Gn Store Nord A/S Adr

Hello everyone and welcome to GN's conference call in relation to a Q2 report announced yesterday evening. Participating in today's call is Group CEO Peter Karlstromer, Group CFO Soren Jelert and myself, Rune Sandager, Head of Investor Relations. The presentation is expected to last around 20 minutes, after which we'll turn to the Q&A session. The presentation is already uploaded on GN.com. And with that, I'm happy to hand over to Peter for some opening remarks.

Thank you, Rune, and thank you all for joining us today. Before going into the business performance during the quarter, I would like to spend a few minutes on the development around the hearing transaction and the hearing business. To remind everyone, we took the decision in March to sell our hearing business to Amplifon to create a global lead on hearing care. The carve-out process is well underway and closing of the sale to Amplifon remains expected towards the end of this year. Let me also remind you about a few items that we shared in connection with our Q1 report in May. The proceeds of the transaction are 12.6 billion Danish kronor in cash and 56 million Amplifon shares. As part of the process, we will make a carve-out of our continuing activities, which will be taxable. We estimate this upfront tax payment to be between 1.5 to 2 billion Danish kronor. However, we will also get an equal-sized tax asset that we can use for tax reductions in the coming years. The estimated total one-off cash cost related to the transaction is 750 million Danish kroner. This includes transaction costs, carve-out costs and rightsizing costs for the continuing GN. We announced in Q1 a cost reduction program that will reduce the running cost of the continuing year of around 200 million Danish kronor compared to the realized level in 26. These cost actions have now been executed during the second quarter and will positively impact our margins in 27 and beyond. As for the proceed and capital allocation going forward, we are targeting a leverage between one and one and a half times in the short term. We are not planning to do any major acquisitions. The excess cash will be distributed through share buybacks and dividends in the best ways for our shareholders. These shareholder distributions will begin as fast as practically possible after the closing of the transaction. Let's now move to the next slide and our latest hearing aid we have launched. We have just launched ReSound Sensia, which is the world's smallest AI hearing aid powered by a new AI platform that adjusts automatically to the listening environment with unmatched efficiency. The product is built around three core technological strengths. The Acoustis IQ technology that delivers the most accurate real-time sound sensing. The narrowest four microphone beamforming deliver even better speech clarity and noise. and the best automatic DNN denoising that lifts conversation in shallow listening environments with less effort. Sensia further strengthens the e-inherence portfolio and will help our patients to hear even better in noisy environments, which we continue to believe is the most important area to innovate around. We have made these great improvements while keeping the small appreciated form factor and a full day battery life. The new family of products will be launching in the US, Germany and Austria as of today, with more markets to follow in the coming months. While it's early days, our initial customer interactions, actual pre-orders, as well as the number of customers signed up for sales events during the coming periods are looking very encouraging. With that, let us turn to the group and division highlights for the continuing business in the second quarter. Let me summarize the key highlights for enterprise and gaming in the second quarter. In summary, we are building momentum, setting us up for growth and modern expansion in the second half of the year. In enterprise, we continue to see healthy growth in North America and APAC. In EMEA, we saw continued decline, but importantly, with signs of improvements compared to the first quarter. Total organic revenue growth came in at negative 7%. with the demand and comparison base in Falcon being a significant factor. Excluding Falcon, the organic growth was negative 3%. The Evolve Free platform continues to resonate strongly with customers. We saw double digit sellout growth in the premium headsets and well into double digit, demonstrating that the products are in strong demand among customers. We also saw a healthy improvement of our gross margins in the quarter while we executed channel investment to support the launch of further wall-free. As already announced in July, more products are coming now in the second half of the year. In gaming, we delivered 5% organic revenue growth despite continued muted consumer sentiment supported by headset market share gains driven by Nova Pro Omni. Margin progression was strong in the quarter, driven by pricing discipline, success of new products, a lower tariff level, and a minor provision release. Looking ahead to the second half, we see significant growth opportunities supported by the upcoming mice and keyboard launches and continued headset momentum. Let's move to the next slide with a bit of further detail on enterprise. In the second quarter, Enterprise delivered organic revenue growth of negative 7% in total or negative 3% if we exclude Falco. On a regional basis, we continue to see strong growth in North America and APAC. In EMEA, we saw a decline but with signs of improvements compared to the first quarter, driven by the positive reception of Evolve Free and a gradually improving EMEA market. Within the product portfolio, the headset business showed improving development and the meeting room and frontline workers segment delivered both healthy growth. Falcom advanced its project pipeline but with