Q2 2026 Siemens AG Earnings Call

May 13, 2026

Operator: Before we begin, I would like to draw your attention to the safe harbor statement on page 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

Speaker #1: Been recorded. Before we begin, I would like to draw your attention to the Safe Harbor Statement on page 2 of the Siemens presentation. This conference call may include forward-looking statements.

Operator: Before we begin, I would like to draw your attention to the safe harbor statement on page two of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

Speaker #1: This statement is based on the company's current expectations and certain assumptions and is therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations.

Speaker #1: Please go ahead, sir.

Speaker #2: Good morning, ladies and gentlemen, and welcome to our fiscal Q2 26 conference call. All documents were released this morning, and can be found also on our IR website.

Tobias Atzler: Good morning, ladies and gentlemen, and welcome to our fiscal Q2 2026 conference call. All documents were released this morning and can be found also on our IR website. I am here today with our CEO, Roland Busch, and our new CFO, Veronika Bienert, for her first earnings call. Both will review the Q2 results. After the presentation, we will have time for Q&A. With that, over to you, Roland.

Speaker #1: Please stand by. We're about to begin. Good morning, ladies and gentlemen, and welcome to the Siemens 2026 second quarter conference call. As a reminder, this call is being recorded.

Operator: Please stand by. We're about to begin. Good morning, ladies and gentlemen, and welcome to the Siemens 2026 Q2 Conference Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor Statement on page 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

Speaker #2: I'm here today with our CEO, Roland Busch, and our new CFO, Veronika Bienert, for her first earnings call. Both will review the Q2 results.

Speaker #2: After the presentation, we will have time for Q&A; with that, over to you, Roland.

Speaker #1: Before we begin, I would like to draw your attention to the Safe Harbor statement on page 2 of the Siemens presentation. This conference call may include forward-looking statements.

Speaker #3: Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our second quarter performance. I'm pleased that we continue our successful path of profitable growth, creating value for all our stakeholders despite an overall environment that was geopolitically demanding.

Roland Busch: Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our Q2 performance. I'm pleased that we continued our successful path of profitable growth, creating value for all our stakeholders, despite an overall environment that was geopolitically demanding. In the Middle East, our top priority has been on supporting and safeguarding the well-being of our employees affected in the region. From a business perspective, we expect our direct revenue exposure in this region to be limited to 3% to 4% in fiscal year 2026. Direct supply exposure at around 1% of purchasing volume is very low and mitigation measures are in place. Obviously, we are closely monitoring developments as well as the magnitude of secondary effects regarding inflation, global supply chains, and investment sentiment.

Speaker #1: This statement is based on the company's current expectations and certain assumptions, and is therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations.

Speaker #3: In the Middle East, our top priority has been on supporting and safeguarding the well-being of our employees affected in the region. From a business perspective, we expect our direct revenue exposure in this region to be limited to 3% to 4% in fiscal year 2026.

Speaker #1: Please go ahead, sir.

Speaker #2: Good morning, ladies and gentlemen, and welcome to our fiscal Q2 2026 conference call. All documents were released this morning and can also be found on our IR website.

Tobias Atzler: Good morning, ladies and gentlemen, welcome to our fiscal Q2 2026 conference call. All documents were released this morning and can be found also on our IR website. I'm here today with our CEO, Roland Busch, and our new CFO, Veronika Bienert, for her first earnings call. Both will review the Q2 results. After the presentation, we will have time for Q&A. With that, over to you, Roland.

Speaker #3: Direct supply exposure at around 1% of purchasing volume is very low, and mitigation measures are in place. Obviously, we are closely monitoring developments as well as the magnitude of secondary effects regarding inflation, global supply chains, and investment sentiment.

Speaker #2: I'm here today with our CEO, Roland Busch, and our new CFO, Veronica Binat, for her first earnings call. Both will review the Q2 results.

Speaker #2: After the presentation, we will have time for Q&A; with that, over to you, Roland.

Speaker #3: Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our second quarter performance. I'm pleased that we continued our successful path of profitable growth, creating value for all our stakeholders despite an overall environment that was geopolitically demanding.

Roland Busch: Thank you, Tobias, and good morning, everyone, and thank you for joining us to discuss our Q2 performance. I'm pleased that we continued our successful path of profitable growth, creating value for all our stakeholders, despite an overall environment that was geopolitically demanding. In the Middle East, our top priority has been on supporting and safeguarding the well-being of our employees affected in the region. From a business perspective, we expect our direct revenue exposure in this region to be limited to 3% to 4% in fiscal year 2026. Direct supply exposure at around 1% of purchasing volume is very low, and mitigation measures are in place. Obviously, we are closely monitoring developments as well as the magnitude of secondary effects regarding inflation, global supply chains, and investment sentiment.

Speaker #3: So far, however, we have not seen material changes in broader customer buying behavior. And we are benefiting from our technological strengths and strong positioning in key growth markets.

Roland Busch: However, we have not seen material changes in broader customer buying behavior, and we are benefiting from our technological strengths and strong positioning in key growth markets. Let me walk you through the key highlights. Book to bill reached a strong 1.22, lifting orders backlog to a record high level of EUR 124 billion. Nominal top-line growth rates were again materially impacted by the strong euro as anticipated. Group orders reached EUR 24.1 billion, up 18% on the prior year, with double-digit growth in all three core businesses. Smart Infrastructure again reached a quarterly order record with strong demand across most end markets. SI's data center vertical clearly stood out with unprecedented triple-digit order growth in the quarter, even topping the excellent Q1. Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure.

Speaker #3: Now, let me walk you through the key highlights. Book to Bill reached a strong 1.22, lifting orders backlog to a record high level of 124 billion euros.

Speaker #3: Nominal top-line growth rates were again materially impacted by the strong euro, as anticipated. Group orders reached 24.1 billion euros, up 18% on the prior year, with double-digit growth in all three core businesses.

Speaker #3: Smart infrastructure again reached a quarterly order record, with strong demand across most end markets. SIs' data center vertical clearly stood out, with unprecedented triple-digit order growth in the quarter, even topping the excellent Q1.

Roland Busch: So far, however, we have not seen material changes in broader customer buying behavior, and we are benefiting from our technological strengths and strong positioning in key growth markets. Let me walk you through the key highlights. Book-to-bill reached a strong 1.22, lifting orders backlog to a record high level of EUR 124 billion. Nominal top-line growth rates were again materially impacted by the strong euro as anticipated. Group orders reached EUR 24.1 billion, up 18% on the prior year, with double-digit growth in all three core businesses. Smart Infrastructure again reached a quarterly order record with strong demand across most end markets. SI's data center vertical clearly stood out with unprecedented triple-digit order growth in the quarter, even topping the excellent Q1. Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure.

Speaker #3: Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure. Digital industries continued its growth path. The market environment had shown some early signs of improvement that are now being challenged by renewed geopolitical volatility.

Speaker #3: Now, let me walk you through the key highlights. Book-to-bill reached a strong 1.22, lifting orders backlog to a record high level of €124 billion.

Roland Busch: Digital Industries continued its growth path. The market environment had shown some early signs of improvement that are now being challenged by renewed geopolitical volatility. DI's automation business was strong across regions. Our software business seized several larger opportunities across the portfolio and is successfully upselling with its customer base. Mobility won attractive large orders in Q2. Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3. We will deliver up to 200 double-deck trains based on the Desiro platform to SBB. This is the Swiss Bundesbahn for the Swiss commuter rail networks. The order value is around CHF 2 billion. Overall, revenue growth reached 6%, driven by Digital Industries and Smart Infrastructure. A very strong contribution came from Smart Infrastructure's electrification business, up 18%. The software business at Digital Industries achieved compelling 14%.

Speaker #3: The ICE automation business was strong across regions. Our software business seized several larger opportunities across the portfolio, and is successfully upselling with its customer base.

Speaker #3: Mobility won attractive large orders in Q2. Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3.

Speaker #3: Smart Infrastructure again reached a quarterly order record, with strong demand across most end markets. SI's data center vertical clearly stood out, with unprecedented triple-digit order growth in the quarter—even topping the excellent Q1.

Speaker #3: We will deliver up to 200 double-deck trains based on the D0 platform to SPB, this is the Swiss Bundesbahn, for the Swiss commuter rail networks.

Speaker #3: The order value is around 2 billion Swiss francs. Overall, revenue growth reached 6%, driven by digital industries and smart infrastructure. A very strong contribution came from smart infrastructures, electrification business, up 18%.

Roland Busch: Digital Industries has continued its growth path. The market environment had shown some early signs of improvement that are now being challenged by renewed geopolitical volatility. DI's automation business was strong across regions. Our software business seized several larger opportunities across the portfolio and is successfully upselling with its customer base. Mobility won attractive large orders in Q2. Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3. We will deliver up to 200 double-deck trains based on the Desiro platform to SBB. This is the Swiss Bundesbahn for the Swiss commuter rail networks. The order value is around CHF 2 billion. Overall, revenue growth reached 6%, driven by Digital Industries and Smart Infrastructure. A very strong contribution came from Smart Infrastructure's electrification business, up 18%. The software business at Digital Industries achieved compelling 14%.

Speaker #3: The IS automation business was strong across regions. Our software business seized several larger opportunities across the portfolio and is successfully upselling with its customers. Mobility won attractive large orders in Q2.

Speaker #3: The software business at Digital Industries achieved compelling 14%. It is good to see that revenue was up in all regions. The Americas led the way, up 10%, fueled by strong momentum in the United States.

Roland Busch: It is good to see that revenue was up in all regions. The Americas led the way up 10%, fueled by strong momentum in the US. EMEA grew by 2% and Asia, Australia was up 8%, driven by India, which was up 21%. Industrial Business profit reached EUR 3 billion, translating to a profit margin of 15.4%. We saw operational strengths at Digital Industries and Smart Infrastructure, while Mobility was impacted by US tariffs. Currency headwinds amounted to 80 basis points and are expected to ease in H2. These results translated into earnings per share pre-PPA of EUR 2.81, including, as previously indicated, a gain from the divestment of our airport logistics business in the US. Compared to Q1, free cash flow picked up to EUR 1.7 billion.

Speaker #3: EMEA grew by 2%, and Asia, Australia was up 8%, driven by India, which was up 21%. Industrial business profit reached 3 billion euros, translating to a profit margin of 15.4%.

Speaker #3: Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3. We will deliver up to 200 double-deck trains based on the D0 platform to SPB.

Speaker #3: This is the Swiss Bundesbahn, for the Swiss commuter rail networks. The order value is around 2 billion Swiss francs. Overall, revenue growth reached 6%, driven by digital industries and smart infrastructure.

Speaker #3: We saw operational strengths at Digital Industries and smart infrastructure. While mobility was impacted by US tariffs. Currency headwinds amounted to 80 basis points and are expected to ease in the second half.

Speaker #3: A very strong contribution came from Smart Infrastructure's Electrification business, up 18%. The software business at Digital Industries achieved a compelling 14%. It is good to see that revenue was up in all regions.

Speaker #3: These results translated into earnings per share pre-PBA of 2 euro and 81 cents, including as previously indicated, a gain from the divestment of our airport logistics business in the US.

Roland Busch: It is good to see that revenue was up in all regions. The Americas led the way up 10%, fueled by strong momentum in the United States. EMEA grew by 2%, Asia, Australia was up 8%, driven by India, which was up 21%. Industrial business profit reached EUR 3 billion, translating to a profit margin of 15.4%. We saw operational strengths at Digital Industries and Smart Infrastructure, while Mobility was impacted by US tariffs. Currency headwinds amounted to 80 basis points and are expected to ease in H2. These results translated into earnings per share pre-PPA of EUR 2.81, including, as previously indicated, a gain from the divestment of our airport logistics business in the US. Compared to Q1, free cash flow picked up to EUR 1.7 billion.

Speaker #3: The Americas led the way, up 10%, fueled by strong momentum in the United States. EMEA grew by 2%, and Asia, Australia was up 8%, driven by India, which was up 21%.

Speaker #3: Compared to the first quarter, free cash flow picked up to 1.7 billion euros. We confirm our outlook for fiscal year 2026 on the group level.

Roland Busch: We confirm our outlook for fiscal year 2026 on the group level with some adjustments in the individual businesses. Veronika will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the timeline for the spin-off of Siemens Healthineers shares. The shareholder vote is now planned for our next ordinary annual shareholders meeting in February 2027. Four key levers drive our growth ambitions as one tech company. First, digital growth. In H1 of the fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November. Digital business was driven by a good mix of organic growth from expanding our Siemens Xcelerator software and digital service offerings, combined with a strong growth trajectory of our recent software acquisitions. Second, grow regions.

Speaker #3: With some adjustments in the individual businesses, Veronika will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the timeline for the spin-off of Siemens Healthineer's shares.

Speaker #3: Industrial business profit reached 3 billion euros, translating to a profit margin of 15.4%. We saw operational strengths at digital industries and smart infrastructure, while mobility was impacted by US tariffs.

Speaker #3: The shareholder vote is now planned for our next ordinary annual shareholders' meeting in February 2026. Seven. Seven. Four key levers drive our growth ambitions as one tech company.

Speaker #3: Currency headwinds amounted to 80 basis points and are expected to ease in the second half. These results translated into an earnings per share pre-PBA of €2.81, including, as previously indicated, a gain from the divestment of our airport logistics business in the US.

Speaker #3: First, digital growth. In the first half of the fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November.

Speaker #3: Compared to the first quarter, free cash flow picked up to €1.7 billion. We confirm our outlook for fiscal year 2026 on the group level.

Roland Busch: We confirm our outlook for fiscal year 2026 on the group level, with some adjustments in the individual businesses. Veronika will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the timeline for the spin-off of Siemens Healthineers shares. The shareholder vote is now planned for our next ordinary annual shareholders meeting in February 2026. Four key levers drive our growth ambitions as ONE Tech Company. First, digital growth. In the H1 of the fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November. Digital business was driven by a good mix of organic growth from expanding our Siemens Xcelerator software and digital service offerings, combined with the strong growth trajectory of our recent software acquisitions. Second, grow regions.

Speaker #3: Digital business was driven by a good mix of organic growth from expanding our Siemens accelerator software and digital service offerings, combined with a strong growth trajectory of our recent software acquisitions.

Speaker #3: With some adjustments in the individual businesses, Veronica will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the timeline for the spin-off of Siemens Healthineers shares; the shareholder vote is now planned for our next ordinary annual shareholders' meeting in February 2026.

Speaker #3: Second, grow regions. A great example of where Siemens' strengths across business come together as one is Vulcan Energy's project Lionheart in Germany's Upper Rhine Valley.

Roland Busch: A great example of where Siemens strengths across business come together as one is Vulcan Energy's project, Lionheart, in Germany's Upper Rhine Valley. This is Europe's first integrated lithium and renewable energy project, and it will create local lithium supply. As a result, it will strengthen growth and competitiveness in Germany. The backbone of Lionheart will be our advanced automation and digitalization technologies, as well as smart buildings solutions. Bringing them together will help in ramping up production faster. As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing. Third, grow verticals. Data center demand has been soaring, and it reflects our trusted systems integration and delivery capabilities. The team grew our revenue in H1 by more than 45% to EUR 1.8 billion.

Speaker #3: Seven. Seven. Four key levers drive our growth ambitions as one tech company. First, digital growth. In the first half of fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November.

Speaker #3: This is Europe's first integrated lithium and renewable energy project, and it will create local lithium supply. As a result, it will strengthen growth and competitiveness in Germany.

Speaker #3: The backbone of Lionheart will be our advanced automation and digitalization technologies, as well as smart buildings solutions. Bringing them together will help in ramping up production faster.

Speaker #3: Digital business was driven by a good mix of organic growth from expanding our Siemens Xcelerator software and digital service offerings, combined with a strong growth trajectory of our recent software acquisitions.

Speaker #3: As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing.

Speaker #3: Third, grow verticals. Data center demand has been soaring and it reflects our trusted systems integration and delivery capabilities. The team grew our revenue in the first half year by more than 45% to 1.8 billion euros.

Speaker #3: Second, grow regions. A great example of where Siemens' strengths across business come together as one is Vulcan Energy's project Lionheart in Germany's Upper Rhine Valley.

Roland Busch: A great example of where Siemens' strengths across business come together as one is Vulcan Energy's Project Lionheart in Germany's Upper Rhine Valley. This is Europe's first integrated lithium and renewable energy project, and it will create local lithium supply. As a result, it will strengthen growth and competitiveness in Germany. The backbone of Lionheart will be our advanced automation and digitalization technologies, as well as smart buildings solutions. Bringing them together will help in ramping up production faster. As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing. Third, grow verticals. Data center demand has been soaring, and it reflects our trusted systems integration and delivery capabilities. The team grew our revenue in H1 by more than 45% to EUR 1.8 billion.

Speaker #3: This is Europe’s first integrated lithium and renewable energy project, and it will create local lithium supply. As a result, it will strengthen growth and competitiveness in Germany.

Speaker #3: And we are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low and medium voltage production capacities in the US at several locations in the Carolinas.

Roland Busch: We are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low and medium voltage production capacities in the US at several locations in the Carolinas. We are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal: we are creating more flexibility across compute, energy, and infrastructure systems. Data center operators can connect to the grid faster, scale efficiently, and operate reliably in a power-constrained world. Fourth growth lever, grow AI. Bringing AI to the real world was our key theme at our first RXD summit held in Beijing, which was a major customer and partner event. We deepened our partnership with Alibaba to bring our advanced industrial software together with their cloud and AI capabilities.

Speaker #3: The backbone of Lionheart will be our advanced automation and digitalization technologies, as well as smart building solutions. Bringing them together will help in ramping up production faster.

Speaker #3: And we are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal we are creating more flexibility across compute, energy, and infrastructure systems.

Speaker #3: As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing.

Speaker #3: Data center operators can connect to the grid faster and scale efficiently and operate reliably in a power-constrained world. Fourth, growth lever. Grow AI. Bringing AI to the real world was our key theme at our first RXD summit held in Beijing, which was a major customer and partner event.

Speaker #3: And we are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low- and medium-voltage production capacities in the US at several locations in the Carolinas.

Roland Busch: We are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low and medium voltage production capacities in the US at several locations in the Carolinas. We are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal. We are creating more flexibility across compute, energy, and infrastructure systems. Data center operators can connect to the grid faster, scale efficiently, and operate reliably in a power-constrained world. Fourth growth lever, grow AI. Bringing AI to the real world was our key theme at our first RXT summit held in Beijing, which was a major customer and partner event. We deepened our partnership with Alibaba to bring our advanced industrial software together with their cloud and AI capabilities.

Speaker #3: We deepened our partnership with Alibaba to bring our advanced industrial software together with their cloud and AI capabilities. Now, engineering teams at our customers in China can flexibly run complex simulations more efficiently.

Roland Busch: Now, engineering teams at our customers in China can flexibly run complex simulations more efficiently. We introduced 26 new products for edge automation and control to execute AI-driven applications in industry and in infrastructure. These products were locally developed at China speed, as we say, for the Chinese market and beyond. Those of you who visited our booth in Hanover saw firsthand how we are bringing industrial AI to the shop floor together with our partners. Let me highlight just a few examples. First, we launched our Eigen Engineering Agent, with which we are moving industrial AI from providing assistance to autonomously planning and executing industrial automation engineering tasks. The impact is impressive, with up to 50% greater engineering efficiency and up to 80% higher solution quality, proven in more than 100 global pilot deployments.

Speaker #3: And we are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal: we are creating more flexibility across compute, energy, and infrastructure systems.

Speaker #3: And we introduced 26 new products for edge automation and control to execute AI-driven applications in industry and in this infrastructure. These products were locally developed at China Speed, as we say, for the Chinese market and beyond.

Speaker #3: Data center operators can connect to the grid faster, scale efficiently, and operate reliably in a power-constrained world. Fourth gross lever: grow AI. Bringing AI to the real world was our key theme at our first RXD summit held in Beijing, which was a major customer and partner event.

Speaker #3: Those of you who visited our booth in Hanover saw firsthand how we are bringing industrial AI to the shop floor together with our partners.

Speaker #3: Let me highlight just a few examples. First, we launched our eigen engineering agent. With which we are moving industrial AI from providing assistance to autonomously planning and executing industrial automation engineering tasks.

Speaker #3: The impact is impressive with up to 50% greater engineering efficiency and up to 80% higher solution quality proven in more than 100 global pilot deployments.

Speaker #3: And we introduced 26 new products for edge automation and control to execute AI-driven applications in industry and in this infrastructure. These products were locally developed at China speed, as we say, for the Chinese market and beyond.

Speaker #3: Second, we showed that physically AI is becoming reality in our own factories. We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions.

Roland Busch: Second, we showed that physical AI is becoming reality in our own factories. We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions. A huge opportunity to address this scarcity of skilled labor. With KION, we entered a strategic partnership to shape the supply chains of the future. Using comprehensive digital twins and our Digital Twin Composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain. A key part of this collaboration is exchanging selected areas of industrial data and domain expertise to accelerate AI-enabled solutions. All these applications will lead to increasing demand for electricity for AI factories. We launched a comprehensive new direct protection and switching portfolio, the basis for offerings more efficient and sustainable DC grid solutions.

Speaker #3: Those of you who visited our booth in Hanover saw firsthand how we are bringing industrial AI to the shop floor together with our partners.

Speaker #3: Let me highlight just a few examples. First, we launched our Eigen Engineering Agent, with which we are moving industrial AI from providing assistance to autonomously planning and executing industrial automation engineering tasks.

Speaker #3: A huge opportunity to address this scarcity of skilled labor. With Kion, we entered a strategic partnership to shape the supply chains of the future.

Speaker #3: Using comprehensive digital twins in our digital twin composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain.

Speaker #3: The impact is impressive, with up to 50% greater engineering efficiency and up to 80% higher solution quality, proven in more than 100 global pilot deployments.

Speaker #3: A key part of this collaboration is exchanging selected areas of industrial data and domain expertise to accelerate AI-enabled solutions. All these applications will lead to increasing demand for electricity for AI factories.

Speaker #3: Second, we showed that, physically, AI is becoming reality in our own factories. We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions.

Roland Busch: Second, we showed that physical AI is becoming reality in our own factories. We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions. A huge opportunity to address the scarcity of skilled labor. With KION, we entered a strategic partnership to shape the supply chains of the future. Using comprehensive Digital Twins and our Digital Twin Composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain. A key part of this collaboration is exchanging selected areas of industrial data and domain expertise to accelerate AI-enabled solutions. All these applications will lead to increasing demand for electricity for AI factories. We launched a comprehensive new direct protection and switching portfolio, the basis for offerings more efficient and sustainable DC grid solutions.

Speaker #3: We launched a comprehensive new direct protection and switching portfolio: the basis for offerings more efficient and sustainable DC grid solutions. I'm very pleased with the momentum and performance of our DI software business.

Speaker #3: A huge opportunity to address this scarcity of skilled labor. With Kion, we entered a strategic partnership to shape the supply chains of the future.

Roland Busch: I'm very pleased with the momentum and performance of our DI software business. Organic ARR growth trended upward to a very healthy level of 11% over the prior year. The integration of our Altair and Dotmatics acquisitions is progressing very well. We have achieved an important milestone by implementing the targeted cost savings measures of $150 million following the Altair integration. The bottom line impact will follow subsequently. At the same time, we are working on accelerating cross-selling revenue synergies, where customer opportunities are gaining more and more traction. As AI capabilities are evolving rapidly, our top priority is ensuring that all our teams fully embrace AI to leverage the full productivity gains of AI-powered coding. We are uniquely positioned to build on our strengths and meet key customer needs when implementing AI-powered industrial software. First, deterministic.

Speaker #3: Organic ARR growth trended upward to a very healthy level of 11% over the prior year. The integration of our Altair and Dotmatics acquisitions is progressing very well.

Speaker #3: Using comprehensive digital twins in our Digital Twin Composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain.

Speaker #3: We have achieved an important milestone by implementing the targeted cost-savings measures dollars following the Altair integration. The bottom line impact will follow subsequently. At the same time, we are working on accelerating cross-selling revenue synergies where customer opportunities are gaining more and more traction.

Speaker #3: We launched a comprehensive new direct protection and switching portfolio, the basis for offering more efficient and sustainable DC grid solutions. I'm very pleased with the momentum and performance of our DI software business.

Speaker #3: As AI capabilities are evolving rapidly, our top priority is ensuring that all our teams fully embrace AI to leverage the full productivity gains of AI-powered coding.

