GomSpace Group AB (publ)

Welcome to today's event where we have the pleasure to present Gumspace. The occasion is of course the financial Q2 and H1 report fresh from the press this morning. Looks like market are liking what they are seeing, at least at the share price level. To help us to take you through the results and answer questions, we are joined by Carsten Blackmann, CEO of Gumspace. As always, ask questions in the box down below. There's already a lot of questions in. Maybe if it's asked, you don't need to ask it. So try and read some of the questions, but do feel free to do it. Also, do feel free to ask in Danish. I will try and translate that to the best of my ability. But for now, I think I will let you, Carsten, take the stage.

Thank you, Michael. And welcome to, I'm actually standing right now in the North Sea Oceanarium up in Northern Jutland. It's a bit of a special background, you can see right here. We're here on an executive team meeting. We're talking about strategy. We are talking about the future. As you can see, there's a lot to do in the future. and just to give you an idea of where we are it's a pretty big tank behind me here there's about 54 million liters of water and i just checked that the glass is this thick behind me so don't you can't see my face now but uh it's a very interesting being here We thought the link here is also, while we're talking to our customers that are usually human beings, but hey, we're actually also here to help the environment. We're here to help the fishes. So we thought it was a good place to be. So we're enjoying ourselves up here. I know those of you say, oh, it's just kind of dated to a background. It's not. Just watch the shark and the stingray that's passing once in a while. You'll see it's actually live. Anyway, let's get started. So we make space yours. I start, I'm gonna talk a bit about investor communication as I usually do, some key messages and highlights. Where are we on our business units? This is GumSpace, quick overview. We're growing with confidence. You'll hear me say that a couple of times in a quick summary. Okay, clarity and communication, my two key mottos, mottos internally, externally, we need to be clear, we need to communicate. So let me try and help you as investors the best I can here. So key messages for Q2. So let's take the revenue. Basically, our second quarter, we are 45% compared to the... second quarter last year in 2024. It's a pretty significant increase. Our EBITDA is positive, about 9 million. It's also an increase. We were just below break-even the same period last year. So very, very happy with that. Our cash flow this year was, this quarter was negative, minus 45 million Swedish kronors. We've had a long stream of positive, free, positive cash flow, positive free cash flow. This has been really good. We have managed tightly the cash. This is what we needed to do. But we knew now that we have cash coming in. We have capital coming in. We have good credit facilities. So we have been much more forward leaning to capture the growth that we've seen in the market. And this is then the outcome here that we are negative on the free cash flow. We're keeping momentum for the year. You can see that we are about 96 million SEC in revenue for the second quarter. We were 88 in the first one. So quarter on quarter growth, this is good. And we have the positive EBITDA that we are chasing for the year. As promised, we are looking to generate a positive EBITDA. So tracking fine there. Significant events, big contract, 18 satellites, 215 million Swedish kronas, pretty good. We closed it just at the end of the quarter, a few days before we're closing. To be delivered over about 12 months, plus minus, really, really strong deal for us. Also, while we're speaking with confidence about what we think we'll deliver for 2025, also gives us some confidence into next year. We have the capital, access to the capital now. Money has come in from Peter Hargreaves, 196 million SEK. We also have the credit facility that actually Hargreaves had taken over from the European Investment Bank. Summary of all of that is that we have a lot of cash now. And if you look at it combining that, good results. We are actually on a good track for the P&L and our balance sheet is really strong. This is a very good position. I'm very, very pleased that we are here now. As I said, the free cash flow is impacted. This is a little bit the price of winning. I would claim that we have probably we would would have been really difficult for us to win. It was difficult, but we won anyway. The large contract, had we not had the confidence we had by having cash and cash coming in so that basically led us to make some decisions saying hey in order to win this we need to start investing in we call it long lead items we are ramping up early and that was also part of the sales process convincing the customer come at us it's safe we know what we're doing we can stomach this now in a startup phase and that's actually why they chose us in the end as well so It takes some cash in order to do the bigger deals. And I'm really, really pleased with this. And this is a consequence of having more capital now. If you're looking a little bit beyond, first just summarizing. So for the first half year, we are up 59% on the revenue. Pretty good as well, I would say. The first half year EBITDA in total is slightly above 20 million. This is against minus 16 million last year. So again, we are trending in the right direction for EBITDA, an operational profit, if you like. And obviously the free cash flow is negative, as I've discussed as a consequence here. Looking forward, we maintain our outlook with confidence, with confidence, for sure. The big contract that came in, of course, gives us that confidence. We need more than that. So let's see what's happening in the coming months here. There's still a few months to go, but that contract gives us a lot of confidence in delivering on our outlook. We are increasing spending in some areas more than I had originally budgeted. And this is to capture the momentum that we'll talk about later, the momentum in the market. If you want to set ourselves up for continuous growth, we