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Hello, everybody, and welcome to QT Group's Q2 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 presenting the results.

After the presentation, we have time for questions, first starting from the room and then if time permits, then from the line. But without any further ado, let's get going. Please go ahead, Juha.

Thank you, and good morning, everyone, and welcome to Q2 results. My name is Juha Varelius, and I'm CEO of the company. Pretty much same all the agenda, business highlights, market trends, financials by Ann, and then I'm going to talk about the outlook and guidance for 2026 later.

So if we go into the Q2, our net sales grew 19.6% and the quarterly net sales was EUR 61.3 million, an increase of 19.6% so comparable currencies, 20.9%. EBITA margin, EUR 15.1 million and EUR 9.3 million. ARR increased to EUR 160.4 million, and so it was a healthy growth on there.

If we look at the Q2 a bit more detailed. I'm actually pretty happy about our performance since the distribution license sales year-over-year was a bit over EUR 6 million less this year than it was a year before. Last year, we had a EUR 19 million on distribution revenue so that we were able to increase our revenues.

Our developer license sales has been developing very well overall. If we look on the IAR, IAR has been performing very well on their subscription changes. We were expecting on aggressive plan that we're going to have a 40% conversion.

Now we are on the -- over 60%, if I remember correctly, 68% conversion on the second quarter, which means that the IAR revenue, obviously, compared to last year is in a pressure since we have the already majority of the sales in the subscriptions.

I'd say a good news because in the beginning of the year, we, of course, didn't have an idea that how quickly can we do this transformation. And now it seems that we can do it even quicker than we were anticipating.

So -- and quicker we do it, then we get on the -- on a healthy revenue growth on the IAR side as well. So given those caveats, I think that we are pretty happy on the Q2 performance.

On the profitability side, we've had the change management negotiations going on. We've done them in the USA and in Finland, they're still going on in some parts of Europe, and we do have one-off costs of those in Q2.

So given those one-off costs, we're pretty happy on the profitability as well. We are definitely going in the right direction and at the pace even quicker than we were hoping for.

So I expect that the next year, the profitability will be well in the old healthy good numbers that we were used to see. So -- and the change management negotiations where we're targeting 20 million cost savings are well on track. So I have no doubt that we're going to be able to reach those numbers.

If we look on the license sales, well, we do have -- it's kind of -- it's a mixed package in a way that the -- we do have different industries, medical and defense industries overall are doing globally very well.

If we look at automotive, we obviously -- our customers are having challenges in Europe, whereas in Asia Pacific, the automotive industry is doing relatively pretty well. So for us, we do have pockets in the automotive industry where we're doing okay. And then we have pockets where our customers are suffering along with us and the -- of course, the Tier 1 as well.

On regions, well, I would not read too much on the regions on a quarterly level because there is -- as you know, in this business, there is quite a lot of fluctuation. EMEA was good. Americas stable. APAC was on this quarter more moderate.

If I look overall on the longer term, let's say, that the end of this year and next year, I'm expecting USA that quite a substantial improvement still where we are. So the -- that's where there is a room for improvement definitely.

Well, I already mentioned the IAR subscription licensing model. So no doubts about that, that can we drive through that change in IAR pricing models that will happen, and that's been very well adopted. So the -- that's well on track.

Well, depending on these industries, it's always good to remember that we operate on 3 regions. So we are a very global company. We do have 70 different industries that we serve. Some of our industries are a bit under pressure like the automotive.

But then on the other hand, some industries are doing very well like the medical and defense. We also do see overall economy kind of stabilizing. I think that the latest disruption and uncertainty came from the war in Iran.

Well, let's see what's going to be the next big disruption because there's been many of them. But if we now look at the -- what our customers are saying and how people are looking for the future that there is -- I would say that the market has stabilized pretty much.

On APAC, it's been more or less stable all along, but in Europe and in U.S., we've seen some disturbances. I'm not going to talk about much on AI, but the -- I think that if I look, there was a lot of hype in February, March, April, and then there was a conclusion that the software industry is going to disappear and AI is going to take over everything.

Now I think it's calm down there a little. And I'm not saying that AI is not coming. AI is definitely coming. But is it coming so that it's going to take over everything? I have a bit of my doubts. Here are the kind of the same phrases I said last time.

