MIPS AB (publ)

Good day and thank you for standing by. Welcome to the MIPS interim report Q1 2025. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone and you will then hear an automated message advising your hand is raised. To withdraw your question please press star 1 and 1 again. Alternatively, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. Now I'd like to hand the conference over to your speaker today, Max Strandvits, CEO. Please go ahead.

Thank you, operator, and good morning, everyone. My name is Max Strandvits, and I am the CEO of MIPS. With me today, I also have our CFO, Karin Rosenthal, and we will take you through the presentation of the Q1 2025 interim report. And if we start with the key highlights of the quarter, so first of all, performance, we did see a continuation of the last quarter performance and growth patterns with strong performance in the quarter of 42%, of course, organic growth. We saw good development in all the three categories we operate in and good growth in most geographies. We do see strong sales to European customers fueled by improving consumer markets. Good growth also in the US despite a much more careful consumer spending versus before. Our assessment is that the near-term sales development to our customers will be more uncertain due to the lack of full understanding of the effects and implication of the implications of or implementation of tariffs. We did see a strong improvement in the quarter with 78% improvement, mainly driven by the strong net sales improvement. This was partly upset by legal costs relating to a customer's legal IP dispute. MIPS are not part of the process, but have decided to step in since NIPS has an interest in the IP-related areas. And we remain confident in our long-term strategy and our financial targets. If we look at the current situation and expected impact from tariffs, I think it's very important to spend some time in that area to explain what we mean. The rapid implementation of tariffs have brought a lot of uncertainty to our industry, and that is valid for all the three categories that we operate in, and it's valid for the US market. Our customers' main uncertainty is, of course, what is actually the right cost of the product. Most customers today They don't know how much their product will cost in one month from now when it lands somewhere in the port in the US. And of course, that creates a lot of uncertainty. If you don't know the cost of your product, it's also very difficult to assume or assess what is the right level of pricing to protect your margin and cost and what you need to take in terms of covering that part. And then, of course, the third one, If you price, how do you actually know that it's the right level of pricing? How will that affect your competitive position? And of course, in the long run, also the consumer demand. I think that's a question that everyone in the industry sits with at the moment. And we believe that that will create a lot of uncertainty. What happened last time this happened? So in 2019, Q3, we actually saw similar type of impact when the bike industry all of a sudden were hit by tariffs, which they have previously been exempted from. Then we saw a little bit of a standstill to the U.S. market for one to two months. And then after that, people took pricing and everything normalized. And we do expect a similar type of situation also this time. And just also to clarify that in 2024, 53% of MIPS net sales is to US-based brands. This is, of course, also visible in our annual report. Those brands are then distributing the products all over the world. And of course, we have other brands, especially in Europe, that is then exporting to Europe. But if we make a net calculation on our estimate on how much that actually lands in the US market when it comes to volume, it is a bit more than 50%. And we do expect short-term demand swings from the implementation of perish. So hopefully that clarifies a bit in that area. If we then go into the first category, and sports. In sport, the good progress continues. We saw strong performance in sport with 40% net sales growth. Inventory is back at healthy levels. Market conditions in Europe are improving. US consumer market a little bit more uncertain. And of course, this also fueled a bit what happened in the implementation of tariffs. We have a very strong position on the market and we are confident on the long-term outlook of the sports category also in the US market. If we then look at Moto, we saw a strong growth there and really good to see Moto getting back on track. Good performance in the quarter with 32% net sales growth. Situation is much more normalized, but it is, of course, a very tough market out there. We have also seen a very successful rollout of Integra TX product, which is our fabric solution. And to support that rollout, we also have a very strong retail activation program, which is also working very well. Also here, no change to our long-term outlook. Good opportunity to continue to grow in the category. If we look at safety, we continue to see good development. It was actually the largest quarter so far, despite that the Q1 is normally not the biggest quarter. That was actually the biggest quarter in safety Safety to date in the mix history. 60% growth in the quarter. We did roll out or continue to roll out new helmet models. And of course, also last year, we had a strong rollout program. And of course, we start to see that those models are starting to generate a lot of demand. And we are also very positive on the outlook of this category. But of course, also here, short-term demand could be impacted by the implementation of tariffs. If we then look at the development and summary of the development in our different categories, In sports, good performance with 40% net sales growth, a bit better if you adjust for forex effect. And we see a continuous strong performance, also good to see that we were growing strongly in bike, but also in snow, we showed an improvement of 20% net sales growth in the quarter, which is of course great to see, despite the fact that it has been quite a challenging snow season. Motorcycle also continued to develop well with 32% growth in the quarter. And safety, the largest quarter so far. And here, of course, we continue to see a lot of traction. With that, I hand over to Karin.

