Qt Group Oyj

Hello everybody and welcome to QT Group's Q2 2026 results presentation. My name is Hertta Nervanen and I'm the communications lead at QT Group and I'm here today with our CEO Juha Varelius and our CFO Ann Zetterberg who will be presenting the results. After the presentation we have time for questions first starting from the room and then if time permits then from the line. But without any further ado let's get going. Please go ahead Juha.

Thank you and good morning everyone and welcome to Q2 results. My name is Juha Parelius and I'm CEO of the company. Pretty much same old agenda, business highlights, market trends, financials by Ann and then I'm going to talk about the outlook and guidance for 2026 later. If we go into the Q2, our net sales grew 19.6% and the quarterly net sales was 61.3 million, an increase of 19.6, so comparable currencies 20.9. EBITDA margin 15.1 and 9.3 million. ARR increased to 160.4 and so it was a healthy croton there. If we look the Q2 A bit more detailed, I'm actually pretty happy about our performance since the distribution license sales year over year was a bit over 6 million less this year than it was a year before. Last year we had 19 million on distribution revenues so that we were able to increase our revenues, our Developer License Sales has been developing very well overall. If we look on the IAR, IAR has been performing very well on their subscription chains. We were expecting on aggressive plan that we're going to have a 40% conversion. Now we are on the over 60%, if I remember correctly, 68%. Thank you very much. And quicker we do it, then we get on a healthy revenue growth on the IAR side as well. So given those caveats, I think that we are pretty happy on the Q2 performance. On the profitability side, we've had the change management negotiations going on. We've done them in the USA and in Finland. They're still going on in some parts of Europe. And we do have one-off costs of those in Q2. So given those one-off costs, We're pretty happy on the profitability as well. We're definitely going in the right direction and at the pace even quicker than we were hoping for. So I expect that the next year the profitability will be well in the old healthy good numbers that we were used to see. And the change management negotiations where we're targeting 20 million cost savings are well on track. So I have no doubt that we're going to be able to reach those numbers. If we look on the license sales, well, it's a mixed package in a way that we do have different industries, medical and defense industries overall are doing globally very well. If we look automotive, we're obviously, our customers are having challenges in Europe, whereas in Asia Pacific, the automotive industry is doing relatively pretty well. So for us, we do have pockets in the automotive industry where we're doing okay, and then we have pockets where our customers are suffering along with us and the, of course, the tier one as well. On regions, well, I would not read too much on the regions on a quarterly level, because there is, as you know, in this business, there is quite a lot of fluctuation. EMA was good, America stable, APAC was on this quarter more moderate. If I look overall on the longer term, let's say that the end of this year and next year, I'm expecting USA to need quite a substantial improvement still where we are. So that's where there is room for improvement, definitely. Well, I already mentioned the IAR subscription licensing model, so no doubts about that, that can we drive through that change in IAR pricing models, that will happen, and that's been very well adopted. That's well on track. Well, depending on these industries, it's always good to remember that we operate on three regions, so we are a very global company. We do have 70 different industries that we serve. Some of our industries are a bit under pressure, like the automotive, but then on the other hand, some industries are doing very well, like the medical and and Defense. We also do see overall economy kind of stabilizing. I think that the latest disruption and uncertainty came from the war in Iran. Well, let's see what's going to be the next big disruption because there's been many of them. But if we now look at what our customers are saying and how people are looking for the future, I would say that the market has stabilized pretty much. On APAC it's been more or less stable all along, but in Europe and in the US we've seen some disturbances. I'm not gonna talk about much on AI but the I think that you know if I looked there was a lot of hype in February, March, April and then there was a conclusion that the software industry is going to disappear and AI is going to take over everything. Now I think it's calmed down a little. And I'm not saying that AI is not coming. AI is definitely coming. But is it coming so that the AI is going to take over everything? I have a bit of my doubts. Here are the kind of the same phrases I said last time, but what do we see in the market is that the companies are not really getting rid of developers because of AI. We do see companies downsizing, but they're downsizing because their business is not doing very well, right? And they're downsizing developers and they're downsizing in certain industries. They're downsizing quite a lot of other people as well. So we know, I mean, you know, you've read the news. There are big automotive companies that have announced that they're going to downsize, you know, 100,000 employees. by 