Qt Group Oyj

Hello and welcome to Qt Group's first quarter 2024 results presentation. My name is Herta Nervenen, I'm the communications lead at Qt Group and today with me here are our CEO Juha Varelius and our CFO Joone Lintunen to share the results. After the presentation we have time for questions, first starting from the room and if time permits then from the conference line. Without any further ado, Juha, please go ahead. Thank

you. Good afternoon everyone and welcome to our Q1 results and as usual we go through our agenda first, the business highlights, then Joone will go through the financials and then I'll talk about the guidance and outlook for 2024 and then we go into questions. So if we look the first quarter highlights, it was a slow quarter, we weren't not very happy about it, it's the net sales crew, 13% reached 45 million and it's 14% on comparable currencies. Our EBIT margin was at 24%, 11 million which is say a .5% increase so this continues to be a very profitable business although we would like to see a bit higher top line and well the profitability is where we were thinking it to be. We do have the comparable like we said always that the quarters are not brothers to each other so we do have these big deals and this quarter we had a comparable quarter was pretty good and therefore it was a tough quarter to compare but still we were expecting actually a bit better quarter for ourselves so it was a tough comparison and where we were behind or if I look at how the business went, we did budget the consultancy revenue pretty much flat this year and that's going according to plan and that's always been a business that we don't, we do it to support our customers, especially our new customers, we're not looking to grow in that particular business, it usually grows slowly as the business grows. Now we saw last year that as the market environment got tougher our customers were looking where to save and the consultancy was the obvious that they tried to do a bit more by themselves and what not but so the consultancy went according to our plans. Our development license, license revenue actually grew very healthy so we had a, if we have our guidance on 20 to 30% our license revenue was growing on a top end of that guidance so the license revenue was doing very well. Where we were behind on the first quarter was on distribution licenses so that was the soft bit that actually made us to be a bit lower than we were expecting. The new customer acquisition has gone well and the renewals which I've been highlighting to you that this year we're going to be seeing more and more the one or three year subscriptions coming first time into renewals and we've said that we don't think that there's going to be a big difference on that do people renew, we do believe that people will renew their licenses because the projects are ongoing but there is that are they going to be renewing three year licenses into three year licenses and so on or instead of three year licenses to one year licenses. Well that conversion rate is pretty much bang on what we've been expecting so they are renewing and they are renewing on the rate that we have been expecting and mainly that renewal goes into that they renew what was the old license so we haven't seen a change over there. So now we are much more confident that if we were a bit reluctant or we were hesitant to say that how that looks like I think that the renewal business will go pretty much bang on on the budget that we've been thinking and it seems that the developer the license sales is going according to the plans so the and it's growing nicely so on a distribution license revenue was the softness and if I look the regions APAC is performing well and US is performing well so mainly the slowness we had this quarter was in Europe and so that's in a nutshell if we look where we are. I'm going to talk about the Q2 and the outlook after Joonas presentation. Personnel 806 on March 31st increase of 31 employees. We are continuing hiring new people as planned so we haven't changed our growth plans anywhere. If we look into the future I think that the percentage wise we've always hired on sales and we've hired on R&D now if we look our businesses I think that percentage wise the increase is going to be the biggest on the our quality assurance business and that's what we are ramping up as we speak. If we look the Q1 performance on quality assurance it went pretty much like we were thinking and we see that the front logic squeeze cocoa is going forward fine and actually we are well it's a bit different type of a business the deal on on squeeze it's like selling licenses on a fairly quick fashion actually even quicker fashion than on Qt whereas on AxiVee on the sales process is a bit longer there is proof of concepts and what not so there is a more fluctuation what I'm trying to say is that there is more fluctuation on AxiVee on deals quarter on quarter so it's not so steady whereas squeeze kind of a grows very steady line and AxiVee on grows like a bit a bumpy curve if that's made any sense. Okay with that I'm going to let Joone to talk about financials and then we talk I'm going to well I'm going to talk a bit more about these different revenue groups and how do we see them going forward this year.