Yes. Good morning, everyone. I'm Karin Rosenthal, CFO of MIPS. And I will take you through the financial part of the presentation. We saw strong development in the first quarter with an increase in net sales of 40% and adjusting for FX due to a strong SEC versus USD. Net sales increased with 42% organically. Gross profit increased with 46% and a gross margin of 72.1% versus 69.4% last year. and the increase is mainly due to the increase in net sales. In OPEX, we were negatively impacted by legal costs of 9 million, based on what Max presented earlier. We also continued to invest in our strategic priorities, R&D, and marketing in the quarter. EBIT was up 78% to 24 million versus 3%. 14 million last year. And EBIT margin improved by 4.5 percentage points to 20.9% versus 16.5% last year. And we saw a strong operating cash flow in the quarter with 36 million versus minus 10 last year. And if we look at the financial KPIs, 42% organic growth, 21% EBIT margin and 36 million in operating cash flow. If we then turn to next page and look at the balance sheet and cash flow, we have a strong cash position with cash and cash equivalents of 408 million. And just to remind you that we don't hold any loans. And the board proposes a dividend of 6.5 SEC per share versus 6 SEC per share last year. And that corresponds to 122% of net earnings. And operating cash flow in the quarter amounted to 36 million. And we have an equity ratio of 87%. Over to you, Max.

Yes, thank you, Karin. If we then summarize the first quarter, good start of the year with 42% organic growth, good performance in all our three categories, strong increase in market share and penetration in the market. Inventory situation is fully normalized. Our current assessment is that near-term sales development to our customers will be a bit more uncertain due to the lack of understanding of of the effects and implications of the implementation of TRID. And we remain positive on the long-term outlook and the delivery of our financial targets. And with that, we open up for questions.

Thank you. If you would like to ask a question over the phone lines, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you wish to ask a question via the webcast, please type it into the box and click Submit. Please stand by while we compile the Q&A roster. We will start with questions over the phone lines. First question is from Adela Dashian from Jefferies. Please go ahead.

Good morning, Max and Karin. A couple of questions from me. If we could please start with the legal dispute affecting one of your customers. Are you able to share any more information regarding this? And particularly as it relates to yourself, is it fair to assume that we will see additional legal costs throughout the remainder of the year? Maybe a timeline on the legal aspects of the dispute would be good as well. Yeah, start there, please.

Yeah, of course, this is under confidentiality. So there is some things we can share and some things we can't share. Of course, the part relating to us, we try to be as transparent as possible. Of course, we had nine million of cost in the quarter. That's very much preparatory cost, which you normally have when it comes to these things. And of course, we assume that we will have similar type of costs also going forward, at least in the beginning, as you prepare for these type of costs or cases. The more you spend, the better you prepared you are. For us, this is a very important area. So of course, we take this always very serious. I think it's also very important to understand that MIPS Patents is not part of this. MIPS IP is not part of this. This is about someone else's rights and what they could claim on the market. As we are extremely adamant and focused on our own brand, our brand position, our IT and our technology. Of course, we also want to make sure that we have the right rights on the market, but also that someone else can't claim this. And when we announced our targets in 2022, a lot of people questioned why we don't have an ambition higher than 50%. And we said then that we assume that we will have legal costs like this going forward. That's also why we don't adjust for these type of costs, but we have them under the normal operating cost. And it's part of our business model. It looks a little bit more dramatic, of course, than it is because Q1 is the smallest quarter of the year. So, of course, proportionally, it becomes a bigger part of the total result. But as we go forward and of course long term, costs like these are assumed to be within the budget and of course not impacting our long term ability to hit our financial target. And for us, this is more of a cost issue rather than something else. And of course, when it comes to these type of things, we always want to do the right thing. We want to make sure that we have the best position on the market. And that's why we take a decision to become active in cases like this.

