Ovzon AB (publ)

STO:OVZON

Earnings Call Transcript 2024-Q1

[Operator]

Hello, and welcome to today's presentation, where we have Ovzon with the CEO, Per Noren; and CFO, Noora Jayasekara, who will be presenting the Q1 report for 2024. [Operator Instructions] And with that said, please go ahead with your presentation.

[Per Noren, executive]

Thank you, Martin, and good afternoon, good morning, and warmly welcome, everyone. Thanks for joining us today on Ovzon's earnings call for the first quarter 2024. I'm joined here today by our Chief Financial Officer, Noora Jayasekara.

[Noora Jayasekara, executive]

Good morning, good afternoon, and welcome.

[Per Noren, executive]

Thank you, Noora. Well, the first quarter, '24 has been more than exciting for Ovzon. Not only did we end 2023 with a major order from the Swedish Space Corporation that we started to deliver on both in Q4 '23, and in the first quarter of this year with regards to terminals. We also successfully launched the Ovzon 3 satellite on January 3 earlier this year. an absolutely historical milestone that obviously will have a huge impact for our company going forward.

During the quarter, Ovzon order intake continued with the same positive trend as the fourth quarter 2023 with expansion in Europe, mostly coming from a major order valued at USD 9.7 million. The quarter had a strong order intake, a successful launch and in all, a good start to 2024 for us. We will obviously get into more details in a few minutes, but before that, let me, as always, provide a brief introduction from -- [ to ] Ovzon.

Ovzon is a leading provider of advanced and unique satellite communication, spearheading the progressive development of the most sophisticated mobile satellite communication solutions in the world. We're committed to constantly developing and introducing relevant solutions, business models and technologies to our customers. Our company has a clear strategy and implementation plan to revolutionize guaranteed connectivity for all critical missions through our unique integrated satellite communication solutions. We continue to be fully dedicated to our vision of connecting the world's most critical missions via satellites. A little bit of the background. Ovzon was established in Sweden in 2006 and has been publicly traded on Nasdaq Stockholm since 2018. Initially, the company concentrated all its efforts on the design, development, sales and delivery of the most compact and high-performing mobile satellite terminals in the industry. Today, Ovzon has expanded its offering to be the only turnkey provider of Ovzon SATCOM-as-a-Service, the industry's leading premium solution offering unparalleled levels of connected performance. We work closely with customers, partners, distributors and end users across the United States of America, Sweden, Europe and South America. We've invested over SEK 2 billion in our new revolutionized technology programs the past few years, resulting in cutting-edge next-generation platforms that will be delivered to customers during 2024.

What's absolutely unique with Ovzon is that we deliver a solution that we manage end-to-end, and we control the entire value chain for guaranteed performance for our customers' critical missions. In the first quarter, we have had 100% uptime for our customers with very high demand and requirements. This has become highly valuable and a critical success factor for us. Our customers view Ovzon as a true partner. As you can see in the picture, we deliver SATCOM-as-a-Service with immediate connectivity from one, further to the left, we call this the circle of life, the smallest, lightest and most high-performing mobile satellite terminals 2 -- #2, [ 12:00 ], managing high-performing agile and stable satellite networks. Today, our service is based on leased satellite capacity, but by mid-2024, we'll have our own satellite Ovzon 3 in operation and thereby manage an integrated network of owned and leased satellite capacity of networks.

Three, to the east or to the right in the picture. We partnered with a few selected secure gateway providers where we implement our own hardware and secure racks. And four, further south in this picture, we manage all of that to our dedicated white-glove 24/7 expert support from our network operation centers to ensure that any potential anomalies are resolved in real time. We have demanding service level agreements, so-called SLAs with customers and our uptime, as I mentioned before, the past quarter has been 100%.

As a reference, many of the alternative solutions [ to toss on ], including LEO or Low Earth Orbit services only promised best effort. Ovzon is truly unique in this regard, which is something we will continue to deliver on. Satellite Communications has today become an integral part of any communication infrastructure and the broader communication landscape. The infrastructure for fixed and mobile telecom networks are, as you know, well built out and covers the need for well functioning communication for most people and organizations. However, many areas are -- in situations, at land or a sea or in the air simply lack trust worthy or even broken communication capabilities.

