BioGaia AB (publ)

Hi, this is Teresa Agnew, CEO of BioGaia, and we are here to report on our Q2 2025 results. For Q2, our sales were 405 million SEC, which represents growth of 5%. That was mainly due to higher sales in Americas, specifically North America and Asia Pacific. We did have growth of 13.2% when you exclude currency effects for the quarter. Sales in Europe, Middle East, Africa decreased by 1%. In Asia Pacific, sales increased by 15%. And in the Americas, sales increased by 5%. Our EBIT was 108 million SEC, which was a decrease of 20%. And our EBIT margin for the quarter was 27%. We also, over the period of Q2, announced that we are establishing direct sales in the Netherlands for the first time. This is a market in Europe where we never had bio Gaia sales. So this is a first for us where we have launched our business online. And I can talk about that a little bit more. I also wanted to mention first half sales were 771 million sec, which was growth of 2%. And that is growth of 5%, excluding the currency effects. Some of our launches over the quarter, you can see listed here where we launched our BioGaia Gastros product. We launched Protectus Drops in Jordan, and we also launched a new product. So we had our first launch last year in Finland of BioGaia Gastros Pure Action. And we have continued to roll out that product in Q2 of this year in Sweden, Poland, and Hungary. And we will continue for the remainder of the year to roll that product out in even more markets. In terms of key events, we did announce that we were establishing direct sales in the Netherlands, and this was through Amazon and Bull. These are two of the leading online marketplaces in the Netherlands, and this launch is going very well. Actually, the results have surpassed our expectations. Also on May 30th, we announced that the number of votes decreased as a result of the conversion of Class A shares into Class B shares. And then also recently, we have announced the launch of a new subsidiary company, which is called BioGaia New Sciences. And this new subsidiary will be dedicated to advancing new microbiome research and innovation beyond our core business. We consider our core business to be gut health, immune health, and oral health. So BioGuide New Sciences will expand into new areas such as skin health. Now getting into sales. So overall sales by segment, in terms of for the quarter, our pediatrics segment increased by 2%. The adult health segment increased by 15%. So in pediatrics, excluding currency effects, we had growth of 9%. And this was mainly due to increased sales of our protectus tablets in Spain and South Africa and other countries. For adult health, we had a very nice increase of 15%. and excluding currency effects was 23%. And this was mainly due to increased sales of gastrous in the U.S. and other markets, but as well, predentists, mainly in the U.S. and Indonesia. So our adult health business is growing disproportionately, and we will continue to focus on that. So for Q2, our pediatric sales was 77%, but year-to-date, around 75% for pediatrics. So you can see our adult health business is continuing to grow substantially. By region, in Europe, Middle East, Africa for the quarter, we saw a decline of 1%. And this was mainly in Turkey, France, and Germany. Our sales were negatively impacted. We did terminate our local partner agreement in France earlier this year. and we have started up our direct distribution. So that started at the beginning of Q2, and that is going well. In Asia Pacific, our sales increased by 15%. That was mainly in Indonesia, Australia, and South Korea. Australia is doing very well. That was a direct market that we took in 2024. And then in Americas, our sales increased by 5%, mainly in the US and Guatemala. And you can see the overall year to date changes for the first half as well. So Europe, Middle East, Africa declined 13%, Asia Pacific 1%, so relatively flat, and the Americas at 21%. So with all of this, our direct business now represents approximately 36% of our sales. So now I will turn it over to Alex to discuss our financials in more detail.

