Frequentis Aktie

Good day, ladies and gentlemen, and a warm welcome to today's online roundtable of Frequentis AG. I am delighted to welcome the CEO, Norbert Haslacher and the Head of Investor Relations, Stefan Marin, who will guide us through the presentation.

[Operator Instructions]

And having said this, I hand over to you, Mr. Haslacher.

Yes. Thank you very much, and also thank you for joining that online session about the Frequentis results 2025. First of all, I would like to say that we are very proud of what we have achieved in 2025 and a big thank you to the employees around the world who have invested enormous time and dedication to what we have achieved in 2025. So you can see already on the first slide that our order intake went up again significantly by 17% after 5 consecutive years growing our order intake. Revenues went up by 21% and the EBIT margin, we achieved 8.1%.

So in detail, order intake was EUR 680 million. Orders on hand, nearly EUR 800 million and revenues grew, as I said, 21%, entirely organic growth to nearly EUR 600 million. EBIT was up EUR 46.8 million, which leads to an 8.1% EBIT margin. And net cash, as usual, was positive EUR 104 million at the end of the year, thereof, EUR 87 million was advanced payments from customers, which is in our business model, very usual that governments usually give us upfront payments according to the milestone achievements then during the program.

What I want to like to mention is to be very transparent, we had an EUR 8 million claim settlement, which gave us a positive effect on our bottom line. That claim settlement was a negotiation over the last 3 years with a prime contractor we had in Europe in public safety. And last year, we achieved a claim settlement before we went to court. And therefore, that has -- or had a very positive impact on our bottom line.

I would like to give you some insights about orders and projects we have won in 2025. We really secured very interesting long-term large-scale programs in 2025. So first is the APC program in the United States, where we do a rollout of IP-based air-to-ground protocol converter systems in the United States. The budget of the FAA is around $500 million for that program. Then we also received the first orders for the modernization of the voice communication system in the U.S. And what's also growing, but very slowly, is our drones business. So Sweden has decided for Frequentis for a low altitude drone operations below 500 feet for public and private drone users, and that contract was also awarded to Frequentis. Those have been the relevant and major order intakes we have achieved in the area air traffic management civil.

What was also very successful is our defense business. So we have deployed the first U.S. military digital air traffic control tower in operation at the U.S. Army Garrison in Germany. And what is also going forward is the AIR6500 program in Australia, where we are a partner of Lockheed Martin deploying our voice communication system over all Australia. What's interesting is that the drones business is -- and I come to that a little bit later, is it seems that it's coming more to more into the defense sector due to a lot of incidents we had recently in Europe. So the German Armed Forces have given us a contract where we test military uncrewed traffic management for German Army to integrate drones into a military airspace.

I have to say that -- and you will see that a little bit later that we have been growing in all of our segments. That's a good thing. So we didn't create any cluster risk for Frequentis. All segments have shown positive development. Also public safety, where we have secured a large contract for the Thuringian State Police in Germany, where we deliver an integrated operation and control center as a prime contractor and the control center technologies are already ready for multimedia communications. As you know, our product is LifeX. It's a cloud-based system where we can integrate microservices for big data, for video and also for voice communication.

What was also a big success is that we have won a large contract in Norway, where the fire emergency call centers have tendered a new communication solution. And the new system, which we will deliver to Norway will handle calls, radio, video and digital messages also based on our cloud-based system, LifeX.

So here are the figures. You see that we have now since 5 consecutive years, 20% CAGR in order intake. So it really remains a very strong year 2025. And also orders on hand grew. And you see that we also have executed orders into revenues. So currently, our orders on hand book shows EUR 800 million approximately. And I also want to mention again that we only show orders as orders on hand if they are contracted based on the real deliverable contract. It's not the budget of the customer, which is shown here. It's the share which has already been contracted out of their budget to Frequentis.

Yes, revenues went up to EUR 580 million. That was a big step forward also based on the APC program. APC program, you can see that in the segment ATM, it was growing from EUR 338 million to EUR 401, and public safety has been growing from EUR 142 million to EUR 179 million. So both segments really show a good trajectory when it comes to continuous growth in our world markets. The revenue split is pretty normal, 70% ATM and 31% public safety and transport.

Interesting is, here, you see that Europe has been growing from a very high altitude already. But what really gave us a big push last year was Americas. And I have to be very clear here that not only the U.S., of course, the U.S. plays a major role here as there is a lot of budget available in the United States for upgrading the FAA infrastructure. So we participate in that. but also Brazil and other South American companies, which are consolidated in Americas played a good role in revenues in 2025. So we have increased our revenue share in Americas from 18% to 27%.

Asia went a little bit down because we had some shifts from orders from '25 to '26. They have already been secured in the first quarter of '26. And Australia and Pacific Africa. Pacific Africa is not really a focus of us. It's more an opportunistic market, but Australia did also a very good performance last year. So overall, we had 59% Europe, 27% Americas; 7% Australia, Pacific Africa, whereof most of the order intake and revenue comes from Australia; and Asia, 7%.

Yes. So the margin profile, as I said, we had a very good settlement with our prime contractor. So we have defended our claim, and we got an EUR 8 million payment out of that claim settlement before a court decision. I also have to say that the last 3 years, we have been filing for that claim. We have been showing only costs in public safety in the last 2 years. And 2025 was the time where we had the recognition of our claim and therefore, for bottom line and top line, we generated an EUR 8 million plus in euros. Therefore, the group EBIT grew from 6.7% to 8.1%. If we would deduct the EUR 8 million onetime payment of the claim settlement, the revenue -- the group margin would be in the range of 2024, 6.7%.

Yes. I also want to mention again, we are in a very stable market. So the major growth path for our business as we are focusing on safety critical control rooms and therefore, national safety critical infrastructures is that the importance of security. And I think it's very obvious that the security situation in the world has changed over the last 2, 3 years, not only in Europe, but as we see also in the Middle East and in Southeast Asia and now also, of course, in the United States. Therefore, the budgets are made available for investments into the security infrastructure, especially in the United States and in NATO countries.

What's also important to us is the growth of the amount of aircraft joining the airspace. So there is a big demand of mobility in the U.S., but also in Asia, but also in Europe. So around 3,000 new aircraft enter the airspace annually. And for those aircraft, we need, of course, ground infrastructure and control center workplaces to manage that growing air traffic. That will continue, especially when you see the forecast of Boeing, Airbus, Embraer and other aircraft producers, you can anticipate that, that trend will go on for many, many, many years.

What's also a push to us is the new SESAR program. It's a Single European Sky initiative. It's a joint undertaking between European Commission, European countries and industry. Because they have issued a new funding program, SESAR with a lot of money available to force industry and ANSPs to change their technology. The technology in the past 20 years was very much spaghetti code, so it is an old structure, how to develop software. That was changed now from a regulatory point of view that they want to have an environment where we talk about service-oriented architecture, microservices and cloud-ready or cloud-native solutions.

That means that ANSPs are now forced to reinvest into a technological change in getting rid of the old systems and bringing in new service-oriented architectures. That's a program for the next 5 to 10 years and trajectory-based operation will play a major role in forcing or enforcing that type of technology as in future, there is anticipated that the trajectory is not calculated by the ground forces, it's calculated by the aircraft. And therefore, you need additional and different infrastructure and applications in the control centers to process that trajectory data coming in future from the aircraft.

What's also interesting is besides these new technological change and new deployment models is that we've got a lot of M&A teasers in 2025, ongoing in '26. So we see, of course, some of them are really not interesting for us because they produce hardware, old structure, old technology, but they do some defense business. Therefore, they expect a very high multiple for their product portfolio, but we are usually not following up on that. But currently, I can report that we have some targets where we want to go more into the depth of that opportunity. They are not large. Unfortunately, there are smaller opportunities, but we are in the due diligence phase in 2 of those M&A opportunities. Currently, the outcome is not clear at the moment.

Yes. One growth factor I would like to share with you is our MissionX product. I have presented that already 2, 3 years ago after we have acquired Nemergent, that's a technology company in Spain coming out of the Technical University of Bilbao. They have been a pioneer in developing a technology where you can put a software-defined network layer on top of 5G to make 5G available for mission-critical push-to-talk video transmission and data transmission. The interesting thing is that there is a market coming up, which is really huge because there is an obsolescence and the replacement for TETRA and GSM-R technologies coming up very soon.

The industry has issued a letter to the rail infrastructure organizations worldwide that the support for GSM-R will run out by 2036. GSM-R is a very, very old technology, and it's in all rail operators currently live in Europe, but also in other countries. And they are now forced to change the GSM-R communication technology for communication between train and control center within the next 10 years. Those are huge programs because we have to replace their whole radio access network and put a mission-critical software-defined network layer on top, which is addressed by our MCX.

But also the countries now started to tender the replacement of TETRA. TETRA is also a very old technology used by blue-light forces. So police, fire brigade, rescue, the bandwidth is very, very low. So you can transmit voice and some text data, which is, of course, inappropriate for a 2026 environment. They want to have a mass data capability, a video transmission capability, which is not possible based on TETRA technology. Therefore, the countries now budget step-by-step the replacement of TETRA with 5G. It can be their own 5G network, but usually, it goes into the direction where they talk to the MNOs, the mobile network operators to have a hybrid network between mobile network operators and their own terrestrial 5G network. And then they need a service stratum on top to make that 5G network mission-critical.

We can address that, and we are currently already in some tenders. The first tender we have won in the U.K. where IBM as a prime contractor, together with Samsung and Frequentis delivers a replacement of TETRA in the U.K. and put in a 5G network plus MCX on top to make a mission-critical data exchange possible.

What's also one of our investment cases is the area of drones. As I said in the beginning, the European regulation is still lacking results. So the ANSPs are still not responsible for the lower airspace, which is called the nonregulated airspace. And therefore, no one is really responsible. Therefore, the budgets are lacking in the civil area as responsibility is not clarified by the European regulator. We see some ANSPs, Air Navigation Service Providers like the Norwegian ones or the Bulgarian ones or also the Baltic ones, they get some budget available and make the budget available to implement our UTM solution to be prepared for the upcoming European regulation.

By the way, we are waiting for that regulation since 2, 3 years now already. But it still seems that it takes another 2 years until we get a paper where responsibilities and obligations are described. Therefore, the market in the civil area is very, very, very slow. Nevertheless, the researches we have available from research institutions say that by 2030, the overall drone market in Europe only, including drones and hardware will be more than EUR 10 billion. We are still waiting for that regulation.

On the other side, there is a fast track, which is coming from the military side. As I presented on Slide 2, we have already secured one contract from the German Armed Forces where they give us a contract to test and make a POC for military use cases where they want to -- where they have usually sensors out there, identifying a drone, giving the sensor data to our data platform. Our data platform takes care about an alignment with the ATC to identify if it's a friend or a foe based on registration data or flight plan data. And in case there is a foe result coming out, we give the data to the effectors to shoot the drone down or bring the drone down by jamming by net or whatever is available.

So Frequentis is positioning itself as the data hub for collecting sensor data from different suppliers, checking availability of data from registration or flight plan data from an ANSP and give back data in case it's a full result to the effectors, which -- where we are agnostic to any effector suppliers to bring the drone down.

What's also interesting is that the remote tower operation is getting traction. Maybe most of you, if you know Frequentis for a longer time, we are waiting for the certification in the United States from the FAA Tech Center in Atlantic City to get certification for the use of remote tower in the NAS, in the National Airspace. We are the only provider currently who has done a 3 years certification process in this tech center of the FAA in Atlantic City. The forecast is still Q2 '26, where we should receive that. And then we are the only provider for the U.S. National Airspace, civil and defense who have a certified solution for that remote tower operation.

We already deployed that remote tower operation deployable and fixed in a couple of countries. Most of them are currently civil, except the one I've mentioned at the U.S. Army base in Germany and also in Brazil. But Germany also uses our technology and also Jersey uses it for civil purposes. So we think that the next couple of years, remote tower will play a major role in our top line for defense and for civil ANSPs.

So to conclude, before we come to your questions is, what is the outlook and management agenda for 2026? I have to say that we started already strong in '26, and we expect an increase of order intake again. Although as I have shown to you over the last 5 consecutive years, we have already shown significant growth in orders, but we think that will continue, and we have a very good feeling for '26. We also aim to increase revenues by about 10%, could be higher.

But to be honest, we are a little bit conservative here as there are a lot of tensions going on when it comes to supply chain. You know that the semiconductor producers are focusing on artificial intelligence chips because that's much more margin for them. Therefore, time line and price commitments from Dell or HP currently is a challenge. And we do not know how the situation in the Middle East will continue. Therefore, we said that we aim to increase the revenues by about 10%, depending on the development of the supply chain and of course, of the situations we have in the Middle East.

EBIT margin, we will increase. So we think it will be about 7%. That's our guidance now. CapEx is about EUR 15 million and the company funded R&D expenses of about 6% of revenues. For the new guys of you here in the call, I would like to mention that Frequentis has a very conservative bookkeeping rule. So we do not capitalize any R&D. You won't find capitalized R&D in our balance sheet. So we expense all our R&D expenses, which is around EUR 30 million annually.

Yes, that was my presentation, and I would like to open up now for question and answers.

Yes. Thank you very much for the presentation and the insights. [Operator Instructions] We have Mr. Specht.

Okay. So 2 ones to start from my end. First, the situation in MENA, you told us that you have to bring home a part of your -- or large part of your workforce in the region. Has this picture changed? So have you been able to return some workforce? Or is it still more or less a no-go to go to the Gulf region? And then on the RFP pipeline, it would be interesting if there has been any, let's say, changes over the last week. So do you believe that the pipeline has become stronger, softer? Or is it largely unchanged from, let's say, the situation in the first quarter?

Yes. Thank you for the question. So first of all, after the start of the war in Iran, we immediately created a crisis team, which was in alignment with our foreign ministry. We have flown out all our people or brought them in secure -- to secure places in Oman. So there was no casualty on Frequentis employees side. We are very grateful that, that happened in that way. It's still problematic. We -- I mean our people who are living in the Middle East, they stayed because their kids go to school, their wives or their husbands have to work. So they stayed. It's not that we have to bring out everybody, but we had to bring out the people who are usually not living in that area.

The situation is still challenging, although the flights are partially again available. And what we have agreed with the workers' council and the people is that on a voluntary basis, people can fly to the Middle East, but we cannot force them to fly there. Is that an impact to our project performance or to our sales performance? I would say currently not because the salespeople are usually living in the region, so they stayed and they are still active.

