Financial Presentation

Q3 2023

November 8, 2023

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
In total Smartoptics addresses about 30%

Key driver is data growth

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

Open and disaggregated solutions

Shift toward more cost-efficient networks
IP over DWMD

Data centers, Cloud, Enterprises and Small to Medium Operators

Smartoptics is well positioned for long term profitable growth

Attractive technology Strong financial model Open solutions Cost efficient No legacy products, unique position

Well positioned in small and mediumsized customers

Opportunity to expanding into larger accounts

Strong footprint in Americas and Europe

Investing into selected emerging markets

and outlook

Solid margin & capital light Debt free & good cash flow Paying dividend

Continue to gain market share in metro segment in key markets and expand adressable market

Continued strong financial development

15.9% 0 5 10 15 20 25 30 35 40 45 50 55 60 4.9 5.8 -2.0% 2018 7.9 6.6 6.7 5.0 3.8% 2019 11.5 9.2 7.9 6.6 5.1% 2020 12.4 11.1 12.4 10.0 10.0% 2021 17.5 13.5 14.6 11.8 16.2% 6.0 13.6 17.0 14.1 2023 22.6 2022 35.1 45.9 57.4 44.7 5.9 26.2

EBIT % Q1 Q2 Q3 Q4

Revenue and profitability development since 2018 Key milestones

-2%

10%

12%

14%

16%

18%

20%

22%

24%

26%

Last twelve months revenue is 62.1 MUSD
Operational situation more favourable in 2023, enabling shorter lead times

Continued solid profitability and strong cash flow in Q3 2023 13% revenue growth excluding 5G related projects in Q3

Revenue		Gross Margin		Earnings Per Share
Q3: 9m:	13.6 MUSD (+1.1%) 44.7 MUSD (+11.9%)	Q3: 9m:	50.0% (+2.5 p.p.) 49.9% (+3.9 p.p.)	Q3: 9m:	0.15 NOK 0.71 NOK

EBITDA Margin		EBIT1 Margin		Operating Cash Flow
Q3:	19.8% (2.7 MUSD)	Q3:	16.3% (2.2 MUSD)	Q3:	+5.5 MUSD
9m:	19.0% (8.5 MUSD)	9m:	15.9% (7.1 MUSD)	9m:	+9.7 MUSD

Strong growth in business area Software & Services

Revenue by business area Q3 specific development

(MUSD)

Software and Services showing very strong growth
Significant portion of Software and Service is recurring
Solutions slightly down due to lack of large projects which contributed to 2022 numbers
Software & Services shown after reduction of deferred revenue, i.e. numbers shown are the recognized revenue

Growth in Americas, while EMEA declined slightly

Revenue per Region and Quarter – Last 5 quarters

Increased cash position due to profitability and decreased working capital

Balance Sheet Sep 30, 2023 Working Capital Development past 5 quarters

Solid profitability and strong cash flow

EBITDA & EBIT

Return on Capital Employed

Q1 Q2

Q3 Q4

Q1 Q2

Operating Cash Flow (MUSD)

Note: Return on Capital Employed (ROCE) defined as EBIT divided Capital Employed. Capital Employed is defined as Fixed Assets + Current Assets – Current Liabilities

Long term ambitions stay firm

	2023 Q3	2025/26 aspirations
Revenue	13.6 MUSD (LTM 62.1 MUSD)	~100 MUSD
Gross margin	50.0%	~45%
EBITDA margin	19.8%	~17-20%
EBIT margin	16.3%	~13-16%

