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Luis, nice to see you again. How are things in Glasgow?

Great to see you, Carl. It's actually a very nice day here in Glasgow.

For a change. Luis, last time we spoke, you guided for a very busy second quarter or a quarter ahead, and as far as press releases and the figures are concerned, I would say that you've been proven right there.

Please, take it away.

Thank you, Carl. It was indeed a very busy quarter.

As I said, it was a foundational quarter. If we take a look at the presentation, we have a slide on listing those.

We have, not only we finished signing the second part of the STERNA contract, and effectively the whole payload and avionics contract came into life during this quarter with the work starting in earnest on all the parts of this contract. It was a very busy quarter from that perspective.

Also it's the quarter where we signed the next phase of Inflexion for the 12 satellites. This is when we really start the work to build the constellation, the work to actually start preparing all the services.

That's an extremely important milestone for us. Of course, we have launched Virian 1 and 2 back in March.

We are now going through their commissioning. We announced first light on Virian 1.

We are going through the process of focusing, calibrating that camera while we work on Virian 2 also. What we saw was growth on both business segments, both on the products and missions and on the data and services.

Overall, what this has given us is a backlog that is approaching 1 1.2 billion SEK. A very busy quarter.

If we go on to the next slide, we can also see that it was a quarter where we achieved good numbers, we achieved good results, very much in line with what we were expecting. We have growth, about 51% growth on net sales in relation to last year, to the same quarter last year.

We achieved a positive EBITDA of 2.7 million SEK, again quite a bit growth in relation to last year, but importantly is another strong quarter in terms of EBITDA. We have a very positive operational cash flow, something that we would expect with the kind of contracts we've got right now, but it is something that we have been working towards for some time.

As I said, an order backlog approaching the 1.2 billion SEK. It's very healthy.

It means that a lot of our revenues are already in our order book. That's actually a very good position to be in.

If we go on to the next slide, we are now very much focusing on execution and expansion. For the next few months, we continue to see strong demand for our products and satellites, we are working with potential customers, we are working through our pipeline of opportunities right now.

A lot of our focus is now on expanding our data and services, bringing Virian 1 and 2 online, getting Sat 3 and 4 through their build so that we can reinforce our maritime data intelligence gathering and we can start monetizing those satellites, and of course focusing on the Inflexion program and growing our constellation on the maritime side with new services, not just tracking, but also communications and other associated services. We continue to do that.

As I said, we have strong demand, and a lot of our focus now is actually on delivering products and missions to customers, governments, and commercial customers. We continue to do that.

We see strong demand for our products. If we go on to the next slide, we keep our full year guidance.

As I said before, this quarter 2 was in line with our expectations, we keep our guidance of 440 million SEK to 510 million SEK in net sales for the year, with an EBITDA of 10% and positive operational cash flow. We continue to maintain that guidance.

As I say, quarter 2 was aligned with our expectations, we are very, very happy to maintain our guidance. This is in summary the quarter.

I don't know if there are some questions now, but it was a positive quarter for us.

Thank you for that. Short and snappy.

In summary here, if I can just recap the first slides where you're referring to 6 months being foundationals here, you're talking about two separate things that will be connected. See if I got this right.

Firstly, we have the STERNA orders strengthening the hardware side and proves that you're now operating on a much larger scale, which we can see that the figures here are delivering. Secondly, you have the launch of the Virian and progress with Inflexions, driving future data and service growth.

A, you have one part that is delivering, and another part that will drive the growth. Do you buy into my interpretation there?

Absolutely. We very much have that that bedrock of our business that is hardware, but we see quite a lot of opportunities on the growth of our data and services business to expand the company, to grow the company.

The first quarter, the first half of the year is very much good example of how we operate, building on on our success as a hardware producer and then delivering on data and services as as a growth engine for for the future.

Would one or the other of those two developments be more important than the other?

I would say they are equally important in their different way. When you look at something like STERNA is a very large contract, is technically challenging, but perfectly achievable.

We have done a prototype before on the Arctic Weather Satellite, we are very comfortable with the design and build of this constellation. It's a big contract, but it is an important contract for Europe.

It shows our ability in terms of hardware, our design engineering. That is something that we will continue to do, is something that will continue for the future.

As I say, it's very much the foundation of the company, the hardware capability, the engineering capability. Then we see huge potential on the growth of data and services, and that of course is an area we are investing, it's an area that we expect to grow.

In the long term, we expect those areas to be about 50-50 of our business. We are in that journey right now.

I have some complementary questions here regarding this from viewers here coming in. Virian 2, is it doing well?

We are going through its commissioning. We have focused very much on Virian 1 at this stage because we want to start service, so that we are putting more effort into that.

Virian 2 is going through its commissioning, doing its tests as normal. Yes, but the focus has been on Virian 1 because we want to start revenue from those satellites on quarter 3.

More to come from Virian 2, then.