That's very good color. Thanks. Maybe just a follow up. I guess I'm trying to wrap my head around if it's not MIPS patents that are at risk here. Like, what's the, I guess, what are you protecting yourself against? Like, what's the worst outcome out of this, let's say? And is the plaintiff, is it a consumer-related lawsuit? Because it doesn't really sound like it's any patent infringement-related, so...

Now, I think when it comes to what MIPS is protecting is, of course, if someone else comes in and of course, especially since they don't have any products on the market, they could claim that they have the rights in certain areas, which MIPS also have the rights, of course, and patents are normally very specific. We want to make sure that our freedom to operate is as big as possible. And of course, we don't want that other IP could be very close to our product or questionable for our products. That's why we want to be very specific on the actions we take. IP is, of course, a very complicated matter. Because a lot of things or discussions like this is normally about products infringing because the patent can of course never infringe because without the product there is nothing to infringe about. So it's more of making sure that other IP is not closed or in areas where we believe that we have very strong rights.

Got it, got it. So it is about a patent infringement and not the safety. hazard.

No, exactly.

Okay, perfect. That makes perfect sense. Thank you. And then if we follow on your comments regarding tariffs, I appreciate the commentary around what you expect for the bike market and so on. But could you maybe touch a bit more on the safety segment? I mean, we had great hopes that 2025 would be the year where volume would ramp up quite materially. in this segment and I do know that the U.S. is also important or maybe just as important as it is for the rest of the group for construction helmets. So what's the, I mean, are you still sticking with your guidance of a doubling every six to 12 months or do you think that we could even see with construction helmets delays?

No, I think when it comes to, I think first of all to outline what we are saying we don't expect it yet to have a material effect of the full year, more of a refacing of sales. So our full-term guidance, what we said on safety remains. But of course, it's more of short-term issues that the customer don't know what pricing they should take, what actions they should take and so on. And that's impacting all our three categories. So yet, We don't consider it to be lost sales, more refacing of sales, and that everyone is trying to delay their decisions as long as possible. There is very erratic behavior at the moment when it comes to the implementation of tariffs. No one knows what to expect, and that's what everyone appreciates at the moment, is to have a little bit more time to take more informed decisions. And that's why we talk about an uncertainty and not the long-term impact.

Got it. All right. And then if we think about the bi-calmate category, I mean, could we assume that you're somewhat protected? It might not be the right word, but just from seasonality variations, the fact that you produce or your customers produce bi-calmates in the second half of the year, and now it's more about sell-through to the retailers and the end users. As long as we don't end up in a situation like post-pandemic where inventories were elevated post this spring and summer season, like, I don't know, I'm just trying to think about how we should, I guess the second half of the year could be potentially still okay-ish, despite all the uncertainties.

