Qt Group Oyj

Welcome to QD Group's second quarter 2025 results presentation. My name is Helja Jämsa, IR Lead, and with me today are our CEO Juha Varelius and CFO Jooni Lintunen to present the results. After the presentations, we will have Q&A, and considering the number of analysts here with us in the studio, we might not have time for questions from the lines. Without further ado, please Juha, the floor is yours.

Thank you. Good day everyone, my name is Juha Varelius, I'm the CEO of Qt Company, and let's get to the agenda, which is the pretty usual business highlights. Then Jooni will talk financials and I will finish up on the outlook and guidance for 2025. If we go into our Q2, it was, well, it was not good. You may call it soft or not good, I call it not good. We were of course expecting a bit better quarterly sales, although we must say that the comparable quarter was very difficult. Last year we had a one very big one-off deal, and so the comparable revenue this year was a tough to beat, but yet we were expecting a bit better result. Our revenue decreased .9% and on comparable currencies 0.5%. Of course, that is a fairly big difference, and we all know that that comes from the dollar exchange rate. A large part of our sales is in dollars, so that's affecting. Our EB-DAO margin was also 22.7%, which is a bit less than we usually get, and that comes together with the sales. So what all affected on this, we said already on a Q1 that the global economic situation and these trade tensions, they are affecting our customers in a way that if we think Qt, it always goes into a project which is an investment. This uncertainty in the market has caused that many of our customers are considering their investments not on a way that should they do it or not, but maybe more on a size and on a timing perspective. We can see this particularly in automotive, pretty much everywhere else apart from China. Where automotive is doing fine, but on the Western markets, we see that the automotive industry has been slow. Basically, in our terms, it means that there are a lot of budget freezes and hiring freezes and such. So the decisions are being delayed. And then we see on the defense and medical sectors that we don't see that much of that kind of hesitations. Defense specifically is investing pretty strongly at the moment. So the purchasing behavior of our customers are currently somewhat cautious. We saw this particularly in America and Europe. It was affecting both the new customer acquisition and customer expansion. Whereas the distribution license revenue went as planned and grew pretty much as we were expecting. And that's kind of the theme of the day that the new projects customers are thinking and maybe delaying the decision making and are very cautious. We see that on developer license sales, whereas the distribution obviously is something that the decision has been made long before this date. And the products are rolling into the market. We have personnel now 915 as of June 30th year, an increase of 78. And this is of course for future outlook, but we're not changing our long term investments plan in any particular way. So we see that this softness is more or less what is happening at this point. Well, this was already announced in World Summit that we have started developing any bridging technology. Not going into more detail into it, it basically means that we are expanding the Qt user ecosystem. And when this ecosystem is growing, obviously it gives us potentially, it gives potential opportunities to sell the commercial licenses as well. When you think of this, the financial impacts will start coming in slowly and then they gradually grow. So I'm already taking the first question away, which is probably one of the questions that's probably is going to be coming that what is the financial impact? I would say that next year I wouldn't put a whole other financial impact on this at all. World Summit once again was a big, big success in Europe. We had 800 participants and the customer presentations, industry leaders, Metz, Sohamen, Siemens, Rode & Swartz, Warwick and so on. So just to demonstrate that the community is very healthy, we get a there is a lot of excitement and there are a lot of big companies using Qt. But that of course has always been the case. Feedback from the customers on the product is very positive actually on all of our product portfolio, not only Qt, but also the QA products. And we don't see any changes on the competitive environment in that sense. So the only headwind we are experiencing at the moment comes from the market. We also announced that a few weeks ago that we're going to make a public cash offer on IAR Systems Group, which is a Swedish company based in Uppsala. And this goes into our Qt growth strategy that we've been communicating that we're looking for products that will add into our current portfolio. If you think IAR products, if I simplify quite substantially, they go into when people are starting a project, they are choosing the hardware. That's when IAR products are coming into play. Once that happens, then the next phase is that, well, what kind of software are we going to be building with what tools and then comes a Qt offering. The obvious cross-sell right in the beginning is particularly Oxyvion in that hardware selection. So QA products go there right away. So this means that our customers can buy more from one shop. We can offer an expansion in that sense. And it also means that this is earlier on on the project decision making kind of gives a lead generation to Qt, if you like. And also gives the cross-sell opportunity and large in our addressable market. So this is conditional offer among other things, 90% of the IAR shares. And we'll see the, I think that the in October timeframe will have, will be visor to see that what is our current situation and where this deal is going. But the not before that. So the offer is still out there and let's see how it goes. The board of directors of IAR are supporting it. We have some major shareholders that are supporting it. So we're hopeful that we'll be able to conclude this deal during this fall. But at this point of time, it's a public offer. But we see that this combined company will benefit. We would be stronger together and this would add to our portfolio. One particular thing, if you've looked from the IAR websites there, one point on their strategy has been that they are now on a perpetual licensees. And their target is to go into subscription licensees. But they haven't, they've started it, but it's on a very early phase. That's of course something that Qt has already done. So we think that with our know-how and IAR's management execution, we can combine this and accelerate maybe even the shift from perpetual to subscription licensees. That of course would then affect the top line of IAR. So that's very briefly what happened on Qt 2. Joani is going to talk about the financials a bit and then I'll talk about how the rest of the year is looking like.

