F Secure Oyj

Good afternoon, everybody from Helsinki, Finland. My name is Timo Laakson and I'm the president and CEO of F-Secure. Welcome to F-Secure's half year results session and also covering quarter two results. Let's get going. So with regards to our second quarter, we made consistent progress on multiple fronts, on technology, products, service launches, new business. But we were clearly hampered by a couple of matters that have been communicated to the market last week. First of all, we saw some delays in our tier one business. And secondly, the headwinds in the currency exchange rate between Euro and US dollar have been negative from our perspective. In terms of our quarter two revenue, we grew about 1%. about 2% currency neutral, slightly faster than in quarter one, but not quite what we were forecasting. What was evident was that our tier one partners who already have signed up with us and who have launched new services, their service uptake has been slower for multiple reasons. I'll get back to that a bit later on. Now, also closing of new tier one deals, although I would say that we've been forecasting relatively conservatively knowing what larger enterprises are like in procurement, those deals have been closing way, way slower than we ever expected. I would say roughly delays of four to 10 months even have been experienced in this field. Not that these partners would not be moving forward, because of personal changes, because of timing of other projects that they have ongoing priorities in their IT projects and so forth, have all thrown curveballs into the processes. But these are moving forward slower than expected. In terms of commercial progress, we did sign up a completely new embedded security partner with a major insurance company in Latin America. We expanded our partnership on multiple fronts actually with our partners, especially with scam protection. A couple of names here mentioned TDS Telecom in the US and Docomo in Japan expanding their service capacity with us. And we've had multiple service launches with major partners. And many of these are to do with expanding with scan protection, taking a wider set of total capabilities in use. So this is all total related business where we've had lots of service launches, which is good news in terms of then seeing traction for a higher value product in the upcoming quarters. We've had obvious challenges. That's why we went out with a negative profit warning last week. But we have a very strong opportunity pipeline and I'll get to that now, which gives us a lot of reasons to be optimistic about our future growth. Now, with regards to our strategic priorities, this is what we've been consistently communicating. So first of all, we want to be transforming as a company to grow faster. That's number one. Number two is that we're driving for a leadership position in scam protection, which is a new high growth, high visibility market where the issue we all need to solve is imminent. And thirdly, we want to transform the business also in terms of innovation and faster pace of development through the use of data and AI. So I'll go through a few points on each one of these. So first of all, in terms of growth. So this gives a little bit more depth to what we're experiencing on the tier one business side. It is and continues to be our core growth driver in the mid-term. I'm talking about the next years. Naturally, it's not the only one. We've said that we're looking for growth on every single business, but tier one partner business is the one where we see most sizable opportunities for growth. The market dynamics have not changed. So what we're seeing with our tier one partners, the ones that are already partnering with us and the ones which are potential partners, they continue procuring services. They continue procuring new solutions which are built almost exclusively on embedded security capabilities. So there is no change there. There is rising demand for protection amongst their customers. There is a massive surge in online scams. And the CSPs who are seeing that their core business is relatively mature, both in terms of communication services, content services, and so forth, they are looking for new high margin growth opportunities. Secondly, the embedded security proposition continues to be a very attractive offering for this market. These partners do not prefer based on what we experience and observe. They do not want to resell the same service that the vendor would be selling directly to their customers. So they rather want to have a differentiated service that is very unique to them, looks like them, feels like them and is on brand. So procurement process is ongoing, albeit slower. We're still well positioned to win. Nothing changed on that front. Our portfolio