Elliptic Laboratories Aktie

Good morning, and welcome to Elliptic Labs Q2 Results Presentation. My name is Ola Sandstad, CEO. And together with Mathias Norderud, our CFO, I'll present the results for the second quarter. In addition, I will give a deeper review of our work on new growth opportunities and finally go through the outlook. As usual, we will conclude the presentation with a Q&A session. Many have been following Elliptic Labs for a long period and know what we represent. At this time, I would like to start by giving a short recap on what we're all about.

Elliptic Labs have been building and deploying AI-based technology for a decade. Our updated vision is really to maximize the value of edge devices by enabling advanced intelligence to be deployed seamlessly at scale. To achieve this, we have employed what might be one of the most skilled groups of AI experts, coupled with embedded software developers in Norway. Our current customers build their products in Asia, so we have people on the ground efficiently managing the project execution with Tier 1 device manufacturers. I believe this position and potential is very strong for a Norwegian tech company.

Our mission is to utilize this and bring the value to the market resulting in our commercial success. Our core offering so far has been to provide sensing capabilities to consumer electronics, delivered through our software expertise and use of existing hardware as a source of input. Today, we deliver this to the larger smartphone and laptop vendors of this world. Since Q1 of this year, we've expanded our targets to include new growth opportunities, both in small and big form factors. The hunger for contextual intelligence is real in a space booming with devices that need to adapt and optimize according to the environment and situation it is in.

Our embedded AI platform is a key ingredient in this venture. Through the presentation today, we'll touch on where we are and where we are heading with our new offering to scalable growth opportunities. As a software company, we need hardware to run on. So during the last decade, we've been established and benefited from tight integration and collaboration with top-of-the-line hardware and chipset vendors in the consumer electronics space. We interact with a large part of these on a weekly basis. This enables us to go from a paper tiger to a real production-ready solution in weeks and months, not months and years. We know that this position is crucial to achieve success in the market we operate.

Our management team was recently completed with the hiring of Linn Gimmestad, joining as Chief People and Flow Officer. This team is strongly motivated and focused on executing on our strategic growth opportunities. We're now a lean AI machine delivering on our strategic initiatives presented earlier this year. This includes further expanding business based on our core offering, adding new growth markets and device types to the mix, and ensuring operational efficiency, and doing this with an organization that's more compact and focused. Q2 was a quarter of high activity. Our research and development teams have been locked on to the priorities set, and a large portion of real-world demonstration kits have been made.

These are being used actively in dialogue with selected customer opportunities to get transparent feedback on our value proposition. We've been attending a series of industry and networking events to showcase our latest innovations. Being a well-established player in the ecosystem has enabled us to reactivate some of our existing connections that now can benefit from our new offerings. Let's take a brief look at the recent operational highlights. We continue with our focused execution through a transition year, and we're seeing growth in laptop shipments. We have renewed the smartphone contract with a key customer. Our cost reduction is going according to plan.

The new and adjacent verticals are seeing promising progress, and we have received positive validation from chipset and IP vendors on our Edge AI platform offering. Turning to the financial highlights, which Mathias Norderud will cover in more detail shortly. Revenue for the quarter was NOK 13 million, driven by a combination of milestone revenue and some incremental volume revenue. We continue to see strong underlying operational momentum. Laptop shipments grew 33% year-on-year. This is important because growing shipment volumes are what ultimately drive cash generation and incremental royalty revenue as volumes move above the contractual thresholds.

We also saw continued growth in our market footprint with the number of smartphone and laptop models launched increasing by 14% year-on-year. We're now delivering growth from a leaner organization. So following the measures implemented earlier this year, we have reduced our annual operating cost base by approximately 15%. While reported revenues reflect the timing and structure of our existing contracts, the underlying indicators are moving in the right direction. Shipments are growing, our installed base is expanding, and our cost base is lower.

Looking at shipment volumes, as I just mentioned, laptop momentum remains strong with shipments up 33% year-on-year in Q2. This reflects the contracts won over recent years now translating into devices shipping in the market. We have also significantly improved deployment efficiency. The number of people involved in a laptop delivery project is much lower than just 1 year ago. In smartphones, shipments were down 17% year-on-year, mainly reflecting broader memory and cost constraints. However, our contract mix provides some protection against short-term volume fluctuations. Importantly, we also renewed an agreement with one of our major smartphone customers during the quarter.

Model launches remain an indicator of future business development in our core markets. The continued expansion across both smartphone and laptop devices reflects the strength in our products and the relevance of our technology across portfolios and high-volume devices. During the quarter, we saw launches across several of our smartphone customers with new launches from vivo, Transsion, HONOR, and Xiaomi. In the laptop segment, we saw dual sensor configurations in 4 of the new models. Providing insights into the business model and market dynamics is a key goal for us. I'll now hand over to Mathias, who will go through the numbers and provide a deeper dive into some of the financial aspects.

Thank you, Ola, and good morning, everyone. Let's dive into the Q2 financial results. Starting with revenue. Q2 was lower than both the corresponding quarter last year and Q1 this year. This is in line with the communication of revenue mainly being back-end loaded to the second half of this year. Let me focus on what I see as the key question behind these numbers. Why is laptop revenue so low when shipment momentum remains strong? The answer lies in both the structure and the timing of our existing laptop contracts.

The contracts driving current volumes largely remain within their minimum commitment thresholds this quarter. These shipments demonstrate continued adoption but generated very limited incremental volume revenue in Q2. The comparison with last year also matters. Q2 last year included revenue from a laptop agreement as well as a higher contribution from incremental volume revenue. This makes the year-on-year decline in laptop revenue particularly pronounced.

On smartphones, we did see lower shipment volumes year-on-year, reflecting the market constraints Ola touched on earlier. The contribution from incremental volume revenue was also limited. Smartphones nevertheless accounted for most of the revenue in Q2, primarily due to milestone revenue from the new smartphone agreement entered into during the quarter. As we communicated in Q1, incremental volume revenue for 2026 is expected to remain below 2025 levels, although we expect a higher contribution in the second half of the year. The development so far is, therefore, in line with our previously communicated expectations.

The previous slide illustrates the dynamic that we know makes it difficult for outsiders to model future revenue, especially on a quarterly basis. Revenue is significantly lower so far this year despite record-high shipment volumes in laptops and growth in launches in both segments. To understand that apparent disconnect, it helps to separate what is consistent from what varies. Operationally, the process is broadly the same across our customer projects. We deliver software, the customer deploys it, and the market demand ultimately drives shipment volumes.

What varies is the commercial structure of the contract. This determines when we recognize revenue and when we collect cash. We broadly distinguish between 3 contract models. The first model, minimum commitment plus IVR, or incremental volume revenue, is particularly important for understanding our current revenue dynamics. It applies to all our active laptop agreements and a meaningful part of our smartphone portfolio. Under this model, the customer commits to pay for an agreed minimum volume regardless of how the product ultimately performs in the market.

We generally recognize the value of that commitment when the software is delivered, while cash collection follows reported shipments. This provides downside protection and volume upside, but also a timing difference between initial revenue recognition and cash, illustrated by the revenue and cash profiles on the slide here. IVR is generated once cumulative shipments exceed the agreed minimum commitment thresholds. While shipments remain within the threshold, volume growth does not generate new IVR. This is a dynamic that is particularly strong so far this year. Several active agreements are now approaching the thresholds, supporting our expectation of a higher IVR contribution in the second half of this year.

We also have fixed-fee agreements, primarily within smartphones. Here, the contract value is independent of actual shipment volumes. Revenue is generally recognized when the software is delivered, while cash is collected according to an agreed payment schedule. This provides a predictable revenue and cash profile with no additional volume upside if shipments exceed expectations. The third and last model combines upfront cash with IVR. This is less common in our current portfolio. The upfront payment provides an earlier cash contribution, while subsequent revenue and cash collection are more directly linked to the shipments.

Okay. So, the key takeaway is that shipments, revenue, and cash are connected, but contract structure and terms can cause them to develop differently in an individual quarter. With the contract structures in mind, the year-on-year decline in revenue of 48% is largely explained by timing effects and a different revenue profile compared with last year. We have already covered the revenue development in detail, so I will focus mainly on the cost side here on the slide. Employee benefit expenses decreased by 39% year-on-year to NOK 11.1 million this quarter.

This primarily reflects a lower headcount compared with last year following the cost efficiency measures earlier this year. This has resulted in a structurally leaner operating cost base. Other operating expenses were somewhat higher year-on-year, partially due to approximately NOK 1 million in non-recurring legal and patent-related costs. Overall, operating expenses before depreciation and amortization decreased to NOK 18 million this quarter from NOK 23.9 million last year. The lower cost base did not fully offset the revenue decline, resulting in negative EBITDA of NOK 5.1 million this quarter.

So, looking ahead, with a leaner cost base now in place, we expect operating leverage to improve gradually as incremental volume revenue becomes a larger contributor over time. Moving on to cash flow. Cash decreased by approximately NOK 15 million during the quarter, leaving us with a cash position of NOK 59 million at the end of June. Cash flow from operations was negative NOK 8.5 million, an improvement from the previous quarter. The outflow reflected the operational loss this quarter in addition to scheduled payments of holiday pay and Board remuneration as well as payments under severance arrangements recognized in prior periods.

These effects were partly offset by a decrease in trade receivables. Please note that the cost measures implemented in Q1 will have the full cash effect from H2 2026. Turning to investment activities. We continue to make selective investments in our core technology and strategic growth opportunities. Going forward, we remain highly focused on operational efficiency and cash flow while continuing to fund the technology and commercial opportunities that we believe are important for future growth.

Turning to the balance sheet. The asset mix remains broadly unchanged from last quarter with cash, intangible assets, and trade receivables as the main components. I have already covered cash and our investments in technology, so let me focus briefly on the trade receivables. Trade receivables declined both quarter-on-quarter and year-on-year. Days sales outstanding increased, but this primarily reflects the lower revenue base over the last 12 months rather than any significant change in customer payment patterns.

Collections and cash conversion remain a key focus going forward. Overall, the balance sheet remains well-capitalized with a strong equity position and no borrowings, providing financial flexibility to support our ongoing operations and strategic priorities. And with that, I'll turn it over to you, Ola.

