Interim Report January - March 2023

Comments from the CEO
93% of Order Intake is recurring TRaaS
The order intake in Q1 arrived at SEK 90 million, comparable to last year at SEK 84 million. The order intake excludes the Dutch procurement award of SEK 245 million, which was won in Q1 2022, and which will be added to the order intake once the orders are formally allocated. Of the Q1 2023 order intake, SEK 83 million or 93% relates to TRaaS recurring revenue, including SEK 35 million from one new city we added in our strategic USA market and two renewal contracts.

TRaaS represents 76% of total Sales
With total sales of SEK 113 million, our first quarter was successful and on par with Q1 2022 sales. At SEK 86 million, our strategic recurring TRaaS sales increased by 25%. Our TRaaS Managed Services business, which is primarily realised in the United States, increased by 23% this quarter, from SEK 40 million to SEK 49 million. In the quarter, our TRaaS sales reached 76% of total sales, exceeding our target of 60% for our 2025 ambition.

Investments in US Market
We started executing on a new plan for our US market in Q2 2022. Compared to Q1 2022, we added three sales managers to our US sales force. The investment is paying off with an increase of 7 closed contracts in this strategic market, of which 4 new cities, demonstrating the effectiveness of the strategy.

Historic order intake makes increased development necessary
By placing significant orders in Europe, Australia, and the USA in 2022, our customers clearly displayed their enthusiasm for our solutions for traffic enforcement. Orders received for the whole year of 2022 totaled SEK 1.5 billion. This order intake represents more than three times the yearly revenue for 2022 and is by far the largest in Sensys Gatso's 65-year existence. We received an additional SEK 90 million in orders in Q1 of this year, bringing our total order intake that is currently in a project development phase to SEK 1.6 billion. Our engineering team is currently working hard to develop solutions to cater for the customer specific demands for each of these large wins and for many smaller ones.
This is reflected in higher development costs now. These project investments will be leveraged during the revenue generation phase of these long term contracts.

Development cost increase is temporary
Our temporary upscaling of the development teams has a side effect. We are to a high degree using short term consultants for the upscaling in order to be flexible and effortlessly able to scale down once the push is over. The downside is that this is a rather costly way of increasing capacity, which is visible in our Q1 financial metrics. As soon as our new product platform FLUX has proven itself on the market, we will adapt our development capacity thanks to the way that Flux is built. More importantly, the transition to FLUX enables us to further grow our topline without linear development cost increases.

Short-term EBITDA decrease was planned
EBITDA arrived at 1.5 million for the quarter, compared to 16 million last year. The decrease in EBITDA can be attributed to an increase in operating expenses of SEK 11 million, which is primarily due to greater sales expenses to achieve our topline goals in the USA. These investments will be leveraged once the seven new contracts recently won by our sales team start adding to the topline, later in 2023. Additionally, our COGS has increased by SEK 9 million, mostly as a result of the additional development times needed to simultaneously complete a number of key projects and also construct the new FLUX platform. Once these projects are completed, later this year, we will reduce our development costs. As a result, the decrease in our EBITDA this quarter should not be looked upon as being structural.

Healthy financial position
Taking into account the total amount of available credit facilities, the free available cash at the end of Q1 amounted to SEK 143 million. This is SEK 6 million lower compared to Q1 2022. Our investments in our software platforms FLUX, Puls and Xilium have increased at a similar level of around SEK 7 million. With our strong available cash position and low level of debt, the company has a healthy financial position.

Outlook
We added SEK 1.6 billion to our order book in 2022 and Q1 2023 and we are now executing against these orders. This temporarily increases our costs, mainly in our global development team. Our profitable TRaaS business continues to grow and our strengthened team in the USA proves to be able to push our topline in this strategic market. On top, we see our new ground breaking roadside platform FLUX coming to fruition in the market. We therefore retain our long-term plan to, by 2025, grow our net sales to more than SEK 1 billion, of which TRaaS revenues is more than SEK 600 million. We also retain our ambition to increase our EBITDA margin to more than 15% in 2025.

Ivo Mönnink
CEO, Sensys Gatso Group

Invitation to a presentation
On 26 April at 10 am CET Sensys Gatso Group invites press, analysts, shareholders, and stakeholders to participate in an audiocast. The company’s CEO Ivo Mönnink and CFO Simon Mulder will present the financial results in English. The presentation in connection with this report will be published on the website.

The presentation/audiocast can be joined online or via telephone and will be available on the company’s webpage: https://www.sensysgatso.com

If you wish to participate via webcast please use the link below.
https://ir.financialhearings.com/sensys-gatso-group-q1-2023

If you wish to participate via teleconference please register on the link below. After registration you will be provided phone numbers and a conference ID to access the conference. You can ask questions verbally via the teleconference.
https://conference.financialhearings.com/teleconference/?id=5003177

This information is information that Sensys Gatso Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.30 on 26 April, 2023.

For further information please contact:
Ivo Mönnink, CEO
e-mail: i.monnink@sensysgatso.com
e-mail IR: investors@sensysgatso.com
Telephone: +46 36 34 29 80

Sensys Gatso Group AB is a global leader in traffic management solutions for nations, cities and fleet owners. Sensys Gatso Group has subsidiaries in Australia, Costa Rica, Germany, the Netherlands, Sweden and the USA, and a branch office in the United Arab Emirates and has 284 employees. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm.

For further information, visit www.sensysgatso.com