Cherry Aktie

Ladies and gentlemen, good day, and a warm welcome to today's earnings call of Cherry SE following the publication of the preliminary half-year figures of 2026. I'm delighted to welcome the CEO, Rogier Volmer; and CFO, Jurjen Jongma. The management will speak in a moment and guide us through the presentation and the results. After [Operator Instructions] We are looking forward to the presentation now.

And with this, I hand over to you. Mr. Volmer, please.

Thanks, [ Ingmar ]. Good afternoon, everyone. Thank you for joining Cherry's first half 2026 earnings call. I will start with a general update and some investment highlights. As shared during our last update call, we focus on stabilizing and simplifying Cherry and focus on what matters. First on stabilize. We are aligning the cost base to the revenue. We are bringing inventories back to healthy levels, and we can drive growth on operations and cash. Second, simplify. We are working towards a leaner organization, clear accountability, a smaller and better product portfolio, and faster decisions.

And thirdly, on focus, there will be fewer priorities and resources go to the segments where we can win. We will focus on the need-to-have before the nice-to-have. These 3 moves will lead to one ambition, which is for Peripherals to reach breakeven at around EUR 85 million revenue and around 44% gross margin.

If you go to the next slide, you will see that when I started, we did a full review, and this slide shows what we said, what we would do, and what has changed so far. On the stabilize part, our operating expenses are lower versus the first half of last year. The gross margin improved materially compared to last year, and the channel normalization is underway.

On simplify, we have the new Management Board structure in place, and the responsibilities between Jurjen and myself are implemented. A new leadership team for Peripherals is installed, and we kick off the product review to further simplify our operations.

On focus, Project Blossom is launched where we focus on 4 growth initiatives and a cost-saving program, and one of these growth initiatives is our Security & Industry business. And for Digital Health, we are well on track to deliver our ambition for the full year.

Two points on the next slide. First, my appointment as CEO was confirmed effective July 1 after my interim mandate. This gives continuity and stability while we execute the turnaround. Second, Jurjen and I both participated in the rights issue. We acquired new shares, and we both oversubscribed, showing our confidence in the direction of the company and the long-term value we can create.

With this, I hand over to Jurjen for the financials.

Yes. Thanks a lot, Rogier, and all of you a good day. Before we dive a little bit deeper into the financials, a couple of remarks on today's presentation. First, the final half 1 numbers will be released after the completion of the 2025 audit, and I will come back on this later. Second, our discussion today focuses on operational segments in their current structure to provide the best basis for comparison. For completeness' sake, however, we will show the so-called discontinued operations P&L in this presentation as per the IFRS requirements.

Thirdly, the presentation covers the first half performance, where detailed Q2 figures will be made available in the appendix of the presentation, and we will publish that online after our call. Lastly, but equally important is to highlight that in this presentation, we focus on our operational performance, excluding Active Key that was sold to Contour last year.

So let me turn to this discontinued operations P&L on the next slide. While revenues continue to reflect the challenging market environment, especially in Europe, we achieved a significant improvement in profitability. Gross margin increased to 43% from 37% in the prior year period, and the adjusted EBITDA loss improved to minus EUR 4 million from minus EUR 10 million last year. This was mainly the result of our structurally lower cost base and an improved margin as well as a positive earnings contribution from DH&S.

At the same time, we further reduced working capital, demonstrating our continued focus on cash generation and balance sheet discipline. Our cash balance at the end of June was EUR 4.3 million (sic) [ EUR 4.34 million ] which was further boosted in the month of July on the back of the recently completed capital increase.

So let me now take you through our first half 2026 performance. And as I said, the structure of the presentation basically represents the structure of the segments, as you know it. Comparable first half 2026 group revenue came in at EUR 40 million, approximately 3% above the first half of 2025 with EUR 39 million on a comparable basis.

When discussing the year-on-year development, it's important to note that this comparison is affected by several extraordinary effects in the first half of 2025. And these mainly relate to the one-off Argand inventory transaction that we did in November of last year. In the first half of 2025, we sold approximately EUR 6 million worth of SKUs that in 2026, we also sold, but then on behalf of Argand and hence, these revenues were recognized as revenue by Argand and not by Cherry.

In addition, there were adverse foreign exchange effects of around EUR 0.5 million. Excluding these items, the underlying Peripherals business proved resilient with revenues declining by 3% despite continued challenging market environment.

Looking at the individual businesses, CDH continued its strong momentum, delivering a revenue growth of 36% year-on-year, while the Components business continued to face a difficult market environment and recorded a further decline.

Moving on to the next slide, I will dive a little bit deeper in the quality of the earnings. Turning to profitability. We delivered a significant improvement in adjusted EBITDA despite the fact that revenues fell short of the same period last year. Adjusted EBITDA improved to minus EUR 4 million in the first half of 2026 compared with minus EUR 10.2 million in the prior year period. This was primarily driven by disciplined cost management and strong margin execution.

At the group level, we reduced costs by around EUR 10 million year-on-year, while gross margin improved by 12 percentage points. Both the Peripherals business and DH&S made a meaningful contribution to this improvement. Although gross margins in the Components segment have also significantly improved, top line in Components remains weak. You will find that central costs remain relatively stable year-on-year, which is where a big part of the Blossom efforts are focused on.

Now moving to adjusted EBITDA. I've mentioned before that it's important to me and to us that we're transparent as to how and by how much we adjust EBITDA to get to adjusted EBITDA. As you can see on this slide, we adjusted for nonrecurring gross margin effects to the tune of almost EUR 1 million. This particularly relates to lower margins related to selling off slow-moving inventories and restructuring costs in the manufacturing area. Adjustments in operational expenses mainly relate to transaction costs related to the divestment of DH&S. As you know, we have a thriving DH&S business and our difficulties largely relate to the Components and Peripherals segment of Cherry.

So let's dive a little deeper into the developments of these segments from a gross margin and from a cost point of view. We've been quite vocal about the fact that we believe that the entitlement margin level for our combined Peripherals business lies around 44%. This relates to sales minus material costs. Year-on-year, we improved this on an adjusted basis from 41.7% to 45.1%. This entirely relates to more focus on margin management and a better product mix.

Second, as I will further elaborate on when talking about costs, our so-called gross margin II saw an increase of 12.5 percentage points to 29%. This basically relates to substantially reducing our manufacturing base. We still believe that 29% is not good enough, but the improvement is promising. Thirdly, we must make sure that our cost base comes down. You see this on the right-hand side, where I show that costs have come down from EUR 17.5 million in H1 2025 to EUR 10.8 million in H1 2026, predominantly driven by lower manufacturing costs and lower selling expenses. We've also said that this is not the end of our cost reduction efforts. And in Project Blossom, we plan to take out even more costs.

Let me end this financial section with an update on the key topics on the next slide. First of all, let me update you on the status of the 2025 audit and our recent financing activities. The audit is well advanced and the majority of audit procedures have already been completed. However, as you can imagine, the anticipated divestment of DH&S will have a material impact on the remaining Cherry business in terms of size, in terms of planning and outlook, and in terms of financing, and all of these aspects have to be evaluated by the auditor. Consequently, the audit cannot be completed until there is more clarity on the outcome of the divestment.

On the financing side, we successfully completed our rights issue. The capital increase comprised up to 9.7 million new shares and was subscribed almost in full. Only 877 shares remained unsubscribed, and these were subsequently acquired by members of the management team. Gross proceeds amounted to approximately EUR 10.1 million and further strengthened the company's financial position.

Finally, let me briefly update you on the planned sale of our Digital Health & Solutions business. We have received a number of non-binding offers, which are currently being evaluated. As this process is ongoing, we're not in a position to now provide further details at this stage, but obviously, we'll do so as soon as something new is worthwhile mentioning.

With that, let me hand back over to Rogier for an operational update.

Thanks, Jurjen. Thank you. Let me start with our Peripherals business and where we currently stand. Over the first half year, our priorities have been very clear, restoring profitability, normalizing the channel inventory, which, in this case, is Europe only, and sharpen our go-to-market approach. First, we achieved a meaningful recovery in gross margin, as already mentioned by Jurjen. This reflects the benefits of our disciplined cost management, a more focused product portfolio, and improved pricing quality.

At the same time, we continue to normalize the channel inventories. We're working closely with our distribution partners to bring inventory levels back to a healthy position over the course of the year, creating the basis for more sustainable sell-through.

We have also further refined our commercial approach. Rather than going after broad market coverage, we are concentrating on selected full-service partners and prioritizing product market combinations where we see the strongest opportunities. This reduces operational complexity, lowers inventory risks, and improves capital efficiency.

Regionally, our priority is different. In Europe, the focus is on accelerating sell-through, completing the channel cleanup, and launching targeted B2B growth initiatives. In the U.S., we are redesigning the commercial model, reducing the number of SKUs, and further optimizing our route to market together with our reseller network. In China, market conditions remain challenging following the phaseout of governmental support for consumer electronics. And here, our priority is to continue adapting the portfolio to the current demand environment.

Let me now turn to Digital Health & Solutions. This business operates in a highly regulated market with high entry barriers, giving strong visibility and attractive long-term growth. The main driver is Germany's telematic infrastructure rollout. Around 150,000 institutions are still to be connected by 2027, which gives a predictable demand.

Our certified secure platform already handles secure messaging and sensitive health data with room to expand into further compatible services. We also see a clear path to growing our recurring revenue. We are well positioned to move from hardware-led sales to SaaS subscriptions, and our installed base and terminals support cross-selling additional software over time. In short, the regulatory tailwinds, a growing installed base, and rising recurring revenue give this business a clear sustainable growth path.

On Project Blossom, let me summarize again the key operational priorities under this project. The program is built around 5 focused initiatives that are designed to accelerate profitable growth while further improving operational efficiency. The first priority is to strengthen our position in China by accelerating growth in those market segments where we see attractive opportunities by further aligning our portfolio with local demand. In parallel, we are redesigning our commercial model in the U.S. to simplify our route to market, improve execution, and increase commercial effectiveness.

The third focus area is expanding our presence in our home country in the DACH region. We see attractive growth opportunities in both existing customer relationships and new market segments, supported by a more targeted go-to-market [ approach ]. We're also investing in our position in the Security & Industry segment, where we aim to further strengthen our market position with a differentiated product offering and deepen customer relationships.

And finally, all of these initiatives are supported by a continuous focus on efficiency and effectiveness. We remain committed to simplifying processes, reducing complexity, and allocating resources to areas where the highest value creation is possible. All combined, these initiatives form a clear operational road map to improve execution, strengthen our market position, and support sustainable profitable growth over the coming years.

On the next slide, you see the key priorities for the Cherry Group. As you can see from this slide, we have 4 key priorities. We have successfully completed a capital raise, which gives us the bandwidth to implement Project Blossom. As mentioned before by Jurjen, the sale of Digital Health is well underway and several non-binding offers are under review. With proceeds from Digital Health, we will repay debts and strengthen our balance sheet.

And last but not least, the execution of Project Blossom will bring us back to growth and a reduced cost base. And we are pleased to share that we are well underway with all these priorities.

Let me finalize with a management summary with 4 messages to take away. One, is we are consolidating the plan. The cost base will be aligned to revenue and gross margin is materially up. Two, we have a clear strategy: stabilize, simplify, and focus with one transformation program, which is called Project Blossom. Three, we have a clear ambition. Peripherals are breakeven at around EUR 85 million revenue and around 44% gross margin. And four, is a disciplined execution. Few priorities, clear accountability, and a strong focus on cash and working capital.

I will now hand over to Ingmar for the Q&A.

Thank you, Rogier. Thank you very much for the presentation, and we will now move on to the Q&A session. [Operator Instructions].

Some questions from me. The first one is on the [ DOPs ] segment, which seems like you stabilized a decent amount with only a 3% decrease on an adjusted basis. And a few words about [ next ] to explain what -- like the most important changes you made on that business? Was it more like on inventory? Was it more like your partner selection? And on top of that, what is needed to grow the business and increase margins further to reach your '27 target.

So for me, Bastian, the question was not entirely clear. You broke up a little bit. I think your question related to the Peripherals business and how the margin increase came about, whether it was on the back of partner selection, distribution channels, product mix, and things like that. Is that correct?

Yes, it was on margin and on the growth. So only a 3% decrease on an adjusted level. It seems like you stabilized quite a bit. Yes, what measures you took there as well?

Yes. So let me do one part of the equation and then I hand over to Rogier for the, let's say, more commercial aspect of margin improvement. I think one of the major drivers outside of our decision to limit distribution to specific distribution partners is the fact that, as you know, in the course of 2025, a restructuring plan under [ S6 ] was agreed to with the banks, and that basically pushed a fairly steep reorganization and restructuring of the manufacturing environment, and that obviously specifically relates to Peripherals and Components. And this is from a cost point of view, one of the elements that boosted margins.

And then I think on the commercial side, and I'll turn to Rogier in a bit, but we're just much more stringent on what deals to pursue and what deals not to pursue, but Rogier can elaborate on that.

Yes. Indeed, Bastian, sorry, I could not reply immediately because you were breaking up a little bit. On the margin improvement, so what we see is it's actually across the 3 regions, so both China, Europe, and the U.S., we see margin improvement versus last year. In the U.S., related to what I shared earlier, is the changed operating model where we decided to focus on fewer accounts, but do them better and also to optimize, for example, promotional spend to make sure that we return on the investments that we do, meaning sometimes less is more in this case.

So investing more promotional spend is not always leading to better results. So it's a mix across the countries and across the regions. In Europe, it is, as mentioned as well, is more focused on, say, which customers to work with, which products we want to sell, but also a first step into improved pricing quality in the pricing model and pricing structure that we are kicking off. And you see that these effects are kicking in. So it's early days, but we see that the operational margin indeed is improving versus last year given the input and efforts that we have put in.

Maybe a little outlook on H2. Do you think you can grow the Peripherals business in H2 again on an adjusted basis? Or is that too early?

Yes, it's a little bit too early to say. One point which I raised is that we have still some challenging channel inventories in Europe, which will slow down sell-in. So there, we need to accelerate sell-out or sell-through to get to healthy levels. So it's a bit early to say. For us, important this year is that we are also preparing the company to get to the level where we said we would be next year, which is the stabilized 44% gross margin or the minimum of 44% gross margin. So in 2026, we are working towards that plan for 2027.

