Qt Group Oyj

Hello, and welcome to QT Group's Q1 2026 results presentation. My name is Herta Narvanen. I'm the communications lead at QT Group, and I'm here today with our CEO, Juha Varalius, and our CFO on Zetterberg, who will ask questions first from the room, and if time permits, then from the line. So let's get going. The stage is yours. Please go ahead, Juha.

Thank you. Hello, everyone. My name is Juha Varelius, CEO of Qt, and we're going to go through the Q1, pretty much the same agenda. Business highlights, market trends, and then we'll talk about financials and then outlook guidance for the rest of the year. If I look at the Q1, our net sales ended up 52.7 million, an increase of 11.6%, and on comparable currency is 18.4% and we are pretty happy on that EBITDA margin 9.6% and 5 million on Q1 and that was pretty much on target as well ARR which is the new measure we are now telling 155 million so the the increase of 32.7 in comparable currencies. So that takes away the flux, you know, the one and three year licenses and whatnot. And of course, we have the IAR in these figures. So overall, a kind of a typical first quarter, which is usually very slow for us, and fourth quarter being the best and busiest quarter, which then reflects on the first quarter numbers. So if we, well, foundations for long-term growth, I'm going to comment here a bit. So the developer license demand remains strong. If we look at our industries, the defense is nowadays the probably strongest one, medical and other industrial. They are all doing really well. And automotive industry obviously is suffering. specifically in Western markets. In China, the automotive market is doing good, but the Western automotive market is suffering, and the growth overall is very slow over there. If I look on the regional trend, we have APAC. APAC was actually last year pretty much on our plans. It is still continuing pretty much on our plans, so we are happy with APAC. That's a pretty robust execution over here. Over there in EMEA, we have a rather volatile situation where the European export companies are suffering. and that comes mainly from exports to U.S. The tariffs keep on going up and down, and there is some uncertainty, which is shown in decision-making, but if I look on the first quarter, our EMEA overall was showing pretty robust execution, and it was growing as well. in America is forming according to plan, and that was pretty much in same thing last year. I'm gonna talk about a bit of AI, but when I usually say that AI, we don't see the AI effect in our demand. Well, we don't when we discuss with customers, of course, in safety critical industries like medical, They don't want to use AI. They want to do, it's very careful that what type of software goes into devices. Same goes pretty much on defense sector, on many devices, in automotive a bit more. But if we look and we discuss, we actually discuss quite a bit with our customers that how are you using AI, how are you utilizing AI. We see that developers are using AI, but they're coding how they use it is that they use it to code with Qt framework. So they are utilizing Qt framework in their coding when they're using the AI. That's what we see. And believe it or not, I've been getting quite a lot of questions about AI and its effect on Qt. So we've done customer surveys also. It's not only my own discussions. We've done customer surveys, but we put an external company interviewing customers that obviously use of AI and how does that affect and how do you see the effects on Qt? And the answers being that, yeah, we utilize it or we don't use it at all or the AI usage is forbidden. So there are some companies that they actually forbid using AI. but we didn't get any responses that AI is replacing us. And I understand that everything develops, but that is as of today. So if I look at our execution on regions, it's fair to say that if APAC and MAI is executing pretty well and all the headwind we're basically getting against our own plans is coming from the United States, it's more than the AI effect basically. IAR, we're still happy with the acquisition. And I'm sure we're gonna continue being happy with the acquisition. The big theme for IAR obviously is that it's on subscript, it's on perpetual licensing. And we're selling, we're changing that into subscription licensing. And when we do that, the perpetual license obviously is more expensive when we go on subscription, which is on a yearly base billable license, the price is less. So the IAR revenue is decreasing this year and the profitability is also suffering. When looking at things in the beginning of the year, I was wondering, it was a bit slow start. It was going very well in the U.S. and somewhat good in EMEA and slower in APAC, but now if we look overall, the subscription chains, we did set a pretty aggressive target, and we are on that target now, so I'm happy on the execution on that subscription change on IAR. That puts pressure on the IAR profitability this, but that means that more aggressive we can be this year on the subscription, the more it will grow next year. So we're going to do as aggressive as we can and take the hit now and then have a healthy growth. And of course, it's a licensed business, which means that the profitability will follow next year. IAR integration is proceeding as planned. We've laid the operational foundations, unified organizations, aligned core systems, established data sharing across teams. We are combining sales efforts with the