is competitive. It's extensive. We ran our global partner event species in May, where we once again introduced a whole spectrum of new embedded security capabilities, for instance, in the areas of deepfake video scams, deepfake photo scams, and so forth. And our partner model is as partner centric as anybody in the market. As a matter of fact, we stand out as the one which is most partner centric and we have very strong references to show for it. Now, we've ramped up our business. slower than what we expected, which has been clearly a disappointment for us. But we are naturally mitigating and pivoting quickly to improve our performance in the upcoming quarters. We are engaging with our major tier ones on their strategic leadership level to ensure that their commercial machines are moving forward in lockstep with their product and technology organizations which are the ones who are bringing the new services to market so we naturally want to have the higher level leadership commitment that this is what they want to put at the top of the the corporate agenda so we're active very active on that front secondly we are starting to direct more of what we've typically done with our partners work hand in hand with them to make sure that the services are taken up by users as extensively as possible and users remain active and perceive the value of the services so we haven't done as much of that activity with our tier one so far now we have set up specific, let's call it a SWOT team, to work with partners and this activity has started roughly a month ago. And then naturally, we haven't been able to meet our targets in the first half of the year and we are seeing that we are short of what we originally planned for the second half. So we're naturally very prudent in our own planning and forecasting to make sure that we hit the numbers that we aim to achieve. that's on the the tier one partner business outlook and and let's take questions and answers later on should you have any further questions on this front then we move to the second one which is about the scam protection leadership so um we are very happy to have gained quite a number of of nice awards and recognitions in the past quarter uh stl partners which is a very uh renowned telco-centric research company and analyst, put us as the number one partner for telcos in cybersecurity. So it's naturally understandable that we are very proud of what we're doing and confident about our capabilities, but it's good to see that others see it the same way. Secondly, in terms of sustainability, we won a gold medal. So we're now among the top five of listed companies in terms of our sustainability. We're relatively new at doing this in a systematic, structured fashion. So this was, of course, a very sweet recognition from that point of view that almost from the get go, we're scoring high. And then finally, a US focused association fiber broadband ran certain number of new service innovations as proof of concepts and we were one of the ones which were awarded as the best ones about our species 25 partner event once again we broke our record of participants we had 43 partner companies in there. We beat last year's attendance by one. So this was taking place in Madrid and we did this at the end of May. We had 10 partner case studies. So partners are presenting to other partners the best practices of how to go about taking consumer cybersecurity services to market. the learnings, the pitfalls to avoid. We had extensive peer-to-peer networking, tens and tens of meetings between our partners. So we are creating a community, which they appreciate. We had multiple keynotes in there, both from F-Secure and external speakers, and well over 90%. of our partners agree that F-Secure will achieve its goal of becoming the number one for scam protection. So that's good. Then if we get to the third focus area of F-Secure this year, we ran a hack week, we ran a company-wide AI learning week, both took place in May. and massive success, I would say. We've never had the same number of ideas submitted. We had roughly one quarter of the company staff involved in these submissions of new ideas. And multiple ideas are already now in production, being used in our day-to-day operations. And some others are still being developed. Not all were followed up on, but it's been very concrete in terms of speeding up things making work easier, as well as helping people build the competencies. So we've taken a clear, clear leap, I would say, during the course of 25 on this front. And on we go. The aspiration is higher all the time for the remainder of the year. More about that in upcoming quarterly releases. That's all from me. I'll hand over now to Sari Sommerkallio, our Chief Financial Officer, who will go through the financials.