From a project perspective, we have currently a phase in the projects where we can do work from home that reminds us a little bit of corona 4, 5 years ago, where we did the same. So we have conversations with our customers by video that works well. If that continues for a couple of months, then I have to say we have to reevaluate the situation. But currently, we don't see any negative impact.

When it comes to the RFP pipeline question, nothing has changed, Mr. Specht. Everything is the same. We are very -- we started very strong into 2026. As I said, Asia has moved some decisions from '25 to '26, but they have already been taken these decisions, and we are grateful that Frequentis was selected as a provider for these type of opportunities. We will -- as we do disclose half year figures and full year figures, we will disclose details after the half year report. But overall, we see a strong pipeline for that. It is unchanged to a couple of weeks ago.

And we received a question via the Q&A chat box from Mr. [ Udaya ]. Apologies, my microphone is out. I have 2 questions. I'll read it out for you.

Orders on hand this year grew slower than the CAGR of the last 5 years. Why is this? And what growth should we expect going forward? And the second question is, can you roughly quantify the size of your order book that includes both contracted orders and expected orders already allocated in customer budgets?

Yes. Thanks, [indiscernible] for the question. So first of all, the CAGR comparison is okay, but you have to look into the characteristic of the projects we have won. As I said, APC was a large part in '25 of our project order intake and revenues, and that was a pure hardware play. So APC is that we produce in Texas, U.S.A., we produce 15,000 boxes, which we deliver to the FAA and invoice them. Therefore, also our revenues jumped by more than 20%.

And that's not a typical contract we have where we deliver a project over 4, 5, 6 years where the orders on hand value would be much higher than what we can execute during the year. That was the effect of APC. When we roughly quantify the size of the order book, including the available budgets, it's really hard to say, but what we have identified as a multiplier is that we think it's around double. So when we have EUR 790 million orders on hand, the available budget usually is around EUR 1.6 billion.

One is again in our chat box, and I'll read this out. It's from Mr. [ Krueger ]. You referred to supply chain issues, especially semiconductors. How do you plan to manage this? And how do you expect this to impact your working capital?

I think, Krueger, you have given the answer already to your question as we have decided to buy on stock. So we have pulled out a big order for HP and Dell for servers. We have put them on stock. So it will, of course, increase the working capital for now. But we think over until the end of the year, we hopefully have that executed in programs already and in invoices to the customer. But yes, we, of course, have to stock up our server base as we have to be committed to the delivery dates we have contracted.

[Operator Instructions] Well, yes, there is [indiscernible]. By now, we can't hear you, Ms. [ Suzie ]. So let's try to hear you. Well, unfortunately, that is not the case. Now you're muted again.

[Operator Instructions] Unfortunately, we cannot hear you, Ms. [ Suzie ]. And there are no more raised hands.

Can you hear me now?

Yes. Now we can hear you.

Sorry for the technical difficulties. I was just wondering about how I should think about potential orders for the remote digital towers in the event that you do get FAA approval. Should I be thinking more from an international orders or ex-U.S. basis? Or should I be thinking about the U.S. as the next big driver for the RDTs?

Yes. What we expect, [ Suzie ], is that the FAA from a sale point of view will start ordering remote towers for specific airports they have already identified. So the new Transport Minister, Buttigieg is very keen in digitalizing the FAA and the remote digital tower, of course, is a perfect element of the strategy of the FAA. Therefore, we think it's a question of the rollout capacity the FAA has, but we expect the first orders from the FAA for civil airports.

As soon as the approval is in, we also expect that the DOD will start budgeting for remote digital towers of domestic United States because for remote digital towers outside of the U.S. National Airspace, they do not need FAA approval. It's only required for air traffic within the U.S. So we expect then '27 and '28 that the military is coming into play. And we have already deployed for the U.S. Marines and U.S. Air Force remote digital towers, but the locations are not disclosed that it was a classified program.

And there is one more question in our chat box, Mr. [ Wagner ]. Are you involved in refund of customs?

[ Wagner ], no, we do not really pay that much customs because the point is that we have regionalized and localized our workforce in the U.S. already a couple of years ago. So we have been growing now to up to 250 people on site near Washington, D.C., Maryland, Colombia. So there is not much customs or taxes or tariffs on our portfolio element as the U.S. does 80% of the work themselves. The only risk we see is that if the tariff situation is coming back, that there could be tariffs on software licenses, but that would also end up in a back-to-back tariff on software licenses. And I'm not sure if Microsoft and Oracle would appreciate that.

Okay. Well, yes, Mr. [ Treisch ], you should be able to speak now.

Yes. Can you hear me?

Yes.

Okay. Let's say, on the pipeline or ordering process, it would be interesting. Are there some, let's say, project types where you have a long lead time that you can, let's say, with your current workforce only work gradually on that could force some customers to start fearing to be left behind and let's say, a kind of panic ordering starts in a certain area because otherwise, the customers would be forced not to be delivered before, let's say, 2, 3 years' time. Are there any areas you can think of?

To be honest, not [indiscernible] because the point is that our customers are governments and governments have to follow public procurement laws. And if there are delays in the program, first of all, usually, they are planned already because when you have a large program and a rollout program, you usually have in the beginning, 1 to 2 years to create the master before you go into rollout. Therefore, the investment usually come the first 1, 2 years and then you come into a profitable rollout phase. Usually, that's already planned.

But if there are delays, it's always a question who is responsible for the delay? Is it the customer? Or is it the vendor? Usually, it's a mix of both. But it's not easy for governmental customers to do an ad hoc purchasing. They have to tender it again. So they lose too much time and they usually focus on improving the time line together with the vendor in reducing scope or putting more money on the table to increase workforces. So I've never experienced in my business life that the customer has in parallel done an ad hoc procurement for that type of solutions.

And we are getting back to Mr. [ Krueger ] with another question. How are your margin expansion efforts in the air traffic management space progressing?

I think we are in a good way. I think we know where we have to improve. As I said, we spent around EUR 30 million from our EBIT into R&D in changing our portfolio from hardware-centric solutions to software-centric solutions. We started that a couple of years ago in public safety. And since then, we have introduced a software-centric business model and the EBIT margin is double digit since then.

A couple of years ago, we started in ATM. So we spent most of the EUR 30 million is spent in ATM to replace our old hardware-centric business solutions with cloud-ready software solutions. That costs money. That's harming the EBIT line. But the more projects we get in where we can deliver and get refunding for that R&D, the better the margin will be. So we expect a better margin in ATM 2026 compared to 2025.

Thank you very much. And we are waiting for some questions or people raising their hands. That's not the case by now. And there are no open questions in our chat box. So with having said this, we come to the end of today's call. Thank you very much. And to all the participants, if there are any questions in the -- after this call, please contact Stefan Marin, Investor Relations. And that's for -- that's everything for all. And I get back to Mr. Haslacher for some closing words and this call afterwards. Thank you very much.

Yes. Thanks for your interest and participation. As I said, we are very proud of our 2025 results, and we are really energized about the outcome in 2026. So we are running on full speed. We have hired 200 additional people last year, 80 of them in Europe and the rest in the U.S. and in other countries. So we are on the growth trajectory, and our ambition is to continue that also in 2026. Thank you for your interest.

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the Frequentis AG following the publication of the financial year figures of 2025. I'm delighted to welcome the Management Board of Frequentis with CEO, Norbert Haslacher, CFO, Peter Skerlan; and CTO, Karl Wannenmacher; as well as Stefan Marin as Head of Investor Relations. So the gentlemen will guide us through the presentation and the results shortly. Afterwards, we will move over to a Q&A session in which we will be happy to take your questions. And having said this, I hand over to you, Mr. Haslacher.

Yes. Thank you, and also welcome to this conference call. Before we start our presentation on behalf of the Executive Board, I would like to say a big thank you to all 2,600 employees around the globe for their very strong dedication and team spirit and achievements in 2025. This gives us every reason to look back with joy and pride. And the culture of appreciation and personal development is of central importance to us. It creates the conditions for us to grow sustainably and also remain successful from a long-term perspective.

So I would like to start the presentation with Slide #2, the highlights of 2025. We are again able to report a double-digit increase in order intake, orders on hand and revenues. So the order intake rose by almost EUR 100 million to EUR 680 million. The orders on hand are now close to EUR 800 million, EUR 795 million to be exact, and revenues grew by 21% in other words, EUR 100 million to EUR 580 million. EBIT climbed to EUR 47 million, resulting in an EBIT margin of 8.1%, but please note that the EBIT margin includes a positive effect from an EUR 8 million claim settlement, and without this, the EBIT margin would have been 6.7%. At the end of December ' 25, we had a net cash position of EUR 105 million, including EUR 87 million from advanced payments from customers.

On the order intake highlights, when we look back, we had really great highlights to report last year. So additional orders in the U.S. contributed to the high revenue growth in the Americas region that we will show you later. The rollout of the air-to-ground protocol converter system in the United States is on track. And in addition, first orders for a modernized voice communication system were generated.

The countrywide drone traffic management system ordered by Sweden shows that we have the right applications and solutions to participate in this growing drone market, even if it is only a small order. The multi-domain communication systems for the Australian Defense Forces, next-generation AIR6500 Joint Air Battle Management System are the type of order that moves us forward, especially in terms of both our product portfolio and our knowledge base.

Following completion of an order from the U.S. Defense Department, there is now a digital air traffic control system in place at the U.S. Army Garrison in Germany. And another drone management system this time for testing the integration of drones into military airspace for the German Army.

In public safety, we won sizable contracts from the German Federal State of Thuringia. Here, Frequentis is the general contractor. Multimedia functionality, in other words, managing multiple types of inquiries via phone, radio, video or digital channels is an important element in the LifeX rollout for all fire emergency call centers in Norway.

Slide 4 shows that the order intake grew again this time by 17% to a new record of EUR 680 million. Both segments contributed to that success. And Air Traffic Management posted a rise of 11.8% and, Public Safety and Transport, a rise of 26.6%. So the order intake shows confirmed orders only, as you know, not the budgeted value of the contract.

Looking back the past 4 years, we averaged an increase of 20% per year. And looking forward, we have a well-filled order pipeline and also very good opportunities for 2026 and beyond. The orders on hand increased by 9.8% to EUR 795 million compared with December 2024. And the composition of order intake on orders on hand is quite similar, roughly 2/3 for air traffic management and 1/3 for public safety and transport. We now go more into details about financials, and I would like to hand over to Peter Skerlan, our CFO.

Thank you, Norbert. Hello, here's Peter. Now to Slide #5. The revenues rose 20.8% to a new record of EUR 580 million in 2025, and the book-to-bill ratio was 1.17 underlining our growth. Both segments contributed to the growth. ATM grew by 18.5%, while Public Safety and Transport grew by 26.4%. In the past 4 years, we have managed to increase revenues by 15% per year. And this increase fills the need for additional employees. On average, 8% during past 4 years, bringing our headcount to about 2,600.

We are able to find enough qualified employees around the world to handle this growth as we are an attractive employer in some industries, notably the automotive industry are having to downsize their workforce. The revenue split by segment was almost the same, 60.9% ATM and 31% PST.

I'm now on Slide 6. Revenues grew in all regions, except for Asia. We saw postponements of tenders for projects and therefore, revenue in Asia. Some of these projects were awarded to us in first quarter 2026. Europe is still our biggest market. We are happy with the new growth in North and South America. The second highest relative growth rate was in Europe with [indiscernible] The growth rate in the Americas region gives this region a 27% share of total revenues compared with 18% in 2024, while Europe's share fell slightly to under 60%, but we are totally happy with the increase of EUR 40 million.

Slide #7 shows the figures for revenues, EBITDA and EBIT for the past 4 years. The EBIT margin increased to 8.1%. And without the positive effect from the EUR 8 million claim settlement Norbert mentioned before, the EBIT margin would have been 6.7%. The settlement occurred in the Public Safety and Transport segment. Even without the settlement in the EBIT margin in PST, PST is above 10%. The slight decline in the EBIT margin at ATM was due to R&D costs and to setup costs for larger projects. As a reminder, we don't capitalize research and development costs. They are recognized in the profit and loss statement.

Now let us return to the numbers for the group in 2025. The impact on EBIT mainly came from the cost of materials and purchased services, which rose by 38%, outpacing revenue growth of 21%. This was largely attributable to a more material-intensive project in the Americas region. By contrast, personnel expenses increased only by 12%, a relatively lower increase than the rise in revenues. For the comments on our strategy and outlook, I would like to hand you back to Norbert.

Thanks, Peter. So let's go on Slide #8. It shows the strategy of becoming #1 in control center solutions. So on the right-hand side, you can see that our current product portfolio can address a market of around EUR 3.8 billion. According to our research, the global market for control center solutions, including equipment, is around EUR 14 billion a year. So our strategy is based on 3 main aspects: R&D, new deployment models and M&A to make more and more out of the EUR 14 billion addressable for Frequentis.

So R&D results in new solutions and products that cater for the changing technology and user landscape our customers face. So for example, critical communications such as mission-critical services known as MCX, drone management, that is the integration of and defense against drones and the future communications and tower infrastructure that can run in virtual and cloud environments. Systems also supported by artificial intelligence.

A word about R&D. So expenses for internally funded R&D amounted to EUR 19.2 million in 2025. It should be noted that the proportion of funding provided by customers was higher in 2025 than in previous years. Expenses for internally funded R&D are expected to amount to a normal level of around 6% of revenues in 2026.

When you look to the next box on the left, new deployment models, so like cloud solutions and Software-as-a-Service meet changing customer demands and are part of our strategy package. Nevertheless, we have to say that our customers are governmental entities usually having funding available for CapEx expenditures. Nevertheless, we think that over the time, maybe a more OpEx-based model could be of interest for our customers.

Our decision to acquire companies and interests in businesses that enhance our product portfolio has proven right. So take the emergency services program in the U.K., the contribution made by our colleagues at Nemergent, where we acquired a stake in 2020 has been vital in enabling us to partner with IBM. So the proactive search for interesting M&A opportunities remains part of our strategy.

When making acquisitions, we focus on parameters such as expansion of the product portfolio, a profitable business model, culture fit and the acquisition price, of course. So we will continue to look at which technologies and products we develop ourselves and which we buy in.

