April–June 2024

• Revenue totaled 67 MSEK (69)
• Operating loss totaled -17 MSEK (-28)
• Loss after tax totaled -16 MSEK (-24)
• Earnings per share totaled -0.14 SEK (-0.45)
• Cash flow for the quarter totaled -42 MSEK (-238)

January–June 2024

• Revenue totaled 132 MSEK (126)
• Operating loss totaled -42 MSEK (-52)
  Adjusted operating loss totaled -42 MSEK (-63)
• Loss after tax totaled -59 MSEK (-43)
• Earnings per share totaled -0.53 SEK (-0.82)
• Cash flow for the quarter totaled -119 MSEK (-167)

Significant events during the quarter

• Renewal of Ovzon SATCOM-as-a-Service to Spanish Civil Defense customer
• Launch of Ovzon 3 based services: Ovzon Pegasus and Ovzon Orion
• Renewal of Ovzon SATCOM-as-a-Service to UK MoD
• Launch of On-The-Move mobile satellite terminals: Ovzon P20 and Ovzon P30
• First customer on Ovzon 3: French GIGN for the summer games in Paris

Significant events after the end of the quarter

• On July 5, 2024, Ovzon 3 entered commercial service, delivering Ovzon Pegasus SATCOM-as-a-Service to the French government organization GIGN, refer further to Note 11
• First major Ovzon 3 order from U.S. DOD of 6.2 MUSD
• Initial limited Ovzon 3 order from Swedish Space Corporation
  

Enters a new era with Ovzon 3 in commercial service
The second quarter has been focused on ensuring full readiness for bringing our first proprietary satellite, Ovzon 3, into commercial service. In parallel, we have continued our in-depth customer engagements and market activities, including launches of new products and services. After five months of orbital raising, Ovzon 3 arrived in its dedicated position. Upon the successful completion of in-orbit tests as well as implementation of ground systems, Ovzon 3 was ready for commercial service on July 5, 2024, and we received the first major order from the U.S. Department of Defense (U.S. DOD) for Ovzon SATCOM-as-a-Service on Ovzon 3 in August. This means that we are now entering a new era in achieving profitable growth by offering our next generation SATCOM-as-a-Service, based on Ovzon 3.

The largest order in the second quarter was a renewal of a 12-month SATCOM-as-a-Service contract with the UK MoD through our new partner Babcock International. This renewal is important as it solidifies our installed base in Europe. We also received a renewal for delivery to a Spanish customer within the Civil Defense sector. Consequently, the 12-month rolling order intake at the end of the quarter amounted to 318 MSEK, indicating a strengthened order momentum.

Revenues in the second quarter increased compared to the first quarter and what was even more encouraging was the improved profitability and cash flow. EBITDA improved to -12 MSEK compared to -22 MSEK last year and -18 MSEK in the first quarter. The profitability increase comes from optimized utilization of leased satellite capacity and solid cost control. We have also further tightened our cash management during 2024, which is detectable in our cash flow from operating activities which amounted to 8 MSEK in the quarter compared to -7 MSEK last year and -3 MSEK in the first quarter this year.

Extensive preparations for commercial success of Ovzon 3
Since the successful launch of Ovzon 3 on January 3, 2024, we have focused on in-depth demonstrations and meetings with customers in key markets ensuring they understand and can take full advantage of the benefits of the unique capabilities the Ovzon 3 satellite delivers. We launched two new SATCOM-as-a-Service offerings based on Ovzon 3, both are designed to meet the most advanced customer demands for the best combination of performance, mobility, and resiliency. The new solutions are named Ovzon Pegasus and Ovzon Orion.

We also launched two new mobile satellite terminals, the Ovzon P20 and Ovzon P30. They are On-The-Move terminals for land, maritime and airborne applications. The Ovzon T7 On-The-Pause terminal that was officially launched during 2023 is now in serial production and was delivered on time to the first customer, the U.S. DOD. With these preparations made, Ovzon 3 was ready for commercial service on July 5.

First customers confirm competitive advantage
The first delivery of Ovzon 3 based SATCOM-as-a-Service was to the French government organization GIGN (Groupe d'Intervention de la Gendarmerie Nationale) who has been using the service to meet its advanced connectivity needs during the Summer Games in Paris 2024. A perfect, advanced and exciting first user of the Ovzon 3 capabilities.

The first Ovzon Pegasus order on the Ovzon 3 satellite was received in August from the U.S. DOD. This order represents the transition from current Ovzon SATCOM-as-a-Service using leased satellite capacity to now utilizing Ovzon 3. The contract length is twelve months with an order value of 6.2 MUSD. We are proud to support our long-term customer U.S. DOD who is the first to take full advantage of the unique capabilities of the industry first Ovzon 3 satellite.

Furthermore, we received an initial limited order for Ovzon SATCOM-as-a-Service on Ovzon 3 from our partner, Swedish Space Corporation (SSC). The service was delivered within 24 hours of being requested.

Positioned for sustainable growth
To summarize, the first roughly seven months of 2024 has been a great achievement by the Ovzon team when it comes to the launch and start of commercial service on Ovzon 3.

With the new customer centric SATCOM-as-a-Service solutions in place, we are convinced that we have further strengthened our ability to deliver the most advanced satellite communication to organizations within Defense, National Security and Public Safety. The results of our shift in focus on these customer groups has become even more evident during the last 18 months. This has led to larger contracts, but is also a reminder that government procurement and evaluation processes are somewhat complex and time-consuming.

During the remainder of 2024, we will continue to be highly concentrated on serving and expanding solutions with current customers and with the ambition to win new customers on Ovzon 3. With Ovzon 3 in service, we will manage a mix of our own and leased satellite capacity. This creates flexibility in terms of geographic coverage in combination with performance, mobility, resiliency and cost effectiveness.

The geopolitical tension in Europe, Middle East and parts of southeast Asia continues to put focus on governmental and larger organizations investments in rearmament. Satellite communications has become a critical part of any nation’s overall strategy to secure a more resilient and autonomous communications infrastructure. I am confident that Ovzon is well-positioned and has the customer references to deliver on the mission critical needs of performance, mobility and resiliency that is required in today’s contested communications environment.

Per Norén, CEO Ovzon

Webcast
In conjunction with this interim report, a webcast will be conducted at 2 pm CEST on August 16, 2024. Ovzon’s CEO Per Norén and Interim CFO Viktor Bremer will present the results and answer questions.

The webcast can be reached via the following link: https://www.finwire.tv/webcast/ovzon/q2-2024/