Fixed and mobile networks also lack some important features that only satellite communications can offer. When land-based communications are down or cannot be trusted for whatever reason, satellite communication may provide instant communication access. As we start to see more floodings, storms and wildfires, due to change in climate patterns that destroy land-based communication capabilities, satellite communication is, in many cases, the only answer.

Moreover, as we can get fed with daily media, the geopolitical tension in the world has regrettably continued to significantly increase. Many nations, alliances and organizations are accelerating and strengthening their capabilities for total defense, national security and public safety. Space and specifically satellite communications plays a vital role and is rapidly becoming a critical part of any nation's overall strategy. It's frankly also building a new space-based economy.

Countries with little to no satellite infrastructure are now shaping plans to create sovereign systems that allow for more autonomy in any increasingly space-based geopolitical environment. This enables governments to build a more resilient communication infrastructure. The Ovzon 3 satellites and the unique Ovzon proprietary developed On-Board-Processor will shortly bring capabilities online that will be more important now than ever.

Here's a graphical description of where we are positioned today in the competitive solutions landscape with mobility on the x-axis and performance on the y-axis. Built in is the ability to deliver high-performing connectivity in a highly resilient way. Those three components, performance, meaning data rates, up and [ down link ], mobility and resiliency what sets different services and service providers apart. Ovzon operates in the most distinct segments, the premium-value segment helping customers that have no fail requirements and the demand for guaranteed connectivity.

Our next-generation technology based on the Ovzon 3 platform will be made available to customers by mid-2024, and will move us even further off the value ladder. The Ovzon 3 platform will lift guaranteed satellite communication and customer experience to totally new levels.

Now let us run through the highlights of the first quarter of 2024. As noted earlier, a very, very exciting quarter for Ovzon. Let me start with the most important milestone in the history of our company, the successful launch of Ovzon 3. During the fourth quarter of 2023, we were concentrating on the finalization of Ovzon 3 and the Ovzon On-Board-Processor. After some weather-related delays, Ovzon 3 was finally launched into space from Cape Canaveral, Florida, on January 3, 2024. 2024 has kicked off as it should with intense focus then on customers, products and service delivery and market penetrating activities, including customer presentations, in-depth dialogue and capability demonstrations. We have continued the strong order momentum that we ended '23 with, both new orders and contract extension and renewals from current customers. We won a significant order of USD 9.7 million from a new European customer, considerably expanding our installed base of Satcom-as-a-Service offerings in Europe. We also received a continuation and renewal of the delivery of Ovzon SATCOM-as-a-Service to the Italian fire and rescue services. And last but not least, the U.S. Department of Defense showed a strong signal by being the first customer to place an order for the newly launched Ovzon T7 mobile satellite terminal. Ovzon T7 is the smallest, lightest, most powerful and easiest to use mobile satellite terminal ever designed. After the first quarter ended, we also received a 6-month extension for SATCOM-as-a-Service from our Spanish partner, Aicox Solutions supporting the Spanish civil defense.

Now let's dig a bit deeper into the successful launch of Ovzon 3. What you see in this picture is the actual launch of Ovzon 3 on a SpaceX Falcon 9 rocket that carried Ovzon 3 out in space from Cape Canaveral Florida on January 3. This is the same rocket that launched the Swedish astronaut Marcus Wandt to the International Space Station a few weeks later. I personally stood at the launch site watching Ovzon 3 lift off. It was an amazing experience for myself and all stakeholders.

Ovzon 3 is the first privately funded and developed Swedish geostationary satellite ever to be launched and is the most powerful small GEO satellite launched into orbit. When parked in its orbital position at 59.7 East, it will cover 1/3 of the earth with its steerable spot beams. The satellite and payload are patented by Ovzon. It includes 5 high-power steerable beams and software-defined capabilities. The Ovzon On-Board-Processor is a unique and powerful in-orbit processing platform allowing users to be directly connected across multiple beams without the use of teleports, cutting latency in half and enabling previously unavailable resiliency for assured connectivity.