Speaker #3: Organic ARR growth trended upward to a very healthy level of 11% over the prior year. The integration of our Altair and Dotmatics acquisitions is progressing very well.

Speaker #3: We are uniquely positioned to build on our strengths and meet key customer needs when implementing AI-powered industrial software. First, deterministic. Our customers require the management of physical laws and deterministic outcomes.

Speaker #3: We have achieved an important milestone by implementing the targeted cost-savings measures of $150 million following the Altair integration. The bottom line impact will follow subsequently.

Roland Busch: Our customers require the management of physical laws and deterministic outcomes. Embedding AI in our physics-based solutions enables better and faster deterministic intelligence that, unlike probabilistic results, can be trusted. Our tools have the capability for sign-off and verification. Second, contextualization. Industrial-grade AI requires precise contextualization of data. Our industrial software understands design intent and all of our product configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships. Third, multi-domain. The complexity of innovation is rapidly increasing in a world of personalized and software-defined products. Customers require AI to be built on systems that understand the multi-domain design intent across the enterprise. We are the only company that can do this across PLM, EDA, simulation, and shop floor execution. Fourth, life. Real-time intelligence that will drive action requires a live digital twin that is infused with real-world physical data.

Speaker #3: Embedding AI in our physics-based solutions enables better and faster deterministic intelligence. That unlike probabilistic results can be trusted. Our tools have the capability for sign-off and verification.

Speaker #3: At the same time, we are working on accelerating cross-selling revenue synergies, where customer opportunities are gaining more and more traction. As AI capabilities are evolving rapidly, our top priority is ensuring that all our teams fully embrace AI to leverage the full productivity gains of AI-powered coding.

Speaker #3: Second, contextualization. Industrial-grade AI requires precise contextualization of data. Our industrial software understands design intent, and all of our products' configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships.

Speaker #3: Third, multi-domain. The complexity of innovation is rapidly increasing in a world of personalized and software-defined products. Customers require AI to be built on systems that understand the multi-domain design intent across the enterprise.

Roland Busch: Our customers require the management of physical laws and deterministic outcomes. Embedding AI in our physics-based solutions enables better and faster deterministic intelligence that, unlike probabilistic results, can be trusted. Our tools have the capability for sign-off and verification. Second, contextualization. Industrial-grade AI requires precise contextualization of data. Our industrial software understands design intent and all of a product's configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships. Third, multi-domain. The complexity of innovation is rapidly increasing in a world of personalized and software-defined products. Customers require AI to be built on systems that understand the multi-domain design intent across the enterprise. We are the only company that can do this across PLM, EDA, simulation, and shop floor execution. Fourth, life. Real-time intelligence that will drive action requires a live digital twin that is infused with real-world physical data.

Speaker #3: Embedding AI in our physics-based solutions enables better and faster deterministic intelligence. That, unlike probabilistic results, can be trusted. Our tools have the capability for sign-off and verification.

Speaker #3: We are the only company that can do this across PLM, EDA, simulation, and shop floor execution. And fourth, life. Real-time intelligence that will drive action requires a life digital twin.

Speaker #3: Second, contextualization. Industrial-grade AI requires precise contextualization of data. Our industrial software understands design intent and all of our products' configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships.

Speaker #3: That is infused with real-world physical data. Siemens is the industrial leader in bringing the real and digital worlds together to drive better, faster, real-time intelligence, and governed actions.

Roland Busch: Siemens is the industrial leader in bringing the real and digital worlds together to drive better, faster real-time intelligence and governed actions. With focused investments, we are speeding up the development of AI-enhanced products and new applications in three ways. First, faster engines. Our physics AI solution doesn't replace deterministic CAE solvers. It makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates. They run full deterministic solvers on only the top few. Result. Dramatic faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic industrial-grade AI platform that autonomously plans, executes, and validates. We have stress-tested this capability where the stakes are at the absolute highest, which is in the semiconductor design.

Speaker #3: With focused investments, we are speeding up the development of AI, enhanced products, and new applications in three ways. First, faster engines. Our physics AI solution doesn't replace deterministic CIA resolvers.

Speaker #3: It makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates. Then they run full deterministic solvers on only the top few.

Speaker #3: We are the only company that can do this across PLM, EDA, simulation, and shop floor execution. And fourth, live. Real-time intelligence that will drive action requires a live digital twin.

Speaker #3: Result? Dramatic faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic industrial-grade AI platform that autonomously plans, executes, and validates.

Roland Busch: Siemens is the industrial leader in bringing the real and digital worlds together to drive better, faster real-time intelligence and governed actions. With focused investments, we are speeding up the development of AI-enhanced products and new applications in three ways. First, faster engines. Our physics AI solution doesn't replace deterministic CAE resolvers, solvers. It makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates. Then they run full deterministic solvers on only the top few. Result, dramatic faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic industrial-grade AI platform that autonomously plans, executes, and validates. We have stress-tested this capability where the stakes are at the absolute highest, which is in the semiconductor design.

Speaker #3: With focused investments, we are speeding up the development of AI-enhanced products and new applications in three ways. First, faster engines. Our physics AI solution doesn't replace deterministic CRA resolvers.

Speaker #3: We have stress-tested this capability where the stakes are at the absolute highest which is in the semiconductor design. The fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools.

Roland Busch: The Fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools. It delivers real engineering productivity for industry leaders such as TSMC and NVIDIA. Even more, this is a platform approach for scaling. We are taking this agentic intelligence and will extend it to more than 20 agents across our broader software portfolio. Third, increased design intelligence. One of the key challenges in adapting and implementing comprehensive digital twins for factories is the complexity of integrating data across ecosystems. Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all these data streams from the digital and real worlds into one experience. You saw this compelling concept in Hanover with PepsiCo and KION examples. We enabled those companies to build an ever-evolving engineering mirror of the physical product and factory, constantly driving operational improvement. Customer interest is massive.

Speaker #3: And it delivers real engineering productivity for industry leaders such as TSMC and NVIDIA. Even more, this is a platform approach for scaling. We are taking this agentic intelligence and will extend it to more than 20 agents across our product software portfolio.

Speaker #3: Result: dramatically faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic, industrial-grade AI platform that autonomously plans, executes, and validates.

Speaker #3: Third, increased design intelligence. One of the key challenges in adapting and implementing comprehensive digital twins for factories is the complexity of integrating data across ecosystems.

Speaker #3: Siemens has resolved this issue by introducing the digital twin composer which can merge all this data streams from the digital and real worlds into one experience.

Roland Busch: The Fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools. It delivers real engineering productivity for industry leaders such as TSMC and NVIDIA. Even more, this is a platform approach for scaling. We are taking this agentic intelligence and will extend it to more than 20 agents across our broader software portfolio. Third, increased design intelligence. One of the key challenges in adapting and implementing comprehensive digital twins for factories is the complexity of integrating data across ecosystems. Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all these data streams from the digital and real worlds into one experience. You saw this compelling concept in Hanover with PepsiCo and KION examples. We enabled those companies to build an ever-evolving engineering mirror of the physical product and factory constantly driving operational improvement. Customer interest is massive.

Speaker #3: You saw this compelling concept in Hanover with PepsiCo and Kion examples. We enabled those companies to build on ever-evolving engineering mirror of the physical product and factory constantly driving operational improvement.

Speaker #3: And it delivers real engineering productivity for industry leaders such as TSMC and Nvidia. Even more, this is a platform approach for scaling. We are taking this agentic intelligence and will extend it to more than 20 agents across our product software portfolio.

Speaker #3: Customer interest is massive. So far, we have been working on more than 300 inquiries from large enterprises since the launch at CES. To sum it up, our foundation is strong.

Roland Busch: So far, we have been working on more than 300 inquiries from large enterprises since the launch at CES. To sum it up, our foundation is strong. It's built on Teamcenter, the industry's number 1 trusted and secure system of records. On this basis, we are bringing the benefits of faster engines, faster engineers, and enhanced design intelligence to life. We are building an AI-native experience that is secure, trusted, and governed. We aim to lead this transformation. Now over to you, Veronika.

Speaker #3: It's built on team center, the industry's number one trusted and secure system of records, on this basis we are bringing the benefits of faster engines, faster engineers, and enhanced design intelligence to life.

Speaker #3: Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all these data streams from the digital and real worlds into one experience.

Speaker #3: We are building an AI-native experience that is secure, trusted, and governed. We aim to lead this transformation. And now over to you, Veronica.

Speaker #3: You saw this compelling concept in Hannover this PepsiCo and Kion examples. We enabled those companies to build on ever-evolving engineering mirror of the physical product and factory constantly driving operational improvement.

Speaker #1: Thank you, Roland, and good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year.

Veronika Bienert: Thank you, Roland, good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year. Orders for Digital Industries at EUR 4.8 billion were 12% above the prior year, with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving. At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year, with orders close to EUR 1.8 billion. Book-to-bill was clearly above 1, driven by structural tailwind from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to EUR 10.2 billion, with a gradually increasing software share.

Speaker #3: Customer interest is massive. So far, we have been working on more than 300 inquiries from large enterprises since the launch at CES. To sum it up, our foundation is strong.

Speaker #1: Orders for digital industries at 4.8 billion euros were 12% above the prior year with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving.

Speaker #3: It's built on team center, the industry's number one trusted and secure system of records, on this basis we are bringing the benefits of faster engines faster engineers and enhanced design intelligence to life.

Speaker #1: At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business, again, delivered strong growth over the prior year with orders close to 1.8 billion euros.

Speaker #3: We are building an AI-native experience that is secure, trusted, and governed. We aim to lead this transformation. And now over to you, Veronica.

Speaker #1: Book-to-bill was clearly above 1, driven by structural tailwinds from sustained AI momentum and by several large order winds s in EDA and PLM. Our backlog at digital industries increased moderately to 10.2 billion euros with a gradually increasing software share.

Veronika Bienert: Thank you, Roland. Good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year. Orders for Digital Industries at EUR 4.8 billion were 12% above the prior year, with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving. At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year, with orders close to EUR 1.8 billion. Book-to-bill was clearly above 1, driven by structural tailwind from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to EUR 10.2 billion, with a gradually increasing software share.

Speaker #1: Thank you, Roland, and good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year.

Speaker #1: Orders for Digital Industries at €4.8 billion were 12% above the prior year, with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving.

Speaker #1: Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA. DI's automation revenue was up by 6% to 3 billion euros, led by the short-cycle factory automation business.

Veronika Bienert: Revenue for Digital Industries increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA. Digital Industries' automation revenue was up by 6% to EUR 3 billion, led by the short-cycle factory automation business. Process automation was up modestly. Digital Industries' profitability was higher than expected at 18.5%, with a strong contribution from its software business. Digital Industries is increasingly reaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies in connection with Altair. A favorable mix with the high share of short-cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remained the engine for a clearly net positive economic equation in Q2. Integration-related costs for Altair and Dotmatics had a magnitude of 90 basis points in Q2, in line with expectations.

Speaker #1: At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year with orders close to 1.8 billion euros.

Speaker #1: Process automation was up modestly. DI's profitability was higher than expected at 18.5% with a strong contribution from its software business. DI is increasingly reshaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies and connection with Altair.

Speaker #1: Book-to-bill was clearly above 1, driven by structural tailwinds from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to €10.2 billion, with a gradually increasing software share.

Speaker #1: A favorable mix with the high share of short-cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remain the engine for a clearly net positive economic equation in Q2.

Veronika Bienert: Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA. DI's automation revenue was up by 6% to EUR 3 billion, led by the short cycle factory automation business. Process automation was up modestly. DI's profitability was higher than expected at 18.5%, with a strong contribution from its software business. DI is increasingly reaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies in connection with Altair. A favorable mix with a high share of short cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remained the engine for a clearly net positive economic equation in Q2. Integration related costs for Altair and Dotmatics had a magnitude of 90 basis points in Q2, in line with expectations.

Speaker #1: Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA. DI's automation revenue was up by 6% to €3 billion, led by the short-cycle factory automation business.

Speaker #1: Integration-related costs for Altair and Dotmatics had a magnitude of 90 basis points in the second quarter, in line with expectations. We now expect this number to reach around 80 basis points for full fiscal 2026.

Veronika Bienert: We now expect this number to reach around 80 basis points for full fiscal 2026. Finally, as anticipated, negative currency effects weighed on DI's margin development with around 90 basis points. I am pleased that Digital Industries improved its free cash flow performance to EUR 760 million. Looking at the regional top-line perspective, DI's automation business grew across the board. China was robust, clearly up in orders and revenue after a strong Q1, which was supported by some pull forward effects due to the expected price increases. In Q2, the book-to-bill was above 1 in China, where motion control drove revenue growth. Our local China portfolio is well on track, growing by a rate in the mid-20s. Germany showed 13% order growth on easy comps, while revenue was up modestly.

Speaker #1: Process automation was up modestly. DI's profitability was higher than expected at 18.5%, with a strong contribution from its software business. DI is increasingly reshaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies and connection with Altair.

Speaker #1: Finally, as anticipated, negative currency effects weighted on DI's margin development with around 90 basis points. I am pleased the digital industries improved its free cash flow performance to 760 million euros.

Speaker #1: As favorable mix with the high share of short-cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remain the engine for a clearly net positive economic equation in Q2.

Speaker #1: Looking at the regional top-line perspective, DI's automation business grew across the board. China was robust, clearly up in orders and revenue after a strong first quarter.

Speaker #1: Which was supported by some pull-forward effects due to the expected price increases. In Q2, the book-to-bill was above 1 in China where motion control drove revenue growth.

Speaker #1: Our local China portfolio is well on track, growing by a rate in the mid-20s. Germany showed 13% order growth on easy comms while revenue was up modestly.

Veronika Bienert: We now expect this number to reach around 80 basis points for full fiscal 2026. As anticipated, negative currency effects weighed on DI's margin development with around 90 basis points. I am pleased that Digital Industries improved its free cash flow performance to EUR 760 million. Looking at the regional top-line perspective, DI's automation business grew across the board. China was robust, clearly up in orders and revenue after a strong Q1, which was supported by some pull forward effects due to the expected price increases. In Q2, the book-to-bill was above 1 in China, where motion control drove revenue growth. Our local China portfolio is well on track, growing by a rate in the mid-20s. Germany showed 13% order growth on easy comps, while revenue was up modestly.

Speaker #1: Finally, as anticipated, negative currency effects weighed on DI's margin development by around 90 basis points. I am pleased the Digital Industries improved its free cash flow performance to €760 million.

Speaker #1: The US showed positive trends driven by brownfield modernization and greenfield activity in selected industries. Among them were semiconductors, data center, power generation, grid modernization as well as aerospace and defense-related manufacturing.

Veronika Bienert: The US showed positive trends driven by brownfield modernization and greenfield activity in selected industries. Among them were semiconductors, data center, power generation, grid modernization, as well as aerospace and defense-related manufacturing. After a successful H1, we raise our fiscal year 2026 guidance for DI's revenue growth 100 basis points at the midpoint to a narrowed range of 7% to 10%. We now expect DI's profit range to reach 17% to 19%, up 100 basis points at the midpoint versus our previous guidance. DI is driving growth and margin expansion by simplifying its setup, optimizing its sales approach, fostering innovation, and ensuring stringent post-merger integration. For Q3, we see DI orders clearly up over the prior year level with a strong contribution from its automation business. DI software will grow moderately on lower order volume from EDA year over year.

Speaker #1: Looking at the regional top-line perspective, DI's automation business grew across the board. China was robust, clearly up in orders and revenue after a strong first quarter.

Speaker #1: After a successful first half year, we raised our fiscal year 2026 guidance for DI's revenue growth 100 basis points at the midpoint to a narrowed range of 7% to 10%.

Speaker #1: This was supported by some pull-forward effects due to the expected price increases. In Q2, the book-to-bill was above 1 in China, where motion control drove revenue growth.

Speaker #1: We now expect DI's profit range to reach 70% to 17% to 19% up 100 basis points at the midpoint versus our previous guidance. DI is driving growth and margin expansion by simplifying its setup, optimizing its sales approach, fostering innovation, and ensuring stringent post-merger integration.

Speaker #1: Our local China portfolio is well on track, growing at a rate in the mid-20s. Germany showed 13% order growth on easy comms, while revenue was up modestly.

Speaker #1: The U.S. showed positive trends driven by brownfield modernization and greenfield activity in selected industries. Among them were semiconductors, data centers, power generation, grid modernization, as well as aerospace and defense-related manufacturing.

Speaker #1: For the third quarter, we see DI orders clearly up over the prior year level with a strong contribution from its automation business. DI software will grow moderately on lower order volume from EDA year over year.

Speaker #1: After a successful first half year, we raised our fiscal year 2026 guidance for DI's revenue growth 100 basis points at the midpoint to a narrow range of 7% to 10%.

Speaker #1: The sales funnel for EDA is skewed towards the fourth quarter again. We anticipate that DI revenue growth will see a high single-digit increase supported by growth in automation and software.

Veronika Bienert: The sales funnel for EDA is skewed towards Q4 again. We anticipate that Digital Industries revenue growth will see a high single-digit increase supported by growth in automation and software. We expect a profit margin of around 18%. Now let's turn to Smart Infrastructure, which continued its success story with an excellent performance across all businesses and metrics. Orders were up 35%, reaching a new record level of EUR 7.5 billion. This increase was driven by massive growth of 62% in SI's electrification business and 38% in its electrical product business. Both businesses benefited from surging contract wins from hyperscalers and colocation providers, but also from leading semiconductor firms. Data center orders amounted to a record high EUR 1.9 billion, with customers globally building out capacities for surging AI workloads. Book-to-bill reached an outstanding 1.27.

Speaker #1: We now expect DI's profit margin to reach 17% to 19%, up 100 basis points at the midpoint versus our previous guidance. DI is driving growth and margin expansion by simplifying its setup, optimizing its sales approach, fostering innovation, and ensuring stringent post-merger integration.

Speaker #1: And we expect a profit margin of around 18%. Now let's turn to smart infrastructure which continued its success story with an excellent performance across all businesses and metrics.

Speaker #1: Orders were up 35% reaching a new record level of 7.5 billion euros. This increase was driven by massive growth of 62% in SI's electrification business and 38% in its electrical product business.

Speaker #1: Both businesses benefited from surging contract wins from hyperscalers and co-location providers, but also from leading semiconductor firms. Data center orders amounted to a record high 1.9 billion euros with customers globally building out capacities for surging AI workloads.

Veronika Bienert: The sales funnel for EDA is skewed towards Q4 again. We anticipate that DI revenue growth will see a high single-digit increase supported by growth in automation and software, and we expect a profit margin of around 18%. Let's turn to Smart Infrastructure, which continued its success story with an excellent performance across all businesses and metrics. Orders were up 35%, reaching a new record level of EUR 7.5 billion. This increase was driven by massive growth of 62% in SI's electrification business and 38% in its electrical product business. Both businesses benefited from surging contract wins from hyperscalers and colocation providers, but also from leading semiconductor firms. Data center orders amounted to a record high EUR 1.9 billion, with customers globally building out capacities for surging AI workloads. Book-to-bill reached an outstanding 1.27.

Speaker #1: The sales funnel for EDA is skewed towards the fourth quarter again. We anticipate that DI revenue growth will see a high single-digit increase, supported by growth in automation and software.

Speaker #1: And we expect a profit margin of around 18%. Now let's turn to smart infrastructure. Which continued its success story with an excellent performance across all businesses and metrics.

Speaker #1: Book-to-bill reached an outstanding 1.27. SI's record order backlog of 22 billion euros now already provides visibility well into fiscal year 2027. Revenue growth was broad-based and reached 10%.

Veronika Bienert: SI's record order backlog of EUR 22 billion now already provides visibility well into fiscal year 2027. Revenue growth was broad-based and reached 10%. The largest contribution came from the electrification business, up 18%. Stringent backlog execution led to further operational margin expansion, up 10 basis points year over year to 18.6%. SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements. This offset a material currency headwind of 110 basis points, as well as higher commodity costs. For H2 of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02, with a reduction in operating working capital despite strong top-line growth.

Speaker #1: Orders were up 35%, reaching a new record level of €7.5 billion. This increase was driven by massive growth of 62% in SI's Electrification business and 38% in its Electrical Products business.

Speaker #1: The largest contribution came from the electrification business up 18%. Stringent backlog execution led to further operational margin expansion up 10 basis points year over year to 18.6%.

Speaker #1: Both businesses benefited from surging contract wins from hyperscalers and co-location providers, but also from leading semiconductor firms. Data center orders amounted to a record high €1.9 billion, with customers globally building out capacities for surging AI workloads.

Speaker #1: SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements. This offset a material currency headwind of 110 basis points as well as higher commodity costs.

Speaker #1: For the second half of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02 with a reduction in operating working capital despite strong top-line growth.

Veronika Bienert: SI's record order backlog of EUR 22 billion now already provides visibility well into fiscal year 2027. Revenue growth was broad-based and reached 10%. The largest contribution came from the electrification business, up 18%. Stringent backlog execution led to further operational margin expansion, up 10 basis points year-over-year to 18.6%. SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements. This offset a material currency headwind of 110 basis points, as well as higher commodity costs. For H2 of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02, with a reduction in operating working capital despite strong top-line growth.

Speaker #1: The largest contribution came from the Electrification business, up 18%. Stringent backlog execution led to further operational margin expansion, up 10 basis points year over year to 18.6%.

Speaker #1: Looking at the regional top-line development, there was healthy demand across the board and stringent backlog execution drove revenue the US demonstrated exceptional order momentum up 72% led by data center demand.

Veronika Bienert: Looking at the regional top-line development, there was healthy demand across the board and stringent backlog execution drove revenue. The US demonstrated exceptional order momentum, up 72%, led by data center demand. It was also good to see bookings and buildings up by low teens. Germany recorded double-digit order growth in buildings and electrical products. The Europe and Middle East region also benefited from large data center orders in the Nordics and from some power utilities wins. SI's top line in China showed further improvement driven by electrification and electrical products, despite a continuously soft real estate market. The service business delivered 7% growth, clearly up across all regions. We anticipate that the service business will accelerate in H2. Our teams continue to expect very consistent end market dynamics with data centers and power utilities as key pillars for growth.

Speaker #1: It was also good to see bookings in buildings up by low teens. Germany recorded double-digit order growth in buildings and electrical products. The Europe and Middle East region also benefited from large data center orders in the Nordics and from some power utilities bids.

Speaker #1: For the second half of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02, with a reduction in operating working capital despite strong top-line growth.

Speaker #1: SI's top-line in China showed further improvement driven by electrification and electrical products despite a continuously soft real estate market. The service business delivered 7% growth clearly up across all regions we anticipate that the service business will accelerate in the second half year.

Veronika Bienert: Looking at the regional top-line development, there was healthy demand across the board and stringent backlog execution drove revenue. The US demonstrated exceptional order momentum up 72%, led by data center demand. It was also good to see bookings and buildings up by low teens. Germany recorded double-digit order growth in buildings and electrical products. The Europe, Middle East region also benefited from large data center orders in the Nordics and from some power utilities wins. SI's top line in China showed further improvement, driven by electrification and electrical products, despite a continuously soft real estate market. The service business delivered 7% growth, clearly up across all regions. We anticipate that the service business will accelerate in H2. Our teams continue to expect very consistent end market dynamics, with data centers and power utilities as key pillars for growth.

Speaker #1: Our teams continue to expect very consistent end-market dynamics. With data centers and power utilities as key pillars for growth. After delivering 10% revenue growth in the first half of fiscal year 2026 and given high visibility from backlog, we raise our guidance for the full fiscal year.

Veronika Bienert: After delivering 10% revenue growth in H1 of fiscal year 2026, given high visibility from backlog, we raise our guidance for the full fiscal year. For SI, we now expect comparable revenue growth in the range of 8% to 10%, up by 150 basis points at the midpoint. For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18% to 19%. For Q3, we anticipate that SI's revenue growth will be at the upper end of the full year range and profit margin in line with full year expectations. Mobility recorded a mixed set of results in Q2. Strong orders at EUR 5.3 billion were well above the prior year, with a book-to-bill of 1.76.

Speaker #1: For SI, we now expect comparable revenue growth in the range of 8% to 10% up by 150 basis points at the midpoint. For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18% to 19%.

Speaker #1: For the third quarter, we anticipate that SI's revenue growth will be at the upper end of the full-year range and profit margin in line with full-year expectations.