Thank you, Dima. Okay, let's start this by looking into the partner channel. As Timo mentioned already several times, USD has had a clear impact on these numbers. So even if the currency neutral numbers are available only in the geographical split, but definitely these would have been higher without that. So overall, partner channel grew by 2.6%, better than in Q1, but behind our own expectations. We split it nowadays into security suite and embedded, where security suite continues to be the bigger part, and that was growing by 2.1%. The total conversion continues to proceed well, so that's generating growth. DAH region is otherwise good, but we have earlier mentioned the challenge with the German customer and that continues, which is pushing down that area. In the Nordics, Sweden and Finland, which are key security suite markets, so the performance is really good. Then on the embedded side, which is of course very much about the strategic, the tier one customers. So there it's nice that the growth is faster because this is in the core of our strategy. So 4.6% and the number without USD would have been bigger. Now this was mainly the good growth was driven by Japan. That's like biggest delight here in this area. But we have customers ramping up also in other places. Then here on the left hand side, we look at the direct channel. So as expected, based on our current strategy and investment profile. So this is declining by now more than 5% because we are not doing basically paid customer acquisition at all. So expected and actually this is a better number than we were expecting ourselves. And here the renewal rates remain to be high. So people who are using the services are happy, but the new customer acquisition is then behind our own expectations. And that's because of the sort of missing marketing we are doing, mainly social media type of like internal activities and also trying to come up with other tricks. Then if we look at the full sales here on the right hand side, the revenue by geography, And here, this is a very mixed bag. If we start with the top and bottom, so on the top, you have the rest of the world, which is growing really nicely. Currency neutral is plus 21%. And this is really driven by Japan, where we have very good traction in the mainly in embedded side. Actually, both sides are doing fine here. And then on the bottom, we have the Nordics with 8% growth. And I mentioned earlier Sweden and Finland, and there the performance is really good. So these are the areas which work like we want things to work and where we can show that we can grow and why we believe in growth. Then the challenges are in the middle. So with the dark blue color, we have rest of Europe. And there it is, this German customer who is the main cause for the lower numbers. And the impact of these customers, we can say it's in hundreds of thousands, and this would have been pretty flat without that case. And otherwise, it's normal that they are both growing and declining customers, all the others. But there is this one which has a really major impact. And North America, even with currency neutral numbers, it is negative in this quarter. We have one customer where we have pricing, let's say pricing structure change. And which caused the business to go down. We have not lost any consumers there, but it is changing the pricing structure a little bit as a defensive action. But when the consumer numbers grow, we will reach growth there in the future as well. Looking at the cost side, costs have increased more than the top line, so of course, which is hitting the profitability in this quarter. You see the admin costs are higher, they are like one-off type of costs that are increasing that, so on a sort of normal level, no significant changes there. And then R&D is the other one where you see growth. And there it is more of a timing question or what we have done compared to last year. So the underlying activity is on a similar level. Last year we had many customer projects that were capitalized. And this year we know our CapEx will be more heavy on H2, so really different timing in terms of capex. So that's why more cost is coming through to OPEX in this quarter. And in general, because the growth has been lower than we have anticipated, so we have been really careful with our costs. Of course, we are doing all the things we need to do to deliver our Tier 1 strategy, but in general, very cautious with our costs. Gross margin is a bit lower than last year and it is, I would say, as expected, no drama here. Embedded grew a little bit faster than security suite, which is also then causing the gross margin to go slightly down, as we typically have lower gross margin on embedded side, like we have discussed previously. And then the EBITDA percent 32.2, it is low on sort of our scale. Q1 was really good, like we said, after Q1. So that was exceptionally good. And maybe there is some facing between Q1 and Q2. But of course, this CAPEX pattern also has an impact on that and the growth that has been lower than expected. We said when we announced the profit warning we said that in our business model costs don't scale so fast so most of our cost is fixed people cost so if the growth doesn't come this is the impact in short term. So and maybe about also I've seen some discussion about the currency impact. So in terms of USD, we have quite a lot of costs also in USD. So whatever is a top line impact. So the impact on the profit is less than half of that. So we have like natural hedging there. And then very briefly about H1, so growth 1.5% overall and here the FX impact is not so significant because actually in Q1 there was a positive impact from USD which seems like a very distant fact at this point. And maybe good to remember that in this rest of world in Japan, there was this phase one facing topic in Q1, which lowers the rest of world growth for H1. And then in profitability, so like we said already in the beginning of the year, so we've been investing and growth is not so fast yet. So that's why the profitability is slower than last year. In terms of cash flow, cash conversion, cash conversion was 89 in this quarter. It's a good number. Of course, it's significantly lower than the 124 that we saw last year, but that was exceptionally high. And I would say that this is a normal, normal good level. The revised outlook that we announced last week, maybe a couple of words about that. So now we say growth will be low single digit currency neutral growth. So now from now on, then the FX movement should not have an impact on this, but it is only about the actual underlying business and what low single digit means. So it means that there is growth. It's not flat. And without decimals, I think it's a one to three type of ballpark that you can expect this to mean. And then in terms of the profitability, last year adjusted EBITDA margin was 35.7%. So this is then slightly lower than that. And which is a result of the lower growth and costs that we have ramped up so that we are prepared to for the tier one business, which we completely still believe in. And like Timo said, we have a good pipeline for that. In the background assumptions, nothing else has changed except for we added this general economic volatility into the sort of market view. And capex was mentioned here, so we still expect the numbers to be for the full year similar to last year, but it's just different facing. Last year it was more front-end heavy, and this year it will be more on the second half. Last year, Q4, capex was really low. A little bit change of the topic. You might have noticed that we updated our disclosure policy yesterday. And of course, this reflects the fact that we are now in this tier one world where some of the deals can be really big. And we have developed, well, first of all, internal tools, how we assess when we get the RFPs and how we look at the bids. And we look, of course, at the business case, what we have at hand, mainly the three first, just three years is a typical time for a contract. So we look at the three years, we take into account the time value of the money, but also the certainty. So if let's say there is a case where we in the business case have 20 million euros in year three, if it's just an assumption without no commitment from the customer, it's clear that we discount it much more than if there was a commitment from the customer that we actually will buy 30 million. or 20 million in year three. And the fact is that very seldom there is a commitment, but it is a business plan and things will change. But I think that, of course, if there is a stock exchange release, you will see the values and assumptions there. But maybe this helps with the cases where if there is a press release with no numbers, so at least you know that it's smaller than this, what we see here. So hopefully this helps in looking at the cases that we discuss and maybe tells about what we feel that the big cases can be like. Then just as a reminder, the next interim report is due on 28th of October. So that's in a bit more than three months, we'll be discussing these topics again. So thanks. for this part and now we are happy with Timo to answer any questions that you have.

