Good morning and Welcome to Otovo's Q2 presentation. We are Otovo, the European solar and battery marketplace. We are on the mission to put solar panels on every roof and batteries in every home in Europe in the easiest and most affordable way. Today's presenters are Andreas Thorsheim, Founder and CEO, Petter Ulset, CFO, and myself, Sondre Breivik, and I work with investor relations. We'll start off today with a business update, financial results, and then a summary. At the end of the session, we'll have a Q&A, so please don't hesitate to leave your questions in the chat. Now, over to you, Andreas.
Thank you, Sondre. It's summer, it's sunny, and we're super excited to be presenting these numbers of growth and improved profitability. We knew as this quarter started that it would be an uphill battle. We're coming out of a period with labor shortages, and we were looking at a quarter or more with supply chain friction ahead of us. It's with great pride that we can say that compared to the same quarter last year, we've grown our installation numbers by more than 100%. We've grown our revenue generated by more than 200%, and we've increased our gross profit generated by more than 300%. Our subscription portfolio has also grown by 300%. Looking at our units sold and installed.
On the projects sold, we're up to 2,400 systems sold. A growth of a bit more than 100% compared to last year, and sequentially flat from Q1 as we were steering towards the capacity that we have the ability to install in the autumn. We've done a rotation towards profitability and towards quality in the sold portfolio. In terms of installations, we're up at 1,745. Also, more than 100% growth in number of units installed compared to the same quarter last year, and nicely up from what we did in Q1 in, as I said, a very difficult quarter in terms of the working environment on supply chains and installer ecosystems.
On the ticket size, we're delivering ticket sizes above NOK 100-NOK 1,000, a growth of 37% compared to the same quarter last year, with countries like Norway, Germany and Italy leading the charge in this quarter. We've done a conscious choice to improve ticket size, and we'll see the fruits of that also later in the year. System sizes are up pretty much across the board as consumers buy bigger systems to hedge against future power prices. In addition, the battery attachment rate is trending strongly upwards, and we've been able to pass on cost increases to consumers and add markups in all our markets, as you can see on the right-hand side of this slide. All those things combine to push ticket sizes upwards.
The subscription portfolio is growing nicely since we made the bid for EDEA in the fourth quarter of last year. We came out of Q4 with a 17% share of subscription sales in Q4, going through 23% in Q1, and now 25% of our sales are on the subscription model. Growing the subscription sales is a top priority for the company and for each one of our outstanding general managers. We're activating marketing, product development, incentives and partnerships to boost our subscription numbers, and we're looking to surpass the 30% mark of subscriptions towards the end of the year. What happens when you sell more units, when you install more units and those units are more profitable? Well, inevitably, your countries are gonna turn positive.
Now we've seen positive months, but we thought that this quarter we should show which countries are in the black. We're proud to say that in terms of delivered units, Norway, Spain and Italy all have a positive EBITDA generated. It's the effect of our operational gearing that's really kicking in. Italy, really impressive, being profitable in its fifth quarter of operation. This is, of course, for all countries driven by higher volumes and a push for improved unit economics. Now we're seeing a continent thirsty for solar power, and we're seeing our ability to deliver as very strong. What should we do in that case? Well, we should put this model at work in more markets.
Over the last few quarters, we've been going into and scaling in more markets, and we will continue to do so. Germany is on track with a legal entity established, its product localized and contracts localized, a GM in place, our first installers on board, first sales done, and first installations completed. Following that, we have Portugal, also first sale completed and first installation expected within months. Then on its coattails, Austria and U.K. coming up. You can see the time from decision, fundraise in February, to action on the ground, super short for Otovo, and this will also start giving effects in the P&L towards the autumn, increasingly through the end of Q3 and Q4, and then onwards. What are we doing here?
Otovo is building the number one distributed energy platform in Europe. We're scaling. We're growing our volumes in all our markets, and we're entering new markets with our rapid and low risk expansion model. At the end of this year, we will be established in countries with an addressable market of more than 1.7 million households that will put solar panels on their roofs. Our target is to fight for and become the number one in 13 European markets. A year from now, we want to be at 20,000 installations per year. On the hardware side, we see that we can add batteries to our sales. They increase the ticket size and the gross profit per customer. Today, one in four customers in sales and one in five customers in installation includes a battery.
