Unibap AB (publ)

So, hello and welcome to Unibab's quarter presentation after Q1. Some practical details first when we start here. This presentation will be recorded and then available on our website. At the end of the presentation, we will answer questions and you can write in some questions in the chat in the same way as we have done in previous quarters now. So we hope you have questions. Then we start. So, the agenda is, first Emil, our CFO, will draw some financial figures. Then I will go through the most important events during the quarter and some that happened after the start of the quarter. Then we go into an overview of Unibap, what we are doing and how we see the market and the like. And then in the end we talk about what we call ambitions, that is, goals for the future. So let's get started, Emil.

Thank you very much, Johan. Unibap delivered a very strong quarter for Q1 2024, where we grew 205 percent quarter over quarter, which is an incredibly strong result, but especially if you look at the growth towards the previous quarter, or the last quarter, we have grown by 78%. We are on a strong path towards growing by the 50% that we had as an ambition last year. So that's a lot of positive. What Johan also mentioned in the VD word, we have this shift towards selling hard goods and products. Our majority of our revenue in Q1 comes from that type of hard goods sales. Which is where we want to go as a company, where we also have very good margins. Regarding our EBITDA, we make a profit this quarter. We have some positive input effects in the result, but the basic result is positive and very strong, which is very pleasing. The company also shows a positive cash flow for Q1. which is a big part of the result, but where we also have, what is it now, where we bind a lot of the network and capital in the company, primarily against the law. But here we should also expect to have, what is it now, fluctuations over the coming quarters. as we have also said earlier. And that is still one of the things we are expecting. So that was a short summary of the results for the quarter. Back to Johan.

Thank you Emil. Yes, we are satisfied with our deliveries during the quarter and we see that we are on the way to reaching our ambition and goal of at least 50% growth during the year compared to previous years. So, if we look at the most important events during the quarter and right after the quarter, we started this year with an order from Hawaii Space Flight Laboratory for a NASA-funded project. It's called HIT-2. And this was right after we published... That order came just before we published it on March 21st. That is, what the HIT-1 satellite was equipped with, the IX-5. And then we got an order for an IX-10 for HIT-2. This is very positive. It is a NASA-funded project, so it is a good reference for us. They are also a bit special, these satellites. They are quite small satellites, a little smaller than what we normally have with us, but they have very advanced sensors, so in principle our computers are required as a link in the chain to be able to handle the large data flows from these very advanced satellites. The purpose of these satellites is to to predict a volcanic eruption. It's an interesting application, but from our point of view, the most important thing is that we see a trend towards more and more advanced sensors with more and more data flows, which we consider to be driven by edge computing. And it was also very positive that they have worked with iX5 for a few years and then chose to continue with iX again. We also see that as a very good reference. Unfortunately, as we have already talked about during the autumn, our Israeli customer In the end, we chose to close the project due to the circumstances in Israel, which has nothing to do with us. According to both our and Kunde's assessment, we had a very good project together, but unfortunately, the circumstances are difficult in Israel, so it is unfortunate. A little later, in March, we received an order from The Orbit, and as you may remember, you who have been with the company for a while, we have had a fairly long-running collaboration project with The Orbit. And that has, among other things, meant to verify that you can do over-the-air upgrades of software up in space. So we have sent up more than 40 third-party applications and shown that you can program and basically control satellites over the air. And this has been groundbreaking. Under this project, we have also developed a business model for edge computing as a service in the space. Now we have chosen to go further with this business model and make it a business area. De har även testat en del av vår konkurrens, det har de publicerat information om, så vi är mycket glada då att de valde att beställa från oss nu när de går vidare permanent med den här affärsmodellen, så det ser vi också som en bra bekräftelse. Den här ordenen omfattade IX-femman, och det är också IX-femman som vi har använt i det här samarbetsprojektet. Sen fick vi också då i slutet av mars Authorization Proceed, vilket är ju egentligen a kind of pre-order and a cost protection to start with batch 2, the second batch of 3 of the big constellation order that we got at the beginning of last year from a European SMOLSAT integrator. This is a larger European constellation where all satellites have our computers on board. This is very positive, partly because it is a big deal for us, And then there is also a confirmation that we have delivered well on the first batch. Now we have not received the entire order on the second batch yet, but this is a kind of advance notice and cost protection to be able to get started with production preparations. Because there are short lead times in this project, which is also in line with our strategy, to be able to deliver with short lead times, but the customer is waiting for slutgodtjänande från sin slutkund, som är en europeisk myndighet. Så det är väl därför som inte hela orden har kommit henne, men vi fick både sorts förhandsbesked och authorization to proceed. Hela batchen är värd 2,25 miljoner euro, vilket kanske är 25 miljoner kronor ungefär, eller mer. Men som sagt, vi har inte fått hela orden än, men vi har fått förhandsbeskedet. After the quarter, we will have delivered to the defense project Bifrost. It is also a IX5 that we will have delivered to FNB, the Defense Materials Agency. It is a Swedish project, we will talk a little more about it later. This is very positive for us too, because it is a strong growth, one could say, That is, defense-oriented space operations. This is a good way for us to get into that market. We are also indirectly, through our distributor Moog, we also deliver into American defense projects, but we can't often talk about them, but we can talk about these projects as a Swedish-Danish defense project. Just this morning, we also received an order from the Finnish space company Reorbit. It is an order for one satellite, the first satellite, but it is also important that we have become in-designed in their new platform. So that is probably the most important thing that has happened during the quarter and it has shown a good trend.

