Invisio AB (publ)

Thank you very much and welcome to our Q1 presentation that we have chosen to title position for an eventful 2025 and indeed we do expect a very interesting and busy 2025. As you might recall we come from a very strong fourth quarter in 2024 and indeed a full year 24 where we grew our revenues with 46% and in the late part of quarter four we had a delivery and order intake of a large order of 150 million Swedish kronor that we managed to deliver before the end of the year. Normally that would have been played into Q1 and be part of the revenues in Q1 but as we always deliver according to customer wishes we managed to do that in Q4. And this is reflecting the normal order and revenue volatility that we see in defense markets. We will go into the different details of the numbers slide by slide. And of course when we have a quarter like this which is a little more soft we still have to remember that the revenues are actually almost 10% better than same quarter last year and it is actually the highest revenue number ever for a Q1. Order intake a little down we have hard comparison numbers because we did receive a very large order last year with the radio deliveries that you might recall but we still leave the quarter with a quite strong order book. I will dive deeper into that in terms of operational highlights there's a couple of things important to mention the acquisition of the product line ultra links in the UK the fact that we have updated our market estimates and also a few comments around the tariff discussions that are ongoing. So when it comes to order intake we were quite a lot lower than last year and as I said that was partly due to the very large order in Q1 last year that included radios from a third party. And I would say there's nothing unusual in this quarter it's a little lower maybe than previous quarters but it is part of the normal fluctuations and seasonality that we see. We still expect a very strong 2025 we can see the activity level being very high all around the globe we can also see that many of the funds and budget increases that have been distributed in many countries have not yet reached our part of the product portfolio so we expect this to happen from the second half of 25 and onwards. Our revenues as I said best first quarter ever approximately 10% higher than last year so yeah not so much to comment there. We will move on to the order book where we at the end of the quarter were at almost 750 million and majority of this order book is expected to be delivered during the next Q2 quarters we are well prepared to be able to deliver relatively fast as you will see also from the inventory levels a little bit further on. Our gross margins are stable over time it was a little lower in this quarter primarily due to a couple of deliveries made through third-party system integrators where we have a little bit lower margin but over time our gross margin is averaging over 60% and as we continue to increase the number of newly developed products that will continue to support a strong gross margin but there will be a few fluctuations between quarters pending some of these deliveries where we work with large system integrators or vehicle manufacturers or others where we have a little bit lower margin but all in all we are happy with that when we know the reasons why. So for OPEX we are also in line with our own expectations we continue to invest in product development and in the sales organization where we see fit as you know we have also acquired ultra links during the quarter which added seven or eight head counts to our cost base and we have consistently and very focused been investing in a new product portfolio and you can see some of the within the last four quarters the new V60 generation 2 ADP control unit our new world leading X7 in-ear headset the Invisio link intercom system that will be shipping from the second quarter the Invisio control app for the intercom the acquisition of ultra links and a number of other product upgrades and just yesterday at a large trade show in Tampa, Florida called soft week we announced two further accessory products to our intercom a switch and a loudspeaker to further expand the capabilities of our intercom system so our investments in operating expenses is definitely leading to a lot of new products we have a world leading product portfolio at this point in time and there is more to come before the year is over. Operating margin of course lower than last year because of the lower gross margin and as well as the higher operating expenses that we have just seen we still maintain our financial target that the operating margin over time should exceed our target of 15 percent and for the four last quarters we've been around 21 percent in average so as always and said many times our company development should be evaluated from a long-term perspective and not from a single quarter. Inventories continue to increase a little bit and we are now at almost 300 million and that is a management decision to do so because it does enable us to deliver large volumes at speedy