limited revenue contribution as expected in the quarter. On the financial side, gross profits were 891 million Danish kronor, translating into a gross margin of 57.2% compared to 56.1% in the second quarter of 2025. Division of profit was 483 million Danish kronor, translating into division of profit margin of 31% compared to 34% in second quarter of 2025. The year-on-year development reflects the channel investments we are making to prepare for further Evolve Free launches in the second half. Overall, enterprise continues to progress in line with our plans. Let's move to the Evolve Free portfolio on slide 9. On the 1st of July we announced three important additions to the Evolve Free portfolio. The Evolve Free 65 Flex, 65 and 45. The Evolve Free 85 and 75 were launched in March 26 and have already demonstrated strong commercial traction with solid double-digit seller growth in the premium Bluetooth category, which I will return to in a bit more detail. The next wave of the portfolio, the Wall Free 65, 65 Flex and 45 is planned for launch in September 26. This launch is significant to us and addresses 35% of our enterprise business. That means that we together with the Wall Free 85 and 75 will address 50% of the enterprise business with a fully refreshed portfolio that is set up for growth. The Evolve 365 Flex is tailored for users who move between locations. It comes without a boom arm, in a small form factor, with better outer voice pickup and a wind-adaptable ANC, designed for professionals who need performance on the go in a very compelling small form factor. The Evolve 365 brings the core Evolve Free experience into the mid-tier segment. With better sound, a four-microphone adaptive ANC system, a very strong product for everyday modern work. The Evolve 345 takes the concept into the entry-level segment. It is the lightest model in the portfolio, with best-in-class office voice pickup and ANC, making it ideal for large-scale deployments and frontline workers where price is key, but voice performance still cannot be compromised. With the addition of these three products, Evolve Free is no longer a premium-only offering. It is a portfolio spanning from premium to entry-level, with more products still to come. This portfolio expansion sets a stage for returning to growth in the second half of 26. Let us look at the recent financial performance driven by Evolve Free products. As we mentioned in Q1, our premium Bluetooth category is roughly 15% of total enterprise. In this category, we experienced a very strong selling growth during Q1, driven by the initial stocking effects of Evolve Free. Now, a quarter later, it is encouraging to see that we are also seeing solid double-digit sell-out growth in the category, which underpinned the strong customer reception of the flagship products. On top of the strong sell-out, we have continued to see a very strong selling growth in Q2 as well. Taking it together, on the right side of the slide showing the conceptual revenue build-up of our headset segment. In the first half of this year, we have seen strong growth in North America and APAC, but continued weakness and channel reductions in EMEA. That has weighed on the top line due to EMEA being the major revenue contributor. While there are still some uncertainties around channel inventories, we expect this effect to be smaller in the second half of the year. Also, as we move into the second half, we will begin to see the new free products starting to ramp up as well. This means that a larger part of our headset segment will be supported by new products. These effects together set us up for a healthy second half with significant revenue generation and profitability improvements. This year we expect a bit of unusual seasonality driven by the strong set of launches we have which is in line with what we also shared in our Q1 results. Let's move to the next slide and talk about gaming. In the second quarter gaming delivered revenue of 613 million Danish kronor corresponding to 5% organic revenue growth in a market held back by muted consumer confidence. We saw strong growth and market share gains in headsets and keyboards, while mice had a more difficult quarter, predominantly due to an aging product portfolio. Regionally, North America continued to grow well, whereas EMEA and APEC were more challenged due to the market conditions. Gross margins came in at 39.2% compared to 34% last year, driven by pricing discipline, success of new products, and a minor provision release. Division of profit margin ended at 15% compared to 12.2% last year, driven by continual cost focus combined with some of the target channeled investments we do to support growth opportunities in the second half of this year. Let's move to the next slide. This highlights a milestone we are very proud of. SteelSeries is now the number one brand globally in gaming headsets. This is the result of a consistent and relentless innovation over many years. Looking at our market share development from 2017 to today, the trajectory is clear. Each product generation has expanded our position. From the original Arctis headset line, through the Arctis 9, Arctis 7 Plus, Arctis Nova Pro, The Game Buds, The Nova Elite and now the Arctis Nova Pro Omni. The Arctis Nova Pro Omni has received outstanding reviews from leading gaming media including IGN, T3, GamesRadar and PC Gamer. Descriptions like the best headset on the market and the most well-rounded gaming headsets available speak to the quality and product differentiation we have achieved. This market leadership position gives us a strong commercial foundation as we head into the second half of the year, where we expect continued headset momentum combined with a contribution from new launches across mice and keyboards. That concludes the deep dive into our divisions. Let me now hand over to Soren for the group financials and guidance.

