Unibap AB (publ)

Let's get started. Hello and welcome to Unibab's Q2 presentation. Thank you for taking the time to listen in. We are presenting today is me and Johan, the CEO of EMIR, our CFO. We will talk about the Q2 financial results, a little about our highlights. They have been done in advance and a little different. And then as a special chapter this time we will talk a little about the status of our product development. Especially how we develop and what we aim at and how we are dealing with our latest generation, iX10. Finally, later on what we have for the goals for the year and a little forward. After that there will be time to ask questions. The questions are written in the chat and we will pick them up here. This presentation will also be recorded and posted on the web later. So let's get started. Here you go, Emil. Hello.

To start with, we have a very strong growth this quarter, especially compared to the previous quarter. We are growing by 254%. We are also doing the strongest quarter ever in the June BAPS history. Which is very pleasing and shows the progress we have towards achieving our goal. We have it, and as in the previous quarter, our absolute biggest part will be our income from our hardware side. That is, where we sell our products, which we have left to the older, more project-oriented, customization perspective. And we feel that we are on a good track to achieve our goal of 50% growth. When we come to the result, we have a positive, eternal result for the other months in a row. A moving result, which is very promising. This month, it has been negatively affected by the start of the termination of the products phases in our IX10 and IX10. So you can see that the termination has increased a lot in the quarter. So you can almost say that if you take net worth of our capitalization and our termination, we are close to zero in the result. When it comes to our cash flow, our operational cash flow is just below zero. And there we have seen that our capital movement moves very negatively. Which means that we are not able to achieve our greater positive this month. And as I said earlier, we will have big swings in the quarter, we think. So we should not be surprised if it is not always at zero.

Thank you, Emil. So it is a good trend. And as Emil said, we are well on the way to our goal of reaching over 50% growth for

the whole year. If we look

at the most important events during the quarter, on the business side we delivered to the only Swedish company that we participate in the defense project Bifrost. Swedish defense and Danish defense, which was very exciting. There has been a lot of publicity around that, starting from the defense itself. So it is a highly profiled project, you could say. It is a demonstration for possible future Swedish defense-related satellite constellations. So we are very happy to be able to be there to help. We contribute both with hardware, softwares and services, so it is a rather comprehensive scope. Then we were assigned to a relatively new satellite company, Finland. Finland is very advanced when it comes to building satellites, there are several well-developed satellite companies in Finland, including I-Sight. But we have been assigned to Reorbit, their new LEO platform, which we are very happy about. So this was the first order, hopefully there will be more in the future. Then we got the biggest deal for us, the call of batch number two of three in total, to this big European constellation. It is one of the largest ground observations constellations that will be sent up. We are happy that we got the call. It was of course good for the customer, but also that we do well with our deliveries of batch one. One of our most important goals last year was to get you on the production and product quality and the quality of the satellite. We think this is a good thing. After the quarter we have also announced a new mission for Next, or a company linked to Next. We are very happy about getting in Next as a big owner in the company. We expect that they will be able to provide a lot of expertise, both in business and business softwares, and also when we are now going to take a more comprehensive approach to the American market. So that was important for us. This new mission is not finished yet, but we have had company votes and decided. We are now monitoring the approval from ISB. Since we are a dual use company, we need to approve direct investment.

