Hello, and welcome to today's webcast presentation, where we have Ovzon presenting the Q3 report for 2023. With us presenting, we have the CEO, Per Norén, and CFO, Noora Jayasekara, who will be presenting and answering your questions. You can either write your questions to your right, or if you're calling in, please press star nine to raise your hand. With that said, please go ahead with your presentation.
Thank you so much. Good afternoon and good morning, everyone, and thank you for joining our webcast today regarding Ovzon's third quarter 2023. As was said, my name is Per Norén, I'm the President and CEO of Ovzon, and by my side here today, I have our Chief Financial Officer, Noora Jayasekara, who is going to present our financials more in detail later in the presentation. Before I start the formal presentation, I just want to acknowledge that we've announced a number of critical things in the last 24 hours. First of all, and most excitingly, it's the improved timeline for the launch of Ovzon 3. Thanks to a great team effort the last few months, we will now launch Ovzon 3 as early as in December 2023.
We also announced that our Board of Directors made a decision to make a new share issue with preferential rights to existing shareholders. This to further strengthen our financial position ahead of the launch and orbital raising of Ovzon 3. We will, of course, walk you through all of this in today's presentation. However, for all Ovzon followers and new listeners, and as a general reminder, let me begin with providing you with a quick overview of our company. First slide, please. Ovzon is a company pioneering new solutions, technologies, and know-how, and capabilities. The company embarked on a strategy and execution plan and a transformative journey to be a game-changer in guaranteed connectivity for any critical mission, using integrated satellite communications. The company was founded in Sweden in 2006.
At that time, the company was focused on designing, developing, selling, and delivering the most capable mobile satellite terminals in the world. With mobility, we mean and we really mean the smallest, easiest to carry, lightest, easiest to use, and best performing satellite terminals. Today, we're the leading solution provider of fully integrated end-to-end SATCOM-as-a-Service that delivers the highest level of connectivity, performance, and being truly mobile and truly resilient in delivering such guaranteed connectivity. We have customers and end users in the United States of America, in Sweden, and in several countries in Europe. We have, since 2018, invested heavily in large technology programs, the most prominent one being the satellite Ovzon 3, which will, as we noted, be launched in December this year. Next slide, please.
In 2018, the company decided to advance its position from a mobile satellite terminal to a provider, to a vertically integrated satellite communication services company. Decisions were made to invest in building the company's first own satellite, Ovzon 3, alongside a software-enabled resiliency solution for continuous and guaranteed connectivity, the so-called Ovzon Onboard Processor, as well as an ultra-small, onboard processor-enabled satellite terminals. These technologies and development programs have been significant investments and undertakings. What sets us apart from other satellite communications provider and from any competing solution is that we manage and control the entire value chain that you see on this slide. As you can see, we deliver small terminals, we deliver a full space segment of networks, and we deliver secure gateways which we sign up with selected partners.
We manage all of that in an integrated fashion through our global support and service organization that has 24/7, 365-day a year support and service, and a very, very high performance on uptime globally. Next slide, please. Here is a graphical description of where we are positioned today and the competitive landscape and solutions landscape. Satellite communications has today become an integral part of the broader communication landscape that connects and powers the world's most critical missions. The increased geopolitical tension in the world fills our news daily, regrettably, even more so in the last few weeks. The warnings of environmental changes through global warming are obvious, and we're seeing growing numbers of natural disasters, such as floodings, storms, and wildfires. Geopolitical instability, as well as natural disasters, has also led to increased refugee streams across borders.
In critical situations, the only means of guaranteed connectivity to protect and connect people, businesses, and countries, have become evident to be satellite communications. For our customers, this harsh truth has become more and more obvious. Guaranteed connectivity when you need it and where you need it, is critical, and fast and easy-to-use and guaranteed solutions are key. On the x-axis , you see mobility. That is the performance of actually connecting anywhere, anyhow, and in any way. On the Y axis, you see performance. Performance is the ability to send and receive. Transmit and receive large amounts of data, and so on and so forth. Ovzon operates in the premium segment of this. We're a vertically integrated service provider. We perform today on leased capacity, and tomorrow on leased and our own capacity through Ovzon 3.