rates as we saw in Q4 where we delivered the 115 million order very swiftly and that is definitely a competitive advantage in the current market conditions where a lot of customers and governments are willing to spend money and need to spend money there it will be a significant advantage if you are able to deliver within a reasonable amount of time and I would also say again that the inventory is predominantly components and standard products so we normally do not see any risks from obsolescence or scrapping from the inventory it is all products that are sellable. Cash flow was positively impacted due to payments of trade receivables that happened arising from sales in our very strong Q4 2024 so nothing out of the ordinary there explanation is strong sales in Q4 and from an operational point of view well you have probably heard by now that we acquired ultra links in the UK during the quarter and this is part of our ongoing transformation towards a company where we do not only sell and offer hearing protection communication solutions but we look a bit broader on platforms for the modern soldier system and vehicle systems and a modern soldier system today is a very complex network of many different products radios weapon sights navigation sensors and all kinds of different unique standards and all of these devices must be able to share data audio and power in an efficient way on the body of the soldier so with our acquisition of ultra links we believe that we have expanded our value proposition considerably and over time it will help us in developing new products solutions so it allows us to work on the body of the user to combine a number of different products that were not always developed to be able to communicate with each other and to share data and power and in itself this product line from ultra links will soon start to create revenues for us of a considerable size but it will also help sell products of our entire portfolio in a larger system and we again believe that this is strengthening our position in the modern soldier system segment and we will continue to do that over time During the quarter as we touched upon also in the update from the fourth quarter we have updated our total addressable markets from an estimated 14 to 25 billion swedish kronor per year and i'm not going to go into details with it here it's also available on our website in details but the headlines here are that this is an update based on where we are now it's an update towards our first estimate almost 10 years ago and the estimate is more related to price increases and system selling than of the increased fundings that we are going to see over the coming years so we still expect that the funding increases budget increases over the next 10 to 15 years will result in even further market sizes and we will have to update the numbers some years down the road but this is where we believe we are right now from a market size perspective 25 billion tariffs there has been a lot of talks about that and uncertainty and historically defense equipment has either been exempt from terraces or subject to very low rates how that will play out in the future is of course a little bit uncertain at this point in time but from a company point of view in visio has for quite a while been putting a couple of strategies in place operational plans to compensate and handle potential terrorist situations and that also include preparations for manufacturing in the u.s. related to certain activities we have since a long time back a well-functioning manufacturing model that makes use of partners within nato and almost entirely in europe we have today warehouse facilities distribution facilities in the u.s. and have also prepared for manufacturing in the u.s. I think all in all we will have to follow the situation closely but we are well prepared for what might come not only short term but also long-term effects of these discussions so in summary we are moving forward according to our long-term strategy in visio is committed to playing a central role in the development of modern solar systems and we have further reinforced that now by the acquisition of ultra links we have a strong order book we have good market conditions and we look forward to a year of continued high activity good growth profitable sales we it is still very difficult to estimate regarding national defense budgets but our best assessment is that they will start to have significant impact on our revenues or take from the second half of of 25 we have consistently made very good investments in new products in our organization and we believe that this has given us an excellent position to take advantage of the opportunities that we will see in the defense markets and public safety markets today and for the next 10 to 15 years so we look forward to an eventful 25 where we will continue our long-term work to strengthen in visio as a company and add value for our customers our shareholders and our for our employees so with that i end my short presentation of the q1 and operator we are now open for questions please if

