GomSpace Group AB (publ)

Welcome to today's event where we have the pleasure to present GOM Space. Today's topic, UQ1 training statement and the progress here in the first part of 24. If I should give it a headline, backwards looking indicators still showing signs of the cleanup last year, forward looking indicators continuing the momentum we also saw in the end of 24. To help us through today, we're joined by you, Carsten Reichmann, CEO of GOM Space. Welcome. Welcome. And to everybody listening in, there's potential to ask questions in the box down below. We have already gotten a lot of questions. I will see what I catch. I will group some of them, but do not hesitate to ask questions. You can do it in Danish and in English. If in Danish, I will try and translate to the best of my ability. But that was my words, Carsten. I think you will take over from here.

Thank you, Michael. Yes, and welcome again. I saw there was a lot of questions, so I'll try and get through the presentation so we have time. First of all, I just wanted to introduce you to our electronics production. We have people sitting here working. This is where we do our assembly of products. So we have battery packs, power modules, et cetera. It's happening here. And what you can't hear, what I can hear, we have an SMD machine, so the thing that's mounting all the little components on the print board is running in the back here. But let's take a look at the first quarter. We have done it as a trading statement instead of a full report. And I'll get into that very quickly, why we did that. So the agenda, what you can expect today is that wider change in reporting, the journey. I want to recap a little bit where we are, and Michael was alluding to it. We'll take a look at the key one, highlights. A quick reminder on Gump Space, as I usually do, I have a why invest in Gump Space slide, just so we're on the same page. And lastly, a summary. Okay. Clarity and communication. I think I've said that ever since I started, this is close to my heart, and this is what we're trying to do all the time. So why did we change the reporting at GOM Space? Well, we aim at this clarity, frequent communication. The reason for changing this and the reason for changing now is that if you're going to make change, do it in the beginning of the year. I think it's important to be setting a new standard. We've changed our organization. I want to make it more concise, more readable, more efficient, and also that it's coming out sooner. So going into the future, the first quarter and third quarter reports will be in the shape of a trading statement that you have seen. We will now from third quarter onwards, you will receive it quite a lot earlier. So four weeks earlier than we had originally anticipated. So it's about four and a half weeks after the closing of the Q3. It makes it easier for us. We have most of the information that's really relevant for you, and I hope you enjoy reading it. We're giving you a lot of information. So rather than reading long balance sheet and statements, et cetera, which is fine, but they don't really change much quarter to quarter, we can get this information out sooner. Part of our change, part of driving Gump Space into the next era here. We're also sharing it with you more in the shape of how we run the business. So business units are new. You can see we're reporting on that. I think that would be helpful for you. Just a note, we are reporting on the order backlog and order intake. We actually are not obliged to do that. So just a note, we're actually giving more information to the market that we are required to do. But I think it's important. I want to tell the story about where we're heading. This is quite common in Denmark, not in Sweden. So we might be pioneers on the Swedish NASDAQ doing trading statements. Okay. But before going into Q1, I really want to take a look at the journey. You saw this last time for the Q4. It's a summary of what I said in April last year, that this is really a transformation. It's a journey. We are working towards a more stable financial situation for Gump Space. We are focusing on profitability. We are focusing on free cash flow. And we want to reach a state that we are self-funded from our operations. We don't want to take more capital. into the market only for further investments or strategic investments. But from an operational perspective, we need to be able to run. We're going to do that by focusing on product business, project profitability and expanding in North America. So remember, it's a journey. So I want to talk a little bit about where are we on that journey. So if you take a look at it, describing 2023 in a few words, Uncertainty, I'm sure you as shareholders felt beginning of last year, there were some level of uncertainty on the company. Change, a lot of change. You may have felt or seen some change. I hope for the better. Internally, I can tell you it's been a lot of change for the organization. It's gone well. People are working along and we were in a clarifying mode. So what do we focus on? What do we need to do? So to me, that's 2023. So where are we now? 2024. I think we have a lot more clarity. We know exactly how to execute, how to measure our business. We understand the dynamics and the strengths that we have. We have a good idea of the market around us. We created stability. I've talked a lot about that. What do I mean by that stability? But we have created a financial stability that enables us to really manage our business. And then we can start driving the right sales. Now we have a bit more calm. We can pick projects. We can try and take projects that fit what we're really good at and not taking any project that can create a risk. So that's important for us. And as part of the journey, so of course the desired state, where do we want to be going