Qt Group Oyj

Good afternoon and welcome to the QD Group's third quarter 2025 results presentation. My name is Heli Jansson, I am your lead and with me today are CEO Juha Varelius and CFO Jouni Lintunen to present the results. After the presentations we will have Q&A first in the room and if we have time left we will move on to questions from the lines. Without further ado, please Juha, the floor is yours.

Thank you. Good afternoon everyone. My name is Juha Varelius, CEO of the company and As Heli was already saying, I'm going to go through the business performance on Q3 first. Well, our quarterly sales was, say, 40.7 million, and the decrease on 3.4 or comparable currencies, it was flat, basically. And year-to-date, we've been growing – on 1% on comparable currencies and our EBITDA margin on Q3 was 10 and a half. What has actually led into this and why are we below on our expectation is the fact that the market has been softer longer than we've been anticipating. So if we looked at what we've been missing is basically larger deals. The number of the deals we've been making this year and on a Q3 has been pretty steady and growing. And so we've been doing more deals than we've been doing before, and we've not been losing any customers. So the turn rate, per se, is at the same level that it has traditionally been, but the average deal size has been lower. So what we are experiencing on a few segments particularly, Where our customers are suffering, we are doing smaller deals. Our customers are reviewing the number of licenses they require, and they try to go forward with their, let's say, kind of with their minimum investment. So there is still life in the market. We see the activity in the market. We don't see any competing technologies. So we're dealing with the same customers. We're getting new customers, but the deal sizes are lower. We've also experienced some shift from three-year deal to one-year deals. We were expecting that on the second half this market condition would get better. Well, it hasn't. And we gave a profit warning because we anticipate that basically this same development will continue on the fourth quarter as well. So we were looking for that the market demand would be stronger. Now we don't anticipate that anymore. Of course, we could have been waiting. and see that the uh what's going to happen on a big deals on a q4 i'm going to talk about that in the future outlook more but the uh as as we uh concluded that the uh we had a bit of same thing on the second quarter and now on a third quarter that we saw the bigger deals moving forward and the uh and the overall deal size being smaller uh we think that the uh this um outlook that we've now given is more on a realistic size. The distribution license revenue on third quarter was on a previous year level. Overall this year, the distribution license revenue has been developing favorably and that's been on our expectations. But on our license sales, we've been suffering both on a QA and acute side. Personal-wise, we had 922 people on September 30th, and year-on-year increase is 64. We are, of course, cautious on the cost side, but on a long-term, we are still continuing our investment as planned because we don't see on a long-term vision any changes in that sense. We did complete the IAR. acquisition couple weeks ago and the like we've said before where do we see IAR is that the we do have a more comprehensive product portfolio we see our strategy as that when we look the development process of our customers we want to be on the whole process and with IAR we are now with their compiler it's in the very beginning of this development process, so to say, so that when customers are starting a new project, the first thing they will do is that they will choose the hardware, and then they start looking for a compiler, and after that comes actually how to develop software and and so on so it will give us a benefit of course to be aware of customer projects on an earlier phase it also gives us a benefit that we can be yet even a one more one-stop shop for our customers they don't have to go and shop various things from various places. And specifically on our QA, our testing offering, it's a complimentary or we can do cross-sell. So when people buy the IAR product, also that needs to be tested. So we have a cross-sell opportunity over there. IAR is well positioned in safety critical systems which is also an area where acute works. So we do have safety critical, you can see in the automotive, for example, quite a lot, and on medical. So they are typically the same segments where we work. We do have coincidentally also offices pretty much on the same locations throughout the world. So we are operating in the same segment and this strengthens our position in embedded world quite a lot. So we are becoming a Nordic powerhouse going global. IAR is selling perpetual licenses. They have started the subscription change on licensing model, which we did a couple of years back. We are now reviewing that we're doing a bit different scenarios that on what scale and on what speed we're going to be doing the transition going into next year. As of now, I don't have a – I don't have an info to give that what that's going to look like, but the, of course, more aggressive you're going to be, the effect on the revenue is going to be greater on a short term and then on later it'll grow faster. But what is the kind of a speed of change, we haven't yet decided, and we are doing that study as we speak as well as we're doing the excess budgeting and so on and so forth. We do look that the IAR is going to be a very complimentary product for our portfolio, and we've started the integration work now. When we made a public offer, it was done on a due diligence, on a light due diligence. Now we are going through the processes. We've started the integration work. And like I said, we started the planning for next year budget. We started the planning for the subscription change. And once we have those ready, then we're going to share more on that information to you on the later stage. And with these words, I hand it over to Joni.