We have a high level of our market activities.

A little description of Unipap. Since last summer, we have been totally focused on space operations and edge computing for space. We are about 50 people, staff and consultants. Distributors in the USA is Moog, which is a multi-billion dollar defense company. So it's a very good collaboration partner that also gives us great credibility when we go into the American market. We also have distributors in Japan and Korea, but in Japan, for example, we also work directly with JAXA, where we have a number of missions that go up during the year. Even though we haven't been working with space for so long, The space business in the company has accelerated since 2019, so we have managed to achieve many leading collaborations and many customer relations. Space is generally driven by the environment and climate, and geopolitics is now emerging. It will take up a larger part of the total space market. And by geopolitics, I mean defense-oriented space investments- or civil defense-oriented investments as well. What we contribute to is the digitalization of space. We enable our customers to have a digitalization strategy. Traditionally, satellites have been relatively stupid. They have low electronic and computer content. And we contribute to quickly enabling- more modern and more advanced digital strategies in space. When we look at the space market, there are some important trends. The first is that almost all activity in space occurs in what is called LEO, Low Earth Orbit, which is more than 90% of all space activity. And Low Earth Orbit is incredibly valuable lanes around the Earth, but it also starts to get tight. There will also be space junk. There is a prognosis of a very strong continued growth in the space market, which will be in low Earth orbit. But then you will also have to deal with the problem of it starting to get tight. We see three overarching trends. One is that fewer satellites should do more. And then we will talk about multi-user or multi-sensor satellites. It will drive more advanced data solutions to handle both the large data amounts from these sensors and to be able to have many different customers for the same satellite. Then you need to be able to do over-the-air upgrades and the like. Then the satellites will need to be autonomous, either because they will dock with each other. It's a use case. Last year we got a space servicing customer where you would then refuel satellites. But what we think will be the most important is that they will be able to avoid collisions themselves. Today, collision maneuvers are taking place controlled from the earth, but it will be way too slow, to be honest, when it gets tighter and tighter up in space. To handle these autonomous maneuvers, you will need very advanced AI networks, a lot of sensors and a lot of AI on the satellites. This will also drive the need for data power. Then there is a third trend, which is that you may go a little closer to the earth. It is better to go closer than go further out. Right outside LiU there is the so-called radiation belts, which is very hard on all electronics in satellites, so it is likely that they will move a little closer to Earth. This is called very low earth orbit, VLEO. The closer to Earth you get, the less communication you will have with Earth. You will switch forward very quickly over the earth's surface and spend very little time over these so-called ground stations. This means that more and more data will have to be handled up in space in the future. So we see that this drives our applications and our use cases. We usually talk about payload control to handle very complex satellites, autonomous operation for very advanced AI processing, and then a lot of edge computing or in-orbit data handling to handle large data volumes. Another trend in space is rapidly increasing data amounts. There are forecasts that show that the amount of data generated in space will increase by 30% over the next year. That will only create bottlenecks to get the information down to earth. Then more edge computing will be needed, that is, data processing up in space. The next is the increased defense focus in space. It is due to the need for time-critical information, fast actionable information. Within the defence and civil defence, you do not have time to wait until you pass a ground station, but you have to send the information directly and then you have to drastically reduce the amount of data, that is, basically just send the relevant information, for example coordinates on a ship or the like, not send raw data. Another trend is that collisions will happen in space. It can be both accidents, it can also happen... The Russians showed in 2021 that they shot down a satellite and created 6000 small pieces of space debris. It can also happen hostile activities in space. Especially in the USA, they are focusing on standardization and a short period of time to quickly get new access, that is, satellites in space and around costs. This requires that they are easy to use, easy to program, that they can be reprogrammed according to needs and so on. So that will also drive, as we consider it, the need for advanced computer power in space. So we focus on standardization, standardizing hardware and configurable and customer-adjusted software. A lot of computer power to be able to handle advanced AI networks. And then pure computer power to be able to handle large data volumes. And that's exactly what what we call Space Cloud solution. We standardize hardware. We offer high performance edge computing to do advanced AI processing. Our computers are user-friendly and upgradeable over the air. And what we have to make it possible to use this type of modern computer solutions and digitization strategies in space It also requires that they survive in space, and we have focused on that a lot over the past few years. And we have succeeded in the form of getting flight heritage, as they say, since 2021. And put up our own production last year, so we now have serial deliveries of the IX-5. And a rapidly increasing test activity.

