Qt Group Oyj

Good afternoon and welcome to the QD Group's first quarter 2025 results presentation. My name is Heli Jämsa, IR Lead, and with me today are CEO Juha Varelius and CFO Joone Lindtunen to present the results. After the presentations, we will first have questions in the room, and if time allows, then we'll continue with questions on the lines. But please go ahead, Juha. The floor is yours.

Thank you. Good day, everyone. My name is Juha Varelius, and like I said, I'm going to go first to business highlights, Joone, then on financials, and then the outlook for the rest of the year. So if we look our quarter, our net sales grew only 4.8 percent, and of course that was a disappointment. We were expecting quite a bit more, but the challenge was, the environment was very challenging for us. Our EBITDA margin was 17.9, and well, we're not, our EBITDA, Joone will talk about it more, but of course our EBITDA goes very well hand in hand with our revenue, because we're in a product business. So given on that, we are not, it's always a question that are we going to be reducing our investments for the future, and the answer is no, we don't do such decisions based on one quarter. So what we saw during the quarter, if I look on the overall perspective, we had softness more in Europe and the U.S., and less so in Asia Pacific. So in APAC we were doing better, and the market was not that soft over there. Overall, if I look on the renewals and how people were renewing, they were renewing pretty much on the same ratio as they traditionally have done. So people that have one year license is renew one year, and three year license is three years. So we didn't see any big impact over there or change. However, we did see people being, customers being cautious. They were very cautiously looking at how many licenses they need, how many they want to renew, and on new sales we saw a lot of uncertainty. We are on R&D and R&D based projects are usually that the, those you have a bit of a timeline that when to invest and when not to invest, whereas if you have a project that's already in production, then it's going, but on R&D where you start new projects, there is always a bit wiggle room. So in some sense we saw a lot of uncertainty and we saw that in pretty much on all our revenue streams. If I look on a huge market, we did see a, of course industries like defense and medical, they're doing a lot better in our automotive market. The market is very challenging in the Western markets, whereas in China not so much and on consumer electronics and industry automation, there were cautiousness as well on decision making. So we do have some industries that are doing globally well and then we have a whole bunch of industries where this uncertainty is affecting. Then if we look on our testing market, which is the, we talk about QA market testing, software testing, that was going on pretty much as planned and kind of makes sense because that goes more into the production. So that is when there is already a software and it needs to be tested. So that's the, we didn't see that much effect on this market uncertainty over there. So basically people on some industries are waiting or pushing a bit forward and the decision making is slower on starting bigger projects on specific industries. So on some industries, like I said, on defense, there are no delays whatsoever. If I look and compare this into COVID, I kind of see the COVID times, then we saw immediate stop. I mean, we saw factories closing down and whatnot. So this is not something like that, but we see a bit of the same behavior and same sort of the cautiousness over there. And so I think that if this continues a bit longer, this situation, we kind of think that we may have, we may see similar type of the environment where when the demand starts picking up again, that then there is a shortage of some parts and the supply chain disturbances because the supply chains are very long at the moment, as we know. So to build a product, the parts are coming globally here and there. And now then the investments are slowing down and people don't know what's happening. We think that the first effect we're going to be seeing is the problems in the supply chains in that respect. How long do we think that this is going to last? Well, now we know that all the tariffs on the 90 day pause sort of say that the 1st of June, 1st of July should be that the that's the end game. I think that the uncertainty will start clearing out once we start seeing that where we're heading, then the things will clear out. But definitely we're expecting that the our first half is going to be in that sense. The situation will continue. We don't expect this to continue forever. And well, that's more of a future outlook when I talk after Jony. But we don't expect this to last more than a few months because at the end of the day, the all the products and services our customers are building, eventually they need to build them. It's a matter of that. The when do they start and on what volume they will be doing it. So like I said already in the beginning, we will continue our long term investments. So we have the same same plan that we've had and we're looking like three years ahead that what we're going to be doing. If I now look currently, obviously we are on a percentage wise investing more on the quality assurance because it's a smaller, smaller business for us. We acquire two products and the we're putting their more efforts on R&D and the sales product management, marketing and so forth. But we continue our investments on Qt technology as well. So in that sense, we don't see any changes on a longer term growth. We haven't seen if I look the overall the market, we haven't seen any increase on our churn rates. Our churn rates are pretty much the same than they traditionally have been over the 10 years. We haven't we haven't seen any competitors or competing technologies or shots. So in that sense, we don't see on the market, we don't see any changes on demand nor on the our competitive situation at the moment. So basically all the disturbance we have is the market turmoil around us, which is a bit different in different regions. We had personnel end of March 888 and the that's that's well, that's going to increase again during this year. And I think we're going to be close to a thousand when the year ends or around thousand give a take. With these words, I'll give over to Joni and I'll continue with the future outlook after him.

