Dustin Group AB (publ)

Good. Thank you very much. Good morning, everyone, and most welcome, both our existing, of course, new and potentially new shareholders, to our second quarter presentation and conference call. I hope you are all well. Here on the right side of the call is myself, Tomas Ekman, and Johan Carlsson, CFO, and Fredrik Sesterström, also head of IR in Lund as well. So, today we present our second quarter result for our fiscal year, 2021-2022. To start with, I must say, this has been, of course, a very special quarter, starting the quarter with more or less open markets and societies in December, with then relaxed corona restrictions to complete lockdowns in all our markets in November, December and January, causing a lot of challenges, of course, and then to fully open markets again in February, and then a couple of weeks later into a catastrophic phase of the Russian invasion of Ukraine. So a lot of turmoil, but despite all this, we continue our growth journey, and this quarter with the 80% reported growth and a very strong 12.2% total organic growth. Margins, which we'll come into later on, were impacted by mixed effects driven by high deliveries of low-margin products and temporary cost increases due to a lot of sick leaves in the middle of the quarter, and also, of course, a higher share of LCP sales in general. And as always, I've said this before, but I'm always very proud of everyone in the industry group for doing their utmost every day to deliver a great customer experience. And this second quarter very much put the light on the skills and competencies and engagement we have in the group, given the turmoil in the world and the effect, of course, it has on us as humans and our work. The supply chains are continuously disrupted and are driving an intense work in sourcing and delivery. But despite all these challenges, as I said, we managed to have a double-digit growth and capture the demand from our customers. And the second quarter, once again, shows that availability and delivery capacity, it is the driver of the high growth and drives the generated high growth. And that, of course, builds on our cash-generative and asset-light business model. So let's proceed in the presentation. And for your reference, we have Dustin at the glass on slide two. But I think we can move directly to slide three for the financial pilots to see how we are performing and improving during this quarter. The strong organic growth at 12.2%. We have strengthened our position in the markets and our productivity and position in the value chain, of course, benefited our performance. Our beta margin was impacted by customer and product mix effects, as well as temporary cost increases due to corona lockdowns. Adjusted to beta increased to 275 million sec, while the beta margin came in at 4.2%. Our S&P segment performed strongly on both the growth and margins in the quarter, and our LCP segment had a very strong growth, while slightly lower margins due to high share of sales of low margin products, such as PCs, Apple mobile phones, and software. The market trends that we build our strategy on, the online shift, growth mobility, cloud services, demand for predictable IT costs, focus on security and integrity, and, of course, sustainability, they have continued during the quarter to increase in importance. And that, of course, makes also our long-term position better. So total net sales were 6.6 billion SEK, up with 80% versus last year on reported level. And the organic growth, as said, was 12.2%. LCP at a very good 17.2%, and BTC a negative 22.4%, as an effect of much less campaigning due to the overall shortages of products. Overall, good organic growth and strong, which shows not only a good underlying demand, but of course also our capability to make use of it and deliver. Gross profit was 904 million SEK compared to last year's 591 million SEK. That gives us the gross margin at 13.7%, down from last year's 16.1%. The change is mainly attributable to an altered mix with higher share of sales from LCP and within LCP. And that, of course, relates to the acquisition of CentralPoint, together with higher organic growth also in LCP. Our adjusted EBITDA increased to 275 million SEC versus last year's 201 million SEC. And as said, that's 2% for the quarter versus last year's 5.5%. And the EBITDA margin was affected by the customer mix towards LCP and the product mix of lower margin products within LCP as well as the temporary costs I talked about before here for sick leaves in December and January. Item selecting comparability was minus 13 million SEC and that consequently giving us an EBIT of 220 million SEC compared to last year's 177. And EPS Earnings per share was 1.27 SEC per share versus last year 1.34. Strong cash flow from operating activities at 388 million SEC versus last year's 218 million SEC. And our leverage at the end of the quarter was 3.3 versus 2.0 last year. Increase, obviously, because of the acquisition of Central Point and the dividend payoff during this quarter. And we are working our way down in leverage So apart from an intense quarter in general from an operational perspective, we have continued the integration work with Central Point and former venture companies in the Benelux. We've also come further with our Nordic integrations with, for example, now Danish Exato now fully integrated. So when you want, you can take us through the financials on our different segments. We have a slide for them. Yes, on slide four, we see SMB. Sales for the quarter in FFD was 1,941,000. That was an increase of 20.2% over last year, representing an organic growth of 10.1, as Thomas mentioned. Sales growth continued to be