We think we can grow that further in the future. In addition, we see that we successfully can increase markups in all markets. We're pushing for higher battery attachment rates, and we're increasingly looking at attractive unit economics that will drive our markets one by one into profitability. The oldest and best markets growing first, but eventually every single one. Then the third strategic lever for us is our subscription model. Subscription increases our profitability per customer by 3x. We're accelerating deployment through the overall growth of Otovo, but also through our proven ability to increase the leasing or slash subscription share of business. We're seeing a significant potential to increase our debt ratio and are confident on the attractiveness of debt financing of the subscription portfolio.
Otovo is going to deliver high subscription shares on high sales numbers, and we're looking at a consistent deployment of more than EUR 100 million per year in the quite near future. Now, let's zoom out on the European position that we're fighting for. This spring and early summer, we've seen extreme changes in consumer power prices and consumer power markets. That's giving an uplift in the demand for solar power and storage in households. It's one of the few ways that people can hedge themselves against higher power prices, fluctuations, and the unpredictability of power markets. In addition to that, we're seeing European governments and the European Commission making solar power a centerpiece of its way out of its reliance on Russian gas, and something that it wants to build Europe's future on.
The REPowerEU initiative has both short-term and long-term incentives and policies that are beneficial to solar. All of this adds up to what will become a very positive decade for solar in Europe. At that time, Otovo is growing its European business. We're on track for continued growth of 100% or more to catch up with our U.S. peers. We did 2,000 sales in 2020. We did 5,000 sales in 2021. We're now running at a run rate of 10,000 per year, a number that we will go past towards the end of the year.
Our run rate in installation is increasing sequentially, going from about 6,000 in the previous quarter, going through 7,000 into 8,000 right now, and we'll catch up with our sales numbers towards the end of the year. We are very confident in our ability to keep growing, as our supply chain worries are easing during this autumn. Otovo is increasingly confident in becoming Europe's number one platform for solar energy and batteries. Now over to you, Petter, with the financial numbers.
In the second quarter, we also had strong performance on reported financials. In the second quarter, our total operating revenue was NOK 156 million. That's an increase from NOK 64 million last year, an increase of 138%. Our gross margin in the second quarter was 18.9%, which is an increase of 2.8 percentage points from 16.1% second quarter last year. On our balance sheet, we see that our cash position was NOK 330 million in the second quarter, and that we had an inventory of NOK 9.9 million. We will get back to those numbers. However, as we see it, our reported financials does not fully reflect the value creation potential in our business model.
To recap the basics, we are a marketplace that matches homeowners that wants solar projects with installers that can provide those solar projects to them. The consumer can either choose to purchase the solar system on a direct purchase model. In that model, we would sell the project to the customer for NOK 175, and the installer will deliver the project on behalf of Otovo for NOK 100, and we would net a profit of NOK 25. They could also choose to enter into a long-term subscription with Otovo. In this case, Otovo would sell the project to the customer on behalf of our subscription SPV. The installer would again deliver the project on behalf of Otovo. The SPV would then buy the project from the originator, and the customer would pay a monthly fee to Otovo, to Otovo's subscription SPV.
The reported financials do not fully reflect the underlying value creation in this model. Hence, we have introduced key metrics. In our direct purchase segment, revenue recognition is quite straightforward. Revenue is the booked revenue value of upfront payment from the customer. Our gross profit is the revenue less the upfront COGS that is paid to the installer. In our subscription segment, our contracted subscription revenue is the present value of all subscription payments over 20 years, discounted at 5%. Our gross subscription profit is our contracted subscription revenue, less upfront COGS. That is what we paid the installer, and the present value of O&M costs, which is the inverter replacement in year 10 and customer service.
