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Hello, and welcome to Qt Group's Q1 2026 Results Presentation. My name is Herta Eronen. I'm the Communications Lead at Qt Group, and I'm here today with our CEO, Juha Varelius; and our CFO, Ann Zetterberg, who will be taking questions first from the room and if time permits, then from the line. So let's get going. Stage is yours. Please go ahead, Juha.

Thank you. Hello, everyone. My name is Juha Varelius, CEO of Qt, and we're going to go through the Q1, pretty much the same agenda, business highlights, market trends, and then Ann will talk about financials and then outlook guidance for rest of the year.

If I look at the Q1, our net sales ended up EUR 52.7 million, an increase of 11.6% and on comparable currencies 18.4%. And we're pretty happy on that. EBITDA margin, 9.6% and EUR 5 million on Q1, and that was pretty much on target as well.

ARR, which is the new measure we are now telling EUR 155 million. So the increase of 32.7% in comparable currencies. So that takes away the one- and three-year licenses and whatnot. And of course, we have the IAR in these figures.

So overall, a kind of a typical first quarter, which is usually very slow for us and fourth quarter being the best and busiest quarter, which then reflects on the first quarter numbers.

So if we, well, foundations for long-term growth, I'm going to comment here a bit. So the developer license demand remains strong. We look at our industries, the defense is nowadays, the probably strongest one, medical and other industrial, they are all doing really well. And automotive industry, obviously, is suffering specifically in Western markets.

In China, the automotive market is doing good, but the Western automotive market is suffering and the growth overall is very slow over there.

If I look on the regional trend, we have APAC. APAC was actually last year pretty much on our plans. It is still continuing pretty much on our plan. So we are happy with APAC. That's a pretty robust execution over here over there.

And in EMEA, we have rather volatile situation where the European export companies are suffering, and that comes mainly from exports to U.S. The tariffs keep on going up and down. And there is some uncertainty, which is shown in decision-making. But if I look on the first quarter, our EMEA overall was showing pretty robust execution and it was growing as well.

In America, is actually the only region where we are performing according to plan, and that was pretty much in same thing last year.

I'm going to talk about a bit of AI, but when I usually say that AI, we don't see the AI effect in our demand. Well, we don't, when we discuss with customers, of course, in safety critical industries like medical, they don't want to use AI. They want to do, it's very careful that what type of software goes into devices.

Same goes pretty much on defense sector on many devices; in automotive a bit more. If we look and we discuss, we actually discussed quite a bit of, with our customers that how are you using AI, how are you utilizing AI. We see that developers are using AI, but they're coding, how they use it is that they use it to code with Qt Framework. So they are utilizing Qt Framework in their coding when they're using the AI. That's what we see.

Believe it or not, I've been getting quite a lot of questions about AI and its effect on Qt. So we've done customer surveys also. It's not only my own discussions. It's, we've done customer surveys that we put an external company interviewing customers that how is your use of AI and how does that effect? And how do you see the effects on Qt and the answer being that, yes, we utilize it or we don't use it at all or the AI usage is forbidden. So, there are some companies that they actually forbid using AI, but we didn't get any responses that AI is replacing us.

I understand that everything develops, but that is as of today. So if I look our execution on regions, it's fair to say that if APAC and EMEA is executing pretty well and all the headwind we're basically getting against our own plans is coming from United States, it's more than the AI effect basically.

IAR, we are still happy with the acquisition. And I'm sure we're going to continue being happy with the acquisition. The big theme for IAR, obviously, is that it's on perpetual licensing. And we are selling, we're changing that into subscription licensing. And when we do that, the perpetual license, obviously is more expensive when we go on subscription, which is on a yearly base billable license, the price is less. So the IAR revenue is decreasing this year and the profitability is also suffering.

When looking at things in the beginning of the year, I was wondering it was a bit slow start. It was going very well in the U.S. and somewhat good in EMEA and slower in APAC. But now if we look overall, the subscription change, we did set a pretty aggressive target, and we are on that target now. So I'm happy on the execution on the subscription change on IAR.

That puts pressure on the IAR profitability this year, but that means that more aggressive we can be this year on the subscription, the more it will grow next year. So we're going to do as aggressive as we can and take the hit now and then have a healthy growth. Of course, it's a license business, which means that the profitability will follow next year.

IAR integration is proceeding as planned. We've laid the operational foundations unified organizations, aligned core systems, established data sharing across teams. We are combining sales efforts with the IAR sales and onwards.

I've done a few integrations in my career, and I'm pretty happy, I'm pretty confident that this integration is going to go well. And you can always sense it from the company that's been bought. All the IAR people that I've met, they are anxious. They are happy for this merge. They are keen on working together and the mood is very good. So I do expect that this integration will be successful going forward.

Well, as you know, there is war on Iran and, as a matter of fact, the high oil price is affecting in, not only on gas pump and maybe inflation and whatnot, the oil effects on the price of a glass and paint and numerous different products, which our customers are using for their production. And that is the thing that makes them cost conscious that their production prices will go up because of this oil, and it's not directly to oil like paint, for example.

We do have our long-term customer relationships; they are very solid. So we've done and we're doing like on the second quarter big renewals with our very long-standing customers. So our customer relationships are like years and 10 years and 15 years. So, once companies start using Qt, they are usually so happy with it that they extend the usage and the customer relationships are extremely long.

That's a foundation for our business. We've, despite doing these cost-cutting measures we are doing now, our product is very competitive, and that's, of course, something that we tend to keep good care of.

Well, of course, there can't be a presentation in today's world, not talking about AI. So here is a bit of a snapshot that the, what we're doing in different products. We do have definitely, specifically, there is Qt Framework. Sometimes we kind of think that Qt is a set of tools. It is a lot of tools, too, but it's foremost, it's a Framework. And Framework is something that developers like to use because there are reasons for using it and also AI likes to use it.

We do follow, for example, our competitors and what are they doing on AI, what kind of functionalities they have in their products and frameworks and whatnot. And I can say that we are at least on par or better in what capabilities we are offering. That basically goes on Qt, Squish, AXIVION, and across QT Group. I have always been questions that do we use AI in our own work. And yes, of course, we do throughout the company, we use AI in, pretty much in each and every department, which means that the, it is being utilized as a tool.

Do I see that AI is replacing office people or our R&D people per se in today's world? No, I don't. It's a tool that makes our people more efficient, but it's not replacing at this point of time.

So, if we look a bit of these products, on Framework side, like I said, it's, we see it as a tool for developers to be more efficient. In larger terms, if we think we do have different kind of skills, AI assistance on Qt Framework to help developers using Qt. And also, we see that we've enabled the general AI language models to learn from Qt so that developers can actually use AI.

I know that I've said this sometime in my earlier presentations that nowadays, we, the first step actually in this world, it's a bit of like on Internet that if you have an Internet site, you need to make sure that Google finds you. Well, on AI world, you need to make sure that AI finds you. If developers want to develop something and the AI doesn't find your framework, then, you know, it doesn't find right.

So, we've made sure that with these general language models, they do know how to use Qt, developers can use Qt and AI agents do find it. And there, we have a one trade benefit compared to our some proprietary competitors, that Qt is open source and has 1.5 million developers out there. So, there is a ton of material that AI can learn from that how to code with Qt and how to be better on Qt. So, I think that that was kind of the first step we did on that.

You probably are going to have a question that what about pricing? And I have nothing more going to go more towards a consume-based pricing models where whatever is being produced using Qt, the payment, the license payment is based on that. And that's the logic behind that is that now we have per developer seats, but if a developer is using AI, which is using Qt Framework, we see that's also payable.

We've had actually discussions with some of the clients that are doing that already, and there seems to be no problem in that, that it's payable. The matter is that how it's measured, what is the pricing and all that. And we're working on it. And on that sense, the pricing will change in the future.

Well, Squish is very tightly integrated into Qt. So, I know it's a bold statement. But if you develop something with Qt, there is really no reason whatsoever not to use Squish for that testing. They're so well integrated and they work so well together.

Over there, we have a AI generated test script exploring applications. Vision IQs, Squish Vision is visual testing that adapts into interface, the changes in the interfaces, and that's been very well received. On Axivion, well, it's more like on a partners we work with NVIDIA and Qualcomm and the likes on different types of solutions.

Axivion is a very complex, very good product. And over there, I think that, that is something that AI is not going to be replacing in any matter and it does so specific job. And like I said, across Qt Group, we are using AI extensively and looking at efficiencies over there.

On the future outlook, I'm going to come back and talk about a bit about these changes we're doing currently. But before that, Ann will talk about some financials.

Yes. Let's talk about the financials. Yes. As Juha said, we had a growth of 11.6%. The exchange rate impact in this quarter was EUR 2.7 million, 18.4% at comparable currencies, not too bad. We had distribution licenses there was about, was 2.3% growth and developer licenses and consulting were about flat compared to last year.

The maintenance revenue almost tripled compared to last year. This is, of course, the IAR effect because IAR has a higher share of maintenance revenue, specifically as we are pushing all of the developer licenses into the balance sheet with subscription transformation going from perpetual to subscription.

Then the ARR, as Juha also said, it was EUR 155.9 million. There is some IAR effect in this, too. The growth at comparable currencies, there was a currency effect of 4.5%. So the growth at comparable currencies was 32.7%. We have a very stable customer base, and therefore, we have a very stable IAR growth, ARR growth, I was going to say, not IAR growth. It's difficulties. Too many Rs, yes, too many short.

The organic growth anyway of the ARR was 11.5%, which is a very stable growth over time also for the Qt Group without IAR. Then also the IAR transfer into subscription is going to push this further then because more of the perpetual revenue will then go into being annual recurring revenue.

So, this, I think this number shows that Qt has a very stable customer base and a very stable business and solid business.

Then looking at the expenses, you can see that the costs grew a bit, they grew by 23% compared to last year. Part of it is because IAR has a lower profitability and also because we are pushing down the revenues because with the subscription transformation. But the personnel costs then they grew by 26% almost. So, it was 1,120 people at the end of Q1. That was a growth with 232 people, which is almost the number of IAR employees.

So basically, that is what we grew with. But now we have the cost implementation project, and we will, are aiming to cut about EUR 20 million. So, then we are moving towards where we were in 2025. See if we will reach that.

There is also, of course, some costs in other costs, external services and so is obviously targeted first, consultants, marketing, various things like that. But there are also other things that is part of the integration that will, over time, generate cost savings. That will not happen very quickly, but it's, IAR has 13 offices around the world in pretty much the exact same spot as QT has. So just merging the offices and the legal entities, which are also in the same spots will over time, save money also under other costs.

The profitability is then was around EUR 5 million EBITDA. So the margin was 9.6%, and that is basically because of IAR's lower profitability, and the need for efficiency work around the cost side.

So a little look at the balance sheet then. We have goodwill of EUR 166 million or EUR 167 million. Most of that, EUR 122 million older acquisitions, froglogic and Axivion mostly, but, and then on the other intangible assets, you have the other technologies from those acquisitions. It is technology acquisitions, brand acquisition and customers as it is split in the PPA.

IAR has EUR 87 million of those intangible assets and froglogic and Axivion has been written off over time. They're written off over 10 years. So those are lower values now and are at EUR 9 million versus EUR 17 million.

Also as I remember mentioning to you last time, I also has EUR 6 million of capitalized assets, capitalized development assets. It's the IAS 38, where we treat development work into specific assets and we capitalized in the balance sheet. This will, over time, not happen anymore or will be synchronized to doing it the same way as the Qt Group does it. But for the Q1, we had capitalized EUR 0.4 million then. So that affects the P&L and also increases the balance sheet.

Other noncurrent assets is mainly the right-of-use assets, which are our premises around the world. assets like furniture and stuff in those locations. Trade receivables, basically we have a healthy cash balance of EUR 56 million compared to EUR 80 million last year. It is lower. We also have, because of that, we have interest-bearing debt in the balance sheet of EUR 143.5 million. Bank loan of that is EUR 135.3 million, and that refers to the IAR acquisition, which will be amortized over time. And the rest of that interest-bearing debt is basically leasing debt related to those IFRS 16 assets.

Under other receivable and other short-term liabilities, still we have those EUR 5.2 million that refers to the acquisition of the last IAR shares. That arbitration process is still ongoing in Sweden, and we hope that it will be closed soon, but it's a little unclear when it will happen. But those money is referred for that.

I guess I can end the presentation on the financials by saying that looking at the balance sheet and saying that we have a pretty healthy balance sheet still with a high share of equity. It is over 50%, even though we made quite a few acquisitions over the years. So with that, I guess I will end and hand over to Juha for the outlook.

So, outlook. Well, on IAR, the big thing, obviously, is the subscription change. Our plan is to transition in the next three years. And as that goes as planned, the year-on-year, that's going to be a decrease on IR revenue in '26 and '27 onwards, it's going to be growing and then continue the growth.

We did an aggressive plan. We are on that plan. So, it seems that, well, it goes in the United States, it's so typical way of doing business that the transition is no problem in EMEA, a bit slower and in APAC slowest. As a matter of fact, the same we had on Qt at one point.

But now seeing a few months this year, how it's been going, I have no doubt whatsoever that we're going to be successful on that over the next three years.

We do have this operational reorganization announced in April, where we said that we're looking to improve our cost base by EUR 20 million. Well, again, maybe taking away questions around that. As you know, in Finland, we have this period of negotiations. And during the period of negotiations, we are negotiating and now we are in that negotiation period. So there are no decisions being made in Finland and the negotiations, I think, well, the minimum time is six weeks, I think we still have two, three weeks to go.

There's really nothing I can comment on that part on that negotiation is ongoing. What comes to other countries, we are doing that in the United States and Europe. based on the local legislation, but I'm confident that we're going to be able to reach that EUR 20 million cost saving we're looking for, and that includes the overall other cost savings and personnel cost savings.

We're also doing those structural changes in a way that it would not affect on the sales targets that we have. Since we are in, already on the second quarter, we do believe that once these negotiations are done, obviously, in some countries, we've been progressing faster, we're going to get savings already for this year. Once they're done and whatnot, then we can announce that, what is the outcome of those negotiations.

But we do expect to get savings already for this year, and we do expect to have a EUR 20 million full year savings on 2027.

Well, the challenges in market environment continue, but like I was explaining in APAC, APAC has actually been performing on plan last year and now in the beginning of this year. So I have no reason to believe that, that's going to change in any particular way. The outlook is good. Pipelines look good. The execution over there is good.

In Europe, we've had this headwind on these large companies we have that do have large export business, whether to China or the United States. But that's kind of a leveling off in EMEA. I was pretty happy about it. And in U.S. I think, well, we've had a lot of headwind last year and whatnot, but that's leveling off now. So we do expect that we're going to get the operational efficiency in the U.S. back on its normal track as well going forward.

If I look different parts of the business. There is a consulting business is not a huge part of our business, as you know, but that's kind of performing on a lower end. So they are a bit behind what we were expecting.

License sales is doing fine, which is a good sign. And the deviation we're getting, if I look year-on-year comparisons, the only deviation we're getting is going to be on the distribution licenses. And as you know, the distribution license sales comes that when new projects are starting, companies may do prebuys companies or they launch a big product group, then there are other distribution licenses being bought.

Distribution license growth is not very, how would I say, it's not stable on quarter-on-quarter Instead, it fluctuates quite a bit, and that is the fluctuation we are having on year-on-year. Although when we are looking on the whole year distribution license estimate, what we are having, what we did our budget and what we were budgeting for the whole year, it looks like that the whole year is going according to plan pretty much.

Well, I talked about AI. I talked about the market environment. I talked about the different regions. As we get the better performance and execution in the United States, we're going to get a healthier growth also on the business.

IAR integration is going well. I don't see any problems over there, although the revenue is coming down, but it's a deliberate decision we've made, and I don't see any cultural problems over there.

On the contrary, I see two teams really wanting to work together. So I am not doubtful at all that, that integration is going to go pretty well. And of course, it helps that the, both are global companies and, but the headquarters are in, there is a Nordic culture in both companies. So the cultural fit is kind of there naturally.

Long term, well, the need for software, the need for products being differentiated by software, software defining the value of products, that's not going to go anywhere. We're going to see that more, not less. So in that sense, I do see that there is lots of growth potential going forward.

We're not changing our full year estimate as of now. And it's kind of, so we're saying that we're going to grow at least 10% year-on-year in comparable currencies and operating profit at least 15%, and like I said last time, that's the, we're not giving a range. We're getting a bottom. We're giving a floor. I'm very confident that we can reach those numbers, so there's no reason to change them. And yet again, of course, the fourth quarter is the biggest quarter. So remains, that's where really the difference is made at the end of the day.

But as we look forward, I think that this market is pretty stable stage at the moment and things are going forward. Well, of course there is always this disclaimer that, well, what's going to happen in Iran? Well, who knows. But I think it's there's going to be so much pressure from elsewhere.

Asian markets depend on that oil export and whatnot. So I don't think that we just, there are so many parties that can't afford that conflict to go on forever. So it's going to be sorted out. But yes, it's fair to say that we kind of have, we're used to the fact that there is a bit of a surprise every quarter, at least either tariffs or war somewhere or whatnot. So let's assume that, that will continue this year, but life goes on.

