GomSpace Group AB (publ)

welcome to today's presentation where we have the pleasure to present gomspace uh today's topic of course uh the q126 interim report fresh from the press this morning uh as always we are joined by you ceo carsten dragman to take us through your results and of course answer questions in the end there's a box down below your screen when you're watching this presentation here you can ask questions there has already come a lot in and we have a a fixed time point, look whether the question has already been answered. But for now, I will hand the call or the scene to you, Carsten, and then I will rejoin when we come to the Q&A session.

Thank you, Michael, and welcome all to this first quarter presentation. Exciting. Back again. Spring is here. We started a new year and finished quite well last year and we're off to a good start. But I thought actually I'd start with repeating a bit the strategic outlook that I see because it's also telling a story about where we're heading and it's telling a story about why we made the changes that we've done to the organization. So first of all, space is here to stay. GOM space is right in the middle. And if you look into why is space so important right now, why is it growing? One area is space is a new defense frontline. There's absolutely no doubt about it. And this is a change that has come over the last couple of years. it is really driving our business that is sending the foundation also for how we're thinking and how we are structuring ourselves governments are shifting from from services to sovereign assets basically having control of the assets that you need in order to secure your country we'll talk more about Ukraine later in this presentation is a good example of that we enabling end-to-end solutions to create value really important that we don't only offer a A satellite, a technology, we're offering an end-to-end solution that is adding value to the customer. Growth is driven more and more by our growth by multi-year constellations. So we should see larger deals coming in. We have seen it and we will see more coming into the future. So there's no doubt also that you will see larger constellations coming. Deep space and lunar missions are also evolving. We have already a satellite flying out to an asteroid. that we launched a couple of years ago. It's still flying, and it's still alive. Lunar missions are coming. We are engaging into a lunar mission with Blue Origin. It's Jeff Bezos' investment company. It's out in the news also. We have the first part of that contract this year, and we are working on the second part, and we are executing that out of Luxembourg. So we see more and more also deep space and lunar missions. There will be an increasing share of product revenue. You will also see that in the structure that we have set up that we see our product business will grow into the products and subsystems. Volume capability and ability to scale is a differentiating factor. You have to be able to have the production facilities. You need to be able to scale your operation, both in terms of producing of components and assembling satellites. This is a competitive edge that you need to have. Obviously for us to grow, it means we need to be able to do more. So it's sort of a given, but we need to do more of that. We'll see a roll up and consolidation. As I said before, the business is growing. Everybody understands space is an industry that is growing and there are many people starting up. There are many new companies starting. Not everybody will be surviving. So we'll see a roll up trend also coming. So some companies buying other companies. And if you read the news, you'll see every day it's happening actually every week and there will be more of that. So that's the baseline. But let's jump into, oh yeah, so there's 42, sorry, 14%, 40.2% compound average growth. So this is the prediction over the next five years, the overall market growth for satellites up to 500 kilos. That's the market we are in. So we definitely want to grow much more than that. And that is also our ambition. So into Q1 highlights. First of all, our revenue compared to first quarter last year went up with 43%. It's very good, up to about 125 million SEK. I'm very happy with that. Our EBITDA in absolute numbers also increased compared to first quarter last year, and we're keeping about a 9%. EBITDA margin. This is good. This is where we want to be. Industry is around that level. Nobody is higher. A lot of the industry is not even making a positive EBITDA. So very happy with being able to deliver a growth with a profit. Negative free cash flow. This is related to that we are investing more. I saw the questions on you hired more people. What's your plan? We're hiring more people to grow, to build more technology, to increase our ability to scale, to increase our ability to capture more business in the market. And it's also costing some money. So as expected, a negative free cash flow. We have secured a further facility. We took 7 million euros from the Hargreaves loan facility that we have. We did that simply to make sure that we want to have more than ample cash in order to execute our plans, which we're doing right now. So our cash balance is at a very solid, very strong 226 million. Small note on the bottom, net profit is a positive 20 million. This is actually a first time as well. It's very nice. There is a 13 million part of that, which is related to shares that we have received from the company that owes us a lot of money. They owe us about 150 million SEK. It's been going on for some time. We have taken actions to have collateral. That collateral is also triggering penalty payments on their side in terms of shares for us. And right now that's accumulated to 13 million SEK. And as this continues until they pay, we will see more shares with a value. So that's why you see a fairly high net profit there. further to this it is a very very interesting company we strongly believe in the business case they're doing they're raising capital and we have secured we control assets etc so we've we've done