Thank you, Theresa. So if we start to summarize some of the key financials, we had a sales of, as we heard, of 405 million, which was a growth of 5%. We had a gross profit of 294 million, which was a growth of 3%, and a gross margin of 73%, and an EBIT of 108 million, which was a negative 20% in terms of growth. To move on to the sales, as we have mentioned previously, sales was 405 million SEK, growth of 5%. However, we did have quite substantial negative currency effects in the quarter of minus 8%, so therefore the organic growth was 13%. Looking at the gross margin, we had a gross margin of 73% versus 74% in the previous quarter last year. The pediatrics margin came in at 74% versus 77% last year. The same quarter last year, due to some seasonal and geographic mix variation, had a very strong margin of 77%. If you look at the year to date figure, it was 76% for 2024, and we are at 75%. So we're slightly below last year. However, in the quarter, it looks like we are much more below. But again, it was due to a very strong quarter in 2024. For adult health, we had a margin of 66% versus 61% in the same quarter last year. The reason for the stronger margin, both in the quarter and year to date is a mix effect. Quite a lot of that has to do with the increased relative sales in the US where we have a stronger gross margin. So that is why we have a positive gross margin development for the quarter and also year to date. Move on to the operating expenses. We had total operating expenses of 186 million versus 149 in the same quarter last year, an increase of 25%. So if we start with the sales and marketing, sales and marketing costs increased with 25%. So that's the large explanation why the total OPEX is increasing. It's the sales and marketing expenses. And the reason for this increase is mainly has to do with increased sales and marketing activities in our subsidiaries, mainly then in the US, but also in Canada, for example. And the fact that we are starting some new subsidiaries have some initial costs for that, for example, in France. So those are the main explanation for the increased sales and marketing costs, which then obviously are increasing more than the sales. In terms of the R&D, R&D increased with 13%. due to some increased activity level in the clinical studies. However, year to date, it's only an increase of 2% in R&D costs. Administration costs increased to 12 million versus 6 million last year. However, last year included some negative costs due to the reversal of an accrual for litigation fees in connection with the termination of the distribution agreement in Italy. So that explains why the OPEX for administration increased quite a lot in the quarter. So if we look year to date, our administration costs were 23 million versus 20 million. And that increase is to a large extent then explained by that reversal of an accrual last year. So if you would take out that effect, administration costs are basically flat. Then we have other OPEX, which is negative currency effects, re-evaluation of receivables that came in at minus 5 million in the quarter and at a very substantial number, minus 29 million year to date. And then that all in all leads to that we had a total OPEX of 186 million and the growth of 25%. So if we move on to the cash flow, Sorry, the profit and loss. So as we said, we had a total sales of 405 million, a growth of 5%. We had an OPEX growing 25% to 186 million, which then leads to an EBIT of 108 million versus 135 million last year, which is then 20% lower. And we have in the quarter a margin of 27% versus 35% last year. And profit after tax came in at 88 million versus 111. That is 21% lower. And earnings per share at 0.87 versus 1.1 last year. Move on to the cash flow. So cash flow from operating activities before changes in working capital came in at 91 million versus 124, 26% lower. The reason for the lower cash flow from operating activities then is of course the lower operating profit. Changes in working capital came in at minus 14. that is higher than last year when it was minus five. The reason is an increase in receivables. This mainly has to do with some normal fluctuations that we do have between the quarters. And all in all, that leads to cash flow from operating activities at 77 million versus 119, which is then 35% lower than last year. Cash flow from investing activities came in at a very, very low level, only one million SEK in investments versus minus two, which was also low last year. And then we have cash flow from financing, which is basically the dividends we paid. And then the total cash flow for the period at 624 million minus 624 million. And that leaves us with the cash at the end of the period of 622 million versus 1 billion one year ago. So with that, I hand over to Theresa for some concluding remarks.

