Half year Report January - June 2024

Comments from the CEO

Delivering on our ambition
We realised a strong order intake this quarter, 37% higher than last year. Our sales team in the USA is making great commercial progress by signing three new contracts, on top of the nine new contracts signed in Q1. Furthermore, the execution of the two large contracts in Sweden and the Netherlands, with a combined contract value of SEK 1.25 billion, is on track to drive revenue for many years to come, starting in Q4 this year. Lastly, new traffic enforcement solutions are technically qualified by our Saudi customer. Altogether, we are on track to meet our 2025 financial ambition.

Order Intake +37%
Order intake and procurement awards during the second quarter came in at MSEK 418 compared to MSEK 306 in Q2 2023, an increase of 37%. Of the total order intake, SEK 276 million, or 61%, is from TRaaS Managed Services contracts in the USA. Part of the order intake this quarter is the signing of our first contract in the Town of Stratford, Connecticut, worth SEK 73 million. This state just recently opened up for Photo Enforcement. Getting our first contract in this state is an important milestone for us. For the first half year, the total order intake, including procurement awards, amounted to SEK 736 million (396).
No less than SEK 551 million, or 75%, came from TRaaS order intake from the US market. With our strengthened US sales team we managed to sign twelve contracts in the first half of 2024, of which five new customers and seven contract renewal and extensions. It's encouraging to see that our stepped-up sales efforts in the crucial US market are clearly visible in the order intake.

Large backlog from home markets
In 2022, we received two large orders in our home markets, Sweden and The Netherlands. The combined value of the two contracts is SEK 1,250 million. The Swedish order of SEK 850 million is in its final development phase. The rollout of this project is now expected to commence in the third quarter and will continue for the next five years. The Dutch order, worth SEK 400 million, has started its rollout and will continue into the first half of 2025, depending on the acceptance schedule from our customer. Of the combined SEK 1.25 billion contract value, 9% has been delivered to date, the remaining SEK 1.14 billion is still in our backlog.

Revenue is up 26%
Total Revenue for the quarter arrived at SEK 167 million. Compared to SEK 133 million in Q2 2023, this is an increase of 26%. Looking at Revenue by Nature, our System Sales for the quarter arrived at SEK 119 million. Compared to SEK 90 million in Q2 2023, this is an increase of 32%. Our TRaaS revenue for the quarter of SEK 88 million was slightly higher than Q2 2023 at SEK 87 million. This recurring business equates this quarter to 53% of total sales. The TRaaS revenue is primarily driven by our TRaaS Managed Services sales, which was up this quarter by 13% to SEK 59 million (52). Year to date, our TRaas Managed Services revenue grew by 16% from SEK 102 million in 2023 to SEK 118 million in 2024. The revenue from newly signed contracts in the USA this year is not yet part of this. We expect these new contracts to start contributing by the end of 2024.

Legislative changes in Iowa
As of May 17, 2024 the state of Iowa in the USA enacted legislation that provided guidelines for automated speed enforcement programs. The aim is to bring Iowa legislation in line with other states, mostly regarding permitted locations, maximum fine amounts, and speed thresholds. As communities navigated the changes, some programs were paused between May 17th and late June. We estimate that the pause of the programs will have limited effect on the revenues for 2024 in the US. The changes include the catch up period through the process of restarting the mailing of citations and the timing for payments thereafter. We do not project that the Iowa legislative changes will have an effect on the delivery of services or revenue in future years, other than a temporary pause on the start of the implementation of three new programs in Newton, Granger, and Grinnell. Our US team will continue to work with partner communities to ensure the effectiveness of their driver safety programs while adhering to the new regulations.

New solutions technically qualified in Saudi
In April this year, we signed a Memorandum of Understanding with our customer Tahakom in the Kingdom of Saudi Arabia. With this MOU, Sensys Gatso will collaborate with Tahakom in multiple initiatives across Saudi Green Initiative, Local Content and the road to Saudi Vision 2030, reinforcing the strong partnership between the two entities that dates back to 2016. Sensys Gatso and Tahakom will provide the Kingdom with next-generation traffic safety solutions that can handle a variety of Smart Mobility features in all environments and weather conditions. Next to the successful in-vehicle solution, Tahakom has now technically qualified Sensys Gatso as a supplier for Fixed Speed and Fixed Redlight solutions, creating the possibility for a more in-depth relationship in the future.

Big on-going projects
The available cash at the end of the quarter came in at SEK 65 million compared to SEK 84 million at the beginning of the year. Financing of big projects such as the Swedish and Dutch Contracts has temporarily increased our investments in working capital. On top we have continued investing in Fixed Assets in operations in the USA as well as in our software platforms. With the roll-out of the projects in Sweden and The Netherlands we expect a gradual improvement of our available cash.

EBITDA up 28%
Our Gross Margin this quarter was 42%, the same as in Q2 2023. This is mainly due to higher margins on system sales from our Saudi customer. At the same time, and as planned, we face lower margins on deliveries of system sales in the initial phase, specifically from the new large contracts in the Netherlands and Sweden.

We typically start the rollout of a new System Sales program with the delivery and installation of systems, followed by acceptance by our customer. Only after customer acceptance, the systems go into operation and the Service and Maintenance part of the contract commences. This is a gradual process over a period of 12 to 18 months. The program will come to full fruition when all new systems have been installed and are in operation. The overall gross margin of the contract will gradually recoup during this phase. Twelve months rolling, our margin is stable at around 40%.

Our EBITDA for the quarter arrived at SEK 25 million, 28% higher than in Q2 2023 at SEK 19 million. Year to date, the EBITDA arrived at SEK 28.3 million, 37% higher than the first half of 2023 at SEK 20.7 million.

Outlook
Our order book is strong, with a revenue backlog of SEK 1.14 billion from two large contracts in our home markets, Sweden and the Netherlands. Our profitable TRaaS business continues to grow, and our strengthened team in the USA proves able to sustainably grow our topline in this strategic market. On top, we are pleased to see our new ground-breaking roadside platform, FLUX, now launched in our home markets Sweden and The Netherlands. We therefore retain our long-term plan and ambition to, by the end of 2025, grow our net sales to more than SEK 1 billion, of which TRaaS revenue is more than SEK 600 million. We also retain our ambition to increase our EBITDA margin to more than 15% by the end of 2025.

Ivo Mönnink
CEO, Sensys Gatso Group

Invitation to a presentation
On 23 August 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-q2-report-2024

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=50049086

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 23 August, 2024.

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, Saudi Arabia, Sweden and the USA, and a branch office in the United Arab Emirates and has 302 employees. The Sensys Gatso Group’s shares are listed on Nasdaq Stockholm.

For further information, visit www.sensysgatso.com

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