Thank you Jooha and welcome from my behalf as well to the Q1 earnings presentation I will talk through the P&L side and some words about the balance sheet before Jooha continues. You have touched pretty well on the net sales growth already we grew by 13% reported and 14% in comparable currencies and there was a negative slight negative impact from AFX US namely by 0.4 million the growth as stated did come from the licenses and consulting which grew by 17% and this contains as well the consulting and distributionalized revenues meaning that the developer license bucket was growing nicely. Our maintenance revenue is going down as expected now in the first half year and then it will start gaining again the second half year when the subscription or the old maintenance tail has been eaten. We will keep on seeing strong quarterly fluctuation it's because of the timing of the developer license deals timing of the distribution license deals and then also we expect to see the effects impact going forward as well. If the exchange rate remain the current level it's kind of a limited impact for this year but no forecasts in that regards though. P&L we are investing as per growth strategy we are increasing our headcount in growth areas CSR&D for example QA specifically and our headcount went up by 100 employees during the last 12 months or 14% and that was a bit kind of tail end quarter heavy in that way so towards end of quarter the headcount increase got stronger. This explains the personal expense growth by 8% from 22.6 million to 24.4. Our materials and services spent was in slight decline and that's the item that we used for adjusting the resourcing for our consulting projects. There is no change in depreciation which is limited 0.8 million per quarter and then the other operating expenses were slightly up 6% to 8 million. I guess one sign of the scalability here is that we grew our expenses and headcount cost by roughly 2 million and revenues by 5 million and that lands nicely the EBITDA margin which went up close to 5 points from .5% to 24.3 EBITDA in absolute figures 11.0 million. No change in amortization there are no new acquisitions that we accomplished in Q1. This leads to EBITDA of 9 million or 20% and due to a slight decline in the cost of the financial items we had a higher value. The financial items were positive 0.5 million out of which roughly half realized and half unrealized gains. Then the profit before taxes lands to 9.4 out of which then income tax is 1.8 million or roughly 19% effective tax rate which is in ballpark where it should be. We are reporting 7.6 million net profit or .9% and this leads to EPS of 30 cents. In balance sheet side there are only minor movements. First I mean not from balance sheet but our operating cash flow was pretty good 18 million coming from the incoming payments from NQ4 deals. Ending cash balance was about 1 million higher than where we reported December 2023 despite the fact that we repaid the loan of 16 million early in the quarter. Accounts receivable down by 10 million and a slight reduction in the contract assets and there's a slight shift as well from long term non-current bucket to short term one during the first quarter. In equity and liability side the biggest change there is the repayment of loan 16 million and then some long term liabilities move into short term relating to the activity and earn out accruals specifically. But not much else of significant changes in these numbers. Now it's time to give back to Juho for him to talk through the outlook and guidance for this year.