Thank you, Mathias. A key focus for this period has been to further develop and validate our strategic growth opportunities. Looking at the adjacent verticals, we're seeing commercial progress with new customer opportunities within wearables. New customer relationships are strategically interesting and represent a new avenue for our company. The use cases center around proximity sensing combined with agentic AI and the general aim of making devices easier and more intuitive to use.

Our features are enabled by our flexible and efficient Edge AI platform, which is built for embedded devices with limited compute and power. The customer dialogue is an encouraging proof that a market exists for the company's technology in this new vertical. Within smart glasses, we continue to progress opportunities where our audio-based sensing approach offers a more privacy-friendly alternative to camera-based solutions. This development reinforces our view that the category remains commercially interesting.

Smart TV customer demonstrations are proving our technology's ability to detect how many people are near the screen. The commercial track is developing according to plan. During Q2, we continued validating our Edge AI offering and its path towards commercialization. We received positive feedback from chipset and IP vendors and progressed discussions with potential lead customers. It's important to underline that the platform capability is not limited to sensing functionality provided by our company. It can be utilized for any AI-based application that needs to combine logic and inference and run in a capacity-constrained environment.

This could easily be applications like sensor fusion, anomaly detection, predictive maintenance, acoustic event detection, health signal analysis, and motor and energy control. We are working from an angle of empowering our hardware partners and their customers, providing an interesting channel and route into new market segments. Now let's take a look at the outlook going forward. So looking ahead, our outlook remains largely unchanged from what we presented in Q1. We remain focused on cost discipline with an approximately 15% reduction in our annualized operating cost base now implemented.

The full cash effect of these measures is expected from the second half of '26. Within smartphones and laptops, we expect continued operational momentum through new launches and growing shipment volumes, particularly in laptops. We also expect revenue to improve gradually through the second half, supported by a combination of milestone and incremental volume revenue. For Edge AI in new verticals, progress remains on track. Our ambition is still to reach commercial execution during the second half of '26. And with that, we're ready for the Q&A.

Let's get the system up on stage and take a look at the questions we have. Stay tuned. So we now put our laptops in front of us with the online system for the questions from the Q&A. We have a good list of questions here. We'll try to categorize them somewhat. The first one is from Pernille. "Your revenue is down both quarter-on-quarter and year-on-year. Was that lower than expected? Are you less confident in your '26 total revenue ambitions now given the weak Q2?" Maybe you can take that question, Mathias?

I can try to answer that. So I think we addressed some of these topics also in the presentation regarding H1, the first half of the year, and that the revenue levels are in accordance with expectations for us. For the rest of the year, we haven't put a specific number on the table for what we expect for the rest of the year. But what we anticipate or expect is that we will end up broadly in line with 2025 numbers as previously discussed as well.

And that's based on new contracts coming in and also contracts in the pipeline that we signed last year with the revenue recognition in the second half of the year on laptops previously disclosed, and also improvements in launches and growth in shipments that will increase the incremental volume revenue also pointed out in the presentation. So there's always kind of a space there depending on the timing of contracts and so on, but that's what we expect at this point in time.

Good. Further down this one.

The new strategic opportunities are reasonable, but it is difficult to understand the progress since last quarter. Are you still confident in the strategic direction? And can we expect this to meaningfully contribute to revenue in '27?

It's a good question, and it's a very correct question. So yes, we are absolutely confident in the direction we set out in Q1. It's now 6 months down the line. And during that phase, we've done a lot with the organization in terms of reorganizing and focusing teams on what their effort should be used against. We've been out in the market validating this continuously.

So instead of sitting in the Oslo office in the black room and just hearing our own voices, we've really been out in the market. So whether that's through industry events, customer meetings, partner negotiations, all these types of things have been ongoing. And during those 6 months now, we've really seen positive answers to a lot of the things that we've pitched and offered and seen as a value proposition. So yes, I absolutely believe in the strategy that we set out and the things we are doing and really plan and hope for things to materialize even further during the second half of this year. When it comes to '27, we've talked about during this presentation today the structures of our contracts.

So this will, of course, impact how we see the revenue developing. But it goes without saying that we're a company looking to grow into new markets to get the proper deal and the setup to move forward in the growth phase. So we do expect revenue to materialize in '27 from these new initiatives. But also, of course, the growth in the existing markets that we cover. Good. There's a question here regarding cash. "Your cash flow is improving, but it's still negative. Can you please talk us through how you'll get to a positive cash flow?" And maybe that's for you.

Yes, sure. So the cash position and cash flow going forward is a key item for us on the agenda, definitely. And from my perspective, there are some building blocks to that. We have the outflows that we more or less can control, and we've done some concrete measures on that in Q1 and forward regarding reducing the cost. And we're seeing some of the effect in Q2, but we expect, as previously mentioned in the presentation, the full effect of the cost measures in Q1 in the second half of the year. And that will help us going forward.

Adding to that, we have the existing business and existing active contracts that contribute to shipments and payments from customers, and that helps us improve the cash flow as well. So depending on market conditions in the second half of the year and shipments, that will impact us as well. And also, as Ola just talked about, the new initiatives and growing the existing business as well will help us improve the cash flow in the future. But we haven't put a specific timing on that statement yet, but we're focusing on that definitely.

Let's see, further down, scroll a bit here.

Maybe I can have a question for you as well. We're going through all questions.

Questions set out.

Are you more or less confident about the potential from new verticals now than you were in the beginning of the year?

I'm more, absolutely. So when we set out, as I already talked about a bit, set out in Q1, we had a hypothesis on what our value could be in those markets and the trends we're seeing. Take the example of smart glasses where one of the main pain points for glasses today is the size and the design and how much you enjoy using them. So reducing weight on a smart glass is a really important metric for the customers that we're talking to. That's one aspect.

Another thing which we've all read about in basically all newspapers nowadays is the use of cameras on these smart glasses, that is, to a large degree, invading your private space, and that's a topic. And we've actually seen this being reflected in the discussions we have with customers. It's not that we believe that smart glasses will never have cameras moving forward, but our capability of doing audio-based sensing, whether that's for detecting how you touch and actually interact with the smart glass, whether that's to sense what's happening around you, which is typically audio or ultrasonic-based that we can do.

This then serves as a really good alternative to some of the privacy topics that have been raised during the last year. So we're absolutely confident that this will materialize. Timing-wise, we know there's a lot of things developing nowadays. It's a booming market and a lot of growth. And of course, we're trying to inject ourselves into that. So absolutely, I'm more confident.

Great. So the next question is on smartphones. You had a few quarters with lower shipments. What can we expect from growth in smartphone shipments going forward?

So we're seeing, like the rest of the world, that the memory pricing this morning as well, that even NVIDIA has an issue with memory costs impacting their production rates. So they see they will be slowed down by the fact that the access to memory chips is limiting them. We see the same in the smartphone market. This is a key ingredient in any type of electronics that's doing some type of compute or memory. So how does this impact the smartphones?

Well, people will not stop buying smartphones, that's for sure. It's a big market. It's absolutely potential for us to gain more ground in that market still. As we've talked about a bit during the presentation, we have different pricing models. This is something we do to get a proper payment for the value that we bring and not necessarily always risking the impact of shipments.

So we think the risk assessments we're doing in this market, how the pricing models we decide to go forward with together with the customer somewhat hedges the outcome of that. From a shipment-wise perspective, last quarter, we can't go into details, but we saw some of our customers going up, some of them going down. So the width of our portfolio of smartphone customers does indeed impact the total game.

Good. So other than that, I don't have a crystal ball to say how the shipments are actually going to do. I know that we're doing what we can on our side to control, of course, the costs that we put in, the resources we put in, and also the pricing models that we set forth for the customer. Good. It seems to be coming to an end, maybe, Espen, any final one?

One more question with regards to Edge AI. Can you please explain in short what the Edge AI project from Elliptic Labs is? It's a big question.

Yes, a big question. So the main thing, it's an important ingredient into achieving something efficient and quickly in the market of today. So what we see is that we've been good at doing logic plus AI models, basically merging those 2 worlds where the outcome on what an AI model says, you're going to do something about that and maybe you make decisions through that path.

This is something we've been doing in our products for a long time. And this is definitely a need in today's AI-driven products, physical AI products, whether it's consumer electronics or robotics or whatever. So what we bring to the table is a capability of actually being able to do this quickly, effectively, in a very efficient way when you do the development. And also after deployment into the field, you can easily update the AI model on that device.

So where that typically today needs a lot of actors to get together and make that happen, we have a really efficient way of doing that. Our delivery into the Edge AI market is a compiler, it's a system. It's a full ecosystem of how to run and implement logic plus AI models. And that can be deployed on anything, meaning that any customer that wants to build a product today based on chipsets, based on systems that are going to do something at the edge, typically not connected or they're connected to the cloud, but they're not processing in the cloud.

What we bring there is a software component that makes that a much more enjoyable journey and quicker journey. So where a typical customer could today use maybe 6 months to get something actually running, with us, we're talking about weeks, more than several months. And we see when the customers get this in their hands and they see the benefits of this, they really see the value. And that's what we're going to do now since we've built this now out in the second half, we're going to put this in more hands of our potential customers to actually get this to materialize into commercial agreements.

Good.

Okay.

I think we start to run out of time, but we have time for one more last question here from Jonathan here. What initiatives are you implementing to establish new runways for corporate revenue growth?

Yes. So, initiatives we're implementing to establish new runways for corporate growth. So, basically, the revenue of our company is largely driven by the devices shipping to the market and the deals we do with that. So we have 2 established markets today, smartphones and laptops, and that's where we've been living for the last 5 to 10 years. So we are absolutely trying to expand that to more customers with more features and more capabilities to win more designs.

In addition to that, we launched initiatives to do wearables, meaning whether that's the type of AirPods or your earbuds, your smart glasses or your smart wrist or something like that. We're going into that with our existing technology. I mentioned smart glasses. That's also a dedicated track we have. So that's the second initiative.

And then more of a third one is larger screens, whether that's smart TVs that might benefit from having insight into what's happening in front of the TV, for instance, how many people are watching the current show, or whether there's digital signage out there doing commercials that need some type of contextual intelligence. So that's roughly the tangible markets we're going towards. And then the final one, the Edge AI, which I just talked about, is more of a horizontal offering.