Yes. So as we talked about, our strong sales momentum returned in the second quarter. We saw high demand in some of our key markets, such as in North America, as we mentioned before, US and Canada, and also Asia Pacific. Just to summarize again, our sales for the quarter were up 5%, but when you factor in the strengthening SEC, our sales were up 13.2% for the quarter. And for the first half, our sales were up 2% and net of currency effects grew by 5%. As we mentioned, we had very strong sales in the adult health segment. That net of currency effect was up 23% and in the pediatric segment also grew 9% net of currency effects. Our operating expenses were up 25% and that was up 23% when you exclude the items affecting comparability. And this was mainly due to increased marketing investments in some of our direct businesses, such as the US and starting in Canada. and opening of new direct businesses, such as in France and continuing to invest in our direct businesses that we've opened last year, such as Australia and New Zealand. So our EBIT margin for the quarter was 27% and also 27% for the first half. And also, in line with our strategic direction, where we are taking certain markets where we feel we have strategic opportunity, we take those businesses direct. We continue to grow with newer direct markets, such as France and the Netherlands. And happy to also report that many of our established direct markets, like the US, Canada, Australia, Finland, and UK, continue to show excellent sales growth. So now our direct businesses represent about 36% of our over sales and that will continue to grow. We also announced this earlier this week that we formed a new subsidiary by Guy New Sciences. We are excited about this opportunity because our first area of focus will be on the skin microbiome and on skincare products. And you may know that we launched our first probiotic skin ointment in 2023 as a test in the US and then rolled that out in Canada actually last year, so that has done well. So we're continuing to roll that probiotic ointment out in more markets this year, and then we'll be launching some additional skincare-focused products as well as part of this new subsidiary. The formation of that new subsidiary does not monetarily impact our overall financial results. So this is in conclusion for our Q2, and we now open it up for any questions that you may have.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Matthias Vadston from Seb. Please go ahead.

Yes, hello, good morning. Thank you for taking my questions. I have three. First one, how much is Prudentis now out of group cells, i.e. the oral health product? Is it possible for you to put this into perspective a little bit as well? Let's say how much it has been growing in the past five years or so, and yeah, what the prospects are there. That's the first one, and we'll have two more.

okay on on predentist we don't share specific sales figures by product but what i can say is predentist has grown substantially since we started significantly investing in it in the united states back in 2023 so we really saw an upward trajectory starting in 2023 then into 2024 and now this year so we've seen very strong double-digit growth of Prodentis in the United States. Prodentis continues to grow in Japan. That has always been one of our main markets for Prodentis and then some of our European markets as well. But it's really the growth in the United States that has been driving the overall strong Prodentis performance. And just know we are starting to place you know more focus on prudentis in other markets as well in canada we've just started in the uk we've just started uh we will be starting that in france as well so that you know that will be an area of focus for us it has been the last uh two years um and then will continue to be thank you and then also with your product now being sold at cds in in the us

Help us understand a little bit how major this is and how major opportunity that is. And maybe also help us a little bit with what we should think of in terms of stocking of products and so on. Which quarters is it benefiting you mostly? That's the second one.

And I'm sorry, I couldn't hear now that it's being sold in the U.S. where? I'm sorry? It's

At the CVS pharmacy.

Oh, CVS, yes. Yes, so in the U.S., we just started selling predentists at CVS earlier this year, and that is going very well. They're happy with it, and they're continuing to place second and third orders, which is very good. So we anticipate that that will continue to be strong performance at CVS. And also of note, in the United States, we have also gained additional distribution of our Protectus drops, where we now have our 5ml at Target. That will be starting in the second half of this year. And also Walmart in stores will also have our Protectus drops product. So we have increased distribution, not just on Prudentis, but also on our Protectus drops in the U.S.

Okay, that sounds good. And then lastly, OPEX, very high in the quarter, I think growing somewhere around 25%, as you mentioned. So basically, I think Q4 last year and Q1 this year, and now also this quarter, the increase has been around, you said, 20% to 25%. So my guess is another 20% increase for Q3, but how do you see selling expresses developing year on year after that? I think I'm after, you know, how lasting this selling expenses increase is for Birgaya. That's the last one. Thank you very much.

