Ovzon (OVZON) investor relations material

Strategic direction and business model evolution

• Focus on maintaining positive cash flow and profitability by running a healthy core business and leveraging strengths in terminals, satellites, and services.

• Entering a scaling phase with a focus on driving profitable growth and industrialization, expanding satellite and terminal capabilities to enhance market relevance.

• Shifted from bundled, short-term subscription contracts to longer-term service contracts (12–72 months), selling terminals outright to defense customers and integrating consultative maintenance services.

• Service revenue now constitutes over 80% of total revenue, with higher margins on proprietary satellite capacity; terminals are only sold with integrated service contracts.

• Top priorities for the next 6–12 months include decisions on new satellites, scaling mobile terminal production, and building predictable long-term revenue streams.

Financial outlook, guidance, and investment planning

• Financial modeling assumes moderate growth, refinancing, incremental satellite utilization, and renewal of most current contracts, with continued use of third-party capacity.

• Recently announced refinancing solution expected to reduce annual interest expenses by 70 MSEK, contributing to increased financial stability and predictability.

• Operating cash flow is expected to remain positive, financing roughly half the cost of two new satellites, with additional funding sourced externally.

• Balance sheet projected to strengthen over time, potentially enabling future dividends as equity increases.

• Revenue and profits are expected to grow with satellite expansion, with EBIT growth outpacing top-line growth due to operational leverage.

Market opportunities, partnerships, and operational considerations

• Strong demand in the market, especially for government, defense, national security, and public safety sectors, with a focus on replicating recent large deals and expanding use cases.

• Recent launch of proprietary geostationary satellite Ovzon 3 supports service expansion.

• Sales cycles for large government deals can take up to 18 months, with smaller deals averaging 12 months.

• Economies of scale and modular satellite architecture are expected to reduce costs for future satellites, though launch costs remain a significant variable (20–25% of total cost).

• Strategic partnerships, including co-investment with customers or other operators, are being explored to fund satellite expansion and leverage third-party capacity.