Warm welcome to everybody joining us for this Q2 2023 Zaptec Quarterly Report. What a morning it is, and what a quarter it is to be able to present to you this morning. As always, I'm very excited, and I guess, it's a good reason to be, because now it's the sixth consecutive quarter that I can stand here and report top-line breaking revenue records. That is, something that, to my knowledge, is quite unheard of in the business, these days. Again, I'm very, very proud to stand here. Over the past 12 months combined, we have recorded revenue of over NOK 1.1 billion. In fact, order intake in 2023 alone, and our underlying order intake, is also over NOK 1 billion. Considerable high numbers that we're looking at.
Our record-breaking revenue growth reflects very high dedication from our employees, our ability to adapt in, in these very challenging markets that we'll be touching on as we look into our deck in a moment. It hasn't been all roses in, in this first half of the year. Definitely when we look at our peers in the industry, we do see that there are others out there suffering. We're seeing reductions in revenues, we're seeing consolidations, and also in certain parts, seeing some closings of companies, bankruptcy, and so forth. In that light, we are even higher and more excited about the fact that we've been able to gain market share and present to you these record-breaking growths.
We've been very focused on our innovation, very focused on quality, very focused on safety, and all of these aspects are now paying off. It bears fruit to be true to one's visions, and we will be going forward, ramping up production even further. Kurt, our CFO, will be bringing some more highlights into that in a moment. When we look at the financial numbers for today, well, revenue's 133% up. We've got order intake also up, considerable numbers, backlog, gross margin. We'll be going into slight more details on this. Of course, we have several products here in Zaptec. Some have various margins and, of course, all depending on the product mix, it does have an effect.
However, we do and we are, again, very proud to be able to present an EBITDA of 23 million NOK, as well as, again, record high export share. Without further ado, I'm now going to pass over to Kurt, our CFO, who'll be going into a little more detail in relation to our financial numbers.
Thank you. First, as, as mentioned, the revenue growth for 134%. This was a total of NOK 355 million in the second quarter. As mentioned, this is a record high quarter, and we expect this to continue since the production is ramping up during the autumn. As Peter mentioned, the last 12 months, we have had a record high revenue for about NOK 1.1 billion. Looking into the order intake, it was also very strong, stronger than the sales, and it was NOK 445 million. This is 104% higher than the second quarter last year. Our order is somewhat down from the first quarter this year.
You have to remember that the first quarter was very special since we have the sales ban for our biggest competitor in Sweden in the first quarter. If you look at the revenue and then order intake in the second quarter, it's much higher than previous quarter, as you see. The large backlog for almost 600 million NOK is to be delivered from now in the third quarter and into the first quarter of 2024. Also, note that only on the sixth last months, we have had an order intake for NOK 1 billion. Very strong numbers this quarter. Over to you, Peter.
Thank you. In order to deliver on these magnificent numbers that we're presenting here, we're ramping up production, and it's going according to plan. We've been working on the MID certification as something that we've been talking about for years. That was finally went through in Q1. Production started here in Q2. That's been ramping up specifically at our Westcontrol site here in Tau, outside of Stavanger. The rest of the MID approved Go-Pros will be also working in conjunction with our Sanmina plant in Germany later this year. Preparations in relation to our Go production at Sanmina is also continuing.
That will happen in Q3, so that we can ensure to deliver on all the Zaptec Go orders that we were looking at earlier. Things are looking very, very promising in being able to ensure that we can deliver on these very, very high Zaptec Go order intakes that we've been seeing over the past six months. Now, as alluded initially, export revenue and export share have been record high. Also, as talked about, sixth consecutive quarter in a row that we've been growing here. It's again, very, very proud to be able to, to look at these enormous numbers when we see year-on-year, 163% growth, which very much significant plays into our whole plan of going international.
Of course, being able to show that we are growing exponentially outside of Norway is something that's of great importance to us. We've also now been signing agreements with new distributors in Southern Europe, specifically in Spain, to be able to grow in these markets, also Italy. These markets will be developing from our existing hubs in Europe, we're not gonna see any large OpEx setups in these areas just yet. We'll be going to be working these markets through distribution agreements in these various markets that we see developing throughout Europe. Now, EV adoption is continuing. It is slowing down somewhat in Europe. As I initially mentioned, this has been a bit of a sluggish market in the last six months comparatively.
