MIPS AB (publ)

Good morning, everyone. My name is Max Strambitz. I am the CEO of MIPS. And with me today, I also have our CFO, Karin Rosenthal. We will take you through the Q3 interim report presentation of 2023. And if we start with the key highlights of the quarter, we did see a soft quarter with a decline in sales of 32%. If we adjust for currency effect, organic growth was down 33% and the soft performance that we have seen is mainly from the bi-category, sub-category and moto as explained also in the report. We have seen a good start of the fourth quarter in terms of orders received and the indication from our customer in the industry is also that the markets will recover in 2024. There is still some short term uncertainty in the retail environment. I think you all have seen the announcement from Cigna Sports, which is the biggest retailer in the world, which is now in an insolvency process and so on, and quite a lot of disruption in the whole retail environment. But what we have in our control looks good. And like I said, we are at least off to a good start in Q4. Then we are also very happy with the announcement we did of the two strong partnerships in safety. Of course, the first one being the global brand MSA, which is one of the biggest players in the PPE industry. And then, of course, lift safety, really important building blocks for the success of the US market. We also see good improvement in penetration and awareness in the end market to have just received recent surveys. Despite the very challenging market environment, we are gaining shares and gaining penetration in all our key channels. And we remain confident in delivering on our long-term strategy and our financial targets. In sport, We are still impacted by inventory adjustments. We did see a challenging quarter again in sport with a decrease of net sales of 29%, mainly explained by the soft sales development that we saw in the beginning of the quarter. We did see an improvement through the quarter and we actually see positive momentum in September. There has been very erratic sales development in the US end market, which has created some uncertainty on short-term outlook in bike. Customers still plan for a major recovery in 2024. And despite the soft sales performance, we see positive development, like I said, on both global awareness, so more people are aware about the MIPS brand and what we do, And we also see that the penetration, despite, of course, soft sales numbers, we are gaining shares on all the key channels. And we also see a very positive outlook for bike going forward. In Moto, we have been disappointed by the performance in Moto. We see slower markets. We saw soft development in the quarter with a decrease of 68%. We see a much more cautious retail environment, especially in our important US market. And we expect that the coming one to two quarters, we see soft performance in Moto. We have launched several initiatives to improve sell-through and awareness, and of course, also to drive higher volume in the category. We haven't changed our view on the long-term outlook, still strong interest for MIPS in the category. supported by new partnerships and models being launched during the coming quarters. If we then turn to the next page and we go to the slide with safety, we continue to see strong development in line with ambitious plans we have. We continue to see good interest both in the US and the European market. We did launch the two new partnerships in connection with the two big fairs of the year. This week there is both the NSC in New Orleans in the US market and also the biggest industrial fair of the year, or actually it's only every second year, A plus A in Düsseldorf, where we of course participated in both of them. We always have a requirement that if a brand shows a MIPS product, we always need to do an announcement first. And of course, both of these two brands showed the MIPS technology. And of course, therefore, we did the announcement. So we will do launches with these brand coming quarters. Really exciting to have MSA on board and with them on board. Our total platform for within the safety category is somewhere 30 to 40 percent of the addressable volume. So really a strong platform for growth and really looking forward to the long term delivery in the safety category. If we then go into the next slide and we look at an investment, we did an exciting investment in sensor technology. It's all aligned with our strategy of doing more in the helmet. It was the first strategic investment towards exploring the opportunity in the sensor technology market. We have evaluated a lot of different technologies and we consider the QUINT technology to be the leading in the sensor technology market. The technology will enable us to gather a lot more information regarding incidents but also about consumer behavior, all very important steps in delivering the MIPS vision, ambition and strategy. And also, of course, a great way of becoming a lot more consumer centric. If we then look at the category development, we did see soft performance in sports down 29 percent in the quarter. Most of there is several activities to boost the performance again and start delivering growth. And in safety, we are making great progress and, of course, happy with the performance there. With that, I hand over to Karin, our CFO.

