Maven Wireless Sweden AB (Publ)

Hi, and a warm welcome to this live presentation of Maven Wireless quarter report 1. For those of you who don't know me, my name is Hugo Lischö. I am an analyst and follow Maven Wireless. with us from the company to tell us about the first quarter. CEO Fredrik Ekström, a warm welcome. Thank you Hugo, I'm glad to be here. It's great to have you here. I think you will start with a presentation and then we will end with a Q&A session. Since this is also sent live, it is perfectly possible to ask questions in the chat function that you hear in the video. So I will try to get as many questions as possible. Now we want to hear the interesting things, Fredrik. How has it gone for Maven Wireless in the beginning of 2024?

Yes, thank you for that. I was going to start by setting the stage and talk a little bit about who we are for those of you who are not fully aware of that. Maven Wireless is a product company. We develop and sell products for indoor and tunnel coverage for mobile telephony and blue light radio. So we have products that we sell that extend the coverage into tunnels, road tunnels, train tunnels, into buildings. Such as hotels, casinos, airports, galleries, sports arenas. All types of places where you need coverage for all operators and all technologies. Typically 2G, 3G, 4G and 5G coverage. Because that is the finesse of our products, that we can combine printing for all operators and all technologies through the same system and the same radio units in the printing area. So it is a very effective way to get printing for all operators and all technologies in a cost-effective way. In Maven Wireless, we have had the philosophy since the start. We founded the company together with some ex-colleagues from the industry, where we will lead the development. We have digitized all the products that we have launched. They are built more on digital signal processing, more software functions. Through these technology platforms, we have also been able to reduce power consumption, where we also offer a greener alternative, i.e. a more power-saving alternative for heating solutions in tunnels and indoors. Since we are leading this technology development, we have invested a lot in IPR and patents. By the end of 2023, we have built up a patent portfolio of 73 different patents that are spread around the world. We started our business and developed products for Etsy, 3G, PPC, marked products for Europe, started our sales in the north and expanded out over Europe. And that's where we have our main sales today. The same type of recognition and frequency areas can also be sold in the Middle East and Asia. So it was a natural expansion for us. So we have established a regional office in Dubai for the Middle East, Turkey and Africa. And we have a regional office in Singapore for Asia and also covers Australia and New Zealand. After we noted Maven Wireless on Nasdaq First North, we took in capital to start investing in the American market. The American market is large, only North America has a third of the world's market for these kind of indoor and tunnel systems, i.e. the day market. The global day market is today about 10 billion US dollars. Of that, Maven Wireless can address about a third, i.e. about 3.3 billion US dollars. And another third of that is in North America. In addition to the cellular products that I mentioned, we also have products that we usually call blue light radio systems, Public Safety. A system for blue light, that is, police, fire department, rescue service. Here in Sweden, the radio system is called Rakel. Orakel is based on old 2G technology, push-to-talk, it supports voice communication. What is interesting in the blue light industry globally is that it also stands for a big technology shift, where we now see that in different countries they are starting to implement the next generation of public safety networks, which also supports data transfer, image and video transfer. And that will also be done in Sweden. It is called Rakel Generation 2 here in Sweden. We have already launched products that support both old and new technology for blue light. We have been selling these products for about a year now and deliver in the Middle East, among other things. So we are well prepared to have that product offer already done so we can jack into more countries where you now start this comprehensive expansion of new blue light radio. So that drives public safety and on the cellular market we drive 5G expansion, the day market and growth in general on the market. As I said, if we break down this 10 billion US dollars, North America is also an important growth market for us. If we look at the figures we have delivered, it is from Europe, between the East and Asia. So, the US turnover from that region will increase during the year. We will also, of course, expand to existing markets. The product areas that we have already mentioned, mobile telephony, repeaters and distributors, ignition systems, fiber mat, both for 2G to 5G and public safety. We also have a lot of other special products, including a train repeater. which then establishes coverage in the train wagons. These are repeaters that move on, so they are a little unique in the design that should work on trains. We have also sold them to a number of ships, including equipped Hurtigruttens boats with this technology. We also have systems now that support private networks, which is also a relatively new area that also expands as an expansion product area. So we can also support private networks through our products. And what is also unique for Maven Wireless products is that we are fully broadband and can mix all types of technologies. So we can support private networks and all public networks in the same equipment. So we can have a multi-system to offer perhaps an industry, a completely private network, but also the ordinary the mobile network that can be supported in this industry. It also makes us unique. Here we see our product portfolio with different types of systems. We have repeaters, those types of train repeaters and also outdoor and indoor repeaters that are individual products that cover smaller areas. Then we have the fiber-mated system, where the operators connect their base station radio signals in a central unit, down to the right in the picture. It is already there that we convert all radio signals into digital form. where