So well long term I think that if we look this year we have seen significant changes in the market. Well like I said we've budgeted the consultancy to be pretty much flat and that's what I you know it might grow a bit faster. We've been gaining some new customers that they might need a bit more help than we've anticipated in the beginning but that's roughly where it is. And I think that this market environment US economy is doing well and on APAC we're seeing a lot of activity. I think in the US and Europe we're seeing a well we do see activity but we do see that our customers are cautious might be the right word. Not hesitant but cautious and the very cautious on cost side as well. Like I said many times before we don't see on developer license sales we do see that all our customers they do have their projects, they do have their plans, they're going to go according to those plans so we don't think that the license sales we see pretty much the steady healthy growth we've been seeing in the past years and that's going to continue. We don't see any bumps on that. If we look on the distributionalized revenue we think that well in Europe we think that it's going to start picking up. There's been some cautiousness over there and slowness if we look in US and in Europe in US and in APAC I think they're going to continue their good performance over there. That's the line item that I think we have the least visibility in some sense because it comes from many various sources and what not but just yesterday I was speaking with our sales guys in Europe and some of the sales guys in Europe they think that the environment is now more optimistic than it was on Q1 so they see that it's probably going into more positive direction. If I look to QA business I think Squiskoko they're going to continue pretty much on a growth path they've been and like I said on Axivion I think that well it's still such a small business and the deal making is a bit different in a way that each deal is negotiated that takes a bit longer time like Qt in the beginning as a matter of fact. If we look like the first half I think it's going to be so it kind of peaks and the deals come in more on a random sequence. It's not so steady line as on the other business lines. However we see that all the customers we've been talking to that are using our Axivion and our Squisk products they are very happy about them and so we see the same story a bit like on Qt that the product is very good the users are getting a very good feedback and there is definitely a need. We've talked many times about the Qt need that there is a lack of developers there is more software to be developed and therefore there is a need a tool like Qt to be that you can use the code all over again and cross platform tool that increases the efficiency of the developers. Well now that we do have this vast amount of code coming into the market there is even more need to be able to automate the testing on graphical user interfaces and there is even more need to be able to do the testing on a code even before it's ready and there is even more need to get the architecture in place in a right manner. So we think that the QA market basically is double the market potential market that we have on Qt so it's twice the size and our target is that we would get roughly about 30% of our revenue in the future outside of the Qt ecosystem which means that the other languages Windows, Java and so on and so forth so it also opens up the addressable market that we are very excited about that opportunity and we see that it's on very early phases and QA is going to have a nice cute type of story ahead of itself. We don't see on a long term that there is going to be much change in this big picture. We do see that both on Qt and well it's always difficult to say projections many years ahead but let's say that the next couple of years that we see that what people are doing and how things are expanding we see no slowness in that per se. So we are keeping our guidance. We estimate that our net sales will increase 20 to 30% and our operating profit will be on -35% bracket and as always I think that unfortunately this year is not going to be any different so what we see is that usually first quarter is a bit slow, second quarter is better, third quarter is a bit slow compared to the other quarters and then the fourth quarter and the last month of the fourth quarter is very very busy and that's going to be pretty much the same this year as well so the latter part of the year and specifically the fourth quarter is going to be the far out busiest and best quarter of the year and this hasn't changed. Why this has to be so I really don't know. Maybe we should change our fiscal year and then we would put it on a third quarter. I don't know but that's how it seems to go. So we actually sell on December we sell a substantial part of the whole year's revenue coming in on December and that's how it works. But the one thing if I look at when you think about this guidance so if I look at the pipeline we are having now and if we look at we close that pipeline into same ratio that we've been doing before then that gives us the belief that we're still very good in this guidance that we're now giving. So we do have a healthy pipeline and it's growing as we speak. So there is we haven't and we haven't seen any slowness in building that pipeline. So in that sense we're pretty comfortable that we're going to be meeting the whole year target this year. And that's actually the end of slides and we can start questions.

Hi good afternoon it's Matt Rikonen Carnegie. Couple of questions about the distribution license business. Since you talked about distribution licenses in Q4 has there been any changes in your clients thinking about production volumes that they talk to you about? So have they indicated any kind of slowness in their volumes compared to three months ago or actually two months ago? So any kind of indication from their side?

No no when we did when we had COVID then the customers were actually telling us that hey there's going to be a slowness. But no we haven't had I haven't heard such a no I haven't had such discussions with customers no. And I think well the thing for us is what's a bit difficult. So we have a distribution license goes in a couple ways either customers or report us that so and so many things were sold and here is the distribution license revenue. Or they buy for example half a million distribution licenses and once they are used they buy a next stack kind of. And then this distribution license revenue we always often we talk about automotive but there are you know there are hundreds of clients paying us distribution license revenue so it's coming from very multiple sources. We have 70 different industries so there are cars and then there are very small devices. So the if and usually the clients don't tell us exact volume numbers. We do have a if we suspect that they are wrong we can do an audit later but they in beforehand they may give us an idea but the many customers don't tell exact production numbers because it's kind of a it's an information they want to keep themselves. And so therefore for us to estimate the distribution license revenue exactly for each quarter is a bit of a challenge. So we have an idea but we don't have an exact figure.

