Welcome to the Jefferies Virtual Space Summit. I'm Greg Konrad from the Aerospace and Defense Equity Research Team at Jefferies. We're very excited to have Mynaric with us today on location, and Stefan von Bülow, CFO, and Juan Carlos López, Chief Operating Officer. Thank you both for being here today. Maybe just to start, if you can talk about the history of Mynaric, how that drives the company today, who do you typically compete with, and maybe who your largest customers are, just kind of some background. So great to see you. As you can see, we chose a little bit of a different format today. So we are actually in our production hall that you can see how the terminals are built in the background. I think this gives you some good impression about Mynaric. But back to the company. So the company is a spinoff of the DLR, which is the equivalent of NASA in Germany. The founders worked and developed laser com terminals for a decade there, and they realized the potential in commercializing this product. And so this is also the aim of the company. And about our competitors, I would say our biggest competitor is maybe the physics, because this is a really hard technology. You have to imagine that you are in space on a vehicle which is moving. You have to send a link over up to 8,000 kilometers and hit the target size of that. So it's really high precision optics, and it's never been done in scale before. So this is really an amazing technology. But the reality, our competitors, and this is mainly TESAT, a subsidiary of Airbus, SA Photonics, which got acquired by CACI 1.5 or 2 years ago, and Skyloom. Our biggest customers today is the end customer SDA, but through various brands like Northrop Grumman, York Space Systems, Rocket Lab, and these are our main customers for that day. And then maybe just for people who aren't as familiar with the market, what exactly are OISLs, and why are they growing in importance today? What are the catalysts for growth, just thinking about the ramp that you guys have called up? So OISLs are basically optical inter-satellite links. So in essence, think of it as systems of communications between different satellites. But imagine it with the process where today we use cable-to-cable connections between satellites or between systems. And with the OISLs, it's basically using lasers as that communication medium. So basically light to reception, if you will. And one of the biggest, I guess, catalysts to this is that when we look at the current technology that exists today, especially with the heavier in the RF technology, you're very limited with bandwidth capability with the systems. So in moving in this direction that we're developing, that's one of the biggest things that we see in market is the opportunity to expand with larger capacity capability, with, in essence, a much more highly secure system with the ability to basically be able to be, what's the word? A much more secure system, if you will. Yeah. This is what also our customers are looking for: high bandwidth, security, license free. These are the key factors driving this technology and the demands today. Then, I mean, given kind of their background, are there certain markets that Mynaric are more competitive in, just thinking about the broader applications out there? Yeah. So the first adopter is for sure space, where we have also the biggest backlog today, more than 800 terminals. And the first application we see is especially from the SDA, the Space Development Agency. They have announced several Tranche 0, Tranche 1, Tranche 2. And this is the first adaptation. The second adaptation will be the commercial market. So compared to Starlink, there are also other providers out there like OneWeb or Rivada, which are planning all for LEO constellation with a high bandwidth. This is the first application we see. This will be or is already followed by the European government. So the European government sees also the need for this in Europe. So they're planning on constellation, which is called IRIS2. And we see also other markets like Asia. They're looking for their own constellation. And this is the first driver we see in the market. If the first backbone is in space, then there will be furthermore application. If you can send a link down, for example, for an aircraft, a drone, and then you go from there to a ship or ship to shore, pole to pole vehicles. So there are a ton of applications, but the first in space will be the first adaptation, what we see today. And then I feel like we've been hearing more and more about multi-orbit. What type of opportunities does that create? What are the applications when we think about linking GEO and MEO versus LEO? Maybe to give a little bit of background, so there are different orbits. There's the LEO Earth orbit. This is the lowest orbit, which has the advantage that you have shorter distance to the Earth. So you have a shorter signal and not so much latency. Then MEO is on higher orbit and the GEO orbit. With the LEO orbit, you need much more satellites to cover all the Earth because you're closer to the Earth. With the MEO, it's less, but you have more hard radiation, and with GEO, it's way above. And then with the GEO, you can cover more, but the environment is much harder. And it depends on the application of each customer, what they're looking to do. In the past, it was only GEO. Then we saw a lot of LEO constellation. Now we're seeing driving more constellations who are looking also for MEO layer, because then you can bounce back and forth the data from a LEO satellite. This really depends on the final application of each constellation, but gives them much more flexibility than only a LEO constellation. Exactly. And then just thinking about the evolution of laser communications, we've seen a continuous increase in bandwidth, and I think you're working on a terabit solution. What does that mean for applications as we think about the next five years or so? Start a little bit with the history. Laser communication is not a new technology. It has been out there for several decades, but this was more the one-off mission where you have one super expensive terminal on one satellite for a lunar mission or even a further out mission. And this is not what we are looking for. We are looking more for scaling it down. And this is where one comes into play. Exactly. So one of the key premises is the fact that we're looking at much more exactly what Stefan was saying is much more of a scalability process. So, as you can see, part of why we want it to be here so you can actually see the infrastructure is that we've taken the initiative to actually implement the infrastructure way before we were