Speaker #1: Our teams continue to expect very consistent end-market dynamics, with data centers and power utilities as key pillars for growth. After delivering 10% revenue growth in the first half of fiscal year 2026, and given high visibility from backlog, we raise our guidance for the full fiscal year.

Speaker #1: Mobility recorded a mixed set of results in the second quarter. Strong orders at 5.3 billion euros were well above the prior year with a book-to-bill of 1.76.

Veronika Bienert: After delivering 10% revenue growth in H1 of fiscal year 2026 and given high visibility from backlog, we raise our guidance for the full fiscal year. For SI, we now expect comparable revenue growth in the range of 8% to 10%, up by 150 basis points at the midpoint. For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18% to 19%. For Q3, we anticipate that SI's revenue growth will be at the upper end of the full year range and profit margin in line with full year expectations. Mobility recorded a mixed set of results in Q2. Strong orders at EUR 5.3 billion were well above the prior year, with a book-to-bill of 1.76.

Speaker #1: Order backlog stands at 53.5 billion euros with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for the second half of fiscal 2026 looks very promising.

Veronika Bienert: Order backlog stands at EUR 53.5 billion, with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for the H2 of fiscal 2026 looks very promising. Revenue in Q2 came in 2% below the strong prior year level on tough comparables, held back by the impact of US tariffs, mainly in rolling stock. In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call offs under framework agreements, especially in Europe. The U.S. Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the US. The result of this assessment impacted both top and bottom line equally. Their negative impact on Mobility's profit margin of 6.9% was 170 basis points.

Speaker #1: For SI, we now expect comparable revenue growth in the range of 8% to 10%, up by 150 basis points at the midpoint. For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18% to 19%.

Speaker #1: Revenue in Q2 came in 2% below the strong prior-year level on tough comparables. Held back by the impact of US tariffs mainly in rolling stock.

Speaker #1: For the third quarter, we anticipate that SI's revenue growth will be at the upper end of the full year range and profit margin in line with full year expectations.

Speaker #1: In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call-offs under framework agreements especially in Europe. The yes Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the US.

Speaker #1: Mobility recorded a mixed set of results in the second quarter. Strong orders at €5.3 billion were well above the prior year, with a book-to-bill of 1.76.

Veronika Bienert: Order backlog stands at EUR 53.5 billion, with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for the second half of fiscal 2026 looks very promising. Revenue in Q2 came in 2% below the strong prior year level on tough comparables, held back by the impact of US tariffs, mainly in rolling stock. In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call-offs under framework agreements, especially in Europe. The US Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the US. The result of this assessment impacted both top and bottom line equally. Their negative impact on Mobility's profit margin of 6.9% was 170 basis points.

Speaker #1: Order backlog stands at €53.5 billion, with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for the second half of fiscal 2026 looks very promising.

Speaker #1: The result of this assessment impacted both top and bottom line equally. Their negative impact on mobility's profit margin of 6.9% was 170 basis points.

Speaker #1: In addition, severance charges at 80 basis points were somewhat higher due to some factory network optimization measures. Free cash flow was soft as expected because the timing of milestone payments led to a temporary buildup of operating working capital.

Veronika Bienert: In addition, severance charges at 80 basis points were somewhat higher due to some factory network optimization measures. Free cash flow was soft as expected because the timing of milestone payments led to a temporary buildup of operating working capital. Looking at project payment profiles and the timing of order awards, we continue to expect a material catch-up in H2 of fiscal 2026. After H1, we take a prudent perspective on the current geopolitical challenges and having taken into consideration the current situation of US tariffs. As a result, we lower our full year outlook for revenue growth at Mobility to the range of 5% to 7%. Despite this change, we confirm the full year margin outlook in the range of 8% to 10%. Also, it is now expected to be towards the lower end.

Speaker #1: Revenue in Q2 came in 2% below the strong prior year level on tough comparables. Held back by the impact of US tariffs mainly in rolling stock.

Speaker #1: Looking at project payment profiles and the timing of order awards, we continue to expect a material catch-up in the second half of fiscal 2026.

Speaker #1: After the first half year, we take a prudent perspective on the current geopolitical challenges. And having taken into consideration the current situation of US tariffs, as a result, we lower our full-year outlook for revenue growth at mobility to the range of 5% to 7%.

Speaker #1: The result of this assessment impacted both top and bottom line equally. Their negative impact on Mobility's profit margin of 6.9% was 170 basis points.

Speaker #1: Despite this change, we confirm the full-year margin outlook in the range of 8% to 10% also it is now expected to be towards the lower end.

Speaker #1: In addition, severance charges at 80 basis points were somewhat higher due to some factory network optimization measures. Free cash flow was soft, as expected, because the timing of milestone payments led to a temporary build-up of operating working capital.

Speaker #1: For the third quarter, we see mobility's revenue growth and margin within its full-year guidance. Our below IB performance as shown on page 19 in the appendix was as expected.

Veronika Bienert: For Q3, we see Mobility's revenue growth and margin within its full-year guidance. Our below IB performance is shown on page 19 in the appendix as was as expected. The results included a gain of EUR 172 million from the sale of our airport logistics business in the US. Free cash flow of EUR 1.7 billion in Q2 was well above the prior year. As discussed, we saw a significant catch-up in the industrial businesses and lower tax payments below the line. We are very confident that we will achieve a double-digit cash return once again in fiscal year 2026. With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength.

Speaker #1: Looking at project payment profiles and the timing of order awards, we continue to expect a material catch-up in the second half of fiscal 2026.

Speaker #1: The results included a gain of 172 million euros from the sale of our airport logistics business in the US. Free cash flow of 1.7 billion euros in the second quarter was well above the prior year.

Speaker #1: After the first half year, we take a prudent perspective on the current geopolitical challenges, and, having taken into consideration the current situation of US tariffs, as a result, we lower our full-year outlook for revenue growth at Mobility to the range of 5% to 7%.

Speaker #1: As discussed, we saw a significant catch-up in the industrial businesses and lower tax payments below the line. We are very confident that we will achieve a double-digit cash return once again in fiscal year 2026.

Speaker #1: Despite this change, we confirm the full year margin outlook in the range of 8% to 10% also it is now expected to be towards the lower end.

Speaker #1: With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength.

Veronika Bienert: For Q3, we see Siemens Mobility's revenue growth and margin within its full year guidance. Our below IB performance is shown on page 19 in the appendix as was, as expected. The results included a gain of EUR 172 million from the sale of our airport logistics business in the US. Free cash flow of EUR 1.7 billion in Q2 was well above the prior year. As discussed, we saw a significant catch-up in the industrial businesses and lower tax payments below the line. We are very confident that we will achieve a double-digit cash return once again in fiscal year 2026. With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength.

Speaker #1: For the third quarter, we see Mobility's revenue growth and margin within its full-year guidance. Our below IB performance, as shown on page 19 in the appendix, was as expected.

Speaker #1: Our leadership team is fully committed to delivering stringent capital allocation and a strong shareholder return. Therefore, we retired 18 million shares in March and we have almost finished our current 6 billion euro buyback program after less than two and a half years.

Veronika Bienert: Our leadership team is fully committed to delivering stringent capital allocation and a strong shareholder return. Therefore, we retired 18 million shares in March, and we have almost finished our current EUR 6 billion buyback program after less than 2 and a half years. Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to EUR 6 billion over a period of up to 5 years. These parameters allow sufficient flexibility. However, we have built a track record of accelerated execution when feasible. Now, let me point out our updated outlook assumptions for full fiscal 2026. Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year.

Speaker #1: The results included a gain of €172 million from the sale of our airport logistics business in the US. Free cash flow of €1.7 billion in the second quarter was well above the prior year.

Speaker #1: Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to 6 billion euros over a period of up to five years.

Speaker #1: These parameters allow sufficient flexibility. However, we have built a track record of accelerated execution when feasible. Now, let me point out our updated outlook assumptions for full fiscal 2026.

Speaker #1: With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength.

Veronika Bienert: Our leadership team is fully committed to delivering stringent capital allocation and a strong shareholder return. Therefore, we retired 18 million shares in March, and we have almost finished our current EUR 6 billion buyback program after less than 2.5 years. Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to EUR 6 billion over a period of up to 5 years. These parameters allow sufficient flexibility. However, we have built a track record of accelerated execution when feasible. Now let me point out our updated outlook assumptions for full fiscal 2026. Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year.

Speaker #1: Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior-year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year.

Speaker #1: Our leadership team is fully committed to delivering stringent capital allocation and a strong shareholder return. Therefore, we retired 18 million shares in March, and we have almost finished our current €6 billion buyback program after less than two and a half years.

Speaker #1: We will continue to support mid-term growth momentum by increasing CapEx in targeted growth fields to expand capacity. Severance costs are now expected in the range of 300 to 350 million euros.

Veronika Bienert: We will continue to support midterm growth momentum by increasing CapEx in targeted growth fields to expand capacity. Severance costs are now expected in the range of EUR 300 to 350 million. We will continue working on ensuring competitiveness across our businesses and functions, primarily with regard to Digital Industries. As expected, FX was a strong burden in H1 of fiscal 2026. However, based on current rates, we expect the headwinds to ease over H2. Finally, let me conclude with a confirmed outlook for the Siemens Group and the updated guidance for the businesses at a glance. We continue to expect to reach the upper half of our group revenue growth guidance of 6% to 8%, and we anticipate that we will reach EPS pre-PPA in the range of EUR 10.70 to 11.10.

Speaker #1: Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to 6 billion euros over a period of up to five years.

Speaker #1: We will continue working on ensuring competitiveness across our businesses and functions primarily with regard to digital industries. As expected, FX was a strong burden in the first half of fiscal 2026.

Speaker #1: However, based on current rates, we expect the headwinds to ease over the second half year. Finally, let me conclude with a confirmed outlook for the Siemens Group.

Speaker #1: Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year.

Speaker #1: And the updated guidance for the businesses at a glance. We continue to expect to reach the upper half of our group revenue growth guidance of 6% to 8%.

Speaker #1: We will continue to support mid-term growth momentum by increasing CAPEX in targeted growth fields to expand capacity. Severance costs are now expected in the range of 300 to 350 million euros.

Speaker #1: And we anticipate that we will reach EPS pre-PPA in the range of 10 euros, 70 cents to 11 euros, 10 cents. In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow.

Veronika Bienert: In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow. With that, I hand it back to Tobias for Q&A.

Speaker #1: With that, I hand it back to Tobias for Q&A. Thank you, Veronica. We are now ready for Q&A. Please limit yourselves to one question per person.

Tobias Atzler: Thank you, Veronica. We are now ready for Q&A. Please limit yourself to one question per person. We want to give as many of you as possible the opportunity to raise your question. Operator, please open the Q&A now.

Speaker #1: However, based on current rates, we expect the headwinds to ease over the second half year. Finally, let me conclude with a confirmed outlook for the Siemens Group.

Speaker #1: We want to give as many of you as possible the opportunity to raise your question. Operator, please open the Q&A now.

Speaker #2: Thank you, ladies and gentlemen. Anyone who wishes to ask a question may press start followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press start followed by two.

Operator: Thank you, ladies and gentlemen. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. The first question comes from the line of Philip Buller from JP Morgan. Please go ahead.

Speaker #1: And the updated guidance for the businesses at a glance. We continue to expect to reach the upper half of our group revenue growth guidance of 6% to 8%.

Speaker #2: If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press start followed by one at this time.

Speaker #1: And we anticipate that we will reach EPS pre-PPA in the range of 10 euros 70 cents to 11 euros 10 cents. In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow.

Speaker #2: The first question comes from the line of Phil Buller from JP Morgan. Please go ahead.

Veronika Bienert: In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow. With that, I hand it back to Tobias for Q&A.

Speaker #3: Thank you. Hi. Good morning, Roland, Veronica, and Tobias. I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp?

Philip Buller: Thank you. Hi. Good morning, Roland, Veronika, and Tobias. I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp? Is it a one-off, or are you gaining share? If so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great. Thank you.

Phil Buller: Thank you. Hi. Good morning, Roland, Veronika, and Tobias. I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp? Is it a one-off, or are you gaining share? If so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great. Thank you.

Speaker #1: With that, I hand it back to Tobias for Q&A. Thank you, Veronica. We are now ready for Q&A. Please limit yourselves to one question per person.

Tobias Atzler: Thank you, Veronika. We are now ready for Q&A. Please limit yourself to one question per person. We want to give as many of you as possible the opportunity to raise your question. Operator, please open the Q&A now.

Speaker #3: Is it a one-off, or are you gaining share? And if so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great.

Speaker #1: We want to give as many of you as possible the opportunity to raise your question. Operator, please open the Q&A now.

Speaker #3: Thank you.

Operator: The first question comes from the line of Phil Buller from J.P. Morgan. Please go ahead.

Speaker #3: Thank you, ladies and gentlemen. Anyone who wishes to ask a question may press start followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press start followed by two.

Speaker #4: So we do our homework when we compare our growth in as far as we can, obviously, see it from we call it electrification. So this is a sum of medium voltage, low voltage.

Roland Busch: We do our homework, when we compare our grow in as far as we can obviously see it from, we call it electrification, so this is a sum of medium voltage, low voltage. From that perspective, I would say we slightly gained market share, but we are growing, in part, let's say with the key competitors, likewise, maybe a little bit stronger in that, in that quarter. I mean, this is all about delivering capabilities, so you know that we continuously expand our manufacturing footprint in the United States, in Carolinas, we invested more. We are ramping up high quality manufacturing, very much automated, so we are able to do that. We have our supply chain under control, and we are having a strong focus on that.

Speaker #3: If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press start followed by one at this time.

Speaker #4: And from that perspective, we I would say we slightly gained market share. But we are growing in let's say with a key competitor's likewise maybe a little bit stronger in that quarter.

Speaker #3: The first question comes from the line of Phil Buller from JP Morgan. Please go ahead.

Phil Buller: Thank you. Hi, good morning, Roland, Veronika, and Tobias. I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp? Is it a one-off, or are you gaining share? If so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great. Thank you.

Speaker #4: Thank you. Hi. Good morning, Roland, Veronica, and Tobias. I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp?

Speaker #4: So I mean, this is all about delivering capabilities. So you know that we continuously expand our manufacturing footprint in the United States, in Carolinas.

Speaker #4: We invested more. We are ramping up high-quality manufacturing very much automated. So we are able to do that. We have our supply chain under control.

Speaker #4: Is it a one-off? Or are you gaining share? And if so, why is that? Anything you can help to offer to build out that huge headline order momentum would be great.

Speaker #4: And we are having a strong focus on that. And so therefore, this is the way to keep momentum. The other part is that we are not only growing with a hyperscalers.

Speaker #4: Thank you.

Roland Busch: Therefore, this is the way to keep momentum. The other part is that we are not only growing with the hyperscalers, we are diversifying also to others, data center builders. The last point is, and that's more looking forward, we are launching new products. You saw that 800 volt DC switching technology, which hits the market anytime soon, launch right now, which gives hopefully another momentum going forward.

Roland Busch: We do our homework when we compare or grow in as far as we can obviously see it. We call it electrification, so this is a sum of medium voltage, low voltage. From that perspective, I would say we slightly gained market share, but we are growing, Let's say with the key competitors, likewise, and maybe a little bit stronger in that, in that quarter. I mean, this is all about delivering capabilities, you know that we continuously expand our manufacturing footprint in the United States, in Carolinas, we invested more. We are ramping up high-quality manufacturing, very much automated, so we are able to do that. We have our supply chain under control, and we are having a strong focus on that.

Speaker #5: So we do our homework when we compare our growth in as far as we can, obviously, see it from we call it electrification. So this is some of medium voltage, low voltage.

Speaker #4: We are diversifying also to other data center that's more looking forward. We are launching new products. You saw that 800-volt DC switching technology, which hits the market anytime soon.

Speaker #5: And from that perspective, we, I would say, we slightly gained market share. But we are growing, let's say, with key competitors, likewise, maybe a little bit stronger in that quarter.

Speaker #4: Launched right now. So which gives hopefully another momentum going forward.

Speaker #3: Thank you. And is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we're seeing coming through on the order book, please?

Philip Buller: Thank you. Is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we're seeing coming through on the order book, please? Thank you. For the follow-up.

Phil Buller: Thank you. Is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we're seeing coming through on the order book, please? Thank you. For the follow-up.

Speaker #5: So, I mean, this is all about delivering capabilities. So, you know that we continuously expand our manufacturing footprint in the United States, in the Carolinas.

Speaker #3: Thank you for the follow-up.

Speaker #5: We invested more we are ramping up high-quality manufacturing very much automated. So we are able to do that. We have our supply chain under control.

Speaker #4: No, it's parting a great margin in that business.

Roland Busch: No, it's supporting a great margin in that business.

Speaker #3: Thank you.

Philip Buller: Thank you.

Phil Buller: Thank you.

Speaker #4: Yeah.

Speaker #5: And we are having a strong focus on that. And so therefore, this is the way to keep momentum. The other part is that we are not only growing with a hyperscalers.

Roland Busch: Yeah.

Speaker #1: Next question, please.

Tobias Atzler: Next question, please.

Speaker #2: The next question comes from the line of James Moore from Rothschild & Co. Redburn. Please go ahead.

Operator: The next question comes from the line of James Moore from Rothschild & Co. Redburn. Please go ahead.

Speaker #5: Yes. Good morning, everyone. And thank you for the time. I wondered if I could ask a little bit about the automation momentum. Broadly similar environment to last quarter.

James Moore: Yes. Good morning, everyone, and thank you for the time. I wondered if I could ask a little bit about the automation momentum, broadly similar environment to last quarter and the Chinese environment, could potentially have been even a little bit faster. I wondered if you could talk a bit about market share in China. Was it that a year ago you'd done the launch, so it was a tougher comparative? You mentioned some pre-buys. Could you talk a little bit about global automation momentum into April as well? Thanks.

Speaker #5: We are diversifying also to other data center builders. And the last point is and that's more looking forward. We are launching new products. You saw that 800-volt DC switching technology, which hits the market anytime soon.

Speaker #5: And the Chinese environment could potentially have been even a little bit faster. I wondered if you could talk a bit about market share in China.

Speaker #5: Launched right now. So which gives hopefully another momentum going forward.

Speaker #4: Thank you. And is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we're seeing coming through on the order book?

Speaker #5: Was it that a year ago, you'd done the launch? So it was a tougher comparative. You mentioned some pre-buys. Could you talk a little bit about global automation momentum into April as well?

Speaker #4: Please. Thank you for the follow-up.

Speaker #5: Thanks.

Speaker #4: Okay. Oh, well done. So let me start. And maybe that's one of the key messages we are also looking for is that April shows really another strong growth, which is even above our forecast.

Roland Busch: Okay. Oh, that. Well done. Let me start, and maybe that's one of the key message we are also looking for is that April shows really another strong growth, which is even above our forecast. I mean just to give you that glimpse. This is automation globally. Let me start maybe in China. In general, the industrial market is recovering. In particular, you know that China is going more for high-tech manufacturing, but they're also driving export for, I mean, e-cars, semiconductors, and the like. We see stable distributor stock levels, which is good. What's really exciting is our China new products, they grow extremely well. They hit the market really to the point. We talk about broad portfolio edge drives and controls.

Roland Busch: No, it's supporting a great margin in that business.

Speaker #5: No. It's parting a great margin in that business.

Phil Buller: Thank you.

Speaker #4: Thank you.

Speaker #5: Yeah.

Roland Busch: Yeah.

Tobias Atzler: Next question, please.

Speaker #1: Next question, please.

Operator: The next question comes from the line of James Moore from Rothschild & Co Redburn. Please go ahead.

Speaker #3: The next question comes from the line of James Moore from Rothschild & Co. Redburn. Please go ahead.

Speaker #4: I mean, just to give you that glance. And this is automation globally. So let me start maybe in China. The in general, the industrial market is recovering in particular.

James Moore: Yes. Good morning, everyone, and thank you for the time. I wondered if I could ask a little bit about the automation momentum, broadly similar environment to last quarter. The Chinese environment could potentially have been even a little bit faster. I wondered if you could talk a bit about market share in China. Was it that a year ago you'd done the launch, so it was a tougher comparative? You mentioned some pre-buys. Could you talk a little bit about global automation momentum into April as well? Thanks.

Speaker #4: Yes. Good morning, everyone. And thank you for the time. I wondered if I could ask a little bit about the automation momentum. Broadly similar environment to last quarter.

Speaker #4: And the Chinese environment could potentially have been even a little bit faster. I wondered if you could talk a bit about market share in China.

Speaker #4: You know that China is going more for high-tech manufacturing, but they're also driving export for e-car, semiconductors, and the like. We see stable distributor stock levels, which is good.

Speaker #4: Was it that a year ago, you'd done the launch? So it was a tougher comparative. You mentioned some pre-buys. Could you talk a little bit about global automation momentum into April as well?

Speaker #4: And what's really exciting is our Chinese China new products; they grow extremely well. They hit the market really to the point. And we talk about broad portfolio edge drives and controls.

Speaker #4: Thanks.

Roland Busch: Well done. Let me start, and maybe that's one of the key message we are also looking for is that April shows really another strong growth, which is even above our forecast. I mean, just to give you that glimpse. This is automation globally. Let me start maybe in China. In general, the industrial market is recovering. In particular, you know that China is going more for high-tech manufacturing, but they're also driving export for, I mean, e-cars, semiconductors and the like. We see stable distributor stock levels, which is good. What's really exciting is our China new products, they grow extremely well. They hit the market really to the point. Here we talk about broad portfolio edge drives, and controls.

Speaker #5: Okay. Oh. Well done. So let me start. And maybe that's one of the key messages we are also looking for is that April shows really another strong growth, which is even above our forecast.

Speaker #4: I'm super excited about our smart PLC, which was part of the last 26 products we launched. But also switching technology. So it's not only automation.

Roland Busch: I'm super excited about our smart PLC, which was part of the last 26 products we launched, but also switching technology. It's not only automation, it's also electrification and this I business there. We continue to see a China new product growth. This growth is really gaining market share definitely in that case. A strong growth in OE business too. If you ask for the verticals, there are a couple of government-supported verticals: AI, semiconductors, obviously, e-cars, solar, batteries, logistics, and marine. At the other level, maybe on a short one on pricing, you saw that there was a price increase in Q1. Currently the pricing sits on a stable level. All in all, that's doing well.

Speaker #4: It's also electrification. And there's eye business there. So we continue to see a China new product growth. And this growth is really gaining. We're gaining market share, definitely, in that case.

Speaker #5: I mean, just to give you that glance. And this is automation globally. So let me start maybe in China. In general, the industrial market is recovering, in particular.

Speaker #4: And a strong growth in OEM business, too. So the if you ask for the verticals, there are a couple of government-supported verticals: AI, semiconductors, obviously, e-car, solar, batteries, logistics, marine, and the other level, maybe a short one on pricing.

Speaker #5: You know that China is going more for high-tech manufacturing. But they're also driving export for e-cars, semiconductors, and the like. We see stable distributor stock levels, which is good.

Speaker #5: And what's really exciting is our Chinese China new products they grow extremely well. They hit the market really to the point. And we talk about broad portfolio edge drives and controls.

Speaker #4: You saw that there was a price increase in Q1. Currently, the pricing is still on a stable level. So all in all, that's doing well.

Roland Busch: I'm super excited about our S7-200 SMART, which was part of the last 26 products we launched, also switching technology. It's not only automation, it's also electrification, and there's AI business there. We continue to see a China new product growth. This growth is really, we're gaining market share definitely in that case, and a strong growth in OEM business too. If you ask for the verticals, there are a couple of government-supported verticals: AI, semiconductors, obviously e-cars, solar, batteries, logistics, marine. At the other level, maybe on a short one on pricing, you saw that there was a price increase in Q1. Currently the pricing sits on a stable level. All in all, that's doing well.

Speaker #5: I'm super excited about our smart PLC. It was part of the last 26 products we launched. But also switching technology. So it's not only automation.

Roland Busch: Regarding pre-buy, we currently see indicators which suggest that pre-buying may be partly driven by our order dynamics, fueled by maybe components scarcity or price increase. We cannot rule out some of these effects. However, if we look in our KPIs, we see no meaningful shift in order patterns or requested lead times that would point out pre-buy distortions in our performance. That's very, very important to say, but we are staying obviously very vigilant on this point. On a global basis, if you ask for the automation, we see in the automotive space, there is, I mean, limited growth in early 2026, partially with recovery. Europe, Japan flat, China softened sequentially. It's over capacities in China, therefore cautions in CapEx spendings.