All right. Thank you. My name is Jodi Lindunen, CFO for Qt and welcome from my behalf as well to the earnings call. I'll dig into a little bit deeper in the numbers by going through the income statement and then some words about the balance sheet. And as we saw, the net sales was growing by 4.8 percent. We get a little bit of tailwind from FX by 0.6 million. And at the same time, we have been you remember, we've been transitioning from the perpetual license mode into subscription during past four or five years time. And now from now on, we are going to be seeing the maintenance bucket growing pretty much aligned with the license revenue growth going forward. Obviously, there will be some quarterly fluctuations as well on that. Our materials and services, we see a growth of 0.4 million and that's driven by some consulting projects for which we used more external resources than compared to like a current general run rate. And there's no kind of a major in some projects. We level our resources by using external consultants and that's kind of one way of mitigating the margin for us when the volumes fluctuate. We grew, as you have said, by roughly 20 people employed in Q1 by 82 year on year in 12 months time, which is pretty much a run rate we've been seeing for two, three, four years as well. And this is very much aligned with the headcount increase or personal expenses increase as well what we see in our P&L. And we are putting selective investments in place specifically into quality assurance testing business, primarily into R&D marketing and sales. And then we are, well, one of our targets is a new customer acquisition. And then as well, we have increased some headcount in our ventures team for kind of new opportunities. Depreciation, slight increase and that's driven because of some extensors of the rent agreements and the expansion of the space. No major difference in that. And there's a little bit of offset in the other operating expenses on that. And then other operating expenses pretty much proceeding or developing as planned, plenty of efforts into marketing, into R&D, third party project execution and so on. Also, we have recruited quite a few employees as well the same time, which shows here if we use any external consultants. So this leads us to EBITDA margin of 17.9, down by close to five points from around 5% from last year. No change obviously in amortization, which is coming from the Froglogic and Accivian acquisitions, which then brings us to 6.5 million EBIT earnings before interest and taxes result. There was a slight negative item in financial expenses and that's driven pretty much because of the negative USD development in our terms. Our effective tax rate was somewhere around 20.5%, which the current setup is where it's supposed to be. And the net profit for the period is 10.5 and EPS 0.20. Similarly, quite limited changes all in all as well in the balance sheet side. Well, we are collecting the funds from like last quarter bookings from last year's, which shows in Operative Cash Flow, which is pretty much the same magnitude as last year's 17 million for the first quarter. And then the other kind of asset buckets, we do see overall the pretty consistent development on trade receivables and contract assets, which both are kind of accounts receivable buckets towards our customers. Trade receivables obviously down because of the first quarter revenues being lower than last year, the same time we saw a reduction in the contract assets as well by 1.3 million in Q1. Very little changes in equity and liability side. I guess worth mentioning probably 0.8 million interest bearing liabilities going up. That's because of these liabilities we have increased now and there's an offset on the asset side then the same time. But I think that's the most topical items from the financials. So I will hand it over back to Juha to go through the outlook and guidance for the year.

