Yubico AB

everybody, or actually it's good evening where Camilla and I are at. We're in California following today's board meeting in Yubico and we're excited to share some background and then dive into the results from the interim report for the third quarter. I know that we have several participants that have been listening in to presentations earlier, but I'd like to give just a quick overview of Yubico as a company before we dive into the specifics for the quarter. And just as a quick reminder, Yubico is a leader in the multi-factor authentication industry. Our key product is the YubiKey. And we've been growing over the past 15 years and on a rolling 12 month basis, our annual turnover is about 1.8 billion Swedish krona. We're about 430 employees. We're we have a very nice set of customers that I'll return to shortly. And we work primarily with the world's largest companies and organizations. Some 30% of the fortune 500 companies are already our customers to a to varying degrees, some just initial deployments, whereas others use it pretty much wall-to-wall with their organizations. As I mentioned, we're a hardware-based company, but because of the big software component of our offering, we are able to maintain very healthy margins and we continue to deliver that in this quarter, more than 86% margins. Since start, we've deployed more than 22, I think it's about 23 million UV keys And the other number which is significant to mention that we deployed some 23 million YubiKeys, but we've had zero account takeovers following a full integration of the YubiKeys among our customers. So we're very proud of that. Flipping then over to the next slide here. As I mentioned, we work with some of the leading brands, this is a subset of the companies that we're working with, and you can see that we started out very strong in the high tech sector that remains our biggest industry vertical but we're seeing an increasing. Jone Peter Reistadler, A range of customers from within several different industries that are now the customers of ours and for growing within the public sector, both in the US and Europe, so we feel that this positions as well. Jone Peter Reistadler, For future growth and the final slide then as a. Jone Peter Reistadler, As an introduction. is that we're fundamentally selling a key. It's the YubiKey, and we've spent a lot of time and investments into ensuring that our key fits into all the relevant locks. On this slide, it's kind of a mouthpiece, but we're talking about the fact that our key fits into most of the relevant locks, which means that our enterprise customer can use our key to access all relevant systems in their operations. It's different types of hardware, software and we've done a lot of integrations over the years, ensuring that we can have both a very secure and easy access for users across the globe. With that as a backdrop, I would want to present a few highlights from the quarter and then Camilla will share more detailed numbers. Start by noticing that this is the first quarterly results that we present. following the completion of the transaction between Eskildura and Ubico and the renaming of the company to Ubico. The picture shown today is just this happened on September 20th, time flies towards the end of the quarter. What we'd like to summarize then is what happened during this quarter and a few milestones then. As I just mentioned, we completed the merger and the new merged entity's name is Ubico. In connection with the merger, there was a placement of shares to a limited set of investors. A lot of that was because several pre-existing Ubico shareholders could not get payment in the form of shares, otherwise we'd have to register with the SEC. So therefore, a placement was made and then there was a number of warrants exercised. So this was an exercise which meant that we played successfully shares for about 340 million with institutional owners. And if you look at the set of shareholders that we have today, After the merger, Bure is the biggest shareholder in Ubico, followed by AMF, and then the founders in Ubico. But we have several institutional and VC owners in the US, including, for instance, Envy and Horowitz. Another thing which was completed during the quarter was that we updated the board, and we added a few members. and one left from the previous board, which means that we feel like we have a good set of competences within the board today, a mixture of US and Swedish board members and seasoned professionals. The final thing I have to highlight was that in connection with the completion of the transaction, we got approval for a long-term incentive program. The rules are that it will get rolled out later this month, Sorry, yeah, this month, but it was approved by shareholders, which means that it will entail a dilution of approximately 0.8% at full usage. Talking a little bit about what we did on the technical side, so I'd highlight three things. There's ongoing development work going on, of course, but one of the important things that didn't have a significant impact short term, and it was announced as late as in October, was a pre-Retch cooperation that we launched together with Okta at their Octane conference in early October. This is another effort to ensure that it's easier. As I mentioned before, our hardware authentication solution is super secure. it's also easy for the user we want to make it easy to deploy to and this is a significant part of that ensuring that as an enterprise rolls out or as an organization rolls out uv keys internally that they can do so and it kind of works out of the box we're starting that cooperation with octa and we see a lot of interest in that another project that i'd like to highlight which will not have an impact on our sales in the short term which we feel but we're still very