Good morning. I'm Karin Rosenthal, CFO of MIPS, and I will take you through the financial part of the presentation. We saw soft development in the third quarter with a decrease in net sales of 32% and adjusting for FX due to a strong dollar versus SEK. sales decreased 33% organically. Gross profit decreased with 28% and we saw a gross margin of 73.1% versus 69% last year. The increase was due to product and volume mix. In OPEX, we continue to invest in our strategic priorities. EBIT was down 60% to 15 million and an EBIT margin of 19.5%. and operating cash flow of 12 million in the quarter. If we look at our financial KPIs, minus 33% organic growth, 19% EBIT margin, and 12 million in operating cash flow. If we then turn to next page and look at the development for the first nine months, net sales decreased with 42% and adjusting for FX, sales decreased 44% organically. Gross profit decreased 42% and we had a gross margin of 71.1% versus 72% last year. The decrease was due to higher share of fixed COGS as an effect of decreased net sales. In OPEX, we continue to invest in our strategic priorities, marketing and R&D. EBIT was down 74% to 53 million and an EBIT margin of 20%. We had a negative operating cash flow of 21 million due to tax payments relating to the 2021 profit. So looking at our financial KPIs, minus 44% organic growth, an EBIT margin of 20% and minus 21% million in operating cash flow. If we then turn to next page, we are now on page 10, balance sheet and cash flow. We have a strong cash position with cash and cash equivalents of 371 million. And just to remind you that MIPS don't have any loans. Operating cash flow in the quarter amounted to 12 million. We made an investment in Quinn of 80 million in the quarter. We paid out dividend of 144 million in May. We had a new share issue due to exercising of warrants amounting to 94 million during the second and third quarter. And we had an equity ratio of 89%. Over to you, Max.

So if we then summarize the quarter, it was a soft quarter driven by weak markets, still influenced by inventory reduction and a very soft consumer sentiment. We do see good development in safety with strong partnership announced in October. We see strong trends in awareness and market share development despite the challenging market conditions that we see. And of course, since we believe that this is only short term, we continue to invest behind our strategic priorities to make sure that we deliver on our long term strategic plan. And we remain confident to deliver on our long term financial targets. With that, the official presentation is ending. And of course, we open up for questions.

The next question comes from Oskar Wikström from Burenberg. Please go ahead.

Hi, good morning and thanks for taking my question. To start off, I was just wondering, you know, in the end of the CEO letter, you mentioned this recovery taking place gradually and a bit varied depending on markets and the brands and so forth. Would you be able to give us a bit more kind of clarity what you mean by that, what markets you're seeing moving quicker than others, et cetera, just to get a better sense of what's going on there?

Yeah, I think, I mean, as we also communicated before, the biggest impact was on the US market, despite that they actually have had a little bit stronger markets, but they also hold a lot more inventory. So that recovery takes a little bit longer. European markets have less inventory, but also saw a much weaker consumer earlier in the recession, if we can call it a recession. So Europe is a little bit earlier out of the starting gate. When it comes to retailers, we actually see that they have normalized across most of the geographies or actually all the geographies. It's more relating to the brands and depending where they are. US a little bit more behind, but of course also have a stronger consumer market.

Yeah, so it's fair to assume then that the order intake and this kind of flood pickup activity you're seeing is coming more from Europe then?

Yeah, it will come more from Europe.

Okay, okay. And the other thing I was thinking is, you know, you're mentioning, you know, like post, pre and post pandemic. First of all, I noticed you said that most major markets are above where they were uh before the pandemic just curious which markets aren't um and then also on on the mobile penetration you know of course you've added more models in this period but maybe could you give us a sense of the volumes within those models i'm thinking you know have you added sort of smaller volume type brands as opposed to bigger brands or how should we view kind of the volume you know increase over this period um and not just the models, let's say.

