Ovzon AB (publ)

Hello and welcome to today's webcast with OBSON, where CEO Per Norén and CFO Victor Bremer will present the report for the first quarter of 2025. After the presentation, there will be a Q&A, so if you're calling in and want to ask a question, please press star 9 to raise your hand and then star 6 to unmute yourself when 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, Per.

Thank you, Ludvig, and good afternoon and good morning, and warmly welcome everyone to our Q1 report for 2025. I'm here with our interim CFO, Victor Brimmer. Hello, everyone. Okay, so before we start the presentation, I would like to comment on three things specifically. First of all, the geopolitical pressure and turmoil has further increased, of course, in the past few months. which probably no one has escaped. This brings a lot of uncertainty to the world, obviously, but one thing is for sure, the need for resilient and high-performing mobile satellite communication continues to increase. Secondly, Oxfam's financial performance has continued to improve during the quarter because of a very strong finish to 2024. We have the third consecutive quarter, Q3, Q4, 24 and Q1 2025 with positive EBITDA. The EBITDA was 18 million SIC this quarter versus minus 18 million SIC in the first quarter of 2024. And we had positive operating cash flow of 66 million SIC. The revenue growth year over year from Q1 2024 to Q1 2025 is 38%. So we think we have a very, very strong quarter behind us. But the third thing I think is important to understand before we dwell into the numbers and the reporting is that timing of deals, dealing with government procurement and decision processes can take time. um and also the decision by the customers to decide when they want delivery of the service and the terminals in our case can also vary which means that it can have an effect on a quarter to quarterly basis it's just a a general thing when you work in this industry. So what we do with that is we invest and we have invested, we'll continue to invest in both relationships, building business cases and education of the customers, current customers and the new customers we're working with. And the last thing I'll just say is that Three years ago, the company had 90 plus percent of its revenue base from the United States of America, from customers there. We have today a very well balanced economy. revenue base about 60 percent from sweden and and europe and about 40 percent from the united states of america and some of those contracts are also in swedish krona and not us dollars which you'll see has a as a positive effect given that the krona has strengthened its position versus the us dollar so overall i think uh before we go in deeper into the presentation A solid quarter, the third consecutive quarter with positive EBITDA and growth in the quarter with a positive operating cash flow. We'll go into more details now. First of all, again, an introduction to Awesome. Most of you probably know the company fairly well by now. We are a leading provider of integrated satellite communication solutions with the most advanced capability to drive performance, meaning bandwidth, And data throughput mobility, meaning you can bring it with you anywhere, any place, any time. And resiliency, meaning we can guarantee uptime and connectivity for the customers that use it. That's our mantra, performance, mobility, resiliency. We call it the OBSON coefficient because there are actually things you need to do in order to have both performance, mobility, resiliency. And that goes into choices of technology and choices of how we design networks and how we deliver the service to customers. We are in the niche market. We are not the consumer market satellite connectivity provider. We are really here for those organizations and customers that need guaranteed connectivity for their critical missions, whether there's no infrastructure or destroyed infrastructure, or they need the backup to where the infrastructure might be vulnerable. So we're very, very targeted. We're almost like snipers in that approach. We work very closely with customers, partners and end users across Sweden, United States, Europe. And we also see opportunities in Asia Pacific and other places. Our core markets are defense, both military and civil defense, national security and public safety. The defense customers we have are the majority of our revenues today. We have invested around 2.4 billion Swedish kronor in our new technology programs. That would be our first proprietary-owned satellite, OPSON 3, our OPSON onboard processor, and our OPSON mobile satellite terminals. You can also see that the trend, as I spoke about in the introduction, is that quarter by quarter, we are improving the revenue base. And since we are a services business and the majority of the revenues are in services, they're repeatable and they span over years at this point. And we're now on a much higher level than we have been before. Next slide, please. You know, satellite communications has been nice to have. It's been used by specialized organizations. But the more we see the trend in geopolitical pressures and situations, such as Russia's full invasion of Ukraine or in the Gaza Strip or in other places, the more communication has become an essential part of the architecture of how you actually both protect and connect countries and regions of the world. Cyber and secure communication is essential. For those of you in Sweden, when we talk about this, you know that the Swedish version, the bank ID was down yesterday. We don't know the full effect of that, but we all see it around us. So the drive towards security and resiliency is very, very high. Digitization is, of course, another thing. With digitization comes the need for communication and secure communication, where satellite communication actually provides the most advanced ability to do that. Most of our defense customers are talking about the digitization of defense. Digitization then requires communication again. So you cannot kind of turn around and say, oh, I don't need communication. I'm just going to digitize or automate or use AI. You absolutely need the last mile of being able to utilize digitization and AI and cloud is that you have a communication pipe that is strong enough and guaranteed enough. So we see that the