excited about in terms of long-term development is An initiative initiated by the European Commission, ensuring that there is a digital identity wallet that should cover all member countries. And Yubico has now been included in that project as contributor. And we want to make sure that there is support for Yubikeys and that it's a convenient way for EU citizens to secure their online identity going forward. More to come on that. The project aims at rolling it out to all EU citizens by 2026, but there's a lot of work that needs to happen before that. And finally, in terms of development work, I'd like to highlight what's today still a niche product, which is really protecting secrets stored on servers, our UBHSM hardware security module product. We're launching a new functionality there in November, so it hasn't been launched yet, but we're announcing it in connection with the report. And we feel that this will be a clearly improved offering and will set us up for growth in this market. The HSM market globally is estimated at 18 billion Swedish kronor. Today, this is about one to 2% of our turnover, but we're setting us up for growth within that market. That was a little bit on the technical side. And on the market side, there are a number of trends. And it's encouraging from our perspective to see given the high level of cybersecurity threats that government and financial services company are taking action. More regulation, which may sound as a limiting thing, but I think it's actually makes a lot of sense for there to be more regulation in this market to ensure that users, companies, and citizens are protected. Two initiatives to highlight here is the Securities and Exchange Commission. which are now setting up strict requirements for public US companies on what they need to do in terms of authentication, which is to a large extent mirroring the federal requirements for public organizations. So that's interesting. Another great example is Goldman Sachs, one of the leading banks, as you all know, who are now doubling down on the use of FIDA security keys, where YubiKey is, of course, a leading vendor. Moving then to the numbers and the quarter, the numbers are out in the report. And in terms of net sales or revenue, we saw an increase in the quarter of about 4%. And in local currencies, that was 2%. I'd like to highlight, and this is something that we mentioned in the, as we released the Q2 report, that some of the comparisons in the Q2 report were distorted by the fact that we had an unusually large order in Q2. That meant that the comparable numbers for order bookings were a little skewed in Q2. That order was delivered in Q3 and Q4 2022. So if we had difficult comparables when it came to order bookings in the first half of 23, there's some of that in in q4 so we saw a stronger growth in revenue or net sales during the first half of the year as we deliver this unusually big order in 2022 that meant that it boosted revenue during the second half of the year still growth but just as an explanation for why the growth was perhaps a little lower than some might have expected gross profit we posted a profit i think what we have sorry, for gross profit, we actually posted a very strong number at almost 88%. We're seeing, and to explain a little bit more about that, we're seeing a very solid gross margin on our product, which is based on that we have implemented very cost efficient manufacturing, but there are also some seasonal things there for instance we had strong ecom sales during the quarter that's our highest margin business and also product composition has a small impact on this number but but we're continuing on a very healthy trend there we talk about ebit and i i would want to highlight that one the numbers that are on display here are the adjusted ebit numbers because we had some transaction related costs to the tune of about 94 million swedish krona which meant that if we don't adjust Rebit, we posted a small loss, but those were simply related to the merger. One comment also on the adjusted number, that number does entail one-off cost, which was not really related to transaction, but as we've highlighted in the report, we did a company event and company conference in December, mid-September in Prague, where most of the company's employees attended. So that had a short-term negative impact on profitability of about 20 million when it comes to additional cost during the quarter. Another KPI that we're tracking very closely is our annual recurring revenue, and we'll talk more about that. But that grew compared to last year by about 70 million in Q3 to 55. So one of the things that we track very closely is our bookings numbers. And Q3 22 was more of a normal quarter and compared to that, unlike Q2 and compared to Q3 last year, we saw growth of a little bit more than 19%, close to 20% in local currencies. And it comes from a broad set of customers, two sectors that we would highlight. this quarter that contributed to to growth were telecom companies in the us and the public sector in the us which is kind of natural because the federal fiscal year ends in q3 in the us and then we had so a lot of interest in a lot of demand and orders from the polish markets from both private and government institutions as everyone knows poland is under a lot of security threats including in the cyberspace, and we're very happy to be part of the solution there, supporting our customers in Poland. Talking about subscription bookings, they were at about 58 million, so about 14.5% of the bookings. And again, as a reminder, when you look at the year-to-date numbers, keep in mind that we had an extraordinary order in Q2 2022, but a more normal period. And with that, I think I'll hand it over to you, Camilla, to discuss the other numbers that we presented in the quarterly report.