All right, thank you Juha. And welcome from my behalf as well to the earnings call of Qt Group. Juha, quite well described already the environment and the net sales development as discussed. We were suffering from negatively from the development of USD and also to some extent Japanese yen, not only in second quarter but also the whole H1. We reported net sales development of negative development of 3.9%. It was flat on constant currencies negative .5% revenue growth. For the full first half year, we are reporting flat revenue and there in constant currencies we were growing .4% over last year. You see there 0.5 million other operating income bucket. I mean this is coming from namely from the tickets sold to Qt World Summit that we had in May in Germany and so this is kind of an income from that event. You see as well that the materials and services market is higher now for two consecutive quarters. This is because we are having some single projects where we are using more external services for our customer consulting projects than the run rate is. However, that wouldn't make any difference on the project profitability point of view for consulting projects. It's just another bucket of expenses. Our personal expenses are up by 7% in Q2, .4% for the first half year and this is aligned with personal headcount development. We are up by 78 employees for the last 12 months time. We are up by 27 in Q2 isolated and we are continuing the investment into growth areas. We are having more employees into R&D namely in the quality assurance side and also to the customer facing organizations. Other operating expenses you see as well an increase by roughly 4 million for the first half year and this is driven by not only the Qt World Summit in marketing side. It's a big event and adds costs and last time that event was held was back in 2023 in Q4. So that's kind of up. There's a different comparison period then. On top of that we are having more professional services expenses for our R&D projects and also business development. We are having some increase in the recruiting costs in HR side and also there are project costs relating to the IAR acquisition proposal that we had booked already for second quarter. So this all adds up to the EBITDA margin of .7% or 11.6 million for the second quarter. And for the first half year EBITDA margin is 20.4 down by 10 points from last year's driven by not good revenue development. Amortization remains unchanged and this is coming from the amortization from the acquisitions of back in 21 and 22. So no change in that and this leads to EBITDA margin over 19% for the second quarter and 9.6 million. The negative or unfavorable development of exchange rates, it does not show up only in the revenue line but also it shows in the financial items where we have intercompany balances and that impact now on the negative kind of impact of that is roughly 1.5 million now for the second quarter. And our effective tax rate is a level of 19% which has been the run rate during past few quarters already and not expected to change significantly going forward. Net profit for the period is 6.7 million or .2% and EPS is 27 cents down from 53 last year. We have increased our cash position from 12 months ago from 6 months ago quite significantly and ending cash balance is 91.5 million. We have been able to reduce the accounts receivable somewhat and that's 41.4 million and that's pretty much aligned on the revenue and invoicing development for the quarter. There's also a reduction of the contract assets by 4.1 million from end of 24 and this all leads to positive cash, operative cash flow which is 29 million this year somewhat up from last year despite the softness in the revenue top line and also specifically the profitability side. There are not too many changes in the equity and liabilities. Interest bearing liabilities are somewhat up from end last year and that's coming primarily from the agreement bookings that we have now in the balance sheet and the other short-term liabilities are down by 4 million from end last year driven primarily by a reduction in tax liabilities. This is in short what I wanted to say talk about the financials and now I hand over back to Juha to go through the outlook and guidance for the year.