trend there continues. And last but not least, we see more and more of the environmental impact on our society and societies around the world. And at such occasions, it's very, very important that you have communication so you can have a fast. an efficient and effective way of doing rescue missions. And most often when things happen like wildfires or landslides or whatever, or earthquakes, you have no fundamental infrastructure. You have to use the space infrastructure, meaning satellite communications for it. So I think all of those four things drive, continue to drive a need for satellite communications. Now, as I said, it takes time. You have to educate, you have to show, you have to tell, and you have to build business cases and use cases for your customers. But I can tell you that the world, and specifically in Europe, the focus is very, very high and hard drive towards these kind of capabilities and solutions that we provide. Again, we are a niche provider. We are not it all be all for everyone. We are very, very, very, very advanced in what we do for those that needs that advancement. And therefore we provide premium value. We provide premium solutions and we do it at a premium price. And it's worth taking the time to win the right customers and the right deals in the right regions for the right purpose. Next, please. This is our value proposition, and I don't have the slide this time around for what the difference is between low Earth orbit satellite, mid Earth orbit satellites and geostationary satellites. But in essence, if you have a geostationary satellite, which also operates in that part of space, you have And you do it in a certain band that we do in the KU band. We have a very, very advanced way of building and designing networks. If you look at 12 o'clock, and therefore we can get and we have steerable antennas and beams on our satellites which means we can concentrate the energy of the satellite and the beam to smaller areas which means you have higher throughput and higher bandwidth we're very very good at that very strong at that and geostationary satellites provides that advantage i would say versus low earth orbit satellites that circles closer to the surface of the earth But you cannot guarantee it's when the satellite is over you in orbit that you can actually get connectivity. For our customers, guaranteed performance, mobility, and resilience is the thing. So geostationary is the perfect choice for us. The only way to get connectivity is for you to have a satellite terminal that can connect within seconds. We provide that. We provide the smallest. most advanced with dual modems in most of our terminals, which means that we can switch on and off and we can connect in different ways that others can't. Our competitors do not have this. They choose other third-party providers of terminals, while we develop, design, and secure that we have the smallest and most high-performance and resilient mobile satellite terminals that can connect to our networks within maximum a minute. And of course, we don't own any teleports if you look at three o'clock. But we partner with a few selected partners that actually are the ones that provide that capability. And we embed ourselves there and we connect then the signal to fiber and ensure that we have the highest resiliency and performance for that as well. and then last but not least both out in the field as well as virtually and as well as in our network operations infrastructure we have dedicated 24 7 customer support and service that have both been part of designing the networks understand our terminals understand where signals come come in and can continue to drive up time of We hold ourselves accountable to 100%, but things can happen, and that's what we do better than anyone else. So we have an integrated solution that no one else has. Next slide, please. This is just a way of trying to describe where satellite communications is going and where OBSON is going with that. Now with the OBSON 3 satellite in space, we have the ability to do multi-domain operation. We can connect stationary, on-the-move equipment, personnel, and headquarters for total mission control, basically. Whether it's on the ground, in the air, or on the water, whether it's manned or unmanned, we have both the terminal capability, the design of the network capability, and our solution capability to actually connect all aspects of this. This has been one of the dream scenarios for defense, national security and public safety organizations for years. And it's first now that OPSON and we're in the leading edge of this can offer this. So this is called multi-domain operations, or you connect all aspects of your operations at the same time. Very, very unique and advanced. Next slide, please. Competitively, I would say that This is then going to try to, it's a summary really of what I've said initially here. You can see that from the bottom it's traditional, you know, network infrastructure of communications all the way up to low earth orbit satellite which is you know best effort to have connectivity when the satellite is is near you and above you in space but we operate in the upper upper upper part of that pyramid of competitiveness and niche and we provide exactly what i said on the previous slide the integrated solution for uh guaranteed connectivity The top, top sliver of it is what I would call sovereign capability, meaning that a country or an alliance, but foremost a country, have their own capabilities. And we border into that. We work closely with customers on that side so that they have their own resilient and sovereign capability that we can provide for them exclusively. So we're very well positioned at the higher end of the competitive landscape. Next slide, please. Now over to Q1. Q1 has been very, very strong for us. I would say that we ended Q4 in 2024, obviously, with a large deal with a Swedish-based corporation that was prepaid in January 2025. so we filled up the cash bank um that contract started uh first of march we'll come back to that and what effects it has on the financials but we also delivered the the majority of the mobile satellite terminals during q4 as well and We are engaged. We got one new customer during the quarter. That customer was on the last day of the quarter, actually, a new country that chose to