Right thank you. Then how much do the distribution license and of payments and revenues that you book how much do they fluctuate normally per quarter. So are we talking about kind of big fluctuations like five million per quarter or is it more smaller?

Yeah a lot. That's why we tell it on a yearly basis. It really fluctuates a lot.

Right and do you have any seasonal expectations on how the quarterly payments or revenue bookings land? No. No they

they they we do they they do fluctuate quarter on quarter throughout the year.

Right okay. And maybe just a recap of what you have been talking about earlier about the average prices and prices in different product categories. Is it still so that you are getting roughly one US dollar per automotive screens and twenty to thirty euro cents per inexpensive devices like coffee machines? Yeah so yeah

like I said it's coming from many different various clients and different sources. So take those and I know that you try to evaluate the runtime potential. So those are the prices I've given you so that you can you know end up in a ballpark and that hasn't changed. And sometimes we do see that some of our competitors may be offering a lower prices but we don't go into that price competition and we don't think that it's a long lasting story. So if we think that the it's you know automotive if the screen is a dollar screen or euro screen the it's it's such a small fraction of the of the enterprise of the product that it's better for the OEM auto manufacturer to make sure that the car digital cockpit is the best possible that there is rather than trying to save fifty cents per screen. So we don't see we do see sometimes the competition usually that is fading out at their last resort is kind of a virtue trying to lower the prices but we don't do that. But yeah so I mean roughly like that if you go on a well on cars it's per screen if you go into MCU type of products that's you know very little hardware very little software then you end up in that twenty thirty cent bracket. Then you usually end up in a very high volumes too.

Sure thank you. Then is the average price still around seventy euro cents as you have discussed earlier?

Yeah if I would be an analyst then I would be doing modeling that's something I would be using.

Okay so you don't think that it would be changing over time since you have been closing quite a lot of these kind of small ticket items.

Yeah it's going up. But it's going up. Yeah well you know it's inflation prices are going up.

Ah that's not in a sales mix. No not in

a sales mix. I think that in some senses yeah you are the it's not in a it's not that accurate but I you know I understand the logic that more and more we go into low you know high volume in the other industries the average price might be dropping in that sense here I see. But you know it's such a rough number that's to give you an idea because I know that some analysts have been doing a calculation that they you know they take the number of different devices and then they think that on how many devices we might end up. I've told that that's a bit mission impossible but I've given this kind of a guidance that if you try to do it like that then that's that would be roughly a price to look for and to give you a guidance that how could you be able to calculate it. But the so we're talking about small prices and high volumes. Do I think that the distribution license prices per se will go up in the future? Yeah I do like every other license prices going up. Is that mix gonna you know it's such a rough number that even though we do get a higher volume lower numbers more I wouldn't you know I still would use that as planning at this point of time.

Okay fair enough. Then one question about the testing and quality assurance software. I understood that you have planned to hire a dedicated salesperson to sell the quality assurance product. Yeah. And I think you highlighted that you have been recruiting or investing in that area. So since the kind of sales cycle can be longer there is it fair to assume that the second half of this year would be stronger in terms of sales growth for quality assurance than the first half or should it be kind of even?

I would keep it pretty even now. I mean yeah of course you know you're right. I mean you know in your logic is right that's probably gonna happen. I mean the fourth quarter is gonna be the busiest right and the we're building up specifically the activity on activities and whatnot. So yes it's accelerating so but I mean the difference is on monetary wise the difference is going to be so small that I wouldn't I wouldn't try to guess the number but I mean logically what you're saying is true and probably not this is going to happen but I don't think the difference is going to be on euros it's not going to be that big that I wouldn't you know spend too much time on it in roughly. But you know we see a like I said you know we when we started Qt we started well we were kind of very happy when we got a 100 000 euro deal not opening champagne bottles but very happy and you know then it started slowly growing and we hit 30 million and then 40 50 and so on. We're pretty much on same track on QA and then we were of course we were building our sales organization and what so what we if we're looking to squish sales and selling to existing Qt customers our existing sales network can do that very well. Squish fits very well into a majority of our Qt users and there we are you know we have we have covered only a small portion of that customer base so there is still a long way to go and our existing sales force can do that sales. When we're going selling Axivion outside of the Qt ecosystem it is there you need more expertise so some of the Axivion sales guys might be our own old Qt sales guys that are trained specifically for that and then we've also hired new sales people mainly from QA background that they've been selling testing software before in their career so basically from competition right and to bring in more knowledge that how to sell QA in that sense and they are all in a same sales organization so they work under same management but the we need to start specializing because the products and the needs and the target groups are getting a bit different so for a one salesperson or one pre-sales engineer if we talk about our design tools our MCU offering our Qt offering we talk about the Squish Coco and Axivion it's getting so complicated that for one person to be able to handle the whole portfolio is probably too much so we need to a bit specialize in our sales as well as in the pre-sales in that sense.

