Half Year 2026 Qt Group Oyj Earnings Call

August 6, 2026

Speaker #4: Hello, everybody, and welcome to the Qt Group Q2 2026 results presentation. My name is Herta Narvanen, and I'm the Communications Lead at Qt Group. I'm here today with our CEO, Juha Varalius, and our CFO, Anne Zetterberg, who will be presenting the results.

Operator: Hello everybody and welcome to Qt Group's Q2 2026 results presentation. My name is Hertta Närvänen and I'm the communications lead at Qt Group. I'm here today with our CEO, Juha Varelius, and our CFO, Ann Zetterberg, who will be presenting the results. After the presentation, we have time for questions, first starting from the room, and then if time permits, then from the line. Without any further ado, let's get going. Please go ahead, Juha.

Hertta Närvänen: Hello everybody and welcome to Qt Group's Q2 2026 results presentation. My name is Hertta Närvänen and I'm the communications lead at Qt Group. I'm here today with our CEO, Juha Varelius, and our CFO, Ann Zetterberg, who will be presenting the results. After the presentation, we have time for questions, first starting from the room, and then if time permits, then from the line. Without any further ado, let's get going. Please go ahead, Juha.

Speaker #4: After the presentation, we have time for questions—first starting from the room, and then, if time permits, from the line. But without any further ado, let's get going.

Speaker #4: Please go ahead, Juha.

Speaker #5: Thank you. Excuse me. Thank you, and good morning, everyone, and welcome to the Q2 results. My name is Juha Varalius, and I'm CEO of the company.

Juha Varelius: Thank you. Excuse me. Thank you and good morning, everyone, and welcome to Q2 results. My name is Juha Varelius, and I'm CEO of the company. Pretty much same old agenda, business highlights, market trends, financials by Ann, and then I'm going to talk about the outlook and guidance for 2026 later. If we go into the Q2, our net sales grew 19.6%, and the quarterly net sales was EUR 61.3 million, an increase of 19.6% or comparable currencies, 20.9%. EBITDA margin 15.1% and EUR 9.3 million. ARR increased to EUR 160.4 million, and so it was a healthy growth on there. If we look the Q2 a bit more detailed, I'm actually pretty happy about our performance since the distribution license sales year-over-year was a bit over EUR 6 million less this year than it was a year before.

Speaker #5: Pretty much the same old agenda: business highlights, market trends, financials by Anne, and then I'm going to talk about the outlook and guidance for 2026 later.

Speaker #5: So if we go into Q2, our net sales grew 19.6%, and the quarterly net sales were €61.3 million, an increase of 19.6%. On comparable currencies, growth was 20.9%.

Speaker #5: EBITDA margin was 15.1%, and €9.3 million. ARR increased to €160.4 million, so it was a healthy growth there. If we look at Q2 in a bit more detail, I'm actually pretty happy about our performance, since the distribution license sales year-over-year was a bit over €6 million less this year than it was a year before.

Speaker #5: Last year, we had $19 million in distribution revenue, so we were able to increase our revenues. Our developer license sales have been developing very well overall.

Juha Varelius: Last year we had a EUR 19 million on distribution revenues so that we were able to increase our revenues. Our developer license sales has been developing very well overall. If we look on the IAR's been performing very well on their subscription change. We were expecting on aggressive plan that we're going to have a 40% conversion. Now we are on the over 60%, if I remember correctly, 68% conversion on Q2, which means that the IAR revenue, obviously, compared to last year, is in a pressure since we have the already maturity of the sales in the subscriptions. That's a good news because in the beginning of the year, we of course, didn't have an idea that how quickly can we do this transformation, and now it seems that we can do it even quicker than we were anticipating.

Speaker #5: If we look at the IAR, IAR has been performing very well on their subscription change. We were expecting, on an aggressive plan, that we're going to have a 40% conversion.

Speaker #5: Now we are over 60%, if I remember correctly, 68% conversion in the second quarter, which means that the IAR revenue, obviously compared to last year, is under pressure since we already have the maturity of the sales in the subscriptions.

Speaker #5: That's good news, because in the beginning of the year, we of course didn't have an idea of how quickly we could do this transformation.

Speaker #5: And now it seems that we can do it even quicker than we were anticipating. So, and the quicker we do it, then we get on a healthy revenue growth on the IAR side as well.

Juha Varelius: Quicker we do it, then we get on a healthy revenue growth on the IAR side as well. Given those caveats, I think that we are pretty happy on the Q2 performance. On the profitability side, we've had the change management negotiations going on. We've done them in the USA and in Finland. They are still going on in some parts of Europe, and we do have one-off costs of those in Q2. Given those one-off costs, we are pretty happy on the profitability as well. We are definitely going on the right direction and at the pace even quicker than we were hoping for. I expect that the next year, the profitability will be well in the old healthy, good numbers that we were used to see. The change management negotiations where we are targeting EUR 20 million cost savings are well on track.

Speaker #5: So, given those caveats, I think that we are pretty happy with the Q2 performance. On the profitability side, we've had the change management negotiations going on.

Speaker #5: We've done them in the USA and in Finland. They're still going on in some parts of Europe, and we do have one, of course, of those in Q2.

Speaker #5: So given those ones, of course, we're pretty happy on the profitability as well. We're definitely going in the right direction, and at a pace even quicker than we were hoping for.

Speaker #5: So I expect that the next year the profitability will be well in the in the old healthy good numbers that the we were used to see so.

Speaker #5: And at the change management negotiations, we were targeting €20 million in cost savings, so well on track. So I have no doubt that we're going to be able to reach those numbers.

Juha Varelius: I have no doubt that we are going to be able to reach those numbers. If we look on the license sales, well, it's a mixed package in a way that we do have different industries, medical and defense industries overall are doing globally very well. If we look automotive, obviously our customers are having challenges in Europe, whereas in Asia Pacific, the automotive industry is doing relatively pretty well. For us, we do have pockets in the automotive industry where we are doing okay, and then we have pockets where our customers are suffering along with us and of course the tier 1 as well. On regions, well, I would not read too much on the regions on a quarterly level because as you know, in this business, there is quite a lot of fluctuation. EMEA was good, America stable, APAC was on this quarter more moderate.

Speaker #5: If we look on the license sales, well, we do have it's kind of a it's a it's a mixed package in a way that the we do have different industries.

Speaker #5: Medical and defense industries overall are doing globally very well. If we look at automotive, obviously our customers are having challenges in Europe, whereas in Asia-Pacific, the automotive industry is doing relatively pretty well.

Speaker #5: So for us, we do have pockets in the automotive industry where we're doing okay, and then we have pockets where our customers are suffering along with us.

Speaker #5: And then, of course, the tier one as well. On regions, well, I would not read too much into the regions on a quarterly level.

Speaker #5: Because there is, as you know, in this business, quite a lot of fluctuation. EMEA was good. America was stable. APAC was, on this quarter, more moderate.

Speaker #5: If I look overall on the longer term, let's say at the end of this year and next year, I'm expecting the USA to need quite a substantial improvement from where we are.

Juha Varelius: If I look overall on the longer term, let's say that the end of this year and next year, I am expecting USA to need quite a substantial improvement still where we are. So that's where there is a room for improvement, definitely. Well, I already mentioned the IAR subscription licensing model, so no doubts about that can we drive through that change in IAR pricing models. That will happen, and that's been very well adopted. So that's well on track. Well, depending on these industries, it's always good to remember that we operate on three regions, so we are a very global company. We do have 70 different industries that we serve. Some of our industries are a bit under pressure, like the automotive, but then on the other hand, some industries are doing very well, like the medical and defense.