IAR sales and onwards. I've done a few integrations in my career. And I'm pretty confident that this integration is going to go well. And you can always sense it from the company that's being bought. And all the IAR people that I've met, they are anxious. They are happy for this merger. They are keen on working together, and the mood is very good. So I do expect that this integration will be successful going forward. Well, as you know, there is war on Iran, and as a matter of fact, the high oil price is affecting not only on a gas pump and maybe inflation and whatnot. The oil affects on the price of a glass and paint and numerous different products which our customers are using for their production, and that is the thing that makes them cost that their production prices will go up because of this oil. And it's not directly the oils like paint, for example. We do have our long-term customerships. They're very solid. So we've done, and we're doing like on a second quarter, big renewals with our very longstanding customers. So our customer relationships are like, years and 10 years and 15 years. So once companies start using Qt, they're usually so happy with it that they extend the usage and the customer relationships are extremely long. And that's a foundation for our business. Despite doing this, our product is very competitive and that's, of course, something that we tend to keep good care of. Well, of course, there can't be a presentation in today's world not talking about AI. So here is a bit of a snapshot of what we're doing in different products. We do have a different, specifically there is Qt framework, something Sometimes we kind of think that Qt is a set of tools. It is a lot of tools too, but foremost it's a framework. A framework is something that developers like to use because there are reasons for using it and also AI likes to use it. We do follow, for example, our competitors and what are they doing on AI, what kind of functionalities they have in their products and frameworks and whatnot. And I can say that we are at least on par or better in what capabilities we are offering. That basically goes on Qt, Squish, Axivion and Acro. We use AI in our own And yes, of course, we do throughout the company, we use AI in pretty much in each and every department, which means that it is being utilized as a tool. Do I see that AI is replacing office people or our R&D people per se in today's world? No, I don't. It's a tool that makes our people more efficient, but it's not replacing at this point of time. So if we look at a bit of these products, on framework side, like I said, we see it as tool for developers to be more efficient in larger terms. If we think we do have different kind of skills, AI assistance on Qt framework to help developers using Qt. And also we see that we've enabled the general AI language models to learn from Qt so that developers can actually use AI. I know that I've said this sometime in my earlier presentations, but nowadays we, you know, the first step actually in this world, it's a bit of like on internet that if you have an internet site, you need to make sure that Google finds you. Well, on AI world, you need to make sure that AI finds you. If developers want to develop something and the AI doesn't find your framework, then so we've made sure that that with these general language models, they do know how to use Qt, developers can use Qt, and AI agents do find it. And there we have a one great benefit compared to our self-proprietary competitors that Qt is open source and has one and a half million developers out there. So there is a ton of material that AI can learn from how to code with Qt and how to be better on Qt. So, I think that was kind of the first step we did on that. You probably are going to have a question that, what about pricing? And I have nothing more than a goal more towards, say, consumer-based pricing models, where whatever is being produced using Qt, the payment, the license payment is based on that. And that's, the logic behind that is that now we have per developer stage, but if a developer is using AI, which is using Qt framework, we see that that's also payable. We've had actually discussions with some of the clients that are doing that already, and there seems to be no problem in that, that it's payable. The matter is how it's measured, what is the pricing, and all of that. And we're working on it, and on that sense, the pricing will change in the future. Well, SQUIS is very tightly integrated into Qt, so I know it's a bold statement, but If you develop something with Qt, there's really no reason whatsoever not to use Squish for that testing. They're so well integrated and they work so well together. Over there, we have an AI-generated test script exploring applications. Vision IQ, Squish Vision is... visual testing that adapts into the interface, the changes in the interface, interfaces, and that's been very well received. On Axivion, well, it's more like owner partners. We work with NVIDIA and Qualcomm and the likes on different types of solutions. Axivion is a very complex, very... very, very good product. And over there, I think that that is something that AI is not going to be replacing in any matter. And it does some specific job. And like I said, the across Qt group, we're using AI extensively and looking at efficiencies over there. On the future outlook, I'm going to come back and talk a bit about this changes we're doing currently. But Before that, I will talk about some financials.

