Avanza Börsdag 2025

Nov 20, 2025

Slides

The next speaker is on his way up on stage. I say welcome to Lewis Miller. Will he come up? I'll shake you. I think you're just standing there. You're a CEO of Sensys Gatso Group, right? Yes. Most welcome. The floor is yours. Thank you. Welcome, and thank you for having me. Good morning, good afternoon. I know we're getting close to lunchtime here, so I appreciate you staying and listening to my presentation on Sensys Gatso. Let me move this forward here. In the presentation today, I'll share a little bit about the group and the company, talk about our strategic pillars, review our financial results for Q3, which were released earlier this morning, and a little bit more detail on our work around the globe and our various core regions. Sensys Gatso Group is a leading global player in traffic enforcement technology, which is a growing, ever-growing business, as shown on the left-hand side of the slide, across the globe in all markets, continues to expand significantly. We have a significant track record of matching that growth in the industry over time. Year after year, we've grown the size of the business, and our performance, particularly top line, has continued to improve. We've sold systems into 70 countries worldwide, over 50,000 systems over the years. We have approximately 300 employees, primarily located in our four core markets, which include Asia-Pacific, primarily Australia, North America, primarily the US, Western Europe, and the Middle East. What's unique about Sensys Gatso is that we're an end-to-end solution provider. We don't just manufacture hardware or the beloved traffic cameras at the side of the road, but we process the data that comes out of those edge solutions on the roadside that can include red-light enforcement, speed enforcement, and other applications. We process that data in a mid-office software platform. Depending on the business model, we do data processing or end data processing or managed services in certain markets, which can include everything from notice or infringement mailing out to citizens, payment support, customer service, etc. What are we focused on at Sensys Gatso? We have three strategic pillars. Our first is strategic market and customer engagement. In that, as we move forward, we're focused primarily on those four core markets I described in Western Europe or Europe, Middle East, the United States, and Australia. As part of that, we're very much driven towards increasing our share of recurring revenue. In our business, we have two primary business models. One is the sale of hardware, which can be non-recurring revenue, which we need to continue to sell year over year to grow. We have recurring revenue, which comes from maintenance, managed service contracts that are typically long-term, five to seven years, where we provide services in support of that hardware over the duration of the contract. We are focused on those core markets, and we are focused on increasing our share of those recurring revenue streams as opposed to just the one-time system sales. In a company like ours, at our size, involved in many markets around the globe, those four markets, it is very important that we make good investment decisions and we leverage our investment spend across our global entities to improve time to market and our overall return on investment. That is a significant focus for us as we move forward. In addition to that, we are focused on continuously improving the operational efficiency of our business, recruiting, retaining, and rewarding talent. Right now, a key focus for us is bolstering our sales, marketing, and product organizations. Our Q3 results, well, we released a couple of hours ago. We had a very strong Q3, which we're happy about. That started with a significant increase in our order intake for the quarter, up to SEK 331 million. That followed on a quarter in Q2, which was SEK 54 million. A really nice outcome for us in the quarter. This was driven by very good performance in our Australian and our US businesses. We entered a new state in Australia for the first time and continue to expand our business there, as well as a variety of expansions and renewals and new customers in the US as well. Importantly, 86% of that revenue was recurring, so associated with those long-term contracts, which, again, was a mix of both renewing contracts and incremental new business with customers, consistent with our strategic focus. We continue to see very strong demand for traffic enforcement technology worldwide, and we're actively participating in tenders and procurements across all of our core markets. A very strong quarter in terms of accelerated, excuse me, in terms of order intake. We outperformed year over year on revenue growth, up 17%. We've also, again, increased our share of recurring revenue year to date. This was across our markets, particularly in the US, as mentioned. We've also seen significant rollout of systems in our core Dutch and Swedish projects as well here in Europe. Very pleased with our revenue results for the quarter. That's a picture of one of our systems in Tasmania. Yeah, it's a nice picture. Yeah. Right. Margin improvement, we've made huge strides here. We had an outstanding quarter, up to 17.7% in our EBITDA margin, or close to $30 million for the quarter. As you can