However, we have seen some very strong indications in some of the markets as we, as we grow. Specifically, there is a continuous increase even in Norway, comparatively to Q2 last year, 9% up. Our continued plug-in share of new sales is now touching on 90%, so we're really getting to a point where almost all vehicles being sold in the private sphere here in Norway is of electric mobility versions. And of course, that does give Zaptec a quite unique possibility to be able to ensure that the products that we actually deliver fits into this future-proof version that we'll be seeing being adopted throughout the rest of Europe.
Despite the, the numbers in other markets being not quite as high as, as Norway, it is indeed growing, and that, of course, is playing into the mega trend that Zaptec is delivering into. When we look at the gross margins, I'll pass this over to Kurt.
Yes. The, the gross profit was 36% in the second quarter. This is down from 41% in the first quarter in 2023. I have to underline that this is solely due to the change in the product mix, as there has been no increases in the cost price of the product. Despite the fact that the sales of the Zaptec Pro had had an increase for over 100% in the first half of this year, sales growth of Zaptec Go has been even higher and much higher than we expected. Even with continued high sales of Zaptec Go compared with the Zaptec Pro going forward, we still expect improved gross profit ahead of us, as well already have achieved lower production cost of Zaptec Go from the 1st of August. More reduction will come.
We are very confident about the gross margin going forward. If you look at the EBITDA in the second quarter, we produced a record high EBITDA of NOK 23 million. This is a result of high sales and our strong focus on cost. This is up from NOK 12 million in the second quarter last year and gave an EBITDA margin of 6%, which is up from 2% in the previous quarter. This 6% also includes an additional provision for potential compliance and failure, as well as a provision for potential losses on trade receivables. This is a total of NOK 8 million in provision in the second quarter.
We expect an improved EBITDA going forward due to the continued high sales as a result of a large backup and ramp up production, and also entering into new markets, as well as improved gross margin and continue strong cost control from our side.
When we look at our strategy and outlook, of course, as mentioned just before, we are positioned in a global mega trend. The electrification of the transport sector is going to plan. In some markets, it's going quicker than others. As alluded, the Norwegian market is way ahead, but the other European markets are following. Markets outside of Europe, of course, are very strong. We're seeing an enormous uptake in China, but also seeing a huge uptake in U.S. Despite these markets being some years behind Europe, we're definitely looking at these markets as being very, very interesting, specifically, the U.S. market, but that is into the future. Right now, we're being very strategic in growing in the areas that we can see EV adoption is strongest.
For all intents and purposes, we're going where the fruits are hanging the lowest, and we expect to be able to continue our growth in these addressable markets, as we just talked about before, going into new markets in Southern Europe, like Italy, like Spain, and doing through this, through collective distribution networks and so forth, using our hubs already established in both France, in Switzerland, in Germany, as means of being able to go into these markets. Overall, our outlook for sustainable growth is very, very good. We expect revenue growth in new markets to continue, and we expect that this will be combined with increased margins, due to the benefits of scale that Kurt was just alluding to just before.
In to surmise, again, it has been a fantastic quarter. I think, definitely there was perhaps a feeling in the market that this was a one-hit wonder in relation to the enormous uptake that we saw in Q1. Through focus and dedication, we've definitely shown that we've been able to take this into Q2, bringing the whole first half of 2023 into absolute record-breaking territory for Zaptec. We've been able to deliver the significant growth, 134% in sales increase. I can't really say that enough, when you look at comparatively to last year.
Not least, getting the Pro MID into certification, into production, and most importantly, getting the quarterly EBITDA back online into the positive, and also a positive outlook for the rest of the year, being able to follow the trajectory that we've been on for the past 6 years. We're definitely gonna continue that into 2023 and beyond. Once again, I'd like to thank you all for listening in this morning. Again, we've been very, very proud of being able to do this.