But what do we see in the market is that the companies are not really getting rid of developers because of AI. We do see companies downsizing, but they're downsizing because their business is not doing very well, right? And they're downsizing developers and they're downsizing in certain industries, they're downsizing quite a lot of other people as well.

So we know -- I mean, you've read the news, there are big automotive companies that have announced that they're going to downsize 100,000 employees by the 2030 and so on and so forth. But do we see that companies are downsizing because of AI? We don't. Do we see that the developers are using AI as a tool to be more efficient? Yes, of course, that we do see.

We also see that the AI adds kind of a complexity in a way that the AI does software very quickly and quite a lot. And it's still in a phase that somebody needs to look into it, a human needs to look into it, but what was done, human needs to look into it that does this actually make sense.

AI, as you know, also has imagination of its own. It's like a good -- AI is like a good coworker that never says, I don't know. It always gives an answer. And the -- I've actually encountered this in real life as well, but the AI can be very confident of giving that answer and AI can do a lot of things.

Also, what we see is that on a cute, what is say a framework, Framework kind of gives an architecture to software. And it's like a plumbing of the software in a way. And even for AI, it makes sense to use this. So that's kind of where we are.

And what do I envision is going to happen is that the -- all those that we are now watching and wondering that why I paused there were people coming in and I started looking at should I say hello or not. So that's why I paused and I didn't say hello, but hello, welcome.

So what we see on AI is the fact that the -- it's -- we need to find a way on our monetizing model that it also takes into account that AI does do some coding. And this means that, we need to start monetizing and invoicing not only per seat, but on the usage of the Qt technology.

And when that shift is going to happen? Well, it's probably going to be something like the subscription change that we're going to have a new version of our framework and then we start implementing it.

We are working on it, and we are now working on different models. We're monitoring that -- how to implement it and whatnot. And you can expect that during next year, we'll start moving into that direction once we figure out what is the best model for us and for our customers so that we can take into account that there is a developer doing development and then there is also AI doing development.

On IAR, that's kind of already taken care of because IAR is selling subscription and then IAR charges for simultaneous compiling already now. So it's based on the usage on that sense.

And then on Squish, we think that the -- since everything that AI does needs to be tested and whatnot, we expect the software testing market to grow in the future. We, of course, use AI extensively internally, not only in our R&D and developers are using AI to understand that how it works and how can they be more efficient. We use it pretty much everywhere in the company, nowadays.

I think that the big thing for -- going forward is that as AI moves into consumption-based pricing models, we need to be careful that how much we absorb cost as a company when we are using AI. So I think that these business models will be evolving just because AI's business models will be evolving and how and where AI -- how much we need to pay for using AI because very easily on R&D, we're using millions of tokens on one go. So the -- what's going to be the cost of it.

But -- so we do use it internally on many various things starting from sales and marketing. Of course, for example, sales guys making a sales pitch nowadays, it's much more easier using AI because you can get all the info of the target customer and tailor -- make a tailored personalized presentation on each customer meeting you have, and you can do that very quickly. So of course, it's giving a lot of efficiencies.

We're also looking for the opportunities as we go forward because, as you know, nowadays, we're looking on the development process, and we're looking at where can we offer services and solutions to our customers so that they can be more efficient on their development process.

But yes, as AI comes along that, well, the most obvious thing that comes to mind, of course, is a vertical integration because using AI on our tools on smaller customers, we should be able to offer actually ready-made solutions more than we are doing today.

So we're looking into those opportunities that we have. Very particularly strong now is, of course, all the functional safety and safety critical things because there you need certifications and you need -- you can't use open source, you need to be able to prove that your code meets the criteria that are required for car breaks and whatnot, everything that is somehow functional safety or safety critical.

And we do have tools starting from IAR. Our compilers are certified using an IAR compiler, that you can have a certification that it's done according to the specs and you can use Qt and our testing. So we have a very comprehensive offering in safety critical functional safety industries, and that's a very sweet spot for us in this current portfolio we are having.

So I think that the AI will be there a topic for the future. But for the investors, I would say, I kind of see this twofold that, yes, it's going to change very many business models, but at the same time, and it does give us efficiencies internally.

But at the same time, of course, it also opens up new opportunities for companies that are awake. So I don't see AI only a threat. I see that, it will open up new opportunities as we go forward. So there's going to be a whole service layer on top of that on these data centers we see as of today. And of course, we're going to be on that wave as well.