we can then distribute these digital data freely over high-speed fiber out into our DAS network where we can connect radio units, high-power remotes for example, and build very large systems if necessary to cover large areas, the entire tunnel system, huge buildings. So it is a very competent and flexible system. On the repeater side, as mentioned briefly, you can take a single unit and cover smaller buildings in different effect classes and climb up. We also have a unique product on the right in the picture called Cirrus, where we combine both repeater thinking with fiber feeding. So without base stations, we can pick up radio signals from the macro network outside the house. Digitalize in a Cirrus of Air Master, which we also call it, and then build a local fiber network to be able to cover larger buildings without taking physical base stations. Also a unique product concept that we have. If we then move on to what we have delivered during the first quarter of this year, I would like to start by pressing on some of our highlights. If we look at businesses with Vodafone, which we have done some projects with before, we continue with the business together with Vodafone, where we have now also taken in businesses and secured both tunnel projects and indoor projects with Vodafone. We continue to grow together with them. What is also really exciting, I think, is that we are winning a first business in the UK for cellular systems. For a while, we have done business in the UK on blue light radio for different types of applications. But this is now our first system where we connect the British operators in a tunnel project in London. We have delivered those products only a few weeks ago to our system integrator in London and we will now connect all units in the tunnel and run this during the spring. This will be our first complete cellular reference in Great Britain, so it is a bridgehead for our further expansion there. And why I think it's extra exciting is because Great Britain is actually the largest individual share market in Europe, together with France and Germany. So this is a strategically important reference unit. Further, if we look at the framework agreements that we deliver, I would like to mention Österrike with the traffic agency ÖBB in Österrike, where we have launched additional product variants. I was a little bit into it that we have unique modular platform that we can flexibly configure. We have developed a high-effect remote unit where we have added so we can build in five separate frequency bands. We have also built in 5G together with something called SDL on the 1400 band. And that stands for Supplemental Download, which is a form of booster, so you can boost the data speed for operators who use that function. So we have now launched it. It is an additional product beyond what we have agreed on in the framework agreement. So this is a more sales, you can call it. to the end customer ÖBB. A very competent product for their customers. If we continue with the highlights, I also think it is super fun and important for further expansion in North America that our central units, our Stratus remote units have received full FCC approval. Also ISED in Canada. So everything is tested, documented, published in all the places where they should be. So we can now really go out wide throughout North America with these additional product variants. So that of course supports our further expansion in North America. We have also as the last highlight point signed yet another agreement with a third EMS. Vexos is an American company. They have different factories all over the world. Our initial idea with Vexos is to build the new product Nimbus low-effect indoor high-capacity 5G indoor heating. which then goes a little bit for low-volume products, which we then have low-volume, high-mix in the types we have, then we will try to go up with Nimbus and maybe go up towards a medium-volume production capacity. If we look at it from an EMS perspective, then this will go in larger volumes. Therefore, we need a slightly different production setup for that particular product so that we can ramp it up in a good pace. So that's the logic there. It is also interesting to note that they have factories both in the USA and Mexico, which can then help us to mix it together with the Keithron factory in Pennsylvania. So we have more flexibility when we now in the future need to connect local production in North America. In terms of figures, in quarter one we see that our sales increase by 31%. We landed a sales of 54 million during the quarter. Then you should also look at seasonal variations. Quarter one in our industry is typically the weakest quarter during each year. Q4 is generally always the strongest. These are trends in the industry, so it is good to compare with the previous quarter. We can also look at the gross profit, which also increases sharply with 67%, so we make a gross profit of 25 million. Bruttovinstmarginalen skriver ner till 47 procentenheter på bruttovinstmarginalen. Vilket är den högsta genom tiderna. Vi har aldrig levererat så hög bruttovinstmarginal. Under pandemin när det varit nedpressat så har jag alltid pratat om att vi ska reparera det här och komma upp till en bruttovinstmarginal runt 45 procent. Nu har vi gjort det med Råge. EBITDA comes in at approximately 10 million and EBIT is 8.5 million. If we then compile it down to profit per share, it will be 12 cents compared to 5 cents in last year's Q1. Order entry 47 million, and then we will look at, and that is a continuous recovery. And then I want to go into the next picture and look at, we can start with the picture on the right side with the order book order entry. And you who have listened in and read comments from me and the company, we have gone from pandemic scenario with everything that has occurred. on different KPI parameters, but precisely the order book order entry has been affected in the way that during the pandemic we had very long lead times in production. We could have delivery times of up to a year and sometimes even longer. So the order book we had about a year ago was then in production for more than five quarters. Now, what we see now, and we already saw that at the end of last year, is that we have completely removed these long lead times. Now we deliver, from we get an order on standard products, until we deliver them, it takes about three