Ladies and gentlemen, welcome to the Frequentis Half-Year 2024 Results Conference Call. I am Donovan, the Chorus Call operator. I would like to remind you that all participants will be in the listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand the call over to Stefan Marin. Please go ahead. Ladies and gentlemen. Ladies and gentlemen, welcome from our headquarters to Vienna. With me, I'm Norbert Haslacher, CEO, Monika Haselbacher, Chief Operating Officer, Peter Skerlan, CFO, and, for the first time, Karl Wannemacher, who has been our new Chief Technology Officer since July 1. Karl succeeds Hermann Mattanovich, who was with Frequentis for more than 30 years, including 15 years, as a CTO. Hermann has decided to reduce his activities at Frequentis and step down as CTO at the end of June 2024. May I now ask Karl to introduce himself to you? Yeah, Stefan, thanks a lot for the introduction. Hello, everyone, and also a warm welcome from my side. My name is Karl Wannemacher, and I would like to take a few minutes to introduce myself. I'm now on slide 2 of the presentation. I joined Frequentis nearly 20 years ago, back in 2005, after graduating from the University of Applied Sciences in Vienna. When I joined in 2005, Frequentis annual revenue was around EUR 100 million. Meanwhile, we are on more than EUR 400 million, so apparently things have changed a lot over the last 20 years, and so did my responsibilities and positions during those 20 years. I started in 2005 as a senior software engineer. I was working mainly for public safety and maritime, and I got promoted into a management position in 2010. This was also the time when I joined the Frequentis Technology Management Board. The Frequentis Technology Management Board is the board that takes group-wide technology and architecture decisions. Over the last 10 years, I was responsible for initiating and scaling one of the first software products in the Frequentis Group. The product is called LifeX, and meanwhile it is one of our flagship products. It is a very successful product, targeting mainly the public safety market. So my focus in the next years will be to continue our growth path, to ensure that Frequentis remains a first-class technology provider. I will put a special emphasis on further strengthening our software capabilities, investing further into software products, combined with a strong expertise in cybersecurity. I look forward to the dialogue with you, and with that, I would like to hand over to you, Norbert, to give us an overview of the first half of 2024. Yes. Thank you, Karl. Before I start with my presentation, I wanna give a big thank you to Hermann, for his dedication to Frequentis for so many years, and also his offer to tap into his technical expertise and advice at, any time. We are very grateful. I also wanna welcome Karl to the executive board, with his vast software expertise. You have just heard from him personally, and also his strategical approach and entrepreneurial mindset. He will lead our R&D organization to further strengthen the Frequentis group as a world-class technology provider, and I wish him all the best in his new role. We would like to, go to slide number three, please. On slide number three, I would like to reflect a little bit on the past, five years as a listed company. In March 2020, less than one year after the listing in May 2019, the COVID pandemic and the related lockdown started, and all employees managed the two years of the pandemic, 2020 and 2021, with an enormous dedication and passion, true to the Frequentis spirit of making the world safer. Then the war in Ukraine started in early 2022, and in addition to the ongoing tragedy and loss of life, the economic impact has been two years of high inflation, especially Austria. Despite all this, we have grown significantly in the past five years, and almost all of it was organic growth. Together with our employees, we are very, very proud about these achievements. To give you a little bit of figures, revenues increased since then by 50%, EBIT margin increased to 6.2%. The order intake increased by 65%, the share price grew by 50%, and employees increased by 26%, which is around about 400 additional FTEs. Coming now to the result of the half year, I wanna ask you to go on slide number 4.... where I want to present the highlights from the first half year, 2024. We were able to increase order intake and revenues again. Order intake rose by almost 10%, or EUR 19.9 million, to EUR 227.9 million. For the first time, orders on hand are above EUR 600 million, EUR 621 million, to be exact. Revenues grew by more than 10% to EUR 206.2 million. Given the usual, half-year seasonality resulting from project business with the public sector, EBITDA was EUR 6.7 million, and EBIT was -2.8. The equity ratio stayed close to 40%. At the end of June 2024, we had a net cash position of EUR 66.6 million, including EUR 55.3 million from advanced payments from customers. As a result of the seasonality, the cash position is lower in half-year compared to the full year. Let me share some order intake and project highlights on slide number 5. Frequentis USA has been providing voice communications and data information systems for the FAA, which is the Federal Aviation Administration in the United States, then the Department of Defense, NASA, and other U.S. government agencies for over 20, for over two decades. This year, we won a multi-year framework contract to implement the Air-to-Ground Protocol Converter system for the U.S. National Airspace System, which supports over 1 billion passengers per year. We are helping the FAA to migrate from the current analog communication methods to digital Internet Protocol. We are the prime contractor for this program. This contract is on top of the contract awarded by the FAA last autumn, where we will work together with the telecom provider, Verizon, to transition the