So in that sense, on this AI, I would conclude that we use it ourselves. We are looking for the pricing model change. We are adapting it, and we are looking actively to new business opportunities it potentially will give us.

And with that, the financials.

Yes. Thank you, Juha. Well, as Juha said, this was quite a nice quarter for us. We had a very good growth. It's fine to repeat it, I think, since it was so nice. The growth was 19.6% in the quarter with a small exchange rate impact. So therefore, at comparable currencies, it was 20.9%.

And the year-to-date growth was also pretty decent, 15.8% with a larger exchange rate impact of EUR 3.3 million, and that's -- it brought us up to 19.7%, about the same level as in Q2 at growth at the comparable currency then.

And if we look at the products we sell, as we illustrate them in the interim report, licenses and consulting, it grew 10.3% in Q2, and it grew by 5.3% year-to-date. The maintenance revenue almost tripled like it did last quarter because of the IAR effect. IAR has a lot of maintenance revenue in sales.

Historically, it's been about half of the revenue that's been those maintenance contracts. Now, it may -- it's a little less because of the transition into subscription. So we're selling less of support and update maintenance contracts in IAR. And instead, we're selling subscription.

About the distribution licenses, those declined. That was totally anticipated. We knew we had a lot high distribution license level last year. So we knew those were going to decline. They declined in Q2 by 32.4% and year-to-date 17%, so totally anticipated. But that also -- if you remove that from the development license and consulting part, we actually had a growth there in Q2 on 38% on that and 18% year-to-date, which we are actually quite happy with, I must say.

And looking at the ARR, also rolling 12, we ended up at EUR 160.4 million, like Juha said. And rolling 12, it grew 33.8%. Obviously, IAR was not there last year. So that is separate, and that is why the growth becomes a bit large for 12 months at comparable currencies, it was 32.2%.

But for the quarter, it's still also a decent growth. I mean, 4.5% increase in ARR, like Juha also showed in his slide, and that is 2.4% growth at comparable currencies. IRR is growing in ARR as we're moving into subscription, removing perpetual revenue and instead selling subscription, which is annual recurring revenue instead then.

And then looking at the cost side, unfortunately, though, the revenue side was good. The cost side grew more. They grew by 31.2% in Q2 and year-to-date, 21.7%. So we are, as you know, working on lowering those.

Doing those reconstructions, efficiency work, removing some employees here and there as a result of the acquisitions, of course, but also some cost adaption to various parts of the sales that needs to happen.

But looking at the personnel, that grew 38.2% in Q2 and 32.1% year-to-date. We have had 1,035 employees end of June, and that is a year-on-year growth of 119 people. IAR has 200 people. So you can already in that see the effect of the people that we have downsized in Finland, the U.S. and partly in Norway.

We have still got Germany, France to go. And those are ongoing and those one-off costs will come in Q3, hopefully, instead. But in Q2, we have EUR 3.7 million one-off costs under employee costs and EUR 0.6 million costs under other costs that are one-off costs also.

Part of it is relating to that business unit security in IAR, which we are removing over time as it was more of a cost burden than any type of revenue really. So that relates to the EUR 1.6 million.

But we are, of course, looking at other costs also as part of the integration, offices, merging entities and whatever we can do to be a more efficient and strong company for the future.

But if we look at the EBITA then, EUR 9.3 million today is lower than what we had last year, EUR 11.6 million and the margin was 15.1%. But if you remove the one-off costs, we are actually up to 22.2%, which is quite in level with what we had last year. So the Q2 is still in level with the profitability there if you adjust for that.

And the year-to-date, that brings us to the EBITA level, 12.6%, up to 16.3% if you adjust for the one-off cost also. So still a fairly decent profitability there also with that adjustment, even though it is actually still then lower than last year.

Balance sheet, not much happens in the balance sheet every quarter. A lot happened when we purchased IAR, but still, it can be good to give it a quick run-through. Goodwill, EUR 166.9 million. That is a constant. It doesn't change. We doesn't depreciate it. You don't never do that with goodwill. And most of the goodwill, as you can see, refers to IAR. The rest of it is pretty equally distributed on Froglogic and Axivion.

