Unibap AB (publ)

Welcome to Unibab's presentation for Q1.

As usual, we will record this broadcast and then post it on our web. You are also welcome to ask questions during the entire presentation. You write the questions in the chat and we pick them up halfway through the presentation. Today it is me, Johan, the CEO, and then we have Emil, our CFO. We have four agenda points. We will go through Q1, Q1's finances, some of our highlights. Then we will talk about defence and the US, our plans in the US and how the market looks. And in the end, we will conclude with our ambitions for this year and in the future.

Let's start with financials. Go ahead, Emil. Thank you, Johan. For the second quarter today, we are doing the strongest quarter in terms of revenues in Unibab's history. The strongest contributing cause to that is a defense concentration that we have delivered on, and growth year-over-year is 63%. When it comes to our moving results, we make a profit of 7.7 million, or 21% against revenues. Det visar ju på vilken skalbarhet vi har i vår affärsmodell. Och då ska man dessutom ta med att det finns negativa valutakurseffekter i vårt resultat på ungefär två miljoner under det här kvartalet också. Som ni kan se så har vi ett negativt operationellt kassaflöde som är hänförligt till mindre förskottsbetalningar i det här kvartalet. And as we have said earlier and also written in the report, we will have twists and turns between quarters when it comes to our operational cash flow. When it comes to our netto between activated work and deductions, we see that from the negative netto in the last two months, we now have a positive netto of these two parts. This is due to new models of ix10 and our SKOS that we are developing right now. If you look at our EBITDA-C, where we eliminate activations, you can see that, from a rolling 12 perspective, we have a positive result.

Thank you, Emil.