see, that was a very significant uptick from the same period last year, over 100%. Probably most importantly to me, if you look at the trend over 12 months, we have a continuing positive trend in our 12-month rolling EBITDA as well. Year to date, we're at 13.8% versus at this time last year, we were at 9.5% in EBITDA. In Q3, and we had a question about this in our market presentation this morning, what's driving this margin improvement? We get significant economies of scale from the rollout of our project here in Sweden with Trafikverket, and we have implemented several measures to improve our operational efficiency in the US. Very pleased on where we are from a margin perspective. Again, I just wanted to touch on quickly our business model, which is split between hardware sales and recurring revenue. That recurring revenue can be maintenance on the systems. It can be some of those services I described, annual calibration of systems, otherwise. We have a strong and predictable base of recurring revenue, which is near SEK 100 million per quarter, which we are looking to continue that positive upward trend, and we think we are well positioned for that. As we take in incremental orders, particularly in recurring revenue, it helps us to grow that base and add predictability to our performance moving forward. We're not dependent on one of our core markets to do that. We have a good spread of our recurring revenue. About half comes from the business in the United States, and the remainder is spread across Europe, the Middle East, and Australia. We'll talk about that briefly in a minute. Just to recap our financial outlook that we released this morning, it's improved. We're holding, despite some currency fluctuation challenges, particularly with the Australian and US dollar, we're holding to our revenue guidance for the year at the lower end of the revenue range that's described there. We've increased our EBITDA guidance for the year to the upper end of the range of 12-14%. We're near the end of the year, so we have pretty good, can't get into detail, but a pretty good view on where we'll finish. We'll continue to watch it closely. Again, very happy with our financial outlook and how the year has developed for us. I want to get to the Q&A, but a few comments on our core markets. You can see that in the US, it's really not one market. It's 50 markets because traffic enforcement is regulated at the state level. From the map, you can see that about half the states in the US have some form of automated traffic technology. We're currently participating in 11 of those states and looking to expand. Year over year, when you take the currency fluctuations out of the US dollar, we've seen growth. This market is entirely recurring revenue of 17% from a US dollar perspective. We're very proud of that performance and happy with that performance. There is significant procurement activity, which we're participating in across the US. A very important market for us. In Europe and the Middle East, we're primarily right now, in addition to growing the business, focused on execution of some very large projects, including here in Sweden, the rollout of our fixed and average speed systems in the Netherlands. The Middle East, particularly Saudi, is a good example of our business, where we've sold over 1,200 in-vehicle systems in recent years. Those systems need to be maintained. We are the people who can maintain those systems, and that leads to long-term maintenance contracts, which we recently signed and had our first full quarter of impact from that in Saudi Arabia this year in Q3. A very good step for us. Australia was a significant portion of driving our high order intake for the quarter at almost AUD 200 million. As mentioned earlier, that involved us renewing some key contracts we have in Tasmania and the state of Victoria in Australia, as well as entering into a new state, South Australia, and expanding with some existing customers as well. Just like the US and our other markets, we continue to see significant procurement activity in Australia as well. This is a key focus for us in our APAC region. To sum up, a key takeaway from today in the presentation is that we had a very strong Q3 performance. We have a clear strategic direction moving forward. Our order intake accelerated in Q3, and year over year, all of our key metrics improved: order intake, revenue, and EBITDA. We have upped our guidance for the year on the margin side. Very happy with where we've landed. With that, I'm happy to open it up to questions. Thank you very much. I must admit I haven't followed you on a daily basis, but I understand that today was a good day for you. I mean, the market is. Do you mind if I step down a little closer? I think it's the camera guys. Oh, okay. Yeah. Okay. No, but basically, I think you're up 14% today. The market is obviously liking your report, but it has been a rocky ride, I mean, being an investor in your company, right? From your perspective, what do you need to do in order to restore the confidence from an investor perspective going forward, and what can we expect from your company? Yeah, I would say probably three things are key for us. One is making sure we're communicating clearly to the market on our business and what makes up the components of our business, excuse me. That is making