Earnings call transcript: Ovzon Q2 2025 sees strong revenue growth

Ovzon AB reported its second-quarter 2025 earnings, showcasing a record quarterly revenue and a positive profit after tax. The company continues to demonstrate strong growth in its services segment, with InvestingPro data showing impressive year-to-date returns of 121.96%. The stock rose 5.13% to close at 39.95 USD, continuing its strong momentum that has delivered a 90% return over the past year. This marks a significant movement within its 52-week range of 9.56 USD to 49.8 USD.

Key Takeaways

• Record quarterly revenues with strong growth in services.
• Positive EBITDA for the fourth consecutive quarter.
• Stock price rose by 5.13% post-earnings announcement.
• Continued focus on satellite communication innovation.

Company Performance

Ovzon’s performance in Q2 2025 highlights its robust growth trajectory, driven by increased demand for its integrated satellite communication solutions. The company reported positive EBITDA for the fourth consecutive quarter and a positive profit after tax, underscoring its financial resilience. The services segment has been a key growth driver, expanding consistently over the past five quarters.

Financial Highlights

• Revenue: Record levels, driven by services and terminal sales.
• Earnings per share: Not specified in the call.
• Positive operating cash flow and reduced investment phase.

Outlook & Guidance

Looking ahead, Ovzon is focused on profitable growth and exploring new satellite developments. With analysts maintaining a Strong Buy consensus and projecting significant sales growth, the company’s outlook appears promising. The company plans to hold a Capital Markets Day on September 4th to discuss future strategies, including potential refinancing options and further industrialization efforts. According to InvestingPro’s Financial Health Score of 2.01 (FAIR), the company operates with a moderate level of debt and maintains stable financial metrics.

Executive Commentary

CEO Per Orien emphasized the importance of mission-critical communication, stating, "We cannot rely on the traditional infrastructure. You have to have something that is mission critical that you can rely upon." This underscores Ovzon’s strategic focus on secure and reliable communication solutions.

Risks and Challenges

• U.S. Department of Defense contract renewal remains uncertain.
• Potential market saturation in the defense sector.
• Geopolitical tensions affecting satellite communication demand.

Q&A

During the earnings call, analysts inquired about the status of the U.S. Department of Defense contract, which has not been renewed yet, but negotiations are ongoing. The company also discussed its flexible satellite capacity management and potential expansion into the emergency services market.

Ovzon’s Q2 2025 results reflect its strong market position and strategic focus on innovation in satellite communications. As the company navigates the challenges of contract renewals and market expansion, its commitment to growth and profitability remains evident.

Full transcript - Ovzon AB (OVZON) Q2 2025:

Matthias, Moderator/Host: Welcome. In an increasingly geopolitical uncertain time where many are seeking resilience in the more complex world, secure satellite communication services are becoming a more important piece of the puzzle. Today, we will meet a company experiencing strong growth in just that field. Avsund is the company and I welcome CEO, Pan Orien and CFO, Andreas Please welcome.

Per Orien, CEO, Avsun: Good morning. Thank you.

Andre Lovgin, CFO, Avsun: Thank you.

Matthias, Moderator/Host: I am sure you are very eager to get started with the presentation. So I’ll leave it to it, and I will be back for the Q and A.

Per Orien, CEO, Avsun: Thank you, Matthias. Yes, thank you so much for having us here, and good morning, everyone. We’re very excited to start the presentation of the 2025. There are several things that are exciting today. One being that we have our new CFO, Andre Lovgin, with us today.

This is his first quarter. As the CFO of Sonne, I’m very pleased to have you here.

Andre Lovgin, CFO, Avsun: Thank you. Looking forward to this moment.

Per Orien, CEO, Avsun: Secondly, I think our numbers are which we’ll go through are very positive from our perspective. And also, of course, that the quarter included a major milestone, historic milestone in terms of business. So without further ado, let’s get into the presentation. First of all, I would like to do an introduction to Avson as we normally do. I think it’s important to put us in context of what Matthias talked about in the beginning.

This is a company that’s been in going business since 02/2006. We are very deep in technology, and we’re very broad in services and solutions. Are listed on NASDAQ Stockholm, obviously. Our main operations is in Sweden. We’re a Swedish technology company, but also with a strong foothold in The United States and a few other European countries.