In an increasingly unstable world, systems that function reliably even in challenging conditions are becoming ever more important. So Frequentis is a global leader in this field. We are not passengers. Our place is in the cockpit. So our course is very clear, open standards and true interoperability so that emergency services can work together across systems and borders. And there are currently 3 major focus areas with potential for growth in addition to our current business, which is mission-critical services or called MCX, drones and remote digital tower. And I would like to go a little bit more detail into the area of MCX.

So let us start with MCX, which represents a quantum leap for security critical communications used by emergency services, such as the police, fire brigades, ambulance services, but also railways and other customers. Technologies you are probably familiar with, such as TETRA or GSM-R in the rail industry do not longer meet current requirements and become obsolete. So MCX operates on existing 5G-based networks, enabling the real-time transmission of voice, mass data and video across national and organizational boundaries using a single standard.

Frequentis is already involved in large-scale implementations such as the MCX rollout in the U.K. for around 300,000 emergency service personnel. On Slide #10, the growing volume of drone traffic is also changing airspace, and are placing new demands on safety and on coordination. And it is estimated that the drone ecosystem in Europe only will be worth more than EUR 10 billion by 2030.

For civil and military aviation customers, emergency services and railways, we develop and supply solutions for the safe monitoring and management of drones, combining traditional radar systems with intelligent sensor and detection technologies. And by integrating safety critical data and linking drone traffic management, air traffic control and operations management systems, Frequentis is strengthening its position in the management of lower airspace and the protection of critical infrastructure.

I think you're aware also of our remote digital tower. So our remote digital tower enables airports to remotely monitor takeoffs, landings and aircraft movements using cameras and sensors for both civil and military users. So airport operators benefit from the centralized management of multiple airports and from the relief this provides in the event of staff shortages among air traffic controllers in remote areas.

This technology has already been in use for several years in Germany, England and in Brazil, and we see good growth prospects for Frequentis because there are only a few other companies that offer remote digital towers. And our target regions for remote digital towers are Europe, the United States of America, Asia and Australia. So our local subsidiaries in these regions are staffed to manage tenders and the rollout of remote towers.

Regarding the United States, our remote digital tower system is the only one currently being tested for U.S.-wide certification at the tech center of the U.S. Federal Aviation Administration. And we still expect to obtain this certification in Q2 '26. Nothing has changed there. Given our annual volume of over 1,000 projects, questions about our capacity to handle multiple requests at the same time are common.

So in practice, however, demand is well distributed, customers initiate tenders when their current solutions reach the end of their service life, and these time lines vary across customers. As a result, there is no simultaneous surge in demand for individual products such as remote digital towers.

So let me conclude with the outlook for 2026 on Slide #12. Based on orders on hand of EUR 795 million, we are working at a good level of capacity utilization. We aim to increase order intake further and the sales pipeline for '26 and beyond remains well filled. Revenues are set to increase by about 10%. And the word on profitability. inflation and now above all, shortages, long delivery times and limited commitments from the suppliers on the IT hardware market will weigh on EBIT in 2026.

Temporary shifts in milestones, revenues and potential start-up costs at the beginning of projects are common challenges for a project-driven companies like us. Overall, we expect an EBIT margin of about 7% in '26, which is above the 6.7% margin we achieved in '25, if we exclude the claim settlement of about EUR 8 million.

Capital expenditure mainly for notebooks, office equipment and production machinery will be around EUR 15 million and company funded that is self-financed R&D expenses will amount, as mentioned already, to around 6% of revenues in 2026. So to sum up, we are proud of what we have achieved as a team in '25, and we are really energized for another year of growth 2026. We are now ready for your questions.

Thank you so much for the presentation. So ladies and gentlemen, we are now happy to take your questions if you may have. [Operator Instructions] So we move on with Elias New. So, Elias, you should be able to unmute yourself. He is from the phone.

I hope you can hear me well. I have 2 questions. I'd like to take them one at a time. So firstly, starting with the '26 revenue outlook. You specified your target for around 10% of growth. So could you perhaps just give us some additional color on the underlying assumptions here and why we shouldn't expect a similar growth rate as we saw in 2025? And perhaps if you could also just shed some light on why 2025 was so strong in terms of revenues, that would be great.

Yes. Maybe I will anwer your question about the '26 outlook, and Peter will then give you a feedback around the 2025 revenue explosion. So '26, we have a very conservative view on '26 as we see a lot of tensions currently coming up in the Middle East or already ongoing in the Middle East. And also on the delivery time of hardware, especially standard IT hardware equipment, we currently do not get any commitments on prices, neither on delivery time from HP and Dell. That's why we fear that maybe our execution path in transferring orders into revenues will probably be challenged by the delivery time of IT standard equipment.

Karl can maybe give you a little bit more insight about the problems we have there due to the AI boom, artificial intelligence boom. So in orders, we see very good IDIQ contracts in the U.S. Nevertheless, I think the U.S. is currently not the most stable country in the world when it comes to decisions. Therefore, we are more on the conservative side.

We are -- have a good run on our IDIQ program execution, and we get orders in from the U.S. continuously. Nevertheless, we have midterm elections in -- very soon. And the question is what's the outcome there? And is that influencing the continuation of our programs, which have been set up during the new administrative time of the U.S. administration. That's why we are a little bit conservative about 2026. When it comes to revenue jump in '25, Peter, do you want to add something?

Yes. Thank you for the question. So as I tried to show it on my Slide #6, you can see that a large portion of the revenue increase comes from the Americas as well as a substantial increase from Europe, which could more than compensate the decrease in Asia. So I think revenue comes from our projects from larger and midsized programs where we have the possibility to do a little bit more in the Americas.

And Karl, maybe you can say something about our current challenges on the standard IT hardware equipment side?

Yes. So the challenge here is that the big memory manufacturers are currently focusing very much on providing high-bandwidth memory chips where they can make higher margins and sell them to the big AI data center providers. And this leads to a sharp increase in prices for the traditional random access memory chips that are used in our COTS IT hardware servers. So we see sharp increase in prices of our standard manufacturers, and we decided to buy on stock those servers so that we are able to fulfill our contract obligations. But this will remain a challenge throughout the entire year and probably also into 2027.

And understand it's not only a price increase, it's also a delivery time increase.

Right.

Daniel, did we answer your questions? Okay.

Yes, that's very helpful. And second question would be on the margin outlook. And I guess what you mentioned in terms of memory pricing sort of feed into that. But I was just sort of wondering around the sort of moving parts within the 7% guidance for next year. So if we look at the clean EBIT margin for this year of around 6.7%. I was just wondering where this progression comes from? Is it sort of more the ATM segment with software transition or higher defense share? I was just sort of wondering how you think about that?

May I ask you mean the increase from the 6.7% to around 7%, that's the equation. Where does that come from? Is it right?

Yes, exactly. Just -- exactly, just, I guess, tied into that, the underlying margin dynamics by segment, ATM versus PST. Just sort of how we should think about that trajectory as well in terms of not just '26 margins, but in terms of your midterm targets of 10%?

Shall come from the ATM section.

Yes, ATM and PST, the margin dynamics. I guess most of the uplift...

Yes, uplift will shall come from ATM. I think we are quite satisfied with the PST margin.

Okay. So that entire uplift also towards the 7% will come from ATM and the software rollout? Or what are the dynamics there? Because you also mentioned higher R&D costs for '25. So just wondering if you can shed some light on that. And should we then expect a kind of linear improvement each year as the software rollout gains traction in '27 and beyond?

Yes, yes. When you look upon the history, then you see that in the past, we had also the possibility to maybe a little bit more margin in ATM and due to starting costs from programs, that's the reason why our new products, that's the reason why the margin decline. We want to gain -- come back to better margins and improve them as well as when the transition to the new products is then fulfilled, which shall be done within the next 2, 3 years, the transition shall be done then to more software-based business.

Okay. Great. That's very clear. And just on the PST margin as well in terms of '25, I mean, even if we strip out the one-off gain, it looks like it's quite a step-up as well compared to the '24 margin. Just wondering if there's anything to mention there? Or is it just a product specific -- sorry, project specific, and that's the main driver.

Yes. Of course, it's fluctuating from 1 year to the next year, but I think we have reached here a quite acceptable level.

And then we will move on with the next one. So this would be Daniel Lion. You should be able to unmute yourself and ask your questions, Daniel.

I would like to follow up a little bit on the margin discussion. Can you confirm that you see basically everything on track towards your midterm margin target level of around 10% by the end of the decade. Is this still valid?

Here's Peter again. There are a lot of dependencies here, but still, we try to follow this plan.

What do you see as a major risk in meeting this midterm projection?

We -- I think on the last slide, Norbert mentioned some major threats for our profitability. So with good a phase without a crisis, a worldwide crisis would be quite nice for the margin. I think that if you make a business worldwide, you have probably all the problems worldwide. Next thing is to succeed in finishing the transition and finishing our new products, especially in the ATM business.

The next thing is that larger projects, when we fulfill the larger projects that there are no postponements, but also the customer is able to finish his tasks so that we can deliver in time. And these are the main things. And I think all the risks -- the other risks, I think we have declared them in our financial statements over several pages, political risks and inflation. Inflation in Europe is a tough thing for us. As you know, we had inflation rates of 7%, 8%, 9% here in Austria as well as in the other subsidiaries countries, Slovakia and Romania. That's tough for us in comparison to the international competition. These are the things that could hurt us in the future.

Okay. Understood. Then one more on the claim settlement. You mentioned the EUR 8.5 million one-off. Could you provide some more insight on this settlement just to get a feeling of to what extent we should really treat this as one-off?

Yes. It would be nice to have this each year, to be honest, yes. So that would be really nice. But it's a situation that I don't want to have each year. It's a large program where the customer decided to stop it because they...

Prime...

The prime contractor did not perform and the customer decided to stop the program. Frequentis performed, but we had a contract that more or less if the prime does not perform, we have a problem. And so we had to fight that, and it took several years to fight it through. So we have done all our work, but we were not paid by the prime contractor. And that's the reason of this marvelous effect in 2025 because all the costs were in past periods, but we had no possibility to capitalize it or do something with it because we had this fight. And the question was, will we win or will it last for years? Because, as you know, some court decisions take a lot of years.

Okay. I understand. And then maybe a last one. Working capital sales, it's flattish for the first time since years on a year-on-year basis. Do you see this level now as sustainable going forward, especially now reflecting on the shortages that we see on the memory side, but there might be other shortages coming up as well? Or should we prepare for this ratio maybe to even increase higher?

Thanks for the question. It's a very good question. So we have to make decisions each day. So shall we put something on stock so that we are able to deliver or shall we risk that we cannot deliver? And shall we take the contract because the payment milestones are ugly, but it's a tender, and we have no possibility to improve the payment milestones. So we will receive the payment at the end of the contract. So it's decisions that we have to do each day. But our overall target, especially my target is to keep it stable and even to improve it because we had lower rates in the past. And due to the growth of the company, we have to keep the working capital under control. Otherwise, it will cost a lot of funds to prefinance the working capital.

So and then we move on with the question from Mr. Becker. So Mr. Becker posed this question in the chat, and he would like to know, given the continued search for acquisition targets, have potential targets already been identified in 2026 and beyond?

Yes. So I will take that question. We are now a stock-listed company since May 2019. So that's around 7 years. And within these 7 years, we have acquired 10 companies and I think have learned what it means to acquire a company and then to focus on a post-merger integration phase. We are in some larger acquisition areas still working on that post-merger integration, which is, of course, a good learning for us. So yes, we are hungry to and keen to do further acquisitions.

Are there targets out we are interested in? Yes, there are. So we have around 30 to 35 pieces a year where we -- not in all of them, we go into details, but in some of them, we are interested to learn more about their business model, about their profitability level, about their pricing level, about their culture and so on. So yes, M&A stays a major cornerstone of our strategy. Will we acquire something in '26? I cannot tell you now. But M&A is one of our prime activities when it comes to growth of the Frequentis Group.

All right. Thank you so much. And then we move on with the questions from Mr. Zuzak. So Mr. Zuzak, we are happy to take your questions.

Can you hear me?

Yes, Miro, we can hear you.

I have a couple of them. And if it's okay for you, I take them one by one.

Okay.

The first one is for Peter. The EUR 8 million settlement one-off payment, in which P&L line was it booked?

Revenues.

In the revenues, okay.

Yes, we had the possibility to bill, that is one sum. And part of it was then already paid 2025 and the other half then in 2026, but it's in revenues. So you can deduct it if you want to know it without this onetime effect, you can deduct the amount from revenues and then it's also deducted from the EBIT.

Okay. Very clear. Thank you. And it's in PST, as you said. Okay.

Yes.

The next question, I've seen that you released quite a large amount of provisions in H2 -- sorry, you didn't release, you built provisions, BUR 17 million in bonuses. Congratulations, gentlemen. And -- but the question is, are these EUR 17 million of bonus provision already included in the personnel cost in H2, the EUR 148 million. It's also a question for Peter probably.

Yes, yes.

They are already in there.

Yes.

So then I have a question because if I deduct EUR 17 million from EUR 148 million, which is the H2 personnel cost, then I get like EUR 131 million of pre-bonus personnel cost, which is in line with the number you had in 2024 already, roughly EUR 130 million per semester. And now the question is, why was H1 already basically at EUR 144 million, which is quite high. So despite the EUR 17 million personnel cost bonus provision booked in EUR 148 million, we have EUR 144 million for H2.

Yes. I'm not sure if I understood your question, but what we have to do is we -- for the half year -- for the first half year, to do also a provision for bonus if we think that by the end of the year, we -- the people will meet the targets. And if you have a good idea how to convince our auditors that I don't have to book these provisions when the half year result shows a very low result then I would appreciate that. But the opinion is here since years, if we think by the half year that we will achieve the target, I have to make a provision of half of the bonus. The question is if the result is then better, the provision at the end of the year has to be then a little bit more here. But I'm willing to pay more bonus if the results are better.

Yes. Okay. Very clear. So you already booked some of the provisions in H1...

Unfortunately, I have to. Yes, it's...

No, it's fine.

Yes.

Next question. What are your hiring needs in the next 2 years without acquisitions. So if you just want to grow the 10% around, which is, in fact, more because you had the CHF 8 million one-off, right? So it's maybe 11% or 12%. Do you also need to scale employees and by what extent?

I had a slight noise. So did you ask for how many people do we plan to hire in the future? Was that the question?

Yes.