months. So it's a complete return to normal times. And that results in the fact that we now also see that the order book and order income are adjusted. We had a decline to Q3 last year and now it will rise, start rising in normal normal pace again. So we see this rise from 24 Q3 31 and now up to 47. So it's a repair and a return to normal dynamics in order intake, order book and planning in production for deliveries. On the left side we see quarterly sales and the gross margin that we talked about. So we compare sales 54 million with Q1 2023 at 41. And we see here the reparation of the gross profit margin, which we are now completely back and also above normal levels. If we take the right side, we see EBITDA and margin figures as well. We have a 19% EBITDA margin. What also affects is that we take some additional costs during the quarter. We have taken in a number of extra R&D consultants to complete some development related to, among other things, Nimbus and some additional development we have to do within our technology department. Of course, we have also taken some final costs for the type recognition and so on. Related to just here and now. If we look at the geographical split on the left side, we see an overweighted sales in Europe. And then you can think that there has been very little in the Middle East and Asia. But here we are not going to make too big changes, because this is isolated for a quarter. And we also do a lot of big batches in production and delivery. During the quarter, we have continued to deliver a lot of products on the European framework. Among other things, we have now finished delivering all the products that will be mounted in the Gotthard base tunnel in Switzerland. And it's a fantastic project, and it's a big project. It's the world's largest and longest railway tunnel. Two tunnel tubes that are 56 kilometers each. There we have a complete Maven system. And it will contain, when everything is running, about 350 high-effect DAS remotes with all technologies. So it's a very competent system and there we have now delivered a lot of products. So that's probably the reason that there will be some focus areas during certain quarters with such larger deliveries. So then it can look like this. I have already talked a lot about references. What I also want to highlight here is what we have done historically in the last quarter. We have continued this with data centers. We continue to deliver within the Microsoft world for their data centers where we have approved products. Gotthard Base on the far right, a very interesting system. We have also got another system in France, in the lower row to the right, Grand Palais in France. Then we continue to deliver on our framework agreements. We continue on Telenor, where we have an extended framework agreement. We continue both on SBB and ÖBB. We wrote a new framework agreement in 2023 with One Nordic. There we have also delivered to the left, Stockholm Bypass, the bypass of Stockholm, which was a good project. which comprises products for about 9 million kronor for our part. So it is fully delivered now. It is not open to the public, but our products are already prepared. As I said, I went a little ahead here, here we have our framework agreements that I have already mentioned that we continue to deliver on. I can also comment there in Turkey, we have also delivered completely these two new railway lines are then final delivered to Istanbul Metro. Our new launch, we have launched during Q1 the product we call Nimbus. It is a low-effect, but high-capacity, especially high-capacity 5G indoor heating. It can handle 4G and other technologies as well. But the finesse with this is that you can run what is called 4x4 MIMO. We run four parallel data streams radio-wise over this, which boosts the data speed. This is unique with Nimbus. To run 4x4 MIMO on the entire C-band, no one else can do it. If we look at our main competitors, Comscope Solid, similar products, a little older technologies. They must then install two separate units to be able to do what Nimbus does. So of course it doubles the installation and work and of course double the cost for two boxes. So this addresses the high capacity system for 5G indoor heating. This is the best product. We have no fans in this either. It's a bit of our signum too. And it has competitive solutions. This is screwed up in the indoor roof and working under a unit with a fan that rumbles all the time. It's not particularly nice, I would say. So this has gained a lot of interest now that we are launching the Q1. We are now planning to start delivering this to the first customers later during quarter two. And of course, it addresses offices, indoor environments, it can also be airports and so on, casinos, hotels. But also within, we can then mix and match this product, when I think of a tunnel track, then we typically use these existing Stratos high-effects, where we push out a lot of effect in the tunnel tube. But 5G is definitely needed on platforms, in ticket stores, in railways. There we design now, together with our integrators and end customers, where we then mix Nimbus for just high-capacity 5G for platforms. So a very nice way to be able to mix different types of products in the same system to optimize it and also create high-speedness that is really needed more on platforms than in the tunnel pipe. And this is also the first product that we have that has built-in antennas. So it also makes it easier to install this for the integrators. You don't have to pull coaxial cables and connect antennas. Everything is built in here. It's a fiber cable or a hybrid that also feeds the unit. Then it's done. We also have the stock market. I just wanted to briefly mention that those who are interested in what is happening there, there have been some bigger block trades. And if you look at the list of owners, you can see that Almi has sold a part of its content, which is completely in order. They usually start selling When you go public, the share is noted. But it is only now that they sell their first post. This has happened during the quarter. A post has also been sold together from Yvonne and Miriam, who are under the owner list. So this is what has happened here off-market, which I have received a lot of questions about. So these are the off-market transactions that have happened. I will stop there and will gladly take questions.