I'm happy with start for the year and things are going in better direction. So the, I think we're going to have a decent year going forward. And with these cost savings and then IAR turning into growing revenues, 2027 numbers are, I think they're going to look pretty good. And with that, thank you.

It's Matti Riikonen, Carnegie. A couple of questions. I'll take them one by one. You mentioned that already last year and also this year, the U.S. has been a kind of problem with the execution. What have you done and what will you do also going forward to kind of amend that so that it would be in the growth again as your internal plans probably suggest?

Well, we've done people changes. We've done a bit of an organizational change over there, and there are personal changes quite a bit. And those are probably the biggest ones we've done. And then there is a bit of a special emphasis on bigger accounts, there's been more top management involvement and these type of things. So the pretty difficult measures when you have issues.

But I would say that, so we've had a management change in U.S. in U.S. sales, and we've changed also a bigger structure. There's been changes in mid management and those are the biggest changes. We don't see a need for, all the encounters we've had with customers over there been not product related, I would not say. So there is, I'm not alarmed by the fact that our product would not be competitive and whatnot. And then unfortunate headwinds that have nothing to do with our own doings, but not naming any customers, but some customers did have quite aggressive plans building new platforms for their next product generations with different power plants and whatnot, and they were put on hold and these type of things did happen over there so that they affected quite a bit on our performance over there. So that's basically those, the sales basically those been affecting most of our performance.

Right. Then you mentioned that many of your customers are in the savings mode. How do the customers save? Do they just buy less licenses? Do they get discounts from you? Or do they just postpone purchasing?

Well, when there is uncertainty, then there is postponements. Like I said, I mean, there have been some really big postponements on that there were plans to build a totally new platform for the next set of products, software platform for the next set of product line and then expand that to all products. And then it was decided that, well, let's not do that. Let's continue with the old one and try to hang on.

So there are those kind of things. If you not referring to any particular region or company or country, but it's been on the news that specifically automotive makers been postponing their electric vehicle initiatives going forward and instead continuing that let's continue with the old ones. That's what we've been seeing quite a bit.

On medical, they [Break] not at all or defense again, but in automotive and in consumer business. Then another is that people calculate really carefully that how many developer licenses they need and whatnot. And that's kind of where people are more cautious. And of course, then when there is uncertainty, even there is a higher cost, people tend to buy one-year licenses, prefer over three-year licenses.

And then we have, which is kind of, I know this is, so that's the maturity, right? Then we do have industries and we do have customers that would like to buy like a 10-year license because they want to make sure that Qt is available and they have a license and there are limited price increases and whatnot, so they have control over it because they know that they are going to be using Qt for the next 10 years.

All right. Then finally, you talked about IAR and the license model change. What kind of attractions are you offering the customers that you would like to shift to the continuous licensing model from perpetual. So does it mean that just to trigger as many customers as possible to change, you offer some kind of discount and then try to find the remedies in the next year pricing increases. Could you just discuss a bit how are you going to drive this change? Because obviously, you need customers to move. You cannot just order them to move.

Yes, that is true. So I mean, majority of the change comes from the fact that if you think from perpetual license sales on perpetual license sales, it means that you only have new customer sales. because the ones that bought the perpetual, they already have a license and they're never going to buy, right?

So for the new customers, for the typical IAR sales, which has been new customer sales, it's kind of easy that the subscription is the only one available. Well, then comes, so for the new sales, no questions really. This is just that you have a new customer, and this is how it goes.

For existing customer that has a perpetual and is buying new ones, then the discussion is that, well, what is this licensing change? And then it's a discussion about the, that you have this perpetual license versus you have a new license. But when you have a new license, of course, you can call it discount, but it's the perpetual license is always has been more expensive, less. But we're not pricing it in a way that hey, that here is a price, take this and get a first year 40% discount. That's not the way we do it.

And then they are, when you go on this new licensing model, then you are entitled for the fact that when there are updates and whatnot, you are capable of having those. And so that's basically the route to go. So which means I don't know I think, well, it's less than 10% on Qt base that are still on the old licensing model. But on Qt, and they'll probably never change. They built something 10 years ago, and they're just maintaining it and they will never upgrade to anything.

When we did it on Qt, we introduced 6.0, and we told to customers that 6.0 is with subscription. If you want to have the latest version, then you have to roll into this subscription. That's the only model. If you want to stay in the old versions, you can stay with the old terms and conditions. And nowadays, maturity of the people have changed and over time. So it's a really small fraction at Qt base that hasn't changed.

And those are typically customers that they've built something one-off and then they are just maintaining it and they change it, they're staying in the old. Usually, people do want to get into new versions.

Then another thing is that when we did this at Qt, we were maybe not, well, obviously, we were not the last one since there is IAR. But nowadays, I think it is so typical model of buying software and subscription that you don't have to kind of explain it. I mean all the software is in subscription mode now. And now the next change is going to be then on a consumption-based usage, which IAR is moving towards as well. I mean, our whole group, of course.

Jaakko Tyrvainen from SEB. On the ARR growth during the quarter, meaning the quarter-on-quarter growth of 2.4%. Could you elaborate a bit how much of this was driven by old Qt licenses and on the other hand, quality assurance tools and as well as IAR. Did the transformation to subscription had positive or negative effect?

You mean the IAR shift to subscription? We don't disclose these BU numbers. So, I don't even have them out of my head that the, what were those, but I can say that they were all growing. So the IAR obviously contributed, but not the, more than half of the, everybody was contributing. So all the ARRs are growing, but we're not disclosing those separately. So I don't have those numbers in my head. But they are all growing. So it's not something that is coming only from IAR.

Okay. And still on ARR, did you say, did you say that Qt organic growth was 11.5% year-over-year.

Yes.

Then on the distribution licenses, which had a pretty nice quarter, but you are referring to certain volatility. Do you have any visibility to that volatility over the summer quarters?

Summer quarters, summer months. Yes. Well, I mean, I would say that it's, last year on second quarter, the distribution license revenue was exceptionally high if I look on the overall. And I think we're more going to be on a normal level. We're going to be more on a flat level.

I mean, Q1, Q2 on the distribution licenses are going to be pretty much the same, maybe a bit higher on, but if I compare last year on the Q1 and Q2 numbers, there is, there were big distribution license deals last year. So that's actually the biggest effect.

If I look on all the other numbers, I think the consulting is going to be a bit soft developer license will be less year-on-year than they were last year.

And yet again, they tend to fluctuate. So, the guidance we're giving on distribution licenses for the whole year, I do, with the visibility I have, we're going to be pretty much on the same level than we were last year. I mean last year on distribution licenses were very good. This year, we're going to be a few million below or somewhere over there. But the biggest deviation on this year is going to come on this Q2.

Good. And then lastly, on the AI topic, just to confirm, so you're stating that you're not seeing customers possibly downsizing their teams and thus the number of licenses because of the AI efficiencies, that's just them, if so, that's just them kind of squeezing overall costs?

Yes. That is, they are squeezing costs everywhere, and now they're going to be squeezing more because if you think the automotive manufacturers, like I said, glass is going to cost more, plastic is going to cost more, paint is going to cost more. So the automotive manufacturers because of this oil prices being so high, their manufacturing cost per car is going to go, it's just the physical cost is going to go much higher.

And on top of that, they have tariffs, right? So it's going to be a big issue for them. And also other manufacturing companies on medical defense, whatnot, it's no issue at all. So it varies industry by industry. And it's not only our own internal discussions. So we hired an external consultant, and he may on many aspects, but one was AI, and he made a massive amounts of calls and interviews on customers on our customers interviewing the use of AI and the effects on AI.

So developers are using AI to be more productive and whatnot, but we don't see layoffs over there in this embedded world. When we look on the web technologies, right? So that's a bit different story.

Waltteri from Danske Bank. About the pricing model change that we have discussed today. If you don't see any kind of impact on demand from AI, then why do you also say that you will change the pricing model? What's the reason for that?

Well, we don't see any layoffs of developers. But of course, we see developers using AI. So if you think that the old world developers, well, the company, the only way to extend building more software would have been hiring more developers. Now the same developers are using AI. So from our perspective, we see that there is more use of Qt Framework, and that's where the world is going.

We see more and more that happening in the future. And I think that more and more the new customers will be such that developer will be asking from AI that I want to build something like this, let's use Qt or what should I use? And then the AI is probably proposing that, hey, let's use Qt and then they start building something.

That's where the sort of the consumption-based usage is going to go. So if our customers and then our customers start using automated tools to generate code as well, it's kind of, from our point of view, it's pretty logic that, well, hey, you need to pay for that, too, right?

So then the question is on the long run, this is, well, we really, of course, this is going to be developing. That's for sure. There is a couple, a few things, first of all, that are going to be issues going forward using AI.

One is this consume-based pricing. And the other is that if you use AI on Qt, you build something with Qt using AI and you don't pay a license, who owns the code, right? So kind of that if you use AI building software and AI goes and uses frameworks and code being built before, does it make your code and you have automatically copyright for it? No, because many times AI just copes code. If you do proprietary code and you take open source components, put it into the proprietary code and then say that this is my proprietary code, well, you're violating the open source rule.

Can you be certain that you actually have right for that software, that's one. Then the other is that, like I said, nowadays, all the AI companies are losing money like a ton, right? At some point, of course, they will lure us to use AI and we start using AI and get the benefits of it. But the cost of using AI will increase at some point, right? Otherwise, these AI companies will never get their money back that they are investing, in billions and billions.

So the pricing will change and then the dynamics that what is really the benefit of AI will change. Now we get to use for everything pretty much free of charge, right? And so that's going to change a bit.

And then the third is really that what is the behavior because how it's going to go. So far, I usually see that people want more and then they want even more. So if you think that you have 10 developers doing code and then you start using AI, are you happy that you generate the same old level of code and you fire, you get rid of five developers and you stay on the same level? Or do you keep the 10 developers and generate a lot more code and do a lot more products.

In the history of people, they usually want more and they develop more. So this kind of a thinking that AI is going to come and the productivity is going to get much higher without any coders. Well, that's not going to be the case. I mean the assumption that AI comes and all the software coders daily work will change and the simple things will get simpler and they will get done by the automated by AI, there are many things and hurdles we go forward, but it's going to be an interesting time.

What we don't discuss very often is that we see that, well, there is a threat here and there and whatnot. Of course, we can turn this coin around that assume that AI is so powerful that it does all the coding. So what would it mean to us? Well, we do have these customers that we know that what hardware configurations they are doing.

We do know that what they want to put and build on their products. And we do know that we do have tools that we can let them that, hey, design what you want, if AI does everything, we can become a solution provider. We can start selling total solutions, right? I mean this doesn't necessarily mean all threats to you. I'm not saying that we're going into that direction. All I'm saying is that, of course, this will give also opportunities for us to expand our business going forward.

Right. Maybe two quick ones. First, the Western Automotive, do you think that, that business will ever recover for you to the point where it was like two years ago? And roughly how much is automotive of sales today versus two years ago?

Well, is the amount of vehicles going to be the demand for vehicles is going to be about the same that it was in previous years. I think overall in that market, if we ever get into this vision that I think it was 10 years ago or so that there was predictions that in two years, we're all going to be driving self-driving cars.

Well, I have an old Volvo, but I can tell that I drove myself. It's been taking some time. But I mean, if we do get in a world that we have a lot of self-driving cars, then you could assume an idea that instead of maybe you have a car, but while you're at work, your car goes and re-rent it to Uber. So your car is driving people around and then comes to pick you up. So is there then a need for total amount of cars that's been sold as of today?

Well, of course, not, but that change is going to take a long time. Would there be a bit of a consolidation in car manufacturers? So let's say, five years from now, are we having the same automotive manufacturers as we are having today? Probably not. So there is going to be a consolidation.

That we probably will see how that will be evolving. The automotive is now, I should know this, that it was around 20% a long time ago. Now it's substantially less. And defense is the biggest vertical we have, medical right after it and industrial, third.

If I looked at what the automotive market is growing this year, probably the market growth probably like flat or 2%. That's my educated guess.

European car manufacturers are in real trouble with the tariffs and the competition in China. And so is U.S. car Ford GM, they're not doing very well, as you know. So it's going to be a struggle. But are people still buying cars? Do they need about the same amount of cars? Yes. But when self-driving comes, then that's going to change the world, but many, many years ahead.

So it depends on that do we get the deals back at that point with the new players? I think we do.

Maybe one quick one. On IAR, I'm not sure if you said how much IAR sales were of Q1, if you said, I missed it, but could you please repeat? And once again, the SaaS transformation that IAR is going through, did it already have an impact on Q1 on its sales?

Well, IAR impact on subscription sales is having impact all the time because the revenue compared to last year, IAR revenue is going down. So yes, it's having effect on Q1. It's having, it's going to have effect on the whole year. And then next year, we do expect double-digit growth on IAR. But this year, we expect it to go down, and it is going down compared to last year.

So, and the subscription change being going very well, which means that the downward pressure on IAR revenue is at its highest, let's put it this way, and on profitability as well, which means that next year, more aggressive we can be this year, more the growth is going to be next year. So it's definitely with this change rate, the IAR growth next year is going to be double digit, probably starting with Qt. But this is not a promise. It's the first quarter. Let's see towards the end of the year. But it's going to be double-digit growth next year and very healthy over there.

And then the IAR profitability will swing back and the year after that, it's going to be on a very healthy level. So we have no reason at this point doubt that that's not going to happen. On IAR revenue, no, we do, there are too many Rs. We do tell the ARR, but we are not disclosing the different BUs. So yes, I didn't say it. You didn't miss it.

Well, you can ask one. Yes, we can go a bit over time. if it's the easy one.

All right. Perfect. I don't know if it's an easy one, but I'll ask you anyway. Antti Lyytikainen from Inderes. On the ARR organic growth of 11.5%, just to drill down on the number, is there any kind of one-off positive effect from IAR's transition to subscriptions kind of boosting that number? Or is that kind of not in the numbers?

IAR, that is the growth at comparable currencies.

Okay. Thank you. We're over time now. Thank you very much for coming. We're relatively happy on the profitability and the, and the development on the first quarter. Second quarter, we see consulting being on a bit soft. Developer license is doing very well.

Year-on-year comparison on distribution, there's going to be quite a lot less sales on last year. But if we look at the distribution license on the whole year, it's going pretty much where we were predicting so last year and a bit below from last year. And we are not changing the guidance.

We're pretty confident that we're going to meet those numbers over the course of the year. And the integration is going well. We've done a lot of work in the U.S. to turn that around, and we're seeing first signs that, that is also happening.

So looking forward, we're pretty confident that this year is going to be okay year and a change year and means that when we build this foundation 2027, we're going to get back on track with the very healthy profitable numbers and sales growth as well. With that, thank you.

Good afternoon, and welcome to Qt Group's Q4 2025 Results Presentation. My name is Heli Jamsa, IR Lead. And with me today are our CEO, Juha Varelius; and Interim CFO, Ann Zetterberg, to present the results. After the presentations, we will have Q&A first in the room. And if there's time left, move on to the questions from the lines.

Without further ado, please, Juha, the floor is yours.

Thank you. Thank you. Good afternoon, everyone. And we have a same agenda, as always. I go a bit through what happened on Q4, and then Ann is going to go through the numbers in more detail. I'll talk a bit about the future outlook and then questions.

So the Q4, we had a growth of 12.6% or 18.6% comparable currencies. And of course, IAR acquisition, which we completed -- contributed in this development. And IAR was EUR 8.1 million on Q4, and our organic growth was 6.1%. So it was a -- compared to the very difficult year we had last year, it was a decent quarter, and we were happy on that.

Our EBITA margin was 35.6% and the EUR 27.5 million, and that's -- there is a decrease compared to last year, but we did have a one-off cost on the acquisition that were burdening that. I'm going to talk more about the overall market environment. But of course, the -- even the year changed, the market environment hasn't changed that much. So we had quite a bit challenges last year which affected our customers in a way that we had tariffs and whatnot uncertainties. So the selling developer licenses last year was slow, if put it on one word.

So the -- on the whole year, we ended up on EUR 216.3 million, which is a increase of 6.6% on comparable currencies. So we went pretty much in the middle of our guidance. The distribution license revenue grew very well last year. There were a lot of new things coming into the market, new programs started, which ended up on the 26.4% growth. And of course, the main growth drivers, industries for distribution licenses is the automotive, medical and industrial manufacturing.

The whole year EBITA was EUR 51.8 million, and there was a decrease. EBITA margin was 24%. Our personnel increased end of the year to 1,100 out of which 215 are IAR employees. So -- but we did continue our own hiring as well. The one-off costs for IAR acquisition, EUR 5.8 million.

We're going to talk that also a bit later, but the -- of course, we all know that the IAR profitability has been less than the Qt. So that affects the overall profitability of the group going forward this year.

We haven't disclosed the ARR before. And on the ARR we had a growth of 8.3%. And there on the small print is that the -- it is Qt and the QA developer license base and it does not include the IAR licenses and distribution licenses. So that ARR is the Qt and QA business.

We plan to give that ARR number now in the future also in the half year sequence. So you can see that because one of the questions affecting our revenue has always been the shift from 1 to 3-year licenses. Of course, last year, we did see the cautiousness in our customers. So the -- it was slowness in sales, but it was also people shifting from 3 year to 1 year. So now presenting this ARR, we don't have to -- you don't have to worry about the shift from 1 -- 3 year to 1 year because we can follow the ARR. And our plan is to give that number now next time after second quarter and so on.