from Danske Bank. Three questions. First, you now guide for low single digit currency neutral growth. So does that mean that the reported revenue will actually decline this year? Is that how we should read it? Or do you mean that now that you have taken into account the changed currencies, you expect low single digit real growth?

Yeah. So we have now, this is now the second year that we are also reporting all the time, both there's a reported number and the currency neutral. And in the currency neutral number, we are basically taking last year's number with this year's FX rate. And it's that number that we've been reporting all the time so that we are looking into. And now we are looking at the forecast with the latest effects. So now it's like for USC, something like 170 that we are looking at at the rest of the year and when the rate changes. So of course, there's all the time less months remaining, but the view can change. So and for example, I think we discussed after Q1 that that we find with the current rate And at that time we were, because then we were, it was more sort of 110 type of number that we had had in April when we discussed this. And now it has changed. So, of course, it's all the time whatever we have. Actuals are done with the current rate and forecast is always what we have now. So rate changes every month.

Okay, but so just so that I understand it correctly, so the reported revenue. that should, according to this current guidance, should be negative then or close to zero?

Well, it depends on how the rates go. You cannot see it directly because we don't know what the rate will be for the rest of the year. And now, for example, you saw here For H1, now the situation is that reported is plus 1.5 and currency neutral was 1.2. So there the difference is not very big. But if we take here the right hand side, so in this quarter reported was 1.1 and currency neutral 1.9.

All right, thank you. Fair enough. The second question relates to the direct channel sales. Do you think you can grow in that segment in H2 without putting more marketing expenses in compared to H1?

We don't expect to grow in that area right now. Our target is small decrease in direct business due to the fact that we are not investing into new subscriber paid acquisition.

Okay, that's clear. Thank you. Then the last one, you said that you started selling scam protection as a standalone product now. Would you say that that is slightly backing out from the previous one total solution model back to the previous sales model where you sell multiple models separately?

No. So it means that the customer is buying total. All capabilities are in there. Some are shadowed out because they are not active. So you can buy scan protection by itself. But it is the total package. And then you can upgrade yourself to have VPN, password management, ID monitoring and so forth.

Okay, that's clear. Thank you.

By the way, while the microphone is handed over to Ate, I would like to add something that we haven't taken into account in our presentation is that we now have an all new VPN as part of Total, which is now in all the clients, iOS, Android, Mac, and Windows. And we got that fully done already for desktops in quarter one, and now also for iOS and Android customers at the end of June. So this was something that has been commented quite actively online that we're going to be doing this and that's done now. So that was a good improvement in total in terms of VPN capabilities.

Hi, it's from Inderes. Still about the lowered guidance. If we compare your expectations before or let's say in Q1 info and now, how about, for example, your expectations with like signing new deals versus now we know that there, for example, is the AT&T and SoftBank has launched New solutions to the market. Is the disappointment coming from those ramp ups or were you expecting many new deals in H2? How's the situation has changed?

It comes as no surprise to you maybe that I will not mention names of customers, but there are some of these tier ones where the service uptake has not been anywhere near to what had been indicated to us and what we had agreed and what we had forecasted. And there are some others who have actually done better. And maybe when you look at the numbers that Sari was showing for the different geographies, maybe you can draw some conclusions there. But that would be my five point tip.

And let's say that there is that one one ramp up that is not going so well. Is there some ways to improve that? Absolutely. Absolutely.

Things like what I referred to earlier on the slide where I was commenting on the tier one business status. We are working now much closer with the partners marketing teams, not just product and technology. Product and technology are typically the ones who buy. They are the ones who evaluate, define the solution, build the solution and so forth. And then we need to involve their product marketing, marketing organizations to actually turn those services into a success. So we have intensified that work now. It will take some time. I'm not expecting things to turn around in a month or two, but clearly we are seeing signs of, let's say, mutual strong intent and willingness to work together to turn those services into growth.

And in our guidance assumptions, we said already earlier and continue to say that we expect the growth to accelerate throughout the year. And that pattern continues to be so thanks to these ramp ups. But as the pace is slower than we expected, so it's not as much accelerating as we wanted, but still second half should be higher than the first half.

You also mentioned that in some partners, there's like shifting priorities and evolving business cases. So can you give some examples what that means?