Speaker #5: So that's where there is room for improvement, definitely. Well, I already mentioned the IAR subscription licensing model, so no doubts about that.

Speaker #5: That can we drive through that change in IAR? Pricing models, that that will happen and and that's been very well adopted. So the that's well on track.

Speaker #5: Well, depending on these industries, it's always good to remember that we operate in three regions. So, we are a very global company. We do have 70 different industries.

Speaker #5: ...that we serve. Some of our industries are a bit under pressure, like automotive, but then, on the other hand, some industries are doing very well, like medical and defense.

Speaker #5: We also do see the overall economy kind of stabilizing. I think that the latest disruption and uncertainty came from the war in Iran.

Juha Varelius: We also do see overall economy kind of stabilizing. I think that the latest disruption and uncertainty came from the war in Iran. Well, let's see what's going to be the next big disruption, because there's been many of them. But if we now look at what our customers are saying and how people are looking for the future, I would say that the market has stabilized pretty much. On APAC, it's been more or less stable all along, but in Europe and in US, we've seen some disturbances. I am not going to talk about much on AI, but I think that if I looked, there was a lot of hype in February, March, April, and then there was a conclusion that the software industry is going to disappear and AI is going to take over everything. Now, I think it's calmed down a little.

Speaker #5: Well, let's see what's going to be the next big disruption. Because there's been many of them, but if we now look that the what our customers are saying and how people are looking for the future, that the there is I would say that the market has stabilized pretty much on APAC.

Speaker #5: It's been more or less stable all along, but in Europe and in the US, we've seen some disturbances. I'm not going to talk much about AI, but I think that, you know, if I look, there was a lot of hype in February, March, April, and then there was a conclusion that the software industry is going to disappear.

Speaker #5: And AI is going to take over everything. Now, I think it's calmed down a little. And, and I'm not saying that AI is not coming.

Juha Varelius: I'm not saying that AI is not coming. AI is definitely coming. Is it coming so that it's going to take over everything? I have a bit of my doubts. Here are the same phrases I said last time, what do we see in the market is that the companies are not really getting rid of developers because of AI. We do see companies downsizing, but they're downsizing because their business is not doing very well, right? They're downsizing developers, and they're downsizing in certain industries. They're downsizing quite a lot of other people as well. We know, you've read the news, there are big automotive companies that have announced that they're going to downsize 100,000 employees by 2030, and so on and so forth. Do we see that the companies are downsizing because of AI? We don't.

Speaker #5: AI is definitely coming. But is it coming so that it's going to take over everything? I have a bit of my doubts.

Speaker #5: Here are kind of the same phrases I said last time, but what we see in the market is that the companies are not really getting rid of developers.

Speaker #5: Because of AI, we do see companies downsizing, but they're downsizing because their business is not doing very well, right? And they're downsizing developers, and they're downsizing in certain industries.

Speaker #5: They're downsizing quite a lot of other people as well. So, we know—I mean, you know, you've read the news. There are big automotive companies that have announced they're going to downsize, you know, 100,000 employees.

Speaker #5: By 2030, and so on and so forth. But do we see that companies are downsizing because of AI? We don't. Do we see that developers are using AI as a tool to be more efficient?

Juha Varelius: Do we see that the developers are using AI as a tool to be more efficient? Yes, of course, that we do see. We also see that the AI adds a complexity in a way that the AI does software very quickly and quite a lot, and it's still in a phase that somebody needs to look into it. A human needs to look into it, that what was done. Human needs to look into it, that does this actually make sense? AI, as you know, also has imagination of its own. AI is like a good coworker that never says, I don't know. It always gives an answer. I've actually encountered this in real life as well, the AI can be very confident on giving that answer, and AI can do a lot of things.

Speaker #5: Yes, of course, that we do see. We also see that the AI adds a kind of complexity, in a way, that the AI does software very quickly and quite a lot.

Speaker #5: And it's still in a phase that somebody needs to look into it. You know, a human needs to look into it. But what was done?

Speaker #5: A human needs to look into it. Does this actually make sense? AI, as you know, also has imagination of its own. A good AI is like a good coworker that never says, "I don't know."

Speaker #5: It always gives an answer. And, you know, I've actually encountered this in real life as well. But the AI can be very confident in giving that answer.

Speaker #5: And AI can do a lot of things. Also, what we see is that, you know, on Qt, what is a framework? A framework kind of gives an architecture to software.

Juha Varelius: Also, what we see is that on Qt, what is a framework? Framework kind of gives an architecture to software, and it's like a plumbing of the software in a way, even for AI, it makes sense to use this. That's where we are. What do I envision is going to happen is that all those that are now watching and wondering that why I paused, there were people coming in, I started looking that should I say hello or not? That's why I paused, I didn't say hello. Hello, welcome. What do we see on AI is the fact that we need to find a way on our monetizing model that it also takes into account that AI does do some coding.

Speaker #5: And it's it's like a plumbing of the software in a way. And the even for AI, it makes sense to to to use this.

Speaker #5: So that's kind of a where we are. And what do I envision is going to happen is that the I I all those that the now watching and wondering that why I paused, there were people coming in and I started looking that the should I say hello or not.

Speaker #5: So that's why I paused and I didn't say hello. But hello. Welcome. So what do we see on AI is the fact that the it's we need to find a way on our on our monetizing model that it also takes into account that AI does do some coding.

Speaker #5: And this means that we need to start monetizing and invoicing not only per seat, but also based on the usage of the queued technology.

Juha Varelius: This means that we need to start monetizing and invoicing not only per seat, but on the usage of the Qt technology. When that shift is going to happen, well, it's probably going to be something like the subscription change that we're going to have a new version of our framework, then we start implementing it. We are working on it, we are now working on different models. We're monitoring how to implement it and whatnot. You can expect that during next year, we'll start moving into that direction once we figure out that what is the best model for us and for our customers, so that we can take into account that there is a developer doing development, there is also AI doing development.

Speaker #5: And when that shift is going to happen, well, it's probably going to be something like the subscription change—that we're going to have a new version of our framework, and then we start implementing it.

Speaker #5: We're very we're working on it, and we are now working on different models. We're monitoring that the how to implement it and whatnot. And you can expect that the during next year, we'll start moving into that direction once we figure out that what is the best model for us and for our customers.

Speaker #5: So that we can take into account that there is a developer doing development, and then there is also AI doing development. On IAR, that's kind of already taken care of, because IAR is selling subscriptions, and then IAR charges per simultaneous compiler compiling already now.

Juha Varelius: On IAR, that's kind of already taken care of because IAR is selling subscription, then IAR charges per simultaneous compilings already now. It's based on the usage on that sense. On Squish, we think that since everything that AI does needs to be tested and whatnot, we expect the software testing market to grow in the future. We, of course, use AI extensively internally, not only in our R&D and developers are using AI to understand that how it works and how can they be more efficient. We use it pretty much everywhere in the company nowadays. I think that the big thing for going forward is that as AI moves into consumption-based pricing model, we need to be careful how much we absorb cost as a company when we are using AI.

Speaker #5: So, it's based on usage in that sense. And then, on squares, we think that since everything that AI does needs to be tested and whatnot, we expect the software testing market to grow in the future.

Speaker #5: We, of course, use AI extensively internally, not only in our R&D. Our developers are using AI to understand how it works and how they can be more efficient.