Yes, so the well Q2 obviously was a disappointment and the we had the first half of the year we've been having this uncertainty. I think that what it looks now we see that the development at the moment that the second half will not be as gloomy as the first half so there are the questions around tariffs and the deal making and whatnot so we do expect that the environment will be getting better. Well on the long term we don't see any changes actually. Pretty much everything that we use and see will have some sort of a graphical user interface and a touchscreen and whatnot and the amount of software is increasing so the demand for our product is still there and our products are best in the market so I don't think that will change. We don't see any development over there. Some of the like in the early days we were talking html5s and flutters and whatnot so they kind of come and they go but they never come to challenge us in a very big real terms in that sense. But the economic situation like we already said in the early of the year we think that the well it's slowly getting better but it's definitely going to be a challenge so far specifically in automotive and a couple other industries there's really been a slowdown. Automotive will probably continue its recovery even to the next year but it is getting better. So we keep our guidance same so the growth between 10 and 20 percent year on year on comparable exchange rates and then of course comes a next question that the how can we do that when the first half's been so slow? Well basically like you all know the our sales cycle meeting a new customer and closing a deal that's like a six month period of time so if we give a guidance like this we pretty much have to have the pipeline already in place for the second half of the year because if we wouldn't we wouldn't have time to do the sale and close the deals on time. So this guidance that we see now is roughly the pipeline we already have in place so if we close the pipeline in in the same ratios we've been historically been doing that should be the end game over there and the same applies that the busiest quarter is of course going to be the fourth quarter that's what it always is and if we hit those numbers on the revenue then the profit margin is going to be between 30 and 40 percent probably more on the lower end of course now given the first half of the year but the that's where we see it going and our EBITDA always is well it's very driven by the revenue of course because we are on a licensing business so that's basically the guidance we have or the the basis for the guidance we have in general if we take away the big deals on a longer in some period of time and we look how the business be been performing that's also bit over 10 percent growth so in that sense we do believe that we can reach those numbers on top of that like I said I think that the uncertainty in our customer base is slowly decreasing it's not more increasing as it has been when the tariff has been going from zero to 50 and whatnot but now the that uncertainty is going away the biggest challenges we've have had like I said in in Europe and in America's whereas the APAC has been more stable and that's largely because China has been China has actually been performing pretty well on the markets where we are concentrating for example the automotive in that sense so that's been more stable and more investments over there apart from the what we've been seeing in Europe so that's overall the big scheme of things we of course do always continue the looking for increasing our operational efficiency and I believe that we can get we can we we can become even better on that as well so at the moment we feel that the we can we can meet those target numbers although very challenging year so far and I think it's going to continue very challenging year so this definitely not the not not been an easy year in in in any respect on the IRA side we'll hope that we're going to be able to close the deal during this year but it like said it's still a public offer but if we can do that we think that the we can add value quite substantially when it adds to our product portfolio we can do cross-selling and we can do the subscription chains so we think that going forward for the next couple years together with IRA would be a very good addition but let's see how it goes and and hope that the it closes this year well there you can see the old slide but a lot of nice brands we have as customers and I bet Matti Riikonen is going to have his first question

Good morning it's Matti Riikonen, DNB Carnegie. A couple of questions. What kind of changes are you seeing in your customer behavior right now? You said that Asia customers have been doing relatively okay, Western customers far from okay. What are the changes that the customers what do they say to you? So has it been that they are just postponing until we get some clarity of the tariffs or have they said that no we will not start any new projects this year or next so we won't be needing any software in the near future and everything between those. So what kind of feedback are you getting from from your customers and what makes you so confident that the actual pipeline would be closed by the end of the year even though the first half has been so particularly weak?