Well, I was already touching a bit on this. The long term prospects haven't really changed the number of displays devices. They will be growing and the growing AI will be generating more software to be tested. So that's not going to go anywhere. To give a bit more light, I think that the first of all in general, this our product portfolio where we offer a software development and testing. That's a very compelling offer and that resonates very well. So we can sell our testing tools into Qt commercial users and also Qt open source users. And if we look the other way around, if we look at our competition on a testing side, they tend to be offering services for developers. So this combination of developer and testing, that's a good strategic move and that works very well. On our testing, we further increase our addressable market because with our test tools, you can use them also on Windows, Java, so other languages than Qt only. So the addressable market is bigger. So we see over there, like I've said many times that our testing business is like Qt 2.0. So it has a long, long runway to grow going forward. And we see that our products are very good over there. Actually, we own the static code testing. So during the development and the architecture testing will be needed even more and on functional safety solutions. Actually, we own a very, very good product and we see a pickup over there on these segments and that will increase going forward. Squeeze on the other hand on the automating the user interface testing and automatic code testing. There is a very growing market. So we don't see any changes over there. Like I said on the Qt, we don't see from a competitive point of view. There are no, it's pretty much the same. And the feedback we get from our product and from our users is that the product is very good. So in that there we do see no changes. In going forward, I think that for some of our customers specifically, the ones that are having manufacturing business that they're selling their products either to a factory China market or in the U.S. market, there is a great uncertainty that where, you know, what's going to be the cost, how big of a volumes they should be expecting and where all this is going. And that uncertainty, I think, will last at least until the summer, maybe even further. But at some point, of course, this uncertainty has to go away. And when people have to make decisions in this uncertainty, anyways, it affects specifically in our case. We do have 70 industries, so it does not affect all of our industries, but it does affect. So, for example, the automotive industry is in some challenges on the western part of the world. Also, the U.S. manufacturers, we have the over there. It's not only that where do you manufacture, but in car manufacturing, the supply chains are very long. So the parts are coming throughout the world. So that that alone will increase the cost. Plus, then there is a tariff on the end user product. So that is one of the challenging industries. We have the industry automation a bit challenging consumer electronics, of course, depending on what products we talk about. And then, like I said, on medical and medical devices on defense and whatnot, very little effect, if none in that sense, because everybody is investing all they can. And there is a great demand for their products at the moment. So what is our guess now is that the this or our estimation? Well, I mean, everybody knows that this situation has been very fluid. It it tend to change day by day. So in that sense, I mean, you know, it's very hard to make scenarios where it's going. I think that at the end of the day, things have to you know, things market will just force things to start getting a bit clearer as we go towards the summer. And the uncertainty will be less. Also, at some point, our you know, we need to start making decisions even in these uncertain times because business needs to continue. So in that sense, I think the first half will be a bit of challenging. But the second half, we do expect a a bit smoother, right? What comes to a market? You only was there mentioning on our profitability. Well, it's obvious when the revenue comes down, our profitability comes down because we don't adjust our investments or our costs based on the quarterly fluctuations. We play on our on our longer play. And there we do see a lots of runway for both Qt and for our QA products to continue to grow. What comes on the M&A? We do actively look for acquisition targets. And the we we don't give a we don't give a any timeline guidance because, you know, the deals will come when they come. But the we do still see that our we do have a very unique position because we do have our own sales. We do have our local sales offices throughout the world. And we have Fortune 500 companies that are spending a lot of money on software development R&D so that we can add value and we can bring more efficiency to their development processes. That's basically what we're looking when we're looking to acquisitions. So we're looking to buy new products into our portfolio. We're not building a portfolio of businesses to add revenue is that we always look products that we would add synergies to our whole offering. Well, the it's kind of a disclaimer that weakening of the global economic situation may also affect the solvency of companies, customers. I actually don't see that a huge risk in our case because we deal, you know, very, very big companies mainly. But of course, that's for some smaller companies is a possibility. So we changed our net sales growth to 10 to 20 percent. And why did 10? Well, basically, we're like I said, the first half of the year will be is going to be a tough. So I think that the 15 to 25 and do we have a plan to be on a 25? That looks challenging at the moment. Do we have a plan to be close to 20? Yes, we do. So if the things don't get a thing, things don't get totally out of the loop, sort of say, then we do have a we do have a path to be on a 20. And the are we do I feel confident that we're going to end somewhere in between? Yeah, definitely. So at this point of time and the our EBITDA on that is going to be between. 30 to 40 percent. And that's, of course, driven very much on the on the fact that the how do we how do we generate revenue to give you a bit of an idea? How do we plan is that we're going to be looking probably next month already. We're going to be looking into that. What is the what's the rough revenue we're looking next year? And where do we roughly think we're going to be? And we start hiring those people already during the second half because, you know, for example, salespeople, if you if you need a certain amount of salespeople for 2026, you need to hire them in 2025. They need to be on board. They need to be up and running so that they are already there. So that's kind of the gives you an idea of a timing of our business. So we need to we need to think already now that what is the investment level for next year to make next year wherever we want to be. So that's why the that's kind of the scale. So in a sense, slow moving business when it comes to new customer acquisition, that's also a slow moving business. So usually we from the first meeting six months to make a deal with the first customer. And usually those first customer deals are small, even though the company is bigger and then they start expanding and expanding the usage. So in that sense, it's a we always take a look like a three year three year view, a one year ahead for you all the time. And we make our investments based on that to to give you a bit of a highlight. Why did we change the 15 percent to 10 percent on the lower end? Well, that's basically that we see a lot of turmoil and where we are at this point, I think that the lowering the lower end makes that's a more feasible estimation at this point of time. So with that, I say thank you. And then we have. Lots of our customer logos over there and Marty has a Carnegie question number one.