Obviously, it's a number that doesn't change that much. We might even go on a quarterly basis if that's needed. But the -- like I said, it's much slower moving -- slower moving measurement.

Well, here are some of the product-related things we did in 2025. There are always questions about AI. Is AI going to eat our lunch in a way that the -- you know that there are a lot of predictions on AI that the -- no developers are needed and AI is going to do all the code. Well, at least as of now, we don't see that development. We do see that there are a lot of AI assistants being used like we are offering them in Qt and our design studios and on Squish. So on writing test scripts, for example, you can use AI and then the Squish does the actual testing. So they help on that. But do we see that the -- specifically on embedded world that the AI would become and replace the developers, that kind of a development, we don't see as of yet.

At the same time, of course, it's good to realize that I think that the U.S. companies are planning to invest EUR 500 billion, EUR 600 billion next year. So obviously, they are expecting to get something out of it. But I have -- I don't see that developers would be going away next year or even in the coming years in that sense.

On the partnering side, we -- on Axivion, we do have partnerships with NVIDIA CUDA. So the -- when you're doing CUDA code, you can -- or using CUDA, you can use the Axivion. On the R&D, on the defense sector, we did have the FACE certifications and working with Infineon over there, on the AI consumer power devices. And then we are expanding our ecosystem through the Qt bridges, which will enable more languages over there basically. These are just some of the highlights that we are working on the product development.

So in general, our product has -- all our products have always been very good. We get a very good feedback. So this is just to show a few examples that we do continue our R&D and we do -- we are on the forefront of product development all the time, making sure that all the Qt products are very competitive in the market, and that seems to be the case on all the customer surveys from our users.

With this, Ann, please. Some numbers.

Yes. I am Ann Zetterberg. I am -- I have been the CFO of IAR for -- I'm on my fifth year now. And with the acquisition of IAR, I had the opportunity then to step up and become the interim CFO for Qt. And I'm going to tell you a little about the numbers then for this quarterly report. So delighted to meet you all.

There will be a bit of a P&L first, maybe a little repeat on what Juha just mentioned. But we had -- in Q4, we had a growth of 12.6% and after exchange rate impact, it was 18.6% at comparable currencies and the organic growth with removal of IAR revenue, which was EUR 8.1 million, that was EUR 6.1 million. And we -- in -- for 2025, the growth was 3.5%. Exchange rate impact has been pretty bad, both for Q4 and for the full year, especially the dollar has behaved very, very badly for us.

And the growth there for 2025 at comparable currencies was 6.6% and the organic growth was 2.6%. But as Juha also said, we plan to show the ARR as that shows better the yearly underlying growth for the company. It doesn't -- it's not affected from which contract length the customers chooses. As we recognize 95% of the contracts upfront, it depends -- it matters a lot if they choose a 5-year contract or a 1-year contract for revenue, but ARR illustrates the underlying growth very stably, and that is growing good for us. It was 8.3% of growth for the Qt part, excluding IAR during the year.

And then looking at expenses, the personnel and year-on-year grew by 267 individuals. That's a growth of 31%. But of course, a lot of that relates to the IAR acquisitions, 215 people worked at IAR at the acquisition. And -- so that increased the headcount to 1,136, both on average for the year, but also at the year-end. And IAR contributed EUR 4.8 million in staff costs in the P&L.

Under other OpEx, the IAR acquisition had some extra costs then, EUR 4.1 million in Q4 and EUR 5.8 million during the year. And also, I wanted to highlight, even though it's a very small cost, the capitalized asset as IAR has interpreted IAS 38 a bit differently than Qt has and has capitalized R&D assets in the balance sheet.

Presently, there is EUR 5.4 million of capitalized unfinished assets in the balance sheet of IAR and those are expected to be finished under 2026. But this means that we will have a small positive effect on the P&L from these capitalizations, removing costs and putting it into the balance sheet. I don't expect any large amounts from this, but it is still good to understand that this is what it looks like now. Over time, there will be some harmonization within the group, so all companies look at this in the same way.

And then, of course, the profitability, like Juha just mentioned, has gone down. The EBITA margins are lower both for Q4 and for the year. IAR has a lower profitability. So that contributes to that and as does the acquisition costs. But of course, when you join 2 companies, there are also opportunities for integration, efficiencies and cost reductions, which we are going to work with on starting this year. And this means that the earnings per share has gone down to EUR 0.73 for the quarter and EUR 1.25 for 2025.

So then moving on to the balance sheet. A lot has happened to the balance sheet, obviously, from the acquisition of IAR. The preliminary PPA added EUR 204 million in net assets to the balance sheet. Of that, goodwill was EUR 122 million. And then there were identified other intangible assets of almost EUR 90 million. Those were customer relations, technology and trademarks. And those will be written off over 15 years. So the amortization yearly net of tax would be EUR 4.8 million. And also the PPA added, or the acquisition added other net assets of EUR 11.2 million in IAR. Some of those assets on the asset side of the balance sheet and some on the debt side sort of spread over, but the net of them all are EUR 11.2 million.

Some of those assets were trade receivables then, which increased the trade receivable balance to EUR 58.7 million in the balance sheet. And there are also other receivables, which could be good to know, one booking of EUR 5.1 million as we have booked the full value, 100% of the shares to the balance sheet, as there is arbitration going on, and we are obligated to buy the rest of the shares. We are not showing any minorities under equity and so because it's only a matter of time until we own 100% of the shares. But that can also be good to know.

And then the ending cash balance was EUR 40 million -- EUR 40.1 million, a little lower than compared to last year as we have made this large acquisition. And as the balance sheet has expanded, the equity ratio has gone down from 81% to 50% and also the interest-bearing debt has increased. The interest-bearing debt is EUR 143.2 million. And of those, EUR 134.4 million are debt relating to the acquisition of IAR. So we have paid off some of the debt already. It was EUR 150 million from -- to begin with.

And also on the deferred tax on the debt side relating to those intangible assets that were EUR 90 million on the other side, there is also deferred tax booked on the other side which is EUR 18.5 million. So good to understand that also how the PPA affects the balance sheet. And on the short-term liabilities, there is a debt of EUR 5.1 million, which is the amount we expect to pay for the remaining shares of IAR after the arbitration is finalized.

And then I can just, as a final note, say that operating cash flow then had gone down a bit, but mainly because of the profitability going down. So nothing strange about that.

And with that, I suppose I'm done with the financials, and we will take questions afterwards, but I will then leave to you, Juha, to take the next of the slides.

Thank you. So 2026. Well, I think the first big thing is that the -- during the next 3 years, as you know, the IAR has been on a perpetual model. And our -- during the next 3 years, we are -- our target is to shift that into subscription model. That's roughly the -- by the way, the same plan we did have the -- early on with Qt when we did this a few years back. And if this goes as planned, the IAR revenue will be going down this year. So it's going to be decreasing this year. And then depending on how aggressively that goes down this year, then the swing back will be bigger next year. So -- but it's the early phases. So we've started the journey. We have now a couple of months behind us. So it's to make -- exact predictions at this point is there is a bit of a room for that estimate still.

The -- well, the -- I think it's -- the market has been uncertain so long, that the uncertainty will definitely continue. As we know, there are a lot of global tensions going on as we speak, and that's what we're looking this year. Some of our customers are in a challenging environment. The -- like in automotive, the Chinese automotive manufacturers are putting a pressure on the European manufacturers. And at the same time, there are tariffs that's obviously going to continue all this year. And so on and so forth. So I think that on the industries, the automotive will be in challenge, Medical will not so, and the industry automation seems to be doing pretty well. Defense is doing really well. So in -- if I now look at the 2 of our biggest industries, they are actually medical and defense at this point of time. So they've grown quite substantially over there where they've been.

The long-term growth prospects, well, like I said on the AI, this software really defines the value of the products. Each product will have software going forward and the new versions of it we don't see on embedded, that the AI would be eating all that market away far out from that. But we do see AI improving our own products on many respects, and that's what we are implementing.

So before we've given our estimates that -- we've given you a range, but we gave up on that range. So now we're saying that the -- our full year net sales will increase at least 10%. So we're saying that, that's the floor, but we are not giving a range. So we're not giving the upper part guidance. So that's a bit different. And we're saying that our operating profit margin will be at least 15%. So again, we're saying that, that's the floor. We're not giving the upper range. So we've -- we're not giving those ranges anymore.

Going forward, we're going to start after Q1 or after Q1, we're going to start giving you more info on the -- on how the -- well, we'll start sharing this ARR, which will give you a better understanding. You don't have to worry about the shift on the 3 to 1-year licenses. And then we're looking at the -- we're going to give you more on the revenue per product, so you get a better understanding on the -- how the licenses -- distribution licenses are coming. So we're looking to open up that a bit.

I don't know if it's going to make your life any easier because there is a lot of fluctuations. But at least you can then see that fluctuation. So the -- we've been listening -- what you've been asking and -- so that's the -- but more to come on that later. I think the ARR actually will help you more than seeing the license -- distribution license sales and whatnot, but the -- more than that.

So do you have any questions? Okay.

It's Matti Riikonen, DNB Carnegie. A couple of questions. They are very simple. Do you expect the legacy Qt business to decline in 2026?

Simple answer, no.

Okay. Do you have a rough estimate of how much IAR's revenue would decline in '26 versus '25, if you give a broad range? You say it's going to decline and you say that you don't know yet, but roughly where is -- where are your thoughts at the moment?

Well, double-digit.

All right.

Low double-digit.

And third question before I give the mic to somebody else. How will IAR's fixed cost base develop in 2026?

Simple question, longer answer. The -- well, I mean, we're not looking to increase the IAR cost base. So what you're going to see now is that the IAR -- the revenue decline really depends on the -- how well can we go on a subscription, and we try to go as aggressive as possible. So the -- if I say low double-digit revenue decline, somewhere there, right? I don't know yet, but somewhere there. And then 2027, I do expect to see a double-digit -- high double-digit growth on the -- maybe close to 20-something, to give you an idea how it's roughly good work, right?

On a cost level, when we see costs, obviously, we're not going to be increasing costs because the prices are increasing, right? But the -- we do have some R&D-related initiatives over there where we think that we're going to be increasing cost, and they are related into the fact that the IAR is very much on a functional safety critical environment in automotives and whatnot. We are looking for a product development that we can broaden that segment roughly, to put on a broad perspective. And then we have few places where we're going to -- mainly on sales, we're going to increase sales costs, but we're talking very modest cost increases on the IAR side.

So if you look at the old IAR, I know you have the numbers from there, we're looking very -- we're looking some cost increases, but fairly modest over there. But still, if you model that -- the revenue development on IAR numbers with that revenue dip, you're going to be seeing that the EBITA contribution for the whole group this year is going to be pretty much breakeven or even slightly negative. So we're not looking for -- first of all, on the guidance, we are -- those are the bottom lines. They are the floors. They are not the -- we see that, that's the bottom, bottom, right? So we do expect a bigger numbers.

And then the IAR negative contribution will be on this year, but when it swings next year, we don't -- there is no need to increase costs for that because it's basically a price increase. So it will swing the IAR EBITA. Well, it's a license sales. So everything that the revenue will be increasing will go directly to bottom line. So that's the implication.

On Qt Group, we are -- well, you call it legacy group. So the time changes. But -- so we'll figure out the better name than legacy. Anyway, the old Qt, we're not expecting organic decline, and we're not expecting that the -- what we saw last year, the bottom line, we're not expecting there to see a declining EBITA that we had last year. So the -- and that's the bottom performance, right? So we expect that the bottom performance be last year level and higher from there. So that's kind of the overall picture. So it's maybe not that gloomy than you were first thinking. I don't know how gloomy you were, but that's my educated guess. But thank you for the simple questions.

That's all from me so far.

Jaakko Tyrvainen from SEB. On distribution licenses, what happened in the sales in Q4 since I recall that the commentary after the first 9 months performance was rather moderate also in this revenue stream? So I'm curious whether there were some customers filling up their inventories in terms of distribution licenses? And how should we look at the revenue stream for '26?

Yes. Thanks. So well, maybe later on the first Q when we open up a more broad distribution, you're going to see -- But the distribution licenses is really hard to predict because the -- it's not like this -- I mean, quarter-on-quarter like last year, it went like -- well, first quarter, second quarter boom and then up again, and that changes every year. So the quarters are not alike. So you can't expect that what was last year and second quarter is going to be the same. And that makes it difficult.

And as you know, the distribution licenses go that -- some customers buy them afterwards, telling that how much they [ chipped ] and some people buy a chunk on prebuy. And that's why it's hard to predict. On a general level, we can always see that we know that the -- some big new products, productions are coming into the market, then we know on a yearly level, what's going to happen. So last year was on that sense, very good. So if you look last year numbers and distribution licenses for this year, I would take them slightly down. That's my expectation for this year given the market volatility, given the -- what's the customer demand in Europe and whatnot.

So the -- I mean, at the end of the day, our distribution license revenue comes from product, what the consumers are buying, right? So the -- that's in a general terms, it follows. And we do have -- we are in 70 industries. We are both on commercial devices like industrial automation, robots and whatnot, stuff that goes into hospitals, stuff that goes into factories, but also on consumer goods like auto, cars and whatnot. So that's where the fluctuation really comes. So I would not put on my model same growth this year than we had last year. This is going to be substantially lower. So same number or a bit below. That would be my best guess. And -- that's a guess.

Understand very well. And just to confirm, Q4 was strong in distribution license?

Yes, yes, yes, I was a good. So last year, on distribution licenses, Q2 was very good. Q3 was very weak. Q4 was good. Q2 was, if I remember correctly, the best on distribution licenses last year and does not mean that, that's going to replicate. It really goes like this.

Good. Then on the ARR, thanks for sharing that to us and the growth of 8% there. Could you give some color on how much of this was pricing and how much was coming from the effect that customers changed from 3 year to 1 year, which obviously should have kind of positive pricing impact on the ARR number -- annualized ARR number?

That -- Very good and detailed question that I -- those numbers I don't have. We can come back later, but those I don't have out of my head. But the -- on general level, I can say that there was some shift from 3 year to 1 year, if I look on a whole year number, but it's slowing down. That shift is slowing down. But definitely, what we saw through all the year was the fact that on renewals, the -- what people used to do is that they had something and then they renewed older licenses. Nowadays, customers are counting that how many developers we really have, how many licenses we really need. And in general, money has been very tight. I mean our customers are very -- they're very tight on money. So they are looking all the costs. And on many R&D budgets are such now that the R&D budgets are not growing, but the -- so if they do something additional, they need to stop doing something old.

Good. And then my final one on the possible AI disruption also in the embedded side, I heard what you said. But could you give us for -- kind of for a dummy explanation why the embedded world, what are the barrier entries for AI native solutions to break in?

Well, as of today, what we see, first of all, that you have lots of safety critical, you have lots of functional safety type of things like car brakes and whatnot, you need certificates and there are -- there is a very tight regulation what you need in order to have software. So you can't just ask AI that do me a car brake system, thank you and implement it, right?

The second is that the -- on embedded, the software goes into products, right? And in products if you need to do a product recall, that is really, really expensive. So you have to be fairly certain that what you're doing.

The third is that the embedded is fairly slow moving. There are huge companies building these cars and all these devices, medical devices and whatnot. So the time of the change and how secure they need to be that if I'm building this medical device, that nothing really goes wrong. So they change relatively slowly, right? Whereas if you think that on a website that I want to do a mobile application, I do a mobile application, if it works, great. If it doesn't work, it doesn't matter so much. So the -- it's kind of a different environment.

And then if you think about coding, just building the software is -- it's one part of the process. You need to define what you want. You need to discuss with people that what are we building, what this product is doing and on and on and on. And AI is definitely not ready for that yet, right? So the -- where it's really going to end, we'll see, but that's what we see as of today. So there are -- we see AI as assistance and the -- like if you're designing something, you can use AI to give you creative ideas because as people, we tend to start looking one-way street. AI can open up your creativity and whatnot, but yet you're still using tools.

So my prediction is that the next phase you're going to see on SaaS environment and the products like ours is yet another pricing change. We're doing this just to mess you up, right? So -- but yet another pricing change. And the pricing change is going to be that -- the pricing, I think, is going to go more towards from that the -- what has been built, how much the tool has been used rather than a deficit, right? So that's where I see the AI is going.

And I had a -- one breakfast discussion and the person pointed out that the -- remember a couple of years back -- this person said to me that remember a couple of years back, everybody in Finland were talking that the -- even grandmas need to learn coding because software is in every device and everybody needs to learn how to code so that we can use these products, and they were all kind of coding school starts and whatnot. That was 2 years ago. Now everybody is talking that developers are -- nobody needs developers anymore. So there is a bit of a hype on the speed of the change. I mean, over time, of course, AI is going to -- 10 years from now, AI has changed a lot how we work, but -- and live our lives. But in the near future, I don't see much of effect. Then on the -- and this is the Qt development, right?