everything that we can to secure that is going to be fine and i'm sure they will raise the capital when needed it's a super interesting company and it's a business case that the world needs so i'm i'm comfortable and confident about that So structuring for growth. We made some changes. We announced it last year. Last year we had three business units. Now we have four plus one, I call it. Five engines of profitable growth. This is related to the market outlook, the strategic outlook that we have. The first one is products. I mentioned that before. It's all the bits and pieces inside the satellites or subsystems. That continues to be a business unit as last year. The one that was called programs are converted into what we call satellite systems, which are really focusing on building high volume satellites. So we need to talk about standardization. We need to talk about optimizing for volume. We have our national and defense solutions, which are targeting very much government and also for civil purposes, dual use purposes, building end-to-end solutions for customers. Ukraine is an example of that. Then we have our advanced missions where we're doing lunar missions. Just mentioned the contract with Blue Origin that we're working on right now. We also signed some other contracts during the quarter with ESA. So this is where we see new innovation is coming in here. And then we have our plus one, which is North America. North America is selling all the technology solutions from across the other business units, but because North America is, for the industry, the biggest market in the world, about 60-70%. We have a special focus on that. All of these business units are driven as mini P&Ls, and we're also reporting on that. I hope you appreciate the transparency we're giving you. You can follow what each business unit is doing in terms of revenue and EBITDA, and this is also how we follow up internally when making decisions. Now I wanted to give you a little bit more insight into the drivers behind this. So if you take products, call it an industrial scale engine. Revenue is driven by high volume sales of standardized subsystems. This is very much about repeat production of the same systems. And volume is higher here because we have many smaller components that we are selling to more than 200 customers around the world. Profit is driven by our efficiency, our supply chain, ability to scale the supply chain, repeatable production. So we have really a chance to optimize here. So high volume and then a strong margin and we can control a margin even better by managing this. The free cash flow is very much driven by inventory, turnover and low capital intensity. So we don't have a lot of capital signed up in addition to inventory. So this is how we drive this. It's also very important for us to say we do it because we're addressing a market, but we also very well understand how we're going to make money on this. They have our satellite systems, constellation execution engine, as we call it, as we are expecting to get larger and larger orders into the future. We are focusing more and more on our ability to actually drive these programs over multi-years. They need to be efficient. The profit, the margin we get out of that is driven by repeatability, ability to also scale in the assembly. and execution excellence. Here you can see when you look into the numbers, you see actually quite high EBITDA on products and a relatively low EBITDA on satellite systems. But there's a good reason for that. It is because this is where we need to scale it in order to get the margin. What we've also done here is that satellite systems are actually buying from our product business. That means part of the revenue that we get from satellite systems, we're actually passing over and part of the margin as well. so this is a very clean this is how we execute in the market and this is how we also compare ourselves to to our competitors then we have national and defense solutions this is also by multi-year mission critical contracts sovereign customers this is more than selling a satellite or a piece of technology this is truly end-to-end solutions profit is more driven by value-based pricing uh there's going to be a lot about the program governance and risk management in this but it's very much about value value pricing it's not what is the cost of the satellite it is what do i get when i have launched a full system including satellites and what is the value to me so this is a very interesting uh space to be in and we are we are now perfecting that You saw, probably noticed, there's no revenue yet. No, there's not. But there will come. And this is why we are driving it. Give you a few examples of what goes into this. One would be Indonesia as an example. And we also have Ukraine that we'll talk about later falls into this category here. Typically, cash flow is good here, free cash flow, because you can negotiate advance payments, etc. So this is a predictable payment plan, often perhaps with export guarantees, etc. behind it. So good business for us here and definitely an area for growth. Advanced missions are contract-based. Here, it's more about securing strategic projects right now. They will be fairly complex. There will be some reuse, but there's also going to be a lot of new activities. The one that we do right now with Blue Origin is a lunar mission. We're going to have two satellites orbiting around the moon. That requires a new development, and we are learning from that. Profit is driven by ability to execute. It's gonna be more heavy on the engineering side and less heavy on the assembly side, which means it's high value engineering that we need to make our money on here. So we have to be quite selective in terms of what we picked in order to make money. It's milestone based delivery for high value projects. So cashflow is, you should be able to secure a possibly cashflow here. Advanced mission is also an example. Some of you have heard perhaps about VLEO, very low Earth orbit. So when the satellites come even closer to Earth and start having some issues with