Zaptec is and will continue to be very committed to be producing and delivering very safe and high-quality products that play in to this very, in my mind, critical EV infrastructure that we're seeing being rolled out in Europe and other nations across the globe as electrification is being pushed by this mega trend. We, at Zaptec, see this as our social responsibility to ensure that we deliver on these aspects, i.e., safety and high quality. With those words, I look forward to now taking on Q&A. We will start with a couple of questions. I'll be reading these out, and Kurt and I will be answering this to the best of our ability within what we're allowed to say and not allowed to say. Here we go.
Cash flow is weak on on higher Westcontrol. How do you see Westcontrol, including investors trade receivables, delivering next 2-3 quarters? Is this inventory mainly Pro chargers? Kurt?
Yeah. Yes, the working capital will increase also in the third quarter. It's not only Pro chargers, but the biggest part of it is Pro chargers. We have a, we have a, we have a plan, and we are doing some reduction in the production plan, but this will not be effective before in the fourth quarter and also into 2024. We are very confident with the working capital in the longer term, but now in the short term it will increase some. We have padded, we have liquidity, so, we don't see any challenge with it.
How was Pro sales developed through the quarter? Any improvements? What about the start in Q3 for Pro? Again, also Peter Bardenfleth-Hansen.
Yeah. It's, it's picking up, the market, as Peter have mentioned, all over Europe. We also see the reports from our competitor out in Europe, that everyone is reporting a weak demand for, for Pro charging. But have to underline that even if, the Pro sales are some weak, we have 100% growth in the Pro sales, the first half, half year. But the fact is that when you look at the demand at the end of last year, we had expected a triple of sales of, of Pro this year. But that has been compensated by the extremely, I have to say, extremely high demand for the Zaptec Go.
Since we now increased the gross margin for the Zaptec Go, we will reach our targets for this year.
Congratulations on the strong growth and EBITDA developments. I have two questions. On improving gross margins going forward, do you foresee a product mix to shift, or is this mainly scale-driven? You mentioned a profit reservation for customer complaints. Could you please elaborate a bit on this? Yes. I think definitely, I can say a couple of words, and then Kurt can mention up here. Going forward, of course, there is a shift in product mix, definitely, as just mentioned by Kurt. The. There's been a shift in the market, in specifically a higher focus on the home segment.
We're seeing the consumers being picking more on an individual basis, as opposed to the larger systems that are placed with higher investment requirements. We don't expect that that means that this is the death of system charging. On the contrary, what we're feeling and seeing in the market is that there has been a slowdown in the investment due to the macroeconomics, the geopolitical situations, but it doesn't mean that there is not going to be an investment in system charging going forward. The question is, of course, when? In order to be able to deliver infrastructure to this mega trend that is continuing, and this has to be underlined, the mega trend of EV adoption is continuing. In order to be able to deliver on this, you need the infrastructure.
The investments will come in the Pro segment. The question is just when. We are ready, but right now, the focus is on the individuals whom are buying the home segment. We are in a situation where we've now been recalibrating our focus towards the Go segment. As we've been telling for quarters and years on end, the margins on the Go have been lower on the Pro. This is something that we're working on. This has been a continuous work, so the margins on the Go are improving. We're doing this from a both top-down as well as a bottom-up approach.
I'll be probably quite happy to be able to stand in front of you guys in the next quarter or 2, to be able to report on even better gross margins on our Go products, but that is something that we're working on, and that's yet to be seen. Kurt, perhaps you can say a little bit more.
Yeah
about what I just said.
Yeah
but specifically on the profit reservation.
Yes, I just want to add on what you said, that we are also going into new markets with our new Pro MID. That will also improve the sales of Pro, and we see this already in some markets. When it comes to the profit reservation for customer complaints, we don't see any increase in this, but we have had a fixed amount for this reservation earlier. When the sales have increased so much as it had, we had to increase this amount, so, so the, in percentage, it, it became the same. That's the reason for this increase in this quarter. It's a
Excellent
a kind of one-off. Yeah.
Do you still consider EBITDA margins of 10% achievable in 2023? What is the feedback of your distributors considering their level of stock at the moment? What is the premium applied to price of the MID charger compared to the regular Pro charger? Kurt, wanna say a few-
Yes.
Yeah.