On the IAR compiler business where you need all the certificates and whatnot, there is no way you can use the AI for a long time. And then on our testing tools, well, whatever you do with AI, you need to test. So I see that there's going to be more and more software that needs to be tested because you can't rely on AI. So the testing business is going to grow substantially as a market.

Felix Henriksson, Nordea. Three questions. Firstly, on Q4. The revenue growth organically accelerated a little bit, and we discussed about the distribution licenses being strong, but was there anything else that improved? For example, the lack of large deals that we saw in earlier quarters, did that -- did those sort of come back at all?

No. no. If I look on the regions, the -- I would say that the -- we're doing well in APAC. We're doing okay in Europe. We have room for improvement in Europe in some markets. And then in general, we have lots of room to improve in the U.S. So the majority of our softness has been in U.S. And then we come to the point that the -- if we talk about the AI or if we talk about that the -- is there a competing product or is there a price change? What I see in the market is that we're doing fine in APAC, we're doing fine in Europe and the main softness we have is in U.S. and even in U.S., we have some teams that are doing okay, but then some teams are really suffering in that respect. So that's why I'm fairly confident that it's not about AI eating our market because if it would be, it would be eating our market everywhere globally, right? And this is more a local softness we are having.

Same thing for prices and competition because we have same type of -- in APAC, we have the same industries and same type of customers we have elsewhere. So our softness basically has come last year that we've been a bit soft, been a U.S. related, right? And I'm very confident that we can fix that and get the efficiencies over there on a better shape.

Right. And then on the guidance, you mentioned that you're no longer giving those ranges, upper end. Can you expand on that a little bit? What's changed with your guidance philosophy in a way that triggered that change?

Yes. I wasn't very good at that last year.

Okay. So maybe more conservatism in that way?

Yes, yes, absolutely. Yes. Well, hey, we gave 2 profit warnings was not on my plan.

Fair enough. And lastly, on distribution licenses, I mean, we've started to see memory prices going up and there are some supply constraints emerging that potentially are impacting your customers, I presume. Do you think that's a sort of potential headwind when you look ahead and what are your customers saying when it comes to this?

No, that's a downwind because the -- that's where Qt really signs. The fact that if you use Qt, you can do more with less memory. So that's the -- I mean, that's been the basic promise since the beginning.

So the -- with Qt, you can have the same performance with the lower-end hardware, and that's the main selling point we are having as of today. And so higher price is better for us because at the end of the day, our customers will have to build those products anyway. So then it's a question of that how -- what kind of performance they want, what kind of end user experience they want. And that's where we sign.

And that's where like Android doesn't sign, right? You use Android and you need a lot more hardware than using Qt and so on and so forth. Same goes with Unity. So most of our competitors, they may be in some use cases like Unity, Unreal, they might be able to do a better 3D visualization or it looks better, but it consumes so much hardware that if we go on a lower-end hardware, we can beat them. And you can get good enough, you can get a fairly good performance and a lot lower hardware using Qt. So that works for our benefit.

It's Antti Luiro from Inderes. One question. We know that the last year's growth was quite sluggish and there is still uncertainty around this year. So is that affecting your own investment plans? Or are you just keep on going with all the growth investments that you have planned before?

Yes. I mean, yes, we will continue our investments, yes, for sure. That's the -- no doubt about that. And we do have these few areas where we see the -- well, first of all, I think that we wouldn't be here in the first place if our products wouldn't be so competitive. So we need to keep them in that way. And then, of course, we are exploring the opportunities that the AI is opening up, and we need to do product development to have AI agents in our own products and so on and so forth. And you're going to hear product releases as we go forward this year. So yes, definitely, we're going to do that.

Then at the same token, like the -- Ann was saying over here that we just merged 2 companies. And of course, we are going through all the processes, we're going through the -- that where can we be more efficient. So we've grown very fast. We are 1,200 people. And the -- so we do have also the efficiency programs, if you like. But it's -- so it's not all more, more, more. It's also efficiencies at the same time, and that's very much on and stable as well.

Waltteri Rossi from Danske Bank. A few questions about AI. Did I hear correctly that you said that you might change your pricing model in the future due to AI?

Yes. I said that, that's probably going to be the first change that we see on AI that the SaaS models pricings will start changing more from based on the consume of the tool rather than the deficit. I did not say that we're going to do that change, and I did not say that we're going to do that change this year, but I said that, that's what I see that the -- how AI is going to be affecting SaaS companies in general that the pricing will change going forward. I don't see that AI will be taking over the tools business per se.

Yes. I understand, but no time line for that?

No, no, no, no, no.

Okay. But that would imply in a way that there is at least a big threat on your developer license sales?

No. No, I don't see it that way. I see it that the -- that's going to be the effect that the SaaS business will go more towards that, that the people are charged at how much you use the tool rather than the per deficit. I see that development coming. But no time line, definitely not this year, next year or so. No.

Okay. Well, next one is still on AI. What would you say is basically Qt's value proposition for the customers because there's the argument that AI will make developers' work more efficient. So that's kind of eating up your -- one of your value propositions. So what else do you basically offer for the customers?

Well, we offer a tool that they can build their graphical user interface or applications. And as we are here today, AI is not capable of that. So you need the human and you need the tool. And then it's debatable that when will AI be able to do that, if ever. And then we see that if you need certifications, you need -- like on defense, like in automotive, on many industries, on medical, there's a long list certifications you need to meet. So who's going to train an AI that will meet those certifications and make sure that AI does the things every time in that particular manner and everything is met. I mean, that's years away, if ever.

Yes, yes. I agree. But still on that, actually, a follow-up. We know that programmers are already today using AI assistance. But are you saying that you don't see your customers yet using them?

No. And you see a lot of developers using AI on the web technologies. So if you want to do a simple mobile application, you can do that or you want to do web pages, you want to do your own homepage, you can use AI for that. But of course, they are so simple that you can -- if you want to do your own web pages, you can have -- they are on a web already. So what AI does is that it takes a web page and then it produces a new web page, right, that you can do. But on embedded building on products, no.

One last on AI. So can you please elaborate how Qt is currently using AI in the framework? Or do you have add-on or something?

Yes, you can have add-ons. You can have assistance over there that helps you getting started. For example, on the -- on testing, you can use AI, that it helps you doing the testing script and these type of things. So it helps you kind of where you can think that it helps you building a bit of a story or text, but yet still you have to read it and modify it. That's what we see as of today.

All right. Then one last question on the usual 1 to 3-year licenses. So do you have a number on how much that shift from 3-year licenses to 1-year licenses impacted last years?

No, but we're going to give you the ARR, so you can start following that.

Matti Riikonen, Carnegie, a couple of questions more. They are even more simple. First of all, you discussed the capital -- capitalized cost policy so that you would basically go towards Qt's policy, which I read that you would not any longer capitalize some costs that IAR has. Should we expect that there would be none whatsoever on the capitalized costs in '26?

Because we have unfinished assets in the IAR balance sheet, and we need to continue capitalizing on those according to IAS 38. So there will be some capitalization of R&D assets during 2026. But we expect that those will be finished under 2026 assets that are not finished. And after that, we will harmonize between the companies so we can find a common application of IAS 38...

Because -- I want to come over here, so we have you in the camera as well.

Yes, sorry. I apologize. Yes, about the capitalization since Qt and IAR has handled the IAS 38 application very differently. So IAR has been capitalizing R&D assets into the balance sheet, which increases the profitability and then you write off the assets over time. And after the acquisitions, we kind of cleaned out the balance sheet. But the assets that are not finished, they are still there, and we will have to follow IAS 38. We will have to continue to capitalize on those until they are finished. Otherwise, we don't follow the bookkeeping rules correctly, and we don't want to break them. So that will happen. And in that time, we will evaluate and harmonize between the companies so we can have a common approach to this. And then I expect that we will not capitalize anymore, but I cannot 100% tell you that, that will happen. But we will have to have a common approach anyway within the group on how we handle this adjoiner [indiscernible].

What kind of magnitude of capitalizations do you think there would be in '26?

It will not be a lot. Those assets are almost finished. They're EUR 5.4 million there now. So I don't expect there to be any huge capitalizations. As you saw during Q4 on those assets, we capitalized EUR 200,000. So it wasn't a lot. So you can -- then -- it can go up and it kind of go down a little depending on how much work the R&D department puts into various projects. But I don't expect it to be -- I mean, anything that affects the profitability much, but it can be good for an analyst to understand that this is a difference from how Qt has handled it before.

Right. That's helpful. Then second question is about the annual recurring revenue disclosure that you plan, which is an excellent idea. How long into the history will you bring that? So is it possible that you would bring maybe a couple of years' history so that we could start to track it already from there and not just from here on because, of course, in the ARR pattern, the history is what counts and current day is less interesting if you don't know the history?

We already gave the last year number, right?

That's not a very long history.

Well, it's the last year. Well, we'll look into that. Yes, great question. We didn't think it that way, but we'll look into it. And on capitalization, it's like Ann said, that there are a few projects we need to continue. But of course, in general, going forward, on a longer term, we're not looking to capitalize. So we rather implement the Qt policy going forward and not capitalize the development. Yes. It's a better way.

Jaakko Tyrvainen, SEB. A brief follow-up on the profitability dynamics and IAR part of that. Let's say, the revenue is down double-digit something, like you said, Juha, would this imply that IAR as a stand-alone would be at breakeven or even red numbers in '26?

Red.

This is...

Sorry, one last one from me. You said you are going to continue...

You were?

Waltteri Rossi, Danske Bank. You said that you are going to continue recruiting this year. So could you elaborate a bit on where exactly are you going to recruit? Or you said invest, but...

Regionally or by function.

Say again, I didn't...

I mean regionally. Well, I mean, I think that the -- we do have a few markets where we're going to be increasing personnel, probably the U.K. is one, and these are small numbers, but then they add up for our Italian business. More or less in Japan, we're going to be increasing the personnel, the China probably. And the -- so in particular markets, I think in the U.S., we're pretty much on a headcount we like to be at this point of time.

On R&D, there are these new technologies like the one that interests you a lot, which is the AI. So of course, on these new technology areas, we -- instead of trying to learn them ourselves, we are hiring people. So we do have some of these new technology areas. If I look in general on the R&D, the Qt is very well staffed. The QA business function itself, it's still on the investment mode. So over there, you're going to see pretty much on each and every function. So a bit of marketing, a bit of sales, a bit of product management, a bit of the R&D.

On IAR, we are strengthening some of the R&D functions over there. So IAR, I would say that the most personnel additions will be on the product R&D side and then some on sales. But when you have so many different locations, you add up and then you get the personnel increase, that's basically what we're looking for.

Thank you so much. I believe that concludes all the questions from the room. And as we are running out of time, I give it back to Juha for closing remarks.

Okay. That came quick. So thank you very much for being here today. And the -- as we go into this year, like I said, the -- one -- the very big item for us this year is going to be the subscription change on IAR. So going from perpetual to subscription, that's the one of the core things we're doing. And of course, integrating IAR into the Qt family. So we're going to be a bigger, happy family.

We are also looking forward this year that, yes, it's going to be a challenging year. I'd like to emphasize that the guidance we gave was not a range. So we just gave a bottom line that what is the floor level where we expect to be this year. Of course, we are expecting to be better on those numbers. And the -- on the profitability side, we're not looking on Q2 decrease on profitability nor on sales, but the IAR subscription change will affect our profitability this year. And so that's why the lower guidance.

Where it's going to end up then that how aggressive can we be, remains to be seen. In any case, the 2027 for IAR will be a revenue growth year and a profitability year, then the question is that how steep is that curve over there. It's still very early phases to see that how rapidly we can drive this subscription change.

I think with these words, thank you very much.

Good afternoon, and welcome to the Qt Group's Third Quarter 2025 Results Presentation. My name is Heli Jamsa, IR Lead. And with me today are CEO, Juha Varelius; and CFO, Jouni Lintunen, to present the results. After the presentations, we will have Q&A first in the room. And if we have time left, we will move on to questions from the lines.

Without further ado, please, Juha, the floor is yours.

Thank you. Good afternoon, everyone. My name is Juha Varelius, CEO of the company. And as Heli was already saying, I'm going to go through the business performance on Q3 first.

Well, our quarterly sales was EUR 40.7 million and the decrease on 3.4% comparable currencies, it was flat basically. And year-to-date, we've been growing 1% on comparable currencies. And our EBITA margin on Q3 was 10.5%. What has actually led into this and why are we below on our expectation is the fact that the market has been a softer longer than we've been anticipating.

So if we look at the -- what we've been missing is basically larger deals. The number of the deals we've been making this year and on a Q3 has been pretty steady and growing. And so we've been doing more deals than we've been doing before and we've not been losing any customers. So the churn rate per se is at the same level that it has traditionally been, but the average deal size has been lower.

So what we are experiencing on a few segments, particularly where our customers are suffering, we are doing smaller deals. Our customers are reviewing the number of licenses they require and they try to go forward with the, let's say, kind of a -- with a minimum investment.

So there is still life in the market. We see the activity in the market. We don't see any competing technologies. So we're dealing with the same customers. We're getting new customers, but the deal sizes are lower.

We've also experienced some shift from 3-year deal to 1-year deals. And we were expecting that this -- on the second half, this market condition would get better. Well, it hasn't. And we gave a profit warning because we anticipate that basically this same development will continue in the fourth quarter as well. So we were looking for that market demand would be stronger. Now we don't anticipate that anymore.

Of course, we could have been waiting and see what's going to happen on big deals on a Q4. I'm going to talk about that in the future outlook more. But as we concluded that the -- we had a bit of same thing on the second quarter and now in the third quarter that we saw the bigger deals moving forward and the overall deal size being smaller. We think that this outlook that we've now given is more on a realistic size.

The distribution license revenue on third quarter was on the previous year level. Overall, this year, the distribution license revenue has been developing favorably, and that's been on our expectations. So -- but on our license sales, we've been suffering both on a QA and Qt side.

Personnel-wise, we had 922 people on September 30 and year-on-year increase is 64. We are, of course, cautious on the cost side, but on the long term, we are still continuing our investment as planned because we don't see on a long-term vision any changes in that sense.

We did complete the IAR acquisition a couple of weeks ago. And like we've said before, where do we see IAR is that the -- we do have a more comprehensive product portfolio. We see our strategy as that when we look at the development process of our customers, we want to be on the whole process.

And with IAR, we are now with their compiler. It's in the very beginning of this development process, so to say, so that when customers are starting a new project, the first thing they will do is that they will choose the hardware and then they start looking for a compiler. And after that comes actually how to develop software and so on.

So it will give us a benefit, of course, to be aware of customer projects on an earlier phase. It also gives us a benefit that we can be yet even a more one-stop shop for our customers. They don't have to go and shop various things from various places. And specifically on our QA, our testing offering, it's a complementary or we can do cross-sell. So when people buy the IAR product, also that needs to be tested. So we have a cross-sell opportunity over there.

IAR is well positioned in safety critical systems, which is also an area where Qt works. So we do have safety critical, you can see in the automotive, for example, quite a lot and on medical. So they are typically the same segments where we work. We do have coincidentally also offices pretty much on the same locations throughout the world. So we are operating in the same segment and this strengthens our position in embedded world quite a lot. So we are becoming a Nordic powerhouse going global.

IAR is selling perpetual licenses. They have started the subscription change on licensing model, which we did a couple of years back. We are now reviewing -- we're doing a bit different scenarios that on what scale and on what speed we're going to be doing that transition going into next year.

As of now, I don't have an info to give that what that's going to look like. But of course, more aggressive you're going to be the effect on revenue is going to be greater on the short term and then on later, it will grow faster. But what is the kind of a speed of change, we haven't yet decided, and we are doing that study as we speak as well as we're doing the next year's budgeting and so on and so forth.

So we do look that the IAR is going to be a very complementary product for our portfolio, and we've started the integration work now. When we made a public offer, it was on a due diligence -- on a light due diligence. Now we are going through the processes. We've started the integration work. And like I said, we started the planning for next year budget. We started the planning for the subscription change. And once we have those ready, then we're going to share more on that information to you on a later stage.

And with these words, I hand it over to Jouni.

All right. Thank you, Juha, and welcome from my behalf as well to the earnings call of Q3. I will dig into a little bit more details on P&L, income statement and balance sheet as well.

Juha already discussed quite in detail already about the top line net sales. We reported negative 3.4% net sales growth. And we see that happening driven by the customers' kind of cautiousness for most parts. We are seeing the headwind from the FX, specific from U.S. and the magnitude of that was a negative 1.4% in the Q3. So in other words, in comparable currencies, the net sales were flat year-on-year.

For first 9 months, we are reporting a negative 1% reported net sales growth. With the constant currencies, we are around 1% positive, so flat all in all. We did some flattening on the materials and services part. There's still an increase of roughly EUR 100,000. That's the resources -- external resources that we are using for our customer consulting projects. So kind of insignificant in any means, though.

Our headcount, as Juha described, was up by 64 year-on-year. And we have been adding resources into R&D, product management and also customer-facing organization during this period. And these are specifically the growth areas we see to be contributing going forward. This headcount increase, it reflects very much in line to personnel expenses growth, 10% in Q3 or 9% for the first 3 quarters.

Some increase in depreciation. We have extended our -- in some -- extended the premises in some of the locations of ours -- in our locations and also in Finland during this year. So this shows a slight increase in that line.