So today, we primarily focus on verticals, features where we need to be intimately involved with the customer and understand the use case and everything. With the Edge AI offering, it is more of a horizontal offering. So we don't need necessarily to be so hands-on with the feature that's being implemented by the customer who's buying our technology. So totally, that's 3 main tracks. There's the existing markets, it's the adjacent verticals, and then the horizontal offering to the wider markets.

And just to add to that at the end as well, for the new verticals, we have an ambition to have some commercial contracts this half of the year, so before New Year's. And we expect that to materialize in revenue in 2027 at some point.

Yes. Good. Okay. I think that's a wrap. So thank you for today, and stay tuned for more updates from Elliptic Labs moving forward.

Thank you.

Good morning, and welcome to Elliptic Labs Q1 Results Call. My name is Ola Sandstad, the CEO; and together with Mathias Norderud, our CFO, I'll present the results for the first quarter. We'll walk through the developments during the quarter, which for those who have followed us over time, have largely been shaped by the strategic review we conducted and presented earlier this year. We'll recap the changes we communicated at that time, the measures we've implemented and how we have executed on our strategy.

In the second part of the presentation, Mathias will take you through the financial results. Along the way, we will also discuss how the current transition phase is beginning to materialize operationally. As usual, we'll conclude the presentation with a Q&A session. Then let's look at the key highlights from the quarter.

We've implemented targeted cost measures according to plan, including organizational changes, resulting in a leaner cost structure. We also successfully completed a private placement, leaving us fully funded and financially well positioned to deliver on our strategic priorities. We remain focused on operational execution in laptop and smartphone markets, building on the strong foundation we have established in these segments. Laptop shipment growth momentum stands out as a key highlight this quarter.

Strategically, we are working to productize our platform to enable frictionless development and deployment of AI on embedded devices. During the quarter, we saw encouraging validation of this direction. Lastly, we have seen early but positive traction in strategic initiatives within adjacent verticals, including smart TVs, smart glasses and other wearables. These opportunities build on our existing technology platform and partner footprint, allowing us to selectively expand into adjacent device categories.

Capturing the opportunities created by our renewed strategic direction requires the right organization, leadership and operational focus. During the first quarter, we implemented important organizational changes to better align the company with our long-term growth ambitions.

This included restructuring larger parts of the organization to increase focus, accountability and execution in line with our strategy. As part of this, I have strengthened the leadership team through the appointment of Tobias Boren as Chief Technology Officer; Oystein Grimstad as Chief Product Officer; and Brian Daly as Chief Commercial Officer. These promotions reflect my strong focus on empowerment, clear accountability and execution as we accelerate product development, operational excellence and expansion into new growth areas. In February, we presented the outcome of the strategic review initiated in Q3, including targeted cost measures and a sharper commercial focus. While continuing to build on our strong position in laptop and smartphones, we're also leveraging our platform and AI capabilities to expand into new verticals.

Turning to the key financial highlights for the first quarter. Total revenue came in at NOK 17 million. Revenue development during the quarter was impacted by milestone recognition and lower incremental volume revenue as a larger share of shipment volumes remain within commitment agreements. In the laptop segment, we saw a particularly strong momentum with quarterly laptop shipments increasing by 41% year-over-year.

This reflects continued adoption of our technology and a broader product rollout by our customers. We also saw a solid number of model launches featuring Elliptic Labs technology across both smartphone and laptops. As of the end of April, the combined number of launch models increased 23% year-over-year. The continued model expansion across both premium and high-volume devices reflects the strength of our technology and platform capabilities. During the quarter, we also implemented cost measures, resulting in an approximately 15% reduction in the operating cost base. Elliptic Labs has been present in the market for more than a decade, during which we built a strong foundation through our technology, broad customer adoption and deep ecosystem integration. At the core of this foundation is our proprietary tech stack, strengthened by patents.

During this quarter, five new patents were granted, further strengthening our IP position. Our close collaboration with ecosystem and hardware partners have been critical in scaling our technology across global device platform. This integration work combined with strong relations across the value chain, position us well both within our existing market and as we expand into new adjacent verticals.

During the quarter, we saw -- we continue to see strong operational momentum in our established laptop business, delivering 41% year-over-year growth in laptop shipments in Q1. This reflects continued customer rollouts and increasing adoption of our technology across existing programs. In smartphones, shipments were broadly in line with Q1 last year. The smartphone segment continues to be impacted by memory and cost constraints, which are affecting OEM model planning cycles. At the same time, our diversified smartphone customer portfolio helped maintain stable shipments activity across the segments. The continued expansion across both premium and high-volume devices reflects the strength of our technology and platform capabilities. Q1 marked an all-time high in quarterly model launches for Elliptic Labs with 17 laptop models and 22 smartphone models introduced during the quarter.

Notably, four of the Lenovo IdeaPad models are among the first laptops in the market to ship on Intel's newly released Series 3 processors, highlighting Elliptic Labs' continued alignment with leading ecosystem players and next-generation platforms. We also saw adoption of more advanced feature operations within laptops. In March alone, six out of nine laptop launches included dual sensor configurations combining AI Virtual Human Presence Sensor and AI Virtual Tap Sensor. This continued expansion across devices and feature sets creates a solid foundation for the future shipment momentum and revenue growth.

As part of the outcome of our strategic review, we outlined the market opportunity emerging within Edge AI. We see how Edge AI development for embedded and edge devices remains highly fragmented and resource-intensive, creating long development cycles, difficult deployment process and slow iteration across device platforms. We believe this creates a significant structural opportunity for Elliptic Labs. Our software-based platform and embedded AI capabilities are designed to address key bottlenecks related to scalability, deployment efficiency, time to market and cost. So far this year, validation is progressing with potential partners with ongoing demonstrations on partner hardware and active dialogue across prospective customers and chipset vendors.

The ongoing validation keeps the first commercial contract to be within reach during the second half of this year. Our ongoing discussions with partners continue to reinforce our view that software-defined sensing and contextual intelligence will become increasingly important across connected devices, validating both the relevance of our platform and the long-term growth opportunity ahead. Across our strategic initiatives within adjacent verticals, particularly smart glasses, smart TVs and smart watches, we saw early but encouraging traction during this quarter. These opportunities build on our existing technology platform and partner footprint. By leveraging hardware already present in these devices, we can enable new contextual and privacy aware AI features without requiring additional hardware sensors. During the quarter, we took several steps that may lead to tangible commercial progress. Let me highlight a few examples.

Within smart glasses, we are engaged in active presales dialogues with Chinese smart glasses companies that are among the most advanced players in the consumer segments. Within smart TVs, we are moving from lab development into evaluation in customer environments, representing an important step towards commercial validation. And in smart watches, we are exploring AI-enabled features by leveraging existing ecosystem integration and collaboration within chipset vendors. Focusing more closely on smart glasses, market research projects the global smart glasses market to reach over 100 million annual shipments and $40 billion in market value by 2030.

We see a large and fast-moving opportunity where Elliptic Labs is naturally well positioned. The market is evolving across multiple categories from AI-enabled smart glasses to more advanced video capable glasses, all requiring contextual intelligence, lower power consumption and seamless user interaction. This aligns closely with the strength of Elliptic Labs platform. By leveraging our -- or replacing actually existing hardware in the devices, we can enable additional functionality while reducing bill of material, improving user experience and supporting privacy-first on-device AI. Combined with our proven ability to scale technology across adjacent consumer device categories, we see strong potential to capture market share as adoption accelerates.

And with that, I will hand it over to Mathias for a closer look at the financials. Over to you, Mathias.

Thank you, Ola, and good morning, everyone. Let's dive into the Q1 financial results. Revenue in Q1 2026 came in below the recent quarterly run rate, primarily reflecting the timing of renewal of a larger smartphone agreement being pushed out and lower incremental volume revenue contribution compared to the corresponding quarter last year. At the same time, laptop revenue increased year-over-year, primarily driven by milestone revenue related to the new laptop agreement signed with an existing customer during this quarter. Laptop shipment activity remained solid during the quarter with volumes increasing 41% year-over-year.

Despite this, a larger share of shipment volumes remained within minimum commitment thresholds compared to the same period last year, limiting incremental volume revenue contribution even as shipments continued to grow. Turning to the P&L. Revenues from contracts with customers came in at NOK 16.9 million, down 37% year-over-year, reflecting the revenue dynamics discussed on the previous slide. Employee benefit expenses increased to NOK 23.6 million from NOK 22 million in Q1 last year, primarily reflecting approximately NOK 4.5 million in one-off restructuring and severance-related costs recognized during the quarter.

As a result, EBITDA for the quarter was negative NOK 12.5 million compared to negative NOK 1.6 million in the corresponding quarter last year. Net financial items were negative NOK 3.5 million in the quarter, primarily driven by unrealized foreign exchange effects on trade receivables and other balance sheet items. Going forward, we expect to benefit from a leaner and more scalable operating cost base with a full cash effect from the implemented cost measures expected from the second half of 2026.

Looking at cash. Cash flow from operating activities was negative NOK 17.6 million in Q1, impacted by current profitability levels as well as restructuring-related cash effects. Cash from investing activities was negative NOK 4.8 million, primarily reflecting continued capitalized development investments related to the company's core AI Virtual Smart Sensor platform as well as ongoing R&D investments within new strategic initiatives and adjacent verticals. The cost reduction measures implemented in Q1 are expected to improve the company's cash flow profile over time, with the full cash effect of this initiative expected from the second half of 2026.

During the quarter, we completed a NOK 60 million rights issue, strengthening both our liquidity position and financial flexibility going forward. Overall, we remain focused on improving operational efficiency, maintaining capital discipline and operating with a leaner and more scalable cost base following the restructuring measures. Moving to trade receivables, where we ended the quarter at NOK 82 million compared to NOK 81 million at the year-end 2025, with no major structural changes during the quarter. Trade receivables continue to be primarily influenced by contract-specific payment terms and IFRS 15 revenue timing effects. As a result, quarterly fluctuations should be expected depending on the mix between milestone revenues, shipment-linked revenues and underlying contract structures.

Days sales outstanding came in at 326 days in Q1 compared to 304 days in Q4 2025. We have not seen any material changes in underlying customer payment behavior or customer quality, and we remain focused on receivables and cash collection as part of our working capital management efforts. Turning to the balance sheet. The most significant development during the quarter was the completed rights issue, which strengthened our cash position and overall equity base.

