Unibap AB (publ)

Welcome to Ljungelbabs Q4 presentation. Thank you for showing interest and taking your time. Let's start. The presenters today are Johan, the CEO, and Emil will help me with our CFO. We will talk about the financial results for Q4 and the year. We will discuss the highlights during Q4 and then we will take a little development about the US and the defense. With some market descriptions and brief descriptions. And then we will conclude by discussing 2025, our ambitions for 2025. So,

here you go, Emil. Thank you. The company is doing its best quarter so far in terms of turnover. And we came in just under 90 million in turnover for the whole year. We went out earlier and said that we would do 80% growth during the year, but it ended at 80%. And it is primarily a consequence that we delivered faster than we had planned in our views on customer projects, above all. So that's what drives the additional 10%. And as we said earlier, the majority of our income comes from the year. Earlier we said that the company is in a phase of transformation right now when it comes to going over to a customer or product perspective in our deliveries. We are through with that now and we would say that we have the whole conversion of companies that way. It is clear now. Absolute majority comes from hardware and we will build up a higher number of license revenues during the coming periods. When it comes to EBIT, we deliver a positive EBIT result driven by turnover, but also that we are getting lower on OPEX than we had for Q4 last year. We get a negative effect of capitalization from our R&D against signings, when we have started signings for primarily our IX10 project, which we have previously closed the phases in the project and started signing off. The company shows a positive cash flow per month, a lot is driven by. We have a higher per quarter cash receivable and prepaid income, mainly due to pre-sales invoices against the orders we won in Q4. During the year we have also built up the deposit, depending on whether we are going over to a product company instead of a project company. But there we also see a weak reduction of the deposit during Q4, due to the deliveries we have done and the increased turnover. As we have said earlier, there will be swings between the quarters when it comes to turnover, profitability and cash flow. In the future we will start looking at a result that we call EBITDA, which is EBITDA, where we exclude capitalization from our R&D. Because it is a close operational result that is against what we deliver. If you look at the left graph, we can see that the capitalization has decreased, especially during Q3 and Q4. We have closed the development phases for IX10 and IX5 and we have moved over to the pre-studies for next generation products, which means that they have gone down. We have also started to exclude the closed generations, and it has been a negative EBITDA result during the year, especially during Q3 and Q4. If you look at the accumulated results during the year, we have a negative EBITDA of 3.2 million. But it is very good that we show a positive EBITDA of results for Q4, which is very strong. That is the result we aim to improve during next year.