A good afternoon, it's matter going to Carnegie. Just getting back to Q1, could you explain what happened in Q1? Actually, I think most of the market participants were expecting that Q1 would be fairly normal for you still, because in Q4, you said that there would be some postponed deals having a positive revenue effect on on Q1. Now, obviously, if that happened, then of course, new sales must have been extremely poor. So what was kind of explaining the so small growth in Q1? Yeah,

the. Well, all the sleep deals, I it's you can always say you can say on each quarter that there is a sleep deal, because there is always a sleep deal. So when I look the when I look the quarter, there is always the if I look the pipeline and I look the pipeline, I have kind of my hand figure that how much we can are close on and what percentage is going to go forward. Right. So the slip deals, there's always on each quarter, there are slip deals and then they close on the next quarter for whatever whatever reasons. Then the other is that the we usually have the well, first and third quarter are usually a bit slow. Second quarter and fourth quarter specifically are are very big quarters and first quarter. Fourth quarter is a really big one for us. So that's kind of a seasonality. And then on each quarter, what we see is that the first two quarters are very slow. And January is usually very slow. Traditionally, for some reason, people close a lot of deal on the fourth quarter and then the first quarter, you know, people get back to work and and whatnot. So January is usually very slow and then it starts picking up. But that's each quarter is like the last month is very busy and the last two weeks are very busy. That's where we make most of our business on each quarter. Why is that? I don't know, but that's always been the case that it's very back back and heavy. So what happened this year, you're absolutely right. We had some deals coming over from the fourth quarter. We had consulting coming, finishing consulting. We started on a fourth quarter. So all that was in there. And so in that sense, it went OK. But yes, the the new sales was the and rules were OK. They were pretty much on plan. So the new sales towards the end of the quarter. Yeah, that was slow. And the we, you know, all kinds of reasoning. But that was basically slow. If I look into there, do I see that projects being bought, you know, projects being canceled or projects being deleted or whatnot? I don't see that behavior in our customers. But the no decision making slow quarter. You can always, of course, think that should have been should have been should have we been able to do better? Probably yes. Where, you know, should have been we be able to close better than on the other hand, we have, you know, we've been in this business for 10 years or longer. So the of course, you can always operate better. But the new sales was really suffering. It was slow. And I if I look now, well, obviously, again, on the second quarter, April is slower, May is lower. And then June is really June is really busy. And the last two weeks of June are really busy. And that's where the result for the second quarter is made. But the if I look now, yeah, I do see some slowness still over there.

Yeah. Okay. And then when you said that testing and quality assurance business was roughly meeting your expectations. Yeah. Doesn't that also mean that then the rest of the business like QT ecosystem developer license sales and also distribution license sales, they must have fallen to negative. And could you just clarify which of those I mean, is it the royalties that are coming heavily down or is it the new developer license sales which is coming heavily down or is it both?

Well, I would say that, yeah, it's yeah, we see a slowness on new developer license sales. Yes. Yeah. So in all in all, that's where we see a slowness. Yeah, absolutely. So we see that the I would say that we see on the kind of hesitation that the let's wait a little bit before we kick off. Right. That's that's what we see.

So basically, you haven't seen that kind of weakness or soft softness in the distribution license revenue? No, no, not in

that. No, not that big. No. But of course, this is the, you know, going forward. So when we give this guidance to 10 to 20, that's, you know, my expectation is that the that's where we're going to see softness as well. Growing softness, let's put it this way, because obviously, I mean, the economy is slowing down. Basically, that's that's what's happening now.

