Haypp Group AB (publ)

Welcome to Hype Group Q3 earnings call for 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, CEO Gavin O'Dowd and CFO Peter Deli. Please go ahead.

Good morning, everyone. and welcome to our Q3 2025 conference call. Our CFO, Peter Deli, and I, Gavin O'Dowd, will take you through our results. Starting at slide four, I would like to focus on four key aspects of our operational highlights, beginning first with our nicotine pouch Q3 volume year-on-year growth of 21% on a like-for-like basis. It should be noted that Q3 last year had an exceptionally high traffic base in the US, which I will provide more details on in the next slide. Secondly, like-for-like sales grew 15% for the period, impacted by accelerated decline in snooze sales during the period. Third, gross margin continues to increase to a record high of 18.8%, reflecting the strength of our operating model. And lastly, we have continued to make strides forward in our infrastructure overall, having successfully migrated our largest site onto our new infrastructure. By year end, we expect to have the two remaining smaller sites completed, bringing the overall project to an end. This new infrastructure is already enabling much more speed and agility and creates an excellent foundation for future growth. Moving to the next slide, slide five, and focusing on the US performance. Our like-for-like sales volume in the US grew 40% year on year, despite the high comparators from last year, which you can see here in the chart. In addition, we recognized the strong development in our new consumers in recent quarters, which is visible in the second chart. And lastly, in mid-September, we resumed sales of Zinn in the U.S. This comes on the back of a mutually beneficial agreement where the brand will also avail of our media and inside services. We recognize that there are many Zinn loyal consumers who were forced to buy from other retailers over the past year. And we are now placing an emphasis on reactivating those consumers. Moving to slide six and the U.S. outlook. The FDA are piloting a new approval process which aims to process products from four of the leading manufacturers before the end of 2025. While this process doesn't guarantee that each product will be approved, it may signal an acceleration in the range of new products entering the US market. On the back of the ever-improving landscape in the US, Hype Group are preparing to accelerate new consumer inflow. Hype Group initiated a deep market analysis during Q3 with a third party specialist firm. The goal of the analysis is to identify the evolving needs of different offline consumer segments and how to overcome impediments to them shopping online. This work is expected to be completed this year. In conjunction, Hype Group have commissioned a marketing agency with specific expertise relating to our business, with the intent of engaging key consumer segments to accelerate our new consumer inflow. The learnings from our pilots this year, such as same day delivery, out of store advertising, referral and loyalty programs, are feeding into this marketing plan. And we expect it to be operational early in 2026. Moving to slide seven, our regulatory and legal update, and starting with the US. In addition to the point of the prior slide regarding the FDA's pilot program to process a range of SKUs before year-end, we expect the most notable changes to occur around state-level excise taxes on nicotine patches during 2026. As more information becomes available, It should also be noted that there is a referendum underway in Denver, Colorado, on tobacco product flavor ban. Nicotine patches is included in that categorization. Regarding the EU, in addition to the TTE, which we spoke of last quarter, the EU Commission is preparing a submission for the FCTC. These discussions are likely to generate a variety of headlines that over time will likely moderate. And we remain optimistic about the regulatory outlook for Europe, where the most regressive positions are opposed by member states led by Sweden. In the UK, the tobacco and vape bill is currently being discussed in Parliament. We hope the bill will implement nicotine patch product standards, which are in line with Hype Group's policies. Regarding litigation, Hype's legal proceedings in Stockholm are expected to take between three to nine months. And regarding San Francisco, a settlement was reached during October, removing US litigation uncertainty. With that, I will now hand over to Peter for an update on our financial performance.

