Welcome to the Sensys Q1 2025 Report Presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by dialing #5 on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO, Ivo Mönnink and CFO, Simon Mulder. Please go ahead.
Good morning and welcome to Sensys Gatso's Market Presentation of the First Quarter of 2025. My name is Ivo Mönnink, I am the CEO of Sensys Gatso, and I will be presenting to you together with Simon Mulder, our CFO. In this market presentation, I will provide you with an update on our business for the first quarter of 2025. We then follow up with a financial update by Simon, and finally, I will finish this presentation with a summary and our financial outlook for 2025. Let's now look at an update of our business. In this business update, I will take you through our order intake, of which 94% has a recurring nature this quarter, our first recurring revenue order from our Saudi customer, the negligible impact from the tariffs on our U.S. Business.
The impact we see from a weakened dollar, the continuing growth of our recurring trust business, and finally, our margin and EBITDA development. Let's start with the order intake. The order intake and procurement awards during the first quarter came in at SEK 192 million compared to SEK 318 million in Q1 of 2024. Of the total order intake, 62% or SEK 119 million is from orders received in the U.S. market. SEK 65 million is related to renewing a contract with our longstanding customer, East Providence, in the state of Rhode Island, and the remaining SEK 54 million relates to three new contracts signed during the quarter in three different states: Illinois, Pennsylvania, and Colorado. The latter one is our first contract in a new state for Sensys Gatso, with the city of Longmont. Opening up a new state is a milestone that potentially could lead to new cities following suit.
Of the SEK 192 million total order intake, 94% or SEK 118 million is labeled as recurring revenue. The substantial share of recurring TRaaS revenue within our Q1 order intake demonstrates that we continue to grow our stable recurring revenue baseline in line with our strategy. In January, we received a TRaaS order from our customer Tahakom to the value of SEK 27 million. The order is to provide maintenance and support services on the 1,200 in-vehicle systems that have been delivered since 2018. This order is for the first year of service and maintenance under a three-year framework agreement. These trust services include ensuring that the systems are always compliant with regulatory requirements, correctly functioning, and up to date.
It reinforces the strategic partnership between Tahakom and Sensys Gatso and marks a significant step towards improving road safety in Saudi Arabia, whilst emphasizing the importance of supporting local content and sustainability initiatives in the Kingdom. After the quarter, the U.S. government has imposed global tariffs on most of the countries that export to the U.SA. Sensys Gatso has a significant business in the U.S.A., representing roughly 40% of our worldwide revenue and growing. The business model we operate in this strategic market through our wholly owned subsidiary, Sensys Gatso USA, is a so-called Managed Services Business model. In this model, we own, install, maintain, and operate automated traffic enforcement equipment sourced from the Netherlands and Sweden. When operating the equipment, we evaluate events, send out citations, and collect the money on behalf of our customers: 55 cities, 12 states.
The value added for Sensys Gatso in this model is generated from the operations part in the value chain. The equipment we use is typically depreciated over five years and has a negligible impact in the value chain. The recent turmoil resulting from the communication on the tariffs has weakened the dollar against the Swedish Krona and the Euro. These currency translation effects naturally affect our profit before tax during the first quarter. Due to volatility in our main foreign currencies, U.S. Dollar, Euro, and Australian Dollar, Sensys Gatso has been impacted through translation of its foreign currency receivables and cash positions to Swedish Krona. This has resulted in a negative impact in the first quarter of approximately SEK 6 million, compared to a positive impact in Q1 2024 of SEK 3 million. Adjusting for this, our profit before tax would have been negative SEK 8 million instead of negative SEK 17 million reported.
The interest on the Euro bond of EUR 30 million has resulted in an interest expense of approximately SEK 7 million compared to SEK 3 million in Q1 2024. In summary, the total financial items amount to approximately SEK 13 million for the quarter. Total revenue for the quarter arrived at SEK 152 million, 22% higher than Q1 2024 at SEK 125 million. The 44% increase in system sales from SEK 41 million to SEK 59 million was mainly related to an increased rollout of the Dutch tender in Q1. The recurring trust revenue arrived at SEK 93 million this quarter, 11% higher than Q1 2024 at SEK 84 million. Our trust managed services revenue remained relatively stable at SEK 57 million versus SEK 59 million in Q1 of last year. From this, we may conclude that our U.S. team managed to compensate for the shortfall in revenue from the Iowa programs with increased revenues from programs in other states.