All right. Then my final question is related to the margin guidance. You kept it at 30 to 40 percent. And is it because you think that some of the growth investments that you have been planning for this year might not come as large as you perhaps considered in the beginning of the year? Because if you have a lower top line outlook on in which you are investing in next year, is it other costs that you can manage?

Well, I think that the well, as we've looked into it, as you know, if we get the revenue in, as we are foreseeing now, the top line will take care of the bit, basically. So I'm not expecting that I have to start cutting down on any of our growth investments really on our second half. So the second half revenue will will get us, as you know, probably our fourth quarter EBIT will be way over guidance. I mean, the overall year guidance, as it is always like our fourth quarter EBIT is EBITDA is usually very high. And so that's what I expect to happen this year as well.

All right. Thank you. That's all for me.

Hi, Jakko Turvenen from ACB. I could follow up on what this discussion about the Q1 performance and just to confirm and clarify that you didn't see major changes in in renewing rates. So so all the licenses that were coming up to renewals, those were renewed. Or did you see customers renewing perhaps a bit less? Yes,

I did. Yeah, not very many customers. But so customers are renewing. But it used to be like that the customers renewed whatever they had. Right. And now customers are looking very carefully at how do how many do we need? Well, to put this in a perspective, like 99 percent of the customers need whatever they already have. So I see a very little customers that the that the are taking less. So our renewal business is pretty much where we expect it to be. But what do I see is that the I see like in a call with that the CFOs are starting starting to run the business. So the CFOs are looking that the hey, we need to have, you know, we need to be cautious on cash flow. We need to we need to strengthen our cash position and we need to be tied on costs because who knows what's coming. Right. And that what we see. But then, you know, in like I said, you know, maturity like almost all of our customers, they renewed what they had to continue in their plans. And that kind of makes sense because if you have something in production, you know, it actually doesn't matter what's going to happen. Right. I mean, you know, you're going to produce whatever you were planned because you already have all the parts coming in. You have all the factory facilities, whether you do it on your own or if you're subcontracting what not. So if you have something already going, you're going to continue to no matter what. And then you hope that the best will happen. That's basically a bit of our if we take a global view and forget Qt for a moment, that's a bit of our problem because China is producing a lot of goods. They were thinking selling into U.S. and those will be done and they're going to go somewhere else. So we might have a whole bunch of very cheap Christmas gifts, toys in this year over here. So and that kind of adds on the equation. What will Europe do if we start seeing a big flood of Chinese products coming into our market? So that's what we see on renewals business that people are continuing. What we see is cautiousness into that. Hey, you know, if we are now to kick off a new production on what volumes and can we postpone that decision a little? Well, we know for a fact that the these decisions can be postponed a little, but they can't be postponed like a year. We don't see also we don't see cancellations. So we just see that people are a bit hesitant because and that kind of makes sense, too, because if you're in the business of making TV, you see, you got to have a new model next year as well. It's just a question that on what volume.

Okay, then then another confirmation. Did you did you say that your distributionalized revenue grew in the first quarter?

I said that it was pretty much where we expect it to be. And I think that the we're going to have more challenges on the distributionalized sales as we go forward. So on the first quarter, we didn't see that much on the distributionalized revenue was where we were expecting it to be. I think that we're going to see more turbulence around that as the year goes further, depending on how this how this environment is developing. So the softness we see was on the developer license sales. Okay.

And in your thinking regarding the guidance downgrade, how do you split that between developer licenses and distributionalized? Is will it do you think that distributionalized will be impacted more than than than the developer license?