All right so did I understand correctly that if we think about the modeling you are or the fluctuation between how different individual deals land in the quality assurance business they are far more important than kind of seasonal thinking that there would be more deals in second half less in Q first half so on?

Well on like I said on Squish and Coco it's the volume is higher and it's more like a steady growth quarter on quarter on Axivion there is more fluctuation and over there we see that it's very important to build the pipeline and where the deal lands there is because the you know the euro value the euro revenue for Axivion is still so small so you know percentage wise it's a big fluctuation but the as it grows it's gonna be on more on a steady growth here so in that sense there is a bit more fluctuation and it's a similar type of a business as Qt business in that sense that the QA business it does have a quarter on quarter fluctuations yeah on Axivion side it's also very much like a Qt type of a business that in the beginning the customers usually buy a bit smaller chunk of licenses the first deal is a bit smaller and then it starts growing and the follow-up deals to existing customers are bigger so we're going to see the same type of a revenue fluctuation license sells on Axivion that we're seeing on we've seen on Qt as well so in that sense they're similar yeah

all right thank you i'll stop here

okay thank you

Hi, Jakko Turunen from ACB. I'd like to continue on the softness in the distribution licenses. Was it just the existing clients end product sales volume were just lower than you expected or was it because of perhaps postponed new product launches or did you see some kind of inventory cycle issues in this quarter?

Well inventory cycle issue it could have been which like I said when you know some of our clients they buy distribution licenses up front and once they are used then they buy the next chunk so you know what's the reason that there's been less than buying don't know have we seen any product loans postponements not that I'm aware of because usually when we are in that situation that you know you have the production facility you have ordered all the parts and everything you don't you basically make the product so what usually happens is that you produce the products maybe you know maybe you lower the prices like you know we've seen on electric vehicles that you know some brands are coming you know fast down on the prices but you know what's so we don't usually see production cancellations or at this time when we're expect you know everything when we talk about distribution revenue when we talk about the developer license revenue early on in the process we may see that everything is ready but the customer doesn't sign the deal because they are postponing the start of the development design so they don't start designing the new product they postpone that start of the project but if we are in a distribution license phase where the production is already you know everything is ready and you just product produce the product we don't see a cancellation on on that it's too late for that so what we see on a developer license sales that we may have a everything is signed and everything is waiting but the customer decides that well you know now it's let's wait another quarter before we start designing and well designing that how are we going to be manufacturing this new product so there we may see deals delays but not on a distribution license so if so not that but of course when people buy the distribution licenses upfront and they they don't consume them you know how long it's going to take them to consume you know what are the reasons we don't necessarily know

and could you point any any specific end client industry where you saw the the no but i can say it was europe all right sure then on the license renewals could you give us some kind of an indication how the expected license renewals both three licenses and one year license is split throughout the quarters this year of course the q4 will be the highest but any comments on q1 to q3 split