gravity, but you have advantage that they're closer, this will also fall inside of advanced missions. And we did sign a contract with ESA in a consortium to start looking into this. So a good example of this is our innovation and capability building engine. But we still want to make money, and that's what we're focused on. North America, market expansion, biggest market, repeating myself, it's about driving regional pipeline conversion on local customer engagements. It can be products, it can be individual satellites, it can be solution programs, it can be pretty much anything from our portfolio. Here it's more about entering the market and positioning GOM space. Profit is driven by scaling our commercial presence and then leveraging the facilities and capabilities of the other business units. Okay, so that gives you an idea. So five business units, four plus one, they all have a very distinct focus in the market, something they need to achieve. They're all somewhat different. And now we define it so that we're also trading internally. So products are actually getting paid for the products they're selling to the other business units, as an example. Now, with that in mind, let's take a look at our EBITDA here. EBITDA came in at just above 11 million, so that's 9%, more than the first quarter, a little bit less than the first quarter last year, a little bit less than the previous quarter Q4 here, perfectly within range of what we are driving for. If you break it down, as mentioned earlier, a lot of the margin you can see lies in products. It is a good business. And now that we've actually added that we have internal trading as well, what you see here is a real margin that if products have sold at a very high discount externally, then this would be what they have. So satellite systems are basically buying at a big discount, if you like, in order to deliver their program. So this is a result. So the product business is a very good business, and we need to scale it. Satellite systems, relatively low margin here, needs to go up. And as I said, how do we do that? Obviously, by having more contracts. It's also done by having higher repeatability. We are very focused on optimizing our assembly. And we are also investing. There are some questions from you about what you're going to spend the money on, where we are investing in making more and more standardized platforms so we can make better margin and deliver faster and then also improve the EBITDA here. National Defense Solutions, we don't have any revenue yet, so this is reflecting, this is what it's costing us right now to run that organization. Advanced Mission, just about breaking even, because they do have a project that we are running right now, actually have a couple of projects that's more or less paying for the team that we have sitting there, which is about 8-10 people right now. North America, first quarter has been a bit slow. We're still living on income from last year. We do not have an ambition for high EBITDA. I've said that before. If we can break even, it's fine. What I'm focused on is billing presence. So we keep hiring in North America. We get more people coming in. We're very cautious about picking the right people. And we have some great new hires that have started recently. So North America is not about creating a high profit right now. It's about capturing the market and getting a top line. And then we'll start making money over time. So that's a breakdown. Again, I hope you appreciate it. You can see the details here. You can start following this. And this is also linking to the market dynamics. Auto intake, well above where we were first quarter last year. Auto intake a little bit lower than the revenues. So the net outcome, and I apologize for the picture here. We will make this better for presentation later on. But in that summer, we have this is that the order backlog dropped a little bit and 20 million. It's fine. We, of course, expect to see more order intake later in the year to recover that and to continue to have an increasing order backlog. Just to highlight a couple of the key orders that we got, we had 60 million SEC from Onseen Labs, our fantastic, wonderful customer, for two more microsatellites. Again, a confirmation of GAMSpace is in microsats as well. We are starting to sit on that market, and we're definitely continuing with our good customer in France here. So this is great. So this is now a continuation. then another measure is it's good to have repeat customers and you have repeat revenue top but we also want to have new customers so in addition to it's a great contract value 80 million sec it's a new customer virtual apps in italy are buying four satellites from us for signal intelligence New customer, always great welcoming new customers. And I'm sure I'm looking forward to working very closely with Virtual Labs and also building their business. And we do see that there is possibility beyond this. So a great check in the box, new customer in a fold here. Outlook for 2026, no change revenue in 550 to 650. We expect, so midpoint is about 30% growth, double up of the market. We are expecting to keep the profitability in a 5% to 12% range. Right now we hit 9%, so that's well in the middle. Free cash flow will be negative, repeating here. We do more investments that we've done in a long time into development to R&D, both in our product portfolio, creating standard platforms to assemble, investing in ability to scale, also gearing up for production. We're investing in testing facilities. Those of you who live up here, go by, you can see there's a lot of digging. We've set up some long-needed facilities to be able to test faster and better. This is essential for us to capture the market, to be able to scale, to be able to handle the volumes coming in. And also further to this, we want to have the flexibility for different opportunities as they come along. We need working capital available, but also we have to have the possibility to jump into opportunities when they are there. Ukraine is one example of that. so let's jump to ukraine you will