The healthy balance sheet supports our ongoing operations, customer commitments and continued strategic execution. Current assets remain primarily driven by cash balances and trade receivables, while receivables continue to reflect timing effects related to IFRS 15 revenue recognition and contract structures. On the liability side, we have no financial debt exposure, and our equity ratio supports operational and commercial flexibility going forward. Let me turn to revenue dynamics and ambitions going forward. As we have seen, revenue growth in the quarter does not fully reflect the growth in shipments volumes. This is primarily a near-term dynamic that we expect to gradually improve through 2026 and into 2027. The reason relates to the milestone heavy contract structures established in the previous years, which we have described earlier.

Looking specifically at 2026, incremental volume-based revenue is expected to end below 2025 levels. This is driven by a combination of the previously mentioned contract structures together with shipment volumes on certain models launched during 2025, developing somewhat below initial expectations year-to-date, thereby delaying the timing of incremental revenue contributions. That said, we anticipate higher incremental volume revenue in the second half of 2026 compared to the first half.

Looking further ahead into 2027, we expect revenue growth to be supported by continued growth in shipment volumes, while incremental volume-based revenues are expected to become a larger contributor over time as shipments increasingly exceed minimum commitment thresholds. In addition, we expect strategic initiatives within Edge AI and adjacent verticals to begin contributing to revenue from 2027 onwards. Overall, these developments support our expectation of improving revenue growth dynamics over time.

With that, I will hand it back to Ola for the outlook and concluding remarks.

Thank you, Mathias. To summarize, Q1 was a quarter of solid operational progress across our strategic priorities. We continue to grow our footprint in both laptops and smartphones, saw encouraging validation within Edge AI and achieved positive early traction in adjacent verticals. At the same time, we implemented targeted cost measures and successfully completed the rights issue, resulting in a leaner organization and a strengthened balance sheet. Overall, we believe Elliptic Labs is well positioned to execute on our business plan and capture the opportunities ahead. Turning to the outlook. 2026 remains a transition year for Elliptic Labs with a strong focus on execution across both our established business and new strategic initiatives. We will continue to maintain cost discipline and reiterate our target of reducing the annualized operating cost base by approximately 15% with the full cash effect expected from the second half of 2026. Within smartphones and laptops, we expect continued momentum driven by new launches and increasing shipment volumes.

While revenue development in the first half is impacted by contract phasing and conversion timing, we expect gradual improvement through the second half of the year. At the same time, we continue to make progress within Edge AI and adjacent verticals with validation activities and customer dialogues progressing according to plan. Our ambition is to reach initial commercial execution during the second half of '26 with revenue contributions expected from '27.

With that, I would like to thank you for joining today's presentation. We will now take a short moment before moving into the Q&A session, and we look forward to taking your questions.

So then we're ready for the Q&A session after this quarterly report. We received a bunch of questions. We're looking through them a bit now, trying to organize and structure them a bit.

So one of the first questions is, so your headline today is that you're growing from a strengthened position. yet your revenue is down almost 40% year-over-year. To what extent are you actually growing?

So what I'd like to touch upon that is basically looking at the shipment numbers, as you saw in the earlier graphs, the underlying shipments are indeed growing. We've launched all-time high number of models during the quarter. Our shipment numbers are at an all-time high. And basically, that's the underlying factor in our business model. shipments drive our revenue. So how do I then explain the 40%, almost 40%. Well, basically, the contract structures that we have, as we've also gone through several times before and also this presentation is based on the milestone revenue where we have a minimum commitment from the customer. This is something we do to make sure that we have visibility on our business going into the next -- the couple of next years.

What we need to do based on that is that we need to recognize that revenue at the point of contract signing because we deliver the value to the customer during that period. And then Mathias you can touch a bit on that later, how the accounting rules kicks in for us then to do the revenue recognition early. So even though we're shipping now, unless we've passed the threshold of the minimum commitment, you're not seeing the incremental volume revenue. However, the underlying shipment is there and just a matter of time then before we break through that threshold. I see we also have another follow-up question on that, which is kind of the same, which you can take current receivables in Q1 versus the revenue.

Yes. So we received a couple of questions on the revenue side and also on the trade receivables. that's good questions. And you touched upon some of the details already. So I'm just going to elaborate on some of them. So we are following the accounting rules of IFRS 15. And as Ola mentioned, there's some milestone revenue that we initially recognize in our books, depending on contract signing and delivery of the initial software. And then we have revenue recognized when those thresholds in those contracts are reached, right? So typically, for Q1 now, we see that there are some active contracts with a lot of volumes that do not bring in that much revenue this quarter, and that's basically the dynamics that you can see in our P&L at this point. But we -- as we said in this presentation today, we anticipate that this will become better going forward, especially from the second half of the year and into '27 as well. So.

Good. Let's scroll down further. Some of the -- so we have a question here. The private placement in March strengthened the balance sheet. How do you plan to use that capital? And how are you thinking about the cost base from here?

So as we presented, Elliptic Labs is currently in a transition year, where there is mainly two tracks we're following. And the capital that we raised to strengthen the balance sheet is indeed to support those and drive those. So it is, of course, to continue to strengthen our existing business within smartphones and laptops. That means delivering the products that we already have and have successfully deployed in millions and millions into the market for several years.

That's absolutely a key -- a core component of our business going forward. And what's happening there is that we are in the dialogue with the customers. We're sitting by the table specifically of the [ Novo ] and having discussions about the innovative features that they want to focus on moving forward and where we bring value. So that's a key factor still in our operations, building with more features and taking our AI capabilities to the next step. It's also important to mention that our existing customers are also going into adjacent, let's say, verticals or feature set or ecosystem thinking, which broadens them from a one type of a device manufacturer to something wider. So there's some interesting dynamics within our existing customer base as well.

So that's the main track together with the smartphone where we're doing some of the same. We're seeing that primarily the laptop type of customer who is extending into smartphones more than smartphone vendors and extending into laptop or other devices. But there is a mix. The smartphone vendors, they're moving into smart glasses, for instance. So that's an interesting development where we already have our strong footprint. In addition to that, that's the one track. In addition to that, we are following up and trying now new initiatives where we've seen a great potential for our technology and our company, both with our current partners, our relationships, our deep integration into the ecosystem, where we're specifically going after smart glasses, smart TVs and smart watches. And all of them fit perfectly handling glove with the Elliptic Labs technology. The thing that we've been doing for the last 10 years, basically using our capability to take kind of any signal and make an assessment of it, what's happening around the device.

So bringing that contextual intelligence. which for one device can be used for how we interact with it. For another device, it can be used to understand more about what's happening in the room or around in the proximity of the device and then acting based on that with some type of feature. We also do have a question on Edge AI. Maybe you want to read that up. I think it was further down.

Please elaborate on what Edge AI is.

Yes. So it's a fairly broad term. Focus of Elliptic Labs within that Edge AI space is taking kind of the underlying platform that we've developed over these years and bringing that into that space without necessarily pitching a specific feature. So meaning that it's not about us selling presence sensing or proximity sensing or tap detection, these type of things into the environment, but it's us bringing the platform that's been used to bring those features to the market already to other customers and partners so that they themselves can have a speedy AI development, going from lab to production in a very short amount of time. And this is not about us Elliptic Labs cannibalizing our own business. This is basically extending -- extracting the value of all that has been built in this company and into that market.

So what's that market? It's basically any -- a lot of -- basically, it's any type of device that has a need to do on-device processing of some information quickly locally. So not going to the cloud to get AI processing of the signals or what's happening, but actually doing it on device, responding within milliseconds, not seconds. And to do that, you need to have really efficient implementation of AI. The models need to be really snappy and actually implementing that is not straightforward. And that's what we're trying now to bring to the market. We're getting good reaction from the customers and the partners that we're talking about that there's a need for this. It's actually a quote from one of our customers, there's a really need for this. And through that, we plan to go into a wider market than currently smartphones and laptops. Whether that's health or defense or drones or whatever type of device, the future will show us, but it's a really interesting opportunity within that space.

Yes. We also received some questions regarding the cost base going forward. Specifically, we had one question which stated, does renewed cost structure mean that we can expect to see total quarterly OpEx of less than NOK 25 million?

I'll answer that myself. So we don't guide specifically on each quarter in terms of OpEx. But what I can say and what we have already put in our outlook as well is that we initiated this cost cut program in Q1. And the cost base is anticipated to be reduced by 15% on an annualized basis going forward compared to the cost base or benchmark from Q3 last year, 12 months. So we anticipate those kind of levels on average, but we do not specifically guide on each quarter because there's fluctuations in between quarters, right? So -- but yes, the cost base is going down. That's the message.

Good. We do have some questions also more specifically on laptop, knowing the fact that currently, we're in the market with Lenovo.

So I'd like to comment on that. So, what we are in the market with Lenovo, and we're seeing a great increase in the shipment numbers. For those of you who follow our customers directly, you'll see that the market share of Lenovo is bigger than ever, and they have great success with their current laptop lineup and other PC lineup.

So if there was one laptop customer to deliver to and have as a customer, I would definitely choose Lenovo and hope luckily, that's the position that we have. On top of that, we are also working with other customers or pitching them and then looking at what they want to achieve, what type of strategy they have for the devices going forward. whether that's doing something beyond human presence detection or TAP, whether that's mixing some of our existing products into a new user interface, whether that's -- there's a lot of new form factors also in this space and not a lot of new types of using the devices, where suddenly a feature that has not had focus maybe two months or two years ago, suddenly becomes really interesting.

So there are discussions and there are activities related to that. We're not a Lenovo only company on the laptop side. But of course, we don't announce or give information about these type of things until it's actually signed and sealed and ready to be delivered. So the news will come through a potential stock exchange notice. if something happens on that. Have you seen any other questions?

We received some questions regarding the cash position and the cash situation going forward.

So I can comment on that as well. So what we've done, as I already mentioned, we've done the cost cut program, and that's reducing the cash burn significantly going forward. And we're also seeing good underlying volumes, as I already stated, and we anticipate that those will grow, especially in the laptop segment going forward as well. And with those numbers together, we anticipate that the cash position is better going forward, but we're not guiding specifically on when we're going positive in terms of cash. So we'll have to get back to that in the future.