No, I don't. I you know, at the end of the day, I think that for this year, the you know, the distributionalized is we're going to be getting. Of course, there is, you know, some pressure downwards, but the usually these products are already in production in development and whatnot. So they're going to end up somewhere. I don't know where, but they're going to end up somewhere. But the of course, there will be pressure on that one has to. So basically, if if you think of that guidance, how we did that was that the well, you know, we pretty much know the bigger deals that we are we see for this year. And then we see our pipeline and we see that how much pipeline we develop per week, basically, and those ratios. And then we look now that we saw the first quarter where it ended up and we're looking at the second quarter and the whole year. We kind of felt that the the you know, that the so there is quite a lot of deviations still because there is so much uncertainty. But we kind of felt that keeping 15 to 25, did we see the did we see that we can get into 25 after slow start of the year? We felt that, well, that's not feasible anymore. Right. We felt that the keeping a 25 guidance, given this low start in a year would be kind of a bit unrealistic. So we were looking at that. Are we you know, if if all the stars are lined and everything goes very well, can we be close to 20? Yes, we can. Yeah. Right. And so and then if the well, there are lots of these English impressions that what if and and things go wrong, which is also the possibility. The we looked at the can the 15 be in pressure and unsure. So then we kind of felt that well, 10 to 20 guidance is a is a fair guidance that the given the slow start of the year. But that's where we are at the moment. So I don't see. You know, of course, I'm not happy for the first quarter. That goes without saying. Do I see that this year as it is now, do I see that this year is going to be a disaster? Well, no. Do I see that we have to or do I see on a three year path that the are we you know, are we going to be going to be on a long term targets where we think we want to be? Yeah, I think we can get there. Is this year going to be kind of a disaster? No, is this year going to be a bit of a, you know, not so good here? Well, that's what it looks like now. This is going to be not so good here. It's not going to be a total disaster and it's not going to be where we want it to be. But the that's how it looks now, given that the things don't get any worse than this. And I mean, you know, the first time or the first time or days of this year, I mean, you know, whatever can happen.

So it seems if I may I still continue on the in Q4, you said that there were some material deal deal postponements and you previously commented that you are perhaps expecting this to take place in the second quarter or in the third quarter. What is your touch now on these deals? Are you seeing risk of further postponements or reductions of the scope or even total cancellations?

We haven't seen cancellations really. I mean, you know, of course, sometimes you have one or two here and there. But I mean, in general, in a big scheme of things, how many deals we have and how many transactions we have, I haven't seen a big cancellations. Not at all. The reductions. Yeah, to some extent we see reductions and very much now I do actually expect that the on the first half of this year, we're going to see reductions. So people will will start their projects, but they will start smaller than they were anticipating. So that's basically what we do expect to see. So and the what comes on the the the big deals we talked about on Q4. Yeah, they are very much in the works. It's going to happen on a queue. My best guess is that Q3 probably. But the let's let's see how it plays out. But yeah, so these kind of postponements we do we do see. And so basically this year, I think that the we're going to do pretty much the deals we were thinking of, but the scale will be smaller.

Okay, excellent. Thank you. All from me now.

Hey, it's Antteloura from Inderas. Maybe a question looking back at the last few years and give your thoughts on your growth trend. I mean looking at the rolling numbers evening out the quarters, you've had growth of some 25 to 50 percent per year three or four years back. And now we're at somewhere like 10 to 15 percent. And I think there's probably many drivers to it. But now in Q1 at the end of that, we maybe just had the soft start of the trade war and the customers were still on their toes with investments. So if you think of your product portfolio maturing and the effect that has on your growth versus maybe customers becoming more cautious overall, how do you think of the growth trend and the drivers behind it?