Yeah, thank you. So I think, I mean, probably all of you also follow Shimano. Shimano is 27% higher than they were in 2019. Of course, they also have a certain impact of price in their assessment, but probably somewhere around 20% is their sales compared to pre-COVID. And I think that's probably a fair assumption on most markets that they are somewhere around 20% bigger. So, of course, we haven't heard any market that actually have been shrinking during the COVID situation. We know that the Chinese market, for instance, was a little bit smaller because no one were actually allowed to be out and so on. And that's also why you see a little bit of a boom of the Chinese market. But we actually haven't heard any markets that have been shrinking as such. And when we then talk about volumes and models, if we look at the amount of models that we have versus the number of 2019, we are up 102%. If we look at the number of brands we had in 2019 versus today, we are up 148%. So, of course, we have a bigger portfolio. But you also need to be a little bit careful because a little bit what you also alluded to, some of the brands, since we had most of the bigger brands already, is smaller brands. And of course, they will not contribute to the bigger volume. From when we look at the market and our addressable market, we have said before that we also estimate that it's somewhere around 20% bigger. But our assumption comes from two different things. The first one is the general market trend and the growth of the addressable market. We assumed during COVID that it has been growing with an average of 3-3.5%. Of course, it's not that linear, but on average around 3-3.5% per year. That makes the market around 10% bigger during COVID. And then, of course, since we also have an opportunity to reach down in price points, we can now go from 40 US dollar to 30 US dollar in terms of addressable market. That has increased our assumption with another 10%. So our 10% is probably lower than most brands and partners in the industry. And I'm really, really happy if I'm surprised that the number is too low, but 10% growth of a general market is quite big. So hopefully that answers your question.

Yeah, that's very helpful. Thanks. And then just maybe finally on safety, quite interesting. So if I understood it correctly now, you're basically addressing 30 to 40% of the addressable market. So that would equate to sort of 33 to 44 million helmet models potentially with the current customer base. Is that correct?

Yeah, the customer base that we have represent around 30 to 40% of the total market. So by having them as a customer, we have a potential to reach 30 to 40% of the market. It doesn't mean that we have in all their models representing 30 to 40% of the market, if that makes sense.

Yeah, no, that's fair. And then just, I know previously mentioned sort of safety reaching sort of 20 to 30 million this year with 9 million year to date, do you still view that as a possibility?

Yeah, I think, I mean, what we have said is two things, that we will double our sales every six to 12 months. And you see also on the numbers that we are tracking well ahead of that. 20 million to 30 million will be a little bit of a stretch, but at least we're up for a good fight. Okay, thanks. That's all from me.

Thank you.

If you wish to ask a question, please dial star 5 on your telephone keypad. to enter the queue. If you wish to withdraw your question please dial star 5 again on your telephone keypad. The next question comes from Emanuel Jansen from Danske Bank. Please go ahead.

Good morning Max and Karin. I hope you can hear me. I think most of my questions have already been answered here just before uh calling in but uh i got one question on on the opex base just looking on the absolute figures in this quarter compared to q2 there seems to be a bit lower especially maybe on the marketing side can maybe explain why and what should we expect going forward from here yes

So if you compare to last year, we had the trade shows in the third quarter, but this year we have them in Q2 and Q4 instead. So that's the biggest difference.

Okay, perfect. That's clear. And also coming back to the bike markets. Max, you mentioned Shimano previously, and they, a few days ago, reported their Q3 numbers. And I think you have explained it before, and Shimano produce a lot of components, and they are much earlier into the cycle, maybe selling into the 2024-2025 bike season. But looking at their statement, they state that... retailers inventory levels still still seems to be quite high both in both in europe and the us can can you please describe why they they do see this yes so i think the shimano example is good um the thing is with shimano is that they are not

