Interim report, January–June 2022

January–June 2022

• Revenue increased to TSEK 177,815 (70,346). Revenue for the period include compensation for divested production stock of TSEK 3,367 (-)
• Operating profit amounted to TSEK -26,318 (-61,568)
• Profit after tax amounted to TSEK 4,483 (-49,792). The result includes currency conversions and financial transaction costs of TSEK 31,420 (11,948)
• Earnings per share amounted to SEK 0.09 (-1.08)

April–June 2022

• Revenue increased to TSEK 77,928 (33,216)
• Operating profit amounted to TSEK -8,810 (-30,910)
• Profit after tax amounted to TSEK 16,263 (-38,538). The result includes currency conversions and financial transaction costs of TSEK 25,027 (-7,451)
• Earnings per share amounted to SEK 0.32 (-0.83)

Significant events during the quarter

• Delivery of Ovzon SATCOM-as-a-Service to the Italian Fire and Rescue Service started
• MUSD 1.8 order from U.S. DOD for renewal of SATCOM-as-a-Service

Significant events after the quarter

• Ovzon’s CFO will leave the company in September 2022
• MUSD 1.1 order from UK MoD for renewal of SATCOM-as-a-Service

Outlook

• The company believes that sales for 2022 will be significantly higher than 2021, and that the launch of Ovzon 3 will take place in the period from December 2022 to February 2023, given that the final tests fall out as planned. Previously, the company’s assessment was that sales for 2022 would be higher than for 2021.

Key figures

Strong growth and clarity around Ovzon 3

During the second quarter of 2022, we have further advanced Ovzon’s position with our unique and world-leading SATCOM-as-a-Service offering. We see clear signs that our current customers are extending contracts and the use of our services. In addition, an increasing number of potential customers are attracted by our premium service offering and the new applications we can add. We have been in active dialogues with European, American, and international civil and defense organizations since the war in Ukraine started. There is clearly an increased need for high performing and resilient mobile satellite communications for all types of critical missions. We are convinced that this will lead to strategic business. It is however important to note that despite this increased need, sales cycles and lead times are still relatively long. We do have the endurance needed and we are deeply engaged with the most progressive and relevant organizations. Our ability to quickly establish high-performing and secure communication in environments with geopolitical and security concerns where the regular infrastructure is deficient or non-existent is more important than ever before.

With the increased interest and need as a starting point, we believe that it is a clear advantage that we have high performing satellite capacity available that we previously invested in from Intelsat. This means that we immediately are able to deliver Ovzon SATCOM-as-a-Service to current and new customers. However, this does not mean that our potential to grow and take more orders is limited only to our own available satellite capacity. We have the ability to purchase additional external capacity with fast delivery in case of increased order intake. This, until our own satellite Ovzon 3 is launched and operational, which will of course increase our capacity considerably. In addition, Ovzon 3 will increase the value of our unique service offerings, as we can then offer additional flexibility, resiliency, data speed, and mobility to our existing and future customers.

Increased clarity around the launch of Ovzon 3

The details and clarity around the launch of Ovzon 3 have increased significantly in recent months. The critical key components that were previously delayed are now delivered to our production partner Maxar as well as our own developed On-Board-Processor, which is now integrated, and under testing on the satellite. This industry-unique communication platform will make the satellite’s capabilities exceptional from many perspectives, but above all,around guaranteed and secure connectivity in all kinds of conditions. Ovzon 3 is now entering the final stages of integration and assembly with active final tests, including the so-called Thermal Vacuum Test. Given that all tests perform well, and that all logistics and coordination is achieved the launch of Ovzon 3 will take place sometime during the period December 2022 to February 2023. We have received this launch slot from our partner Arianespace as part of their total launch plan. The launch of Ovzon 3 will take place at Arianespace’s spaceport in Kourou, French Guinea. After launch, it will take another four months approximately before the satellite is in an operational position and can be used for customer deliveries.

Due to the delay in the launch of Ovzon 3, the pre-capacity commitment of MUSD 56.2 from Intelsat General Communications (IGC) has been, in accordance with the agreement, reduced by 5 percent in the third quarter and will most likely be adjusted down by another 10 percent in the fourth quarter to then amount to MUSD 47.8. Considering our solid relationship and collaboration with Intelsat and IGC and the increased demand for our services, it is our assessment that this will not have any impact on future revenues for Ovzon 3.

Good position for the second half of the year

In conclusion, our focus continues to be to drive profitable growth in our core offering, Ovzon SATCOM-as-a-Service. We also continue to deliver on last year’s clearly increased order intake. Our recently extended agreements with key customers, as well as the new deals we are working feverishly on, show that there are many needs our solutions can fill in a number of geographic markets. It also shows that our go to market method based on close and active customer dialogue, a deep understanding of the customer’s environment and operational needs, coupled with well-functioning partnerships, can make initial test installations and smaller orders grow into large contracts.

In addition, there is a tangible appetite for investment and activity in the satellite industry right now, which benefits the entire industry and thus puts the spotlight on companies like Ovzon. Our advanced and reliable technology, our products and premium services, in combination with our ability to deliver quickly means that we have a simple and progressive business model at the absolute forefront. The generally growing macroeconomic uncertainty of the last six months has not affected us or our industry significantly so far. We see that the escalation of security and geopolitical concerns in Europe have instead increased the demand for surveillance, security, and critical communication where traditional communication channels and infrastructure cannot be used or are not available. There is also an ongoing consolidation in the satellite industry, which creates room for Ovzon to focus even more on winning new customers and thus continue to grow. Our previous assessment was that sales for 2022 will be higher than for 2021. That assessment has become more certain, and we now assess that sales will be significantly higher in 2022. Through higher capacity utilization, our profitability conditions have also improved.

I would also like to take the opportunity to thank Ovzon’s CFO and my colleague Johan Brandt for his contributions to the company, as he at the end of September will leave his position. The recruitment of a new CFO is in progress. The company is growing and developing rapidly, and we continue to strengthen Ovzon’s organization. We work close with the market, and our employees and partners do a fantastic work. We have an exciting fall ahead of us.

Per Norén, CEO Ovzon

This information is information that Ovzon AB (publ) is obligated to make public pursuant to the EU Market Abuse Regulation 596/2014 and the Securities Markets Act (2007:528). The information in this press release has been published through the agency of the contact persons set out below, at the time stated by Ovzon AB’s (publ) news distributor Cision upon publication of this press release.

For further information, please contact:

Per Norén, CEO, pno@ovzon.com, +1 206 931 7232
Johan Brandt, CFO, jbr@ovzon.com, +46 703 69 33 00