Hello, and welcome to today's presentation with Freemelt. With us presenting today, we have the CEO, Daniel Gidlund; CFO, Martin Granlund; and Regional Manager, EMEA, Viktor Valk presenting. If you have any questions, please use the form located to the right, and we'll take that up during the Q&A. With that said, please go ahead with your presentation.
Thank you. Okay, today's agenda is mainly about the Q4 result, but also the closure of 2024. As we always add a specific topic during these webcasts to zoom in on, today we have actually added two, so it's defense and also then region EMEA. Please raise any questions through the chat during the presentation, and we'll try to answer them during the end of the webcast as well. Welcome to all. This information may be a bit of a repetition for some of you, but as we gladly have thousands of new shareholders since the beginning of 2025, I want to just make a brief, let's say, recap on who we are, but also what we do. At Freemelt, we develop metal 3D printers, and of course, we try to develop and work within areas where additive manufacturing adds value.
When it comes to the Freemelt technology, this is really in areas where the demand of high complex and high performance materials and applications is needed. This is typically seen like in defense, in energy, and also in medtech. Our technology, it's not really, let's say, limited to any kind of materials, but also here we have tried to focus on materials that really make sense and add value for those applications. We mainly work with tungsten. Tungsten can be used pretty much in all three other applications: defense, energy, and medtech. We work with titanium, which is mainly within medtech for orthopedic implants, and then copper, which actually can be used both in energy and defense. How Freemelt differentiates within 3D printing? I mean, 3D printing has been pretty much up for 40 years. It's a lot of different kinds of suppliers.
We are in something called an electron beam powder bed fusion, which represents roughly 10% of powder bed fusion manufacturing. The remaining 90% is laser. We have a unique system to any other system in the market. We have modular printers, and the main reason for this is really to reduce the cycle times in production. Really get up productivity, which means that you can reduce your cost per parts manufacturing, which is absolutely critical when you talk about serial production. Our go-to-market is both through the academia side, and the reason for this is that it's still a lot to educate the market about the values of additive manufacturing.
Here we try to first use the universities and research institutes to develop new material processes, but also new applications for the industry, but also to bring PhD students that have been at the universities that have really been taught about additive manufacturing and Freemelt technology. When they then go out to the industry, they keep this in mind and bring that value to the industry. The other segment that we work directly with from, I would say, last year is the industrial side as well. A few of the agreements we made last year are with Saab Dynamics in defense. We also had two major achievements end of last year, which is in the orthopedic implant side. We had three different kinds of offerings of machines, as you can see on the left side.
One open source research machine called Freemelt ONE, and then eMELT is our industrial concept for serial production. Despite that, we only, let's say, we are in the eighth year now. We are number two in the world in this specific segment after GE, which is number one. We have so far sold 31 machines. If we then quickly look into those industries that we mainly invest our time and engagement with customers, the first one is defense. I think I don't need to dwell too much about the focus that is in defense at the moment. I mean, I think actually these numbers that you see on the slide here must be revisited. I think most probably the growth would be even higher, especially if you look into Europe that just recently made a decision to ramp up the investment in defense substantially in Europe.
We are exposed, as you can see here as well, to different kinds of defense companies. As we are a public company, I can only, of course, share what we have shared publicly, but these are a few that at least have been okay to share in names. It is both in with research institutes working with defense industry and, as you can see, some industrial names as well. If we go then to energy, same kind of thing here as well. I mean, really, because of the geopolitical situation we are facing now, energy and, let's say, to become more independent on energy sources has been really ramping up the increase of focus here as well. One of the areas that we are heavily exposed to, and I would say that we have an extremely good position, is in fusion energy.
Here you can also see a couple of names and companies and institutes that we are working together with when it comes to fusion. UKAEA is someone that we have been working on for pretty much a year and a half in different kinds of projects, but also now we sold an industrial machine to as well. Last, and definitely not least, medtech. This is mainly when it comes to orthopedic implants. This is the industry so far with the highest adoption to serial production with additive manufacturing. Having that said, only 5% of the world's orthopedic implants are produced through additive manufacturing. The industry claims that it will be more than 20% by 2032. It is a huge increase expected from an AM perspective in the medtech side as well in the next couple of years.
Let's then zoom in on our first focus area in this webcast, defense. Again, we have seen a huge increase in interest only during, I would say, the past 12 months as well. I personally must say that during my two and a half years at Freemelt, I've never seen an application where AM can bring such a high value as it can for defense. I will try to explain how as well. First of all, when you hear the name additive manufacturing, I mean, this is a process where you add powder layer by layer. The powder, just to give you an understanding, I mean, the powder is a size like a strand of hair, which you then melt layer by layer. Freemelt, we have an electron beam technology, as I said.
