Year-end report, January–December 2022

January–December 2022

• Revenue increased to TSEK 356,993 (191,378)
• Operating profit/loss amounted to TSEK -46,958 (-113,383)
• Profit/loss after tax amounted to TSEK -2,079 (-83,854)
• Earnings per share amounted to SEK -0.04 (-1.78)
• Cash flow for the period amounted to TSEK -161,291 (208,880)
• The Board of Directors proposes that no dividend be paid for the financial year 2022

October–December 2022

• Revenue increased to TSEK 101,109 (73,209)
• Operating profit/loss amounted to TSEK -8,685 (-29,030)
• Profit/loss after tax amounted to TSEK -8,585 (-21,723)
• Earnings per share amounted to SEK -0.17 (-0.42)
• Cash flow for the period amounted to TSEK -57,250 (-59,266)

Significant events during the quarter

• Noora Jayasekara was appointed CFO starting November 1, 2022
• Order of MUSD 2.9 for SATCOM-as-a-Service from GRC in UK
• Order of MUSD 16 for SATCOM-as-a-Service from U.S. DOD
• Order of MSEK 10 for SATCOM-as-a-Service from Swedish Space Corporation
• Order of MUSD 1 for SATCOM-as-a-Service from new French partner Nigma

Significant events after the quarter

• Postponement of the launch of Ovzon 3 and change to SpaceX as launch partner
• Secured additional financing through loans and confirmed interest in new issue
• Publication of preliminary financial figures for the fourth quarter of 2022
• Notice of completed directed new share issue of MSEK 200
• Notice of extraordinary general meeting on March 3, 2023

Outlook

• The company assessment is that sales for 2023 will be higher than in 2022 and that the launch of Ovzon 3 will take place in the period from July to September 2023, given that the final integration and tests fall out as planned.

Key figures

CEO comments
Record quarter and eventful start to 2023

We can look back on a strong quarter for Ovzon. We extended the contract with our largest customer, the U.S. DOD, for 16 MUSD and broadened our customer base in Europe. Our focus in driving profitable growth had great effects and we signed agreements with new customers in Sweden, UK and France. We also got our first new customer in Spain at the beginning of 2023. Earlier in February we announced preliminary figures for the fourth quarter – our strongest to date both in terms of revenue and profitability. At the same time, we announced that the timing of the launch of Ovzon 3 is planned for July–September 2023 and will be carried out with SpaceX, which has resulted in increased costs for the project. We have therefore secured additional financing through an extended loan and a directed share issue.

Best quarter in Ovzon’s history

Let’s take it in turn. The fourth quarter was the best ever for Ovzon with sales growth of 38 percent and clearly improved profitability. During the quarter, we managed to utilize all satellite capacity and in addition used our inventory of mobile satellite terminals in an efficient way. Even more gratifying is that we have significantly advanced our positions in the European market through new contracts, via partners, with mainly military and civil defense organizations in England, France, Sweden and, after the end of the quarter, also in Spain. We are thus beginning to see the results of all the progressive dialogues we had during the year. We also renewed contracts with the U.S. DOD and UK MoD. The order intake for Ovzon SATCOM-as-a-Service during the quarter thus amounted to 17.8 MUSD.
Extended and expanded relationships with existing customers as well as a broadened customer base, profitable growth and the launch of Ovzon 3 will also be in focus in 2023. Our cash flow is improving gradually, even though the quarter was negatively affected by increased inventory and late customer payments. We always work closely with our partners and we are in an active process to secure the late payments from one of our resellers.

Updated timetable for Ovzon 3

The start of 2023 has also included challenges. During the first part of 2023, it became clear to us that our manufacturing partner Maxar experienced further delays in the completion of our first own satellite Ovzon 3. This led to intensive dialogues with the contracted launch partner Arianespace to find a new possible time for launch, which Arianespace finally could not satisfy. To ensure flexibility and the most optimal time for launching the satellite, we instead entered into an agreement with SpaceX. Ovzon 3 will thus be launched later this year, planned in the period July–September 2023, with a Falcon 9 rocket from Cape Canaveral, Florida.

While we are clearly disappointed by the continued delays in satellite manufacturing, we are fully confident in the market demand for Ovzon 3, as evidenced by the continued positive engagements with existing and new customers regarding Ovzon 3, the Ovzon On-Board-Processor as well as the unique capabilities of our new mobile satellite terminal Ovzon T7. The delay will have no effect on our current business commitments or new sales as we have access to satellite capacity to ensure ongoing deliveries, service and sales.

As a consequence of the delayed commercial service date for Ovzon 3, Intelsat General Communications (IGC) has opted to execute their termination right for the pre-capacity commitment for Ovzon 3. In light of our continued solid relationship and cooperation with Intelsat and IGC and the increased demand for Ovzon services, it is our assessment that this will not have any impact on future revenues for Ovzon 3.

Continued support from major shareholders and credit partners

The delay is expected to increase the total cost of the satellite project by approximately 25 MUSD. We have therefore secured financing for this by increasing the current loan facility with P Capital Partners and through a directed share issue of 200 MSEK to a number of the company’s current major shareholders such as Öresund, Bure, Handelsbanken Fonder, Fjärde AP-fonden and AFA Försäkring as well as new shareholders. The strong commitment and long-term support that our shareholders and creditors have shown with short notice in this situation is a tremendous strength for the company. It also shows confidence in the unique technology and the paradigm shift in terms of mobility, performance and reliability that Ovzon 3 entails.

Good starting position for 2023

We enter 2023 with a strong confidence and drive for several reasons. We are today the only provider in the world that can deliver a unique integrated satellite communication service (Ovzon SATCOM-as-a-Service) that includes networks with strong bandwidth, mobile satellite terminals, tested and secure connection to the Internet and global support 365/24/7. Through our unique technology and integrated solutions, we today deliver the highest data transfer speed and the smallest mobile satellite terminals on the market in a secure manner. We can also quickly expand our capacity if needed. In addition, we have strengthened the organization with new key recruitments. Last but not least, through our collaborative partner strategy, nearness to the end-users, and through our own efforts, we can continue to broaden our base of quality customers where reliable, fast and high-performing satellite communication is absolutely crucial.

Per Norén, CEO Ovzon

For further information, please contact:
Per Norén, CEO, pno@ovzon.com, +1 206 931 7232
Noora Jayasekara, CFO, nja@ovzon.com, +46 70 318 92 97