We offer integrated satellite communication solutions for mission critical customers. And our core markets are defense, national security and public safety. We have most of our revenue coming from the defense market today. As you can see, we have our fourth consecutive quarter with positive EBITDA. It started in Q3 two thousand and four Q2 two thousand and four and are now in this quarter as well.

We are on a million enrolling twelve month, And we have an order book of SEK 1,500,000,000.0 indicating a very solid revenue base going forward. Let’s put things in context. As was mentioned in the introduction, There is an accelerating urgency and demand for satellite communications. Obviously, we follow and track the geopolitical tensions there are. Today is a big day.

Later this evening, European time and morning U. S. Time, there is a meeting between President Trump and President Putin given Russia’s invasion of Ukraine and trying to negotiate something there. But there are tensions not only there, but in other parts of the world. That’s one of the aspects of where we play.

I’ll come back to why. Cybersecurity is something that is also both in space and in our daily lives that is very, very driven by the adversaries. So that’s another aspect of secure communications. Digitization, we are the world is exploding in data, content, AI analytics, another aspect of communication as an infrastructure. And then obviously, the devastating news we have daily now of the wildfires currently going on in Spain and in British Columbia and Canada and in many other places with heat waves that are beyond what we’ve seen historically.

All of these things drive one thing. You cannot rely on the traditional infrastructure. You have to have something that is mission critical that you can rely upon. And the only way to do communications in those kind of environments where you can’t rely on the normal infrastructure is actually through satellites. That’s exactly what Avsun is about.

So this drives the need for what we do. Market trends though. Four years ago, we started to pivot much more towards defense, national security and public safety customers, going away somewhat from the commercial markets that we were looking at then. The overall trend with that has been very positive for us, obviously, maybe not good for the world, but positive for Avsun in that regard, where we can protect and connect people, societies and organizations with what we do. There is a strong increase in defense investments, specifically in Europe.

There is an expansion of the NATO budgets. I was personally recently at the NATO TOP meeting in Den Haag in June and was able to participate in the industrial discussions there where the NATO countries actually unified around an increase in budgets and commitment to that. The U. S. Administration, when it comes to decision making, executive orders, budgets, priorities and procurements are very, very much internal.

It shifts and changes every day, and it creates a lot of uncertainty as well. So it’s a difficult environment to navigate within. That has had an effect for Afzon actually. We have one of our contracts that we’ve had there was not current has not currently been renewed, but we are in deep conversations with our core customers, with new customers both within The U. S, DoD and other customers.

So we think the long term aspects of this market is very important to us, and we will continue to penetrate that market. But it’s a reality of what we have to live in. In Europe, sovereignty is an important thing and specifically in satellite communication systems to ensure independent and secure connectivity. And it also drives standardization and interoperability as things. So you can collaborate, you can use it on manned and unmanned vehicles, etcetera, etcetera.

So those are also trends that play quite well into what we do as a company. And of course, governments are looking into hybrid, bringing commercial capabilities and technology into military grade capabilities. And last but not least, I think what we’ve seen from specifically in Ukraine, the electronic warfare aspects of that, that also has cybersecurity components to it, our capabilities that our NATO and others are investing heavily in, in order to make sure that they stay ahead of the curve of technology and evolution for that. So all those trends are actually somewhat in the favor of what we do. So what do we do then?

Well, our value proposition is unique versus other competitive solutions. We’ll come to that in a few minutes here. But we deliver an integrated satellite communication solutions. We build satellite networks based on our own proprietary satellite, OBSON3, and third party satellites that have similar attributes to our satellite, meaning steerable antennas. We can design networks that are geared for those specific missions that drives performance, mobility and resiliency, very important aspect for our customers, always or ubiquitously connected.

We deliver mobile satellite terminals that are both for on the pause and on the move, as we call it. On the move is for vessels in the air, on the ground and on the water. And then, of course, for headquarters and other functions as base stations basically. And then we partner with secure gateway providers to get the signal. Those are the parabolic signals that is connected to fiber.

And last but not least, we have a very dedicated team that delivers this integrated service twenty fourseven and three sixty five days a year with a very, very high uptime, almost up to 100%, but at least at 95 uptime to guarantee the connectivity without disruption for our customers. So very unique for Avsun. No one is close to this integrated system. Now just to put it in context, what you want to have in a secure national defense, national security and public safety environment, This is military applications, but it could be emergency services and could be police, etcetera, etcetera, is you want to have your system connected. All your assets, whether they are flying, walking, driving or on water or on land, and you want it all connected so you can have the data for decision making at your fingertips and information at your fingertips.