All right. Thank you, Juha. And welcome from my behalf as well to the Learning School of Q3. I will dig into little bit more details on pnl income statement and balance sheet as well you have already discussed quite in detail already about the top line net sales we reported negative 3.4 net sales growth and we see that happening driven by the customers kind of cautiousness for most parts We are seeing the headwind from the FX, specific from the US, and the magnitude of that was negative 1.4 in the Q3. So in other words, comparable currencies, the net sales were flat year-on-year. For the first nine months, we are reporting negative 1% reported net sales growth. With the constant currencies, we are around 1%. So flat all in all. We did some flattening on the material services part. There's still an increase of roughly 100,000. That's the resources, external resources that we are using for our customer consulting projects. So kind of insignificant in any means though. Our headcount as you have described was up by 64 year-on-year. And we have been adding resources into R&D, product management, and also customer-facing organization during this period. And these are specifically the growth areas we seem to be contributing going forward. This headcount increase, it reflects very much line in line to personal expenses growth, 10%. in Q3 or 9% for the first three quarters. Some increase in depreciation. We have extended the premises in some of the locations of ours in our locations and also in Finland during this year. So this shows a slight increase in that line. The other operating expenses, dispense side, it's up roughly by two million. That's for most parts driven by the IAR-related acquisition costs. And that impact is 1.7 million now in Q3, or roughly four points in the EBITDA margin, if you will. So run rate EBITDA margin excluding the one-off would be somewhere 15% level. close to 10% or 9% down from last year's. The amortization specifically from FrogLogic and Axivion acquisitions back in 21 and 22 remains unchanged, 2 million a quarter, 6 million for year to date. And this leads us to the EBIT of 2.3 million. or 5.6% down by 13% points from last year's. And the year-to-date EBIT percent is 13.2. The financial items did not play that big a role now in Q3. There was not that much fluctuation in the exchange rates. We are suffering from the headwind from the first half year from USD 1. specifically by 1.8 million. Our income tax was for third quarter 650,000 for first three quarters 3.4 million which equals to roughly 21% effective tax rate which is our run rate and a good scenario going forward as well. And then this leads us to net profit of 1.4 million for the period, for the quarter, or 13 million for the year to date numbers. On the balance sheet side, we see a significant increase in cash balance. I mean that's the reason of the seasonality of the business and that shows us as well in the accounts receivable trade receivables pocket which went down by roughly 16 million from end of last year and this is driven by the seasonality of the business we execute. I mean fourth quarter is always the busiest one with highest number of invoicing and then the cash will be collected in in the first half year time and then again fourth quarter will be the busiest one we also see a reduction in the contract assets by 3.9 million which is a reflection that we have not been booking any major significant deals recently with multi-year deals with extended payment terms so this is kind of contributing to uh which is 32.4 million for year to date. What comes to the equity and liabilities, there's very little movement on that in accounts payable or any other items. And I mean, this balance sheet obviously will be subject to change now quite significantly because of the acquisition of IAR. and then that will be taken into account into Q4 finances then in February. With these words, I will hand it back to Juha to go through the outlook and guidance for this year.

