Ovzon AB (publ)

Hello and welcome to today's webcast with OBSON, where CEO Per Norén and CFO Victor Bremer will present a report for the third quarter of 2024. After the presentation, there will be a Q&A. So if you're calling in and want to ask a question, press star nine to raise your hand and then star six to unmute yourself when you're handed the word. You can also send in questions via the form to the right. And with that said, I hand over the word to you guys.

Thank you, Ludvig. Good morning, good afternoon and warmly welcome. And thank you for joining us today on OBSON's earnings call for the third quarter of 2024. I'm here today with our CFO, Victor Bremer. Thank you. You're welcome. The first nine months and especially the third quarter of 24 has been very busy and exciting for OBSON. As you all know, hopefully, we successfully launched the OBSON 3 satellite in January earlier this year. And since July, it's in commercial service with signed contracts with some of our core customers. And we are in intriguing sales pursuits and commercial dialogues with current and potential customers. We will for sure get into more details in a few minutes. But before that, as always, let me provide a short introduction to OPSOM. Next slide, please. Good. Ofsun is a leading provider of the most advanced, integrated, unique satellite communication solutions. We're spearheading the progressive development of the most sophisticated and resilient SATCOM solutions in the world. We continue to be fully dedicated to our vision, connecting the world's critical missions via satellite, and what we see as our greater calling of connect and protect. meaning connect and protect nations alliances organizations people and the environment the company was established in sweden in 2006 and is traded on nasdaq stockholm today awesome provides unique satcom solutions with unparalleled levels of connected mobile and resilient performance we work very closely with customers partners and end users currently across the united states sweden europe and south america We have invested over 2 billion Swedish kronor in a new revolutionising technology platform during the past years, resulting in a cutting edge solution we call OPSON 3. Next slide, please. To put everything in context, satellite communications have been available for decades, but in recent years, the demand for and the investments in technology advancements to progress satellite communications have accelerated considerably. There are several structured drivers behind that. First of all, the concerning geopolitical tension in the world continues to escalate. Nations, alliances and organizations are therefore accelerating their development and investment in total defense, natural security and public safety. Countries with little to no satellite infrastructure are now shaping plans for more sovereignty and dependent independence. In case of conflicts or natural disasters, guaranteed communication with undisturbed and continued uptime is crucial on land, at sea or in the air. Secondly, Secure and resilient communication is becoming a very important requirement in all parts of society, especially for our target markets and customers. Cyber violence is becoming more advanced and progressively developed and strongly protected systems is a must. When land and mobile based communication are down, satellite communications is essential and will provide secure communication across the networks. The third driver is simply digitization. Our lives and all types of organizations are today powered by improved digital processes and quick access to data and information is expected. Satellite communications is therefore becoming an integral part of the integrated communication infrastructure globally. And finally, climate change. most recently we saw the terrible situation and pictures from valencia in spain a couple of weeks ago the same in florida and southern parts of the united states with the change in weather patterns and increased flooding storms and wildfires satellite communications is in most cases the only answer to quickly execute fast and agile rescue missions and saving lives next slide please What's unique about OPSON is that we deliver a solution where we manage and control the entire value chain. With OPSON 3 now in operational service, we manage the most advanced communication satellite in space, also as a satellite operator, controlling our own capabilities and capacity. We complement that with least capacity when and if and where needed, a very powerful and strong position for OPSON. This picture shows that we deliver SATCOM solutions with immediate connectivity from one, left to right here, the smallest, lightest and most high performing mobile satellite terminals to two, managing high performing and agile and steerable satellite networks. Three, we partner with a selected few secure gateways providers where we implement our own hardware and secure racks to manage and control our service delivery. And last but not least, we manage all of that through our dedicated 24-7 support from our network operation centers globally. Our customers require continuous communication and expect 100% uptime and performance. Only Ovsum can guarantee resilient connectivity in contested environments. It is positioning us as the premier solutions provider. Next slide, please. Here's a graphical description of our positioning and the way to read this is mobility on the X axis. Performance meaning data speed and throughput on the Y axis and integrated and built in is the ability to deliver continuous and resilient communications. These three components performance, mobility and resiliency are what set different services and service providers apart. Our next generation platform on the Office on 3 satellite has moved us even more up to the right in this picture, enabling us to add even more value as a niche solution provider for critical missions. The Office on 3 platform is lifting the customer experience to totally new levels. Next slide, please. Now, that's OVSON in a nutshell. Let's go to the accomplishments of the quarter. But I want to highlight a few personal reflections on the quarterly report, as I'm especially pleased with three things. One, the increased EBITDA result. It's now on positive levels. Very, very important and pleasing to see. Two, the revenue growth for the quarter. And last but not least, the migration of the first customers to OVSAN 3, which sets us in a very, very good position for continued growth and expansion. Okay, I'll walk you through some of the most relevant accomplishments in more detail on the following slide. As I mentioned earlier, OVSAN 3 was launched in January this year. In June, the satellite arrived at its designated position in space, its orbital slot, And on July 5th, the satellite entered into