Thank you, Gavin. Good morning, everyone. Before going to the details, I just would like to quickly summarize what you're going to see. In our view, we concluded a solid quarter. As Gavin already elaborated on, we successfully relaunched Zinn, the market-leading brand on our US storefronts, and we maintained our strong gross margin, allowing us to initiate the necessary investment primarily towards the US market to lay the foundation for the next growth chapter. despite the increased level of investments or adjusted EBIT remain flat versus same period last year at 3.5%. On slide eight, let me begin with our sales development, like for like comparison. Like-for-like comparison became even more complex because we have to adjust our 2025 Q3 reported numbers as well to make the numbers comparable. In 2024 Q3, we had Zin in the US for the full quarter, while in 2025 Q3, we sold this brand only for 19 days. Our reported sales grew by 1%. Excluding FX, the increase was 3%. Like-for-like sales growth was 15%. There is no change in the product composition of growth drivers. The 15% like-for-like growth is mainly driven by nicotine pouches, with snooze decline mainly in Sweden impacting our performance negatively by 5%. This is partly offset by the emerging segment contribution to the growth of 2%. The snooze decline accelerated during the quarter. However, on a going forward basis, we expect it to moderate. On slide 9, going into more details about our like-for-like sales development, you can find the key drivers. The net impact included in the reported sales driven by US ZIN, tobacco discontinuation and closing states was 92 million SEC. As said before, currency created a headwind for us. The impact of the foreign exchange movement remained in line with the first half of the year. The depreciation of the Norwegian crown and the US dollar against the Swedish crown have negatively affected reported sales. Zooming into the operational performance, all reporting segments contributed to the growth on a like-for-like basis. The growth segment, US particularly, remained the biggest driver, accounting for 54% of the operational growth. Core segment represented 29%, while the emerging segment accounted for 17%. Moving to slide 10 and progressing a few lines down in the P&L, you can find the long-term quarterly development of Hype Group's gross margin, both in absolute terms and as a percentage of net sales. Q3's margin level remained in line with the first half of 2025. Compared to last year, not only in terms of the margin rate, but also the key drivers of increase are the same. Year after year, we managed to increase our gross margin driven by consistent volume and top line growth and by the increasing contribution of our media and insights business. The sustainable margin performance is the foundation for the execution of our growth strategy in the U.S. This allows us to make the investments required to set the foundations of the next growth chapter. Important to note that going forward, the return of ZIN is not expected to negatively impact our margin levels. Sustaining a strong media and insights business will remain important, and the continued development of those products are pivotal for us. I would like to reaffirm the foundational principles of our business model. We allocate the value created by your company across our consumers, business partners, and shareholders. Our ongoing priority is to enhance the value we provide to consumers, which in turn requires us to strengthen the value we generate for our business partners. By continuously improving our media and insights offerings, we are able to deliver greater value and convenience to our consumers, while also driving healthier profit margins over the medium term. On slide 11, you can see an overview of our overhead base, which increased to 126 million SEC for the third quarter. This increase is mainly driven by the US local team capabilities build. We also strengthened our media and insights teams and invested into activities to increase online channel and high-proof brand awareness. On slide 12, you can see key figures around our profitability. Adjusted EBIT for the third quarter grew by 0.9%, reaching 33.4 million SEC. The adjusted EBIT margin remained flat at 3.5%. We got the benefit from the increased gross margin. However, this was offset by the increased investments into overheads and marginally into paid marketing. The increase in depreciation similar to previous quarters this year is partly driven by the US automatization, which we installed mid-December last year. We maintained our investment into the emerging segment. This quarter, the investment amounted to 13.1 million SEC and reduced the overall adjusted EBIT of the group by 1.6 percentage points. Adjusted EBIT for the core and gross business was 5.1%, growing 0.7 percentage point versus last year. Moving to slide 13 and zooming in in our core markets. This segment delivered an overall 5% constant currency net sales growth. The quarter started slow, with some acceleration during the second half of the quarter. Behind the sales growth, two completely different dynamics remained. The nicotine pouch segment, which accounted for 57% of the volume of our core markets, maintained its growth and consistently gaining share with Hinor Volume. The snooze segment's volume remained in decline, and this decline was accelerated in Q3 versus the first half of the year. The decline was driven by the reduction of the underlying consumer demand, but also important to note that Q3 is the last quarter where the tax reduction driven price decrease on the 1st of October 2024 drove a negative price mix for the Swedish market in the snooze segment. These two opposite dynamics mean that the share increase of the fast-growing nicotine pouch segment will improve the overall growth rates of the core markets. The changes in the purchasing customer numbers are also showing the different dynamics. While we are continuously building on nicotine pouch consumer base, the decline in Swedish snus consumer offset this. Adjusted EBITDA remains strong for this segment at 10% in Q3. This result is 1.3 percentage points above same period last year. The driver behind the increase is the media and insights revenue growth. On slide 14, you can find our growth market performance. Net sales excluding currency impact on a like-for-like basis is up by 39%. While all markets increased their sales, we are very pleased with the high double-digit growth rates of the US and the nicotine pouch volume development in the UK. IGSTDB moved into the negative territory, driven by increased investment levels mainly to the US. In absolute terms, it amounted to minus 1.4 million SEC, and the adjusted EBITDA rate was minus 0.6%. While the profitability is down versus the same period last year, important to note that gross margin remained stable for the segment. However, the overhead increase, mainly driven by the US, negatively impacted the business unit. On slide 15, for emerging segment, The sequential sales growth continued and we are particularly pleased with the Swedish and German market performance. Unfortunately, operating in the UK vape market remained challenging due to the absence of regulatory enforcement across the entire spectrum of market participants. Hype Group was and always will be committed to comply with regulation. However, this can create a significant competitive disadvantage in case other retailers are not doing so. On markets and segments, where we are market leaders, we can compensate with our weight, but in the UK weight market as a challenger, the unleveled playing field prohibits us from achieving our ambitions. As you can see on the bottom chart, while Sweden and Germany net sales maintain its growing trend, this was not the case in UK, despite the heavy investments we made both into our consumer offer and also into our internal capabilities. These factors led us to decide to discontinue our vape and heat node burn sales in the UK during Q4. On page 16, I would like to highlight three of our selected KPIs. The full list of KPIs are available in the appendix of this presentation. Starting with the inventory, it increased versus Q2, driven by the ZIN inventory build in US, with slight reduction in other inventories in other locations. The inventory increase didn't translate it fully into the increase in our working capital, driven by improvements in other components. Net debt to adjusted EBITDA ratio remained at 0.4 times. With this, I would like to hand back to Gavin. Thank you very much, Peter.