Yeah, it's a very good question. I think the well, the first thing that comes to mind is that why the percentages are more difficult is that the base number is increasing. It's easier to make 25 percent growth on 10 million than 25 percent growth on 100 million. Yeah, so that's obviously that we always talk about percentages, but the company has grown substantially what it was, you know, a few years back. So of course, that's that's affecting. If I look the well, if we go really far down the history, we were selling the we were selling developer licenses and then we said that we're going to introduce this distribution license. And basically everybody told us that that's that's not going to work. No one's going to pay you distributional licenses. And well, but that happened, right? So and that number of devices has been growing. If I look the back then I saw basically and we were also talking to the automotive. I mean, it was all the motive, all the motive, all the motive to the extent and some people thought that we are only in the automotive industry because it was the automotive introducing the infotainment systems and Mercedes, the digital cockpits and whatnot. And everybody were very excited about what's happening in automotive. Now, if I look, it's the you know, even Leopard tanks are having graphical screens. They have a digital cockpit inside the tank and the every, you know, medical industry has come there. So it was the well, maybe they started from mobile. Really, the Apple iPhone was the first graphical user interface that people got very excited about it. And then it was all the motive. But nowadays, I think it's it's everywhere. So in that sense, I see that the market has grown substantially. And the the number of industries where do we see now, for example, it's not that long ago if you bought a motorcycle or a scooter that the the cluster was really kind of a clumsy black and white and whatnot. You see that industry picking up. So now we see a lot of scooters done in India, for example, and the next the next generation clusters will be a lot, lot nicer because they are using great tools. So in that sense, and then I see new iterations of product innovation all the time coming. So I see that on Qt market, the market has grown and the efficiency requirement is there. And there is no reason to explain. I mean, you see these interfaces in vending machines, you see them pretty much everywhere. So that's what has happened that the market has pretty much exploded. So we being a cross platform tool from very low and the very high end, we can address that whole market pretty much. And that's really the success that we've enjoyed. The other is that we have the local offices. So we've been able to talk Korean in Korea and we've been able to talk Japanese in Japan, whereas many of our competitors, they relied on reseller networks and they relied on one industry or one function or whatnot. So if I look back then when we were 20, 30 million on revenue, the competition is pretty much still there. So we've really grown our markets here on embedded and you don't get that research. But are we the market leader or are we definitely one of the gorillas on the embedded software development market? Yes, we are. And we are a well known brand in that particular market and whatnot. So no doubt about that. We were very successful in the strategy work. Then if you think this business, like I said, that the you know, we think already now that how many people we need next year for four different things. So the embedded business is typically relatively slow moving. And the decision making on embedded businesses, I mean, there are big decisions that we're going to start doing this kind of a product and on what volume, where to manufacture, what are the target market, what are the target prices and whatnot. So it's a slow process. So embedded is typically very slow moving business area, whereas on web, if you look on a web technologies, the prices are usually like, you know, 30 euros or 100 euros per month. The technologies come and go and they get high volumes and then they die as quickly. Whereas on embedded, you talk about developer licenses being, you know, thousands of euros per year per developer. And it's a it's a bit it's quite a bit slower moving. So when we see that the that things slow down a bit, we're not that worried about it because the big trend will keep on moving. And that's why we don't kind of change. So back to your question that do I see slowness in the maturity of our product? No, not yet. Will it be there someday? Definitely it will be there someday. But at the end of the day, where we are as of today on a global scale and how many companies there are developing these things. Yeah, I think there is still quite a lot of room to grow on Qt. But the on Qt technology are definitely someday it'll start having the maturity. Oh, I don't think with these numbers, we're pretty far from that.

Yeah, right. So I guess the maturity obviously has gone up quite significantly in the last three, four years with your market share going up. But with the last sale of the market and the market being rather slow, you don't see kind of a rapid slowdown in growth? No,

no. And when we do reach that point, obviously, then the new sales will slow down, but the renewals will stay. Yeah, so but I mean, you know, if you look the number of customers, the number of licenses we have on a global scheme of things, when you start dividing our Qt revenue per country, let's put it this way. If you think that we operate on three, you know, three continents and you start dividing our revenue per country and whatnot, it's relatively, if I looked our revenue, for example, from China, it's given the market size. We are like this big in China. So I see or in the United States that matters. So or in any given market. So yeah, we do have a we do have in this scheme, we have a relatively we've been able to break through and we have a bit different strategy than many of our competitors. You know, this the other part from the retail, having our own sales network, we also have this cross platform approach where you can actually use Qt on on different industries, whatnot that say a different than what our competition did. Yet this is a different than our competition did that we can offer the testing and the developing tools. So we kind of are hard to compare to directly to competition in that sense. But of course, let me continue. Someday it will mature. That's why we're having products that will grow. I mean, that's product portfolio management. So of course, QA is now small. It's one day it's going to be 100 million and beyond. And we're looking new products into our product portfolio so that the whole company will be growing. So it's it's it's the product portfolio management in that sense. You can also think it that way. So our intention is to keep on growing even when Qt start maturing whenever that happens.

Maybe following up on that expansion part within QA business, you mentioned that Exivion has been tougher to sell because it's a bit of a different product than the testing tools that you have. Have you cracked that yet and been able to speed up the adoption?

Yeah, we have cracked. Yeah. Yeah, we are. Yeah, we are on that path. Yes. So we've signed very big customers.

Thanks. That's all for me.

Okay. One last question. It has the question

1B. Hi, it's Matti Rikonen-Karnegi. Two small questions. We have talked the automotive revenue share earlier and you have been saying that it's roughly between 10 and 20 percent. Let's put it at 15. How much of that is developer license revenue and how much is distribution license revenue? Just trying to get a feel how important automotive segment is for you in terms of distributional license revenue.