sure that people understand the difference between the hardware portion of our business and the services and recurring revenue portion of the business. I think we need to focus on, and that was a big focus in our market presentation today, making sure we're clearly telling that story. I think the next thing we need to do is we need to demonstrate quarter after quarter consistent performance, right? Moving to a more recurring revenue-based business takes some of the lumpiness or ups and downs out of a hardware business, which is a big focus for us. The third thing is we have to actively manage our business from an operational efficiency perspective, right? If we're seeing fluctuations, right, we need to be agile, right, to adjust what we're doing on the expense side of the company to maintain strong margin performance in the business over time. I think if we clearly communicate or communicate better about our business, demonstrate predictable performance, and focus on good, responsible day-to-day management of the business, we'll build that trust. Okay. Should we read it as this is the start of your journey? I mean, you stepped into the role by June, I think. Can we expect that in our quarter by quarter, we will see improved performance and a better investor confidence so we can actually avoid the large swings in the share price? Yeah, look, it's been five months. It's been a good five months. Sensys Gatso is an incredible company with what I would argue tremendous subject matter expertise going back 50, 60 years and a deep understanding of the traffic enforcement business and in the business for the right reasons focused on safety. I probably won't speak specifically to our future performance, but I think we are in the strategic pillars I shared today. Those are designed to produce that performance. We need to go execute on it. With our team all across the globe, I'm confident that we can do that. How do you see the balance, the product mix in your portfolio between the, let's say, the hardware and the recurring revenues? Yeah. All are important, and one leads to another. I think from a company perspective, it's important that we're involved in the full spectrum of what I would call the value chain, right? We will never completely move away from our history of edge hardware and producing the systems that go at the roadside. Although that can be sold in different models, it does not have to be a one-time sale. It can be a managed service model as well. I do not see them as mutually exclusive. I think we will try to push towards recurring revenue streams in both the hardware, software, and data parts of our business. My belief is we need to stay involved in that full spectrum of the value chain. Who do you see as your main competitors? We have some global competitors, and then we have regional competitors. Our primary competitors globally are companies like Jenoptik, Verra Mobility, Jenoptik, a German company, Verra Mobility, Bitronic, another German company. Within the US, we have a variety of players. Elevate, which is the former Conduent and part of Medexo, is a competitor along with several other companies. It really does vary by region, but those are a few of our primary competitors. Last year, I met with Motorola in Chicago. I mean, they're not exactly doing what you are doing, but they're also in the surveillance space, right? Do you see them as a potential competitor in support? Yeah, I haven't focused significantly on Motorola. I don't think of them as a direct competitor. I know they're involved in different things in the space. One of the things that I think gives us an advantage and a differentiator at Sensys Gatso is traffic enforcement is our focus. I think it's very important that we stay focused on what we do well, and that will lead to that predictable growth that we need. You showed us a map over the US states, right? Are there any, let's say, any geographical places in the US that you see midterm that you have potential in? Yeah, I'm not going to give away entirely our strategy there, but what I will say is the addressable market continues to expand. If we look back just a couple of weeks in the US, we saw a reform of legislation in California to move from traditional criminal traffic enforcement to civil or administrative enforcement and red light enforcement. I think the expectation in that is that will, because of challenges in a criminal setting with traffic enforcement, the expectation is that will potentially lead to a significant expansion of the market in California. In addition, California recently enabled or passed legislation for work zone enforcement on highways. You are talking about one of the 10 largest economies in the world in California, significantly expanding the use of the technology. That would be one example of something that we're looking for. We continue to, it's very important in our business that we monitor legislative activity across the states. We continue to see new markets opening up in those states. A completely different geographical area than Africa and Ghana. You have a joint venture there. Can you tell us a little bit more about that? Yeah, we have a joint venture there with a local partner where we are both an investor in the joint venture and the designated technology supplier. We continue to work closely with the joint