Moving on to our outlook slide, slide 18. In our view, the long-term future for risk-producing nicotine products, the online channel and Hype Group, with its many strengths, remains very encouraging. Conditions within the US continue to evolve in a positive direction for Hype, and Hype Group's operating model continues to generate increasing value for consumers and suppliers, while also providing margin expansion opportunities over the medium term. The expected increase in regulatory requirements are beginning to manifest, which further differentiates us, given our sustained focus on investment in long-term compliance. And finally, on slide 19, I would like to touch upon our medium-term guidance from the Capital Markets Day in April of this year, which runs out to 2028. We envision revenue growth rates of 18% to 25% cargo over the period, with the US market being a material contributor. This reflects the lower expected growth rates for 2025 due to the comparatively narrower consumer base in the US. We also guide towards 5.5% EBIT at the end of the period, plus or minus 150 basis points. While we have been materially increasing our EBIT over the past two years, we intend to reinvest into RDUS to accelerate our market share growth over this period. I would kindly direct your attention to our CMD material, which is available on our group site, and this provides more detail behind these targets. Lastly, the company does not intend to issue a dividend over this period, instead reinvesting surplus cash flows into the company's future expansion. Before I open up for questions, I would like to take the opportunity to thank my colleagues for their dedication and hard work in delivering these strong results. With that, I will hand over to the operator for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Johan Fred from SEB. Please go ahead.

Yeah, good morning, guys. Thanks for taking my questions. A couple of ones from my side. First one on SYN. Now that SYN is back in the US assortment, could you share any early indicators on reactivation of dormant US customers? I saw that active customers declined by 25% year-on-year in Q3 in growth markets.

but what did you observe observed from from mid-september once once sin returns in terms of traffic conversion etc good morning joan yes absolutely and if i take this question perhaps in chronological order so if i take a look back first of all at 2024 there was an exceptional number of customers even relative to the volume because we were rationing the volume of products and particularly of Zin that any consumer could buy over a 30 day period during Q2 and particularly Q3 of 2024. Then moving along to this year. So yes, we note that there was a substantial number of consumers which came in particularly during 2024 that then of course disappeared in the latter part of the quarter when we no longer had the product. And I guess there are two dynamics to those. Some of those were ones who were forced to online because they couldn't get the product anywhere else. And some of those were ones who chose to come online and quite enjoyed the experience. So there's quite a substantial number of consumers there along the way. We have been working on reaching out to those consumers via different channels over the the window from the SIN came back and we've been quite happy with the early successes we've made on that. However, we realize this is a substantial number of consumers and we need to keep leaning into that to capture as many of those and reactivate as many of those as possible over the remainder of Q4.

Cool, got it. And maybe if I can just dig in, dig a bit deeper into that topic. And I wonder if you could walk us through your strategy here into rebuilding awareness in the US. Is this primarily a CRM driven or will we see a step up in paid acquisitions? And if so, what channels are you leading on? And any sort of early read from what you have from the end of September would be much appreciated.