The other operating expenses, the expense side, it's up roughly by EUR 2 million. That's for most part driven by the IAR-related acquisition costs. And that impact is EUR 1.7 million now in Q3 or roughly 4 points in the EBITA margin, if you will. So run rate EBITA margin, excluding the one-off, would be somewhere 15% level, still close to 10% or 9% down from last year's.

The amortization, specifically from froglogic and Axivion acquisitions back in '21 and '22 remains unchanged, EUR 2 million a quarter, EUR 6 million for year-to-date. And this leads us to the EBIT of EUR 2.3 million or 5.6%, down by 13% points from last year's. And the year-to-date EBIT percent is 13.2%.

The financial items did not play that big a role now in Q3. There was not that much fluctuation in the exchange rates. We are suffering from the headwind from the first half year from USD fluctuation specifically by EUR 1.8 million.

Our income tax was for third quarter, EUR 650,000, for first 3 quarters EUR 3.4 million, which equals to roughly 21% effective tax rate, which is our run rate and a good scenario going forward as well. And then this leads us to a net profit of EUR 1.4 million for the period -- for the quarter or EUR 13 million for the year-to-date numbers.

On the balance sheet side, we see a significant increase in cash balance. I mean that's the reason of the seasonality of the business and that shows as well in the accounts receivable, trade receivables bucket, which went down by roughly EUR 16 million from end of last year. And this is driven by the seasonality of the business we execute. I mean, fourth quarter is always the busiest one with highest number of invoicing. And then the cash will be collected in the first half year time. And then again, fourth quarter will be the busiest one.

We also see a reduction in the contract assets by EUR 3.9 million, which is a reflection that we have not been booking any major significant deals recently with multiyear deals with extended payment terms. So this is kind of contributing to cash flow, which is EUR 32.4 million for year-to-date.

When it comes to the equity and liabilities, there's very little movement on that in accounts payable or any other items. And I mean, this balance sheet obviously will be subject to change now quite significantly because of the acquisition of IAR and then that will be taken into account into Q4 finances then in February.

With these words, I will hand it back to Juha to go through the outlook and guidance for this year.

Yes. Thank you. Well, we don't see any changes on our long-term growth prospects in a sense that the -- we do see all our customers planning for new products. They're going to be launching new products. They are designing new products. We do see graphical user interfaces coming more and more into play. We see on testing that the more and more software is being developed that needs to be tested to be robust. So in that sense, we don't see a -- on a long term, we don't see a whole lot of change on that.

However, we do see that the -- on the short term, what we see in our customers, there has been lay-offs in our customer base on different regions and segments. Basically, on all our regions, we see that our customers are on many cases on a saving mode, if you like. And we do see that there is -- on embedded market, specifically, we see on consumer electronics, we see in automotive that there is a bit of a downturn on our customers on that.

Do we see that, that's going to continue in the long term? No, we don't. And do we see, like I've said before, that the -- is there a need to develop further new products, new product launches? Definitely. So the number of devices will be growing. The software will be growing. AI will be generating a lot of software. And whatever software AI develops, all of it needs to be tested because we never know what the AI does.

The market uncertainty, this is a, as I say, a great question that how long do we think that this is going to last. And as a matter of fact, I was thinking and I was -- we were kind of hopeful and we were -- well, not hopeful, we were pretty certain that the second half would be better. Well, that's not been the case. And we see that this market uncertainty on the embedded segment will definitely continue.

How long? At this point, I don't want to make that estimation. But the -- let me put it this way. I don't see it getting any worse. So we don't -- I think that the cost savings that we're seeing, companies are doing it and I don't expect it to get any more challenging than it is as of today.

So we estimate that the -- we gave a profit warning and we gave the new estimation for this year, 3% to 10% year-on-year comparable exchange rates and margin between 20% to 30%. And as you know, the large part of that delivery will come on the fourth quarter. We took a very -- well, if we were on a positive side, now we are -- our estimations, we've been on a conservative side on the -- that the -- how do we see on 2025.

As we go forward into -- if we look into the next year, like I said, the basis what we have on our -- how do we prospect market going forward, we do expect this market to get better. And we're kind of on a low end of this turn as we speak now.

Well, it's the usual I already mentioned that basically on our segments, the automotive, consumer electronics are suffering the most, defense and medical, maybe the least. So it's a good thing that we are on multiple different industries.

If I look on the regions, maybe U.S. been for us -- kind of varies that which region is the best. Probably U.S. was suffering a bit more than Europe, apart from the -- on APAC, we're doing better. And well, of course, when you think of it, it's kind of no surprise that the Chinese automotive is doing pretty well. But it doesn't kind of offset that how we're suffering in the other parts of the world.

So that's basically the outlook we have. And now if you have questions, please.

Felix Henriksson, Nordea. 3 questions, if I may. It sounds like your customers are reducing the number of licenses that they have in use. What is the reason for that? What do they tell you? Is it merely because of cost savings or is there anything to do with structural matters with developers becoming more efficient and companies seeing a lower number of licenses and that sort of thing?

Well, they have less developers. They're downsizing, right? So if we look on the IT market, I think it's 2 years back, there was a shortage of developers. I mean, everybody were anxious to get developers. It was very hard to find them. And that was kind of a bottleneck for IT company growth.

If you look now at the job market, I mean, there are developers unemployed basically at this point of time. So now it's kind of the opposite. If you look at the big companies in the U.S., for example, that how big lay-offs there's been during the course of the, let's say, 1.5 years now. So that's one of the reasons.

Then the other is the overall cost awareness, let me put it this way. So it was very typical for our customers that whatever they had when they renewed, they renewed the same amount with the same deal like a 3-year deal and so and so many developers. Now they are calculating exactly that how many do we need and they try to survive with the least amount of licenses.

And then when they start new projects, when they are starting a project, they started with as small amount of developers as possible and try to go forward like that, whereas before, they started in a bigger scale. So that's where it comes from. But like I said, the churn has not increased.

So we still have the same customers. They continue their development. They are just more cautious on the spending. And also the number of the deals we do, so the number of new customers, that is actually even increasing than what we've been doing before.

And secondly, what about quality assurance? Did that grow in Q3? Because it sounds like you seem to think that there's a bit of a structural tailwind from AI in that area. Is the demand on that front any better than for traditional Qt developers?

I would say that our QA business is the license sales is suffering a bit same things than on Qt. So the growth on QA has been slow as well. We've also -- well, testing is kind of -- it's -- development is something that you either do development or you don't. Testing, you can always not to test and hope for the best. So you don't have to test everything and completely and so on and so forth. So that is -- for customers, it's easier to adjust on a testing bit than on development bit. But I would say that our license sales has been sluggish, both on QA and Qt.

Were quality assurance sales down year-on-year?

No, it's not down, but it's – yes, same roughly -- follows pretty much closely to what Qt is doing.

And then regarding the one-off costs relating to the IAR acquisition, they were for the full year, at least a bit higher than what I had anticipated. Will there be any one-off costs in 2026 from that?

2026 on IAR?

Yes, these one-time costs.

I don't think so, but you never know if there are surprises that we need to close down something or do something extraordinary that we are not anticipating. But I mean, these one-off costs are -- well, this money so far has been flowing mainly to bankers. So what can I say? It's a big amount.

But the -- so do I anticipate any one-off costs on 2026? Well, at this point, I'm not aware of. But of course, if there would be something that we would totally write-off, then there would be, but we don't see that as of now, no.

Antti Luiro from Inderes. I could ask on the lack of large license deals and kind of the drivers behind that. What -- do you have any sort of idea where that comes from? Why are larger deals not coming in?

Well, they are being postponed. Yes. So they've been pushed forward. The big projects, they are waiting to start. So a bigger deal usually comes. So in our business, the first deal is always a smaller one. Then there is -- the people start developing, then there is the expansion and that comes a bigger deal. And there have been postponements on those projects. They've been kind of -- well, put on hold is a wrong word, but they continue with a smaller amount of developers, they don't scale up. That's the -- so the projects are not going away, but they go on a lower flame, so to speak.

Right. So does that mean that they are basically extending the time lines for getting those products out or...

Yes, they're doing -- yes, basically, they're doing with less, yes.

Okay. I could also go back to the discussion around having less licenses sold to the same customers and then optimizing the amount. Drilling down to the AI effect because you could assume that developers are getting more efficient every year. You could see a recurring effect that companies downsize every year because they can do more with less. Do you see that as a realistic risk for the market and your license sales volumes or do you think that the customers might just, at some point, expand the scope of their products because the AI can help them do more?

Well, if I look at AI as of now, where I see that -- you can use it is that on the web technologies or mobile technologies. So if you want to do a simple mobile app, for example, you can have the AI helping on that. If you want to do kind of simple things that are very easy to verify that what they are, yes, you can do that with an AI. If you're doing any safety critical functional safety type of things, you can't -- or let's say, that the infotainment system on a car it's a very complicated system. AI can't do that.

Will it be able to do that some day? Well, of course, you can take both views. Some people say that in a few years, we don't have to work anymore because AI is doing everything and other people are saying that, well, maybe not. So I think that on embedded before the AI starts doing so much work that there is really less need for developers, that's kind of down the road and let's see how that goes.

On top of that, AI is not very reliable, as you know. So as of today, you can do simple things with AI. On testing, for example, you can do -- you can have test scripts written by AI. And if that's not complete, well, then the test is not complete, but it's not end of the world. Those type of things you can do. And you can use -- it can be a helper.

But do I see that developers being so much more efficient that there'd be need for less on embedded side? Not really. Do I see that what's really affecting our customers is the lack of demand and their profitability is under pressure and they need to do less. That's more of the reason as of now.

[Indiscernible] Private Investor. So my question is about the competitive landscape. What's going on in there? And are you seeing any sort of advances in the competitive technologies that might be impacting the license volumes?

No. Yes, that's -- and I can elaborate on that. So we do have the usual suspects. We do actually see the -- I don't know if you've heard me speak before, but so we have Android on the IVI on the automotive, but there is not a whole lot of change.

There is Flutter that the Flutter was coming and that was kind of the recent emerging technology came from mobile and web and they were kind of making inroads into embedded. We don't see them that much anymore. And as far as I know, they are more in a maintenance mode nowadays and they've cut back on their development.

We do see Unity. Unity is very good on the 3D. And on advanced 3D, if you want to have very nice-looking 3D, then Unity is -- it's a good choice. However, it consumes more hardware. So you need to have more powerful hardware, more expensive hardware. And it's fairly expensive on the -- per item cost on Unity is much higher than on our pricing, for example.

So what we now see is that on kind of good times, we saw Unity being used also on kind of a middle tier automotive or middle tier cars, whereas now we see that customers are looking at cheaper offerings for low and middle tier and Unity can be used only on a high tier vehicles. So basically, this cost pressure is, on that sense, it's working on our benefit rather than and more against Unity.

So we don't see a change over there. And we don't see -- at this point of time, we don't see any new technologies that would be coming into our territory. And like I said before, we don't have any customer -- our customer churn is the same that it's been for years. And that's kind of a natural, I would say, natural churn that the project ending and whatnot. We don't -- we haven't seen that and we haven't seen any reduction on the number of the deals we're making. So we're selling as well as before, even a bit better on a number of deals, but the actual sizes are smaller.

Waltteri Rossi from Danske Bank. First, on Q4, as the problem this year has been especially related to the large deals. Do you expect Q4 sales to be under more pressure actually compared to Q2 and Q3? Because I would assume that there is even more of those large deals.

Yes. And so, yes -- well, yes. And when we gave our estimation for our full year guidance, we kind of took that into account that there will be less, yes. So we were more conservative on that one, especially for that particular reason.

All right. Then about the license maturity mix once again. Would you say that the 3-year license lower-than-expected renewal rate has had over or under 5% impact on this year's sales?

How much is 5%? I would say that on -- it's somewhere between EUR 3 million to EUR 5 million on the third quarter is the effect, yes.

On the third quarter?

Third quarter. I was trying to calculate what percentage, but yes, somewhere between that.

And how much would you say year-to-date?

That figure I don't have out of my head. But I knew that you're going to ask, so I looked at Q3 specifically.

All right. Last one about the underlying market conditions. Do you expect the market to improve still this year or are we going to have to wait until next year for that to happen?

Well, yes, I was more hopeful when we were here on the beginning of the third quarter, I was expecting a -- obviously, I was expecting a better third quarter. That's for sure. I was expecting the -- and that didn't happen, right? And so we are now more conservative on that and we don't expect much of a change on the fourth quarter and hence our guidance.

Are we going to see better next year? Well, at some point, this starts turning for sure. And so yes, we are expecting -- we're kind of seeing that it doesn't get any worse than this, but when do we see it turn to better, on what particular quarter that will happen, it's -- well, I can't say that. And as you can see from our fourth quarter guidance, it's fairly conservative. So we don't expect any big turn this year.

Jaakko Tyrvainen from SEB. I could continue on the AI and the related productivity gains on software development. Are you seeing such kind of a trend or pattern that proprietary development would become, again, a bit more appealing for the clients or do they still need to trust in some sort of tools when developing the embedded solutions?

Yes, they are definitely going to be using tools. That's for sure, yes. And I think that the -- like I said, on embedded development, you can use AI for writing test scripts on embedded development. You can use AI on design phase to give you trade ideas that what could be different kind of different kind of solutions and ideas, creativity ideas. But the actual coding on embedded, I don't see that the AI will be there for anytime soon to replace the developers. No, we don't see that risk.

But on simple tasks, you can -- I've used the AI like that it's a great buddy -- it's your best work buddy. It can help you out on many – automating many simple tasks and whatnot. But the actual coding, I don't see that on embedded for the foreseeable -- in many, many years that would change. I mean you can use AI doing simple mobile apps, for example, now.

But -- and of course, there is also the other side of the room saying that it's going to advance so quickly that we're going to all be surprised. Well, usually on these new things, as you know, is that when the change starts happening, it takes many, many years and people kind of even forget it and nothing happens and then the change comes later on. But on this embedded coding, not in the -- well, foreseeable future is always kind of a scary word, but not in the coming years, let's put it that way.

Okay. And still using the word of AI, have you included any kind of AI features in your own products? And has that improved the customers' productivity so much that they need less licenses perhaps? So are you basically cannibalizing the renewals by including such features?

No, no. I mean these embedded systems that people build using Qt, they are very complicated systems, very big platforms and whatnot. So no, that's not the case. I think what we see is that the -- well, first to your question, yes, we utilize AI in many aspects in our products.

Is that downscaling the number? Is that affecting less license sales? Definitely not. We do see that there is -- our customers are feeling the pain that they are not selling their products as much as they would like to and they have cost pressures, and that's where -- that's what we are seeing. And those cost pressures are not only that they're selling less. Many of our customers are having high tariffs, for example, selling stuff in the U.S.

I mean, like the -- well, I don't know what's going to be the South Korean car manufacturers' tariff, but it used to be 25% before. Trum now visited and them, they've made a deal. I don't know if it's now 15%. But I mean many, many of our customers are having a 15% cost increase on stuff they are selling to U.S. So -- and then there is a bit of an oversupply on some industries and whatnot, and this is causing the overall friction in the -- on embedded business.

Okay. Then finally, on the license maturity mix, you mentioned that customers are perhaps now choosing a bit more on the 1-year licenses. Doesn't this imply that you should have a pretty nice growth in your 1-year license base for '26? And could you elaborate a bit what type of a growth you are seeing in renewing 1-year licenses when going to '26?

Well, yes. Of course, yes. I mean, on a short term, it affects us specifically. As you know, that our monetization model is that if you buy a 3-year license, we book it as revenue at that point of time as one goes. So if people are buying more 1-year licenses, we book it at that point, which is obviously less than a 3-year license, right? But then the good thing is that the 1-year is going to renew next year. So obviously, it's going to help us, absolutely.

And how much larger is the base now versus a year ago?

Well, I can't answer that. But I mean, the logic is right that it will help us next year, of course.

It's Matti Riikonen, DNB Carnegie. A couple of questions. First, regarding your cost base at the moment. It's now clearly more elevated because you have done growth investments, but you haven't got the growth. So you are going with a pretty heavy cost load into 2026. So how are you going to tackle that? Should we expect lower margins in '26 because of that or do you think that just operating leverage would work in your favor in '26 to basically set it to the right path?

Yes. So you should not expect lower margins because of that and the operating leverage will fix that. And in the case that, let's say, that this would be a permanent situation that the revenue will never ever grow, obviously, then we would not have growth investments and we would get -- we would still get the profitability, right?

Now the one thing that will affect our profit margin next year is obviously IAR. And that effect, I'm not fully aware yet and it depends on how aggressive subscription change we take. If we take very aggressive subscription change to IAR, then the revenue might be flat or even decreasing, which would mean that the IAR profitability would be diluting our group profitability.

I will give guidance to that once we've made those decisions and I know that what the effect will be. But the IAR profitability traditionally has been lower than Qt. So obviously, there is potentially an effect. Having said that, IAR profitability will obviously improve because they are not any more listed company and whatnot. So we're going to get some savings out of there.