Yes, thank you. Well, we don't see any changes on our long-term growth prospects in a sense that we do see all our customers planning for new products. They're going to be launching new products. They're designing new products. We do see graphical user interfaces coming more and more into play. We see on testing that more and more software is being developed that needs to be tested to be robust. So, in that sense, we don't see a – on a long-term, we don't see a whole lot of change on that. However, we do see that on a short term, what we see in our customers, there has been layoffs in our customer base on different regions and segments. Basically, on all our regions, we see that our customers are on many cases on a saving mode, if you like. And we do see that there is a – on embedded markets specifically, we see on consumer electronics, we see in automotive that there is a bit of a downturn on our customers on that. Do we see that that's going to continue in the long term? No, we don't. And do we see, like I've said before, that the – is there a need to develop further new products, have new product launches? Definitely so. So the – The number of devices will be growing. The software will be growing. AI will be generating a lot of software. And whatever software AI develops, all of it needs to be tested because we never know what the AI does. The market... uncertainty this is a let's just say a great question but how long do we think that this is going to last and as a matter of fact the I was thinking and I was we were kind of hopeful and we were well not hopeful we were pretty certain that the second half would be better well that's not be the case and we see that this market uncertainty on the embedded segment will differently continue how long At this point, I don't want to make that estimation, but let me put it this way. I don't see it getting any worse. So, we don't – I think that the cost savings that we're seeing, companies are doing it, and I don't expect it to get any more challenging than it is as of today. So we estimate that we gave a profit warning and we gave the new estimation for this year 3% to 10% year-on-year comparable exchange rates and marching between 20 to 30. And as you know, the large part of that delivery will come on the fourth quarter. We took a very – well, if we were on a positive side, now we are – our estimations, we've been on a conservative side on the – how do we see on 2025. As we go forward into – if we look into the next year, like I said, the basis what we have on our – how do we prospect market going forward? We do expect this market to get better and we're kind of on a low end of this turn as we speak now. Well, it's the usual, I already mentioned that basically on our segments, the automotive consumer electronics are suffering the most defense and medical maybe the least, so it's a good thing that we are on a multiple different industries. If I look on regions, maybe U.S. been for us, kind of varies that which region is the best. Probably U.S. was suffering a bit more than Europe, apart from on APAC we're doing better. And well, of course, When you think of it, it's kind of no surprise that the Chinese automotive is doing pretty well. But it doesn't kind of offset how we're suffering in the other parts of the world. So that's basically the outlook we have. And now if you have questions, please.

Three questions, if I may. It sounds like your customers are reducing the number of licenses that they have in use. What is the reason for that? What do they tell you? Is it merely because of cost savings or is there anything to do with structural matters with developers becoming more efficient and companies getting a lower number of licenses and that sort of thing?

Well, they have less developers. They're downsizing, right? So if we look on the IT market, I think, you know, it's two years back. There was a shortage of developers. I mean, everybody were anxious to get developers. It was very hard to find them. And that was kind of a bottleneck for IT company growth. If you look now at the job market, I mean, there are developers unemployed basically at this point of time. So now it's kind of the opposite. If you look at the big companies in the U.S., for example, how big layoffs there's been during the course of the, let's say, year and a half now. So that's one of the reasons. Then the other – is the overall cost awareness let me put it this way so it was very typical for our customers that whatever they had when they renewed they renewed the same amount with the same deal like a three-year deal and so on so many developers now they are calculating exactly that how many do we need and they try to survive with the least amount of licenses. And then when they start new projects, when they are starting a project, they start it with as small amount of developers as possible and try to go forward like that. Whereas before they started in a bigger scale. So that's where it comes from. But like I said, the churn has not increased. So we still have the same customers. They continue their development. They're just more cautious on the spending. and also the number of the deals we do, so the number of new customers, that is actually even increasing than what we've been doing before.

And secondly, what about quality assurance? Did that grow in Q3? Because it sounds like you seem to think that there's a bit of structural failing from AI in that area. Is the demand on that front any better than for traditional Q2?

I would say that our QA business, the license sales is suffering a bit same things than on Q2. So the growth on QA has been slow as well. We've also, well, testing is kind of a, development is something that you either do development or you don't. Testing, you can always not to test and hope for the best. So you don't have to test everything and completely and so on and so forth. So that is, for customers, it's easier to adjust on a testing bit. than on development bit. But I would say that our license sales been sluggish both on QA and Qt. But were quality assurance sales down year on year? No, it's not down, but it's, yeah, you know, same roughly, you know, follows pretty much closely to what Qt is doing.

And then regarding the one-off costs relating to the IAR acquisition, they were for the full year at least a bit higher than what I had anticipated. Will there be any one-off costs in 2026 from that?

2026 on IAR?

Yeah, these one-time costs.