even seeing the level of demand that we started to see today. And basically, we're more geared towards volume production. And our objective in the way that the design has come together, as well as the manufacturing process, is geared towards looking at what the market is looking at beyond these next couple of years. We're seeing this significant growth and necessity, and we're just putting ourselves in a position where we can help meet a lot of the demand. And then, I mean, when you look forward, how do you think about the defense versus commercial? It seems like most of the deliveries today are SDA directed. Is there a crossover point where commercial becomes maybe more relevant to the business? Yeah. So as I explained before, the first application we see was the SDA. So with Tranche 0, Tranche 1, Tranche 2, so they awarded the most satellites and the most terminals out there today. And from the public announcements, which are out there, we have the biggest market share on that. And they're the first adopter. But the second is really the commercial application. So all the commercial application has started. They've booked their launches. They signed contracts with the satellite builders. And the next steps we will see is then announcing the suppliers of laser communication terminals. So they're really picking up. And in the long term, we assume that the numbers of commercial satellites are way bigger than the government. But once again, the first driver is the SDA or the government side. Then, I mean, just staying on commercial, you reported recently, but how do you think about the timing of some of these supplier announcements on the commercial side? What more broadly are you seeing in terms of locking down the suppliers? What we see, as I said, OneWeb has the first generation, but still with RF in space. They're looking for the next generation, also with Rivada and all of the others. So we assume that in the next 3-6 months, we will see the announcement of the commercial constellations. This is our assumption. And then maybe just on the SDA side, you mentioned share before, but how do you think about that? We've seen Northrop announcements. You've been successful with newer entrants such as Rocket Lab and York. But how do you compete on the SDA side? And any other thoughts around kind of share in terms of what you're seeing? On the numbers of satellites, which were publicly announced, and if you look at our backlog, roughly 829 terminals, be 100% exact for today. If you do the math of the public announcement, we assume that we have more than 50% of the market share, if not even higher. And this is mainly driven for sure with Northrop Grumman and York. They are our major customers in this area. And then just giving that and thinking about competitor announcements, I mean, how do you think about the core Mynaric and maybe where you best compete either from a technology standpoint or ingrained with the customer base? I don't want to mean one of the key things that Mynaric really did was it poised itself more for a volume manufacturing infrastructure. And a lot of what we've seen, we're kind of very far along in that process. Again, looking at the infrastructure, which is really always great to look at, is that we took initiatives to actually build the infrastructure way before a lot of the demands. And in essence, the technology that we've implemented and designed here at Mynaric is actually built with the perspective of scalability in mind. And so a lot of the effort going into that is in correlation to us being able to keep up exactly with this demand and where we see what the future is for that. And once again, to highlight what Juan said, we invested heavily. The main proceeds from the US IPO, which we did in the end of 2021, we invested in the infrastructure and the manufacturing hall. This is just a small, small part of what you can see here in the background. We have another facility where all the heavy machinery is sitting for polishing, grinding, and all of that. We have a big testing hall. We have heavily invested for ramping up the production up to 2,000 units per year. Not that we have the employees today for 2,000, but from the machinery capacity, we are almost done with all the investments. This is what we are aiming for a company, really the mass production of terminals. Correct. Exactly. And then I think you've changed timing of HAWK a little bit and maybe paused some of the efforts there. But can you maybe talk about what the overlap is between HAWK and Condor? And is there timing where you maybe expect to see that market materialize a little bit more? So we had a final product with HAWK, but this was a different product, which was built for the airframe, so for aircraft. And we had some demonstration there. But what we realized one and a half years ago, as I explained before, the first adopter will be space. So we paused HAWK for a moment and put all the efforts on the company and the space application. But we see a huge demand there. As I explained before, when the backbone is in space, there will be tons of application, pole to pole, ship to ship, ship to aircraft, aircraft to satellites. And this could be a huge market. And if we're seeing this market will come again, then we will start a development or redevelopment of the HAWK product, which fits this application. Then somewhat tied to that, you mentioned capacity. We talked a little bit about HAWK, but just given these drivers, I mean, where do you see the company in five years in terms of ability to ramp and ship the terminals? And kind of what do you think about the longer term, biggest drivers of growth and maybe applications that aren't as material today? Yeah. So what we are aiming for is once again, roughly the 2,000 units per year. And we also see the market for that. We have the 800 terminals and backlog. But what we can see today is it's focused on LEO. Then we see the MEO application. This will be the next driver. Then if the backbone is set with all the airborne and terrestrial applications. And what we also do in the meantime, it's not so publicly known. We're building also ground stations, not in the big numbers we do like the Condor product, but we will deliver a ground station end of this year or beginning next year to Hawaii. And there will be really growing demand also for ground stations. And overall, we see a huge increase of the business. At the end of the decade, there are assumptions that there are 50,000 to 100,000 satellites out there. And if you think about it, each satellite means roughly it depends on the application, 2, 3, or 4 terminals per satellite. This is really a $1 billion or EUR 1 