Gapwaves AB (publ)

Welcome to RedEye and this live queue where we have Gapwaves presenting today. We will have both CEO Jonas Ehinge and CFO Nils Mösku presenting the quarter followed by a Q&A session. Before I hand over to them, if you have any questions, please fill out the question formular on the website so we can deal with those and get answers to those after the presentation. But without further to do, I hand it over to you, Jonas.

Thank you, Rasmus. Good to be back here and I'm happy to join Red Eye for today's presentation of the second quarter report that was published earlier today. So like Rasmus said, we'll go through a summary and make sure that we have enough time to discuss your questions and also I'm sure Rasmus has some questions related to the second quarter report. So first for those of you that are new to Gapwaves, we're a tech company located in Gothenburg, founded in 2011. And our main application area right now is for radar antennas, especially within automotive. But we're really a waveguide technology company, and this technology can be used in various other areas, primarily wireless solutions in higher frequencies, such as in automotive radars that are utilizing higher frequencies to get better performance also. And within automotive, we're considered a tier two supplier. So we develop design production and set up production and deliver antennas for our customers that are tier one suppliers. Some of the names of such companies are surely familiar to you. And our customers supply their customers to car manufacturers. They are called normally in this industry OEMs. and they supply these solutions to several OEMs. We're listed on NASDAQ since 2016. And I'll discuss some of the other applications later in this presentation. So fundamentally, for GethWaves, we're active in a growing market with strong market potential. Requirements on active safety features in cars are increasing. and there are legal requirements and also regulatory requirements for how these sensors are going to work and how these functions of the cars need to perform in various conditions, driving the need for radar sensors, which we see clearly in our increased production volumes. Our technology is unique worldwide. It's well protected in patents over 45 patent families as of now. This is far more mature now than just a lab product or a lab technology. We have to date produced more than 2 million antennas with Gapwaves technology. It's right now under licensed production, but it's still our design, our production processes, our design production capacity, together with a customer, Hella, and a contract manufacturer, Fränken, in China. Our business model is asset light since we don't build and maintain our own factories. We contract with select partners that we pre-qualify for this type of production and scale up. So turning to Q2 and the report that was published earlier today, the main thing in that report, and we're very happy to report that, it's a fundamental, very fundamental milestone for gapwaves development going forward. It's the completion of the high-volume start-up production in China for Valeo. Most of you probably know that we started production for Valeo already last year in Gothenburg, but this is the high-volume line that will scale up significantly over the coming years. As I mentioned, more than 2 million antennas have been produced by the end of the quarter with GetWaves technology. That's a solid proof of how well this technology and our products can be industrialized and scaled up. We've also added and strengthened our supplier base through the partnership with AT&S from Austria providing layers for our MLW antennas. And during the quarter, we're also entering into new application segments or market segments beyond automotive radar. So coming back to this big milestone and achievement, during the second quarter where we transition from pilot production in Gothenburg running at well over full capacity for the last 9 to 12 months and now we're ramping up in the next step and the next phase with high volume production in Shuzhou in China together with Franken at their facility there. This volume ramp up that now takes that now starts will accelerate heavily going forward and that will take time to get into several millions of millions of units per year we estimate that this process will take around two years with successively increasing volumes month by month and quarter by quarter And it's not only an important milestone now, it's also an important statement to other customers and validating gapwaves in terms of its technology, but also the production processes and our ability to set up and manage and scale up this production for our customers, especially in automotive. Looking at the numbers in the second quarter, I'd like to invite Nils to discuss this and also summarize the numbers from the Q2 report.

Thank you, Jonas. And as you have seen, revenue came in at that 13.1 million. That's 11 million lower than last year. In general, that reflects the lower project revenues and the fact that the product sales does not yet offset those lower project revenues. Also good to keep in mind that last year's figures were affected by production equipment sales of around 7.7 million SEK and the booking for a council project, which was booked in Q2. On EBITDA, there's a couple of reasons for the lower EBITDA. Firstly, there's a higher startup cost for the launch, for example, travel to China, et cetera, freight cost, et cetera. Secondly, we are in a launch phase. So as we increase volumes, the per unit cost will decrease. And thirdly, it's a mixed effect on the revenue side. Project sales are profitable and, of course, more profitable than high volume product sales. But of course, they are also a bit more volatile in their nature. Total cash flow came in at minus 22.6 million. That includes a partial repayment of our loans, our trade finance loans of 10.8 million. If we go to the next page, there's a breakdown on the revenue mix. And as you can see, the yellow part on that slide shows the revenue from last year from production equipment sales of 7.7 million. Stripped out for that, the year-on-year comparison looks a bit more fair. What it also shows is that we are transiting from the revenue mix, from project revenues to product revenues. And this will continue over the next quarters as production will ramp up. And in the end, or in a couple of quarters, product revenues, product sales revenues will dominate and be the most important revenue source for us. Yes, Jonas.