Let's move on to the highlights. The quarter was not strong in terms of order. We have seen a high market activity. As before, it is the largest market in the USA, but we also see that a lot of things are happening in Europe now that are generally known, especially with defense investments. What we have done during the quarter is that we have finally established ourselves in the USA. We have two subsidiaries, but actually the business is happening in our LLC, which is registered and up and running in the USA. We have two employees now. Vi planerar lite färre ytterligare rekryteringar under året. Vi har sagt att vi ska ha en kostnad på ungefär 10-15 miljoner under 2025. Vi har fått exportlicens nu efter kvartalet för den order vi fick i höstas. Den var beroende på en exportlicens. Den har vi fått nu, så den kommer vi leverera ut under året, vilket är bra. That was also according to expectations. In the afternoon of our annual vote, we will announce a name change. As you may have seen on the PowerPoint, we started by calling ourselves Unibap Space Solutions, but the formal decision will hopefully be in the afternoon of our annual vote. The reason we chose to change the name to Space Solutions is to emphasize that we have completely changed our business to Rymd since 2023. If we look at the market, we usually talk about the number of satellites and the number of satellites that are relevant to us. And there are many satellites that are up in space and most of them that are up in space, this number of active satellites, they are in this so-called low earth orbit, that is, near Earth. And that is also what is our main market. We have a few single customer projects where you can go to Månen and where you can go to GE and so on. But that's a few cases for us. The largest volume and where we also see the largest activity is at LEO. Of these LEO, a large number is sent up per year. So you see that in total there are 8,000 open, but it is sent up over 2,500 per year. So it's a quick increase in the number of satellites in space. What we see from 2023 to 2024 was a small decrease in the total number of satellites. It was the first time in a long time. You can think about if it was a little blip or if it was a trend. We think it was a little blip on the market. So the total number of satellites sent up is 2,700, about 2,800. Of those, there are a large number of these mega constellations, Starlink and the like, and that's not our market, that's not the market we're after, but we're after these other satellites, and that was about 800 last year. And among those 800, we have a little different relevance. Those that we have the highest relevance for are remote sensing, and that's either because the so-called earth observation, but it can also be for defense, and then you talk about ISR, intelligence surveillance and recognizance. It can be signal scanning, it can be optical surveillance, or it can be radar satellites. With nuclear defense and civil defense, you could talk about spy satellites or scanning satellites and the like. So remote sensing is of course our most important segment, and it has increased, and it is also what is Much driven now in these defense investments, what is driven by many defense investments is that Europe, for example, will have its own capabilities. You have been very dependent on the USA for spy satellites. So we see that it is about 400 satellites, almost 400 satellites that have high relevance for us. And it's a good market that is not yet Most of the satellites that are sent up do not still use edge computing. It is an addition that is penetrating this market now. Our goal is to grow quickly and take market shares to position ourselves. If we look a little forward, we see that The number of these relevant satellites for us will increase. We see that they will increase in a number of years, up to maybe 900 satellites a year. It is a bit difficult to predict what will happen beyond that. It may happen that there will be a fill in space, that it will start to be full and that it may plan out. But as we see it, there is many years of growth ahead of us. So our goal is, the company, is to take market parts, to position us on this growing market now. The interesting thing is that the US is generally five times bigger than Europe, but things have happened in Europe, and this is what we can call the awakening. We see a high market share, both in the US, because it is such a big market, but also now more and more in Europe, so we see that as positive. It is of course driven by, perhaps not so good reasons, that is, insecurity in the world, but for us and other companies that are If you are focused on defense, then it is a good market development. We have shown this picture before, it is on how we see the market and the positioning on the market. Traditionally, there has been new space and then there has been traditional, or sometimes we say old space, but traditional. And they have basically never met. NewSpace has grown in recent decades. It is among other things from there that SpaceX comes. You work hard in NewSpace to bring in new technology, fast innovation trends. Traditional is driven by the fact that it should never go wrong. It comes a lot from when you have people. So you have had a never fail approach. So these have been completely different. Det som har hänt de senaste åren och vuxit fram är ju att man främst i USA, US leading away, är ju att man vill satsa på fler antal satelliter, konstellationer för försvarstillämpningar. Och då kan man inte gå den traditionella vägen, det är alldeles för dyrt och dessutom går det för långsamt, utan istället har man då velat... to incorporate elements from NewSpace. So we see this hybrid market that is, you can call it non-traditional, it's not NewSpace and it's not traditional, it's in between. You want to have technology and innovation pace from NewSpace, you want to have certain specifications. from traditional, so you want a little longer lifespan. Satellites have higher value, so it becomes a little more important with requirements and such, but you absolutely want to have speed and innovation from NewSpace. We see this hybrid market as a sweet spot. Satellites are worth quite a lot, but you are interested in new technology. There are two types of competitors. We and others come from NewSpace. For us, the question is that we should move upwards. And we have to move upwards to meet these requirements that you take with you from traditional, from RedHard. And that means that we have to improve our reliability. Customers should dare to use us in these slightly more expensive satellites. You want to have our technology, but it's about that you can trust us. If you instead come as a supplier or satellite manufacturer from Traditiona, you have to increase the cost levels, which are lower. They are of course worth more than NewSpace, but the price levels are much lower than Traditiona, because you have to send up many satellites in these constellations. You want to have the technology with performance, you want the innovation pace and lead times that you have managed to open in NewSpace. So this becomes a mix, and it is a race, you could say, between suppliers and competitors from NewSpace and Traditional. And we see that we are good among those who come from NewSpace. We have come the longest among them, so we usually say that we are leader of the pack there. And our goal is to move quickly up towards this hybrid market. And we see that we have been able to take defense deals in the USA through our partner MOOCs. So we see that we have a good position and we move quickly upwards here. So our strategy is focused around this. We talk about innovation and trust. Trust has several aspects. It's both that you can rely on our products, but also that you can rely on us as a company. We want to be financially stable, we want to have delivery capacity, we want to deliver on time and so on. There are many things to be able to be a supplier to a defence project in the first place. So, we are talking about performance. We come from NewSpace, so we are going to deliver something new, and that is performance, high performance computing in Space. And we need to improve our trust step by step, and we have worked hard with that. We have set up our own production and we have started to deliver to larger projects. And when it comes to our products, we are moving up step by step, so we have higher levels of qualification for the iX-team than we had for the iX-femes, or what we had with Generation 9 before, the so-called Q-seagulls. And when we are now planning for the next generation, we are going to do fast innovation cycles, we are going to take another step. The iX-team is well positioned, but we still see that we want to take a little step up to Trust all the time. But it will also go fast, so we see a two- to three-year cycle between generations. Another thing that we take with us from NewSpace with the innovation that we will bring to the hybrid market is easy to use. We come in with Linux computers. It's easy to find programmers. It's easy to program. There are a lot of tools, tools you can use on the market. We are working hard to increase our availability. We start from the technical side, we start with the operating system, drivers. We have also launched, and we will also have business in the end of last year, and now that we have started to shoot up into space, this Univap Loom, our pre-processing of space data. I was part of the RIDE constellation in Italy, which is up to 40 satellites, where the first ones started to be launched. We work, our strategy is step by step, down from the technology stack, to increase our software offer. We also work with establishing a so-called ecosystem of third-party suppliers, so we have had over 40 software applications that have been tested on our computers up in space. We are constantly working to increase that. If we don't have softwares, we have partners who have softwares for our customers. The other part of this ECDU is plug and play. We have services, we have customer support, but we also work with something called compliance or matrix or compatibility matrix. be easy to integrate with other equipment satellites and it can be the ones that are around us in the flow. It can be radio apparatus or it can be cameras and the like. And we have it continuously and we see a very large interest from these other suppliers to satellite integrators to become compatible with us. So there we have a rapidly growing compatibility matrix. This is one of our competitive advantages. We come in with high performance, easy to use and we develop step by step our Trust. So that you dare to use us in slightly more expensive satellites. Part of our strategy is to establish ourselves in the USA. It is the largest market. We also see that the products are in the right position, which we see that we have, and that we are moving in the right direction all the time. Then we will have sales coverage. As I said, we have two sellers now. We will hire another person during the year. We also want to be more American. We work with various cooperation partners to be certified or qualified for defence permits in the USA. What has arrived now above is the European awakening. And in Europe, we have a very good position, we see. We are seen, due to this ecosystem and the competitive ability and the like, as a solution provider. That we can offer a solution in some way for edge computing. We have chosen to have a defense focus in Europe now. We believe that it will be the market that will be the first to adopt edge computing in Europe. In the US it is a little different. In the US it is both defense and commercial.