Then

we have another viewer questions here: For the product and mission revenue, how much of the revenue came from STERNA for the quarter?

A large amount. It was a big part of our revenue, but it was not the only one.

Yes, it was. I couldn't tell you an immediate number on top of my head, but it was an important part.

It will be the case for the next 2 years. Always be a big part of our revenue for products, because it's our biggest contract.

It is the dominant contract on our products business line. Yeah.

I can see that we have some questions about SKAO here, but I'm coming to that a little bit later because I would like to stay on Virian satellites. When will Virian start generating revenue following commission, and how would investors think about the commercial ramp-up for the first revenues to a more meaningful contribution, if you could elaborate a little bit of that, and then we'll jump in to South Africa?

We expect revenues to start on quarter 3. As I say, we are already capturing imagery, we are already doing some of the work in preparation for our customers.

We expect, as I say, Q3 to already start delivering some revenue, but then we expect a normal ramp-up on a project. We have customers lined up, we have people wanting to take on contracts on the satellite.

I expect what would be a normal ramp-up on a data and services contract. We expect to be in full revenue for those satellites towards next year, there will be a ramp-up from here until then.

It's difficult to go into that detail without going through the detail on contracts and customers, but it's what I would expect a normal approach for a satellite, data and services satellite, that we see also on our maritime side, for instance.

If we go back to a press release from last week, I think, if you could elaborate a little bit about the SKAO project. What is SKAO, and what to expect going forward?

I have some detailed questions here, we'll see how much you can answer here. Just in round things here, this is a large organization, as I understood.

SKAO stands for Square Kilometre Array Organisation. Square Kilometre Array is a telescope that's several antennas in places in South Africa, in Australia.

We are working on the one in South Africa. We provide one part of that network of antennas and including receivers for a specific band.

The objective is to look at the universe and measure certain amounts of microwave radiation coming from different stars and different celestial bodies. It's a big international organization, it's actually headquartered in the UK, but it's financed by many different countries.

As I say, the antennas and the telescopes are based in South Africa, the ones we are working on. We are supplying the feeds for those.

We are building them in Gothenburg. It is a project that has been running for quite some time.

What we announced is that we shipped the prototypes of those feeds to South Africa. We are very much dependent on the timelines of that large international organization.

They have to build antennas, they have to expand their site in South Africa. We have been working on that, and we are very happy to have those feeds there.

They are now being tested. We will have results later this year for those tests.

It just shows the progress that we have done. The design is pretty much done.

We are now in a phase where we are just waiting for our customers to say, "Okay, start delivering these units." We have quite a lot of those units to deliver.

It's a great start. It's great progress.

We are very much on the timelines of our customer on that.

We have a more granular questions here regarding it, I'll just read it through: You recently delivered the first pre-production band 1 feed systems to the observatory as a part of the €12 million contract. How much revenue remains for the project?

What can you say?

I would say that there is still substantial revenue on that program. We have done the design phase and the production of the first unit, the bulk of the production is still to be done.

I would say I won't go into the detail of the numbers, but I would say that a large amount of the revenue is still to come.

Coming into future here, though, a large European satellite programs like IRIS² are increasingly moving towards procurement. How well positioned would you say that AAC Clyde Space power and data handling products would be for larger LEO and MEO platforms?

I think they'd be the ideal, but we will only do that work if it's actually profitable. What we have seen in many of these very large constellations and very large large programs is that they are actually quite margins are usually expected to be quite low, they are they are usually very commercially aggressive.

They also tend to attract lots of people, of course lots of suppliers, there is huge competition because they are seen as large programs, what depresses margins. We have walked away in the past from one or two of these opportunities, because when when we get to the negotiation, the discussion with the customer, effectively they want to do us they want us to do that at ridiculously ridiculously low margins that would barely pay our costs and and if there are any problems, any issues on the design, we could actually lose money.

Although the promise is is is good, the reality is that in some cases this is just not what it seems. We will, of course, we are having we are in the discussions, we are talking to the to these potential customers, but we will only only actually do that if if the business makes sense.

It has to make sense. In some cases in the past, for these kind of things, we we preferred to negotiate, for instance, a licensing a license agreement with the the customer.

If they are going to build a lot of satellites, they might might be more interested in doing these things themselves, the the production themselves. These are things that we are in discussion right now.

As I say, we are we are part of these conversation, we are talking with the different the different potential customers, and so we are in that phase. As I say, we will only do it if it's actually if it makes sense for us.

I think we have a very strong products, actually probably the best for for what they are looking for, but we'll we'll have to see if the if the business makes sense.

Coming away not having an order doesn't necessarily mean that, well, it could mean that you will not suffer margins going forward.

Yeah. As I say, we have in the past, we have been approached for other constellations, we have been asked to bid, we bid, and technically we, of course, offer a very compelling offer to the customers, but the kind of prices they are looking for, the kind of conditions even that they impose on us are such that it's a risky business and you can actually lose quite a lot of money.