So it’s an integrated system, and it’s only really possible through the advanced satellite communication capabilities that we can provide today. So this is where you see the defense investments in NATO, U. S, Sweden and Europe going today. That positions us very high in the value chain. So this is supposed to talk about the base of this triangle is the mass market.

Of course, that’s their traditional communication systems and infrastructure. They are very important. They are provided often by government owned entities and so on and so forth. And as you walk up the value chain, you can become to mission critical. So in essence, on the layer below where you can see also at the top of this triangle are the so called low earth orbit providers that provide connectivity to consumers and organizations in any remote place or in any part of the world.

We believe that’s very, very important. We believe we complement this, whether they are Starlinks or OneWeb or Project Kuiper by Amazon. It’s complementary to what we do, but we put our capability on top of that and drive ubiquitous connectivity for those missions that are very critical that cannot have any latency. So in essence, that’s the first part of our presentation. It’s to put Afzan in context, we have done this for many years, and we are very strong at it.

And I think now when we walk into the second quarter here, we can start to see that the commercial success has started to grow for the company. And it takes a long time to invest in the right technology, right solution, right people to get to a point where you can satisfy the customers day in and day out. So over to the second quarter then and accomplishments. Now obviously, during the quarter, the base for everything we do is to have customers that become repetitive. Pardon me.

Repetitive customers, meaning the evidence of that is that they renew the contracts they have. So the first thing that happened in the quarter was we renewed a larger European customer that we’ve had for a few years, again, given that they are extraordinarily satisfied with what we’ve done. And of course, at the May, we signed an historic milestone order with the Swedish Defense Material Administration over SEK 1,000,000,000. The contract is for twenty four months, and we’ll come into a little bit more of details on that and the mix of terminals and services and networks that we have. So historic for us sets us up for the future, but we’re also very humbled by it because now it’s about delivery.

We’ll come back to that as well. And after the end of the quarter, we also got a follow on order from the Swedish Defense Material Administration of more mobile satellite terminals, and the order value was SEK 72,000,000. And as you will see when you read the report properly and Andre will talk about, we received the payment from FNV of SEK $264,000,000 on July 1 and not June 30, which means that it actually came into the next quarter, but the money is in the bank and the cash is at hand for Afzan. So it was more of an administrative thing that made it arrive on the July 1. So very strong accomplishments in the quarter historic milestone.

The historic milestone order, as we noted SEK 1,040,000,000.00, but 1,000,000,000 in from the Swedish Defense Material Administration. It’s the largest order to date and a significant milestone for the company, obviously. It includes, obviously, the whole value chain that I talked about, also network services, we call it hero, and mobile satellite terminals. And we have a broad portfolio of those, both on the pause and on the move terminals that we deliver. And we have delivered onethree of those terminals in this quarter.

And of course, our dedicated customer support that we that takes on a massive role in making sure that the uptime is close to 100% for the customer. The duration is longer than what we traditionally have had. It’s twenty four months. And as I said, the delivery started in June, onethree of the terminals and the networks was gradually started in June as well. It’s based on mostly third party satellite capacity, but we have the chance and we’ve taken the chance to also mix in some of the capabilities and networks from Avsun three into that as well, which we have the right to do.

We have done it because it serves the customer well, and it helps us also to utilize the satellite in an optimal way, I would say. And of course, we see this as a real significant proof point of our direction that we’ve had for a few years, our solutions, our technology and our way of working and delivering as a trusted partner to countries and to defense, national security and public safety units. Historic milestone, very proud on behalf of all employees and all stakeholders that have made this possible. Over to the numbers. And before I hand over to Andre, I’ll talk a little bit about the order intake and the order book.

Obviously, as you can see on this slide, it is a significant order book now, which gives us predictability in our numbers going forward, which we can see then in the revenue, etcetera, etcetera. But you can see we have a large order book now, and it increasingly have grown from other quarters, as you can see on this picture as well. So that sets us up well for a continued scaling up and industrialization of the company and to go to market and find more customers, added on customers and an expansion, which we are on a path to do. So with that, we’ll dive a little bit deeper into the numbers, and I’ll hand it over to you, Andre.