earlier into the process, they're actually later into the process. If you actually look at their performance in 2022, they still had good growth and it will take them a little bit longer probably. I don't have the full view on their numbers, but that's just my assumption because of course they deliver components and so on. And if you look at inventory levels in general, especially in bicycle versus bicycle helmets, bicycle is still higher. And of course, that's what they are seeing. So bicycle helmets have been worked through a lot quicker than the normal bikes and e-bikes and so on. So that's why they made that comment. I think if you look at inventory levels around the world when it comes to bicycle helmets, like I also said and mentioned in the report, at the retailer side, it's more or less normalized across all the geographies. With some brands, you still carry some stock, especially on the lower price point. But of course, we also see that that is being normalized over time. So no, we don't share the view. And I don't think anyone outside bike sees the same. You have a little bit the effect in clothes and also on shoes where they carry more stock. But other when it comes to apparel and accessories, it is less than you normally see in bikes.

Okay, perfect. That's very clear. And just to make sure, when you say that the market, overall market believes that they see a strong or at least good underlying demand for 2024, you mean for sales into 2024 or sales into 2025 for your part?

Yeah, so there is two different things and I think it's always good to divide it. So first of all, when it comes to the market because of course we need to start with a bigger picture the market is expected to return back to growth so that's what will be sold in the markets within 2024. then of course the main impact from MIPS as a company and and i think that's where our picture is distorted quite a lot and that is when you look at our performance of course it's disguised quite a lot by inventory reduction. So instead of us selling to a brand, they actually take all the products they sell from their inventory levels. And some of our bigger customers are at index 20 or 30 versus the year before. And that's why you see the dramatic drop in sales in this year. So when we look at 2024, Just not having the whole impact of inventory reduction will have quite a big impact on our sales and, of course, also our P&L. So for us, it's a little bit of a double whammy. The markets are down. We could live with that given that we are increasing our penetration, launching more helmets with MIPS and so on. But the whole inventory correction, that has a significant impact on our P&L. And we don't see that to the same extent in 2024. And that will be the big game changer for us in the 2024 numbers.

Perfect. That's very clear. And last question from my side. How hopeful are you that the models that you have implemented, I think it's over 200 new models you have equipped with MIPS, Do you think the majority of these models will be launched into the 2024 season or how should we view it?

We see a very good project momentum. During last year we did 217 new helmet models, so you're very accurate on the number. And of course, the positive momentum continues. We still see very positive customer requests. We are up just in the quarter in terms of project revenues, around 20%, which you almost can translate to 20% more projects. So we haven't seen any difference when it comes to our customers wanting to do more projects. And of course, in motorcycle and in safety, those are versus basically no comparator. So we see a big interest when it comes to new helmets and so on. Normally the lead time is around 18 to 24 months from when we start the project until we actually see a revenue. So most of those 200 helmets that you have seen will be launched and produced in Q4 and during 2024.

Perfect, that's very clear Max. Thank you very much for taking my questions. Thank you.

The next question comes from Daniel Thorsen from ABG Sundal Collier. Please go ahead.

Yes, thank you very much. I have a question on Quinn here. I see that there are a couple of models out in the market with both MIPS and Quinn. Do you have any indication on how they are selling and what type of price levels are they? Are they in and is the interest good?

Yeah, I think, I mean, when we evaluated technologies, we looked at a lot of different things. Of course, the potential is the main thing we are looking at. And we evaluated a lot of different technology and so on. And Quinn was the leading one. They are at a couple of strong brands at the moment. You can find them in all the sellers in fly racing and so on. And there will be a lot more. models launch with the Queen technology. So they have quite a good momentum on the market and you also see that it attracts quite a lot of interest. I think also what It's not only within helmets because of course they also do products outside helmets for ATVs and other types of products and so on. But in helmets, yes, there is a positive trend, but you will also see other products being launched in other categories. So they have a very positive momentum and doing really, really well on the market. In terms of price level, the technology is a little bit different because They work with a dual accelerometer system, which means that they have a much higher accuracy than the other sensor technology that we have seen on the market. That also comes with a cost. So it is a couple of more times expensive than other sensor technology on the market. So normally you see them at the higher price points and so on. Over time, you can, of course, also assume that they will start reaching down. But when you're building presence on the market, building brand equity, you normally start at the higher price point. And then, of course, you work yourself down.