Okay. Perfect. And my last question is on the Components business, which, yes, is still in a challenging situation. Would you expect the business to wind down in the future? Or what kind of prospects do you see here?

Yes. We're looking at that as we speak. So yes, it is challenging. And yes, we are looking at all opportunities, and we're looking at all models to make the best decision for the company going forward. So it's under review. And to your point, it is indeed -- it is a slightly more challenging market than the Peripherals business.

[Operator Instructions] And we move on to the next participant [indiscernible]. [Operator Instructions].

I hope you can hear me now.

Yes.

Maybe on top line again, the inventory or channel normalization has been going on for quite a long time. Is there maybe any end in sight, maybe some hope that sales are going to increase soon, maybe this for the beginning?

Yes. Well, hopefully, it's a bit more than hope. What we're working against is that we are trying to normalize it in the course of this year. Also here, what I mentioned as an answer to the question of Bastian is that we're preparing the company, the Peripherals company, to be ready for 2027. So the aim is to reduce channel inventory significantly in the course of this year, where we anticipate to be significantly below what we currently have at the start of 2027.

Perfect. And the second question on cost control. We have seen good progress here in recent quarters. Any bigger initiatives that maybe put pressure on cost or cash planned for 2026?

For 2026, I mean, there's a couple of elements in terms of cost, and we have outlined already that in Project Blossom, we plan to take out more costs. Some of these expenses and costs are discretionary in nature. And what I mean with that is you take a decision to take -- to no longer do certain things. So it doesn't cost an investment to get rid of these costs.

When it comes to people, when it comes to size of the organization, obviously, we also have to make sure that people get a fair severance package and this needs to be catered for. And this needs to be properly planned in view of the available cash that we have in hand.

Perfect. And then maybe one last on liquidity. If I count it correctly, you have collected around EUR 15 million via the capital increase and then some commitments from Argand in May, I think. Can you give us an update on cash generation or cash burn where you currently stand?

Yes. So the -- I mean, I have to unfortunately correct you a little bit because the liquidity comfort that Argand provided is subsequently diminished with the money that Argand actually invested in the capital increase. So the net liquidity improvement is not EUR 15 million, but the gross proceeds of EUR 10.1 million that was also listed in the presentation. So that is one aspect.

I think Rogier was quite vocal about the 4 things that need to happen when it comes to restoring our balance sheet and setting up the remaining business for success. One, obviously was and is that capital increase. The second one is the divestment of DH&S. Then we need to make sure that we settle the outstanding bank debt, and we have to execute on Project Blossom.

Clearly, with a divestment of Digital Health & Solutions, the cash situation of the company remaining is negative, which is why it is so urgent that we execute on Project Blossom to get to this EBIT breakeven situation in 2027.

Okay. Just so I understand the number correctly. So in May, the announcement was made by Argand to commit capital and then this committed capital was seen during the increase. So that's basically one announcement.

Correct.

And we move on to the next participant, Mr. Felix Ellmann. [Operator Instructions].

So can you hear me now?

Yes. We can.

Well, the majority of my questions already have been posed. Can you shed some more light on the question of the divestment, whether this will be successful? I understand that you can do this only very limited, but maybe you can share some kind of probability or how many parties you are talking to or whether we can be sure that it will be done in the next, let's say, quarter or 2. Tell us what you can.

Okay. Let me try and be as transparent and explicit as possible. Like we said in the presentation, we've received a number of offers. They're all non-binding in nature. Discussions with a number of interested parties are ongoing. There is definitely appetite. And I think our decision to apply discontinued operations for the business should be fair and occasion enough that we believe it is more likely than not that the DH&S will be divested. And I'm sorry, Felix, but there is not much more that I can say to that.

Okay. So we move on to our next participant, Mr. Huber. [Operator Instructions].

Sorry.

Yes. Now you can hear me.

So can you give perhaps a little bit light on '27. So how would you like to get the turnover like it's more than double from this year? What are the points you think you can do that and especially with the market?

Yes. So it's not double. It's not double, but we expect indeed double-digit growth versus this year. One is that the normalized channel inventory should support a higher sell-in in 2027. So you see that with high channel inventories. And this, again, as I outlined before, this is Europe only. But with the higher inventory levels in Europe, we need to actually sell out more or we can sell out less than what we should sell out. So sell-in is expected to be higher in 2027, even on a normalized operational basis once the channel inventory is lower. So that's one reason.

And the other actually are the 4 initiatives that we shared in Project Blossom, which is the new operating model in the U.S. where we focus on fewer but bigger accounts. In China, which is predominantly around gaming. You see that in China, the majority of our business is done in gaming keyboards. So with the China team, we're working on a more China for China portfolio, which should support growth. We -- there is an opportunity for us to grow. It is a challenging market, but the market shares that we have are still quite low. So the opportunity for China to grow there as well.

And then for Europe, for now, we focus on the DACH region. Within the DACH region, specifically Germany to grow our B2B business for office products. And in the same kind of -- in similar time frame, we're also increasing our commercial capacity in both the U.K. and France, where we hired some new people.

And the fourth is the Security & Industry input device business, as we call it, where we see an opportunity for Cherry with secured keyboards, but also industrial keyboards to focus on, firstly, the German market. And secondly, after approval success, we expect to roll it out to France, the U.K. and perhaps Benelux and Nordics, first, France, U.K.

So the channel inventory normalization, combined with these 4 growth initiatives in Project Blossom should lead to that growth. And we have to grow because we cannot restructure to profitability. So we need to take cost out, which we committed to do, and we're well underway. But the top line growth will come from the Blossom initiatives and the channel normalization. I hope that clarifies.

And competition-wise, any new competition coming up or is still...

For the Peripherals business, I don't think so. I think the competition is -- the competition out there and the expected competition is the competition that we have seen for many years in a row. I don't expect that to change. Perhaps there will be some consolidation. We see that in gaming keyboards, there will -- there are more and more Chinese entries on the European market. But overall, I think the market is pretty transparent, and I don't expect too much change over there.

Thank you Mr. Huber for your questions.In the meantime, we have received no further questions. [Operator Instructions] That's not the case by now, and we, therefore, come to the end of today's earnings call. Thank you for joining, listening and all the questions. A big thank you also to the gentlemen for the presentation and the time you took to answer the question. I wish you all a lovely remaining week. And with this, I hand over again to Rogier for some final remarks.

Yes. Thanks, Ingmar. So as already mentioned, thank you all for your time and your questions. A brief summary. We are moving -- the company is moving step-by-step into a slightly better direction, I would say. We see that the results of the first half year have improved versus the first half year last year. We have a concrete plan, which is Project Blossom. We are well underway there.

We have shared the 4 priorities for the company, the rights issue, which we successfully completed, the divestment of Digital Health, restoring -- working on improving our balance sheet and reducing our debt. And then last but not least, is the execution of Project Blossom. So we're well underway. There's still a lot to do, but we feel positive about the future. Thank you so much for joining.

Ladies and gentlemen, welcome to Cherry SE's Analyst Conference in Q1 2026 Earnings Call and thank you for joining. You have just seen the video of Cherry XTRFY's launch of a new complex magnetic switch keyboard. The key component of this new gaming keyboard is tunnel magnetoresistance, abbreviation TMR technology, which is considered the next evolutionary step in magnetic switches.

For gamers, this technology translates to noticeably higher sensitivity and shorter response time. Combined with an ultrafast TMR performance, the K5 Pro TMR is the ultimate tool for ambitious gamers who demand uncompromising precision, speed and comfort.

So today's call is being recorded. [Operator Instructions] Joining me in the room today are Rogier Volmer, Chief Executive Officer; Jurjen Jongma, Chief Financial Officer and our working student, Tim; and we have Dr. Udo Streller, our Chief Operating Officer, dialing in from Auerbach.

Let me briefly outline today's agenda. Rogier will open with his investment highlights and lay the foundation, reflecting on his first 4 months as CEO and the key strategic conclusions he has drawn so far. Jurjen will then walk you through our Q1 2026 financial performance, covering underlying revenue and margin development as well as free cash flow progress. He will then explain our financing strategy, including implications of the proposed reverse share split. Rogier is then going to present the strategic outlook and main aspects of our new transformation program, Project Blossom. After the presentation, we will open the Q&A session.

With that, let me hand it over to Rogier.

Thanks, Nicole. Good afternoon, everyone, and thank you for joining the Cherry's analyst conference in the Q1 2026 results call. Today, we will first go through our Q1 results and then explain how we want to move the company forward. But let me start first with my observations, which will lead to how we want to move forward and a few key milestones of the previous quarter.

So Cherry has a strong foundation. We have a trusted global brand built on strong engineering, and we have solid positions in office, gaming and security peripherals or input devices. We have super committed and engaged people and people that are super proud of our products. This is a real strength and a strong base to work from. But we also need to improve. Our organization is too complex, and we need to be faster and more focused. Our goal is to simplify our organization with more focus and execute with discipline.

In the past months, I've spent time with our teams and review the business in detail. From this, we defined our priorities, what we will focus on and where we will invest. Later in the presentation, I will explain this in more detail through Project Blossom, our plan to strengthen the Peripherals business and return Cherry to sustainable profitability.

Before we move to the Q1 financials and year-end, let me highlight some of the key milestones from the first 3 months of 2026. We saw some first signals of encouraging progress in Q1 when it comes to our performance, our financial performance. Our EBITDA margin improved by more than 5 percentage points year-over-year, and this shows that cost control is working.

We also had a positive free cash flow of EUR 1.1 million, which is around EUR 10 million better than last year. Our Digital Health business performed and is performing very well. The revenue tripled on a comparable base versus last year, and Jurjen will explain this more in detail in the finance part.

We also announced the EGM, the Extraordinary General Meeting on May 22, where we will propose a 4:1 reverse share split. This is an important step to improve our capital market position and support potential future.

With Project Blossom, we are now -- we now have a very clear plan targeting to be EBIT breakeven in 2027 through a combination of rightsizing the company and growth initiatives. As I mentioned, more on this after financials that Jurjen will now present in detail. Jurjen?

Yes. Thanks a lot, Rogier. And ladies and gentlemen, a very good afternoon. Let me take you through our Q1 2026 financial performance. First, on revenue, you will find that it is a bit of a mixed bag. And I think the performance in Q1 needs a bit of background color. So group revenue came in at EUR 20.8 million, which is approximately 18% below Q1 2025 revenue of EUR 25.3 million. Unfortunately, there is a number of effects that makes comparing Q1 2026 with Q1 2025 difficult. For this, we inserted the smaller graph at the top right of the visual for easy reference.

The effects relate to, first of all, in Digital Health & Solutions, there is EUR 1.1 million of Active Key sales in Q1 2025 that obviously was divested in the course of Q2 2025. And then in Peripherals, there is EUR 2.7 million of sales included in Q1 2025 that relate to SKUs that were sold in a transaction with our shareholder in Q4 2025, and we, hence, did not sell in Q1 2026.

In addition, there is approximately EUR 700,000 of currency effects that negatively impacted Q1 2026 in comparison with Q1 2025. So as Rogier pointed out, on a like-for-like basis, sales in the DH&S segment more than tripled to a level of EUR 5.2 million in Q1 2026. At the same time, the trend in our Components segment continues to decline, reflecting the commodization of the Components business in general.

Lastly, in the Peripherals segment, in addition to softness in the sell-in, which is caused by high channel inventories at our distribution partners, it's important to highlight that in North America, like I said, Q1 2025 includes sales of SKUs that were sold to Argand in the third quarter. This affects a further decline in sales in Q1 to the tune of EUR 2.7 million. And like I said, negative currency effects further impacted our sales to the tune of EUR 700,000. So on a like-for-like basis, the segment sales developed as follows: an increase of EUR 3.6 million in DH&S and a decline of EUR 3 million in the Peripherals segment and then lastly, a decline of EUR 700,000 in the Components segment, where we manage the quality of contribution margin.

Moving on to the next slide, where I dive a little bit deeper in the quality of our earnings. First of all, EBITDA. So Q1 group adjusted EBITDA came in at minus EUR 600,000, a meaningful improvement versus the EUR 2 million negative in Q1 of 2025. Adjusted EBITDA margin improved by more than 5 percentage points year-over-year. The improved results are a direct consequence from 2 elements which are important to highlight. First of all, and I come back on this a little bit later, the margin management. Great performance in the DH&S domain, especially driven by very healthy contribution margins, stabilization of operational contribution margins in the peripherals domain and clear focus on positive contribution margin in the Components segment, albeit that the segment is small in absolute terms. Again, I will elaborate more on margins in the next slide.

Secondly, cost management. Operational costs reduced by EUR 4.6 million in Q1 and even by EUR 5.5 million on an adjusted basis. It shows that our restructuring today is paying off and that we have a clear focus on spending less with a keen eye on liquidity and cash flow. At the same time, we also must be clear. We're not yet there where we need to be. Our cost base must be tuned to a level where we can also sustain lower levels of revenue. Rogier will come back on this later in the presentation, but it is good to see that the trajectory is positive and the drivers are structural and not driven by incidental [ effects ].

Let me end this financial section with some key trends on the next slide. I've elaborated on our revenue picture quite extensively. And when we turn our focus on gross margin, we see that the trend unfortunately is too [ erratic ]. While DH&S performs at a very good level, we're still not at the level where we need to be in the Peripherals and Component segments. In these segments, we strive for an average contribution margin of around 44%. You can see this at the bottom of the slide. We're getting close, but there remains work to be done.

I'm very pleased with our free cash flow performance, but it must be very clear that eventually, free cash flow must come from operational business, of course, in addition to minimizing working capital.

Let me now spend 2 slides on the announcement we published a couple of weeks back. We've sent out an invitation to our shareholders for an EGM taking place on May 22 and announced a reverse share split. Let me share some more details with you and explain the strategic rationale and the technicalities.

As Rogier mentioned, we're proposing a 4:1 reverse share split for approval at the EGM on May 22. Technically, it means that 4 existing shares will be consolidated into 1 new share. The share capital will be reduced from EUR 24.3 million to EUR 6.1 million. And in parallel, we're proposing a simplified capital reduction to offset the accumulated losses on Cherry's balance sheet. This is purely a nominal capital adjustment. There is no cash impact. Economic ownership ratios remain unchanged, and existing shareholders retain the same proportional stake in Cherry.