you wish to ask a question please dial star five on your telephone keypad to enter the queue if you wish to withdraw your question please dial star five again on your telephone keypad the next question comes from daniel thorson from abg sundial collier please go ahead

yes thank you very much slush and thomas a question here on q1 started off with a decline year of year in european sales but growth in north america how do you expect these two regions to develop in terms of growth pace during 25 is it anything that differs these two given the recent u.s european political discussions

no i don't think so i think this is again just a snapshot of a single single quarter and it doesn't give any direction to the growth of the two regions we we still of course we still expect the investments in europe to be very very strong for many years to come and that will fluctuate between quarters but will over time be significant but we also have very strong position in the u.s we have very good business in the u.s regardless of any tariff discussion and i'm sure that the u.s market will continue to be a very contributor to our order intake and revenues not only in in 25 but also onwards

yeah i see okay that's clear but then also given the current tailwinds in military spending i assume there will come some kind of increased competition perhaps from adjacent players like potentially the radio players or other already well-functioned military suppliers is that something you are seeing at for example the miami trades area you mentioned in the beginning of this call

not not yet and i would also think that many of the companies that are presently in the defense space have enough to do with their own product categories and i think many will be very busy just executing and delivering on their normal core categories there will of course be uh maybe newer companies that will be trying to get into the military market but just because there is a lot of funding it doesn't mean that the market will change its dynamics it's still a market where and it takes a long time it is volatile you need to be a recognized supplier for quite a while before you get any of the larger assignments and just being uh you know a sort of really well positioned and accepted player in the industry is a competitive advantage it's not an easy market to get into no matter what will happen with the budgets but we always welcome competition competition is good

i see fair enough uh final question did ultra links contribute with any sales here in q1 at all

not yet uh and we've also said that we expect not to contribute significantly until 26 but i would i would expect to see revenue from it in in in 25 second half

excellent thank you very much

welcome

the next question comes from jauma alberg from red eye please go ahead

thank you a question on your comment on on defense budgets it sounds like you're a bit more confident that uh that the impact is i mean the defect is is coming in second half is that correct or is it more like the same comment as before

it's hard to say i would say i think what um what most defense companies are asking for these days is some type of uh predictability and uncertainty from the defense organizations globally and it is it is very difficult right now but we can as i said the activity level is very high we have many customer meetings there's a high interest for testing and so uh so i yeah my my gut feeling is that we will see some effect of that in in the second half of the year

all right and uh also i mean you commented i mean you can see quite high variations in quarterly deliveries uh you also increased your inventory and do you think that the is there more potential for these kind of wars that you got in q4 where you have very quick deliveries or was that kind of a one-off

no it could that that could definitely be the case and that's also why we are preparing ourselves for for these kinds of uh and and even if even if it is not for super quick delivery i still think that many uh customers countries would like to see deliveries that are not many years out because it is urgent as we all know and therefore deliveries are often asked to be done within at least a quarter or two so so that would be the the regular norm i think so so we are very well prepared for that we have ample capacity to be able to meet almost any demand within a couple of quarters

um and you also mentioned a bit that q1 is typically a seasonally softer quarter during the year can you say anything what you're sending q to this bar do you see our activity or is it similar to q1 before i guess in only one month but but if you can say anything

no like i as i said also there was a there's some timing into to some orders received so you know sometimes when we are at the end of a quarter and we would like maybe a few more orders to come in the the customers really don't care whether it's at the end of a quarter of or the start of the next quarter so so and we of course always respect our customers wishes so i think this is this is timing more than anything else

and also you mentioned that you are potentially looking at production in the u.s how quick could such a production change do do you need to test enough before you actually do something or oh i mean that

that that there's a number of things related to that and uh and we have been preparing for that for quite a lot for a long time it's not related from from our sake it's not really related to uh to uh to the tariffs it's it's related to other things so so we have been preparing for for a long time so we and we we really just need to push the button so we could we could do it i would say probably in three months

right and then if the question on your products i mean the intercom wireless is coming within the next month and you also mentioned two new accessors there will this kind of go direct to volume orders or do you anticipate kind of more test volume orders over the this year they

are part of the intercom system so i i would expect the the wireless link system and and and the other accessories to actually provide for all intake in 25 right thank you

welcome the next question comes from tom ginchard from perito please go ahead

thank you uh a question on the gross margin development here in q1 is that driven by the west third-party sales or is there any other geography negatively impacting here

in this case as i recall it is mainly us

are you seeing higher activity on sort of third-party sales in the u.s now compared to a year ago or is it just yeah yes we