Andre Lovgin, CFO, Avsun: Great. Thank you, Baier. I’ll dive into then the revenue. As you can see on the bar to the left here or the graph to the left and the Q2 twenty five bar, it’s a strong increase in revenues this quarter. And as you can see, we split it up here between services and terminals, and it’s actually a record sale of terminals in this quarter.

As Per said, we delivered all the onethree of the terminals that we’re supposed to deliver. But then if you look into the price mix of those terminals, it’s a slightly lower price in total. So there’s more to come from this terminal delivery as we go, but it will not be as a big chunk. It will be more successive delivery going forward. And then what’s also pleasing to see in this graph is that the service revenues has been now increasing for five quarters in a row.

So it’s a really strong, stable foundation that we have here and also a big step up then in this quarter. And then to the right, you see run rate revenue, which is our revenue from services for the last quarter or this quarter and then multiplied by four. So that’s kind of an annualized version of our revenue, telling you where we’re heading. And that’s actually also at record levels. Now moving on then to profitability, which is very important.

Here we are very pleased to announce that we have positive numbers on EBITA, also on EBIT level and on profit after tax. So when all costs have been included, we have a positive result, which has been a long time since we delivered that, as you can see from the graph to the right as well. And it’s quite a big step up as well in that profitability. And that comes from well, first of all, we have higher volumes. But in those volumes, we have higher volumes of sales.

And in that volume, we have a bigger portion of Zone 3 being utilized. So that drives the profitability. And then we are good at keeping operational costs at bay. So that drives this profitability upwards in a strong way. Then I move over to the operating cash flow.

And here, to the left, you see two strong quarters then in this quarter followed by an outflow of cash. And as Per mentioned, we have had a big payment coming in the July 1. So this bar is actually the opposite just the day after. So it’s if you where we stand today, this is actually very strong cash flow. It’s just where quarters are cut and when payments get into our bank account.

Then moving to the middle graph, you see our investments. And from the history, you can see that we have invested significantly into Afzan three. It’s now for a year been in operations. So what’s left now of investments is more of terminal development and then on our onboard processor, which is a unique feature of our satellite. And then to the right, you see the net debt increasing slightly, but it’s actually not the debt that’s increasing, it’s the cash that has been decreased.

And again, that’s connected to this payment that we received in July. So if you take that into account, it’s a completely different picture, and it’s a much brighter picture as well. So that’s basically the financials. And if we summarize it, we I would say that what we’re delivering in this quarter is strong growth, and it’s done together with improved profitability. So we have strong bookings, which gives us a solid backlog, and that has increased our revenues.

And with a solid backlog, we can assume that, that growth will continue for a while. And then EBIT wise, as Per said, very satisfying to see that we have actually four quarters in a row now with improving profitability and a pretty significant step up in this quarter. And finally, cash again, it’s much better than it looks like in this graph. And I’m really looking forward to present this graph in Q3. So with that, I hand it over to you, Per.

Per Orien, CEO, Avsun: Thank you. And before we wrap up, I’ll rest on this slide a little bit here. As the company has been in obviously for years in the investment phase of building the satellite the satellites, the onboard processor and new terminals in the integrated system we have. And we’ve had a mantra of driving profitable growth. I would say that we can call this profitable growth, and we’ve turned the corner, right?

At the same time, you to be smart. You have to run a healthy core business. You have to manage your cost. You have to manage your cash. And you have to be out in the market, educate and drive value to customers.

And we have basically four things that we base that on. We say customers first. We say people always. We say business ubiquitously, meaning 20 fourseven, both in terms of service, but also in terms of understanding and being creative with customers how to utilize our technology. And then lastly, delivering value with technology.

So this sets us up to continue that path that we’ve been on. Going forward, the three main targets or goals for us is to deliver financial performance. I think we have shown that with this quarter. Actually, on the EBITA side, we started that journey this is the fourth quarter in a row. So we started that journey, and we continue it.

I think maybe the most satisfying thing is that we are we have profit on the last row as well. And then Andrea talked about the cash flow. We never run out of cash. So that’s a very important measure for us to continue to drive. And then obviously, continue to ensure commercial success.

You cannot rest on your laurels. Yes. We had a very, very significant historic milestone with the win we have. We have to deliver on that, and we have to continue to deliver value to customers and then find new customers, renew and regain customers that we have in our purview. And then lastly, industrialization and scale up of the company.