I don't think so, but you never know if there are surprises that we need to close down something or... or, you know, do something extraordinary that we're not anticipating. But, I mean, this one, of course, are – well, this money so far has been flowing mainly to bankers. So what can I say? It's a big amount. But the – so – Do I anticipate any one-off costs on 2026? Well, at this point, I'm not aware of. But, of course, if there would be something that we would totally write off, then there would be. But we don't see that as of now, no.

Okay.

Fair enough. I could ask on the lack of large license deals and kind of the drivers behind that. Do you have any sort of idea where that comes from? Why are larger deals not coming in?

They are being postponed. Yeah, so, you know, they've been pushed forward, the big projects they are waiting to start. So a bigger deal usually comes. So in our business, the first deal is always, say, a smaller one. Then there is the people start developing. Then there is the expansion, and that comes, say, a bigger deal. And there have been postponements on those projects. They've been postponed. kind of a, well, put on hold is a wrong word, but they continue with a smaller amount of developers. They don't scale up. So the projects are not going away, but they go on a lower flame, so to speak.

Right. So does that mean that they are basically extending the timelines for getting those products out?

Yeah, they're doing, yeah, basically they're doing with less, yeah. Okay.

I could also go back to the discussion around having less licenses sold to the same customers and then optimizing the amount. Drilling down to the AI effect, because you could assume that developers are getting more efficient every year. You could see a recurring effect that companies downsize every year because they can do more with less. Do you see that as a realistic risk for the market and your licensed sales volumes? Or do you think that the customers might just at some point expand the scope of their products because the AI can help them do more?

Well, if I look at AI as of now, where I see that you can use it is on web technologies or mobile technologies. So if you want to do a simple mobile app, for example, you can have the AI helping on that. If you want to do kind of simple things that are very easy to verify that what they are, yeah, you can do that with an AI. If you're doing... any safety critical functional safety type of things you can't you know or let's say that the infotainment system on a car it's a it's a very complicated system ai can't do that will it be able to do that someday well of course you can take both views some people say that you know, in a few years we don't have to work anymore because AI is doing everything and other people are saying that, well, maybe not. So I think that on embedded before the AI starts doing a, you know, so much work that there is really less need for developers, that's kind of down the road and let's see how that goes. on top of that AI is not very reliable, as you know. So as of today, you can't, you know, you can do simple things with AI on testing, for example, you can do, you can have test scripts written by AI. And, you know, if that's not complete, well, then, The test is not complete, but it's not end of the world. Those type of things you can do. And you can use – it can be a helper, but do I see that developers being so much more efficient that there'd be need for less on embedded side? Not really. Do I see that what's really affecting our customers is the lack of demand? and their profitability is under pressure and they need to do less, that's more of the reason as of now.

Okay, thank you. Hi, Mikko Laaksonen, private investor. So, my question is about the competitive landscape, what's going on in there, and are you seeing any sort of advances in the competitive technologies that might be impacting the license volumes? No.

Okay, yeah, and I can elaborate on that. So we do have the usual suspects. We do actually see the – I don't know if you've heard me speak before, but so we have Android on the IVIO on the automotive, but there is not a whole lot of change. There is Flutter, that the Flutter was coming, and that was kind of at the recent – emerging technology came from mobile and web, and they were kind of making inroads into embedded. We don't see them that much anymore, and as far as I know, they're more in a maintenance mode nowadays, and they've got back on their development. We do see Unity. Unity is very good on the 3D, and on advanced 3D, if you want to have the very – a very nice looking 3d then unity is a it's a good choice however it consumes more hardware so you need to have more powerful hardware more expensive hardware and the it's fairly expensive on on on the per item cost on Unity is much higher than on our pricing, for example. So what we now see is that on kind of our good times, we saw Unity being used also on kind of our middle-tier automotive, middle-tier cars, whereas now we see that customers are looking at cheaper offerings for low and middle tier and Unity can be used only on a high tier vehicles. So basically this cost pressure is on that sense it's working on our benefit rather than and more against Unity. So we don't see a change over there. And we don't see at this point of time, we don't see any new technologies that would be coming into our territory. And like I said before, we don't have any customer – our customer churn is the same that it's been for years. And that's kind of a natural – I would say natural churn that the project's ending and whatnot. We don't – we haven't seen that, and we haven't seen any reduction on the number of the deals we're making. So we're selling the – we're selling – As well as before, even a bit better on a number of deals, but the actual sizes are smaller.