Okay. Okay. There is a special effect. When you look upon the ratio, personnel cost, in relation to turnover, you see that personnel -- you will see that personnel cost is declining from where we were almost up to 54% of revenues was personnel cost, and now it declined to 50-something percent. The decrease was because we have a little bit more material and more procured services.

And I think if we need more people and how many of new employees we need depends on the structure of the tenders that we win. I don't want to sell IT hardware. I'm not interested in selling IT hardware. But if the customer tenders these things, we have to offer it to procure it. And then a portion of the turnover is created by delivering this IT hardware. So we will see more material costs.

What will I expect in the future? I would expect in the future that probably we really transform them in a software company by not having -- not being forced by the customer to deliver hardware. So that means that we provide more labor to the customer, more software. That means the relation, personnel cost to turnover will increase in the future.

So you can't give a number, like 200, you know, it was always like 200, plus couple of hundred...

If you want to have a percentage because when you think that will be the turnover, then from the 50%, we probably will go back to 52%, 53% of revenues.

Okay.

Yes, I think it's probably better than people because people -- the question is where do we hire the people and how much payroll do you then calculate. So if you take this ratio, it's probably easier for you.

Okay. Next question is basically related to what you just said. So I mean, you've seen very low personnel cost in percentage of sales. You also have seen quite a low gross profit or high cost of material related to sale, which led to a lower gross profit margin, especially in H2, but also for the full year. And we also see a lower EBIT margin in ATM. Can you explain better how much of this low-margin hardware straight-through selling was included in your top line. There must certainly be such an element in your P&L from the numbers I see.

That's hard to say because a project has hardware in it or not. So I think in this case, I can't give you a figure that could be useful for you. And as I mentioned, concerning the material costs, we hope that in the future, that's declining because especially on IT hardware, the margin is lower.

Okay. And a different question regarding margin in ATM. I think the ambition in the beginning was to have clearly an increasing margin there right now it was a decline in ATM. And I guess this is related to a specific like project from the U.S. That's my guess. I mean you don't have to comment on that. But will these profits, have they disappeared? Or have they just been moved into 2026?

A very good question. Unfortunately, a large portion of it was used up in 2025. And to regain it in the future depends then on change requests, if we can sell additional stuff with probably additional things with probably higher margin. So as I mentioned before, the increase for 2026 that we have shown already when we went a talk in -- was it in January or February?

February.

In February, when we went in talk in February, will mainly come from ATM.

I'm not sure, but did you -- when you answered, did you talk about cash.

See...

The cash flow, the usage of the prepayments? Or were you...

Not margin, EBIT margin.

Margin.

I'm talking about EBIT margin because what we elaborated, I don't know, 10 minutes before was the increase from the 6.7% margin when we take off this onetime effect to around 7% EBIT...

Can you better explain, because I was expecting positive operating leverage in the ATM division also given the fact that, it can -- you know with the not capitalized R&D cost should increase to an increase in the margin in the ATM division. I expected that the ATM division would actually increase the margin year-over-year. Now it was lower. Can you better explain what was happening there? And how this is going to develop into 2026? Do we have to expect that with continued growth in the ATM division that the margin is going to go down again? Or how does that work? Maybe you can explain better what's happening there in this division? Was there like a problem -- a specific problem happening something, which you didn't expect or so, or...

As I mentioned before, it's the transition takes further 2 to probably 3 years to transition to these new products. That's the point.

And during this transition, the margin will...

Yes.

Decline or just...

No. As I mentioned, overall in ATM, we think the improvement for 2026 from 6% to 7%, to 7%, to around 7% will come from ATM. So other words -- in other words, a slightly recovery shall be seen in 2026.

Okay. And then a last question, then I go back into the line. Actually, 2 last questions, sorry. One is the minorities went up significantly to EUR 5.3 million from EUR 1.5 million, which was EUR 1.6 million the year before. So it was clearly much higher probably team communication or so ELARA. I don't know, maybe you can explain what that is and in which -- maybe also in which segment these profits were booked?

Yes. The thing is if you don't own 100% of a company, there is another owner. And if the other owner has half of the company, half of the profit is then.

Yes.

The profit of the other owner. And in this special year, we had the nice possibility to gain profits in these companies where we had not 100%. So that's the...

No, that was my -- I know what minorities are. So was it communication technology or was it ELARA or...

ELARA.

ELARA. And is this in ATM or in Public Safety?

Public Safety and Transport.

That's there in there. And this is a 50%, 45%...

Mainly from this company. But I have to say that also team -- with team, we are doing quite good business. So overall, we are happy if all these companies doing good business because even when the other half belongs to another person, half of it belongs to Frequentis.

Okay. So the entire increase in Public Safety and Transport, if you adjust for the EUR 8 million, it went from EUR 14 million to EUR 19 million. The entire increase was basically coming from ELARA, I can infer from the increase of the minorities. There was no underlying increase from other than ELARA companies, quite the opposite?

Yes, you're right. And...

And ELARA is -- is there a one-off element or ELARA is also...

You are in a good track. Congratulations. You are in a very good track and you combine it quite well. Yes, you're right. The one-off -- the onetime effect happens there -- happened there.

The EUR 8 million was in ELARA.

Yes.

Because -- very clear. No, that's much better. Thanks a lot.

That's better, yes. It is as it is. Yes, you...

No, no, it's fine. Thank you for the transparency.

Congratulations to your combination. Mr. Sherlock Marlowe, yes...

And then the last one, sorry, would be on the EUR 80 million prepayment from the FAA. I wonder why your net working capital change was still negative in 2025. Is it already used up entirely the EUR 80 million of the prepayment of the AE -- of the FAA?

I think now I've missed the point. May I ask you to repeat it once more? I think I've missed the point.

I think there was a large prepayment of around EUR 80 million coming from the FAA in the beginning of the year. And despite this large prepayment, the change in net working capital was negative in some?

EUR 80 million, I don't know where the EUR 80 million comes from.

It's from my note, from my notes, I'm not sure where they're coming from actually, but I have it in the notes. I hope they're not wrong.

I don't know that EUR 80 million. I had appreciated this sum. It wasn't -- I think probably we expected something like that 1 year ago. That's possible because sometimes customer promise a lot and then the question is how much do they keep. I think there were enormous sums in discussions. But then when it comes to the contract and to the real payment, sometimes numbers are smaller. But the prepayment was then used to procure materials. And what you see is in working capital -- in the working capital, you will see a little bit still concerning that you still increase of materials because the materials were procured were on stock. So you see a large increase in the inventories. You see also an increase of our trade receivables and also the trade advances. In total, FAA has an effect of the working capital of EUR 20 million. Yes.

Okay. Cool. Thanks a lot.

But it affected every position in the working capital, but overall, EUR 20 million.

Thanks a lot and I'm stepping back into the line. Congratulations.

Thanks Miro.

Thank you for your questions. So before I hand back to Elias for his follow-up questions, ladies and gentleman, it's still possible to ask questions if you may have. [Operator Instructions] So Elias, the stage is yours again.

A couple of follow-up questions from my side. So firstly, on your defense business, I was wondering if you could comment on the defense revenue share for 2025 and also what the current backlog share of the defense business is? And perhaps also your expectations for 2026 and beyond, when do you expect orders to pick up more meaningfully? And also in terms of profitability, where do margins currently sit and what you sort of see going forward?

Okay. I mean for defense revenue share in 2025, we have been around 18%, the reason for that is that we had a very strong growing Public Safety and Transport business. In absolute numbers, defense was growing. The order backlog is pretty good for defense. So we expect a higher order intake value '26 compared to '25 when hopefully soon the NATO spending starts in Europe out of this special funding mechanisms in Germany and other NATO countries.

We expect that '26, '27, '28, we will see much more tenders following the procurement of fighter aircraft, tanks and other hardware equipment. Margin profile, I think we have reported that last year as well. It's the same this year. Margin profile in defense is much better than the margin profile in Civil. And to be honest, in some projects, it's not easy to distinguish between civil and defense as it is a joint infrastructure like in Brazil, where the network is managed by military organization, but is also used by civil aerospace users.

Okay. Great. So margins still sits somewhere around 10% or slightly double-digit...

Yes.

Profile...

Yes.

Okay. Great. And in terms of the drone business, I know you mentioned that in your presentation anyway, but could you just shed some light on expectations there in terms of revenue growth contribution going forward and also current revenue share margins? Anything you could share here would be very helpful as well.

Yes. We don't have these figures as we have incorporated drones, MCX, Recording and our C2 development agency into one organizational unit called Acceleration Hub. There, we share resources and the purpose of that company is to have a much bigger and faster scale than in our standard business model. That's why we have combined them. Overall, we do around EUR 25 million to EUR 30 million order intake already in -- coming out of that Acceleration Hub.

What I can report concerning the drones is that we see currently more activity in the defense space as we have published the research program for one military airport in Germany, where we test the friend foe distinguish based on our technology and based on sensors being available there and effectors being available there. So we are the data collector and data processor in the back, collecting sensor data, processing the data together with the ANSP and then come to decision if it's a friend or a foe. And if it's a foe, we give data to the effectors. That's our positioning.

In the civil area, yes, we have one, Sweden, but to be honest, it's a very, very slow developing market in Europe as the regulation is still missing who is responsible for the lower airspace. I think the regulators and the European Commission would love to have competition to the ANSPs Therefore, they hoped that somebody will stand up and say, I will be an ANSP for the lower airspace managing drone traffic. Unfortunately, that didn't happen because nobody was willing to invest millions of dollars into infrastructure to manage maybe upcoming drone traffic. Therefore, we hope that within the next, hopefully, 24 months, European Commission will come to a conclusion that the only way out here is to give the ANSP responsibility for also managing the lower airspace and therefore, the drone traffic.

That's helpful. And final question on R&D. I mean, you're guiding for around 6% of revenues for 2026. Is that a sort of reasonable run rate to assume for the outer years beyond '26 as well?

Call is yours.

Yes. No, the goal clearly is to reduce that rate. As Peter has mentioned before, for the next 2 years, we expect to stay on this 6% rate and then slowly moving towards the 5% rate. I mean Frequentis will always be a very R&D-heavy company and for a good reason. But the clear ambition is here to move towards the 5%. But it will take some years.

So ladies and gentlemen, in view of the time, we only have the opportunity to take questions from Wolfgang Specht. So. Mr. Specht, please unmute yourself and ask your questions.

Yes, I should unmute now.

Yes.

Yes.

Okay. So once again, on one of your 3 strategic growth areas, drone management. If I look at the military part of the business that's hopefully upcoming here, do we may need some more, let's say, solutions for combating drones before you will really see a spike in orders here because detection and combating should be one integrated solution for the military part. So is it maybe a little bit too early to really hope for big orders from the military side?

Our reflection goes more into another direction. So our positioning is very clear. We want to stay agnostic when it comes to sensor equipment and effectory equipment because what we see is that sovereign states try to support their local industry. So you find hundreds of companies developing sensors and you find hundreds of companies developing effectors.

So our positioning is we are an expert in managing a controlled space. That's where we have a lot of domain knowledge and solutions available. Part of them are in our UTM solution where we can process sensor data, process and align with ANSP and regulation and give it back to effectors if necessary, to shoot or bring a drone down. That's our positioning.

And we see that military organizations are interested in that because you shouldn't forget we have peace time in Europe. Hopefully, we have peace time for a very long time. And in peace time, you cannot just start shooting around if you see a drone. You have to follow a process and the procedure, and this has to be aligned with the air navigation service provider.

Therefore, we think our positioning to be the channel to the ANSP and be the data processor of sensor data and effector data is the right positioning for us. Do we see a major development in the area of tenders? Currently not. It's more a research program. Partially, we see a tender like Sweden coming up and partially then another tender is now coming up in the Middle East. But we think the next couple of years, it will be more a military tender traffic than a civil one as long as the regulation is not clear for Europe.

Thank you so much, Mr. Specht. So ladies and gentlemen, thank you, everyone, for your participation and your interest in Frequentis. So a big thank you also to the gentlemen from the Management Board for your presentation and the time you took today. So it was a pleasure to be your host today. I wish you all a lovely remaining day and hand over again to Stefan Marin for some final remarks.

Yes, hello from my side as well. Yes, I'm looking forward to meet you at the upcoming conferences next week with ODDO BHF in Zurich or on the 6th of May with Berenberg in London. And our half year results for 2026 will be published on the 11th of August. If you have any further questions, please just drop me an e-mail at [email protected]. Until then, all the best and take care.

Good day, ladies and gentlemen, and a warm welcome to today's virtual roundtable with the topic, Mission Critical Communications MCX as a growth driver of the Frequentis AG in English language. I am delighted to welcome the CEO, Norbert Haslacher; and Head of Investor Relations, Stefan Marin, who will guide us through the presentation shortly. [Operator Instructions] And having said this, I'm handing over to you Mr. Haslacher.

Thank you very much, and welcome also from our side for the Frequentis presentation with a little bit of specialty around MissionX, our product for mission-critical networks. So before I jump into the presentation, I would like to mention some historical data. So Frequentis is a family company. We are existing since 1947, have been established after second World War II to reestablish civil air traffic into Austria and from Austria. And from that year on so that's more than 75 years old now, we have been active in a very special field, which is safety critical infrastructures in multiple nations.

And last year, we have delivered our solutions to more than 150 countries in the world. We are stock listed since 2019, still a family company from our behavior and 68% is with the family Bardach, who are the major shareholder of the company. So who is typically our customer? Our customers are organizations, which are responsible for managing national safety critical infrastructures. And these organizations exist in pretty much all of the countries worldwide. So the market is a real global market. On one side, it's the typical air navigation service provider who is responsible for the airspace.

Therefore, a country has usually ANSP in Germany; that would be DFS; in the U.S., it would be the FAA, the Federal Aviation Administration; in the U.K. it would be NATS. So every country has its own air traffic -- air navigation service provider organization. They are usually governmental organized or owned by the government as a majority as they manage safety critical infrastructure. So the privatization there is not really a topic. The other market segment and customer segment we are in is defense. Around 20% of our revenues are based on defense contracts.

Why Defense? Usually, the Air Force also is a big user of the air space. So there has to be a coordination and also the same infrastructure and control center capability in place for having military flights. That's in smaller countries, only conducted by an Air Force organization, but in larger countries, there are also the Navy and Army have objects which are flying in the air. So they have helicopters, they have fighter aircraft-s, they have drones, they have different capabilities they use for their special missions.