This quarter, our recurring trust business accounted for 61% of our total revenue. This is in line with our strategic target of more than 60% of total revenue. Our gross margin this quarter was 37% compared to 38% in Q1 2024. This is somewhat lower than our run rate margin of 40% and is driven by the relatively large contribution this quarter of system sales from the Dutch project. System sales margins are typically lower and precede the higher margin. Service and maintenance recurring revenue, which is expected to continue for at least six years for the Dutch project. The overall gross margin of the contract will gradually recoup during this phase. Our EBITDA for the quarter arrived at SEK 9 million, SEK 5 million higher compared to our EBITDA of SEK 4 million in Q1 2024, an increase of 125%. On that note, I'd like to hand over to Simon.
Thanks, Ivo. As usual, I will talk you through our group's financial performance, the performance of the segments, and our financial position. Looking at the group's financial performance from the income statement, we focus on revenue margins and profitability. The revenue for the quarter came in at SEK 152 million compared to SEK 125 million, up by 22%. During the quarter, trust sales increased to SEK 93 million from SEK 84 million in Q1 of 2024, an increase of 10%. The sales of systems came in at SEK 59 million compared to SEK 41 million. The increased sales in Q1 2025 is mainly related to deliveries on the Dutch tender and the announced Australian order. The group's gross margin arrived at 37% for the quarter, in line with last year. Operating expenses totaled SEK 59 million, an increase of SEK 4 million compared to Q1 2024.
Our operating profit for the period improved by SEK 3 million compared to Q1 2024 and came in at negative SEK 4 million. As the average currency exchange rates were similar to Q1 2024, there is a relatively small impact on the income statement on revenue and EBITDA level. However, due to large currency fluctuations since the end of 2024, the financial performance of the group has been impacted by translation of foreign currency receivables and cash to Swedish Krona. The translation impact amounted to negative SEK 6 million in the quarter and is SEK 9 million lower than the reported SEK 3 million positive impact of Q1 2024. Discussing the performance of our managed services segment, it is good to understand that this segment predominantly reports on our U.S. business and the costs associated with software development for our software suites, Zillium and Pulse.
The order intake in the quarter amounted to SEK 190 million, consisting of SEK 54 million total contract value over the contract period of new customers and SEK 65 million for contract renewals and expansion possibilities. Revenue came in at SEK 46 million, SEK 4 million lower compared to last year. The impact of Iowa of approximately SEK 10 million per quarter has been partially offset by revenue growth on new and existing customers by improvement of performance. The EBITDA amounted to SEK 5 million compared to SEK 8 million for the same quarter last year, resulting in an EBITDA margin of 10%. 12 months rolling, the sales came in slightly lower than Q4 last year at SEK 191 million and an EBITDA margin of 11%. Looking at the sales development from an annual perspective, the sales in the U.S.
have grown from SEK 95 million in 2019 to SEK 191 million in 2024, excluding SEK 20 million impact of Iowa on top-line sales. The CAGR over this period is approximately 15%. Moving to our system sales segment, the segment reports on results from our system sales companies with revenues from one-off sales of systems, service and maintenance, and in the case of the Australian entity, also a small part of managed services revenue. Order intake in the quarter for the segment system sales is driven by orders from Australia and several repeat orders from existing customers. The order intake for the quarter amounted to SEK 73 million compared to SEK 44 million last year. The increase in sales from SEK 75 million to SEK 106 million in Q1 2025 is driven by deliveries on the Dutch project and the announced Australian projects.
EBITDA improved by SEK 8 million from negative SEK 4 million to positive SEK 4 million in 2025. 12 months rolling, the revenue increased from SEK 437 million to SEK 468 million in Q1 2025, with an EBITDA margin of 11%. During the quarter, the segment reached a recurring revenue of 44% of sales, consisting of trust, service and maintenance, and trust managed services. 56% relates to one-off sales of systems. Discussing the financial position of our company, I would like to focus on cash movements, interest-bearing debt, and available cash. The largest movement in our available cash position are investments in working capital and fixed assets. The increased cash usage in working capital is caused by build-up of inventory for projects and timing of invoicing of customers. The investment in fixed assets for the period is mainly due to investments in our software products.