Yeah, I think first of all, it's important that, of course, we see an impact in US. We don't see an impact in Europe. Europe is actually tracking very well. And you see that also in the first quarter. And we believe that also will continue, of course. When it comes to where the impact will be, you're right that bicycle helmets has been produced and a lot of the volume has been produced. What will be impacted is Repeat orders, of course, if no one produces, that should normally land on the US market late July, beginning of August, especially when you have a lot of back-to-school campaigns and so on. So I think that is the volume that is really at risk. We believe that the production for next year, which will happen in Q3 and Q4, will not have a significant impact, of course, all depending on what the levels of tariff is. and so on, but there we expect it to be much more normalized. The other part that is a little bit at risk depending on how long this will take is of course the snow category. The snow category normally produces a lot of helmets during Q2. Those should then land in the US market at the retailers mid-September beginning of October. So that, of course, is the window that you need to hit. And there, of course, they need to take a decision at some point when is the right time to produce to still make that window, because no one will accept that you have a winter helmet coming after the season. So I think that's what everyone is preparing for. We all have, of course, very active dialogues with all our brands. Everyone is in the same position. It's more about uncertainty rather than consumer demand. And as you also seen, I mean, we have great traction and momentum on the market, but this is something else. And of course, we need to treat it as an exceptional event. And that's why we communicate the way we do. I think there is a lot of people that will tell you exactly what will happen at the moment. For me, they're only guessing because there is very erratic behavior. And that's why also we want to really explain this as we see it. It's more around uncertainty.

Makes sense. And then just lastly, if I may, I mean, I fully understand the fact that you're not directly, so to say, impacted by the trade tariffs, but that your customers will have to increase prices to offset. Could this be a situation where you potentially can end up being a bit opportunistic and then also increase your prices? Because it's been quite stable since inception, really.

We have a little bit of a different pricing strategy, I think. Long term, you deserve or you get the price you deserve on the market. We manage our pricing mainly through innovation, bringing better product on the market. That, I think, is a much more attractive way. For me, using tariffs to be opportunistic, I don't think that's our right approach. And especially since normally tariffs can go both ways. And of course, we end up in quite a complicated discussion. So I think For us, we stick to our current strategy, which is, of course, to innovate ourselves to better products and better pricing and so on. And that has worked really, really well so far. And that's what we want to stick to.

Sounds fair. All right. I'll step back in the queue. Thank you.

Thank you. We'll take our next question. This is from Carl Dejenberg from Carnegie. Please go ahead.

Thank you very much. Good morning. So a couple of questions from me. First, starting coming back to the Q1 numbers, I just want to make sure here, but I guess there haven't been any patterns of pre-buys in your numbers given the pace of the implementations and the long delivery cycles, right? Nothing of that in Q1, right?

No, I think now we hear from a lot of customers that they wish they had done pre-buys and so on, but no, we cannot distill in any direction. People ask us if there is pre-bias, not to a bigger extent. People also ask if we saw a lot of delays in the end of Q1 due to the uncertainty of tariffs, and it's the same way. So no, we can't distill any impacts or either direction. Mm-hmm.

Very clear. And then secondly, I wanted to come back a little bit on the underlying market. I mean, I appreciate the color and let's say the increased uncertainty in the US, but recalling from Q4, you were actually talking about underlying market growth on bike in Q4 on the sellout side. And I just wanted to hear, because I guess the statement here for Q1 is a little bit more vague, at least relating to the US. So Any more color, just Q1Q development, underlying market would be appreciated as well.

The market development number and market share numbers for Q1 is available from next week onwards. So there is always a bit of lead time. But of course, if we talk about overall assessment from the industry, is that the market was sort of flattish. In the US market, of course, we had a lot better performance than that since we grew 35% with our sales to the US market. But best assessment is somewhere around Flattish. And then if you look at the European market, of course, that we actually saw quite good development. And you have probably seen also that on... reports announcements from both Halfords, Bike.de and others that they are quite optimistic of the European market and we see that development we see that the European market is improving but it's also worth to mention that it's from lower levels because the European market has been a lot more depressed therefore it's also a lot any upbeat in terms of consumer sentiment will, of course, have a positive effect. But Europe seems to be tracking quite well.