Our computer solutions consist of software and hardware.

We take inspiration from gaming and automotive. A lot of this with autonomous satellites is basically the same as self-driving cars. So in our computer boxes we have parts that are also used in autonomous cars or self-driving cars. We have parts that are in the most advanced game consoles. There we have a customized Linux operating system. And on this we have a large ecosystem. As I told you, The Orbit has sent up more than 40 third-party applications. So we have a growing and lively ecosystem around us.

Vi levererade en hel del datorer förra året, så totalt har vi levererat över 30 nu.

Vi har mer än 3000 dagar i rymden utan några destruktiva händelser. Det kan ju hända att datorerna behöver startas om på grund av strålning i rymden, men jag har ännu inte sett någon dator som vi har skickat upp som har gått sönder, vilket ju är väldigt bra. Vi har fått igång vår produktion. Our goal is to have a capacity of up to 100 computers. We will not deliver 100 computers this year, but we have built up a production for that and it will be enough for a while. We have focused a lot on short lead times because we strongly believe in this trend that you have to get up in space much faster than what you have done historically. Instead of long development projects that you have been doing for 5-10 years, you now see that you will go up in space within two and a half years. And then it will be important to be able to deliver quickly. And we add that by standardizing hardware and then instead of software configuration and software customer adaptation. The markets are growing. The space market itself is growing. The space computer market is growing. Edge computing, which is part of the entire space computer market, is growing faster. This is an up and coming user case. Vår approach, som vi kallar icke-traditionell, där vi kommer in med jordbaserad computing som vi tar upp i rymden, där räknar vi med att vi kommer att kunna växa fortare. Vi har som mål att över de kommande åren kunna växa med 30-50 procent. Det är vår ambition. Det kommer givetvis att fluktuera mellan kvartal. For 2024, we estimate that the overall growth rate will be at least 50% per year.