to the future? So the first one is product business. I keep saying that. It's really a good business for us. It runs very well. We have a quite healthy contribution margin. What we need to do there is have a much more focused sales approach. And we are well on the way of doing that. Product sales doesn't have to be random. Product sales can be managed to a certain level, which is aligned with the market. So it doesn't have to be something that's fluctuating a lot year on year. Quarter by quarter, yes. Year on year, no. A structured product roadmap. We need to make sure that the investment money we spend are spent on the right thing that will help us generate profit either from the market by selling directly or because it's supporting our programs. Really, really key. And then marketing. We have a really strong brand, but it needs to be reminded, the market needs to be reminded that we are here, we have good products, we have a long heritage. Two, program profitability. We want to deliver profitable projects. Four bullets here. Stay relevant. We need to make sure that we have the platforms, the satellite platforms that are relevant to the market and the market trends. We do, and you have seen, we'll talk more about the microsatellite order we got from Unseen. This is really important. selecting the right projects, improving execution, we of course have to be good at executing, it's not enough closing good business, we also need to be able to execute. So we are focusing a lot on that on improving our processes and procedures and how to, to work better with our customers. And then It's business to business. It requires patience. There is no such thing as, oh, let's close the deal next week. We'll just do it. It's a long road. We started it years back. I would say we strengthened the focus a lot the last 12 months. And you also, I hope you start seeing that there's a little bit more coming in all the time and a little bit more means also there's more out into the near future. So patience is important. And then North America, biggest market in the world for us. We need to be there. We need to be present. We need to have partnerships. SRIC is a good example that's progressing. And by the way, did you see that they signed a contract with Pentagon for AI in space? And Gump Space was mentioned in the headline. It was really, really cool. It doesn't mean business tomorrow, but it means Gump Space name is right now at Pentagon as part of the SRIC AI strategy. Guys, how much better can that get in the North American market? So this is really, really good. And patience, patience, patience. And now the punchline, can we afford to be patient? And the answer is, yes, we can. And that is the point of Q1. And I want to help you read it, what we have in Q1. We can afford to be patient now. This is a good thing. Things can accelerate quickly, a little bit slower. It's okay. We're not going to die. We are in a good position. So with those words, let's go into the first quarter summary here and look at the facts. Well, on the right hand side, you see a free cash flow minus 12 million SEK. I'd love it to be positive, but actually quite okay. It's still very much within a good range and you'll see that on the coming slides. Oh yeah, by the way, compared to first quarter last year was minus 42 million. So yeah, relative to that, quite okay. Our cash in bank reduced a little bit. We're still fine. We're not in a critical level here, but obviously with the negative free cash flow, it's going to go down a little bit. Employees, we are 130 permanent employees, and we have some consultants and student workers in addition to that. But take a look at where we were in the beginning of the same quarter last year. We started actually our 2023 with 215 people. It's a huge difference. It's a huge difference. And you also see that in Yes, we have a lower sales and EBITDA is perhaps a bit lower. It is what it is. I'm not worried about the EBIT right now. It will come later. But our cost base is so much stronger and that's important. We are now executing in the new business units. We have key executives in place, senior executives that can drive the business. We are reporting to you exactly in that format. So you see the order intake, you see the revenue per quarter per business unit. This is good. This is how I run the business and I'm showing you exactly how we do it. Um, we got, uh, during the quarter, some, uh, some good orders, uh, unseen labs, our best friends, uh, partners, uh, customers, of course, they gave us more orders on the existing technology during the first quarter. We also closed business with, uh, with Germany and we announced earlier, uh, our product order intake was around 20 million, uh, on, uh, in, in the first quarter. I'm okay with that. I want it to be bigger. Yes, but I'm okay. It's actually sufficient to keep us self rolling forward, like I say, so we can be patient. Next phase of satellite partnership reconfirmed with SAIC, and actually after that came the PENSECON announcement. I'll give you an update on Indonesia by the end of the quarter, as I have promised. And I know there are questions in the pipeline, and we'll talk about that after the presentation. And not in Q1, but this week, order from Unseen Labs on Microsat. I'll dive into what it is, but this is really, really good news for us. Look at some of the key pictures, figures here. So order intake, 57 million. We sent a bottle of red wine to those of you online who was calculated 55.2, well done. So I don't even need to report it because just go to the chat room. They had already figured it out. But it's trending positively. So remember, we had a huge reduction in backlog purposely. We said we focused on profitability, so we reduced the backlog with more than 200 million SEG, more than 50%. That was a lot in the second