In synchronization with our newly launched mobile satellite terminal Ovzon T7, we're now demonstrating and enabling our customers and the markets we serve with this unique solution. We, of course, very often get the question what the status of the satellite is. And thank you, by the way, for all those questions. Ovzon 3 is now in its orbital raising process. And as my teammates say boring, meaning no news is good news during orbital raising. I can assure you that the satellite is in excellent shape and it's fully on track towards its orbital position. There is health monitoring, tracking our activity going on with the satellite constantly, and we have, for example, successfully completed the planned In-Orbit test of the satellite platform. Since launched, the deployments of solar arrays and thrusters have been successfully and the propulsion system, including the thrusters are continuously working normally. It's now 3-months since launch and Perigee is raised, Apogee reduced and inclination decreasing. All of that means we have a healthy and progressing satellite towards its orbital position. On the ground, in parallel, we are actively preparing with bit service by mid-2024. During the next couple of months, there are several planned activities to be performed, when the satellite reaches its parking loss of 59.7% East, there will be several In-Orbit test before commercial deployments, all planned and scheduled. Now over to order intake. As we've noticed, the 2024 has started in a strong way. The largest order came in the quarter was a 12-month contract with the European customer at the value of USD 9.7 million. It includes both Mobile satellite terminals as well as our high-performing SATCOM-as-a-Service. The service starts in the second quarter. This win is important as it is a significant expansion of our installed base in Europe and also underlines the fact that Europe is a key geographical markets for Ovzon.

Let's dive a little deeper and then on to a more detailed financial update by Noora. For a company of our size, serving mostly the government markets, our order intake is still somewhat cyclical. The lead times are often fairly long in concluding major new customer contracts. In parallel, we're working hard to complement larger long-term contracts with small- to medium-sized orders, which then becomes reference points and the start of the expansion in that geography or with that customer group. In a niche market, as we're in, this is very important to understand. In the first quarter, order intake amounted to USD 11.1 million or SEK 118 million. Our analytics display that our momentum has improved in the last number of quarters. We also experienced increased interest from customers for our next-generation Satcom-as-a-Service. And looking at our order intake in a rolling 12-month perspective, our order intake by end of Q1 was SEK 369 million compared to SEK 259 million for the full year ended 2023. Our order book at the end of the quarter increased to USD 19.1 million corresponding to SEK 204 million. Now let me hand over to Noora to provide some more in-depth details on our financial performance. Noora, over to you.

[Noora Jayasekara, executive]

Thank you, Per. I will now give you some details on the financial performance in the first quarter of 2024. Revenue totaled SEK 65 million for the first quarter, corresponding to an increase of 13%. Adjusted for currency effects, the increase was 16%. Revenue from SATCOM-as-a-Service as well as terminals in Europe had a positive impact in the quarter, compensating for the decrease we saw from the U.S.

Run rate revenue from -- for SATCOM-as-a-Service was SEK 145 million, a decline compared to the fourth quarter due to lower order intake for services during 2023.

Next slide, please. EBITDA in the first quarter amounted to minus SEK 18 million and EBIT to minus SEK 25 million. EBITDA in the first quarter this year was positively affected by much higher utilization of purchased satellite capacity and sale of mobile satellite terminals, but also negatively impacted by higher sales costs and personnel costs related to activities in conjunction with the finalization and launch of Ovzon 3, and soon to be launched Ovzon 3 products and services. And as a reminder, the comparative period was positively affected by a foreign currency effect of SEK 11 million. EBITDA margin for the period was minus 28% and EBIT margin, minus 38%. Considering that the comparative period contained a significant positive foreign currency effect and that this quarter has slightly higher costs we are pleased to see our financial performance improve.