um well i don't think we've opened up that split that's how that goes but the uh what i can say is that the uh it's um we were um cautious that is going to change so that if if the mix is going to change last year we did have a we did have a bit that people were buying more one-year licenses than three-year licenses and we were thinking that well if that split is going to change that that split has changed that people are buying more one-year licenses than three-year licenses it's good is that going to affect our renewals business this year that instead of three-year licenses people will renew from three to one well that seems not to be the case so people are renewing pretty much on the rate that we were expecting and we don't expect there now to be a bit of a change i think that the over time um well better not to give you a percentage out of my head but so um we do have roughly two type of customers we have a we have customers where the q2 usage is very extensive and you can say that q2 is almost like in a bidet platform in in the whole development they do and those customers tend to like longer licenses they they even talk about five or ten year licenses which we don't sell right basically it's just too long over time but they are looking for certainty going into the future they are looking certainty that they do have those licenses and and whatnot then we do have we do see the same um scenario also in china and for very obvious reasons over there the customers are thinking that you know they would like to buy perpetual licenses so that they are for the lifetime we don't sell them either but the uh so there are these type of things and then there are customers that are using qt they're using maybe other tools and whatnot and it's business as usual and and and they're usually a one year license you know they they are happy to pay a bit more all the other licenses they're probably buying starting from word and windows they they buy one year licenses and and they pay a bit more and then they adjust what they need year on year and so um those are kind of the two categories we see when um when interest rates were zero and money was free then we saw that people were thinking a bit that that well you know if i buy a three-year license it makes you know from a cfo point of view let's spend the money and buy a three-year license now and we get a you know fixed price for three years and money doesn't cost anything now the cfos are looking that well you know in in it it doesn't necessarily make sense to um just to get a or lower price but that's basically the brackets i know i'm not answering your specific question here but i don't think we've given out that split in in public and but now it seems that it's kind of a leveled level so it seems to be pretty steady so it's not changing anymore like it was doing last year at least this first quarter was pretty much steady what it was before

thanks thanks good thanks for the good insights you're sticking to your guidance what are the key risks or concerns uh you have in terms of not reaching your guidance this year what would have to happen what keeps you up awake up at night nothing

gives me up at night but the but the uh well um like i said i'm pretty confident now on the renewal business that that's the uh the renewal business i'm i'm you know it looks to be going very steady what we budgeted it looks to go where we think um on on on where we planned so that seems to be very robust people are renewing into the um into the licenses they have and whatnot it's going according to the plan i see that the acute developer license sales is going very steady i mean it's been amazingly steady all these years so the i don't expect there a much of a fluctuation i think squish is pretty much going steady bang on it's the budget level and and of course these three items they may even exceed what we've been budgeting and and what we've been guiding so the um there is a chance that it goes even better then if we go on actually on it's an early business and the uh the timing of the of the last deals are they going to come on a fourth quarter or they're going to slip on a first quarter there you have a bit of a risk that are they going to hit the whole year number but uh in a whole scheme of things they are still small numbers um in in our big in in our big environment if i look to consultancy uh we've we've budgeted it to be a small growth stroke flat basically do i is there a big risk that even if it would decline again we're talking so small number you know it's the revenue was so small in this bigger picture that it doesn't have an effect so i'm not too worried about that and and so that leaves that the biggest unknown fluctuation we really have is the distributionalized revenue and that's the you know if i would have to be awake at night that would be the one then if i look the uh to markets i think that uh us i'm i'm not too worried about it uh you know we have a good team over there and there is a high level of energy and execution i'm sure they'll find a way to meet their numbers europe is a kind of a you know well i think that europe is going to be slow but some say that there might be some growth in this continent we'll see but uh you know on from a business-wise i think that you know the u.s economy seems to be even the the interest rates are high and whatnot is it seems to be amazingly strong and flexible whereas europe is kind of fragile and if i look into asia pacific we see in there i'm not too worried about i mean japan korea well korea is kind of a it's it's more like a key account market we have few very good and respected key accounts over there china is doing really well i think that the china is going to be the biggest electric vehicle manufacturer in the world that's not even far we're very well and we're doing very good in china i think that the the trade wars are behind the corner so one day we're going to have challenges i mean global challenges regarding to china but if i look the business for this year the activity i mean everybody talks that china is not growing that much that it used to and all that yeah that is true but the activity over there is still very energy level is very high and and we're having a lot of meetings over there and japan is a a big embedded market we've you know we're there we have our respected key clients over there and we're getting new all the time so asia pacific as a region not too worried about so on our on the markets i would say that europe is a bit that we're kind of that i was kind of thinking that you know we would be growing already in europe well not quite so let's see when the when the growth starts and and when the interest rates really start coming down then you know well you all know that if the interest rates in europe come down euro is going to be weakening weakened and and then again you know how our what's what's going to be the effect on on the european economy but so i'm not too worried about it does have effect but then we are on on three continents and two of them are doing really well and i think that europe is going to be doing okay so to summarize distributionalists it was a long answer for one simple good