One of the key benefits here is speed. What you see on the upper right side here, the green dots, you might think that it's a lot of lasers that are pointing, but actually this is one electron beam moving 4 km per second, so extremely fast. It actually melts roughly 3,000 spots per second. What we also have, we have a high temperature process, which makes the material properties become the best. It's also in vacuum. This makes it possible to actually manufacture parts in new types of materials and get the highest material properties, which actually is not possible with traditional manufacturing technology like casting. If you take tungsten now, that is in such a focus, especially in defense and energy here, which has the highest melting point, it's actually not possible to cast because the mold will actually melt then.
Here additive manufacturing really brings a different level of value as well. Let's then come back to defense. I mean, as all of you know, defense is a highly sensitive application. This is where, especially in this geopolitical situation, you really want to be in control of the entire process from the material to the final part. If we go back a few years when we did not have this geopolitical situation, actually a lot of the components, even in defense, were actually manufactured abroad. We had outsourced that manufacturing. This is why now the defense industry really quickly wants to take back the full control and manufacture all parts locally where the part will be used or needed. The good thing here with a 3D printer is that it is a digital process.
You can even place it in the battlefield as well if that's where the parts are needed. The other great value with additive manufacturing is that this is, as I said, a fully digital process. This means that you don't have any kind of design limitations, which means that you can design and you can manufacture the end functional part in one process. I mean, the time to market to really ramp up volumes quickly, which is also extremely important now. As I said before, Europe is now quickly trying to ramp up volumes. This is really where additive manufacturing can add another level of value as well. In a really efficient time, first develop the prototype and then ramp up in serial production. It's definitely something where AM brings a huge value to the process.
I think also, I mean, all of us have seen that, for instance, if you take the ongoing war now in Ukraine, it's also a new type of weapons that are being used, such as drones, hypersonic missiles, for instance. Some of these applications require really high material quality to manage the extreme temperatures that are generated in, for instance, high speeds, for instance. This is where materials like tungsten have been a very high demand and interest recently. As I said before here, Freemelt, we have a very strong position in how to manufacture tungsten with full density and accuracy as well. I hope this gives you a better understanding of the value that AM and Freemelt technology brings to the defense industry. On the next slide here, I think you can see a few more examples.
This is from one of the big U.S. defense companies. They bring up, for instance, when it comes to creating new parts, again, it's a digital process. The time, as I said, from prototyping to serial production, is pretty much seamless, which reduces the time, but also the cost for the client. You can also improve all parts. I think here, if you look, zoom in on the middle part of the slide, again, tungsten. By using new materials such as tungsten in this case and printing tungsten, in some cases, you can actually manufacture tungsten by high pressure, but then you cannot get the full density and the crack-free part, which means that you do not get the properties you can get with additive manufacturing.
One of the greatest benefits with AM is that you can build the functional part in one process. Instead of like traditional manufacturing where you manufacture different parts and then you weld them together to get the functional part, here you can do it in one process. Again, from prototype to serial production, much more efficient, but also the product becomes much more stronger as well than having different kinds of welding points. With that said, I would like to hand over to Viktor.
Thank you, Daniel. Thanks for having me here. I started with Freemelt just over a year ago, last year, February. Prior to that, I've been with another Swedish company, Sandvik, for about 10 years where I had different positions in their mining and rock technology business.
For the last year, I've been mostly focusing on getting a structured approach in sales for the EMEA region to generate volume of both prospects and leads. I believe that currently we're starting to see the effects of that, where we have a really good-looking solid sales funnel for the coming quarters, both at the end of the sales funnel, but also still at the start where we're filling them up. We're seeing good engagement both within industry as with research. With industry, we have engagement with all of the focus industries like implants, defense, and energy. I'll actually get back to that in the next slide, but with defense next week, we'll be at the European Additive Manufacturing Military Symposium, where you basically get people from industry as different defense organizations across Europe who focus mostly on additive manufacturing.
It'll be a really good opportunity to meet the industry. We had great progress as well with energy last quarters with both studies and feasibility and actual machine sales to UKAEA. At the same time, we have a lot of activities ongoing in research. We are working on several tenders to actually get more machines out there to that part of the business. One of the things we do is we keep track of how our industrial customers are proceeding towards industrialization. We have identified different steps towards industrialization where we start at material qualification studies, then application testing, prototype printing, and from there, actually checking production scalability before we see it actually being ramped up in industrial use.