billion, however you want to take it from which side, market. And we are really aiming for that one. And then, since you are in the facility, just I might as well ask about the manufacturing side of OISLs. I mean, where are the advantages or areas of highest IP? What's the most challenging part of actually mass producing? And where are you on that ramp just given first production units have shipped? So one of the key factors, I think, with the core IP, so for the first part of that, is really in the telescope design, basically taking, if you will, a block of aluminum and then obviously milling out and building out the telescope from a single piece. I think that's one of the big advantages in the way that we've actually developed our design, for sure. Software is another big one. We basically develop our own software infrastructure for all of the internal needs. And obviously, we have key IP for that. But in general, all of the manufacturing processes are very much internalized. And we lean heavily on the expertise and the infrastructure. Again, going back to what Stefan said, the significant investment that Mynaric has done in the infrastructure way ahead of what we're seeing as the industry. Even though the factory itself is structured with the ability to hit up to a 2,000 capacity capability, when we're talking about primarily equipment-wise, factory-size-wise, so it's a matter of implementing resources like personnel as we need it, as we see the achievement and the demand grow with that. Then just two financial ones. I mean, I think you've talked about exiting the year at even a break-even positive run rate as you exit the year and 50% gross margins have kind of been set as the bogey. Can you maybe talk about the biggest drivers of improvement? What volume is that based on and how you think about kind of that crossover point? So as I explained before, we have roughly 800 terminals in the backlog, which are to be shipped this year, main portion next year, and a smaller portion still in 2026. And as we see the ramp up today, so we are going from a flat base and it's getting, how is this called? Increasing. Increasing. Much more increasing and increasing, increasing by the end of the year. And so for overall to be even a break-even, we calculate roughly 600 terminals per year. And if you have such a ramp up, then if you take the last two, three months, then you have the numbers where you can go through the break-even. So we are not saying that we are break-even for the whole year, but for the last month. And I think this would be a really important step for the company to achieve this. And one of the key points with the ramp up is it is actually a decision that Mynaric actually took because what we want to do is in the process, again, this is new technology. This is new design. No one, to my current awareness, is manufacturing to this level of skill that we are attempting to. So we want to make sure that as we're progressing, we're learning lessons and we're improving our production processes. Because again, from the initial ingestion, there's a lot of things that we implemented that made a lot of sense. Now we're just seeing opportunities where by correcting them, fixing them, if you will, we're seeing our ability to speed up even faster as we get closer to the end of the year. Today we're seeing roughly a gross margin of 50% on the unit to the material cost. We are looking already for next version, which is more cost-efficient so we can reduce further the material cost on the product. Because what we also see is that the prices on the government side, they are quite stable. With the big commercial constellation, we see a little bit of pressure on the price because they are ordering huge quantities. We want to be prepared with already our next generation that in the average mix, we can stay with the 50% gross margin on the product. That's really important for us. Just to clarify, you're talking about a 600, you said 600 per year run rate as kind of that number. Yeah. And then, I mean, on your earnings call, you did talk a lot about cash, but how closely does free cash flow correlate with EBITDA, just thinking about that cadence and some of the moving pieces around investment? So the good news is, as we explained before, that we made all the heavy investments already. So the machinery is there, the facility is sitting there, not that we own it, but there was a lot of special construction in the facility for our needs. And everything is outfitted. So the CapEx should go or will go down this year and over the next year and stay at a flat level. What is coming more into play is the working capital financing because if we are ramping up the production, for sure, we have to meet or need to order more material and put it in the stock. But also, we purchased a lot of parts last year. So it's coming really, we are changing from a development company to really a production company. And it's more about the working capital financing. But as I also alerted in the earnings call, and Greg, you were also there, is our plans foresee at the moment if we could do the ramp up as planned and we win contracts as we did last year, we should be good with the financing. But if we see postponements or further shifts, we may need additional capital, mainly for the working capital financing. And then maybe just to wrap it up, I mean, what are three takeaways investors could walk away with from today? A big one, obviously, is again, what I've been alluding to is the fact that the key factor that Mynaric did was it actually structured itself to be much more of a volume production infrastructure. So we are clearly setting ourselves up to be able to hit to scale. And as I said earlier, the factory itself, we poised it to be able to do 2,000, even though we're not at that scale yet. And it's only a matter at this point of personnel, people-wise, if you will, as we need to. Yeah. And the next, I think, really important topic is that we are really well positioned, especially in the SDA and government segment. So we won a lot of contracts with big primes. So we are the major supplier there. And on the other side, it's a really scalable market. We see a lot of demand. We are talking since years about that. Now we see the inflection point where it comes to reality on the government side, on the commercial side, and it will be followed by other applications in the terrestrial and air segment. So high, scalable, and huge growing market. Stefan, Juan, really appreciate the time today. It looks like you're pretty busy in the facility. So I appreciate you making time to chat with us today. Thanks, Greg. Thank you so much. Thank you. Thank you.