quarter. And thank God we did it because then we're not losing money on that. But of course, it has an impact in terms of the revenue. We would have had a much higher revenue if we kept the projects, but it wouldn't have contributed to positive cash or contributions. It wouldn't have helped us. So I'm fairly okay with the revenue. It would be nice if it would be a bit higher, but I'm sure that's going to come now that we start closing more projects also. EBIT, it is what it is. I don't want to spend too much time on it. EBIT will be a result once we get to traction and we manage the cash flow and then we'll be okay. Employees, I talked about already. But let's dive into the new information that we are sharing. So order intake and revenue per business unit. So you see here programs. Remember, programs are the satellites, projects that we contract, a customer contract with us, and we deliver a lot of resources and technology production and We have a contract with milestones that we are delivering. Products is customer see, customer like, order, supply chain, production, deliver, and collect cash. So more of a, I wouldn't call it exactly off the shelf. We still do manufacturing through production, but it's not an engineering heavy activity, product specifically. North America primarily selling products now. That's our strategy in the beginning. We don't want complex projects in North America. I'm sure we can get them if we wanted to, but let's just start and get some traction over there with products that we can control and manage. Overall, the backlog went up slightly from 152 to 161 million. It's okay. It will come up more into the future. And then you saw from a revenue perspective, it's interesting that actually the products, which is key for us, remember a good contribution, actually gave the bigger revenue contribution in the first quarter with about 23 million trailed by programs at 20 million. I think that dynamic will change, but I'm pleased to see that the revenue from products is relatively good here. Okay, so ladies and gentlemen, free cash flow. It's all about cash. Said that many times, I repeat it. It's all about cash in 2023. It's going to be all about cash in 2024. So where are we? Well, okay, we are at minus 12 compared to previous quarter. We were plus 21. That was a really good quarter. Very, very happy with the year end. But I did a little math to try and summary and try to give you a perspective of where we are and why I'm so excited about we have exactly the right platform for going into the future. The last three quarters, we are plus 9 million. The three quarters before that, we were minus 120 million. Step one more quarter back, take a 12 months trailing. We were burning 200 million in cash, 200 million in cash per year. We are burning just below zero the last four quarters. This is good news. This is why I say, can we be patient? Yes, we can. We have a situation now with our cash. We can manage our business. We know what we can sell. We know what we need to do. We're never gonna have these extreme losses per quarter. Those days are over. Now we're ready to be patient and then gradually we'll see the sales going up. So take a note of this and we keep our guidance unchanged for the second half to be a free cash flow positive situation. Okay. A quick reminder on GAM Space for those of you who are joining the first time, we've been around for a long time. We were founded in 2007. We went public on NASDAQ in 2016, listed publicly. So 17, 18, running on 18 years of experience as a company. Actually, our founders launched the first satellite in 2003. Funny story, go in and check the label, the naming of the satellites. All satellites have a unique name. You will see it was the first satellite in the world. It was the first CubeSat in the world. So that was pretty good. That's us. We have a big production facility, lots of space missions, a lot of flight heritage from our products. Does it matter? Yes, it does. Because you don't know what's going to happen in space. We have more flight heritage as most other companies, which is also why we see people are coming back to us. We see our product sales start increasing because they know, well, if you buy from Gram Space, there's a pretty good chance that it works. We have a global footprint, more than 60 customers around the world, and we are present in all of Denmark, in Sweden, in Luxembourg, Toulouse in France, and also in Washington DC in order to expand into the North American market. So what are we doing? Well, my previous slide said we're building small satellites, five to 50 kilos. Guess what? Now we're also doing macro satellites, 50 to 150 kilos. This is a very important move for us to get the trust from Unseen Labs to move into that. This is new technology. It's a new platform. What does it do? What does it do? Good question. Well, it's basically more energy. You have more surface, so you have more possibility to take energy from the sun. That's important. So you can recharge more if you like. You have more power available. can basically if you put loudspeakers up you can play louder music if you want to for a longer period of time but you basically have more power available so you can put more onto the platform and it's bigger so there's more space so why is there's a trend in that direction it doesn't mean the small satellites continue we have a great pipeline on that but they will not go away it's very clear that there is a trend towards microsats because becoming a little bit more efficient to we can get more out of one satellite with a payload that's significantly bigger. As you can see, we're talking with unseen labs, although it's about 100 kilos versus what we're doing now is about 25 kilos. So unseen labs get more bang for the buck, if you like, by doing it this way. So this is important, an