Next slide, please. Cash flow from operations landed at minus SEK 3 million, slightly better than the comparative period. Improvement is primarily linked to payments from customers. Investments in Ovzon 3 as well as the development of the mobile satellite terminal Ovzon T7, still drives cash flow from investing activities during the first quarter. Net debt landed at SEK 520 million, as a result of the mentioned investments affecting cash negatively. And with that, back over to you, Per, for some final comments.

[Per Noren, executive]

Thank you so much, Noora. Well, we would like to conclude this part of the webcast before we go to questions and answers with some further comments and forward-looking remarks. First of all, I'm obviously very pleased with the successful launch of Ovzon 3 and to not finally have this industry-first capability, healthy and making progress on its way to its orbital position. Clearly, one of our main targets for '24 is first to operationalize Ovzon 3 and enter the satellite into service and make it ready for commercial uses.

We're in close dialogue with interested customers about our unique Ovzon 3-based SATCOM-as-a-Service. We will continue our very, very focused execution to drive a step change towards profitable growth and strive to be the more even and more predictable in our order intake. Our customer segmentation and geographies are focused. They are to be found in the United States, Sweden, Europe and within Defense, National Security and Public Safety. In the constantly ongoing dialogue with our customers, both the current and new ones, coupled with our in-depth demonstration, it's clear that we are here as a partner to solve their problems with guaranteed connectivity for any critical situation on mission, long-term, mid-term and short-term.

At Ovzon, we have a unique value to deliver. We know we're the market-leading solutions provider of satellite communications, delivering measurable performance mobility and resiliency. We're concentrating all of our sales efforts towards longer-term commitments of SATCOM-as-a-Service based on Ovzon 3.

In 2024, we will also continue to accelerate what we call, our industrialization initiatives. As we plan for growth, we also plan for scaling up the company in both quantity, quality and efficiency when it comes, for example, to volume production of mobile satellite terminals, concentrated and targeted sales business development and marketing efforts and in-depth partnering with selected partners to [ messing ] a few of the actions we're working on.

We'll continue to accelerate the positioning of Ovzon and our Ovzon SATCOM-as-a-Service for customers, countries and alliances with critical missions. Nations, alliances and organizations are strengthening their capabilities for total defense, national security and civil defense. Countries with little to no satellite infrastructure and are shaping plans to create sovereign systems that allow for more autonomy in an increasingly space-based geopolitical environment. And after a period of years with heavy investments, we now enter a phase where ongoing technology programs will be finalized. Our financial position is obviously very important, managing costs, and scarce resource is and have always been a key to Ovzon. Growing revenue is where the big lever will come from. We continue to have continuous discipline in both of these areas. Even though we'll continue to have a mix of our own and leased satellite networks and capacity, the use of our own capacity from the satellite will provide more flexibility and should start to work in our favor during 2024. Creating and achieving more predictable and profitable growth is critical to Ovzon at this point. In summary, I remain very confident in Ovzon's ability to deliver and exceed the world's requirements and rapidly increasing need for high-performing mobile connectivity via satellite. And I would really like to thank my colleagues, the [ Ovzonians ], for all dedication and excellent work so far. The best is yet to come. With those closing words, I want to hand it over to you, Martin, as we're ready to get to questions and answers

[Operator]

[Operator Instructions] And we got the first person calling in Mikael Laséen, Carnegie.

[Mikael Laséen, analyst]

Yes, I have a few questions. First of all, can you talk to us about the U.S. market revenues were around SEK 30 million in Q1. What are your expectations for Q2 and the coming quarters?

[Per Noren, executive]

Absolutely. A very good question, obviously. The U.S. market has traditionally been extraordinarily important to Ovzon where the bulk of our revenues actually come from, as you know, and most others know. The situation in the U.S. is right now a little bit complicated when it comes to budget, decision-making between politicians, the DoD, what's being prioritized and not being prioritized, and we have an election year in the making as well. So I think we're in the middle of a situation, which is fairly difficult to read. But I would say this, it was not a real positive for us not to renew all the contracts that we had with the US DoD in December as we have gotten used to. However, the dialogue with the customer is very close, very strong and very strategic. They renewed a very core element of their SATCOM-as-a-Service with us. And we believe that we're going to recoup back some of those things that weren't renewed before. And we're also working on expanding our customer base and customer interactions within the U.S. DoD and within the U.S. market. So I think we've not seen a new norm, but it's fairly difficult to predict exactly what's going to happen during the year.