one thanks

you're welcome

um thanks for taking my question i have three i can take them one by one let's take one by one yeah starting off with the least price increases for 2024 what have you implemented in your product seat so far and how does that compare to the ones that you made in 2023 we

haven't increased our so far yet so that that's yet to come i think that the all the pricing crisis we're going to be having this year more or less like inflation or a bit more i think that the you know if i think that where we need to look into our pricing is the distribution license i think our if i look the the developer licenses are fairly on on fair value so to speak

thanks that's that's quite clear then a housekeeping question in in q2 2021 you you signed a really large i think it was a six million deal in in the developer license business can you confirm whether or not that was a three-year deal and if that's coming up for renewal this quarter

no clear is that can't confirm or not gonna answer at all yeah

last time we discussed that it's not gonna happen this

oh

yeah yeah okay yeah

so it's not gonna happen fair enough that's that's uh clear then a bit of a broader question you've announced these collaborations with silicon vendors infineon and and qualcomm and also your entry into aws marketplace so yeah could you just talk through the commercial and financial implications of these deals to to your business and how we should look at them as analysts yeah

yeah well first of to be able to do such deals with such household brand names you know means that you know you're a credible player and you know they your your technology is credible and your credible company and your credible player and and you're identified as such so that's of course important for us and and so that's kind of a reference for the other players in the market that the we can do such partnerships if i look the infinite on i think that well that's first of all i'm very happy to say that the cooperation has started very well we've had a our first successes on on on doing some deals together they've put a lot of effort into this into this so that you know it's not only that hey let's do this many times you have this type of a deal says that hey let's make a deal and make an announcement and then you're on our partner portal and nothing happens right but in this particular case they've been putting effort we've been putting effort we've been training our sales we've been doing joint marketing and whatnot and we've been gaining results early results and and that's of course on the mcu side i think per se that the mcu in our years to come it's going to be a it's going to be a big business and because you have all these two-wheeler scooters and whatnot so you have a lot of products where the the amount of hardware and software is very limited and the user interface is fairly simple and and so that market is kind of opening up so you know if we look this business is a bit of internet when internet started it came into telcos and then finance and media so what we saw on this digital came into cars came into medical and whatnot and now it's we're seeing digital user interfaces in smaller and smaller and simpler and simpler devices so to speak and that's where tmcu market kicks in do i think that it's a joint business starting from zero so do i expect that there are going to be a huge amount of revenue this year of course not because all businesses when they start from zero it's going to you know it starts slow do i believe this cooperation that when we get our act together and we start working together on both customers that on on that we have is it going to be successful in the years to come yeah on amazon same thing pretty much the same story i don't it's starting from zero i don't expect any meaningful revenue that would affect our top line this year at all so it's it's early starts but it's kind of tells you that when we started this business we on cute business we we had many small competitors we were about equal size what we did we invested quite a lot of we invested on our own sales network whereas most of our competitors invested on very focused use cases on specific industries and they relied on well maybe on their own sales because they had such a small number of clients to reach to or or resellers but by that time and that led into that those competitors are pretty much gone sold or they're still very small so we were able to grow so if i now see that how are we going to get the next big boost on ourselves of course we have our own sales network we're investing on more products so many of our acute users are also using our testing products and whatnot but i also see that we need to build a meaningful partner network like and and and be able to combine two best products in the world and and offer them commonly to our common customers and get even more visibility than we can do on ourselves and i see that on a strategic level if we can succeed on that we you know we're going to take an x-pick jump going forward and that's what we're trying to do so i'm very excited about these opportunities and we're going to have all more in the future