The importance here with this picture is to say that there are a lot of, of course, new satellites coming out during this year and the last couple of years. We believe that we have a very unique position in that higher end of the market with a premium solution, with guaranteed connectivities for those with critical missions. Next slide, please. What about the market? Well, I think many of you have seen this before, but some quick words around it. We operate in a large global industry and large global market, where investments in both technology and capabilities are increasing right now, and where we see many new interesting initiatives, such as direct satellite to device connectivity, for example. We are well positioned in this market. As noted, it's large and growing.
We're able to serve any country, organization, business, and mission that requires the highest throughput and satellite communication capabilities. Our main focus is increasingly on government business, meaning defense, so military and civil defense, police, emergency and rescue services, and organization that performs humanitarian efforts and protection. We're proud of our current and growing list of prestigious and highly demanding and important customers and end user. Those serves as a platform for renewals of business expansion and points of reference for new sales. Our go-to-market approach is fairly straightforward. It's very focused. Our success comes from always working closely with end users and with selected partners across the globe, from large to small and agile local partners. This network is a network of trusted partners with the right connection, and it takes a time to build up in all the countries where we operate.
We are making good and solid progress, but it does take time. Next slide, please. Over to the third quarter and our main events. During the third quarter, we received three orders. We are very intrigued by these renewal orders as they're all within our selected geographies and core market segments. They will further strengthen our position in these markets. They represent solid continuation and the start of long-term collaboration, and they have the potential of scaling up. During the third quarter, we also launched our newest mobile satellite terminal, the Ovzon T7, which has been very well received in customer performance and usability demonstration. I'll get back to the importance of Ovzon T7 in a few minutes when we touch upon our next-generation offerings and Ovzon 3.
As noted earlier today, and as I noted in the beginning, we communicated a narrow timeline for the launch of Ovzon 3. The test, assembly, and finalization of the satellite have progressed very well during the last six months. It's been a great team effort that has resulted in a planned launch as soon as in December. This is definitely in the early part of our previously communicated time interval. Even though we have received orders during the quarter, ongoing new sales pursuits have been extensive, but taken much longer than anticipated compared to our previous assessment in the second quarter. Consequently, our outlook for 2023 in today's report is adjusted to a full year revenue of, at the lowest, SEK 250 million, which should be compared to the SEK 350 million we had in 2022.
The adjustments is due to changed long sales cycles for new business, and they are obviously less likely to generate significant revenue before the end of 2023, because we today say that it's October 20th. Therefore, to strengthen our financial position and create flexibility in preparation for the launch of Ovzon 3, the Board of Directors has decided to pursue a share issue with preferential rights for existing shareholders of up to approximately SEK 250 million, guaranteed to 80% by our main shareholders. Next slide, please. Let's talk about Ovzon 3 a little bit more and provide an update. What you see in this picture is our spacecraft at the Maxar production facility. The Ovzon 3 satellite weighs about the same as a modern car, about 2 tons.
The satellite is 27 m wide when solar panels and antennas are deployed, more than twice the length of a normal bus. That is a small geostationary satellite compared to those that are in space today. As mentioned before, the tests, assembly, and finalization of Ovzon 3 have progressed very well during the quarter, and we're now very close to final countdown. Ovzon 3 is estimated to reach the launch site at Cape Canaveral in Florida, United States, by late November this year. Regarding the launch, we will, of course, communicate a more detailed timeline of a specific day, date, and time for the launch as soon as we possibly can. We continue to have very close dialogue with our partners, SpaceX and Maxar in planning those launch details.
As a reminder, when launching a spacecraft, there are always uncertainties regarding the exact timing of those satellite launches, such as, for example, weather. When launched by a Falcon 9 rocket, Ovzon 3 will be released from the rocket at apogee at 36,000 km. The satellite will then utilize its internal electric propulsion system to reach its designated geostationary orbital position in space. Next slide, please. We're obviously very, very, very excited about and look forward to the day in December, as Ovzon 3 will lift off from Cape Canaveral as the first-ever privately funded, built, and launched Swedish commercial geostationary satellite. It carries Ovzon's patented software-defined capabilities, complemented with high-powered steerable beams. The software-defined capabilities are delivered via Ovzon's unique onboard processor.