commercial service. For those that are not familiar with our industry, this is quite an achievement by our company. In August, we announced our first large order on OPSON 3 from our long-term customer, the United States Department of Defense. And a couple of weeks later, we also received an order of additional OPSON T7 terminals from the same customer. In August, we signed an initial limited but still important order from the Swedish Space Corporation for use of OPSON 3 for specific mission. In September, we received a 12-month renewal for OPSON Satcom as a service from Swedish Space Corporation at 115 million Swedish kronor. This order was thereafter expanded in November with additional offs on the move terminals and the order value thereby increased from 115 to 132 million Swedish kronor. The total order value will be paid before the end of 2024. We'll go into more details on the Swedish-based corporation order in just a few minutes. This morning, we also announced an extended estimated lifespan for OPSON 3 after new data and analytics and information from the manufacturer. The lifespan has increased from 15 to 18 years. This will have positive economic effects for us. Next slide, please. Some words about the commercialization of OPSON 3. As previously mentioned, OPSON 3 arrived in June in its dedicated position, 59.7 east after a five-month journey and orbital racing. After successful in-orbit tests, OPSON 3 was on July 5th ready for commercial service, all according to our plans. The satellite covers a third of Earth with its six high-power steerable spot beams and is equipped with our patented solution and unique software-enabled capability, what we call the digital hub in the OVSAN onboard processor. A quick summary of what makes OVSAN 3 unique. It's purpose-built to the smallest mobile satellite terminals on ground. It has an all-steerable antenna architecture. It's industry-leading in transmit and receive performance. And the offshore onboard processor is enabling single-hop communication between ultra-compact terminals, something no one else had been able to do in the world previously. And as mentioned, the launch and commercial start of OpsOn3 have been conducted optimally without incidents based on data and information from a manufacturer and our own and their experts now assess the lifespan of 18 years compared to 15 years previously. This means that... This is good news for our company, basically, and our customers and investors, as it improves the return on investment with a reduced depreciation of 20 million SEK annually on this extensive and highly strategic investment. Its end of life is now expected to be 2042, but satellites can live longer. Slide eight, please. Let me turn to order intake. I think that's the wrong slide, actually. I'm on order intake here now. Oh, no, no, correct, correct. Let's see. The first order from the OPSON 3 from the U.S. DOT. We received our first large order on OPSON 3, what we call OPSON Pegasus services from our long-term cluster within the U.S. Department of Defense. We started delivery on August 1st. The contract is for 12 months with an order value of $6.2 million. And for those of you that follow us closely, you will recall that we received an eight-month order from the USDOD in December 2023. That contract ended at the end of July this year. The contract was re-scoped in December compared to previous years. But it's very positive that we now transition without any gap over to a 12-month contract on August 1st to shift from least capacity to the powerful OPSON 3. With that, we've also further strengthened our position, and it allows us to continue to add value to the United States Department of Defense with SATCOM solutions based on OPSON 3. We can go to the next slide, please. During the last two plus years, we've purposely rebalanced our geographical revenue distribution. That means that we really established our position in Europe. About 40% of our revenue in the quarter comes from Europe, which equals about 55% year to date. During the past 12 months, we've initiated a very solid partnership with Swedish Space Corporation, what is called SSC. On this slide, we've highlighted and explained a little bit of the business outcomes of that partnership so far. In December 23, we received our first large order from SSC of 135 million kroner for the delivery to a critical end customer. This order was for OPSON SATCOM as a service, including a larger amount of OPSON mobile satellite terminals. In September 2024, the service part of this contract was renewed for 150 million SEK for 12-month delivery of Afsan Satcom as a service. This renewal did not include any terminals as they were already delivered. And yesterday, we received a further expansion of the same order by adding Afsan on the move terminals to a value of 17 million kronor. That means that the total order value is 132 million. Another important dimension to note with this expanded order is that we'll receive full payment of the total order value of 132 million before the end of 24. That improves our liquidity and enables us to continue to focus on growth and to concentrate on the solidification and capturing of new business opportunities. Next slide, please. We'll now turn to the financial section of the presentation But let me begin to talk a little bit about order intake, which is very important. The continued development for Offsun during and after the third quarter signals a commercial breakthrough. Our order intake has accelerated since our first own satellite, Offsun 3, was put in commercial service during the summer of 2024. Our order book has clearly improved during the last quarter, providing us with much better financial predictability. This means that we expect the company's growth rate, profitability and cash flow to strengthen in the coming year. The order intake for the quarter amounted to 17.8 million US dollars, which equals 173 million Swedish kronor. The rolling 12-month order intake was at 47 million US dollars at the end of the quarter, translating to 474 million Swedish kronor. Looking at our order book, it was at 22 million US dollars or 222 million Swedish kronor at the end of the quarter. Our deliberate and decisive shift in focus to customers in defense, national security and public safety is proving to be the right strategic move. It has and can lead to larger and potentially longer contracts. I will, however, note that this market with very strict government procurement and evaluation processes are somewhat cumbersome, complex and time consuming. But as we start to see, definitely worthwhile when you have a unique value proposition and can deliver fast as we can. I would now like to hand over to our CFO, Victor Brimmer. He'll provide some more detailed information on our P&L. Over to you, Victor. Thank you, Per.