We have some ideas over there that how can we improve some of the performance on revenue even if the subscription is over there. So that remains to be seen. But overall, that is the moving part over there. I would not be worried about the Qt profitability. And by the way, of course, we're going to have one-offs the same type on the fourth quarter than we had on the third quarter.

Okay. Now regarding Q4, you have a fairly big hockey stick model for Q4 to meet the full year numbers because in the first 3 quarters you haven't grown at all basically. So when the customers know that and they kind of want you to give them discounts at the end of Q4 to close the deals this year, not next year, so usually that creates a psychological kind of challenge. So is there a greater risk that if you stick to your discount policy and don't give any discounts then there would be a bigger share of those deals being postponed to '26?

Yes, that is a risk, yes. Of course.

Right. Then a question of your forecast model. Throughout this year, we have basically been disappointing in each quarter. And your sales forecast model looks to be kind of broken or it hasn't worked like it did in the previous years. So have you scrutinized what's wrong? And how can you improve the accuracy so that going forward your forecasts would be a bit closer to reality?

Yes. So we have 2 ways of looking into the forecast. The one is that actually starts from the bottom up. So the sales -- each salesperson, they have their pipelines and they make the forecast. They make what is their best case and what is the most likely case. And it's been built upwards from the pipeline and the sales makes their forecast through that.

And then we have through finance, which is more like a scientific model that they've been looking at the pipeline over the history and they've been -- they have forecasting model that this pipeline is likely to get into the sales, kind of an AI approach. And both -- basically both have been broken this year.

So what we did -- so if you look on the third quarter, for example, when I was here telling you what are my expectations on the third quarter, we had a pipeline and we had a forecast model done by the sales that this is the most likely out of this pipeline. And we do have -- and the same thing from finance. So we know that if this is the pipeline most likely with these multiples, this is how it's going to turn into sales. And that was not the case, right?

And so when we look into more detail on the big bulk of things, that's how it's been moving around roughly there, but less. And then these bigger deals being missing over there. So if we look at the end of the day on these numbers, it doesn't have to be -- the deviation doesn't have to be that many millions, right? So if you're missing some of the bigger deals over there, then all of a sudden, you are on the -- out of the scale what you were forecasting. And that's basically been the -- what's been misleading us, say a bit. So we haven't been closing the pipeline as we did in the history.

And when you look what's been the reason behind on that on the pipeline, we've been closing the deals on the pipeline, but the deal has been smaller. So the average deal size has been smaller. So have we been able to forecast that we have this amount of deals, are we going to close this amount of deals? Yes, we have. We've done even a bit better than we've been expecting. But the deal sizes on those pipelines, they've been smaller. So the deal has been closed, but on a smaller amount that's been expected. And that we need to adjust going forward in our forecasting. So our customers have been closing the deals, but smaller than we've been anticipating.

And then your follow-up question is that have we been giving discounts so that the deal has been shrunk? No, we haven't. It's been less licenses basically. And that's where we've gone wrong. So now on a Q4 or at the -- when we saw what happened on Q3, we took a more conservative look for our Q4, because in our old world, if we look at what's our pipeline for Q4, it's big enough for a bigger sales than we have, but we took a more conservative view how that pipeline is going to be closing.

All right. So that was actually partly an answer to my next question, which was that, did I really hear you correctly saying that you think that your guidance for Q4, and of course, this year is conservative?

We think that if it goes like the Q3, then this is the best guidance we can give. If we look on the pipeline and if we look at the -- we take the older history kind of the multiples, then it would be conservative. But now we've seen 3 quarters that the pipeline doesn't close as it used to be.

So I think that this guidance that we are now giving is very best we can give. And I think that that's going to happen given the fact that we are using now the multiples that be into reality on the second and third quarter. So for the old world, it's conservative. For this world, I think it's spot on.

Jaakko Tyrvainen from SEB still continuing. In the aftermath of the, let's say, Q3 and perhaps the year-to-date performance, which has been the most kind of a disappointing revenue stream for you? Has it been the renewals or the new license sales or the quality assurance tools or the distribution license?

Well, new sales, definitely. So new sales has been the -- that's been lower than we anticipated. We've had our challenges on renewals, but I'm very happy with our renewals team. They are doing a magnificent job. And of course, they do have this challenge that people, when they renew, they're going to go through each licensees and there are reductions on some cases, but our customers are renewing.

So the projects are continuing. They are not resigning. They are not churning. They do have a pressure on the renewals, but less so. But new sales being the biggest challenge for this year for sure. And if I look on Qt and QA, I would roughly say that the same challenge.

And then finally, I know it's a bit difficult to have the apples-to-apples comparison in your case, but could you elaborate a bit what is the magnitude of average price hikes during the year?

Average price hikes?

I believe you have hiked prices.

Yes. We have -- I would say that not significant. We've increased our distribution license. It's kind of -- it's a -- there are different buckets in our distribution licenses and we've changed the pricing on the different buckets. But I would not say that not a huge impact on that, no.

There are no more questions in the room. I think we can check if there is anybody on the line. No. So we can conclude the Q3 results and maybe some final remarks.

Yes. Thank you, everybody, for great questions. I think we kind of covered pretty much everything. Like I said, we do have -- I want to emphasize the fact that we're doing the number -- the number of the deals we're doing is looking good and promising. It's actually bigger than we've been experiencing so far.

What we do see is that our existing customers and new customers are very cautious on buying the number of licenses, and we've seen deal sizes decreasing. We haven't seen any decrease on our churn. And so we continue with the same customers we've had. We don't see any new technologies or competition coming into the market on that effect.

How long do we think that this embedded market downturn will continue? Well, definitely, it will continue into Q4 and going into the next year. Do we think that we're kind of on the bottom of the downturn here? Definitely. And do we see that we're going to be going forward upward from here? Yes, but the timing is a bit of a question.

Do we think that -- are we concerned about the next year profitability because we've been investing on a long-term growth for next year? No, we are not. And we do expect the return on the normal profitability that you've been expecting to see from us.

And like I said, we're very thrilled about the IAR acquisition. We are now going through with them, different customers, integration facts and whatnot. We are preparing a budget for next year. And depending on how aggressive we are going to go into the subscription change, that depends on what's going to be the IAR profitability next year and how that will effect on group profitability.

So that is the moving part and we're going to get -- give you more info on later once we've concluded that work. I don't expect that to take a very long time because we need to get going in the early next year. So all in all, disappointing Q2, but we are very -- we think that the future looks better and we are in a good move to execute in -- towards better performance on the top line. Thank you.

Welcome to QT Group's Second Quarter 2025 Results Presentation. My name is Heli Jamsa, IR lead. And with me today are our CEO, Juha Varelius; and CFO, Jouni Lintunen, to present the results.

After the presentations, we will have a Q&A. And considering the number of analysts here with us in the studio, we might not have time for questions from the lines. Without further ado, please, Juha, the floor is yours.

Thank you. Thank you. Good day, everyone. My name is Juha Varelius. I'm the CEO of Qt Company, and let's get to the agenda, which is the pretty usual business highlights. Then Jouni will talk about financials, and I will finish up on the outlook and guidance for 2025.

If we go into our Q2, well, it was not good. You may call it soft or not good. I call it not good. We were, of course, expecting a bit better quarterly sales, although we must say that the comparable quarter was very difficult.

Last year, we had a very big one-off deal. And so the comparable revenue this year was tough to beat, yet we were expecting a bit better result. Our revenue decreased 3.9% and on comparable currencies, 0.5%.

Of course, that is a fairly big difference, and we all know that that comes from the dollar exchange rate. A large part of our sales is in dollars, so that's affecting. Our EBITDA margin was also 22.7%, which is a bit less than we usually get, and that comes together with the sales.

So what all affected on this, we said already in Q1 that the global economic situation and these trade tensions, they are affecting our customers in a way that if we think about Qt, it always goes into a project which is an investment. And this uncertainty in the market has caused the many of our customers are consider their investments, not on a way that they should do it or not, but maybe more on a size and timing perspective.

We can see this particularly in automotive, pretty much everywhere else, apart from China, where automotive is doing fine. But on the Western markets, we see that the automotive industry has been slow.

Basically, in our terms, it means that there are a lot of budget freezes and hiring freezes and such. So the decisions are being delayed. And then we see on the defense and medical sectors that there, we don't see that much of that kind of hesitation.

Defense specifically is investing pretty strongly at the moment. So the purchasing behavior of our customers is currently somewhat cautious. We saw this particularly in Americas and Europe, and it was affecting both the new customer acquisition and customer expansion, whereas the distribution license revenue went as planned and grew pretty much as we were expecting.

And that's kind of the theme of today, that the new projects customers are thinking and maybe delaying the decision-making, and are very cautious. We see that on developer license sales, whereas the distribution obviously is something that the decision has been made long before this date, and the products are rolling into the market.

We have personnel now 915 as of June 30 year, an increase of 78. And, well, this is, of course, for future outlook, but we're not changing our long-term investment plan in any particular way.

So we see that this softness is more or less what is happening at this point. Well, this was already announced at the World Summit that we have started developing an e-bridging technology. Not going into more detail on it. It basically means that we are expanding the Qt user ecosystem.

And when this ecosystem is growing, obviously, it gives potential opportunities to sell the commercial licenses as well. When you think of this, the financial impacts will start coming in slowly, and then they gradually grow.

So I'm already taking the first question away, or one of the questions that probably is going to be coming that what is the financial impact. I would say that next year, I wouldn't put a whole lot of financial impact on this at all.

World Summit once again was a big, big success in Europe. We had 800 participants, and the customer presentations, industry leaders, Metsohaman, Siemens, Gardenswartz, Woo, and so on.

So, just to demonstrate that the community is very healthy. There is a lot of excitement, and there are a lot of big companies using Qt, but that, of course, has always been the case.

Feedback from the customers on the product is very positive, actually on all of our product portfolio, not only Qt but also the QA products. And we don't see any changes in the competitive environment in that sense, so the only headwind we are experiencing at the moment comes from the market.

We also announced a few weeks ago that we're going to make a public cash offer on IAR Systems Group, which is a Swedish company based in Uppsala. And this goes into our growth strategy, which we've been communicating that we are looking for products that will add to our current portfolio.

If you think about IAR's products, if I simplify quite substantially, they go into when people are starting a project, they are choosing the hardware. That's when IAR products are coming into play. Once that happens, then the next phase is that, well, what kind of software we're going to be building with what tools, and then comes the acute offering.

The obvious cross-sell right in the beginning is particularly Axivion in that hardware selection. So QA products go there right away. So this means that our customers can buy more from one shop, our offering expands in that sense. And it also means that this is earlier on, on the project decision-making kind of gives a lead generation to Qt, if you like, and also gives the cross-sell opportunity and enlarges the addressable market.

So this is a conditional offer, among other things, 90% of the IAR shares, and we'll see, I think that in the October time frame, we will be wiser to see that what is our current situation and where this deal is going, but not before that. So the offer is still out there, and let's see how it goes.

The Board of Directors of IAR are supporting it. We have some major shareholders that are supporting it. So we are hopeful that we'll be able to conclude this deal during this fall.

But at this point of time, it's a public offer. But we see that this combined company would benefit. We would be stronger together, and this would add to our portfolio.

One particular thing, if you've looked from the IAR websites there, one point on their strategy has been that they are now on the perpetual licenses and their target is to go into subscription licenses, but they've started it, but it's on a very early phase.

And that's, of course, something that Qt has already done. So we think that with our know-how and IAR's management execution, we can combine this and accelerate maybe even the shift from perpetual to subscription licenses. And that, of course, would then affect the top line of IAR.

So that's very briefly what happened on Q2. Jouni is going to talk about the financials a bit, and then I'll talk about how the rest of the year is looking like.

All right. Thank you, Juha, and welcome from my behalf to the earnings call of Qt Group. Juha quite well described already the environment and the net sales development as discussed, we were suffering negatively from the development of USD and also, to some extent, Japanese yen, not only in second quarter, but also the whole H1.

We reported negative net sales development of 3.9%. It was flat on constant currencies, negative 0.5% revenue growth. For the first half year, we are reporting flat revenue. And there, in constant currencies, we were growing 1.4% over last year's.

You see, there is a EUR 0.5 million other operating income bucket. I mean, this is coming mainly from the tickets sold to the Qt World Summit that we had in May in Germany. And so this is kind of an income from that event.

You see as well that the materials and services bucket is higher now for 2 consecutive quarters. This is because we are having some single projects where we are using more external services for our customer consulting projects than the run rate is.

However, that wouldn't make any difference on the product profitability point of view for consulting projects. It's just another bucket of expenses.

Our personnel expenses are up by 7% in Q2, 8.4% for the first half year. And this is aligned with the personnel headcount development. We are up by 78 employees for the last 12 months' time.

We are up by 27 in Q2 isolated, and we are continuing the investments into growth areas. We are having more employees into R&D, namely in the quality assurance side and also to the customer-facing organizations.

Other operating expenses, you see as well an increase by roughly EUR 4 million for the first half year. And this is driven by not only the Qt World Summit in marketing side, it's a big event and adds cost. And last time that event was held was back in '23 in Q4. So there's a different comparison period then.

On top of that, we are having more professional services expenses for our R&D projects and also business development. We are having some increase in the recruiting costs in HR side. And also, there are project costs relating to the IAR acquisition proposal that we had booked already for second quarter.

So this all adds up to the EBITDA margin of 22.7% or EUR 11.6 million for the second quarter. And for the first half year, EBITDA margin is 20.4%, down by 10 points from last year, driven by not good revenue development.

Amortization remains unchanged, and this is coming from the amortization of the acquisitions of Axivion and Froglogic back in '21 and '22. So no change in that. And this leads to an EBIT margin of 19% for the second quarter and EUR 9.6 million.

The negative or unfavorable development of exchange rates, it does not show up only in the revenue line, but also it shows in the financial items where we have intercompany balances and that impact now or the negative kind of impact of that is roughly EUR 1.5 million now for the second quarter.

And our effective tax rate is a level of 19%, which has been the run rate during the past few quarters already and is not expected to change significantly going forward. Net profit for the period is EUR 6.7 million or 13.2% and EPS is EUR 0.27, down from EUR 0.53 last year.

We have increased our cash position from 12 months ago from 6 months ago, quite significantly, and the ending cash balance is EUR 91.5 million. We have been able to reduce the accounts receivable somewhat, and that's EUR 41.4 million, and that's pretty much aligned on the revenue and invoicing development for the quarter.

There's also a reduction of the contract assets by EUR 4.1 million from the end of '24. And this all leads to positive operating cash flow, which is EUR 29 million this year, somewhat up from last year despite the softness in the revenue top line, and also specifically the profitability side.

There are not too many changes in the equity and liabilities. Interest-bearing liabilities are somewhat up from end last year, and that's coming primarily from the lease agreement bookings that we have now in the balance sheet.

And the other short-term liabilities are down by EUR 4 million from end last year, driven primarily by a reduction in tax liabilities. This is, in short, what I wanted to say: talk about the financials. And now I hand over back to Juha to go through the outlook and guidance for the year.

Yes. So, well, Q2 obviously was a disappointment, and we had the first half of the year, we've been having this uncertainty.

I think that what it looks like now, we see that the development at the moment is that the second half will not be as gloomy as the first half. So there are the questions around tariffs and the dealmaking and whatnot.

So we do expect that the environment will be getting better. Well, in the long term, we don't see any changes. Actually, pretty much everything that we use and see will have some sort of a graphical user interface and a touchscreen, and whatnot, and the amount of software is increasing.

So the demand for our product is still there, and our products are best in the market. So I don't think that that will change. We don't see any development over there. Like in the early days, we were talking HTML5s and flutters and whatnot. So they kind of come and they go, but they never come to challenge us in a very big, real terms in that sense.

But the economic situation, like we already said in the early of the year, well, it's slowly getting better. But it's definitely going to be a challenge so far, specifically in automotive and a couple of other industries. There's really been a slowdown.

Automotive will probably continue its recovery even to the next year, but it is getting better. So we keep our guidance the same. So the growth is between 10% and 20% year-on-year on comparable exchange rates.

And then, of course, comes the next question that how can we do that when the first half has been so slow? Well, basically, like you all know, our sales cycle is meeting a new customer and closing a deal, that's like a 6-month period of time.

So if we give guidance like this, we pretty much have to have the pipeline already in place for the second half of the year, because if we don't have time to do the sale and close the deals on time. So this guidance that we see now is roughly the pipeline we already have in place.

So if we close the pipeline in the same ratios we've historically been doing, that should be the end game over there. And the same applies that the busiest quarter is, of course, going to be the fourth quarter. That's what it always is.

And if we hit those numbers on the revenue, then the profit margin is going to be between 30% and 40%, probably more on the lower end, of course, now given the first half of the year. But that's where we see it going. And our EBITDA always, well, it's very heavily driven by the revenue, of course, because we are in a licensing business.

So that's basically the guidance we have or the basis for the guidance we have. In general, if we take away the big deals in some period of time and we look at how the business has been performing, that's also a bit over 10% growth.

So in that sense, we do believe that we can reach those numbers.

On top of that, like I said, I think that the uncertainty in our customer base is slowly decreasing. It's not increasing as it has been when the tariffs have been going from 0 to 50 and whatnot. But now that uncertainty is going away.