Thank you, Peter. Let's have a look at the group financials for the second quarter. In the quarter, GN's continuing operations delivered organic revenue growth of minus 4%. As expected, the gross margin improved strongly following the temporary weak gross margin in quarter one. Adjusted EBITDA ended at 110 million DKK, corresponding to an adjusted EBITDA margin of 5%. The development reflected targeted investments to support growth in the second half of 26. Total incurred one-off costs in the quarter were 74 million DKK, all of them cash costs mainly related to the carve-out of the hearing and preparations for the new GN structure. Free cash flow, excluding M&A, ended at minus 616 million DKK, reflecting insourcing of activities in the supply chain driven a temporary increase in working capital, which is expected to normalize during the rest of the year. This insourcing is related to our distribution of products across enterprise and gaming. Net interest bearing debt ended at 9.6 billion DKK, but let me just remind you that the coming proceeds from the transaction will resolve in a net positive cash position at closing. With that, let us move to the financial guidance for 26 on slide 15. Our group-wide financial performance in the second quarter has been in line with the assumptions put out in May. We are seeing the underlying improvements in our growth development and at the same time a strong development on our EBITDA margin, which improved strongly compared to first quarter. As we communicated yesterday evening, we are upgrading our margin outlook for the year and narrowing the revenue assumptions. We have had a healthy development of our gross margins in Q2 and feel good about the trajectory for the year. OPEX-wise, we are making growth-related investments as we planned. This, together with an assumption of 100 to 150 million Danish kroner of tariff refunds, led us to upgrade our adjusted EBITDA margin guidance for the year. Revenue wise, we will be within our initial guidance, but given the continued muted market development as well as some earlier upside scenarios that is not deemed realistic, we are narrowing the range towards the lower half of our earlier guidance. In summary, we are making healthy progress for the year and encouragingly are set up to finish the year in a good second half momentum, which will carry with us into 27. Let's look at the margin expectations for the second half of the year in a slightly more illustrative form. The traditional seasonality in gaming as well as successful in World 3 rollout will be a key turning point for the revenue development and thereby growth aspects in the second half of the year. As we have mentioned throughout the year, we have assumed the year to be slightly more back-end loaded than normal. This also impacts our sequential growth outlook, but we remain convinced that Q3 will be a turning point with a return to positive group organic revenue growth, and then likely improving sequentially into Q4 when we have a full quarter of launch products. As mentioned earlier, gross margin improved strongly in Q2 and was mainly driven by underlying improvements. We are therefore assuming that these current levels should continue into the second half on roughly the same strong levels. On top of this, you will of course see the impact from the expected tariff refunds We have a good control on OPEX, and while there might be quarterly fluctuations, you should expect more operating leverage as we are progressing during the rest of the year. When you combine these elements – revenue seasonality, gross margin improvements, tariff refunds and a fairly stable OPEX – the path to the full-year margin guidance of 9 to 10 is clear. In addition, the structural cost initiatives executed in the second quarter will significantly further improve our margins expansion for 2027. And with that, I'm handing you back to Rune.

Thank you, Peter and Soren. That concludes our prepared remarks and the presentation for today. I will now hand over to the operator for the Q&A session. Please limit your questions to two at a time, please.