Other intangible assets, EUR 120 million. Those are the technology assets from the purchases of the acquisitions, and we depreciate those over 15 years. IAR also, as I told you before, capitalizes some development assets investments already in the -- still in the balance sheet. We have a couple of those, and those will be finalized in 2026.

So the capitalization for Q2 was EUR 0.4 million. That increases or resolved then by that because we increased the technology in the balance sheet instead with that same number. So no large numbers, but it's good to understand that, that is still happening in IAR. It will, over time, as we have harmonized the handling in Qt with the handling in IAR, likely not happen much of this anymore. It's not our intention to do that.

And the trade receivables are at a pretty good level. They are around 20% of the rolling 12 sales, a little higher now as we don't have IAR in the rolling 12 sales looking back, but it will harmonize itself down to that over time. And we still have a very healthy cash balance, EUR 42.4 million, even though that is, of course, lower than it was last year because we put a lot of money into the acquisition of IAR.

And looking at the interest-bearing debt, that was EUR 126 million, of which the bank loan is still EUR 120 million, but we have paid off EUR 30 million. It was EUR 150 million initially. So we have a good cash flow and a good position there in paying off the debt in good time.

Other receivables still have those EUR 5.2 million under receivables and on the debt. As you remember, the arbitration for us to purchase 100% of the shares is still ongoing in Sweden. We haven't bought 100% of the shares, but we have booked 100% of the shares in the balance sheet.

And that we have an interim booking on the asset side for those EUR 5.2 million and the debt to those shareholders on the debt side for when we pay the shares, and those are still there.

It is moving along this arbitration, but rather slowly, I must say. So I hope it -- we can make it move forward in a faster speed. The equity ratio is still decent, 53.6% compared to 83%, which, of course, is why -- because we expanded the balance sheet with the IAR acquisition and the debt. So it's a pretty solid balance sheet still looking at it.

And the operating cash flow was EUR 20.6 million compared to EUR 28.9 million last year. The main other cash flow apart from the operating cash flow was really the amortization of the debt, which we amortized in Q2 with EUR 15 million.

So the total cash flow for the period was EUR 2.3 million compared to EUR 27.3 million last year. But of course, it is lower because the profitability is also lower, which we are working on improving for the future.

So with that, I guess I will hand over to Juha again to talk about the future.

Thank you. So well, we haven't changed our full year guidance. So net sales 10% and operating profit at least 15%. And as I said last time, those are the floors, so at least -- and we're not giving an upper range on that. So that's the change. Usually, before, we used to give a range. Now we give the kind of the floor.

Well, our plan was that we're going to transition the majority of the IAR customers into subscription in the next 3 years. That's what it took roughly in Qt when we did that. And of course, not all the customers will change, but the majority. We're well on track on that.

I'm happy how the integration has gone. It's gone actually so well that we, I see that we didn't even mention it on the slides anymore because we think that it's already kind of a done deal. But of course, the integration is still there. But it's gone very smoothly. And so we haven't had any big problems, and I don't expect to have, and it's going to continue as planned.

So on IAR integration doing well, the subscription change doing well and IAR sales on bookings, that's been doing really well. So I'm happy on the IAR performance, and I expect that to continue.

On Qt, on license sales, very happy. The distribution licenses, they do fluctuate from quarter-to-quarter, and they are, of course, a result of deals done before. So even though they were a lot less this quarter than they were a year-on-year ago, that's only natural. They do fluctuate, and it's based on the fact that how much our customers distribute. So I'm not worried about that, and we're looking the overall number is heading where we estimated it to be.

On regions, I think that -- well, there is always a room for improvement. I think that the United States, we've been -- we've had some execution issues in the past. So I think that there we are in the right track, but in the United States, we can still improve our business quite substantially. And other than that, the things are looking pretty good.

On the macro and global environment, of course, if a country overall is doing well, usually our businesses are doing well because our customers are global customers. They're very big customers, building products for either B2B or B2C customers. And if the economy is doing well, then usually we're doing well.

So if I look now that the how does the rest of the year look, if we're not going to get any big disruptions over here. I'm relatively positive that our numbers will keep on improving. And next year, I'm definitely, they're going to be improving on profitability and also on the top line.