also i would say we as as i've said before we have a very good relationship to many of the radio manufacturers to the vehicle manufacturers to system integrators we work with large companies like talus who used to be the owners of rakel back in the day so so we have many ways to to market and sometimes a fast and good way is through one of these third parties or partners as you like and and there in those cases they take a part of the margin and we have a little bit lower gross margin but i would expect the opportunities to arise in the all parts of the world when we acquired rakel the they have quite a lot of sales through vehicle manufacturers and in the three years we have owned rakel or four years the margins have been improved quite significantly some of the sales have gone direct but we've also improved on the on the margins in general for for the rakel

products all right perfect thanks and just a question on the new products here for the wireless infra is that customer driven or have you sort of instigated the development

it is definitely customer driven so but we but we are the owners of the the technology and everything included in it so but there are strong customer demand around the wireless link solution so we expect shipments to be yeah good already in in 25

perfect and just a final one on follow-up here on q2 expectations can you give us anything on the mix here moving forward should it be more general creative here year on year adjusted for the radio deliveries yeah

i think again we are seeing a very active market and then as usual it is very hard for us to decide or to influence exactly when the orders will come in so q2 has the possibility of becoming really really good but some of these expected orders could also be pushed into to q3 that's that's what always happens but but again the underlying activity and interest and and and so forth is is definitely positive

all right perfect thank you welcome

as a reminder if you wish to ask a question please dial star five on your telephone keypad the next question comes from eway jiu from seb please go ahead

hi thank you for taking my question laris also i want to ask about the new product and it is interesting that you continue to broaden your offering the wireless technology but i still recall that you mentioned a few years back the wireless is bent in the military use and what happened here given you are sort of continue to to to launch here in the wireless is it a new industry standard or change in the in the regulation or you still expect the wireless communication to be a niche segment only for selected user case

right now it's a good question way and it is complicated it's not there's not an easy answer to this i think when we talked about no wireless back in the days this was a question where we were talking about on the on the body of the soldier where the question was why are there so many cables between the radio and the communication headsets and so on why isn't it wireless and there the questions that the answer still is that you are not allowed to have wireless on your body as such between devices because you can be jammed or intercepted and so forth so that's a good reason for that when it comes to an environment like a vehicle or a boat where we can use the intercom and the wireless link there you are talking about a little bit of a different wireless scenario because there you are in a maybe a controlled environment where you can operate wirelessly let's say a 50 or 100 meter around the vehicle and where maybe the risk of being intercepted is is less and there some users probably not everyone but some users will allow the use of wireless around the vehicle we are actually also using wireless technologies a little bit related to the soldiers because we do have a wireless ptt that you can put on your weapon and then you can ptt back to your radio system wirelessly but you still have your body worn cabled system at the same time so it's a little bit of a a double-edged answer here but in general wireless on the body is not allowed whereas around vehicles and inside vehicles it is allowed to a certain extent

okay great and could you also make comment on the competition do you have do you see like similar technology from the competition already there or

maybe

some new product launch from the competition i

would say on our portable intercom with the wireless link i do not see any direct competition there might be other types of products like a radio that can do something similar to similar but in a totally different way but the way we do it where it is part of the in visio system and if you have an in visio intercom an in visio control unit in visio headset then you are able to create this ecosystem where you are also wireless around the vehicle i cannot see anyone that can do that

okay great and and it could just indicate to be you know and the value vehicle of solution i mean entire system how's it going to change with all those new products

yeah it's a little hard i mean if you if you entire if you equip an entire vehicle with the whole system with intercom with control units with a number of headsets and cables and wireless products and so on then the system will will probably end up in the 20 to 25 000 euro area per vehicle

okay very clear great and i just want to clarify that in the pre-release yesterday you that the new system would be ready for ship in the second half of before the end should we expect any like larger order announcement before that

ah you are you ask clever questions uh just wait and see

all right thank you last i jump back to the queue

so there are no more questions at this time so i hand the conference back to the ceo larz hoigart hansen for any closing comments

all right thank you everyone for your interest and listening in and for your great questions today so we will end the conference here and we will be our q2 report on july 18th thank you bye for now