In Q1 2023, Creotech Instruments reported total revenue of PLN 10.5m. Product sales accounted for PLN 6.2m, showing an improvement of PLN 0.5m compared to the corresponding period of 2022. However, the company’s EBITDA was recorded at PLN -0.5m due to higher general expenses stemming from the company’s rapid growth and increased production costs of electronics. Operating cash flows were substantial, reaching PLN 10.7m, primarily driven by changes in subsidy settlements. Consequently, as of 31 March 2023, the cash balance showed a surge of PLN 7.4m, culminating at PLN 33.4m. The company’s current strategic focuses include launching its first proprietary EagleEye satellite and substantial capital expenditures associated with relocating selected departments to prepare the organization for scaling up to manage the increased revenue streams expected in the coming years. Creotech acknowledges the potential of the quantum segment, as reflected in its acquisition of significant contracts in the early months of 2023.
“We are progressing with our crucial projects in the space segment. The upcoming and most pivotal event for us is the EagleEye mission, which marks the culmination of years of work on our proprietary HyperSat satellite platform. The mission, scheduled for 2024, will bolster our standing in the international arena and may significantly increase demand for our products, the commercialization of which will be our primary focus in 2024. To expand our production capacities and meet rising demand from commercial partners and government entities, we initiated the relocation of our office, along with our R&D and production departments, to new premises in Q1. Despite these measures temporarily affecting our bottom line, they will enable continued scaling and help manage the growing revenue streams in the future. In the first quarter and the subsequent months, we secured several contracts and signed agreements in the quantum area, including quantum key distribution This existing and rapidly growing global market offers excellent prospects and could be a significant driver of Creotech Instruments’ future financial performance,” comments Grzegorz Brona, PhD, President of the Management Board (CEO) of Creotech Instruments S.A.
The initial months of 2023 were marked by an escalation in work on the company’s proprietary projects within the space segment. Additionally, Creotech secured several substantial contracts in the rapidly emerging quantum sector, including quantum key distribution. Moreover, the European Commission has commissioned the company to implement a project in the field of quantum communication as part of the Horizon Europe and EuroQCI programs. With a total budget of EUR 7m, approximately EUR 4.2m is allocated to Creotech, which leads the international consortium. The company is expected to contribute to developing, certifying, and producing advanced quantum key distribution systems. The quantum communication market vastly outstrips the market for products tailored for quantum computer systems, and quantum key distribution is expected to be deployed in critical infrastructures across Europe in the coming years. This includes terrestrial networks and satellite connections.
In Q1 2023, Creotech Instruments reported a total revenue of PLN 10.5m, signifying a 26% year-on-year increase. Revenue from product sales was PLN 6.2m, showing a 9% growth compared to the same period in 2022. Despite an EBITDA of PLN -0.5m due to heightened R&D activity aimed at advancing the company’s key proprietary satellites projects, the cash balance at the end of 31 March 2023 rose to PLN 33.4m, largely due to changes in subsidies.
“In the two sectors where we see the greatest potential for growth, namely space and quantum, we observed improved product sales compared to Q1 2022. Additionally, we’re ramping up our investments in research and development to propel our growth and be well-positioned to manage the anticipated surge in demand for our products in the near future. The Q1 financial results also reflect a substantial increase in property, plant, and equipment, and lease liabilities, consequent to the initiation of long-term leases in our new facilities. This new space is already in use by our employees and supports our day-to-day operations. In the upcoming quarters, we will continue to invest in preparing and retrofitting facilities, including clean rooms and production rooms,” said Paweł Górnicki, CFO of Creotech Instruments S.A.
In addition to pursuing its own projects, Creotech Instruments has been repeatedly selected for international-scale ventures. One noteworthy project is a contract secured to develop the first large-scale quantum computer for the European Union. In this venture, Creotech Instruments will be responsible for supplying the control electronics for the computer’s CPU. In April 2023, the company inked a contract with the European Commission. The agreement stipulates a consortium-wide budget of approximately EUR 20m, with around EUR 2.2m allocated to Creotech. The objective is to develop a 100-qubit quantum computer by 2025 and to attain the technological readiness necessary to build a 1000-qubit solution by 2029. The global quantum computing market is expected to reach USD 1bn by 2026, a significant increase from the USD 472m valuation in 2021.
Creotech Instruments is Poland’s only company capable of building microsatellites, i.e. satellites ranging from 10 kg to several dozen kilograms. A significant milestone in the company’s growth is the EagleEye Project, which involves the development of an Earth observation satellite set to launch in 2024 atop SpaceX’s Falcon 9 rocket. Additionally, the company is a co-executor of the PIAST project, where it plans to launch a constellation of three observation satellites in 2025, based on the proprietary HyperSat platform.