Yeah well I think that in APAC as we slow down they are putting more gas so they're clearly they're investing and it's not only there is a lot of activity over there and whereas we've seen in in the Western market customers hesitating there's been a budget freeze that hey let's not hire anybody for a moment let's postpone these projects and let's see where it goes. I would say that the will there be cancellations of projects well not likely because our software goes into new products and if our customers start stop launching new products then that's kind of a end of the story but what our customers are of course thinking is that what might be the production volume they need to be doing are they going to be have a market in in northern America or not are they going to be having a market in China and on what volumes and while there is a lot of uncertainty then the projects are postponed and pushed forward and that's possible in our business because the on Qt is usually going into new projects that have not yet been started right so starting as a delaying an investment on on new product development that's always possible delaying a a production that is already going is very very difficult and very seldom happens so will these projects go on and will will the world go on and will there be a software development on western world yes they will of course they will they you know it can't be stopped basically because that would mean that there would not be new product releases facelifts and whatnot so that's in that sense i'm i'm pretty confident on that on what volume it will go forward so in many ways you know this it's a it's been like the second quarter's been a bit like type of a thing that the things are kind of are things are kind of are halted for a while but the i'm certain it will will go forward because you know life goes on and and the you know these companies our customers they are they are building products they they can't stop that basically but they can delay projects and they can make them smaller and whatnot so that's kind of a situation and our companies our customers as you can see over there there is lg boss hundai abb ford and so on and so what they you know huge companies so the they will exist also next year and five years from now at least most of them and and so they need to be developing things further that's a very good question that the that it's one thing to have the pipeline then it's another thing to close it as you're you're saying on so we do have the pipeline now we need to close it basically that's that's what it takes to make the rest of the year can we do that well i i think we can and of course we we go through each and every deal and it's distributed on the each and every at the end of the day to each and every sales guy who are making their own predictions and it's built from from bottom to up and they make their own estimations and then we have the historical data that we looked at on the how do we close the pipeline and if all that points to the fact that this is going to be the end game i mean you know i don't i don't have any very good reason or compelling justification to say otherwise than that so that's what it's based on but of course that's the risk basically that it moves forward

then regarding the european customers who were facing quite harsh tariffs or that was the initial plan now we seem to be getting some kind of truths with the u.s what are your european customers telling you about their incentives to start investing again is that no more positive or is it the same as before

it's more positive but the everybody when uncertainty happens usually how companies behave is that they start delaying decisions that they can delay and they can start they start preserving cash so they start saving cash for the rainy day and and that's what we see that the people are very cautious on their spending and the that's what we've been seeing so the they they calculate very carefully when they do renewals they calculate very carefully that how many licenses they need they are cautious on that that how can they be most effective that in in every way so they are cash courses at the moment and that's by the way the same thing that have it on covid that the the decision everything that was possible to delay started delaying and then the company started saving cash well at the end of the day the the companies that want to be successful in the long long term they do have a strategy and based on that strategy they make investments because that's the only way to grow if you preserve cash and you don't make investments you're out of business then the question is that is that going to be a year or 10 years or whatnot but all the companies that want to be successful on long term they need to have a strategy and they need to make investments because otherwise you know saving cash is is is is you know it's not a sustainable strategy and so all our customers are actually in a business where they do make investment decisions and they do make investments so in a long term on a longer term that's that's where they're gonna get but the now on the first half that's been slow i mean they've been delaying being very cautious but that's not sustainable long-term strategy for them and they know it of course it's very natural

