Unibap AB (publ)

Hello and welcome to Unibab's Q3 presentation. Thank you for showing interest and taking your time. This presentation will be recorded and will be posted on our website. We will present today me, Johan, the CEO and I will be helped by Emil,

our Finance Manager.

We

will talk

about the financial results of Q3. We will take some highlights from Q3 and the next quarter. Then we will have a deep dive into how we see the market. And in the end we will come back to our ambitions or goals for the year.

Let's

go!

Thank you for your interest. The company is delivering its fourth strongest quarter so far when it comes to turnover. Which is very nice. We have a growth of 57% compared to the same period last year. As in the previous quarters, the majority of our income is related to our annual income. We have also given marginal indications in the previous quarter. As Johan said, we have a growth of at least 70% per quarter. Which is good for the company. In EBIT, it is a bit weaker than in the previous quarters. This is due to the slightly lower income this month and that we have activated a little less. Activation is more due to the fact that we have moved some of the resources that were made. Which were developed on the IX5 earlier and now look at new generations of products. So it will be a cost reduction for the company and OPEX does not decrease. But we activate less. OPEX is still a bit lower than last year. And that is very positive for the company. When we look at the cash flow, it is also worse than in the previous periods. And there are some similar effects. But here we also have an effect of the storage increasing. Because we prepare for the deliveries we are going to do for Q4. So that is the big thing. And as we have previously noticed, we can get big swings between the quarters. And this is such a quarter where we see that type of effect. So balanced cash flow, if you put it in parity with Q4 and Q2, is more of a representable situation. So that was

the points I was going to take. Thank you Emil. As Emil mentioned, we are increasing our ambition for 2024 for the whole year from 50 to 70%. And we have had a high production start here at the end of Q3 and Q4. And at the beginning of Q4. So we look forward to strong deliveries during the fourth quarter. If we then go on to talk about what happened during the quarter, we did a funding round, a direct funding round, to Next. We are very happy to get in Next. They have great experience that we will be able to count on. We already have one from Next in our board. We have also closed the options for the new mission last year after the quarter. So in total we have given ourselves about 47 million. So we feel that we have a good position in front of Next coming year. An important reason for this directed mission to Next was that we intend to increase our investments towards the US and in the US. We will probably return to that in the next quarter report, with a little more detail about that. But we see that the US and defense are the most important market segment, so to speak, for us forward. We also got an order from The Orbit, the Italian round company that we have a long relationship with. It is very positive. They seem to have confidence in our products and that we can deliver. A little deeper understanding of our market. We are working or are active in the space data market. Space data market is a large market. It grows maybe around 12 percent, you could say. That was the main reason for the reports to come a few years ago. There is no reason to doubt that. The space market is expected to grow by 10 to 14 percent right now. Then within the space data market we work in the edge computing. Edge computing is expected to grow faster. I will come back to why it is expected to grow faster. Then within edge computing we work with an non-traditional solution. We come from new space, but now we are on the way to move out of new space segment towards what is called hybrid segment. I will come back to what it means. It is mainly driven by the fact that we see that the market growth is within defense applications. Our goal is to grow with 30 to 50 percent per year.