U.S. National Airspace System to a modern IP network. Another long-time customer is the German Armed Forces. The development of MILRADNET began in 2004. It was a pioneering solution for the exchange and distribution of military flight surveillance and flight plan data. As a nationwide sensor network at 22 locations with high scalability, the network also makes a significant contribution to Pan-European air defense. MILRADNET is a core element for processing the air situation picture by combining military and civilian radar sensor data from aircraft, missiles, and flying objects. In the public safety market, we have teamed up with an Australian-based Tait Communications. They are going to distribute our core product, LifeX, to North America, where they have a big customer base. The organization of emergency services and police forces differs greatly from Europe, where they are mostly organized nationwide, or at federal state level. In total, there are about 5,000 potential customers in the U.S. for the software solution, LifeX. Given that high number, we decided to team up with a partner who knows the landscape and who has better access to potential customers. Therefore, Tait will act as a reseller for the LifeX software. For us, this is an important step towards a more software-centric business model. When you go to slide number six, it shows that order intake grew again, this time by 9.6% to a new half-year record of EUR 228 million. Both segments contributed. Air Traffic Management posted a rise of 9.9%, and Public Safety and Transport, a rise of 9%, pretty balanced. As in the past, the order intake shown consists only of confirmed orders. Please note that major orders involving multi-year programs, in particular, only become more profitable over time. In other words, profitability is lower at the beginning of these large programs. The book-to-bill ratio was 1.11. Looking forward, we have a well-filled order pipeline and good opportunities for 2024 and beyond. We are now going more into the financial details, and I would like to hand over to Peter, our CFO, to go through the slides with you. Peter? Thanks, Norbert. Thank you very much. So hello from me as well. Let's switch to slide 7. Orders on hand increased by 13.6% to EUR 621.1 million compared with June 2023. It's the first time that orders on hand have exceeded EUR 600 million. Revenues were up 10.4%. A word about recruiting. At the moment, we can find enough qualified employees across the globe to handle this growth. Partly because some industries need to train their workforce, and thus, these persons are then available on the top market. The revenues split by segment shifted a bit more towards ATM, to 70% ATM and 30% public safety and transport, compares to 66% versus 34% in the first half, 2023. The development in public safety and transport with slightly lower revenues due to temporary project shifts into the second half of 2024, also contributed to this. I'm now on slide 8, revenues. Revenues grew again in all regions. Europe is still the biggest market. We are happy with the growth of more than 30% in North and South America. Slide 9 shows the continued strong seasonality of EBITDA and EBIT. Please note that 2020 and 2021 were positively influenced by the pandemic, because travel restrictions and lockdowns led to lower travel and trade expenses. The main impact on EBIT in the first half of 2024 versus first half of 2023 came from personnel expenses, which grew by 14.1% compared to revenues growth of 10.4%. The high inflation in 2022 and 2023 resulted in significant salary increases. For example, in accordance with the collective bargaining agreement, the salaries of all our employees in Austria had to be increased by 7.1% in January 2023 to offset inflation in 2022, and again, by 7.8% in January 2024, as further compensation for inflation in 2023. As inflation slows already down in 2024 on a global scale, and also especially in Austria, the salary increases in 2025 will be much less. The cost of materials and purchased services increased by 9.5% and were in line with the revenue increase, while other operating expenses remained almost flat at +0.2%. For the outlook, I would like to hand over to Norbert Haslacher. Thank you, Peter. Let me conclude with the outlook on our agenda for 2024 in slide number 10. Based on orders on hand of EUR 621.1 million, we are working at a very good capacity utilization level, and are therefore confident that we can increase revenues over the full year 2024 as well. The sales pipeline for 2024 is well filled. Our capital expenditure will be about EUR 12 million. Company funded, that is, self-financed R&D expenses, were EUR 25 million in 2023. We expect R&D spending to be higher in 2024. R&D expenditures are recognized in the income statement and not capitalized. Regarding profitability, as outlined in April already, inflation and the startup costs for major projects acquired in 2023 will impact the margin situation in 2024. Therefore, we expect an EBIT margin of about 6% in 2024, so no change to that one. Finally, I would like to highlight that the Frequentis group is on good track for another year of growth, and we are now ready for your questions. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Daniel Großjohann, from BankM AG. Please go ahead. Hello, and thank you for taking my question. My question is about the Gasser acquisition. It's a small acquisition in the workflow field, and you said that you want to improve or you go- you want to roll out it to other products in the control center area. And my point is, is it to improve your product world, to increase your USP, or is it to improve a margin or something of both? Then an additional question related to that, is there are other smart and small acquisition potential in the software sector? Yeah, thanks. That were my questions. Okay, so I will answer those questions. Daniel, thank you for the questions. I will start with the second one. I think we have shown since our IPO that we are, we have M&A as a core part of our strategy, so we acquired 10 companies since our IPO, and this will remain one of our core strategic targets... to make a tough make or buy decision before we invest money, either in a R&D exercise or buying a company to save time to market. So that will remain as a core pillar of our strategy. We analyze between 25 and 30 companies per year. Some of them do not fit our strategic goals, therefore, we refuse in going further, but in some of them, we decide then to go into due diligence. Do we have plans to further enhance and expand our product portfolio with software companies? Yes, we do. Are there concrete companies where we are very close to assigning or closing? No, because we said to 2024, we would like to use for post-merger integration activities after we have acquired a couple of companies last year. Gasser & Partner is a small company with around eight employees. July the first, we acquired the Austrian software company based in Klagenfurt, in Austria, and with this acquisition, our demand is that we expand our expertise in the field of workflow management systems and also workflow automation. We plan to expand into other business areas through the integration, so this strategic step will enable us to offer our customers more comprehensive workflow management solutions for various applications, and therefore, we think we can create unique selling propositions for our solutions. And another area why we have bought growth, is that we also maybe can use those workflow automation tools for our own processes within the Frequentis group. Thank you. Thank you. The next question, it comes from Teresa Schinwald with Raiffeisen Bank International. Please go ahead. Thank you very much. I've got three questions. First one, on this very interesting partnership with Tait. What's the expectations for that in terms of steps, going forward, revenue-wise? Because this would also help us understand where, we could plug in the figures for this new market access. The second one is also on the top line growth. There was really good growth in new product revenues. Could you tell us a bit more, where this happened, and maybe a bit of an outlook on that? And the third one is the general shift in revenues, more to the ATM side. Is this the shape of things to come, like more ATM expected for, the medium term, given that, the orders probably are more in that, region as well? Thanks. Okay. Yes, Teresa, thank you for your question. We would like to start with the Tait partnership. I mean, I will explain you a little bit the rationale behind it. I think we know the U.S. market very well because we have been active in the public safety U.S. market, I think 15 years ago already, so we have some experience. The experience for us was that the sales model we have currently in Frequentis U.S.A, covering one large customer, as a key account, FAA, Department of Defense, NASA, is a complete different sales model compared to a go-to market potentially in the public safety area. Because there, you do not have the one big customer, you have 5,000 customers. As in my words, every sheriff can choose his own system. Therefore, we refused to build up on our own costs as sales organization in the United States for addressing those public safety potential customers, and well, started to look for a partner who is already active in the U.S., having a good customer network and sales network into those 5,000 sheriff offices around the United States. Tait is a family company based in New Zealand, and they have a very strong U.S. business built up over the last 10 years with a lot of customers and sales forces and partner structures around the United States. They sell radios for the public safety, and they wanted to go into the so-called console business, where they wanna sell radio dispatching and emergency call taking, which is exactly our LifeX. It took us two years to find a partnership, the right partner. We had multiple opportunities, but we have chosen Tait, also due to their spread of existing IBP, installed base business, plus the family culture, type of business model they have. We have big plans for the U.S. Of course, we start small, so we follow the McKinsey rule: think big, start small, scale fast. Of course, we have to adapt a little bit, our software and also our operating model, because the model is that we only sell licensed business to Tait, and they do the installation work in the United States and also the maintenance work. So we will be more a software provider like SAP or Microsoft in that case. It would be, it should be very good margin business. What is the scale of business we can expect 2025, 2026? I think you have to give us a little bit more time to analyze the market now in reality, not only on paper. But, it won't be a double-digit million EUR next year. It will be a single-digit million EUR next year. We have planned, and I think we have more experiences next year, which we can then report. The second question was around the split ATM PST. It was the third question, but I will answer that first. Yes, we have a split of 70%-30%. I mean, that's always depending on the order intake types we can generate. I think it will go a little bit down, next year, as we have acquired, as you know, SNCF, in France, which is a large public transport program. And, we also have acquired a larger public safety. So I think it will, next year, my expectation by the end of this year, Peter, maybe you can also say something. I mean, it's anyhow, an expectation, will be maybe between 65% and 70%. So I don't think we will go into 75% direction. It's more going back, to the 65% direction. And then, one question was about the, product. Have you? Yeah, it was about the growth in the new product revenues. They grew nicely, and could you tell