This can be illustrated with a view of what it could look like for us in the future.

Vi har inte möjlighet att prata om försvarsinriktade projekt som vi har med via vår distributör i USA, MOG. Vi kan prata om Bifrost som är ett projekt som är mellan Sveriges och Danmarks försvarsmakter via Försvarsmaterialverket Sverige. Syftet är att skicka upp en demosatellit, en första satellit, där man ska Arbeta med fast actionable information. Man ska göra AI inference. Man ska hitta föremål. I det här fallet är det fartyg i Arktis. I princip kunna skicka ner identifikation och koordinater- istället för att skicka ner all rådata till marken. Vi har levererat datalösningen. Vi kommer även bistå Försvarsmaterialverket med djupvaruutveckling. If you look a little forward, we are in a transition as a company from start-up to scale-up. And in it, we have changed our strategy from a project with a large content of customer adaptation, including customer adaptation of hardware, so we have worked hard last year to move to standardized hardware and instead have software configuration and software customer adaptation. Det här kommer att styra om vår mix så att det kommer bli mer hårdvara och mjukvaruprodukter och ett mindre tjänsteinnehåll i våra affärer framåt. Det är positivt för våra marginaler. Vi ser också att de flesta av våra affärer är fortfarande kvalificeringsprojekt, det vill säga kunder som antingen i labbet eller i några single satellites, similar to the Bifrost project, evaluate this modern technology with edge computing in space and AI. We see in the long term that we will be able to convert, as we say, these qualified projects into a little larger volume business when we are indesigned. Similar to what we said, we have been indesigned in March for Reorbit in their new satellite platform. This will of course mean that there will be more fly hardware, relatively lab hardware, what we call IMR, evaluation models, relatively flight models, FMR. And they have better prices and also better margins. We have also previously gone over to a more software-focused business model and Vårt operativsystem och den mjukvara som vi lägger på operativsystemet har vi gått över till en årlig licensmodell. Det är ju precis i uppstartsskedet. Vi har de första affärerna på de här årliga licenserna nu. Vi ser att det kommer att vara en större del av våra affärer framöver, men det kommer givetvis att ta ett tag att bygga upp. an income volume in that area. We are also gradually working on expanding our software portfolio with plugins and modules that help customers on top of our operating system. So we see that our share of software revenue will gradually increase in the future. This shift will in different ways improve our margins, and we can already see the first signs of that, but it will also be better in the future, as we see there. If we were to summarize this strategic shift that we have made, or that we are in the middle of right now, when we go from a start-up to a scale-up, is that we go from having a high proportion of Special development for customers, we can call it engineering, which we have relatively low margins to become more hardware and software focused. In the near future, hardware will dominate, but we see that software in the long term will increase most quickly. So concretely for 2024 is our goal. We have got a lot of deals. We have the big constellation order for the IX-5. It has flight heritage and it is qualified and ready and we want to release it in volume from our production facility. So the goal now on the technology side is that The same maturity rate for the ix10. To reach the whole way, we are dependent on our customer plans, because it is the customers who shoot them up into space to get flight heritage. But as it looks now, we still think we will be able to reach it by 2024, but it is a bit up to the customer as well, how their deployment plans look and how they could possibly be changed. Last year, we started our production at Regenproduktionsanläggning. Our goal was to reach 100, and we reached it at the end of last year, where we delivered more than 10 computers during December. The goal is to establish this and ensure that we can have this production capacity and flexibility during the year. On the business side, we want to continue winning qualification projects. We want to get more customers. We announced it this morning with Reorbit. It was a new customer for us, so it was another customer then. And that can be said is a qualifying project. Now we have also been designed into a satellite platform, so it's a little more than that, but it was still a first satellite. Then we wanted to be able to come to some of the qualifying projects that we have worked on for a while, we also wanted to be able to step by step start converting to a little more continuous business or a larger volume project. And as I said, we aim to achieve more than 50% growth by 2024. A small side note about the order we received this morning from Reorbit, it was €340,000. And that includes an example of our new mix shift. It is an order that contains one aircraft hardware and one annual license, annual licenses and a slightly smaller content of services and those services are then oriented towards software adaptations for customers and a little support. So you can say that the order we received as we announced this morning is a type of example of how we see that the mix will be able to look in the future. It will of course be a a mixture. We are not completely through with the transition, we have some historical projects that we are still working on and so on, so this will happen over time.

