others are for our customers. So this will be quite a lot of new AC Clyde Space designed satellites in orbit. It will be good to see an expansion of the number of satellites that we have built that we have put in orbit. And then, of course, we have inflection phase two program coming online. So we are now just in the last aspects of closing phase one. And we are just in discussions with European Space Agency on phase two. And that is going well. Those discussions are going well. We're just going through all those aspects. It's going to be very important for us to actually start that phase two so that we keep to the timeline of having a constellation late 27, 28 of new maritime services, satellites for new maritime services. And then, of course, probably the biggest thing, the biggest focus for the company over the last few months is getting ready for EPS turn-up. And that project, as it's well-known and well-documented, has been delayed. You met Sat, and he said some delays internally in terms of approvals. But on the 12th of January, you met Sat, got the green light and the go-ahead. to start the project. And on the 27th of January, they actually signed their contract, the agreement with the European Space Agency to start the procurement. And we are now going through that phase of final negotiations, discussions, and we expect to actually start working on this project quite soon. So that is quite a positive development. And as such, and this is why I remain very optimistic for 2026. I think it is a year that is shaping up to be very, very good for us. And it has the right ingredients, even if 2025 was a bit of a disappointment. 2026 has the ingredients to be a great year for us. Thank you. Take some questions now, if there are some.

Excellent. I think we lost you there for a minute here. I think you already gave the indication of when you expect the EPS Sterna orders to come in. That was probably on the last slide. But we have another question here. What is the reason for the lower EBTA margins in the data segment?

We are expanding that side of the business. So we are doing investments there. We are expanding the the number of people we have on sales, for instance, we are expanding the number of people we have to manage the data flows in preparation for the new satellites coming on board. And as such, we will see a reduction on EBITDA levels now until those satellites are online. But we have to prepare the work, we have to invest, we have to get more people, as I say, both on the sales and on the data management distribution side and processing side of the business. So we will see that happening now. But when the satellites are online, when the data flows are going to the customers, we expect those numbers to improve again.

And as you mentioned, you're in a good position for 2026. But looking at 2025 numbers, there are some disappointments in the market. And we have one comment here on the generally lower level of order intake during 2025. What's the main drivers behind that? Is there one main drivers? Would there be any lessons learned or what can you, could you elaborate a little bit on that?

I'll tell you the lesson learned is that working with governmental organizations sometimes is a bit more challenging than we would like to be. I think the main point in terms of order intake is that we have a very large order in the form of EPS Sterna. And that is one we have focused quite a lot. So we have focused our effort internally in capturing that. And a lot of our work, a lot of our backlog is dependent on that. So when that comes in, that will actually change things quite dramatically. And because we have been waiting for that, it's also not like we can just go and replace, start new orders. We have to actually choose and we have to focus on a certain number of orders. And that probably will have actually meant that our backlog, because of the delays on that project, actually was reducing. But in general, I think this will be a very different situation. We'll see a very different reality once that project comes in. In terms of 2025 in general, yes, it was disappointing and it was very disappointing for ourselves because we expected a better year. And as I say, there are the delays on EPS Sterna, but we also have another project where due to external issues, circumstances to us. There is a technical disagreement between one of the suppliers and the customer. And that has led to some delays in terms of recognition of revenue, because there are some work that we can't do until they actually agree. But this is something that is being resolved. And as I say, moved from 25 to 26. And it is something that we really couldn't control.

And if we're looking forward here, guidance and long-term outlook, what shall we expect and will there be a full year guidance?

Once the situation with Sterna is all resolved and everything is done, we will give guidance to the market. Until then, it would be premature just because the impact is so big on our finances for the year. So we will give that guidance once everything is settled.

And we have a viewer question here. Should the additional Sedna launches be considered a constellation expansion, a constellation expansion, sorry, or a renewal? Both.

So our objective is to expand our maritime constellation. We want to do that. But of course, we also have old satellites in the fleet. So some of those will start reentering. They'll stop working. And the new ones are needed to both replace them, but also to expand. So our objective is to have a net positive in the expansion of the fleet in terms of the amount of satellites and data that we deliver to customers. So that's what we are working towards. But it's a mix of both.

And you mentioned earlier the 15 satellites that will be launched in the next six months. And we have a question. If you could tell us which ones they are, if we can get some more granular information.

So I can just mention the two Virions that we own ourselves. The other ones are customer satellites, and we are not in a position to discuss those. But it's just to give the number of satellites. But we can talk about the ones we own. The other ones are for our customers.

And what is a reasonable timeline for the Virion constellation to start earning revenues? And now we're moving into forward-looking statements here.

