Profoto Holding AB (publ)

My name is Amanda Åström and I am Head of Investor Relations. Today I have with me our CEO Anders Herdeberg and our Acting CFO Linus Malmstedt. We'll start off by handing over to Anders who will give you some highlights for the quarter.

Good morning and hello everyone. Today we are reporting the second quarter 2025 and we are reporting from a challenging content creator market. Our net sales decreased with 13% down to 171 million Swedish crowns and half of that was organic negative growth and half of it was explained by currency effects, mainly a lower dollar and Swedish crown. exchange rate. As I said, the market is tough and we see that the customers are hesitating to take decisions to buy, big decisions to buy. And this has also affected our EBIT, which is down to 18 million Swedish crown and 11% EBIT over sales ratio. Of course, this is explained by the lower sales, but it's also explained by product mix and somewhat increased cost for launch of our new LED products. And I will cover that more later in the presentation. We launched, though, a lot of new products. First of all, we launched the B20 and B30, which are two new flash products. And we also launched and renewed our line of LED products. More of that later. One of the other things that is, of course, affecting everything is the development regarding tariffs into the United States. And we're working heavily with that and following the situation closely. So sales decline of 13%. And that looks dramatic, but as I said, half of that is currency effects and half of it is organic growth. And if you look in two regions, we first see the Americas, which is not showing a decline, but mainly in local currencies. So the organic growth was slightly up. But given the currency effects, we are not down 9%. We're also seeing a decline both in organic and currency effects in Europe as well as in Asia Pacific. The down size of organic growth, as Do explained, that we have very good product launches in this quarter, this year, but we have actually even better product launches last year in the same quarter. Last year we launched the Pro D3 and this year we launched the B20 and the B30 products. But I would like to explain also what we have done into the LED product market. We launched at the Cinegear Expo in the beginning of June. We launched our full line of LED products, the LP2000C, which is a large panel used especially in cinema production. The L600 color and the daylight versions, which are used both in cinema, but also in the content creator market. The initial reaction was very good, especially to our large panel, because we were at Cinegear and the interest was huge for that kind of product. But we have not started to ship yet, so we're taking costs for launching the products, but we have not started to ship yet. to get the production going so that we will start shipments towards the end of the year during Q4. So we hope to see figures for that in the fourth quarter. In addition to the LED launches, we also launched the B20 and the B30, which is a replacement of the B10. And the reaction from the market was very good. So now over the last 12 months, we have updated our Flash product line. So we have brand new, very great products selling into the photography market. We also have a very good lineup for professional products into the LED market, both to the cinema market as well as to the content creator market. And this results in that we have the possibility to approach a greater addressable market. And we see that the addressable market is increasing with three, four times from the 3.5 billion to 14, 15 billion Swedish crowns. We see that the flash market is rather flat and it is not increasing. And we can see that the content creator market, especially for still photography, is flat. However, we also have now products, especially for the film and cinema markets, which all our products are positioned towards that market, as well as to the dealers and large studios and content creator economy market. We see that large still photography studios are investing in not only in flash, but also a lot into LED for shooting small, shorter films to be used in both e-commerce, but also for driving sales of different brands. And that market is actually very attractive at the moment. So thank you very much. I will leave the word to you, Linus.

Okay. Thank you, Anders. As Anders mentioned, we see no major changes in the underlying sentiment. The customers are still a little bit affected by the cautious market environment. And this means that we actually see them decline in the top line of 13%, of which half is explained by currency effects. And also the strong launch last year compared to this year in terms of the B series this year. And I think it looks really dramatic when you see the sharp drop of 50% in the EBIT. And that is, of course, partly explained by the sales decline, but also the product mix. But also there is an accounting effect as we now start to not decrease, but we're not capitalized as much as we have done in the past, given the current R&D portfolio and where we are. And I will revert to that a little bit later. So all in all, it is a disappointed result, but we are taking actions and we are seeing the first sign of our earlier communicated cost reduction program. So we see not the full effect yet, but we start to see the signs of it. And And the next slide is not really my favorite slide. As you see, it's a declining trend. And I mean, it is a tough market and it has been for quite a while. But we are really acting hard to increase and improve the top line, but also, as I mentioned, the cost side of it. So we are really motivated and have a clear target to really reverse this negative trend. We communicated that we launched the cost reduction program earlier this year and now we're starting to see the effects and during the quarter we haven't really seen it on the personal expenses yet. that is about to come during the second half of the year. But as you can see, we have run a very tight cost shift during the quarter and especially on the other external expenses. So during the quarter compared to last year, we actually saw a decline of 15%. So we are on track to reduce the total cost base with 20% and we will see the full effect in the fourth quarter of this year. So that's positive and that we really have full control of our costs. And this is also despite the fact, as Anders mentioned, that we actually had some costs related to the major launches during the quarter. So despite that we continue to invest in new launches, we see the total cost base actually to decline. And this is the R&D portfolio in terms of the ratio compared to sales. And I think we have stated for a couple of quarters that now we have a really solid product portfolio. So we can reduce the R&D spend both in absolute terms, but also in relation to sales. So, we are on target to reach the 10% of sales, and that will be, you see the full effect during the fourth quarter, as this is mainly driven by reduction in personnel, which takes a few quarters to have the full impact of. And of course, we hope to see signs of improved sales during the second half of the fall. So that hopefully will help us to reach the target. But we are full control of our cost base, so we will achieve it anyway. That's basically it from my end. Over to you, Anders.