I see we have a question here. Please quantify shipments of smartphone and mobile phones.

So we're not in a position to reveal the numbers, the shipment numbers of our customers and take the laptop example, if we were to reveal that, we're basically giving you the Lenovo numbers. So we're not allowed to do that. We have provided in the presentations an indexed graph that shows the development, which is growing. But other than that, we can't give you more specific numbers.

There's also questions on -- a question on contract structures, whether they're different now compared to previously. And maybe you can say a bit about how the people with these questions what they should expect from, let's say, our new initiatives, thinking about IFRS 15, et cetera, how will we do revenue recognition on potential new contracts within new adjacent verticals?

I would say we haven't signed any contracts yet. So it's too early to basically comment on how it will impact the revenue structure in the future. But what we have said is that for '26, we don't anticipate that the new contracts from new customers and new adjacent verticals will impact the top line.

Significantly.

Significantly, right. So that's what I can say at this point. So we'll have to get back to that question when we have specific contracts to discuss, I guess.

Good.

I think we cover most of the questions that we've received. We received a lot of questions this time, but I think we'll come through them anyway. Most of them at least. Yes.

Perfect. Good. Then we thank you for joining us this Thursday morning. I look forward to bringing you more information and updates also between the quarterly presentations on the development of Elliptic Labs and our new market focus. Thank you.

Thank you so much.

Good morning, everyone, and thank you for joining us. Welcome to Elliptic Labs Fourth Quarter 2025 Results Presentation. My name is Ola Sandstad, Interim CEO of Elliptic Labs. And with me is Mathias Norderud, our Interim CFO. After taking on the role as CEO last November, I have initiated a series of initiatives to further develop our company from the strong position we already had. It's been a busy few months, and we look forward to share with you the results of the fourth quarter and the outcome of our strategic review, including some color on the road ahead.

Let's jump in. Starting off with the highlights and outlook. Revenue for the full year 2025 ended at NOK 102.7 million, down from the previous year and also lower than we indicated on the Q3 presentation. The main reason for this is a revision of milestone revenues that were recognized in Q3, a decision that was made following the audit process of the 2025 financial statements and made us restate our Q3 2025 revenue accordingly. The milestone revenues for the laptop contracts are now being evenly distributed between 2025, '26 and '27, starting with NOK 16 million in Q4 and then approximately equal amounts in the third or fourth quarter of '26 and '27. This does not affect the execution of the contracts or the cash flows. The audit process has also led to removal of deferred tax assets from the balance sheet, which Mathias will come back to. Revenue for the fourth quarter ended at NOK 42 million with EBITDA at NOK 1.4 million in a quarter with high one-off costs, which Mathias will also detail further.

Looking at our underlying portfolio, we continue to see positive momentum with both laptop and smartphone verticals demonstrating positive shipment volumes and entering of new contracts. Our focus forward is clear, leveraging our existing portfolio and broadening our scope to enable and secure profitable growth. Our announced strategic review concluded on a few takeaways to that end. We will continue to drive growth in laptops and smartphones. We have implemented targeted cost measures and resource allocation to further improve profitability. We have set in motion a plan to expand into new verticals, and we are working to productize parts of our platform to empower the landscape of embedded devices. I look forward to providing you with more insight about this later in the presentation.

Moving to the volumes of sensors shipped across our portfolio. We're seeing a positive and increasing trend for both laptops and smartphones. This is a key indicator of performance as our business is ultimately linked to the shipment numbers from our customer portfolio. The figures are indexed to Q3 '23, a 2-year horizon since we started reporting on these metrics last quarter. Compared to Q4 last year, ship volumes ended with just under 40% increase for laptops and a clearly rising trend. The smartphone volumes were approximately on par with the same quarter last year, but aggregated growth was about 25% for '25 compared to '24. For those who follow us closely, you'll note that the smartphone volumes have changed since the presentation last quarter. This is because we have now also included shipments from fixed price contracts. These contracts stipulate volumes for the full year, and we have, therefore, distributed annual shipment figures across quarters based on historical seasonality patterns to give a better view of our full smartphone portfolio.

Another important indicator for our business is the number of models launched with Elliptic Labs AI virtual smart sensors. This chart shows the cumulative number of smartphone and laptop models brought to the market with our technology since 2016. What stands out is the acceleration over the past few years. In 2025, 25 laptop models were launched containing a total of 34 of our AI virtual smart sensors compared to 15 models with 16 sensors in 2024. To date, this totals 58 laptop models. We have also signed a new contract with a current laptop customer this month for a minimum of 11 upcoming models in the consumer market scheduled to begin shipping in 2027. For smartphones, 65 models and sensors were launched in 2025 with another 5 models launched so far in 2026, totaling 232 models in aggregate to date.

Our ability to deploy our technology stems from a position as a trusted partner to globally leading technology players. We are fully embedded with leading global OEMs, ODMs and chipset partners, positioning Elliptic Labs at the center of the device ecosystem. Our technology is commercially deployed and proved at scale with repeated launches and expansions validating performance and relevance. Deep integration into customer software stacks and chipset platforms lowers deployment barriers and strengthens long-term road map alignment. In sum, this position is a strong enabler of continued deployment growth in laptops and smartphones as well as our ability to branch into new verticals and productize our platform to empower edge AI on embedded devices.

As already mentioned, our smartphone position has been built as a trusted partner to leading global OEMs, driving sensor deployment and shipments to the market. This has led to smartphone revenues growing meaningfully over the previous years, reaching NOK 78 million in 2024 and NOK 60 million in '25. 2024 was a very strong revenue year in the smartphone vertical with high launch pace and high milestone revenue levels with a mix of existing and new contracts falling into the financial year of 2024. The portfolio growth is what provided the foundation for the strong shipment volumes seen in 2025. For the contracts announced in 2025, milestone revenues were comparably lower than in '24, partly due to timing of contracts as well as lower minimum committed volumes across models.

Looking at the laptop vertical, I'd like to put our progress with our current customer into perspective. We are growing with the customer. Being the largest laptop OEM in the world, they've grown a number of units shipped by 20% over the last 2 years to 71 million units in 2025. During the same period, our deployment share has risen from 4% in '23 to 9% in 2025. And the share is set to grow further from on launch models under contract. This shows their commitment to our technology. There's undoubtedly a clear potential for further growth within the customer as a meaningful portion of the portfolio remains untapped, and we continue to work closely with the customer to expand our footprint.

Before we move into the laptop revenues, I want to remind you how we convert our laptop portfolio to revenue and cash. The chart we are looking at shows actual revenue and cash generation for the laptop contract we announced in the third quarter of 2022, which is now end of life. There are normally 3 main stages involved in the process and our communication, contract announcement, market launch and shipments. The latter 2 are sometimes combined, but where shipping represents the start of the cash generation. When the shipping volumes exceeds the minimum committed in the milestone revenue, incremental revenue will be recognized in our books. Incremental volume revenue has previously been referred to as pay-as-you-go revenue, but we are replacing that terminology.

You can see the cash generation reflected in the light gray cumulative cash curve. Cash build steadily as devices ship regardless of whether those units are above or below the minimum commitment. Our sensor launches shipment volumes and revenues have increased significantly over the last years. I would like you to view this development from left to right. Number of sensor launches on model drives the volumes of sensors being shipped to the market as the OEM ramps up its unit sales. It's clear to see that shipments in 2025 are meaningfully higher than in 2024. Of these volumes, only models launched from 2022 to '24 have exceeded minimum commitments, meaning that they have started to generate incremental volume revenues as can be seen in dark green on the chart. These models alone have doubled the incremental revenue from NOK 6 million in '24 to NOK 12 million in 2025 and continue to generate revenue into 2026.

The models launched in 2025 contain 34 sensors have yet to reach minimum committed volumes and can generate incremental revenue later in the model life cycle. This is, of course, also goes for on-launch models from recently signed contracts. With restated laptop contracts from second half of '25, milestone revenues for the full year ended at NOK 29 million, not including the milestone revenue backlog of about NOK 32 million. Going into 2026, the year started on a strong note with an additional contract for minimum 11 models to be shipped in '27, which with attached milestone revenue expected to be recognized in Q1 of 2026.

Let's go deeper into the financial numbers. Mathias, the floor is yours.

Thank you, Ola. As Ola told you, we are reporting revenues from contracts with customers of NOK 101 million for the full year, which is NOK 31 million below 2024. On the other hand, we end the year with an order backlog for the first time of NOK 32 million relating to the contracts that will be recognized in 2026 and 2027. For 2026, we expect NOK 16 out of the total NOK 32 million to be recognized as revenue in the second half of the year. Splitting revenue into verticals, you can see smartphones declining to NOK 60 million from a very strong year in 2024, whereas reported revenue from laptops declined to NOK 41 million. This was partly due to timing of contracts as well as lower minimum committed volumes across models.

Looking closer at the fourth quarter, we had revenues from contracts with customers of NOK 42 million, including NOK 16 million milestone revenue from the 2 major contracts we announced in August. This was down from NOK 47 million in the fourth quarter last year. Operating costs increased by approximately NOK 10 million to NOK 41 million in the quarter. However, all of that increase reflects special items in the quarter, close to NOK 8 million in losses on trade receivables from customer deliveries dating back to 2022 and 2023 and close to NOK 4 million related to management changes in the quarter. Underlying operating costs were hence actually somewhat lower than in the fourth quarter last year. EBITDA ended at a positive NOK 1.4 million despite the high costs in the quarter with an operating loss of NOK 6 million and a loss before tax of NOK 5 million for the quarter.

Then moving toward the bottom of the P&L. We have reassessed the recoverability of our deferred tax assets in accordance with IAS 12 at the end of the year. The viewpoint of IAS 12 is backward-looking and purely based on contracted revenue and not on any potential upsides from expanded deployments or any new revenue not yet contractually secured. On this basis, we have recognized the tax assets in full in the balance sheet, although the underlying tax losses remain available indefinitely and may be recognized later if the criteria are met. This is a noncash accounting adjustment that does not affect our cash position or operational performance. However, it results in a net loss after tax of minus NOK 95.1 million for the fourth quarter and minus NOK 138.2 million for the full year 2025.