It is a very powerful in-orbit processing platform, allowing users to directly connect across multiple steerable beams without the use of teleports, cutting latency in half and enabling previously unavailable resiliency for assured connectivity. Ovzon 3 will boost performance of existing terminals while allowing development of even smaller terminals that will be closer in form factor to modern smartphones, rather than traditional satellite terminals. Pound for pound and ounce for ounce, we believe that the Ovzon satellite and our next-generation technology will outperform any competing solution. Let's turn to our order intake for the quarter, followed by the financial updates with our CFO, Noora Jayasekara. For a company our size, our order intake is still very cyclical and somewhat of a bumpy and not as predictable journey as we would like it to be.
It takes time to build market awareness of our unique value-added solutions and to achieve relevant market presence in the right geographical and customer markets. The lead times have been long in concluding major customer contracts, and in parallel, larger contracts will also be complemented with smaller orders, which is the start of expanding contracts with customers in our target markets. I'm pleased with the fact that we have received multiple orders during the quarter, both from current and new customers, but I'm not satisfied with the non-predictable nature and flow of order intake. During the quarter, we received a new order from the Italian Border Police, a renewal and extension of the contract with the U.K. government through our business partner, Airbus, and new orders from the Swedish Space Corporation.
They were all relatively small orders in magnitude and in order intake. In total, during the quarter, they amounted to $0.4 million or approximately SEK 5 million. Our order book at balance day amounted to $5 million or approximately SEK 55 million. As mentioned before, ongoing new sales pursuits and customer dialogues have been extensive but taken longer than anticipated to close compared to our previous assessment. This has resulted in our new outlook. I believe, however, that it's worth underlining that we haven't lost any customers or procurements during the quarter. Also worth noting is that the fourth quarter normally is our strongest in terms of order intake during the year, hence due to government budgeting cycles. Now I leave the word to Noora to provide some more in-depth details of our financial performance.
Over to you, Noora.
Thank you, Per. I will now give you some details on the financial performance in the third quarter of 2023. Turning to Slide 10, revenue totaled SEK 73 million for the third quarter of 2023, corresponding to a decline of 7%. The downturn is largely explained by the difference in size of the renewal from the Italian Fire and Rescue Services. This was mitigated by other renewals and sales to new customers, consisting of both terminals and SATCOM-as-a-Service. Adjusted for currency effects, the decline was 9%. Run rate revenue for SATCOM-as-a-Service was SEK 247 million, a slight decline compared to the second quarter due to low order intake during 2023. Turning to Slide 11, EBITDA in the third quarter amounted to SEK -22 million and EBIT to SEK -29 million.
Profit for the period is lower compared to last year, due to lower delivery of services and lower capacity utilization. EBITDA margin for the period was -31% and EBIT margin, -40%. The decline driven by higher overhead costs related to sales and personnel and unutilized capacity. On Slide 12, cash flow from operations landed at SEK -12 million, lower than in the comparative period due to lower revenue, unutilized capacity, as well as increased costs. Investments in Ovzon 3, as well as the development of the mobile satellite terminal, Ovzon T7, drive the cash flow from investing activities during the third quarter. Net debt amounts to SEK 433 million, an increase from the comparative period as a result of the mentioned investments in Ovzon 3 and Ovzon T7, and lower cash balance.
On Slide 13, since our sales efforts have taken longer than anticipated, and we have continued to invest in the finalization of our major technology programs, we consider it necessary to strengthen our financial position in preparation for the finalization and launch of Ovzon 3. As you have seen in the report and the press release earlier today, the Board of Directors has therefore decided to conduct a rights issue to existing shareholders of approximately SEK 250 million, guaranteed to 80% by our main shareholders, as well as CEO Per Norén and founder Per Wahlberg.
The proceeds from the rights issue are intended to be used to finance operations for 2024 and 2025, taking into account the adjusted outlook for 2023, as well as to strengthen the company's working capital and additional costs related to the completion and launch of Ovzon 3. Now back over to you, Per, for some final comments.
