Year End Report January - December 2024 and Outlook 2025

Comments from the CEO

Strong Order Intake in Q4 2024 with Significant TRaaS Contributions
Order intake and procurement awards during the fourth quarter came in at SEK 161 million compared to SEK 212 million in Q4 2023. Of the total order intake, SEK 79 million or 37% is from an extended TRaaS service and maintenance contract from the state of Victoria in Australia. Year to date, the total order intake, including procurement awards, amounted to SEK 992 million, 32% higher than last year at SEK 754 million. In the full year 2024, no less than SEK 655 million, or 71%, came from TRaaS order intake, predominantly from 13 new and extended contracts, signed with cities in our strategically important US market. The substantial share of recurring TRaaS revenue within our 2024 order intake indicates that we have successfully implemented our strategy to establish a solid foundation of recurring revenue for the future.

Significant Progress on Major Contracts in Sweden and the Netherlands with SEK 1,000 million in Backlog
The backlog from our two large contracts secured in our home markets Sweden and the Netherlands amounts to SEK 1,000 million. The development phase of the Swedish order of SEK 850 million has been completed during Q4 of this year with final acceptance by our customer in January 2025. This followed extensive testing required to align and integrate our new FLUX speed enforcement system with our customer’s various IT systems, some of which are also new or updated. The commencement of the Swedish project rollout is now anticipated in the first half of 2025, encompassing the replacement of existing systems and the installation of new systems in the field. The Service and Maintenance component of the contract will be initiated incrementally and is projected to endure for the next twelve years.

Implementation continues for the Dutch order, which is worth SEK 400 million, split between SEK 200 million in systems sales and SEK 200 millions in repairs and maintenance over a 6 year period. The systems installation rollout started in 2024, continues during 2025, and is expected to be completed in 2026. Service and maintenance for the Dutch order is slowly phasing in, starting in 2024 and ending in 6 years, with potential contract renewals for another 6 years thereafter. Of the combined Swedish and Dutch SEK 1,250 million contract value, approximately 15% has been delivered to date, leaving more than SEK 1,000 million still in the backlog of just these two programs in our home markets.

Stable TraaS revenue, notwithstanding Iowa
Total Revenue for the quarter arrived at SEK 198 (221) million, whereof TRaaS revenue SEK 100 (104) million and System Sales SEK 98 (117) million. The decrease in System Sales was mainly related to timing of deliveries in Sweden and delay of anticipated orders from the Middle East. The recurring TRaaS business equates this quarter to 51% of total sales. The TRaaS revenue is primarily driven by our TRaaS Managed Services business in the USA. For the full year 2024, our TRaas Managed Services revenue grew by 2% from SEK 363 million in 2023 to SEK 371 million in 2024. This is notwithstanding the negative impact on our TRaaS Managed Services revenue caused by the legislative changes in the state of Iowa in the USA.

For the full year 2024 our recurring TRaaS business accounted for 59% of our total revenue.

Iowa Legislative Changes Impact Speed Enforcement Operations and Revenue
As of May 2024, new legislation in Iowa led to a permitting process for automated speed enforcement systems, issued by the Iowa Department of Transportation. Unexpectedly, only 11 out of 140 existing fixed speed location permits were approved, including 7 out of 75 for Sensys Gatso's customers. 95 out of 148 mobile speed deployment location applications were approved. Red light enforcement cameras were not affected. We are working with our customers to find solutions to reestablish the operations of the speed systems that did not receive a permit. This process is both time-consuming and laborious, with consequently slow revenue recovery for our programs in Iowa. The estimated negative impact of the legislative changes on our 2024 revenue is SEK 20 million. Corrected for this, the full year growth of our Managed Services business would have been approximately 14%.

New order from Tahakom under Multi-Year framework agreement
In April 2024, we signed a Memorandum of Understanding with our customer Tahakom in the Kingdom of Saudi Arabia. Following this, our customer provided technical qualification for our automated traffic enforcement solutions. During the fourth quarter, Sensys Gatso has signed framework agreements for fixed & mobile speed and fixed red light enforcement as well as a framework agreement for Service & Maintenance on the delivered Vehicle in Motion systems. With these framework agreements in place, detailing pricing and logistics terms and conditions, Sensys Gatso is now in the position to receive purchase orders under these agreements. In January 2025, we received the first order for the maintenance of the in-vehicle systems in Saudi Arabia. This was a first order, for one year, under a three year framework agreement. This purchase order is worth SEK 27 million. The expectation is that we will receive new purchase orders for the remaining two years under the framework agreement, with an increased level as more systems will be added for service and maintenance.