all right then finally what will you do with your costs if you see that the top line growth that you are now expecting doesn't materialize in the in q3 q4 so you have earlier been fairly fairly skilled with keeping costs down when your top line doesn't increase by that much so do you see that that is still possible and at which part of the second half would you start considering to kind of radically taking costs down

i don't even think about it because the top line will go up well of course i mean you know i i run a business right so if my top line doesn't grow you know then i'm going to secure the bottom line but on a longer term i have no doubts that we will be growing so if i look the few years down the line are we going to double our revenue we're going to double our revenue no doubt on that so the on the would that make sense that on on a week first half i kind of start changing and saving that would be like you know going up and down and we're on a bedded business where development processes are long the development cycles are long so it doesn't make any sense in our type of a business to start acting on based on the on on on on a quarterly or first half weaker than expected performance in that sense having said i mean rest assured that the if we would hit a situation that we would not grow at all right we would see that the the revenue is going to be flat or growing five percent then of course we would adjust our costs in a way that the we would still have a very good profitability and with very good i mean where we are as of today but the on on you know we take like a few year view from now we're going to be increasing our revenue substantially no doubt about that so in that sense the i'm not and and we're definitely going to be adjusting our costs on a quarterly basis because that would be kind of making decisions delaying making decisions delaying and in our type of a business doesn't make any any sense at all so the our own product development cycles are fairly long our customer product development cycles are very long so the on these kind of small hiccups we need to look beyond having said that this is no medical business where on medical business they you know they look beyond few year recessions because their development cycles are like 10 years right but the we're somewhere in between but we're not definitely a web type of a business where the on a monthly basis we just costs i know i didn't quite answer your question but i don't the i don't think that i need to start slashing costs on the second half let's put it that way

all right fair

enough thank you

Hi, Walter Rossi from Danske Bank. Why do you think that your business has been so heavily impacted on by the short-term macro environment even though the development projects should be more immune to that and do you think that it's more related to the tariff uncertainty or or actually longer term uncertainty in the automotive industry?

Well yeah i guess we got most slammed in or the worst slam we got was from the automotive obviously and i think that the biggest over there is tariffs that's for sure on some manufacturers it of course affects the fact that the for some western companies at the same time there is they've been facing the fact that the there is fierce competition in china so they've been you know many western companies had a big big market share in china and now they've been losing that quite heavily i think i said a few years back that the if development continues like this we're all going to be driving chinese cars and that's what it definitely looks like so it's both can i quantify that what is what hard to say but of course you know that there have been there have been western car car manufacturers that they've done write-offs worth of billions of dollars on only on their chinese operations so the clearly they are affected on both now we're in a situation that there is overproduction in so china is producing more cars that they can consume domestically and now the question is that where are those cars going to be landing right so at the same time there is oversupply of of the product and then there is tariffs in the u.s and the tariffs are kind of a two-fold that they are also affecting the u.s manufacturers because they manufacture so much soft contracting in mexico and canada so it's kind of hitting the whole industry pretty hard and then it comes down to tier ones and ones are also our customers right so we have customers tier one customers that are suppliers to automotive industry so we that's probably the worst industry we have and then on consumer electronics being a bit of a headwinds as well and then some other industries like the defense been doing fine but the it can't overcome the whole portfolio so i mean you know if you want to have a silver lining on all this the one of the silver lining is that thank god we are in 70 different industries because if we would be automotive only i mean you know this then this would look really bad

and how much do you think that automotive is going to be of your sales this year roughly and how much is china from that figure well

we don't publicly say those i think that the automotive have always been between 15 and 20 now probably going to be on the lower end obviously china figures we haven't released publicly but the are growing fast started small but now growing growing fast and there comes you know the next obvious thing that is that good or bad for

the long term but but long term you think and that you can compensate the declining western automotive sales yeah