Thank you. Yes, so as Mattias mentioned, we had a relatively low growth rate this quarter, also the net sales, especially in August, September, and related to the enterprise segment. But we also saw that e-commerce was growing with actually 24% in the quarter. And notably, this quarter is also that we have less impact of currency exchange rates. For the first half year, we had an average of approximately 10% positive effect when translation into Swedish krona. And this quarter, we only have 2.6%. that kind of effect. So that was also affecting the growth numbers, of course. On the ARR side, the ARR increased with 38.2% versus Q3 last year and amounts then to 255 million at the end of this quarter. And thereby we added 12.5 million net new ARR in the quarter and 50.7 million since the start of the year. Looking at the EBIT side and we are now starting to look at the adjusted EBIT as we have introduced just that due to these quite big costs that we had related to the transaction and the merger. We will look into the merger costs later in the presentation. But this is to give you the feeling of how the underlying business is actually going. And so the adjusted EBIT amounted to 19.1 million, and that led to an EBIT margin of 4.7%, which is substantially lower than last year. as you know, and we continue to show a strong gross margin, as Mattias said. Comparing the 87.6 this quarter with H1, we also did better. In H1, we had 86.1%, and basically that relates to the mix in sales channels and products. And the currency is also less impact this quarter, also from profit side. The last year we had positive effect from unrealized currency effects of 28 million, while we in this quarter see a negative impact of 1.7 million. So it's quite a big difference as well. So in total, almost 30 million SEC in difference there. But of course, the biggest impact on the profit level is the lower growth of net sales in the combination with increased run rate of OPEX. And then especially related to employee costs, both the one-time costs related to our all company conference here in September. But we have also been growing with more employees during the last 12 months as well. If you remember, we had not so much growth of people during the first half year, but we also said that we will recruit more during the second half of the year. And so we have also done during the Q3. So we are now 13% more employees this quarter compared to last year, which is also driving the OpEx run rate. Looking at the cash flow and the financial position, you recognize the graph here with our inventory. We had an operating cash flow of minus 19.8 million this quarter compared to minus 9.9 last year. We continue to build up the inventory, not so much this quarter as we did first half year, but anyway, it's still 61.3 million more in this quarter. And this is related to that we secure the availability of our components and also our delivery capability to the customers to be sure that we can deliver also large orders when we get them. And year to date, we have increased the inventory 242 million. You see here that we have increased the inventory percentage as a percentage of the last 12 months net sales. And we are now close to 24%. And it's probably approximately where we will be. Related to costs in the transaction, accruals have increased with 51.3 million. So we have costs related to a transaction which was not paid at the end of the quarter, but paid here now during Q4. And those two components, the items, the inventory and this accrual, basically builds up the net change in working capital of minus 5.7 million. That is a positive cash flow effect. So the cash at the end of the period amounted to 581 million. where the merger contributed with approximately 184 million. And we still have a loan outstanding with Svenska Sportkreditt amounting to 42 million at the end of the quarter. So the net cash at the end of the quarter was 539 million. So we have a quite solid financial position. We have had quite some work. to do when we close this quarter as we did this merger and the transaction. And I've tried, we have in the report a specific note added where we try to explain also accounting wise what happened with this merger. But the short story, so the merger was made as a reversed merger from accounting perspective. So ACQ is still the surviving company, the legal entity, so to speak. But accounting-wise, we have did it the other way around. And thereby, we don't get so big effects on the total balance sheet. Otherwise, we would have ended up with a super big goodwill and a big equity and so forth. And so the net equity effect is only 229 million. And when looking at the numbers, the old Ubico numbers that you recognize and that is the Ubico numbers that we carry with us also as comparable comparing numbers in our reports going forward. Transaction related costs or expenses. We have reported, to be very clear, so we have reported that on a separate row in the P&L report, and it amounts to almost 94 million. And that is, of course, the item affecting a comparability with this adjusted EBIT. And this cost, it consists of advisory costs and employee-related costs, accounting amounting to approximately 43 million. And in addition to this, we also have a cost for cancellation of incentive programs, our old stock option programs, and the merger loss when we added the ACQ balances into the Ubico balance sheet. And that totaled to 50.9 million, those two last categories. And those two does not affect cash flow. It's only technical. And then looking at the net cash contribution as well. When you look at the cash flow statement, it looks also a bit strange, or so to say. I'm trying just to explain what happens. So the net cash contribution from the merger was 184 million. And that consists of Both the cash balance in ACQ before the merger, which is 3.4 billion, and cash consideration paid out to the Ubico shareholders in the transaction of 3.8 billion. And then adding to that the share issue, part of this placement, adding available cash for us also to pay to the shareholders. of 133 million. And then also we had you because option and warrant holders were exercising those into shares in related to the transaction. And that added also 430 million in cash to the company. So there were quite many unusual transactions to speak in this. So I leave it over to you now, Mattias.