Very well. Then I just wanted to come back a little bit also here on Q1. I mean, looking at the reported numbers, as you disclosed, the sales of goods, I guess, the pure volumes and the service or, let's say, implementation, invoicing. And I'm noticing that it's taking... Both on a year-on-year basis they stepped down and also sequentially here from Q4 down to 3 million on the service side versus let's say 7, 6, Q3, Q4. Any more color on that? Let's say the implementation or interest been a little bit lower from the brands here or anything specific behind that?

No, if you actually look at the total number of running projects and so on, we still are on a historic high. What we have been doing the last two quarters is that we see a big increase of our fabric solution, which is also in line with our strategy. Those solutions don't require the same type of tooling, especially not injection molded tools and so on, which is normally quite expensive. So in terms of project momentum, no change is more relating to a mix and facing of projects as such. no change in momentum no change in customer interest but good to see of course that the fabric solutions is coming out especially the air node solution and also our integral tx which is of course a higher price solution where we deliver more of the product and we also see a great reception on the market of those products

Very well. And just finally, from my side, I wanted to hear, I mean, when, you know, reading some articles here and there and, you know, coming back to the price situation, I mean, I appreciate the color that you gave on your pricing strategy, but have you seen what your customers have been doing? I mean, we see, you know, some bike manufacturers have been talking about price hikes of around 50% offset this effect. I don't know if that's actually been materializing or not, but have you seen any, you know, material price adjustments upwards on the helmet side in the US already, or is it?

Yeah, the first movers, we have started to see them acting. We have not seen anything close to 50%. One big manufacturer, they increased price with 10%. Another one with 8%. So, so far... 8% to 10% is what we have seen. Bicycles could be a little bit more because, of course, they are more impacted by tariffs at the moment because, first of all, you have the general tariffs, but then you also have material tariffs that impact the product. So there, some speak about more like 15% increase. But from what we have seen, first movers is somewhere around 8%. to 10%. It all of course depends on what will happen on the tariffs. I think the general assumption is that no one believes that the levels of tariffs that we see at the moment is the one that will stay over time and therefore also brands are a little bit more careful of initiating really aggressive pricing with of course the potential impact of that and also The goods that have landed so far have not been impacted by tariffs. It's more the goods that will be shipped coming months. And of course, the argumentation around that. But I think also the US market starts to understand. And of course, also like if you look at Walmart or Target, the US government now understands also how reliant they are on Chinese and Vietnamese goods. And of course that you will have empty shells if this continues. So over time, I think everyone expected to be less dramatic than it is now, but it's just anyone's guess.

Okay, very well. Thank you very much, guys. I'll get back in line.

Thank you. Next question is from Emmanuel Johnson from Danske Bank. Please go ahead.

Good morning everyone and thank you Max and Karin for taking my questions and just jumping quickly back to the tariff situation. I think you mentioned that you expect to maybe see a similar situation as you saw in 2019 and just looking back at those numbers I think we saw a negative organic growth in Q3 around 6% and then in Q4 it jumped back to 30%. Obviously at the moment I think the tariff situation is it's more severe than last time. But do you think that the, but do you experience that the OEMs or the manufacturers has more experience this time regarding this situation or is it a completely new situation for them?

Yeah, they are much more prepared. I think no one was prepared for the levels of tariffs that they saw at the moment. We started the discussion with our customers already in October last year to understand what their position was, how they're going to act and so on, because, of course, it's important to understand. I think everyone is taking a bit by surprise by this ping pong negotiation that we saw between US and China, of course, and how it escalated. But you're right. They are much more prepared. They saw this coming. And of course, every one of them have a pricing strategy linked to that. I think everyone is just waiting for the dust to settle to really understand what's in front of them. And of course, what the future looks like in terms of the right level of pricing. So I think for everyone at the moment, it's more like wait and see.

Thank you. That's clear. And regarding these U.S. brands, do you think there is opportunity or maybe a potential scenario where they will focus more near-term on the European market, which will maybe drive your penetration faster?