I will now give you some details on the financial performance for the third quarter. The revenue of 95 million SEK in the third quarter is split between Ovsons Satcom as a service of 65 million SEK and Ovsons Terminals of 29 million SEK. We can see that the revenue from Ovsons Satcom as a service is recovered from a dip in the first and second quarter and now back on the same levels as in 2023. In addition to this, we managed to deliver a higher portion of Ovsons Terminals as well. When we are looking at the run rate for Ovsons Satcom as a service, we are continuing in the positive trend from last quarter and the run rate is up to 259 million Swedish kronor. Next slide, please. As mentioned during the second quarter, EBITDA was gradually improving and I'm now glad to be able to present the positive EBITDA of 12 million SEK in the third quarter. The improvement is a result of revenue from off-zone terminals, but also reduction in operational cost compared to the second quarter. The reduction in operational cost is a result of harsh cost control and seasonal effects. Jone Peter Reistadler, EBITDA margin improves from minus 31% in a third quarter 2023 to plus 13% in a third quarter 2024 as we communicated in a second quarter EBIT and EBIT margin are in a third quarter affected by increased depreciation due to the activating also on three. Jone Peter Reistadler, Next slide please. Cash flow from operations amounted to minus 14 million Swedish kronor. Even though EBITDA has improved substantially, the third quarter is affected by payments of interest following the activation of Oslo 3. Total amount of paid interest affecting cash flow from operation was 23 million Swedish kronor in the quarter. Cash flow from investments amounts to 27 million SEK and are mainly related to the finalization of some three. And I will come back to this subject in a minute. Net debt increases from the second quarter with 75 million SEK, which is mainly a consequence of net negative cash flow for the period, but also effect of activation of O3 and deferred contractual payments as explained in note 10 in the quarterly report. Next slide, please. We have received questions of how much that remains to be invested in O3 before the project is finalized. And we can now narrow down this figure. During 2024 to 2025, remaining part of 24 and the whole 2025 we estimate the total remaining cost to be 62 million sec and in note 10 in the quarterly report you can also read that we have deferred contractual payments to suppliers involved in those on three projects which amounts to 60 million second total and will be we will be paid between 2028 and 2023. volume 2033 uh sorry All amounts are subject to variations in currency rates, mainly in US dollar and euro. Back to you, Per.