Obviously, we’ve been operating on a fairly small team and driving kind of the value with that. We are not going to go crazy. We’re going to do a step by step upgrade as we see that the business is continuing to perform at the levels or better than that where we are today. So with that, we’ll thank you. Maybe you want to say something about our Capital Markets Day before we hand over to Matthias again.

Andre Lovgin, CFO, Avsun: Yes, sure. I mean, hope that this quarter announcement will give you some interest and maybe to learn more about our company. And we have a Capital Markets Day on September 4 in Stockholm. So please check that out and sign up. It’s going to be an inspiring day, I hope.

That’s the plan at least.

Per Orien, CEO, Avsun: Thank you. Back to you, Matthias.

Matthias, Moderator/Host: Thank you so much, Per and Andre, for that We very exciting presentation, I must will start the Q and A by inviting we are joined by two equity analysts, and we will start off by inviting Simon Granat of ABG Sundal Collier. Please go ahead with your questions.

Simon Granat, Equity Analyst, ABG Sundal Collier: Thank you so much. Hi, Per and Andre. Congrats on the strong numbers and particular kudos to the recent contract signings. Initially, I have questions on the latest development in The U. S.

I know we tend to come back to this during earning calls, but it is a bit surprising to me that the DoDEA has not renewed the contract from last year. Have you received any feedback to why this is the case? Or is your assessment that this is only about budget and procurement uncertainty? Thank you.

Per Orien, CEO, Avsun: Thank you. Very good question. I think, first of all, you can see that we also mentioned it in the CEO comments. So it’s an important aspect of us for us, obviously. It’s the biggest defense market defense spender, and it’s important customer base.

Yes, we have received feedback. We have very strong feedback from the users. Remember, they have a lot of terminals out in the field, and they stay out in the field. So the need from them is there. They want to continue with the service.

I think they’ve gotten stuck in the budget bureaucracy and prioritization changes that are happening. So we continue to work with the end users. We continue to work with the procurement people, both on that current customer base, but also with other customers within U. S. DoD and other customers in The U.

S. So I think that’s all I can say at this point. We know that the value is there. We know that we protect and connect those organizations that have used it, and we continue to have a positive view on The U. S.

Market.

Simon Granat, Equity Analyst, ABG Sundal Collier: Thank you so much. Appreciate that. And the terminal sales, as Andre highlighted, were indeed strong and reached the highest quarterly level ever reported. Is this the level in terms of capacity that you are able to manage? And I ask this partly in light of the current strong order backlog.

So I’m trying to understand the linearity in terms of deliveries of the terminal backlog over the coming quarters.

Per Orien, CEO, Avsun: Yes, very good question. Part of our scaling up, obviously, is if you look at our value cycle networks, so we have our own satellites, and we buy capacity from others. We are very good at that. And you have followed us for a while, so you know that we used to have inventory of satellite capacity that were unsold. We don’t have any inventory of satellite capacities unsold.

That drives our profitability up. So we’re very good in mixing and matching and building that up and have good relationships with other providers and can utilize Allsone three. So that’s one part of that. On the terminals so we don’t see a restraint on our business in that regard. On the terminal side, I feel very comfortable that we can deliver on this historic milestone deal that we had.

I don’t see it’s strange. Well, it’s tougher for the supply chain because there are more volume, obviously. But we are also placing orders and continuing to develop, so we will build up an inventory for coming business as well. So I think we’re not at peak levels, but we obviously, with these volumes that we have never been, we are testing the waters on how to expand that supply chain and how we can actually deliver and build up a little bit inventory ourselves. We’ve been quite a lot of just in time.

So that’s part of our industrialization going forward. So I wouldn’t say that it’s holding us back, but we have to continue to invest in kind of making sure that we can build up inventory and deliver on new business that is coming in. I hope that answers your question.

Simon Granat, Equity Analyst, ABG Sundal Collier: Yes, indeed, it does. Thank you for that. And I’m going to ask a follow-up question on capacity in general terms, that is given that the recent FMD Satcom order involves leased capacity, how are the discussions progressing on finding increased leased capacity? And also, will additional leased capacity fully match the FNV contract? Or could you add some extra capacity for other customers or orders from the same customers

Per Orien, CEO, Avsun: yes. Very good question, obviously. First of all, we have relationships with many of the satellite operators, satellite providers, capacity providers. We keep that going even though we buy at different volumes at different times during the history of the company. But we don’t see that we have constraints on that building up for this delivery, And we don’t see that we will have constraints in actually taking on more customers either as well.