yeah yeah of course yes yes yes yes and the western automotive sales i mean they are now delaying things because they don't know that the uh you know you know i can understand that if you're in that kind of a situation and you think that you are you're thinking that what would be my production volume right what's what's what's my volume for europe what's my volume for usa and what's my volume for china in this particular situation it's very hard to decide but once you've decided that then that's the volume you're going to produce right so it's a very difficult environment to make decisions because they need to estimate you know what's going to be the end user volumes and and in this current situation it's tough i mean the worst case for the european car manufacturers of course is that instead of being global they are manufacturing cars only for european market that would be pretty big change i don't think it goes into that but the uh you know so the decision making environment for them has been very very difficult during the first half so much uncertainty and yet you have to make decisions that you have to live with like you know five years going forward so if i could delay if i would be in that position i could delay i would delay my decision making for sure

uh still still a few follow-ups on the automotive have you so have you seen there any any changes in the competitive situation or have you have you lost any customers or or are there some large customers specifically that are leaking right now

yes and of course i'm gonna i'm not gonna say that but the uh no we haven't lost any any any uh you know no losses or whatnot uh i think that the uh if if you study the industry more in depth you'll know that who are in trouble and in what kind of but the um they are our customers so i'm not gonna start this discussion on that front uh and what about the

competitive situation that has sorry against uh android or or uh chinese competitors uh

no that hasn't changed and i mean we're doing very well in china i mean qt is not only on automotive but qt is being used more and more in china on also on desktop as a matter of fact so the uh the product our product is competitive and we see these uh newcomers kind of are coming we saw the uh well in the early days html5 then there were like uh right where gunseat then we there was flutter flutter i haven't heard of the last i heard from flutter is that they are actually not developing it anymore they've uh they've uh slashed all the development personnel they are only uh upkeeping it as as of now unity made a big announcement that they're gonna do big inroads in the automotive and yes they you know they are somewhere but the i haven't i i don't see them making any inroads whatsoever so it's it's a complicated environment the requirements for products are very very high it's it's uh you know it the uh it takes a lot to be competitive in for example in the automotive so we haven't seen any uh the uh changes on that front nor have we seen any uh that there'd be a new product that that there is price competition or any of that so that's not the case at all

all right thanks and one one last question regarding the developer license maturity so the three-year license is how much of those developer license sales do you think three-year licenses will be this year how much were there last year and has there been actually a significant decline in that also partly explaining the decline in sales

that's a very detailed question i don't have those numbers out of my head unfortunately but the uh on a general level i haven't seen a substantial change over there so so

that's not one main reason no

no no i wouldn't call that a a main reason not at all but i don't have exact figures to give you fair

enough

thank you thank you

hey want to learn from me in the rest a quick question about the guidance i assume that's fully organic not assuming any revenue from my ar oh yeah yeah yeah yeah for sure yeah yeah good yeah good to hear um then on the iar deal and maybe just contrasting a little bit how they do sales versus how qd does sales i know you both have global sales networks yeah is there any difference in terms of who you sell to like tier one two suppliers versus the oem and if so are there any opportunities to build sort of deeper relationships by combining your networks of sales uh assuming deal

goes through yeah uh assuming deal goes through yeah they do have their uh it was actually funny enough their offices are pretty much on the same locations where we have offices so the uh that that seems to be the case uh what is exactly that how do they what's their sales process i don't have enough visibility on that but the uh looking how they're organized how they operate uh seems to me that the uh it's pretty much direct sales like qt does its direct sales to uh to any user customers they do have very strong partnerships with the uh chip vendors nxp's and and and whatnot uh and the they work very closely the uh hardware manufacturers i think that their the relationship is stronger than qt has so in that whereas the expertise that they have for that particular sales to sell directly to the customers of course it's unique that the we don't have so in that sense the i don't see benefit on that but of course i do see that we can sell the our qa products over there so they can start using their sales guys can start their sales force can start selling our qa products and well of course pretty much also cute to all of their customers so that cross sale is their right right imminent