The strategic rationale is clear. The reverse split, [ for source ], carries capital market eligibility and it creates the structural basis we need for potential future financing transactions. It's a prerequisite and not a goal by itself. We're building the foundation from which future steps can be taken. We'll provide more details on our overall financing approach as appropriate once the EGM has taken place.

Now let me walk you through the 3 pillars that frame our current financing situation and the strategic flexibility we have going forward. On the left, you'll see the key corporate action from November 2025. We announced potential sales of one of our business segments and the rationale is straightforward. Proceeds from the sales would directly reduce liabilities and free up capital to fund growth in the remaining higher quality business while at the same time, like I said, it would strengthen our balance sheet.

In the middle column, we want to highlight our Peripherals division continues to be a strong market player. Rogier will elaborate on that further on in the presentation. We've identified complete opportunities to improve the cost base within the division and additional capital would meaningfully accelerate the pace of restructuring we have underway.

On the right, lastly, the financing status quo, which is actually a positive of relative stability. Our EUR 23 million UniCredit facility does not mature until the end of 2027, which gives us clear runway. We closed Q1 2026 with EUR 3.5 million cash on hand. And importantly, the reverse stock split, which is the headline of this slide, enhances our opportunity for capital market solutions. A higher share price typically broadens the institutional investor base we can [ attest ] and improves the conditions for any future equity-related transaction.

In summary, we've defined a path, monetize on DH&S, improve cost efficiency in Peripherals and preserve strategic flexibility to the capital market measures we've announced. We're confident in our ability to execute.

And with that, let me hand over to Rogier to guide you through this. Thank you.

Thank you, Jurjen. All right. So before I speak about the virtual outlook in detail, let me start by addressing our Digital Health & Solutions business first. Digital Health is a strong business. It operates in a regulated market, and therefore, it has high entry barriers and good visibility in the health care market. The rollout of the telematics infrastructure or TI continues to drive growth. Around 32,000 health care facilities still need to be connected. This is because the rollout for the users was more complex than expected, and this demand is now extending to 2026, and that is what we clearly see in our numbers.

In Q1 2026, the e-health terminal sales increased by 47% compared to Q4 2025. At the same time, we reached an important milestone. We received the final approval for TI-Messenger Pro after completing the certification process with gematik. This means the product is now launched and the rollout started in Q1 with the first users already on board. With the current state of the business and the strong momentum, we are very well positioned for the business for continued growth.

Then on the Peripherals business. We start from a position of strength. Cherry is a premium brand with a long history, engineering history and that is also how we are being recognized and perceived in the markets that we operate. Our switch technology, combined with our hard and firm knowledge is well known and trusted by professionals, gamers and partners in the industry. This is a strong base we can build on, and we will build on. At the same time, we are changing how we operate.

We will move to a more asset-light model, reduce fixed costs and improve efficiency. We're also focusing on our core input device categories where we are strongest. We're simplifying our portfolio so we can move faster and execute better. We are building a leaner and more sustainable business. This will help us to grow profitably with faster innovation, lower cost and stronger margins and cash flow over time.

So briefly about the markets. The market that we operate in the global peripherals market is growing at a rate above inflation. Within this total market, both gaming and office peripherals are growing fast. The global gaming peripheral market is expected to reach about USD 12 billion by 2030 and the global office peripherals market should grow to around USD 60 billion. Our focus is to make sure that we capture our share of this growth.

In 2025, we grew 13% in the Europe 3 markets. Europe is Germany, U.K. and France. This is for the corded keyboard segment. And with that, we grew faster than the market in the same period.

Next to this, we also managed to increase our average price, bringing our prices closer to the market average, more in line with the Cherry brand positioning and the product quality. So the results of 2025 are that in the corded keyboard market in the largest 3 European markets, we are the leader with an increased market share of 42% and in Germany, even 60%. However, having said that, we are aware that the cordless keyboards are growing stronger, and our ambition is to grow our market share stronger in this segment.

We go to the next slide. As mentioned in the beginning, we have launched several strategic initiatives to reposition the Peripherals business for profitable growth by focusing on 4 clear initiatives: driving revenue growth, investing where we can make a difference, rightsizing the organization and optimizing our cost. These initiatives are captured in Project Blossom. So what you can see from the next slide is that Project Blossom is about bringing our Peripherals business back to growth. I will share a little bit more in detail.

There are 2 dimensions in Project Blossom. We have identified 4 growth initiatives and rightsizing exercise. On the growth side, we are building a stronger B2B office business on the back of a strong market share in corded keyboards, starting in Germany and the U.S. We will further strengthen our e-commerce model for both office and gaming with focus on the U.S. and Western Europe. In APAC, with China as our dominant market, we will accelerate growth in gaming keyboards with a stronger China-for-China approach. And finally, our Security & Industry input devices are from now on a strategic priority for Cherry peripherals, and I will elaborate more on that in the slide after next.

On the rightsizing side, we are targeting at least an EUR 8 million reduction in nonmaterial costs in the Peripherals and Component business on an annualized basis. This EUR 8 million comes on top of the EUR 10 million OpEx savings we announced for 2026 versus 2025 at our last earnings call in March. And this will give us a clear path to EBIT breakeven in 2027.

So starting from the 2025 base and by the disciplined execution of Project Blossom, we see a path to revenue growth across office, gaming and security with the overall Peripherals business growing to well above EUR 100 million by 2030. These numbers are targets and not guarantees, but they are based on a concrete bottom-up plan, and our Q1 performance gives us the confidence that we're moving into the right direction.

A little bit more in detail on the Security & Industry business, as I shared before. We see this the Security & Industry business, the security keyboards as an important growth opportunity for Cherry. This category fits very well with our in-house capabilities and with current market trends. For this category, we moved to a more B2B -- direct B2B approach, focusing on selected high-value customers, both the corporate end user as well as the value-added reseller.

At the same time, we are building partnerships with key players where we already have relationship with, such as the German military, the U.S. Department of Defense and Deutsche Telekom. We're also launching new products, including the next generation of security keyboards. Next to this, we are exploring more use cases, for example, in defense and other high-security environments.

Looking ahead, we see a strong potential here. We can combine our hardware with new technologies such as keystroke biometrics and passwordless solutions. This also opens the door for subscription-based revenue. The market trends do support this opportunity. The defense spending is increasing and there's more focus on secure European solutions. And for now, keyboards are being seen more and more as a potential input security risk. So overall, and based on our knowledge and in-house technology, we are well positioned to grow in this segment.

Then on the management board. We have announced today that after more than 4 years, our COO, Udo Streller, will leave the company at the end of June. Under Udo's leadership, the Auerbach site was successfully developed into a modern European hub for development and logistics. During his time with Cherry, he also played an important role in scaling the company's operational structure and capabilities. And we thank Udo for that.

With this, we will now return to a 2-member management Board structure. Both Jurjen and I will cover the scope of operational responsibilities supported by a strong functional leadership team. This leaner structure is better aligned with the size of the company we are building, and it will contribute to faster and clearer decision-making.

At Supervisory Board level, we are proposing a rightsizing to 4 members at the upcoming EGM on May 22. 3 of the current members will step down, and Stephen Greenberg will continue to serve through this term. This adjustment reduces cost and creates a leaner and more efficient governance structure, better aligned with the current size and the scale of the company.

So let me close with the summary. The new scalable business model for Peripherals will be leaner, focused on core input devices with a simplified portfolio, faster decision-making and less complexity. Our trading in the first quarter of 2026 was in line with our underlying expectations, and the second quarter so far shows solid performance in Peripherals and a strong momentum in Digital Health.

The M&A process is ongoing. And as mentioned, we expect that we will be in line with the early announced time line. Given this, given the ongoing M&A process, at this moment, we do not believe that we can share a reliable outlook for the rest of the year at this stage. The expectation is that we can share this in more detail next quarter.

So overall, our priorities are clear. Implementation of the Blossom project, executing the financial steps and restoring the confidence in Cherry as a company.

With that, I hand over to Nicole.

Thank you, Rogier. [Operator Instructions] So the first question comes from Bastian Brach, Montega.

First question for me is on the DH&S segment, which had quite a good revenue increase year-on-year. Could you outline the drivers for that development? Was it exceptionally strong hardware demand or any other drivers you would highlight?

So the question was about the growth of the Digital Health business?

Yes.

I think as I mentioned, we see the growth coming from the e-health terminals. So the growth versus Q1 last year was significant. As I said, it was more than tripled. If you compare to Q4 2025, we grew 47% in the terminal business. Also on the back of the delayed rollout of the 32,000 health care facilities in Germany, that still have to be connected. So part of the rollout that was expected in 2025 moved into 2026. So that is the most -- the largest part of the growth that we have realized.

Okay. So any outlook for the quarters ahead? Is it a sustainable level? Or will it come down because there were some extra effect in Q1?

Yes. No, what I mentioned is that we had a strong Q1, right? And what we see right now up until we are now in the first week of May, we see that the performance is still more than solid. I think as we said that solid performance of Peripherals, but we continue on a good growth level with digital health. So we expect also a good Q2.

Okay. My second question is on the cost side. First of all, the central costs increased compared to previous years despite the cost management. So what drove that? And also, what are the costs you expect for the Project Blossom?

Can you hear me well?

Yes. Yes.

So it's a good question, and I found that as well, but it basically has to do with we're allocating costs out of the central section to, let's say, the operational units. And because especially in the Peripherals domain, the revenue was so much lower, also less costs were allocated to the Peripherals domain. So the EBITDA picture that I showed per segment is a little bit skewed, and that's why I focus on total cost reduction, which was the EUR 4.6 million on a reported basis and EUR 5.5 million on an adjusted basis. So the comparison on a segment-by-segment way in terms of cost doesn't make a lot of sense. And therefore, we're focusing on the cost for the total company as a whole.

Okay. And the costs for Project Blossom for like rightsizing the company, et cetera, do you have any indications on that?

We're still, of course, contemplating the cost effects to that. I think it's a two-edged sword to be honest. So one is ensuring that we have the right funds available to invest and to grow. And the second is money that is needed for rightsizing. We're in the course of going through all of that in granular detail. So I cannot share this at this point in time. But again, it's a two-edged sword. So one is making sure that we have the right capabilities and competencies and also resources in place to invest for growth. At the same time, optimizing cost is a term that I prefer over rightsizing, but that certainly will also drive investments. But at this point in time, it's not exactly [indiscernible] how much.

Okay. And then my last question, and I'm afraid you won't answer that. But on the potential sale of a business unit, are there any more details you can share? It seems from your presentation that it's more centered around the DH&S segment. But yes, any comments on potential buyers or yes, anything you can share there?

No, I can confirm your fear. So indeed, we will not further elaborate on it. I think you should, for the time being, satisfy yourself with the remarks that we also make in the presentation. We believe that we are well on track on the time lines that we define.

I will wait until the Q2 numbers.

Thank you, Bastian.

Thank you, Bastian. The next question comes from Felix Ellmann, Warburg/MPC Bank.

Can you hear me?

Yes, we can hear you.

Could you elaborate on the fact that you made an interesting EUR 1.1 million positive cash flow in Q1, how you did that? And maybe you could say anything with regards to the selling process you mentioned of one or the other units? Maybe yes, maybe no, at least on my two questions?

Okay. Yes. So from a cash flow point of view, yes, indeed, it's just working capital. I mean at the end of the day, the only opportunity that we have in terms of cash flow is either operational performance or working capital. So there is no further magic to it. I do think that you should bear in mind the comment that I made earlier, even though the operational improvement in comparison with Q1 2025 is promising, and we're happy with it. Of course, reporting a negative EBITDA result on an adjusted basis still means that on an average basis, we burn cash to the level -- to the tune of the level of the adjusted EBITDA. So in this case, the positive cash flow stems from working capital management. And as to the M&A process, I think I answered the question further previously with Bastian.

All right. Thank you for questions. The next question comes from Ramon Huber.

Can you hear me?

Yes, we can hear you.

Okay. So can you remind me on the time line? You mentioned the time line for the sale. What was the time line?

Back in March, we announced that we expect to be able to announce something towards the end of the first half of this year.

Okay. And then you do this reverse split and talking about the possible capital increase. So I'm not -- it's not really clear for me why you need more capital if you do the sale of the DH&S?

Yes. So even though the time line as communicated just now by Rogier, we just do not want to be in a position that any of the actions that we now want to start. So either restructuring or pursuing growth initiatives is interrupted or that we have to pause that because we have not closed the sale of the DH&S business unit.

So for us, timing is everything. I think there is no, let's say, secret around or difference of opinion around the fact that we are very cash constrained. Executing on restructuring, like I said, regardless, whether it is investing into growth or whether it is investing into rightsizing the organization, costs money, and we don't want that process to stall. So we want to keep all those options open.

Okay. But I think you should get quite a lot of money from the DH&S. So does it make such a big difference? You wait for a month or so?

Yes. I mean we also believe that the valuation of the DH&S business is positive and helps us. So I mean, it's not a clear-cut defined case yet. We want to keep the options open. And if so necessary, we will execute on the capital raise that you mentioned.

Okay. And then why the head of DH&S is not in the meeting. So I think the path really working well. So it would be interesting to hear him also what he is saying about the whole [ business ].

Okay. I'm not sure what we did in the past, but for this meeting, like in March, we decided to have this meeting with the 3 Management Board members. So that's the reason, nothing else.

And then perhaps a question to Mr. Streller. So you're leaving the company. I think you have done quite a long or important job there. So your reasons to leave and why you're not staying and seeing a success later on?

The reason for leave is the end of the second contract extension we have And the leaving is on good terms on both sides. And the reason mostly is already given as explained by Rogier. It's adjusting to the company to the size and also the Management Board with 3 for the size of the company is the rightsizing. And that's -- therefore, also we both are fine so that there's not another extension of the contract. That means I'm not leaving. So it's just that the contract is not again then third time extended.

Thank you, Ramon.

[Operator Instructions] So this doesn't seem to be the case. So with no further questions, I will turn the call back to Rogier for some closing remarks.

Yes. Thanks, Nicole. Yes, let me -- from our end, apologize for the technical interruption in the Q&A. Of course, we tested and tried it yesterday and today and everything worked fine. So our apologies for that.