strong, despite the challenges in the global supply chain, and with a very high underlying demand. During the quarter, we saw strong demand for hardware in general, but computers and mobile phones in particular. All customer groups in the segment performed well. However, the On the services side, the standardized managed services performed well while the consulting business was down from last year. This is a result of higher standardization of the service portfolio and in line with our strategy. From a geographical perspective, sales were strongest in Norway to 11.0, despite a negative effect from customer moves affecting margins negatively with 0.3%. Private label continues to contribute positively as we are increasing sales in both Nordics and Banalax, and also using the supply chain challenges to our advantage was improving the margins. However, the quarter was also affected negatively from high share of computers and mobile phones with lower margins, and my higher cost for delivery coming from the high sick leave due to COVID. The delivery cost issues was mainly affecting December and January and is now back on normal levels again. In summary, we saw the same trends in demand for IT products and services in Q2 as we did in Q1. Then move to slide five and the LCP segment. Sales in NCP was $4,553,000,000 in the quarter, which was an increase of 139.3%, of which 17.2% was organic. During the quarter, we saw a very high sales increase in both public sector and large corporates. As our quarter two contains the end of the calendar year, we also had strong sales software in the was up by 300% compared to the same quarter last year. From a geography perspective, growth was strongest in Sweden, Norway, and Denmark. Segment margin was at 6.5, was down from 7.2 last year. As said before, product mix was affecting margins negatively as software was increasing in the share of states. Further to that, large inbound deliveries to fulfill large rollout commitments further weakened the margins. Also, higher cost of delivery, as mentioned in SMB, was affecting the LCP margins. However, private label product increased as we were expanding in the Nordics and launching in the Benelux, and this contributed to a higher margin. The customer transfers We then move to slide six, and B2C segment. So B2C segment lost 20.5% of sales. It went up to 9.6% from 8.6% last year due to the lack of price campaigns, which usually affects the margins negatively. Segment result was 13 million, which was down from 15 million last year. Let's move to slide seven and the net working capital. The net working capital continues to perform well. It was negative 433 million compared to last year's negative 549 million. compare it to also the q1 of this year and network capital in this quarter was approximately 100 million lower but as in previous quarters we have seen negative effects on inventory levels coming from turbulence in the supply chain but this has been compensated by longer payment terms to suppliers and more efficient more effective payment process from customers we look at the details of working capital inventory in the quarter was one The main reason for the increase was the inclusion of central points, adding 476, and higher purchase volumes to reduce the risk of shortage of components. Accounts receivables was up $1,351,000,000, mainly as a result of central points adding $995,000,000, and higher business volume coming from the strong organic growth. Moving to accounts payables, it was $3,000,000,000, seven hundred eighty four one billion seven hundred and fifty three million higher than last year again central point added the majority of that difference compared to last year in total we continue to see strong performance in the area with capital where we continue to stay in or below our target range of negative 100 to 200 and our leverage as we have before that is the net The quarter was 3.3, including rolling 12-month numbers for Centrepoint. And as you know, our target is to stay between 2 and 3. The effect compared to last quarter was mainly coming from dividend and slightly higher net debt due to currency differences in the debt number. We then move to slide 8 and look at the cash flow. We can see cash flow for the quarter was 15 million compared to negative 32 last year. We look at the parts. Cash flow from operating activities before changing net green capital, 278 million compared to 207 last year. And change in net green capital was 110 compared to 10 last year. The main difference Cash flow from investing activities was negative 75 compared to negative 18 last year, where majority comes from capex investments. Cash flow from financing activities was negative 298 compared to 231 last year. The main difference being the investments, they were at 90 million compared to last year's 43. CapEx related to IT development amounted to 40 million. That was 31 million above last year, mainly coming from IT investments in Central Point. They were moving the ERP platform to the cloud. Investments in tangible and intangible assets increased to 40 million from 24. All in all, $64 million out of the $90 million in capex was affecting cash flow. The others were changes in lease or rent contracts. And with that, moving back to Thomas. Good. Thank you, Johan. And then continuing over to slide number nine. And let's do a little detail in our EBITDA margin development. As you know, our target range long-term is between 5% to 6% EBITDA, and we're not back there yet, but we are on our way. The challenging turmoil in the markets in general obviously affects us as everybody else, and to give you some flavor to it, you can see the graph at the left-hand side of the slide