Another area where we are active in the control center is public safety. I think it's also obvious there that it's very, very safety critical as police forces, fire brigades and emergency and medical services rely on safety critical infrastructures to operate from the control center in cooperation with the assets and people they have out there on the street. Same applies to public transport. We have control centers managing rail traffic in heavy rail and urban rail environments.

And also maritime is, of course, a safety-critical control center capability, countries need who have a connection to the sea. But not only in connection to the sea, also large rivers need control centers for authorities to manage ship traffic in inland waterways through the country on large rivers. So what you see is we are in a niche. We supply applications, and we are kind of the data collector from different sensors out there in the field. So we take the data from sensors, we fusion them to a radar picture or to a situation awareness picture to give the operator a chance to evaluate the situation based on accurate and consistent data.

On the other side, we provide communication capabilities into the control center to be able to communicate with an aircraft or with a police force or assets out there in the field via voice or via data. That has to be conducted in a very secure way. So there is no compromise from the outside possible, and that has to be an end-to-end responsibility in the network as well to make sure that the data are not compromised. This is what we deliver. And as I said, we deliver that in around 150 countries in the world. So how big is the market? The market is pretty large, and we have created our own market model as you don't get studies for all segments, where you can evaluate how big the market for your portfolio is.

So we -- for ATM and public safety, there are very good studies available, which we have purchased. On the other side, we have made our own assumptions based on historical knowledge, how much tenders our control center market is tendering annually. What we can see is that the tenders concerning the control center market in safety critical infrastructures is around EUR 14 billion annually. So the market is pretty large.

And what we can address in that market is around EUR 4 billion with the current portfolio we have. We have extended that addressable market for us already since the IPO as we did merger acquisitions and also put a lot of money into R&D to develop new capabilities for our customers to make more and more addressable from the EUR 14 billion for Frequentis. Currently, we have around 550 governmental customers in 150 countries in the world. So I think we have a pretty good customer base out there where we can add products to our customer base and therefore, increase our share of wallet within the customer environment -- within the existing customer environment.

So what are the major drivers for investing and given the total market size also a growth element. We have 3 megatrends influencing the availability of money in our market. As you can imagine, as our governments -- our customers are governments, they usually rely on taxpayer money. And governments always have money. It's only a question about what type of budgets for what purpose they put into their plans. And of course, these plans are very much driven by -- for our industry by one topic, which is security. I think it's very obvious that the security situation around the globe has changed significantly in the last couple of years.

And therefore, governments are really threatened by the level of defense infrastructure and safety critical infrastructure they currently have in their countries. One of the biggest drivers for increasing their budgets based on the security situation we have in Europe is the commitment of the NATO countries to increase their military spending from 2% of GDP to 5% of GDP. So that's definitely something which is driving money into our market. The other point, which is driving money into our market is the recent threat of having drones in a regulated airspace and in the sovereign air space, not only in Poland, also in Estonia, in the Baltics, in Sweden, in Norway, in Finland and even in Munich, where I've seen last week.

So there is a new threat coming up, which is in the air and it's called drones. And Europe has no answer to that threat at the moment. And therefore, we also expect an increase of budgets within the governments to address these type of threats. Another driver in -- to the infrastructure we are addressing is, of course, the growing mobility worldwide. So when you see the forecast of Boeing, Airbus, Embraer and other aircraft providers, but also drone producers, you can imagine that thousands of vehicles in the air will join the airspace.

It will be more than 1,000 manned aircrafts from Boeing, Airbus and Embraer, but maybe multiple thousands of drones entering an airspace. For that, you need a proper infrastructure and a proper control center structure to manage that air traffic as there are a lot of strong regulations worldwide to make sure that passengers can fly safely from A to B. Therefore, these countries have to follow very strict regulations. And the more traffic is in the air, there are more working positions they need on the ground and infrastructure on the ground to be able to manage that growing air traffic according to the law and according to the regulation.

That brings me to my third megatrend, which is driving investments into our markets, that's the technological advancements. The air traffic organizations and also the other public sector safety critical organizations have been very, very conservative. They have to be conservative because it's a 24/7, 365 days a year operation, you cannot put a maintenance window in for a couple of hours and stop the air traffic, it's all not possible. So they have to be up and running 24/7. That means that they are really reluctant to implement new technology and test or try something out.

They usually take technology, which is already 10 years in operation in the commercial sector. Therefore, they are a clear follower. But what they face now is that based on the old technology they have, they cannot manage the growth of air traffic with the current processes and tools and applications they have in place. So there is a new regulation or was a new regulation coming out from European Union that also the navigation service providers have to go from spaghetti code to lasagna code in their applications, meaning that they have to think of implementing service-oriented architectures, microservices, virtual environments going more into private cloud environments, to be able to adapt much faster to changes than they have been able before.

And that's the third major driver for investing into the current infrastructure, especially in Europe and the United States. So here are the figures from our first half year. We had a pretty good first half year, and we also expect to have a pretty good full year. Q4 for us is the most busiest quarter in the year as the -- our customers, our governments, and they want to close the programs before the end year so that the money can flow out to the vendor.

I think that's obvious for all people who are -- who know the public sector business model, some programs we have already secured in the first half year is we got a pretty large order from the FAA as the FAA got the order from the new administration in the United States that they have to completely refurb their FAA current infrastructure. They are also part of the Big Beautiful Bill and around USD 13 million to USD 14 billion should flow into the refurbishment of the FAA infrastructure.

And Frequentis is definitely part of that. European companies are pretty welcome in the U.S. because they know that the technology leaders, especially in air traffic management, are not coming from the U.S. They are coming from Europe. Due to the complexity of the airspace we have in Europe, our systems are much more advanced than the systems which are available in the United States.

What's also important in the U.S. for us is the remote tower. So we have developed a remote tower capability for German ANSP DFS 10 years ago. And 5 periods ago, the U.S. Air Force was aware of that, then we got a contract from the U.S. Air Force to test our equipment in U.S. Air Force and U.S. Marine capability environments and they were really impressed about our capability and has -- they have put us into Atlantic City into the tech center of the FAA to gain certification for that remote tower capability so that they can use it within the U.S. national airspace. That certification should come in Q2 '26, and then we are the only provider of that technology within the United States.

What's important is that the U.S., of course, is allowed to take this technology to countries which are not part of the U.S. national airspace. So they have put our technology into Germany, into a U.S. Army base and operate the first system there of Frequentis already and are very happy with the capability they generate for the U.S. Army. What we also have acquired in the first half year is a very large contract with Thuringia, the state police in Germany.

We are already delivering to Bavaria, Northern Rhine-Westphalia, Hamburg, Saarland. So we have already 9 countries in Germany. North Thuringia is the next one. It's a large contract where Siemens and T-Systems are our subcontractors, and we are the general contractor. So the technology for multimedia communication will be rolled out in whole Thuringia. Also important for us was the acquisition of Regola 3 years ago in Italy because this is adding a portfolio element in public safety to our comms platform in the area of CAD. So the CAD comps are the major applications in the control center for public safety.

And with this acquisition, we started to address the U.K. market, where we could already save 2 opportunities for Frequentis, delivering the first systems of a kind to the U.K., which was awarded also in the first half year. So this is, I think, not much to say. We really had very good years in order intake and the jump from '24 to '25 was really huge. And we also expect, as I said, we have a very good order intake year until the end of the year '25. That also gave us a very good orders on hand visibility. So we have around 1.5 years orders on hand visibility currently available. And this is, I think, a very good starting point also for the next fiscal year.

That's our revenue growth. I think we have also shown good revenue growth. It's only half year figures. That's not full year figures. And you know that we do around 40% in the first half year, 60% in the second half year. The split between ATM and PST is pretty much the same, it's 30% PST and 70% ATM, which consists out of civil and defense. Here, you can see already that the Americas is really appreciating our technology as the American share of revenue has increased significantly already in the first half year.

So we have been jumping from 17% in half year 1, '24 to 23% half year 1 in '25 within the Americas. And the major driver for that was the United States. This will continue as there are large programs coming up in the U.S., for this refurbishment of the FAA infrastructure, and we expect more to come in the U.S. This is a slide I always want to show very openly to people who are not so much aware of the public sector business and are maybe a little bit concerned about a negative EBIT in the first half year.

I can assure you that a very normal pattern every company has acting in the public sector field because usually, you produce cost in the first half year and when you get the milestones in, you can put the revenues out and create your margin. That's a pattern for all our -- for all project companies being active in public sector. Our margin is generated in the second half year. And thereof, most of it in Q4, as before the end of the year, the programs have to be finalized, closed and invoiced.

Yes, today, we have a little bit of a specialty. So the guys asked me to talk a little bit more about our newest product, which is called MCX Mission-Critical Services. And I've brought a picture with me to you hopefully explain a little bit more the situation the countries currently have. So on the right side, the people you can see here are typically police forces, firefighters, railway staff, people who are out in the field, are operating for a national safety critical infrastructure.

On the other side, you have on the left side, somebody is sitting in a control room to steer the operation of the people and the assets out in the field. And in the past, they have been communicating via very, very old infrastructure, either it was GSMR in the rail sector. I think most of you know GSM, it's a very old technology. It has a very low bandwidth. And blue light organizations or public safety organizations, they have been communicating via TETRA, digital radio network.

That's not much better than GSMR it's very low bandwidth, and you can transmit voice and can transmit a little bit of text data. But for 2025, that's not really appropriate. So what the country started to think of is, is there a technology out there which can use 5G LTE with high bandwidth and high priorities to be able to transmit mass data, videos, voice, whatever is out there and is recognized by our police forces and law enforcement agencies and transport that into the control room to create a better situational awareness.

So Frequentis has acquired a company called Nemergent in Bilbao in Spain 3 years ago, coming out from the Technical University of Bilbao, they have generated a software-defined network layer, which is put above the 5G network or an LTE network and make that current network available for mission-critical push-to-talk, video transmission, data transmission and also provides an interworking function with existing legacy equipment like TETRA and others.

So this thing is the future of network communication in the area of public safety and rail. The first tenders are already out and we got the first award in the U.K. with IBM as a prime contractor, as this is also an IT program. And Frequentis is very much focusing on the software side of that software-defined network layer. And what we see is that other European countries already started trials to test it and also started tendering this MCX solution within 2026. So we have already, in some countries, conducted trials with police forces or rescue organizations in Germany. We did it with [ Maltesa ] to test the equipment out with MCX based on Vodafone or Deutsche Telekom infrastructure, and it really worked well.

And there is also a European telecommunication system. The standard is really great. It was 3GPP standard is -- up to the detail. So it also allows them that with MCX, we can even operate across country. Up to now, it was not able that the German police officer, which is maybe coming to Austria to help in an incident can communicate with Austrian law enforcement agencies as the infrastructure is so different and MCX has now created a new standard for public safety that it can be a cross-border collaboration in all elements of collaboration when it comes to infrastructure, drones, radios, whatever is available as a communication can be used cross country. That's the vision behind this new European standard of 3GPP.

Yes. I think I've mentioned already everything. We are really proud that we got even awarded for the software development standards we have created. And I think Frequentis is technology-wise a real frontrunner. And we have invested significant money over the last years to be able to explore that new business field where Frequentis has not been active over the last years.

Yes. I would like to conclude with the outlook and management agenda for '25. So as I said, we have a pretty good orders on hand status by 30th of June '25, which gives us a good security level through the end of the year and also for the beginning of next year. We strive to increase our order intake in double-digit percentage range. We don't know how much it will be as there is always a risk of a slip into the next fiscal year. And the U.S. currently can award very fast, but it can also slip into next fiscal year as the U.S. has a different fiscal year than we in Europe.

What we have changed is our guidance on the top line. We said last time, it will be around 10%, we have changed that to at least 10% as we are pretty confident that we can transfer a lot of orders into revenues already in 2025. And the EBIT margin, we have guided around 6.5% to 7%. And I always remind all investors that's an EBIT margin without any capitalization of R&D. We spent around EUR 30 million annually in R&D and finance. So that's paid by our EBIT and you won't find capitalization in our balance sheet because we -- as I said, the family still gives us the order that we have to be very risk-averse in our balance sheet, not to take loans on the next generation future.

Therefore, we invest what we can afford, and we do that from our EBIT line. There are large programs currently in R&D, transforming our remaining hardware-centric products into software. That was the major task I've got when Mr. Bardach hired me 10 years ago into the Executive Board. I was coming from a U.S. American IT company. He said we have to change our portfolio as our customers are going more and more into the IT world.

So we started to replace our proprietary engineering hardware products with software. We have all paid that from our EBIT, and we did that successfully in the PST segment, where we do already around 11% EBIT margin. And now 3 years ago, we started to replace our ATM portfolio with software. And this is an ongoing process for the next 3, 4 years. But we are, I think, in a good way, and we will also make the same business model implementation in ATM as we have done it in PST. Yes, I'm now at the end of my presentation, and I would like to give back to you, Judith for taking questions, which I can hopefully answer accurately.

Yes. Thank you very much, Mr. Haslacher for your presentation and the interesting insights. [Operator Instructions] We already had a very dynamic call in German language this morning already. And it seems like you were very clear, Mr. Haslacher because there are no questions coming in so far.

Well, with this, we are coming to the end of today's roundtable that was a fast one. Ladies and gentlemen, thank you for your participation and your interest in the Frequentis AG. If you have any further questions, please don't hesitate to contact Investor Relations Manager, Stefan Marin. And if you would like to be added to the company's investor mailing list, please send an e-mail to [email protected]. I will put the e-mail address into the question field. So you can see it and a big thank you also to you, Mr. Haslacher for your presentation. My name is Judith. It was a pleasure to be your host today. I wish you all a successful business, a lovely remaining day. And with this, I hand back over to Mr. Haslacher for some final remarks.

Thanks, Judith, and thank you for joining the session, your interest in Frequentis. I'm looking forward to seeing you in a couple of conferences we are visiting the next months. And we go back to work as it will be a very busy Q4. And thank you, and have a good evening.

Hello, everyone, and a very warm welcome to the Austria on Air Conference. It is a pleasure to have you all here today for this special roundtable session. This session is dedicated to the Frequentis AG, and we are delighted to have the chance to hear from their leadership.

It is my honor to introduce the CEO, Norbert Haslacher; as well as the Head of Investor Relations, Stefan Marin, who will share insights with us in just a moment.

And with this, let me hand over to Stefan. The stage is yours.