Hi, Valter from Danske Bank. Thanks for the presentation. First, especially related to the large deals, do you expect Q4 sales to be under more pressure actually compared to Q2 and Q3 sales? Because I would assume that there's even more of those large deals.

Yeah, and so, yeah, well, yes. And when we gave our estimation for our full-year guidance, we kind of took that into account that there will be less, yes. So we were more conservative on that one, especially for that particular reason.

All right. Then about the license maturity mix. Okay. Once again, would you say that the three-year license lower than expected renewal rate has had over or under 5% impact on this year's sales? How much is 5%?

Well, I would say that it's somewhere between 3 to 5 million on a third quarter. Is there a fact? Yeah.

On a third quarter?

Third quarter. I was trying to calculate, you know, what percentage, but yeah, somewhere between there.

And how much would you say year-to-date?

That figure I don't have out of my head, but I knew that you're going to ask, so I looked at Q3 specifically.

All right. Last one about the underlying market conditions. Do you expect the market to improve still this year, or are we going to have to wait until next year for that to happen?

Well, yeah. More hopeful when we were here on the beginning of the third quarter, I was expecting a obviously I was expecting a better third quarter. That's for sure. I was expecting the and that didn't happen. Right. And so we are now more conservative on that. And we don't expect the much of a change on a fourth quarter. And, you know, hence our guidance. are we going to see better next year? Well, at some point this starts turning for sure. And so, yes, we are expecting, we kind of are seeing that the better that the, on what particular quarter that will happen, it's, well, I can't say that. And as you can see from our fourth quarter guidance, it's fairly conservative. So we don't expect any big turn this year.

Hi, Jaakko Turvanen from SCB. I could continue on the AI and the related productivity gains on software development. Are you seeing such kind of a trend or pattern that proprietary development would become, again, a bit more appealing for the clients, or do they still need to trust in some sort of tools when developing the embedded solutions?

Yeah, they're definitely going to be using tools, that's for sure. Yeah, and I think that, like I said, on embedded development, you can use AI for writing test scripts. On embedded development, you can use AI on design phase, you know, to give you great ideas about what could be, you know, different kind of a different kind of solutions and ideas, creativity ideas, but the actual coding on embedded, I don't see that the AI will be there for any time soon to replace the developers. No, we don't see that risk. But on simple tasks, you know, you can – I've used AI like that it's a great buddy, you know, it's your best work buddy. It can help you out, but the actual coding, you know, I don't see that unembedded for the foreseeable, you know, in many, many years that would change. I mean, you can use AI doing simple mobile apps, for example, now. And, of course, there is also the other side of the room saying that it's going to advance so quickly that we're going to all be surprised. Well, usually on these new things, as you know, is that when the change starts happening, it takes many, many years. People kind of even forget it, and nothing happens, and then the change comes later on. But on this embedded coding, not in the – well, foreseeable future is always kind of a scary word, but not in the coming years, let's put it that way.

Okay, and still – using the word of AI, have you included any kind of AI features in your own products? And has that improved the customer's productivity so much that they need less licenses perhaps? So are you basically cannibalizing the renewables by including such features?

No, no. I mean, these embedded systems that people build using Qt, they are very complicated. systems, very big platforms and whatnot. So, no, that's not the case. I think what we see is that the – well, first to your question, yes, we utilize AI in many aspects in our products. Is that downscaling the number? Is that affecting less licensed sales? Definitely not. We do see that there is a – our customers are feeling the pain that they're not selling their products as much as they would like to, and they have cost pressures, and that's what we're seeing. And those cost pressures are not only that they're selling less. You know, many of our customers are having high tariffs, for example, selling stuff in the U.S. I mean, you know, like the – well, I don't know what's going to be the resultant before Trump now visited and they've made a deal. I don't know if it's now 15. But, I mean, you know, many, many of our customers are having a 15% cost increase on stuff they are selling to U.S. So – and then there is a bit of an oversupply on some industries and whatnot, and this is causing the overall friction in the – on – embedded business.