Thank you Emil. Some highlights for Q4. We of course carried out the drawing of our options. It was a welcome addition to our cash flow. We thank you for that. Then we got three slightly larger orders. We got an order from Moog Space and Defense. It was a second batch. We got a corresponding order during 2022. So that was the second batch. That was very important for us. Partly because it is a large order, but also because it is a strategically important order. Then we got the first order on free-standing soft goods. We have a strategy to build up our soft goods offer. We already sell our soft goods license to our hard products. We also want to expand our soft goods offer. This was the first order on free-standing soft goods. We see it as an important step. Then we got the first order from Korea. It was from Context Space Optics for a smaller constellation. This order is a target for export control. We are waiting for our message about export control. It is an important breakthrough in Korea. We also went directly to a constellation without passing a qualification project. We see that as a sign of the credibility we are building up in the market. Let's look back and look forward. We started our history with sending up Q4-cards. We sent up over 50 of them during a time period. Then we went on to build complete computers. Then we went on to build complete computers. Then we went on to build complete computers. We have now paid 79 of IX5 and IX10. 24 are engineering models that are used on the ground in the lab to develop satellites. Then 55 flight models are going up in space. It may take a while for them to be delivered to space. The purpose of flight models is to go up in space. Flight models have better margins by having a higher price. We have nine units in space. Two of these nine came up in January. Two IX5s came up. That was very good. We have been delayed in getting the first IX up again. The customer who was going up first, but could be delayed, that was nothing we could do. The first IX will come up during spring 2025. We have a large number of units that will be sent up. We have delivered well the last few years. They will come up in space now during 2025. We expect more than 30 computers to come up in space. If we compare that we have had seven before, up to 2024. Nine of them in January, that is a catch-up effect that will come up during 2025. It is an important year for us. 2025 now, in that view. The order during 2024 was roughly 102 million. That is double what it was in 2023. As you can see from the graphs, the graphs are based on the number of computers. We do not give a price for our computers. Here are the statistics on the number. We see that we got more orders than we delivered to the US. The US will grow. We see that we got more orders than we delivered to the defense projects. The defense part will increase. We also see that we got more constellation orders than we delivered to the constellations. The constellation part will also grow. We got three larger constellations projects during 2024, compared to one during 2023. So we have a plus two on the constellation project. Our goal is to go from a quality project to a constellation project. Often first the customers will try our computers, maybe send up some space, and then hopefully we will be in design and maybe some bigger business. If we look at the market, we see that the defense and the US will be in the market. It does not mean that commercial customers and Europe are unimportant, but there is greater growth and greater market for defense and the US in the future. What is different between commercial customers or civil customers, defense or emergency, is that we do not deliver the same solution. We deliver the same solution. It is what drives the customers. Most of our customers are working on Earth Observation, collecting ground data. The problem for the customers is to get a good business case. To do this, they have to maximize the use of their investments. There are bottlenecks with how much you can use the satellites, mainly because of how much data you can get down, both down in time and down to a reasonable cost. It actually limits the commercial value or the use of these satellites. The solution to this is to make more processing on board. It reduces the data that goes down. You can also have several customers. You can upload new applications, software applications. You can also upload software applications under the satellites' life span. This can have a big effect on the value you can get from your investments. If we look at the defense side, it is the first-hand satellite that we deliver. You need very advanced sensors to find small objects, from missiles to fighter jets, to speedboats passing through the Baltic Sea. What drives the defense satellite is time latency. You want to have a little latency. The problem is that it takes time to get data from space. What we can do is to reach real-time with processing on board. As long as the satellite is over an area, you can get the information directly. I will describe a little. This means that you can both control the satellites and get the information down in real-time, when they pass over an area. This increases the value enormously on the information you can get from these satellite spawning. Similar solution, but with two different angles. What we deliver is high-performance computers. We take ground technology adapted to the space. On these you use a lot of machine learning. We help customers with this, and they do it themselves. There is a large ecosystem that we have been involved in developing. We have tested around 40 third-party applications in space. There is a large ecosystem. Our software goal is to gradually increase our performance on onboard processing. In principle, high-performance computers in space make machine learning possible. With this machine learning, you can get what we said for commercial customers, that you can be more flexible, you can do -the-air upgrades, you can load up new customers during the journey. You can get cognitive satellites, that is, they can make decisions themselves. They can also be autonomous, or self-driving. With defense applications, you can get real-time insights. Our main commercial example is what we recently did. We got orders in two rounds. We got a frame rate, and we have delivered the first two batches to the frame rate. The Eridehi constellation is a constellation funded by the Italian state. Argo Tech Vorkun will deliver up to 40 satellites with very high performance computers. The so-called Revisit satellites will be back. It is an interesting area, they have advanced optical cameras. We have our IX5 onboard on all these satellites. We also have our software, our Goose, which we call our operating system. The order we got for the year was for what we called Loom, which is a pre-processing pipeline. We process the raw data that comes from the camera, and we package them in a standardized format that fits machine learning. The first one has been sent up. It was one of the two IX5s that were sent up in January. It will be sent up in total, and another 25, that is, 24 more until 2026. That is from the first two batches, and then there is a possibility for a third batch. What Argo Tech Eridehi does is that it is a commercial and civil customer. It makes it possible to get up to the surface. We have seen examples of satellites where you can get up to 40 times with our computers. It makes the possibility of throwing away investments dramatically. This is the purpose of Argo Tech using our IX5s on their satellites. It is to be able to get up to that level. More applications, more customers, cover a larger part of the circuit around the earth. When we think of defense customers, it is about time. Time is money, time is critical information. Normally, you are limited in space to take a strategic perspective. You can monitor infrastructure, see if something is happening, if something is being built, a flight base or something. What you want to do is go to tactical information, that is, real-time information. See what is happening now and get information about when it happens. There are three levels, strategic, operational and tactical. The goal is to be able to go to tactical information, that is, real-time insights from satellites. To get real-time insights, you need to do real-time processing on the satellites. We have seen that the number of defense projects has increased. We also saw that on the order process. We have a number of projects here in 2024. Sometimes we have worked together with French soft-farm defense companies. We got the second order from MOOC here in the fourth quarter. We have also drawn a smaller collaboration with a South Korean defense company. We also got the evaluation of our computers and AI solutions. We