Yes. Hello, everybody in -- I guess, in Europe. I guess the Americans are still sleeping. But nevertheless, we are happy to have you here for this first Austria on Air Conference organized by Airtime. Thanks for the invitation.

Without further ado, I would like to hand over to Norbert to present to us, and then there will be, of course, a Q&A session afterwards.

Yes. Good morning, everyone, and thank you for joining this short presentation about the Frequentis Group.

We have prepared some slides to give an overview about our business model, about our markets and also reserve some time for questions in case there are any. I think we have started really strong into that fiscal year. In the first half year, we have improved our order intake volume, our orders on hand and also our revenues. So we are -- have a good flow currently in the market segment where we are specialized in.

So to give you a little bit of understanding what we are doing, we provide applications for safety-critical control centers around the world. So here, you see in the pictures, typically a control center and tower at an airport where the operator or the air traffic controller is managing air traffic based on radar data, different sensor data, video data and also communication streams to the aircraft and ground-to-ground communication. That's a typical workplace for an air traffic controller in the tower. Then military organizations also have control centers, managing their military operations or their military infrastructure in the country. Same for public safety, police, fire brigade, rescue centers, public transport as of rail organizations, or coast guards, navy in the maritime space.

So this is the space where we are operating in. We are usually a full service provider to these customers who are typically governmental entities or governments because they manage and operate national safety-critical infrastructures and networks, and they have to be up and running 24/7, 365 days a year.

The market we are in is pretty huge. So what we see worldwide is a tender volume of around EUR 14 billion annually in tenders, addressing safety-critical control rooms around the world. And what is driving investments into our customer base is, first of all, the importance of security. I think it's obvious currently that we have a lot of tensions around the world. Therefore, investments into national security is increasing, especially driven by the commitment of NATO members to increase their military spendings from 2% of GDP to 5% of GDP. So what we expect over the next couple of years is a significant increase of military spending in the area where we can be active.

Another driver for investments into our markets is the growing mobility worldwide. So if you see the forecast of Boeing, Airbus, Embraer and other aircraft producers, more than 1,000 aircraft annually join airspace. That means that there is a necessity to create infrastructure on the ground to manage that increasing air traffic in the air space. And not only aircraft are entering an air space of around 1,000 a year, also unmanned traffic vehicles are entering the air space, one side on the military side, but also on the civil side.

And what's also driving investments into our market is a technological change. You have to understand that our customers are governments in the safety-critical space. So they are usually very, very risk averse and very slow because they have to manage an infrastructure, which has to be up and running 24/7. But nevertheless, they also now start to think of changing their environment into more IT, virtual, service-oriented architecture, software as there is a new ATM Master Plan release from the European Commission that all European air navigation service providers have to change their technology base towards service-oriented architecture. Therefore, a new technology change will come into those segments, and that will be also financed by European Union in the program of CSR to give the industry the chance to change their portfolio elements to address these topics like virtual environments and service-oriented architectures.

So what's new for our customers and what's a new business model for us in the future is that our customers, of course, have to think about cloud operations, cloud solutions, Software-as-a-Service models, but also having the, of course, necessity to even more secure their IT -- future IT infrastructure based on these two or Cyber Resilience Act regulation coming from European Union, but also being very strong in the United States, Asia and in Australia.

What's also interesting for us currently, we can address with our current portfolio around EUR 3.8 billion out of the EUR 14 billion. That's why we invest into M&A and R&D to get more and more addressable from the total market size for Frequentis. One area where we invest since around 4, 5 years is the drone management system. which is currently very attractive, to be honest, because due to the incidents we had in Europe and we still have in Europe, there is an increasing demand on getting a UTM, unmanned traffic management solution, in place to be able to identify drones and also identify them as an enemy or as a friend and then potentially take actions and countermeasurements against those drone traffic.

Another area where we also invest a lot of money is the 5G MCX solution. So what we see in the United States, Europe and Australia is that the TETRA digital radio network infrastructure is now 30 years old. It's very, very low bandwidth oriented. You can transfer voice and text. But for 2025, that's not an appropriate infrastructure as mass data, video transmission and mass data transmission in a secure way is required. It can't be that police forces and law enforcement agencies transport with private iPhones, their videos as there is no infrastructure available. Therefore, Europeans are now starting to budget a transformation program from TETRA digital radio networks into 5G LTE usage with software-defined network layers like MCX to be able to transport mass data in a secure way from the police force or the assets out to the control centers.

So what we see is a lot of investment coming into our space based on our mega trends. And that's why we are confident that we can even extend the addressable market we already have extended the last years via M&A transactions or respective R&D activities.

I think the figures are disclosed for a long time now. We had a really good first half year. So we have increased all of our figures. What's important to us is that we have, as a family company, a good equity ratio as well in a net cash position at the end of the year. It's also important for our customers. They have the right to audit us during the year and come to Vienna. And beside our financial auditors and FMA and BaFin from the stock exchange, we also have always customers auditing us, and what they really appreciate is that they have a stable, sustainable vendor, who can serve them for a long time because if we implement one of our solutions into the environment of our customers, it has to be up and running for the next 15 to 20 years.

To give you a little bit of an overview about the classical programs we acquired during the year. So I would like to start in the middle with Public Safety. Recently, we have won a large contract of the Thuringian state police in Germany. We already equipped our LifeX solution, which is a cloud-based solution in North Rhine-Westphalia, in Bavaria, in Saarland. So in 9 countries, we already have deployed our solution. Thuringia is now the next country where we implement our software solution for the state police. That's a very large contract for us because we roll it out to all police forces within the state.

And the control center technology is already ready for multimedia communications and future broadband. So that's very important for the Germans as they're also targeting with BDBOS as the infrastructure provider, a change in technology going away from TETRA into the MCX space.

In Air Traffic Management, I think it's valuable to tell you that we really secured large contracts in the military area and also in the U.S. Federal Aviation Administration infrastructure for the -- for civil purposes. So what we have deployed is the first U.S. Department of Defense digital air traffic control tower, which was tested in the United States from the U.S. Air Force and the U.S. Marines and is now deployed in Germany at the U.S. Army base in Garrison.

What's also important to us is that this infrastructure is really driving a lot of security elements in the military. And therefore, we are currently in Atlantic City in the tech center of the FAA to get certification, which is predicted by Q2 '26 for that technology to be able to be deployed in the national airspace of the United States next year. So that's a very important technology from Frequentis, where we hope that we will be the only provider of that technology from Q2 2026 onwards.

What I also would like to mention is that we are in the middle of a rollout of a large program in the U.S., which we have got awarded last year. The budget for that program is around USD 0.5 billion for Frequentis to convert their classical infrastructure they currently have into the IP world to make the FAA network IP capable. That's also one of the programs of the new administration of the U.S. to transform that network and the infrastructure as soon as possible into a modern IP environment.

Last point I want to mention is on the right side that one of our major focus is Public Safety, not only in Germany, but also within Europe. And we secured very interesting contracts for us in the U.K. and especially in Norway, where we currently roll out all fire emergency call centers with our new LifeX solution over whole Norway and also got a contract for our new computer-aided dispatching system from the U.K. and Italy, provided by our latest acquisition, Regola based in Italy.

So the figures you see here is order intake. Those are confirmed orders. Those are not budgets. Those are confirmed orders we have in our books. So we really had a great jump in first half year '25 compared to first half year '24. And this jump is pretty much based on the megatrend developments I have shown you in the beginning. That also has driven our orders on hand. So we have a visibility of around 1.5 years in orders on hand already committed in our books.

Yes, also double-digit revenue growth. So we were also able to execute the orders accordingly. So we had a good development also of our orders into revenues. The split between the 2 segments, ATM, which is civil and defense, and PST is like last year, 70-30. What's interesting is that our U.S. business was really growing pretty well in the first half year, and we expect to continue like that also in Q3 and Q4 as we secured really large orders from the U.S. administration. So our European share went down compared to last year from 64% to 61% and our Americas from 17% to 23%. That's very important for us also to have a more balanced allocation of our orders between Europe, Asia Pacific and Americas.

I also want to give you an overview about the seasonality of our public sector business. So every company, which is working in the public sector business doing projects, is facing the same pattern that usually the projects are closed in Q3 and Q4, most of them in Q4. So all of our margin is executed in Q4 when we close our milestones and finalize our programs with site acceptance test together with our customers. So that's a pattern which is -- unfortunately, I would love to have another pattern, but that's a typical public sector project pattern, which is valid for decades now.

Concerning the fluctuation of U.S. dollars, so exchange rate losses are largely offset by exchange rate gains. So we hedge 5 currencies as we deliver to 150 countries in the world, but only allow 5 to 6 contractual currencies maximum.

Yes. What's the outlook and management agenda for '25? So as I said, we really have a good -- very good strong pipeline for all our segments and not only until the end of this year, also for 2026. So what we aim is to increase order intake in a low double-digit percentage range because we also have to be careful not to overstress our organization. We have changed our guidance in the area of revenues that we had before around 10%. We changed that to at least 10% as we are very confident that we will have another growth year 2025 compared to '24. And the EBIT margin is around 6.5% to 7%. That's important to understand that we spend around EUR 30 million annually in R&D, which is expensed and not capitalized.

So when you look in our balance sheet, you will find no capitalization of any R&D software. We fully expense the EUR 30 million from our EBIT year-over-year as we have to invest into future solutions and also in the transformation of our portfolio from hardware-centric legacy into software-centric portfolio elements.

Yes. Thank you very much. That's what I wanted to show you. I'm open for questions now, and I give back to you.

Yes. Thank you very much for this insightful presentation, Mr. Haslacher. We will now move on to our Q&A session. For a dynamic conversation, we kindly ask you to raise your hand and place your questions via our audio line. And if, however, you prefer not to speak today, you are also more than welcome to share your questions in our chat, and we will keep an eye on both for this.

We had some questions coming in before the roundtable, and I will start with this, Mr. Haslacher. Can you estimate when the contract in the U.K. involving 300,000 emergency personnel will be completed?

That's a good question. We are a subcontractor to IBM, and we are part of a consortium together with Samsung, Ericsson, IBM and Frequentis. I think the rollout program will take another 4 years, if I'm not mistaken. But currently, there are still discussions about the 3GPP standard, how this standard can be met. And yes, I think 3 to 4 years should be a good time frame for going into operations.

Thank you very much. Can MCX also be used in other areas such as maritime or air traffic control?

That's a very good question. And the answer is yes. Wherever TETRA is currently in operation, MCX will be the substitution for that. Where you have TETRA or even GSMR, I think those are the 2 technologies, which have to be replaced. So therefore, we talk about rail where we have GSMR. We talk about airports. We talk about harbors. We talk about defense using TETRA. So wherever TETRA and GSMR is in operation, MCX has a chance to replace it.

[Operator Instructions] I have one more. In which regions outside Europe, do you see opportunities for MCX?

We see also Asia because Asia faces the same problem. They also have a large amount of TETRA installations. But we currently focus very much on Europe because we expect a big amount of tenders coming up over the next 3 to 5 years. Those tenders are very complex and the programs are very large. Therefore, we currently focus on Europe. The United States has already implemented that based on the FirstNet program in the last 6 years, but they don't go out of the U.S. So they stay within the U.S. Therefore, I think the European solution and especially the European 3GPP standard will probably also drive the Asian market in the future.

Thank you very much for your questions. And I have one raised hand from Andreas [ Goz ]. You should be able to speak now.

[Foreign Language] I don't know, but yes, Andreas -- this is Andreas speaking from [indiscernible] Network. Nice to see you again on this platform. My question is about a very actual issue, which is drone issues coming from Russia probably flying over parts of Poland and Germany as well. Is there anything that can Frequentis do about this? Maybe there's a business opportunity?

Yes. Andreas, thank you for the question. Yes, of course, I mean, there is an additional threat coming to Europe, and we shouldn't forget we are not on board. We have peace times in Europe. Nevertheless, we have to defend against those threats. And we have a solution, which is our UTM solution already deployed in some countries, especially in the Baltics, where our solution can take data from different sensors to identify a drone. And there can be sensors based on video, there can be sensors based on radar, there can be sensors based on noise. So there are different sensors. We aggregate these data and fusion that data in our UTM solution to make sure that there is a drone identified.

The next step our solution is doing is to compare that drone movement with a filed flight plan and the registration of the drone. And if there is a registration and a flight plan filed, then we can assume it's a friendly drone, which is registered. We know who the owner and who the operator is, and there is a reason for that flight. If there is no match in our system of that drone behavior and drone flight versus the plan and the registration, then we can assume it's an unfriendly drone. And then we can give position data to effectors, which are very different to shoot them down or to jam them or to send a drone to catch them and engage an effector. And the center of this data flow is based on our UTM solution.

And you mentioned it's only in the Baltic areas. Why just there? Can it be rolled out to other countries as well?

Yes, it can be rolled out. And we, to be honest, expect also additional tenders coming up for that. I think it's a very hot topic currently. Therefore, Europeans think about drone walls, think about drone countermeasurement activities. So what we expect is that the European market will accelerate tendering this type of solutions. And I think Frequentis has a very good chance in that upcoming processes.

Thank you very much for your questions, Mr. Goz. And I will hold the room another moment if there should any questions coming in. And that doesn't seem to be the case.

As no further questions have come in, we come to the end of today's roundtable of the Frequentis AG. At this point, we would like to cordially invite you to Frequentis AG next roundtable at this coming Thursday on 11 in German language and 4:00 p.m. in English language. Should further questions arise at a later time, please feel free to contact Stefan Marin. We are looking forward to this day and kindly invite you to our panel discussion at 1:00 p.m. with Vienna Stock Exchange.

Thank you dearly to Mr. Haslacher and Mr. Marin and to all of you for attending this call. And now I hand over again for some final remarks to Mr. Haslacher.

Yes. Thank you for your interest. And as already said, we have 2 more conferences this week. And Stefan, you also want to mention our Investor Relations e-mail address in case there are requests for additional information.

Thanks. Just drop me a line at [email protected], if you want to be included in the Investor Relations newsletter or if you want to continue the dialogue with us. Thank you so much, and goodbye.

Thank you. Goodbye.

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the Frequentis AG in English language regarding the half year figures for 2025.