Yes, thank you for a very good presentation, Fredrik. And what everyone is actually wondering about, you feel that the scalability is there, you have the profitability in place, it is also visible in the cash flow. The growth rate, that's what's interesting here now. How do you feel about this year round that we had under Q1?

We are going up on another level. We see the repair from the pandemic or the reversal where we fell to around 25. Now we climb up via 36, now we are up to 47. So we see this return to the order entry. So it's all in order, that's exactly what we've seen coming. So it feels very good. One of the highlights of this quarter is that we have now opened the doors for the North American market, where we have all types of approval in place, all certificates. We have previously this casino project in the back pocket. We have under the quarter also taken further orders in the USA for a slightly smaller project of 500,000. gone further. But now I see that the doors are going to open. Here I see a big growth in the coming periods. And that is North America. Now we have lined up all our anchors and are fully prepared for this. So this is where we are going to push to expand, of course. And there we have a third of the world's market is located in North America. It's a super exciting place. At the same time, I also see this with the continued expansion of both 5G and the technology shift for blue light radio systems, which also drives the market. So there are fantastic opportunities for us to continue to expand to existing markets. There are many big projects that are bubbling up now that we are involved in and will of course bring home in the future. So there are great opportunities to continue our expansion.

Exciting. Because of that, it was mainly during Q2 last year that it really took off, so it will be a little tougher comparison talk here during the rest of the year. But then it sounds like we have the Nimbus, we have the USA. We also have something that I have noted now. The sales in Asia have been a little softer here in the last quarter. What does that have to do with it?

We have a number of customers in the Philippines and Singapore where we implement these larger and more competent projects with hotels, casinos and resorts. We have done some upgrades together with them. We have connected more 5G capacity to existing systems. And it sometimes becomes a bit of a shock project. Because we also have to remember that these partners, local partners, integrators or neutral host companies, they have their own project organizations and they also need to be done with the project before they can start again. So there has been a lot of work with existing projects and now we see that there are several new projects that are upgraded also in Southeast Asia. So that's good. And also come back to Nimbus to connect it. What is the logic further with Nimbus for expansion if we take the expansion vein for Nimbus? If we look at our turnover and break it down, what is it responsible for over time? Now in Q1, if we look, we actually have something more. I think it's 57% cellular systems. and the rest public safety, so we're a little more cellular. But normally over time, if we look backwards, it's about 50-50 public safety cellular. But how it looks on the market, it's not what the market looks like. The market has overweight. on the amount of cell phones. 83% of the market is cell phone systems. Therefore, there is more possibility of expansion for us on the cell phone market. Nimbus is the ticket for us to expand even more aggressively towards cell phone operators, in-house coverage for the cell phone market. So it is also a product that will help us expand faster on the cell phone market.