Speaker #5: We use it pretty much everywhere in the company. Nowadays, I think that the big thing going forward is that, as AI moves into consumption-based pricing models, we need to be careful about how much cost we absorb as a company when we are using AI.

Speaker #5: So I think that these business models will be evolving, just because AI's business models will be evolving, and how and where AI—you know, how much we need to pay for using AI, because very easily on R&D, you know, we're using millions of tokens.

Juha Varelius: I think that these business models will be evolving just because AI's business models will be evolving, and how much we need to pay for using AI, because very easily on R&D, we're using millions of tokens on one go. What's going to be the cost of it? We do use it internally on many various things, starting from sales and marketing. Of course, for example, sales guys making a sales pitch nowadays, it's much more easier using AI because you can get all the info of the target customer and make a tailored, personalized presentation on each customer meeting you have, and you can do that very quickly. Of course, it's giving a lot of efficiencies.

Speaker #5: On one go. So, what's going to be the cost of it? But we do use it internally on many various things, starting from sales and marketing.

Speaker #5: Of course, for example, sales guys, making a sales pitch nowadays, it's much more easier using AI because you can get all the info of the target customer and and and tailor make a tailor tailored personalized presentation on each customer meeting you have.

Speaker #5: And you can do that very quickly. So, of course, it's giving a lot of efficiencies. We're also looking for opportunities as we go forward because, as you know, nowadays we're focusing on the development process and looking at where we can offer services and solutions to our customers so that they can be more efficient in their development process.

Juha Varelius: We're also looking for the opportunities as we go forward because, as you know, nowadays we're looking on the development process and we're looking at where can we offer services and solutions to our customers so that they can be more efficient on their development process. As AI comes along, the most obvious thing that comes to mind, of course, is a vertical integration, because using AI and our tools on smaller customers, we should be able to offer actually ready-made solutions more than we are doing today. We're looking into those opportunities that we have. Very particularly strong now is, of course, all the functional safety and safety critical things, because there you need certifications and you can't use open source. You need to be able to prove that your code meets the criteria that are required for car brakes and whatnot.

Speaker #5: But as AI comes along, the most obvious thing that comes to mind, of course, is vertical integration, because using AI and our tools on smaller customers, we should be able to offer actually ready-made solutions.

Speaker #5: More than and than than we are doing today. So we're looking into those opportunities that we have. Very particularly strong now is, of course, all the functional safety and safety critical things because there you need certifications and you need you can't use open source.

Speaker #5: You need to be able to prove that your code meets the criteria that are required for car brakes and whatnot—you know, everything that is somehow functional safety or safety-critical.

Juha Varelius: Everything that is somehow functional safety or safety critical. We do have tools starting from IAR. Our compilers are certified using IAR compiler. You know that you can have a certification that it's done according to the specs. You can use Qt and our testing. We have a very comprehensive offering in safety critical functional safety industries, and that's a very sweet spot for us in this current portfolio we are having. I think that the AI will be a topic for the future, but for the investors, I would say I kind of see this as two-folded, that yes, it's going to change very many business models, and it does give us efficiencies internally, but at the same time, of course, it also opens up new opportunities for companies that are awake. I don't see AI only a threat.

Speaker #5: And we do have tools starting from the from IAR, our compilers are certified using a IAR compiler. You know that you can have a certification that the it's it's done according to the specs and you can use Qt and and and our testing.

Speaker #5: So, we have a very comprehensive offering in safety-critical, functional safety industries, and that's a very, very sweet spot for us in this current portfolio we're having.

Speaker #5: So I think that the AI will be there a topic for the future, but the for the investors I would say I kind I kind of see this twofolded that yes, it's going to change very many business models, but at the same time, and it does give give us efficiencies internally, but at the same at the same time, of course, it also opens up new opportunities for companies that are awake.

Speaker #5: So I don't see AI only as a threat. I see that it will open up new opportunities as we go forward. So there's going to be a whole service layer on top of that, on these data centers we see as of today.

Juha Varelius: I see that it will open up, say, new opportunities as we go forward. There's going to be a whole service layer on top of these data centers we see as of today. Of course, we're going to be on that wave as well. In that sense, on this AI, I would conclude that we use it ourselves. We are looking for the pricing model change, we're adopting it, and we're looking actively at the new business opportunities it potentially will give us. With that, the financials.

Speaker #5: And of course, we're going to be on that wave as well. So, in that sense, you know, on this AI, I would conclude that we use it ourselves.

Speaker #5: We are looking for the pricing model change. We're adapting it, and we're looking actively for new business opportunities it potentially will give us.

Speaker #5: And with that, the financials.

Speaker #2: Yes, thank you. Well, as you have said, this was quite a nice quarter for us. We had very good growth. It's fine to repeat it, I think, since it was so nice.

Ann Zetterberg: Yes. Thank you, Juha. Well, as Juha said, this was quite a nice quarter for us. We had a very good growth. It's fine to repeat it, I think, since it was so nice. The growth was 19.6% in the quarter with a small exchange rate impact. Therefore, at comparable currencies, this was 20.9%. The year-to-date growth was also pretty decent, 15.8% with a larger exchange rate impact of 3.3%. It brought us up to 19.7%, about the same level as in Q2 at the comparable currency then. If we look at the products we sell, as we illustrate them in the interim report, licenses and consulting, it grew 10.3% in Q2, and it grew by 5.3% year to date. The maintenance revenue almost tripled like it did last quarter because of the IAR effect. IAR has a lot of maintenance revenue in sales.

Speaker #2: The growth was 19.6% in the quarter, with a small exchange rate impact. Therefore, at comparable currencies, this was 20.9%. The year-to-date growth was also pretty decent, at 15.8%, with a larger exchange rate impact of 3.3%.

Speaker #2: And that's it. It brought us up to 19.7, about the same level as in Q2 at the growth at the comparable currency then. And if we look at the products we sell, as we illustrate them in the interim report, licenses and consulting, it's it's grew 10.3% in Q in Q2.

Speaker #2: And it grew by 5.3% year-to-date. The maintenance revenue almost tripled, like it did last quarter, because of the IAR effect. IAR has a lot of maintenance revenue in sales.

Speaker #2: Historically, it's been about half of the revenue that's been notes maintenance contracts. Now it may be a little less because of the transition into subscription.

Ann Zetterberg: Historically, it's been about half of the revenue that's been those maintenance contracts. Now it's a little less because of the transition into subscription. We're selling less of support and update maintenance contracts in IAR, and instead we're selling subscription. The distribution licenses, those declined. That was totally anticipated. We knew we had a high distribution license level last year, we knew those were going to decline. They declined in Q2 by 32.4% and year to date, 17%. Totally anticipated. If you remove that from the development license and consulting part, we actually had a growth there in Q2 with 38% on that. 18% year to date, which we are actually quite happy with, I must say. Looking at ARR also, rolling 12, we ended up at EUR 160.4, like Joar said. Rolling 12 it grew 33.8%.

Speaker #2: So we're selling fewer support and update maintenance contracts in IAR, and instead, we're selling subscriptions. But the distribution licenses—those declined; that was totally anticipated.

Speaker #2: We knew we had a lot of high distribution license levels last year, so we knew those were going to decline. The decline in Q2 was 32.4%, and year to date, 17%.

Speaker #2: So, totally anticipated. But also, if you remove that from the Development Licenses and Consulting parts, we actually had growth there in Q2, with 38% on that and 18% year to date, which we are actually quite happy with, I must say.