The available cash amounted to SEK 149 million at the end of the period. Due to currency volatility in the first quarter of 2025, we have seen a significant impact on the translation effects of balance sheet items, such as the EUR 30 million bond. The bond was valued at SEK 338 million at the end of 2024 and at SEK 319 million at the end of the first quarter, resulting in a translation effect of SEK 19 million on this position. During the quarter, we have prolonged the lease of our headquarters in Jönköping. This has resulted in an increase in the unbalanced lease liabilities and right-of-use assets of approximately SEK 22 million. The net interest-bearing debt has increased from SEK 217 million to SEK 274 million at the end of the quarter. On that note, I'd like to hand it over to Ivo.
Thank you, Simon.
Sensys Gatso has made significant progress in several key areas, including obtaining first contracts in new states in the U.S.A., expansion of the managed services business model into other geographical areas such as Australia and Ghana, and a strategic partnership in Saudi Arabia with a first order for recurring revenue in hand. Our order book and remaining backlog of more than SEK 1 billion is robust and will provide solid revenue well into the future. We expect our trust business to continue delivering profitable growth driven by our strengthened U.S. team and our groundbreaking FLUX roadside platform. Our long-term strategy remains unchanged, and we are taking proactive steps to address the challenges we have encountered. We are confident that these actions will position us to deliver on our ambition in the near future.
For 2025, we expect our revenue to arrive between SEK 700 million and SEK 800 million, and due to additional sales investments to accelerate the growth in our U.S. market, we anticipate to realize an EBITDA margin between 12% and 14% in 2025. On this note, I now open up for questions.
If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Orjan Rodan from Carnegie Investment Bank. Please go ahead.
Yes, good morning, everyone. Orjan Rodan here. First question, can you give us a brief update on the work with the order to traffic work it, how that is progressing? My second question is relating to the Netherlands where you seem to be doing quite well. Are there any new tenders coming up that you are aware of? The third question is relating to the U.S. business. Can you describe how your managers have actually worked to compensate for the Iowa shortfall? That was all from me. Thanks.
Okay. The first question is on traffic. Yeah, we're progressing there according to plan. Communicated earlier, we will start the deliveries in Q2. This is about to happen. There is nothing actually preventing us from doing that. We executed there on plan. You will see that in the numbers going forward. I think the second question was related to the Netherlands. We recently won three tenders in the Netherlands, EG 36, EG 39, and EG 37. We're now in the process of rolling out. EG 36 has been rolled out. EG 37 is what you see in the numbers now in the increased system sales in the Netherlands, and EG 39 will be rolled out towards the end of the year. That is where we stand in the Netherlands. If there are any new tenders coming up, we will definitely participate in those.
Regarding Iowa effects, the team has been working hard with the communities to address the situation and helping them also to protest against what has been decided by the Department of Transportation. That is an unfortunately slow-moving process, but it's going ahead. We will know the outcome of that in the months to come. Meanwhile, you probably remember that a number of the mobile locations are still operational, so we can still use those. We acquired new mobile trailers to move our enforcement around these positions, so that will help us mitigate some of the loss on Iowa. Also, don't forget that the red-light systems are still in operation as well. That's it on the U.S. No news compared to what I've mentioned there before.
Okay. Thank you very much. Can you also give an update on the Ghana project, how that is progressing?
Yeah, we had elections in December last year. The opposing party won the elections. That was also the party that initially started with the project of automated traffic enforcement, so that's favorable for us. There are some minor changes to the legislation that is being implemented right now. The expectation is that the law will be laid in front of Parliament in May, and then it needs to be laid for 20 days, seating days of Parliament, and then it will pass automatically. We stick with our projection that we will start issuing citations in July, say, the second half of the year. The company is all set up. The systems have been tested. The staff has been trained, so we are in a, we can be in operational mode fairly quickly.
Okay. Thank you very much.
The next question comes from Tim Ehlers from Kepler Cheuvreux. Please go ahead.
Thanks, Operator. Good morning, gentlemen. Thanks for taking my question. The first would be about the Dutch project and the Dutch contract. With the Q4 results, we had a slide with a graph talking about the backlog of the project. In this slide, you could see that for the Dutch project, you were only expecting TRaaS revenues going forward. The system sales revenues you mentioned, are those a new project, or is it still the old one? Could you maybe explain that a little bit?