Okay, interesting. And then I have a question on the cash flow here in the quarter, which was quite weak, obviously driven by the weak result here. But how do you view the credit worthiness of your customers, especially the smaller helmet brands? Do you see any risk of bad debt in the receivables?

Yes, we do. I think we are extremely careful in terms of our exposure and so on. And anyone following us knows that we have a very low history of credit losses and so on. But times are different at the moment. Cash is a lot more expensive and so on. And of course, we are very restrictive on our deliveries if our customers are not paying or cannot pay. they will not get any additional product and so on. And of course, that does also hamper sales a little bit. But I will not sell something where I see the risk of not getting paid. So there we are a bit restrictive. We have like weekly meetings where we are following up anyone that is slipping when it comes to payment. So far, what we have seen during this whole process is that we have two partners. That goes into like an insolvency process and so on. Total exposure that we have seen is somewhere around 200,000 US dollar. And of course, we have also accruals relating to that. So no big exposure, but you need to be extremely careful these days. We are on a very strict financial disciplines when it comes to who we sell to, how much credit we give them and so on. It's not difficult to sell if you don't plan to getting paid. And for us, it's really, really important to have that discipline. So, so far, no big exposure. We are also, of course, following all the bigger customers that we have, but most of them belong to bigger industry with quite healthy balance sheet and so on. But of course, we are very careful on that aspect.

Okay, that makes sense. Let's follow that then. And then finally, on the inventory levels for bike retailers here, I mean, is there a risk that they will carry lower inventory than before going into 2024, given that we have a weaker consumer, we have higher interest rates, which means that we still have some quarters left with net inventory reductions, if you say that they are normalized right now, is that a risk?

They are already carrying less inventory than normal. If you talk to most of the retailers, not a lot of them have actually bought the innovations of this year. And some of them have even been restricted at innovations of last year. So what you also see a big consumer trend is that if the consumer really wants to have the latest and greatest product, they actually go to a lot of the brands. own e-tail channel to get the new innovations and so on. So the inventory reduction in terms of inventory levels, that has already happened. So I think the last two, three quarters, you really see them adapting their inventory levels to the new normal. They also communicate to all the brands that we expect you to hold full inventory and to be able to deliver with very short lead times because, of course, they are as sensitive when it comes to cash as everyone else. So that inventory work done has already happened.

Okay, I see. That makes sense. Thank you very much.

The next question comes from Carrie Rinter from Handelsbanken. Please go ahead.

Thank you for taking my question. I wanted to ask specifically about the comments regarding the start of the fourth quarter where you say that the order intake has improved from last year. So how should we think about this in terms of sales? Because one could argue without knowing your order intake from last year is that you probably are meeting very easy comparables in terms of order intake. So I guess the question is that can we translate this into an expectation that your sales will start to increase as well in the fourth quarter?

Yeah. So, I mean, if we talk about growth that we also indicate, of course, if there is a growth in orders that normally also results in a growth in sales. And that's what we have seen so far of the quarter. So higher number versus last year, and you're right, there is quite soft comparators in prior year. I think, I mean, what we see now, we stop and saying at growth, that's what we have seen so far. How much bigger and so on, we will not give any forward-looking statements. There is a lot of uncertainty out on the market, and that's why we are a little bit more careful on the statement. You have probably seen The announcement from Cigna Sports, which is the biggest e-tail in the world. They have around 70 different e-tail sites which filed for insolvency. And there is a lot of disruption on the market. So what we have seen so far and the communication from our brands is positive. But of course, we don't have everything under our own control. And that's why we're also a little bit more careful on that. assumption, but at least we are off to a good start. And we also ended the quarter last quarter in positive territory.