Speaker #4: Regarding pre-buy, we currently see indicators which suggest that pre-buying may be partly driven by our order dynamics. Fueled by maybe components, car CD, or price increase.

Speaker #5: It's also electrification. And there's eye business there. So we continue to see a China new product growth. And this growth is really gaining we're gaining market share, definitely, in that case.

Speaker #4: So we cannot rule out some of these effects. However, if we look in our KPIs, we see no meaningful shifts in order patterns or requested lead times that would point out pre-buy distortions in our performance.

Speaker #5: And a strong growth in OEM business too. So the if you ask for the verticals, there are a couple of governments supported verticals. AI, semiconductors, obviously, e-car, solar, batteries, logistics, marine.

Speaker #4: So that's very, very important to say. But we are staying obviously very vigilant on this point. On a global basis, if you ask for the automation we see in the automotive space, there is I mean, limited growth in early '26.

Speaker #5: And the other level, maybe a short one on pricing. You saw that there was a price increase in Q1. Currently, the pricing sits at a stable level.

Speaker #5: So all in all, that's doing well. Regarding pre-buy, we currently see indicators which suggest that pre-buying may be partly driven by our order dynamics.

Roland Busch: Regarding pre-buy, we currently see indicators which suggest that pre-buying may be partly driven by our order dynamics, fueled by maybe components scarcity or price increase. We cannot rule out some of these effects. However, if we look in our KPIs, we see no meaningful shifts in order patterns or requested lead times that would point out pre-buy distortions in our performance. That's very, very important to say, but we are staying obviously very vigilant on this point. On a global basis, if you ask for the automation, we see in the automotive space, there is, I mean, limited growth in early 2026, partially with recovery. Europe, Japan, flat. China softens sequentially. It's overcapacities in China, therefore cautions in CapEx spendings.

Speaker #4: Partially, US recovery. Europe, Japan, flat. China, softened sequentially. It's overcapacities in China. So therefore, cautions in CAPEX spendings. Machinery, there's a moderate moment ahead of us.

Speaker #5: Fueled by maybe components, car CD, or price increase. So, we cannot rule out some of these effects. However, if we look in our KPIs, we see no meaningful shifts in order patterns or requested lead times that would point out pre-buy distortions in our performance.

Roland Busch: Machinery, there's a moderate moment ahead of us. Europe is slightly positive, and the automation demand is expected to grow modestly, low single digit to mid-single digit. Chemicals. We see chemical output shows moderate growth driven by China, Europe weakening further. Pharma, solid growth there led by China, Japan. Pricing remains under pressure, it's also indexed by tariffs. Food and beverage, production growth remains modest, so there are some more cautious near-term outlook. Electronics, semiconductors, super strong, exceptional momentum, due to the AI chip demand. Aerospace and defense, likewise here, key growth drivers. Aerospace and defense is a high dynamic market, and Siemens can play a key role in scaling up capacities and in a closed loop production.

Speaker #4: The Europe is slightly positive. And the automation demand is expected to grow modestly. Low single-digit to mid-single-digit. Chemicals, we see chemical output shows moderate growth driven by China, Europe, weakening further.

Speaker #5: So that's very, very important to say. But we are staying obviously very vigilant on this point. On a global basis, if you ask for the automation we see in the automotive space, there is I mean, limited growth in the early '26.

Speaker #4: Pharma, solid growth there, led by China. Japan. Pricing remains under pressure. I mean, also from indexed by tariffs. Food and beverage, production growth remains modest.

Speaker #4: So there's a more cautious near-term outlook. Electronics, semiconductors, super strong exceptional momentum. Due to the AI chip demand and aerospace and defense, likewise, here, key growth drivers: aero fence and is a high-dynamic market.

Speaker #5: Partially, US recovery. Europe, Japan, flat. China, softened sequentially. It's overcapacities in China. So therefore, cautions in CAPEX spendings. Machinery, there's a moderate moment ahead of us.

Roland Busch: Machinery, there's a moderate moment ahead of us. Europe is slightly positive, the automation demand is expected to grow modestly, low single-digit to mid-single-digit. Chemicals. We see chemical output shows moderate growth driven by China, Europe weakening further. Pharma, solid growth there led by China, Japan. Pricing remains under pressure, I mean, also from index, indexed by tariffs. Food and beverage, production growth remains modest, there are some more cautious near-term outlook. Electronics, Semiconductors, super strong, exceptional momentum, due to the AI chip demand. Aerospace and defense, likewise here, key growth drivers. Aerospace and defense is a high dynamic market, Siemens can play a key role in scaling up capacities and in a closed-loop production.

Speaker #4: And Siemens can play a key role in scaling up capacities and in a closed-loop production. So I hope that covers your question somehow.

Speaker #5: The Europe is slightly positive. And the automation demand is expected to grow modestly. Low single-digit to mid-single-digit. Chemicals, we see chemical output shows moderate growth driven by China, Europe, weakening further.

Roland Busch: I hope that covers your question somehow.

Speaker #5: That's very helpful. Thanks, Roland.

James Moore: That's very helpful. Thanks, Roland.

Speaker #4: Sure.

Roland Busch: Sure.

Speaker #1: Next question, please.

Tobias Atzler: Next question, please.

Speaker #2: The next question comes from the line of Ben Uglow from Oxcap Analytics. Please go ahead.

Operator: The next question comes from the line of Ben Uglow from Oxcap Analytics. Please go ahead.

Speaker #5: Pharma, solid growth there, led by China. Japan. Pricing remains under pressure. I mean, also from indexed by tariffs. Food and beverage, production growth remains modest.

Speaker #6: Oh, good morning, Roland, Veronica, and Toby. Thank you very much for taking the question. Unsurprisingly, it's also about China. I guess my puzzle here is what is new and what could be driving this?

Ben Uglow: Good morning, Roland, Veronika, and Toby. Thank you very much for taking the question. It, unsurprisingly, it's also about China. I guess, my puzzle here is what is new and what could be driving this? In terms of your conversations, Roland, I guess with either the customers or, you know, government, et cetera, why do we think we may now finally be seeing some form of improvement in China? Is this to do with the 15th Five-Year Plan? Is this to do with just catch up? Is it stimulus? I just your sense of what might be going on.

Speaker #5: So there's a more cautious near-term outlook. Electronics, semiconductors—super strong, exceptional momentum due to the AI chip demand. And aerospace and defense, likewise here, are key growth drivers. Aero defense is a high-dynamic market.

Speaker #6: In terms of your conversations, Roland, I guess, with either the customers or governments, etc., why do we think we may now finally be seeing some form of improvement in China?

Speaker #5: And Siemens can play a key role in scaling up capacities and in a closed-loop production. So I hope that covers your question somehow.

Speaker #6: Is this to do with the 15th five-year plan? Is this to do with just catch-up? Is it stimulus? Just your sense of what might be going on.

Roland Busch: I hope that covers your question somehow.

James Moore: That's very helpful. Thanks, Roland.

Speaker #4: That's very helpful. Thanks, Roland.

Roland Busch: Sure.

Speaker #5: Sure.

Speaker #6: And then could you just talk a little bit specifically about the machine-building segment, one of your end markets, which I see on your slides are kind of flat-ish, but other people are calling out Germany getting better, Italy getting better.

Ben Uglow: Could you just talk a little bit specifically about the machine building segment, one of your end markets, which I see on your slides are kind of flat-ish, but other people are calling out, you know, Germany getting better, Italy getting better. Could we just drill into that vertical a little bit more? Thank you.

Tobias Atzler: Next question, please.

Speaker #1: Next question, please.

Operator: The next question comes from the line of Ben Uglow from OxCap Analytics. Please go ahead.

Speaker #3: The next question comes from the line of Ben Ugler from Oxcap Analytics. Please go ahead.

Ben Uglow: Good morning, Roland, Veronika, and Toby. Thank you very much for taking the question. Unsurprisingly, it's also about China. I guess, my puzzle here is what is new and what could be driving this? In terms of your conversations, Roland, I guess with either the customers or, you know, government, et cetera, why do we think we may now finally be seeing some form of improvement in China? Is this to do with the 15th five-year plan? Is this to do with just catch up? Is it stimulus? I just your sense of what might be going on.

Speaker #6: Oh. Good morning, Roland, Veronica, and Toby. Thank you very much for taking the question. Unsurprisingly, it's also about China. I guess my puzzle here is what is new and what could be driving this?

Speaker #6: Could we just drill into that vertical a little bit more?

Speaker #5: Yeah.

Speaker #6: Thank you. Yeah.

Roland Busch: Yeah.

Ben Uglow: Yeah.

Speaker #4: Yeah. So talking about China, on a high level, we said it over the last quarters, remember? We said we expect China to improve gradually.

Roland Busch: Yeah. Talking about China, on a high level, we said it over the last quarters, remember, we said, we expect China to improve gradually. There will be no V cycle, whatever. It will improve gradually. This is a combination of, let's say, getting step-by-step more consumer confidence, of having the Chinese government strategy working out. Remember high quality manufacturing. Also being able to divert their exports away from United States to other regions, Asia in particular, but also Europe. This is a combination which somewhat drives it. The last point I would say is, I mean, China is really good in embracing new technologies. AI technologies, let me take that now one by one.

Speaker #6: In terms of your conversations, Roland, I guess, with either the customers or governments etc., why do we think we may now finally be seeing some form of improvement in China?

Speaker #4: There will be no V cycle, whatever. It will improve gradually. And this is a combination of, let's say, getting step by step more consumer confidence of having the Chinese government strategy working out.

Speaker #6: Is this to do with the 15th five-year plan? Is this to do with just catch-up? Is it stimulus? Just your sense of what might be going on.

Speaker #4: Remember high-quality manufacturing? But also being able to divert their export to away from the United States to other regions. Asia, in particular, but also Europe.

Speaker #6: And then could you just talk a little bit specifically about the machine building segment, one of your end markets, which I see on your slides are kind of flattish.

Speaker #4: So this is a combination which somehow drives it. And the last one, I would say, is I mean, China is really good in embracing new technologies.

Speaker #6: But other people are calling out Germany getting better, Italy getting better. Could we just drill into that vertical a little bit more? Thank you.

Speaker #4: So AI technologies, and let me take that now one by one. So the let me talk with this about the export. And this is cars, for example, but also machines.

Roland Busch: Yeah.

Ben Uglow: Thank you. Yeah.

Speaker #6: Yeah. Yeah. Yeah. Yeah. So, talking about China—on a high level—we said it over the last quarters, remember? We said we expect China to improve gradually.

Roland Busch: Talking about China, on a high level, we said it over the last quarters, remember, we said, we expect China to improve gradually. There will be no V-cycle, whatever. It will improve gradually. This is a combination of, let's say getting step-by-step more consumer confidence, of having, the Chinese government strategy working out. Remember high-quality manufacturing. Also being able to divert their exports away from United States to other regions, Asia in particular, but also Europe. This is a combination which somewhat drives it. The last point I would say is, I mean, China is really good in embracing new technologies.

Roland Busch: Let me talk with this about the export, and this is cars, for example, but also machines. They're quite competitive. They diverted their export to other markets, as I said, amazingly fast. Their export is increasing despite the tariffs and the, let's say, the throttling of export to United States. This was a surprisingly fast way to really find new ways that helps. The other one is there's clearly a kind of a pivot to this high-quality manufacturing, which is also higher price, higher value added. If you, if you go away from, let's say, clothing to a machine, that makes a big difference. That goes along with technology, the embracement of technology.

Speaker #4: They're quite competitive. They diverted their export to other markets, as I said. Amazingly fast. So their export is increasing despite the tariffs and the, let's say, the throttling of export to the United States.

Speaker #6: There will be no V-cycle, whatever. It will improve gradually. And this is a combination of, let's say, getting step by step more consumer confidence of having the Chinese government strategy working out.

Speaker #4: So this was surprisingly fast way to really find new ways that helps. The other one is there's clearly a kind of a pivot to this high-quality manufacturing, which is also higher price, higher value added.

Speaker #6: Remember high-quality manufacturing? But also being able to divert their export to away from the United States to other regions. Asia in particular, but also Europe.

Speaker #4: So if you go away from, let's say, clothing to a machine, that makes a big difference. And that goes along with technology, the embracement of technology.

Speaker #6: So this is a combination which somehow drives it. And the last one, I would say, is I mean, China is really good in embracing new technologies.

Roland Busch: AI technologies, and let me take that now one by one. Let me talk with this about the export, and this is cars, for example, but also machines. They're quite competitive. They diverted their export to other markets, as I said, amazingly fast.

Speaker #6: So, AI technologies—and let me take that now one by one. So, let me talk about the export. And this is cars, for example, but also machines.

Speaker #4: I mean, we see that for local competitors, but also the international ones acting there. And maybe here there's something what I really believe we are sticking out if we look around and compare ourselves to, number one, local Chinese competitors.

Roland Busch: I mean, we see that for local competitors, but also the international ones acting there. Maybe here there's something what I really believe we are sticking out if we look around and compare ourselves to, number 1, local Chinese competitors. We really win customers back. I mean, our RXD Summit was extremely successful. Roughly 3,000 people, 42 partners exhibiting in our summit. I mean, we had I think more than 1 million streamings with really hit the market, including forging partnerships. I had Alibaba on stage. We are going now offering our software in China on the cloud, so it can be deployed super fast, we see a lot of interest there.

Speaker #6: They're quite competitive. They diverted their export to other markets, as I said. Amazingly fast. So their export is increasing despite the tariffs and the, let's say, the throttling of export to the United States.

Speaker #4: And we really win customers back. I mean, our RXT Summit was extremely successful. We had roughly 3,000 people, 42 partners exhibiting in our summit.

Roland Busch: Their export is increasing despite the tariffs and the, let's say, the throttling of export to United States. This was a surprisingly fast way to really find new ways that helps. The other one is there's clearly a kind of a pivot to this high quality manufacturing-

Speaker #6: So this was surprisingly fast way to really find new ways that helps. The other one is there's clearly a kind of a pivot to this high-quality manufacturing, which is also higher price, higher value added.

Speaker #4: I mean, we had, I think, more than 1 million streamings with really hit the market, including Fortune partnerships. I had Alibaba on stage. We are going now offering our software in China on the cloud.

Ben Uglow: Mm-hmm, mm-hmm

Roland Busch: which is also higher price, higher value added. If you go away from, let's say, clothing to a machine, that makes a big difference. That goes along with technology, the embracement of technology. I mean, we see that for local competitors, but also the international ones acting there. Maybe here there's something what I really believe we are sticking out if we look around and compare ourselves to number one, local Chinese competitors.

Speaker #6: So if you go away from, let's say, clothing to a machine, that makes a big difference. And that goes along with technology, the embracement of technology.

Speaker #4: So it can be deployed super fast. And we see a lot of interest there. So this is coming together. And coming to your point about machine building, you know that, Ben, that the machine builders in China, they really made a step up, super competitive.

Roland Busch: This is coming together, and coming to your point about machine building, you know that, Ben, that the machine builders in China, they really made a step up.

Speaker #6: I mean, we see that for local competitors, but also the international ones acting there. And maybe here there's something what I really believe we are sticking out.

Roland Busch: Super competitive. Would I see them already in their super high-end market? Let's say, the DMG Mori or the high-end Trumpf machines, maybe not. The working horses, standard machines, they're quite good and they take advantage out of that. Overall, and coming back maybe to the customer sentiments or the private consumption, we believe that this comes back gradually, as we say. I mean, another sideline, obviously the real estate thing is improving also gradually. Don't expect any kind of fast pivot here. This package, what I was talking about, seems to be a very, let's say, somewhat slow but gradually improving momentum there. Yeah.

Speaker #4: Would I see them already in their super high-end market? So they, let's say, the DMG Modis or the high-end Trump machines, maybe not. But the working horses, standard machines, they're quite good in the tech advantage out of that.

Speaker #6: If we look around and compare ourselves to, number one, local Chinese competitors, and we really win customers back. I mean, our RXD Summit was extremely successful.

Roland Busch: We really win customers back. I mean, our R&D summit was extremely successful. We had roughly 3,000 people, 42 partners exhibiting in our summit. I mean, we had I think more than 1 million streamings, which really hit the market, including forging partnerships. I had Alibaba on stage. We are going now offering our software in China on the cloud, so it can be deployed super fast, and we see a lot of interest there. This is coming together. Coming to your point about machine building, you know that, Ben, that the machine builders in China, they really made a step up.

Speaker #4: So overall, and coming back maybe to the customer sentiment, so the private consumption, we believe that this comes back gradually as we say. I mean, another sideline, obviously, the real estate thing is improving also gradually.

Speaker #6: We had roughly 3,000 people, 42 partners, exhibiting in our summit. I mean, we had, I think, more than 1 million streamings, which really hit the market, including forging partnerships.

Speaker #6: I had Alibaba on stage. We are going now offering our software in China on the cloud. So it can be deployed super fast. And we see a lot of interest there.

Speaker #4: Don't expect any kind of fast pivot here. But this package, what I was talking about, seems to be a very somewhat slow, but gradually improving momentum there.

Speaker #6: So this is coming together. And coming to your point about machine building—you know that, Ben—that the machine builders in China, they really made a step up, super competitive.

Speaker #4: Yeah.

Ben Uglow: Super interesting. Thank you.

Speaker #6: Super interesting. Thank you.

Roland Busch: Super competitive. Would I see them already in the super high-end market? They, let's say, the DMG Mori or the high-end Trumpf machines, maybe not. The working horses, standard machines, they're quite good and they take advantage out of that. Overall, and coming back maybe to the customer sentiments or the private consumption, we believe that this comes back gradually, as we say. I mean, another sideline, obviously the real estate thing is improving also gradually. Don't expect any kind of fast pivot here. This package, what I was talking about, seems to be a very, very, let's say, somewhat slow but gradually improving momentum there.

Veronika Bienert: Um, and-

Speaker #6: Would I see them already in the super high-end market? So they, let's say, the DMG Modis or the high-end Trump machines, maybe not. But the working horses, standard machines, they're quite good in the tech advantage out of that.

Speaker #4: Veronica.

Roland Busch: Monika.

Veronika Bienert: Maybe, Ben, just to add to the China performance really in the way how we are really monitoring that in a very prudent way. Therefore, what is really important for us that we look at the distributor stock levels, and here we see for the for Q2 really a stable distributor level. What is as well quite interesting that if you look at the market development that what was really driving was the high tech manufacturing, what Roland mentioned, but as well the export growth, for instance, really for e-cars and SMEs, which is a very important element.

Speaker #3: And maybe, Ben, just to add to the China performance really in the way how we are really monitoring that in a very prudent way.

Speaker #3: So therefore, what is really important for us that we look at the distributor stock levels. And here we see for the Q2 really a stable distributor level.

Speaker #6: So overall, and coming back maybe to the customer sentiment, so the private consumption, we believe that this comes back gradually as we say. I mean, another sideline, obviously, the real estate thing is improving also gradually.

Speaker #3: And what is as well quite interesting that if we look at the market development, that what was really driving was the high-tech manufacturing, what Roland mentioned.

Speaker #6: Don't expect any kind of fast pivot here. But this package, what I was talking about, seems to be a very somewhat slow, but gradually improving momentum there.

Speaker #3: But as well, the export growth, for instance. Really, for e-cars and semis, which is a very important element. And that is something which we expect as well to develop going forward in this way.

Speaker #6: Yeah. Super interesting. Thank you. And maybe, Ben, just to add to the China performance really in the way how we are really monitoring that in a very prudent way.

Ben Uglow: Super interesting. Thank you.

Veronika Bienert: That is something which we expect as well to develop going forward in this.

Veronika Bienert: Maybe Ben, just to add to the China performance really in the way how we are really monitoring that in a very prudent way. Therefore, what is really important for us that we look at the distributor stock levels, and here we see for Q2, really a stable distributor level. What is as well quite interesting that if you look at the market development that what was really driving was the high tech manufacturing what Roland mentioned, but as well the export growth for instance really for eCars and SMEs, which is a very important element.

Roland Busch: Since we are talking about it, another one is, I mean, Q1 is normally strong. Q2 normally we see a little bit weak. This is not the case.

Speaker #4: And since we are talking about it, another one is, I mean, Q1 is normally strong, Q2. Normally, we see a little bit weak. This is not the case.

Roland Busch: Since we are talking about it, another one is, I mean, Q1 is normally strong. Q2 normally we see a little bit weak. This is not the case. Now, going into April, again, you see, we see a good momentum there. That's really encouraging. We like that.

Speaker #4: I know going into April, again, you see a good momentum there. So this is really encouraging, we like that.

Roland Busch: Now, going into April, again, you see, we see a good momentum there. That's really encouraging. We like that.

Speaker #6: So, therefore, what is really important for us is that we look at the distributor stock levels. And here, we see for Q2 really a stable distributor level.

Ben Uglow: Super helpful. Thank you very much.

Speaker #6: Super helpful. Thank you very much.

Speaker #5: Next question, please.

Tobias Atzler: Next question, please.

Speaker #7: The next question comes from the line of Benjamin Heelan from Bank of America. Please go ahead.

Operator: The next question comes from the line of Benjamin Heelan from Bank of America. Please go ahead.

Speaker #6: And what is as well quite interesting is that if we look at the market development, what was really driving it was high-tech manufacturing, which Roland mentioned.

Speaker #8: Hi. Yeah. Good morning. Thank you for the question. I wanted to touch on M&A. There were some reports yesterday you were linked to potential rail acquisition.

Benjamin Heelan: Hi. Yeah, good morning. Thank you for the question. I wanted to touch on M&A. There were some reports yesterday, you were linked to a potential rail acquisition. If you could maybe comment on that. Just broader, how are you thinking about M&A? Can you talk about the pipeline? Are there any divisions that you're particularly focused on right now? Thank you.

Speaker #6: But as well, the export growth, for instance. Really, for e-cars and semis, which is a very important element. And that is something which we expect as well to develop going forward in this.

Speaker #8: If you could maybe comment on that. But just broader how are you thinking about M&A? Can you talk about the pipeline? Are there any divisions that you're particularly focused on right now?

Veronika Bienert: That is something which we expect as well to develop going forward in this.

Speaker #8: Thank you.

Roland Busch: The first part of your question I can make very short. We do not comment on that. On the second one, I can speak a little bit longer. I mean, the number one is obviously we have a lot of in focus which is supporting our strategy, which is combining the really in the digital world. Any kind of digital asset, I mean, in software assets, is super interesting. It's getting harder the more, I mean, the more market leadership you're expanding with Altair, for example, then the harder it gets. There's another space we call operational software, which is really not a bit going off away from the design world of software into the operational world. That's super interesting.

Speaker #4: The first part of your question, I can make very short. We do not comment on that. On the second one, I can speak a little bit longer.

Roland Busch: Since we are talking about it, another one is, I mean, Q1 is normally strong. Q2, normally we see a little bit weak.

Speaker #5: And since we are talking about it, another one is, I mean, Q1 is normally strong, Q2. Normally, we see a little bit weak. This is not the case.

Roland Busch: This is not the case.

Ben Uglow: Do I-

Roland Busch: Now, going into April, again, you see a good momentum there. That's really encouraging. We like that.

Speaker #5: I know going into April, again, you see a good momentum there. So that's really encouraging. We like that.

Speaker #4: I mean, number one is obviously we have a lot of in focus, which is supporting our strategy, which is combining the really in the digital world.

Ben Uglow: Super helpful. Thank you very much.

Speaker #6: Super helpful. Thank you very much.

Speaker #4: Any kind of digital asset, I mean, software assets, is super interesting. It's getting harder. The more, I mean, the more market leadership you're re expanding with, for example, then the harder it gets.

Tobias Atzler: Next question, please.

Speaker #3: Next question, please.

Operator: The next question comes from the line of Benjamin Heelan from Bank of America. Please go ahead.

Speaker #7: The next question comes from the line of Benjamin Healand from Bank of America. Please go ahead.

Benjamin Heelan: Hi. Yeah. Good morning. Thank you for the question. I wanted to touch on M&A. There were some reports yesterday, you were linked to a potential rail acquisition. If you could maybe comment on that. Just broader, how are you thinking about M&A? Can you talk about the pipeline? Are there any divisions that you're particularly focused on right now? Thank you.

Speaker #8: Hi. Yeah, good morning. Thank you for the question. I wanted to touch on M&A. There were some reports yesterday you were linked to a potential rail acquisition.