simply need to be more in the market. We need to have more salespeople, business development people all over the world. So we are basically saying we have to start investing in that now. We're also investing in more people with solution experience so we can go out to the customers and help them build the solutions that they require in order to solve the business case, legal fishing right behind me here, or monitoring what's going on in the oceans around the country, et cetera. So this is already, when I say with confidence for the outlook, we have actually increased our costs in certain areas, but we maintain our confidence here. A look into the beyond Q2 is also just to say we actually had a negative equity in first half of the year or the end of the quarter. This has been restored. We knew that would happen. Our equity ratio right now is about 40%. We have more than 200 million SEG equity and cash in bank, middle of August was 260 million SEG. If you go in and read, it says 29 million in a bank end of the quarter, not so good, but we knew money was coming. We have 260 million SEC. It's the most money I've seen in a very long time. So everything is fine and we can continue to execute here. Cautious optimism for 2026. I don't normally make forward-looking statements and I should be careful what I say, but I would say we have a certain optimism that the momentum that we are picking up on in 2025, it's a good chance that we will go into the first part of 2026 with a confidence and some optimism. Okay, just a reminder, we run our business through three business units, programs, doing contracts with customers for the building satellites, products where we are selling bits and pieces of the satellites to competitors, universities, and then North America, a little bit outside of this, but simply a big geographic region. We want to capture business in North America. It's the biggest market in the world. So mood pictures, this is what an example of a satellite. We're putting it together in a clean room. So I know we have a lot of new investors. I hope you enjoy the pictures here. It's really cool. Here we have some examples of the products or the insights of the satellites. Like I usually say, it's a flying laptop, a satellite. We do hard disk, we do power, power supplies, et cetera, which is sitting inside the satellite. This is what it looks like. Battery packs as well. So pretty cool stuff. Pretty cool stuff. Go look at our website also if you want to see more. Now let's dive into the revenue. So how was it distributed? As I said, it increased very well year on year, about 49%. It's 96, 97 million in total. If you look at the breakdown and now we're sharing with you, we are running our business based on the business units also to help you to see the dynamic here. So 40% improvements for programs, pretty good. It's about 60 million out of the total. So they're about two thirds. Products increased 71%. This is also a consequence of, you remember, we had a very good order intake in the first quarter of the year. Now we see that because, of course, we start delivering, so we start seeing the revenue coming in. So a great performance there. A little bit less on North America in the quarter. So looking at the half year, programs up 73%, that is pretty damn good, if I can put it that way. Slight increase in products and also North America, ever so slightly, small steps are moving forward and we see some motion and traction there. So that's the distribution. Take a look at the EBITDA, so we're around 9 million, a little bit less than the first quarter, this is related to. the mix of products and programs and margins. So it will always vary a little bit. Break down into programs that delivered a very good EBITDA this quarter, products a bit less. We had some more costs coming in there and the product and the margin mix was a bit different. and North America just around break even. The story in North America, I said, it's okay. We don't need to make a lot of money right now. We just want to start building business. And every time we make money, we reinvest it in North America so we can grow the platform. On a half year basis, programs do about 13 out of the 20 million, products 7 million, and North America, as I said, just about break even. So I'm fairly content with the EBITDA results here. It doesn't say we don't want to do more. Of course we will do more, but it's a pretty good development if you compare it to previous years. Operating profits, we are actually a bit positive. 100,000 is also positive, but let's be fair, we are around break-even on the EBIT. That's good. The net profits, I haven't put in the numbers, but it was a negative quite a lot. And this is a bit odd, so just a very brief explanation on that. We have, with the European Investment Bank, a loan that's now transferred to Hungary. There are also warrants associated with that. So this is a technicality and it's because we have a lot of investors. You like us, share price has gone up a lot. So there's a technical valuation, a liability on those warrants that is basically impacting the net profit. If you ask me, and I'm pretty blunt about things, a pretty stupid way of accounting for it, but whatever, that's what we have to do. Um, and, uh, actually this will fluctuate with our share prices, but there's no cash involved. It's got nothing to do with our financial performance, nothing, but it is purely accounting a technicality. So if, uh, if the share price in, uh, in the next quarter is somewhat less than what it was in average in the second quarter, actually it will be positive again. Anyway, now, you know, no cash impact, no impact on business, no consequence for anything, but Hey, that's accounting. So I already, I restate here, the equity ratio, the equity is restored in August. We knew this was coming, but just to be clear, because if you read the report, you have a negative equity, not anymore. We are fine with a strong balance, no problems doing government business, et cetera. Free cashflow, negative in the Q2. I explained that. This is about leaning into winning a deal, a large deal that we then won. It was the right decision. You can say, why did you get so much money? Well, we