So to summarize, we're moving as a company. Our Q1 numbers show operational improvement, which is encouraging to see. We have a concrete plan now for Peripherals with Project Blossom. We're taking some governance measures right now, as I mentioned. There's more work to do for sure. The foundation is stronger. The direction is clear. And with all the work ahead of us, we're looking forward to updating you on our progress during the next meeting.

Thank you for your time. Thank you for your participation. Thank you for your questions. And Nicole, I think this is the end.

Thank you. This concludes our analyst conference on Q1 '26 results call. Have a good day.

Thank you.

Thank you.

And have a good day.

[Presentation]

Ladies and gentlemen, welcome to Cherry SE's Full Year 2025 Earnings Call. Thank you for taking the time to join us today.

You have just seen the launch video of Cherry [indiscernible] first TMR-powered keyboard. This product exemplifies our strategic focus, combining cutting-edge magnetic technology with premium build quality and next level performance. The keyboard is designed for gamers who want maximum speed, precision and customization. As customary, today's call is being recorded. [Operator Instructions]

Joining me today are Rogier Volmer, Chief Executive Officer; Jurjen Jongma, Chief Financial Officer; Dr. Udo Streller, Chief Operating Officer. Today, Udo has dialed in from China. Let me briefly outline today's agenda.

Rogier will begin with introductory remarks. This being his first earnings call as CEO of Cherry and will frame the strategic direction of the company and highlight key milestones achieved in 2025. Jurjen will then walk you through our Q4 and full year 2025 financial performance, followed by a segment review and a detailed discussion of a comparable P&L also on a segmental basis. He will also explain the structural and operational drivers behind the significant reduction in working capital.

Udo will subsequently provide an operational update, including progress on our restructuring program and advancements in sustainability initiatives, particularly regarding our carbon footprint. We will conclude with Rogier outlining our strategic outlook, including insights into our innovation pipeline and our way forward. After the presentation, we will open the Q&A session.

With that, let me hand it over to Rogier.

Thank you, Nicole. Good afternoon, everyone, and welcome to Cherry's Q4 and Full Year 2025 Earnings Call. Today, we will walk you through our final 2025 results and the actions we have taken to reshape our business across the key segments. We will also outline the actions already implemented and those that are still ahead of us to ensure a sustainable change, of course.

While this call is primarily about the financial performance, it's also an opportunity to introduce myself and to share my initial observations. My mandate from the Supervisory Board is to create stability, support the team and ensure Cherry is managed with professional discipline during this important phase of the company. Most of my career I spent in peripherals and accessories. I worked 9 years at [ Philips ], 10 years at [ Logitech ] and 4 years at [ Trust ]. And most recently, I held a management position at [indiscernible] Europe, where I have been responsible for driving a turnaround in two of the core European regions.

What attracted me to Cherry is the combination of a global recognized brand, strong engineering capability and a company that is at an important turning point. We have leading technology and highly committed employees. Over the past weeks, I have visited our teams worldwide and without exception, I've experienced strong engagement and pride in the company. The focus now is to strengthen stability, set clear priorities and build a sustainable future together with the team.

To deliver sustainable performance, we first had to analyze -- we first had to stabilize foundation. 2025 was fundamentally a year of structural refocusing and operational cleanup. By reaching several critical milestones, we created the necessary room to shift from stabilization towards more disciplined execution. A key step was strengthening the leadership team to ensure clear accountability across all segments. [ Alexander Hecker ] took the responsibility for global sales of peripherals and Philip Groth has been leading the Digital Health business and Solutions until -- since March 2025. In September, Jurjen Jongma joined as CFO, bringing the Management Board to its full strength.

Another important milestone was the sale of our Active Key [indiscernible] business [indiscernible]. This transaction generated a fixed purchase price of EUR 10.3 million and a book gain of EUR 5.7 million. More importantly, it allows us to focus our resources on our core competencies. In digital health, we achieved TR Messenger provider approval from [indiscernible] in August, followed by the TIM Pro approval in December. These approvals are important building blocks for our positioning to secure digital communication.

Finally, we made strong progress in our operational fundamentals, particularly in reducing the inventory, a key focus of the strategy. The group inventories now stand at EUR 28.8 million, down EUR 29.5 million compared to previous year. At the same time, we reduced complexity by cutting the number of SKUs by more than 40% since January 2025. These steps support our stabilization and have been delivering the first results that are needed for the next phase.

Over to Jurjen, who will guide us through the financials.

Yes. Thanks a lot, Rogier, and thank you all for your interest in our Q4, 2025 webcast. So let me start with an overview of the key KPIs and the main drivers behind it.

At EUR 94.3 million, our full year revenue was down 15% in 2025, primarily driven by weaker demand in the Components segment, but also due to the basis effect of the deconsolidation of Active Key, which we sold in May 2025. On a like-for-like basis, revenues actually grew by 4.7%. As a consequence of this, adjusted EBITDA in 2025 was significantly down as well. In the fourth quarter of 2025, revenue amounted close to EUR 24 million, down 10% versus the same quarter of the previous year. And adjusted EBITDA of the same period improved on a year-on-year basis, driven by strong underlying demand for our [indiscernible] terminals as well as narrowed losses in peripherals and much better capital and cost discipline. Now obviously, we are far from satisfied with these numbers as we have promised to reach EBIT breakeven after 2 comprehensive and consecutive restructuring programs.

If we then move on to the next slides, I start with addressing overall performance in terms of revenue and adjusted EBITDA. Note that Q1 is depicted in dark gray, Q2 in light gray, Q3 in red, and finally, Q4 in black. We ended 2025 with EUR 94.3 million of revenue, like I just said, against our guidance of north of EUR 100 million. This is predominantly related to lower-than-expected sales of our card reader terminals in the Digital Health segment on the back of the government decision to postpone mandatory adoption of terminals. We see, however, that we are recuperating from that, and we are positive about the initial developments in Q1 2026 in our Digital Health segment. In addition, our Peripheral segment suffered from the inability to fulfill all of the orders towards the year-end of 2025 due to shipments arriving late in Europe, and these orders will shift to 2026.

In terms of adjusted EBITDA, I'm encouraged by our lower operational cost levels, which is one of the key drivers to narrow the losses in both Q3 and in Q4. I will dive a little deeper in adjusted items later on in the presentation. If we then move to the next slide, let me elaborate on the results per segment for the full year and for Q4, 2025.

As it is our custom in this slide, the Components segment is shown in light gray, Gaming and Office Peripheral segment in red and Digital Health & Solutions in dark gray, and the [ Central ] segment in black. Looking at components in light gray, we can be brief. Annual revenue to third parties is now less than half of what it was in 2023, with a significant loss. As far as components are concerned, we obviously continue to use our switches in our own keyboards. And going forward, we only entertain profitable sales with third parties.

As can be seen on the slide, the business showed a considerable loss in 2025 of more than EUR 5 million. Our Peripherals business, even though pressured by supplies arriving late in Europe, showed low single-digit growth in the fourth quarter, bringing annual revenues to a level of EUR 67.2 million. As it has been the case throughout '24 and '25, the EBITDA contribution of our Peripherals business continues to be negative, driven by adverse margin effects. We see, however, that the loss in Q4 was half of the loss recorded in '24, signaling the first signs of margin recovery.

In Digital Health, the sales decline versus 2024 is entirely driven by our Active Keys business, which was divested in June of 2025. Excluding this, on a like-for-like basis, the Digital Health business shows very healthy growth levels of 17%. Although the adjusted EBITDA numbers in 2025 contain part of the proceeds from the Active Keys divestment, the Digital Health segment performs on a very strong and healthy EBITDA level. As I said, I will elaborate on adjustments in more granular detail as I believe that the 2025 adjustments results contain too many nonrecurring items, which blurs a transparent view on underlying operational performance.

As I commented during our Q3 call, it's obvious that our Central segment is too heavy a burden on the total organization with an adjusted EBITDA level of minus EUR 15 million in 2025. However, our cost reduction efforts are beginning to bear fruit, and I will provide a little bit more color on cost and cost effectiveness further on in the presentation.

Let me now spend some time on a topic that is very close to my heart and that we really must address in order to get a better, more transparent view on true operational performance. Unfortunately, in 2025, our adjustments did not fully reflect the nonrecurring nature that, in my view, adjustments should reflect. Let me illustrate this with the next slide.

In brief, although our methodology of arriving at adjusted EBITDA was consistent, it did not include a clear distinction between recurring items that reflect normal continuing operations, and nonrecurring items that should be adjusted out. Upon my start in September 2025, we looked closer at this methodology and came up with a stricter definition of items to be adjusted out and obviously, which one not. Although the adjusted EBITDA for the group as a whole remains largely unaffected, we did find that the adjusted results for the peripheral segment were picture too low, and the adjusted results for the DH&S segment were [indiscernible] too high. While this transparency certainly is something that we wish to provide for our investors and our shareholders, it is also important for ourselves, in a sense that we must focus on true underlying operational performance.

In the slide that is currently screened, you will see what we actually adjusted our '24 and '25 results were as they are now published. But you can also see what we should have adjusted for, and had we followed a more robust distinction between recurring results and operational performance. So if we then do this, and apply these effects on our actual segmental performance, we arrive at a segmental view that makes more sense, allows us to look at real progress over time, and more importantly, let us take the right decisions going forward. You will see this depicted in the next slide. We can now start and take a closer look at segmental performance and can draw a number of important conclusions, specifically related to Peripherals and [ VH&S ].

For Peripherals, we see that gross margin appreciated by some 500 basis points to almost 38%. While this is still too low, it represents an important improvement versus prior years. In Digital Health, margins remain strong and results are largely in line with 2024, albeit that we continue to invest to ensure that we capture the growth opportunities in this market. In 2026, we will adopt this methodology of adjusting EBITDA, and we will restate the 2025 results for it so that the 2026, 2025 comparison is on a like-for-like basis.

Before we now move to the balance sheet, I would like to highlight what has been done on the cost side since 2023. As you can see, on a comparable basis, we've taken out approximately EUR 16 million of cost over these 2 last years across all cost categories. Given where we are in terms of profitability, this is still not enough. And therefore, we're planning to take out at least another EUR 10 million in 2026.

Now that I've taken you through the main elements in our '25 P&L, let me move to working capital. Since March ' 23, the group has consistently managed inventories down from EUR 75 million in '23 to EUR 29 million by the end of December 2025. As it is very apparent in our results, a part of this inventory decrease is related to write-offs, and these have no cash effect. Importantly, however, almost 80% of the inventory reduction actually represents the sell-off of inventories. As the quality of our gross margin clearly suggests, this has often happened at a strongly discounted price, but it obviously did generate liquidity for the group. If we now take a little closer look at the cash conversion cycle, you will see that this has improved by 90 days since 2023, which is the key driver behind our resilience from a liquidity and cash point of view.

With that, let me pass on to Udo.

Good afternoon also from my side. Greetings from China, exceptional. So I mean I'm not in the same room like my colleagues being in China here. So warm welcome also here to all of you in today's conference. In a few -- in the next few minutes, I will present you a detailed strategy update. We'll provide also an example for our ESG measures, one just as an example and also the restructuring benefits that we have waived so far -- react so far.

With the slide, you see now that explains how we translate strategy into sustainable value creation. At the core of our operating model is what we call the heart of Cherry. It's our culture and our ESG foundation. For us, ESG is not a reporting exercise. It is embedded in the operational decision-making, risk management and capital allocation. It reduced volatility and strengthens long-term resilience. Around this core and its and its first driver, we focus on 4 additional strategic value drivers.

In alphabetic order, I means all are equally important. It's the product and the innovation and the technology, ensuring differentiating customer value and protecting pricing power through innovation. It's the performance of the footprint, continuously optimizing our global manufacturing footprint to secure scalability, cost efficiency and margin stability at the quality, preventive and best-in-class, reducing failure costs and safeguarding our brand and customer trust. And last but not least, the supply chain being resilient and customer-centric, mitigating disruption risk while protecting service levels and working capital performance.

Execution discipline is critical for all of these elements. Here, we operate with a clear annual strategy review cycle and a structured half year road map deployment. This creates transparency, accountability and measurable progress. From the [ CEO ] perspective, this ensures 3 things. First, the operational leverage, the risk mitigation and the disciplined capital efficiency. In short, as a scalable, resilient operating platform designed to deliver sustainable returns.

Within the field just as of ESG, as an example, we compiled in 2024 now for the first time since the IPO, a detailed materiality analysis based on a complied long list of potential material relevant topics. A total of 7 [ ESRS ] topics, including corresponding subtopics were systematically assessed in terms of the impact in the financial materiality, critically examined and classified in the materiality metrics.

Strategic packages of measures were then derived accordingly here as example, and it's just one example, provided for the topic -- so-called topic E1, the climate change. It's our CCF corporate carbon footprint analysis we have done. If we're looking to, and we have looked in detail and in total, all of our emissions for 2024, we had this slightly more than 36,000 CO2 equivalents were caused by our business activities in the year 2023. Less than 2% out of these are really direct emissions, what is the so-called Scope 1 emissions from our factories itself. An extremely tiny fraction are upstream emissions related to energy consumption, Scope 2. Also, I will come to this why it's so low. And the far majority, roughly 98% are due to other upstream emissions, the so-called Scope 3. The corporate carbon footprint serves to identify the large sources of the emissions within the company and along the upstream and downstream value chain.

With the support of our CCF, we focus on 4 value relevant outcomes. First, what we had achieved is increasing transfer across Scope 1, 2 and 3 emissions, strengthening risk management and strategic steering. Secondly, ensuring regulatory compliance and future-proof reporting, reducing exposure to transition risk. Thirdly, improving energy efficiency and cost discipline, protecting margins. And the fourth point, enhancing access to capital and customer contracts by demonstrating measurable ESG progress. In short, the CCF is not just a sustainability tool, it's really a risk mitigation and a volume protection instrument supporting long-term shareholder returns.

For the point of the general optimization and footprint optimization and restructuring Rogier already mentioned, we have gone through several quarters over a period of time, which resulted in a production shift to China, as well as the reclassification of the [indiscernible] site. For this, I would like to give you a quick overview on the main benefits that resulted from these measures.