All right, thank you. That's helpful. Then safety and as we have seen, especially Sweden and in some other Nordic countries that contract construction industry is taking a beating on the on the higher interest rate. So what are your safety customers saying about their customers? especially the construction industry, both in Europe and in the US?

I think if you divide the markets in three, I would say, first of all, if you talk to the US markets, still a lot of very big infrastructure, programs and so on and the construction industry is quite strong so there we haven't seen any impact at all from the market on the contrary we see two trends first of all that there is a lot of PPE being bought and we see that the whole PPE market is growing quite fast and what we also see is a very positive trend in terms of buying more advanced and more expensive PPE We have seen quite a big conversion of what we have called before, which is from type one helmet to type two helmets. So type one helmet is normally the simpler type of helmet and type two helmet. There you have a more advanced offering, normally carries a shin strap neck retention system and is testing to different standards. And we have seen a dramatic increase in those type of helmets. So the US market works very much in our favor. Europe in general is softer. Of course, it is a very tough market. We have seen much more impact on the economy, especially from energy prices and interest rates and so on. And then when you look at the Nordic market, of course, the Nordic housing market is a drama. And there we see, of course, very negative sentiment on the market. So far, if we look at the customers that we have in Nordic, they are actually still growing. So it hasn't been translated to our numbers. Nordic doesn't have a huge impact as such, but we don't have great expectations when it comes to the Nordic construction market, I would say at least for the next coming one to two years.

All right. Thank you. Very helpful. And then finally, it's a busy morning, so So you have probably commented on this, but could you repeat your comments regarding snow? How are you trending compared to last year and what are your expectations for this season?

Yeah. So I think in terms of what we know, of course, is pre-orders have been quite strong versus last year. So you see most brands are actually up. There has been some early indications. You saw Ski Store that the season is quite strong. That's mainly related to Sweden. And of course, with the currency effect and so on, maybe people don't want to go abroad to the same extent. The first indication from the US market is that the booking situation is up and that there is very positive numbers. We have, of course, we are facing quite a strong comparator in snow where we grew almost 60%. And if we can end flat against that number for 2023, I will be quite happy. So good progress. But of course, it's also up against quite a tough comparator in prior year.

All right. Thank you. Those were all my questions.

Thank you. The next question comes from Adela Dashian from Jefferies. Please go ahead.

Yes. Good morning. And apologies if this question has already been asked and answered. joining the call previously. How comfortable do you feel with your financial targets given the weakness and the different types of segments that you operate in right now and the performance year-to-date?

I think I mean financial targets I think first of all we have three so of course we have net sales, EBIT and dividend. I think you are probably alluding to the net sales number and so on. And there, of course, if we would use the 2023 performance as our platform and extrapolating that to achieve our growth target, then, of course, it is a very challenging number. So if we think that 2023 reflects the new normal, we do not do that. We see that there is a lot more potential than that. What we have said before and exactly the way that we did last time, also when we updated our financial targets, when we were actually significantly ahead of the target and was being challenged for that. We have said that, first of all, when we conclude this year, like you normally do, we look at all the different categories and assess what is the new normal going to look like. Everyone is, of course, focusing a lot on bike because bike is, of course, a big part of the total MIPS sales. There, of course, we have seen a very challenging market, but we expect it to return back to growth and we still see a major potential there. When it comes to all the activities that we have done in bike, there is actually not a lot of things where we missed versus what we said we were going to do but the market has not been in our favor. If you then look at the other categories, snow, for instance, we are doing much better than we anticipated in our plans. Equestrian is also doing better. Moto, we have a challenge when it comes to street motorcycle, and there we are reassessing our plans. And safety, when it comes to the amount of customers, we are actually ahead of the plan. When we are summarizing the year, we will put all this into one basket and assess what the potential new target and if any changes needs to be done. And then, of course, we will communicate them in due time.