Speaker #4: But there's another space we call operational software, which is really going away from the design world of software into the operational world. That's super interesting.

Speaker #4: I mean, obviously, we're looking also into any kind of ADA or AI or data-related assets. Which is interesting. But we do not shy away from also going into hardware, particularly connected hardware, hardware which supports our electrication growth.

Roland Busch: I mean, obviously, we're looking also into any kind of data or AI or data related assets, which is interesting. We do not shy away from also going into hardware, and particularly connected hardware which supports our electrification growth. I mean, is it both on acquisitions or looking also into adjacencies? I mean, you know that the AI factory market is very fast changing. We see a change in technology. You have to control AI factory differently from a data center. That just has an impact on the controls itself, on the valves, the mechanics, the controls, but also the DC technology, which you see there. We're looking in that space as well. Anything what is And we love connected hardware.

Speaker #8: Thank you.

Roland Busch: The first part of your question I can make very short. We do not comment on that. On the second one, I can speak a little bit longer. I mean, number one is obviously we have a lot of in focus which is supporting our strategy, which is combining the really in the digital world. Any kind of digital asset, I mean, software assets is super interesting. It is getting harder the more, I mean, the more market leadership you are expanding with Altair, for example, then the harder it gets. But there is another space we call operational software, which is really a bit going on off away from the design world of software into the operational world. That is super interesting.

Speaker #5: The first part of your question, I can make very short: we do not comment on that. On the second one, I can speak a little bit longer.

Speaker #5: I mean, number one is obviously we have a lot of in focus, which is supporting our strategy, which is combining the really in the digital world.

Speaker #4: I mean, is it bolt-on acquisitions or looking also into adjacencies? I mean, you know that the AI factory market is very fast changing. We see change in technology.

Speaker #5: Any kind of digital asset, I mean, software assets, is super interesting. It's getting harder. The more, I mean, the more market leadership you're expanding with, for example, then the harder it gets.

Speaker #4: You have to control data center AI factory differently from a data center. That has an impact on the control itself, on the so the valves, the mechanics, the controls, but also the DC technology, which you see there.

Speaker #5: But there's another space we call operational software, which is really going away from the design world of software into the operational world. That's super interesting.

Speaker #4: We're looking in that space as well. So anything what is and we love connected hardware, hardware who delivers data and who's connected is super relevant for us because finally, it has not only memory on it, but also silicon.

Roland Busch: Hardware who delivers data and who's connected is super relevant for us because finally it has not only memory on it, but also silicon, so you can really run AI technology on it. Therefore, broader space to look at. Regional expansion, obviously, India is a place we always would like to do more. Remember our C&S acquisition, we love it. This was low voltage stuff. If you find any other options there, we'd do this as well.

Speaker #5: I mean, obviously, we're looking also into any kind of ADA or AI or data-related assets, which is interesting. But we do not shy away from also going into hardware, particularly connected hardware—hardware which supports our electrification growth.

Roland Busch: I mean, obviously we're looking also into any kind of AI or data related assets, which is interesting. We do not shy away from also going into hardware, and particularly connected hardware which supports our electrification growth. I mean, is it both on acquisitions or looking also into adjacencies? I mean, you know that the AI factory market is very fast changing. We see a change in technology. You have to control AI factory differently from a data center. That just has an impact on the controls itself, on the so it evolves the mechanics, the controls, but also the DC technology, which you see there. We're looking in that space as well. Anything what is and we love connected hardware.

Speaker #4: So you can't really run AI technology on it. So therefore, broader space to look at. And regional expansion, obviously, India is a place. We always would like to do more.

Speaker #5: I mean, is it bolt-on acquisitions or looking also into adjacencies? I mean, you know that the AI factory market is very fast changing. We see change in technology.

Speaker #4: Remember our CNS acquisition. We love it. This was low-voltage stuff. If we find any other options there, we would do this as well.

Speaker #5: You have to control a data center AI factory differently from a data center. That has an impact on the controls itself—on the valves, the mechanics, the controls—but also the DC technology, which you see there.

Speaker #5: Very clear. Thank you. Next question, please.

Benjamin Heelan: Very clear. Thank you.

Tobias Atzler: Next question, please.

Speaker #7: The next question comes from the line of Andre Kukhnin from UBS. Please go ahead.

Operator: The next question comes from the line of Andre Kukhnin from UBS. Please go ahead.

Speaker #6: Yes. Good morning. Thank you very much for taking my question. Could we talk about the industrial software momentum and how you assess your performance there versus your respective peer groups?

Andre Kukhnin: Yes. Good morning. Thank you very much for taking my question. Could we talk about the industrial software momentum and how you assess your performance there versus your respective peer groups? Also, could you talk about if your stance has changed at all on the potential AI impact on the space? I think at Hanover Fair, we actually talked to a lot of people who are excited about prospects for simulation and how much can be done with agents. Are you ready to price for that hike in consumption?

Speaker #5: We're looking in that space as well. So anything—and we love connected hardware. Hardware that delivers data and is connected is super relevant for us, because finally, it has not only memory on it, but also silicon.

Roland Busch: Hardware who delivers data and who's connected is super relevant for us because finally it has not only memory on it, but also silicon, so you can't really run AI technology on it. Therefore, broader space to look at. Regional expansion, obviously, India is a place we always would like to do more. Remember our C&S acquisition, we love it. This was low voltage stuff. If we find any other options there, we would do this as well.

Speaker #6: And also, could you talk if about if your stance has changed at all on the potential AI impact on the space? I think at Hanover Fairwear, she talked to a lot of people who are excited about prospects for simulation and how much can be done with agents.

Speaker #5: So you can't really run AI technology on it. So, therefore, broader space to look at. And regional expansion—obviously, India is a place we always would like to do more.

Speaker #5: Remember our CNS acquisition. We love it. This was low-voltage stuff. If we find any other options there, we would do this as well.

Speaker #6: Are you ready to price for that hike in consumption?

Speaker #4: Yeah. So let me start with the industrial software. Number one is and I said it in my presentation, and I spent a little bit more time on that, that we are developing software, industrial software, is based on physics.

Roland Busch: Yeah. Let me start with the industrial software. Number one is, I said it in my presentation and spend a little bit more time on that we are developing software, industrial software is based on physics. It is, has a difference between AI technology, which is non-deterministic to that one which you require. For us, the combination is making the beauty. Having simulation, which you can enrich with AI, by the way, also rewriting and running on a different hardware on GPUs makes it already faster, but AI is really making a big difference. With our software and the combination, you can make non-deterministic AI suggestions, let's say, deterministic and roll it in the real world.

Benjamin Heelan: Very clear. Thank you.

Speaker #3: you. Next question, please.

Tobias Atzler: Next question, please.

Operator: The next question comes from the line of Andre Kukhnin from UBS. Please go ahead.

Speaker #7: The next question comes from the line of Andre Kuknin from UBS. Please go ahead.

Andre Kukhnin: Yes. Good morning. Thank you very much for taking my question. Could we talk about the industrial software momentum and how you assess your performance there versus your respective peer groups? Also, could you talk if about if your stance has changed at all on the potential AI impact on this space? I think at Hannover Fair, we actually talked to a lot of people who are excited about prospects for simulation and how much can be done with agents. Are you ready to price for that hike in consumption?

Speaker #4: Yes. Good morning. Thank you very much for taking my question. Could we talk about the industrial software momentum and how you assess your performance there versus your respective peer groups?

Speaker #4: It is has a difference between AI technology, which is non-deterministic to that one, which you require. For us, the combination is making the beauty.

Speaker #4: So having simulation, which you can enrich with AI, by the way, also rewriting and running on a different hardware, on GPUs, makes it already faster.

Speaker #4: And also, could you talk about if your stance has changed at all on the potential AI impact on the space? I think at Hannover Fair, we talked to a lot of people who are excited about the prospects for simulation and how much can be done with agents.

Speaker #4: But AI is really making a big difference. So and with our software and the combination, you can make non-deterministic AI suggestions, looks at deterministic and roll it in the real world.

Speaker #4: Are you ready to price for that hike in consumption?

Speaker #4: Is it on the shop floor? But also on the design. You cannot make a mistake in a design of your semiconductors that costs you billions if you make a mistake there.

Roland Busch: Is it on the shop floor, but also on the design. You cannot make a mistake in the design of your semiconductors that costs you EUR billions if you make a mistake there. That's what we love. The other one is term PLM Teamcenter. This is the trusted, secure system of records. It also contextualizes. This is super important because if you throw AI on non-structured, non-contextualized data, it doesn't really do well. If you work it on a contextualized way, you really do magic. This is the reason why Teamcenter is such a powerful platform, and we offer it not only also with an X version for small and medium-sized enterprises to scale it faster.

Roland Busch: Let me start with the industrial software. Number one is, I said it in my presentation and spend a little bit more time on that we are developing software. Industrial software is based on physics. It is, has a difference between AI technology, which is non-deterministic to that one which you require. For us, the combination is making the beauty. Having simulation, which you can enrich with AI, by the way, also rewriting and running on a different hardware on GPUs makes it already faster, but AI is really making a big difference. With our software and the combination, you can make non-deterministic AI suggestions, let’s say, deterministic and roll it in the real world.

Speaker #5: Yeah. So let me start with the industrial software. Number one is, and I said it in my presentation, and I spent a little bit more time on that, that we are developing software, industrial software, is based on physics.

Speaker #4: So that's what we love. The other one is kind of PLM team center. This is the trusted, secure system of records. It also contextualizes.

Speaker #4: And this is super important because if you throw AI on non-structured, non-contextualized data, it doesn't really do well. If you work it on a contextualized way, you really do magic.

Speaker #5: It has a difference between AI technology, which is non-deterministic, and the one which you require. For us, the combination is making the beauty.

Speaker #4: And this is the reason why a team center is such a powerful platform. And we offer it not only also with an X version for small and medium-sized enterprises to scale it faster.

Speaker #5: So having simulation, which you can enrich with AI, by the way, also rewriting and running on a different hardware on GPUs makes it already faster.

Speaker #5: But AI is really making a big difference. So and with our software and the combination, you can make non-deterministic AI suggestions and deterministic and roll it in the real world.

Speaker #4: Now, we are developing an agent platform and an agent studio. To supply a variety of agents that enhance team center capabilities for customers and for all products.

Roland Busch: Now, we are developing an agent platform and an agent studio to supply a variety of agents that enhance Teamcenter capabilities for customers and for all products. On the AI stack and own a agent framework across, and now listen, EDA, PLM, and simulation. That's unique. That's unique in the market. Again, with our X expansions, we offer that also from the cloud. That's a kind of a competitive edge. The other elements are going then across, now I'm moving from the design space to the operational space. Our Digital Twin Composer, for example, you have digital twins of products and manufacturing, you compose it into one, which creates this digital thread, which is unique. Then we make it able, make it open for a round trip of data.

Speaker #5: It's not just on the shop floor, but also in the design. You cannot make a mistake in the design of your semiconductors—that could cost you billions if you make a mistake there.

Roland Busch: Is it on the shop floor, but also on the design. You cannot make a mistake in the design of your semiconductors that costs you billions if you make a mistake there. That's what we love. The other one is term PLM Teamcenter. This is the trusted, secure system of records. It also contextualizes. This is super important because if you throw AI on non-structured, non-contextualized data, it doesn't really do well. If you work it on a contextualized way, you really do magic. This is the reason why Teamcenter is such a powerful platform, and we offer it not only also with a X version for small and medium-sized enterprises to scale it faster.

Speaker #4: So an AI stack and own agent framework across and now listen, EDA, PLM, and simulation. That's unique. That's unique in the market. And again, with our X expansions, we offer that also from the cloud.

Speaker #5: So that's what we love. The other one is kind of PLM Teamcenter. This is the trusted, secure system of records. It also contextualizes.

Speaker #4: So that's kind of a competitive edge. The other elements are going then across now and moving from the design space to the operation space.

Speaker #5: And this is super important because if you throw AI on non-structured, non-contextualized data, it doesn't really do well. If you work it on a contextualized way, you really do magic.

Speaker #4: Our digital twin composer, for example, you have digital twins of products and manufacturing and compose it into one, which creates this digital thread. Which is unique.

Speaker #5: And this is the reason why Teamcenter is such a powerful platform. And we offer it not only, but also with an X version for small and medium-sized enterprises to scale it faster.

Speaker #4: And then we make it able, make it open for a round trip of data. So real-time data going into that and have a chance to really operate then.

Roland Busch: Real-time data going into that, and have a chance to really operate then out of the cloud. This is, this is another unique element which requires actually having a hands-on operations and getting real-time data into our software stack. We believe that we have a, number one, a super strong position there, including, I mean, Altair was really closing a gap in our simulation. Now we go cross-domain, so to speak, super relevant cross-domains. Domains is either the supply chain, as I said, EDA, PLM, simulation, but also cross disciplines like hardware, software, electronics and the like. The other one is the capabilities to increase it. Well, maybe two more things. One is rewriting our software also in a sense for how customers use it.

Speaker #5: Now, we are developing an agent platform and an Agent Studio to supply a variety of agents that enhance Teamcenter capabilities for customers—and for all products.

Roland Busch: Now, we are developing an AI, an agent platform and an agent studio to supply a variety of agents that enhance Teamcenter capabilities for customers and for all products. On the AI stack and own agent framework across, now listen, EDA, PLM, and simulation. That's unique. That's unique in the market. Again, with our X expansions, we offer that also from the cloud. That's a kind of a competitive edge. The other elements are going across, now I'm moving from the design space to the operational space. Our Digital Twin Composer, for example. You have digital twins of products and manufacturing. You compose it into one, which creates this digital thread, which is unique. We make it able, make it open for a round trip of data.

Speaker #4: Out of the cloud. So this is another unique element, which requires actually having an enhanced on-operations and getting real-time data into our software stack.

Speaker #5: So, an AI stack and our own agent framework across, and now listen: EDA, PLM, and simulation—that's unique. That's unique in the market. And again, with our X expansions, we offer that also from the cloud.

Speaker #4: So we believe that we have a number one super strong position there, including I mean, Altair was really closing a gap in our simulation.

Speaker #4: Now we go cross-domain, so to speak, super relevant cross-domains. And domains is either the supply chain, as I said, EDA, PLM, simulation, but also cross-disciplines like hardware, software, electronics, and the like.

Speaker #5: So, that's kind of a competitive edge. The other elements are going, then, across now and moving from the design space to the operational space.

Speaker #5: Our Digital Twin Composer, for example—you have digital twins of products and manufacturing, and you compose it into one, which creates this digital thread. Which is unique.

Speaker #4: And the other one is the capabilities to increase it. Maybe two more things. One is we are rewriting our software also in a sense for the how customers use it.

Speaker #5: And then we make it able, make it open for a round trip of data. So, real-time data going into that, and have a chance to really operate then.

Roland Busch: Real-time data going into that, and have a chance to really operate them out of the cloud. This is another unique element which requires actually having a hands-on operations and getting real-time data into our software stack. We believe that we have a, number one, a super strong position there, including, I mean, Altair was really closing a gap in our simulation. Now we go cross-domain, so to speak, super relevant cross-domains. Domains is either the supply chain, as I said, EDA, PLM simulation, but also cross disciplines like hardware, software, electronics and the like. And the other one is the capabilities to increase it. Well, maybe two more things. One is rewriting our software also in a sense for the, how customers use it.

Speaker #4: Currently, it's engineering using our software. In the future, it will be a blend of engineers and agents. Which is obviously, you can imagine a different way.

Roland Busch: Currently, it's engineering using our software. In the future, it will be a blend of engineers and agents, which is obviously, you can imagine, is a different way. This now, to your other question, this goes over to the way how we, how we monetize. We also look into AI-driven monetization tokens, usage-based, which is really changing the model. That's something which is, it's premature yet, but we see that this is a huge opportunity as well to leverage the portfolio I was talking about also into the way how we monetize it. Now, I talked a lot, but I don't know whether I hit your, all your, the points you wanted to know.

Speaker #5: Out of the cloud. So this is another unique element, which requires actually having an enhanced on operations and getting real-time data into our software stack.

Speaker #4: And this now to your other question, this spills over to the way how we monetize we also look into AI-driven monetization, tokens, usage-based, which is changing the model.

Speaker #5: So we believe that we have a number one super strong position there, including I mean, Altair was really closing a gap in our simulation.

Speaker #4: And that's something which is it's premature yet, but we see that this is a huge opportunity as well to leverage the portfolio I was talking about also into the way how we monetize it.

Speaker #5: Now we go cross-domain, so to speak. Super relevant cross-domains. And domains is either the supply chain, as I said, EDA, PLM, simulation. But also cross-disciplines like hardware, software, electronics, and the like.

Speaker #4: Now I talked a lot, but I don't know whether I hit all your the points you wanted to know.

Speaker #5: And the other one is the capabilities to increase it. Maybe two more things. One is we're writing our software also, in a sense, for how customers use it.

Speaker #6: No, that's really helpful. Thank you. And I guess in H1 performance, do you feel like you've taken share or performed more in line with the market?

Andre Kukhnin: No, that's really helpful. Thank you. I guess in H1 performance, do you feel like you've taken share or performed?

Roland Busch: Yeah

Andre Kukhnin: more in line with the market?

Speaker #4: No, I would say we took share. I mean, remember, for the first half, our digital business grew by 19% in the quarter now Q2.

Roland Busch: No, I would say we took share. I mean, remember, for H1, our Digital Industries grew by 19%. In the quarter now, Q2, our software by 14%. We feel, we are very, very confident. Well, we were happy about this performance, absolutely. Veronika?

Speaker #5: Currently, it's engineering using our software. In the future, it will be a blend of engineers and agents. Which is obviously, you can imagine a different way.

Roland Busch: Currently, it's engineering using our software. In the future, it will be a blend of engineers and agents, which is obviously, you can imagine, is a different way. This now, to your other question, this goes over to the way how we monetize. We also look into AI-driven monetization tokens, usage-based, which is really changing the model. That's something which is premature yet, but we see that this is a huge opportunity as well to leverage the portfolio I was talking about also into the way how we monetize it. Now, I talked a lot, but I don't know whether I hit your, all your, the points you wanted to know.

Speaker #4: Our software by 14. So we feel very, very confident. We were happy about this performance. Absolutely.

Speaker #5: And this now to your other question, this spills over to the way how we monetize we also look into AI-driven monetization, tokens, usage-based, which is changing the model.

Veronika Bienert: Maybe just to briefly add to monetization. We are convinced that user-based licenses will continue to exist. If required for AI, we can really fully leverage new monetization models, and we are testing this on new AI solutions and our AI capabilities in the product. Therefore, we are convinced that the mix of both will really help to grow our top and bottom line.

Speaker #6: And maybe just to briefly add to monetization, so we are convinced that user-based licenses will continue to exist. But if required for AI, we can really fully leverage new monetization models and we are testing this on new AI solutions.

Speaker #5: And that's something which is it's premature yet, but we see that this is a huge opportunity as well to leverage the portfolio I was talking about also into the way how we monetize it.

Speaker #6: And our AI capabilities in the product, so therefore, we are convinced that the mix of both will really help to grow our top and bottom line.

Speaker #5: Now, I talked a lot, but I don't know whether I hit all the points you wanted to know.

Speaker #4: No, that's really helpful. Thank you. And I guess in H1 performance, do you feel like you've taken share or performed more in line with the market?

Andre Kukhnin: No, that's really helpful. Thank you. I guess in H1 performance, do you feel like you've taken share or performed?

Speaker #4: I'll give you one more. This is really exciting. Buying engineering. Agent. I don't know whether you have a chance to be at our Hanover Trade Fair, but what is it?

Roland Busch: I'll give you one more since this is so exciting. Engineering Agent. I don't know whether you have a chance to be at our Hanover Trade Fair, but what is it? It's an agent which really helps engineers programming industrial PLCs, typically using our TIA Portal, but that can go much, much broader. What it does, I mean, it receives. Actually, you interact with a prompt. This is the first thing. You go for a task. For example, I would like to give you a welding task, including the clamping, the welding, and the unclamping and moving on. Then the agent goes out and checks out for all the necessary documents, in whatever you need in order to do that for your machine.

Roland Busch: Yeah

Andre Kukhnin: more in line with the market?

Roland Busch: No, I would say we took share. I mean, remember, for H1, our Digital Industries grew by 19%. In the quarter now, Q2, our software by 14%. We feel, we are very confident. Plus, we were happy about this performance. Absolutely. Veronika Bienert?

Speaker #5: No, I would say we took share. I mean, remember, for the first half, our digital business grew by 19%. In the quarter now, Q2, our software by 14.

Speaker #4: It is an agent which really helps engineers programming industrial PLCs. Typically using our Tier portal, but that can go much, much broader. What it does I mean, it receives actually, you interact with a prompt.

Speaker #5: So we feel very, very confident. Well, we were happy about this performance. Absolutely.

Speaker #6: And maybe just to briefly add to monetization, we are convinced that user-based licenses will continue to exist. But if required for AI, we can really fully leverage new monetization models, and we are testing this on new AI solutions.

Speaker #4: This is the first thing. And you go for a task. For example, I would like to give you a welding task. Including the clamping, the welding, and the unclamping and moving on.

Speaker #6: And our AI capabilities in the product, so therefore we are convinced that the mix of both will really help to grow our top and bottom line.

Speaker #4: And then the agent goes out and checks out for all the necessary documents. I mean, whatever you need in order to do that for your machines.

Speaker #4: So it looks around in all the documents, uploads it, creates a software to run on your PLC. Validates it. Over and over again until it really works.

Roland Busch: It looks around in all the documents uploaded, creates a software to run on your PLC, validates it over and over again until it really works, and then it comes back and say, Okay, here's the ready-to-release software. Finally, a human can decide and push a button and upload it.

Speaker #5: I'll give you one more. This is really exciting. Eigen engineering. Agent. I don't know whether you had a chance to be at our Hanover Trade Fair, but what is it?

Roland Busch: I'll give you one more since this is so exciting. Eigen Engineering Agent. I don't know whether you have a chance to be at our Hanover trade fair, what is it? It's an agent which really helps engineers programming industrial PLCs, typically using our TIA Portal, that can go much, much broader. What it does, I mean, you interact with a prompt. This is the first thing. You go for a task. For example, I would like to give you a welding task, including the clamping, the welding, and the unclamping, and moving on. Then the agent goes out and checks out for all the necessary documents, in whatever you need in order to do that for your machine.

Speaker #4: And then it comes back and say, "Okay, here's the ready to release software." And finally, a human can decide and push a button and upload it.

Speaker #5: It is an agent which really helps engineers programming industrial PLCs, typically using our TIA Portal—but that can go much, much broader. What it does, I mean, is it receives—actually you interact with a prompt.

Speaker #4: And guess what? It works. I mean, this is so amazing. And that's something what was really done by our Seattle team based on a pre-work for our team here in Germany.

Roland Busch: Guess what? It works. I mean, this is so amazing. That's something what was really done by our Seattle team based on a pre-work for our team in here in Germany. They did it, made it work. This is first of its kind engineering agent. By the way, we call it Eigen because number one, it's yours. Eigen is a German, it's yours. Number two, it's links to the eigen state of in physics, which means that this is a very interesting point because physics is non-deterministic if it comes to quantum, but a eigen state is deterministic. That's the beauty of it. We make out of a non-deterministic technology a deterministic output, which is hard and can run on the shop floor.

Speaker #5: This is the first thing. And you go for a task. For example, I would like to give you a welding task, including the clamping, the welding, and the unclamping and moving on.

Speaker #4: They did it, made it work. And this is first of its kind. Engineering agent. And by the way, we call it Eigen because number one, it's yours.

Speaker #5: And then the agent goes out and checks out for all the necessary documents. I mean, whatever you need in order to do that for your machines.

Speaker #4: Eigen is a German. It's yours. Number two, it links to the Eigen state of in physics, which means that and this is a very interesting point because physics is non-deterministic if it comes to quantum.

Speaker #5: So it looks around in all the documents, uploads it, creates a software to run on your PLC. Validates it. Over and over again until it really works.

Roland Busch: It looks around in all the documents uploaded, creates a software to run on your PLC, validates it over and over again until it really works. Then it comes back and says, here's the ready-to-release software. Finally, a human can decide and push a button and upload it. Guess what? It works. I mean, this is so amazing. That's something what was really done by our Seattle team based on a pre-work for our team here in Germany. They did it, made it work, and this is first of its kind engineering agent. By the way, we call it Eigen because, number 1, it's yours.