So moving on to cash. We had a negative operating cash flow of NOK 3 million in the quarter, mainly due to the losses in the period. Cash flow from investments amounted to another NOK 7 million, mainly related to capitalized development costs and financing added a cash outflow of NOK 2 million. All in all, the cash position declined by close to NOK 12 million in the quarter. Going forward, note that we have implemented cost measures and reductions in development costs in Q1 2026, aimed at lowering employee and other operating expenses by around 15% combined and capitalized development costs down by around 12%, which all other equal, will reduce the cash burn.

Looking deeper into our net working capital and specifically trade receivables. Our receivables are dependent on the contract mix in any given quarter. The majority of trade receivables represents milestone revenues recognized but not yet received as cash. These are billed as volumes are shipped by OEMs to the market. Following the restatement of Q3 revenues, accounts receivables in the third quarter were reduced from NOK 104 million to NOK 70 million, and days sales outstanding increased from 260 days to 314 days. In the fourth quarter, receivables increased by NOK 10.8 million, but days sales outstanding were reduced to 304 days, driven by revenues in the quarter. The incremental volumes revenue previously pay-as-you-go revenue that were recognized in Q4 '25 will be received as cash in Q1 '26.

And ending off before leaving back to Ola, we ended the year with an equity ratio of 86% of a total balance of NOK 190 million after the recognition of deferred tax assets. We have limited liabilities and a cash position of NOK 43 million. With that, I hand over to Ola to guide you on the road ahead. Thank you.

Thank you, Mathias. Now that we have looked at the figures for Q4 and the full year 2025, let's move on to what lies ahead. I'm sure many have been waiting for the outcome of the strategic review announced in conjunction with Q3, and I would like to start off by summarizing the key takeaways. As I said in the introduction, our focus forward is clear, leveraging our existing portfolio and broadening our scope to enable and secure profitable growth. We have implemented targeted cost measures, strengthen operational efficiency and improved resource allocation. We have started the work to expand into new adjacent verticals, leveraging our solidified position in the AI ecosystem. The review reinforces our strategy to scale within smartphones and laptops while increasing multi-sensor penetration. At the same time, we are productizing our platform to empower edge AI on embedded devices, addressing aspects of great importance and value to our future customers.

Let's start off with our strategy within existing verticals, laptops and smartphones. We'll continue to increase value per device through multi-sensor deployments, leveraging our existing platform at a limited incremental cost. Signing new contracts on existing products is a key enabler in ensuring a well-positioned seat at the table when our customers work out the strategy for their upcoming devices. At the same time, we are working to expand our footprint across both existing and new customers, building on our position as a trusted supplier to globally leading OEMs and a strong partner ecosystem we are a part of. This includes working with main chipset partners, but also other component providers part of the device architecture. The growth will be achieved through a combination of deploying proven products to new customers and through development of high-value use cases. There's a vastly growing demand for context aware AI-capable devices, providing tailwinds that support broader and deeper deployment across smartphones, PCs and adjacent categories.

An important growth lever going forward will be to increase the exploitation of our technology and leverage our existing platform and customer relationships to expand into adjacent device categories. Utilizing the same core technology as in laptops and smartphones, we can enable contextual privacy aware intelligence across new form factors, prioritizing adjacent verticals where we have identified clear value propositions. Two such verticals are smart glasses and enablement of targeted content and advertising models for smart TVs, where our technology can drive capabilities such as user intent, contextual intelligence and high-value functionalities.

But we will also think differently about how we commercialize our platform. As part of a new strategic direction, we are in the process of productizing our AI platform to enable frictionless development and deployment of edge AI on embedded devices, a new and potentially high-margin revenue stream. This introduces a new [indiscernible] path beyond sensors, allowing partners to build and scale their own products directly on our platform. The offering will leverage our validated technology and existing partner base while expanding our addressable markets. The outcome and value proposition towards customers and key stakeholders is strong, faster time to market, lowered engineering cost, scalable production AI and empowering every edge device to become AI capable.

It builds on the insight of what challenges Elliptic Labs have met and overcome during the journey of delivering our AI Virtual Smart Sensor platform and seeing how this can be a clear value to other companies trying to enter and succeed in the embedded AI space. It's important to underline that our existing product portfolio consists of several layers of innovation and expertise. This is not a matter of cannibalizing our current offering, but expanding into the endless potential of AI-driven features. To put it in so many words, Elliptic Labs isn't just building AI features, but providing a solution that makes deploying embedded edge AI frictionless.

Enabling edge AI on embedded devices represent a vast and structural opportunity. The global edge AI market is expected to grow more than 10x towards 2034, driven by billions of connected devices and demand for real-time private intelligence. However, development friction remains a key bottleneck with complex handovers between AI and embedded teams slowing deployment and increasing costs. Elliptic Labs is positioned to remove this friction by productizing a proven edge AI platform that moves AI from lab demos into scalable production.

In summary, we are excited about the road ahead and our opportunity to utilize our market-leading technology and position to drive growth in existing and new verticals and rethinking how we can approach and expand the opportunities ahead. Our platform and organization is highly scalable, rigged to deliver profitable growth as we move ahead. With that, we will open the floor to questions from the audience. Thank you.

So then we've gathered the questions from our Q&A platform. trying to structure them a bit here. We have a laptop in front of us that will start taking questions one by one.

So one of the first questions is whether there's a defined time limit which minimum volumes need to be shipped and what happens if they are not?

So during our negotiations with our customers when we define the contracts, we always try to land on a minimum commit that makes sense, both for Elliptic for visibility, but also lies within the forecast of the customer on the safe side. This is, of course, to try to avoid getting in a situation where there is -- you are on the limit and you need to have these tough discussions on whether to push for it or not. So far, this has not been a topic at all for Elliptic Labs. We have always exceeded the minimum commits on all of our contracts. So that's not a topic of concern for us.

Yes. One more question here to you, Ola. Can you present a similar path for smartphones as you have done for laptops?

Yes. So the laptops, they have a, let's say, a yearly cycle and next generation always comes in a yearly cycle. And we do see somewhat of the same for smartphones. However, the smartphones have a much higher frequency. There's more models being shipped or launched throughout the year. So when we write a contract and agreement with a smartphone customer, it's normally for a year, for the next year. And they've done their initial product planning. And I'll touch a bit also on the topic of that product planning, how that process actually is executed.

But when they plan, let's say, in the 5 or 10 models for that year, then they start to execute. From contract signing until the first launch, you could see 3 to 6 months as a typical number. So -- and that's the first model they put to market. And then there are consecutive launches, let's say, every third month or something like that for our customers.

When it comes to some of the financial questions that have arrived, so there's one for you here for you there, Mathias. What drives the relatively large quarterly fluctuations in the net financials?

Yes. So that's a good question. We do have all our revenues in the USD. So basically, depending on the exchange rate between USD and NOK, the financials will fluctuate. So as you know, in 2025, the NOK to USD exchange rate has declined. So that's the reason why we have a downturn there in '25 basically.

Good. Let's scroll a bit further down here. So there's one which is, can you elaborate more on the deal with Intel?

So last year, we announced, we did some PR regarding an agreement with Intel, which is on the strategic partner side of things. So what we'll do moving forward now is try to be even more crisp on what represents a launch, what represents a new commercial contract, what is indeed a more strategic partner agreement, which is key in this market. You could have the best products in the world, but if there's no one backing you in this fairly complex ecosystem, you're not in the best position. So the thing that the Intel deal actually represents is we are working with them. They are backing us.

When we have discussions with the customers, they can easily state that, yes, they've been working with Elliptic Labs. There is a solid relationship underneath it. So we're a trusted partner that can deploy globally in mass market. So it's more on the strategic side. We'll make sure moving forward to be even more crisp on that communication so that you, our stakeholders, understand whether this is a direct commercial agreement or not. But of course, having this type of relationship with Intel or AMD or Realtek or Cirrus or all of these vendors that we work closely with is key for actually being able to deploy our product the way we do. So that's good.

Okay. One more question for you, Ola. Could the tight market increase adoption of your solutions?

I would say, yes. So this is a big topic nowadays, the cost of memory for all types of devices. We are seeing -- and this goes into some of the product planning topics that I touched earlier. We are seeing some delays and some more extensive processes at our customers when it comes to planning for 2026 and the memory situation has indeed been a delaying factor. So take the example of one contract that we normally receive in November, December time frame, did arrive this year in January instead. This was primarily due to that type of factor. They used a bit longer time on their product planning compared to earlier.

When it comes to what that represents for us, is it a threat or is it an opportunity? It's absolutely on the opportunity side when it comes to what we provide as a software company. And we are executing within the already existing hardware, including the memory that they decide to put in. So the incremental cost of our software is not affected by the direct increase on memory prices.

Yes. Good, good. Okay. One more question for you as well. How are you working to convince additional OEMs the need for E-labs technology going forward?

Yes. Of course, it's a mix of pitching our groundbreaking IDs and the things we've been cooking in our lab that we think can make sense for their customers and their value proposition to the markets. But it's also having these close conversations on what their strategy is. So we, as a Norwegian software company, global software company can, of course, and will also pitch IDs to them, but getting into those close conversations where we understand what they want to achieve and how our innovative software can mix into that to actually enable that even further. That's the type of way we are working with our sales teams. So it's both on the high executive level and more -- both from a top-down and from a bottom-up sales approach. Also after having worked over several years now with the main players in these markets. So take the ODMs or take the partners that are part of these devices today, really working through there to make sure that people understand how smooth and beautiful right it is to work with Elliptic labs.

Okay. One more question for you, Ola, as well. Are you expecting a new mobile contract soon? It seems one is missing compared to last year.

Yes. So it goes back to what I just mentioned when it come to planning. So for those of you who have been following Elliptic Labs for some time, there is a cycle to contracts. And whether there is a new contract around the corner is, of course, not something I can state right now. But we are continuously working with our existing and potential new customers on contracts.

Okay. I think that concludes the overall. We just do a final scroll here, whether there's anything more that's not touched.

Covered most of the questions here. Well done.

So thank you for spending time and looking into our presentation for the fourth quarter results. Really looking forward to start sharing also even more updates from our company moving forward. Thank you.

Thank you.