Thanks, Camilla. And please feel free to reach out to us with questions. We realize that when it comes to how the transaction gets treated in our balance sheet is a little complex, but it all adds up. And this is the one, of course, for this quarter, with the exception that we're making payments for some of the costs and have done so in Q4. So we feel that this quarter, which has been an intense one from a number of perspective, sets us up for continued good growth. The business is performing well and in line with our expectations. In full candor, we had actually set the bar even a little higher in Q3 in terms of order bookings. So we saw some, sorry, in Q3. So we saw some of the orders slipping into Q4 and therefore we're particularly happy to see that we're off to a great start in Q4. including a significant order from a long-standing high-tech company to the tune of 86 million kronor, which means that we're off to a great start. Another fact that bodes well for the future is that we've really broadened our customer base and we have a very healthy sales pipeline going into Q4 that we're now executing on. We're working on a lot of interesting product and business development initiatives. Some of them will actually probably paid dividends already this quarter, but the other ones that I've highlighted are also for the long haul, which will have a big impact. For good and bad, cybersecurity has never been more important. We're happy to be part of the solution there and working with the good guys, so to speak. It is a rapidly growing market because of the trends going on in the world, of course. So to summarize, we feel that this quarter means that we're in line with our guidance that we provided for 2023. So, the guidance for the year remains unchanged. And with that, the plan was to hand it over to questions. I think we'll start with those who have questions live. And we have a small queue there. I think Fredrik from Conege is first in line.

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 Predrak Savinovich from Carnegie. Please go ahead.

Good morning, Mattias and Camilla. Thanks for taking my question, or good afternoon, rather, for you. Starting off with net sales, and I appreciate what you said there in the closing remarks of Q4 beginning quite strong. But if you could reason a little bit about the percentages. I mean, now that Q3 sales dropped from Q2, so some color on how it started so far in Q4. Is it possible to see in percentage terms Or if not, could you maybe say in compared to year to date or compared to H1 or so, if that's possible?

Yeah, I think I understand what you're aiming at here, Fred. What I can tell you is that, as you said, comparing to Q2, we actually saw a small decline in order bookings in Q3 or a decline in order bookings in Q3 due to, if I remember right, 7% or 8%. So some of the orders that we saw early Q4 if we had actually expected those to land in Q3. So that means that, but, and as mentioned, we have a lot of events happening in September. We have the company going public and we have the company event in the middle of September. So perhaps we didn't spend enough time ensuring that we got a few of the orders across the line. So this means that But the good part of that is that it wasn't that the business disappeared, we were managed to execute it in October. What I can tell you about October so far, it is by far the best October we've had ever, even I think excluding this individual order. So we're off to a good start, but we'll have to get back to you with the actual numbers for the full quarter as we deliver our Q4 report.

