Ovzon Interim Report January–June 2023

• Revenue and adjusted revenue totaled SEK 69 million (78)
• Operating loss and adjusted operating loss totaled SEK -28 million (-9)
• Profit/loss after tax totaled SEK -24 million (16)
• Earnings per share totaled SEK -0.45 (0.32)
• Cash flow for the quarter totaled SEK -238 million (52)

January–June 2023

• Revenue totaled SEK 126 million (178). Adjusted revenue totaled SEK 126 million (174)
• Operating loss totaled SEK -52 million (-26). Adjusted operating loss totaled SEK -63 million (-26)
• Profit/loss after tax totaled SEK -43 million (4)
• Earnings per share totaled SEK -0.82 (0.09)
• Cash flow for the period totaled SEK -167 million (-44)

Significant events during the quarter

• Order of USD 4.8 million for SATCOM-as-a-Service from a European customer
• Follow-up order of USD 0.3 million from Colombian partner Bansat
• Follow-up order of USD 0.6 million from French partner Nigma
• Order of USD 0.3 million through Vodafone Italia for continued SATCOM-as-a-Service to the Italian Fire and Rescue Services
• Order for SATCOM-as-a-Service from the Swedish Space Corporation (SSC)
• Updated schedule for Ovzon 3. The launch will take place between the end of 2023 and the start of 2024

Significant events after the end of the quarter

• Launch of the new mobile satellite terminal Ovzon T7
• Order from the Italian Border Police for Ovzon SATCOM-as-a-Service
• Service contract renewal from Airbus Defense and Space for continued support to the UK Government

Outlook

Due to the weak start to the year, the company’s assessment is that revenue for 2023 will be in line with 2022.

The company has provided an update on the launch of Ovzon 3, which is now expected to take place in the period between the end of 2023 and the start of 2024, given that the final integration and tests fall out as planned.

CEO comments

New orders, launch of Ovzon T7 and progress with Ovzon 3

The second quarter and the first half year of 2023 has been intensely focused on customer success, shaping growth and delivering on the key development programs that Ovzon is embarked upon.

Satellite communications is today an integral part of communication technologies that connects and powers the world’s critical missions. The continued geopolitical tension and environmental changes through global warming, coupled with the fact that the refugee streams have more than doubled in scope and natural disasters such as floodings, storms and wildfires fill the news daily. In critical situations it has become evident that the only means of guaranteed communication to protect and connect people, businesses and countries is satellite communications. For the Ovzon team and our customers, this harsh truth has become more and more obvious. This development, coupled with Ovzon’s high performing, resilient, fast mobile connectivity and 24/7 delivery and support, has given us renewal of contracts with current customers such as the UK and US Governments, Italian Fire and Rescue Services as well as acquiring new customers such as the Spanish National Police and the Italian National Border Police (Polizia di Stato).

Multiple new orders and renewals from key customers

During the second quarter we announced five orders in total of our Ovzon SATCOM-as-a-Service solutions, and another two so far after the end of the quarter. The first order came through our partnership with Nigma Conseil for Ovzon’s On-The-Move (OTM) satellite terminals. The second one, and the largest order in the quarter at the value of 4.8 MUSD, was from a European customer for Ovzon SATCOM-as-a-Service. We were also pleased to have closed a contract, in one of our home markets, from Swedish Space Corporation (SSC). From a humanitarian perspective, we were very proud of the order through our partner Bansat to provide mobile satellite connectivity to the UDAPV (Attention Unit for Vulnerable Population), a department within the Colombian Civil Registry.

In June, we renewed our service to the Italian Fire and Rescue Services, this time through Vodafone Italia. With Vodafone Italia, who has frame agreements with Italian government authorities such as the Italian Ministry of Interior, Ovzon gets a fresh start in Italy. Even though this renewal is reduced in scope, we believe our prospects of increasing this service and deliveries to Italian government authorities will become more progressive with this customer as a reference. In total, our order intake during the second quarter amounted to 5.5 MUSD.

Our progress in the Italian market was further solidified with signing a new customer after the quarter, the Italian National Border Police. It is a positive signal that our position and reputation leads to new customers and new contracts. When it comes to the situation with our former Italian distributor, resulting in bad dept provisions during 2022, we still have 7 MSEK of related exposure in our balance sheet. We have received some payments during the quarter, but unfortunately, we still see delays in payments.

Ovzon 3 in its final phase

The tests, assembly, and finalization of Ovzon 3 has progressed well during second quarter and the spacecraft completed the so important dynamics test in early August. While important work still remains, the satellite is in the final stages of development. I am pleased to confirm that our adjusted timeline, that we communicated in June 2023, currently holds which points to a launch of Ovzon 3 no earlier than late 2023 or early 2024. We will communicate a more narrow and specific time for launch sometime in the fourth quarter.

As previously communicated, the rescheduling of Ovzon 3 is not impacting our current commercial activities or the delivery of Ovzon SATCOM-as-a-Service to our current and new customers worldwide.

Market launch of Ovzon T7

We are excited to have announced the market launch of the industry first mobile satellite terminal Ovzon T7. This unique mobile satellite terminal has the smallest and lightest formfactor and weighs only 2.8 kg.

It has dual-modems of which one is an On-Board-Processor modem. All these distinct new capabilities without sacrificing the highest performance. The demonstrations that we have already started to perform with customers and partners are showing strong interest.

Ovzon T7 is specifically designed for military, civil defense, police, and emergency services. It is designed for use with Ovzon 3 and is the start of the go to market activities with our unique next generation SATCOM-as-a-Service based on Ovzon 3, Ovzon On-Board-Processor, Ovzon T7 and Ovzon T6. We believe this will further boost our ability to deliver value to customers and set us apart from competition in terms of performance, mobility, resiliency.

Focus on growth and delivery for the rest of 2023

For the rest of 2023, we are focused on driving growth, and we will obviously continue to concentrate on the completion of Ovzon 3 to achieve a launch as fast as possible.

We have also added new key industry experiences, competence, and leadership to our Executive Team, with emphasis on growth, business development, delivery and development of our crucial technology programs.

We continue to work closely with all stakeholders which includes customers, partners and end-customers to deliver value and advance our market position. We are confident that we will be able to meet the world’s rapidly increasing need for high performing, resilient and fast mobile connectivity via satellite.

Per Norén, CEO Ovzon

Webcast
In conjunction with this interim report, a webcast will be conducted at 2:00 pm CEST today August 18, 2023. Ovzon’s CEO Per Norén and CFO Noora Jayasekara will present the results and answer questions. The webcast can be reached via the following link: https://www.finwire.tv/webcast/ovzon/q2-2023/

The presentation will be given in English, with the possibility of asking questions in Swedish.