First, we have reduced our in-house manufacturing sites to two, one in [ Zhuhai ] and one in Vienna. [ Zhuhai ] for the Peripherals, Vienna is for the terminals, completed by two established subcon partners for peripherals in Slovakia and China. Secondly, we have streamlined the number of warehouses, our global warehouses from 7 to 3, one [indiscernible] each in Europe, Asia and [indiscernible] U.S. In the European [indiscernible] warehouse, all European business, including the Peripherals workshop and the Digital Health products are being handled. [indiscernible] remains the development site for the hardware technology, and that means also including switch development and for some piloting for the metal parts. It is becoming complemented by our development hubs in Sweden and in China. So by this, we are really globally set it up. Our software and [indiscernible] development center is based in Vienna.

With this, back to you, Rogier.

Thank you, Udo. Now moving to our outlook and the road ahead. Our priorities are clear. Transparency, operational discipline and realistic sustainable goals. We're not here to make any bold promises. We're here to show how we steadily strengthen Cherry's foundation to create long-term value.

Our business stands on 2 pillars. One, the continued transformation of our digital health business into a platform-driven model. And two, the structural realignment of peripherals and components to reflect market realities and focus on our core competencies. Our long-term ambition remains clear. To evolve Cherry into a provider of secure, quality and high-performance input solutions built on our hardware footprint.

In Digital Health and Solutions, demand for our terminals remain solid. Our installed hardware base is the foundation that enables us to bundle software solutions. With the rollout of [ TI Messenger ], we are progressing from a hardware-focused model toward a more platform-based model with recurring revenues. Over time, this shift will improve revenue visibility and margin quality. We expect our proof of patients present SaaS business-based offerings to become increasingly relevant over the coming years. Our hardware creates entry points. Software adds recurring value. In Peripherals, stabilization is visible. The foundation is stronger, and we still have improvements to make. We are positioning Cherry as a focused input device specialist with our proprietary technology. And with this, our ambition is to strengthen our position in the core segments, in the core markets over the coming years.

From a regional perspective, in EMEA, we see that the transition is progressing and operational stabilization becomes more visible. In APAC and predominantly China, we see that a disciplined execution and a clear focus is driving solid performance with room for further profitable growth. In the Americas, the reset continues. We are prioritizing structural profitability of a short in volume. This turnaround requires discipline rather than quick fixes. Overall, the foundation is stronger, transparency is improving, and our focus is firmly on sustainable profitability.

Now a bit more details on the specific businesses. First, let me start with Digital Health. Our [ eHealth ] business is built on a strong foundation. Looking at the numbers, we expect up to 200,000 additional unit deliveries through 2028. A key highlight of our operational improvement is the 45% decrease in return rates in 2025, which provides a direct increase of our margin. The strategic logic behind this business is simple but powerful.

Our established hardware footprint enables bundling with new software offers. This is the foundation for our licensing model, which creates compounding recurring revenues. By moving away from purely transactional hardware sales, we ensure that each new bundle adds incremental predictable revenue that accumulates month-over-month. This shift not only increases our visibility, but also ensures that the platform-driven transformation we talk about is backed by a scalable and highly profitable financial structure.

Furthermore, the 120,000 new TI users who were previously postponed, represent a unique opportunity. Unlike existing customers, they will need both hardware and software right from the start. This perfectly fits into the new business model. The German telematics infrastructure remains a regulated and highly attractive market with long-term visibility. Several regulatory milestones will drive demand, including the mandatory connection of 90,000 therapeutic and medical aid providers. The [ POPP ] is an important component of the telematics infrastructure in Germany, enabling digital verification that a patient is receiving medical care. It is scheduled to be rolled out at the end of 2026.

Next to this, we are actively evaluating all opportunities here and identifying exactly where our expertise in secure hardware and certification plus software can create a differentiated value. We will focus on secure connectivity solutions with this new architecture. At the same time, the integration of AI into TI Messenger opens opportunities for additional value-added services.

On Peripherals and [ Components ], as mentioned earlier, 2025 was fundamentally about stabilizing and strengthening the foundation of this business. We will focus on 3 core areas. First, working capital and inventory discipline. We significantly reduced our inventory from peak levels, actively sold down slow-moving SKUs, and we restored price discipline across our core portfolio. At the same time, we implemented a more demand-driven replenishment model, and this was essential to improve transparency and control.

The second part is our portfolio and commercial focus. We initiated SKU simplification, and we have sharpened the differentiation between B2B and B2C. Our emphasis is clearly shifting toward our core higher priority segments where we see sustainable demand and margin potential. The objective here is to focus and to do more with less and clear positioning of the products.

Thirdly, the structural simplification, we optimized our distribution model, clarified regional ownership, streamlined logistics and improved visibility across the value chain. This reduced and will further reduce complexity and strengthen accountability. Importantly, although the reset is not yet fully completed, the business today is structurally stronger than it was a year ago. Working capital intensity is improving as shown by Jurjen. Transparency is higher, operational discipline is increasing, and this provides us with a foundation towards a more disciplined execution.

On [indiscernible], with the portfolio stay streamlined and inventory largely normalized, our focus now shifts to innovation with fewer and bigger products. Our 2026 pipeline is balanced across office, gaming and security peripherals, all built on our foundation of in-house technology and hardware expertise. In office, we are expanding our cordless and premium portfolio while strengthening our presence in the B2B environment. A key highlight is the MX 8.2 TMR, as you could have seen in the intro video. Here, we bring our high-end mechanical technology into a modern wireless office design. This segment is about stable demand, margin consistency and quality differentiation.

Gaming. In gaming, we will continue to leverage our Cherry [ ExtraF5 ] brand and with launches like the K5 TMR and other MX-based platforms, we fully control the core technology inside the keyboard. This gives us a clear differentiation in performance and durability in the premium segment. The security and specialized markets where our certified hardware solutions underline our role as trusted partner in regulated environments where compliance and secure connectivity are critical.

Products such as the [ SmartBoard 1150 ] and the Smart Terminal highlight our capabilities in reliability, security and long product life cycles. Across regions, including China, we use our global platforms and products with locally adapted editions like you can see here with Pokemon, that increases brand visibility and support our China for China business. Overall, the pipeline shows innovation with fewer and more targeted pros aligned with our cordless growth, mid- to premium positioning and secure connectivity.

As I mentioned earlier, we see an opportunity in retail and wireless products. So as you -- our portfolio has historically been strong in B2B and [indiscernible] products. However, the market clearly shows that structural growth lies in retail and wireless products. According to the GFK data for Germany, retail growth accelerated to 14% in Q4, 2025. More importantly, the retail value share of the total market increased from 65% to 74% over the past periods. This confirms a structural shift towards the retail channel. The market mix is moving, and we are aligning our portfolio and go-to-market strategy accordingly.

The wireless category has reached a critical point. Approximately 80% of the German market is now cordless. Given our historically stronger position in the corded products, this is a clear opportunity for us. By strengthening our cordless portfolio and expanding our retail business, we are addressing the segments with strongest opportunity. Our strategy is, therefore, to build on our technological strength and expand into segments where market growth and potential are structurally higher.

Let me briefly update you now on the ongoing strategic review. As announced in last November, an M&A process was initiated for the divestment of one of the segments, peripherals or Digital Health & Solutions. The objective of this process is to further strengthen the company's financial position while ensuring that the remaining division is optimally positioned and financed for its future growth. As previously communicated, we continue to work towards concluding the strategic review within the first half of 2026. The process is progressing in a structured and disciplined manner in line with our internal planning.

Engagement with interesting parties is ongoing. These discussions are being conducted under customary confidentiality arrangements and such -- and as such, we are limited in the level of detail we can provide at this stage. What we can say is that we are seeing interest from both strategic and financial investors. This reflects the underlying value and positioning of the business. Our clear priority throughout this process is to act in the best interest of the company and its shareholders. We remain focused on executing the process professionally and with discipline. We will provide further updates as appropriate and when there's a greater certainty. In the meantime, we ask for your understanding that we cannot provide any further information on the details of the M&A process. This is a structured process in which, in accordance with market practice, detailed information is only disclosed to those involved in the process.

And lastly, let me close with a brief perspective on our priorities going forward. After a year of focus on stabilization, we are now moving into execution phase. We will continue to reduce inventory and complete the remaining cleanup. This improves our capital efficiency, increases transparency and will strengthen our operational foundation. At the same time, we are sharpening operational control across the organization. This means clearer targets, better performance tracking and stronger cost discipline.

We will simplify processes and further clarify regional responsibilities. Decision-making is moving closer to the market, which strengthens ownership and improve the execution. At the same time, we are focusing our portfolio on core priorities, directing resources to areas with clear strategic relevance and sustainable margin potential. Our goal is to improve margin quality and optimize our product mix through disciplined commercial execution and structural improvements.

Regarding guidance, we will provide a credible outlook in the second quarter based on better visibility and realistic assumptions. Regaining trust through reliable and consistent performance remains our key priority. Overall, our focus is clear. Strengthen operational performance, restore sustainable profitability and position Cherry for long-term success.

With that, I hand over to Nicole.

[Operator Instructions] The first question comes from Bastian Brach, Montega.

So some questions for me. The first one is on the card reader with obviously strong growth in last year. And you said software revenues could outpace hardware revenues there as early as 2029. Could you give us some guidance when we can expect material software revenue? Is it already like in H2 this year? Or is it more like '27 and late '27? This would be my first question.

And the other two for Jurjen. The EUR 10 million cost savings you mentioned in some of the slides, could you like detail in which department? Is it mainly in G&A? Or is it a marketing reduction, or more on the operating side?

And then my last question would be on the gross margin adjustments that you also mentioned in the Peripheral segment. Could you explain that further? I didn't really get it in the short amount of time.

Okay. I think all these questions are for me. So thank you, Bastian, for these questions. So on -- I think, by and large, your first question is on the distinction between the hardware sales and software sales in the digital health area.

In 2026, we expect the vast majority of our revenue to be hardware-based still. Obviously, we also see that at a certain point in time, all the health care providers will have a card reader and then this business becomes more of a replacement business. We have forecasted some software revenues in the course of 2026. But like I said, the vast majority will still be on hardware, and we see that gradually picking up in the years thereafter.

When it comes to cost savings, you would actually see this across the board. So I mean, it would be difficult for me to highlight a particular department, or a particular cost category. What I can say is that, by and large, these savings are, let's say, the outcome of all of the restructuring that has been done in the past. And so you basically -- you will see in 2026 a cleaner run rate of operational costs. And obviously, that is across the board. But the big impact obviously comes from, by and large, closing down our production facilities in [indiscernible].

So then on gross margin, perhaps you can reiterate the question. So the slide on, let's say, the adjustments and the changes were unclear, or what is the question?

Yes. On the peripherals segment, you restated the gross margin. Could you explain why you did that and why it's now higher? Is it the -- yes, inventory sell-down to your partner in the U.S.?

No. So first and foremost, we're not in '25 adjusting the numbers. But I was interested and so should you in, let's say, a true operational outlook of performance. So if I do that and then in peripherals, by and large, clean for extraordinary items that largely impact margin, like selling off of inventories and obviously, the [ Argent ] transaction fits in that profile, then a comparable operational margin performance in the Peripherals segment would be around this 38%, as opposed to the adjusted number that you see.

So on the slide, you see that in the adjusted picture, as we will also publish it in our segment reporting, you see a margin of 20 -- gross margin of EUR 20 million. And if I adjust for those, let's say, nonrecurring items, you end up at [ 25.5 ]. So if you will, a bigger adjustment, bringing the operational performance in the peripheral segment to close to [ 38 ].

Okay. Okay. Got it. But the published numbers are like the adjusted?

Correct. So you will -- the numbers that we published are in the adjusted column indeed. Yes.

The next question comes from Oliver [indiscernible]

I would start maybe with the Q4 shipment delays in Peripherals. Could you quantify these? And how much are you expecting to get in Q1?

No, it's difficult for me to quantify it. So like I said, we missed -- we gave guidance of -- just short of EUR 100 million. So if you take that, it would be approximately EUR 6 million. That is too big a number because the miss against the EUR 100 million was also, to a certain extent, health care related where we expected to ship more. We expect a, let's say, modest quarter on the Peripherals side for Q1, and it's difficult to exactly quantify the, let's say, delayed shipment number, Oliver.

Got it. And maybe on the restructuring side, how much expenses are you planning in to get to those EUR 10 million in savings you are targeting?

Yes. Like I just mentioned to Bastian as well, thanks for the question. The EUR 10 million of cost savings that we're planning in 2026 are a result of restructuring that has already happened. And so I'm not planning to spend additional restructuring on it. So that is already included in all of the actions that we did so far.

Perfect. And maybe as a small last question on inventory side. I think in earlier of 2025, you mentioned the targeted run rate of around EUR 50 million. Did this change?

I don't think that this EUR 50 million is coming from me because the EUR 50 million was already achieved somewhere half 2025, if I'm not mistaken. I think when I joined, we were somewhere in the high 30s. So I've never seen this EUR 50 million level. And if you look at the number of days in terms of inventories that you can also see in the cash conversion cycle in the picture. And then we're at 114 days towards the end of 2025. That's occurred approximately [indiscernible] that is like 4 months. I still think, honestly, that 4 months is on the wrong side. So we see some further opportunities. But EUR 50 million is a number, Oliver, that I don't recognize.

I can shortly comment. I think EUR 50 million was, as mentioned, as a reasonable target for end of 2024, we reported then in the quarter 1, 2025. This is the figure. And also for this year, it was a realistic figure. As mentioned, EUR 50 million for now would be [indiscernible]

We have another question coming in from Philip [indiscernible]. Philip please unmute. From what I can see, you're still on mute.

Can you hear me now?

Yes.

Yes, sorry. Difficult question. Thank you very much for the elaborate presentation. I'm a bit struggling, honestly, with the impact of the [ Argent ] deal and your gross margin adjustments restatement, however you want to term that, because I was under the impression that the [indiscernible] deal is also impacting your sales and that this negatively in that way.

So first of all, how should we look at the Q4 underlying growth in Peripherals? What's the best way to get your real underlying growth? Shall we probably just look at Europe where you didn't sell any inventory, how you performed there? Or what's your suggestion?