Yeah, so it starts off with the lowest hanging fruit here is very much via CRM as regards to the ability to reach out to them initially via email. We're now testing ways of being able to follow up that via other aspects as well, such as calling some of the consumers to let them know that we're back on this. We'll also be doing some... postal distribution to send out physical messages to these consumers as well as it's going through. What we can see is that, just to be clear on this one, we're dealing with over 100,000 zine consumers which came to us in the first nine months of the 2024 with a particular lean towards perhaps the periods between late March and late September. So this is a sizeable base of consumers within the US. We see that we've gotten a good activation flow for perhaps the first 12 to 14,000 of those coming back in already. But I think, like I said, there's still a sizeable piece out there that we need to see how many of them we can reactivate. We're not naive enough to assume we can reactivate them all, but we are going to continue to expand the channels and the communication to them to get more and more of them in. These are extremely valuable consumers.

Got it. Thank you so much for that additional cover. And the final one here before I jump back in the queue. The gross margin stepped up meaningfully in the quarter, but the adjusted EBIT margin did not expand at the same extent, which is reasonable given your investment in the US. But how should we think about the sort of operational gearing going into Q4 and 2026 now that it's fair to assume that volumes in the US will pick up significantly?

Yes, I think the way we're reviewing this one is, you know, we set out a very clear destination. One was a destination, but perhaps milestone for who would be in 2028. But we do expect that we will continue to invest in the US so long as we can see strong returns on that investment that we're putting in. So we're not so much viewing this one from saying this is exactly what our gross margin and EBIT and free cash flow would be for each quarter as we look out to 26 and early 27. But more a case of so long as we can see strong return on the capital which we're investing, we believe that the strong return coming on the capital that we're investing with some of the aspects, it's difficult to quantify exactly in advance. we will continue to invest that money so i think it's probably more that principle we should be you should be viewing this one or you should be considering this one through your mind with us rather than a set target for what it would be for each quarter got it got it make makes perfect sense um thank you those were all my questions now i will get back in the queue perfect thank you

The next question comes from Nicholas Ekman from DNB Carnegie. Please go ahead.

Thank you. Yes, I have a couple of follow-up questions from Johan here. Is there any way you can quantify the current trading in the U.S. market? And obviously there are two effects here. Firstly, that you come from a period of exceptionally tough comparisons and then the absence of VIN. And now this completely reverses as we go into Q4. So I'm just trying to get my hands on here. What kind of growth rates are you expecting? What kind of growth rates are you seeing now at the start of Q4, I guess, both for the US market and what kind of impact that has on the group? If there's any color here you could give us, it would be appreciated.

Yeah, exactly. I think you're spot on. So I think there's been many factors coming into it, as you say. Firstly, looking backwards, you were dealing with a scenario of not just the shortage of zinc, but we had also discontinued tobacco, which is not completely ran out when it comes to like for like, but it's a small enough part and it's been wound down quite heavily already by October of 24. And then there was the closed states. So then you have that on one hand, all of the closed states were already been reflected into, were already completed by the, by the end of September of 24 as well. So then if you bring all of that together and you look at the initial growth coming through, I think what we can see here is that for example, the October numbers are coming in with close to perhaps 60% volume growth in the US. Does that give you some form of guidance on where we are here?

Yeah, absolutely. And what kind of impact does that have on the group? What is U.S. roughly? U.S.

is making up roughly 20% of the group sales at this point in time, growing substantially faster. So I guess you can reverse engineer back from that as regards to what impact it could have on growth rates at a group level.

Very good. Second question on the same topic and you reiterated here your guidance or your targets from the CMD in April with growth rates of 18 to 25% and that's a CAGR and kind of adjusting them for the weakness that we've seen in the last four quarters with growth rates of around 5%. So I guess my question here is To me, that suggests that you're expecting growth rates in the next four quarters to be well above that 18% to 25% range, more in the range of 30% plus, given the easy comparison base. Am I looking at this correctly?

Yeah, we do expect the growth rates to pick up during 26. Yeah.

Yeah. Okay.

Good.

Fair enough.

Yeah, I'm sorry. Here and now, Nicholas, when I say growth rates, I'm talking about reported growth rates. As opposed to like for like, so like, like, well, of course, the like for like will be lighter. And because I'm going to be making the adjustment for having the extra assortment that I didn't have before.

And when you can, yeah, will you continue to report like for like sales, because I think that would be very helpful, particularly over the next four quarters, when the comparisons are very easy.