Speaker #4: But Eigen state is deterministic. And that's the beauty of it. We make out of a non-deterministic technology a deterministic output, which is hardened and can run on the shop floor.

Speaker #5: And then it comes back and says, "Okay, here's the ready-to-release software." And finally, a human can decide and push a button and upload it.

Speaker #4: Sorry for being a little bit technologically here, but we love it. And our customers too. They have very strong interests.

Roland Busch: Sorry for being a little bit technologically here, but, we love it. Our customers too. They have very strong interest.

Speaker #5: And guess what? It works. I mean, this is so amazing. And that's something what was really done by our Seattle team based on a pre-work for our team here in Germany.

Speaker #5: Next question, please.

Tobias Atzler: Next question, please.

Speaker #7: The next question comes from Max Yates from Morgan Stanley. Please go ahead.

Operator: The next question comes from Max Yates from Morgan Stanley. Please go ahead.

Speaker #5: They did it, made it work. And this is first of its kind. Engineering agent. And by the way, we call it Eigen because number one, it's yours.

Speaker #8: Thank you. And good morning, everyone. I just wanted to ask about the health and ear spin. Obviously, in the quarter, you made the announcement that the vote would take place at the AGM next year.

Max Yates: Thank you, and good morning, everyone. I just wanted to ask about the Healthineers spin. Obviously in the quarter you made the announcement that the vote would take place at the AGM next year. I was just wondering, could you give us a little bit of context around kind of why that's now at an AGM as opposed to maybe an extraordinary general meeting earlier? Maybe sort of once the vote happens at the AGM, what kind of timeline after that would we expect the transaction actually to take place? What are the hurdles that need to happen once it what that we need to get through once it has shareholder approval? Thank you.

Roland Busch: Eigen is a German, "it's yours." Number two, it's links to the eigen state of in physics, which means that this is a very interesting point because physics is nondeterministic if it comes to quantum, but a eigen state is deterministic. That's the beauty of it. We make out of a nondeterministic technology a deterministic output, which is hardened and can run on the shop floor. Sorry for being a little bit technologically here, but we love it. Our customers too. They have very strong interest.

Speaker #5: Eigen is a German. It's yours. Number two, it links to the 'eigenstate' in physics, which means that—and this is a very interesting point because physics is non-deterministic if it comes to quantum.

Speaker #8: I was just wondering, could you give us a little bit of context around kind of why that's now at an AGM as opposed to maybe an extraordinary general meeting earlier?

Speaker #8: And then maybe sort of once the vote happens at the AGM, what kind of timeline after that would we expect the transaction actually to take place?

Speaker #5: But an Eigen state is deterministic. And that's the beauty of it. We make out of a non-deterministic technology a deterministic output, which is hardened and can run on the shop floor.

Speaker #8: What are the hurdles that need to happen once it kind of what do we need to get through once it has shareholder approval? Thank you.

Speaker #5: Sorry for being a little bit technological here, but we love it. And our customers do too—they have very strong interest.

Speaker #6: Yeah, I'm happy to take your question. So we are working on an unprecedented transaction. And while such processes naturally take time, the alignment with the tax authorities is progressing well.

Veronika Bienert: Yeah. I'm happy to take your question. We are working on an unprecedented transaction, and while such processes naturally take time, the alignment with the tax authorities is progressing well and in a very constructive and positive manner. We cannot give you details on the ongoing proceedings. However, the alignment with the tax authorities is progressing well, and we are very confident there. I assume you are as well aware that there are certain key contractual aspects which need to be solved between Siemens Healthineers and Siemens AG. All existing contractual relationships like service contracts, rental leasing contracts, or financing agreements, they are being checked, and their continuation or termination evaluated from both sides.

Speaker #7: Next question, please.

Tobias Atzler: Next question, please.

Speaker #8: The next question comes from Max Yates from Morgan Stanley. Please go ahead.

Operator: The next question comes from Max Yates from Morgan Stanley. Please go ahead.

Max Yates: Thank you, and good morning, everyone. I just wanted to ask about the Healthineers spin. Obviously in the quarter, you made the announcement that the vote would take place at the AGM next year. I was just wondering, could you give us a little bit of context around kind of why that's now at an AGM as opposed to maybe an extraordinary general meeting earlier? Maybe sort of once the vote happens at the AGM, what kind of timeline after that would we expect the transaction actually to take place? What are the hurdles that need to happen once that we need to get through once it has shareholder approval? Thank you.

Speaker #9: Thank you. And good morning, everyone. I just wanted to ask about the health and ear spin. Obviously, in the quarter, you made the announcement that the vote would take place at the AGM next year.

Speaker #6: And in a very constructive and positive manner. And we cannot give you details on the ongoing proceedings. However, the alignment with the tax authorities is progressing well.

Speaker #9: I was just wondering, could you give us a little bit of context around kind of why that's now at an AGM as opposed to maybe an extraordinary general meeting earlier?

Speaker #6: And so we are very confident there. And I assume you are as well aware that there are certain key contractual aspects which need to be solved between Siemens Healthineers and Siemens AG.

Speaker #9: And then, maybe, sort of once the vote happens at the AGM, what kind of timeline after that would we expect the transaction actually to take place?

Speaker #6: So all existing contractual relationships like service contracts, rent, leasing contracts, or financing agreements, they are being checked. And there are continuation or termination evaluated from both sides.

Speaker #9: What are the hurdles that need to happen once it kind of—that we need to get through once it has shareholder approval? Thank you.

Speaker #6: Yeah, I'm happy to take your question. So, we are working on an unprecedented transaction. And while such processes naturally take time, the alignment with the tax authorities is progressing well.

Veronika Bienert: Yeah. I'm happy to take your question. We are working on an unprecedented transaction, and while such processes naturally take time, the alignment with the tax authorities is progressing well and in a very constructive and positive manner. We cannot give you details on the ongoing proceedings. However, the alignment with the tax authorities is progressing well, so we are very confident there. I assume you are as well aware that there are certain key contractual aspects which need to be solved between Siemens Healthineers and Siemens AG. All existing contractual relationships like service contracts, rental, leasing contracts, or financing agreements, they are being checked and their continuation or termination evaluated from both sides.

Speaker #6: So we are confident that we will have satisfactory solutions to the questions at the time of the spinoff. And so we have a very straightforward approach.

Veronika Bienert: We are confident that we will have satisfactory solutions to the questions at the time of the spin-off. We have a very straightforward approach. We will go to the regular AGM and then execute on the relevant spin-off activities. That's how we move forward. You are aware we are currently hold 67% and we will deconsolidate with effectiveness of the spin-off. While reductions are planned in the midterm, as previously communicated, we are in no rush and will approach reductions as we always do with a very steady hand and taking into account that the market and operational development of Siemens Healthineers.

Speaker #6: So we will go to the regular AGM and then execute on the relevant spinoff activities. That's how we move forward, yeah? So you are aware we are currently hold 67%.

Speaker #6: And in a very constructive and positive manner. And we cannot give you details on the ongoing proceedings. However, the alignment with the tax authorities is progressing well.

Speaker #6: And we will deconsolidate with effectiveness of the spinoff. And while reductions are planned in the midterm, as previously communicated, we are in no rush and will approach reductions as we always do with a very steady hand and taking into account that the market and operational developments of Siemens Healthineers.

Speaker #6: So all existing contractual relationships, like service contracts, rent, leasing contracts, or financing agreements, they are being checked. And they are from both sides. So we are confident that we will have satisfactory solutions to the questions at the time of the spinoff.

Speaker #8: Okay. Thank you, Veronica.

Max Yates: Okay. Thank you, Veronika.

Veronika Bienert: We are confident that we will have satisfactory solutions to the questions at the time of the spin-off. We have a very straightforward approach. We will go to the regular AGM, and then execute on the relevant spin-off activities. That's how we move forward. You are aware we currently hold 67%, and we will deconsolidate with effectiveness of the spin-off. While reductions are planned in the midterm, as previously communicated, we are in no rush and will approach reductions as we always do, with a very steady hand and taking into account that the market and operational development of Siemens Healthineers.

Speaker #5: Next question, please.

Tobias Atzler: Next question, please.

Speaker #7: The next question comes from the line of Alexander Virgo from Evercore ISI. Please go ahead.

Operator: The next question comes on the line of Alexander Virgo from Evercore ISI. Please go ahead.

Speaker #6: And so we have a very straightforward approach. So, we hold a regular AGM and then execute on the relevant spinoff activities. That's how we move forward, yeah?

Speaker #4: Well, thanks very much. Good morning. Roland, Veronica, and Toby. I wondered if you could just talk a little bit about DI margins. And in particular, I'm thinking about whether you can give some clarification about what you've included in terms of basis point headwinds effects, price cost in particular, I suppose, in the full year guide.

Alexander Virgo: Well, thanks very much. Good morning, Roland, Veronika, and Toby. I wondered if you could just talk a little bit about DI margins. In particular, I'm thinking about whether you can give some clarification about what you've included in terms of basis point headwinds, FX price cost in particular, I suppose, in the full year guide. I guess really what I'm getting at is thinking as we exit this year, we're looking at well north of 20 on an underlying basis. I'm just sort of trying to get a framework for thinking about 2027. Thank you.

Speaker #6: So, we hold 67%, and we will deconsolidate with effectiveness of the spinoff. And while reductions are planned in the midterm, as previously communicated, we are in no rush and will approach reductions as we always do—with a very steady hand, and taking into account the market and operational developments of Siemens Healthineers.

Speaker #4: And then I guess really what I'm getting at is thinking as we exit this year, we're looking at well north of 20 on an underlying basis.

Speaker #4: So I'm just sort of trying to get a framework for thinking about 2027. Thank you.

Veronika Bienert: As previously explained, for Q2, we see 80 basis points impact in terms of FX. For the entire fiscal year, 50 basis points. Our expectation is that in Q3 and Q4, the difference to previous year will kind of flatten out. In this regard to the different impacts in terms of supply chain, inflation and alike, we are heavily working to keep economic equation up and to compensate in different areas so that we have a very strong purchase price approach here. Therefore, we are quite confident to fulfill our targets for the course of the fiscal year.

Speaker #6: Yeah, so as previously explained, so for Q2, we see 80 basis points impact in terms of ethics. And then for the entire fiscal year, 50 basis points.

Speaker #9: Okay. Thank you, Veronica.

Max Yates: Okay. Thank you, Veronika.

Speaker #7: Next question, please.

Tobias Atzler: Next question, please.

Speaker #8: The next question comes from the line of Alexander Virgo from Evercore ISI. Please go ahead.

Operator: The next question comes on the line of Alexander Virgo from Evercore ISI. Please go ahead.

Speaker #6: So our expectation is that in the Q3 and Q4, the difference to previous year will kind of flatten out. And in this regards to the different impacts in terms of supply chain inflation and alike, so we are heavily working to keep economic equation up.

Speaker #5: Well, thanks very much. Good morning. Roland, Veronica, and Toby. I wondered if you could just talk a little bit about DI margins. And in particular, I'm thinking about whether you can give some clarification about what you've included in terms of basis point headwinds effects, price cost in particular, I suppose.

Alexander Virgo: Well, thanks very much. Good morning, Roland Busch, Veronika Bienert, and Toby. I wondered if you could just talk a little bit about DI margins. In particular, I'm thinking about whether you can give some clarification about what you've included in terms of basis point headwinds, FX price cost in particular, I suppose, in the full year guide. Then I guess really what I'm getting at is thinking as we exit this year, we're looking at well north of 20 on an underlying basis. I'm just sort of trying to get a framework for thinking about 2027. Thank you.

Speaker #5: In the full-year guide, and then I guess really what I'm getting at is, thinking as we exit this year, we're looking at well north of 20 on an underlying basis.

Speaker #6: And to compensate in different areas. So that we have a very strong purchase price approach here. So therefore, we are quite confident to fulfill our targets for the course of the fiscal year.

Speaker #5: So, I'm just sort of trying to get a framework for thinking about 2027. Thank you.

Speaker #6: Yeah, so as previously explained, for Q2, we see an 80 basis point impact in terms of ethics. And then for the entire fiscal year, 50 basis points.

Veronika Bienert: Yeah. As previously explained, so for Q2, we see 80 basis points impact in terms of FX. For the entire fiscal year, 50 basis points. Our expectation is that in Q3 and Q4, the difference to previous year will kind of flatten out.

Speaker #6: Yeah.

Speaker #5: Next question, please.

Tobias Atzler: Next question, please.

Speaker #7: The next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead.

Operator: The next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead.

Speaker #9: Hi, good morning. Thank you for taking my question. I just wanted to follow up on some there were some news articles a couple of weeks ago regarding sort of you considering reorganizing how the divisions DI and SI are structured.

Daniela Costa: Hi. Good morning. Thank you for taking my question. I just wanted to follow up. There were some news articles a couple of weeks ago regarding sort of you considering reorganizing how the divisions DI and SI are structured. I just wanted to check sort of like whether you've considered anything of that sort or if we should dismiss those. In case you would consider, what is the logic behind? Thank you.

Veronika Bienert: Different impacts in terms of supply chain, inflation, and alike. We are heavily working to keep economic equation up and to compensate in different areas so that we have a very strong purchase price approach here. Therefore, we are quite confident to fulfill our targets for the course of the fiscal year. Yeah.

Speaker #9: I just wanted to check sort of like whether you've considered anything of that sort or if we should dismiss those and in case you would consider what is the logic behind it.

Speaker #6: And to compensate in different areas, so that we have a very strong purchase price approach here. So, therefore, we are quite confident to fulfill our targets for the course of the fiscal year.

Speaker #9: Thank you.

Speaker #4: Yeah, thanks, Daniela, for asking that one. So for the time dismiss it. Because we keep on going with what we do. What we do it's maybe behind the scenes.

Roland Busch: Yeah. Thanks, Daniela Costa, for asking that one. For the time, dismiss it, because we keep on going with what we do. What we do, it's maybe behind the scenes. I'd give a little bit of some background. Remember, we had our ONE Tech program, which is targeted for three elements. Number one is stronger customer focus. Number two, faster innovation, so increasing our innovation velocity. Number three is ultimately gearing for higher profitable growth. We thought out what do we need to do in order to make a step up? I give you a little bit of background.

Speaker #6: Yeah.

Speaker #4: I give a little bit of a background. So there's and remember, we had our with our one technology program, we also had a which is targeted for three elements.

Speaker #7: Next question, please.

Tobias Atzler: Next question, please.

Speaker #8: The next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead.

Operator: The next question comes from the line of Daniela Costa from Goldman Sachs. Please go ahead.

Speaker #4: Number one is stronger customer focus. Number two, faster innovation. So increasing our innovation velocity. And number three is ultimately going for gearing for higher profitable growth.

Speaker #10: Hi, good morning. Thank you for taking my question. I just wanted to follow up on some—there were some news articles a couple of weeks ago regarding, sort of, you considering reorganizing how the divisions DI and SI are structured.

Daniela Costa: Hi. Good morning. Thank you for taking my question. I just wanted to follow up. There were some news articles 2 weeks ago regarding sort of you considering reorganizing how the divisions DI and SI are structured. I just wanted to check sort of like whether you've considered anything of that sort or if we should dismiss those. In case you would consider, what is the logic behind? Thank you.

Speaker #4: So and we thought out what do we need to do in order to make a step up. And I give you a little bit of background.

Speaker #10: I just wanted to check sort of whether you've considered anything of that sort or if we should dismiss those. And in case you would consider, what is the logic behind?

Speaker #4: And some things there's a reason why I say disregard it because hopefully, you don't see what we do. Because while delivering, we're increasing our performance.

Roland Busch: There's a reason why I say disregard it because, hopefully you don't see what we do, because while delivering, we're increasing our performance. Take one example. We basically reworked our sales organization in the automation business. Currently, it was driven by actually four business units and segments, and this whole structure was reduplicated in the regions. We don't think that is a good idea, so we bring that now under one control. It's one CRM, so one sales organization, which is really having a much, much more better grip on what products to sell, how to sell it. It's a common way to address it. It goes live. I mean, we already work in that direction. It goes live then 1 October, but we are ready to do that.

Speaker #10: Thank you.

Speaker #4: Take me one example. We're basically reworked our sales organization and the automation business. It was currently, it was driven by actually for business units and segments and this whole structure was reduplicated in the regions.

Speaker #5: Yeah, thanks, Daniela, for asking that one. So for the time dismiss it. We keep on going with what we do. What we do it's maybe behind the scenes.

Roland Busch: Yeah. Thanks, Daniela, for asking that one. For the time, dismiss it, because we keep on going with what we do. What we do, it's maybe behind the scenes. I'd give a little bit of some background. There's. Remember, we had our with our ONE Tech Company program, we also had, which is targeted for three elements. Number one is stronger customer focus. Number two, faster innovation, so increasing our innovation velocity. Number three is ultimately gearing for higher profitable growth. We thought of what do we need to do in order to make a step up? I give you a little bit of background.

Speaker #5: I give a little bit of background. So, there's— and remember, we had our one technology program, we also had a— which is targeted for three elements.

Speaker #4: We don't think that this is a good idea. So we bring that now under one control. It's one CRM, so one sales organization. Which is really having a much, much more better grip on what products to sell, how to sell it.

Speaker #5: Number one is stronger customer focus. Number two, faster innovation. So increasing our innovation velocity. And number three is ultimately going for gearing for higher profitable growth.

Speaker #4: It's a common way to address it. It goes live. I mean, we already work in that direction. It goes live then, first of October.

Speaker #4: But we are ready to do that. And we believe that with the same portfolio, we can do better impact because we have better transparency.

Speaker #5: And we thought out, what do we need to do in order to make us step up? And I give you a little bit of background.

Roland Busch: We believe that with the same portfolio, we can do better impact because we have better transparency. We get our productivity of our salespeople up. This includes also how we steer new products when we go to the market. We also strengthening our marketing, product marketing. Once we are launching products, you saw that in China, that we have a product marketing and a campaigning behind to really create impact much, much faster. In short, this is professionalizing the CRM, our sales organization in automation as an example. That's what we do. The other one is we're working on our, the way how we are delivering products, and I'm still on automation, so that we don't have redundant platforms, which creates a kind of an headroom for investing in new innovations.

Speaker #5: And some things, there's a reason why I say disregard it, because hopefully you don't see what we do, because while delivering, we're increasing our performance.

Roland Busch: There's a reason why I say disregard it because hopefully you don't see what we do, because while delivering, we're increasing our performance. Take one example. We basically reworked our sales organization in the automation business. Currently, it was driven by actually four business units and segments, and this whole structure was reduplicated in the regions. We don't think that is a good idea. We bring that now under one control. It's one CRM, so one sales organization, which is really having a much more better grip on what products to sell, how to sell it. It's a common way to address it. It goes live. I mean, we already work in that direction. It goes live then 1 October. We are ready to do that.

Speaker #4: We get our productivity of our salespeople up. This includes also how we steer new products when we go to the market. But then we also strengthening our marketing product marketing.

Speaker #5: Take me one example. We're basically reworked our sales organization and the automation business. It was currently, it was driven by actually for business units and segments and this whole structure was reduplicated in the regions.

Speaker #4: So once we are launching products, you saw that in China. Then we have a product marketing and a campaigning behind to really create impact much, much faster.

Speaker #4: So in short, this is professionalizing the CRM, our sales organization in automation as an example. That's what we do. And the other one is we're working on our the way how we are delivering products.

Speaker #5: We don't think that this is a good idea. So we bring that now under one control. It's one CRM, so one sales organization. Which is really having a much, much better grip on what products to sell, how to sell it.

Speaker #5: It's a common way to address it. It goes live. And then we already work in that direction. It goes live then 1st of October.

Speaker #4: And I'm still on automation. So that we don't have redundant platforms. Which creates a kind of an headroom for investing in new innovations like I mean, China new products, super successful.

Speaker #5: But we are ready to do that. And we believe that with the same portfolio, we can deliver a better impact because we have better transparency.

Roland Busch: We believe that with the same portfolio, we can do better impact because we have better transparency. We get our productivity of our salespeople up. This includes also how we steer new products when we go to the market. We also strengthening our marketing, product marketing. Once we are launching products, you saw that in China, that we have a product marketing and a campaigning behind to really create impact much, much faster. In short, this is professionalizing the CRM, our sales organization in automation as an example. That's what we do. The other one is we're working on our the way how we are delivering products, and I'm still on automation, so that we don't have redundant platforms, which creates a kind of an headroom for investing in new innovations.

Roland Busch: Like, I mean, China new products, super successful. We keep on going. We talk about virtual PLC, software-defined automation, which already starts hitting the market. We need the headroom to deliver and grow faster in doing that. The next thing is that once you start doing that, you think also about what is it what our functions can do. We create a fabric of functions which are able to scale also technology. We talk IT and AI technologies across the company much faster, while having a clear focus on supporting the businesses. World-class support for businesses in scaling. Give you one detail, one idea behind.

Speaker #4: We keep on going. We talk about virtual PLC, software-defined automation, which already starts hitting the market. So we need the tandem to deliver and grow faster in doing that.

Speaker #5: We get our productivity of our salespeople up. This includes also how we steer new products when we go to the market. But then we also strengthening our marketing product marketing.

Speaker #4: And then the next thing is that we once you start doing that, you think also about what is it what our functions can do.

Speaker #5: So once we are launching products, you saw that in China, that we have a product marketing and a campaigning behind to really create impact much, much faster.

Speaker #4: And so we create a fabric of functions which are able to scale also technology. We talk IT and AI technologies across the company much faster.

Speaker #5: So in short, this is professionalizing the CRM, our sales organization in automation as an example. That's what we do. And the other one is we're working on our the way how we are delivering products.

Speaker #4: While having a clear focus on supporting the businesses. So world-class support for businesses. In scaling. Give you one detail, one idea behind. We have currently because we didn't really put too much attention on it.

Speaker #5: And I'm still on automation. So that we don't have redundant platforms. Which creates a kind of a headroom for investing in new innovations like I mean, China new products, super successful.

Roland Busch: We have currently, because we didn't really put too much attention on it, I think something like 600, 700 engineering tools in our company, which is maybe not the right idea to really scale productivity also, using GitHub and all the new technologies and AI. We are consolidating that now and driving them. Within doing that, not only operation productivity of our coders, but also developers, but also having a tool chain which is supporting them to be much, much more productive. On top comes scaling that for the company. It makes us also more productive if we move people around and the like. This is what we do. We do not touch things which are not broken, so you don't see very limited change in our medium voltage, low voltage business.

Speaker #4: I mean, I think something like 600, 700 engineering tools in our company. Which is maybe not the right idea to really scale productivity also.

Roland Busch: Like, I mean, China new product, super successful. We keep on going. We talk about virtual PLC, software-defined automation, which already starts hitting the market. We need the tandem to deliver and grow faster in doing that. The next thing is that once you start doing that, you think also about what is it what our functions can do. We create a fabric of functions which are able to scale also technology. We talk IT and AI technologies across the company much faster while having a clear focus on supporting the businesses. World-class support for businesses in scaling. Give you one detail, one idea behind.

Speaker #5: We keep on going. We talk about virtual PLC, software-defined automation, which already starts hitting the market. So, we need the tandem to deliver and grow faster in doing that.

Speaker #4: I mean, using GitHub and all the new technologies and AI. So we are consolidating that now and driving then within doing that, not only operation productivity of our coders, but also developers.

Speaker #5: And then the next thing is that we once you start doing that, you think also about what is it what our functions can do.

Speaker #4: But also having a tool chain which is supporting them to be much, much more productive. On top comes scaling that for the company. It makes us also more productive if we move people around and alike.

Speaker #5: And so we create a fabric of functions which are able to scale also technology. We talk IT and AI technologies across the company much faster.

Speaker #4: So this is what we do. We do not touch things which are not broken. So you don't see very limited change in our medium voltage, low voltage business.

Speaker #5: While having a clear focus on supporting the businesses. So world-class support for businesses. In scaling. Give you one detail, one idea behind. We put too much attention on it.

Speaker #4: You see an improvement in our building business. So therefore, we are very selective. But we are very clear what we want to do and how we want to do it to come again back.

Roland Busch: You see an improvement in our building business. Therefore, we are very selective, but we are very clear what we wanna do and how we wanna do it to come again back stronger customer focus, fast innovations, and higher profitable growth.