We have,

as I said, increased our goal for the year from 50 to 70 percent. Our goal is to have growth between 30 to 50 percent per year. If you look at the space data market, it is mainly made up of what you can call OBC, on-board computers. They are used to regulate, one might say, to control the space costs or satellites. Edge computing is a new sub-segment within space computing. The penetration is still low. It is a new growing segment. Most satellites do not have edge computing with them today. Some space companies are trying to make their own edge computers. Then there are both traditional and similar suppliers like us, who have come from new space and have come into the realm of edge computing. Edge computing is a distinct sub-segment within space computing. It has a low penetration rate today, which is also a reason for why it can grow faster than the total space markets. What is it that separates edge computing? If you think about the form of performance, there are many numbers, but what is illustrative is that if you think of traditional OBCs, traditional space computers, there have also been some more modern versions of them. Typical companies could be Beyond Gravity or AAC Clyde Space, which delivers this. There are quite a few suppliers here. If you compare it with the performance we have in our edge computers, it is a completely different size arrangement. If we go on to the latest generation, the most advanced we deliver is the iX10-101. We also plan to introduce iX10-102 shortly after the end of the year. Edge computing is a distinct sub-segment within space computing, and it delivers a completely different performance level than the OBC computers. The penetration rate is low today, which is a reason for why it can grow faster than the total space market. If you look at the number of satellites that could have edge computing, you can assume that in 2021 there will be 1,743 satellites. Of these, a large number of them were called megaconstellations, and they are not available to us. So 470 could be available. Of these, we consider that all within remote sensing, which can be signal scanning, space radar, optical surveillance or Earth photography, are all suitable for edge computing. A portion of them are other. We estimate the portion to be about 20%. It would give that in 2021 195 satellites could have edge computing. We had a lot of concern about that, since the penetration rate is still low. If you look two years forward, what happened in 2023 was that the number of satellites increased significantly. It is 2,860 that were created in 2023. Of 750 were the megaconstellations, and of 442, which is quite a lot higher, could be available for edge computing. Even in 2023, there was only a few that had edge computing. Then we have to think about that there is no data for the launch of 2024, but it will come soon, and not even 2025. But what we, the customers today, are working on, the ones we are working on 2024, are the ones that can launch 2025 or possibly 2026. Then you have to scroll the market forward and calculate that there is growth in the total satellite market. This is to exemplify and show how many satellites edge computing could be used on. What happens on the market is that it goes towards a defensive direction. The most important thing in this is what is called by the Ministry of Space Development Agency, the SDA in the US. The SDA sets the standard on the small satellite market, which is satellites up to 600 kilos or the size order. It is incredibly clear that the model of demand comes from the SDA in the US. The SDA recently went out with the intention of trading in what they call Trans-3 next year, which was up to 300 satellites. Furthermore, the value of these military satellites is higher than commercial satellites, so it is a lot of money that it is about. It is also the reason why they can set standards in the market, which means that other customers, compared to other applications, will then have to buy similar satellites. This creates what we call a hybrid segment between New Space and traditional. It is New Space technology, but with a slightly higher demand. Demand for availability, performance and so on. Also a slightly higher value on these. This is incredibly important. This is driven by the US, as I said, by the SDA. We expect that this trend will come over the whole world, in the long term. It will take a while, maybe a few years, but it will come. To meet these hybrid markets, we who come from New Space, we have to move up, first of all through availability and availability. That is why we invested last year in building our own production apparatus, and why we have invested a lot, as we talked about in the previous quarter's report, to standardize our products. Our goal is to work up in this hybrid segment. We are now in the sub-section, but we see that we have great and clear possibilities to move into this segment. It is driven by what can be called a defense-oriented LEO, Low Earth Orbits. That is where the large number of satellites will be, and the great value will be in the future. For the traditional suppliers, to be able to meet these requirements, they need to, which we have built into our technology, they need to work with price performance, to get new technology and shorten their lead times. We have set up our strategy to have high development time, short delivery times and high performance. An example of this, which is quite interesting, is that Sweden has been a bit of a hook-up with this trend, even though it is only a form of one demo project with Denmark. But Sweden also recently said that they will invest one billion in space defense, that is, not to the space administration. Space administration is linked to ESA, and ESA is responsible for NASA in the US, so it is more exploration than defense. So this was one billion in space defense that Sweden was up to. And then it is this demo that we as the only Swedish company are involved with. And it is a demo that is focused on using edge computing to apply AI in space, to get fast information, in this case mainly to monitor the speed up in the Arctic. Instead of waiting for the ground station to pass and load data, on this satellite there is a modem that is always connected to satellites in higher planes, so you will be able to send within a minute the message when you find a ship in the Arctic. And this is exactly what the Americans and the SDA are doing. They are trying to go from having strategic information from space to tactical information, that is, information that can be used directly when you are in a battle situation, if you think of defense solutions. So if we were to summarize how we see the market, we work within space computing. Within space computing we work within the segment edge computing. Edge computing still has a low penetration when it comes, that is why it grows faster. We then come in with an non-traditional solution. We move from new space to this hybrid market. We are counting on being able to take market shares. One of the things that also differs when you come from new space to accounts, when you come from traditional, you have a softwares-centered approach. So we usually say that we deliver both hardware softwares and services to our customers. This leads to our medium-term growth ambitions being 30-50%. If you look at the market potential, the number of satellites has increased quickly from 21 to 23. Those who have been easier to believe that you can get in edge computing, they have increased from 154 to 42, that is, 50% per year during this period. As I said, the ones we could work with today are the ones that will be sent up either next year or the year after. If you look at the market trends, it is this Leo Defense, that is, the defense-oriented Low Earth Orbit, which is the most important and fastest growing segment. It is driven a lot by the US and this space development that is under Space Force in the US. This creates the hybrid market that we work with to move up, and we have our goal to move up in this market. So we are looking first-hand at what we see in the future, is that we will both have commercial defense customers, but we see that defense customers will be more important. And we also see that the US will be very important to us. That is also why we took in money together with Next and we are looking to increase our presence in the US during next year. If we look at our goals, we have had goals for 2024. We have had goals to reach TRL 9 for IX-10. To reach TRL 9, the customers must shoot up the computers in the room, and unfortunately, we have our first customer for IX-10, with us that their shooting has been delayed until the beginning of next year. We do not see that this directly affects our business opportunities, but of course, the earlier the better, you could say. But it is not really in our hands. We have delivered a number of IX-10 to different customers. We have a good production capacity. We have received one more constellation project, which was batch 2 for the European small-sized customer. We are counting on our goal to get a little more constellations projects during the year. We also wrote about this in the quarterly report. We have had a high production rate during the end of Q3 and Q4, so we are counting on our growth to be 70% or more during the year. Our long-term goal is 30-50%, or in the intermediate long-term, is still there. With this, we open for questions. If you have questions, you can write in the chat, and we will try to pick them up and answer them, for the best of