Thank you, Victor. Very, very good. And hopefully everyone recognizes the transparency here. Yeah, we can go to the next slide, please. All right. I'm going to summarize our financial key performance indicators in a little bit here. And I would like to highlight our rolling 12 months development, which better illustrates our financial performance as our quarterly development still varies quite a lot. If you focus on the lines in the graphs on this slide, you can see that our order intake, revenue and EBITDA are trending in a positive direction. Most obviously during the third quarter. I'm particularly pleased, as I said before, with the positive EBITDA results. We do expect and plan for improved profitability going forward as well. Next slide, please. All right. So we'll conclude this part of the webcast before we go to questions and answers with some further comments and forward-looking remarks. First of all, I'm obviously really pleased that OPSON 3 now is in commercial service in its orbiter position and with the first customers providing roaring and excellent feedback and references on performance, mobility and resiliency. During the remainder of 2024 and 2025, we'll continue to further intensify our focus on sales of OPSON 3 based services. The sales cycles within our target groups can be long, but we did start early and we have received great response results and references from customers and through trials that we are conducting and have conducted. And that proves that I think we'll see some positive results of that in the future. We're now able to optimize with OpsOn3 our utilization of satellite capability and capacity, mixing and shifting to OpsOn3 and other networks and services based on least capacity. It gives us a very strong position to operate from. We will continue to focus on execution to drive a step change towards profitable growth, and we clearly strive to improve and strengthen our predictable order intake. Our core customer segments and geographies are very focused. They are to be found in the United States, Sweden, and Europe for the time being, and within defense, national security, and public safety. At Offsun, we have a unique value to deliver, and we know we are the top-rated solutions provider of sovereign and resilient SATCOM solutions, delivering continuous connectivity in contested environments, measured in performance, mobility, and resiliency. We're concentrating our sales efforts towards longer-term commitments of SATCOM solutions based on OBSON 3. During the coming year, we'll continue to accelerate our industrialization initiatives. We've come quite far, to be honest. But it means that we're going to scale up both in quantity, quality and efficiency when it comes to production of mobile satellite terminals, scaling and automating service delivery, concentrating and we're very concentrating and laser focused on sales, business development and marketing and in-depth partnering with relevant and handpicked partners whom we share the same objectives with. So the collaboration is aligned, efficient and seamless. We'll continue to accelerate and position offs on and offs on SATCOM solutions for customers, countries, and alliances with critical missions. We know that nations and organizations are strengthening their capabilities and investing in sovereign capabilities for total defense, national security, and civil defense. It bides well for us. And after a period of years with pretty heavy investments, OBSON is now entering the phase where ongoing technology programs will be finalized and we should be able to see return on investment from them in the coming year. Our financial position, as mentioned by Victor, by managing both growth, managing cost and scarce resources is and have always been keen to us on. We'll continue our discipline in this area and scale up as we grow and develop the business. In summary, I'm very pleased with our quarter and the progress we're making, and I'm more convinced than ever that our ability to deliver results and meet the needs of the world's most advanced requirements for satellite communication is ours to take. I want to finally say a big thank you to you, Victor, for the great work you've performed in your role as interim CFO. It's been a pleasure working with you. And my sincere thank you also to our team for their dedication and hard and smart, smart work. With those closing words, I want to hand it over to the operator as we are ready to go to questions and answers. Over to you, Ludvig.

Thank you so much for the presentation here. And as you mentioned, we'll go ahead to the questions. So if you're calling in and want to ask a question, press star nine to raise your hand, then star six to unmute yourself when you're handed the word. And our first caller is the number that ends with 8721. You have the word.

Yes, hello. Can you hear me?

Absolutely.