Yeah. So shifting priorities mean and and evolving business cases. Our partners are building the tier one partners are building unique applications to them. what that scope is has changed for practically all of these partners that we are in negotiations with. So, you know, they may think that, okay, we'll take this capability and build the value proposition around them. and then they leave something else out. Two months later, they say, no, as a matter of fact, we do also want to include these capabilities in so that the scope and the value proposition changes. And these are the kinds of things that evolve over time. The processes are long, so lots of changes can happen along the way, and they have happened. So this is what we mean. So, you know, is scam protection very important to begin with or not? Is identity protection the one that will be the leading thing or not? It's these kind of things that change. Naturally, there's also always scarcity of IT resources. You know, you go to any enterprise customer or communication service provider, there's always a shortage of IT resources and slots. So, you know, at certain points in time, they reshuffle the projects and say that, okay, now we prioritize this, this and this. There's also been moments where we've been, you know, on a holding pattern. We've been going around the airport waiting for a new landing time. And then the process has continued while being frozen for some time. So that's something else that has also delayed us.

And those can have impact both on the sort of existing service ramp up as well as closing a new deal, because it might be that we have a service online, but the marketing plans, for example, change, which can have a big impact on the take-up rate. And then similarly with closing the deal, if they are changing their strategy, that can take some time to then finalize the deal.

in north america you mentioned that one customer where you have done some changes in your pricing so is it like a one-time case or is there some increasing competition from some other vendor that is pushing pushing your clients or it's a one-time case and at the same time we're working on extension deals with the very same partner

But it's based on the customer specific terms. And there was discussion about the terms and they were changed when renewing the contract.

All right. And in Q1, you were still mentioning that there is like one problematic partner in German and one in Great Britain so is another one now so small that it doesn't matter anymore or has the situation changed?

Did we have that in Q1? I think we had removed it already then but there is also we've had UK and Germany and the Germany case is clearly bigger than the other one so that's why we have not highlighted it anymore.

All right thank you very much. Thank you.

I will just say here that there is no certainty or guarantee of anything, but also the partner in Germany is considering amping up their security business again. So there is definitely an opportunity to turn that decreasing pattern and trend that we have seen for quite a number of quarters now, but remains to be seen.

Hi, good afternoon. It's Matt Riikonen, DNP Carnegie. A couple of questions first to the terminology in the profit warning statement. When you talk about Tier 1 customers, it's sometimes a bit difficult from the outside to make a difference between, are you meaning those embedded contract deals or just normal Tier 1 CSP partner type of deals? So just for the clarity when you talk about that the adoption of new security services by tier one customers has progressed slower than expected is that that means the embedded customers or does it mean all customers tier one?

We have one tier one partner which is focusing heavily on total alone. And that's Orange, who is not live yet. Everything else is embedded practically.

But those are two different dimensions. One is customer dimension and one is like product dimension and tier one customers can buy also a security suite.

Yes, of course. But from the outside, I mean, if we think about your business model, you have done CSB business for ages. But tier ones can be also CSBs. Of course. Yes. But now from the outside, it's not always clear that when you talk about embedded business because that's kind of the new growth driver for your company and that's why it would be very helpful to always understand that when you refer to that business specifically and when you talk about all businesses together regardless of whether they are kind of traditional CSP business or then embedded security.

Yeah. Tier one business is by default embedded security business. You can take that as a as a in a way default and a starting point. And then if it's not, we definitely make it clear that here is a tier one partner who is going with Dotto and Orange is the only one at this moment.

Okay, good. Then you gave quite a comprehensive list of different reasons why what were before behind the profit warning, adoption of new services and organizational changes and many others. Could you just make a difference which of those reasons kind of relate to embedded service contract deployment and maybe new customer wins and which are relating to let's say traditional tier one customers that are buying the whole security package?

I'll repeat, there are no old tier one customers that F-Secure practically has. So that one is out. It has to do with embedded security business and either the adoption rate of deals that we have already signed or new deals that we are yet to sign.

Right. Basically all challenges are related to embedded security?

Yes.

Okay. All right. And from your comments, we can basically read that it's not just Q1, it's going to be the second half related as well. And when you talk about the four to ten months delays, Is it possible that even after 10 months there would still be some slowness in customers actually deciding what kind of service they want to have and then only after that you would get the business that you have been waiting for?