And we are looking into ways of partnering revenue share models, etcetera, with some of the providers that we are closer to. So we don’t see that, that is holding us back from delivering and growing further.

Andre Lovgin, CFO, Avsun: And maybe add to that, that what we have secured is at good levels. We are satisfied with the pricing that we have.

Simon Granat, Equity Analyst, ABG Sundal Collier: Very happy to hear that. Thank you. And the final question for me. I think the page you showed during the presentation on market drivers relating to geopolitical tension or military, cyber security, climate change, etcetera, is an interesting page. And my understanding is that most of your current operations is mainly relating to military.

So do you expect that to remain as a key driver for operations over the coming quarters or end years? Or could call it climate related use cases growing share of sales over the coming years? It’s simply a broadening use case, a strategic priority is my question.

Per Orien, CEO, Avsun: Yes. Thank you for the question. We’ll dive deeper into that on September 4 at our Capital Markets Day. But the general question is we see in the coming quarters that defense will be the main driver of that. However, with what’s going on kind of on the emergency side and the need for more capabilities, as you could hear on the news or I mean, this as of the date of this morning with what’s going on in Spain, it is a strategic initiative for us to look into how we capture that market.

It has some different market consent than what the defense market has. So we might have to be smart about how we develop the type of services for that market. But it’s the same core, it’s just that we might have to deliver it in a different way with a different business model. But it is a part of our Horizon two and Horizon three growth plan, yes.

Simon Granat, Equity Analyst, ABG Sundal Collier: Perfect. Thank you for having my questions and the insightful answers. Thank you.

Per Orien, CEO, Avsun: Thank you, Simon.

Matthias, Moderator/Host: Thank you, Simon Gernoft, the ABG Sundal Collier. And we are happy to be joined also by equity analyst Mikael Lassian at Investment Bank Carnegie. Please go ahead with your questions.

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: Yes. Hi. Hope you can hear me. Good. I have a few questions.

First of all, I’m curious about the SEK 1,000,000,000 contract from FNV. How did the service part start in Q2?

Per Orien, CEO, Avsun: Yes. I’ll hand it over to Andre.

Andre Lovgin, CFO, Avsun: Well, it started out well. We delivered terminals, as we said, and for and with that, you can then apply the services and the networks. So they have been established and are up and running. And we have in dialogue with the customers and what their need is, we have ramped that up during June since we got the order in late May. So it’s rolling in the plan that we have set up for establishing this.

Per Orien, CEO, Avsun: You can say just in addition to it. So we delivered the third of the total terminals at the June, right? So it’s somewhat of a gradual increase in the service because you don’t need to have overcapacity on the networks when you don’t have all the terminals out. So I think that’s what I would add Okay. To what you

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: So it was less than a month fully utilized then, I guess. And then it will be up and running in Q3, I mean, on a sort of the right level, I mean, the service part, right?

Per Orien, CEO, Avsun: That’s a fair way of looking at it, yes.

Andre Lovgin, CFO, Avsun: Yes. And the full I’m

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: trying to understand that the mix between Overson three, which has very high margins, of course, and leased side. Can you provide any sort of indications of the mix in this quarter, roughly how the service part is split?

Andre Lovgin, CFO, Avsun: Well, usually, we don’t disclose how much of our own satellites is being utilized. But it’s I mean, as you can see from our margins, margins are increasing and a part of that is more utilization of SOM three. That’s also the plan going forward to maximize that, of course.

Per Orien, CEO, Avsun: I would say it’s in this quarter, it’s mostly third party. But we have all started, as Andreas says, we have added in a part of Afzans three in that mix as well. I think this is great for us actually because it’s we have an asset, and we see what we have in terms of kind of in our pipeline, and we don’t want to sit on unutilized capacity. So we throw that in temporary if we can and if we want to, or we keep it for something that is maybe brewing, etcetera. So it’s a we have a good, good situation today with mixing and matching own assets with procured assets.

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: Okay. Got it. So how flexible is the leased capacity side? So if you got an order for Alzon three and you want to utilize more leased capacity, can you how quickly can you turn that on?

Per Orien, CEO, Avsun: It’s fairly flexible now. When you go into a twenty four month contract, though, you have to actually sign up for some period of time. So we cannot fully have on a let’s think of it as a monthly basis. So we have to actually sign up on some contracts that are, let’s say, on twelve months, right? So we do it with options and firsthand right of first refusal.