I am delighted to welcome the Management Board of Frequentis with CEO, Norbert Haslacher; CFO, Peter Skerlan; COO, Monika Haselbacher; CTO, Karl Wannenmacher; and Stefan Marin as Head of Investor Relations, who will guide us through the presentation and the results shortly. Afterwards, we will move over to a Q&A session and wish you will be allowed to place your questions directly to the management via audio line or chat box. Additionally, I would like to point out that you can already place your questions in our chat box during the presentation.

And having said this, I hand over to Mr. Stefan Marin and Mr. Haslacher to open the call.

Yes. Thank you very much, and good morning, everybody. Before we start our presentation, we, as the Executive Board, would like to say a big thank you to all employees around the world for their dedication in these times where things are changing faster than usual.

I would like to start with our figures on Slide #2. So we were able to achieve a double-digit increase in order intake, orders on hand and revenues again. Order intake rose by more than 1/3 or EUR 81 million to EUR 309 million. Orders on hand are now above EUR 750 million, EUR 764 million to be exact. And revenues grew by almost 15% to EUR 237 million. Given the usual half year seasonality resulting from project business within the public sector, EBITDA was EUR 5.2 million, while EBIT was minus EUR 4.3 million. The equity ratio stayed at 39%. At the end of June '25, we had a net cash position of EUR 68.3 million, including EUR 62.6 million from advanced payments from customers, approximately the same ratio as a year ago.

Now I would like to share some order intake and project highlights on Slide #3. Additional orders in the U.S. contributed to the higher revenue growth in North and South America that we will show you later. The rollout of the air-to-ground protocol conversion system in the United States is on track. Following completion of an order from the Defense Department, there is now a digital air traffic control system in place in the United States Army Garrison in Germany. The multi-domain communication systems for the Australian Defense Force next-generation AIR6500 Joint Air Battle Management System is the type of order that moves us forward in terms of both our product portfolio and our knowledge base in the area of defense.

Public Safety won a sizable contract with the German Federal State of Thuringia. Frequentis is there the general contractor. Multimedia functionality, that means managing multiple types of inquiries, whether via phone, radio, video or digital channels, plays an important role in the LifeX rollout for all Norwegian fire emergency call centers. Other highlights include 2 orders from the U.K. and Italy at Regola, a company we have acquired a couple of years ago, our Italian subsidiary.

When we go into details on order intake, so Slide 4 shows that order intake grew again this time by amazing 35.6% to a new half year record of EUR 309 million. Both segments contributed to this success. Air Traffic Management posted a rise of 10% and Public Safety & Transport a rise of 81.3%. This was because unlike usual, some orders were received in the first half year of the year rather than the second. For example, they came earlier than expected. The difference between the 2 segments is expected to be lower in the full year. Please note that major orders are multiyear projects, so they become more profitable over time. In other words, profitability is lower at the beginning, for example, in the initial phase of such projects, as you know that already from our past.

Looking forward, we have a well-filled order pipeline and good opportunities for '25 and beyond and orders on hand increased by 23% to EUR 763.8 million compared with June '24. This is the first time that orders on hand have exceeded EUR 750 million, so that's EUR 0.75 billion at the half year.

So for more financial details, I would like to hand over to you, Peter, our CFO.

Thanks, Norbert. Hello from me as well. So let's now switch to Slide #5. Revenues were up by 14.8% or EUR 30.5 million at a new record of EUR 237 million for the first half year. This increase fills the need for additional employees. And we are still able and proud to find enough qualified employees across the globe to handle this growth as we are an attractive employer. Both segments contributed to the growth. ATM grew by 13.8%, while PST grew by 17.6%. The revenue split by segment did not change, 70% ATM and 30% PST.

Let's now go to Slide #6, revenues. Revenues grew in all regions, except for Asia. Europe is still our biggest market. We are happy with the growth of more than 50% in North and South America, with most of it coming from the U.S. The second highest relative growth rate was 16% in the Australia/Pacific/Africa region, while Europe grew by 10%. The lower revenues in Asia were due to revenue shifts within some projects.

So now to Slide #7. Slide #7 shows the continued strong seasonality of EBITDA and EBIT. That eventually raises the question, EUR 31 million more in revenues, but no progress in EBITDA and EBIT. How come? This is due to our customer structure and the type of project business we are involved in. Project progress and acceptances and therefore, revenues and profitability are higher in the second half of the year.

To give you some more detail, on average in the past 5 years, approximately 44% of revenue was generated in the first half of the year and 56% in the second half. On average, about 40% to 45% of raw materials, services and other operating expenses were accounted for in the first half and about 55% to 60% in the second half. Hence, the same pattern as revenues.

In contrast to this linear expenses, the pattern was different for personnel expenses, about 50% in the first half and 50% in the second half. Reason is simple. We pay our employees monthly and not on the basis of milestones or project progress. Therefore, in each of the past 5 years with one exception due to the corona pandemic, EBIT was negative in the first half. And given the pattern I have outlined, this will continue.

Now back to the numbers for the first half 2025. The impact on EBIT came from personnel expenses, plus 11.3% materials and purchased services, which increased by 18.8%, while revenues grew by 14.8%. Both other operating income and other operating expenses increased, and this was largely due to exchange rate fluctuations related to U.S. dollars. Exchange rate losses were largely offset by gains resulting from changes in the fair value of forward exchange contracts. Order intake and project acceptance are generally higher at year-end. Hence, the second half of the year is the more important for our profitability.

For the outlook, I would like to hand over to Norbert.

Yes. Thank you, Peter. We would like to conclude with the outlook and our agenda for '25 on Slide #8. So based on orders on hand of EUR 764 million, we are working at a very good level of capacity utilization. We aim to increase order intake further. While the growth was more than 1/3 in the first half year '25, we expect the increase in order intake over the full year to be in the lower double-digit percentage range. The sales pipeline '25 and beyond remains well filled. Based on order intake and orders on hand, we are confident that we can increase revenues by at least 10% over the full year.

A word on profitability. So temporary shifts in milestones, revenues and potential start-up costs of the larger programs at the beginning of the projects are the bread and butter of a project-driven company like ours. Therefore, it's always a little bit of a challenge to forecast the exact extent to which each of the roughly 800 projects per year will impact profitability. Nevertheless, overall, we expect the EBIT margin to stay about 6.5% to 7% in 2025. Capital expenditure will be about EUR 12 million. Company funded that is self-financed R&D expenses were EUR 30 million in '24, and we expect them to remain at this level. R&D expenses, as you -- most of you know, are recognized in the income statement and are not capitalized.

So we are proud of what we have achieved in the first half year of '25. Again, thank you very much to our people around the world. We are on a good track for another year of growth.

We are now ready for your questions.

Thank you very much for your presentation and your transparent insight. [Operator Instructions] We have 3 hands up. I will start with the person, the phone number ending 2809. He should be able to speak now.

This is Miro speaking, from JMS. Can you hear me?

Yes, we can.

Norbert and team, I have a couple of questions. The first 1 would be on the other operating expenses. So you basically elaborated on the cost increase of your personnel, but I also realize that your other operating expenses are now minus -- were minus almost EUR 39 million. Was there anything special in there?

Okay. Miro, we do it question by question. So I will hand over to Peter to answer your question.

Yes. Probably because you cannot see us, we have a special microphone, a very good one, but we have to put it from one person to the next one so that you can understand us very clearly. So yes, there are specialties in it. One is the exchange rate differences. We have EUR 4 million more exchange rate differences in the other operating expenses. And they are mostly compensated by our exchange rate hedging income, which you can see then the other operating income. So that's special to the fluctuation of the U.S. dollar. But due to what we have done, we could compensate it. That's the first thing.

The second thing is what we see is 1 million more licenses. And these are the licenses for our own business and for our office licenses that we need. Here, what we can see is a continuing trend. We cannot buy this software anymore, the software that we use on our own, we have the subscriptions. And so it moves from investments to other operating expenses, and that's an additional EUR 1 million. Furthermore, we see increasing travel expenses. Here, it's a good trend in comparison to last year that we can see that the price of flight tickets is stable. So we don't see further price increases concerning our flight rates. But what we see is additional flights necessary due to the growth. We have to visit our customers to be on site, so we have more flights worldwide. These are, I would say, the largest positions.

Okay. Very clear. A second one would be on the provision, which you basically reversed EUR 3.7 million. Was this also booked in other operating expenses? Or was this booked in other operating income? And maybe you can also tell what it was. Was there any like a special larger provision? I see [indiscernible] the report, which explains around EUR 5 million of this. But was there anything -- maybe you can explain what that is? And then maybe comment on it?

Okay. Thank you for the question. So I keep the microphone, then we are quicker. Yes, concerning the last point that you mentioned the premium, I think it's a variable income of our employees. If they meet their targets, then they get this variable income, the bonus. And as we believe in our goals till the end of the year, we have to make the provisions for that [indiscernible]. And as the half year is over, we had to book half of the expected bonuses. Unfortunately, that's not related to the EBIT. We had tough discussions with our auditors. Can we book the variable income according to the EBIT that we have achieved in the half year, but we have to book it according to the year's end expectations.

Sorry if I asked again here. So last year, these provisions were EUR 13 million. This year, they were EUR 8 million. Yes, they were lower. So they achieved their targets to a lesser extent compared to last year, basically.

Yes. Very good question. You cannot compare the value of half year with the value of the full year because concerning the full year, you see then the variable incomes that we have to pay out then for the full year. So for the half year, it's just the half amount.

Okay. Understood. So you reversed the EUR 13 million and you basically -- there was a new booking of the EUR 8 million. Okay. Understood. Very clear.

Okay. But thank you for the question. It's a very valid question, but it's only half of the variable income that we posted here because it's only half of the year.

Okay. Then I have 2 more for Norbert, and then I go back into the line. The first one would be regarding the margin in ATM. So I think due to X10 development and so on, this margin should go up significantly in the upcoming years. Has there anything changed regarding this outlook? Or do you still think this is going to be the case even though you're growing very fast in this division?

No, nothing has changed, Miro. I mean, we are still in the middle of developing Release 10. As you know, it's a very disruptive technology that voice communication can be executed over data centers and virtual environments. So this is high tech. And we still need, as outlined last -- in our last call, we still need another 3 years to fully complete of what we need for a large go-to-market.

So this will take more time...

Yes, as expected. We expect now 3 years. We have brought in large orders as launching customers, for example, Canada. So we will roll out the technology over whole Canada with more than 1,000 workplaces. But we are not where we have to be for a larger go-to-market. But no surprise for us. As we always said, we need another 3 years approximately.

Okay. And the last one would be regarding the revenue bookings. So I noticed, obviously, the excellent order intake, 36%, just a 15% increase in revenues. Now I say just, obviously, that's a very good number, right? But to keep up with the order intake, you need to grow by more than 10% in the full year. I guess, is the -- you mentioned -- always mentioned the 40-60 split between H1 and H2. Is it still the same this year, like 40-something and almost 60 in H2? Or do you think it's closer to the 45, 55?

No, to be honest, it's still with a 40-60 split, except public safety. That's why I've mentioned that we had 81% jump in Public Safety & Transport orders in the first half year compared to the last first half year because some orders have been shifted to the left, which is unusual. Usually, they're shifted to the right. So at the end of the year, we expect a similar pattern with -- compared to last year. Nevertheless, orders are very strong currently, and we also said in our outlook that we expect a minimum growth in revenues of 10%, not around 10%. We said now it will be more than 10%.

Thank you very much for your questions, Miro. And with this, we already answered a few questions in our chat box. Let me jump over there. Could you please give a status quo comment regarding the U.S. flight system orders?

Yes, we can. So first of all, I have to say that we are lucky that the FAA, so the Federal Aviation Administration in the United States, which is the ANSP in the U.S. is benefiting from the Big Beautiful Bill of the U.S. government. So what the FAA expects is a funding of around USD 12 billion to USD 13 billion for renewing their air traffic control infrastructure. What we have seen in the first half year and that will, as we have planned, continue also in the second half year is that there is an acceleration wish of the authority to accelerate their transformation towards an IP network, which is very important to us because our technology is part of that journey. And we had already significant double-digit order in the first half year and expect another double-digit order in the second half year for that transformation program.

Thank you very much. And what share in your revenue streams is actually based on software and what share on hardware? Additionally, what do you expect to see in 3 years?

I would like to comment on that. So concerning our software portion, we still are at 20% concerning hardware, it means own produced hardware as well as procured and sold hardware. We are approximately 10%. What do we expect for the future? That depends what our customers tender in the future. What we see now large tenders where we are the general supplier. Here, the customer expects us to deliver also a large portion of IT equipment and other hardware required for the airports. So it depends on the tender that we win. So I would say we still see the 10% of hardware in the future, if we don't win large tenders with large material portions.

Okay. Thank you very much. And next online will be Philip Hettich. He should be able to speak now.

Philip Hettich, from ODDO BHF speaking. First question from my side would be, I saw that you recorded a gain from sale of intangibles and PPE in the first half of the year. Could you probably elaborate what that was exactly. I think it was around EUR 850,000.

Okay. I would like to comment on that. Here is Peter again. Thanks for the question. Well, we had projects where the customer decided to lease the equipment and not to buy it. Now the customer has detected funds and asked us to take over and procure the leased equipment from us. So the lease will stop, and we have sold it.

Okay. Maybe a second question regarding defense orders. I think you're still sticking to your view that there's no immediate effect on the order intake from any additional defense spending. But I was wondering if you have anything to share in addition regarding the timing and when you would probably expect, yes, any orders to flow through? Is there any news? Or is there nothing to share at this point that is incremental from what we've already heard from you?

Yes. I mean we always said we don't expect a jump in orders in defense. So that will be more or less a multiyear development of increasing order pipeline in defense. We see that the first compelling event we need in Germany is that the EUR 600 billion will be approved into a budget and then will be distributed to the forces for tendering or for extending existing contract basis. That's one thing. And the other thing is that with the first remote tower for U.S. Army, of course, we also have set the seed for additional orders from the United States in rolling out their digital tower program, where we still wait for the approval of the authority in the U.S. and the tech center for certification expected Q2 '26.

So what we expect is a continuous growth in defense and pipeline increase for '26, '27, '28. I also want to mention the share of the defense business, of course, as we have a very strong civil ATM U.S. business from the United States from the FAA, which I have just mentioned when I think Miro has asked the question. So it will always be in relation to the growth of the other segments. So if the other segments are growing very fast at the moment and defense not, so it can also be that the overall share of defense will be less than 20% due to the big growth of the other segments because we face a book-to-bill ratio larger than 2 at the moment.

