Insplorion AB (publ)

Welcome to this episode of Investor Studios, where we have the opportunity to talk about InSplorion with InSplorion. The company released its Q2 report today, which contains a lot of exciting news, and we will soon be able to take part in a presentation of this. Then follows a Q&A, and for those of you who are listening live, you can write your questions in the chat. And with us from InSplorion we have, as usual, Johan Lask, CEO of InSplorion. And with that said, we welcome you and hand it over to you for your presentation. Please.

Thank you, Adam. Johan Asket and I are here to talk about our quarterly report and answer questions you may have about it. We work with hydrogen sensors, as everyone knows, for an accelerated transition to a sustainable future. If you look at the quarter in a nutshell, we march on from a development company to a commercial product company. During the quarter, we could, among other things, that a large American private company has placed an order on our sensors. We launched our NPS P2 hydrogen gas detector down in Rotterdam. We could also update here during July that we expect a larger order from our strategic partner Consilium. Very exciting and very fun. It was an upgrade order from the slightly smaller order that we did earlier this year. And it is also only one customer among those who trigger this business, which we think is very good. It is not something that should be put on hold. We look forward to more customers there. During the quarter, we had a rather high burn rate, mainly linked to development work, ATEX, but also material purchases to build these sensors that are needed, among other things, for ATEX certification. But we will get these material purchases back later when we sell them, then they end up as KORGs instead. And not least, during the morning we announced that we are doing a targeted emission of 6.3 million kronor, which we are very happy for and grateful for this support. It gives us a strong position to move forward and we look forward to developing value from there. Before I move on, I just wanted to add that there is of course a lot of writing in the media about hydrogen and that it's a bit of a remote project and things like that. It's a pretty natural cycle for a future industry. There will always be a little hype, then there will be a phase where you simply need to calibrate expectations. But the bottom line is that we need clean hydrogen in order to be able to make a change. The missing piece, as the Hydrogen Council says. And for it to be able to be part of the change, it has to be safe. And that's where we come in. As everyone knows, our sensors are, first of all, very specific for oxygen. Not everyone is. It's the smallest molecule out there, and that makes it not so easy to measure. But because it is so small, it also smudges easily. But then of course you want to detect it as quickly as possible, and we are very, very fast in our detection. It can also work in environments where others have problems. For example, low oxygen environments and others. I was just going to say something about what our business is doing today and what we are working on. Apart from the fact that we have sold the sensor through a number of different verticals out there, all from companies that work with electricians, large industrial companies, space companies as mentioned earlier, process, automotive, marine, not least, then our whole strategy is to work via partners, and we are making progress there. We have Consilium, which we have as an exclusive partner within the marine area, and where we have now seen progress with supply orders. We have a letter of intent from a company called Hydra Specma, who are specialists and very good at connections, where you should transfer liquids and gases from, for example, one equipment to another. And these are of course important points where both leakage can occur, but here is also a great advantage if they, for example, can make sure that our sensor fits into their equipment. We also have a letter of intent with SAAB within the flight area, something we announced earlier and where the work is going fast as well. And then, of course, we have a number of other ongoing discussions, partly with a little more pure distributors, but also the development of strategic partners within certain segments, for example, within hydrogen fueling, which we look forward to presenting more news about in the future. On the way forward, it looks like we have said that it should do, we continue to sell our sensors. We sell directly in the end, quite often, but we sell more and more via partners and that's how we see that it will become more and more in the future. ATEX certification, a very high priority. Now we are going to get it in place so that we are ready for larger volumes and we expect to be able to deliver ATEX certified sensors under Q4. Supply chain, it is in place, ready to scale up, as long as the volumes are there. And continued partnership, quite simply. It was extremely brief, I think, but I think that, Adam, you have probably loaded up with one or two other questions that we can dive into. I also hope that we get some questions from the audience and those who are with us.

That's right, Johan. We have some questions in the chat, so let's dive into that. As you mentioned, you are now close to the AT-certification, despite the smaller delay that you have communicated. How do you see the delay and, respectively, the unaltered certification? How has it affected your pipeline and ongoing customer dialogues?

So the truth is that we don't lose any business on that. Yes, there have been some delays for a few different reasons, natural reasons, but we don't lose any business on that. And the customers, of course, in larger volumes, for most of them, I should say, Atex will of course be there. And that's what you expect. But the reason they talk to us, it's not about Atex, it's about our abilities. For example, speed and in the marine segment, in particular, our ability to function in an environment where the amount of oxygen has been reduced. So we are not so worried about that, but of course we will get our place as soon as possible, so that we can scale properly.

You have also communicated that you evaluate the American resistance to APEX. How do you see that balance between getting growth now on APEX for Atex to continue with more certifications?

Great question. We could do a parallel certification for both the US and Europe. But in the current situation, we have said that we are waiting a little bit with the USA. It is not a very difficult thing to add, to be honest. Both certifications build on very much on the same standards. It is about the same checks that you should do. If you have done one, it is much, much, much less work to take the next one. As I said, let us focus, make sure that we get ATEX in place. Then it is a point that we can do relatively quickly, also depending on how the customer dialogues go. If a customer comes up and says that it is a necessity for them, then it is quite easy to hook up and then we follow the customer's wishes, simply in that case. Then Atex is quite commonplace. If you talk about countries like India and things like that, then Atex is perfect for them. So there we have a good platform to stand on. They will expand the certifications over time and it also happens with Concilium, I should mention, where they stand for the Marina certificate. So of course it is based on the fact that we have done the job for ATEX certifications and those bits.