So this is kind of a slow-moving business. So this web technologies, they move very quickly and the moves are very rapid on embedded businesses, the trends are slower moving. But if I look on the -- overall, the rest of the year and next year, I'm pretty confident that we are or I am confident that we are going in the right direction.

The operational reorganization, well, there are always tough things to do. We said that we're going to have at least EUR 20 million savings, and I reiterate that we are definitely going to have at least EUR 20 million savings. We still have some negotiations in Europe ongoing. Once they are finalized, then we're done.

And like I said before, Finland is already done, USA is done. But in Europe, we have a few countries that we're still in that process, but I have no doubt that we'll be able to finalize them during the H2.

Well, yes, challenges in the market environment continued, of course, I think that in a way, I guess, we should stop talking about the market because it seems that at least for the next 2 years, we're going to have surprises every week. So I expect that there are going to be some disruptions coming. I don't know where, but there will be. So the market will be volatile for the next 2 years.

On AI, it's going to come and it's going to be a big thing, but it's like Internet at a time. It not only changes some business logic, but it also gives new opportunities. And I have no doubt whatsoever that Qt will be one of the companies finding also those opportunities and being able to utilize as the years come.

Again, that's like a few year thing. It's not like what's going to happen in H2. Well, long term, I mean, nothing has changed. People do want to have products. They want to have displays. They want to have intelligent mumbling, products going into also in the future.

All our customers, if they want to be in a business, they need to improve their products, they need to have new product lines and whatnot. So the overall prospect is not going anywhere. I think that also in the future, customers will realize that there is a need for developers, there is need for a software testing and whatnot.

So even a lot of things are being automized, it's still -- humans are still needed there for a long, long time. And we're not going to let the machines run over.

So in that, I thank you and some questions, which there seem to be.

Waltteri Rossi from Danske Bank. Congrats on a good result. First question related to the U.S. You mentioned that you can improve there substantially. So what has gone wrong there? If you can go through that once more?

Well, in the United States, I think we had some management changes. We did have some operational, how would you describe not so great operational efficiencies, some attrition over there, a combination of these things.

So if I look at the operational efficiency in EMEA and APAC, just internally, we can do better in the U.S. And then if I look into region numbers that now U.S. is improving. But if I look in the previous that the U.S. was weaker than the other markets, all our customers are pretty much global. If we're doing well in -- with our product portfolio and products in EMEA and APAC, I don't see any reason why it should be.

So there have been some people changes. There have been attrition but not and those -- so just the operational efficiency numbers are not in the level that they are in the other markets. So multiple internal things.

All right. Second question related to the ARR development growth there is quite high. And I guess it's partly explained by IAR.

Mainly 3 letters.

Yes, it's difficult. So how much is IAR from ARR?

IAR. Yes. It's -- we need to -- I mean, I'm having the same trouble with the IAR. We need to change the name. I don't think we've disclosed that number because we've not been disclosing the BU numbers. Sorry about that. And as a matter of fact, I don't have that figure in my mind now.

Okay. But is that one of the top kind of drivers behind the growth?

Well, of course. Yes.

Okay. Okay. And you also don't disclose organic growth.

No, we haven't. No, yes. I think that the -- as we get a bit better, that's a discussion we need to have internally that we start a BU reporting next year because that would kind of give more highlight.

Having the BU numbers myself, I can tell you that you're going to have more questions than you probably get answered when you see them. And it's sometimes a bit difficult for us to estimate. But that's definitely a discussion we're having internally that what would be our next year reporting. And well, I'm sure we definitely -- it's going to change. And one obvious way probably going forward would be the do the BU reporting and then -- well, then you still have a whole other costs, which are central costs and whatnot, but you would see a bit more of the business. But then you have latter numbers that are going like this on every quarter on different directions. So it's the -- they all fluctuate really randomly.

All right. And one last one related to that pricing model change that you foresee also for Qt products starting from next year. So --

Sometime next year, not in the beginning, yes.

Okay. Do you expect any -- what kind of impact do you expect that to have potentially for your business or sales?

Well, that's too early to say really. And that's why we need to be testing it so much so that we need to be kind of simulating now that if we do this kind of a pricing change, how would that actually affect in a real life so that we don't do a pricing change where we have our revenue, right? So we need to do -- there is quite a lot of -- we need to look into very carefully.