Okay. Understood. And then maybe one more question on the seasonality just for me to understand. I think you always -- or you managed in the past to -- and also this first half to come in at a positive EBIT margin in the PST segment. So are there any additional effects that contribute to a better first half margin in the segment compared to air traffic to the ATM segment? Or is it -- yes, or is it just merely an effect of the structurally higher margin in PST that causes EBIT margin in the first half to be positive there?

Here's Peter. Thanks for the question. I think we have 2 things. One is, yes, the Public Safety margin is higher than the ATM one. And the second one is it depends on large projects and how these large projects are executed in the first half year, whereas we had here very good ones in the first half year in ATM in the second half of the year.

Thank you very much, Mr. Hettich. And we will go on to another question from the chat box. In recent weeks and months, there have been various reports of mostly short-term failures of air traffic control systems, for example, in Poland and at London Heathrow Airport. Are these systems currently the focus of increased attacks? Or is the perceived increase in frequency coincidence or due to greater media attention? What could this mean for Frequentis and its competitors, market share shifts or faster replacement of older systems?

Yes, I can answer that. I mean, first of all, I have to say that no Frequentis product was involved in Poland. I didn't even know of the Poland failure and neither at NATS in the U.K. what we have heard from NATS, it was a radar failure on the radar infrastructure side. I think failures always somehow appear. The question is how long is there an impact to the air traffic flow. Usually, our customers have doubled system, backup systems, tripled systems. So they are prepared for failures to -- for the backup systems to take over as soon as possible. I think in the U.K., the outage was only affected by 20 minutes. So then the backup systems went up and took over.

And there will always be failures. Of course, we don't like that, but the question is how fast those failures can be covered by a backup. And then usually, we go into root cause analysis if our systems would be affected to identify the failure and reproduce the failure and then to execute changes to the program that the failure can never occur again. That's typical for safety critical systems.

Is there a chance for others? I don't know. I think every supplier already had the opportunity to face a failure of his or her own system. I think it makes the system more resilient, if we can reproduce the failure and can eliminate the failure. I don't think that it's a chance for more market share. What's the chance is that the ANSPs, of course, have to think about upgrading their infrastructure due to the increasing air traffic. And I think that's the biggest challenge for companies like us to participate in that investment plans they have for the next 5 to 10 years.

Thank you very much. And could you please give us some words about your business in drones? And what you see regarding that business within the coming years?

Yes. I mean, when we look back when we started with our first research programs in CSR and in Europe, to allow drone flights autonomous from Finland to the Baltics, we thought that the challenge of drone systems called UTM systems is to integrate drone traffic into regulated airspace where air traffic is conducted. That's still our goal to provide systems, which can make sure that there is no conflict between a very large increasing drone traffic not to influence air traffic with people in an aircraft. But to be honest, since 2 years, based on the Ukrainian war, we have seen that the type of war has changed significantly. So drones play a major role at sea, on land, in the air as part of the forces.

So what the German Armed Forces have then identified as a threat is that they have no real technology in the German nation to identify if a drone is friendly or unfriendly. That's why they have started a program with Frequentis to build up a technology-based to be able to identify a drone as friendly or unfriendly. And if it's unfriendly, to then start countermeasurements against this drone operating or flying in an airspace. I think that's new. That's a new market segment. We now have identified beside the civil usage. The military usage is increasing, and we think that's not a German problem at all. It's a worldwide problem to be able to -- to see a drone, to identify a drone and to then conduct method to say, are you friendly or unfriendly and in case unfriendly to take countermeasures. So the drone use cases will be more and more military in the future, we are convinced.

Thank you very much for your answer. And the next hand up from the person with a phone number ending 742.

And we will move on to another person with a hand up, the person with the initial you should be able to speak now.

Lukas Spang, Tigris Capital. I have 3 questions. The first one is regarding your backlog. Can you share a little bit some details or some numbers? How much of your backlog is already for 2026 and beyond. And in this regard also, how is this number compared to 1 year ago. So if you compare the order backlog mid of 2024 and looked into 2025. So how is this number or has this number developed since then?

Yes. Thank you. So the orders on hand, as I said before, is committed orders from our customers and not budgetary approvals within their organizations. Otherwise, the orders in hand value would be around double of what we currently have in our books. So those are committed orders. Those orders are usually multiyear orders or not usually, some of them larger orders are multiyear orders as a rollout in a large geography like Brazil or the U.S. takes a couple of years. So therefore, the orders on hand is always higher than the revenues.

What I can say and that's maybe a statement for the end of the year, we usually start with around 50%, 55% of already in-house orders a new fiscal year. So our plan, when we grow '26, another double-digit number, then we expect to have 50%, 55% of the orders feeding that revenue top line already in-house. Does that answer your question?

Partially maybe, but if you look at your fixed or your committed order backlog, how much of this is for 2026 and beyond?

Yes, we think about 50% is around 20 because you never know how fast you are in the project. I mean, we still have 6 months to go or 5 months to go in '25. So it depends how much of the orders we can execute in collaboration with our customer, we can execute in '25. The more we can execute in '25, the less will stay for '26. So it's a very vague figure I can tell you, but we expect around 50%.

Okay. And then staying at the order backlog or order income, you have this, let's say, midterm plan to increase your margin to double-digit number. Do you see in your order income and your order backlog that margins are going up so that you have for 2026 and beyond or if you have also in your pipeline further future orders that you can reach the higher margin in the future based on the incoming orders on pipeline orders you see?

Yes. I mean the average of the last 5 years, when we count our orders are around 10% profit. But that's very much volatile. It depends on the type of orders you get. So when you are a prime contractor and taking over a lot of subcontracting into your prime contract, then usually your bottom line in the order intake phase is not that big as if you would be alone with your own value chain only. So that very much depends on that.

And it also depends on how much PST orders are in because, as you said, the last couple of years, we have ended up end of the year with a double-digit EBIT in PST and with a single-digit EBIT in ATM. And the share between PST and ATM is also responsible for that figure. But the order intake profit is only a starting point. And as you know, public sector is very much depending on change requests during the program. So those are also responsible for producing better EBIT margins than we have contracted in the beginning.

But especially in ATM, if you look on your order intake, do you see that you can reach higher margin? Or is it just that you will have not this high expenses in the future anymore, which you have currently due to the platform expenses?

No. I mean that's depending on the program. I can give you one figure. The APC program in the United States, it will be a 3-digit million program order intake for 2025. At the moment, we only get a cost coverage from the FAA and then the rollout will be contracted in August, September, where we get the whole profit and the civil works accordingly. Then we have a very good margin on that rollout program because we produce 15,000 boxes of the same. So the margin will be double digit overall from a corporate perspective.

When we go into Release 10 programs where we invest around EUR 20 million of our EBIT every year to produce the software, then these programs are around 0 or if we are in a competitive situation, even minus 5, but that's part of our business model that we step in with a minus profit and then develop it during the program. So it very much depends on what type of product we get into our orders during the year.

Okay. And then to your revenue guidance, so you communicate at least 10% that leaves some room on the upper side. What do you think would be a realistic upper end to expect if you would give a range, the upper end?

I would say, at least 10%.

So you don't want to give an upper end. You think it -- which is realistic or you should expect...

We have shown at the half year, I think 15% approximately. So if it runs as expected, we will be around that figure. That's what we can expect.

Thank you, Mr. Spang. And we'll move on to Mr. Daniel Lion.

Mr. Lion, we can't hear you.

Okay, then we will come back to you later. And I will move on to the person with the phone number ending 2809.

This is Miro again. Three more questions, if I may. The first one on tariffs. I think there is a 15% tariff now in place for the EU. How does this impact your P&L?

Yes. Miro, I said that we have around 80%, 85% of value chain localized in the United States. So the only transfer is hours of experts and maybe software licenses to the U.S. So we expect the tariffs to have a minor impact on to our U.S. programs.

Minor means EUR 1 million or so or less than EUR 1 million?

It depends on the revenues we can execute this year in the U.S. programs.

So lower single digit. Is it low single digit?

Yes.

Okay. The second one is regarding the seasonality of your -- and the fluctuation over the seasonality of your P&L. So what we can notice is basically that the amplitude of the minus in the first half and the plus in the second half is getting higher and higher each year. Is there -- can you maybe explain how you account for the people who are working in the first half year, as you have mentioned before, but who do not basically create any revenues in the first half. Isn't there any way or can you explain how these people -- the work of these people is being accounted for? And will this remain this way for the foreseeable future? Or can you do something about it going forward?

Good question. I think what happens in the second half of the year that customers see that they have funds left, which they would like to spend. So spares, change requests, happening then in the second half as well as claims where we negotiate the whole year. We want to have a result until the end of the year, which is then for both sides of interest to have it covered in the calendar year that happens then, especially in quarter 4 to close the cases. And the next thing is a lot of customers are shifting their orders from 1 week to the next one, but what's fixed is the delivery date. So what we do here, we know that we get the order. We know it's, let's say, an extension that the customer will order and the customer is only able to buy it from us.

But he isn't able to place the order, tries to negotiate or wait or have initial or full procedures. As you know, our authorities, our customers have very slow processes. What we do here is we prepare for the second half. We prepare for everything that has to be happened in the fourth quarter, make pre-investments. What we do is we order the core materials to be able to supply. We develop the one or other feature that we are able to deliver things like that happen. So it's like a chess game where we set our pieces and in the second half, in the last quarter, everything has to happen and according to the plan. So the people are not sitting around and looking out of the window. They prepare and develop and build.

But this is not bookable as own work capitalized or change in semi-finished goods or whatsoever because this number has been much lower this year compared to the last years. Since the materials...

Now what happens is the -- the materials that we procure, you see it then under inventories. So we have it on stock. The problem is we cannot put margin on top of it because we have no order. So you see then always in the first half increased inventories. That's what we prepared to be able to ship them in the second half. And also when we develop some features which are not sold, we cannot recognize that as revenue. And we will not recognize it as revenue without orders. I know other companies are doing that to put it -- to make it flat, we don't do that. If there is an order, we can recognize revenues. If there's no order, no recognition.

Okay. Then the last question would be on your segmentation according to installed base business and new business and other, which you also provide in your report. Can you please explain in detail what installed base business means or what a new product or new client business is? Maybe a stupid question, but I can imagine that you have ever and ever the same clients coming back to you for business.

It doesn't -- it's a very good question for all people, new and not experienced with Frequentis or probably haven't forgotten it. It's part of our business model. The first thing we try to attract new customers also with new products, new solutions, new customers. That's the new product, new customer business. That's always with tough tenders with high competition. And then the other phase is when the systems, our systems are done on site, we talk -- it's the installed base business. So the system is on site. The system is installed. Now the customer can have wishes extensions, improvements, things like that. We know that the customer, then the customer knows us. So we are together able to improve the system, which brings additional value to the customer. And this additional value can then be sold at higher prices because it brings value to the customer. And the competition is very limited. In some cases, no competition.

So the defining characteristic is that the system is already installed on the customer side. This is the definition.

That means the installed base. The system is installed. And everything after this installment on site that's then called installed base business where we sell to this customer additional functions, extensions, spare parts, probably additional products that fit to the system trainings, everything like that with a high value.

Thank you very much for your questions again, Miro. And we have 2 questions left in our chat box. Do you have an M&A pipeline in side? And are there any news concerning the remote tower projects in the U.S.

Yes. So M&A is still part of our corporate strategy. As you know, especially since our IPO 2019, we have acquired 10 different companies. I said in my last call that we need some time to digest and integrate them and put SAP in and all the processes. I think you know what that means. That's a lot of work. Nevertheless, we are -- we still have appetite in M&A. But a lot of things have to be checked before we are going into diligence. First of all, is the product a value for us where we can make a 1 plus 1 is 3 out of it. You know that Frequentis is going more and more into the solution business from a single product business into solutions business, and we need multiple products for a solution for our customer to create operational value for our customer. Therefore, the product itself is very important to us.

The second is it has to fit to our strategy. So our strategy is to become #1 in control center solutions of national safety critical infrastructure. We are not interested in commercial business. So we want to stay in that safety critical space. And the next one is the culture of the company because we have a very special culture in Frequentis. We are a family company. Yes, we are stock listed, but still a family company. So we are very long-term oriented, and we are very risk averse when it comes to our balance sheet, not to remain with debts for the next generation because we hand that company over to the next generation at some point in time. Therefore, also culture plays a major role. And those elements are really important to us, and we are not buying just for the buying sense, we are buying to have a real value for the company. So we have a pipeline. We analyze around 20, 30 companies a year. Currently, we are not in a dedicated due diligence phase.

Concerning the remote tower question, what's very interesting to us is that the first U.S. Army base outside of the U.S. has deployed the remote tower of Frequentis for military purposes. It's very interesting. Most of these towers are very, very old. Some of them have been built during the second World War. And they make a decision that if they rebuild it, it costs them maybe USD 20 million or if they put a digital tower in, which costs them much less, especially also from a maintenance perspective. What we're still waiting for, for the U.S. National Airspace is the certification of our remote tower in the tech center of the FAA. That is still the same forecast as last year. We expect a Q2 '26 certification from the FAA for our remote tower to be able to deploy it in the national airspace of the U.S.

Thank you very much. And in the meantime, we have received no further questions. Therefore, I hold the room for another moment if there might some left.

And there is one more hand up from Daniel Lion. You should be able to speak now. Yes. Mr. Lion, you are unmuted, but we can't hear you maybe some audio programmation. No, sorry, still not. Maybe you can place a question in the chat box.

Send it to Stefan Marin, [email protected]. We can answer the question afterwards. No problem.

Okay. Thank you very much, Mr. Marin. And with this, we come to the end of today's earnings call. Ladies and gentlemen, thank you for your participation and your interest in Frequentis AG.

Should you have any further questions, please ask them to Stefan Marin from Investor Relations. A big thank you to the Management Board of Frequentis for your presentation and the time you took to answer the questions. It was a pleasure to be your host today. I wish you all a lovely Tuesday.

And with this, I hand over again to Mr. Stefan Marin for some final remarks.

Yes. Thanks. We look forward to engaging with all of you at the upcoming conferences. Our full year results for 2025 will be published on the 9th of April 2026. And yes, in the meantime, just drop me an e-mail if you would like to schedule a follow-up call.

Until then, all the best and take care and hope to see you virtual or at one of the several conferences that Norbert and I are going to visit. Thanks, and goodbye from Vienna.