You showed in your picture earlier that there are projects and businesses in a fairly large number of different industries now. What are the most interesting successes, challenges and learnings now from recent times?

Good question. Our biggest focus is to get more partnership businesses. It's great to sell in different verticals and have it as a platform to build on to larger businesses. And we do that and we have those dialogues and we do smaller sales. But it's through partners that we can reach the larger volumes. We have also shown here with Concilium that it actually works and scales with a partner. So a little more of those within well-selected segments and perhaps combined with certain selected geographies. The lesson is really that we think that our strategy actually works.

And in order to do this type of partnership with other companies as well, is there anything from the Consilium business that you take with you in particular to be able to scale and replicate it?

in other contexts? Yes, it's a pretty generic learning in itself, because you have to work closely together with your partner. We are quite often involved at some stage in a discussion with the end customer. It can be certain technical issues, issues around different types of environments or situations, but it can be And Consilium is good at a lot of things, but we are experts in measuring hydrogen. So you as a partner must want to have that relationship, so that you don't think that now we take care of everything. And that has worked really well with Consilium.

A few questions from the chat here. To write that the global hydrogen market is in a phase where expectations are calibrated. since this has affected any of your close customer dialogues or plans for the launch?

Not really. There is no customer dialogue that we have or have had where you have stepped back because of these things. I'm just trying to think, but no. It's interesting when you sit and read in the media about closed projects and things like that. Men vi ser egentligen inte så mycket av det i de dialogerna som vi har. Jag kan tänka mig att på sikt, så klart att det kan påverka utrustning, utrustningshastighet för hela industrin som sådan. Men vi ser att det här, det händer saker och intresset finns där och man vill prata med oss, för vi tillför någonting unikt.

Bortsett från det som relaterar till Concilium, hur mycket har ni nu i orderboken?

I can't answer that. But I can say that there is a healthy pipeline with customer dialogues and discussions in different phases. That's how you have to work, you have to have a pipeline. And then you scale it down one by one, and some take a little longer time, some take a little shorter time. And some may want to have things that we in the present moment feel that no, then we are not right for that. And it's about sorting out those things early. A classic pipeline job, you could say.

We have also received a question about the cost picture this year about running costs. How do you see them?

We shouldn't make too many prognoses, but I don't think you should expect any direct oddities. We have a fairly well-timed organization today, a little less basic OPEX than we had last year. I don't see that we should make any larger OPEX investments in the future. As I said, things can happen, you can find a strategic partner who wants to do something specific. Of course, we may increase, but then it depends on that we have a paying customer in other areas.

We have a question about loans from EIC Accelerator, if it is allowed in any way and if any money will be allocated to specific projects?

There are several parts to it, but the first part of these 2.5 million euros is pure contribution money. The idea is of course to continue to develop our sensors for the next generation. Then there is also, and they are not conditional in any way, the difficult part is how they get. But apart from that, there is also the possibility of taking in money via equity investments. And there, the requirement is often that it matches with external investors in such cases. But that bit is optional from our side. We can choose to continue with it or not do it. And then of course we have to look at what is best for the company and to create value for the shareholders we have.

Vi har också en fråga från en tittare kring omsättningen som reagerar på att den var låg. Har du några kommentarer kring det?

Egentligen inte. Det går ju lite mellan kvartalen, men till exempel den första orden som vi annonserade med Consilium, den levererades inte förrän precis i början på Q3. Så det är sådana saker som periodiseringar som styr in till exempel.

And you also mentioned that you launched Sensum at the World Hydrogen Summit in Rotterdam earlier this summer and that you are going to have several interesting events during the autumn. What did you get for feedback in Rotterdam and how do you see it going to evolve into deeper dialogues and business opportunities?

It's happening, you could say. Very positive feedback. We also got a good positioning, so we had good traffic. I also experienced that the traffic was genuinely interested in what we were doing. What often stands out in these discussions is the speed. Everyone also knows that the specificity is not always where it should be, among the sensors that exist out there. So we will move on to that and we will continue now and will be at Smart Energy Week in Japan, where we will be supported by EU Business Hub, which also actually sponsors a part of that, so it is grateful. But we will also be in October at Hydro & Tech Expo. We will also be there. And this is a compliment to all other sellers. activities. It's LinkedIn, of course, there's actually quite a lot of income that we get when you've looked at what's out there and realized that this is probably not really good enough. What are you doing at InSplorion? And it's not very often that a dialogue arises in that way. And another feedback that we know is that For the geographical distributor, for example, in order for it to become a good business or get started with a real business, we need ATEX, because they often sell ready-made products to their end customers. There is a little difference in strategic partners where you work more together. So that's why ATEX is important, and we're working on it hard.

Thank you for that, Johan. It feels like there's a lot of interesting things to keep an eye on in the future. And no more questions in the chat right now. So with that, I think we thank you so much, Johan, and you who have watched online as well. So I hope to hear from you in the future.

Thank you very much and have a nice weekend.