The value of all contracted subscription revenue is the accumulated contracted subscription revenue, which is the present value of the remaining cash flows from all contracts, again discounted at 5%. For Otovo Group, when we then report on revenue generated, that is revenue plus our contracted subscription revenue. Gross profit generated is our gross profit in the direct purchase segment, plus the gross subscription profit in the subscription segment. Accumulated contracted subscription revenue is what we have in the subscription segment. Looking how the key metrics involved in the second quarter. On revenue generated, we had NOK 194 million in the second quarter of this year, which is an increase from NOK 64 million in the second quarter of last year, which is an increase of 3x .
On gross profit generated, we had the gross profit generated of NOK 42 million in the second quarter, which is up from NOK 10.3 million in the second quarter of last year, which is an increase of 4.1x. Our gross margin generated was 22%, versus 19.5% in the first quarter. The increase is driven by an increase in the gross margin for the direct purchase segment. The slight decrease in margin for the subscription segment is due to volume effects. In the subscription segment, which we saw a healthy improvement over the last quarter, we had 1,636 subscribers. That is an improvement of 230% since second quarter of last year.
Annual recurring revenues is NOK 10.1 million at the end of the second quarter, which is an increase of 250%. As Andreas mentioned, accumulated contracted subscription revenues is at NOK 157 million, which is an increase of 300% since second quarter last year. Looking now on our subscription SPV. As Andreas mentioned, this is a top priority for Otovo, and after the merger between EDEA and Otovo, which was approved in April, incentives are now fully aligned between the origination company and the subscription entity. Subscription share continues to increase. The long-term vision for EDEA remains the same. That's a key component of our business model.
Our financing strategy aims to minimize equity required to support the SPV, and we will pursue a similar approach as our American peers for monetizing portfolio, once the portfolio is of sufficient size. It's also good to notice that the subscription SPV was EBITDA positive on reported metrics in the second quarter. Turning over to profitability, EBITDA generated improved NOK 2 million from NOK 48 million in the first quarter to NOK 46 million in the second quarter. As we see a continued improvement of operational leverage in the business. The EBITDA generated margin was 24% in the second quarter, which is up 11% from the first quarter. In EBITDA generated, we also have non-recurring items, which is primarily related to country launches and growth-related costs of NOK 6.6 million, and non-cash share-based compensation of NOK 2 million.
Now looking on our cash position, we ended the quarter with cash of NOK 330 million. We believe that there is upside from tax credits and undrawn credit lines, bringing our cash equivalents to above NOK 400 million. Now looking at the development in the quarter. We started the quarter with NOK 445 million in cash. We saw net cash outflow from operating activities of roughly NOK 90 million. Notable here is that we had a flat development in trade working capital, increasing NOK 2.6 million over the quarter, which includes an expansion of inventory of NOK 9.9 million, and I'll get back to that. We also saw a non-trade working capital increase by NOK 37 million. That was driven by Italian tax credits, which increased NOK 23 million to a total of NOK 48 million held on the balance sheet.
On investing activities, we saw cash outflow of NOK 39 million. Worth noticing is that we had NOK 25.1 million invested in subscription assets. That could have been partially financed by a draw on loans from Nordea. On financing activities, we had an increase of NOK 1 million, which was the exercise of options of NOK 2.9 million net of lease payments and down payment on long-term debt. It should be noted that we draw on the second tranche of debt from Nordea in early July, and that would have improved the cash position of NOK 25 million if executed in the second quarter. Consequently, we ended the quarter at NOK 330 million in net cash.
We have available liquidity of roughly NOK 70 million from tax credits and undrawn debt from Nordea, bringing the cash equivalents to slightly over NOK 400 million. Now, looking at supply chain. As Andreas mentioned, supply chain issues remain the single most important factor constraining both us and the solar industry. We continue to leverage our pan-European position and balance sheet to stimulate throughput. We are helping installers in Italy secure credit from hardware distributors. We are securing hardware for installers in Spain through volume commitments. In Norway, we have been sourcing inverters and panels directly from manufacturers to mitigate bottlenecks. In Germany, we have leveraged our strong position in Poland to move hardware from Poland to Germany to secure installations. Despite this, our operating working capital remains flat.