That's very encouraging. Thank you. On bookings then, the guidance you have is to have bookings growth for 2024 shy of the long-term financial targets. Could we reason a little bit similarly there? Because all else equal, it should indicate then quite a nice pickup in the booking in Q4, right? And can you say what shy means to you?

Yeah, no, because of some of the orders being rather significant, like the one we saw from Q3 that slipped into early Q4, it's hard to be more precise. We're talking about growth for the full year, but we don't want to put out a very specific number. It's going to be somewhat short of the, we expect it to be somewhat long of the long-term target and just repeat our long-term target is to see growth in order bookings of at least 25%. But this year we expect it to be somewhat short of that. I'm afraid I can't narrow down the exact percentage more than that. I don't think I'm in a position to do so yet.

Okay, I'm sorry. Then moving on to the partnership with Okta, how important is this for you for your forward growth? And does it include existing Okta customers to upgrade their IAM platform with YubiKeys or predominantly for new sales? And do you have any color of how important this is for Okta in their organization, how much this might get pushed out to their salespeople and so on?

No, that's a great question. And one of the important aspects of the YubiKey is that we want to work, love all, serve all. Okta is an important player in the identity access management field. The largest specialized company in that field, I'd argue. So they are definitely an important partner and an important platform for us, even before we announced this. What this enables us is to work together with them to offer a better solution to some of their customers. It should be noted that in the initial launch, we're only targeting a subset of the customers because they need to have signed up for their most, let's say the package that they have with the most bells and whistles. So that's a good start for us to test out this more advanced service together with them. It won't have a significant short-term impact, but I think a closer cooperation with some of these important identity access management players is important to lower the thresholds for enterprise customers to get the best security out to their users. So I think this will be of growing importance, our ability to do pre-reg or a route to passwordless as it's communicated in this messaging. will be increasingly important to drive ourselves.

Okay, super. And just one final, I think it was interesting what you said about one of the major banks in the US. And from your experience, going back to other sectors, what would you say the typical behavior is one major company or institution in one sector from a regulatory perspective, you know, then starts adopting or deploying YubiKeys. Is it common then for others to join on the same alternative or what are your experiences there?

Yeah, I mean, to me, that's an ideal use case for the YubiKey, and it's hassle-free for the end user, and it provides the highest level of security. We're hoping that we're at the cusp of a big trend there, and it's interesting to note that one of the major orders we got in Poland was actually from a bank that is now rolling out passkeys and recommending YubiKeys to all of their users, not mandating it, but recommending it. And I think if that catches on, that That is a very interesting market for us. It's, of course, a big difference between an English bank and Goldman Sachs, but it's interesting to see that there are players across this vertical that are adopting house keys as a solution and recommending you the keys. Brilliant. Thank you so much. Thank you. I think next in line is Erik from SEB.

The next question comes from Erik Lindholm Rogestal from SEB. Please go ahead.

Hi Mathias, hi Camilla. Thanks for taking my questions. So a couple of questions from me. I'll take them one at a time here. So you mentioned the UB HSM and some new features there which you expect to drive growth. Can you perhaps dig a bit deeper here and give some more details on how this business looks today and when do you expect it to have an impact on your sales growth? Thanks.