Speaker #2: And looking at the ARR also, rolling 12, we ended up at 160.4, like you said. And rolling 12, it grew 33.8%. Obviously, IAR was not there last year, so that is separate, and that is why the growth becomes this large for 12 months at comparable currencies.

Ann Zetterberg: Obviously, IAR was not there last year, that is separate. That is why the growth becomes this large for 12 months. At comparable currencies, this was 32.2%. For the quarter, it was still also a decent growth, 4.5% increase in ARR, like Joar also showed in his slide, and that is 2.4% growth at comparable currencies. IAR is growing in ARR as we're moving into subscription, removing perpetual revenue, and instead selling subscription, which is annual recurring revenue instead then. Then looking at the cost side. Unfortunately, though, the revenue side was good, the cost side grew more. They grew by 31.2% in Q2, and year to date, 21.7%.

Speaker #2: This was 32.2. But for the quarter, it's still also a decent growth. I mean, a 4.5% increase in AAR, like you also showed in his slide.

Speaker #2: And that is 2.4% growth at comparable currencies. IAR is growing in ARR as we're moving into subscription, removing perpetual revenue and instead selling subscription, which is annual recurring revenue then.

Speaker #2: And then looking at the cost side—unfortunately, though the revenue side was good, the cost side grew more. They grew by 31.2% in Q2, and year-to-date by 21.7%.

Speaker #2: So we are, as you know, working on lowering those, doing those reconstructions, efficiency work, removing some employees here and there. As a result of the acquisitions, of course, but also some cost adaptation to various parts of the sales.

Ann Zetterberg: We are, as you know, working on lowering those, doing those reconstructions, efficiency work, removing some employees here and there as a result of the acquisitions, of course, but also some cost adaptation to various parts of the sales that needs to happen. Looking at the personnel that grew 38.2% in Q2 and 32.1% year to date. We have had 1,035 employees end of June, and that is a year-on-year growth of 119 people. IAR has 200 people, so you can already in that see the effect of the people that we have downsized in Finland, the US, and partly in Norway. We have still got Germany, France to go, and those are ongoing, and those one-off costs will come in Q3, hopefully instead. In Q2, we have EUR 3.7 million one-off costs under employee costs and EUR 0.6 million costs under other costs that are one-off costs also.

Speaker #2: That needs to happen. So, looking at the personnel, that grew 38.2% in Q2 and 32.1% year to date. We had 1,035 employees at the end of June.

Speaker #2: And that is a year-on-year growth of 119 people. IAR has 200 people. So you can already see in that the effect of the people that we have downsized in Finland, the US, and partly in Norway.

Speaker #2: We have still got Germany and France to go, and those are ongoing. Those one-off costs will come in Q3, hopefully, instead. But in Q2, we have €3.7 million one-off costs under employee costs and €0.6 million under other costs that are also one-off costs.

Speaker #2: Part of it is relating to that business unit security in IAR, which we are removing over time, as it was more of a cost burden than any type of revenue, really.

Ann Zetterberg: Part of it is relating to that business unit, security in IAR, which we are removing over time, as it was more of a cost burden than any type of revenue, really. That relates to the EUR 1.6 million. We are, of course, looking at other costs also as part of the integration, offices, merging entities, and whatever we can do to be a more efficient and strong company for the future. If we look at the EBITDA then, EUR 9.3 million today is lower than what we had last year, EUR 11.6 million, and the margin was 15.1%. If you remove the one-off costs, we are actually up to 22.2%, which is quite in level with what we had last year. The Q2 is still in level with the profitability there if you adjust for that.

Speaker #2: So that relates to the 1.6. But we are, of course, looking at other costs also as part of the integration—offices, merging entities, and whatever we can do to be a more efficient and strong company for the future.

Speaker #2: But if we look at the EBITDA, then 9.3 today is lower than what we had last year, 11.6. And the margin was 15.1.

Speaker #2: But if you remove the one-off costs, we are actually up to 22.2%, which is quite in line with what we had last year.

Speaker #2: So the Q2 is still in line with the profitability there if you adjust for that. And for the year to date, that brings up the EBITDA level from 12.6% up to 16.3% if you adjust for the one-off cost also.

Ann Zetterberg: The year to date, that brings up the EBITDA level, 12.6% up to 16.3%, if you adjust for the one-off cost also. Still a fairly decent profitability there also with that adjustment, even though it is actually still then lower than last year. Balance sheet. Not much happens in the balance sheet every quarter. A lot happened when we purchased IAR, but still, it can be good to give it a quick run through. Goodwill, EUR 166.9 million. That is a constant. It doesn't change. We don't depreciate it. You don't never do that with goodwill. Most of the goodwill, as you can see, refers to IAR. The rest of it is pretty equally distributed on froglogic and Axivion. Other intangible assets, EUR 120 million. Those are the technology assets from the purchases of the acquisitions, and we depreciate those over 15 years.

Speaker #2: So, still a fairly decent profitability there also with that adjustment, even though it is actually still then lower than last year. Balance sheet— not much happens in the balance sheet.

Speaker #2: Every quarter, a lot happened when we purchased IAR, but still, it can be good to give it a quick run-through. Goodwill: 166.9.

Speaker #2: That is a constant. It doesn't change. We don't depreciate it. You never do that with goodwill. And most of the goodwill, as you can see, refers to IAR.

Speaker #2: The rest of it is pretty equally distributed on FraudLogic and Exivion. Other intangible assets, 120. Those are the technology assets from the purchases.

Speaker #2: Of the acquisitions, we depreciate those over 15 years. IAR also, as I told you before, capitalizes some development asset investments already in, and still on, the balance sheet.

Ann Zetterberg: IAR also, as I told you before, capitalizes some development assets investments already still in the balance sheet. We have a couple of those, and those will be finalized in 2026. The capitalization for Q2 was EUR 0.4 million. That increases the results then by that because we increase the technology in the balance sheet instead with that same number. No large numbers, but it's good to understand that that is still happening in IAR. It will over time as we harmonize the handling in Qt with the handling in IAR, likely not happen much of this anymore. It's not our intention to do that. The trade receivables are at a pretty good level. They're around 20% of the rolling 12 sales, a little higher now as we don't have IAR in the rolling 12 sales looking back, but it will harmonize itself down to that over time.

Speaker #2: We have a couple of those, and those will be finalized in 2026. So, the capitalization for Q2 was €0.4 million. That increases the results by that amount, because we increase the technology in the balance sheet instead with that same number.

Speaker #2: So, no large numbers, but it's good to understand that that is still happening in IAR. Over time, as we harmonize the handling in Q2 with the handling in IAR, likely not much of this will happen anymore.

Speaker #2: It's not our intention to do that. And the trade receivables are at a pretty good level—they're around 20% of the rolling 12-month sales, a little higher now, as we don't have IAR in the rolling 12-month sales looking back.

Speaker #2: But it will harmonize itself down to that over time. And we still have a very healthy cash balance, €42.4 million, even though that is of course lower than it was last year because we put a lot of money into the acquisition of IAR.

Ann Zetterberg: We still have a very healthy cash balance, EUR 42.4, even though that is, of course, lower than it was last year because we put a lot of money into the acquisition of IAR. Looking at the interest-bearing debt, that was EUR 126 million, of which the bank loan is still EUR 120 million, but we have paid off EUR 30 million. It was EUR 150 initially. We have a good cash flow and a good position there in paying off the debt in good time. Other receivables still have those EUR 5.2 million on the receivables and on the debt. As you remember, the arbitration for us to purchase 100% of the shares is still ongoing in Sweden.

