Asetek A/S

Hello and welcome to Aztec's Second Quarter 2025 Earnings Conference call. Please note that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you'd like to ask a question, please use the Ask a Question box on your screen. I'd now like to hand the call over to Peter Madsen, CFO. Please go ahead.

Thanks, Ellie, the operator. for handing over the word to this Q2 2025 ACETech presentation. My name is Peter Madsen. I'm the CFO. I'm in the room here with André Slot-Eriksen, who is our founder and CEO. Good morning, André. Hello. And we will report to you the report and the presentation that our board met about and discussed this morning and subsequently approved for us to release. As Ali just said, if you have questions, please find the spot on your screen that says something about Q&A and then type in your questions there and then we will see them and respond to them after the presentation. Disclaimer, this is the first one, please read and understand. And then we hand over the word here, the microphone to Andre.

Yes, let's look a little bit on the highlights of the quarter. So sequential increase in liquid cooling revenue along with the new mid-market product line that's been well received so far with shipment starting at the end of the year. Of course, I almost dare to say our simsports revenue was impacted by the US import tariffs just like we had expected. We see a group level gross margin of 45% level with the same quarter last year. I'll get back to it in a minute, but tomorrow I am actually flying out of here in a few minutes. I'm going to Gamescom where we will be launching a new mass market product. And yes, we maintain our guidance for the year. Next slide, please. So on the liquid cooling side, we are seeing a good momentum with both existing and new liquid cooling customers. And there is a demand for innovative high end and new mid market products as well. We do see and what should I call it, returning an increased focus on quality supply chain and full service. And I think the hidden meaning of this bullet is that it's not all about low cost. There are still people who focus on quality, etc. And altogether, that's setting the stage for a profitable growth from next year. Simsport sales reflect the tariff uncertainty and the lower end user demand. As a follow on that, we see the main impact through our resellers and retailers. I'll also come back to that. The mass market initial product line that we're launching tomorrow at Gamescom is, of course, widening the addressable market since it's a much lower price point. And we will later on have a console compatibility with this platform as well. Yes. And then let me address it now. And only now in the sense that I will not address any more questions to this topic or any questions for that matter. We have received additional indications of interest relating to potential strategic transaction with the company. And we have those preliminary discussions that are ongoing. is no certainty then anything will happen at all and yes as i said that's what i will be talking about that topic for today in terms of financial guidance it's still unchanged meaning that it's expected to be between 45 and 53 million with an adjusted ebitda margin of zero to three the liquid cooling segment 40 to 43 with the gross margin between 40 and 45 and the sim sports revenue is expected in the range of five to 10. Of course, disabled and handicapped by the tariff situation. If we dive into the liquid cooling segment first, I almost dare to say that it's a plain vanilla quarter, which is good. Roughly 45% gross margin and roughly 30% EBITDA margin. Right now, we are supplying three out of five of the top global PC manufacturers. We had five new liquid cooling products that started shipping here in the quarter Q2. And between eight and 10 new products, it's estimated to start shipping in this current quarter. We have focused a little bit, we've been talking about it for a long time, but now it's happening, focused on the mid-market as well, because that's widening the addressable market in terms of just selling high-end coolers. And I would say as a very successful start, we have deployed that in China. If there's some misunderstanding, let me just rule that out, that mid-market does not mean necessarily lower margins or anything like that. It's still a very good business to be in. One slide that I personally think is the star of today's meeting is slide nine here. that says continue strong customer momentum. But what I really want to turn your attention to is if you look at the left slide of the graph, although we are a little bit behind on revenue compared to last year, it's only a matter about ASPs or the average selling price. Whereas if you look at units for the entire first half year of 24, we sold 367,000 units you can see this year we have sold 365 000 units so almost the same the interesting point here is the orange graphs in the middle the left hand is exactly the amount of units we lost with two car with two customers going to dual sourcing whereas the right hand graph is actually the growth we have been able to take out of our, let's say, existing and new customers. I actually find it quite remarkable that within one year we have been able to, let's call it, subsidize half of our product and revenue stream with new and existing customers. That, of course, explains why we are not seeing a big growth this year like we are used to, I almost dare to say. But it's also showing that inside the company, we've actually experienced a big growth with new customers and with existing customers. And in terms of 26, we are quite positive that we will return to growth, both because we are in positive dialogues with the two customers who went to dual sourcing about putting more in our basket, as well as we are still seeing new customers and existing customers coming in. One example of what I just mentioned is that we have resumed the collaboration with Antec. Antec was a customer we had many years ago that has now decided to come back. Their profile is that they are a global leader in high performance computer components and accessories. And the first shipments of this mid-market cooler with them is initiated. And in this case, we are delivering a full solution, including the high tops display, et cetera. And from Q4 on, shipments to end users are commencing. On the SIMS board side, There are gives and takes as well. Of course, on the revenue side, you know, half of our revenue last year was the US. So of course we impacted, but not only directly in the US, it has also created a lot of uncertainties around the globe. And it just means that in a high-end segment, like the one we are playing in, we just do see a more cautious buying behavior, both from resellers and also end users. We have... U.S. retailers simply awaiting taking in our products because they want to see where this is heading. So while some people believe it's good that we have now got 90 days of more certainty, it's actually not good. We would rather prefer if we had a final outcome and that's it and we can move on. The highlight of this slide, though, is that our own sales, so direct sales to end users is actually on budget and unplanned. So that's, of course, very positive that there are still end users out there that are buying directly from us and actually enough of them to fulfill our own expectations. We have seen a gross margin at 35%. I would say that's a highlight as well because with what's going on and shipping back and forth and tariffs and, of course, not a very big business yet, I'm actually happy about this. So as I spoke about tomorrow, I'm going in a few minutes, but tomorrow we are launching what we call the initial product line. So initial in Latin means to begin or to enter. And the idea is that this is the entrance to our ecosystem. As far as I recall, this is our biggest product launch ever. because everything you see on the picture and then some is going to be released tomorrow. It has been in development for quite some time now, but it is a high value segment we are targeting here. I don't want to spoil the fun and talk about prices here. You can see them tomorrow, but it'll be much, much lower price than what we currently have available. And what I would argue is that it's actually still pretty high end. So the focus with this is much more gaming mass market. And of course, electronic retail outlets around the globe is the target for this. We are working, as I said earlier, on console compatibility, especially Xbox, which is the biggest platform in the sim racing market. We have been working with Microsoft for a little while now. The cooperation is progressing as planned, but it's also clear that it's not ASICSEC setting the speed here. So we are carrying on and we expect later this year or early next year to be able to launch that. And with that, I will give the word to Peter to talk about the financials.