our ability. I got a question about TRL

-9. TRL-9 is a technology readiness level. It is a standard scale used in the space industry. It is also used in other industries now, but it came from NASA, USA. Technology readiness 9 means that you have gone through all the qualifications. When you go through the qualifications, which we have done for IX-10, you are on TRL-8. Then when you get them up in space, they show that they worked in space. We reached TRL-9 for IX-5 during 2021. We have average times. So now our next goal is to reach TRL-9. To do that, we need customers or partners who are shooting up the towers in space. Unfortunately, there has been some delay with one customer, but that will be in the beginning of next year.

How do we

see the cooperation with Moog? We have also received a question about Moog. Since 2019, we have had a license agreement with Moog. Moog is the division Space and Defense that we work with. Moog Space and Defense has a license on our IX-5 and IX-10 technology. During the previous year, we also delivered parts of our IX-10 to them. We have both a license agreement and within the framework of the license agreement, we also deliver parts of our data solutions to Moog. Moog is a traditional supplier. They are based on Radhard. We consider that it is a good complement to us. Furthermore, it is a market channel for our technology. We see it as a positive complement to us. Moog has also received high credibility in the US. This means that we have a good chance to have active markets in the US. This is part of the reason that we will go in more during next year. We also have a distribution agreement with Moog. Moog has sold our Junibab products. This is an agreement that we also sell directly to the customers in the US. Sometimes it goes via Moog and sometimes it goes directly to the customers in the US. It has also been good for us to give credibility to Moog for wanting to take our products. We are positive about a continued collaboration with Moog. They are a traditional supplier. They are on another level of price and do not have the same delivery time and speed as we do. This is why they have chosen to license our technology.