Speaker #2: And looking at the the interest bearing debt, that was 126 million euros, of which the bank loan is still 120 million euros, but we have paid off 30 million euros.

Speaker #2: It was 150 initially. So we have a good cash flow and a good position there in paying off the debt in a good time.

Speaker #2: Other receivables still have those €5.2 million under receivables. And on the debt, as you remember, the arbitration for us to purchase 100% of the shares is still ongoing in Sweden.

Speaker #2: We haven't bought 100% of the shares, but we have booked 100% of the shares in the balance sheet. And as we have an interim booking on the asset side for those €5.2 million and a debt to those shareholders.

Ann Zetterberg: We haven't bought 100% of the shares, but we have booked 100% of the shares in the balance sheet, and thus we have an interim booking on the asset side for those EUR 5.2 and a debt to those shareholders on the debt side for when we pay the shares, and those are still there. It is moving along, this arbitration, but rather slowly, I must say, I hope we can make it move forward in a faster speed. The equity ratio is still decent, 53.6 compared to 83, which of course is why because we expanded the balance sheet with the IAR acquisition and the debt. It's a pretty solid balance sheet still, looking at it. The operating cash flow was EUR 20.6 compared to EUR 28.9 last year.

Speaker #2: On the debt side, when we pay the shares, those are still there. It is moving along this arbitration, but rather slowly, I must say.

Speaker #2: So I hope we can make it move forward at the fastest speed. The equity ratio is still decent, 53.6% compared to 83%, which of course is lower because we expanded the balance sheet with the IAR acquisition and the debt.

Speaker #2: So, it's a pretty solid balance sheet still, looking at it. And the operating cash flow was €20.6 million, compared to €28.9 million last year.

Speaker #2: The main other cash flows, apart from the operating cash flow, was really the amortization of the debt, which we amortized in Q2 with €15 million.

Ann Zetterberg: The main other cash flows apart from the operating cash flow was really the amortization of the debt, which we amortized in Q2 with EUR 15 million. The total cash flow for the period was EUR 2.3 compared to EUR 27.3 last year. Of course it is lower because the profitability is also lower, which we are working on improving for the future. With that, I guess I will hand over to Juha again to talk about the future.

Speaker #2: So, the total cash flow for the period was €2.3 million, compared to €27.3 million last year. But of course, it is lower because the profitability is also lower.

Speaker #2: Which we are working on improving for the future. So, with that, I guess I will hand over to you. Hi again, to talk about the future.

Speaker #1: Yeah, sure. Thank you. So, we haven't changed our full-year guidance: net sales 10% and operating profit at least 15%. And, as said last time, those are the floors.

Juha Varelius: Yeah, sure. Thank you. Well, we haven't changed our full year guidance, net sales 10% and operating profit at least 15%. As I said last time, those are the floors, at least, and we're not giving an upper range on that. That's the change. Usually, before we used to give a range, now we give the floor. Our plan was that we're going to transition the majority of the IAR customers into subscription in the next 3 years. That's what it took roughly in Qt when we did that. Of course, not all the customers will change, but the majority. We're well on track on that. I'm happy how the integration has gone. It's gone actually so well that I see that we didn't even mention it on the slides anymore because we think that it's already kind of a done deal.

Speaker #1: So at least and we're not giving a upper range on that. So it's the that's the change usually we in a before we used to give a range.

Speaker #1: Now we give the kind of the floor. Well, you know, our plan was that we're going to transition the majority of the IAR customers into subscription in the next three years.

Speaker #1: That's what it took, roughly, in Q2 when we did that. And of course, not all the customers will change, but the majority. We're well on track with that.

Speaker #1: I'm happy with how the integration has gone. It's gone actually so well that we—I see that we didn't even mention it on the slides anymore, because we think that it's already kind of a done deal.

Speaker #1: So but the of course the the integration is still there, but the it's gone very smoothly. And so the you know, we we haven't had any big problems and and I don't expect to have.

Juha Varelius: Of course, the integration is still there, but it's gone very smoothly. We haven't had any big problems, and I don't expect to have, and it's going to continue as planned. On IAR integration doing well, the subscription change doing well, and IAR sales on bookings, that's been doing really well. I'm happy on the IAR performance, and I expect that to continue. On Qt, on license sales, very happy. The distribution licenses, they do fluctuate from quarter to quarter, and they are, of course, a result of deals done before. Even though they were a lot less this quarter than they were year-on-year ago, that's only natural. They do fluctuate, and it's based on the fact that how much our customers distribute.

Speaker #1: And it's going to continue as planned. So on IAR integration, doing well. The subscription change, doing well. And IAR sales on bookings, that's been doing really well.

Speaker #1: So I'm happy on the IAR performance and I expect that to continue. On Q2, on license sales, very happy of the distribution licenses.

Speaker #1: They do fluctuate from quarter to quarter, and they are, of course, a result of deals done before. So even though they were a lot less this quarter than they were a year ago, that's only natural.

Speaker #1: They do fluctuate, and it's based on the fact that how much our customers distribute. So I'm—I'm—I'm not worried about that.

Juha Varelius: I'm not worried about that, and we're looking, the overall number is heading where we do estimate it to be. On regions, I think that, well, there is always room for improvement. I think that the United States, we've had some execution issues in the past, so I think that we are in the right track. In the United States, we can still improve our business quite substantially. Other than that, things are looking pretty good. On the macro and global environment, of course, if a country overall is doing well, usually our businesses are doing well because our customers are global customers. They're very big customers building products for either B2B or B2C customers. If the economy is doing well, then usually we're doing well.

Speaker #1: And and we're looking the overall number is is heading where we where we do estimate it. It's to be. On on regions I think that well there is always a room for improvement.

Speaker #1: I think that in the United States, we've had some execution issues in the past. So, I think that we are on the right track, but in the United States, we can still improve our business quite substantially.

Speaker #1: And other than that, things are looking pretty good. On the macro and global environment, of course, we—you know, if a country overall is doing well, usually our businesses are doing well, because our customers are global customers.

Speaker #1: They're very big customers, building products for either B2B or B2C customers. And if the economy is doing well, then usually we're doing well.

Speaker #1: So if I look now at how the rest of the year looks, if we're not going to get any big disruptions over here, I'm relatively positive that, you know, our numbers will keep on improving.

Juha Varelius: If I look now at how does the rest of the year look if we're not going to get any big disruptions over here, I'm relatively positive that our numbers will keep on improving. Next year, definitely they're going to be improving on profitability and also on the top line. This is kind of a slow-moving business. These web technologies, they move very quickly and the moves are very rapid. On embedded businesses, the trends are slower moving. If I look on the overall the rest of the year and next year, I'm pretty confident that we are, or I am confident that we are going in the right direction. The operational reorganization, well, they are always tough things to do.

Speaker #1: And next year, I'm definitely— they're going to be improving on profitability and also on the top line. So, this is kind of a slow-moving business.

Speaker #1: So this web technologies are they move very quickly and the moves are very rapid on embedded businesses. The trends are slower moving, but the so if I look on the overall the rest of the year and next year, I'm I'm I'm pretty confident that we are or I am confident that we are going in the right direction.

Speaker #1: The operational reorganization—well, there are always tough things to do. We said that we're going to have at least €20 million in savings, and I reiterate that we are definitely going to have at least €20 million in savings.