Okay, then finally, on the license maturity mix, you mentioned that customers are perhaps now choosing a bit more on the one-year licenses. Doesn't this imply that you should have a pretty nice growth in your one-year license base for 26? And could you elaborate a bit what type of a growth you are seeing in renewing one-year licenses when going to 26?

Well, yeah, of course, yeah. I mean, on a short term, it affects us specifically, as you know, that our monetization model is that if you buy a three-year license, we book it as revenue one at that point of time as one goes. So if people are buying more one-year licenses, we book it as revenue. at that point, which is obviously less than a three-year license, right? But then the good thing is that the one year is going to renew next year. So obviously it's going to help us, absolutely.

And how much larger is the base now?

Well, I can't answer that, but the logic is right, that it will help us next year, of course.

Super, thank you. Good afternoon, it's Matt Riikonen, DAB Carnegie. A couple of questions. First, regarding your core space at the moment, it's now clearly more elevated because you have done growth investments, but you haven't got the growth. So you are going with a pretty heavy cost load into 2026. So how are you going to tackle that? Should we expect lower margins in 2026 because of that? Or do you think that just operating leverage would work in your favor in 2026?

So you should not expect lower margins because of that. And the operating leverage will fix that. And... In the case that let's say that this would be a permanent situation that the revenue will never, ever grow, obviously then we would not have growth investments and we would still get the profitability, right? Now, the one thing that will affect our profit margin next year is obviously IAR, and that effect I'm not fully aware yet, and it depends on how aggressive subscription change we take. If we take very aggressive subscription change to IAR, then the revenue might be flat or even decreasing, which would mean that the IAR – profitability would be diluting our group profitability. I will give guidance to that once we've made those decisions, and I know what the effect will be. But the IAR profitability traditionally has been lower than queued, so obviously there is potentially in effect having said that IAR profitability will obviously improve because they're not any more listed company and whatnot so we're going to get some savings out of there we have some ideas over there that the that how can we improve some of the performance on revenue, even if the subscription is over there. So that remains to be seen. But overall, that is the moving part over there. I would not be worried about the acute profitability. All right. And by the way, of course, we're going to have one-offs, the same type on the fourth quarter than we had on the third quarter.

Okay. Now, regarding Q4, you have a fairly big hockey stick modeled for Q4 to meet the full year numbers, because in the first three quarters you haven't grown at all, basically. So when the customers know that, and they kind of want you to give them discounts at the end of Q4 to close the deals, this year, not next year, so usually that creates a psychological kind of challenge. Yeah. So is there a greater risk that if you stick to your discount policy and don't give any discounts, then there would be a bigger share of those deals being postponed to 26?

Yeah, that is a risk, yeah.

Of course. Right. Then a question of your forecast model. Throughout this year, we have basically been disappointing in each quarter and your sales forecast model looks to be kind of broken or it hasn't worked like it did in the previous years. Have you scrutinized what's wrong and how can you improve the accuracy so that going forward your forecasts would be a bit closer to reality?

Yeah. So we have two ways of looking into a forecast. One is that... actually starts from the bottom up. So the sales, each sales person, they have their pipelines and they make the forecasts. They make that the, what is their best case and what is the most likely case. And it's built and been built upwards from the, from the pipeline and the sales makes their forecast through that. And then we have through finance, which is more like a scientific model that they've been looking at the pipeline over the history and they have forecasting model that this pipeline is likely to get into this sales. kind of an AI approach and basically both have been broken this year. So if you look on a third quarter, for example, when I was here telling you what are my expectations on the third quarter, we had a pipeline and we had a forecast model done by the sales that this is the most likely out of this pipeline. We do have – and the same thing from finance. So we know that if this is the pipeline, most likely with these multiples, this is how it's going to turn into sales. And that was not the case, right? And so when we look into more detail on the big bulk of things, that's how it's been moving around, roughly there but less. And then – these bigger deals being missing over there. So if we look at the end of the day on these numbers, it doesn't have to be You know, the deviation doesn't have to be that many millions, right? So if you're missing some of the bigger deals over there, then all of a sudden you are on the – out of the scale what you were forecasting. And that's basically been the – what's been misleading us, say, a bit. So we haven't been closing the pipeline as we did in the history. And when you looked at the – what's been – The reason behind that on the pipeline, we've been closing the deals on the pipeline, but the deal's been smaller. So the average deal size has been smaller. So have we been able to forecast that we have, you know, this amount of deals? Are we going to close this amount of deals? Yes, we have. We've done even a bit better. Yeah, we've been expecting, but the deal sizes on those pipelines, they've been smaller. So the deal's been closed, but on a smaller amount that's been expected. And that's what we need to adjust going forward in our forecasting. So our customer's been closing the deals, but smaller than we've been anticipating. And then your follow-up question is that, have we been giving discounts so that the deal has been shrunk? No, we haven't. It's been less licenses, basically. And that's where we've gone wrong. So now on a Q4, or when we saw what happened on Q3, we took a more conservative look for our Q4 because In our old world, if we look at what's our pipeline for Q4, it's big enough for a bigger sales than we have, but we took a more conservative view of how that pipeline is going to be closing.