I think in the end, we of course already have great traction in Europe. Last quarter, we saw 100%. This quarter, we saw 51% growth. So, of course, we still see a good momentum and so on. I think it's very important to distinguish what happens when it comes to sourcing, which is where the focus is on the brands, and what happens on the consumer market. Because at the moment, everyone is still as active when it comes to the consumer market. One and a half weeks ago, we were at Sea Otter, which is a consumer event where we participated. We saw a very upbeat consumer. Of course, that's the sweet spot for MIPS because there is a lot of mountain bikers. There is a lot of gravel riders and so on. And they were very optimistic on the market. So I think this is not yet a consumer discussion. It's more of a sourcing discussion. So I don't think anyone will change their short-term strategy on that. and not reallocate resources because everyone is still trying to win on the market and I don't expect one or two months of uncertainty will change that. And then it's more like relating to where to produce. There is a lot of pressure to produce in Vietnam at the moment. There is factories planned to open up in other areas, but of course relocating production takes normally a bit of time. We will of course follow the customer wherever they go. We can move our tooling in a couple of weeks. So whatever our brands decide to produce, we will follow them. But it's more of a sourcing discussion rather than a strategy discussion, at least for now.

Yeah, right. That's clear. And can you just remind us on the construction or safety helmet side, is the majority of the production in China or how is it distributed?

Now, I mean, it's a bit of a mix. The more advanced helmets that requires a little bit more of manual work and adjustments and so on are normally manufactured in China. So a lot of the type two helmets and so on. When it comes to simpler helmet models, since transport cost is a big part of the total cost, they are normally produced in the country which they are sold, so Europe for Europe and US for US. But when it comes to a little bit more sophisticated product, it's still heavily reliant on Asia. We expect that to change over time, but at least for now.

Great. And the last question from my side here, just going back to this lawsuit situation. Do you think that this type of case will become more common in the future?

I mean, we have seen last time, but then, of course, MIPS was a party and then we were the ones that were very active on the market. That was in 2018. This time it was started by someone else. Doesn't mean that we didn't decide to be active, of course. Lawsuits, like you see, nine million in a quarter can be quite expensive. So there is not a lot of companies that actually can run a case like this. So no, I don't expect it to happen a lot, but it could happen. And that's why we also assumed it in our long-term budget that sometimes if someone gets rights that we don't think they should have or they are overlapping in the areas where we have rights, then of course we will be active It's part of our business model. We have a couple of priorities, and that is, of course, to make sure that we have the highest awareness when it comes to our brand. We have the best technology out in the market, really important for us. And, of course, where we can also to have good protection around our product. That will always remain a key part of our strategy and a key priority for us.

Great. That's very clear, Max. Thank you very much. That was all my questions for now. Thank you very much.

Thank you, Emmanuel.

Thank you. Next question is from the line of Alexander Silstrom from Pareto Securities. Please go ahead.

Good morning, guys. One follow-up here. If you could Can you talk a bit about the start to Q1 in terms of growth given the tariff situation?

Do you mean Q2 or Q1? Sorry, Q2. Okay, Q2. Like I said, we have seen the uncertainty directly from the start of the implementation of tariffs. We said that we expect it at least to remain for one or two months. So yes, we have seen uncertainty from US-based brands.

Yeah, thanks. And then on sort of the snow sales in Q2 and the possibility to recoup that sales in Q3 and still get it ahead of the season, what's sort of the outlook there in terms of timing?

No, I think, I mean, if we now face one, two months delay, nothing happened with the tariffs. Still, when we hit June and July, there will be a lot of factories running with high capacity to make sure that they catch up. And no one can wait longer than that. And we have not heard that any brand wants to wait longer than that. Because like I said, also in the beginning, Consumer demand is there, great demand for MIPS product, continue to increase market share. Our brands want to have our product, but what they ask for at the moment is a little bit more time to take the right decision. So it's more of a timing issue rather than a long-term issue as we see it now. So I believe when we hit June and July, the factories need to be really, running a lot of production of snow helmets to be able to hit the market.