Juha Varelius: We said that we're going to have at least EUR 20 million savings, I reiterate that we're definitely going to have at least EUR 20 million savings. We still have some change negotiations in Europe ongoing. Once they're finalized, then we're done. Like I said before, Finland is already done, US is done, in Europe we have a few countries that we're still in that process. I have no doubt that we'll be able to finalize them during the H2. Well, yeah, challenges in the market environment continue, of course. I think that, in a way, I guess we should stop talking about the market because it seems that at least for the next two years, we're going to have surprises every week. I expect that there are going to be some disruptions coming. I don't know where, but they will be.

Speaker #1: We still have some change negotiations in Europe ongoing. Once they're finalized, then we're done. And like I said before, Finland is already done, and the USA is done.

Speaker #1: But in Europe, we have a few countries where we're still in that process. But I have no doubt that we'll be able to finalize them during H2.

Speaker #1: Well, yeah, challenges in the market environment continue to cause... I think that, in a way, I guess we should stop talking about the market because it seems that, at least for the next two years, we're going to have surprises every week.

Speaker #1: So, I expect that there are going to be some disruptions coming. I don't know where, but there will be, so the market will be volatile for the next two years.

Juha Varelius: The market will be volatile for the next two years. On AI, it's going to come, and it's going to be a big thing, but it's like internet at a time. It not only changes some business logic, but it also gives new opportunities. I have no doubt whatsoever that Qt will be one of the companies finding also those opportunities and being able to utilize as the years come. Again, that's like a few year thingy. It's not like what's going to happen in H2. Well, long term, nothing has changed. People do want to have products. They want to have displays. They want to have intelligent products going into also in the future. All our customers, if they want to be in a business, they need to improve their products. They need to have new product lines and whatnot.

Speaker #1: On AI, you know, it's going to come and it's going to be a big thing, but it's like the internet at a time.

Speaker #1: It not only changes some business logic, but it also gives new opportunities. And I have no doubt whatsoever that Q2 will be one of the companies finding also those opportunities and being able to utilize them as the years come.

Speaker #1: Again, that's like a a few year thing. It's not like the what's going to happen in a in a in a H2. Well, long term, I mean, nothing has changed.

Speaker #1: People do want to have products. They want to have displays. They want to have intelligent, intellectual—intelligent (mumbling)—products going into also in the future.

Speaker #1: All our customers, if they want to be in business, need to improve their products. They need to have new product lines and whatnot.

Speaker #1: So the overall prospect is not going anywhere. I think that also in the future, customers will realize that there is a need for developers.

Juha Varelius: The overall prospect is not going anywhere. I think that also in the future, customers will realize that there is a need for developers. There is need for software testing and whatnot. Even a lot of things are being automized. Humans are still needed there for a long, long time, and we're not going to let the machines run over. In that, I thank you and some questions which there seem to be.

Speaker #1: There is need for a software testing and and whatnot. So even a lot of things are being automatized. The it's still, you know, it's humans are still needed there for a long long time.

Speaker #1: And we're not going to let the machines run over. So with that, I thank you, and there seem to be some questions.

Speaker #2: Hi, Walter Rossi from Danske Bank. Thank you for the presentation, and congratulations on a good result. First question related to the US: You mentioned that you can improve there substantially.

Waltteri Rossi: Hi, Waltteri Rossi from Danske Bank. Thank you for the presentation. Congrats on a good result. First question related to the US. You mentioned that you can improve there substantially. What has gone wrong there? If you can go through that once more.

Speaker #2: So, what has gone wrong there? If you can go through that once more.

Speaker #1: Well, in the United States, I think we had some management changes. We did have some, you know, operational—how would you describe—not so great operational efficiencies.

Juha Varelius: Well, in the United States, I think we had some management changes. We did have some operational, how would you describe, not so great operational efficiencies, some attrition over there, a combination of these things. If I look at the operational efficiency in EMEA and APAC, just internally, we can do better in the US. Then if I look into region numbers that now US is improving. If I look in the previous that the US was weaker than the other markets, all our customers are pretty much global. If we're doing well with our product portfolio and products in EMEA and APAC, I don't see any reason why it should be. There have been some people changes. There have been attrition and whatnot. Just the operational efficiency numbers are not in the level that they are in the other markets. Multiple internal things.

Speaker #1: Some attrition over there—a combination of these things. So if I look at the operational efficiency in EMEA and APAC just internally, we can do better in the US.

Speaker #1: And then if I look into if I look into region numbers that now US is improving, but if I look in the previous that the US was a weaker than the other markets, all our customers are pretty much global.

Speaker #1: If we're doing well with our product portfolio and products in EMEA and APAC, I don't see any reason why it should be.

Speaker #1: So there have been some people changes. There has been attrition and whatnot. And those—so just the operational efficiency numbers are not at the level that they are in the other markets.

Speaker #1: So, you know, multiple internal things.

Speaker #2: All right. Thanks. Second question related to the ARR. Development growth there. Is is quite high and and and I guess it's partly explained by by AIR.

Waltteri Rossi: All right, thanks. Second question related to the ARR development growth there is quite high, and I guess it's partly explained by IAR.

Juha Varelius: IAR. Too many three letters.

Speaker #1: Arr. Too, too many three-letter acronyms. I know.

Waltteri Rossi: Yeah, exactly. Difficult. How much is IAR from ARR?

Speaker #2: Yeah, exactly. Difficult. So, how much is IAR from ARR?

Speaker #1: IAR from—yeah, yeah, yeah. We need to—I mean, I'm having the same trouble with the IAR. We need to change the name.

Juha Varelius: IAR from Yeah. I'm having the same trouble with the IAR. We need to change the name. I don't think we've disclosed that number because we've not been disclosing the BU numbers. Sorry about that. As a matter of fact, I don't have that figure in my mind now.

Speaker #1: I don't think we've disclosed that number, because we've not been disclosing BU numbers. Sorry about that. So, as a matter of fact, I don't have that figure in my mind now.

Speaker #2: Okay. But is that one of the top kind of drivers behind the growth?

Waltteri Rossi: Okay. Is that one of the top kind of drivers behind the growth?

Speaker #1: Well, of course. Yeah.

Juha Varelius: Well, of course. Yeah.

Speaker #2: Okay. Okay. And you also don't disclose organic growth?

Waltteri Rossi: Okay. You also don't disclose organic growth?

Speaker #1: No, we haven't. No. Yeah. I think that as we get a bit better, that's a discussion we need to have internally—that we start BU reporting next year.

Juha Varelius: No, we haven't. No, yeah. I think that as we get a bit better, that's a discussion we need to have internally that we start BU reporting next year because that would kind of give more highlight. Having the BU numbers myself, I can tell you that you're going to have more questions than you're probably going to get answers when you see them. It's sometimes a bit difficult for us to estimate, but that's definitely a discussion we're having internally that what would be our next year reporting. Well, I'm sure it's going to change. One obvious way probably going forward would be do the BU reporting and then, well, then you still have a whole lot of costs which are central costs and whatnot, but you would see a bit more of the business.

Speaker #1: Because that would kind of give more highlight. Having the BU numbers myself, I can tell you that you're going to have more questions than you're probably going to get answers when you see them.

Speaker #1: But the and and it's sometimes a bit difficult for us to estimate. But that's a definitely a discussion we're having internally. That the the that what would be our next year reporting and and well, I'm sure we definitely it's it's going to change and and one obvious way probably going forward would be the do the BU reporting and then well, then you still have a whole other costs, which are central costs and whatnot, but you would see a bit more to business.