The biggest challenges we have had, like I said, in Europe and in Americas, whereas the APAC has been more stable, and that's largely because China has actually been performing pretty well on the markets where we are concentrating, for example, the automotive in that sense.

So that's been more stable and more investments over there, apart from what we've been seeing in Europe.

So that's overall the big scheme of things. We, of course, always continue looking to increase our operational efficiency. And I believe that we can become even better on that as well.

So at the moment, we feel that we can meet those target numbers, although very challenging year so far, and I think it's going to continue to be a very challenging year. So this definitely not been an easy year in any respect.

On the IRA side, we'll hope that we're going to be able to close the deal during this year. But like I said, it's still a public offer. But if we can do that, we think that we can add value quite substantially when it adds to our product portfolio. We can do cross-selling, and we can do the subscription change.

So we think that going forward for the next couple of years, together with IRA, would be a very good addition. But let's see how it goes and hope that it closes this year.

Well, there you can see the old slide, but we have a lot of nice brands as customers. And I bet Matti Rikkonen is going to have his first question.

It's Matti Rikonen, DNB Carnegie. A couple of questions. What kind of changes are you seeing in your customer behavior right now?

You said that Asia customers have been doing relatively okay, Western customers far from okay. What are the changes that the customers, what do they say to you? So has it been that they are just postponing things until we get some clarity of the tariffs? Or have they said that, no, we will not start any new projects this year or next.

So we won't be needing any software in the near future, and everything between those. So what kind of feedback are you getting from your customers? And what makes you so confident that the actual pipeline would be closed by the end of the year, even though the first half has been so particularly weak?

Yes. Well, I think that in APAC, as we slow down, they are putting more gas. So they are investing and there is a lot of activity over there.

And whereas we've seen in the Western market, customers hesitating, there's been a budget freeze that, hey, let's not hire anybody for a moment. Let's postpone these projects and let's see where it goes.

I would say that, will there be cancellations of projects? Well, not likely because our software goes into new products. And if our customers stop launching new products, then that's kind of the end of the story.

But what our customers are, of course, thinking is what might be production volume they need to be doing? Are they going to be having a market in North America or not? Are they going to be having a market in China and on what volumes? And while there is a lot of uncertainty, then the projects are postponed and pushed forward.

And that's possible in our business because the on Qt is usually going into new projects that have not yet been started. So starting delaying an investment on new product development, that's always possible, delaying a production that is already going is very, very difficult and very seldom happens.

So will these projects go on, and will the world go on, and will there be software development on Western world? Yes, they will. Of course, they will. It can't be stopped basically because that would mean that there would not be new product releases, facelifts and whatnot. So in that sense, I'm pretty confident on that.

On what volume it will go forward. So in many ways, the second quarter has been a bit like COVID type of a thing that the things are kind of halted for a while, but I'm certain it will go forward because life goes on.

And these companies, our customers, they are building products, they can't stop that basically, but they can delay projects, and they can make them smaller and whatnot. So that's kind of the situation. And our customers, as you can see over there, there is LG, Bosch, Hyundai, ABB, Ford, and so on and so what, huge companies.

So they will also exist next year and 5 years from now, at least most of them. And so they need to be developing things further. That's a very good question. It's one thing to have the pipeline, then it's another thing to close it, as you're saying. So we do have the pipeline.

Now we need to close it. Basically, that's what it takes to make the rest of the year. Can we do that? Well, I think we can. And of course, we go through each and every deal, and it's distributed at the end of the day to each and every sales guy who is making their own predictions, and it's built from bottom to up, and they make their own estimations.

And then we have the historical data that we looked at on how to close the pipeline. And if all those points to the fact that this is going to be the end game, I mean, I don't have any very good reason or compelling justification to say otherwise than that. So that's what it's based on. But of course, that's the risk basically, that it moves forward.

Then, regarding the European customers who were facing quite harsh tariffs or that was the initial plan. Now we seem to be getting some kind of truth with the U.S. What are your European customers telling you about their incentives to start investing again. Is that now more positive? Or is it the same as before?

It's more positive, but the when uncertainty happens, usually how companies behave is that they start delaying decisions that they can delay, and they start preserving cash. So they start saving cash for the rainy day.

And that's what we see that people are very cautious with their spending, and that's what we've been seeing. So they calculate very carefully when they do renewals, they calculate very carefully that how many licenses they need.

They are cautious on that, that how can they be most effective that in every way. So they are cash cautious at the moment. And that's, by the way, the same thing that have it on COVID that everything that was possible to delay started delaying and then the company started saving cash.

Well, at the end of the day, the companies that want to be successful on the long term, they do have a strategy. And based on that strategy, they make investments because that's the only way to grow.

If you preserve cash and you don't make investments, you're out of business, then the question is that is that going to be a year or 10 years or whatnot. But all the companies that want to be successful in the long term, they need to have a strategy and they need to make investments because otherwise, saving cash it's not a sustainable strategy.

And so all our customers are actually in a business where they do make investment decisions and they do make investments. So in a longer term, that's where they're going to get. But they are now on the first half, that's been slow.

I mean, they've been delaying. They've been very cash cautious, but that's not a sustainable long-term strategy for them. And they know it, of course, it's very natural.

Then finally, what will you do with your costs if you see that the top-line growth that you are now expecting doesn't materialize in Q3, Q4?

So you have earlier been fairly skilled with keeping costs down when your top line doesn't increase by that much. So, do you see that that is still possible? And at which part of the second half would you start considering to radically taking costs down?

I don't even think about it because the top line will go up. Well, of course, I mean, I run a business. So if my top line doesn't grow, then I'm going to secure the bottom line.

But on a longer term, I have no doubts that we will be growing. So if I look few years down the line, we're going to double our revenue, we're going to double our revenue, no doubt on that. So, would that make sense that on a weak first half, I start changing and saving, that would be like going up and down.

And we are in an embedded business where development processes are long. The development cycles are long. So it doesn't make any sense in our type of business to start acting on based on a quarterly or first-half, weaker-than-expected performance in that sense.

Having said that, I mean, rest assured that if we were to hit a situation where we would not grow at all, we would see that the revenue is going to be flat or growing 5%, then of course, we would adjust our costs in a way that we would still have a very good profitability. And with very good, I mean, where we are as of today.

But if we take like a few-year view from now, we're going to be increasing our revenue substantially, no doubt about that. So in that sense, and we're definitely going to be adjusting our costs on a quarterly basis because that would be kind of making decisions delaying, making decisions delaying, and in our type of business doesn't make any sense at all.

So our own product development cycles are fairly long. Our customer product development cycles are very long. So on these kinds of small hiccups, we need to look beyond. Having said that, this is no medical business where in the medical business, they look beyond few year recessions because their development cycles are like 10 years.

But we're somewhere in between, but we're not definitely a web-type of business where, on a monthly basis, we adjust costs. I know I didn't quite answer your question, but I don't think that I need to start slashing costs in the second half, let's put it that way.

Waltteri Rossi from Danske Bank. Why do you think that your business has been so heavily impacted by the short-term macro environment, even though the development projects should be more immune to that? And do you think that it's more related to the tariff uncertainty or actually longer-term uncertainty in the automotive industry?

Well, yes, I guess we got most slammed in or the worst slam we got was from the automotive, obviously. And I think that the biggest one over there is tariffs. That's for sure.

On some manufacturers, it, of course, affects the fact that for some Western companies, at the same time, there are tariffs. They've been facing the fact that there is fierce competition in China.

So they've been many Western companies have had a big, big market share in China, and now they've been losing that quite heavily. I think I said a few years back that if development continues like this, we're all going to be driving Chinese cars, and that's what it definitely looks like. So it's both.

Can I quantify what is what? Hard to say. But of course, you know that there have been Western car manufacturers that they've done write-offs worth billions of dollars only on their Chinese operations. So clearly, they are affected by both.

Now we are in a situation where there is overproduction. So China is producing more cars than it can consume domestically. And now the question is that where are those cars going to be landing? So at the same time, there is an oversupply of the product, and then there are tariffs in the U.S. And the tariffs are kind of twofold as they are also affecting the U.S. manufacturers because they manufacture so much subcontracting in Mexico and Canada. So it's kind of hitting the whole industry pretty high.

And then it comes down to Tier 1s, and Tier 1s are also our customers? So we have Tier 1 customers that are suppliers to the automotive industry. So that's probably the worst industry we have.

And then on consumer electronics, been a bit of a headwind as well. And then some other industries, like the defense has been doing fine, but it can't overcome the whole portfolio.

So I mean, if you want to have a silver lining on all this, one of the silver lining is that thank God, we are in 70 different industries because if we would be automotive only, I mean, then this would look really bad.

And how much do you think that automotive is going to be of your sales this year, roughly? And how much is China from that figure?

Well, we don't publicly say those. I think that the automotive industry has always been between 15% and 20%, now probably going to be on the lower end, obviously.

China figures, we haven't released publicly, but growing fast, started small, but now growing fast. And there comes the next obvious thing that is that good or bad on the long term.

But long term, you think that you can compensate the declining Western automotive sales with.

Yes, yes, yes. Of course. Yes, yes. And the Western automotive sales, I mean, they are now delaying things because they don't know that the -- I can understand that if you're in that kind of a situation and you think that you're thinking that what would be my production volume.

What's my volume for Europe, what's my volume for U.S.A., and what's my volume for China in this particular situation? It's very hard to decide. But once you've decided that, then that's the volume you're going to produce.

So it's a very difficult environment to make decisions because they need to estimate that what's going to be the end user volumes. And in this current situation, it's tough. I mean the worst case for the European car manufacturers, of course, is that instead of being global, they are manufacturing cars only for European market. That would be a pretty big change.

I don't think it goes into that. So the decision-making environment for them has been very, very difficult during the first half, with so much uncertainty. And yet you have to make decisions that you have to live with like 5 years going forward.

So if I would be in that position, I could delay, I would delay my decision-making for sure.

Still a few follow-ups on the automotive. So, have you seen any changes in the competitive situation? Or have you lost any customers? Or are there some large customers specifically that are leaking right now?

Yes. And of course, I'm not going to say that. No, we haven't lost any, no losses or whatnot. I think that if you study the industry more in debt, you'll know that who are in trouble and in what kind of trouble, but they are our customers.

So I'm not going to start a discussion on that front.

And what about the competitive situation? Sorry, against Android or Chinese competitors?

No, that hasn't changed. And I mean, we're doing very well in China. I mean, Qt is not only on automotive, but Qt is being used more and more in China also on the desktop as a matter of fact.

So our product is competitive. And we see this newcomers kind of coming. We saw the -- well, in the early days, HTML 5, then there were like rightware gun seat, then there was flutter Flutter, I haven't heard of.

The last I heard from Flutter is that they are actually not developing it anymore. They've slashed all the development personnel. They are only upkeeping it as of now. Unity made a big announcement that they're going to do big inroads in the automotive. And yes, they are somewhere, but I don't see them making any inroads whatsoever.

So it's a complicated environment. The requirements for the products are very, very high. It takes a lot to be competitive in, for example, in the automotive. So we haven't seen any changes on that front nor have we seen that there'd be a new product that there is price competition or any of that. So that's not the case at all.

And one last question regarding the developer license maturity. So the 3-year licenses, how much of those developer license sales do you think 3-year licenses will be this year? How much were they last year? And has there been actually a significant decline in that also partly explaining the decline in sales?

That's a very detailed question. I don't have those numbers out of my head, unfortunately. But on a general level, I haven't seen a substantial change over there.

So that's not one main reason. \

No, no, no, I wouldn't call that a main reason, not at all. I don't have exact figures to give you.

Antti Luiro from Inderes. A quick question about the guidance. I assume that's fully organic, not assuming any revenue from IR.

Yes, for sure.

Yes. Good to hear. Then on the IR deal and maybe just contrasting a little bit how they do sales versus how Qt does sales. I know you both have global sales networks. Is there any difference in terms of who you sell to, like Tier 1, 2 suppliers versus the OEM? And if so, are there any opportunities to build sort of deeper relationships by combining your networks of sales, assuming deal goes through, yes.

Assuming deal goes through, yes, they do have. It was actually funny enough, their offices are pretty much in the same locations where we have offices. So that seems to be the case.

What's their sales process? I don't have enough visibility on that. But looking at how they're organized, how they operate, it seems to me that it's pretty much direct sales like Qt does, it's direct sales to end-user customers.

They do have very strong partnerships with the chip vendors, NXPs and whatnot. And they work very closely with the hardware manufacturers. I think that there, the relationship is stronger than Qt has.

So in that sense, I think the sales model is pretty much like as Qt, whereas the expertise that they have for that particular sales to sell directly to the customers, of course, it's unique that we don't have.

So in that sense, I don't see the benefit in that. But of course, I do see that we can sell our QA products over there, so their sales force can start selling our QA products, and well, of course, pretty much also Qt to all of their customers. So that cross-sell is there right imminent.

And then in terms of the market slowdown and that easing up in the future, obviously, EU and U.S.A. trade deal is one of the factors there. And I guess U.S.A. and China deal is another one.

But are you looking at any other sort of factors that could be the stepping stones towards a more sort of calmer market?

Calmer market. Well, in Europe, obviously, is that the 2 crises in Europe or close by. So the Gaza conflict will end and the Ukraine war will end, that will, of course, will boost the economy in Europe.

And then the uncertainty, I think, from my point of view in this manufacturing industry, is that it's even worse than the tariff itself. Of course, the 15% tariff will have impact on the end user demand, but it's going to be a lot less than this uncertainty. So 2 things will have an effect.

Well, you guys know more on the overall economy than I do, but one would think that maybe someday, there would be even small growth in Europe. I don't know if it's possible anymore in my lifetime, but I would think that at someday that there is this possibility.

U.S. will definitely find a way to grow and APAC will definitely find a way to grow.

So I mean, in a worst-case scenario, we will have 2 regions where the economy is growing fast and that is inevitable. And then we have Europe, which might turn into 0 growth retirement home for all or it might find a way to grow a little. So let's hope for the latter.

Felix Henriksson, Nordea. A few questions left from me. Quality assurance, we haven't discussed that yet. How are the quality assurance sales in Q2 compared to your own expectations? And I think you mentioned in the report that you expect a pickup in the quality assurance sales also in the second half of the year. So what's driving that?

Well, overall on quality assurance, it's like Q 2.0. So when we started early on selling Qt, many of our customers had developed software development tools of their own.

And then we sold them Qt and told them that you can be so much more effective if you put your engineers on developing something and let us take care of the software development tools and frameworks and whatnot.

So that was the case on QA, it's a bit of the same story that why would you do manual testing when you can automate all that. So that's kind of the shift people are doing, and they get more efficiencies from there.

The other big driver is AI because if you have humans doing code, there might be mistakes. But if AI is doing good, there might be mistakes because AI decided to be funny or decided to make AI, you never know what the AI is going to be do.

So if you have code done with AI, you basically have to test it all. So those are the 2 factors driving the testing market. So your first question was that did we do as we expected? No, we did not. So it was slow as well.

Because, of course, those are also on our QA sales, it's the kind of a rip and replace type of a situation that you already have a competitive product and you need to replace it with our product or you're doing manual testing and you decide to continue doing the manual testing or you're not testing at all and you continue not testing at all.

I mean, not all software is always tested. You probably have your own experiences where you've bought something, then it doesn't work. So not everything is tested all the time. And so companies may decide that, well, we need to save money, let's go as we've been doing before.

So that's kind of the decision-making criteria over there. But in the longer term, will this trend continue that more and more software needs to be tested? All AI software needs to be tested. There is more software. It doesn't make any sense to do it manually.

So, customers will need to automate their testing and get these types of tools. Is the competitive environment that is our tool good or not? Well, if you take Squizz, it's the far-out, the best tool to test Qt software. So, I mean, if you've developed something with Qt, either commercial or open source, I mean, it doesn't make any sense to take the squeeze basically.

If you think of Axivion on static code testing, you have different possibilities. If you go on the architecture verification and static code, that's pretty much the only product on the market. So there is no alternative to that.

If you're looking for only static code testing, is Axivion better than something else, then well debatable. And then do you want to change it or whatnot? So that's kind of the situation on that.

Well, architecture verification, we're getting into the details. Do I have to do it now? Well, no, you can always postpone it. The downside is that your platform and your software get so complicated that when you want to make a change to your software, it takes forever because your architecture is so twisted, which in many cases might be possible.

So it could be that you don't want to take the architecture verification because you've been building your software for 10 years and you know that it's not good, but you don't want to know how bad it is. And yes, I mean, it has happened.

So it's kind of a decision that you can postpone. The higher up you go in the organization, it's very evident that, hey, this is something that we really need. On that architecture verification and the static code combination, Axivion is far out the best product in the market.

If you look at our customers over here, they are pretty much hardware manufacturers who are getting into software development. Some are more advanced and some are less advanced. But for many of our customers, the hardware manufacturing has been the core DNA.

Well, of course, I'm biased, but I would recommend architecture verification for them all, just in case. So that's kind of the long-term view. So they're all going to get it. It's just a matter of timing. And then we know that well, and then there are all kinds of combinations. So that's kind of the QA.

So if I look then on the QA, in our business, what is the addressable market, difficult to say because Qt is on 70 industries and whatnot. But roughly, I mean, roughly, we can say that our QA products have to double the size of the addressable market than Qt. So, over time, QA should become bigger than Qt.