Yes. So we will continue this year to continue to invest in the marketing campaigns that we're doing. It is showing favorable ROI in the markets where we have increased our spend, such as in the United States. For next year, we will be evaluating that as we proceed with our financial forecasting for next year. So there's no comment on that yet. But for this year, we will be continuing the investments that we have been making in the first half of the year.

Okay, but it's still important to revert back to the long-term EBIT margin target.

Yes, that is correct. And the other thing, as we start to take these markets direct, that also will positively impact over time our EBIT margin as well as our sales.

Perfect. Thank you very much.

The next question comes from Christopher Liljeberg from DNB Carnegie. Please go ahead.

Hi, good morning. Follow up on the previous question regarding higher selling cost. Is it possible to maybe split this out between the initiatives you're doing in existing markets you mentioned, particularly in the US, versus how much of this is higher cost for opening new direct markets such as France and you also have Netherlands, Australia, New Zealand?

Yeah, I mean, we can't break it out in particular numbers. But right now, I would say the higher amount is around the marketing investments that we're doing in markets like the US. because we do run lean organizations when we open direct markets. So we also outsource a lot when we open direct markets in terms of selling organizations and contract sales forces and so forth. So that cost of the direct markets, it increases slightly over time as we build the organizations. But I would say right now, the majority of the cost is around the marketing.

And I don't know if it's possible to quantify this extra investment you're doing in marketing. Last year, you were given a figure for that. It seems last year maybe ended up a bit less than that. Is it possible to do something similar for what do you expect for this year or whether it's possible to say if you would be at this 34% EBIT more than target for this year, if we would strip out these extra investments?

Well, we can't quantify specific investments. We always do say our long-term EBIT margin target is our 34%. We will continue, though, to invest this year. So with these investments, that will continue to affect our overall EBIT margin, but not significantly.

What do you mean with not significantly? Do you mean less of an impact for the remainder of the year?

I mean, I would say overall less of an impact for the remainder of the year. But again, our long-term target is the 34%. OK. Great.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So I want to thank you for your questions and participation for our Q2 results. And we will then be reporting next quarter. Thank you. This is Teresa Agnew, CEO of BioGaia, and we are here to report on our Q2 2025 results. For Q2, our sales were 405 million SEC, which represents growth of 5%. That was mainly due to higher sales in Americas, specifically North America and Asia Pacific. We did have growth of 13.2% when you exclude currency effects for the quarter. Sales in Europe, Middle East, Africa decreased by 1%. In Asia Pacific, sales increased by 15%. And in the Americas, sales increased by 5%. Our EBIT was 108 million SEC, which was a decrease of 20%. And our EBIT margin for the quarter was 27%. We also, over the period of Q2, announced that we are establishing direct sales in the Netherlands for the first time. This is a market in Europe where we never had bio Gaia sales. So this is a first for us where we have launched our business online. And I can talk about that a little bit more. I also wanted to mention first half sales were 771 million sec, which was growth of 2%. And that is growth of 5%, excluding the currency effects. Some of our launches over the quarter, you can see listed here where we launched our BioGaia Gastros product. We launched Protectus Drops in Jordan, and we also launched a new product. So we had our first launch last year in Finland of BioGaia Gastros Pure Action. And we have continued to roll out that product in Q2 of this year in Sweden, Poland, and Hungary. And we will continue for the remainder of the year to roll that product out in even more markets. In terms of key events, we did announce that we were establishing direct sales in the Netherlands, and this was through Amazon and Bull. These are two of the leading online marketplaces in the Netherlands, and this launch is going very well. Actually, the expectations have surpassed, the results have surpassed our expectations. Also on May 30th, we announced that the number of votes decreased as a result of the conversion of class A shares into class B shares. And then also recently, we have announced the launch of a new subsidiary company, which is called BioGaia New Sciences. And this new subsidiary will be dedicated to advancing new microbiome research and innovation beyond our core business. We consider our core business to be gut health, immune health, and oral health. So BioGaia New Sciences will expand into new areas such as skin health. Now getting into sales. So overall sales by segment in terms of for the quarter, our pediatrics segment increased by 2%. The adult health segment increased by 15%. So in pediatrics, excluding currency effects, we had growth of 9%. And this was mainly due to increased sales of our protectus tablets in Spain and South Africa and other countries. For adult health, we had a very nice increase of 15%, and excluding currency effects was 23%. And this was mainly due to increased sales of gastrous in the U.S. and other markets, but as well, for dentists, mainly in the U.S. and Indonesia. So our adult health business is growing disproportionately, and we will continue to focus on that. So for Q2, our pediatric sales was 77%, but year-to-date, around 75% for pediatrics. So you can see our adult health business is continuing to grow substantially. By region, in Europe, Middle East, Africa, for the quarter, we saw a decline of 1%, and this was mainly in Turkey, France, and Germany. Our sales were negatively impacted. We did terminate our local partner agreement in France earlier this year, and we have started up our direct distribution. So that started at the beginning of Q2, and that is going well. In Asia Pacific, our sales increased by 15%. That was mainly in Indonesia, Australia and South Korea. Australia is doing very well. That was a direct market that we took in 2024. And then in Americas, our sales increased by 5%, mainly in the US and Guatemala. And you can see the overall year to date changes for the first half as well. So Europe, Middle East, Africa declined 13%, Asia Pacific 1%, so relatively flat, and the Americas at 21%. So with all of this, our direct business now represents approximately 36% of our sales. So now I will turn it over to Alex to discuss our financials in more detail.