We always endeavor to be helpful, Niklas.

Very good, very good. Another question here is on the margin outlook. Again, coming back to the CMD guidance here of the margins of 4% to 7%. And the reason I'm asking is I know that there's some sell-side expectations that are significantly above that range with margins, I think, coming close to 10%. I know that the quality of the consensus might not be that great, so maybe I'm missing something here, but it seems like there are expectations for a very strong margin expansion in 26 and 27. And based on what we've seen on the gross margin, that seems to make sense. But at the same time, it's not in line with what you are guiding for. So I'm Again, you're just trying to see if I'm missing something here. If there are any reasons why margins should be closer to 10% two, three years from now or Yeah, just to review there.

I think the guidance we gave for three years from now, which is 2028, is pretty unequivocal. We said it would be at circa 5.5%, and given what growth opportunities are manifesting at the time, it would be up to 150 basis points above or below. If we see continued very strong growth opportunities at that point in time, we will continue to invest, and hence the 150 basis points below within it. If we see growth opportunities starting to... level out a little, well then we will perhaps lean a little bit more in towards the 150 basis points above. But everybody's entitled to their own opinions on where this will come in, but I don't know if we can be an awful lot clearer regarding what our expectation is.

yeah um just maybe um i mean as of now the your growth markets have a much lower profitability than your core markets and obviously you are now in a ramp up phase where you have made a lot of a lot of recruitments and you have costs and volumes have only just started to come back so structurally is there any clear difference in profitability if you compare

core markets to growth markets and i'm thinking about the u.s market in particular or do you see that over time that the u.s market could have the same level of profitability as you have in the nordics i think the growth markets in general and as you say the us market in particular structure is designed for having higher levels of profitability over the longer term and i think the biggest feature for that is driven by the amount of oxygen that's provided to us by traditional offline retailers. Sweden is perhaps the most competitive market in the world when it comes to the retail environment for risk-reduced nicotine products, where you have extremely low retail margins, which is the oxygen that we have for traditional retailers, which is the oxygen that we have to play with. There's a lot of reasons for that. A lot of it goes back to when the industry had a completely different construct within Sweden back as far as the 90s and that it has just been a legacy from there. But if you look at it, you're dealing with roughly 20% retail margins across the vast majority of the market in Sweden versus you're dealing with 40 to 50% retail margins across the likes of the US and the UK. So as I see it, the basis for longer term profitability is much greater in our growth markets than it is in our core markets. However, when it comes to us giving guidance for 2028, like I said earlier, 2028 I view very much as a milestone rather than a destination. So we believe that there will still be huge growth opportunities, even when we are dealing with that sort of market share that we laid out in the CMD for both the US and the UK. So we're not necessarily stating that we would be in a steady state margin at that stage, we feel as though if there's still strong growth opportunities and we believe there will be within those markets we will continue to invest but back i think to your initial question or at least my well i think your initial question was here nicholas yes i believe there's a basis for healthier margins in the growth markets than the core markets over the long term very clear thank you um and just the final question on this topic of the us uk vaping and the heat not burn

How big a share was that of the, I think it was 40 million in revenue here in Q3. How significant share did that make up of the emerging segment?

Yeah, so there's around about just under a third of the emerging segment between a third and a quarter. And so it accounts for just over one percentage point of our total revenue. So we consider it to be not particularly material in the scheme of things. And maybe just create a little bit more context in that one here. There's been some very clear regulation introduced into the UK at various stages over the last couple of years, including earlier this year. But it is an environment whereby many of the other retailers, both online and offline, are not complying with this. And we're not prepared to go in and compete in that environment because it is illegal. And that's not a space that we do within it. I think it's also worth bearing in mind on this one, Nicholas, that the fastest growing category by far in the UK is nicotine pouches. And this gives us the opportunity to double down on already very strong performance within the nicotine pouches where we are the market leader and we are a very strong share of the online channel. So this gives us the opportunity to lean into that. And should the environment ever change when it comes to vape in the UK, and if we're sitting here in a few years' time and the regulation has been enforced and it's quite clear what the playing field is, we could very easily reverse the decision that we've made now. But at this point in time, we can't operate in an environment where we're one of the only ones complying with the regulation.

And do you see any risk that the discontinuation of vaping and the heat not burn, that that could negatively impact your momentum in nicotine pouches? I mean, is there a big overlap in the number of users and maybe the risk that you will lose some of these users because you don't have the full product portfolio?