[Mikael Laséen, analyst]

Okay. So if it's primarily the budget process, which is complex and complicated here holding back their decisions or other things?

[Per Noren, executive]

Yes. I think in general, it is a sketchy prioritization alternatives that are going on within the U.S., within the U.S. DoD as well. But I will end my remarks on your question on a positive note. So we should see it as a very strong signal that the U.S. DoD acquired the first Ovzon T7 mobile satellite terminals. That sets us up well to have the right dialogue about the future of their architecture and infrastructure. But foremost, it's not an easy situation with the decision processes, and it's hard to fully predict where it is. But we're working around the clock to actually recoup some of what we did wasn't renewed and then find new ways to find new customers within the U.S. DoD as well.

[Mikael Laséen, analyst]

Okay. Got it. But when you talk to the customers in the U.S., what's your view on their demand when you talk to the users? And I mean, the persons who are actually going to use it and how do you they use it today and they [ loved it ] so far?

[Per Noren, executive]

Yes, I see your question. The end users have a desperate need. They are now being sent on various missions, so to speak. So they have a desperate need. And I think that will eventually evolve into that decision needs to be based to allocate money towards those needs. So there is a need. There is a trust in Ovzon, and there is a continued dialogue going on for it. So I think we'll see some uptake here, but it's hard to predict, as I said, when those decisions will be made.

[Mikael Laséen, analyst]

Okay. And now I have a few, I mean more detail questions on the financial performance. The first one is the gross margin. It was stronger than in a long time, 38%. How should we think about the gross margin and the cost per leased capacity right now in the contract that we have in the order book and potential contracts in the pipeline? I mean I'm talking about the leased part. And also gross margin on terminal sales?

[Per Noren, executive]

Do you want to take the question, Noora?

[Noora Jayasekara, executive]

Sure. So in the first quarter, as we mentioned in the report, we are not burdened by unsold capacity. So we are basically fully utilized for the quarter, and that obviously shows in our gross margin, and that's the effect you are also seeing. And we are not planning on acquiring capacity that we have not yet sold going forward either. So that should remain.

[Per Noren, executive]

Maybe I'll brag a little bit more. I think our team has done an incredibly good job in optimizing the utilization of the capacity that we have acquired from these capacity. So as Noora said, we're basically fully utilized. We did also actually not renew one of the steerable beams that we had before that has had a good effect on the gross margin for us. That's what Noora was referring to. And we see a good uptake on Ovzon mobile satellite terminals. Normally, we bundle with our plus services, for example, or our go service. But when we get closer with the U.S. DoD and other customers that are MOD related, they want to buy the terminals outright, which we allow if they buy the service. and we get fairly reasonably good margins on those things, and it helps the gross margin as well.

[Mikael Laséen, analyst]

Okay. Good. So it means that you are now maybe on track or you're back to the levels in terms of gross margin that you manage and balance the capacity and demand versus the gross margins on the leased capacity can be quite higher?

[Noora Jayasekara, executive]

Correct.

[Mikael Laséen, analyst]

Okay. And what is the gross margin on the terminal sales? Is it well below this 38%? Or is it in line or...

[Noora Jayasekara, executive]

Mikael, we have chosen to disclose that in exact numbers, but the margin on the terminals is somewhat lower than for the service.

[Mikael Laséen, analyst]

Okay. Got it. And then a question on the operating cost. I think you mentioned that you had a bit higher cost in connection to the launch in January. But can you be a bit more specific? Any one-offs nonrecurring costs that you had, and maybe break that out. So we know the underlying cost when you go into Q2 and the second half?

