Gapwaves AB (publ)

Hello, and welcome to today's presentation with Gapwaves, where we have CEO Jonas Ehinger, who will present the Q1 report for 2025. If you have any questions, please use the form located to the right, and I will take that up during the Q&A. And with that said, please go ahead, Jonas, with your presentation.

Thank you, Martin, and thank you for hosting us in our presentation for the first quarter 2025. I'll keep this relatively short. The report was published a few hours ago this morning. I'll summarize some highlights, but we also want to make time for questions at the end. Starting off, GapWaves is in a very exciting situation right now. been on a growth path for quite some time and we're happy to continue this also in the first quarter of 2025. The first quarter is a strong start. Gapwaves is acting and promoting its technology and products in a growth market and this growth market has very strong market drivers. I will describe those shortly in the presentation. GapWaves has also moved its position and transformed as a company. So we're now a complete partner for our customer for their entire antenna need or waveguide need. So we can design products, but also set up production processes and manage high volume production for our customers. So the complete solution for our customers. In a few years, especially in automotive, we've established customer relationships with a majority of the leading automotive tier one companies. And that's a very short time in the automotive industry. So we're very happy to see that this is continuing also in the first quarter of 2025 with new customers coming on board. And we're also happy to emphasize our production capability as a company and provider to our customers. One step was announced last year with a flex line or pilot line here in Gothenburg. But this year will be very transformative as we also start up a high volume production for one of our customers. Looking at the Gapwaves as a company, we are a tech company based in Gothenburg, origin from Chalmers Technical University, based upon the research of Professor Per Simon Kildahl. And we have a unique waveguide technology, which is well patented, but also well documented in technical and research papers since many years, several decades. What we mostly do is to transform this technology into antenna products for our customers. And these antennas are very high performance antennas, but they also offer very cost effective, high volume production opportunity, which means a lot of benefits for our customers. Our main markets are really right now the automotive market, meaning radar sensors for advanced driver assistance systems, But we also keep a very close eye to other markets and future market segments, such as telecom and satellite communication and other industrial applications for our waveguide technology. GapWaves is today what is called in especially automotive a tier two supplier. So we provide a key component. the antenna to our customers. Our customers take the antennas and build them into their products, such as radar sensors, which they provide to car manufacturers. Car manufacturers are referred to as OEMs, and our customers are the tier one suppliers of products to the customers or car manufacturers. So coming over to the news of the morning, which are, of course, the content of our Q1 report. So first quarter, as I already indicated, meant strong growth for gap waves. So our sales were at almost 23 million kronas, which is a very strong growth year on year, 46% up versus the same quarter last year. We also strengthened our result significantly. So our adjusted EBITDA was minus 2.5 million, which is a 71% improvement versus the same quarter last year. We've also, as I indicated, added quite a few new exciting orders from existing as well as new tier one customers. So we feel that we have a strong growth momentum ongoing in the company. It's driven by the increase in order intake and new projects being started up, paid for by our customers. And obviously, the increased sales result in improved profitability. And we can see this continuing the solid revenue growth that we also saw throughout 2024. And, of course, our sales has different types of revenue. It's project revenue or engineering services, but it's also sales of products such as prototypes and now also more and more finished products. And we also design and sell production equipment for our customers. But if we exclude everything except production equipment, we're looking at still a very high growth of 70%. Our cash flow... is also developing positively. So it was a negative of 5.3 million, which is a strengthening compared to previous year and previous quarters. But we also had a very high account receivable number, 30 million by the end of quarter due to the strong sales growth. So we're looking at a very positive cash flow situation going forward. And also, we want to highlight, in addition to all the information you'll find in the report, the announced collaboration between our associated company, Sensrad, and their collaboration with Sensact, a subsidiary of Volvo, which is very exciting. And I think they can have very positive effects for Sensrad and thereby gap waves in the future. Coming over to some background information also on gap waves, but also how the future look and also the status and some of the ongoing projects as well as the production status. So this slide is very important. It shows our pipeline. It also shows the process typically with our customers and where I would like to emphasize that we're generating revenue in every step from first concept designs throughout the entire process until the start of production and obviously after start of production as we produce products and sell to our customers. So with Forvia and Hella, The production was commenced in Q1 2024 and the ramp up is ongoing and that will continue throughout this year and into next year. Also with Sensra, the production was started for that product last year. Same with the smart micro projects that we have been engaged in for several years. With Valeo, which is really a high focus for the company right now, we're planning to start production during this year. And that's a very intense period for us right now related to Valeo and the startup production. Also, with a newly announced customer, Desai, which is a tier one from China, we're We're starting development now and production start is planned for 2026. And as we have communicated before, we've recently added also other tier ones in Asia, but also in North America. So all in all, we're on track and we're seeing the timelines being maintained as per planning when we start projects. And that's very important, gives also predictability. So we're confident about this roadmap for the future. Due to our business model where we develop designs and we develop production processes and production equipment in gap waves and then for high volume customers like the automotive, we outsource and contract external factories that already have all the factory infrastructure in place. we have a very flexible approach that allows us to set up production in the regions where customers need it to be. For Chinese customers, we can do it in China. For European customers, we can do it in Europe. And we're well on track to have a production supply chain set up in Europe. But we can also set it up in other markets like the US. And in today's world, where we see more and more regionalization due to tariffs, etc., this will be a very important factor and a strength for GapWaves going forward to our customers. This approach has been received quite positively by our customers, and I think it's very well timed also given the current discussions between the different strong economical regions. Looking at the market potential, our market is not driven by nice-to-haves. There are very strong market drivers in our market. that will drive our market in a positive way to strong growth, regardless of tariffs. And that's because there are technical regulations on what frequencies that can be used, and higher frequencies require new antenna technology, such as gap waves. Another very strong driver are the legal requirements. on cars and the active safety demands that cars need to fulfill. And they require better sensors, they require radar sensors and also other sensors to comply with these requirements. And these requirements will be there regardless of tariffs and trade politics between countries and regions. So we're confident as well as our customers and their customers about continued growth in this segment. And we still see the growth as predicted in various market surveys of around 25% annually in the number of radar sensors being put into cars. We've shown also this before that we tailor, we design antennas for different types of radar sensors. So we have projects ongoing in all of these segments and this is just an indication of the volumes per customer or per contract that we're talking about. And for a corner radar, such as the Vallejo contract, for instance, we're looking at 100 to 150 million units over a life cycle. And the market pricing for such an antenna in those volumes are typically around one to two euros. On the other end of the spectrum, we have very high-end imaging radar sensors that require very complex antennas as well, and advanced antennas. Volumes are much smaller, 5 to 10 million over a life cycle, but the pricing is also much higher. So it's still a very attractive market segment for gap waves. And in fact, for gap waves... It's a perfect segment because no other antenna technologies can really deliver the antenna designs that are required for this segment, given the performance that you can get with waveguide antennas. So all in all, we think that there is a very strong market situation for gap wave and waveguide antennas. And that market transformation has just started. We're only in the beginning. A large majority of radar sensors in cars today on the roads are legacy sensors. So they use older technology. As you can see from previous slides, more and more customers are switching to waveguide antennas for their future radar sensor generation. So we're very well positioned for continued growth going forward in gap waves. And that finishes my short presentation. Now we would like to have some time for questions from viewers and also questions that have been sent in before. Thank you so much.

Thank you very much, Jonas. And yes, let's open up the Q&A here. We'll start with the first one. How much do you expect the tariffs to impact the gap waves and also your customers?