It is possible. It is possible. In a way, there is no backstop for how long the partners take in evaluating their options and setting their priorities and then making final decisions. There is no backstop. And I would say that There is not necessarily anything odd about large enterprise customers taking time and shifting priorities in that sense. The one thing that gives us lots of confidence is that these projects are going on, yet slower. And the basic dynamics of the need for those services has not gone anywhere.

Right and then how many customer deals or negotiations are we talking about? So how many customers are concerned with delays of any kind?

I will not give precise numbers that's business confidential but multiple.

On the other hand, it cannot be like a too big a number if you are talking about tier one. So they are like big. So it is sort of a handful type of number, not like tens.

Right. So more than one, less than ten.

I think that's a good number.

She said it. OK. All right. Yeah, it's sometimes a bit difficult to understand that exactly what causes the delays, but I think this is Then finally the problematic customer in Germany. Has the negative impact accelerated or has it remained the same versus for instance previous year and Q1?

It's been higher than what we forecasted. The decrease. The decrease. Yes. It's been higher than what we have forecasted.

But still maybe no like super drama. It's just a question is that how steep does... There's nothing like diving.

Yeah. But I mean, if the customer has internal issues, which basically makes them reluctant to do any changes with their current offering and it's declining, Is it possible that the customer just doesn't get their business in order, which means that there would be even continuous decline in your revenue from that specific German customer even in 2026 or onwards?

So I mentioned that this very partner is now considering starting to ramp up again security services. So I think that's an indication that there is an opportunity to turn that. If they choose us to be the partner with whom they continue developing the business. Right. Actually, this is, you know, like a tennis break point for them that they are reconsidering their options, how they will what kind of a service they go out with and, you know, how quickly and and so forth. And naturally, as as the existing partner we're in a good position but no guarantees but I would say that you know there is a backstop how much a business can decrease and you know the numbers that we've been losing in the last couple of years from this partner are significant and the remaining value is maybe now less than what we have lost for instance in 24 alone in that partner. So the decrease will slow down, come what may.

Right. So at the moment, the German customer is such that you are the only provider of security services, is that right?

You're the only... I don't comment on that. I'm just saying that we are an existing partner to them.

Right. So if there would be kind of a change of security supplier, your risk or your revenue at risk would be lower than what you lost in 24?

Yes.

Okay. All right. Thank you. I think that was all from me.

Thank you. Hi, Valter from Danske Bank. Sorry for being slow to understand, but still on the revenue growth guidance. So have I understood correctly that you now expect the negative currency impact for the full year to be 3 million?

That was with our forecast today. with the FX rate from today. Actually today it's better than when we did the forecast that was 117 something and now it's around 116. So today that 3 million would be a little bit less. So it totally depends on the rate. And all the time there is one month less in the forecast and then we know always in the actuals what the situation is.

But with the current 3 million negative impact estimate, then that implies that your guidance high end would mean 1% of real revenue growth. Correct?

Not sure. I need to do the calculation. Because now we look at the currency neutral.

Great. That's enough. Thanks.

Okay, thank you for the questions, audience here in Helsinki. And now we have a couple of questions from the online audience. Your North American sales were down by 2.6%. What is the key driver for the decline? Is it direct business or partner business or coming from old lookout business?

Well, what I didn't mention is the direct business. So it has also an impact because thanks to Lookout Life, we have a significant direct business, mobile business there. But that's still quite a small part. And then we were discussing here this one, terms changes with one partner, and that's the key driver.

So it's the combination of the two. The bigger one being the partner terms changing and then to a certain extent direct business decreasing as it is decreasing elsewhere.

Thank you. Then the next one. Where you are in terms of your organizational capabilities to serve the tier one clients? Do you still need to increase your OPEX levels from here going forward?

So I would say that we are starting to be at a good level in terms of OPEX ramp up. I don't see significant increases on that front. The only dependency is that should we win some let's say, massive deal in some shape or form, for instance, extremely fast delivery schedule or scope extending way beyond what we have seen so far, then we might need to make further OPEX investments to deliver on that. But otherwise, we're starting to be in a relatively good place.

And actually, probably if we have that kind of project where we deliver something for a customer, it can actually be CAPEX instead of OPEX. So it would be more of a cash flow impact than immediate profit impact.

Thank you. So any further questions from the audience here in Helsinki? So I think that was all this time.

Okay, so thank you everybody for joining. We will see again latest in October on the date that Sari indicated earlier for our quarter three results session. Thank you everybody here in the room for the good questions. Also, thank you everybody for joining online. I wish you a wonderful continuation of the summer.

Thank you. Bye bye.