and then in terms of the market slowdown and that easing up in the future obviously you and usa trade deal is one of the factors there and i guess usa and china deal is another one but are you looking at any other sort of factors that could be the stepping stones towards a more of

a

calmer market common

market well in europe obviously is that the will to to crisis is in europe or close by so the uh the uh gaza conflict will end and the uh ukraine war will end that that all of course will boost the economy in europe and uh then i think that the uh and and this tariff uncertainty the uncertainty i think from my point of view in this manufacturing industry is the it's even worse than the tariff itself of course the 15 percent tariff will have impact on the uh on the um end user demand but the uh it's going to be this uncertainty so these two things will have a have an effect uh well you guys know more on the overall economy than i do but the uh you know one would think that maybe someday there would be even small growth in europe i don't know if it's possible anymore in my lifetime but i would think that at some day that you know there is this possibility us will definitely find a way to grow and the uh and and apac will definitely find a way to grow so i mean in a worst case scenario we will have two reaches that the where the economy is growing fast and and that that that is inevitable and and then we have europe which might turn into zero growth retirement home for all or it might find a way to grow a little so let's hope for the latter

thanks that's

all me

hi alex anderson nordia a few questions left from me uh quality assurance we haven't discussed that yet um how are the quality assurance sales in q2 compared to your own expectations and i think you mentioned in the report that you expect a pickup in the quality assurance sales also in the second half of the year so what's driving that

well the overall uh on on quality assurance the uh one of the uh when i've said the uh it's uh like q2.0 so when we started early on selling qt many of our customers had uh develop software development tools of their own and then we you know we sold them qt and told them that you can be so much more effective if you put your engineers you know developing something and let us take care of the software development tools and frameworks and whatnot so that was the case on on qa uh it's a bit of a same story that why would you do manual testing when you can automate all that so that's kind of the shift people are doing and and they get more efficiencies from there the other big driver is that the uh is ai because if if you have human doing code there might be mistakes but if ai is doing goat there might be mistakes because ai decided to be funny or decided to make a you know you never know what the ai is going to be doing so if you have code done with ai you basically have to test it all right so those are the two factors are driving the testing market so uh your first question was that it um uh did we do as we expected no we did not so it was slow as well uh will because of course those are also the uh on on our qa sales it's usually the uh it's the uh kind of a rip and replace type of a situation that you already have a competitive uh product and you need to replace it with our product or you're doing manual testing and you decide to continue doing the manual testing or you're not testing at all and you continue not testing at all i mean not all software is always tested you probably you know you have your own experiences that you've bought something then it doesn't work so you know not everything is tested all the time so and and so may decide that well you know we need to save money let's go as we've been doing before so that's kind of the decision making criteria over there but the uh on the longer term will this trend continue that more and more software needs to be tested all ai software needs to be tested there is more software it doesn't make any sense to do manually so you know people customers will automate the testing and get these type of tools then it's the competitive environment that is our tool good or or not well if you take squish it's the far out the best tool to test test uh qt software right so there is i mean you know if you've developed something with qt either commercial or open source i mean it you know it doesn't make any sense than take the squeeze basically if you think on axevion on static code testing you have different possibilities if you go and the architecture verification and static code that's pretty much the only product on the market right so the uh there is there is no alternative to that if you're looking only static code testing is actually better than something else then well debatable and and then do you want to change it or whatnot so that's kind of the the situation on that well architecture verification we're getting kind of very in the detail do i have to do it now well no you can always postpone it the downside is that your platform and your software gets so complicated that when you do a change on your software it takes a forever because your architecture is so twisted which many cases might be possible so it could be that you don't want to take the architecture verification because you've built been building your software 10 years and you know you know that it's not good but you don't want to kind of you don't you don't want to know how bad it is so it's kind of a it's and and and yeah i mean has happened so so the uh it's kind of a decision that you can postpone higher up you go and the organization is very evident that hey this is something that we really need on that architecture verification and the static code combination axevion is far out the best product in the market if you look our customers over here they are pretty much hardware manufacturers who are getting into software development some are more advanced and some are less advanced but the on on many of our customers the hardware manufacturing has been the core dna uh you know well of course i'm biased but the uh i would recommend architecture verification for them all just in case so that's kind of the long-term view so they they they're all going to get it it's just a matter of timing right and and then we know that the uh well and then there are all kinds of combinations so that's kind of at the qa so if i look then on a qa you can you know in this our business what is the traceable market difficult to say because you know qd is on 70 industries and whatnot but roughly i mean roughly we can say that our qa products have to double the size of a traceable market than qd so over time qa should become bigger than qd