Thank you. We will now begin the question and answer session. To ask a question, you may press star and then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then 2. We will pause for a moment to assemble the queue. The first question we have is from Martin Blackway of SEB. Please go ahead.

Yes, Martin Parker, SEB. Firstly, I hope my sound goes through clearly because I'm on the cap of all three. But my questions are also relating to the enterprise business, firstly. First, of course, I think that you have made quite clear that there are significant growth opportunities on the Evolve 3 launch plan for the rest of the year. But if you consider your guidance, what are the risks to the remaining 20% of enterprise that lies outside of your core business? But because in the past, that has been a little bit destroyed, the growth picture sometimes. And then also on the tariffs refunding, now it's completely already open. Could you talk about the risk of this affecting pricing? And then, yeah, I know it's a third question, but it's at least within enterprise. At Q1, you mentioned that you had seen some shallows to a Chinese competitor. This specific competitor have seen accelerating growth in the second quarter. How significant effect do you see from this company on a global scale in the coming years?

Thanks a lot, Martin. I'm happy to confirm that we hear you loud and clear. Let me start here, and Soren will help me out on some of the tariffs here. First, as I said here in the opening, the wall-free products we are launching now are addressing essentially half of the enterprise business. We, of course, feel very confident about these new great products will confirm Yeah, I mean, confirmed good growth in the market. If you look on the other part, of course, a few different things in there. If I start with the rest of the headsets, I mean, you have done more corded products and some decked products and so on. I think it's true that these products are then still on the old portfolio and this is something you should expect us to address over the coming year into next year so we certainly will refresh this part of the portfolio also. I think they are performing okay so the growth momentum from the new products should be stronger than any kind of smaller declines from this part of the portfolio. And then we of course also have video. We have launched new products in video also, perhaps talked a little bit less about them given that revenue is less, but these products are also confirming very well. So we had actually a very good video quarter also the last quarter. And then we have frontline worker where we also had a good quarter. So feel confident that this will continue into the second half also. And then the final piece, which, you know, we report into Enterprises Falcom, but that we have called out. So I think that's hopefully clear to everyone. But in totality, when we weigh this together, we believe that we are set up for good growth in Q3 as well as in Q4, so growing the second half. Then if I perhaps take the third question and then leave the second for Soren. We did speak before that we have seen some kind of share pressure in particular low end of the market. We called out a few different companies. I don't think it was only one company, but a few different companies. If we look now on the market share for us, they are stable here in the last quarter. We are not losing any share in this period. We also believe that with the new products we're launching here that address the broader set of market, we actually have a good opportunity to gain back some market share. Then your question more about, I think you're talking about Chinese competition for the long term. I think we need to see how this develops. There's of course been changes in the competitive landscape over the last few years also. Some competitors are winning and some losing, so that is not new to us. So I think we will see. We are very focused on having a portfolio that is well differentiated. and having a portfolio that spans from the premium where I think we are the strongest but also strengthening up quite a lot in the mid and entry level products to essentially be well set up to satisfy different type of customer requirements.

Martin, to a tariff question. First and foremost, of course, we are pleased to see now that we have a very strong belief that we are getting in the repayments from the US government here in the second half of the year. And to your underlying question on price, I think What we also communicated last year was that we would close the gap also when we are launching new products and also in terms of our pricing. So that is still our plan and also what we are doing. And as Peter spoke to, it's a significant part of our portfolio that's actually been refreshed and as such is not linked to old tariffs in that matter. So in that sense, we do not expect that what the refunds is impacting current pricing of what we see.

The next question we have is from Angela Bozinovic of BNPP. Please go ahead.

Hi, good morning from my side as well, and thank you for taking my question. I will have the first one on enterprise. I wanted to understand the new guidance, in particular what has changed from May until now, and what are you seeing in EMEA specifically? What is embedded in the guide for EMEA regions and for Falcon as well? And the second question is just on the profitability in the quarter. So if we adjust for the gaming provision, we reach the adjusted EBITDA margin of 4.6%. Can you help us understand better the performance in the quarter and what gives you the confidence that profitability can significantly improve from here? Thank you.