Good morning, everyone, and thank you for joining us. Welcome to Elliptic Labs Third Quarter 2025 Results Presentation. My name is Ola Sandstad, CEO of Elliptic Labs. And with me is Mathias Norderud, our CFO. And it's our pleasure to present the quarterly results for the first time.

With that, let's dive right in. Looking at the highlights from the quarter. We see that revenue from customers increased by 50% year-over-year to NOK 42.3 million. The main driver was milestone revenue from the 2 major laptop contracts we announced in Q3. Around 65% of the minimum commitments under those agreements were recognized in Q3.

Pay-as-you-go revenues were softer. This reflects our contract mix, where most of the units shipping today are still counted toward minimum committed volumes. However, we see high shipment volumes across both smartphones and laptops. And once the minimum commitments have been fulfilled, these volumes will start generating pay-as-you-go revenue.

Moving to profitability. EBITDA came in at NOK 12.7 million, up from NOK 0.5 million last year, reflecting the higher revenue contribution and a relatively stable cost base. Our cash position ended the quarter at NOK 54.8 million, and cash flow was supported by high shipment volumes.

Looking ahead, achieving double-digit revenue growth for the full year will depend on shipment volumes in the fourth quarter and the outcome and timing of ongoing contract discussions.

Finally, we are initiating a broader strategic review of our commercial opportunities and priorities as part of the leadership transition. During this process, we will also reassess our midterm revenue targets, and we look forward to sharing an updated assessment once this work is complete.

Before we move into our own smartphone activity, it's useful to look at the broader market backdrop. On the left, we show the global smartphone shipments over the last 12 months. The market has continued its gradual recovery, with shipments up just over 2% year-on-year. While the growth is modest, it is the continuation of a positive trend we've seen over the past few quarters.

On the right, we've broken out the year-on-year shipment developments for the top 5 OEMs. Within this group, our customer OEMs continue to perform well and combined, recorded a year-on-year volume increase of just above 5%. So overall, the smartphone market is showing steady improvement and the OEMs we work with most closely with are performing well within that environment.

Looking at the volume shipping to the market containing Elliptic Labs AI Virtual Smart Sensors, we also see a clearly positive development. These charts show customer shipments indexed Q3, 2 years ago. So using that baseline, we can clearly see how volumes have developed over time. While quarterly fluctuations are natural, the overall trajectories are steadily moving upward. If we compare Q3 this year with Q3 last year, customer shipments for both laptops and smartphones with our sensors have grown very meaningfully, reflecting that a larger number of models in the market feature our technology.

These shipped volumes are important because they form the basis for future pay-as-you-go revenue, once minimum commitments are fulfilled. And they show that adoption rates continue to build. It's also important to note that several of these laptop models on the left-hand side include 2 products, that is 2 AI Virtual Smart Sensors, which drive up the price point per model.

We've shown versions of this before to try to help you understand the relationship between milestone revenue for minimum committed volume and pay-as-you-go revenue. And now we've also added the cash flow profile.

The chart we're looking at is showing actual revenue and cash generation for the laptop contract we announced in the third quarter of 2022, which is now nearing end of life. What this illustration show is that even with high initial shipment activity, units shipped within the minimum committed volumes do not generate pay-as-you-go revenue.

At the same time, these shipped units were invoiced on a running basis. So you can see this reflected in the light blue cumulative cash curve. Cash build steadily as devices ship regardless of whether those units are above or below the minimum commitment. Applying the key takeaway on this, the majority of the volume shipping in Q3 '25 are still below minimum committed volumes and have therefore, not yet started generating pay-as-you-go revenues.

Another important indicator for our business is the number of models launched with Elliptic Labs AI Virtual Smart Sensors. This chart shows the cumulative number of smartphone and laptop models brought to market with our technology since 2016, stands out is the acceleration over the past few years. So far in 2025, 25 models have launched containing a total of 34 of our AI Virtual Smart Sensors. For comparison, the year -- the last year, we had 15 laptop models with 16 sensors for the full year. So the level of activity in laptop has clearly increased.

On the smartphone side, 58 models have already launched this year. Coincidentally, the same number has accumulated a number of laptops so far. The key takeaway is that every model launch expands our installed base in the market. This growing footprint is a key driver of long-term revenue potential.

Since 2016, a total of 220 smartphone models has launched with Elliptic Labs AI Virtual Smart Sensors, driven by long-term relationships with repeated launches as well as new customers such as TCL, which was recently announced.

The examples on the right illustrate the breadth of devices we support from flagship models to high-volume mid-range devices across global OEMs. Our position in the market -- smartphone market remains strong, because our performance is proven through many generations of devices, existing customers can adopt new models quickly without additional proof-of-concept testing.

Overall, this level of deployment highlights the depth of our footprint in smartphones and the continued trust from the leading OEMs as they roll out their portfolios.

Now I'm pleased to hand the word over to Mathias for some financial perspectives.

Thank you for that, Ola. Good morning. As I step into the CFO role, my focus today is to give you a clear and transparent view of our financial performance this quarter.

Let me start by putting some color on our revenue development. As Ola said, we report revenue of NOK 42.3 million for the third quarter isolated, up 50% from the third quarter last year. The graph on the left-hand side shows the accumulated revenue for the first 9 months of NOK 93 million, up from NOK 84 million in the same period last year.

As we have already touched upon, this reflects a mix of recognized milestone revenues and pay-as-you-go revenues. We only split revenue by verticals on an annual basis. And as you can see on the right-hand side, both smartphones and laptops have grown over the years with the 2024 revenue of NOK 132 million split between close to 60% smartphones and a little over 40% laptops.

This slide looks at our performance on the last 12 months basis. Total revenue for the last 12 months amounted to NOK 142 million, which is also up 50% year-on-year from NOK 95 million in the 12 months leading up to Q3 2024. At the same time, our operating expenses increased only by 8.6% over the same period. This means we have maintained cost control while scaling the business, which supports profitability and gives us operating leverage as volumes build. That continues to be a key focus going forward as well.

So turning to the quarterly P&L. Revenue from contracts with customers came in at NOK 42.3 million, which, as mentioned, represents 50% year-on-year growth. This was mainly driven by milestone revenue from laptop contracts announced in Q3, supported by pay-as-you-go revenue from smartphones and laptops on volumes that exceeded the minimum commitments in those contracts.

Total operating expenses ended at NOK 29.9 million, broadly in line with the third quarter last year. Employee benefits expenses were stable at NOK 23.1 million and other operating expenses were NOK 6.8 million. The increase here is mainly related to a NOK 1.5 million increase in the expected credit loss provision on trade receivables.

EBITDA from the quarter was NOK 12.7 million, up from NOK 0.5 million last year, reflecting both the revenue uplift and stable cost base.

Moving to the cash flow. We ended the quarter with a cash balance of NOK 54.8 million compared to NOK 57 million at the end of Q2. Operating cash flow was positive at NOK 6.5 million, mainly driven by NOK 5.5 million in profit before tax and a positive NOK 5.5 million impact from changes in other current assets and liabilities, including a NOK 4.8 million SkatteFUNN tax credit refund. This again was offset by a NOK 10.7 million increase in receivables related to milestone revenues recognized in this quarter.

Investing cash flow was minus NOK 6.5 million, reflecting stable R&D investments into our AI Virtual Smart Sensor platform. Financing cash flow was minus NOK 2.1 million, reflecting lease repayments and interest payments on those lease liabilities. Note that all current borrowings have now been repaid.

Overall, the cash position was relatively stable through the quarter. And lastly, we continue to remind you that our cash flow is exposed to exchange rate fluctuation.

Okay. Let me spend a moment on receivables because this is an area where our contract structure plays a significant role. Trade receivables increased to NOK 104 million in Q3. The main increase from the previous quarter is latter contracts announced in Q3. When the contract includes milestone revenue, we recognize that committed revenue upfront at the point in time, but the cash is collected gradually as units are shipped. That means receivables naturally increase at the point of contract signature. Because of this, the contract mix in any given quarter impacts our receivables.

As volumes start to ship, and we are seeing strong shipment activity now, those milestone-related receivables are reduced and converted into cash. So the high -- the same high volumes that currently fall within minimum commitments, as Ola described earlier, are also what support cash generation.

You can also see from the graph here the impact of contract mix in our days sales outstanding or DSO. DSO fluctuates from quarter-to-quarter, but this is not a reflection of slower payments or changes in customer behavior. It is simply driven by the timing of contracts. As such, the composition of receivables reflects our contract structure. Majority is represented by milestone revenues. pay-as-you-go revenues recognized in the quarter will be received as cash in Q4. And we also have a smaller share of fixed price contracts, which follow agreed payment schedules.

Finally, let's take a look at the balance sheet. As previously mentioned, cash ended at NOK 54.8 million, slightly down from Q2. Current assets increased by NOK 5.4 million, mainly due to a NOK 10.7 million increase in trade receivables and a NOK 5.3 million decrease in other receivables, which relates to the SkatteFUNN tax credit refund mentioned on the previous slide.

Current liabilities decreased by NOK 3.6 million, mainly from the lower trade payables and lease liabilities. Our equity ratio improved to 92%, up from 91%, reflecting a strong balance sheet.

I now give the word back to you, Ola, for the road ahead and closing remarks.

Thank you, Mathias. Let me turn to the road ahead and outline our priorities for the coming period. Let's move into our outlook. As mentioned, achieving double-digit revenue growth for the full year will depend on shipment volumes in the fourth quarter and the outcome and timing of ongoing contract discussions.

Revenues in Q4 will be driven by 3 elements: milestone revenues from the laptop contracts we announced in Q3; pay-as-you-go revenues; and revenue recognition of anticipated new agreements. Further, I have initiated a strategic review. We will explore, develop and validate our commercial opportunities across new and existing customers. As part of this process, we're also going to reassess our midterm revenue targets.

Our priorities remain on fully monetizing existing contracts, expanding with current customers, launching more models across more verticals and increasing the number of AI Virtual Smart Sensors per device. At the same time, we are exploring new opportunities such as smart glasses, where our platform can add meaningful value.

As we look ahead, it's important to step back and consider the broader opportunity our technology is positioned to address. Our AI Virtual Smart Sensor platform represents a strong value proposition towards a number of use cases. And our focus remains on continuing to execute along the 3 areas where Elliptic Labs already has a strong and proven value.