But in the beginning here, since the terminals were delivered late, we had the opportunity to actually do it more hand in hand, so to speak, from that. And as we go, we have to sign up for more. But right now, we’re utilizing Ossan three partly in that, which means we have a very, very good mix now. If something else is taking OXXOwn three’s attention, we have the chance to bring in the third other third party capacity. So I think that’s how deep I can go in that answer.

Yes.

Andre Lovgin, CFO, Avsun: I think we’ve done our homework and have now like optimized trying to optimize the portfolio of leased versus owned capacity.

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: Yes. Okay. And in terms of margins and costs, how should we think about gross margins on terminals when you have these high volumes? I guess that you have scale effects in production. But if you also can comment on how we should think about the operating costs below gross results going forward?

Andre Lovgin, CFO, Avsun: Yes. If I start with your last question, the OpEx. I mean we are a small organization, have been lean for quite some time. There are competence that we will add, but it’s not a massive increase at all. I think we’re going to stay well, not flat line, but gradually increasing and do that in a disciplined and controlled way.

So a slight increase there. And then on cost for terminals, and we are ramping up production. And of course, there will be probably some pricing or cost increases somewhere along the line, but I think nothing that is difficult for us to handle. And we’re making sure that we’re securing resources and plan for larger volumes as we go ahead.

Per Orien, CEO, Avsun: And with larger volumes also comes that you can order and you get better terms. Yes, exactly. We’re working this, as you can imagine, on a very strategically strategic force, but also securing production lines and inventory.

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: Okay. Got it. Just a clarification here on the follow-up from the first question about The U. S. Situation.

Should we expect that I mean, contracts or renewal could be delayed given the current situation? Is that what you’re suggesting? And maybe they can come back in late this year or early next year or

Andre Lovgin, CFO, Avsun: yes, it

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: would be great to Yes. Have some clarity on

Per Orien, CEO, Avsun: You tell me what you think about the clarity and the certainty of what’s going on in The U. S. Administration, first of all. But I’m not really laughing at it. So trying to answer your question, it’s really hard to predict.

I think, as I said a little bit earlier, we are have always been very close to the end users. We have very positive demand signals from them. They stay with their the terminals. They’re also on the move and on the pause terminals. They need it.

Could that lead to something early? Potentially. Could it be delayed to ’26? Potentially. But we’re also working on other tracks with other customers within U.

S. DoD that shows promise. But new customers take longer than current customers. So it’s very hard for me to say whether or not it happens now, tomorrow or later. But U.

S. The U. S. Market and The U. S.

DoD will remain an off zone target and will be off zone customers for the long term. I know it’s not the answer you want, but I can’t give you a better answer than that, actually.

Mikael Lassian, Equity Analyst, Investment Bank Carnegie: I appreciate it. Thanks. Thank

Matthias, Moderator/Host: you, Mikael Lassianov, Carnegie. So we will continue with some more questions then. If I start with you, Andre, given that the Afzans loan facility has been extended to 09/30/2026, can you elaborate a bit on your plan for refinancing or repaying this debt?

Andre Lovgin, CFO, Avsun: Yes, sure. I mean looking into our loan facilities, that’s something that we always do, of course, try to optimize. And we are, for the time being, very actively working on finding ways of optimizing this. So we are yes, really looking forward to see if we can find a good way forward here.

Matthias, Moderator/Host: This breakthrough in the second quarter with your improved financial status, will this give you possibilities in cheaper loan financing solutions?

Andre Lovgin, CFO, Avsun: Well, we’ll see. I mean it’s we are, as we said, actively looking into this. And it’s the impression we get is that it’s a much it’s a different world now than it was when we were sourcing financing for the satellites, and a totally different situation for the company as well. So it’s a new world and, obviously, in a new situation as well. So I think we’ll just have to wait and see.

And when we know, we will communicate.

Matthias, Moderator/Host: Thank you. Paar, do you say that you have a unique package of services? How will you stay ahead of competition?

Per Orien, CEO, Avsun: That’s a good question. Well, I think the way to stay ahead of competition is what we’ve always done. So staying very close to the customer, seeing what how they use it, what works, what where we need to improve, etcetera, etcetera. And the services, I would say, is an integrated service. So that includes both the terminal side.