Well, we haven't disclosed that number and since you asked it, I don't even have it in my mind now, but we've actually said that the automotive is 15 to 20 percent as a whole and that includes the whole thing out of total. If you think that how important it is, so it is important, obviously, and it kind of fluctuates a bit that we do have, well, there is Hyundai Motor Group on the screen and GM and Ford and whatnot. So we do have Mercedes-Benz. So we do have automotive companies that are currently on a challenging environment because of these tariffs. And then we do have also, we do have company automotive customers in China and they seem to be producing, they seem to be having no issues whatsoever. So they are going full ahead. And then we have a whole other automotive customers that are not in this. We don't disclose their names. So I would say that the overall, yeah, we're going to be seeing softness over there. Is it going to be meaningful? Well, it's going to be one part. Like I said, we are having softness in consumer electronics as well. So it all kind of goes together. So it's not something that it's going to slow us down completely, if you like. And like I said, on the runtime revenue, all the production that it's going on now, for example, those cars will be manufactured. They may not be sold, but they will be done.

All right, thanks. And finally, who is your biggest competitor in terms of comparable revenue? I mean, comparable to your revenue? Well,

see, we do have competition on Qt development side and that's usually a vertical. So we have a competition in, we do have competition in automotive, but we don't see those in industry automation at all and so forth. So it's kind of hard to compare. And then we have competition on the testing side, but they are usually only on testing side. But I see, you know, see, so we're kind of very unique in that sense that on Qt side, we're cross platform, 70 different industries, no direct, no similar type of company. Over there and on testing, again, testing is a very fragmented market. So there are, you know, a lot of testing companies. So the hard to find a comparable over there. The ones that I've seen are usually like a development tool companies. There are some, can't remember the name, there is one private equity company. They've been kind of building a portfolio of tools. So they have lots of small tools put together and that's kind of a bigger ended. But sorry, I can't give you any better answer than that on the competition.

All right, fair enough. Thank you.

I think the I'm unfortunately on a very tight schedule. So we have to stop really at two. So this is going to be the last question. Just

have one.

Yeah.

And it's easy. And

it's going to be last one.

How you're seeing generally AI impacting your Qt developer license business in the long term. Are you seeing, for example, risk someone, risk of someone providing AI powered tool that has the similar outcomes that that Qt has now and and and but just brings a higher better efficiency to clients or will Qt actually be the one providing such tool? And in that case, would you be kind of able to monetize the more effective tool?

That was not easy nor short to give an answer. Well, on a testing side, I see that the one you use AI for generating software that needs to be tested as a whole because AI can be good or bad and it can be bad intentionally. So you can never kind of trust it. So you have to test it all. So I see that the testing bit will will will grow on AI. Then AI as I see it today, I see this best buddy at work. So if you have to be creative, you can ask from AI if you want new ideas, if you want to get your email better, you can use AI. I actually used AI when I wanted to write a very polite email. But then I figured out that everybody knew that it was AI done, not me, because it was so far from me. And I'm not saying I'm polite, but I'm saying that you can after a while, you can actually you can realize when something's done, when the text has been done using AI. So basically, but it's a it's a good body to help you in your work, whatever you do, creating content or whatnot. And it can definitely create. You can put it on development, creating simple development and doing simple development tasks, for example, for you. Or you can put it writing a test script for you and then you view the test script and then you do the testing, these type of things. So it's a great helper. And I think that that's where it's going to be. Will you be able to do simple tasks with it, sort of simple coding? Absolutely, you will be able to do that on embedded. Do I see that? So you can use it to even enhance your efficiency on Qt. Will it be doing kind of embedded software for a car like an infotainment? Not not in the near not kind of a foreseeable future. Let's put it this way. So you're going to have AI helping being a part of Qt, helping developers to being more efficient. But I kind of see that it's a really good work body for you. It can help you on many different ways. When you do your analyst work, I mean, there are AI that you can, you know, it can help you a lot gathering data and sorting out data and whatnot. At the end of the day, you're still going to be looking at it and making the conclusions. Thank you very much. Thank you all over there on the other side. And the I wish you a very nice springtime.