signed a contract at the end of q2. I decided to very early on do ramp up. We started to work internally. We have paid suppliers to make sure that they could deliver in time. This is a very short time frame for our delivery. It's really, really tight, so there's no room for mistakes. So everything is on track there, but it's cost money in q2. and since we signed a contract end of the quarter and typically there are there are some payment terms that basically say the contract payment terms are coming into the third quarter and i'm expecting uh to rebalance that in q3 we should see a positive free cash flow again and we're also guiding on the full year to say we maintain our guidance on positive free cash flow bank balance 260 million sec not worried about the cash Don't misinterpret what I say. It is really, really good that we have that money. We will strive that from our operations, from the business we do, the products we sell, the programs, we will make money. That money gives us some cushion to be a bit more bold in taking larger deals. The other thing is it allows us to start investing more. But we're not jeopardizing it. We're not having the money to say, okay, now we can go to sleep and we have money for years. No, no. That money is going to be put to work, but not to cover losses, but actually to increase the top line and thereby also the profit over time. This is very good. And I estimate we'll have a positive free cash flow again in Q3. Okay, order intake went up, programs improved a lot, obviously with a big contract and we will keep chasing those size of contracts and more, but we can 145 million moving upwards, including delivering actually the highest revenue from programs this year or ever actually. So I'm very satisfied with the increase. You see a slight decrease in products, They had a very strong first quarter, significant, really, really strong first quarter. It's dipping a little bit now. We see the revenue. You can see the revenue here is about 30 million, 31 million we've taken out. We have less coming in, so the backlog is dropping. This is OK. Of course, we're expecting this to go up again. But at the same time, we're also driving on fast delivery, which means, I've said before, our visibility here should not be much more than three, four months tops. We want to get the order, and we've got to get it out the door, get the cash, and get the revenue. So we will never have hundreds of millions in order backlog here. We shouldn't. Then we are failing. We actually need to constantly rotate it and keep it at a steady pace, roughly where it is now. North America, we've built up a bit of backlog, so trending in the right direction. Okay, a quick overview of the markets. Remember, a lot of things are happening in the market. I get questions from many of you all the time. So what are you going to do in the future? Well, look at what's happening in the market. We talk about marine domain awareness, illegal fishing, surveillance of who is sailing in and out of your territory, your sovereign territory. What about the shadow fleets from Russia? There's a lot of things that are driving this. We have a desire and a need to know more about what's happening in our oceans and our seas around the different countries. Denmark, not to forget, absolutely. And I think more is happening there. But Indonesia is on everybody's mind. We have Thailand, we have Philippines, we have Singapore. There's a lot going on. Secure communication in general is important and also alternative communication, not just via ground, but also via space. And then the whole in earth monitoring environments. And on top of all of this, since everything we do is dual use, dual use means while we could take pictures of fishes, we can also take pictures for defense purposes so our technology can be used either it's it's it's a question of what's on the picture there's no difference to what the satellite is so the whole defense industry is booming you know that already our share price has done well in this context and of course we are working hard to jump on that wave so if you ask me or what are you going to do about the future i'm going to catch the wave that's what i'm going to do And now I have the money to do it even better. So marine domain awareness, one of my favorite presentations, I think many of you investors have seen it before, others maybe not, but this is a great picture. This is for our good friends, Unseen Labs. The white dots are these, it's called AIS transponders. It's all about, by law, they have to say, here I am, this is me, this is my ID, you know, I'm all friendly, I'm all good. But they can turn that off. They can, you know, forgot to charge the batteries, whatever the excuses usually are, and then they go dark. The red dots are representing dark ships, basically ships that if they don't have their transponders on, they probably shouldn't be there or doing something they shouldn't be doing. That's already a tell. Look here with our friends from Unseen Labs, and it's all our technology, all our satellites are, all their satellites are coming from GOM space. We can monitor the Baltic Sea here. You see the red dots. You see a couple of guys at the time were taken up just outside of Limfjord. So something is happening there. I wonder what that is. I would send a coast guard out to check out what's going on there. Not a surprise if you look up at the bottom of the Botnik Sea there, a lot of red dots where there's probably Putin's fleet sitting up there, not wanting to tell who they are or what their intentions are. The orange cable is the fiber cable or gas lines, if you like, coming from the Nordics and down through Europe. It was cut. I had the story before. I love the story. It was cut by a Chinese trawler not too long ago. Sort of a big problem. 