Thank you, Linus. So let me summarize. Yes, we are in a tough content creator market. It is challenging at the moment, and this has an effect of the Q2 sales and the sales development. However, uh we have a great product lineup in flash we have a great product lineup coming into led and we have as selena said reduced our cost base so we are ready for um for better times ahead but however this will have a effect towards the end of the year so it will take a while before this happens And we are also affected by the uncertainty of the tariffs, but we are following that closely and adapting accordingly to the new market or the tariff situation. So we are hoping for better times ahead. Thank you very much. Over to you, Amanda, for taking 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 Jakob Soderblom from Carnegie Investment Bank. Please go ahead.

Yes, hello and good morning. I just wanted to ask if you can expand a bit more on the product mix development.

So, Jakob, it's very hard to hear what you're saying, so could you please repeat?

Perhaps you can hear me a bit better now, is this better? Thank you. okay perfect sorry for that now just wondering a bit about the gross margin development the product mixture you're talking about could you expand just a bit what are the different what is the mix effects here that we're looking at what does this entail then for the later part of the year as well Linus would you like to cover that yeah I mean

On a general, on a group level, we continue to have this, the gross margin target that we have, but we see, of course, some differences in various segments or product categories. So we actually saw uh somewhat weak development in our studio business which has a yeah fairly good mark margins and so when the product mix are shifting and that's uh we see actually a smaller effect on on that from the product mix perspective so it's not the major changes but there are if you have a very strong development in one segment with higher margin than the group level and and and strong margins in some categories that are on a group level target you see the mathematical effect on that okay and that's unless talking down on the studio business you expect the current sentiment okay to persist throughout the year then i'm guessing given the comments in this call Yes, but there are also some tariff elements in the second quarter, which actually has affected the COGS. So we don't really see the current level as our long term target. I mean, we still are working on the target that we have.

Perfect, thank you for that answer. Then another question then, some cash flow. I see that the receivers are up quite a bit and I mean you're in a launching period here where you have somewhat of a mismatch I'm guessing then in revenue and cost for these launches. Is it purely timing that is going to swing back then in subsequent quarters or is it anything else?

uh it's more of uh uh i mean as as we have a number of important product launches of course the the the inventory and accounts receivable will increase temporarily but it's no major changes it's more a timing effect perfect i guess the final one from my and then i'm guessing if you could talk somewhat of a bit i mean

In presenting Q1 numbers, kind of a similar commentary in my view to presenting here during the call. Is it possible to give any type of information on this, how this has developed, and guessing coming from April with the tariff announcements and so on, and now moving into the beginning of Q3, do you see any type of, what do you call it, more underlying comments that you're hearing from your distributors and so on, terms of market sentiment and changes? Or has it been a rather flat development, if you can call it like that, month over month in Q2 and now going into July?

No, I can take that, but it is rather flat. We see no major overall from distributors and dealers and customers that it's changing up people are still very hesitant and also cast not only ourselves and our distributors and dealers are also following especially in the us what is happening in the changing market on tariffs and that is putting a wet blanket over decisions so but it is not changing it is it is the same level of uncertainty or um slow demand in the in our market which which we call the content creator market and so it is generally the same feeling as we had in the beginning of the year so we see no changes neither up nor down okay thank you for taking my questions and i wish you happy summer same time thank you

The next question comes from Marcella Klang from Handelsbanken. Please go ahead.