We are still aiming for, for 10% for 2023. Of course, it will depend on the product mix going forward the next 2 quarter. It can be below, but we, we still believe in 10%, and we are working very hard to achieve that. What is the feedback of your distributors considering the level of stock at the moment? This is what we have talked about, that the distributors, they report that the demand in the market for Pro system charging is very low. Not only the Zaptec Pro, but also similar product for the competitors are in stock. That's the reason for the demand into our sales.
We think this is just a postponing due to the high interest that all investment is put on hold because the EV adoption is still increasing. The need for system charging is still there. We think that it's just a matter of time before we'll see an increase in demand for this product again. Yes. What's the premium applied to the price of the MID charger compared to the regular Pro charger? It depends on the market. In markets where it's required with the MID certified, certified charger, such as Germany and France and the Benelux, the price are the same. In all other markets where it's not required with a MID charger, it's NOK 1,000 higher price on the MID certified charger.
That's what gives a bit higher, gross margin, of course.
You mentioned consolidations within the market and peers. How do you see Zaptec's position in this phase? Well, of course, we are very keen to be looking at this. About a year ago, we employed an M&A director for this specific purpose, to be able to help us identify potential targets, how to navigate in this world, ever-changing. I've been expecting this, these consolidations to happen. It often happens when you see a huge uptake, as we did right at the beginning of the pandemic. It doesn't come as a surprise that we're now seeing these consolidations, we're seeing potential bankruptcies, and, and seeing that the effect of this enormous surge within this industry is now slowing down.
Of course, we are looking at potentials, but it has to be something that's a value add to Zaptec, a value add to, to you as investors out there. We're not gonna go into, into specifics in relation to how, but, obviously, there are gonna be two key, two main elements that we look at when we then when we see into potentials. One is, will this help in our market position, market grab, or can it help on our technical development phases? Of course, that is something that we do look at, but we haven't specifically found targets that we feel that plays into one plus one making three. It has to be prudent. It has to make sense on our bottom line.
M&A is definitely not something that's to be taken lightly. It often takes years to be able to really see the fruits of those acquisitions when going into it. Again, to underline, it is something that we're looking at seriously. We're being asked to elaborate our plans regarding future M&As. I just did this. Also regarding U.S. over the next 12-24 months. Yes, we are definitely planning on U.S. We have initiated, as we've alluded earlier in other quarters, that U.S. is very high on our agenda. It is, again, not something that can be done left-handed. It needs a very clear focus. We have indeed a small department.
Nonetheless, it is a specific department that is working on U.S. entry. We've already been in the U.S. 3 times in 2023, and we don't go there just on holiday. We, we go there because we actually specifically look at this market as being a very high-growing EV adoptive market over the next 12 to 36 months. In relation to when we believe we go in there, well, I, I think that we will be doing some serious look into this market in 2024, but I wouldn't expect that you're gonna see any Zaptec sales in the U.S. market until a good 12, 18 months from today going forward.
It is a long process in relation to getting compliant in these markets, but it has to be said, said that our collaboration with the Sanmina Corporation, whom are our production partners in Germany, is a U.S. corporation with over 100 manufacturing sites across the world. Many of these are in the U.S., and we specifically chose the Sanmina Corporation specifically because of their U.S. footprint enabling us to be able to do production in the U.S. once we get there. I hope that answers your question on our U.S. plans.
Maybe we should add on that, that it's not only plans. We are, we are working with the product, so we have started, so it's, it's not only plans.
Exactly. Some light more on the competitive situation, any pressure on your product or aggressive competitors in any of your markets? Well, of course, the situation with Easee isn't eluding anybody, and certainly not in Scandinavia. Of course, this has had an effect on our first half of 2023. As I always say, luck is something that doesn't exist. It is for us taking an opportunity where we've been preparing and being able to step up when that opportunity was there. Of course, we cannot be sitting down looking at what our competitors are doing constantly.
What we can do is be very, very focused on what it is that we're doing, and being able to deliver on our quality, deliver on, on the safety aspects of our components, and the product that we are delivering to our customers. We believe that this focus is paying off comparatively, and seen when against our competitors' market products out there. That when issues arise, when there are problems with other products out there, that the consumers, the market, turns towards a safe haven, and I would be very happy to report that we are definitely, Zaptec is that safe haven when it comes to producing a safe and quality-minded charger for EVs. You're now communicating high levels of marketing and other costs related to new markets and new locations.