That's right. You were also talking about this in the presentation, but now we are talking about Nimbus. You said that you will start launching this in Q2?

No, we are even launching it in Q1. So we will even start shipping to the first customers later during Q2. Exciting.

When you talk to customers, how has the reception been?

There are many who are very interested in it for various reasons. I mentioned that it has a built-in antenna and another way to establish indoor heating in a way that makes it easier in the installation and operation phase. It is also special considering that our Nimbus product is so competent, it is fan-free, but above all that we can deliver so much bandwidth through it. Because that's what 5G is about. You need to meet the bandwidth requirement with 5G. And to buy equipment that does not meet the requirements is counterproductive. Then you can continue to build 4G instead. So that's what makes customers think this is really interesting. I mean, the competitive system needs two units. We do that in one unit. So it's twice as effective.

And another question that has come in here is the brutto margin. It was 47% as you said, the highest ever. Would you say that this feels tangible or should we calculate that it is around 44-45%? Or how do you think in the future?

First I would like to say that we also have to see that the gross margin can fluctuate over the quarter. That's the first thing I want to say. Because it can depend on product mix, it can depend on bulk delivery, on certain frame rates, it can depend on that we maybe do some drive for new markets, so it can ripple a little bit on the gross margin, so you shouldn't be afraid of it if you see it. But I have always said it, and you Hugo who has listened to me many times, have heard that it should be normalized around 45 percent is an expression I have been working on for a long time. So that's what I still see that we should be on with these product flora we have here today. But what I think is interesting if we look a little further into the future. Then we have our completely digitalized platforms, more signal processing, much more software implementation. So what we see is that we can develop more functionality in pure software. I see that we should be able to sell pure software functions to customers who already have Maven Wireless hardware systems installed. Then we can do more sales of pure software functions so they can load systems and start using them. If we get that kind of sales going, beyond the surveillance goods and soft goods licenses that we already have today, which generate soft income, we will increase the type of sales that in general gives an even better gross margin. So I see that as a gap a little further into the future.

You were also talking about this, when we look a little further ahead, the time starts to run away, so I think we should end here. Then it is also, say the end of the year and next year, is it mainly market geographical expansion we see, it is towards cellular, Do you feel that you need new products? Will you need to add more sellers to continue this expansion? Or is there something that needs to be changed or is it better to just keep going and continue to grow in the future?

It's not a revolution that we need to do. We actually follow a strategic plan that we laid out when we founded the company. With some overarching milestones to develop, take away technical risks, do market entry. expand, go in and generate profit. We have done all of this. And our next strategic milestone is to get over a billion dollar turnover. So it's a bit into the future. It's probably a few years until then, but that's the next strategic goal. And to do that, no revolution is required. We can also do that with pure organic growth. We will continue, of course, North America I have already talked about. It is an important market. Expand even more cellular. Nimbus is a driver for that. It is also important. There we have a lot of market and do a lot of business on. If we are talking about what we need to add, it is that when we expand, we need to add more muscles to both sales and technical support for customers. And so on. So it is to build the organization broadly, actually, to handle everything. Also handle our EMS factories, support there, make sure that we get a higher flow through the factories. So it is to build on the plan that we already have and deliver on our strategic goals that we have made backwards.

Yes, just as you say. When you add several EMSs, it feels like you are laying the groundwork for this to continue to expand. Exactly. Thank you very much for your presentation, Fredrik. Thank you, Hugo. Thank you very much to everyone who has watched. If you have any further questions, you are welcome to contact me at hugo.lijo at carnegie.se.