That makes sense. Thank you. And then also on most, though, you say that you expect some short-term pressure. When would you see an inflection point potentially in that segment? Is this too early already next year?

Yeah, so I think, I mean, Moto have taken us a little bit of a surprise. So there is quite a lot of things that are happening in Moto. But normally what you see when you go into a Moto season is, of course, that the season is normally built by a lot of pre-orders. So pre-orders you normally get at all the brands and then all the retailers, they buy order pre-orders to get a little bit of discounts ahead of the season that is also giving all the brands a very good calibration of what they will need for the season if you look at the spring and the autumn by this year everything is basically gone when it comes to pre-orders so no one wants to commit to anything everyone is really really worried about carrying too much inventory and is not putting pre-orders in. So you will see a much more even order pattern in Moto than we have seen before, and more I order when I need it rather than the previous pre-order pattern. So that was taking us a bit of a surprise. And then the other thing that will really change the performance for us is that, of course, We launched a new technology last year, which we call MIPS Integra, which is the first fabric solution that we have in Motto. We have received quite a lot of interest and that, of course, is waiting to be launched on the market. So there you will see a volume pickup and of course, a lot of the new brands that we signed. And then also part of our strategy has also been to launch new e-scooter brands. maybe not from the higher price point but but of course there you get access to a lot of volume and when you add all those activities and the effects of those activities i'm quite confident that moto will go back into growth again within one to two quarters perfect thank you thank you adela

The next question comes from Carl Dagenberg from Carnegie. Please go ahead.

Thank you very much. Obviously, a lot of the questions have already been asked, but I wanted to follow up again on the statements here going into Q4. I heard what you said there, that you don't want to quantify the exact development but uh if you could say anything uh maybe firstly on sort of the monthly comparisons that you're facing here in q4 versus q3 last year because when i look at the revenue development last year that was relatively unchanged q1 q and absolute numbers but i uh recall also from previous years that q4 is usually up sequentially so if i rephrase it is this development that you were talking about, is that mainly a result of monthly comparisons becoming easier or is actually the underlying momentum measured on a sales per brand or what you want to call it, sort of looking better in your view?

Yeah, I mean the underlying momentum and of course coming back to the explanation that inventory reductions are having less than effect, you also see that the orders per brand is increasing. So the main effect is, of course, from brands ordering more. And I think it's also quite important that what is being ordered for Q4 is not something that will hit the market in Q4. What is being produced in Q4 and what we receive as an order is product that will hit the market in Q1 2024. And that's why we see less of an effect from what happens on the market and that we actually record sales in Q4 relating to whatever will hit the market in spring 2024, where I think everyone agrees that the market is a lot stronger. And that's what we are seeing.

All right. Very well. And just a final one following up on that. I know you don't explicitly share this, but the momentum that you were experiencing in Q4 last year, October, November, December, what was the trend in between those months? Could you share anything? Was it accelerating on the downside towards the end of the quarter in terms of your order intake and sales, or was it relatively stable throughout?

No, last year the months were quite equal in terms of size. It was not that one was substantially bigger than the other one. They were almost on par all three months.

Okay, very well. And just a final question, just if you could remind us, how many brands are you serving in safety today in total with this new edition that you launched now?

Yeah, in total we have announced partnership with 15 brands.

Okay, very well. Thank you very much.

Thank you.

The next question comes from Alexander Siljestrom from Pareto Securities. Please go ahead.

Good morning, guys. Just one follow-up here. Do you still see customer inventories largely being washed out here in Q4?

Yeah, I mean, there is some brands that will carry inventory into next year. Like I said, also on the little bit cheaper helmets as such and so on, where they still have some inventory. But most of the customers will have more or less normalized inventory by the end of the year. And then it's our customers, it's not the retailers.