go with OBSON and it's a new country in Europe and a NATO country in Europe as well. That was the We also did refinancing with our current financing partner, P Capital Partners, with somewhat better terms and conditions, and extended that financing for us so we would have time to build up for the next generation of solutions and capabilities we have. Next slide, please. Let me look at this. Which number is this slide? Eight, thank you. I'm just going to move on so I don't miss anything on this. But as I said, we received a large order, which was 185 million for a 12-month contract with Swedish Pace Corporation. And it includes, of course, OPSON 3, which is now in use there. And we have delivered most of the terminals, some in Q1 and some in Q2 of those terminals to that deal as well. Very strategic milestone for us in the partnership. and a strong financial position for us as well. Next slide, please. Now, this is very interesting. So when you're in the top of the competitive landscape with a unique value proposition and integrated solution, we continue to charge forward in finding ways to be more effective and efficient for our customers. And one of the areas in the world that is of very high interest to most NATO countries, but I would say foremost the Nordics, the US and Canada, is potentially others as well but those are foremost is the arctic and arctic is difficult and complicated when it comes to satellite communications so we um we did invest in an expedition to the high north or the arctic and we had a very successful expedition with um four different nato countries participating in that where we could validate that our office on three satellites and our terminals also on T6 and T7, their performance, reliability and ability worked all the way up to Nordkarp flawlessly. And I think this provides a new unique opportunity for our customers to actually build use cases for both man-on-man and personal use of satellite communication in an area that is of great interest from a geopolitical perspective today. We've gotten a lot of interest from a lot of countries after this, and we will potentially continue further up north with another expedition when the time is right to make sure that we can cover as much up in the high north as we possibly can. Thank you. Next slide, please. Now, let's turn to the financial section of our presentation. The ordering take continues to be a bit irregular, as I spoke about. So sometimes it's almost like, you know, the finish line is as a certain date, 31st of March. And it might not be so that the actual things we work on come in on that exact day. But also customers want or does not want to take delivery until a certain time when they have the right delivery. set up and manning for such an important strategic project like implementing satellite communication for them. So it's very natural that there has some sort of fluctuation in the order intake. But what we can see is that we have actually improved because almost three years ago, we would have most of our order intake in one quarter, Q4. And that irregularity has actually disappeared. And we have a more even flow, even though it can fluctuate between quarters as well. The order intake for Q1 2025 amounted to $2.2 million, corresponding to 22 million Swedish kronor, and it was the new European NATO country that was the order intake for this quarter, mostly. In a 12-month rolling perspective, the order intake continues to increase, and it's now at 413 million SEK compared to 368 million SEK in the first quarter of 2024. Order book amounts to 25 million US dollars corresponding to 250 million Swedish kronor. And it's it's a solid figure as it contains network service, mostly network services. This is a good foundation for 2025. We focus on developing current customer base renewals and expansion upsell opportunities with current customers and expanding with new customers. A lot of concentration is in Europe. We also do continue our drive and strive in the United States of America. even though their focus has shifted more towards the West, I would say, meaning West of the US versus what they previously had towards Europe and the East as well. I think that's what I had, and I'll hand it over to you, Victor, for some deeper analysis of our numbers. Thank you, Per.

The recurring revenues from Satcom services of 76 million SEK is an improvement in the first quarter compared with the last four quarters and compared with the first quarter previous year. Compared with the first quarter previous year, this represents an increase of 112%. Total revenues of 90 million SEK is an improvement of 38% compared with the first quarter previous year. And the revenues from terminals in the quarter amounts to 30 million SEK. Run rate for Ops and Satcom services is increasing and follow the positive trend the last year and is also on all-time high the last two years. Next slide, please. For the fifth quarter in a row, we are improving EBITDA. EBITDA for the quarter amounted to 18 million SEK, which is an improvement of 36 million SEK from the first quarter previous year. The increase of EBITDA in EBITDA margin is in effect with the latest OSOM 3 order from SSE in December of which Satcom services started on March 1st. EBIT and EBIT margin was slightly improved in the first quarter thanks to improved EBIT time but still negative due to the depreciation related to the activating of OSOM 3 starting in the third quarter 2024. And the depreciations represent OSOM 3 Next slide, please. Cash flow from operating activities of 66 million is an all-time high for a single quarter, and this is due to the annual customer prepayments that we had in January. Cash flow from investments of 12 million SEK is related to the finalization of the OPSOM 3 program and the onboard process. Net debt decreases from the fourth quarter with 20 million SEK down to 629 million SEK, which is mainly an effect of variances in US dollar. Next slide, please. The total estimated investment in Osan 3 for 2025 remains in the span of 50 to 60 million SEK and is attributable to the finalization of an onboard processor. In summary, we show that we have a strong business momentum with improved recurring SATCOM revenues, improving EBITDA quarter by quarter, and also financial position is today stronger than six months ago. Back to you, Per.