And then just a couple of questions on IAR. You've talked about the sources of synergies, but are you planning to quantify these to us at any point upon the closing of the transaction?

No.

Why not?

Well, I mean, joking. It's too early. I mean, we have a public offer. Obviously, it's a public company, and the amount of due diligence we've done.

Let's see that, first of all, we get to close this deal. Let's see how we can work together. We've not looked at this from the synergy saving points at all. So that's not been the driver for us thinking about this acquisition.

So we see that their product, their R&D, is definitely very specific to what IRA is doing, and we can see synergies over there working together, but rather probably accelerating the investment on that front.

If we look at the sales side, we think that sales have been very specific sales in that matter. They have great expertise in that. I think that we'd probably be looking at how to accelerate their growth through further investments rather than looking for synergies.

So the synergies would probably come somehow well, of course, there are going to be savings when there is only one public company instead of 2 public companies and these. But I think that they are a minor thing in all of this, at the end of the day. So, if you look at what's been behind the success of Qt is that we have a great product, and then we made an investment in building our own global footprint on sales.

We've been investing in sales, investing in commercializing the Qt product. That's what we've been very good at. And I think that we can together accelerate that development in the IRA case.

So I think that together with our know-how and investing even more in that, we can accelerate the IAR's growth and expansion in global markets more than they would have been able to do it alone. And that's the main driver.

And so have we calculated that we're going to be doing some cost savings? No. And I don't think they're going to be any major impacting force, whereas I think that where the profitability on IARs will come, we're going to be able to increase the top line with their existing personnel.

And if we can increase the top line by 30% with existing personnel, the profitability will follow. And that's more our scenario than we've been doing.

One more question. Jaakko from SEB. This should be a rather quick one. Regarding the expected deals for the second half, how much of the expected growth that you are now seeing there is based on kind of foreseeable license renewals, and how much you are relying on new license sales growth, meaning growth in volumes in the second half?

About half and half. You can ask another one if it's as quick.

It should be. Let's continue. On your visibility regarding the distribution license revenue, you've seen growth in this line in the first half. But regarding the existing trade tensions, are you seeing headwinds in distribution license revenue, especially in the Western world? And are you able to compensate for that with the Chinese production?

That wasn't a short one, a quick one. Yes, partly, we can, of course, compensate. And I think that the headwind on the distribution license because of this turbulence now this year, you're going to see it more next year. Because this year, production was already decided like last year. And when it's done and dusted, it's going to happen.

But this year, hesitations; you're going to see some slowdown next year on a growth pattern. That would be our expectations because now the decision is being delayed. The manufacturing has been delayed. It's probably cautious and smaller.

So we're going to see that in the coming months, but that's going to be more of a next year issue than this year's issue. So this year, the rim distribution license decisions have already been made before. So that's why it's not affected. So that's kind of the time sequence, how it goes. Thank you very much.

Thank you. We have 1 minute over. So I think that was definitely the last question. Thank you all.

Good morning, good afternoon, everyone, online. Welcome to the investors and analyst briefing by Qt Group. The topic for today is our recommended cash offer in IAR Systems that was published today. My name is Jouni Lintunen, CFO for Qt. And here with me, I have our CEO, Juha Varelius.

Please mind the disclaimers on the following 2 slides. Investors considering tendering their shares in the offer by Qt Group's plc subsidiary, Qt Company Ltd., should rely on -- only on information disclosed by the Qt Company Ltd., as the offer of the offer.

And now I will hand it over to Juha, please.

Hello, everyone. My name is Juha Varelius. I'm CEO of the Qt Group. And I'll go briefly through the offer rationale, and then, we have some time for Q&A. So we've done a public offer for all Class B shares in IAR Systems Group at the offer price of SEK 180 in cash. And so total value of this offer is approximately SEK 2,293 million or EUR 204 million.

We have unanimously a recommendation from the Board of Directors of IAR, which we are very grateful for. And then we have shareholders representing approximately 25.8% of the outstanding number of shares that have irrevocably undertaking to accept the offer, and shareholders representing approximately 10.9% of the outstanding number of shares have confirmed they support for and are intending to accept the offer. So that's roughly 36% of the current shareholders are backing this cash offer we've made.

Of course, in these kind of deals, there are conditions and completion of the offer is conditional, among other conditions, upon the receipt of all regulatory governmental similar clearances, approvals, decisions, acceptances by shareholders holding more than 90% of the shares of IAR Systems Group on a fully diluted basis.

We do expect this offer to commence around 18th of August '25 and expire on around 25th September 2025. And the financing of this will happen with the funds we have and funds committed on new debt financing. So if we look at the IAR Systems Group in brief, how we see it, it's a leader in the market for secure, reliable and high-quality software for embedded systems with over 40 years of experience. So the company was founded in 1983, and there we have the similarity with Qt.

So we've been on the -- Qt Group has been in the business for a very long time as well as IAR, and we are both focusing on the embedded market. IAR Solutions support the development of embedded applications across various industries, including automotive, industrial automation, IoT, MedTech, military and public safety. And for all those people that have been following the Qt, you know that the Qt Group is basically pretty much on the same industries, although we do have 70 different industries, but those are the main focus areas for Qt as well.

Currently, IAR is supporting 15,000 devices from over 70 semiconductor partners, and they have a global presence with 230 employees in 14 strategically located offices in North America, Europe and Asia. So we are both pretty much focused on the same markets throughout the globe internationally. And IRA Systems Group shares are listed in Nasdaq Stockholm Mid Cap, and the company is headquartered in Uppsala, Sweden. IAR's EBITDA percentage was 38% in 2024, so highly profitable with the revenue of SEK 487 million. And the revenue growth in 2024 was 9%, ARR 63% and the earnings per share SEK 10.20 last year. So let's go to the next slide.

And now really the beef that the -- why do we see that this transaction is in line with Qt Group's ambitions? IAR Systems have a strong capabilities in embedded development solutions, and they do complement Qt Group's existing offering. So Qt Group has a strategy that we want to be a multiproduct company, and we want to be in the software development process for our customers in embedded. And IAR Systems products are actually complementary, and they are more positioned in the earlier stage of the purchase process for customers looking to do -- to build embedded products and to do software development around that. So this also enables Qt Group to enter the sizable broader MCU market. We do have a small MCU offering of our own, but I would say that it targets a bit on the higher end of the MCUs, and it's, of course, substantially smaller. So this will strengthen our MCU position -- or this would strengthen our MCU position substantially.

We do have a software quality solutions. So they are basically quality assurance products, so Axivion and Squish, which are meant for the software testing, software quality use, and there would be a possibility to sell these services to IAR Systems' current customers. And so this would enlarge the quality assurance addressable market substantially. This would also in -- put us in a position that we would be a more comprehensive one-stop shop solution to -- for our customers as a multiproduct company. So in -- that would mean that the customers would get more products for the whole software development process from one party. They would not have to go and buy these products one by one.

We do have, of course, some overlapping customers because we've been operating in the same industries, but we do have also customers that are not overlapping in a large extent. So this stronger market presence to serve global customers with local customer experience by joining forces would add a lot of value to our customers. IAR Systems with their offering are -- I would say that they are earlier on in the customers' buying journey. So the -- when customers are thinking that they're going to start building something, IAR products are there. They are earlier than Qt, which means that now we would be able to be in engagement with customers on the earlier phase when they start thinking about developing new products and services.

We have done this journey in Qt, where we had the license change to subscription-based model. So the -- and IAR is in the beginning of this transition. So we think that we can support and facilitate that subscription-based model leveraging our Qt existing experience to drive long-term growth and customer value. So we've been through this journey how to go from the -- through this SaaS change. We did that in the past 3 years or so, and the IAR is in the beginning of that journey. So I think that the lessons learned, we could bring value on that.

So in short, if I summarize this slide, this IAR's products are considered earlier on than the Qt products in the software development process. They are complementary products. So they add -- they would add into Qt's product offering greatly. They are geared towards same type of customers Qt has been dealing all along. So we've been like in automotive industry, automation and so on. So there is this product fit on the -- and customer fit on embedded. This would add -- combined companies, it would add the total addressable market substantially, and this would -- some of our products would be comprehensive to IAR customers, specifically the -- our quality assurance products.

So we do see that there is actually a lot of synergies and the complementary benefits on -- would be on these transactions, combining the operations of these companies. And based on this analysis and based on this strategic fit, we've made this public offering. We've obviously been following the IAR for a long time. So the -- coming to this point has been a relatively long journey for us.

So -- and now with this short presentation, we are ready for Q&A.

[Operator Instructions] The next question comes from Matti Riikonen from DNB Carnegie Investment Bank.

It's Matti Riikonen at DNB Carnegie. I think the first question that comes to mind is that why now. I think the speculation that Qt and IAR would fit fairly well together has been there for a couple of years already, if not more. So what makes you think that now would be the ideal time instead of maybe a couple of years earlier?

Well, I think that the -- it's a good question. Obviously, we've been following IAR a long time. Well, first of all, it always takes 2 to tango. And so we think that the -- now there's been on the -- on that sense, the timing is right. And if you think a couple of years back, the -- when we were -- we've done 2 acquisitions about 3 years ago. We've -- give or take, we acquired froglogic, and then, we acquired Axivion pretty much a year apart. And I think that the integration, getting those up and running has been -- from our side has been that the -- doing an acquisition, getting them integrated and up and running and then being ready for the next acquisitions is also part of the equation. So putting this all together, that kind of gives you the timing that why now.

All right. Fair enough. Then we know that IAR has only started the process of going into a SaaS model from the license-based model. And you say that you are already at a more advanced stage, but isn't it so that you are still kind of selling licenses, and you have not yourself yet transformed into a SaaS-based software model, although you are selling kind of continuous licenses. So how does it actually work in practice to run a company, where you have still license-based sales and then you have a SaaS-based offering on the other side?

Do you think that at some point you would have to merge these together so that you would be offering a SaaS offering? Because if we look at it from the point of view of your customers, which might be basically buying products from both companies, wouldn't it make sense for the customers to have a kind of such an offering where they are only basically buying something from new Qt Group, assuming that the deal goes through, and then, it would be more likely a SaaS offering?

Well, yes, let's not get ahead of ourselves in a way that the -- today, we are announcing a public offer, but on general, I would say that the -- when we acquired the 2 testing companies on quality assurance, the Axivion and froglogic, we -- our approach on Qt was the -- that each product that we have needs to be good enough, say, stand-alone. So they must be -- we must be able to sell them separately. So they need to be good enough for that. And one reason for that, obviously, is that each product we have, they do have a lot of common customers, but they also do have addressable market that does not overlap. So for testing, for example, our testing products can be used for Java and Windows testing and not only Qt.

And having said that, the other part that we looked for is that the buying for our customers' needs to be as simple as possible. So if we do have a customer that wants to buy all of our products, the terms, the pricings and the agreements, they need to be such that the customer doesn't have to do a -- situation that you have a different pricing and different terms for each product. If a customer wants to buy them all, it's somewhat too complicated. So the buying for the customer needs to be as easy as possible for the purchase process, which means that the -- to your question, that ultimately, yes, at some point, the pricing models, they need to come closer to each other.

All right. And then regarding customers, you mentioned that there is some overlap between you and IAR. But could you be more specific that what kind of percentage of your current customers would also be customers on IAR side? And what's the kind of number of customers at IAR side would be completely new to you at the moment?

Well, that's, Matti, a very good question. Unfortunately, I don't -- I can't answer that. But the -- what I can say, obviously, is that if you look on the IAR's website, they work on the -- on functional safety on areas where different kind of certificates are needed. If you look at the Axivion, for example, it's clearly a focus area for Axivion. And if you think from the industry perspective that what are industries where these kind of certificates, functional safeties, whatnot are needed, then you are in the automotive, defense and whatnot.

Right. Okay. And then you mentioned that the MCU market, the microcontroller unit market, is something where IAR is significantly larger than you addressing more customers. Could you quantify that in some way so that what is your share of MCU customers compared to IAR? Or what is the number of customers compared to IAR?

Well, that number I can't give, but I can give you guidance that we are tiny, tiny, tiny. And on the MCU, IAR is giant to give you an idea, but I can't give you that number. So IAR is really, really big compared to us. So we are really, really small.

The next question comes from Jaakko Tyrvainen from SEB.

I will start with kind of an inquiry for you to simplify in just a few words, what are the key products of IAR, meaning that what is the value add customers get when they acquire those products and how close those products are with Qt's existing product portfolio?

Well, the IAR is selling a compiler. So basically, they are talking with people when customers are thinking about getting a -- starting a new project, and they are choosing the hardware. And that's kind of the early phase where they are -- they also have a development environment into that workbench and the -- some security solutions around it. So they are on that early phase.

Then software design is starting to think that how would the design look, then comes the actual software development, and the -- and in all of this process, you have the static code testing, and then, you have the potentially architecture testing and you have the -- and then you go into deployment and you have the testing on the functional testing that how everything actually works. So IAR is the -- I still -- it's very difficult, the 3 letters. I'm confusing all the time. Sorry about that. The IAR is in the early process on the microcontrollers with their compiler IDE and the security solutions. That's where they are.

And then we continue from there on the Qt products. So this would be a complementary product, yet another step towards that the customers can get more from one place, where IAR is very strong is these environments where you need certifications. They are, like I said, functional safety and different kind of critical software components where you need certifications. They are very strong over there. Our Axivion product is extremely strong over there. And these customers are -- these are the segments where Qt is used. But, of course, we do have customers that are common customers to us, but we also do have customers that are not common, but are in these segments. So this will add the addressable market for both companies.

Okay. Good. And just to kind of confirm, so basically, you are just expanding your value chain position in the embedded systems market.

Yes, you can say that.

Okay. Then regarding IAR's kind of a sluggish growth over the -- let's say, over the past 5 years, what is your -- in your analysis, the key reason for this? And what is the plan to accelerate the growth going forward? Or will this product or this possible transaction kind of result in deeper sales growth for Qt's existing products, which way around it will be kind of accelerate IAR's sales or Qt's current offering sales?

Well, I think my expectation is a bit of both. So I do expect that the -- specifically on the quality assurance side, it will accelerate because the -- I think that many of the IAR customers would benefit using the quality assurance products we have on Qt side. I think that the -- it would accelerate both companies' sales in a way that we would be able to offer a wider product portfolio for both companies, customers as of now. And we would be also able to offer new customers a more comprehensive solution going forward. So that I do expect.

IAR has announced a new strategy, I think, last year, and they also announced the long-term growth targets, where they had the strategic initiatives. I won't go into that in more detail. You can check it from their website what the -- what's their plan going forward. And I think the -- we think that it's a credible plan.

Okay. On that last one, do you have any understanding of the current status of the subscription transformation process of IAR, meaning what has been the kind of a response from the customers of theirs? How will -- how the customers have been responding on the ambition to change towards the subscription model?

Well, it's a public company. So obviously, I have the same information that pretty much everybody else has and no more further detail on that. Although the -- having done the change from perpetual first to term and then into this subscription model we are having today in Qt, and we are operating in embedded markets, so we are in -- and we are talking about pretty much the same type of customer type Qt has, I think that the -- I have a pretty good guess how it's going to go.

And if you remember, when we started the subscription change at Qt, we said that the -- we do expect -- our guesstimate then was that, well, there is going to be a certain amount of customers that will never change. They're going to stay in the old versions. And I'm talking about Qt. The -- we said that that's probably going to be 10%. And then we said that this transition for us is going to take roughly 3 to 4 years. And that guess then turned out to be pretty accurate.

So the -- when you start this kind of a change, it will take a few years. And some part of the customers will never change. But the -- given the experience we got on Qt, not knowing -- I know that the IAR is in the beginning of this process because that's what they've stated publicly that they are now starting the process, so my guess would be that it will take a few years, but I have no doubt that it would not be successful because that's basically the business model on embedded for pretty much everyone.

[Operator Instructions] The next question comes from Matti Riikonen from DNB Carnegie Investment Bank.

It's Matti Riikonen again. I was just thinking about your midterm targets and the guidance for 2025. So if we assume that the bid would go through, do you think that this would be such an acquisition that not -- will not kind of fit into your current guidance range so that it would be kind of a factor that is outside of your current guidance principles. So you would basically give a new guidance if the bid goes through. So that's question number one is how would you respond to this year's targets?

And the second question is that -- and assuming again that the bid goes through, do you think that this would change your midterm top line and profitability targets?

Well, for the guidance this year, we're not -- I think it's kind of too early and it would be very speculative. We've made today a public offer, and it's going to be towards later this year before we see that the -- how successful our bid will be. On a longer term, same thing, I think that the -- we need to first see that if this goes through, and then, we can come back to that. So the -- we don't -- we're sticking on our old guidance, and it's a -- we don't want to speculate what if kind of scenarios at this point of time publicly.

Okay. There are no more questions from telco lines. Thank you for all participants, and thank you for the very good questions.

To summarize, we are extremely excited for this opportunity, and we've made this public offer on the IAR today. We have a 36% backing on this from the major shareholders. We've done a fair offer, and we hope that it will be successful, remains to be seen.

And with these words, I wish you all a very good weekend. Thank you.