us a bit more where exactly this happens? So type of product or customer. You mean the growth in ATM? No, in general, about this revenue composition, new products, or new customer business that you're now publishing also during the year and here. Yeah, where we, where we see especially the increases from, from the U.S., where our, civil products, where they, not as reported already, where we had these two additional larger programs. To that we have, increases, and then furthermore, we have increases concerning our, in past years, acquired new ATM companies. So that's where it comes from. Teresa, the U.S. contracts, APC and Verizon, are all based on long-term existing product of Frequentis. Oh, that's insightful. Thank you very much. Thank you. Thank you. The next question comes from the line of Gautier Le Bihan from ODDO BHF. Please go ahead. Yes. Hi, thank you very much for the presentation. I just have two questions. The first one is about the inflation. I don't really understand how it has an impact on cost, and it's more did inflation have an impact on the revenue, or, and if yes, what was the impact on... How was the split of inflation between cost and revenue? That's my first question. My second one is about orders on hand. What will be the calendar to transform orders on hand into the revenue? How if it would be more mainly next year or in 2026? Yeah, that's my two question. Thank you very much. Thanks, Gautier. Inflation? Yeah. Concerning inflation, in Austria, there's a system that is collective bargaining, means that we are legally forced because there aren't negotiations between employers and employees, trade unions concerning payroll increases. Probably that's not the same in all countries, but here we call it collective bargaining agreement. That happens once a year, where they sit together, and then you, as a company, are forced to execute the minimum pay increase. When you look upon our cost structure, you will see that half of our cost is based on salaries, on payroll. So here you have no possibility to get rid of that, and in addition to that, probably you have the one or the other individual payroll increase for the salary. During past two years, this payroll increase was extraordinarily high in Austria, and as we have half of our people employed in Austria, that's quite high. Also the other countries where we have our labor force, Germany or Romania, Slovakia, here we have also a lot of people, have higher payroll increases due to the awfully high inflation. That hits us because on very long-term contracts where we contracted on a fixed price, and you calculate an average inflation rate, and if it's in reality then higher, then it's hard to be compensated by that. In several cases, we achieved additional increases and negotiated it with our customers, and in some cases, we did not achieve that. And also, if you look upon the second largest cost position, that procured services, here we procure services from other companies, and they also had to increase their prices due to this inflation. That's the basis for these cost increases. The second question that you had was about orders on hand. You can see that in the past years, we always reported how much of the orders on hand will be executed during the next year. And it's a very similar figure from the orders on hand that we had at the end of 2023. We managed to have revenues of EUR 300 million during the next year. Will that change? I think it will, it will stay stable, as we not have mentioned larger contracts, but they are then frame contracts where the customer give us smaller portions, and so I think the ratio will stay stable as the last two years. Okay, thank you very much. Thank you. The next question is from the line of Miro Zuzak from JMS Invest AG. Please go ahead. Yes, good morning. Can you hear me? Yes, Miro, we can hear you. Hello. Thank you for taking my question. Just I take them one by one, if I may. The first one is regarding the seasonal pattern. Typically, you mentioned that the pattern would be like 40% of the order intake. I mean, like 40% in the first half, 60% in the second half. If you look at your current deal pipeline, do you think this pattern will hold also this year? Miro, you are referring to the order intake figure? Yes. Yes, we are pretty confident that this relation, half year 1, half year 2 from the past, will also continue in 2024. Okay. Then, if I look, if we drill a bit down here, so in public safety and transport, if I look in your past figures since 2018, I see that, like in the last three years, there was sometimes a clear seasonal pattern, up to like EUR 43 million in H1 and then EUR 86 million in H2. But if I go before the COVID times, it was more or less even, say, 50/50, and the seasonality came mainly from the air traffic management division. Is this? Are we back into normal pre-COVID times so that the seasonality is mainly driven by air traffic management, or do you expect that also, public safety will also have the 40/60 relationship? Miro, that's really hard to say because, I mean, you know, there are a lot of external influences, possible, which can shift an order easily in December to January. Or if you win a large contract, like as mentioned in the U.S., which is a $500 million budget for Frequentis, where we only book 100% orders out of that $500 million. So I think this year we have booked 17. It's also the question: Is that next order then, out of that budget coming in December or in January? Because the United States, they don't have calendar as their fiscal year. So they... I cannot answer your question, precisely. I can only tell you that from a corporate order intake perspective, we expect to follow our historical pattern 40/60 also for 2024, based on the information I have today. But as I said, if a deal is shifted due to explanation from a competitor for 2 months, then we have it in 2025, as you