That is despite that we have held inverters and panels over the quarter for Q2 deliveries. Q3 and Q4 will remain tight. However, we see easing, and we expect that this will continue to improve over the next quarters. Now, ending off with development in pipeline. We are continuing to build a healthy pipeline of high-value projects. The pipeline at the end of the quarter was slightly above NOK 500 million. Average project ticket sizes are up. 24% of projects in the pipeline are on a subscription model. We also see that our ability to increase throughput has brought down the ratio of pipeline to revenue generated with approximately 7%. Our outlook for the second half is that we expect more than NOK 500 million of revenue generated.
That is roughly kind of similar in size as the value of the pipeline, with some markets observing shorter lead times than others.
Okay, let's sum up. This has been a quarter of records, despite heavy friction, but now the easing is ahead. This quarter, we've shown an intention on direction of our sales, and we're doing record numbers on almost all counts. It's a strong quarter in sales, installations, revenue, and margin, and we've shown an ability to shift our focus to quality and more profitable sales in a high-pressure moment for the company. We did 2,398 sales, up 2x from last year. We did 1,745 installations, also up 2x from last year. We did NOK 194 million Revenue Generated, up 3x from last year, and our Gross Profit Generated came in at NOK 42 million, up 4.1x from last year. In general, our business health is up.
It's manifesting itself in all major metrics that are improving. We also have three of our countries in positive margin territory. We have European momentum. Solar markets are booming, and Europe is really set for a decade of high activity in the solar markets. Otovo is on track for continental leadership with ongoing scaling in Germany, Portugal, U.K., and Austria, and we have three more markets to be added in the second half of the year. Our outlook is strong, with a solid pipeline and confidence in our ability to deliver more than NOK 500 million in revenue in the second half, with a strong ability to deliver and a gradual easing of the supply chain during the year and into next year. Thank you for listening. All right, Petter, it looks like we have a question in.
The first one is, how is inflation affecting Otovo? Well, with regards to inflation, we've seen, cost increases on the component, side during this, winter, and spring. We've been able to pass that on its entirety onto the consumer and then add, margin. The reason for that is, of course, because the energy inflation is higher than the general, inflation. Overall, in this environment, we're seeing a boost in demand, more than anything else. We have a second question here, which is, how is the erosion of purchasing power affecting your long-term growth? Well, what we're seeing is that solar really is a savings, product. If anything, the environment we're in is boosting demand and, probably gonna help shift the sales to leasing/subscription.
We see ourselves as quite resistant to recession. Are new markets on track and on budget? I also see a related question here. When do you expect the first sales in Austria and the U.K.? Well, for the batch of countries consisting of Portugal, Austria and U.K., they will all do sales during Q3. They are on track and developing as we were planning. More in the same vein, when will the additional three new countries to be entered in 2022 be announced? That will happen after summer, so not that far away. Can you clarify the target of reaching 20,000 installations a year from now? Is that run rate or full year?
Well, yeah, let's certainly clarify that. We have an ambition of reaching a run rate of 20,000 installations during 2023. Regarding your guidance of leasing a share of 30% by year-end 2022, is it on sold units or installed units? Do you have a similar guidance for battery attachment rates and gross margins? Perhaps that's one for you, Søje.
Yes. I think we can say that our ambition is that we will have 30% of sales in the fourth quarter in terms of leasing or subscription share. For battery attachment rates and also gross margins, we can see that our sold margins and sold attachment rate is now higher than installed attachment rates. That should continue to increase in the third and fourth quarter.
Of course for battery attachment rates, we're a bit in uncharted territory, where we'll end up there is harder to assess than some of the other numbers we're looking at. Can you say anything about your impression on achievable loan to value for new leasing debt facility?
We announced today that we have extended the facility with Nordea on similar terms, so that secures our financing through 2022. In the second half of the year we will enter into discussions on refinancing of that facility. From discussions with potential partners, we estimate that this will be in the same range that our German and American peers have. More than 80%.
All right. I think we'll leave a couple of seconds if someone puts in a last-ditch effort to make some questions here. Well, it seems like there's no further questions. Thank you very much for attending and wishing you all a wonderful and sunny summer.