Roland Busch: We have currently, because we didn't really put too much attention on it, I mean, I think something like 600, 700 engineering tools in our company, which is maybe not the right idea to really scale productivity also, I mean, using GitHub and all the new technologies and AI. We are consolidating that now and driving them. Within doing that, not only operation productivity of our coders, but also developers, but also having a tool chain which is supporting them to be much, much more productive. On top comes scaling that for the company. It makes us also more productive if we move people around and the like. This is what we do. We do not touch things which are not broken. You don't see very limited change in our medium voltage, low voltage business.

Speaker #5: I mean, I think something like 600, 700 engineering tools in our company. Which is maybe not the right idea to really scale productivity also.

Speaker #4: Stronger customer focus. Fast innovations and higher profitable growth.

Speaker #5: I mean, using GitHub and all the new technologies and AI. So we are consolidating that now and driving then within doing that, not only operation productivity of our coders, but also developers.

Speaker #7: Thank ank you.

Veronika Bienert: Thank you.

Daniela Costa: Thank you.

Speaker #5: We have time for two short questions.

Tobias Atzler: We have time for two short questions.

Speaker #7: The next question comes from Martin Wilkie from City. Please go ahead.

Operator: The next question comes from Martin Wilkie from Citi. Please go ahead.

Speaker #5: But also having toolchain which is supporting them to be much, much more productive. On top comes scaling that for the company. It makes us also more productive if we move people around and the like.

Speaker #10: Yeah, thank you, good morning. It's Martin from City. Just to come back to the margin and DI and particularly on software. I think you said that software was an important part of that margin improvement inside DI.

Martin Wilkie: Yeah. Thank you. Good morning. It's Martin from Citi. Just to come back to the margin in DI, and particularly on software. I think you said that software was an important part of that margin improvement inside DI. Can you remind us where we are in the SaaS transition in terms of the drag from that sort of beginning to reverse or improve? Just to understand, was it largely driven by the timing around that, or is there also an underlying pickup in profitability inside software? Thank you.

Speaker #5: So this is what we do. We do not touch things which are not broken. So you don't see very limited change in our medium voltage low voltage business.

Speaker #10: Can you remind us where we are in the SaaS transition in terms of the drag from that? Sort of beginning to reverse or improve.

Speaker #10: And to just understand was it largely driven by the timing around that? Or is there also an underlying pickup in profitability inside software, thank you?

Speaker #5: You see an improvement in our building business. So therefore, we are very selective. But we are very clear what we want to do and how we want to do it, to come again back stronger—customer focus, faster innovations, and higher profitable growth.

Veronika Bienert: We are on our way with the SaaS transition as planned. Still some activities are underway, but we are progressing very well. You're very well aware that we are not disclosing the software margins, but what we see as well from the Altair integration activities in terms of synergies, revenue synergies, we see as well the translation into profitability. Therefore, we are very confident in the overall SaaS transition.

Speaker #7: So we are on our way with the SaaS transition. As planned, and but still some activities are underway. But we are progressing very well.

Daniela Costa: Thank you.

Speaker #8: Thank you.

Speaker #7: We have time for two short questions.

Tobias Atzler: We have time for two short questions.

Speaker #7: And you're very well aware that we are not disclosing the software margins. But what we see as well from the Altair integration activities in terms of synergies, revenue synergies, we see as well the translation into profitability.

Speaker #8: The next question comes from Martin Wilke from Citi. Please go ahead.

Operator: The next question comes from Martin Wilkie from Citi. Please go ahead.

Speaker #11: Yeah, thank you, good morning. It's Martin from Citi. Just to come back to the margin and DI, and particularly on software. I think you said that software was an important part of that margin improvement inside DI.

Martin Wilkie: Yeah, thank you. Good morning. It's Martin from Citi. Just to come back to the margin in DI and particularly on software. I think you said that software was an important part of that margin improvement inside DI. Can you remind us where we are in the SaaS transition in terms of the drag from that sort of beginning to reverse or improve? Just to understand, you know, was it largely driven by the timing around that or is there also an underlying pickup in profitability inside software? Thank you.

Speaker #7: So therefore, we are very confident in the overall SaaS transition.

Speaker #11: Can you remind us where we are in the SaaS transition in terms of the drag from that? Is that sort of beginning to reverse or improve?

Speaker #10: And maybe to add coming back to when we started off also taking you with us on the SaaS transition. This is something what is really I mean, high credit to our team.

Roland Busch: Maybe to add, coming back to when we started off, also taking you with us on this SaaS transition, this is something what is, what is really high credit to our team. They execute as planned. This is goes back now, I don't know, 4 years or whatever, 5 years. They deliver as planned. You see up the expected pickup in margins. They deliver on the integration of Altair and Dotmatics. Measures for the other $15 million dollar savings are in place, which are kicking in in our bottom line going forward. From that perspective, we are very happy that they pick up as planned and also on the top line with the pipeline building up for our cross-selling and upselling.

Speaker #11: And to just understand was it largely driven by the timing around that or is there also an underlying pickup in profitability inside software, I think?

Veronika Bienert: We are on our way with the SaaS transition as planned. Still some activities are underway, but we are progressing very well and you are very well aware that we are not disclosing the software margins. What we see as well from the Altair integration activities in terms of synergies, revenue synergies, we see as well the translation into profitability. Therefore we are very confident in the overall SaaS transition.

Speaker #8: So we are on our way with the SaaS transition as planned, but still some activities are underway. But we are progressing very well.

Speaker #10: They execute as planned. I mean, even this goes back now. I don't know, four years or whatever. Five years. They deliver as planned. So you see up the expected pickup in margins.

Speaker #10: They deliver on the integration of Altair. And Dotmatics. Measures for the 115 million dollars savings are in place which are kicking in in our bottom line going forward.

Speaker #8: And you are very well aware that we are not disclosing the software margins. But what we see as well from the Altair integration activities in terms of synergies, revenue synergies, we see as well that translation into profitability.

Speaker #10: So from that perspective, we are very happy that they pick up as planned. And also on the top line. So we use the pipeline building up for our cross-selling and upselling.

Speaker #8: So therefore, we are very confident in the overall SaaS transition.

Speaker #11: And maybe to add, coming back to when we started off, also taking you with us on the SaaS transition. This is something that is really—I mean, high credit to our team.

Roland Busch: Maybe to add, coming back to when we started off, also taking you with us on this SaaS transition. This is something what is really, I mean, high credit to our team. They execute as planned. I mean, even this goes back now, I don't know, four years or whatever, five years. They deliver as planned. You'll see up the expected pickup in margins. They deliver on the integration of Altair and Dotmatics. Measures for the $115 million savings are in place, which are kicking in in our bottom line going forward. From that perspective, we are very happy that they pick up as planned and also on the top line with the pipeline building up for our cross-selling and upselling.

Speaker #10: Great. Thank you very much.

Martin Wilkie: Great. Thank you very much.

Speaker #5: We take one last question, please.

Tobias Atzler: We take one last question, please.

Speaker #7: Today's last question is from Gael de Bret from Deutsche Bank. Please go ahead.

Operator: Today's last question is from Gael de Bray from Deutsche Bank. Please go ahead.

Speaker #11: They execute as planned. I mean, even this goes back now, I don't know, four years or whatever, five years. They deliver as planned. So you see up the expected pickup in margins.

Speaker #11: Well, good morning. Thanks very much. Hi, everybody. My question is for Veronica. I'd be really interested in hearing about your early observations in the role.

Gael de Bray: Well, good morning. Thanks very much, everybody. My question is for Veronika. I'd be really interested in hearing about your early observations in the role. You know, where are your priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor? If I may, in terms of, you know, the capital allocation strategy, why only EUR 6 billion of buybacks, given the strength of the balance sheet and the expected deconsolidation of the debt from Healthineers in less than a year's time?

Gaël de Bray: Well, good morning. Thanks very much, everybody. My question is for Veronika. I'd be really interested in hearing about your early observations in the role. You know, where are your priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor? If I may, in terms of, you know, the capital allocation strategy, why only EUR 6 billion of buybacks, given the strength of the balance sheet and the expected deconsolidation of the debt from Healthineers in less than a year's time?

Speaker #11: They deliver on the integration of Altair and Dotmatics. Measures for the 115 million dollars savings are in place which are kicking in our bottom line going forward.

Speaker #11: Where are you priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor? And if I may, in terms of the capital allocation strategy, why only 6 billion euros of buybacks given the strength of the balance sheet and the expected consolidation of the debt from Elsevier in less than a year's time?

Speaker #11: So from that perspective, we are very happy that they pick up as planned and also on the top line. So we use the pipeline building up for our cross-selling and upselling.

Speaker #11: Great. Thank you very much.

Speaker #12: Yeah, so happy to take your question. And with regards, you mentioned it on your own.

Veronika Bienert: Yeah. Happy to take your question. With regards, you mentioned it on your own.

Martin Wilkie: Great. Thank you very much.

Speaker #7: We take one last question, please.

Tobias Atzler: We take one last question, please.

Speaker #8: Today's last question is from Gael de Bret from Deutsche Bank. Please go ahead.

Operator: Today's last question is from Gael de Bray from Deutsche Bank. Please go ahead.

Speaker #10: Oh, you made me stay tuned now here.

Roland Busch: Oh, you make me stay tuned now. Yeah.

Veronika Bienert: Capital allocation is, of course, one of the focus areas which is on top of my mind. In addition as well, stringent execution in terms of delivering our free cash flow. That is something which is very important to show the healthiness of our businesses. Another area is, and something in particular in this challenging geopolitical environment. If you think about increasing inflation and volatility in different areas, it's of course our economic equation, because that is something which shows as well whether our different businesses are healthy and resilient in order to navigate in challenging environments. Yeah, to come back to capital allocation. This goes into different directions.

Speaker #12: Capital allocation of the focus areas which is on top of my mind. But in addition as well, stringent execution in terms of delivering our free cash flow.

Speaker #12: Oh, good morning. Thanks very much. Hi everybody. My question is for Veronica. I'd be really interested in hearing about your early observations in the role.

Gael de Bray: Good morning. Thanks very much, everybody. My question is for Veronika. I'd be really interested in hearing about your early observations in the role. You know, where are your priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor? If I may, in terms of, you know, the capital allocation strategy, why only EUR 6 billion of buybacks, given the strength of the balance sheet and the expected deconsolidation of the debt from Healthineers in less than a year's time?

Speaker #12: Where are you priorities and focus as CFO? Is there anything you'd like to do differently from your predecessor? And if I may, in terms of the capital allocation strategy, why only 6 billion euros of buybacks given the strength of the balance sheet and the expected consolidation of the debt from Elsevier in less than a year's time?

Speaker #12: That is something which is very important to show the healthiness of our businesses. And another area is something in particular in this challenging geopolitical environment.

Speaker #12: And if you think about increasing inflation and volatility in different areas, it's of course our economic equation. Because that is something which shows as well whether our different businesses are healthy.

Speaker #8: Yeah, so happy to take your question. And with regards, you mentioned it on your own.

Veronika Bienert: Yeah. Happy to take your question. With regards, you mentioned it on your own.

Speaker #12: And resilient in order to navigate in challenging environments. And yeah, to come back to capital allocation. This goes into different directions. So of course, our announced share buyback program, it's one of the building blocks.

Speaker #11: Oh, you made me stay tuned now here.

Roland Busch: Oh, you make me stay tuned now. Yeah.

Speaker #8: Capital allocation is of course one of the focus areas which is on top of my mind. But in addition as well, stringent execution in terms of delivering our free cash flow.

Veronika Bienert: Capital allocation is of course one of the focus areas which is on top of my mind, but in addition as well, stringent execution in terms of delivering our free cash flow. That is something which is very important to show the healthiness of our businesses. Another area is something in particular in this challenging geopolitical environment. If you think about increasing inflation and volatility in different areas is of course, our economic equation, because that is something which shows as well, whether our different businesses are healthy and resilient in order to navigate in challenging environments. Yeah, to come back to capital allocation, this goes into different directions.

Veronika Bienert: Of course, our announced share buyback program, it's one of the building blocks. It's more or less one instrument which we are looking at. Capital allocation goes into the direction when we look in a very prudent manner at M&A activities. Of course, we are doing that in the same manner as before. No change. Yeah, a very prudent approach. However, if you look at the multiples in different areas, we are in industries we are acting in. Therefore, we really need to show or to see evaluating such targets. How does it look like with synergies, about revenue, cost synergies?

Speaker #8: That is something which is very important to show the healthiness of our businesses. And another area is something in particular in this challenging geopolitical environment.

Speaker #12: So it's more or less one instrument which we are looking at. But capital allocation goes into the direction when we look in a very prudent manner at M&A activities.

Speaker #8: And if you think about increasing inflation and volatility in different areas, it's of course our economic equation. Because that is something which shows as well whether our different businesses are healthy.

Speaker #12: So of course, we are doing that in the same manner as before. So no change. Yeah, a very prudent approach. However, if you look at the multiples and different areas, we are in industries we are acting in.

Speaker #8: And resilient in order to navigate in challenging environments. And yeah, to come back to capital allocation. This goes into different directions. So of course, our announced share buyback program, it's one of the building blocks.

Speaker #12: So therefore, we really need to show or to see evaluating such targets how does it look like with synergies about revenue, cost synergies. And is it is the strategic fit in terms of top, bottom line.

Veronika Bienert: Is it, is the strategic fit in terms of top bottom line and many other areas you are very well aware of our five to six focus areas from a strategic point. That is something which we further pursue. When we talk about capital allocation, it's not only about share buybacks and M&A activities, it is as well, if you look kind of inside the company, R&D activities, R&D efficiency, such topics we really need to look at in a very close manner and the way how we allocate resources. Just to translate it into a resilience of a company. We really need to diversify. We need to diversify the way, how where are our production locations, where are we running our R&D activities.

Speaker #12: And many other areas you are very well aware of our five to six focus areas from a strategic point. So that is something which we further pursue.

Speaker #8: So it's more or less one instrument which we are looking at. But capital allocation goes into the direction when we look in a very prudent manner at M&A activities.

Speaker #12: But when we talk about capital allocation, it's not only about share buybacks and M&A activities. It is as well if you look kind of inside the company, R&D activities, R&D efficiency, such topics we really need to look at in a very close manner.

Speaker #8: So of course, we are doing that in the same manner as before. So no change. Yeah, a very prudent approach. However, if you look at the multiples in different areas, we are in industries we are acting in.

Speaker #12: And the way how we allocate resources. So just to translate it into resilience of a company, so we really need to diversify. We need to diversify the way where our production allocations where are we running our R&D activities.

Speaker #8: So therefore, we really need to show or to see evaluating such targets how does it look like with synergies about revenue, cost synergies. And is it the strategic fit in terms of top, bottom line?

Veronika Bienert: Therefore, we really need to show or to see evaluating such targets, how does it look like with synergies, about revenue, cost synergies, and is it the strategic fit in terms of top bottom line and many other areas you are very well aware of our 5 to 6 focus areas from a strategic point. That is something which we further pursue. When we talk about capital allocation, it's not only about share buybacks and M&A activities, it is as well, if you look kind of inside the company, R&D activities, R&D efficiency, such topics we really need to look at in a very close manner and the way how we allocate resources. Just to translate it into a resilience of a company.

Speaker #12: And that is something which we started to do. But we will do that in an even more focused manner. That we really ensure in a very stringent way.

Veronika Bienert: That is something which we started to do, but we will do that in an even more focused manner that we really ensure in a very stringent way, but in a very forward-looking way, for the value creation of our company. I hope this gives you a certain insight on my focus areas going forward.

Speaker #8: And many other areas—you are very well aware of our five to six focus areas from a strategic point. So, that is something which we will further pursue.

Speaker #8: But when we talk about capital allocation, it's not only about share buybacks and M&A activities. It is as well if you look kind of inside the company, R&D activities, R&D efficiency, such topics we really need to look at in a very close manner.

Speaker #12: But in a very forward-looking way for the value creation of our company. So I hope this gives you a certain insight on my focus areas going forward.

Speaker #10: Yes. Thank you very much.

Gael de Bray: Yes. Thank you very much.

Gaël de Bray: Yes. Thank you very much.

Speaker #8: And the way how we allocate resources. So, just to translate it into resilience of a company, we really need to diversify. We need to diversify the way—where our production allocations are, where we are running our R&D activities.

Speaker #5: Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions. We're looking forward to our sales ad meeting or sales ad call later today.

Tobias Atzler: Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions. We're looking forward to our sell-side meeting or sell-side call later today and meeting many of you on our road shows over the upcoming weeks. Have a wonderful day and goodbye.

Veronika Bienert: We really need to diversify. We need to diversify the way, where are our production allocations, where are we running our R&D activities. That is something which we started to do, but we will do that in an even more focused manner that we really ensure in a very stringent way, but in a very forward looking way, for the value creation of our company. I hope this gives you a certain insight on my focus areas going forward.

Speaker #8: And that is something which we started to do. But we will do that in an even more focused manner. That we really ensure in a very stringent way.

Speaker #8: But in a very forward-looking way for the value creation of our company. So, I hope this gives you a certain insight on my focus areas going forward.

Speaker #12: Yes. Thank you very much.

Gael de Bray: Yes. Thank you very much.

Speaker #7: Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions. We're looking forward to ourselves at meeting ourselves at call later today.

Tobias Atzler: Thanks a lot to everyone for participating today. As always, the team and I will be available for further questions. We're looking forward to our sales side meeting or sales side call later today and meeting many of you on our road shows over the upcoming weeks. Have a wonderful day and goodbye.

Speaker #7: And meeting many of you on our roadshows over the upcoming weeks. Have a wonderful day and goodbye.

Operator: Good morning, ladies and gentlemen, and welcome to the Siemens 2026 Q2 Conference Call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor statement on page 2 of the Siemens presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

Speaker #8: Goodbye. Good morning, ladies and gentlemen, and welcome to the Siemens 2026 second quarter conference call. As a reminder, this call is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor statement on page 2 of the Siemens presentation.

Speaker #8: This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties.

Speaker #8: At this time, I would like to turn the conference call over to your host today, Mr. Tobias Atzler, Head of Investor Relations. Please go ahead, sir.

Speaker #2: Good morning, ladies and gentlemen, and welcome to our fiscal Q2 2026 conference call. All documents were released this morning and can also be found on our IR website.

Tobias Atzler: Good morning, ladies and gentlemen, and welcome to our fiscal Q2 2026 conference call. All documents were released this morning and can be found also on our IR website. I'm here today with our CEO, Roland Busch, and our new CFO, Veronika Bienert, for her first earnings call. Both will review the Q2 results. After the presentation, we will have time for Q&A. With that, over to you, Roland.

Speaker #2: I'm here today with our CEO, Roland Busch, and our new CFO, Veronica Bienert, for her first earnings call. Both will review the Q2 results.

Speaker #2: After the presentation, we will have time for Q&A. With that, over to you, Roland.

Roland Busch: Thank you, Tobias. Good morning, everyone, and thank you for joining us to discuss our Q2 performance. I'm pleased that we continued our successful path of profitable growth, creating value for all our stakeholders, despite an overall environment that was geopolitically demanding. In the Middle East, our top priority has been on supporting and safeguarding the well-being of our employees affected in the region. From a business perspective, we expect our direct revenue exposure in this region to be limited to 3% to 4% in fiscal year 2026. Direct supply exposure at around 1% of purchasing volume is very low. Mitigation measures are in place. Obviously, we are closely monitoring developments as well as the magnitude of secondary effects regarding inflation, global supply chains, and investment sentiment.

Speaker #3: So far, however, we have not seen material changes in broader customer buying behavior, and we are benefiting from our technological strengths and strong positioning in key growth markets.

Roland Busch: However, we have not seen material changes in broader customer buying behavior, and we are benefiting from our technological strengths and strong positioning in key growth markets. Let me walk you through the key highlights. Book-to-bill reached a strong 1.22, lifting orders backlog to a record high level of EUR 124 billion. Nominal top-line growth rates were again materially impacted by the strong euro as anticipated. Group orders reached EUR 24.1 billion, up 18% on the prior year, with double-digit growth in all three core businesses. Smart Infrastructure again reached a quarterly order record with strong demand across most end markets. SI's data center vertical clearly stood out with unprecedented triple-digit order growth in the quarter, even topping the excellent Q1. Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure.

Speaker #3: Now, let me walk you through the key highlights. Book to bill reached a strong 1.22, lifting orders backlog to a record high level of €124 billion.

Speaker #3: Nominal top-line growth rates were again materially impacted by the strong euro, as anticipated. Group orders reached €24.1 billion, up 18% on the prior year, with double-digit growth in all three core businesses.

Speaker #3: Demand continues to be vibrant, driven by the build-out of cloud and AI infrastructure. Digital Industries continued its growth path. The market environment had shown some early signs of improvement that are now being challenged by renewed geopolitical volatility.

Roland Busch: Digital Industries has continued its growth path. The market environment had shown some early signs of improvement that are now being challenged by renewed geopolitical volatility. DI's automation business was strong across regions. Our software business seized several larger opportunities across the portfolio and is successfully upselling with its customer base. Mobility won attractive large orders in Q2. Two weeks ago, another high-profile contract came finally to a close, which will be accounted for in Q3. We will deliver up to 200 double-deck trains based on the Desiro platform to SBB, this is the Swiss Federal Railways, for the Swiss commuter rail networks. The order value is around CHF 2 billion. Overall, revenue growth reached 6%, driven by Digital Industries and Smart Infrastructure. A very strong contribution came from Smart Infrastructure's electrification business, up 18%. The software business at Digital Industries achieved compelling 14%.

Speaker #3: The IS automation business was strong across regions. Our software business seized several larger opportunities across the portfolio, and is successfully upselling with its customer base.

Speaker #3: Mobility won attractive, large orders in Q2. Two weeks ago, another high-profile contract finally came to a close, which will be accounted for in Q3.

Speaker #3: We will deliver up to 200 double-deck trains based on the D0 platform to SPB. This is the Swiss Bundesbahn, for the Swiss commuter rail networks.

Speaker #3: The order value is around 2 billion Swiss francs. Overall, revenue growth reached 6%, driven by Digital Industries and Smart Infrastructure. A very strong contribution came from Smart Infrastructure's Electrification business, up 18%.

Speaker #3: The software business at Digital Industries achieved a compelling 14%. It is good to see that revenue was up in all regions. The Americas led the way, up 10%, fueled by strong momentum in the United States.

Roland Busch: It is good to see that revenue was up in all regions. The Americas led the way up 10%, fueled by strong momentum in the United States. EMEA grew by 2%, and Asia, Australia was up 8%, driven by India, which was up 21%. Industrial business profit reached EUR 3 billion, translating to a profit margin of 15.4%. We saw operational strengths at Digital Industries and Smart Infrastructure, while Mobility was impacted by US tariffs. Currency headwinds amounted to 80 base points and are expected to ease in H2. These results translated into earnings per share pre-PPA of EUR 2.81, including, as previously indicated, a gain from the divestment of our airport logistics business in the US. Compared to Q1, free cash flow picked up to EUR 1.7 billion.

Speaker #3: EMEA grew by 2%, and Asia, Australia was up 8%, driven by India, which was up 21%. Industrial business profit reached €3 billion, translating to a profit margin of 15.4%.

Speaker #3: We saw operational strengths at Digital Industries and Smart Infrastructure, while Mobility was impacted by US tariffs. Currency headwinds amounted to 80 basis points and are expected to ease in the second half.

Speaker #3: These results translated into a earnings per share pre-PBA of 2 euro and 81 cents, including as previously indicated, a gain from the divestment of our airport logistics business in the US.

Speaker #3: Compared to the first quarter, free cash flow picked up to €1.7 billion. We confirm our outlook for fiscal year 2026 on the Group level.

Roland Busch: We confirm our outlook for fiscal year 2026 on the group level with some adjustments in the individual businesses. Veronika will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the timeline for the spin-off of Siemens Healthineers shares. The shareholder vote is now planned for our next ordinary annual shareholders meeting in February 2027. Four key levers drive our growth ambitions as ONE Tech Company. First, digital growth. In the H1 of the fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November. Digital business was driven by a good mix of organic growth from expanding our Siemens Xcelerator software and digital service offerings, combined with the strong growth trajectory of our recent software acquisitions. Second, grow regions.

Speaker #3: With some adjustments in the individual businesses, Veronica will give you some more color later. In addition, we continue to shape our portfolio. As planned, we clarified the timeline for the spin-off of Siemens Healthineers shares—the shareholder vote is now planned for our next ordinary annual shareholders' meeting in February 2026.

