Smartoptics Group AS

Investor Presentation • Feb 15, 2024

Financial Presentation

Q4 2023

February 15, 2024

Q4'23 Continued solid profitability and strong cash flow

2023 Revenue growth 19% for core business (excl. 8 MUSD 5G revenue from a single US customer) in challenging market conditions

Solid foundation and well-positioned for growth with attractive product roadmap for 2024 and signs of increased investment budgets

Strong profitability despite continued investments for growth. Investments in product organization and selected markets prioritized

Smartoptics in brief

Optimizing the usage of optical fiber

A reliable and competitive offering targeting a wide range of network applications

OUR EDGE

We stand out by offering cost-efficient solutions, leading the transition to modern and open networks with focus on ease of use with no ties to legacy technology

TECHNOLOGY

Our solutions are designed by a world class team using best of bread merchant technology and modern software design principles, allowing a flexible approach and minimal time-to-market.

The market for fiber optical network equipment is worth 16 billion USD worldwide

16 billion USD world market

• 50% is Metro
• 50% is EMEA and North America

Key driver is data growth

• Cloud migration & new data centers
• Migration to 400Gbit/s
• 5G roll-out
• Fiber access roll-out
• Government funding

• Emerging: AI/ML

• Shift toward more cost-efficient networks

• IP over DWDM

Smartoptics addressable market is 4-5 billion USD

Growth drivers towards 100 MUSD by 2025/26

Continuously growing core business

Q4'23 deep dive

Continued track record of profitable growth in 2023 despite harsh market conditions

Revenue and profitability development since 2018

Continuously growing indirect and direct customer base

Active customers

Comments

• Steady growth in invoiced customers YoY
• New customers represented 8M USD in 2023
• High customer retention more then 50% of revenue in 2023 from customers acquired in and before 2018
• Business partners includes value added resellers, distributors and OEM partners

Of which are business partners

Growth in Enterprise and ICP segments

Good traction in Americas results in moderate decline despite lack of large projects

Revenue per Region and Quarter – Last 5 quarters

Strong financial position. Board recommends dividend of NOK 0.50 per share

Balance Sheet Dec 31, 2023 Working Capital Development past 5 quarters

Solid profitability, strong cash flow and gross margin maintained at high level, in line with long term ambitions

Long-term ambitions stay firm

	2023 RESULTS	2025/26 ASPIRATIONS
REVENUE	58.5 MUSD	~100 MUSD
GROSS MARGIN	50.0%	~45%
EBITDA MARGIN	18.0%	~17-20%
EBIT MARGIN	14.8%	~13-16%

Profit and Loss Statement

Profit and Loss Statement Q4 2023 Comments

Amounts in USD 1 000	2023	2022	2023	2022
	Q4	Q4	Jan - Dec	Jan - Dec
Total revenue and other operating income	13 831	17 460	58 504	57 366
Direct cost of sales	6 852	10 468	29 234	32 014
Employee benefit expenses	3 871	3 648	14 449	11 958
Other operating expenses	1 069	577	4 303	2 552
Total operating expenses	11 793	14 692	47 986	46 524
Depreciation	438	333	1 592	1 218
Amortization of intangible assets	65	76	267	324
Total depreciation and amortization	503	409	1 859	1 542
Operating profit/(loss)	1 536	2 358	8 659	9 300
Financial income	157	39	164	40
Financial expenses	- 79 -	52 -	241 -	229
Net foreign exchange gains (losses)	0 -	733	754 -	253
Net Finance Items	78 -	746	677 -	442
Profit/(loss) before income tax	1 614	1 613	9 336	8 858
Estimated income tax	- 355	486 -	2 054 -	2 069
Profit/(loss) for the year	1 259	1 126	7 282	6 789
Shares outstanding (Basic)	96 286 593	96 286 593	96 286 596	96 286 593
Shares outstanding (Diluted)	96 758 986	96 732 899	96 235 329	96 322 038
Earnings per share (Basic) USD	0.013	0.012	0.076	0.071
Earnings per share (Diluted) USD	0.013	0.012	0.075	0.070
Earnings per share (Basic) NOK	0.155	0.112	0.866	0.698
Earnings per share (Diluted) NOK	0.154	0.111	0.858	0.697

Cash Flow Statement

Cash Flow Statement Q4 2023 Comments

Amounts in USD 1 000		2023 Q4	2022	Q4 Jan -	2023 Dec	2022 Jan - Dec
Cash flows from operating activities
Profit/(loss) before income tax		1 614	1 613	9 336		8 858
Adjustments for
Taxes paid		-	-	- 240
Depreciation and amortization		503	409	1 859		1 542
Interest	-	98 -	12	164		109
Change in inventory	-	1 238 -	3 572		1 227 -	3 328
Change in trade receivable	-	1 669 -	5 174 -		1 340 -	8 103
Change in contract liabilities (deferred revenue)		814	782	2 447		1 163
Change in trade payable		1 148	2 683 -		1 344 -	384
Change in other current assets and other liabilities		840	3 606 -	486		194
Interest received		157	39	164		40
Net cash inflow from operating activities		2 071	374	11 805		91
Net cash (outflow) from investing activities	-	744 -	969 -		2 329 -	1 578
Net cash inflow from financing activities	-	372 -	331 -		5 394 -	1 130
Net increase/(decrease) in cash and cash equivalents		956 -	926		4 082 -	2 616
Cash and cash equivalents at the beginning of period		7 826	6 116	5 660		9 380
Effects of exchange rate changes on cash and cash equivalents		451	470 -		510 -	1 104
Cash and cash equivalents at the end of period		9 232	5 660	9 232		5 660

Balance Sheet

Balance Sheet Dec 31, 2023

Amounts in USD 1 000	2023 Q4	2022 Q4	Amounts in USD 1 000	2023 Q4	2022 Q4
Intangible assets	1 075	941	Share capital	189	195
Property, plant and equipment	2 906	1 787	Share premium	12 404	12 801
Right of use assets	1 912	2 380	Other paid in capital	20	152
Noncurrent receivables against related party	-	-	Foreign currency translation reserves	36	188
Deferred tax assets	1 284	1 326	Retained earnings	17 017	14 269
Total Non Current Assets	7 177	6 433	Total Equity	29 667	27 606
Inventories	14 196	15 423	Lease liabilities (noncurrent portion)	1 271	1 759
Trade receivable	17 254	15 915	Contract liabilities (noncurrent deferred revenue)	3 430	2 297
Receivables to related party	0	0	Other noncurrent liabilities	1 032	1 120
Other current assets	1 239	943	Total noncurrent liabilities	5 732	5 176
Cash and cash equivalents	9 232	5 660
Total Current Assets	41 921	37 941	Lease liabilities (current portion)	716	674
			Trade payable	4 487	5 831
TOTAL ASSETS	49 099	44 374	Contract liabilities (deferred revenue)	3 133	1 818
			Current tax liabilities	3 042	868

Other current liabilities 2 322 2 401 Total current liabilities 13 700 11 592 Total Liabilities 19 432 16 769

TOTAL EQUITY AND LIABILITIES 49 099 44 374

Thank you