Thank you, Noora. All right, allow me to close out this part of the webcast with some concluding comments and some forward-looking remarks. First of all, I'm really, really pleased that we can report on such strong progress with Ovzon 3, and that we're heading towards a launch in 2023, meaning in December 2023. It's been a long journey. Let's keep our fingers crossed for stable weather conditions at the launch, and safe travel by Ovzon 3 to its dedicated orbital position. Going into 2024, we will then have continuous work before the satellite is fully operational and can be used for commercial activities. With Ovzon 3 in space, we have deployed our new technology and commercial platform, including the Ovzon onboard processor and the Ovzon T7. We will double down on our execution and plan to drive a step change towards profitable growth.
As noted, 2023 has so far been a very bumpy journey for us from a revenue perspective, but our customer base has increased during the year, and so has the underlying demand and the request for our premium validated SATCOM-as-a-Service. Our core customer segments, our chosen geographies, are very, very clear to us. They are to be found in defense, national security, and public safety. With a much more focused go-to-market approach and organization, we believe we are standing strong to attack the markets. The message to our customers is clear: we're here to solve your problems with guaranteed connectivity. We have a unique value to offer and a market-leading offering in our next-generation Ovzon SATCOM-as-a-Service, providing premium mobility, performance, and resiliency. We will also, in 2024, continue to accelerate our industrialization initiatives.
As we plan for the step change in growth, we also plan for a scale-up in efficiency when it comes to volume production with terminals, concentrated and targeted sales and marketing, in-depth work with networking partners, to mention a few. Our financial position and thoroughly managing our cost is key going forward as well. Even though we will continue to have a mix of owned and leased satellite capacity, the use of our own satellite and capacity will work in favor of our gross margin. I should mention that in Q3, we did terminate one of the lease contracts of capacity, what we call OHO 13, from Intelsat, which will reduce cost of about $3.8 million annually. We'll continue to concentrate on all ways to reduce both operational and financial costs without risking the growth.
We do remain bullish about Ovzon's ability to deliver and meet the world's rapidly increasing need for high-performing, resilient, and fast mobile connectivity via satellite. Last but not least, before we go to questions and answers, I want to thank all our key stakeholders, meaning our people, our customers, and our shareholders, for their continued trust, dedication, and support of Ovzon. We're looking forward to finishing the year strong and to launch Ovzon 3 in December 2023. Now, over to you, operator, and we're ready to go to questions and answers.
Thank you very much, Per and Noora, for that presentation. Like I said, now we're jumping into the Q&A section. We'll start with the first question here. Could you elaborate on the demand situation so we get a better understanding of the dynamics?
Could you read that again? Of the demand situation of our services, I assume.
Okay, cool. I will.
Yes. I assume that many are asking themselves the question with, you know, the focus we have on those geographical markets and market segments, defense, national security, and public safety, why haven't you sold more, and is there really a demand? I'll rephrase the question for the person that sent the question. There is a demand. One should note that for most government organizations or official organizations in humanitarian efforts or what have you, buying or procuring satellite communications of the sort that we provide and our competitors potentially provide is fairly new. It's not something that you just buy off the shelf.
There needs to be pre-studies, there needs to be business cases, there needs to be proofs of performance, there needs to be end users involved in that. Decisions very often go all the way up to budgetary organizations and even governments. They take time. They take time. We are engaged in many demonstrations, building our business cases, showcasing our capabilities, both in detail and more broadly and strategically in how you utilize this strategic asset of guaranteed connectivity that we have, both in the United States as well as in many of the countries in Europe, and in those markets that we serve. That's the only thing I can say about it. We are not nervous about the demand, but we're not happy about the long-term time it takes to actually close the deals.
Okay, and as a follow-up question on that, would you say that the long lead times are a result of either price and terms negotiation, or clients taking time to evaluating your service, or general admin and lead times on the client side?