perhaps be annoyed with me i'll give you the facts that i can give you there's a lot some of you reading in in the news there's a lot of postings and rumors i'll give you the facts as they are right now and i'll let the rest be for for other people's speculation But what is happening right now is that Ukraine wants to have their own independent space capabilities. That is number one. And this is what you need to really focus on and understand. This is coming. This is what I predicted some time ago and saying individual nations wants to have their own space capabilities. Ukraine, for very good, very sad reasons, are obviously first in line to do this. So what have we done so far? Well, on April 22, we have announced we signed a partnership agreement with a company called Stettmann with Dimitro from Ukraine to build this Ukraine sovereign space capability or satellite capability. This was done at an EU summit with the EU Commission, a so-called DGNES, who is focused on developing business towards the east. So this is great. There was a lot of attendance. European Investment Bank was there. Our Danish IFO was there. So this was under EU and an EU conference driving this and an EU conference with the focus on how can we do more for Ukraine, with Ukraine and in Ukraine. It's a joint venture that we'll sign soon. That's the next step in the second quarter here. So now we have signed a partnership agreement. We want to do this. Now we need to do a joint venture, which is an actual company that we'll set up in Ukraine with an ownership structure that we are defining right now. And we will also put some capital into that joint venture to get started. So what is the scope? I know everybody wants to know, hey, so what's the order intake? What do you expect it's going to be? Right now, the focus is driving advanced space capabilities, independent space capabilities for Ukraine. It would be a communication network, satellite communication network, much like Starlink. We are right now in a phase where we're going to investigate how much is needed. There's an ambition to cover the majority of Ukraine. It's for dual use purposes. So right now we are going into what's going to look like this network. We understand how it needs to be used and why, but now we need to build it up. When I know more, I will tell you more. Support from EU and EU Commission is really important. This program will partly be funded. There's going to be funds coming from the EU Commission and from EU towards Ukraine for this. So it's a very strong funding partner. It doesn't mean the whole thing is going to be paid, but it means that there's a strong willingness to put money into this, which is definitely required. So what are our next steps? Well, first of all, once we sign a joint venture, which we will do, we believe, in the second quarter here, we are going to launch one satellite, call it a test satellite, if you like, that is going to fly over Ukraine. And we will start doing different kind of measures and trying to understand what do we need, how do we create the sufficient coverage, where are the challenging areas that we need to be aware of. We'll be working on the scope. You can do a little bit of math yourself that we need to cover all of Ukraine. So it's probably more than one satellite. It's probably a lot more than one satellite, but now we need to understand how much more and what it contains. There's a small mark at the end in bold saying another next step, what we're doing right now as we're speaking is getting the necessary financing in place. It would be a financial framework of money coming from EU in the shapes of loans, guarantees, probably some money from Ukraine itself, money from private investors. So while we are building the necessary technical network, defining the network, we are also in parallel building the different financial and partnership structures that are required to take this off the ground. So this is by no means a simple project, it's a complex project, but it is absolutely worthwhile, it's right in our strategy, and this is driven by National Defence Solutions business unit here. so in summary taking you to the end here last year great we made we had a positive profit we had a seven more than seventy percent growth last year i would say sort of validates our business model we're very happy with the business unit structure we have chosen And it shows that by managing this tightly, we can make money, which we did in 2025, and we created growth. We're expecting more growth into 2026 using the same mechanisms. And I just explained to you for each business unit how we intend to scale it and how we intend to make money. So for the quarter here, revenue up 43%, EBITDA at 9%, great, net profit of 20 million SEK. I explained that we have an extra income by receiving shares as compensation. Cash, negative free cash flow, we did expect that, but we have a very strong cash balance. We took in 70 million SEK in addition to what we had. So we're sitting quite comfortably here in terms of cash. Main events, Ukraine, we talked about that, Antin Labs with 60 million SEG. It's a good contract order, but it's for two more microsets. Great, we love that. And also a contract with a new customer in Italy, Super, and 80 million SEG. And we have four plus one new business units that you will be following. I hope we gave good information in the trading statement so you can follow it. And I'm sure that during the year we'll keep talking about it and you'll start seeing why it makes sense. And also, I think it gives you a lot of information for you as investors to understand how we operate. With that, thank you very much.

Let's jump into the question. As always, a lot of questions. So I'll try and group it. But let's stay a little bit on our game. And I think you gave us a lot of information. So should I understand that you're you're partly owner of the joint venture. So that will kind of be the military part, that cash flow stream. And then you will also sell satellites into it. Is that how we should understand how maybe this model will work for gum space?