[Noora Jayasekara, executive]

Well, we have sort of several components in the cost base in this quarter that are one-offs, but none of them are big, but together they are a number, at least worth talking about, both related to personnel costs, but also mainly related to marketing efforts of different sorts and sales efforts of different sorts in conjunction of launching Ovzon 3 services. And those costs will not run over to Q2. They have been -- they are isolated to this quarter.

[Per Noren, executive]

It's almost -- as you look upon it this way. We have chosen to put the pedal to the metal because there are long lead times in sales, and we need to be out selling the current and future capabilities already now due to those lead times. So if we don't do that now, there will be a lag in when those contracts will come in. So I don't think you'll see a continued cost increase from us at all, but it's almost like kick starting with the launch of Ovzon 3, kick starting the year with being very, very aggressive in the marketplace to try to gain the profitable growth element of what we have in front of us. And that's coupled with a more optimized network management that we do. I think that should be viewed as a healthy sound of a business that is driving towards profitability and higher growth rates than what we historically have had.

[Mikael Laséen, analyst]

Okay. And so more or less unchanged cost in the second half or in Q2 maybe a bit lower, but not much. Is that the right conclusion?

[Per Noren, executive]

That's probably a fair assessment, yes.

[Mikael Laséen, analyst]

Okay. And then my final question is on the remaining CapEx. You had a bit lower CapEx than expected at least in Q1. What remains to be paid here in terms of payments to the your suppliers?

[Noora Jayasekara, executive]

Right. So CapEx will continue until -- related to the satellite until Ovzon 3 is operational and maybe somewhat past that moment as well. But they will decline over time during this year to level that is sort of normal for a technology company who needs to sustain the confidence in the products that we are -- have out there.

[Operator]

And we'll move on to the next person calling in is Simon Granath from ABG.

[Simon Granath, analyst]

Initially, would it be possible for you to talk a little bit about Ovzon 3 and how to think around the number of tenants over time. Are you seeking to have multiple tenants that, of course, may be useful from a diversification perspective. But at the same time, I could also see you're planning for a smaller number of tenants that you would work particularly close with and therefore have a large, call it, stickiness with.

[Per Noren, executive]

Very good question. I would call it the race to space right now. So it's a very strategic question you're asking. One, probably it would be good to have a few tenants that took on longer-term commitments on the satellite that would make it more easier to utilize the unique capabilities and steerability of the antennas and the onboard processor performance, et cetera, et cetera. But we -- you can't always choose how to do that. So right now, we're allowing everyone that has an interest and there is quite an interest given the geopolitical situation we have. There's quite an interest. So we are entertaining to have more tenants, obviously, on the satellite and finding ways to manage the services towards those. They are actually so that there are some customers that are collaborating over borders as well in terms of using Ovzon 3 as an interoperable capability for joint efforts, et cetera, et cetera. So I think the answer is probably a mix of fewer and joined and a fewer than that. That's probably the answer to the question.

[Simon Granath, analyst]

A very clear answer. And then I guess would it be possible for you to add some more color on the current order momentum. We did discuss this earlier, but could you talk a little bit about the potential [ new-end ] shift in terms of what you and your customers are saying today versus, call it, say, 3 months ago in terms of demand? And I guess we have spoken about the U.S., but could we also talk about Europe as a market?

[Per Noren, executive]

Yes. Another good question. I could -- there's clearly a momentum shift, both in terms of -- if you take on the highest level, the strategic notion of having satellite communication capability at the fingertips of users in the current situation that we have in the world. Europe is becoming more and more of an important market to us. U.S. is not unimportant, obviously, but Europe is becoming more and more important as the market for us. But we have to also think about who we are. So we can't be out talking to everyone about everything. So we're fairly targeted. We're fairly granular in our analysis in where we engage. And when we engage, we engage fully so that we both build the business case for the customer as well as the value that our capabilities brings to those customers, and then we demonstrate already today, we use the Ovzon T7 terminal to demonstrate on over the available capability since Ovzon 3 isn't in orbit yet, but you can actually simulate and see how you can utilize this in, for example, GPS-denied environments or areas where jamming is becoming more and more of a threat or resiliency is coming more and more of a threat. These are kind of the use cases that we're working on right now. And Europe is actually taking major steps into that direction. I think Sweden joining NATO is another aspect of that where an interoperability component between nations and between units is very, very critical as well. So all of these are use cases and thinkings that we work on basically on a daily basis.