A combination of all three which in the end leads to... Yeah, I think it's a combination of all three to put a short answer. You have to really, I mean, you can have convinced end users. They do not sit on the monetary funds all the time, so they have to then build their business case, then drive it to their organizations, and then drive it to see if there are budgetary access to budgets or funds for it. If not, they have to actually go and get those funds, which means they have to engage with those that allow those funds to be available. It's in all three steps. You have to work all three in parallel. You cannot only do one, you have to do all three.
Sometimes they go in parallel, and sometimes they are in sequence. That's why it takes time.
Okay, thank you. We'll take the next question here. Will the money that you're planning on raising be enough to fully fund Ovzon 3?
I would say they would absolutely be enough to fully fund Ovzon 3. Furthermore, we believe in the market, as we just talked about in the follow-on the first two questions here. We also believe that we will have a growth from the core business we have today, as well as the new business coming from Ovzon 3 as well.
Are there any specific types of customers that Ovzon has a policy to not work together with?
That's a very good question. I mean, those customers that we have today are U.S. Department of Defense, U.K. government, rescue services, other types of government organizations. Those are all within the core market and geographies of what we have. We obviously are avoiding all countries and regions and markets that are on any blacklist or any outside of the scope of our normal business. That is clearly a policy we have.
Okay, thank you. Let's take the next question here. Looking into 2024, what risks do you foresee that could impact Ovzon not reaching your target for next year?
Well, if you would have asked me six month ago, I still think there would have been a risk with, that the satellite would be, you know, going into 2024. As we said, we had this launch window of late, late 2023, early 2024, and therefore, with orbit raising and everything, we would have been even later in 2024, right? I think that risk is, I mean, retired in time, as we now have a launch window in December this year. I think I've lowered that. It's like a reverse answer to the question here. I think the major risks are still... Listen, we have to finalize the satellite. It's got to get to the launch site, and it's got to get up in orbit.
There are still some risks involved in that, but this has been done by other organizations and so on. I think I would say that those risks are not fully there. The biggest, most major risk maybe is on the commercial side, meaning if you think about Ovzon 3, most government or all government organization needs to have a tangible product or a service they can buy, that they can verify the product or service of. They can't really sign contracts on Ovzon 3 and Ovzon 3-based SATCOM-as-a-Service until it's in orbit. Now, we are moderate in our targets and plans for 2024 for business coming out of that.
The business we are focused on for 2024 that is going to carry us is our current customer base and any new customers and so on, that we can sign this year and in 2024. I think the risk are mostly on the commercial side, meaning executing on the commercial side.
Do you have anything in your pipeline that you could comment on today?
No, because if I did, I would have done that.
You have a new Chairman of the Board. Can you elaborate on that decision and tell us more about the new Chairman of the Board?
Yes, we do have a new Chairman of the Board. I'm looking forward to working with Regina Donato Dahlström. She comes with a very long and broad and deep experience from the telecom industry. I think she has a superb background to lead the board's work and work with us as a leadership team as well. It is not in my role to appoint board members, nor chairpersons, so I'll just leave it at that. We look forward working with Regina. I feel very strongly and positive about that, and I've had a very good collaboration with Magnus René, who was our previous Chairman as well. Thank you.
What would you say are your biggest challenges heading into 2024?
The biggest challenges heading into 2024 is to finish 2023 very strong on the commercial side, finalize the satellite, and launch it in December, and then have flawless execution in 2024 to really drive the profitable growth of the company. Those are also manageable because they're in our own hands.
Okay, we'll take one final question here. What should investors look out for in the coming quarters?
Well, I think investors should look forward to a launch of the significant asset that Ovzon 3 and related technologies are. I think they should look for our ability to actually fulfill what we've just talked about, getting the ongoing contract discussions and long sales cycles to be consummated as quickly as possible, so that we create more predictability in our revenue stream. Which means that we can plan our financial planning of cash flow, a lot of things will get much more predictable as well. I think that's what they should look for.
Okay. Thank you very much, Per and Noora, for presenting today and answering all of our questions. A big thanks to everyone who followed along Ovzon's Q3 report today. I hope you have a great rest of the day, and until next time, thank you very much, and goodbye.
Thank you very much.