You know, I think vaping was quite useful to us a few years ago when nicotine pouches was in its infancy. You have to bear in mind, you know, nicotine pouches today is probably available in about four times as many stores in the UK as it is in Sweden. So the availability of it is pretty significant at this point in time. If you go back two to three years ago when nicotine pouches was in its infancy, it was a great opportunity for us to be able to explain the category to the vaping consumer when they came in to buy vapes from us. What we generally find is that dual users of both categories tend to only be dual users for about a quarter to a quarter and a half as it runs through, at which point in time they tend to have switched across entirely towards nicotine patches. So there's an insignificant share of our sales is made up of consumers who put both categories into a single basket. So we don't envisage that there's going to be any spillover effect on that one.

That's very clear. Thanks so much for taking all my questions.

Thank you, Nicholas.

Thank you.

The next question comes from Marayo Adesina from Barclays. Please go ahead. Hi, guys.

Thanks for taking my question just too quickly from me. On the FDA pilot, I was just wondering if Hype has any insight into the timings of that, if things are going according to plan, and if the reviews are still expected to be completed on the nicotine pouches for this year, or is that something that's only privy to the manufacturers? And then secondly, on the snus consumer demand decline in Sweden, Are you seeing a direct switch from sneeze users to nicotine pouches? Is there any way of tracking this or is that not really the right way to think about the decline? Yeah, those are my two questions.

Perfect. Let me start with the first one. So I think the position that the FDA has taken is quite clear and quite public with their commitment to having the pilot process completed by the end of 2025. I'm not sure actually that anybody has sufficient clarity on what's going on behind within the FDA as it goes to where they are in the process, because I am cognizant that we're now on the 5th of November, which means that best case scenario, I think they have probably about six to seven weeks to get this completed. But you can very much get a sense from all stakeholders involved of how quickly people are preparing for a new environment here. I think what we're going to have to do is wait and see whether the FDA are going to be able to actually comply with the timeline that they've laid out for themselves here. And I think I'm a bit dubious of anybody which is able to say that they have a clear view on this with certainty. I think there's a lot of unknowns in this, and we will know a lot more over the next couple of months. So unfortunately, no, I don't have a direct inroad to be able to give an answer on that one. Back to your second one regarding snus decline. Yeah, so I think there's a couple of factors here which are occurring within the mix of oral nicotine usage in Scandinavia, as in both the combination of snus and nicotine patches. One factor is that there are effectively no new entrants. I reckon there is somewhere around about 70,000 to 80,000 new entrants coming into the oral category in any given year in Sweden at this point in time. And I would say very few of those are coming into the traditional snooze category and have been over the last three to four years. They're generally leapfrogging that and going straight to the beginning patches. At the other end of the journey, A lot of the older snooze, a lot of the older users of oral products within Scandinavia are traditional snooze users. So when they're quitting their snooze usage, often due to end of life or any other aspect like that, it tends to be disproportionately leaning towards those consumers rather than nicotine patch consumers on it. And then in between is the third factor which you were referring to, which is the switching pattern. And the switching pattern was perhaps a little bit more pronounced between 2019 and 2023, early 2024. There is still a degree of it, but every consumer who wants to switch from snus to nicotine pouches has been given a serious opportunity to do so over the last five, six years. So there's not very many left who are actually willing to make the change. So I would say it's probably more the first two factors which is driving that of no new entrance into traditional snooze and hence the natural decline of users within traditional snooze anyway, which was probably declining by about 40,000 to 50,000 users a year simply by people exiting the category as they get older in life.

Okay, super clear. Thank you.

Perfect. Thank you very much.

The next question comes from Johan Fred from SEB. Please go ahead.

Yes, hi again. A quick follow-up from my side on SYN in the US. To what extent is SYN demand providing incremental versus substitution from non-SYN pouches in the US? My question is really, have you seen any cannibalization of sales on other brands since supply returned in September? Thank you.

In a short answer, yes, we have. So we've seen Zyn resonate quite well across our loyal consumer base, where some of the consumers stayed with us. Many of the consumers stayed with us but changed brands. So there was a – and then when Zyn came back, it became part of the repertoire again. So you can certainly see a strong degree of that, yes.

Very clear. 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.

Thank you very much for your time today. It's greatly appreciated. And I look forward to speaking to you during our Q4 release in early February. Thank you. Thank you, everyone. Bye.