showing developments. What has affected the margin in Q2 is, as we have been into before here, you are from U1 as well, is the customer mix with strong share of sales from LCP and within LCP. It has been a higher share of basic hardware in both segments as well as large software roll-offs within LCP. And to that, the temporarily higher cost connected to the extensive absence due to corona lockdowns at approximately 15 million SEK. We have also seen higher irregularities in inbound deliveries caused by the disruption in supply chains, making it slightly harder to exactly forecast estimated time of arrivals for products. And it is somewhat, of course, difficult to assess the short-term effects from both lockdowns in China as well as the Russian invasion of Ukraine and what might be the effect of all that. But I can assure you that we have our eyes on the margin ball. to reach our target of being between 5% and 6% of data. And it is actually, as you also heard from Johan, it is also the share between SMB and LCP. SMB has a good, continued good performance with strong margins and good performance on growth. And the higher share of LCP sort of pushes down the margin somewhat. But that is also why we're working hard to increase the share of SMB sales in our profiles. Good. Continuing then on to slide 10 to give you also an update on our value creation agenda. During the quarter, we have continued our rebranding activities in the van life with now all the former Vinciera companies rebranded to Dustin. We have also initiated the rebranding of Central Point, and that will now take place in May, which is very exciting, of course. We have also launched our private label product that's here from U1. in the later part of the quarter. And that's, of course, very exciting, given that, as you know, private label is a good contributor to our margins. And the initial response also in the Benelux is very positive, so that is very promising. Several group initiatives are also ongoing. Now we're setting up a global procurement and vendor management team that's being set up, as well as the launch of our group common cloud-based ERP platform. And that is built now from the Bandag side, and that will be integrated also to the Nordics. And this platform we aim to complete during the next fiscal year, 2022-2023. And as previously announced, we plan to invest approximately 50 million SEK to extract the estimated annual synergies of 150 million SEK. And those will be fully implemented in the year of 2023-2024. So we have a solid agenda to speed up our ability to reach our long-term targets. And continuing on the long-term agenda theme, let's move to the next slide, slide 11. And let me just give you some quarter highlights connected to our 2030 commitments. During the quarter, we have launched our in-house take-back service also in the Nordics to increase circularity. We have a production facility south of Sweden to cover for the Nordics, and we also have the facility in south of Netherlands to cover for the Benelux. for around 5 million SEK, which may not sound so much with 5 million SEK, but it's a very important milestone to start off this in the way we do. And we can already now see the margin contribution possibilities this will give to us going forward. And we have also financed our solar cell facility, which enabled us a greener warehouse and lower electricity costs. And all in all, we work hard to fulfill our 2030 commitment, and we are on a good way there. So before going into Q&A, let me just sum up our second quarter results on slide 12. Net sales grew with 80% on report 11 to 6.6 billion sec, where organic growth for the group was 12.2, with SMB at a strong 10.7, LCP at an equally strong 17.2, and BTC at a minus of 22.4%. Gross profit at 904 million SEK versus 591 million SEK, and gross margin came in at 13.7% versus last year's 16.1%. And change in sales mix, as we've been into, with higher share of S&P sales and higher share of or vast deliveries, actually, of basic hardware and software is behind the change in gross margin. And adjusted EBITDA came in at 275 million SEK, giving us an EBITDA margin for the quarter at 4.2%, due to the flow-through of the reasons for the drop in gross margin and the extra cost due to the temporary restrictions. EBITDA at 220 million SEK, an increase from last year's 177 million SEK, and EPS at 1.27 SEK per share versus last year's 1.34%. On the other sheet, Orin Strong operating cash flow at 388 million SEK, and the leverage ended in the quarter at 3.3. So solid growth in the quarter with the mixed effects negatively impacting the market right now. The pandemic is still present in the world, teaching us a lot, and not the least a new way of working. The escalation of the war in Ukraine and the Russian invasion of Ukraine also puts pressure, and of course we sincerely hope for an An end to that. The market trends continue to accelerate with the distinct changes in customer behavior. The IT service demand is there, and there is an increased demand for instant availability online, as well as security, mobility, and remote management. Security and knowledge around cybersecurity is obviously a big topic at the moment and will continue to be given the overall uncertainty in the world. We have extensive experience and knowledge in that, and we can serve our customers in all our markets in those areas. And for us, I must say, the last years has meant that our position is clearly strengthened and shows that our asset-light business model is very robust. So, in short, we are well positioned. And with that, Johan, I think we can conclude our presentation and are happy to take any questions you might have. So, operator.

Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel. Our first question comes from the line of Daniel Tolshan of ABG. Please go ahead, your line is open.

Yes, thank you very much. I start off with a question related to software. You say that software sales are up 4x in the quarter, but that is not affecting the margin that much. It's actually diluting the margin. How should we think about that in the future, and what type of software is it? Is it like Microsoft licenses or anything else?

Yes, when we talk about it in this perspective, it is large deals with, in this case, mainly Microsoft licenses, yes.

Okay, and they bear a margin more or less in line with the basic hardware sales, I guess. Lower, much lower than the basic hardware. Okay, thank you very much. And then secondly on the, yeah, go ahead. No, I think you can split software into groups.

These are these larger, one of these with low margins, and then you have other types of software, which actually is relatively good margins.

But it's not all software that is diluting margins at all. No, exactly. I imagine that. Can you give an example of a high-margin software deal?

Well, that you can do Office 365 is much better than, let's say, these big roll-offs for large customers. If you do it for small customers, that's it. That's more in line with hardware things.

Okay. And then, secondly, on the... COVID effects here in the quarter. What part of the organization caused the 15 million negative effects from sick leave? Is it mainly the logistics centers and is that fully behind us now as of Q3?

Yes, it is. You're correct in both. It was the logistics center and it was, as we remember, we have nearly forgot it, but it was in January and December when we had quite strict quarantine rules so people were sent home and then we had to have extra personnel

sort of behind us now okay so you could still deliver the products but it cost you more money it was not it was not a lot of sales no no it was not so we had to bring in a lot of extra extra people to the warehouses and yeah I see okay that's clear and then finally how should we think about your service organization as a margin driver

as you have now decided to trim that a bit post post the pandemic um sales from services are declining year over year is that still an important contributor to reach the margin target or should we expect that to come back when should we expect that to come back i think it's it is an important contributor to the margin target over time uh what we see in services is the transition from let's say the old old world of selling services to the new world of selling services where we come when we are transforming, let's say, highly customized service offerings to standardized. And that means that you will basically sell less of time and material from something, and you will sell more of standardized managed services. And that, in the long term, that is really good for the margin, and also really good for the relevance to the customer, us becoming more sticky to the customers with that offering. So I think it's really a margin contributor going forward. But of course, the transition from the old way of doing it to the new is in some cases painful.

Okay. And is the market development in favor of standardized managed services at the moment? Or do you expect that to happen maybe in 2023 and onwards? Is that more of a bet you're taking on the future or something you see right now?

No, we see it right now. And we are doing quite good in that sector, but Because of the mix, let's say, within services, it's hard to see it on the total number. But from standardized services, we are growing very well. And the more complex the IT world becomes with complexity and security and mobility, the more standardized solutions you tend to seek for as a company. Even the most sort of tailor-used CIO is seeking for standardized solutions right now because you need to have that in order to take on security. Anyone else?

Okay, excellent. That's all from me. Good. Thank you, Daniel.

Thank you. Currently, we have one further question in the queue. So just as a reminder to participants, if you do wish to ask a question, please dial 01 on your telephone keypads now. And that next question is from the line of Carnegie. Please go ahead. Your line is open.

Thank you. Good morning. I was just thinking about the central functions cost, how we should model that going forward, if you can help us out a bit. It increased quite a lot sequentially here. Should we expect the same level in the coming quarters?

I think... i think the level where we are at the moment with the current activity as we're doing is the level we will see for some time um as you know i mean we added central point and we we kind of included the central cost of inshira that affects the numbers of course from last year but we are also driving a more aggressive i.t agenda at the moment compared to what we did before because we believe that that will drive the synergies and integration of CenterPoint in a better way. So we are taking costs here that are higher than before and will continue for at least, I would say, one to two years because of the time it will take to take the whole group up to the cloud-based ERP and CRM platform. So I think you can keep that number. It's a good number for at least for the next four quarters. Let's start with that.

Okay, all right. And the same, I guess, is relevant for the selling and admin expenses.

Yes, I don't see that we have any special costs there except for the $16 million of delivery that was in this quarter. That is odd. So I think that the numbers we have minus the... one of the COVID effects in this quarter, it's a number we can keep.

Okay. There's no seasonality in that, or it usually comes down quite a lot during the summer, for example.

Yeah, because of holiday, I think that's maybe the reason for some of it, because activity goes down a bit during summer, and therefore cost is usually a bit lower during that period. But if you take the other, that effect comes in our Q4, I would say. Mainly, even for amendments, you would see that effect in August, probably.