Yeah, it's still the old EG 37 project. It is still system sales from that project falling into Q1. Once they have been delivered, of course, the service and maintenance part starts kicking in, and that will be the TRaaS revenue you were referring to.
Okay. Could there still be more system sales coming up, or now that it's on TRaaS?
No, the project is almost done. There's a few still left on that project, which is EG 37. Then we have another project, EG 39, which will kick in towards the back end of the year.
Okay. In addition to the SEK 400 million project size, or is that?
The SEK 400 million relates to the EG 37 Simon was mentioning. The EG 39 is a whole new project. That is not in that number.
Okay. Okay. You then, yeah, maybe talking about Iowa a little bit more. Could you maybe update us on the status there? I mean, you already had a slide now that explains the impact on the order backlog. How are you looking at it? Do you consider the probability of recovering the revenues and eventually restarting it at some point as high, or do you now really consider it a loss and it's gone?
No, we don't consider it a loss. I mean, first of all, there's, of course, politics involved, so it's hard to make a fair adjustment on what's going to happen. I think I look at this as a, so call it a test period. It will be a longer test period going into 2026. At that point in time, there will be new evaluations on new contracts. I think that's one thing. The other thing is that the cities are pushing the Department of Transportation on getting these systems back up. There's a good reason for it because we all know that the Trump administration has made quite severe restrictions on federal funding also towards cities. These programs have helped the cities in the past to fund their budgets. There is political pressure at city level towards the state.
Where it will go is also depending on how successful lobbyists will be and how successful our appeals with the, or the city's appeals with the DOT, the Department of Transportation, will be. We have not written it off. Absolutely not. I think also the one comment I mentioned before, red-light enforcement is still up and working, and mobile enforcement, speed enforcement in certain locations is also functional. We can, by investing in new trailers, actually mitigate some of the loss of the revenue through that operation. The number we mentioned is that the impact is roughly now on Iowa only SEK 10 million per quarter.
Okay. Very helpful. You already answered one of my questions partly. On the political landscape in the U.S. and how that has impacted your business, you're basically saying that you do see an impact from the Trump administration in the sense that they cut funding.
Yeah.
Any other?
Yeah. We do. I mean, talking to the team in the U.S., that's their expectation. We don't see it going, yeah, we see it going more likely going in a positive direction than in a negative direction. Yeah.
Okay. Okay. Clear. And then one last question about Saudi Arabia. You already mentioned that you started the first trust contract with them. Any updates on potential new contract there, or it's still more or less the same as in Q4?
No, no. Updates are that we are going through the motions of type approving and validating our systems. As you probably know, we are out there with three solutions. Next to the vehicle in-motion solutions, there is fixed speed, there is mobile speed, and there is red light. All of these projects in various phases are ready for, or getting becoming ready for the customer to actually give us an order for. Now, when that order will fall, that's always very difficult to predict with governmental customers. We are in a good position. We're the only provider to the government in Saudi Arabia that can provide all four solutions they need. It is very likely that we will receive orders for those, certainly because our solutions technically qualify. Yeah, whenever there is going to be an update, we'll keep you posted, of course.
Good news is that we did receive the first recurring revenue order, which is, this is the part which I like about system sales, is that once you sell system sales, there's only one party that can maintain these systems, which is the supplier. In this case, this is us. We sold 1,200 in vehicles to Saudi. 600 of those have been installed. 600 are still waiting to be installed over time. Meanwhile, we received an order of SEK 27 million under a three-year framework agreement. That SEK 27 million is only for the first year. You can anticipate that there will be further orders, of course, for filling in year two and year three.
It tells you something about that business model and the fact that it always comes, system sales order always comes between brackets because it's not, of course, always, but very likely comes with a service and maintenance recurring order. We are really, really happy with that. We set up shop in Riyadh, and we hired a few people to start executing on that new order, which will start in May of this year.
Okay. Great. Thank you very much.
You're welcome.
Thank you, Tim.
There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
There are no written questions at this point in time. No. We do not see any written questions here. Okay. In that case, we will thank you for attending this call and hope to see you back in the next presentation.