also got a smaller first evaluation order from an Italian defense company. A little bigger defense company in the fourth quarter. The defense activity is increasing. If you think of an example of what you can do on the defense side. This is an example from emergency or rescue services. It is totally analogous to what you think of the defense side. Defense and emergency are one category in contrast to commercial and civilian. Traditionally, if you want to be monitored, you have to have a fairly low resolution to cover a large area. What you can do is to see that there is a fire in the building. That is the traditional approach. This information can be downloaded after a few hours. That is good. If you have real-time processing on board with our high-resolution computers. You can process these images on the fly and make cognitive decisions. You could then trigger another sensor with a higher resolution to focus on the fire. You do not need to have these real-time capabilities. You also need to have more sensors. More sensors generate more data, which makes it even more necessary to have onboard processing. With this second sensor, you can zoom in and instead of seeing that it burns in a area. You can see where the fire hoses are. Specific points. If you also have a radar, which is a technology that is coming more and more on satellites. It is called SAR, synthetic-absorber radar. You can locate buildings and vehicles. SAR images can also be processed in real-time with our computers. You can basically pick out the coordinates for vehicles and buildings. Buildings are often on maps, but vehicles are not registered anywhere. If you want to initiate a rescue, you need to know where the fire hoses are. And where there are risks for the vehicles or the house. This can be done with our computers on the fly. You can also handle the amount of data from many sensors and process them all the way to object identification. That is, to run machine learning on board. And because you can also get down to the fact that the amount of data is decreasing so much. Maybe a thousand times. So you can send through very low or slow links. And these slow links can be connected all the time from the satellites. From the geostationary satellites, satellites that fly much higher up. And these satellites are always available. So you can basically connect to these geostationary satellites all the time. So as soon as something is discovered, you can act. That's when you can get real-time information. What is interesting is that we are involved in bi-prospects that Swedish defense took with Danish defense. What is interesting about it is that it has two sensors that you see down there. So if you have a multi-spectral camera and a radio receiver for signal tracking. Then you can put these data on top of each other. It's Data Fusion. You can see where there is a supply of ships in the Arctic. And also see if they are active and send radio communication. Then there is an IX-5 onboard on B-Frost. Which you can use AI apps to find these objects and do analysis. What is special about B-Frost is that it also has this radio-connection. It has a modem to connect to geostationary satellites. So it will be able to send out information immediately if it sees something. This is a typical example of what we see will happen on the defense emergency. To go from strategic to operational to tactical information. This is driven in the US. The US is putting 5 or 6 times more than Europe in total. If you put together militarily, civilly and commercially. Then it is 5-6 times more in the US. A lot has been driven by Space Force, who have gone over NASA when it comes to the budget. During Space Force, Space Force and Space Development Agency, they order and send up about 100 satellites a year. They have just started with it. They will send up a lot this year. They have a new approach. They buy ready-made solutions instead of project development. They don't buy on cost plus, which has traditionally been done in the defense industry. They have a two-year development cycle. Each year they send up a new batch of satellites. They should be better. And then there are very short delivery times. From contract, it is two and a half years until the satellites are up in space. In principle, everything must be pre-developed. Which means that there must be standard products available to use. They also have a clear process for introducing new challengers to the traditional defense suppliers. There is an on-ramp program to get in new suppliers, just because they want to keep up with the pace in technology development. This is the trend you see, for example, with an analogy of using commercial drones in Ukraine and the like. This is to get new technology faster in defense applications. We have adapted ourselves to this. We have leading technology. We have short development cycles. We have short delivery times. We can deliver a flight data in one month. We deliver to the first hand, which we have received directly, not via MOG. It has been these challengers in the US. Traditionally, the markets have been divided between New Space and Old Space, or traditional space, you could call it. We have had a technical license agreement with MOG. We have been able to get the license revenue when MOG has used our technical solutions for this traditional segment. What has happened is that it is driven forward, we call it a hybrid market. You want the technology from New Space, but you need a little better reliability than what you have had in New Space. You may have a life span, instead of 1-3 years, it should be 5-7 years. You need to meet in the middle between traditional and New Space, and that is the hybrid market. It is driven forward very strongly in the US, especially by Space Development Agency. They buy 100 satellites a year. We have been able to deliver via MOG. For example, the order we got at the end of the year was that we would deliver parts of our computers, not only technical licenses, but also parts of the computers, not only the solutions. It is a mix between a hybrid between MOG's technology and our technology. Our goal now when we are going to establish ourselves in the US is to address this hybrid market. We can already address commercial, civil customers with a little more New Space oriented. We have a number of challengers within this, which is more defense oriented. Our goal is to move upwards to cover this hybrid market. We need to do that by having higher sales. We also need to see that we will need to do more in the US. We expect to do more customer adaptation and soft goods work in the US. We will also adjust our future product generations a little more towards the US market, and the requirements that are set there. We started this in the US at the beginning of the year. We have set up a holding company, but the business is driven by an LLC called Unipop Space Solutions. We will start with sales activities right now, but as I said, we have a plan to increase and do more locally in the US. We will continue to support from Sweden, but we will put more and more of the business in the US. We expect to hire a few more this year, and it will cost the company 10-15 million SEK this year. We see this as an important and strategically critical investment for us, and we will continue to take market shares. The goal for 2025. On the technical side, there are many plans. It is very important for us, it can be said that it is a kind of breakthrough. We will also send up the standalone product in the IRIGID constellation. We will also reach the TRL9 for the IXD during the first half of the year. On the operational side, we have built up good product quality and production capabilities in the last two years. We need to work a little more on redundancy. We have some process data that is outsourced during this one month delivery period. We do not do our own cross-border assembly, but we do a final assembly test. We have some process data that is outsourced during this one month, and we plan to move that in. So we have total control over the delivery of the last month. We want to win more customers. We expect to do a smaller project, a quality project. Some of them have been put on hold now, we expect to be able to convert to a constellation project during the year. We will grow in the US, our business will grow and we will be able to take more customers. Our goal is to continue to grow with a average of -50% per year. We have grown more powerfully over the last two years, so we are a little ahead of the plan. This year we set the goal of at least 30% growth. That was the end of our presentation. Now we open for questions. If you write questions in the chat, we will pick them up and answer them. I forgot to mention that the presentation will be recorded and will be available on the web. You can