Thank you, Theresa. So if we start to summarize some of the key financials, we had a sales of, as we heard, of 405 million, which was a growth of 5%. We had a gross profit of 294 million, which was a growth of 3%, and a gross margin of 73%, and an EBIT of 108 million, which was a negative 20% in terms of growth. To move on to the sales, as we have mentioned previously, sales was 405 million SEK, growth of 5%. However, we did have quite substantial negative currency effects in the quarter of minus 8%, so therefore the organic growth was 13%. Looking then at the gross margin, we had a gross margin of 73% versus 74% in the previous quarter last year. The pediatrics margin came in at 74% versus 77% last year. The same quarter last year, due to some seasonal and geographic mix variation, had a very strong margin of 77%. If you look at the year-to-date figure, it was 76% for 2024, and we are at 75%. So we're slightly below last year. However, in the quarter, it looks like we are much more below, but again, it was due to a very strong quarter in 2024. For adult health, we had a margin of 66% versus 61% in the same quarter last year. The reason for the stronger margin both in the quarter and year to date is a mix effect. Quite a lot of that has to do with the increased relative sales in the US where we have a stronger gross margin. So that is why we have a positive gross margin development for the quarter and also year to date. Move on to the operating expenses. We had total operating expenses of 186 million versus 149 in the same quarter last year, an increase of 25%. So if we start with the sales and marketing, sales and marketing costs increased with 25%. So that's the large explanation why the total OPEX is increasing. It's the sales and marketing expenses. And the reason for this increase is mainly has to do with increased sales and marketing activities in our subsidiaries, mainly then in the US, but also in Canada, for example. And the fact that we are starting some new subsidiaries have some initial costs for that, for example, in France. So those are the main explanation for the increased sales and marketing costs, which then obviously are increasing more than the sales. In terms of the R&D, R&D increased with 13% due to some increased activity level in the clinical studies. However, year to date, it's only an increase of 2% in R&D costs. Administration costs increased to 12 million versus 6 million last year. However, last year included some negative costs due to the reversal of an accrual for litigation fees in connection with the termination of the distribution agreement in Italy. So that explains why the OPEX for administration increased quite a lot in the quarter. So if we look year to date, our administration costs were 23 million versus 20 million. And that increase is to a large extent then explained by that reversal of an accrual last year. So if you would take out that effect, administration costs are basically flat. Then we have other OPEX, which is negative currency effects, re-evaluation of receivables that came in at minus 5 million in the quarter and at a very substantial number, minus 29 million year to date. And then that all in all leads to that we had a total OPEX of 186 million and the growth of 25%. So if we move on to the cash flow, Sorry, the profit and loss. So as we said, we had a total sales of 405 million, a growth of 5%. We had an OPEX growing 25% to 186 million, which then leads to an EBIT of 108 million versus 135 million last year, which is then 20% lower. And we have in the quarter a margin of 27% versus 35% last year. And profit after tax came in at 88 million versus 111. That is 21% lower. And earnings per share at 0.87 versus 1.1 last year. Move on to the cash flow. So cash flow from operating activities before changes in working capital came in at 91 million versus 124, 26% lower. The reason for the lower cash flow from operating activities then is of course the lower operating profit. Changes in working capital came in at minus 14. That is higher than last year when it was minus five. The reason is an increase in receivables. This is mainly has to do with some normal fluctuations that we do have between the quarters. And all in all, that leads to cash flow from operating activities at 77 million versus 119, which is then 35% lower than last year. Cash flow from investing activities came in at a very, very low level, only one million SEK in investments versus minus two, which was also low last year. And then we have cash flow for financing, which is basically the dividends we paid. And then the total cash flow for the period at 624 million minus 624 million. And that leaves us with the cash at the end of the period of 622 million versus 1 billion one year ago. So with that, I hand over to Theresa for some concluding remarks.