2030 and so on and so forth. But do we see that companies are downsizing because of AI? We don't. Do we see that the developers are using AI as a tool to be more efficient? Yes, of course, that we do see. We also see that the AI adds kind of a complexity in a way that the AI does software very quickly and quite a lot and it's still in a phase that somebody needs to look into it some you know a human needs to look into it that what was done human needs to look into it that does this actually make sense AI as you know also Thank you very much. Thank you very much. On Acute, what is a framework? Framework kind of gives an architecture to software. And it's like a plumbing of the software in a way. And even for AI, it makes sense to use this. So that's kind of where we are. And... What do I envision is going to happen is that all those that are now watching and wondering that why I paused, there were people coming in and I started looking that should I say hello or not. So that's why I paused and I didn't say hello, but hello, welcome. So what we see on AI is the fact that we need to find a way on our monetizing model that it also takes into account that AI does do some coding. And this means that we need to start monetizing and invoicing not only per seat, but on the usage of the Qt technology. And when that shift is going to happen, well, it's probably going to be something like the subscription change that we're going to have a new version of our framework and then we start implementing it. We are working on it and we are now working on different models. We're monitoring how to implement it and what not. And you can expect that during next year we'll start moving into that direction once we figure out what is the best model for us and for our customers. So that we can take into account that there is a developer doing development and then there is also AI doing development. On IAR, that's kind of already taken care of because IAR is selling subscription and then IAR charges per simultaneous compilings already now. So it's based on the usage on that sense. And then on Squiz, We think that since everything that AI does needs to be tested and whatnot, we expect the software testing market to grow in the future. We of course use AI extensively internally, not only in our R&D and developers are using AI to understand that how it works and how can they be more efficient. We use it pretty much everywhere in the company nowadays. I think that the big thing for going forward is that as AI moves into consumption-based pricing models, we need to be careful that how much we absorb cost as a company when we are using AI. So I think that these business models will be evolving just because AI's business models will be evolving and how and where AI, you know, how much we need to pay for using AI, because very easily on R&D you know we're using millions of tokens on one go so the what's going to be the cost of it but so we do use it internally on on many various things starting from sales and marketing of course for example sales guys making a sales pitch nowadays it's much more easier using AI because you can get all the info of the target customer and tailor make a tailored personalized presentation on each customer meeting you have and you can do that very quickly so of course it's giving a lot of efficiencies We're also looking for the opportunities as we go forward because as you know nowadays we're looking on the development process and we're looking that where can we offer services and solutions to our customers so that they can be more efficient on their development process but the as AI comes along that well the most obvious thing that comes to mind of course is a vertical integration because using AI and our tools on smaller customers we should be able to offer actually ready-made solutions more than we are doing today. So we're looking into those opportunities that we have. Very particularly strong now is of course all the functional safety and safety critical things because there you need certifications and you need you can't use open source you need to be able to prove that your code meets the criteria that are required for car breaks and whatnot you know everything that is somehow functional safety or safety critical and we do have tools starting from the From IAR, our compilers are certified using an IAR compiler. You know that you can have a certification that it's done according to the specs. Then you can use Qt and our testing. We have a very comprehensive offering in safety critical functional safety industries and that's a very sweet spot for us in this current portfolio we are having. So, I think that the AI will be there a topic for the future, but for the investors, I would say, I kind of see this twofold, that yes, it's going to change. Very many business models, but at the same time, and it does give us efficiencies internally, but at the same time, of course, it also opens up new opportunities for companies that are awake. So I don't see AI only a threat. I see that it will open up new opportunities as we go forward. So there's going to be a whole service layer on top of that on these data centers we we see as of today and of course we're going to be on that wave as well so uh in that sense you know on this ai i would conclude that we use it ourselves we are looking for the pricing model change we're adapting it and and we're looking actively at the new business opportunities it potentially will give us And with that, the financials.