know. Okay. Thank you. Then, as a second question, I was a bit puzzled by the relatively high personnel cost line, until I realized that you also booked a EUR 4 million provision for holidays which have not yet been taken in H1. So it's like a provision at the end of H1 was EUR 9 million, as opposed to EUR 5 million at the end of the year. So there was, like, an increase for people working, but not taking holidays of EUR 4 million. Just to clarify, are these EUR 4 million part of the EUR 129 million of personnel costs? And I would assume so. That's the first question. Second question related to this is: How do you intend to handle these people who work all day long without taking holidays? Do you expect then a kind of relief in the second half of the year, for the personnel cost line? Yeah, I- That's a PhD question. I will give that to you. Thank you very much. Thank you, Robert. I would like to answer to this question. So, it's always difficult when we have, post, to meeting project milestones. It's very difficult for the managers. Shall they work hard to achieve the milestones, or shall they take vacation, and let's slip the milestones? So it's, you have to handle it, that individually for each department. Unfortunately, all these people in the first half of the year, they take not a lot of vacation. People love here in Austria to go in July and August on vacation. During these days, more than half of our people are already on vacation, and in some weeks in August, two-thirds of our people are on vacation. So it's very popular here to go in August on vacation. And that leads to a reduction of these holiday provisions. And we also had a discussion the other day to do additional measures to reduce these provisions. And you are right, the increase of this provision is part of our overall salary cost. And this just to, it's a, like, just a control question, whether I understood it correctly. So once these people, they go on vacation, you can release the EUR 9 million, or at least part of the EUR 9 million again. Yes. This will basically give you a EUR 4 million relief, as compared to H1, right? Or even if it is- Mm. an EUR 8 million relief. So to put the question the other way around, from today's perspective, what is, what is the estimated personnel cost for H2? Maybe you can also put the question that way. Yeah, I think our plan is that the people take the vacation each year, the additional vacation that they get each year, that they use it up. That's the overall plan. And it's very important that the people take the vacation in July and August, because Quarter Four is always a tough one, and normally, we are not... It's almost impossible to get a large reduction in Quarter Four, where we have to win a lot of orders, meet a lot of project milestones, where we need our people for contracts and project milestones. So it has to be done now, and I don't expect a reduction by eight, because EUR 8 million, if that was your question, so I'm happy when we can reduce the EUR 4 million that we build up. Okay. Then, the next question, if I may. I've seen from your report that you basically gave a loan to a company called Nemergent Solutions. It's a Spanish company. Maybe you can give some background on this. What's the purpose there of giving a loan to another company? Yes, you know, so Nemergent was a participation we have taken, 2021? 2021, 2022. It's a Spanish company. They develop a software for mission-critical networks. That's one of our business development innovation fields. We believe that digital radio networks like TETRA will have an end. And we... There is a new software capability coming up in the market, utilizing terrestrial commercial LTE 5G infrastructure, and make it with software available for mission-critical push-to-talk, video transmission, and big data transmission. We believe that's the future of the control center market, especially for public safety. We see the first tenders coming up in the UK, in Belgium, Croatia, and other countries in Europe. The U.S. has already implemented that years ago in a large program with AT&T and Verizon. And, that's why we started to have a participation in Nemergent. I think 15% is the current participation, or- Already, uh- Already increased. 24. something. 24.something. And we gave them a convertible loan, which means that we finance that company, as our target is to take over majority of this Nemergent in future, because that will be a critical piece of our go-to-market in that area of critical broadband networks. ... Okay, so today you are at 24, and you would like to increase, and for this, you have given them the convertible loan- Yes. Which once converted, basically will increase your stake again? Yeah, to the majority. We do not do it now because they have a lot of Spanish-funded R&D programs, which they would lose in case a foreign entity is owning more than 25%. Okay. That's it for the moment. Thank you. Thanks, Miro. I would like to add two things. One is exactly it was in 2020 when we procured the first stake, and the actual loan is a little bit more than EUR 1 million, as it was paid in two portions. Good. Thank you. Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. Ladies and gentlemen, we have no further questions. I would now like to turn the conference back over to Stefan Marin for any closing remarks. Yeah, thanks, for listening. We are looking forward, to the meetings at, the next conferences, as being published in the financial calendar on the investor relations website. We will, report our full year results, for 2024 in April 2025. And, yeah, please, feel free to drop me a line at investor@frequentis.com if you would like to arrange, for a call, in the meantime. Goodbye, and, take care. Thank you. Bye. Bye. Thank you. Bye. Thank you. Thank you. Goodbye. Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in today's conference. You may now disconnect your lines. Goodbye.