Sure. I should start by saying that this is today less than 2% of our sales. So primarily it won't have a major short-term impact on our numbers in Q4, but we see that this is an interesting growth market. Our unique... product there is that we actually enable folks to use hardware security models at a fraction of the cost associated with much less complexity. So even if it's a small revenue generator for us today, if you look at the use cases, it's actually protecting huge assets and values. For instance, some of the cryptocurrency exchanges use this to protect their cryptocurrency values That's perhaps on the one end. On the other end, it's used by industrial companies to ensure that they have authentic parts in their supply chain cycle. So there are a number of use cases for this. The specifics of the product development here are at level where I find it hard to describe in layman terms simply because I'm a layman. This enables the new feature primarily means that you can have several HSMs working across several servers and do that in parallel. It's a quite detailed technical thing, but it opens up for a number of new use cases. I'm actually, I think we have a fantastic product there and we need to put a little bit more now of commercial muscle and marketing behind it to see that grow. It won't have a big impact again, short term, but I think this very interesting market to explore long term and the beauty of it is that we're using the exact same hardware as we're doing for the regular YubiKey it's just a different patch of firmware on the device all right perfect that's very helpful so then a bit more short-term question perhaps but you mentioned the

the EBIT margin guidance for the year. I guess it's fair to say that you're trending towards the higher end of this guidance, but do you still see this landing at the upper end of the range for the year? Thanks.

Yes, we have the guidance here between 5% and 15%, and we agree with you there that we also see that we're more probable to end up in the higher and of that range.

All right, perfect. And just a final question for me. So you did some hiring in the quarter, as you mentioned, about 20 more employees versus Q2. Can you talk about sort of in which areas you're doing this hiring and how do you view this space going forward? Thanks.

So the areas that I always want to prioritize is dev and sales, but it's been pretty broad. One thing to note is as we go into Q4 is that we've had an unusually low employee turnover during kind of unnatural low. So we may see some fallout now that the transaction is completed in Q4, but it actually meant that we had a higher employee, a bigger employee rooster than we anticipated at the end of Q3, because we've done hiring, but we didn't see the same turnover as in people leaving through the quarter. Usually that's a good thing. Or I should say it is a good thing because it means you don't need to spend a lot of resources finding and attracting and hiring and then training people. You can be very efficient working with existing resources. And also, I think it's an indication that we're a good employer. But that has meant that because of the lower employee turnover, we won't need to hire as much unless there is change to that in Q4.

All right. Thank you for taking my questions.

Thank you. I think we have another question from D&B Markets. Joakim.

The next question comes from Joakim Gunnell from D&B Markets. Please go ahead.

Thank you for that. Good day to you, Mathias and Camilla. So two questions, one more broader picture here. We can start off with that perhaps. Can you just talk a bit about how much more room you think there is to grow with your very large tech customers? Obviously, it's encouraging to see this order here in Q4, but can you just talk about where you are in terms of penetrating share of wallet at these larger customers?

Great. So we've highlighted a few times that we're working with some 31% of the global 500s and, sorry, Fortune 500s and some 26% of the 27, I believe it is now, of the global 2,000 customers. That means in most cases, to be candid, that we've got our foot in the door and that we have high security users using the YubiKey. So there's a lot of room for growth. If you look at the aggregate number of employees within those customers that are already existing, our average penetration is in the 5% range. So there's a lot of room for growth if you only limit it to already existing customers. Now, if we talk about high tech specifically, that's the sector where we've had the most initial success. So we have a slightly higher penetration rate or users compared to the number of employees within this sector. I don't actually have an exact number then, but I would guess that it falls more in between the 10% to 20% range on average for that type of customers. But what's interesting there and what we're seeing is that it's not just once we, even if we have wall-to-wall penetration within some customers, there's still room for growth, not just attrition and new use cases, but also that these companies start recommending it to their suppliers or even in some cases requiring it from their suppliers and their network of companies. So I think there's still huge potential within our existing customers and in particular, frankly, within the high-tech customer space. Because one example that I think I've highlighted earlier, Amazon is a big customer of ours. They're handing out keys literally to some of their AWS users, recommending it as the safest way to access their servers. We're not hands-on involved in that effort, but it's of course a great thing for us that they're seeding the market that way. So I think it's not like we've at all have emptied growth opportunities within high-tech. We can grow both within them and with them to their users.