[Simon Granath, analyst]

And if we sum up a little bit, could you discuss on what has happened in the satellite market since the geopolitical tension started to worsened, I guess, 2 years ago and how this may progress also going forward? You did mention NATO, et cetera, now -- some brief comments on that would be very helpful as well.

[Per Noren, executive]

Yes, of course. Well, I think if you take it back 10 years ago, satellite communications was for those that most critically needed it, Today, I think it's driving both on the consumer side as well as on the B2B side if we call ourselves that. that organizations, whether they are countries or government or agencies or larger organizations are actually looking into saying, how can we have redundancy. So I think the word redundancy is very important here. Redundancy doesn't mean that satellite communication is necessarily is the primary source of communication but it could be the secondary or tertiary if the first or the second is lost for any or any reason, right? But in some cases, you want a dedicated communication channel, which, for example, with the On-Board-Processor we have, you can have a closed-loop communication system where you actually know that you've locked out the rest of the world from that, and you can have sovereignty with that system for countries or organizations. So that's where it's gone from nice to have to extraordinarily strategic to both build knowledge and competence in how to buy, use and develop this and how to do it jointly with others that are in alliances with you or that you trust. And then to work across the Fibernets. the cloud solutions for storage of data as well as cybersecurity, both in those and in mobile telecom systems as well as satellite systems. So there are bigger architectures, there are bigger projects going on that has totally changed the last 2 to 3 years, I would say. Very, very, very much changed in landscape. And we get invited to instead of pushing knocking the doors down, get invited to those conversations early in a strategic way.

[Operator]

We're moving on. We've gotten a few written questions here, and we'll take the first one. Is it possible to refinance our extremely expensive loan with a bank loan using Ovzon 3 as a security?

[Per Noren, executive]

I can start on the strategic level. A very good question from who ever wrote it. Obviously, everyone can read our balance sheet and our P&L and so on. So this is an important question for the company, which you have to work long-term with all the time. We're always looking at all of the alternatives we have to both finance and refinance the company and optimize the cost of those -- of that financing. We do it regularly. We do it all the time. And obviously, the proposal here or the question is could be [indiscernible] answer to that. There are other alternatives -- alternative ways to do it as well. So we're looking at all of it for the moment.

[Operator]

And will your cost for leasing capacity change when Ovzon 3 comes online?

[Noora Jayasekara, executive]

Sure. Well, that depends on how much capacity we purchased, of course. And time will tell how our customer base will develop where our customers want to be and where -- on which satellite we can and choose to place those customers and their networks. Yes. I don't think if there is any other science to the cost of our networks. And obviously, the bigger company we become, the better negotiators we also become when it comes to buying external capacity.

[Operator]

Okay. And we'll take one final question here. Are you going to transfer clients from leased capacity to Ovzon 3 and thereby improving the gross margin?

[Per Noren, executive]

Thank you for the question. Yes, we will do all we can to optimize our margins, but we also need to be strategically at the same time with how and in what way we do that. But if and where we have a chance to look at the total networks and the total capacity the revenue base, the cost base and the margin, we will do so. That's absolutely part of the plan. That's what I meant in some of my remarks where I said, it allows us to have more flexibility in our decision making and how to manage the company, the cost base and how to win more business based on that.

[Operator]

Okay. That was all of the questions that we had. Thank you very much, Per and Noora for presenting and answering all questions. And also, thank you very much for everyone who followed on today's Q1 presentation with Ovzon.

[Per Noren, executive]

Thank you, Martin.

[Noora Jayasekara, executive]

Thank you.