We are

very much against the competition for standard quality. I will go back to the presentation. We come from Newspace. What characterizes Newspace against the traditional suppliers is that we have new technology. We can have faster development cycles and more innovative technology. We can have shorter delivery times and high performance. But we do not have the same tolerance as in the traditional industry. In the traditional industry, you have gone to the moon, to Jupiter, to the moon and so on. Newspace has adapted to commercial satellites in low earth orbit. It is still a tough environment, which we talked about in the last quarter report. But it is a little nicer. What happens on the market is that we are still in low earth orbit. But when you get into more military-oriented applications, you increase the requirements. We who come from Newspace have to improve. They from RadHard have to try to have shorter delivery times and high performance. We think it is a good position to come from Newspace and to be part of the hybrid segment. When it comes to the traditional suppliers, we are at a completely different price-performance. But we are not RadHard, so we do not go first hand to send people to the moon. But as I said, what is on the market today is Leo Defense. It is where the big money is and will be in the future. The biggest competitors, we have a group within RadHard. There is Moog among others. There is Inner Flight in the US. There is Blue Marble. There is Beyond Gravity, they have been more like OBCR, Edge Computing. There is Seeker in the US. There is a bunch of different traditional suppliers. Then within Newspace there are a number of companies that are similar to Unibup. But there we see that we are at the farthest front. We have gotten our production up, we have gotten some bigger constellation deals. We have something like TRL9 and so on. So we consider that we are good among the challengers who come from Newspace. This with the election in the US and what happened in the US. It is clear that there is a made in US trend in the US. Within the companies there are many countries that you want to have your own. We still have the opportunity to work via Moog. So that has made us more American. If we are going to go further in the US, which we will see in the future, then this is something we have to consider. It is also a reason why we should build our business in the US step by step.

Question

from the audience. Question about Amazon. Amazon Web Services that we have been working with. And how their space strategy looks like. We have close cooperation with AWS. Now maybe we can think a little bit about how their space strategy and their space operation looks like in the future. We can read a little bit about that information that comes from AWS. How you want to interpret their approach. From our perspective it seems that they will not be as active in the future. This I think, should be able to do with the reversal that has happened in recent years. We might have to do with commercial space projects with a defense-oriented space project. So it might be that AWS's approach fits a little better for commercial constellations than defense constellations. But I would think that you should follow and read what AWS writes themselves. Our cooperation with them is still going well. Question from the audience. I have a question about valuation. In the company we focus on delivering. We have clear growth goals, clear technology goals, clear production goals. As you can see on this side, it is up now. The IEXT is new on the market. We have started to deliver. We have delivered the first unit at the end of last year and we have delivered more in the years. It will be launched in the space in the beginning of next year. We see that the IEXT is well positioned. We have also delivered parts of the IEXT to Moog Space and Defense for them to use in their projects. We see that we are doing well with our production. We have, as one of the few or perhaps only companies with the new space edge compute companies, have had a little bigger constellation project. We have a high growth rate and we intend to continue with that. It is our ambition. It is difficult for us to know what will happen with the valuation. We are fighting for the company in this direction.

Regarding

the direct emissions to Next, Next is quite competent and we think we need it. We want to increase our investments towards the US, which is also one of the important reasons for the direct emissions. That is perhaps the most important reason. The competence from Next and that we want to invest more in the US. Next is also the one we are writing in the report. They are good at soft goods, business to business and have experience from the US market.

The

penetration of edge computing is low. We do not have an exact number for that. It is difficult to get market reports on that, as you can see external data. We have our own opinions and we say that it is still low. But it is growing faster, so you can maybe calculate what will happen in the future. Low penetration and faster growth. We also believe that when we come from New Space, we will be able to market our shares in edge computing.

That

is our goal

of -50% growth.

We have a question about the insider owners. It is nothing that we as a company have any specific opinion on. We have not been

told about that. We are waiting for one more minute to see if there is any question. That is also a good thing.

We will have an insider meeting, maybe in a few days, and we will have a meeting with the insider owners. We will have an insider meeting on November 26. It is possible to register on LinkedIn and our website. We will talk more about the market, our strategy and our production. So you are welcome to our insider meeting on November

26. If there are no questions,

we will close the meeting. Thank you for your interest and for taking the time. We look forward to hearing from you again. Thank you. Thank

you.