Over the last months, we have also seen a lot of progress of our customer base moving from initial material qualification studies closer to production scalability testing. With UKAEA, a couple of years ago, we started with material qualification of tungsten for fusion energy plants. Last year, we started the second study with them. This year, in the first quarter, we got an order for a qualification study with them to actually check production scalability and also qualify the parts to be used in the new energy plants. At the same time, we've seen that they also have decided to invest in a machine themselves so that they can continue to do this in-house with our support. Also, we see that new companies are coming in when it comes to fusion energy.
We started with material qualification, the first study together with Oxford Sigma, another company from the U.K. Last year, we also successfully finalized a material qualification study with Saab. This year, we started working on an application testing study with them as well, which we will also conclude during the first half of this year. We also have good traction with the implant industry, which Daniel already mentioned. They are most ahead when it comes to industrial use of 3D printing. We have two projects ongoing with two major OEMs of implants. We are continuing to work with them, and we expect to see the first results during this year. As we proceed, we'll continue to track the different studies that we start and also see how they move up in this path from material qualification all the way to industrialization.
Just to highlight, there's only a couple of companies listed here, but last year, since the start of 2024 in EMEA, we have started with 23 of these studies in all different industries that we work with. I think I would like to pass the floor now to Martin and Daniel.
Thanks, Viktor.
Thank you, Viktor. Thank you, Daniel. Turning to some of the figures from the last quarter and the past year, we already released some preliminary figures on January 27. Some of these were not new to the audience. I would like to highlight on the left side the net sales. SEK 8.2 million in Q4, which is not dramatic in itself, but the mix is interesting. The light green area is revenue from machine sales. In Q3, we booked two machines. In Q4, we booked one machine, but it is 66% of revenue. What we see growing is the project part. That is a great part. Revenue from projects is growing, and that reflects what Daniel and Viktor have been talking about, that it is not a large part of our revenues, but it is increasing.
It is paid projects, which we hope to convert to machine sales at some point in the future. Similarly interesting is the dark green part, which is aftermarket. Our ambition is to grow aftermarket up to the year 2030. We are seeing an increased proportion of sales coming from aftermarket as the install base increases over time. On the right-hand side is the order book. At the end of Q4 2024, we had SEK 12.4 million in the order book. The order book is defined as purchase orders received, which we have not yet invoiced. It is not in our official books anywhere. This is a slight increase from the third quarter and a very large increase from the same period last year or 2023. The big part of what drives sales is machine sales.
That's, of course, where the big money is, and that's driving this figure. Cash flow. On the left-hand side, you see the operating cash flow being visualized. There is an improvement in the last quarter compared to Q3. It's still negative, SEK 8.9 million in the last quarter of last year. This is mainly driven by the negative result, but also from inventory buildup, which is ahead of anticipated machine sales in the beginning of this year, as you will also see. I would also like to highlight the rights issue as a final point. In the first quarter, we successfully finalized a rights issue, providing the company with SEK 90 million before costs associated with the rights issue. This will take us a long way further for the industrialization and commercialization of our products.
What's also important to note is that there is a warrant called TO1, which is part of this capital raise, but it goes into effect or it expires in June 2026. I think this is also something to keep track of, not only the Freemelt share, but also the warrants and the structure of the warrants, which is quite attractive for shareholders. It expires in June. The price of the warrant is going to be set in May, and it's going to be a rebate compared to the price set in June, so 70% of the price. There's a cap on this price, which is SEK 1.33 per share. I would like you all to just keep track of this one as well and not only the Freemelt share.
This warrant also brings proceeds to the company depending on the subscription rate, but up to slightly over SEK 50 million. Thank you.
Thank you, Martin and Viktor. Let's wrap up Q4 and 2024. I think Q4 represented 2024 as such by having seven new paid customer projects. The highlight were actually two strategic agreements with two of our global implant OEMs, as Viktor also mentioned before. I think, first of all, I mean, as we said, the medtech industry has the highest adoption, the highest experience, and also the fact that they are giving Freemelt the trust, I think it's really pleasing to see. It's also really pleasing to see as well that all three industrial focus are showing high interest and demand in our technology. Where we so far since then when we launched the industrial offering mid-last year, have sold four eMELT machines until now. Customer references are absolutely critical for Freemelt now to accelerate our market penetration forward.
I think it's also very promising to see that in all our industrial focus areas, and especially, I would say, in defense and energy, both of them are really under substantial transformations at the moment. As I tried to explain, at least for defense, but it's the same for energy as well. Additive manufacturing or innovative manufacturing or advanced manufacturing, whatever you would like to call it, will play a critical role both regarding the innovation of new types of materials, new types of parts, but also, again, the local manufacturing that they can get full control of the manufacturing or the supply process of this as well due to the geopolitical situation that we are facing. I also want to take the opportunity to thank all our shareholders for the trust and support. I mean, Freemelt, we are now entering its eighth year.