Could you update us on how adoption within these markets has developed? Do you wanna say anything there, or should I? I can definitely say
but, but, Kurt, please.
Yes. In the light of the low demand throughout Europe, we have postponed higher levels of marketing in this market. It had been a slow start, but we are increasing. We're getting new contracts, and we have deliveries, but we have not got any high volume in new markets yet. Of course, we are hope for more sales early, but in the light of the general market situation in Europe, that's just the way it is.
Yeah. To, to be, to be fair and to, to just add a bit more color in relation to this question, when you compare it to the very, very high numbers that you saw in relation to our to our international sales, i.e., 78%, of course, those are specifically in the markets that we've already been very strong in historically. They are under Sweden, Switzerland, Denmark, and these markets are the main drivers in pushing these international increases to, to the point where they are, so export share, in other words. Of course, that doesn't take away from what Kurt just said. We're very, very focused on growing the new markets such as U.S., such as U.K., such as Germany, such as Benelux, such as France.
Of course, we are still a small country, company, and we, we are not wanting to fall into the pit of adding too much OpEx in a situation where we need to be delivering on the various changes in the market. We are seeing, as we've, been talking about several times, that it is a difficult market right now. It is, being thrown a constant, parade of, of, curve balls from, geopolitical situations, from macroeconomics, and so forth. We find it prudent to, be very, very, focused on the markets that we're in.
That doesn't mean that we're scaling down in other markets, but we're just being careful, and we're not, we're not employing, over 100% new employees, as we did in 2022. This year, we'll be a little bit more prudent in the number of new Zaptec employees that we're, that we're having join our team. Again, we have our foot firmly on the accelerator. I think anybody can see that anything that is above 100% doesn't mean that we're always holding the hand on the handbrake. We do also have our foot on touching the brake so that we never spin out of control in relation to our bottom line.
How has the development in Charge 365 and Zaptec Park been in H1, and how are these margins in the product segment being developing? Well, That's a very, very good question. We have decided to invest even more into Charge 365. Zaptec Pro as is a, is a collaboration with Monta, and we've decided to be even more focused on our 100% in-house, so Charge 365 product, because the growth in Charge 365 has far outweighed the Zaptec Pro collaboration. In fact, Charge 365 has been growing year-on-year by over 100%. I think about 120% last year. We're now doing further investment into this.
We've been adding team members into Charge365, with an intended focus to go into other markets outside of Norway, where Charge365 has historically only been used. We're very excited to be able to continue this route. We believe that Charge365 has a very, very potent future ahead of it, and we're excited to be able to further the investment into this, as we also see the revenue growing coming from Charge365. OpEx last quarter has been NOK 105 million. What do you think are the OpEx in Q3 and Q4? Question to Kurt.
Yes. We have a very strong control over the OpEx, and we have decided that we now have a range about 200 employees in Zaptec, and that's about what we're going to be the next six months. We don't expect the OpEx to increase in %. It should decrease. We are all the time looking at the marketing expenses, but of course, if we should add on more marketing expenses, that should lead to higher sales. In %, we should improve the OpEx the coming six months.
Can you elaborate on the state of the future expectations, to the partnership with E.ON? Well, of course, E.ON is a European player, and of course, we do and will continue to have working partnerships throughout Europe with large utility companies such as E.ON. We, of course, expect these to grow as we continue our adoption into these various markets. E.ON being a German player, we of course hope that we can work on that partnership, specifically, with a focus on the German market, but also, the Danish market, where E.ON is also very historically strong. We have a lot of expectations, but we, a gain, this is not, all eggs in one basket.
We, we have several of these types of collaborations and will continue to con- to have these types of partnerships to ensure that the Zaptec products is being distributed on, in many, as many channels as possible. With that, I think we're coming to an end of the Q&A and this morning's report for our Q2 2023 Zaptec reporting. Again, thank you very much for listening in. As mentioned, we will continue to to grow this company, to grow the our footprint in relation to ensuring safe and very high quality products in the market.
Also being able to do this in a manner that gives us positive EBITDA on the bottom line, taking market share and bringing value, not both, not just in a responsible way, but also to you as investors out there. Once again, thank you very much for listening in.
Thank you.