So we expect after they are launched, we expect a commissioning phase of about three months. That is where we are verifying, checking, putting the satellites in the right place, because they will still take a while to actually place in the right place. It can take a little bit longer, it can be a bit quicker. But after that phase, we will be in a position to start delivering data to customers and to start making revenue out of them.

Thank you. And we have some questions here on inflection. What is the current form and how much is in your hand now vis-a-vis the third party? And as I said, it takes two to tango, but here apparently it takes three to tango.

Yes. In this case, in this specific case, I would say three is the right number. And as you can imagine, that's quite a difficult tango. What we have right now is most of the the proposals, most of the plan is all arranged. There is one outstanding item to be discussed. It involves another partner. And as such, we still have to finalize that. But I think we are in a pretty good position to go ahead. But ultimately, as I said, we have to agree together with the European Space Agency and the other partner. We have to agree all the details. But it's something that I expect to be fairly quick, to have a fairly quick solution.

And we have a viewer question connecting to that, and that is a statement. There hasn't been any updates. Is that due to, well, let's say the third party or other parties? So you are somewhat stifled in what you can communicate. And the next question is, would you say that these projects are moving forward as expected with what you know?

Starting by the end, yes, I think they are moving forward as we expected, maybe with a little bit of a delay. We expected to have closed this December, January. So there is a little bit of delay, but nevertheless, projects are still working as we expected. And yes, I cannot disclose details about the ongoing discussions, because as I said, it involves other parties. So we can't give updates on that. But in general, we are still seeing an evolution. Things are as we expected, as I say, with a little bit of a delay.

Okay. And is the scale progressing again or is there still a problem with the suppliers? Is there a problem with the suppliers?

I won't talk specifically about any details on the program. I'll just say the program is moving, but we do have some delays there. But the program is moving, not as quickly as we would like.

And so bearing in mind that you're not discussing particular targets here, but there is a viewer question. In Q4, you communicated 32 million in the scale will shift from 2025 to 2026. This is only 2 million more than in Q3. What is the main factor that the net sales came in 22 million lower than your estimates from November? What is the factor here? And I believe in the beginning you said sales may be postponed.

We expected to recover some of the the movement on that revenue on quarter four still. We had some expectation that we would still recover some of that. We also had some expectations that Sterner would come earlier. And so we could actually recognize some revenue because we've already done some of the work, particularly preparation with subcontractors and so. So there were a few things that we expected towards the end of the year that didn't happen. They moved into 2026. So that's the main cause, the main reason.

And I have a question from someone mailing it in. You press release that Vireon 1 and 2 have been shipped to launch and launch is end of March. But I understand correctly, but if I understand correctly, exact launch date is not set. So why is that and how will we know in the market?

You might want to go and ask Mr. Musk why that is. So SpaceX has changed the date of the launch a little bit over the last few weeks. Now we have a nominal date, but we don't want to commit to it because it has shifted a little bit over, as I say. And so we prefer to say it's the end of March. And it will, as we get closer, we will know better exact dates for the launch.

And I will expose my ignorance here, but a launch, is that the same as being operational or how many steps would there be before you are operational?

No, so that is the first step in operational and the spacecraft being operational. The spacecraft will then separate. We will have to stabilize it. get it pointing in the right direction, get solar panels deployed so that we have enough power for the spacecraft. We will have to start communication. There are a series of sequences of checks that we will do that's called early operations. And then once all of that is done, we'll get into the commissioning phase. That's where we will then start actually testing in detail every single subsystem on the satellite, We'll verify all the communication chains, from taking a picture all the way to download it to the ground station. We'll iron out any bugs on the software, any issues that we observe. We will optimize the operation of the spacecraft. So that period is commissioning. That will take about three months. So all in all... from launch to fully operation satellite, usually you'll be looking at around three months. Sometimes it takes a bit longer, sometimes it takes less. Depends on how things go, how many issues we might find during the duration. So it's a period, as I said, we can make it quicker sometimes, but we also want to make sure that the satellite is safe. We don't want to do anything that might might damage the satellites. So we also like to take our time.

Makes sense there. And if we continue on the timeline here, customer conversion, would you have a number? Could you give us a feel for customer conversion? And also the timeframe between, let's say, discussion to an actual order. So two questions in one.