Speaker #1: But then you have, you know, you have ladder numbers that are going like this on every quarter, in different directions. So it's the—you know, they all fluctuate really randomly.

Juha Varelius: You have a lot of numbers that are going like this on every Q on different directions. They all fluctuate really randomly.

Speaker #2: Right. Thanks. And one last one related to the pricing model change that you foresee also for Qt products starting from next year. So, so.

Waltteri Rossi: Right. Thanks. One last one related to the pricing model change that you foresee also for Qt products. Starting from next year.

Waltteri Rossi: So-

Juha Varelius: Sometime next year, not in the beginning. Yep.

Speaker #1: Sometime next year, not in the beginning. Yep.

Speaker #2: Okay. Do you expect any—any… what kind of impacts do you expect that to have potentially for your business or sales?

Waltteri Rossi: Okay.

Juha Varelius: Yeah.

Waltteri Rossi: What kind of impacts do you expect that to have potentially for your business or sales?

Speaker #1: Well, that's too early to say really. And and that's why we need to be testing it so much. So that the we need to be kind of simulating now that if we do this kind of a pricing change, how would that actually affect in a real life.

Juha Varelius: Well, that's too early to say, really, and that's why we need to be testing it so much so that we need to be simulating now that if we do this kind of a pricing change, how would that actually affect in a real life, so that we don't do a pricing change where we half our revenue, right? There is quite a lot we need to look into very carefully. If you go in a consumption-based usage, you would think that the people start using AI extensively, you would think that there is a lot more usage than there is as of today. How do we actually do that pricing? Would there be a different pricing for a developer consuming and AI consuming and all of that? We need to simulate that and test quite a bit.

Speaker #1: So that we don't do a pricing change where we have our revenue, right? So what we need to do is—there is quite a lot we need to look into very carefully.

Speaker #1: If you go in a consumption-based usage, and you would think that people start using AI extensively, you would think that there is a lot more usage than there is as of today.

Speaker #1: But then, how do we actually do that pricing? And would there be different pricing for a developer consuming, an AI consuming, and all of that?

Speaker #1: So we need to simulate that and test quite a bit. I mean, our target is not to start charging more from our customers than we do today, obviously.

Juha Varelius: Our target is not to start charging more from our customers as we do today, obviously. How that will turn out, that's too early to say. I wouldn't calculate any revenue increase on that, because at the end of the day, there is also competition, right? I would say that in a market, our products are really good. They are really, really, really good. They are not the cheapest either. My gut feeling is, should we do massive price hikes? No, I don't think so. We would be too expensive. We would be on a very high-end usage, like Formula 1, very high price, very small volume. I think that where we are as of today, that we have pretty high volumes, and we're not definitely the cheapest. I don't see a whole lot of price increases in the future.

Speaker #1: But how that will turn out, that's too early to say. So I wouldn't calculate any, you know, revenue increase on that. Because at the end of the day, there is also competition, right?

Speaker #1: So, and we are kind of, I would say that in the market, our products are really good. I mean, they are really, really, really good.

Speaker #1: But they are not the cheapest either. So, I don't, you know, my gut feeling is that, do we, should we, do a massive price hike?

Speaker #1: No, I don't think so. Then we would be too expensive. Then we would be in a very high-end usage, like, you know, Formula One—very high price, very small volume.

Speaker #1: I think that, where we are as of today, we have pretty high volumes and we're not definitely the cheapest. So I don't see a whole lot of price increases in the future.

Speaker #1: Of course, there always is—there is inflation, but, you know, not tens of percents. Then how do we price the AI usage? Because what AI does is that it does a lot of gold very quickly.

Juha Varelius: Of course, there is inflation, but not tens of percents. How do we price the AI usage? What AI does is that it does a lot of code very quickly, and it consumes a lot. We need to do simulations on that. If you think from a revenue modeling perspective, I wouldn't put any revenue increase based on that at this point. That I wouldn't do. Yes.

Speaker #1: And I mean, you know, it it consumes a lot. So the we we don't have enough we need to do simulations on that. So but I wouldn't on if you think from a revenue modeling perspective, I wouldn't put any price you know, revenue increase based on that at this point.

Speaker #1: That, I wouldn't do. Yes.

Speaker #2: Felix Hendrickson from Nordea. Continuing on the pricing change topic, is it sort of unfair to assume that this would change your developer license revenue recognition in a way that it moves the lumpiness stemming from the one- and three-year?

Felix Henriksson: Felix Henriksson from Nordea. Continuing on the pricing change topic, is it sort of unfair to assume that this would change your developer license revenue recognition in a way that it moves the lumpiness stemming from the one and three-

Juha Varelius: SaaS model, yeah.

Speaker #2: But at the same time, could it even be that the revenue impact will be negative as you start that process?

Felix Henriksson: deals. At the same time, could it even be that the revenue impact will be negative as you start that process?

Speaker #1: Well, I don't see that, no. But yeah, the lumpiness would probably go away—apart from the distribution licenses, of course.

Juha Varelius: Well, I don't see that, no. Yeah, the lumpiness would probably go away, apart from the distribution licenses, of course.

Speaker #2: Got it. And then on the quarter, can you sort of elaborate on the developer license mix in Q2 between the three-year and one-year licenses?

Felix Henriksson: Got it. On the quarter, can you sort of elaborate on the developer license mix in Q2 between the three and one-year licenses? Was there any shifts there?

Speaker #2: Was there any shifts there?

Juha Varelius: No. When there is a big shock, like the war starts and the oil prices go sky high, then everybody kind of are scared, right? This is sad to say, but people get used to the wars, right? There is a war in Ukraine going 50 years soon, and it's like a new normal, right? People tend to forget it, right? Whenever there is a big shock, whatever it is, then people tend to go, it's the reserve cash flow, and then it's one-year license. As things kind of resettle, and things settle nowadays very quickly, as a matter of fact. I think that many businesses are now kind of in normal mode. They're looking forward. They're thinking forward. They're thinking their investment. Of course, they are still cautious, but no big changes on that. About the same. Yep.

Speaker #1: No, I… you know, when there is a big shock like the war starts and the oil prices go sky high, then everybody kind of is scared, right?

Speaker #1: And, I mean, this is sad to say, but people get used to the wars, right? I mean, there is a war in Ukraine, going 5 years soon.

Speaker #1: And it's like a new normal, right? People tend to forget it, right? So whenever there is a big shock, whatever it is, then people tend to go—you know, it's the reserve cash flow, and then it's a one-year license.

Speaker #1: But as things kind of settle, and things settle nowadays very quickly, as a matter of fact, I think that many businesses are now kind of in normal mode.

Speaker #1: They're looking forward. They're thinking forward. They're thinking about their investment. Of course, they are still cautious, but there are no big changes on that, so about the same.

Speaker #1: Yep.

Speaker #2: Yeah, so no unusually large share of three-year licenses.

Felix Henriksson: Yeah. No unusually large share of-

Juha Varelius: No

Felix Henriksson: the year licenses-

Speaker #1: No. No, no, no. And no unusually large deals or any of that. Yeah.

Juha Varelius: No.

Felix Henriksson: explained the revenue.

Juha Varelius: No unusual large deals or any of that. Yeah.

Speaker #2: Got it. So to me, that implies that there's a bit of a positive trend shift into developer license revenues.