35% of the data traffic was cut for a period of time. We saw that. We could monitor that. Onsen Labs could monitor that. And this is down from the Strait of Gibraltar between Africa and Spain and Europe. Lots of cables going across there. You see the white line is representing the same boat, the same Chinese trawler, and how it was sailing. And no boat is sailing like that. that trawler was trying to drag an anchor, very likely to cut a cable. With the technology we have with our partners, you can avoid that for sure. Some of you have been sailing down there. You will also know that there's a pretty strong current. So even if you say, oh, I was just floating, that's good. You're not gonna float like that. That's not how it works. So good technology. I'm gonna jump on that ship as well. We have that technology. We have several customers looking to buy this. Megatrends, market changes, you've seen this slide before, but I want to repeat it, heightened threat level environments. This has lead to increased defense budgets in Europe. Denmark has increased their spending, I believe, up to four or 5% of GDP. Many countries have done that. It is unique. It is very different. I know the Danish defense has now allocated about 3.5 billion kroners in the coming years for investing more in space technology of different kinds. So that's good news. Things are moving forward there. And in general, there's a sense of urgency. We do see more requests. We are engaging in many more deals. And the common denominator when we talk about government business is wanting to control assets you can buy as a service you can buy from Elon Musk or from others but as a state you don't necessarily control it so people see yeah maybe I could rent it but I would actually like to control it myself I can decide what I do I want to do with it I can make sure it's always available I can make sure the data that is coming is unfiltered unedited nothing I know exactly I control a whole stream of data that's really important So that's a trend we see as well. And we have many governments, customers asking us for advice. How do we do that? How do we deal with that? obviously one area which is on everybody's mind right now, many areas, but Ukraine in particular and also Denmark is, and thank you Denmark, is actually investing a lot and giving a lot of financing towards Ukraine, also to help Ukraine and to promote Danish technology. And these are, of course, some of the trends that are happening now and we have our nose in that trail and we'll definitely follow it. So addressing market opportunities, some of the things we need to do, reduce time to market is important. Things are moving fast. We can't come out and say, oh yeah, sure, we'll take your order and we'll deliver in two or three years from now, or it'll take us nine months to deliver a part to a satellite. It doesn't work. We have to be faster. So we are building on that and investing in that. we have to have more defense and government oriented solutions so we are going in that direction cyber security more signal intelligence general intelligence and surveillance is important excuse me there's simply more coming So that's a shift we are trying to jump on. And to capture the new market opportunities, we need to do a couple of things. We, of course, need to advance the technology that we have, the capabilities of our satellites, but we also need to be in front of the customer and be on everybody's mind. So that requires sales and business development people, and this requires technical people that has time to talk to the customer. We want to be the trusted advisor. We want to be the company that everybody comes to and say, these guys know what they're doing. But in order to do that, I need more than three people. I need a lot more. And this is what we are investing in. It will obviously cost some money initially, but we are on the right track now to do that and still have a positive EBITDA and cash flow. So that's good news, I think, also here. But following the trends you asked me, Carson, what are you going to do? I'm going to follow those trends. I'm going to gear up and be ready with my organization. I'm going to have the right skill set. I'm going to make sure I'm present in the right parts of the world. Very clear. So in summary, we're growing with confidence. First half year showed a strong growth on 2024. We also have a positive EBITDA. Check in the box for that one. Free cash flow. Yep, it went negative, but for good reason. Look at the deal we got in. Happy with that. It will recover in Q3 and Q4, so I'm not worried about it. Auto backlog increased, that's great. Increased auto backlog gives more visibility. It will always mainly be from programs, as you just talked about, but it gives us more confidence and visibility. You can do the math with that size of backlog and what we're delivering. The backlog is extending into next year also for execution, so that's good. uh we have restored our balance sheet i'm very very very pleased thank you mr hargreaves for the investment i think i hope everybody is giving a big thanks to hargreaves supporting here he has no interest in taking over the company we said that many times but he really believes in the story and he provided this capital without blinking is it was less than 24 hours And this has really restored us to a level where we have a strong equity ratio. We need that to do government business and we have cash in banks. So we can really start focusing on developing the business from here. Guidance, our outlook, we keep that 320 to 380 million on the revenue side, somewhere between, yeah, probably positive, we can say that, and up to 11 for the adjusted EBITDA margin, 11% and a positive free cash flow. And again, I wanna repeat, we say it with confidence, there are more things to be done. And even this, if you allow me, we stick with the confidence in this delivery of the top line. It's still a 30% to 50% growth in 2024. That's pretty damn good. If we can do more, we'll do more. Don't worry about it. I'm not holding back. We are pushing forward. But we want to do it with be profitable as we go along. I now also say with some confidence running into 2026, I think we can keep our momentum going. Thank you.

I think, Carsten, should we jump into the question? As always, a lot of questions. I think we will get very well around all the edges of your investment case. Let's start with the one we usually get. Indonesia. Have you had any contact with the government down there explaining some of the delays? So any thoughts you have on the Indonesia potential contract?