If you go in a consumption-based usage and you would think that the people start using AI extensively, you would think that there is a lot more usage than there is as of today, but how do we actually do that pricing? And would there be a different pricing for a developer consuming and AI consuming and all of that? So we need to simulate that and test quite a bit. I mean, our target is not to start charging more from our customers as we do today, obviously. But how that will turn out, that's too early to say.

So I wouldn't calculate any revenue increase on that because at the end of the day, there is also competition, right? And we are kind of -- I would say that in the market, our products are really good. I mean, they are really, really, really good, but they are not the cheapest either.

So I don't -- my gut feeling is that do we -- should we do a massive price hikes? No, I don't think so, then we would be too expensive. Then we would be like on a very high-end usage like Formula 1, very high price, very small volume. I think that where we are as of today that we have pretty high volumes, and we're not definitely the cheapest. So I don't see a whole lot of price increases in the future.

Of course, there always -- there is inflation, but not tens of percent. Then how do we price the AI usage? Because what AI does is that it does say a lot of goes very quickly. And I mean, it consumes a lot. So we don't have enough -- we need to do simulations on that. So I wouldn't -- if you think from a revenue modeling perspective, I wouldn't put any price revenue increase based on that at this point that I wouldn't do.

Felix Henriksson from Nordea. Continuing on the pricing change topic, is it sort of fair to assume that this would change your developer license revenue recognition in a way that it moves the lumpiness stemming from the 1 and 3 years.

SaaS model, yes.

But at the same time, could it even be that the revenue impact will be negative as you start that process?

Well, I don't see that, no. But yes, the lumpiness will probably go away apart from the distribution licenses, of course.

Got it. And then on the quarter, can you sort of elaborate on the developer license mix in Q2 between the 3- and 1-year licenses? Was there any shifts there?

No. When there is a big shock like the war starts and the oil prices go sky high, then everybody kind of are scared, right? And I mean, this is sad to say, but people get used to the wars, right? I mean there is a war in Ukraine going 50 years soon, and it's like a new normal, right? People tend to forget it, right?

So whenever there is a big shock, whatever it is, then people tend to go, it's the reserve cash flow and then it's 1-year license. But as things kind of settle and things settle nowadays very quickly, as a matter of fact.

So I think that the many businesses are now kind of in normal mode. They're looking forward. They're thinking forward, they're taking their investment. Of course, they are still cautious, but no big changes on that. So about the same. Yes.

Yes. So no unusually large share of your licensees.

No, no, no. And no unusual large deals or any of that here.

Got it. So to me, that implies that there's a bit of a positive trend shift in the developer license revenues.

Oh, yes.

What's driving that? What are customers telling you differently?

Well, it's people are more confident about their future. And maybe we've been a bit better in performance. And it's no secret sauce in that sense, small improvements here and there.

And then finally, just a housekeeping question on the revenue split between the different end markets. Can you sort of provide an update on that? Because it seems like, especially the defense and medical shares have sort of increased compared to past.

So you mean industries.

Yes.

Okay. So good. No, I was not prepared for that question. But we said that, well, they're definitely increasing because at the same time, the automotive has been going down. So we said -- I've said like 2 years back that automotive is roughly 20% or so.

Now, I would say that it's somewhere between 10% and 15%. And at the same time, medical -- well, it kind of changes quarter-on-quarter, but the medical is the biggest at the moment. Defense was actually very small, and it's growing very rapidly. So I expect that the defense will pass the automotive even if it hasn't already done so. So I expect the defense to be somewhere in the 15%, 20% bracket and the medical over there and medical closer to that 20% bracket.

Jaakko Tyrvainen from SEB. Trying to get a bit more understanding on the organic underlying trends in the so-called old Qt. You said that you don't provide any organic growth for Qt like you did -- growth rate for Qt like you did in last quarter. Is that correct?

I don't think we gave it last quarter either.

I recall, you said. Qt was 11.5% up organically in ARR, I mean.

ARR, yes. Oh, yes, okay, ARR, we talked about, yes, but not that. Well, there is -- obviously, with this development, you can make the assumptions that with such a heavy subscription change we are having on IAR -- we really need to change the name.

On IAR, the impact on revenue is negative on short term. So that's what we are seeing. And of course, that puts pressure on the IAR profitability as well. If we look on the Qt having on Qt revenue on those numbers, 6 plus something, downdrift on the distribution revenue means that the license sales has been on a very healthy growth on this quarter.