Yes. So Philip, I thought about this long and hard. because you can argue not only for the [ Argon ] sales, but for all of our inventory cleanup sales that you should not only adjust margin for it, but since you are selling at a discounted price, your sales level is also subdued, right? And that is exactly your point.

Although I would describe myself as creative, I really don't dare to go as far to adjust sales to a higher level. So I have to -- if any margins -- if any adjustments, they would impact margins and not sales. But it is clear also if you look at the inventory picture, and the 80% of the inventory reduction that comes from sales. Now some of that is really truly normal at normal prices and normal distribution, but a lot of our sales in the past 2 years are accelerated inventory sales at discounted prices. So a very, very valid question, super difficult to answer.

But maybe, Rogier, you can say something to it. I don't know the exact answer to it.

Yes, I hear something like that.

I can give it a go, take it as an action, but it's very difficult.

Yes. Yes. So related to that, and well, if you stated now in [indiscernible], something like 38% gross margin. And I think we understand that there is still quite a lot of exceptionals in that. If you look at fresh merchandise that you are sourcing right now, what kind of gross margin do you consider feasible if you are, well, in a, say, normal mode and not selling under duress?

Yes. For me, that would be looking at industry standards and see what margins are do we usually see in, let's say, the computer Peripherals market. Then we look at gross -- what we call gross profit ones, so sales minus cost of sales of around 48%, maybe 50% even. So we're still 10%, 12% off of that.

I think personally, and Rogier said, we will come with a more narrow guidance in the course of the second quarter. But for us to now budget and plan at this 48% to 50% would be naive and overly optimistic. But that should definitely be our entitlement level.

And to add to that, for this year, as I already mentioned in my part as well, we still have some writing off. We still have some inventory that we need to get rid of. So that will, for sure, impact the gross margin in 2026.

But as Jurjen said, the industry standard lies between 48% and 50% to what we believe. Are we -- is it realistic to think that we will already be there, excluding the write-offs? That might be a bit of a challenge, but we should be above -- for sure, should be above a run rate of 38% that we -- that Jurjen showed in the margin side. So I think there's room for improvement still. And we still have -- we will have some impact in 2026 based on previous inventory.

Right. And how clocked do you see your customers' inventory position? How stuff is the channel?

The exact numbers, I don't have. What I do know is that the inventory at our direct partners has reduced significantly versus last year as well. Also there, we still have slightly too much inventory. As Jurjen said, I think 190, 114 days that we currently have, I think, is also still on the high side. And that also accounts for customers. But also there, we see a margin -- or sorry, a stock reduction for both the core distribution partners that we have in Europe. And in parallel, we are working with them to further reduce that to normal levels.

Right. And probably one last and question. Well, imagine you were successful in selling one of your divisions and getting a nice cash in. What kind of projects are you seeing that would enable you to undertake what kind of uplift in terms of profitability or capital returns could that unleash basically?

That is difficult to answer because -- let me try a little bit. Our Digital Health business today is hampered by our inability to fully invest in all of the opportunities that are there. Our Peripherals business today is hampered by our constant search for cash, which means that we are sometimes compelled to make deals that help us from a liquidity point of view, but do not help us from a margin point of view.

So either way for a sale of the Peripheral segment would mean that we would have ample of monies available to invest in the Digital Health business. And the other way around, a sale of the Digital Health business would allow us to truly invest in, let's say, sustainable margin improvement and focus on sustainable healthy underlying profitability rather than having to struggle for cash.

As we are running out of time, we're coming to the very last question. Somebody -- I have only an abbreviation of [indiscernible] Please state your name and company, and unmute.

You can hear me?

Yes.

That's [indiscernible] Capital. So I have 3 small ones. On the Slide 22, you have the red color [ 26 ], what you said you're selling units already in the -- is that for the first 2 months you sold so many? And how much is coming from last year? Is there some special effects in? Or is it going in this speed further up the year?

No, honestly, I think that picture A, we have some, of course, Jurjen already mentioned, a part of the miss in the outlook of 2025 was related to the Terminal business. So we see a part of the Terminal business indeed that has been postponed to 2026, also to Q1. So what you see here is the relative portion versus the expected first half. So we expect Q1 will be -- we expect Q1 is going to be okay and good with some spillover from 2025. I do, however, think that this picture is also a little bit -- it's part of the animation, which is maybe slightly [indiscernible] presenting.

I'm just not completely understanding. So it means the gray one you have, which is nearly as high as last year full year sales, or no second half year. So you would expect the first half year to be the same as the second half last year, or?

So this is what you tried to say the picture is not, let's say, a true reflection of the levels so far. So it's -- the red part is a bit of a misrepresentation of the actual situation. So we haven't sold year-to-date half of our levels in 2026, just to make it very explicitly clear.

Okay. So then why you showed this picture, sorry?

Yes. Well, it's a very sharp spot. So that is what we shouldn't have done. I mean it's not a fair representation of the actual situation.

Okay. So -- okay. But you don't want to sell -- to tell how much you sold compared to last year then?

So we are -- no. I mean, we're 2 months in. So it's also -- we are looking at very good and healthy growth in our Terminal sales in Digital Health, like we also did in Q4, and the total of 2025. So we're absolutely in our Digital Health segment off to a good start, but this is too optimistically represented.

Okay. Then the decision is made that you sell one of the units as you were writing? Or is it still possible that you're going to sell the whole company?

So that is still very well possible. I mean, like Rogier outlined, we're sticking with many interested parties. I do have to say, which is also the reason why we're discussing sales, or divestment of separate units is that the synergy and the obvious synergy between the 2 units is relatively low. And therefore, it is possible to sell the company as a whole, but unlikely, especially when it would be a strategic buyer.

And on the debt side, you have many -- a lot of debt. How relaxed are the banks? How much time do you have for the sale?

So the banks are not necessarily very relaxed, but they are also not necessarily very distressed. I mean we announced last year in the May, June time frame. So also before I was there, the fact that our financing was extended until the end of 2027. So that is still there. Obviously, the banks are expecting for us to repay our obligations once we conclude the sale. So we're also keeping the bank abreast of progress. But other than that, our relationship with the bank is very good, I have to say.

Okay. So liquidity is not really an issue for the next 12 months then?

Yes. I've just outlined to Philip as the previous question that more often than not, we are pursuing deals that help us from a liquidity and from a cash point of view. So yes, liquidity obviously is a concern. I mean we're struggling with that on a daily basis.

Okay. But banks are not facing you that you should redeem it quickly or whatever?

No.

This concludes today's webcast. Thank you very much for being with us today. I hand it back to Rogier for his closing comments.

Yes. Thank you all for participating. Thank you all for also the interesting and high [indiscernible] questions. This concludes indeed the hour with Q4 and [indiscernible] 2025, and we are looking forward to seeing, hearing you in the next quarterly update call, which most likely will be in May. So thank you for your participation, and we wish you a great afternoon.

Thank you.

Dear ladies and gentlemen, the analysts, investors, welcome to our Q3 and 9 months 2025 earnings call, and thank you for joining us today. You have just watched our new product video announcing the launch of the new CHERRY STREAM ULTIMATE series, a new wireless mouse and keyboard in the office category. With this launch, we are also introducing CHERRY ProScroll, which is our new electromagnetic technology that allows you to fully customize the feel and behavior of your scroll wheel to fit your work tasks and preferences.

This video is part of our new marketing strategy, which you will learn more about later. As usual, today's call is being recorded. [Operator Instructions] Joining me today are Oliver Kaltner, our Chief Executive Officer; Jurjen Jongma, our Chief Financial Officer; and Dr. Udo Streller, Chief Operating Officer of the company. Before we begin, let me briefly walk you through today's agenda. Oliver will start with a summary of our year-to-date results and then take you through some major milestones of the past quarter.

Jurjen will then present the key financial metrics for both 9 months and Q3 2025 and walk you through the segments as well as extraordinary and adjustment positions and through the highlights of Cherry's inventory development. Following that, Udo will continue with the restructuring update, thereby focusing on the transformation of our Auerbach facility to a central development, logistics and service hub. The presentation will conclude with our outlook presented by Oliver. Afterwards, we will open the floor for questions. [Operator Instructions]

Let's begin the presentation and over to you, Oliver.

Ladies and gentlemen, dear analysts and capital market experts, dear shareholders, dear participants, dear CHERRY enthusiasts. I would like to welcome you to our company's Q3 2025 earning call. According to the relevant rules and regulations, we would like to give you a detailed insight into our preliminary 9-month and Q3 2025 landing figures and the measures we have taken for further reshaping our business across the major business lines.

We will go into detail about the actions we have already taken and those that will follow in order to achieve a sustained change, of course. The last 3 years have been a very stressful period for everyone involved. The company has had to go through a consistent period of reorganization and restructuring. The past quarter is particularly central for this process and through this process as we have achieved a foundation upon which we can consistently build and leverage the company's true substance.

This may not yet be reflected in all financial parameters, but on the management side, the team has taken a major step in the right direction. Some aspects worth highlighting and considered a significant reduction of inventory in our own warehouse and in our distribution channels, substantial increase in our street prices so that they are higher than the purchase price of our distribution partners now. A reduction of distribution partnerships from 17 contracts to one general contract in the German-speaking region.

Identification of the necessary partner structure for Europe, adjustment of our terms and conditions to industry standards with increased base margins for our partners and for CHERRY. Active cash collection, a continuous liquidity management, a continuous review of all sales and partner activities between management and the Board of Directors. CHERRY go 6, it's a reduction of the number of legal entities from 13 to only 6 by the end of this calendar year. These measures result in reshaping of peripherals based on industry standards. CHERRY is clearly the #2 in the market based on GFK data, an increased demand for CHERRY input devices. Also, it strictly expanding our market position in digital health, and we are currently in a strong voice in politics to further and more clearly advance the digitization of the medical sector.

In total, these are positive developments in our core business segments that we see for 2025 in total and beyond. However, we are self-critical enough to know that we still have to improve some key metrics and performance indicators. While Jurjen will discuss our financial performance in granular detail, let me take the opportunity now to walk you through our key financial metrics for the first 9 months of this calendar year 2025.

Revenue came in at close to EUR 71 million, reflecting a 16% decline year-over-year after the 25% decline as of H1. The lower revenue figure is part of our cleaning up process in peripherals, especially in Europe and therefore, a direct result of the consistent execution of our strategic realignment and is preliminary attributable to the deliberate reduction in sell-in volumes in peripherals Europe. However, this decline was also caused by continuously weak demand on the Components segment and again, an unsatisfactory performance in CHERRY Americas.

Our adjusted EBITDA margin stands at minus 6.9%, driven down year-on-year by restructuring effects and the lower fixed cost contribution from the revenue side. On a more positive note, cash on hand was nearly flat versus last quarter, standing at EUR 7.5 million. As I said, Jurjen will guide you through the numbers in much more detail. Let me now draw your attention to four milestones that have been achieved in the third quarter. The AGM confirmed CHERRY's strategic realignment. In-person AGM on the 22nd of July 2025 in Munich, shareholder approval for our transformational course.

Jurjen Jongma, new CFO as of 1st of September. With this, the Management Board expanded to three members again, and I kind of would like to welcome again JJ being here part of that mission at CHERRY SE. Third, TI-Messenger provider approval. CHERRY Digital Health obviously received the Telematic Infrastructure messenger provider approval from gematik and TI-M enables communication among all health care stakeholders.

And fourth, further inventory reduction achieved. The group inventories is at EUR 37.8 million, down by more than EUR 5 million quarter-by-quarter. And active office SKUs reduced by around 40% versus January 2025.

Ladies and gentlemen, with this, I hand over to our CFO, Jurjen Jongma.

Yes. Thanks a lot, Oliver, and thanks all for taking interest in our Q3 results release. Before I dive deeper into the quarterly performance, let me give you a brief update on the ad hoc announcement that went out on September 11 regarding the fact that our equity value in CHERRY SE had fallen to a level lower than 50% of the nominal value. While there was a slight positive impact on the back of our sales of treasury shares to Argand in October, the equity value in CHERRY SE continues to be below 50% of the nominal value.

I'll now continue with our preliminary Q3 and 9 months 2025 figures. Following a difficult first half, the third quarter of 2025 was also challenging for CHERRY. Notwithstanding the fact that we slightly outperformed compared with Q3 of last year, we anticipated for the negative margin effects of clearing inventories to have less of an impact. At EUR 70.7 million, CHERRY's consolidated revenue for the first 3 quarters of 2025 was approximately 16% lower than the prior year revenue of EUR 84.2 million. Third quarter revenue came in at EUR 24.7 million, up against the Q3 2024 revenue of EUR 22.6 million and also against the previous quarter figure of EUR 20.7 million.

As I mentioned earlier, continuing clearance of inventories has a negative effect on gross margins. At the same time, we see that the group's effort in reducing costs had a EUR 2.4 million positive impact comparing Q3 of 2024. Negative impacts on margins, combined with this positive impact, yielded an adjusted EBITDA margin of minus 10.6% for the third quarter of 2025. Now if we move on and looking at our performance by segment, just let me highlight in this slide that the Components segment is shown in light gray.

The Gaming and Office Peripheral Segment is in red and the Digital Health & Solutions sector is in dark gray and the Central segment in black. I will focus in my comments on year-to-date results reflected in the first chart for sales or revenue and the third chart for adjusted EBITDA. External revenue of the Components segment amounted to EUR 3.9 million against EUR 5.2 million in the same period in 2024. At a minus EUR 4 million, adjusted EBITDA was EUR 4 million below the previous year level where it was 0, corresponding to an adjusted EBITDA margin of minus 61.7%, 0% in Q1 -- Q3 2024.

The decline in the Components segment is further testimony of the decision to discontinue manufacturing in Auerbach, outsourcing assembly to China and reorganizing the Auerbach site to a logistics center. Restructuring costs and relocation costs, to a large extent, drive the negative EBITDA performance of the segment. In the 9 months ending September 30, 2025, the Gaming and Office Peripheral segment recorded revenues of EUR 50.3 million, a decline of 10.8% compared to 2024, where it was EUR 56.4 million. On the back of negative margin impacts following our actions to clear inventories, gross margin too at 21.1% is materially lower than in the same period of '24, where it was 30%. The fact that restructuring efforts are starting to bear fruit, operating expenses in the Gaming and Peripheral segment came in EUR 1.8 million lower than in the same period in 2024. And the impact of lower margin could only be partly compensated for by this lower cost base, resulting in an adjusted EBITDA margin of 0.4% compared to 6.7% in year-to-date Q3 2024.