Thank you, Mattias. And then just a final one. I think there At least from my side, there was some misunderstanding in today's results and how to interpret it. So, thank you for highlighting that off-site in Poland. From a relative perspective, one could say that it's cost-conscious to do that in Poland, but then again, some 20 million on a tick-off here, just help me understand here. for you to retain top talent, I would assume that you would need to keep your employees happy and motivated. So is this to be seen as like a one-off, or are similar types of kick-offs to be expected into Q3 also in the coming years? Thank you.

That's a great question. And just for clarity, it was in Prague, not in Poland, so Czech Republic. And it was, like you said, it's not Monaco, but it's Prague, which is a beautiful city. Historically, we've had all company events like this perhaps every second year on average over the past couple of years. Of course, you had a pandemic when there was a break. The reason why we decided to have it now was that there was so much change going on. We felt it was important to get everyone in the same room. There were some concerns and worries among our US employees in particular about the implications of going public and in particular in the in the swedish market um which is perhaps not the most what people are most used to so i've even though i agree that this was called this was a high cost and i and we typically try to be very cost conscious and this incurred a lot of extra cost i think it was money well spent this time or invested even to ensure that we got everyone aligned with what we want to accomplish making people understand that if anything going public solidifies our position as an independent player and makes us independent and in control of our own destiny. So we got excellent reviews and the feedback from that event. And just to be clear, it was a packed program. We had three full days of both broad sessions and then the specific sessions. So it wasn't just, it was a small part of it that was entertainment. Most of it was really hard work and a lot of communication and interaction. But yes, We may do it in the future. There's nothing planned right now. I don't think it's realistic to expect this to happen every year, but from time to time, we will probably get the entire team together.

Understood. Okay. Thank you for a good product and welcome to the stock market.

Thank you so much, Joakim. Appreciate that.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions from the web or any closing comments.

Great. So as I started mentioning, I don't know if that got through. There were no further questions in line from the live audience, but we have received two online questions. So the first one is regarding, if I try to translate it, the question was posted in Swedish. The increase in expenses related to the company event, approximately 20 million SEK in Prague during the quarter. That's the area of the question. It's really a request for clarification. Is that included in 94 million SEK transaction related in the quarter or is it outside of that? And to be clear, It's a one-off thing, but it's not considered as a transaction cost. So the 94 million is related to transaction cost, whereas the 20 million is taken as an operational expense. And that cost is included even in the adjusted EBIT.

Exactly.

Great. The other one, there's another question written in English. And it says, hi, regarding the 86 million SEC order. highly in the report. Can you educate me and the market how big this order is compared to other orders you receive? You have earlier talked about a big order in Q2. How do two orders compare? This one is a big order, but it's not a... We see them from time to time. If you compare the size of this order to the order we had in Q2, it's about a third of the size of the order we had in Q2, specifically. I hope that answers the question. Then we just received a new one. It was a new all-time high on gross margin. Is it a new trend? Thank you. Great question. I don't know if we mentioned this, but we see a very healthy trend when it comes to the gross margin. We are pretty consistently now for some time even above 85%. Part of that is a trend that we're very cost-conscious in manufacturing and have a high level of automation. But in this quarter, there were also some on the margin like a few percentage a few a few uh tenths of a percentage point was also impacted by the fact that we had a relatively strong growth within e-commerce which is our highest margin sector there are no discounts there and another thing which impacts the gross margin on an individual quarter is the composition of products sold as you know we have some single protocol keys that are less costly, whereas their manufacturing cost for the hardware is pretty much identical. So this quarter we sold more of the more expensive type. Sorry, more higher priced types of products. But also high value, of course. Right now there are no further questions. I think that's a wrap for now. Thank you, everyone, for attending. And as always, Camille and I are happy to take any follow-up questions on an ongoing basis. You know how to get to us, I hope. And looking forward to connecting with everyone, either if you have questions. And then we're going to have, of course, a similar session at the end of Q4. And thank you for also submitting interesting and very educated questions. It's really great to have an interactive session like that. Thanks from our end.

Thank you very much.

And have a great weekend once we get there.