Thank you so much. Let me start, and then I hand it to Soren for the margin question. If we look on enterprise, the new guidance, and I think we wrote that out also in the communication yesterday, it's mostly the significant upside scenarios for part of our portfolio that we now see, will not realize this year. Quite a bit of it is related to our defense business, Falcom. This is project-based business with very large orders and we do believe on Falcom that this year will be similar to last year and I think we have said that before but we also had some upside scenarios that could have come in and which were reflected in the upper end of the guidance. Those scenarios are still there but will likely be more an opportunity for 27 as it looks like now. And then on EMEA, and maybe I take a step back across all regions, as we have said before, the US and APAC has been growing in a good way over a longer period of time. We actually expect that to continue into the second half. On EMEA, what we expect there is to turn into some level of low growth is probably the way to see it in the second half. So that's what we have embedded here. And I think it's of course about the region, but it is largely driven by the products we are launching. So it's not so much that we're sitting and hoping for the market to recover. It's more like when we're launching all these products, it will support EMEA in a way where it may also turn into growth. I also mentioned the channel reductions here in my introduction, and that has been a headwind on the EMEA business for a while. While we can of course not be sure about those exactly over time, they have now come down and also with the new products we're launching, our base assumption is that there will be more imbalance over the second half. So that's a way I think you can build it together in terms of the enterprise guidance we have given. So if I leave it to you, Soren, for the modern question.

I think of course the way you deduct the group margins is absolutely fair. For us, and we called it out after the first quarter also, that especially the gross profit was an area where we had good insight and comfort in that it would actually improve in the second quarter. and I think that is exactly what has happened and especially also on the enterprise also with the positive impact of the portfolio refresh we are doing right now that are yielding gross margins at levels that we also historically have seen. So it's more a question of that this quarter is a testimony to that the Q1 was probably more a one-off and this is back to a normal gross profitability of the enterprise business and also what we can see going forward. On gaming, we have also here been on the clear path to deliver between these 35 to 40. And here also we can see a positive impact on the mix within the gaming. We still have the opinion that a good gross margin for gaming is within this area of 35 to 40%. And in that light, of course, Even deducting 1% in the gross margin in gaming, 38% is definitely approved and we expect that these levels can continue up in this part of the 35% to 40%. And that is really the core and very fundamental belief of the margin both in the second quarter but actually also And then in addition to that, you get the top line growth and you get an OPEC stability in the second half of the year. That's what we are planning with.

Our next question is from Veronica Dubojova of City. Please go ahead.

Hi guys, good morning and thank you for taking my questions. I'm going to keep it to two, please. The first one is just on gaming and the reduction in the outlook there. Just curious of your rationale around that, especially given the GTA 6 launch now being confirmed for the end of the year and whether there is anything to read into. Thank you, guys.

Thanks a lot, Veronica. Let me take this. On gaming, we feel very good about our progress. We feel good about what we've done in first half and feel good about what we have lined up for second half. If we look on taking down the guidance to the low end, it's more market related. We actually believe in a fairly constructive market in second half due to the GTA as you highlight. It looks like it will launch on time now and it will support the market. But as you also can see in our numbers, we actually have the implied guidance for the second half gaming growth. It's a very constructive growth. So I think it's a little bit more the ground we lost in the first half due to quite muted market environment that makes us to make this adjustment. So we do believe in a good second half. A little bit better market-wise, but in particular also with the great launches which we have planned. And then on the carve-out, and I think it's more on the closing estimate, you know that there are two things that need to happen. One is to carve out the business. That is something we in G&N are responsible for and I think very much in control. I think that is progressing well and very much is in line with being able to complete this towards the end of the year. On the regulatory side, the evidence we have until today is that that also point to a successful kind of closing of the transaction towards the end of this year. So nothing has really changed. So I think we are progressing with this timeline and feel good about it. And we'll, of course, update you all if something would change. But there is nothing we see at this point in time.

The next question we have is from Christian Lundborg Madsen of Danske Bank. Please go ahead.

Thank you very much. Two questions here. First, this supply chain internalization that hits working capital quite hard this quarter. Could you try to describe what are you doing, why are you doing it now, and will this lead to cost savings down the road? And then secondly, in terms of your EBITDA guide for the year, obviously you need quite a strong lift in the second part of the year. But how do you see the trajectory? Are we talking about sort of sequential? So improvement Q3 versus Q2 and then Q4 versus Q3? Or is it more of a Q4 thing when all sort of revenue lift comes through and margins improve?

