Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ovzon AB (OSTO:OVZON, Financial) successfully launched its first proprietary satellite, Ovzon 3, which is now operational and expected to significantly impact the company's future.
- The company introduced new SATCOM-as-a-Service offerings, Ovzon Pegasus and Ovzon Orion, designed to meet high-performance, mobility, and resiliency demands.
- Ovzon AB (OSTO:OVZON) secured a significant contract with the US Department of Defense for its Ovzon Pegasus service, valued at approximately USD 6.2 million.
- The company reported improved financial performance with a reduction in EBITDA loss by almost half compared to the previous year.
- Ovzon AB (OSTO:OVZON) has maintained 100% uptime of its networks and services, which is crucial for its premium segment customers.
Negative Points
- Revenue from Ovzon SATCOM-as-a-Service decreased compared to the previous year, although partially offset by increased revenue from Ovzon terminals.
- The company reported an EBITA of minus SEK 12 million, indicating ongoing financial challenges despite improvements.
- Ovzon AB (OSTO:OVZON) faces complex and time-consuming government procurement processes, which can delay contract finalizations.
- The company has a net debt of SEK 561 million with repayment due next year, raising concerns about future financial stability.
- Ovzon AB (OSTO:OVZON) anticipates increased depreciation expenses as Ovzon 3 is activated as a fixed asset, which could impact future financial results.
Q & A Highlights
Q: How have conversations progressed regarding US revenues, and what are the expectations going forward?
A: Per Noren, CEO, explained that the December contract was not renewed to previous levels due to political uncertainty and budget reshuffling in the US. However, the recent contract with the US Department of Defense (DoD) aligns with their fiscal cycle and is expected to expand further. The company plans to leverage Ovzon 3 and new terminals for upselling and cross-selling opportunities.
Q: Should we expect the leased capacity to remain flat, or will it change with Ovzon 3's launch?
A: Per Noren, CEO, stated that the goal is to maximize Ovzon 3's utilization. While leased capacity has been optimized, some will be retained to complement Ovzon 3, especially if demand increases. The company plans to maintain some leased capacity through 2025.
Q: Are there efforts to increase the durability of service contracts to mitigate cyclicality?
A: Per Noren, CEO, emphasized the strategic goal of securing long-term contracts with option years. While progress is being made, the transition to longer contracts is expected to take 18 to 24 months, as it involves strategic conversations at high levels within organizations.
Q: Can customers be moved from leased capacity to Ovzon 3, and how flexible is this process?
A: Per Noren, CEO, confirmed that customers can be moved to Ovzon 3 if it fits their geographical needs. However, the decision depends on whether the premium pricing of Ovzon 3 is justified for the customer, balancing financial optimization.
Q: What is the feedback from the French customer, GIGN, and will they continue using the service?
A: Per Noren, CEO, noted that the feedback from GIGN was "flawless." While the collaboration was initially for the Olympics, the company aims to make it a standard communication solution for GIGN, though no ongoing deal has been announced yet.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