Ghana project progressing
In 2022, we entered into an eleven-year contract with the Government of Ghana through our 40% joint venture share in Nationwide Traffic Management & Enforcement Ltd (NTMEL). The contract involves the design, building, financing, operation, and maintenance of a nationwide road safety program. The total revenue for the JV is projected to be approximately SEK 800 million over the contract duration. The project rollout is progressing well, with the first test citations issued in 2024. Due to parliament elections in December, the formal confirmation of the legal framework has been delayed. The issuance of citations is expected to commence no later than July 2025. In our financial reporting we show results from the project as results from JV’s.

Balanced global revenue distribution
Sensys Gatso is a globally active European company with a balanced sales mix across different regions. In 2024, revenue was distributed across the Americas (30%), Europe (43%), and APAC/MEA (36%). Compared to full year 2023, the region APAC and MEA contributed less in 2024, due to the completion of the deliveries to Saudi Arabia. This has been compensated by the increased revenue in Europe mainly from the roll-out of the Dutch tender. Our global presence helps us at times to even out the volatility that is inherent to the one-off system sales. As we grow our recurring TRaaS revenue, our total revenue growth will become even more stable.

Strategic Investments in Q4 Strengthen US Operations and Consolidate Ownership
During the fourth quarter, we made strategic investments totaling SEK 75 million. This included SEK 24 million allocated to fixed assets in operations, primarily for equipment and construction, to support our managed services programs in the USA. Additionally, we invested SEK 44 million to repurchase the minority shareholding from former employees in our Sensys Gatso USA entity, securing 100% ownership of this key driver of our growth strategy.

Stable margin
Our Gross Margin this quarter was 36%, compared to 42% in Q4 2023. This is lower than our run rate margin of 40% and is driven by the relatively large contribution this quarter of System Sales from the Dutch project. System Sales margins are typically lower and precede the higher margin Service and Maintenance recurring revenue, which is expected to continue for at least 6 years for the Dutch project. The overall gross margin of the contract will gradually recoup during this phase. Year to date, the margin was 38.2% compared to 40.5% in 2023. Our EBITDA for the quarter arrived at SEK 28 million, compared to SEK 45 million last year. Year to date, the EBITDA arrived at SEK 69 million, compared to SEK 85 million last year.

Outlook
Due to recent market dynamics, such as extended customer testing phases and legislative changes in the US, Sensys Gatso sees a delay in achieving its ambition of reaching SEK 1 billion in revenue with an EBITDA margin of more than 15% in 2025.

Despite the delay, Sensys Gatso has made significant progress in several key areas, including obtaining first contracts in new states in the USA, expansion of the Managed Services business model into other geographical areas such as Australia and Ghana and a strategic partnership in Saudi Arabia with first order in hand.

Our order book and remaining backlog of more than SEK 1 billion is robust and will provide solid revenue well into the future. We expect our TRaaS business to continue delivering profitable growth, driven by our strengthened U.S. team and our ground-breaking FLUX roadside platform.

While we are disappointed to not meet our ambition within the original timeframe, we are resolute in our commitment to achieving this goal. Our long-term strategy remains unchanged, and we are taking proactive steps to address the challenges we’ve encountered. We are confident that these actions will position us to deliver on our ambition in the near future.

Financial Outlook 2025
For 2025 we expect our revenue to arrive between SEK 700 to 800 million. Due to additional sales investments to accelerate growth within the US market, we anticipate to realise an EBITDA margin between 12% and 14% in 2025.

Ivo Mönnink
CEO, Sensys Gatso Group

Invitation to a presentation
On 28 February 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://sensys-gatso-group.events.inderes.com/q4-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.inderes.com/teleconference/?id=5005055

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 28 February, 2025.

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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