I was thinking about the revenue mix in the quarter. How much of your service revenue in Q3 was generated with Olsson 3? Was the USDV on track from August 1st or did they have any delays or anything like that?

Yes, good question. Hi, Mikael. Good to hear your voice. I'll start by saying this. There were no gap or glitch in the service start with the USDOD. So on the 31st of July, the previous contract on leased capacity ended. And on August 1st, they were transitioned over to OPSON 3. So they have been on performance with OPSON 3 from August 1st. And thereby the financial, the revenue numbers are according to the $6.2 million order we had for 12 months with that. So monthly, you can probably calculate that. Okay. So no glitches there. We had a few small orders as well on OPSON 3, as you know, during the quarter, but they are they're not having a huge impact on the revenue stream. So the foremost revenue in Alstom 3 comes from the USDOD for the time being.

Okay, good to know. Thanks. And when it comes to this mix effect of launching Alstom 3 and starting operating that service, how did that impact the gross margin so far? And how should we factor in fixed costs associated with

Yeah, I mean, I'll give you a general description. We can't go into all of those details, but I realize that it's pretty hard to actually, if you're on the outside, to understand when terminals are being delivered because the revenue is recognized as the terminals delivered to the customer. and and sometimes it goes over quarters sometimes over over a month or so on so it's really the difficult if you're on the outside actually it might be difficult sometimes on the inside because most of what we do is is basically we're trying not to to bind too much capital into inventory and trying to have a very strong forecasting model for supply and demand especially on the terminals but It is fairly easy to track, and I'll let Victor maybe say a few words, to track the service revenue because it's pointed out in the report, the service revenue and what it is for the quarter and thereby you can also divide it into what it is per month. That's how we manage the business. What I look at personally, is actually a strengthening of that service revenue as they are more subscription-based, right, month by month during the 12 or so month of contract we have. So that's our stable base. And the terminals are a little bit more cyclical and not as per month basis creation of revenue. Do you want to comment anything, Victor, on that?

Yeah, and I mean, since we are operating the full Ozone 3, we have the full COGS for Ozone 3 as well included. So all incremental sales will be pretty much down through the P&L.

Okay. So you have full cost, but far from utilization, of course. But it looks like the gross module was quite high actually, either on the terminal sales or the least capacity and so on. Yes. Can you help us understand the mixed dynamics here to figure out the gross module?

We can. In short, the following. We are optimizing the least capacity to 100%, so that helps. we have been able to get strong price points, both on three, even though that's only on basically one customer, but also on the least capacity. And we have managed to also manage the cost side of that as well. So that increases the margins, yes. And we do have solid margins on our terminals as well.

And if you compare with the third quarter last year, there were unsold capacity in that gross margin. Exactly. And the increasing gross margin this quarter.

So in essence, the summary is price point, our value proposition is very strong. We can get premium price on both least and on option three, even more premium, obviously, as it has a higher value. and we're managing the cost side of what we can. We're optimizing and utilizing all these capacity and we have solid margins on our mobile satellite tournaments.

Okay and the final one is on the pipeline and the timeline. If you can provide insights into the size and maturity of your sales pipeline and how many active prospects that you're engaging with currently, and also how many potential customers that are actually testing Awesome3 right now.

We cannot actually reveal any of that, honestly. And many of the conversations are, I mean, some are in advanced stages, others are in early stages, others are in trial stages, et cetera, et cetera. But we have a solid pipeline. and ages of communication, demonstration, and architecting together with customers and partners and how to do it. So I have a positive view on the strength and depth of the sales pipeline, both in time for 25 and 24 and 25 and beyond that. So it has broadened and it has deepened and it has shortened in time span. I think that's what I can say at this moment in time.

Okay, thank you.

Thank you. Thank you.

Thank you for the questions. We'll now go ahead to the question caller who has number 8632. You're welcome.

Thank you, operator. Hi and good afternoon Per and Victor. Thank you for the presentation. A couple of questions from me. So initially I'll try with another question on the pipeline. Perhaps it's also difficult to comment on, but are we talking about new potential customers or rather in-depth discussion with existing customers. And in terms of the size of these potential contracts, are they significant as the DoD or SSE contracts or closer to the contracts you had in France?