So we can see a great need for smaller antennas, so smaller terminals, because there’s a drive towards unmanned solutions, lot of unmanned solutions. So that’s something we’re exploring. We’re looking into we know that the requirements we had on our own satellite, OFSON three with its own board processor, works, exceeds expectations with those customers that use it. So we are also investigating to see whether or not how we could, in the future, have more of that in our portfolio as well. And then thirdly, then, as I mentioned, unmanned and other things, new applications.

And I think the resiliency component, that’s a popular world in society today, but resiliency for us means that you have an uninterrupted signal even in an environment which is contested. And we are very good at that. Our onboard processor can actually do what’s called single hop communication between terminals instead of going down to a ground station and getting the signal from the fiber net. So that creates a closed loop communication system. That’s an innovation that I think has yet to fully be deployed in the market.

And if you put things on unmanned vehicles, you cannot have any latency, and the onboard processor ensures that you don’t. So this is how we’re going to stay ahead of the game with our mission critical capabilities.

Matthias, Moderator/Host: Thank you. We had a question from the side lobe. You partly answered this already. It was about that U. S.

Customer that has not yet prolonged the deal. But he also asked how much revenue is in play here?

Per Orien, CEO, Avsun: So the contract that we had was for USD 6,200,000.0 over twelve months. That was the current contract that then expired on July 31. So for this year, it maybe it’s not that much financially that we get hit with, but it’s a $6,200,000 on a twelve month basis. But we have always had the goal to expand that as well and get back to new customers and other customers. But that’s what’s in play.

Matthias, Moderator/Host: Thank you. How are your plans to launch a next satellite and its financing? How is that coming along?

Per Orien, CEO, Avsun: Very good question. That’s something that is in work. We’ll talk more about that at the Capital Markets Day. This is not a commercial for that, but we will lay out a little bit more context around that. We are absolutely looking into that given the feedback and the performance of Opsom three and the onboard processor.

So we’re looking into what technologies are there, new technologies on the satellite side that are available. The onboard processor, obviously, is critical, so we need that on as payload on the satellite. So we have a team that is concentrating and looking into it during the autumn here. Of course, if you want to do this, you also have to have financing as the question alluded to. So I think that’s a two step approach.

One is the question you asked, Andre, about refinancing. So I think working on that actively, as Andre answered, is what we do. And then the second phase of that is to look how we secure smart and effective financing for new satellite capabilities. So we can probably say today, we want to build more satellites. But we also have to have financing and capital in order to do it that is not draining the company.

So we are in the process of actually evaluating this.

Matthias, Moderator/Host: Okay. Thank you. On your Capital Markets Day on the September 4, fairly soon, what else can investors look forward to in getting in that day?

Andre Lovgin, CFO, Avsun: Well, it would be a deeper dive in Toveson as a company, our history and where we stand today and our offers and how we view the world and competition and possibilities, opportunities. And then forward looking as well, what’s what’s our strategy going forward. So it’s gonna be a bit of everything.

Per Orien, CEO, Avsun: All right. I would add to that. Think of it as a day in the life of Avsan with what we came from, where we are today as Andreas says and where we’re heading, which includes a view on profitable growth, technology, customers and scale up of the company.

Matthias, Moderator/Host: Great. There’s a late question coming in here. Do you see Ofsun’s satellite solution can create synergies with the Raeckel Gen two network? And have you had discussions with MSB?

Per Orien, CEO, Avsun: Yes. Raeckel Generation two is yes, is the kind of total defense communication solution? Absolutely. Absolutely, it can. It should be a component of Rockwell two or Rachel two, honestly.

We have had discussions through the years with Rockwell has been in play for a long time. We’ve had discussions through the years. But I also think if you look at what’s happening in the world, the question were around emergency services, natural security, public safety and defense. If you look at the situation in the world today, countries need sovereign capabilities and solutions. Rekel could be one of them.

Avsun is not integrated in it yet. It should be. So I think, obviously, we have to be on our toes, and we have to have open discussions. But we’ve started those conversations, early stage, but we’ve started those conversations.

Matthias, Moderator/Host: All right. That was the last question from me today. Thank you so much, Per and Andrea, for joining us today.

Per Orien, CEO, Avsun: Thank you, Matthias, hosting us.

Matthias, Moderator/Host: And I want to address the audience, and thank you, everyone, that has been watching. See us again.

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