When it comes to regional performance, macroeconomic circumstances were instrumental in driving growth in China to the tune of 4.5% and decline of minus 17% in Europe and 16% in the Americas. With regards to restoring the Gaming and Office Peripheral segment, it is important to point out the following key points: one, shifting our focus from sell-in to -- from a sell-in focus to a sell-out focus, keeping a clear eye on the inventories that sit in our channels. Consequent. Two, consequent reduction of inventories throughout the chain on which I will elaborate later on in the presentation. And then thirdly, obviously, restructuring our organization.

In the 9 months ending September 30, 2025, the Digital Health & Solutions segment achieved consolidated revenues of EUR 16.5 million, down EUR 6.1 million from the same period in 2024. Adjusted EBITDA amounted to EUR 11.6 million positive, corresponding to an adjusted EBITDA margin of 70.3% against 37.7% in the same period in 2024. This brings me to an important element that I will raise now, and I will elaborate further upon in the next slide.

Unfortunately, the adjusted Digital Health & Solutions segment results include the net results of the Active Keys divestment earlier this year. Again, I will make this clear in the next slide, but it's important to highlight that the results mentioned -- that I mentioned earlier cannot be regarded without taking into account the fact that the 2024 financials include the results of the Active Keys business, which was sold to the Danish peripheral device manufacturer, Contour Design in the first half of 2025. On a like-for-like basis, Digital Health recorded EUR 16.8 million of revenues against EUR 17.8 million in the same period of 2024, representing a decline of 5.2%. This decline is largely attributable to supply constraints limiting the production of terminal units. Similarly, on a comparable basis and for the 9 months ending September 30, gross margin sits at 44.6% and it declined from 52.6% a year earlier.

This is largely due to an increase in material costs and ramping up production capacity for terminals. Investments in mainly research and development costs drive adjusted EBITDA to a level of 25.3%, down from 37.3% a year earlier. So I already mentioned that the way we look at adjusted cost is a difficult exercise in CHERRY. And with this, I wanted us to have a closer look at group performance from a purely operational point of view. Now I realize that this is a complicated slide. So let me take some time to go through this in granular detail. The bars on this chart are a graphical representation of our P&L.

Starting with the bar on the left, you see our reported numbers for revenue, the material component of cost of goods sold for gross profit one or gross margin, for operational cost and then lastly, for EBITDA. The second bar highlights the adjustments we have made year-to-date to arrive at adjusted EBITDA, a positive effect, bringing adjusted EBITDA to the minus EUR 4.9 million I alluded to earlier. Unfortunately, in the second quarter, we erroneously adjusted for nonrecurring elements of the Active Keys divestment, resulting in an adjusted EBITDA that does not reflect true operational performance of the group.

And this is why we modeled the third bar where we basically adjusted out all nonrecurring elements so that a true operational view on performance will remain. While revenue and gross margin are largely unaffected by this, it has a negative effect on adjusted EBITDA of approximately EUR 6 million. Now that we have a clear and transparent view on our operational P&L, the third bar, like I said, we can see what needs to be done to ensure that going forward, we get to a sustainable financial performance.

First, we looked at gross margin. With our main activities in gaming and office peripherals, where midpoint gross margins are at a minimum level of 45% and our digital health business generating margins well over 50%, we conservatively estimate our entitlement margin range to be between 45% and 50%.

This yields between EUR 4.2 million and EUR 7.8 million of additional margin in comparison with where we are today. Next, we took a good look at the cost opportunities that are also reflective of the S6 business review, and this on an annualized basis, yields between EUR 6.3 million and EUR 8.7 million of cost savings. Calculating this back to the 9 months that we have so far, then it yields between EUR 5.5 million and EUR 6.5 million of cost savings.

Adding those together, and you see the fourth bar and in the fifth bar with the same level of revenue, EUR 71.1 million, it brings us to an improvement opportunity that lies between EUR 9.7 million and EUR 14.3 million, bringing true operational EBITDA to an initially acceptable level.

These ranges you see reflected, like I said, in the fourth and the fifth bar on this graph. What I just explained to you, of course, begs a number of questions, and I understand that. We'll have the opportunity to dive a little bit deeper into that during Q&A, but let me address some questions that I'm certain you will have. First and foremost, how will we reflect operational performance going forward? We have decided that we will continue to report as is for 2025 and restate 2025 in the beginning of 2026 to ensure backwards and forwards comparability. Obviously, we will ensure that for the fourth quarter and for the full year 2025, we will update this slide and keep you abreast of actual operational performance.

And the second question would be, when is it that you will achieve this more sustainable performance? We believe that we have reached the end of our measures to clear in-channel stock. While some effects may still impact margins in the Components segment and the Gaming and Office Peripheral segment in the fourth quarter, these margin must be achievable in 2026. On the cost side, we have to be a little bit more cautious as our cash situation prevents us from pursuing restructuring as fast as we would like.

I hope that this overview gives you more insight in our path to recovery. And with that, I move on to my last slide for today. Now Oliver already alluded to that. But since March 2023, the group has consistently managed inventories down from EUR 75 million in March 2023 to EUR 38 million by the end of September 2025. In and of itself, this, of course, is good news. From reducing inventories alone, the company has created EUR 37 million of liquidity. And similarly important, the company has cleared a lot of what I call debt weight in the channel. However, this has not gone without pain. It went at the expense of margins and profits, and this clearly is visible in the P&L.

Let me now hand over to Udo for the operational update.

Dear ladies and gentlemen, also from my side, a very warm welcome to all of you today. In the next few minutes, I will present to you a more detailed operation and restructuring update. It covers the main factors that drive the underlying improvements in our business and sets the stage to achieve our long-term objectives. The most significant element of our restructure plan, as already mentioned by Oliver in the beginning, is the fundamental transformation of our German site in Auerbach.

As previously announced, we have discontinued switch production in Auerbach and transferred the assembly to our established partners in China and Slovakia. This decision, while difficult, is essential to stress structural and cost disadvantages in the volume market. This operational shift includes a socially responsible headcount reduction in Germany that is executed in close consultation with the working council in Auerbach.

This is crucial for securing the availability of our company. We are strategically repositioning our Auerbach site from a manufacturing heavy operation into a pivotal development, logistics and service hub for Europe, leveraging its core strengths for the benefit of the entire group. In logistics, Auerbach is becoming our new multifunction logistic hub, capitalizing on its excellent geographical location in the heart of Europe. This new structure supports the optimized regional logistics hub strategy, which also includes establishing a new tariff optimized setup in the U.S.A. to improve market delivery and cost efficiency in the key region.

In development, we are implementing a centralized and integrated product and technology department structure to enhance the speed of innovation. We must acknowledge that the ULP productline had to be discontinued as it had reached its product life cycle end and became an excessive fixed cost burn. However, I want to emphasize that our core switch technology development will be continued in both Auerbach and Zhuhai to protect our technology edge in the region of terminals.

Finally, in services, we are centralizing key management functions that are vital for the operational stability that includes central product and project management, along with the subcontractor management as the supply chain management. This holistic restructuring ensures that our operational setup is perfectly aligned with our global strategy, designed to enhance efficiency, streamline our cost base and drive our long-term competitiveness.

Now let's also have a look a little bit more in detail on the execution itself. I'm pleased to report that the transformation of the Auerbach site into our central logistics and service hub is fully on track and in many areas, successfully completed even ahead of time. The logistics transformation has been completed on schedule, thus by doing so, ensuring the smooth operation and a more efficient handling across all our business units. The full transition of all CHERRY webshop logistics processes to Auerbach site is completed, and this is also a major operational achievement that consolidates our e-commerce distribution.

On top of this, the contract with our previous external logistics partner will be terminated at the end of the year, which will lead also to a significant cost saving from 2026 onwards. As you can see on the picture, the serving units in the former production are already now and in operation and filled already according to the [ RISE ] accelerated time line within the Q4. Looking ahead, in summary, by end of Q4 of this year, all logistic tasks for Europe, including Amazon vendor business, the Landskrona in-house warehouse we have transferred and the external warehouse services will be all done and fully managed from the new hub in Auerbach.

Let me conclude with my last slide with the main drivers for our development, technology and innovation outlook. While restructuring our operational footprint, we are simultaneously building a solid foundation for future profitable growth. We already have successfully established the foundation in a way that we have, as already mentioned, the integrated product and technology development structure aligned for our two focused businesses, means for Peripherals and the Digital Health & Solutions. A global PMO is driving crucial efficiency and project discipline across all new product introductions. With this foundation built, we are gaining significant innovation momentum. The centralized department is supported by a dynamic global innovation community spanning across all our sites in Sweden, Germany, Austria and in China, especially also in China.

More importantly, we already finished our technology road map for 2026 and also established the innovation building blocks for 2026 and beyond. Looking ahead, our innovation pipeline is robust and clearly focused. Our teams are currently targeting around 30 technology road map projects across critical areas like hardware, the switch, the connectivity and software and applications.

This extensive pipeline is completed -- complemented by defining approximately or defined already approximately 10 cross-field innovation building blocks designed to generate entirely new solutions opportunities. This clear focus on innovation, supported by a lean restructured operational setup is what gives us the confidence to look ahead to a brighter and more competitive future for CHERRY. With this, back to you, Oliver.

Thank you, Udo, and special thanks, obviously, to the operations team to make all these changes happen. Really great to see how we have converted the place in Auerbach from manufacturing to logistics and on time and with the right kind of effort. Ladies and gentlemen, quite frankly, the investment in CHERRY is a tough test for all shareholders. We are not the only tech stock to have experienced a rapid decline since our IPO in 2021.

But what gives us confidence and optimism -- in almost 75 years, the company has built a remarkable legacy and a universally respected and valued brand. We still hold a relevant market position in terms of technology, innovation, design and relevance. Purchasing decision-makers as well as our distribution and trading partners see CHERRY as a necessary #2 in the market. Due to the shortcomings in the components business, the peripherals business was negatively impacted.

This penalty is now almost complete after 2 years of consistent implementation of our restructuring plan. In the wake of these activities, we were also able to substantially advance the expansion of our digital health business despite investment restrictions. Here, we achieved a leading market position and managed profitability hand-in-hand with revenue growth. Digital health is finally getting the attention this business and the digital health team deserve.

We continue to consistently pursue our strategic goal of transforming CHERRY into an international provider of agnostic digital ecosystems with a strong focus on our Digital Health and Solutions segment. In our DHS division, we continue to see strong demand for an ongoing high market share of our terminal solutions, reflecting the trust of our customers placed in CHERRY technology. But beyond that, we are undergoing a fundamental paradigm shift, moving from a hardware-centric model to a platform-driven business. At the center of this transformation is the TI-Messenger, which is key for our new identity as a platform provider.

This shift allows us to transition from project-based hardware sales toward predictable and recurring software revenue streams, which significantly enhances visibility and profitability. Our [indiscernible] SIS offering plays a critical role here. We project that these revenues will surpass revenues with physical terminals by 2029, marking a major milestone in our digital transformation journey. Turning to our Peripheral segment. We have taken decisive steps to reshape and streamline our organization. We've simplified Office Peripheral structures and focus on attracting highly qualified talent to strengthen our capabilities.

In the gaming segment, targeted marketing initiatives are helping us enhance the visibility of our CHERRY EXO5 brand, driving stronger market recognition. I will also comment on our reshaped marketing division in a second. At the same time, our components business has become deemphasized but as a value strategic add-on. Regionally, our EMEA recovery is on track and APAC continues to perform as a best-in-class region for CHERRY. In the Americas, we've initiated a strategic reset as we are still not satisfied yet with its performance. Let me now turn to the challenges of our environment that we are actively navigating.

After 2 years of recession, Germany remains in stagnant growth and clearly lagging behind the dynamics of its European peers. This continues to weigh overall consumer sentiment and discretionary spending. Most realistically, 2025 will become the third year of recession, which is a negative record in the economy history of the Federal Republic of Germany. We already have achieved a lot in terms of improving and strengthening our structures, processes, workflows, forecasting discipline and data accuracy, more there is still -- more to go and to achieve even better results, as you can imagine.

The German government has submitted an amendment to the Bureaucracy Relief Act for nursing care. It proposes postponing the deadline for the IT connection of medical and providers to October 1, 2027, instead of January 2026. Like many other small- and medium-sized enterprises, CHERRY has already made massive investments in implementing the original plans in accordance with gematik specification. Such a move undermines the credibility of government regulations and bears negative consequences for patients as well as health care providers.

The reasoning behind the delayed EHYO is shortsighted and ignores the independent immediate benefits of TI connectivity. We have submitted an official opinion document to politicians to hold this process and continue to provide support to German SMEs in the digitization of the medical sector. Policy sets the framework for the economy, business plans develops and implements. We have followed precisely this principle. Now politicians cannot change the rules and conditions after the fact, leaving SMEs with their investments in services in the alert.

In APAC, we see rapid growth and innovation, but also extremely short product life cycles, new local brands popping up shortly, causing a lot of friction in the market, pricing pressure as well as FX headwinds, which altogether require continuous agility in development and supply chain management. Cash constraints limit the ability to pursue growth opportunities. And lastly, we work hard on further transforming our distribution and general structure from sell-in to sell-out, but this takes somewhat time for reestablishment.

A few weeks ago, we have implemented a strategic shift in marketing. We're going from B2B to B2C-driven marketing. Our communication must connect directly with end users. We move from partner-focused B2B messaging to consumer-driven storytelling. We shift from explaining what we sell to showing what it matters and why it matters. This change builds pull, not push. It creates demand through relevance emotion and credibility. Before, we focus on B2B channels, product data and trade events. Going forward, every product becomes the center of the story. The user is the audience.

The experience is the message. And going forward, focus on what the product means for the user. Technology is secondary to experience, simplicity and emotion. Our content should feel like us, authentic, distinctive and unmistakably, it's CHERRY's. It is not about CHERRY history. It is about the legacy of this loved brand and what we create for the future. We are bringing more content creation and quality control in-house, building a strong marketing team with the skills to produce more of our own material and rely less on external agencies. This shift will strengthen our brand consistency, create a more unified tone across products and improve cost efficiency. And yes, this is correct. We're already taking advantage of AI.