venture through their legislative process to get the project enabled. That takes a long time, right? We are continuing, again, we have a local representative in Ghana who's there every day working to move the program with the government and our partner working to move the program closer to a live operational state every day. In what country do you see the largest potential for the next two to three years? Yeah, I probably won't specify one particular country because I think we see, again, significant market activity across those four core markets that we described. I view all of them as important. The US is a very important market for us. Australia is a very important market for us. We are heavily focused in Europe right now on delivery, right, in a company of our size of some large contracts that we've signed, but we're involved in procurement activity in Europe as well. We talked a little bit earlier about our new maintenance contract in Saudi Arabia, and we're continuing to look to expand there as well. I probably won't focus on one. I think all are growing. We can't get spread too thin with a company of our size, but I think we can continue to look for, if we stay focused on those markets, we can grow. How do you intend to finance your growth? Will the balance sheet you have today, will that suffice, or will you need to expand with external capital, or is it adept, or how do you see it? Our cash position is stable. We do have a bond, which we're primarily using to fund investments, not working capital. I guess my response to that would be that would be a good problem to have, right, if we need to finance, particularly in a managed service model. In a managed service model, the vendor retains ownership of the assets. So it's an upfront investment that is then recovered through a revenue stream over time. If we're successful in a tender that requires a managed services type or recurring revenue type tender that requires a significant upfront investment from us, I'm confident we can figure out a way to do that. That would be a good problem to solve. I ask the similar question to you at SAW, but how do you manage FX risks? I'd probably turn to our CFO to get into the details of that. To this point, we've been able to manage it within our outlook and expectations. I think if we, in some years, that's helped us; some years, that's hurt us, depending on the currency. We're actively monitoring it. If we need to get more aggressive in terms of how we manage that going forward, we'll do that. Where do you have the largest gap between the cost and revenues? What currency? Is it dollars? In terms of currency fluctuation? No, yeah, exactly. I mean, if you look at where you have a production and where you have your sales, I mean, where is the mismatch that basically creates the currency risk? Yeah, we're in the, let's take the US, for example. Yes, we have production of our systems here in Europe, whether that be in Sweden or in the Netherlands. That would be our two primary production locations. There's two issues with the US right now. One is tariffs, right, which are currently at 15%. In a managed services model, the hardware and the tariff on the hardware makes up a relatively small portion of the overall cost base of delivering a managed service program, which includes not only the hardware, but the software and the services that go with it. We can manage through that at the current tariff rate, particularly because when you look at that, without getting into specific numbers, it's 15% on an intercompany hardware sale, then spread across a five or seven-year contract. That's something we've been able to effectively manage. On the currency side, our end customers in the US pay in US dollars, right? We have seen, I won't get the number exactly right, but more than 10% reduction in the US dollar this year. As we convert that back, right, that's where we're probably seeing our biggest challenge today. Okay, let's see if we have any questions from the audience. We must have some questions. I know it's lunchtime, so. Come on now. Do we have any questions? Yeah, we have one there. Let's start. Great. Did you say something about your order book? How large is that for the future? Yeah, I didn't speak specifically to our overall order book. What we've seen is, in the last quarter, a significant increase in our order intake, which we're happy about, both in terms of the mix, in terms of system sales, but primarily towards recurring revenue and the geographic spread of it. Our total order book is likely in the range of, you know what, I'm going to hold on that number, right? But Simon, our CFO, Simon, do you have a sense on that number? We had two large projects in the phase of. Yeah. No, I was saying that we've communicated in the past on the large orders here in Sweden from Trafikverket, right? SEK 850 million, we're executing on that. We have several large Dutch projects totaling almost SEK 500 million. That is definitely in the backlog. Of course, we have our recurring revenue contracts that will carry into the future, right? That is what we communicate on that. Thanks, Simon. Anyone else? Okay, it's lunchtime. Thank you so much. Yeah, thank you. Lewis Miller, thank you for joining us today. And thank you, tack så mycket, for att ni kom. Thanks for your time. Thank you. Thanks a lot.