important trend in the market that we are now following, and we will enter that journey together with our very good friends, unseen labs. Just touching upon, so to be absolutely clear on the first contract with Onsene, this is for development work. This is for the first phase of designing and specifying together with Onsene Labs. We already have a specification, but we are refining it with Onsene Labs, deciding all the bits and pieces and really have a design ready to build satellites. It is not for actual amount of satellites yet. That is to come to be negotiated in a... in the coming quarters. So it's simply Unseen Labs has a very good business case and raised good money and they are committed to flying 2026 together with us and we are committed to make it happen. So we're starting quickly on a development phase and then soon we will agree on actual number of satellites and and also delivery terms, etc. Okay, so products for satellite systems. That's the other thing we're doing. Like I said, it's a different dynamics. Oh, and by the way, also including microsat. So a small comment on what does it mean that you go to this microsat platform compared to the nanosat platform? The structure is different. It's a little bit bigger. You have a different framework. Imagine the aluminum frame that we have. It just simply looks better. There's some other dynamics coming into play there. But we do it as an evolution because we can use a lot of the products from our nanosats. We can take power supplies and we can just add more power supplies in there. We can take solar panels. We just add more solar panels. So we are rather, it's not a big jump where everything is changing. We are reusing as much as we can, but designing it in a new structure that allows on-seat labs to do what they need to do. So online, there's a lot of questions on the projects. I want to highlight the three key ones. Statical is on track. We have delivered the first milestones according to contract, and we are pushing forward. So far, we are on track there. ESA, launching with Juventus, we're launching in October. It's not a question of being on track or not. You're on track when you work on this. It's going to fly, as you know, for two and a half years, and the launch is in October. So we will be ready, and things are progressing there. On Scene Labs, we have many projects now. If you look at the different announcements, there are many different kinds of projects that we're doing. So they're all on track as orders placed in the last three, four months or further back. And now we have a new order that we are starting and gearing up to now. Actually, we are already geared up. We are already running on that. So on track. Why invest in gum space very quickly? Remember, there's a market demand. It's growing. There's a forecast of 19%. We see space explorers like NASA, ESA. We see commercial applications, we see government. We're addressing megatrends. This is also key for the whole space industry. Why on earth doesn't make sense? Or why in space? Are we in space? Well, because there are certain things that we can only do from space. For example, global climate is very much depending on our ability to measure and look at our Earth from the sky, from space. Information infrastructure, passing data, voice, et cetera, in a more flexible way while space is absolutely growing. National security. What do you think, guys? Is there a higher need for national security and alertness? Yes, absolutely. I'm telling you there is. And there should be. And you cannot necessarily rely on friends from the past. You need to have some of your own technology as well. These are the mega trends that we are tapping into. We have a strong foundation for competing. We just increased with the microsets as well. And we're on a journey to profit. And I just showed you that we are doing quite okay on the cash. Here's our benchmark. You can read it after what you've seen it before, but this is since we were listed, we are tracking that. So of course, we are working on beating 2023, both in terms of revenue and EBIT. In summary, three business units, products, programs, North America, They're tapping right into our focus of increased product business, expanding North America and profitability on program side. So it's very clear and accountability. Yes, we have. We have a strong executive team in place. Frank Chauvin has been with us in North America for a long time. He's doing a great job over there. You can see the news coming in. Patience, but it's going to come. Oliver Shiva is here to run our programs. Very, very strong background from the space industry. And Henrik Kallstorp is here, homeboy from Olbo. working for Cobham for 30 years. He knows how to do products and we have a really, really good team in place. So in summary, we are scaled to a manageable level. We can manage the business as an example, last three quarters, plus 9 million in cashflow, pre-cashflow, previous three quarters, minus 120 million. Go back a little bit further, we've earned 200 million in cash every year, negative. Not good. Are we doing that this year? No, absolutely not. So we are maintaining our guidance for positive free cash flow second half of 2024. Indonesia update, you're looking for it. I'll give you that at the end of the quarter. And we are now also in a Microsoft segment. So let me repeat, selling takes time in this business, especially in terms of mission projects. Be patient. And we are forced to be patient. Yes, we can. And just as a last note here, somebody asked me the other day when they saw this, would you, Karsten, would you consider to running as an independent against Trump and Biden? And I said, yeah, maybe I can probably, I have a bigger vocabulary than one of them. And I think I could speak clearer than the older one.

You're younger also, Karsten.