Thank you, and good morning. A couple of questions from my side as well. During this quarter, you made quite a hefty reduction in your workforce. You mentioned 15%, and still you did not report any extraordinary changes. costs, no adjustments to your earnings. Have you been able to, and also you mentioned costs for trade fairs, marketing events, while you have launched five products in the past 12 months compared to usually two, three. So there is a lot happening in the company and still you're not reporting any kind of extraordinary costs. Is it by choice that you don't view this as extraordinary or what was your reasoning behind this to take everything to the TNL like that?

Yeah, if I start comment, I mean, on the event side, we see it more as an ordinary course of business. So we don't want to have any one-off effect and to make a number of adjustments related to that, because I mean that we are a little bit conservative there. And in terms of the severance payments and one-off cost relation to reductions, we have a policy that people are working to the final end, so to say. So you're actually not allowed to take anyone off there. So they work throughout the notice period.

And do you need to pay any kind of extraordinary packages? Or are you able to terminate the contract without extra costs for the company?

On an overall general comment is very low amounts so that we don't say that senior reasons are actually have it as an one of course, it's a part of the daily operation. So yes.

Understood. And then you mentioned around 30 million effect on EBIT once these cost cuts are fully visible by the end of the quarter, which is around 8 million per quarter if you just divide it by four. Is that enough to bring you up to your, you still have your margin target EBIT margin 25% up to 30. or will you need to do more in terms of cost savings?

The short answer is actually that we are running the cost reduction according to plan and based on that we are able to reach the targets.

And then you mentioned the Pro D3 became very strong second quarter last year. Obviously third quarter last year was weaker. So do you expect any kind of effect that we should take into account tough comparables also in the third quarter? Third quarter last year is more without any extraordinary effects boosted by launches at that time.

Will you take that one, Anders?

No, but the third, I didn't really understand the question, but the third quarter is by the seasonality is normally a weaker quarter since we have the vacation period in many countries in August and also July. So this is the summer period and it is normally much slower as we saw last year.

And just to answer your question, Marcela, no, we did not have anything extraordinary last year in the third quarter.

And then maybe a follow up question, the latest launches B20 and B30, what do you mean by very good initial reaction?

is it sales is it pre-orders is it reviews now it is it is sales that we are have sold into more into both into dealers and the sell-through through dealers to end customers it is in some countries it is as expected in in other countries better than expected so we are it was a good launch

And do you expect aspects from that also in the coming quarter or two?

No, I can't say. We're talking about the second quarter now and the third quarter. We will know in the end of when we summarize in the end of September, beginning of October, where we added. But normally we have As you know, as we communicated earlier, that we have a good selling into the market and that affects the figures. So it helped the figures in second quarter. It would have looked, we would have sold less if we hadn't launched. So the launch was good, but the market is a wet blanket over the market, over the content creative market. And that's why we're not, seeing figures overall increasing and we had this tough comparison in last year.

Then maybe a question that I guess I asked this before. When you have a successful product launch, do you usually have an effect that quarter, like half of the sales are done that quarter or less than half? How long is the Is the way of increased sales from a particular product usually?

No, it's around the launch date. It's prior and around the launch date. So it is not several quarters. It is during that quarter normally. And in this case, we launched these products in the first half of June. So we saw the selling effect in May and in June for those because we what we do is that we obviously sell in to the dealers so they they fill their stock and then we also monitor their sale through so in this case for the B20 and B30 we saw replenishment orders coming quite fast actually and we were very happy for that so but we it is around the month time around around the launch

And then a question regarding the important LED push that you're doing and the hesitant consumers. Do you believe that your expected customers, that they are postponing purchases? Or in these challenging times, is it possible that they are downgrading to cheaper competitors, products such as Aperture, ARRI, and so on?

First of all, downgrading to cheaper products, that is always happening, of course, and people are shopping and trying to take smart decisions. So you should never neglect that. So of course that this is happening by professional purchases. But we also see the trend, as I presented in my last slide, that the flash market is not increasing. So we see that large studios is investing in LED also. And that is, of course, one of the reasons why we are entering this market, the LED product market. And so we expect and we already see we have we ordered have orders preorders for and for our product launches. So so we are very happy. We think that that we will be able to take the small premium position in that market and build from that position going forward. But the more that that addressable market is also bear in mind much larger than our current addressable market so there is more room to maneuver and there are more segments both in price and products in in that market so we'll state an answer to your question marcelo thank you so much um

These were all questions for me. I also wish you a very good summer. Thank you.

Thank you the same.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more phone questions at this time, so now is time for the written questions.

I have not received any written questions here today, so I just wanted to thank you all for joining us today and also give a gentle reminder about our third quarter report, which is published on the 23rd of October. Thank you.

Thank you. Thank you.