and as a quick follow-up can you disclose anything about the sort of commercial and revenue models and and the margin implications from these news sales channels well

like i said this year it's going to be very small so it's going to be very small

but what about the margin profile in these no no sorry no no no thank you that's all for me yeah

hi walter rossi from danske bank only few questions that have not been answered yet um on equality assurance i understand that the quality assurance space is kind of very fragmented and competitive um and i do understand the your edge when you kind of tailor the quality assurance tools to fit the qt ecosystem but what about the when you look at further than the qt ecosystem what's the competitive edge there with your qa tools well

yeah it's a good question um well one competitive edge obviously is that um the the market is fairly uh fragmented it's a lot of small players and and they don't have that much um they can't put um they don't have such a reach than we do like we do have the global sales network we can we can roll out things globally uh so basically just we're more capable and more effective on selling we're more capable and more effective on marketing that's that's that's for sure and if we looked at the um what um what that market is it's uh it's in a cute in the beginning that they are concentrating on very very focused market very focused um or or very focused user industry group maybe geographically also very focused just like our competitors did with cute in the beginning and we're focusing on to be able to offer a more broader product portfolio so our aim is that instead of you buying five different quality assurance tools to do your quality assurance testing you can buy one or two tools from cute and and then you covered that's basically what we believe in and and that's what we are executing

all right sounds good thanks um then thinking about the qt like current customer base how how big of a portion of that already um has bought the quality assurance well

we don't um we don't disclose that um publicly but to give a some sort of an idea way less than half i mean way less than half

all right that's something thanks um lastly um well any any ballpark um kind of uh estimate on the growth uh this year in quality assurance on

quality assurance well you know we don't um we don't um we haven't uh i think we're gonna start um opening up the uh qa as a separate business next year probably but the uh i've sort of given um given this kind of a guidance that at least um intentionally we would not buy anything that dilute cute numbers so that gives you neither on top line or ebit line so you have at least some sense

all right thanks that's uh all from me

all right hi i'm deluto from indonesia i'll try to do a quick one yeah

because we have three minutes

indeed so on the new customer acquisition you mentioned that's going to be a focus area for you um what are the concrete actions you're taking that side you mentioned partnerships as being one kind of a channel sales kind of a thing yeah how does this look like otherwise

uh well new customer acquisition is always the uh we have a we have a approach where we actually um have a you know big list of target customers our marketing is targeting those customers we're trying to get um we're trying to get uh we're doing kind of a different types of prospecting uh we're using different kinds of prospecting tools and mechanisms and working and then we have dedicated teams so we have teams that they're only their only purpose is to hunt new customers so they don't if uh old customer wants to buy more it goes somewhere else so we do have new customer acquisition teams and and they have targets and then we have marketing and whatnot supporting on on that's kind of a and that's that's the pure new customer acquisition then we have of course you know many of our customers are like fortune 500 companies which they have a very many different divisions throughout the world so if you take a big big international company they we might be on one or two divisions but then they are you know there are 15 left and those customers on our sales uh we've targeted we call it enterprise sales and if you own enterprise sales then uh you have a named customer you you know company x and then your job is to take care of that the existing cost the existing business there is but also to grow your business and in a sense you know if you're in a big international company you can win new divisions we consider that as new sales as well

all right i'll let you finish up thanks okay

so we have 30 seconds left so we won't take any more questions thank you very much for coming here today really appreciate it thank you everybody online over there to sum up uh well i think we've had an extensive very good questions over here so there is not much to sum up we're not entirely happy on q1 we were we working very very hard to uh to make this look better the market environment and the future uh gives us confidence our pipeline situation gives us confidence that the uh this is going to be a uh a good year and we believe that we're going to meet our guidance target on 20 30 revenue growth which is definitely the our number one priority thank you very much