But it was a very good example of the Reorbit business this morning, we think. So, then we were at the question time, so you are welcome to ask questions in the chat, we will see if we can answer.

I have a question from Rasmus.

and that the costs were lower during Q1. Maybe you could pass this over to Emil to answer that question.

That's what I said in Q4. We had higher costs due to the construction and the large delivery that was made at the end of the year when it comes to our production facility, and we had development costs that were a little higher than they usually were. But looking back at the quarters that have been laid before, 35 million is higher than it usually is. It was historically higher than it usually is. So that's the reason, we're more on a normal cost level now, just this month. As I also wrote, there are some one-time effects on the warehouse, and that's due to the fact that we, they are included in the product offer now, things that we previously classified as They are part of our product now and our product calculation, and that is why we take them up as laws now.

Then there is a question here about whether we will be able to continue scaling revenues without increasing the cost savings. As a goal, we have to stay around the same amount of costs we have today. There may be some increased costs when the turnover increases, but not in any larger scope. Most of our costs go to technology development. We can see that our activation and our DIG has increased a lot, so we still assess that we are on a good cost base right now. Then the question is if we fail to scale the turnover, if we then have to carry out We are positive about our opportunities on the market, so we are primarily focused on growth right now. Of course, the possibility of cost savings is always there. en relativt hög andel konsulter ibland bland våran personal, så att vi har ju stor flexibilitet i våra kostnader på det här sättet, men det är ingenting som vi tänker på just nu. En fråga här om om NATO-medlemskapet har påverkat våra möjligheter att få tillgång till en större marknad. The simple answer is yes. The more complicated answer is that it will take time. We see a clear focus. I recently wrote a LinkedIn post, which will also be in the link when you go to the website in our quarterly report, about the reception from the largest space symposium conference, which was in Colorado in April. Det var ett stort fokus på det man kallar Allied Partners. Det är ju ett stort försvarsinriktat fokus nu i rynbranschen. Och det var ett stort fokus på Allied Partners. Så det är klart att på det sättet är det ju väldigt viktigt att vi har kommit med i NATO. Så det kommer att öppna upp möjligheter för oss på lite längre sikt.

Det räknar vi med. Just now we don't have any more questions, so we'll wait a little longer to see if there are any more. Vi väntar några minut till och se om det blir någon mer fråga.

I have a question here about the activation of 6.2 million, where the most is EXT and much more resources that are required before EXT is ready for delivery, we can say that we have not reached TRL 9 or Flight Heritage for EXT, we have our ambitions here for 2024 together with customers. So there is ongoing development work on the iX10. But at the same time, we have already begun to deliver. We have delivered both EM, Evaluation Models for the lab, and FMs. These are the FMs that will be up here during the year, at the end of the year, to the space. So we have made the first deliveries on the iX10. We have not started serial production of the iX10, but it is close to starting with that. But we will continue to develop iXTN for a while, until we have reached the whole way. In addition, we see iXTN itself as an important platform in the future. So we are thinking of coming up with a few more versions of iXTN in the future, with a little more advanced functionality and the like. So iXTN will be our main focus of development for the coming years.

There seems to be no more questions on the way.

We thank you for your interest. It was fun that you were interested and were able to call in. This presentation will be saved and posted on our website, so you can also go in and check afterwards and read through it more thoroughly if you want. Thank you for taking your time.