In Europe it will be a little more defense that drives edge computing. Our ambitions.

During the year, a large number of our computers will go up in space, more than 30. We have already sent up our first standard software, which was Loom preprocessing. We see it as an important part of our software strategy. Then we will reach TRL 9, the highest technical standard for the X10. The first step will actually take place already on Saturday. On Saturday, JAXA, the Japanese Space Agency, will send up our EX-10. It is at least planned to be sent up on Saturday. Then it can depend on the weather. In a SAR satellite, a radar satellite that JAXA sends up, and that will now be on Saturday. It is the first. Then there will be another number of EX-10s here in the relatively near future. Among other things, another one from JAXA and then some American customers. and some are European as well. As I said, over 30 computers, iX5 and iX10 in total, are going up this year. When it comes to our operations, we have established production. We want to improve our redundancy during the year, so we can With higher security so that we can't have a stop in production. We want to have a capacity of over 100. That does not mean that we will deliver 100, but we want a capacity of up to 100. And we are at that now, but we need a little more redundancy on some production steps. We will invest in that, make a little less investment over the years. On the business side, it is still the case that most of our projects and businesses, we have customers in a qualified project, that is, after being designed last year, we managed to convert three to Constellation, that is, to larger businesses. Our goal is, of course, that when we go through a qualified project, that they later will lead to larger businesses, and we hope that even this year we will be able to convert some to Constellation. But you have to go through a qualified project to be able to reach the volume businesses. And since we want to grow, we want to start InDesign with as many people as possible. We will increase our presence in the USA, as I said, with a few more people, some person. We need that now, at any time in Europe. So we will also invest in Europe. We have a strong position, so we may not really need add more resources, but we need to have a little focus on Europe as well, especially towards the transport sector in Europe. Our goal is of course to grow, it is to position ourselves on the market. We will grow by 30-50% on average, and we are still at that. The goal specifically for this year is of course to reach over 30, and we still see that we are still at that goal. It does not seem like I can get your current location. We have talked about our margins earlier. We have come from a situation where we made a lot of customer adjustments. We have managed to get rid of that by standardizing the products. So we see that now we are on our way to a situation where we get a little bigger deals. Then it will go more towards what is called flight hardware, and they have the best margins of our hardware products. So we see that when we get a lot of constellation business with a lot of flight hardware, as we had now in Q1, it was a defense constellation business that dominated the delivery in Q1, then the margins will be good. We will also increase our software content step by step. It will of course need to accumulate over time. So it's not that big right now, but it will increase step by step. Both by accumulating in the form that we sell as annual licenses, but also by adding to our product portfolio. But it will happen step by step and gradually over the years. So, then we came up with questions. We have received a question about Starlink, which we have basically cancelled. We exclude what we call mega-constellations from our market. That doesn't mean that we won't be able to address them, but we don't see them as the most relevant ones, and we have a greater chance right now. When we talk about the fact that there are hardly 400 satellites, we have completely cancelled Starlink and others.

I have a question about Israel.

We have had deals. Then the deal was canceled. At least the last phase of it was canceled in connection with the Hamas attack there a few years ago, October 6th. It was not good for Israel and it was boring for us, but even worse for Israel that they were attacked. But of course there are oil companies that are active in Israel, so it's It is a market. Now we see that the US is the largest, Europe will grow the fastest, and then we have a good position in Japan and Korea, because we got an order from Contech in Korea, and we also have these businesses with Jaxa that are now going to be sent to South Africa. So we are actually focusing on the regions where we have the greatest potential. We have a question here about how much hardware and software we have. We don't have it publicly yet, but not a large part of it is software. But we see that it will accumulate through annual licenses, and we also see that we step by step increase our product portfolio in software.

It is an important part of our strategy, easy to use.