Okay. But in the near term, this level is relevant and where you're operating right now, yes, around 635 million.

Yes.

Okay. Another question here is on the product mix. dynamics if you can talk to us about that what is sort of the difference between a weak mix in terms of EBITDA margins and a strong mix so the spread there and how we should think about this mix going forward is this something that you see continuing right now that customers are demanding these type of products or how should we So I modeled this.

If we start by looking at the variance of the NICs, and if you would start by, let's say it grows more than around 15, then you would see PCs and mobile phones being a couple of percentage points below that on average. And you would see accessories and these kind of product groups would be higher. in general terms, and also infrastructure is higher, for example. So that would be the product category mix. Then, of course, you can add to that the customer mix. So if you are a little bit below on PCs, you would be even more below, let's say, if you sell to a large frame agreement public customer compared to the SMB customers that are relatively good margin also on PCs. So that would affect your mix when it comes to customers. And then you have the third variance that you can talk about, which is the vendor mix, meaning that if you sell vendors like Apple, you receive less margin percent than you do if you sell HP. So that would be your vendor mix. So all these three are, of course, working at the same time and all together. So that is a little bit what we have tried to explain.

So this is an unusually unfortunate mix at the same time in all these different segments.

Yeah, you could say that it's rare that you have all these three moving against you because sometimes most of the times you would have compensating factors let's say within this system but now this time we got everything positive on volume but then probably all the factors that could push its margins down was actually on the low side.

Okay. And your margin targets of 5% to 6%, what type of mix is built into that assumption?

I would say it's a mix that if you take the average of a year, if you go back a year and look at the total effect, quarter that can have you know pluses and minuses but I think if you take a longer period that would be the mix we haven't assumed a change of let's say either brands or within the categories let's say yeah makes sense and here in the near term do you see that this mix is continuing into Q3 so far It's really hard to predict because of the turbulence in the supply chain. But if we get release of some of the larger, let's say, deliveries, then, of course, there is always this effect. But on the other hand, there is relatively good margins as we look at the backlog that we have at the moment. So that will compensate positive. So I think it will be – I don't see that any obvious thing that it should continue on a very low level, no.

Okay. And my final question is on the general availability of IT products and how that has changed during 2022 and now in the short term after the invasion, if you have seen any effects from that so far during March.

Overall, it is a turbulence, of course, and we'll see how it comes out with the effects from travel, whether they go by plane or by train or by boat. And so it creates an overall turmoil. But what creates right now more is how actually China also will deal with their, as you know, they have a zero vision for Corona. And they close down and open up. And that, of course, affects the deliveries from China. But in general, we are, as we have been on the other quarters, we have been very much on our go to source and find products and take them into our warehouse and use our model for that. disrupts in general.

But it's the same level as we have had before. Okay. Can I just follow up with one final? It's on transportation logistics costs. If that is impacting your model in any way or if the distributors or OEM side is taking that

I think you could say that, yes, it impacts because prices are very high. We can see it on our own private label. We have, let's say, our way of operating that is, of course, to add that to the price of the customers. But in the times like this, it's sometimes hard to raise your prices fast enough. So there is an inherited, you know, maybe small loss of margin from a time perspective as how fast can you cover up for the increased cost, primarily on transport line. But no big impact coming from transportation on our own margin, rather on price to customer. Okay, got it.

Thank you very much.

Thank you.

Thank you. And we have one further person in the queue. That's Erik Erlander of Handelsbanken. Please go ahead. Your line is open.

Oh, yeah.

Thank you. Good morning. I mean, it's pretty good now. You've been over 10% organic growth for three quarters in a row. So obviously the demand for your products and services is out there. But now we have the corona situation in China. We have the semiconductors, you know, might be issue or have an issue with the Ukraine-Russia war and, you know, the freight or shipment issues that you talked about as well. I mean, how should you look at this? Can you actually continue this organic growth role that you actually are on and have been on for like six quarters or something? I mean, volume-wise, I guess it would be difficult. But on the other hand, if there's great demand, it should be compensated by prices on the same product. Or how should you look at the organic growth potential in the coming quarters?