Yes, thank you, Juha. Well, as You have said this was quite a nice quarter for us. We had a very good growth. It's fine to repeat it, I think, since it was so nice. The growth was 19.6% in the quarter with a small exchange rate impact. So therefore, at comparable currencies, this was 20.9%. And the year-to-date growth was also pretty decent, 15.8, with a larger exchange rate impact of 3.3, and thus it brought us up to 19.7, about the same level as in Q2 at the comparable currency then. And if we look at the products we sell, as we illustrate them in the interim report, licenses and consulting, it grew 10.3% in Q2 and it grew by 5.3% year to date. The maintenance revenue almost tripled like it did last quarter because of the IAR effect. IAR has a lot of maintenance revenue in sales. Historically it's been about half of the revenue that's been those maintenance contracts. Now it's a little less because of the transition into subscription so we're selling less of support and update maintenance contracts in IAR and instead we're selling subscription. But the distribution licenses, those declined. That was totally anticipated. We knew we had a high distribution license level last year, so we knew those were going to decline. They declined in Q2 by 32.4% and year-to-date 17%, so totally anticipated. But that also, if you remove that from the development license and consulting parts, we actually had a growth there in Q2 with 38% on that and 18% year to date, which we are actually quite happy with, I must say. And looking at the ARR also, rolling 12, we ended up at 160.4, like Juha said. And rolling 12, it grew 33.8%. Obviously, IAR was not there last year, so that is separate. And that is why the growth becomes this large for 12 months. At comparable currencies, this was 32.2%. But for the quarter, it's still also a decent growth. I mean, 4.5% increase in IAR, like Juha also showed in his slide. And that is 2.4% growth at comparable currencies. IAR is growing in ARR as we're moving into subscription, removing perpetual revenue and instead selling subscription, which is annual recurring revenue instead then. And then looking at the cost side, unfortunately though the revenue side was good, the cost side grew more. They grew by 31.2% in Q2 and yet today 21.7%. So we are, as you know, working on lowering those, doing those reconstructions, efficiency work. Removing some employees here and there as a result of the acquisitions, of course, but also some cost adaption to various parts of the sales that needs to happen. But looking at the personnel that grew 38.2 in Q2 and 32.1 year to date, we have had 1,035 employees end of June. and that is a year-on-year growth of 119 people. IAR has 200 people so you can already in that see the effect of the people that we have downsized in Finland, the US and partly in Norway. We have still got Germany, France to go and that those are ongoing and those one-off costs will come in Q3 hopefully instead but in Q2 we have 3.7 one of costs under employee costs and 0.6 costs under other costs that are one of costs also. Part of it is relating to that business unit security in IER which we are removing over time as it was more of a cost burden than any type of revenue really. So that relates to the 1.6. But we are of course looking at other costs also as part of the integration, offices, merging entities and whatever we can do to be a more efficient and strong company for the future. But if we look at the EBITDA then, a 9.3% today is lower than what we had last year, 11.6%, and the margin was 15.1%. But if you remove the one-off costs, we are actually up to 22.2%, which is quite in level with what we had last year. So the Q2 is still in level with the profitability there, if you adjust for that. and the year to date that brings up the EBITDA level 12.6% up to 16.3% if you adjust for the one-off cost also. So still a fairly decent profitability there also with that adjustment even though it is actually still then lower than last year. Balance sheet. Not much happens in the balance sheet every quarter. A lot happened when we purchased IAR, but still it can be good to give it a quick run-through. Goodwill, 166.9. That is a constant. It doesn't change. We don't depreciate it. You never do that with goodwill. And most of the goodwill, as you can see, refers to IAR. The rest of it is pretty equally distributed on FraudLogic and Exivion. Other intangible assets, 120. Those are the technology assets from the purchases of the acquisitions and we depreciate those over 15 years. IAR also as I told you before capitalizes some development asset investments already in the still in the balance sheet we have a couple of those and those will be finalized in 2026. So the capitalization for Q2 was 0.4 million euros. That increases the results then by that because we increase the technology in the balance sheet instead with that same number. So no large numbers but it's good to understand that that is still happening in IAR. It will over time as we harmonize the handling in Q2 with the handling in IAR likely not happen much of this anymore. It's not our intention to do that. And the trade receivables are at a pretty good level. They're around 20% of the rolling 12 sales, a little higher now as we don't have IAR in the rolling 12 sales looking back. But it will harmonize itself down to that over time. And we still have a very healthy cash balance, 42.4, even though that is, of course, lower than it was last year because we put a lot of money into the acquisition of IAR. And looking at the interest-bearing debt, That was 126 million euros, of which the bank loan is still 120 million euros, but we have paid off 30 million euros. It was 150 initially. So we have a good cash flow and a good position there in paying off the debt in a good time. Other receivables still have those 5.2 million under receivables and under debt. As you remember, the arbitration for us to purchase 100% of the shares is still ongoing in Sweden. We haven't bought 100% of the shares, but we have booked 100% of the shares in the balance sheet. And thus we have an interim booking on the asset side for those 5.2 million. and a debt to those shareholders on the debt side when we pay the shares and those are still there. It is moving along this arbitration but rather slowly I must say so I hope we can make it move forward in a faster speed. The equity ratio is still decent 53.6 compared to 83 which of course is why because we expanded the balance sheet with the IER acquisition and the debt so it's a pretty solid balance sheet still looking at it. The operating cash flow was 20.6 compared to 28.9 last year. The main other cash flows apart from the operating cash flow was really the amortization of the debt which we amortized in Q2 with 15 million euros. So the total cash flow for the period was 2.3 compared to 27.3 last year, but of course it is lower because the profitability is also lower, which we are working on improving for the future. So with that, I guess I will hand over to Juha again to talk about the future.