Yes, customer conversion is always... in the space industry is always a difficult subject in the sense that many conversations are very top level at the beginning. You have many conversations, at which point that becomes a serious conversation. It's always difficult to actually decide. In some cases, for instance, in the more institutional side, that is when we are talking about big programs like Sterna, That's a conversation that started many years ago, went through everything, and basically there, the conversion for that kind of programs, the conversion is almost 100% once the conversation starts to be serious. Of course, in the more commodity side of the market, it is products, data, conversion rates vary very much depending on what you are doing. have with customers. On the satellite side, on the mission side, you probably have a similar conversion rate. But then the timelines that you have between starting a conversation and actually having a contract is very variable. Again, looking at the more commodity side of our business, that is where we sell products, and data, ready-made data, let's call it, timelines are fairly short. You're talking about a few months from first contact to actually having an order. When it comes to satellites or more specific products like Sterna, then you are talking probably one year, two years from having a first conversation to actually having a contract. When we are talking about large data delivery, secure data deliveries, for instance, exclusive, again, that is a few years of discussions and contract negotiations. So it's very dependent. The market is very different. And as I say, going back to the conversion rate, it's very difficult to actually... We have many conversations, many discussions with potential customers, but many of those are very top level, very initial. At some point in there, they become serious. So it's very difficult to actually have a proper assessment of conversion rate ratios, but the numbers I gave are reasonable. But it tends to be a long process in some parts of our business to actually get from first discussions to converting to a contract.

We have a question here on Comcube S, and it's a statement here. It's a significant project, and the questioner or the person writing the question has read the study, and it seems to have been successful. Would you give us some insight in this project?

So that's a very large project, as I stated. It's very large, but it's still dependent on being approved by the European Space Agency, by being approved by and financed by countries, by member states of the European Space Agency. So we have done what we can, that is to do a good job with our partner and lead partner on this project. But there are still many milestones that need to be achieved before it becomes a real project. So it's something that we continue to work on. But as I say, it's a big governmental project and it will require quite a lot of steps. So it's something that might happen. And if it happens, it will be great in its full format. But at this stage, we are not able to comment further than that. Okay.

And when we look at the defense sector, you have ongoing discussions, I take it. So how much can you tell us? Or is it the same thing here when you are having, let's say, a third party that everything is classified?

So we can't actually discuss and we can't disclose most of the work we do or the discussions we are having. Not until the other parties decide they want to make that public, if they want to make it public. We're having several discussions. We are working on several things with some defense organizations around the world. That ranges from supplying equipment for satellites to actually work on potential missions, to look at service-based activities. There are many ongoing discussions, there are many ongoing studies and work, but I can't say much more than that. But of course, it's a sector that is growing, it's part of the things that governments are paying a lot of attention to, and so we are participating and benefiting from that dynamic right now.

and we have another question here and i believe you touched upon it when it comes to the maritime data but dnb carnegie who back on on the eps sterna green lighting from umetsat recently raised the target price to 107 and one two but between 107 and 138 and obviously you can't comment on the share price. However, they are expecting maritime data offering and thus revenue in the second half of 2027 in this report. Would you say that that's a fair assumption?

I believe that was for data from Sterne or revenues from Sterne. So I would say that that would be a pessimistic view. It would be a pessimistic view in my opinion. It would be a pessimistic view of how things will evolve. In terms of maritime, yes, we will increase. Next year, we expect to increase our maritime revenue. But when it comes into revenues from Sterna, I would say that's a pessimistic view.

So if one were to summarize here, 2025, particularly on sales, disappointing, but the sales may have been pushed forward and you seem to be quite satisfied with the order pipeline. Is that a fair assumption?

Yes, it is a fair assumption. So we have built quite a large order pipeline and we expect to start converting that this year. And so from that perspective, we are very comfortable. with what we have been doing and preparing. And at the same time, our investments in new data services is going ahead as planned. And that opens other opportunities in terms of pipeline and growing our pipeline for the coming years. So yes, all in all, I would say that that 2026 is shaping up to be a good year for us.

And I just received another question here, so I'll just read it off the printer here. You mentioned last year that you had early discussions about possible new VDs constellation. Any progress within this area?

So we are working. This is a more generic aspect in terms of maritime. So we are working several opportunities right now. We're having several discussions, both on just AIS and VDS. And so, yes, there are plenty of opportunities there. There are things we are progressing with customers. In some cases, it's data services. In other cases, it's hardware sales. So we are in discussions right now on that. And yes, we expect that to continue to grow as an area where there is a lot of interest. I don't have specifics to tell you right now, but just we are in discussions and we are in planning phase for our own data services, but also in discussions with potential customers. for constellations of that type.

So you're leaving a rather busy year and you're entering perhaps an even more busy year, if I interpret this correctly. Well, thank you, Luis. Educational, interesting. And if people have any more questions, they should contact yourself and the company, I take it.

Yes, first point of contact usually will be Håkan Tribel. But he will then direct the questions to the appropriate person to answer. So first point of contact, please feel free to contact Håkan.

Right. Thank you so much. It's been a pleasure. Tack alla ni som har ställt frågor. Det har varit väldigt mycket. So keep up the good work. Tack ska ni ha. Hej.