sure and then just a couple questions on iar you've talked about the sources of synergies but are you planning to quantify these to us at any point on the closing of the transaction

no

why

not well i mean yeah i'm joking the uh the uh uh it's too early i mean you know we have a public offer obviously it's a public company the amount of due diligence we've done uh i've we we uh let's see that first of all we get to close this deal let's see that the uh how can how can we work together on the uh i've we've not looked this from the uh synergy saving points at all so that's that's not been the uh that's not been the try driver for us thinking about this acquisition so uh we see that the uh their their product the r and d is definitely very specific to the what ira is doing and and and there is uh we can we can uh we can see synergies over there working together but the uh rather probably accelerating the investment on that front if if we look on the sales side we think that the uh their sales has been um it's very specific sales to that matter they have great expertise on that i i think that the um would probably be looking how to accelerate their growth through further investments than the looking synergies so the synergies would probably come somehow uh well of course there were going to be savings when there is only one public company instead of two public companies and these but i think that they are they are the minor thing in in all of this at the end of the day so if you looked at what's been behind the success of qt is that the uh we have a great product and and then we did a uh we did a uh investment on building our own global footprint on sales we've been investing on sales investing on commercializing qt product that's that's what we've been very good at and i think that the uh we can together accelerate that development in uh in ira case so i think that the uh together with our know-how and and investing even more on that we can accelerate the iar's growth and expansion in in global markets more than they would have been able to do it alone but the uh and that's the main driver uh and so have we calculated that we're going to be doing some cost savings no and i don't think they they're going to be a any major impacting force whereas i think that the uh where the profitability on iars will come that we're able to increase the top line with their existing personnel and if we can increase the top line like 30 percent with existing personnel the profitability will follow and that's more our scenario that we've been doing got it thank you

one more question one more yeah from from sb uh this should be a quick one regarding the expected deals for the second half how much uh of the expected growth that you are now seeing there is based on kind of foreseeable license renewals and and how much you are relying on on new license sales growth meaning meaning growth in volumes in the second half about half and half

um fair enough thank you you're welcome you can ask another one if it's as quick

it should be it should let's continue um on your on your visibility regarding the distribution license uh revenue uh you've seen growth in in in this line in in the first half uh but regarding uh regarding the the the uh existing trade tensions uh are you seeing headwinds in distribution license revenue especially in the western world and are you able to compensate that with the with the chinese production

that wasn't short one or quick one uh yes uh we can uh partly we can of course compensate and i think that the uh headwind on on distribution license because of this turbulence now this year you're gonna see it more next year right because this year production was already decided like last year and and when it's you know done and dusted it's gonna happen but this year hesitations you're gonna see some slowdown uh next year on the on a growth pattern that would be kind of expectations because now the decision is being delayed right the the manufacturer is being delayed it's may it's probably cautious and and smaller so that's gonna we're gonna see that in the coming months but the other's gonna be more next year issue than this year issue so this year runtime distribution license decisions been made already before so that's why it's not affected so that's kind of the time sequence how it goes thank you very much thank you we've one minute over so i think that was definitely the last question thank you all