Thank you. Merci. Hey, this is Simon from ABG. Just so everyone knows who's asking the questions, I think. I don't know if that was clear. So let's start with the questions here. Now, we can't really reveal if they're big, equal, bigger, smaller, longer or shorter. They are the world we live in with selling to government organizations foremost. have historically been a 12-month contract because there are budget cycles. What we are striving to do is to get into strategic positions with those government organizations and try for longer-term contracts. But when you have something new like Ops 3, before you have tested it, You can't really expect to get enormously long contracts for it. But the strive is to get at least the 12-month contract that we have now. That's how much I can say. So I think that's the way to think about them. there might be shorter term contracts. You could see here, you know, we didn't reveal the number here, but we have a very exciting collaboration with FMB in Sweden on an unmanned ground vehicle. That's obviously part of it. And we're utilizing OPSON 3 in that. And that's obviously part of building up the use cases for the asset that OPSON 3 is and how it can drive, you know, seamless, continuous, and resilient communication for unmanned cases, for manned cases, and both in the air, on the ground, and at sea. So that's how the sales cycles go. Sometimes it's a direct sales because there's a direct need. But when you have something new and as powerful as Ops 1.3, you have to actually build it up step by step. So that should be viewed as a positive signal of test and trial.

Thank you so much for expanding on that and also clarifying on whom I am. Continue here. You mentioned in the report that the OBSON onboard processor is expected to be commissioned during H1 2025. Could you elaborate on what this means for the operations and the customer use case? Is this an important aspect from customers, something that they are waiting for, IE?

Yeah, very good question and a very detailed read-through of the report, which we appreciate as we put work into the words and try to explain the business in a proper way. Very good question. So what it means is that the onboard processor actually works today. It's just that we are building out systems of systems architecture for it so it can be used both on a combination with what we call Ops on Pegasus service and Ops on Orion service and a combination thereof. What I think we see in the market is that if you haven't used an onboard processor for continued communication, you want to try Oxfam 3 first with the Oxfam Pegasus services and then start to evolve into the onboard processor work with use cases and so on and so forth. So it's a very natural plan that we've always had to have the basic levels of of service available for it. But we don't see that someone outright jumps in and buys the Ops on Orion services outright before they've actually rolled into Ops on Pegasus and a service which is the traditional Ops on three services that we have and then the onboard processor. So I think what we're just saying is that there's still some investment and work to be done. that also Victor highlighted with in his slide where he talks about remaining investments and also on three where the awesome onboard processor is so you should view the comment in the report I gave you the sales and an operational answer but I also now gave you the what's remaining of investments and that's what you see it's very clear thanks again

and then as you mentioned earlier you are currently fully utilizing the least capacity is the current scope of capacity enough given that or would you like to increase or perhaps reduce this in the medium term I know that there is a balance between this and utilizing the option three capacity of course but any color on this would be very helpful

Yeah, and this is a very important aspect of running this business from a financially sane perspective, right? So if we felt that we did not have prospects that were strong on OpsOn3, we would flip over the users on the lease capacity to OpsOn3. So that's the first point I would make. Secondly, we don't want to carry least satellite capacity that is not utilized because it becomes an anchor around your neck from a cost perspective. So we have visibility of um the cost of the lease capacity and the contracts and the customers we currently have on it and can have on it if we if we so want so with offs on three and lease capacity we now can mix and match and thereby as the previous question came from michael assian we can also see how we can optimize margins but also meet customer needs in different regions of the world and with different service levels that they might request. So that's probably the best way of explaining it, I think. Perfect. Good, I agree. Good. Okay.

Thank you. Then I have a final question. Probably for Victor, and it's a technical question. You announced the news of the expanded lifespan for also 3 to 18 years. Did the DNA rate in Q3 reflect this new lifespan or rather the old lifespan of 15 years?

Sorry, what did the depreciations?

Yeah, the depreciation that was booked in Q3.

Yeah, those are reflecting the 18 year.

Kristoffer, thanks for having my questions.