With a machine offering now both for research and also our industrial customers, our key focus is to scale up now for growth with a clear path towards profitability. Lastly, I'm not sure if you follow Freemelt on LinkedIn. I did write in my year-end summary at LinkedIn that most of the time, you overestimate technology in the short term, but you underestimate it in the long term. I think now we are at a time where 3D printing or additive manufacturing is really gaining momentum driven by structural long-term trends in defense, energy, but also in med tech. With that said, thanks for everyone's attention today. Let's open up for some questions.
Thank you very much, Daniel, Martin, and Viktor for that presentation. Yes, let's dive into the Q&A section here. We'll start with the first one. In the Q4 report, you mentioned starting 28 new paid customers projects during 2024 compared to just three in 2023, which is an impressive increase. What would you say are the key factors behind this success?
Yes, good question. Yeah, I think, I mean, first of all, I think as a company, we are getting more and more mature as a commercial company, but also from the technology such as well. I would say that this is a part of our commercial journey that we sort of started end of 2023, but really trying to accelerate during 2024, where we have had a structured and also a persistent approach to increase the brand awareness about Freemelt. As I mentioned before, it's a lot about educating the market about the opportunities where they are, but also to educate about Freemelt's technology.
I think now when we have two commercial teams, one in EMEA and one in the U.S., I think it just proves the great work they have been doing. I think also, I mean, the technology as such, Freemelt's technology being more present at universities and research institutes, it has also increased the interest of our technology. Lastly, of course, I mean, the geopolitical situation that has really turned from having a bit of a headwind trying to, again, educate and try to really, yeah, push for the interest of AM. I think now we start to get tailwind, and now the demand is really coming from the industry. I think that also is one of the key reasons why customers now prepare to pay for trying out the technology as such.
Thank you, Daniel, for that answer. During Q4, you also strengthened your couple of collaborations with Saab Dynamics for defense applications. Have you also noticed a growing interest in innovative technologies like additive manufacturing due to the increased geopolitical instability?
I think maybe Viktor, you can.
Yeah, I can take this. I think within defense, we've always seen a strong interest in additive manufacturing over time. I think it's also quite well adopted in some of these applications. I think there is definitely a big increase in interest coming from defense, also coming due to the geopolitical instability. A lot of that can be explained also by what Daniel already explained is that, first of all, AM has specific capabilities to make parts, to make whole assemblies. You do not have to weld things in the field or those kinds of things. You can make everything at once.
It also helps a lot to shorten the introduction time of new products because you can test. You have a lot of possibilities to use the technology to do experiments, especially, of course, our open-source technology facilitates this. We also see that there is a shortened supply chain if you use AM. We can also have a local supply chain, which because of geopolitical instability becomes more and more important. This is definitely giving us some tailwind as Daniel described it just now.
Thank you, Viktor, for that answer. You just informed the market that you have received a new order for the industrial machine eMELT from UKAEA. Can you tell us why this is a strategically important business?
I think I can take this one as well. We have been working with UKAEA quite some time already.
We have been working with Fusion also quite some time. We have seen that we have had several orders from Fusion. The fusion energy market, even though it is still very experimental, is definitely expanding. We see that there is a lot of investments coming within this market and energy as such. We expect that there will be an increase of around, from today, SEK 300 billion of investment to SEK 500 billion of investment by 2030. Even though it will take time before we can see fusion energy being adopted to an energy source that is used for all of us to be used at home, there will still be a lot of prototype plants that need to be built. They require millions of tiles that we can manufacture with our machines.
Even if you look at the prototypes that they will be building in the U.K. or in France, we would need several machines to actually manufacture all the tiles that are required. It is a very good market for us from that perspective. We are also very well positioned as we have been working together with the U.K. for quite some time. Now we are also working with more companies within the sector too.
Thank you, Viktor, for that answer. We will take one final question here. Now that it is a busy time for rearmament, could this mean shorter or even faster lead times to reach proof of concept?
I can take it. Yeah, absolutely. I think because you have design freedom within additive manufacturing, you can do a lot of designs that you can test very quickly.
We can also see, I think this is for Saab interesting as well, that we can make something and they can trial it quite quickly. We will definitely see a shorter time of new product development, new product introductions due to our technology or due to AM at such. This is something that will also help with the rearmament of Europe, as you say it, and also rearmament of new technologies.
Okay. Thank you very much for all your questions, Daniel, Martin, and Viktor. That's a wrap of this conference call with Freemelt. We shall greet the rest of the day. Thank you very much.
Thank you.
Thank you all.
Thank you. Bye-bye. Bye.