We have a question about the fact that the US has 93% of the revenue in the previous year. That will fluctuate a lot, so you have to see it over a longer period of time. After Q4, we presented the distribution in deliveries and orders on the number of units, not in money, but in the number of units. And then we saw that when it came to ordering last year, there was a shift towards the US and towards defense in ordering and relatively deliveries during last year. So it's our investments. We started investing in the USA last year, but we did it with people from Sweden, higher relatives, much higher level of activity. We also negotiated agreements with MOG, Sadeblik, Exclusiv, so it opens up so that we can start ourselves. And now we have employees. So we see that the USA will be important. But what has happened lately is the European awakening. But the USA will be important. You have to see it a little longer, would be the short answer, than quarterly. In Asia, it is in the first hand, the question here about the market in Asia, which was a small part of this quarter, We got the export license to Korea on the order we got on the smaller constellation last year. So Korea is important, Japan is important, and we are also actively working on Singapore right now. But first of all, Korea and Japan are important markets. But the United States is the largest. Europe will probably be the fastest growing. We received a question about order entry and order book. We do not publicize order book. Order entry was reported during the quarter when it was weak, but the market activity was high. We see that both order entry and revenue, and thus also results and cash flow, will continue to fluctuate quite a lot between quarters. Some quarters may have higher revenues, others may have higher rates, and so on. Or some quarters will collapse. But you will probably have to look at it from a slightly longer perspective than quarterly here. We are still in a growth phase where it will fluctuate. Especially the slightly larger businesses will get a big impact. både på ordninggång och intäkter och resultatkassaflödet där, men också då. Så det kommer att fluktuerar mellan kvartal, men det var ju inget bra ordninggångskvartal i Q1, var det inte. Men marknadsaktiviteten var hög, har vi ju sagt. Vi får ju en fråga här om de viktigaste use cases, användningsfallen, som driver tillväxten, och det är ju Actually, two. We usually split between commercial and civilian customers. This is the most important use case, that you can shoot so much more of the satellites. You can increase the value that each satellite generates, and you can do that in a few different ways. Either by processing the data in space, then it is not limited to downloading bottles to Earth. Because you get that you compress or you refine the data in space, which makes the amount of data decrease. So just going from raw data to insights in space makes you basically be able to use the entire capacity of the satellite, while previously you might only be able to use a few percent. We have seen cases where customers have been able to exploit their satellite up to 40 times. That was an extreme case. Normally, it might be 5-10 times more utilization. This is a way to generate a lot more revenue from the satellites. The second way for commercial and civil customers to get more satellites is that you get these software-defined, if you can use over-the-air upgrades, as you usually say. Add customers by adding applications on the satellites, under the satellites and constellations for life. So everything doesn't have to be clear. You don't have to have all the customers, you don't have to have all the functionality ready when you send up the satellites. You can continue to process. It's also just like this with the external grids, that it's better to talk about investment for a civilian or commercial. So for a civilian and commercial customer, it's more money, really. When it comes to defense and emergency service, or civil defense and rescue service and the like, it's different. Of course, they also want a lot out of the satellites, so that's good. But even more important is time. Time is valuable when it's crisis, you can say. So it's about, you usually talk about latency. You want low latency. Even better is near real time. And best in real time. And with real time you mean, in this case, maybe within In the quarterly report, I wrote about an incident here during the first quarter with the fires in Los Angeles, where none of the existing satellite constellations managed to deliver any data that could actually be used by the rescue services for rescue efforts. But on the other hand, you could map after some day what had happened. So within the military and civil defense, it's about getting information so that you can take measures. And that's what you call it within the military tactical information instead of strategic, which is that you see what it looks like. And within, yes, we usually talk about real-time intelligence too. So it's on the commercial and civil side, make more money, by getting more satellites out and being able to continue for the rest of their lives. And on the rescue side and the defense side, it is to get the information when it happens. We have a question about what we mean by high brand activity. It can be interpreted as that we are in dialogue with many customers. Then, of course, the dialogues are in different phases, but it is

There is a lot of customer dialogue going on.

We have a question about tolls. Yes, of course, we are also affected by tolls. Now we have, as we determine, since we come from NewSpace, we see that we have a good price performance against these traditional suppliers. The traditional suppliers are mainly in the USA. So a 10% in debt will not significantly change our price performance. It is clear that it is 10% that we could have taken out in price, but we do not see that it will be decisive. We compete with a significant other price performance.

Vi har inga fler frågor just nu. Men vi väntar litegrann här för att se om det dyker in.

Vi får en fråga om varför affärerna drar ut på tiden eller om det är normala säsongsvarianter. Vi säger ju att det svänger mellan kvartal och det har vi sagt under ett tag och det beror på att det är så. Det svänger mellan kvartal. Det gör det. And that will still be considered normal for a company that is in the phase that we are in. So we see that it will turn.

It will continue to turn for a while. So we might wait another minute to see if we have any questions.

Nej, ingenting.

Då tackar vi för intresset. Inspelning kommer finnas på vår hemsida strax. Tack för att ni tog er tid och lyssnade på oss. Tack ska ni ha.