I think, I mean, first, there is, as we said, There is a change in customer behavior that sort of is behind this. And there is also a need for upgrading in terms of systems when it comes to security and mobility, for example. So that we see right now is continuing. And then over to the interesting question regarding pricing and the overall inflation. Of course, as you know, our product is quite... The pricing is sort of set in the market in a way, but of course we compensate where we can increase prices wherever we can, at all times, using what we have talked about before, our dynamic pricing model. But in the short term, as you almost hinted at, it's of course affected by the share, the mix between the segments, how much LCP roll-up we have versus how much SMB roll-up we have. But we still believe there is a demand. But for us, it's more going forward. I think it's more the balancing between the margin and the growth here that will be even more delicate for us to drive, to continue to find the growth, which we can do, but also securing that we do it with the right margin. I also think that, I mean, we haven't changed our view that 8% organic growth over a cycle is the one we are chasing. We had some difficult quarters before the pandemic, and now we've done very good in the last couple of quarters. I think it shows that our 8% on average is not such a bad number, and of course it will not stay at double digits forever. Okay. So it's a strong period now, and it will, I think, naturally go a bit up and down in the quarter. But we stick to the 8% growth and 5% to 6% of the beta market.

Yeah, because the thing here is that I was just wondering that, I mean, this is my very amateurish conclusion, but when... A lot of people want the product and the product is not available. The prices on the product should go up. And why I say this is because, I mean, electronics industry has been on the price decline for a long period of time. But now, since there are more things than ever need to be done within this industry, the people realize that, okay, it's not... as easy as it was before to get the products due to the corona situation, due to the shipment issues and so on. The same products should go up in prices. That's my conclusion at least, or what's wrong with that kind of argument?

That's a good conclusion. If you look at the SMB market, where we are kind of setting the price does affect actually our margins in smb positively but on the other on the other side you have the public tenders and there unfortunately supply and demand doesn't affect that much so that there you don't see the same thing so under the live and there was the contracts are set and that has been of course challenging with that there's a long delivery time so the contracts are set with the prices and then we We deliver sort of on those prices that were when the contract was set. And we don't have any negative effect of the cost for the products, but it's still based on the pricing that we set at the time. So it's more of an old pricing now.

Yeah, because somewhat that's really weird to me. I mean, the public sector can buy like 2,000 computers, and you have to buy 2,000 computers from somewhere else in the global market in order to get that kind of volume. But then the customer doesn't pay for it. So it means basically that you have negative margins then on these framework agreements. No, no, no, no.

In most of the contracts, or basically all contracts where we have a price commitment, that price commitment we have a back-to-back agreement with the manufacturer, with the brand. We are not squeezed.

Okay. Nice. Then I also have another question. Related to your friend or your enemy or however you like to say it in Norway, they have been much more severely impacted by this supply chain issues over the past two years than you have been because they sell a lot more servers, for instance, than their clients. What I also saw was that Dustin was one of the providers now for a Swedish framework agreement for sending just servers. How much of your sales is clients versus servers, for instance, and also are you expanding into servers?

To start with, infrastructure, including servers, are a relatively small part of our sales. I mean, clients and associated products to clients are probably five times as big or six times as big, which is, as you rightly say, it's the opposite probably for or not, but a very different split in our friends in Norway. So that is clear. We are, I would say, not increasing that much in that area. We are increasing a little bit because we are adding functionality to our own platform so it's possible to sell this kind of products, but not rapidly increasing. We are increasing, however, on the, let's say, SaaS products of infrastructure because they fit our sales model much better. So we rather sell infrastructure on tap through a SaaS arrangement. rather than selling the server itself, basically. So we have changed. We are using SaaS as a delivery model or cloud as a delivery model rather than selling hardware in that sense. That's about it.

Okay. I like that you call them friends and not enemies, that they're a promising sign for humanity, Johan. Thank you. Yeah, just a last question. Q2 is actually a kind of high-margin quarter generally for Dustin, and now you've been at 4.2 this quarter. Should we expect you that you could go down below 4 in the coming quarters, given that Q3 and Q4 are generally much weaker than Q1 and Q2, or how should you look at that?

Well, I think you're right in seasonality. Q2 is normally a strong quarter, and you could see that last year was probably the highest number we've ever posted, a bit affected by the cost reductions coming from COVID. But I think you should normalize this quarter and then look at the future, which means, yeah, we will come to weaker quarters seasonality-wise, but they will become better from, let's say, all these mixed issues that we talked about. I don't see any reason why we should now, let's say, use this quarter to extrapolate seasonality and then end up with a very low number. I don't see that coming. Okay.

Excellent. Thank you very much, and have a good day.

Thank you. Thank you. Thank you. If there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments.

Very good. Thank you very much, everyone, for listening in. And just reach out if you have any further questions to us, and we will be happy to respond to that. Apart from that, have a great day and stay safe out there. Thank you.