We

will have to calculate that

shortly. Our product development. We have

hardwares, softwares and services, and they complement each other. The hardwares are the foundation. I will talk a little about how we are dealing with the hardwares, but above that we have softwares. We have softwares to help customers get started quickly, to reduce their development costs, and we have also described in the presentation last year, we have gone over to the license model for our softwares. So we expect that we will have increasing softwares in the future. To this end, we have services. Services can be everything from support to customer adjustments, customer adjustments of softwares or customer adjustments of hardwares. We have tried to keep it a little smaller customer adjustments. If we do customer adjustments, we try to do them in softwares now. This is sometimes to keep very short service times. We have service times of standard three months on hardwares, and with an express option of one month. This can be done by reducing the variant formation of our hardwares. When we develop products, we aim to make them user-friendly. We have a very short service time, we run open platforms, we run Linux platforms, short delivery times, and that we can help customers with both softwares and support. What is special for us is that we have high performance computers. We do this by taking modern technology from the ground and lifting it up in space. Then you have to add what is needed to work in space. Then we have to have reliability, or credibility. You can get that through Flight Heritage, that is, that you have been up in space and shown that it works. You do it through comprehensive testing. What is especially critical in testing is often the tolerance for radiation. I will talk a little about that and how we get there. Traditionally, the space industry saw this with high performance and reliability and it has been the opposite of each other. Modern electronics is not developed to be radiation-resistant. When we are trying to move up modern data technology up in space, we have to work a lot to make it radiation-resistant. That is exactly what our secret, our know-how is, how we can take this data technology up in space and make it radiation-resistant. We usually say that we have computing first, space second, but that actually means that we do not take the traditional approach to space electronics and first of all make sure that it is incredibly resistant, and then see what you can do with it. We take advanced technology and try to make it sufficiently resistant to work in space. We aim first and foremost at LEO, Low Earth Orbit. That is where -95% of all space flights take place, where all large satellite constellations circulate. That is the big market. When you want to prove this modern technology, that you should be able to make it radiation-resistant or space-resistant, you have to go through extensive tests, called space qualifications, and that can be radiation, vibration, vacuum and so on. I will talk a little bit about the tests we do and how we deal with them. What is unique and special about space is radiation. There is background radiation from space and there is radiation from the sun. This is dangerous radiation. It is dangerous for humans and it is dangerous for modern technology. Especially modern computer technology is very sensitive to this, because it is very thin layers. When you manufacture modern electronics, you are down to nanometers, it becomes very thin and very sensitive to radiation. This radiation can lead to everything, from memory failure to the computers not being able to use it anymore, or that they may even burn up. This is called short circuit. This is something you have to qualify for. One way is to have flight-territorial, which means that they work in space. The other way is to perform radiation tests on the ground. Then you use radiation facilities, for example, that are used for cancer treatments and so on, where you shoot high-energy protons on the electronics to see if they survive. We develop and qualify our data solutions to handle the most advanced LEO environments. This also means that they can be used outside of LEO, for example, to the moon or Cislunar, which is between the moon and the earth. But that is not our design target. We aim at -95% of all satellites that go up to low earth orbit

in the first place. When you are up in space,

it is quite calm and you fly around there. You spin at high speed, but there are no big forces. But getting up in space is not so easy. You can imagine the forces that occur during a space launch. We have to qualify all products, both for vibrations and shock. It is like a test of a crock. They have to do a crock, these computers, respectively. It is also a bit special. It is not long, because the rocket launch is quite short, a few minutes, but there are very large forces. This differs from other applications, for example, in the defence, where it is wear and tear during years. Here it is more like a test of a crock. When designing electronics, you have to think about vacuum in space. This means that there is no way to use fan cooling. All heat has to be carried away by radiation, which is quite limited compared to air cooling. So you have to have incredibly good heat management in these computers. You have to think about how much effect they generate, if you want to keep the effect of the generation down. Up in space, it is 15 degrees, but it is a big difference if you are in the sun or in the shadow of the earth. There are large temperature fluctuations and it is difficult to carry away heat. This is also a test, and we test it in thermos vacuum, where we run temperature cycles up and down in vacuum to show that we have good heat management and that we can handle these temperature cycles. All space rockets communicate with radio, and it is quite long, so there are sensitive radio operators that you communicate with, so there are quite a few requirements for electromagnetic compatibility and the like. You must not disturb radio transmission and the like. You run the computers at high frequencies, so we have a huge requirement for electromagnetic durability, precisely because all space rockets are dependent on radio communication at long distances, so it becomes quite weak in the -to-battery ratio of all these communications. So you have to think about this. The things we have described now, like radiation, the body temperature, vacuum, sensitive electrical communications, that is what makes space computers different from ordinary computers. That is also when we try to lift earth technology up in space, and we have helped our customers to get the most modern earth technology up in space, then we have to make sure that we manage these well enough. We aim to be space-saving, that is, to survive a number of years, our goal is to live for 57 years, not forever, so we are not space-saving, because it would have been incredibly expensive if we could use this most advanced technology. So we are trying to achieve high performance and space-saving. And the IX-5, our first computer generation, we have delivered a large number of, it is up in space and is spinning, it has been up since 2021, and it is fully qualified. When we built it a few years ago, we had an ambitious level, which was good. What we have done now to our latest IX-5 is to raise our ambition level a little bit, and that is partly because we want to be able to get better quality, maybe be able to go a little more advanced missions, but also because we want to be able to get into, for example, defense projects where you have a little higher requirements. So on the IX-5 we have, partly, we qualify for a little higher levels, when it comes to everything, it can be the test of the body, it can be the temperature, it is also about the radiation, we have done more advanced and tougher radiation tests. We have also worked more with electromagnetic compatibility. The IX-5 is now in a stage where it is fully qualified, that is, it has something to do with technology readiness level 8. It has managed a space-equivalent environment, it has done. Now we are waiting for it to be up in space. We have delivered a number of flight models, the first delivered at the end of last year. So now we are dependent on when the customers' launch plans, so hopefully at the end of this year, the first IX-5 will go up in space. It may also be so that it will be launched at the beginning of next year, it is in the hands of our customers and the collaboration partners, but the IX-10 is fully qualified and we have delivered computers that are going up in space. So that is status and that is very good. This hardware is based on that and then above this we have softwares