And Squish actually follows pretty much on Qt because if you're using Qt, the only feasible test tool really is Squish, right? So I mean, more Qt does bigger deals and whatnot, Squish goes there. And then on top of that, Squish can be sold outside of the Qt ecosystem and the open source and whatnot. So there it comes.

Now keep in mind, which I've always been saying that the quarters are -- they are not brothers or sisters together. So there is always this quarterly fluctuation. So it's not like that we have one quarter and then we can make a straight line, but this is the future.

Our business is like this. So the -- but I mean, if I look overall trends that how we are selling licenses, particularly DC licenses, how we are performing on license sales and how we're performing on IAR, I think we are going in a better direction.

Now the question is that what's going to be the speed? If I look at our change negotiations that we're going to cut that EUR 20 million cost and where we have this business development as it goes, we're going to -- IAR is going to turn into profitability because of the subscription change next year. We're not going to have these one-off costs.

And I can say that already now, we're seeing a 30-plus percent EBITA for next year. ARR -- sorry before -- if I just look at the ARR number, not dividing it anywhere, I'm pretty happy. I mean it's a sizable number.

A follow-up on that one. Let's put it this way. You had organic ARR growth of 2.4% Q-on-Q. How much of this was driven by IARs subscription change and overall IAR growth? And did Qt grew Q-on-Q basis?

Well, Qt grew organically on the other questions, we don't have them yes. So Qt is growing organically for sure, but on the ARR growth for those other questions, I don't have an answer for you, sorry.

Okay. And then you already touched it a bit, but on the revenue on the P&L and then the volatility there, did you see some significant multiyear deals impacting the strong development license sales growth?

No. It's very -- in that sense, very boring typical quarter. And as you know, the -- always in our business, while the quarters do fluctuate, then the other fact that we do have is that a large part of the quarter sales actually comes into the last 2 weeks and then the fourth quarter is insane. So we do -- a large part of the year result is actually done in the -- probably the 3 last weeks of December.

And so that's the -- and I don't know why all this buying tends to go towards the end of the year and towards the end of the quarter, but that's very typical for us. But at the same time, of course, seeing what's happening, sensing where we're moving and all of that, I say that the underlying performance, underlying environment and whatnot, it is getting better. So the -- and I have no doubt that with the cost savings that we're going to be on a very healthy EBITA numbers next year.

Even with the very modest revenue growth. So when I say the 30%, I'm not expecting that there needs to be a huge top line growth. And that, of course, as you know, affects a lot because the more -- the top line basically drops directly into our bottom line. So even with a very modest revenue growth, we're going to have a very healthy EBITA next year. And if we're going to have a decent growth, then it's going to be even better.

Marianne Palmu from Inderes. You mentioned in the report that new product sales were going well in defense, aviation and medical. I guess from the 2 questions, first one is that which products are kind of flying the best on the new product side in this segment? And then the second one is you've kind of broadened your product portfolio quite a bit in the last years and did one step to that as well. Where are the different products you have in your portfolio in terms of their maturity, I guess, compared to the kind of not legacy Qt, but yes, the Qt Framework?

Well, if we talk about defense and medical and whatnot, they're kind of all regulated markets, safety critical markets and our whole portfolio fits in there very well. I mean, IAR and the Qt and so our whole portfolio fits into that particular segment. We are actually seeing some light in automotive as well.

And just to give you an idea that if we're successful closing some deals in automotive this year, we're going to talk about that revenue in '28, right? So if we are successful closing those automotive deals now, we're going to see the revenue starting to accumulate in '28 so that you actually see them on numbers. So this is kind of the cycle.

We did invest in defense already many years ago, but then the sentiment was something that you didn't want to put that on a website because it was kind of -- it was not well received that somebody does defense work. Now you're seeing being a patriotic if you do that, but a few years back. So our position in defense is a constant deliberate work that's been carried out for the past 5 years.

So into your question that all our products are, in that sense, pretty mature. And that's why particularly on embedded, we are so successful because if you think our customers that they start a project and they do whatever they do, usually the lifespan of their product is like 10 years. And they don't want to buy a product that they do get the updates every 3 weeks or whatnot that they have to do.