All right, so that was actually partly an answer to my next question, which was that did I really hear you correctly saying that you think that your guidance for Q4, and of course this year, is conservative?

We think that this is the best guidance we can give if we look on the pipeline, and if we look, it would be conservative. But now we've seen three quarters that the pipeline doesn't close as it used to be. So I think that this guidance that we're now giving is very – best we can give, and I think that that's going to happen given the fact that we're using now the multiples that have been the reality on the second and third quarter. So for the old world, it's conservative. For this world, I think it's spot on.

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

Okay, from SEB still continuing. In the aftermath of the, let's say Q3 and perhaps the year to date performance, which has been the most kind of a disappointing revenue stream for you? Has it been the renewals or the new license sales or the quality assurance tools or the distribution license?

Well, new sales, definitely. So, new sales, that's been lower than we anticipated. We've had our challenges on renewals, but I'm very happy with our renewals team. They are doing a magnificent job. And, of course, they do have this challenge that people, when they renew, they're going to go through these licenses and there are reductions on some cases, but our customers are renewing. The projects are continuing. They are not resigning. They are not churning. They do have a pressure on the renewals, but less so. But new sales being the biggest challenge for this year for sure. And if I look on QEAT and QA, I would roughly say that the same challenge.

And then finally, I know it's a bit difficult to have the apples to apples comparison in your case, but could you elaborate a bit what is the magnitude of average price hikes during the year?

Average price hikes?

I believe you have hike prices.

Yeah, we have. I would say that... Not significant. Yeah, we've increased our distribution license. It's kind of a – there are different buckets in our distribution licenses, and we've changed their pricing on the different buckets. But I would not say that they're not a huge impact on that, no. Thank you.

There are no more questions in the room. I think we can check if there is anybody on the line. No. So, we can conclude the Q3 results and maybe some final remarks.

Yes. Thank you, everybody, for great questions. I think we kind of recovered pretty much everything. Like I said, we do have, I want to emphasize is looking good and promising. It's actually bigger. than we've been experiencing so far. What we do see is that our existing customers and new customers are very cautious on buying the number of licenses, and we've seen their deal sizes decreasing. We haven't seen any decrease on our churn, and so we continue with the same customers we've had. We don't see any new technologies or competition coming into the market on that effect. How long do we think that this embedded market downturn will continue? Well, definitely it will continue to Q4 and going into the next year. Do we think that we're kind of on the bottom of the downturn? Yeah, definitely. And do we see that the – We're going to be going forward upward from here, yes, but the timing is a bit of a question. Do we think that the – are we concerned about the next year profitability because we've been investing on a long-term growth for next year? No, we are not, and we do expect the return on the – normal profitability that you've been expecting to see from us. And like I said, we're very thrilled about the IAR acquisition. We're now going through with them different customers, integration facts, and whatnot. We're preparing a budget for next year, and depending on how aggressive we are going, we are going to go into the subscription change. depends on what's going to be the IAR profitability next year and how that will affect on group profitability. So that is the moving part, and we're going to give you more info on later once we've concluded that work. I don't expect that to take a very long time because we need to get going in the early next year. So all in all – Disappointing Q2, but we are very, we think that the future looks better and we are in a good move to execute towards better performance on the top line. Thank you.