Thanks a lot. Let me start and then Soren will continue. As some of you know that have looked into our operations more in detail, we've been having an outsourced model for operations in enterprise and gaming. We still very much believe in that, to have an outsourced manufacturing, but we have a We have over time revisited some of that when it comes to the logistics. So what we're insourcing is essentially our logistics and distribution. And we now would like to be in full control of that ourselves. I think it's for a few reasons. We think we can do it more cost efficient than what we can in an outsourced model. We also think that there are significant automations and even AI opportunities to do this better, that we better can control and deliver on if we have it in-house. So that's why we, from a strategic point of view, would like to have this as G and controlled. And then now when we're moving it in, there are some effects on the working capital in this transition. I mean, there are essentially two things happening. We need to then pay out cash to get it in, but then also we will have good payment terms with our major suppliers. We will get back some of that. We have just not been able to time it in the same quarter. So you essentially see quite a hit on our cash flow in this quarter, but we will catch up that in the second half. And we believe that the change we're doing in the supply chain will be very beneficial over time for us.

And then when it comes to the I think here importantly of course to remember is that the way our top line sort of is balanced in Q3 and Q4 will also impact of course the profitability of our business. So in that sense it will be a gradual improvement where you will see an improvement in the third quarter and of course a significant improvement in the fourth quarter. In addition to that, of course, bear in mind that the tariff that we now called out for now will of course also be spiking Q3 and Q4. We think that it's balanced between the two quarters, the way we look at it at least, but it will of course further improve The Q3 and Q4, but also in totality, is supporting why we have a higher expectation for the second half of the year as we are assuming these 100 to 150 million to come in in the second half of the year.

Our next question is from Niels Gronholm, lead of DMV Carnegie. Please go ahead.

Thank you. Now that you expect a return to positive growth in both divisions in the second half, could you talk about the performance that you have seen so far in the two divisions going into quarter three? And then I have a second question on the competitive situation in enterprise. So could you talk about to what extent that you've seen bundling of electrical office products, you know, headsets, keyboards, mice, screens, monitors, etc. from some of your key competitors? Thank you.

Thanks a lot. Let me take these. I mean in the Q3 we have not the perfect data yet across the businesses more than for the first month here so I think it's a little bit Yeah, not enough to share, to be able to draw the conclusions you would like to see. I think that what's more encouraging for us are the kind of distribution conversations we're having around the new product portfolio in enterprise. They, of course, have all now seen the product. We are starting to have discussions on how to pick those up, stock them, roll them out. While that work is not finished, I mean, the initial indications are positive and support essentially our growth outlook here. I think also for enterprise, I think it's very important to take some kind of comfort also in the performance of the products we already launched. I said some here in the opening, but let me just reiterate that to talk a bit more about it. The VOL385 and 75 that we launched in the premium segment, we did communicate last quarter that the sell-in for premium grew 50%. I mean, now in Q2, it grew well into double digit in Q2 as well. So it continues to grow. It's not only an initial stocking. And that is essentially driven because the products are selling out very well. They sold out very strongly in Q1 and have continued to sell out very strongly in Q2. Our distributors and resellers need to replenish the stock. So I think the combination of these factors is what creates the confidence for us in believing in that the further launches of enterprise product will further support the business. Then in gaming, here we have performed, I think Q1 was a slow start due to very significant comparisons. Q2, I think we did well in particular in headset and keyboards. And now if we look on second half, we believe that the headset momentum will continue in Q3 and Q4. We also have further launches coming in both mice and keyboards that we think will support the second half in a really good way. And also for Q4, many of you know us very well, Q4 a year ago was not a great quarter. It was a weak quarter, so the comparison base in Q4, I think for us and probably for quite some of our peers also, I think is very manageable. So I think this together is helpful to have when you think about growth in second half. And then if I move to the other question about bundling an enterprise. I mean, that is a phenomenon. I think it's been something that's been in enterprise for a long time. And you can in particular see it for the largest customers in the world. Think about as the Fortune 500 companies. where they are being sold to direct from a sales force trying to create this type of bundles. And it can be across different categories. It can be between laptops and headsets or laptop and keyboards and so on. So we've seen that a longer period of time. It's not our observation that this is increasing. It's something that's there. And I think it's key that this is, of course, something we Thank you very much.