Yeah. Let's talk about the financials. Yes. As Juha said, we had a growth of 11.6%. The exchange rate impact this quarter was 2.7 million euros, so 18.4% at comparable currencies. Not too bad. We had distribution licenses there. It was 2.3% growth, and developer licenses and consulting were about flat compared to last year. The maintenance revenue almost tripled compared to last year. This is, of course, the IAR effect because IAR has a higher share of maintenance revenue, specifically as we are pushing all of the developer licenses into the balance sheet with the subscription transformation going from perpetual to subscription. Then the ARR, as you also said, it was 155.9 million euros. There is some ARR effect in this too. The growth at comparable currencies, there was a currency effect of 4.5. So the growth of comparable currencies was 32.7. We have a very stable customer base, and therefore we have a very stable ARR growth. I was going to say, not IAR growth, it's difficulties. Too many R's, yes, too many short. But they are. Organic growth, anyway, of the ARR was 11.5, which is very stable growth over time also for the Qt group without IAR. Then also the IAR transfer into subscription is going to push this further then because more of the perpetual revenue will then go into being annual recurring revenue. So I think this number shows that Qt has a very stable customer base and a very stable business and solid business. Then looking at the expenses, you can see that the costs grew a bit. They grew by 23% compared to last year. Part of it is because IAR has a lower profitability and also because we are pushing down the revenues with the subscription transformation. But the personnel cost then, they grew by 26% almost. There was 1,120 people at the end of Q1. That was a growth with 232 people, which is almost the number of IAR employees. So basically, that is what we agree with. But now we have the cost implementation project, and we are aiming to cut about 20 million euros. So then we are moving towards where we were in 2025 and see if we will reach that target. There is also, of course, some costs in other costs. External services and so is obviously target first. Consultants, marketing, various things like that. But there are also other things that is part of integration that will over time generate cost savings. That will not happen very quickly, but IAR has 13 offices around the world in pretty much the exact same spots as QT has. So just merging the offices and the legal entities, which are also in the same spots, will over time save money also under other costs. So the profitability is then... It was around 5 million EBITDA. So the margin was 9.6. And that is basically because of IOR's lower profitability and the need for efficiency work around the cost side. So a little look at the balance sheet then. We have goodwill of 166 or 167 million. Most of that, 122, older acquisitions, Fraudulogic and Exivion mostly. And then under other intangible assets, you have the other technologies from those acquisitions. It is technology acquisitions, brand acquisition and customers, as it is split in the PPA. And IAR has 87 million euros of those intangible assets. And FraudLogic and Exivion has been written off over time, been written off over 10 years. So those are lower values now and are at 9 versus 17. As I remember mentioning to you last time, I also have six million of capitalized assets, capitalized development assets. It's the IAS 38 where we treat development work into specific assets and we capitalize it in the balance sheet. This will over time not happen anymore. We'll be synchronized to doing it the same way as the Qt group does it. But for the Q1, we had capitalized, yeah, 0.4 million euros. And so that affects the P&L and also increases the balance sheet. And there are other non-current assets. It's mainly the right-of-use assets, which are our premises around the world. And there are assets like furniture and stuff in those locations. Trade receivables basically have a healthy cash balance of 56 million compared to 80 million last year. We also have, because of that, we have interest-bearing debt in the balance sheet of 143.5 million euros. Bank loan of that is 135.3, and that refers to the IAR acquisition, which will be amortized over time. And the rest of that interest-bearing debt is basically leasing debt related to those IFRS 16 assets. And under other receivable and other short-term liabilities, still we have those 5.2 million euros that refers to the acquisition of the last IAR shares. That arbitration process is still ongoing in Sweden, and we hope that it will be... close to but it is a little unclear when it will happen but those monies are reserved for that and yes I guess I can end the presentation on the financials by saying that looking at the balance sheet and saying that we have a pretty healthy balance sheet still with a high share of equity it is over 50% even though we made quite a few acquisitions over the years So with that, I guess I will end and hand over to Johan for the outlook. There. You are welcome.