Slide 1: Financial Presentation and Strategy Update
Financial Presentation and Strategy Update Q2 2022 10 August 2022
Slide 2: Agenda
Agenda • Business overview • Financial highlights • Strategic update • Outlook Magnus Grenfeldt, CEO Mikael Haag, CFO Kent Lidström, CTO 10 August 2022 2
Slide 3: Strong financial performance in second quarter of 2022 and continued high demand
Strong financial performance in second quarter of 2022 and continued high demand Revenue EBITDA Margin EBIT Margin Q2: 14.6 MUSD Q2: 22.9%1 Q2: 20.3%1 Gross Margin Revenue Growth Operating Cash Flow Q2: 47.2%1 Q2: +18.1% Q2: +3.4 MUSD Note: 1) Gross Profit and Gross Margin impacted by certain one-of
Slide 4: Continued strong growth for Solutions, Software and Services
Continued strong growth for Solutions, Software and Services Revenue (invoiced) by business area Comments (MUSD) • Solutions account for 56% of 16 the business in Q2 2022 14 1.2 • SW & Services increased from +64% 5.8% in Q2 2021 to 7.8% in Q2 12 2022 0.7 5.3 10 • Stable performance of Device +18% 4
Slide 5: Americas grew by 48%, while EMEA grew by 13%
Americas grew by 48%, while EMEA grew by 13%, as shipments to customers in America have dominated Q2 Invoiced Revenue per Region and Quarter – Q2 2022 Comments (MUSD) • Shipments to key customers in Americas have dominated Q2, Americas EMEA APAC resulting in a growth of 48% +48% (affecting other mar
Slide 6: Strategic review shows higher potential going forward
Strategic review shows higher potential going forward Market Development Insights Actions • Recent years’ market success • Smartoptics is now a • Maintain investment plan has put Smartoptics in a new relevant challenger in Tier 1 • Product organization to position in our market and Tier 2 accounts p
Slide 7: Agenda
Agenda • Business overview • Financial highlights • Strategic update • Outlook Magnus Grenfeldt, CEO Mikael Haag, CFO Kent Lidström, CTO 10 August 2022 7
Slide 8: Summary of financial performance 2022 and 2021
Summary of financial performance 2022 and 2021 Revenue (MUSD) Gross Profit (MUSD)1 Gross Margin (%)1 +38% +18% 47.2% 44.3% 42.5% 42.9% 40.4% 14.6 6.9 12.4 11.1 12.5 11.8 5.0 4.7 5.5 5.1 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q1 2023 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2
Slide 9: Positive operating cash flow of 3.4 MUSD in Q2 2022
Positive operating cash flow of 3.4 MUSD in Q2 2022, as increase in Inventory & Receivables were offset by Payables increase Working Capital development (MUSD) Comments 14 • General trend of increasing 12 inventory, as an effect of 10 semiconductor shortage 8 6 • Inventory levels still at a high lev
Slide 10: Agenda
Agenda • Business overview • Financial highlights • Strategic update • Outlook Magnus Grenfeldt, CEO Mikael Haag, CFO Kent Lidström, CTO 10 August 2022 10
Slide 11: IP over DWDM – so what?
IP over DWDM – so what? • Traditionally, the Transport Network has serviced client technologies with capacity, now almost all being IP based • Metro Area Network architecture is collapsing into one “IP over DWDM” network – Open Line Systems becomes essential – DWDM capable interfaces (transceivers)
Slide 12: IP over DWDM – Simplifying networks and reducing costs
IP over DWDM – Simplifying networks and reducing costs Traditional building concept Proprietary Transport Network Line System 400G 400G 400G DWDM 400G DWDM IP over DWDM Open Line Systems 400G DWDM 400G DWDM 10 August 2022 12
Slide 13: IP over DWDM will take over the metro WDM market
IP over DWDM will take over the metro WDM market – primarily in North America and EMEA Worldwide Metro WDM market (MUSD) & Estimated IP over DWDM share of market Comment 9 000 • Worldwide Metro WDM to remain flat over 8125 8166 8087 the coming years, as spending shifts 7945 7935 7872 8 000 7721 towa
Slide 14: Roadmap to capture increased market potential
Roadmap to capture increased market potential Complete ROADM solution Future proof DCI Open Line System Modern management solution Low-cost Transponder/Muxponder portfolio 10 August 2022 14
Slide 15: Continuing expansion of addressable market with new products that target larger customers
Continuing expansion of addressable market with new products that target larger customers Internet Content Providers Communication Service Providers Segment Enterprise Data Center Interconnect (ICPs) (CSPs) Datacenter interconnect for WAN Datacenter Interconnect for SAN and WAN Datacenter interconne
Slide 16: Growth going forward driven by additional large customers
Growth going forward driven by additional large customers Shift from ”many small” toward ”many small and some large” Previous situation Current plan and development Many small accounts Continued many small accounts Few large accounts Several large accounts Illustrative share of revenue profile Illus
Slide 17: Agenda
Agenda • Business overview • Financial highlights • Strategic update • Outlook Magnus Grenfeldt, CEO Mikael Haag, CFO Kent Lidström, CTO 10 August 2022 17
Slide 18: Long term ambitions
Long term ambitions 2025/26 2022 Q2 aspirations YoY Growth +18.1% Revenue ~100 MUSD (50.0 MUSD LTM1) Gross margin 47.2% ~45% EBITDA margin 22.9% ~17-20% EBIT margin 20.3% ~13-16% Note: 1) Revenue for the 12 months Q3 2021 – Q2 2022 10 August 2022 18
Slide 19: Profit and Loss Statement
Profit and Loss Statement Profit and Loss Statement Q2 2022, 2021, 2020 Comments kUSD kNOK • YoY revenue growth 2022 vs 2021 of 2022 2021 2020 2022 2021 2020 18.1% Q2 Q2 Q2 Q2 Q2 Q2 Total revenue 14 608 12 364 7 863 139 387 103 473 78 642 • Non-recurring items has impacted Gross Cost of Goods Sold 7
Slide 20: Cash Flow Statement
Cash Flow Statement Cash Flow Statement for Q2 of 2022, 2021 and 2020 Comments kUSD kNOK • Operating Cash Flow is positive 3.4 MUSD 2022 2021 2020 2022 2021 2020 Q2 Q2 Q2 Q2 Q2 Q2 • Smartoptics Group has an unused credit Cash at the Beginning of Period 5 077 2 393 1 786 44 414 20 391 18 934 facility
Slide 21: Balance Sheet
Balance Sheet Balance Sheet for June 30, 2022, 2021, 2020 kUSD kNOK kUSD kNOK 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Non-Current Assets 5 809 9 281 6 305 57 877 79 568 60 940 TOTAL Equity 23 660 22 866 9 755 235 723 196 032 94 283 Intangible A
Slide 22: Thank you
smartoptics Thank you