Yes. So as we talked about, our strong sales momentum returned in the second quarter. We saw high demand in some of our key markets, such as in North America, as we mentioned before, US and Canada, and also Asia Pacific. Just to summarize again, our sales for the quarter were up 5%, but when you factor in the strengthening SEC, our sales were up 13.2% for the quarter. And for the first half, our sales were up 2% and net of currency effects grew by 5%. As we mentioned, we had very strong sales in the adult health segment. That net of currency effect was up 23% and in the pediatric segment also grew 9% net of currency effects. Our operating expenses were up 25%, and that was up 23% when you exclude the items affecting comparability. And this was mainly due to increased marketing investments in some of our direct businesses, such as the U.S., and starting in Canada, and opening of new direct businesses, such as in France, and continuing to invest in our direct businesses that we've opened last year, such as Australia and New Zealand. So our EBIT margin for the quarter was 27% and also 27% for the first half. And also in line with our strategic direction, where we are taking certain markets where we feel we have strategic opportunity, we take those businesses direct. We continue to grow with newer direct markets, such as France and the Netherlands. And happy to also report that many of our established direct markets like the US, Canada, Australia, Finland and UK continue to show excellent sales growth. So now our direct businesses represent about 36% of our over sales and that will continue to grow. We also announced this earlier this week that we formed a new subsidiary by Guy New Sciences. We are excited about this opportunity because our first area of focus will be on the skin microbiome and on skincare products. And you may know that we launched our first probiotic skin ointment in 2023 as a test in the US and then rolled that out in Canada actually last year. So that has done well. So we're continuing to roll that probiotic ointment out in more markets this year. and then we'll be launching some additional skincare-focused products as well as part of this new subsidiary. The formation of that new subsidiary does not monetarily impact our overall financial results. So this is in conclusion for our Q2, and we now open it up for any questions that you may have.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Matthias Vadsten from SEB. Please go ahead.

Yes, hello. Good morning. Thank you for taking my questions. I have three. First one, how much is prudenti? now out of group sales, i.e. the oral health product. Is it possible for you to put this into perspective a little bit as well? Let's say how much it has been growing in the past five years or so, and what the prospects are there. That's the first one, and we'll have two more.