The next question we have is from David Ellington of JP Morgan. Please go ahead.

Good morning, thanks for the question. You had a big slowdown from 9% in the first quarter to minus 2%, you sort of mentioned. A more difficult comp, but I just wondered if there was anything in there due to the transaction on the transition towards Amplifon, are you seeing customers waiting for the new launch, any sort of further colour there? And then also on the new launch, I just wondered how incentivised you are to invest in that launch given obviously the change in ownership by the end of the year? Thanks.

Thank you. We're still caring about hearing. I think it's the main message. I mean, I believe we said it already when we were setting out the year that we expect a fairly strong Q1 due to a relatively easy comparison base. Then we did say that we thought Q2 would be the weakest quarter and then that we would have a good Q3 and Q4. I think it's very much how it plays out. We knew that Q2 would be weaker due to comparisons, but predominantly also due to that we have a launch now in Q3 that many of our customers have known about and then slowing down a little bit the purchasing of the generation before. So I think that's what we're experiencing. We also had a quite significant headwind in the large US retailer market. We all know has taken the decision to go from three to four suppliers and now seem to be on the way to go to five. It is creating quite a bit of a headwind for us of actually several percent of growth for the hearing business. So I think it is. We're not overly worried because we're excited about Sensia. It's a very strong hearing aid and we're certainly very motivated to invest in the launch of this and so everything is progressing and everything works that has been doing with the Vivia launch before and launches before that. So we do expect a kind of bounce back here already in Q3 and also a very healthy Q4.

Is there anything contractually between yourself and Amplon in terms of the amount that you're investing in the launch?

Not more than that we are committing to run the business as we normally would, which is exactly what we're also doing.

The next question we have is from Susanna Ludwig of Princeton. Please go ahead.

Good morning and thanks for taking my questions. I have two, please. One is a follow-up on hearing and the other on enterprise. So I guess on hearing, in terms of the U.S. retail, retailer where you're facing headwinds, can you talk about why that pressure has stepped up from Q1 to Q2? Is this because you had stocking last Q2 related to Vivia or are you seeing Thank you.

Thank you for taking them in the order you asked them. I think you more or less gave the answer in the question. A year ago we had the Vivia launched and we had the benefit also of some very large order with this large US retailer. I think that's the primary reason behind now the year-over-year kind of headwind there. Then I think that there is, of course, been a longer period where they have introduced more partners, which we respect. I think we have a very good relationship with Costco. So that is still in place. But of course, it's naturally put some pressure over quarters for us, as you still have a little bit of that in there also. And then if we look on the new portfolio, I mean, I think there are a few effects on the pricing. One is the prices we are launching the products and that you cannot compare them completely one to one because we're launching a portfolio in a slightly different setup than the existing portfolio. But in general, we believe that the wall-free launch should have a positive ASP effect for us. And it goes for the premium products and also for the mid-tier entry-level products. So if you look like on the portfolio effect, that is what we're setting ourselves out to do. I also think that there's an effect that we'd A completely refreshed portfolio. We have an easier way to compete. And when you have that, it's also usually easier to price well. So I think that the new portfolio will certainly support both growth and support margins over time.

We have a follow-up question from Angela Podinovic of the NPP. Please go ahead.

Hi, thank you for taking my follow-up. I just wanted to understand the phasing on the enterprise into H2, mainly your comment on what you've seen in Q3. Does it mean that we are still on the table to see some growth in Q3, or that's mostly reserved for Q4? Thank you.

No, no, thank you. No, our base assumption is that we will see some level of growth already in Q3.

Ladies and gentlemen, this concludes our question and answer session, and I would like to turn the conference back over to management for any closing remarks.

Thank you very much operator, and thank you everybody on the call for your time and interest in GN. As always, if you have follow-ups, please reach out to the IR team. Have a nice day.