Profit and Loss Statement

Profit and Loss Statement Q3 2023

		kUSD
	2023 Q3	2022 Q3	Change
Total revenue and other operating income	13 602	13 451	+1.1%
Direct cost of sales	-6 805	-7 070	-3.8%
Employee benefit expenses	-3 188	-2 679	+19.0%
Other operating expenses	-913	-773	+18.1%
Total operating expenses	-10 906	-10 522
Depreciation	-418	-282
Amortization of intangible assets	-67	-78
Total depreciation and amortization	-484	-360
Operating profit/(loss)	2 211	2 569
Financial income	5	1
Financial expenses	-66	-36
Net foreign exchange gains (losses)	-652	455
Net Finance Items	-714	420
Profit/(loss) before income tax	1 497	2 989
Estimated income tax	-329	-496
Profit/(loss) for the period	1 168	2 493
Shares outstanding (Basic)	96 286 593	96 286 593
Shares outstanding (Diluted)	97 293 383	96 286 593
Earnings per share (Basic) USD	\$ 0.012	\$ 0.026
Earnings per share (Diluted) USD	\$ 0.012	\$ 0.026
Earnings per share (Basic) NOK	NOK 0.147	NOK 0.270
Earnings per share (Diluted) NOK	NOK 0.146	NOK 0.270

Comments to Q3 events

Continued strengthening of the organization with focus on R&D drives employee expenses
Improved gross margin (lower direct cost of sales)
Increase in employee benefit expenses and other operating expenses slowed down as recruiting and external spend are at lower level
YTD (9m) EPS 0.71 NOK
LTM (12m) EPS 0.82 NOK
EBITDA Q3 2023 2,696 kUSD
EBITDA Q3 2022 2,929 kUSD

Cash Flow Statement

Cash Flow Statement for Q3 of 2023 Comments

Amounts in USD 1,000	2023 Q3	2022 Q3
Cash flows from operating activities
Profit/(loss) before income tax	1 497	2 989
Adjustments for
Taxes paid	-67
Depreciation and amortization	484	360
Interest	38	19
Change in inventory	1 165	1 369
Change in trade receivable	2 364	-655
Change in contract liabilities (deferred revenue)	309	-68
Change in trade payable	-1 001	-1 444
Change in other current assets and other liabilities	707	-1 033
Interest received	5	1
Net cash inflow from operating activities	5 502	1 537
Net cash (outflow) from investing activities	-242	-282

Net cash inflow from financing activities	-6	-227
Net increase/(decrease) in cash and cash equivalents	5 254	1 027
Cash and cash equivalents at the beginning of period	2918	5 749
Effects of exchange rate changes on cash and cash equivalents	-344	-659
Cash and cash equivalents at the end of period	7 829	6 117

Lower inventory due to continuous efficiency improvement and purchases during semiconductor shortage being shifted out
Lower trade receivables as revenue late in Q2 converted to cash

Balance Sheet

Balance Sheet for Sep 30, 2023

	kUSD
	2023	2022
	Q3	Q3
Intangible assets	975	834
Property, plant and equipment	2 667	1 352
Right of use assets	1 973	1 442
Noncurrent receivables against related party	-	-
Deferred tax assets	1 232	2 643
Total Non Current Assets	6 847	6 271

Inventories	12 958	11 851
Trade receivable	15 585	10 741
Recaivables to related party	-	-
Other current assets	1 006	1 298
Cash and cash equivalents	7 829	6 116
Total Current Assets	37 378	30 006

TOTAL ASSETS	44 225	36 277

	kUSD
	2023	2022
	Q3	Q3
Share capital	181	177
Share premium	11 879	11 622
Other paid in capital	141	138
Foreign currency translation reserves	73	99
Retained earnings	15 227	13 307
Total Equity	27 501	25 343

Lease liabilities (noncurrent portion)	1 107	1 013
Contract liabilities (noncurrent deferred revenue)	3 099	1 847
Other noncurrent liabilities	1 361	1 497
Total noncurrent liabilities	5 567	4 357

Lease liabilities (current portion)	679	470
Trade payable	3 339	3 149
Contract liabilities (deferred revenue)	2 649	1 486
Current tax liabilities	2 541	461
Other current liabilities	1 949	1 010
Total current liabilities	11 157	6 577
Total Liabilities	16 723	10 934

TOTAL EQUITY AND LIABILITIES	44 225	36 277

AI Terminal

Smartoptics Group AS

3746_rns_2023-11-08_96ede489-c6ab-4b6b-a6db-cb8527824b18.pdf