So if you look Qt, for example, we do a couple of major releases a year, and we have a lot of people using the old versions of Qt, and that's one of the cornerstones on this embedded that people can trust that we are here. We're going to be here in the next 10 years and our products are mature, that they can rely on them, they can use our products for the whole life cycle of the product. And that's one of our competitive edges.

If you go on the web technologies, it's a different story. But on embedded, that's it. I would say that the -- we've had a kind of a new product, and let's see how that works. We do have our design tooling. And during this fall, we're going to come out with the new versions of that design tooling. It's kind of -- it's a mature product in a way that we've had it for a long time, but now it's going to have AI functionalities and whatnot. So it's kind of a revamp totally, and it's going to be a bit of a new product launch as a whole.

So it's a mature product, but it's going to be a new release. But like I said, on embedded, people actually -- our customers respect the fact that we've been around our products are very robust tested, and we don't have to do updates very often to them and they can rely on them for a long time.

So that's a good portfolio, and that fits very well into the functional safety, safety critical segment, really resonates over there. So how do we add our portfolio in the future? Remains to be seen. I think we're going to be doing acquisitions also in the future, adding products into our portfolio.

AI, of course, is changing this seen in a way that the -- I mean, if AI improves a bit, if you think for electric bike manufacturer, for example, we do have lots of engineers in-house as well. We have all these tools using AI, we might be able to offer a more vertically ready-made software than we are doing today. And we already do have these customers globally, and we are definitely a market leader in this.

So is our next acquisition going to be adding the portfolio in this development process? Or is it going to be a product or service that actually enables us to be more vertically integrated, that remains to be seen.

Maybe continuing on that and thinking the angle of revenue potential in these different products. I guess we've been talking about quality assurance for quite a while, and that could be kind of the next Qt. And is that kind of -- do you see that product being past, it's kind of fastest growth phase already? Or is that still in the very kind of...

No, it's still -- it's in the early phases. Yes. Still it's in the early phases, yes. So definitely, if you not -- this is, of course, in a disclaimer that don't think about the timings. But if we think on a product life cycle, the Qt obviously is the much further down the road on the growth.

IAR is, well, IAR is basically going to grow quite a lot due to subscription change. Is it -- it can almost double its revenue basically just through the subscription. That's the likelihood.

So if it was 40 something, just the subscription change will be 80-something when it's done. And of course, that's going to take 3 years. How to get organic growth after that is a good question because it's very well integrated into the functional safety, safety critical, but not used so much elsewhere.

And so I think that during the next 3 years, that's going to be the question that -- what's going to be the strategy for IAR to find organic growth and where on testing market, yes, definitely, I mean, we bought it -- we bought EUR 12 million revenue. It's definitely a EUR 100 million business on the course of the years. How to grow beyond that, it's then a good question.

And this is always good to remember that when we started with Qt, we were probably in a EUR 20 million region or something like that. The people were saying that, well, if you can grow a pools business into EUR 100 million, that you're like a wizard right, because the EUR 50 million more like it. Well, then we got into EUR 100 million and now we're in the EUR 200 million, and it's still growing, right? So when I say that I see that the testing business can grow into EUR 100 million, it's the view I have now.

Of course, it will go beyond that and how and where and where we're going to position it. So if you think on testing, the Qt potential market, if I look only the developers, it's probably EUR 1.5 billion, if I look at the testing market because it's only -- it's not only the Qt technology, it's also other languages.

So it's like the potential market is like a double basically. So that's kind of the size I'm envisioning. So if you add all that together, with the current portfolio, you should be able to build a full EUR 500 million business with a very, very profitable operations.

And what's beyond that, well, then that needs new markets. I mean, don't forget, we're not in South America, we're not in Africa. There are a lot of markets where we're not at this point of time, and there are use cases evolving all the time and whatnot, technology is evolving.

So of course, the opportunities will grow as we go forward. But we're looking for -- we need to do this IAR integration. We need to pay a bit of a debt away, and then we're looking for new acquisitions. So we definitely want to be a growth company also in the future.

Okay. Time's up. Thank you very much for participating in this second quarter. We had a very good quarter, and I'm happy with the results. And I think that we're going into right direction and really looking forward to seeing you again and really looking forward to building the business going forward in the second half of the year and next year. Thank you very much.

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.