Okay. On Prodentis, we don't share specific sales figures by product, but what I can say is Prodentis has grown substantially since we started significantly investing in it in the United States back in 2023. So we really saw an upward trajectory starting in 2023, then into 2024 and now this year. So we've seen very strong double-digit growth of Prodentis in the United States. Prodentis continues to grow in Japan. That has always been one of our main markets for Prodentis and then some of our European markets as well. But it's really the growth in the United States that has been driving the overall strong Prodentis performance. And just know we are starting to place you know more focus on prudentis in other markets as well in canada we've just started in the uk we've just started uh we will be starting that in france as well so that you know that will be an area of focus for us it has been the last uh two years um and then will continue to be thank you and then also with your product now being sold at cds in in the us

help us understand a little bit how major this is and how many opportunities that is and maybe also help us a little bit with what we should think of in terms of stocking of products and so on which quarters are is it you know benefiting you mostly that's the second one and i'm sorry i couldn't hear now that it's being sold in the us where i'm sorry

At the CVS pharmacy.

Oh, CVS, yes. Yes, so in the U.S., we just started selling predentists at CVS earlier this year, and that is going very well. They're happy with it, and they're continuing to place second and third orders, which is very good. So we anticipate that that will continue to be strong performance at CVS. And also of note, in the United States, we have also gained additional distribution of our Protectus drops, where we now have our 5ml at Target. That will be starting in the second half of this year. And also Walmart in stores will also have our Protectus drops product. So we have increased distribution, not just on Prudentis, but also on our Protectus drops in the U.S.

Okay, that sounds good. And then lastly, OPEX, very high in the quarter, I think growing somewhere around 25%, as you mentioned. So basically, I think Q4 last year and Q1 this year, and now also this quarter, the increase has been around, you said, 20% to 25%. So my guess is another 20% increase for Q3, but how do you see selling expenses developing year on year after that? I think I'm after, you know, how lasting this selling expenses increase is for Birgaya. That's the last one. Thank you very much.

Yes. So we will continue this year to continue to invest in the marketing campaigns that we're doing. It is showing favorable ROI in the markets where we have increased our spend, such as in the United States. For next year, we will be evaluating that as we proceed with our financial forecasting for next year. So there's no comment on that yet. But for this year, we will be continuing the investments that we have been making in the first half of the year.

Okay, but it's still important to revert back to the long-term EBIT margin target.

Yes, that is correct. And the other thing, as we start to take these markets direct, that also will positively impact over time our EBIT margin as well as our sales.

Perfect. Thank you very much.

The next question comes from Christopher Liljeberg from DNB Carnegie. Please go ahead.

Hi, good morning. Follow up on the previous question regarding higher selling cost. Is it possible to maybe split this out between initiatives you're doing in existing markets you mentioned, particularly in the US, versus how much of this is higher cost for opening new direct markets such as France and you also have Netherlands, Australia, New Zealand?

Yeah, I mean, we can't break it out in particular numbers. But right now, I would say the higher amount is around the marketing investments that we're doing in markets like the US. because we do run lean organizations when we open direct markets. So we also outsource a lot when we open direct markets in terms of selling organizations and contract sales forces and so forth. So that cost of the direct markets, it increases slightly over time as we build the organizations. But I would say right now, the majority of the cost is around the marketing.

And I don't know if it's possible to quantify this extra investment you're doing in marketing. Last year, you were given a figure for that. It seems last year maybe ended up a bit less than that. Is it possible to do something similar for what do you expect for this year or whether it's possible to say if you would be at this 34% EBIT more than target for this year, if we would strip out these extra investments?

Well, we can't quantify specific investments. We always do say our long-term EBIT margin target is our 34%. We will continue, though, to invest this year. With these investments, that will continue to affect our overall EBIT margin, but not significantly.

What do you mean with not significantly? Do you mean less of an impact for the remainder of the year or so?

I mean, I would say overall less of an impact for the remainder of the year. But again, our long-term target is the 34%. OK. Great.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So I want to thank you for your questions and participation for our Q2 results, and we will then be reporting next quarter. Thank you.