Got it. Can you talk a bit about the inventory situation in the snow segment now post the season?

It has actually not been a fantastic season when it comes to winter sports and so on. Last quarter of Q1, we grew about 20%, which we were very happy about. But if you talk to the industry as in general, there were a little bit more careful consumer spending, especially when it comes to clothes and other accessories and so on. But the good thing, at least from Helmet's point of view, is that no one went into the season with a lot of stock. So if we look at pre-season orders, still very positive and we see good momentum also there. So nothing in terms of what we see at the moment that will hurt us in the season. So good interest still in snow.

Thanks. And then maybe just a last question on... On the partnership with Pyramix in safety, if you could give us some color on the size of Pyramix.

Yeah, Pyramix is mainly active in the US, but of course they have sales, I think, in 63 different countries. So also good presence around the world. Medium-sized player, and the medium-sized player is normally between 1 to 10 million in MIPS terms and so on. So quite a decent size player on the market and someone that I think can help us to drive a lot of growth around the world.

Perfect. Thanks. That's it for me. Thank you.

Thank you. No further questions on the phones at the moment. I will now hand back to the company to check for any questions via the web.

Yeah, we have one question that came from one investor, which is about the legal dispute. That will ask us why we don't treat the legal costs as a one-off expense. and also if there could be a legal one-off gain coming out of the disputes. First of all, like I said and explained before, we see this part of our business model, protecting our IP, making sure that we have the right protection. For me to put something into adjustment or call it adjustment or adjusted EBIT, EBIT needs to be for really the right reasons. If you have things that can come and go, then of course it's important to treat them under your operating results. I think that's cleaner, that's a lot less complex and also much more transparent. So we are treating it under running costs because of course these things can always come and go. And when it comes to one-off gains, I think especially for the US market, the way that it works, very difficult to get any money back from a lawsuit, and we will not count on that. The second question is also around legal cost. Someone asked if we will incur 9 million per quarter or 18 million for the year. And of course, this is something that you really don't know exactly how much cost there will be. Like I said, proportion of the total result, of course, will be a lot smaller since quarter normally will be bigger. But the running cost that you saw in Q1 could, of course, continue for a couple of quarters because we are still very much in a preparatory phase. Then we get the question is, what is the magnitude of price increases that your customers could pass according to the discussion you have with the brands. And like I said before, so far we have seen 8% to 10% that has been put forward to retail. It all depends on where the tariffs will land. If they stay at 145%, of course, that will not be enough. But I think the assumption from everyone is that they will be significantly lower. That's why everyone started more like 8 to 10%. Sales in Asia and Australia lower than last year. How do you see demand in this area? We have had a fantastic development in Asia. We see really good sales in that region. Now it's the low season in the Asian market, and there, of course, you don't have a long shipping time, but we expect that to pick up over time. It used historically to be only like 3% to 4% of our sales. Last year, I think we landed on somewhere around 13%. So it has become a much bigger part, and we still see a lot of interest in especially the Chinese market. We are a little bit careful on who we team up with because, of course, we are still building a brand. We always do as we do in MIPS. We start with the premium brands. We start to build a lot of awareness. And then where we see the opportunity, then we can start reaching down. And that strategy has worked well, served us well. And I think it will work also well in China. And then it was the question in Q2 last year, you talked about increasing project hires for project engineers. And like I said, we are still on the historic high momentum. We still have a lot of recruitment out there for even more engineers because of course we see a lot of good momentum in this area. So even though we have recruited, we still don't have enough people. to manage the workload that we have at the moment. So if you are an implementation engineer, you're always welcome to apply. With that, I think we have answered all the questions in the call. Thank you everyone for listening in and speak to you again next quarter. Stay safe out there. Thank you.

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect. Speakers, please stand by.