Speaker #3: Four key levers drive our growth ambitions as one tech company. First, digital growth. In the first half of fiscal year 2026, we grew our digital business by 19%, well ahead of the ambition level of 15% that we set last November.

Speaker #3: Second, grow regions. A great example of where Siemens' strengths across business come together as one is Vulcan Energy's Project Lionheart in Germany's Upper Rhine Valley.

Speaker #3: As a key partner, Siemens Financial Services will become a minority investor in this project and has supported the structuring and arrangement of the debt financing.

Speaker #3: Third, grow verticals. Data center demand has been soaring, and it reflects our trusted systems integration and delivery capabilities. The team grew our revenue in the first half year by more than 45% to €1.8 billion.

Speaker #3: We are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low- and medium-voltage production capacities in the US at several locations in the Carolinas.

Roland Busch: We are confident that we will be able to keep up this stunning pace throughout fiscal year 2026. To meet accelerated demand, we will ramp up further low and medium voltage production capacities in the US at several locations in the Carolinas. We are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal: we are creating more flexibility across compute, energy, and infrastructure systems. Data center operators can connect to the grid faster, scale efficiently, and operate reliably in a power-constrained world. Fourth growth lever, grow AI. Bringing AI to the real world was our key theme at our first RXT summit held in Beijing, which was a major customer and partner event. We deepened our partnership with Alibaba to bring our advanced industrial software together with their cloud and AI capabilities.

Speaker #3: And we are continuously expanding our data center partner ecosystem to scale next-generation AI infrastructure. The goal is creating more flexibility across compute, energy, and infrastructure systems.

Speaker #3: Data center operators can connect to the grid faster, scale efficiently, and operate reliably in a power-constrained world. Fourth, growth lever: grow AI. Bringing AI to the real world was our key theme at our first RXD Summit held in Beijing, which was a major customer and partner event.

Speaker #3: And we introduced 26 new products for edge automation and control to execute AI-driven applications in industry and in the infrastructure. These products were locally developed at China speed, as we say, for the Chinese market and beyond.

Speaker #3: Those of you who visited our booth in Hanover saw firsthand how we are bringing industrial AI to the shop floor together with our partners.

Speaker #3: Let me highlight just a few examples. First, we launched our Eigen engineering agent, with which we are moving industrial AI from providing assistance to autonomously planning and executing industrial automation engineering tasks.

Speaker #3: The impact is impressive with up to 50% greater engineering efficiency and up to 80% higher solution quality proven in more than 100 global pilot deployments.

Roland Busch: Second, we showed that physical AI is becoming reality in our own factories. We are automating complex and unpredictable logistics tasks with AI-powered robots. After receiving the task, they figure out by themselves how to solve challenges and optimize the required actions. A huge opportunity to address the scarcity of skilled labor. With KION, we entered a strategic partnership to shape the supply chains of the future. Using comprehensive digital twins and our Digital Twin Composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain. A key part of this collaboration is exchanging selected areas of industrial data and domain expertise to accelerate AI-enabled solutions. All these applications will lead to increasing demand for electricity for AI factories. We launched a comprehensive new direct protection and switching portfolio, the basis for offerings more efficient and sustainable DC grid solutions.

Speaker #3: A huge opportunity to address this scarcity of skilled labor. With Kion, we entered a strategic partnership to shape the supply chains of the future.

Speaker #3: Using comprehensive digital twins in our Digital Twin Composer, we turn warehouses from a physical hub into the digital nerve center for the supply chain.

Speaker #3: Organic ARR growth trended upward to a very healthy level of 11% over the prior year. The integration of our Altair and Dotmatics acquisitions is progressing very well.

Speaker #3: We have achieved an important milestone by implementing the targeted cost-savings measures of $150 million following the Altair integration. The bottom-line impact will follow subsequently.

Roland Busch: Our customers require the management of physical laws and deterministic outcomes. Embedding AI in our physics-based solutions enables better and faster deterministic intelligence that, unlike probabilistic results, can be trusted. Our tools have the capability for sign-off and verification. Second, contextualization. Industrial-grade AI requires precise contextualization of data. Our industrial software understands design intent and all of a product's configurations. AI that is built on systems of record uniquely preserves all necessary rules and relationships. Third, multi-domain. The complexity of innovation is rapidly increasing in a world of personalized and software-defined products. Customers require AI to be built on systems that understand the multi-domain design intent across the enterprise. We are the only company that can do this across PLM, EDA, simulation, and shop floor execution. Fourth, life. Real-time intelligence that will drive action requires a live digital twin that is infused with real-world physical data.

Roland Busch: Siemens is the industrial leader in bringing the real and digital worlds together to drive better, faster real-time intelligence and governed actions. With focused investments, we are speeding up the development of AI-enhanced products and new applications in three ways. First, faster engines. Our physics AI solution doesn't replace deterministic CAE solvers, it makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates. They run full deterministic solvers on only the top few. Result. Dramatic faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic industrial-grade AI platform that autonomously plans, executes, and validates. We have stress-tested this capability where the stakes are at the absolute highest, which is in the semiconductor design.

Speaker #3: It makes them dramatically more efficient. Engineers can rapidly screen thousands of options and identify the most promising candidates. Then, they run full deterministic solvers on only the top few.

Speaker #3: Result? Dramatically faster design iterations and earlier validation. Second, faster engineers. Another key innovation is our new agentic, industrial-grade AI platform that autonomously plans, executes, and validates.

Speaker #3: We have stress-tested this capability where the stakes are at the absolute highest, which is in semiconductor design. The Fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools.

Roland Busch: The Fuse EDA AI system securely orchestrates highly complex workflows across very specialized tools, and it delivers real engineering productivity for industry leaders such as TSMC and NVIDIA. Even more, this is a platform approach for scaling. We are taking this agentic intelligence and will extend it to more than 20 agents across our broader software portfolio. Third, increased design intelligence. One of the key challenges in adapting and implementing comprehensive digital twins for factories is the complexity of integrating data across ecosystems. Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all these data streams from the digital and real worlds into one experience. You saw this compelling concept in Hanover, with PepsiCo and KION examples. We enabled those companies to build an ever-evolving engineering mirror of the physical product and factory, constantly driving operational improvement. Customer interest is massive.

Speaker #3: Siemens has resolved this issue by introducing the Digital Twin Composer, which can merge all these data streams from the digital and real worlds into one experience.

Speaker #3: You saw this compelling concept in Hanover with the PepsiCo and Kion examples. We enabled those companies to build on an ever-evolving engineering mirror of the physical product and factory, constantly driving operational improvement.

Speaker #3: Customer interest is massive. So far, we have been working on more than 300 inquiries from large enterprises since the launch at CES. To sum it up, our foundation is strong.

Roland Busch: We have been working on more than 300 inquiries from large enterprises since the launch at CES. To sum it up, our foundation is strong. It's built on Teamcenter, the industry's number 1 trusted and secure system of records. On this basis, we are bringing the benefits of faster engines, faster engineers, and enhanced design intelligence to life. We are building an AI-native experience that is secure, trusted, and governed. We aim to lead this transformation. Now over to you, Veronika.

Speaker #3: It's built on Teamcenter, the industry's number one trusted and secure system of records. On this basis, we are bringing the benefits of faster engines, faster engineers, and enhanced design intelligence to life.

Speaker #3: We are building an AI-native experience that is secure, trusted, and governed. We aim to lead this transformation. And now, over to you, Veronica.

Speaker #2: Thank you, Roland, and good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year.

Veronika Bienert: Thank you, Roland, good morning, everyone. Let me share more about our successful Q2 and our expectations for the remainder of the fiscal year. Orders for Digital Industries at EUR 4.8 billion were 12% above the prior year, with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving. At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year, with orders close to EUR 1.8 billion. Book-to-bill was clearly above 1, driven by structural tailwinds from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to EUR 10.2 billion, with a gradually increasing software share.

Speaker #2: Orders for Digital Industries at €4.8 billion were 12% above the prior year, with a book-to-bill of 1.03. Overall market dynamics in the automation business have been gradually improving.

Speaker #2: At this stage, however, we have limited visibility into the future impact that the conflict in the Middle East will have on investment sentiment. DI software business again delivered strong growth over the prior year with orders close to €1.8 billion.

Speaker #2: Book-to-bill was clearly above 1, driven by structural tailwinds from sustained AI momentum and by several large order wins in EDA and PLM. Our backlog at Digital Industries increased moderately to €10.2 billion, with a gradually increasing software share.

Speaker #2: Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA. DI's automation revenue was up by 6% to €3 billion, led by the short-cycle factory automation business.

Veronika Bienert: Revenue for DI increased 8%. Therein, its software business was strongly up by 14% on broad-based double-digit growth across PLM, simulation, and EDA. DI's automation revenue was up by 6% to EUR 3 billion, led by the short-cycle factory automation business. Process automation was up modestly. DI's profitability was higher than expected at 18.5%, with a strong contribution from its software business. DI is increasingly reaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies in connection with Altair. A favorable mix with the high share of short-cycle business supported healthy profit conversion from automation as well. Sustained productivity gains remained the engine for a clearly net positive economic equation in Q2. Integration related costs for Altair and Dotmatics had a magnitude of 90 basis points in Q2, in line with expectations.

Speaker #2: Process automation was up modestly. DI's profitability was higher than expected at 18.5%, with a strong contribution from its software business. DI is increasingly reshaping benefits from the fact that the SaaS transition is nearing completion and from executing cost synergies and connection with Altair.

Speaker #2: A favorable mix, with the high share of short-cycle business, supported healthy profit conversion from automation as well. Sustained productivity gains remained the engine for a clearly net positive economic equation in Q2.

Speaker #2: Integration-related costs for Altair and Dotmatics had a magnitude of 90 basis points in the second quarter, in line with expectations. We now expect this number to reach around 80 basis points for full fiscal 2026.

Speaker #2: Finally, as anticipated, negative currency effects weighed on DI's margin development by around 90 basis points. I am pleased the Digital Industries improved its free cash flow performance to €760 million.

Speaker #2: Looking at the regional top-line perspective, DI's automation business grew across the board. China was robust, clearly up in orders and revenue after a strong first quarter.

Speaker #2: This was supported by some pull-forward effects due to the expected price increases. In Q2, the book-to-bill was above 1 in China, where motion control drove revenue growth.

Speaker #2: Our local China portfolio is well on track, growing at a rate in the mid-20s. Germany showed 13% order growth on Easy Comms, while revenue was up modestly.

Speaker #2: The US showed positive trends driven by brownfield modernization and greenfield activity in selected industries. Among them, namely semiconductors, data centers, power generation, grid modernization, as well as aerospace and defense-related manufacturing.

Speaker #2: After a successful first half year, we raised our fiscal year 2026 guidance for DI's revenue growth 100 basis points at the midpoint to a narrow range of 7% to 10%.

Speaker #2: We now expect DI's profit range to reach 17% to 19%, up 100 basis points at the midpoint versus our previous guidance. DI is driving growth and margin expansion by simplifying its setup, optimizing its sales approach, fostering innovation, and ensuring stringent post-merger integration.

Speaker #2: For the third quarter, we see DI orders clearly up over the prior year level, with a strong contribution from its automation business. DI Software will grow moderately on lower order volume from EDA year over year.

Speaker #2: The sales funnel for EDA is skewed towards the fourth quarter again. We anticipate that DI revenue growth will see a high single-digit increase, supported by growth in automation and software.

Veronika Bienert: The sales funnel for EDA is skewed towards Q4 again. We anticipate that DI revenue growth will see a high single-digit increase supported by growth in automation and software. We expect a profit margin of around 18%. Now, let's turn to Smart Infrastructure, which continued its success story with an excellent performance across all businesses and metrics. Orders were up 35%, reaching a new record level of EUR 7.5 billion. This increase was driven by massive growth of 62% in SI's electrification business and 38% in its electrical product business. Both businesses benefited from surging contract wins from hyperscalers and colocation providers, but also from leading semiconductor firms. Data center orders amounted to a record high EUR 1.9 billion, with customers globally building out capacities for surging AI workloads. Book-to-bill reached an outstanding 1.27.

Speaker #2: And we expect a profit margin of around 18%. Now, let's turn to Smart Infrastructure, which continued its success story with an excellent performance across all businesses and metrics.

Speaker #2: Orders were up 35%, reaching a new record level of €7.5 billion. This increase was driven by massive growth of 62% in SI's electrification business and 38% in its electrical product business.

Speaker #2: Both businesses benefited from surging contract wins from hyperscalers and co-location providers, but also from leading semiconductor firms. Data center orders amounted to a record high €1.9 billion, with customers globally building out capacities for surging AI workloads.

Speaker #2: Book-to-bill reached an outstanding 1.27. SI's record order backlog of €22 billion now already provides visibility well into fiscal year 2027. Revenue growth was broad-based and reached 10%.

Veronika Bienert: SI's record order backlog, log of EUR 22 billion now already provides visibility well into fiscal year 2027. Revenue growth was broad-based and reached 10%. The largest contribution came from the electrification business, up 18%. Stringent backlog execution led to further operational margin expansion, up 10 basis points year over year to 18.6%. SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements. This offset a material currency headwind of 110 basis points, as well as higher commodity costs. For H2 of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02, with a reduction in operating working capital despite strong top-line growth.

Speaker #2: The largest contribution came from the Electrification business, up 18%. Stringent backlog execution led to further operational margin expansion, up 10 basis points year over year to 18.6%.

Speaker #2: SI's business continued to benefit from economies of scale due to higher revenue and from sustainable productivity improvements. This offset a material currency headwind of 110 basis points, as well as higher commodity costs.

Speaker #2: For the second half of fiscal year 2026, we expect pricing measures in SI's product business to increasingly compensate for higher commodity prices. Free cash flow showed excellent cash conversion at 1.02, with a reduction in operating working capital despite strong top-line growth.

Speaker #2: Looking at the regional top-line development, there was healthy demand across the board, and stringent backlog execution drove revenue. The US demonstrated exceptional order momentum, up 72%, led by data center demand.

Veronika Bienert: Looking at the regional top-line development, there was healthy demand across the board and stringent backlog execution drove revenue. The US demonstrated exceptional order momentum up 72%, led by data center demand. It was also good to see bookings and buildings up by low teens. Germany recorded double-digit order growth in buildings and electrical products. The Europe and Middle East region also benefited from large data center orders in the Nordics and from some power utilities wins. SI's top line in China showed further improvement, driven by electrification and electrical products, despite a continuously soft real estate market. The service business delivered 7% growth, clearly up across all regions. We anticipate that the service business will accelerate in H2. Our teams continue to expect very consistent end market dynamics, with data centers and power utilities as key pillars for growth.

Speaker #2: It was also good to see bookings in buildings up by low teens. Germany recorded double-digit order growth in buildings and electrical products. The Europe and Middle East region also benefited from large data center orders in the Nordics and from some power utilities wins.

Speaker #2: SI's top line in China showed further improvement, driven by electrification and electrical products. Despite a continuously soft real estate market, the service business delivered 7% growth, clearly up across all regions.

Speaker #2: We anticipate that the service business will accelerate in the second half of the year. Our teams continue to expect very consistent end-market dynamics, with data centers and power utilities as key pillars for growth.

Speaker #2: After delivering 10% revenue growth in the first half of fiscal year 2026, and given high visibility from backlog, we raise our guidance for the full fiscal year.

Speaker #2: For SI, we now expect comparable revenue growth in the range of 8% to 10%, up by 150 basis points at the midpoint. For full fiscal 2026, we continue to expect SI's profit margin to be in the upper half of our guided range of 18% to 19%.

Speaker #2: For the third quarter, we anticipate that SI's revenue growth will be at the upper end of the full-year range, and profit margin will be in line with full-year expectations.

Speaker #2: Mobility recorded a mixed set of results in the second quarter. Strong orders at €5.3 billion were well above the prior year, with a book-to-bill of 1.76.

Speaker #2: Order backlog stands at €53.5 billion, with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for the second half of fiscal 2026 looks very promising.

Veronika Bienert: Order backlog stands at EUR 53.5 billion, with further improvement of the gross margin profile. Around 30% represents attractive service business. As Roland mentioned, the sales pipeline for H2 of fiscal 2026 looks very promising. Revenue in Q2 came in 2% below the strong prior year level on tough comparables, held back by the impact of US tariffs, mainly in rolling stock. In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call-offs under framework agreements, especially in Europe. The US Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the US. The result of this assessment impacted both top and bottom line equally. Their negative impact on Mobility's profit margin of 6.9% was 170 basis points.

Speaker #2: Revenue in Q2 came in 2% below the strong prior-year level on tough comparables, held back by the impact of US tariffs, mainly in rolling stock.

Speaker #2: In addition, we saw conversion delays in large-scale rail infrastructure projects due to delayed call-offs under framework agreements, especially in Europe. The U.S. Supreme Court ruling on tariffs and the subsequent introduction of similar tariff structures triggered an immediate reassessment of project calculations in the U.S.

Speaker #2: The result of this assessment impacted both top and bottom line equally. Their negative impact on Mobility's profit margin of 6.9% was 170 basis points.

Speaker #2: In addition, severance charges at 80 basis points were somewhat higher due to some factory network optimization measures. Free cash flow was soft, as expected, because the timing of milestone payments led to a temporary build-up of operating working capital.

Speaker #2: Looking at project payment profiles and the timing of order awards, we continue to expect a material catch-up in the second half of fiscal 2026.

Speaker #2: After the first half year, we take a prudent perspective on the current geopolitical challenges. And, having taken into consideration the current situation of US tariffs, as a result, we lower our full-year outlook for revenue growth at Mobility to the range of 5% to 7%.

Speaker #2: Despite this change, we confirm the full-year margin outlook in the range of 8% to 10%. Also, it is now expected to be towards the lower end.

Speaker #2: For the third quarter, we see Mobility's revenue growth and margin within its full-year guidance. Our below IB performance, as shown on page 19 in the appendix, was as expected.

Speaker #2: The results included a gain of €172 million from the sale of our airport logistics business in the US. Free cash flow of €1.7 billion in the second quarter was well above the prior year.

Speaker #2: As discussed, we saw a significant catch-up in the industrial businesses and lower tax payments below the line. We are very confident that we will achieve a double-digit cash return once again in fiscal year 2026.

Speaker #2: With a capital structure of 1.2 for industrial net debt over EBITDA and strong ratings, we continue to act from a position of financial strength.

Speaker #2: Our leadership team is fully committed to delivering stringent capital allocation and strong shareholder returns. Therefore, we retired 18 million shares in March, and we have almost finished our current €6 billion buyback program after less than two and a half years.

Speaker #2: Since we will conclude the buyback in a few weeks, we are already announcing today a new program of up to €6 billion over a period of up to five years.

Speaker #2: These parameters allow sufficient flexibility. However, we have built a track record of accelerated execution when feasible. Now, let me point out our updated outlook assumptions for full fiscal 2026.

Speaker #2: Incremental investments in AI-based innovation will lead to R&D intensity slightly above prior-year levels. Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year.

Veronika Bienert: Selected investments in optimizing our sales channels will keep SG&A as a percentage of revenue on par with the prior year. We will continue to support midterm growth momentum by increasing CapEx in targeted growth fields to expand capacity. Severance costs are now expected in the range of EUR 300 to 350 million. We will continue working on ensuring competitiveness across our businesses and functions, primarily with regard to Digital Industries. As expected, FX was a strong burden in H1 of fiscal 2026. Based on current rates, we expect the headwinds to ease over the H2. Let me conclude with a confirmed outlook for the Siemens Group and the updated guidance for the businesses at a glance.

Speaker #2: We will continue to support mid-term growth momentum by increasing CapEx in targeted growth fields to expand capacity. Severance costs are now expected in the range of €300 million to €350 million.

Speaker #2: We will continue working on ensuring competitiveness across our businesses and functions, primarily with regard to digital industries. As expected, FX was a strong burden in the first half of fiscal 2026.

Speaker #2: However, based on current rates, we expect the headwinds to ease over the second half of the year. Finally, let me conclude with a confirmed outlook for the Siemens Group.

Speaker #2: And the updated guidance for the businesses at a glance: we continue to expect to reach the upper half of our group revenue growth guidance of 6% to 8%.

Veronika Bienert: We continue to expect to reach the upper half of our group revenue growth guidance of 6% to 8%, and we anticipate that we will reach EPS pre PPA in the range of EUR 10.70 to EUR 11.10. In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow. With that, I hand it back to Tobias for Q&A.

Speaker #2: And we anticipate that we will reach EPS pre-PPA in the range of 10 euros, 70 cents to 11 euros, 10 cents. In a time of highly volatile geopolitics, we are delivering resilient performance with healthy growth and strong free cash flow.

Speaker #2: With that, I hand it back to Tobias for Q&A.

Speaker #1: Thank you, Veronica. We are now ready for Q&A. Please limit yourselves to one question per person. We want to give as many of you as possible the opportunity to raise your question.

Tobias Atzler: Thank you, Veronika. We are now ready for Q&A. Please limit yourselves to one question per person. We want to give as many of you as possible the opportunity to raise your question. Operator, please open the Q&A now.

Speaker #1: Operator, please open the Q&A now.

Speaker #3: Thank you, ladies and gentlemen. Anyone who wishes to ask a question may press start, followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press start, followed by two.

Operator: The first question comes from the line of Phil Buller from J.P. Morgan. Please go ahead.

Speaker #3: If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press Start, followed by 1 at this time.

Speaker #3: The first question comes from the line of Phil Buller from JP Morgan. Please go ahead.

Speaker #4: Thank you. Hi, good morning, Roland, Veronica, and Tobias. I'd like to dig a bit deeper into the triple-digit data center momentum, please. Is this just an easy comp?

Speaker #4: Is it a one-off, or are you gaining share? And if so, why is that? Anything you can offer to help build out that huge headline order momentum would be great.

Speaker #4: Thank you.

Speaker #5: So we do our homework when we compare our growth in as far as we can, obviously, see it from—we call it electrification. So this is some of medium voltage, low voltage.

Roland Busch: We do our homework when we compare our growth in as far as we can obviously see it from what we call it electrification, so this is a sum of medium voltage, low voltage. From that perspective, I would say we slightly gained market share, but we are growing, let's say with the key competitors likewise, and maybe a little bit stronger in that, in that quarter. I mean, this is all about delivering capabilities, so you know that we continuously expand our manufacturing footprint in the United States, in Carolinas, we invested more. We are ramping up high-quality manufacturing, very much automated, so we are able to do that. We have our supply chain under control, we are having a strong focus on that.

Speaker #5: And from that perspective, we, I would say, we slightly gained market share, but we are growing in, let's say, with a key competitor likewise—maybe a little bit stronger in that quarter.

Speaker #5: So, I mean, this is all about delivering capabilities. So, you know that we continuously expand our manufacturing footprint in the United States, in the Carolinas.

Speaker #5: We invested more. We are ramping up high-quality manufacturing—very much automated. So we are able to do that. We have our supply chain under control.

Speaker #5: And we are having a strong focus on that, and so therefore, this is the way to keep momentum. The other part is that we are not only growing with the hyperscalers.

Speaker #5: We are diversifying also to others—other data center builders. And the last point is, and that's more looking forward, we are launching new products.

Speaker #5: You saw that 800-volt DC switching technology, which hits the market anytime soon. Launched right now. So, which gives hopefully another momentum going forward.

Speaker #4: Thank you. And is there anything to bear in mind from our side in terms of gross margin dilution, or a material margin profile difference, for what we're seeing coming through on the order book, please?

Phil Buller: Thank you. Is there any kind of thing to bear in mind from our side in terms of gross margin dilution or a material margin profile difference for what we are seeing coming through on the order book, please. Thank you. For the follow-up.

Speaker #4: Thank you for the follow-up.

Speaker #5: No, it's supporting a great margin in that business.

Roland Busch: No, it's supporting a great margin in that business.

Speaker #4: Thank you.

Speaker #5: Yeah.

Phil Buller: Thank you.

Speaker #1: Next question, please.

Roland Busch: Yeah.

Tobias Atzler: Next question, please.

Speaker #3: The next question comes from the line of James Moore from Rothschild & Co Redburn. Please go ahead.

Operator: The next question comes from the line of James Moore from Rothschild & Co Redburn. Please go ahead.

Speaker #4: Yes. Good morning, everyone, and thank you for the time. I wondered if I could ask a little bit about the automation momentum. Broadly similar environment to last quarter.

Speaker #4: And the Chinese environment could potentially have been even a little bit faster. I wondered if you could talk a bit about market share in China.