First, replacing hardware sensors with software, an area where we build a solid commercial footprint through our AI virtual proximity and human presence sensors. This offering continues to be a core driver of adoption because it reduces costs, saves power and simplifies device design. Second, enabling device interoperability. Features like Tap to Connect are successfully deployed in the market, and we see continued interest from OEMs for solutions that strengthen ease of use and help to build a secure device ecosystem.

And third, developing contextual aware AI-driven features. This includes Tap to Transfer and other custom sensor agents that adopt a real-world environment and user behavior. This is an area where we see significant potential, particularly as devices become more intelligent. These 3 verticals form the foundation of the company today, and they will remain our primary areas of execution and growth near term.

At the same time, we continue to innovate and evaluate new opportunities where our platform can add value. One example is smart glasses, where our combination of AI and sensor fusion can bring clear value and enable completely new user experiences. This is still an emerging space, but it's one we're actively exploring. So the opportunity in front of us is broad, but our approach is disciplined, continue delivering in the areas where we are strong today while evaluating new avenues that can expand the reach of our platform over time.

We'll now move over to the Q&A. We'll take a couple of minutes and review the questions, and then we'll kick things off. Thank you.

We're ready, back for some Q&A. So we've received a lot of questions now. We have them in front of us. I will try to walk you through most of them and try to come back in a bit.

Yes. Thank you for all the questions.

Absolutely.

That's great.

We really value the commitment and engagement from our shareholders. And also moving forward, we really want to emphasize the importance of having an open dialogue between us and the markets. So let's start off. Working capital is a topic that is part of the questions. So Mathias.

Yes. We received a question on working capital. It's still 70% of revenues. How will we get that down is one question here?

Yes, that's a good question. Working capital is something that we have very much focused on in the past and also something that we will keep focusing on going forward. As we've touched upon already in this presentation, the contract mix plays a big role in determining the actual size of the account receivables each quarter. But we will focus on trying to build and agree upon good contracts that will help us reducing the working capital over time. And that's something that we will also get more into in our strategic review for the end of the year.

So the -- how the flow is on this is, of course, built up by the contracts, the milestone revenues, the recurring revenues, new projects, redelivery of existing products. So the continuous mix of that is going to develop. And then this topic is something we are indeed talking with our customers about how we structure this, when we do deliveries for the smartphone and the laptop markets. And as pointed out, it's a key topic in our strategic review, which is -- which I have started now.

Let's move on. When it comes to Q4 and quantifying and clarifying what Q4 will involve.

So in terms of splitting what types of revenue is pay-as-you-go, what is milestone, that's something we don't detail in these reports. When it comes to smartphone versus laptop, normally, we have gone through that on a yearly basis, knowing that there are fluctuations through the quarters, and avoiding that the market is reading too much into each quarter, that's something we present on the full year basis. And that's currently the process, and we'll continue doing that.

Yes. I'll give you another question, Ola. On the agreements going forward and contracts. One question here from investor. Since there are no agreements announced over the summer, no other new contracts have been disclosed so far in H2. Can you comment on the current contract pipeline, both for smartphones and laptops?

Okay. It's a good question, and it's a very relevant question. So for those of you who have been following Elliptic Labs for some time now, you kind of learn the rhythm of the smartphone market and the laptop market, how their cycles are. And the only thing I can comment on that is basically that the health and the operation of Elliptic Labs is fully intact when it comes to our relationship to our customers and how we go from contract, into contract renewal. There's nothing really that has changed on that.

And based on that, you could be able to estimate roughly what's ahead. We don't talk about contracts until we actually announce them due to, of course, NDAs and whatnot with our customer base. But looking into Q4, it's a quarter we're now in the midst of and really focused on closing in a nice way as well.

Let's say, so we're looking at a question regarding smartphone model launches. And the question, how this impacts year-on-year revenue growth and that apparently, it appears weaker in '25 versus '24.

And so looking at that, it's important, again, that we went through in the presentation to look at the minimum commitments that we get when we sign contract with customers and the corresponding pay-as-you-go. So the distance between when the pay-as-you-go starts versus the size of the minimum commit is always going to be some variation in that.

The underlying shipping volumes that we see and that we deliver on are increasing as we showed in the presentation. And that's kind of the main thing to focus on. How the underlying business is in terms of our deliveries and our contracts, which involves customers, models and how many products we are delivering to each of those models.

Just to add to that, Ola. So as we also touched upon in the presentation, there will be variations and fluctuations in the royalty revenues from quarter-to-quarter depending on the contract mix and so on. Ola has touched upon already in the presentation. And that's also the reason why we -- some of the reasons why we tend to get back to the allocation or between the verticals at the end of the year because we need to have a bit of a longer view on the figures.

On the quarter-by-quarter is too much noise fluctuation in those numbers, you could say. So it's a better way of tracking and really measuring the performance over time. So we will get back to those figures at the end of the year in Q4.

Good. There's a mix of questions that ties into the calculation of what Q3 contains, and kind of the underlying run rate, et cetera.

I just want to remind people that we are also in a mix of USD versus NOKs. There are timing aspects here. So doing the final math on the final numbers, keep that in mind when you do this, right? Some of these factors are outside our control. But in general, this quarter and the upcoming quarters will carry on roughly with the same type of mix.

I can take this one for you as well. You announced a strategic review of product and customer road maps. What specific areas are under review? And does this process include revisiting the current business model, cost structure or contract terms with key customers?

That's good. So it's a wide question. I think the answer to that could be half an hour in itself. So what's the strategic review? Well, basically, what we are looking at -- have started looking at and we'll continue focusing on for the remainder of this year, at least, is, as pointed out, the products that we sell to the current customers and the business structure.

We touched upon things like working capital. We touched upon things like we're a software company delivering AI virtual smart sensors to, let's say, the hardware business, hardware-driven market, the laptop and the smartphones. So a lot of the things we're deploying today, today follow, let's say, the rules of the cycles of a device that's being manufactured.

Being an innovative smart software company, we really want to try to help our customers move into more of a software thinking in terms of giving their customers an incentive to add more features even after the product has been deployed. That type of discussions are really interesting to have with the customers and also looking at, for instance, ways to get products to market even after it's been shipped.

Take the example of Nespresso when they sold coffee capsules. That was really nothing new, but it was an innovative business model to sell the machine at low cost and then sell the pods at a recurring high volume. So these are the type of things that we also are looking at. It's not just about technology innovation, but really also about business model innovation. So the full team in Elliptic Labs is a part of this.

Strategic review also, of course, means the typical standard account management going through and getting the real numbers out on what we believe in and where we will put our effort moving forward. Continuing a bit on that, I did touch upon in the presentation, for instance, smart glasses. So we are in the market where we are delivering our technology and our features to smartphone vendors.

And if you do your research, you'll see that a lot of these vendors are now stepping in or have already stepped into other verticals or other device categories, smart glasses being one of them. So it's a really exciting position for us, knowing that Elliptic Labs is fully integrated with the likes of Qualcomm, MediaTek, Intel, AMD and NVIDIA, these type of companies that form the basis of the devices that go to market.

And that position, a Norwegian tech company living inside the inner parts of these chipsets is a great position to do even more innovation. And I'm really happy to -- looking into the future on the things we'll talk about on the capabilities in -- with our existing customers, but maybe new products. So let's see.

So going further down the line, we found a question?

Yes, we have more questions regarding the Q4 and the revenue mix. I think we already touched upon that one. So that's okay. I had one question regarding the ESL in the other operating expenses. We did a provision on ESL on trade receivables, and that's only a calculative calculation relating to like IFRS standards that we do. So we need to calculate based on set of inputs and metrics. So it's no contract -- not related to any specific contract. It's only like a calculation and adjustments to the baseline.

Yes. We also have some questions, of course, about the recent changes in the organization, especially on the leadership side.

The thing I want to really focus on there is that the team of Elliptic Labs consists of people in a lot of different time zones. It's a one team effort, even though we have spanned the full -- the global locations. And what we are doing now is continuing delivering as we have been doing up till now.

I've been a part of this company since 2021. So Lars Holmoy, our former CFO, and I started 1 week apart. I'll let you ask him who started first. But we were working together on this journey that we've had now, the growth journey that we had and fully established on the topics of the products, the markets, the commercial aspects, the leadership and the teams, having hired a lot of really skilled people during the last 4 or 5 years as well. So it's a really interesting journey that we're going to continue on.

And the underlying operational business, the activities, they remain fully intact. There are no changes to that whatsoever. And that's what we're going to build on that moving forward. Having also employed people, let's say, 3 years ago that are now -- they came in with a lot of energy and a lot of fresh thinking, and we immediately saw the fruits of that and being able then to take those aspects into products, into the market is something that really makes this job and this position an interesting one and an energizing one.

And in addition to these type of quarterly reports that we, of course, do, we will start looking into doing more market activities. So you also get information between the quarterly reports in such a way that it's -- you're a part of this innovative journey that we're on.

Yes. I think we're -- we covered most of the questions now, actually. There's some questions regarding the share price as well. And of course, we can't comment on that. It's not up to us to comment on that. So we'll leave it at that. Any other questions you would like to raise before we...

No, I think we've more or less covered -- some of them came in...

During the talk.

During the talk as well. And when it comes to what are the biggest obstacles in securing new deliveries and new product launches. I would say that the markets that we operate in have been impacted by different aspects.

You can go all the way back to COVID and how things are changing. We've seen a positive development as we've shown in the smartphone shipment numbers. That's a good thing. It does something with the mindset also of our customers. That also applies to the laptop type of customers, right? Their willingness and their need to do investments in innovation, they're in a critical phase now on that. And that's the type of conversations we have with our customers.

And again, going back to this hardware versus software, getting them on board on the benefit of deploying a software solution, which is much more quicker and more efficient way instead of implementing on the PCB and the hardware design. But more about that later.

Good. We're done? Again, we are doing an assessment, a strategic review. We will come back with, let's say, metrics and things that we want to put in front of you so you're able to follow the development of Elliptic Labs. That's absolutely something we want. We want to be even more transparent in terms of our development, the wins and also the losses so that we get closer and can help each other move this forward to a successful journey also in 2026. Yes. Good. Well, I think we'll leave it at that then.

Perfect.

And thank you so much for all the questions and taking the time to look at our presentation, and we'll see you soon.

Thank you.