and services. If we

look at the goals for 2024, we have that we will reach TRL 9 for the IX-10, so we will be up in space with the IX again. As I said, we have delivered but we are dependent on the customers' plans. Hopefully it will be this year, it is not 100% sure that it can be during next year. As we saw with the announcement of batch 2, we have worked a lot with the fact that we should be able to deliver to a larger project. So we now have a production capacity of 100, we do not deliver 100 computers per year, but we have a capacity of 100. And that is because we can keep short life times and high delivery precision for our customers and so that we can take these larger business. And then we got a call from batch 2 and thought we had a good chance at that. When it comes to the business side, we are working all the time to win more qualified projects, that is, projects where customers test their computers to evaluate them or build them into new platforms. It is to be redesigned in the future projects for customers. Then to be able to get some larger business, we want to be able to convert these qualified projects into constellations or volume orders. And we have done that a few times, so most of the business we still get a qualified project. We have worked hard to get through these qualified projects by keeping high quality on what we deliver, and that we deliver in time and that we support our customers well. So our goal during the year is to convert more qualified projects into a larger business. Financially, as Emil said earlier, we are on the way with the goal of more than 5000% growth this year. We have also said that we look at it from an intermediate perspective, we aim to have a 35% growth average. It will vary from quarter to quarter, but we see a good opportunity on the market and that we have a good market position. And with that we are then at the question mark. So then we leave over to questions you

can write in the chat. Thank you. We have received a question from Leif here about how our

future business opportunities look like.

So,

what is your opinion on this? We have grown quickly. Last year we were over 100% and this year we are at more than 50%. And then, as I said, in the intermediate we aim at -50% per year. So we are positive about our business opportunities. As we also said here, most of the business we still do is a qualified project. So we hope to be able to convert them to larger business constellation projects to keep up with our revenue. As I said, it has gone well last year and this year it seems to be going well. So we

are positive about our future goals. Thank you. I have a question about the

market growth forecast for the next five years. Yes, we have talked about this as well. We have written about this in some occasions in the prospects, in connection with the new investment last year, and in the fall we will see that the space market is large and the space computer market is expected to grow by about 10%. Then there is Edge Computing, which we are working on, which is an advanced computer. Edge Computing in space is a subcategory for the entire space computer market and it is expected to grow faster by about 20%. Then we are working on introducing modern technology, what is called COTS, commercial off the shelf solutions. They are expected to be market parts, so if you say 10% for the space computer market, then 20% for Edge Computing in space. Then we calculate that our type of solutions and our products, which are added under the category COTS, 30-50%. There are forecasts for the space market, space computer market and Edge Computing in space. Then there is the expectation that COTS or advanced

solutions will take market parts. Question about market parts. We

do not usually give market parts, but we usually talk about what the competition landscape looks like. Then we usually say that there are three or four different types of competitors. The first is that you do not use Edge Computing, because Edge Computing is relatively new in space. Traditionally, you have not used such advanced computers, so there is still a large part of the cost-saving system. Edge Computing is expected to grow faster than space computer markets, so you expect Edge Computing to penetrate into more and more space costs. But one competitor is that you do not use it. The other is that many of the larger space, more traditional space companies, sometimes called primes, have been quite vertically integrated and done a lot themselves. Sometimes we compete with internal solutions, but these internal solutions do not come from the same, they do not come with the COTS approach that we have, but then you choose a more traditional approach. The third competitor category we have is the established suppliers that have these traditional solutions on the market. We have, for example, licensed our technology to Moog. In the US, Moog is a large-scale defense-based military firm that sells into many defense and space projects. We have licensed our technology to Moog, which can use our solutions to make such space-based solutions. Moog sells our technology in the traditional segment. Then there are several other traditional suppliers. Then there are us and a bunch of others who come with this COTS approach. We usually think that we are at the farthest ahead among these new actors. To summarize, we do not exactly agree with the market, but it is still the case that Edge Computing is on the rise, and is trying to penetrate the space market. There are some of the traditional companies that are trying to do it themselves. We have some traditional competitors, and then there are us and a bunch of similar companies that are trying to come in with this new approach. Among them,

we are good at it. Thank you. Thank you. There seems to be no more questions now.

Thank you for taking the time. We appreciate that you are interested in what we are doing. We are proud of what we are doing. We are looking forward to talking again, if not before, at least at the next quarterly report. Thank you.