Thank you, Simon.

Thank you so much for the questions. We'll now go ahead with some questions that have been sent to us. How are you going to finance 2025, loans or new equity?

How are we going to finance? Listen, I think it's a good question. Number one is we foresee to be financially solid ourselves and to have liquidity and cash flow in order to fulfill the loan requirements we have today. So first of all, it's about running a healthy core business. Secondly, we are in good dialogue with our lender regarding the future structure of that. So it's likely that that will be the path forward for us. There are other means as well, but we don't foresee any strange things. We will continue with the financing we've had, we're going to try to find a path forward with that and we're going to run a healthy core business and add liquidity and revenue margin and growth to accomplish it.

Thank you. How much of the 95 million SEK in revenue in Q3 was OBSON 3?

That one we will not disclose.

I understand, thank you. My question pertains to the difference between Starlink and OBSON. I would like Per to clearly clarify the differences, how Starlink isn't a competitor, or if it is, how they plan to coexist, mitigate that threat to become a winner.

Yes, I'll be happy to. First of all, Starlink is a very impressive and formidable provider of satellite internet or satellite communications. Foremost for consumers, you have to understand that. The foremost objective is to provide connectivity to people and organizations in remote areas or where there are no infrastructure or where you need it as a backup for consumers. That's not competing with OpsOn. In our market, StarLink, which is low Earth orbit constellation, can be used for things like crew welfare, meaning when you're not in mission critical mode of any sort. So it's a compliment to us in that regard. We have actually been in a number of trial cases where we coexist, whether it's with Starlink or OneWeb or any other of the LEO providers, just of the reason I just described. So OBSON is used for you know, the high requirements of unmanned band operations, both on the pause and on the move with permission, critical things, both, you know, and then the Leo constellations are used for everything that is not mission critical. So we coexist and we are basically the top of the, of that value chain, that's where OBSON sits, and we complement the broad base of connectivity that the LEO constellations can provide. So we actually see a benefit in having more low Earth orbit constellations up there for the consumers, that they can bleed into some of the applications in our markets, because We can take care of all of that. We can take care of performance, mobility, resiliency, continued contested connectivity for very, very critical missions. So complementary, very positive to it. And it's actually good for us and good for those operators that we coexist and an architecture can be built from the customer's point of view to utilize all of it.

Thank you, very clear. This question is for Victor. In the report you mentioned that the USD 65 million loan was in breach during the quarter on two covenants and that one of them, the extended order from SSC in November with full payment in 2024, strengthened liquidity and suggested there will only be one covenant unmet. Can you clarify which one this other unmet covenant is?

No, I don't want to get into those details, but we do have a close and tight dialogue with the loan provider. And we are confident that we will find a very pragmatic solution for that one.

Thank you. And a question for Per. Per, you have been explained in the past that further capacity to cover the Pacific by additional strategic capacity would be a possible next step. Is this still the case? And if so, when will this undertaking commence?

Did you ask about the Pacific?

Exactly. I can read the question again if you want to.

Yes, please. Thank you.

You have been explicit in the past that further capacities to cover the Pacific by an additional strategic capacity would be a possible next step. Is this still the case? And if so, when will this undertaking commence?

Yes. So now I understand the question. Absolutely. Again, we'll do it from the top. Our core markets are defense, national security, public safety. Secondly, our focused regional domains right now is United States, Europe, and Europe for the moment. We have some business in South America as well, but those two, US and Europe. But we are also obviously looking at, in our core markets, we're looking at where the need is. And there is, with the geopolitical tension and with environmental weather conditions, the need in the in the pacific is there uh when we get use cases or customer cases there we will then turn on we won't go and buy on speculation uh satellite capacity we have access to we believe we will have access to in a very short notice good leased satellite capacity. So when we win a customer or a use case, we will then go and acquire and turn on also on Satcom services for that region. So nothing we carry around, but we are exploiting the opportunities.

Thank you so much. That was all the questions we had for today. Sara, thank you for presenting here and asking all the questions. And thank you all for tuning in. I wish you a pleasant weekend.

Thank you very much, Ludvig.