Yeah. Okay, perfect. That's all for me.

Thank you.

As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Gaylusik Jestayan Guillaume Bouawas from Gaylusik Jestayan. Please go ahead.

morning uh thank you for taking my questions so most of them have been answered i think just to come back maybe on q4 i'm not sure i clearly understood what you mentioned uh so you mentioned that q4 will improve sequentially linked to the uh to the uh the fact that the the demand this summer was a bit better right but you don't uh even provide the guidance of any growth in Q4? Is it what you said? Sorry, I think I missed something. Could you please clarify that point, please?

Yeah. So, first of all, in Q4, yes, we do expect sequential improvement, but do we guide for growth in Q4? What we have said is that we will not give any forward-looking statements because it's two uncertain times. But what we have seen so far in the quarters in terms of order received, we see good momentum and that's also how September ended and so on. So we're off to a good start, but I will not give a forward looking statement on the whole Q4 as such.

Okay, very clear, Max. Thanks a lot.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Yeah, so I think, I mean, we also got two written questions. So one is around what actions we are taking today, similar to what Gore-Tex have been doing when the patent expiring. And I think that question comes choose that some of our patents is expiring in 2030 and 2031. And as you know, a lot of our focus has been on building the brand because that we believe is the strongest protection that you can have. Gore-Tex actually doesn't hold any patents, but they have a very strong protection by the customer because they are the obvious choice. And that of course is what we also want to achieve. Then, of course, we constantly file, of course, new patents. A lot of the products that we are using in safety, for instance, they are expanding in 2040. Some of the patents that we are using in motorcycle and so on. So, of course, we try to prolong the patents as much as possible. But the best protection we possibly can get, that's from the consumer seeing us as the obvious choice. And the only way we can do that is to build a preference from the brand. And that's what we are doing. Then the other question was relating to how long the helmet renewal cycles are in the different segments. And of course, the pandemic situation has changed renewals cycles a little bit. Historically, a bicycle helmet has been changed every five to eight years. You saw during the pandemic that the renewal cycles was down to around five every five years. I believe that over time, somewhere around five to eight years is probably a normal assumption to have. Then when you look at the other sectors, like snow, for instance, there you see that a lot of people tend to have their helmets 10 years or more. You don't use it a lot. You have it maybe one, two weeks per year. Then you put it in the basement. It's quite well protected against sunlight and so on. And of course, you see less of an impact. Motorcycle helmets, you also tend to have an average of around 10 years. Most common, you actually have not one motorcycle, so you actually have two motorcycle helmets on average per person, and you normally carry them every year. Then when it comes to safety helmets, you have them normally one to five years, depending on what type of helmet it is. if you're in a big group there they normally have a helmet changing requirement so you normally do it every year or at least you change the inner content of the helmet so if there is a harness system you exchange that every year and if they do that then of course they also need to exchange the the mip system so very very much around the category and so on. The most frequent helmet changing we see in safety helmets and of course that's obvious also because you use the helmet every day. Then of course we also got two more questions. We got a question on how the insolvency of Cigna impacted us as a company. We don't sell directly to Sigma or the Sigma brands. It's only down to our customers. We believe that the total e-tail business is somewhere around 20 to 30% across all the geographies. And of course, Sigma, even though they are big, they have a minor share of that. I think some of the brands will probably be quite impacted by the Cigna insolvency. I think over time, someone else will pick up that business, but of course there could be some short-term disruption. We are not impacted directly from the Cigna insolvency, but of course, it creates quite a lot of disruption on the market. And what the market doesn't need at the moment is more uncertainty, especially not around the retailers and e-tailers. And then, of course, we also got the question, is it fair to assume that September and month-to-date October in terms of orders received Is expected to deliver positive growth and like I said before yes We see a positive momentum from what we have seen so far of the quarter So with that we don't see any more questions Thank you all for listening in and are looking forward to the q4 result call talk to you again then Thank you