In those cases, we walked away. We've got a few others that we are ongoing, not on IRIS², we've got a few other discussions ongoing on products for constellations of tens, probably not hundreds, but tens of satellites.

Again, it has to make sense. It is something that it's very appealing because the number is very large, but a lot of revenue with a loss makes no sense.

That's what we are always looking for. Does it actually make sense for us to bid on this, or to win these things?

That's always a discussion, and we'll see what terms, what conditions we are offered, and then we'll decide.

We have another question here regarding this quarter and the EPS-STERNA projects, and I think that you have partly already replied to on a previous question, and the question is, how much revenues during the quarter is related to the EPS-STERNA project? Could I just add then and say, are you happy with the contribution so far in comparison with other revenue streams on the EPS-STERNA project, well, this quarter and so far?

Yes. We are broadly on target on STERNA.

In general, yes. We are where we plan to be with STERNA, and we expect that to continue.

Yes, I'm happy with that.

I'll tie in that to another question, which is easier perhaps to say than answer, and what is the full revenue potential for Virian 1?

That would be giving too much information about our business plan, I will not answer that one, but I would say that it makes economic sense. Of course, we only invest in it because we believe that it will actually make us quite a good revenue and quite good profit.

Okay. You are reiterating your full-year guidance as you did in the previous quarter, and that's just to remind people, 440 to 510 million SEK, and a margin of 10%.

I will ask you more or less the same question as I did the previous quarter: What gives you the confidence in the guidance, and what are the key things that you would like us to look for and that you need to happen in the second half?

Largely where we are is we are delivering on our plan, second quarter was quite good, gave us confidence that we're delivering as expected. The third quarter continues to deliver.

That's what is giving us the confidence on the guidance. We expect to continue to deliver.

We've got the backlog. We've got a strong backlog with most of the revenue already booked, if not close to all, but a large part of the revenue is already on the books.

We have a few more things to do throughout the year that we need to do, but we are pretty confident on where we are right now.

Would you be so bold so you could give us an expectations of revenue for 2027? It's a viewer question.

Not yet. Too early for that one.

Okay. Then I will come back here on products and customers here.

How well positioned would you think that AAC Clyde Space would be for the UK coastal maritime ISR service procurement?

We are always well placed. It depends very much, many of these things have a variety of different technologies that are required.

We can actually deliver part of those. Together with other partners, we can deliver full solutions.

We would be poised to be part of that, but we would have to see. We would have to see what exactly requirements we are being asked to do and in which parts it makes sense for us to invest in development of capability.

It's a little bit of the IRIS² here. You are discussing and you think you're well positioned, but it takes two to tango in, well, here as well.

It depends. First, if you look at Inflexion, that is already part of that type of technology.

If you look at Inflexion, we have different partners delivering different parts of the system. It depends very much if the demand on us, we can fulfill it all ourselves, if we need to work in partnership with someone.

It depends very much. These are discussions that are always happening, and in some cases we can lead, in some cases we can actually be a follower, can work with someone else.

These are all part of life discussions. Until a contract is defined, it's something that we just have to continue talking and discussing.

Just as, well, more or less a wrapping up question here: When you said you have to continue discussing, could you just give us a feel for the timeline from let's say initial discussion to actually signing on the dotted line? Are we talking 6 months, 6 years, and...?

Depends. It depends very much on the type of contract, the type of customer.

It can be very quick, can be very long. Contracts like STERNA, as everyone knows, take a few years to actually happen, from first discussion up until you've got a contract, it can take quite a long time.

Other contracts with particularly commercial customers can be much quicker. I would say a 1 year is a good average, 1 to 1.5 years between first discussion and a contract.

That's an average.

Of course.

There are quite extreme cases, particularly if it involves government and governmental organizations. It's not unusual to have a 2-, 3-year timeline between the first contact and actually having something black and white.

Yeah. On the other hand, it's more of a question: If it takes a long time to negotiate, particularly with a state, if you have it, then you know you have it and you know you have a solid customer who will actually pay the bills.

Exactly. That's why we do it, because ultimately that's why we actually like those contracts and we like to work with governments, because ultimately they are good customer.

Although the negotiations can take quite a long time, as you point out, usually you know very early on if you are the one that has been selected, and then you just have to go through the process. It's good business.

Okay. Excellent.

Thank you for that, and last time you predicted a very busy quarter, could we expect a very busy coming quarter as well?

They're all busy. Very rarely we have a quarter that is not busy.

If it's not new contracts, it's delivering on the ones that we've got. Yes, quarter 3 will be busy, quarter 4 will be very busy.

We expect the momentum to continue.

All right. Thank you for that, Luis.

We will thank anyone who asked the questions, and if you feel that you need more meat on the bone, take contact with the company and its IR. With that, I would say thank you so much,

tack ska

ni ha, and see you later. Bye.

Thank you. Bye.