Going forward, every visual tells a story, lightning sound movement and environment will create desire in identity. Our goal is clear identity and unified appearance, where tone of voice, design and messaging aligned seamlessly. Ladies and gentlemen, regarding the outlook for peripherals in Europe, we clearly see two buckets of opportunity. Let me start with a quick update on the three major European markets.

The European peripherals market remains under pressure with the EU3 reseller market, which is Germany, France and the U.K., declining by minus 8% in value year-to-date, driven by a significant contraction in the U.K., which is minus 22% and France, which is only minus 1%, only partly offset by plus 2% growth in Germany.

The Consumer Retail segment, however, shows robust momentum with plus 10% growth, particularly in areas where CHERRY is not yet broadly distributed beyond Amazon and MediaMarkt Saturn. Germany continues to be the strongest market within the EU3, and CHERRY was able to increase market share by 1 percentage points year-on-year in Q3 calendar year 2025. More than 80% of the total EU3 keyboard market revenue is generated by cordless products, whereas CHERRY's mix remains 47% corded. This mix imbalance is directly impacting CHERRY's average selling price and margin potential.

These are our strategic implementations. The massive consumer market growth by plus 10%, combined with CHERRY's low representation in retail and cordless categories confirms the need for the ongoing strategic portfolio differentiation between consumer and B2B. The new distribution setup and portfolio realignment will allow CHERRY to: a, increase presence and numerical distribution in consumer channels; b, improve category relevance in cordless products; c, strengthen margin structures across the channel; and d, align product pricing with the overall EU3 value market.

The organizational realignment of sales and channel marketing initiated in September 2025 supports this shift, ensuring that CHERRY's resources, incentives and go-to-market folks are fully aligned with these growth and profitability drivers. In recent weeks and months, voices have grown louder that our largest shareholder, New York-based Argand Partners, should speak more clearly about the strategy. Well, it is entirely up to our shareholders to decide how, when and whether they want to comment on their own investment strategy.

With the announcement on October 23, 2025, we were able to announce a deal with Argand Partners that conveys commitment, support and optimism. CHERRY SE and Argand have entered into the following agreements: Argand is acquiring two intragroup loan receivables of CHERRY SE from CHERRY Americas LLC and CHERRY Europe GmbH. CHERRY SE is selling its 1,100,284 treasury shares to Argand. Argand also undertakes to provide the company with additional funds amounting to EUR 3.5 million. If CHERRY makes use of these funds, CHERRY Americas LLC and Argand will conclude a purchase agreement for certain inventory of the U.S. subsidiary.

As I stated in the news, Argand Partners as the largest shareholder of CHERRY SE is demonstrating a strong and concrete commitment to the Management Board's further strategic plan. The focus on the company's potential is supported by concrete financial measures to give management more leeway to implement the right measures in the areas of peripherals and digital health with sufficient consistency. With those investments, the CHERRY U.S. business remains unchanged in the hands of CHERRY.

For sure, you agree that these are very positive signals for the company, the Management Board, the CHERRY team and of course, also the capital market. As usual, I complete our presentation with a comment on our financial forecast. As stated in our ad hoc release from the 20th of October, we are currently reviewing whether and to what extent our full year forecast requires adjustment. I will now hand it over to Nicole for the Q&A session, and I'm very much looking forward to it.

[Operator Instructions] First question comes from Bastian Brach, Montega AG.

So three questions for me. First two on DHS segment. So in Q2, you mentioned the good eHealth terminal traction and the outlook for H2 with delivery numbers more than doubling. Does this still holds true? You mentioned supply problems in your presentation. And yes, following that, what can we expect in 2026? Will the good traction also continue into next year?

I go straight into answering that question. So first of all, obviously, we're absolutely in line with the projections we have shared with you in Q2 call. Again, unfortunately, there is a bit of a kind of a distraction right now with some politicians moving out of that part of the business. But again, we are already approaching all the politicians. As we are the market leader in that segment, we have a certain kind of a voice -- so we still keep on the plan that we shared with you in Q2 for the rest of the year. And we see that our solutions are the best-in-class when it comes to hardware, software and cloud services that we have.

With regard to the 2026 market, imagine there will be a little bit of a decline from the projection if that's the case. And obviously, we're not going to lose that business. So it's going to enrich 2026. And even the outlook to 2027, 2028 is very positively. One of the elements that we always should bear in mind is when we're talking about Germany and we're talking about digitization, we all know that we are not on a fast track mode in this country.

Fortunately, this gives us a little bit more traction and a little bit more reach over the years. Second thing is, and that's something where we're going to look specifically into it. We're getting more and more kind of positive feedback on our solutions as they're purely agnostic from other countries. And with more focus on this opportunity, obviously, this will also enrich DHS. So from a sustainability perspective, sustainability in terms of long-term business, DHS is a very promising business line.

Okay. And could you also, for that segment, talk a little bit more about the TI-M rollout. So when could we expect first meaningful revenues? And then can you further elaborate on your comment that you expect software sales to be on the same level as hardware in, I think, 2029, it was what is needed in terms of like customer numbers or other milestone to reach this target?

Yes, very good question, Bastian. So basically, obviously, we already started having the first kind of signings. That means that we're already generating recurring revenue in this one here. We're going to have a strategic session on that with regard to the outlook 2026 up to 2028 in December. And this will the time when we're going to have a consolidation and the projection at the same time of our assumptions for the next 3 years, and that's something that we're going to share most probably in the first quarter next calendar year.

Okay. Okay. And then my last question is on the -- yes, quite complicated Page 9, the adjusted EBITDA bridge. The EUR 5.5 million or EUR 6.5 million in the optimistic case, are these cost savings you have already implemented? And which will be realized in 2026, so we can see that as an indication? Or what does that refer to? Is that -- yes, other cost measure implementations you will do in 2026 as well?

So as this slide looks a little bit complicated, first of all, I appreciate you coming up with the questions. Most probably you're not the only one on that call. The answer is pretty simple. And with this, I hand over to Jurjen.

As I already alluded to, I mean, these cost savings to a limited extent are reflected in -- we mentioned that our cost profile in the third quarter in 2025 is better that is lower than in the same quarter in 2024. But the vast majority of these costs and reductions are yet to come. And I just annualized, let's say, the total number and then pushed it back to 2025. So it's really a cost opportunity from the cost level where we are today.

Okay. So it's not implemented yet and shouldn't be seen as an indication for 2026, but like a general midterm outlook where the cost base could be?

If we -- yes, exactly. I mean that's the right way of formulating it. And as I said, our current tight liquidity management prevents us from doing this in a big bang.

Okay. Maybe to underpin that a little bit, Bastian, and again, it's a really important question here. If you're going through this channel inventory down management as we have managed it now the last 3 years, if you're at the same time, cash limited, you cannot do the typical what you do in the industry, which is always called the flush out, you can't.

So it took a longer period of time. But at the same time, obviously, and this is where we look at this from a pure management perspective, if we then see the increase of the street prices of CHERRY products by up to 80%, if we then see that the channel demand from the different partners has increased significantly, then from a management perspective, we have done the right stuff.

And I was also kind of expressing that in the Q2 call that we're going to look into Q3 getting to the end of that channel down, and that's exactly what we have achieved. Now with the current inventory of around EUR 35 million, EUR 38 million, it depends on shipments we're going to make. it looks like we already are in a certain kind of a range where we most probably are looking to is that the right number? We always say something like a constant, obviously, inventory level of EUR 30 million to EUR 35 million in the range of CHERRY might be the proper situation.

But the most important is that we also have cleaned out, let's say, the slow-moving products quite significantly. Second is that most of the inventory obviously was in the German-speaking market. That means like there is exactly where we had our strong position in the market. But at the same time, we kind of overloaded not only the channels but also our internal inventory situation.

So again, long story, but quite frankly, it is an important story as we have done the cleanup that I know other brands in the industry still are facing ahead of their time. They still have to go through this. We have done it. So this could be a very, very nice opportunity for the sales team, obviously, to really sell on higher margin and profitability level and even there gaining more shares in the market.

And allow me shortly to add from my side on the question before with the cost measures. Yes, so they are not implemented in the way that as of today, all of them are in place. But for sure, they are initiated. And then that's exactly what we're doing. We have the structured PMO, getting the things on the street. Of course, for some of the elements, it takes some time. So it means you can finalize them, but the path is very clear and also the path is defined towards this.

The next questions come from Oliver, Frei [indiscernible].

And maybe starting with previous and upcoming investments and in relation to your liquidity, you mentioned that you were somewhat cash restrained. Can you remind us on the restructuring charges for, let's say, severances for components for the Auerbach side, what you've already done? And then looking forward, what's still ahead of us, I can imagine that you will have to think about your inventory again that you get the right products and again, maybe rebuild it in some capacity? And how are you monitoring liquidity for that also given that some loan payments are coming up at the beginning of next year?

I can take the first part on the severance payments simply based on the legal requirement and the social plan negotiated. Roughly half of it is already done. The majority comes in quarter 4, a few exception employees with the longest termination than in January and then it's done. And we are strictly at plan, even we are slightly below what was originally targeted. It's also part of an element which we're monthly reviewing as this is also one of the key elements of the '26..

I'm happy to take the part on the financing. So our agreements with the bank when it comes to financing, they run until the end of 2026. So there is no repayments anticipated or scheduled for the beginning of 2026. And obviously, towards the end of 2026, this financing needs to be refinanced.

And maybe just to clarify on upcoming investments. Maybe on the Auerbach side, you mentioned some good progress. Anything that we can expect or have to expect in Q4 and maybe Q1 '26?

You mean in terms of capital expenditures and investments? Or what is the...

Yes.

For the logistics setup, we are done. And honestly, this is on a very reliable or even acceptable low level of cost. So introducing the shelf as the building, as I mentioned already before, the building, everything was ready to be used for such a logistics hub, even it was originally planned or built for something like this. So therefore, the investment costs were minor and they're all done. So there is nothing additional comes. So what we have to invest around the logistic hub is already done by end of October.

Okay. Perfect. And maybe a second question. You mentioned that your guidance is still under review, but can you help us on how we have to think about Q4 on the demand situation and where you would see some short-term growth potential because we have seen some -- like you mentioned, the clearing out of the distribution channels has hurt sales for a couple of quarters now. Where do you see some low-hanging fruits to get back to growth?

Yes, that's a very good question. So first of all, obviously, we're looking at the top line, which seems to be sufficiently underpinned, which is good. Now we're looking at the costs. I hear some voices that say, oh, Mr. Kaltner, you are now 3 years with the company, you're always complaining about the market condition.

If I was coming across that way, I can obviously say like that was not my intention. My intention was to say like listen, if you're talking about a European market and you have 85% of your business in the German-speaking region, if you're then obviously filling, filling, filling, overfilling that channel, if you're coming up with EUR 84 million in total inventory, most of it obviously in the German-speaking market, if you then have a bit of a cash restriction in the beginning and a heavier cash restriction in the end of the last month, you cannot move product because that was dedicated German-speaking product that you simply cannot sell to the U.K. or somewhere else.

And the comparison with a company such as Logitech doesn't make any sense because it's more than USD 5 billion company. They can obviously move their product from better marketplace to the other one. So if you look at this from a management perspective, we have done exactly the right thing. And -- also to repeat that, we had 17 direct agreements for the German-speaking market with 17 distribution partners, not even adding the one with the sub-distribution partners.

This is what I call a maximum mess, which is now cleaned up, okay? So please understand this took a while. We've been pretty explicitly explaining it, but I understand that obviously, that's a lot of detail when it comes from operational management perspective. Now we have one dedicated partner for the German-speaking market. We have a full-size agreement about the sell-in volume for Q4.

It is contractually absolutely underpinned, which is fine. The good thing is obviously that basically the channel coverage is on a pretty soft level. And obviously, the demand that we were facing from our end partners is higher than obviously our supply. This is all good, and this is kind of giving us the confidence right now with regard to the Q4. But even more, we're not going into any overshipment mode anymore where the Q4 looks good and the Q1 is going to suffer.

That's exactly where we're heading to. And again, with regard to the costs, I'm very happy to see that Udo is really progressing very nicely with all the operational points that we have laid out and now obviously, also with the new quality from a CFO perspective provided by Eugen, obviously, we're looking specifically into our cost structure. And with this, I also will say like we're not at the end of our cost structure. Cost structure still is too high.

And we're still not there to say like done deal, but we have now sufficiently reshaped the business in peripherals. And again, it was really suffering from the decisions based on the component business that was not showing up. And at the same time, we very nicely managed Digital Health. That means like we have now 2 out of 3 business segments that are delivering better results from Q4 onwards.

So as there are no further questions at this time, and we are running out of time, I hand it back to Oliver for his closing comments.

What else needs to be added? Quite frankly, I fully understand that everybody that is kind of joining our quarterly sessions over the last 3 years, most probably would expect an energy of positive news and based on positive news. Having said that, it's been a journey of restructuring, and we've been very, very vocal about what we're doing and how we're doing this and why we're doing this.

I'm very pleased to see that we have strong management capability within the organization that we have a dedicated team that has really taken the company through this very, very challenging period of time. Having said that, my confidence level with regard to having peripherals back in shape is very, very high. My confidence level with regard that we can really change the rules in the market of digital health is absolutely very high. And at the same time, we are going to do the right thing with the remaining part of components.

Component was the part that was kind of starting the suffer period for the company. We have managed it in a certain way that this pain is now out of our range, and that's very helpful. I really thank you very much for the questions. I know that there will be more questions popping up after the session. We're going to answer all the sessions popping in. I'm very pleased to see, again, Jurjen Jongma joined the company, very helpful, obviously, to see that really step up.

And again, also special thanks to Udo Streller because you look at Udo always as the COO, I can tell you this guy is really involved in so many other business streams outside his direct mandate, and I really appreciate that setup. Again, with all the others that are also in the core team, this is the reason why we could manage it the right way.

And very promising, obviously, what we have achieved, not in all the metrics as we have explicitly shared with you in a self-critical way. But from a management perspective, most of the reshape is done. Thank you very much. Have a fantastic rest of the week and enjoy your weekend upcoming.

Have a nice day. Thank you also.