also check it out later if you want.

Thank you. We have a question about the Q1 report. We have a higher margin on flight computers than on FMR and EMR. When customers go from a quality project to a constellation project, the number of flight computers increases. This will improve our margins. We expect this change to continue. Therefore, we see that the margin should be able to continue or be improved in the future. We have also started with softwares. When we sell a flight computer today, it always includes a yearly license. Some customers choose to buy first year, which they will then buy later. This was the case with the Korean business in the end of last year. We are also building up a software business step by step. We see that we have the possibility to improve our margins. If you want to know more, I think it was in the Q1 presentation that should be posted on the web. We received a question from a post from Kreotech about an MOU. We chose not to publish it ourselves, because it was so early on and we were unsure about what it would lead to. Poland is an important market, one of the countries that puts the most in Europe. There is also a great defense interest, which is close to Ukraine and Russia. It is an interesting market for us,

but it was a very early stage. I mentioned three things

that you should choose from. From a customer perspective, we have high performance, easy to use and a very simple computer to use. It is fast to program, there are many third-party applications. When we talk to customers, we talk about high performance and easy to use. To get into hybrid segment, we have to add trust and reliability. We have worked hard with that in the last few years. High performance, easy to use and trust. Short delivery times, high delivery precision and good quality.

Long-term softwares.

Long-term softwares will be built step by step. We have not said anything about the speed. What we can say is that for a life-long flight computer, about a third of it will come from softwares. We have moved a relatively large number from hardwares to softwares. We have already built our flight computers. About a third of the life-long flight computer will be softwares. Beyond that, we will build the standalone softwares

step by step. We will wait a little while to see if there will be any more questions. We have a question about the fact that 30

% of growth was a little careful. We have the goal this year to grow more than 30%. Long-term, we have the ambition to grow between -50% per year. If we are over 30%, we are also counting on increasing our market share. Beyond that, we have the ambition to grow more than 30% per year. We have had this goal of -50% a few years now. We have delivered over that. We are a little ahead of our plans.

We have a question about the Batch 3

for the IRID constellation. We do not talk about the timing of that. We

do not.

We have a question about the EBCAC. The goal is to improve the measured running and improved operational results. We aim to get a positive cash flow. We will increase the cost base in the US. We aim to improve that.

We have a question about the Batch 3. We have a question about the Batch 3. We have a question about the Batch 3. We have a question about the Batch 3. We have a question about the Batch 3. We have a question about the Batch 3. I think

that the questions seem to end here. I think we will thank you for us now. Thank you for taking interest and took the time to listen. See you again. Thank you.