Felix Henriksson: Got it. To me, that implies that there's a bit of a positive trend shift in the dev license revenues.

Speaker #1: Oh, yeah.

Juha Varelius: Oh, yeah.

Speaker #2: What's driving that? What are customers telling you differently?

Felix Henriksson: What's driving that? What are customers telling you differently?

Speaker #1: Well, it's you know, people are more confident about their future. And maybe we've been a bit better a bit better in performance and and it's you know, no no secret sauce in that in in that sense.

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

Speaker #1: Small improvements here and there.

Speaker #2: Got it. And then finally, just a housekeeping question on the revenue split. Between the different end markets, can you sort of provide an update on that?

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

Speaker #2: Because it seems like, especially, the defense and medical shares have sort of increased compared to the past.

Speaker #1: so you mean industries?

Juha Varelius: You mean industries?

Speaker #2: Yeah.

Felix Henriksson: Yeah.

Juha Varelius: Okay. Good. Now, I was not prepared for that question. Well, they're definitely increasing because at the same time, the automotives being going down. I've said a year or two years back that automotive is roughly 20% or so. Now I would say that it's somewhere between 10% and 15%. At the same time medical, well, it kind of changes quarter-on-quarter, but the medical is the biggest at the moment. Defense was actually very small, and it's growing very rapidly, so I expect that the defense will pass the automotive even if it hasn't already done so. I expect the defense to be somewhere in the 15% to 20% bracket than the medical over there and medical closer to that 20% bracket.

Speaker #1: Okay, so good. Now, I was not prepared for that question, but let's, you know—we said that, well, they're definitely increasing, because at the same time, automotive has been going down.

Speaker #1: So, we said—I said, you know, like Europe—two years back that automotive is roughly 20% or so. Now I would say that it's somewhere between 10 and 15%.

Speaker #1: And at the same time, you know, medical—well, it kind of changes quarter on quarter, but medical is the biggest at the moment.

Speaker #1: Defense was actually very small, and it's growing very rapidly. So I expect that defense will pass automotive, even if it hasn't already done so.

Speaker #1: So I expect the defense to be somewhere in the 15–20 bracket, and the medical over there, and medical closer to that 20 bracket.

Speaker #2: Thank you. Hi, Jakko Turvainen from SEB. Trying to get a bit more understanding on the organic underlying trends in in the in the so-called old QT, you said that you don't provide any any organic growth for Q2 like you did growth rate for Q2 like you did in last quarter.

Felix Henriksson: Thank you.

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

Speaker #2: Is that correct?

Speaker #1: I don't think we'd give it last quarter either.

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

Speaker #2: I recall you said Q2 was 11.5% up organically in ARR, I mean.

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

Speaker #1: Oh, ARR. Yeah. Well, yeah. Okay. ARR we talked about. Yeah. But not the well, there is you know, obviously with this development, you can you know, you can make the assumptions that the with such a heavy subscription change, we're having on A IAR, the the the we really need to change the name.

Juha Varelius: ARR. Well, obviously with this development you can make the assumptions that with such a heavy subscription change we're having on IAR. We really need to change the name. On IAR, the impact on revenue is negative on short term. That's what we're seeing. Of course, that puts pressure on the IAR profitability as well. If we look on Qt revenue on those numbers, six plus something downdrift on the distribution revenue means that the license sales has been on a very healthy growth on this quarter. Squish actually follows pretty much on Qt because if you're using Qt, the only feasible test tool really is Squish, right? I mean, more Qt does bigger deals and whatnot, Squish goes there.

Speaker #1: On IAR, the impact on revenue is negative in the short term. So, that's what we're seeing. And, of course, that puts pressure on the IAR profitability as well.

Speaker #1: If we look on the Q2 having a you know, on Q2 revenue on on those numbers, 600 6 plus something, down drift on the on on the distribution revenue means that the you know, the license sales has been on a you know, very healthy growth on this quarter.

Speaker #1: And squeezes squeeze actually follows pretty much on Q2 because the you know, if if if you if you're using Q2, the only feasible test tool really is a squeeze, right?

Speaker #1: So I mean, you know, more Q2 does bigger deals and whatnot, Squeeze goes there. And then, on top of that, Squeeze can be sold outside of the Q2 ecosystem.

Juha Varelius: On top of that, Squish can be sold outside of the Qt ecosystem and the open source and whatnot. There it comes. Keep in mind, which I've always been saying that the quarters are not brothers or sisters together, there is always this quarterly fluctuation. It's not like that we have one quarter and then we can make a straight line that this is the future. Our business is like this. If I look overall trends that how we're selling licenses, particularly dev licenses, how we're performing on license sales and how we're performing on IAR, I think we are going in the better direction. The question is that what's going to be the speed?

Speaker #1: And the open source and whatnot. So, there it comes. Now, keep in mind, which I've always been saying, that the quarters are, you know, they're not brothers or sisters together.

Speaker #1: So there is always this quarterly fluctuation. So, you know, it's not like we have one quarter and then we can make a straight line and say this is the future.

Speaker #1: You know, our business is like this. So the but I mean, you know, if I look overall trends that how we're selling how we're selling licenses, particularly DC licenses, how we're performing on license sales and how we're performing on IAR, I think the we are going in the better direction.

Speaker #1: Now the question is that what's going to be the speed? If I look our change negotiations that the we're going to cut that 20 million cost and where we have this business development as it goes, we're going to IAR is going to turn into profitability because of this subscription change next year.

Juha Varelius: If I look our change negotiations, that we're going to cut that EUR 20 million cost and where we have this business development as it goes, IAR is going to turn into profitability because of this subscription change next year. We're not going to have these one-off costs. I can say that already now we're seeing a 30+% EBITDA for next year.

Speaker #1: We're not going to have these one-off costs, and I can say that already now. You know, we're seeing a 30-plus percent EBITDA for next year.

Speaker #2: Good. If I may, I'll pull up.

Jaakko Tyrväinen: Good. If I may follow-

Speaker #1: The ARR, you know—sorry to interrupt you—but if I just look at the ARR number, you know, not dividing it anywhere, you know, I'm pretty happy.

Juha Varelius: The ARR. Sorry to interrupt before. If I just look the ARR number, not dividing it anywhere, I'm pretty happy. It's a sizable number.

Speaker #1: I mean, you know, it's a—it—it's a sizable number.

Speaker #2: Good. A follow-up on that one—let's put it this way: you had organic ARR growth of 2.4% quarter-on-quarter. How much of this was driven by IARs subscription change and overall IAR growth?

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

Speaker #2: And did Q2 grow quarter on quarter, on a quarter-on-quarter basis?

Speaker #1: Well, Q2 grew organically on on the other questions. I don't we're not we don't have them. Yeah. Yeah. So yeah. Q2 is growing organically for sure, but the on the ARR growth, the for those other questions, I don't have an answer for you.

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

Speaker #1: Sorry.

Speaker #2: Okay. And then the you were already touch it a bit but on the revenue on on the P&L and then the volatility there, did you see some significant multi-year deals impacting the strong development license sales growth?

Jaakko Tyrväinen: Okay. You already touched a bit, but on the revenue on the P&L and then the volatility there, did you see some significant multi-year deals impacting the strong development license sales growth?

Speaker #1: No, it's very, you know, in that sense, very boring, typical quarter.

Juha Varelius: No. In that sense, very boring, typical quarter.

Speaker #2: Okay. Good. Thanks.

Jaakko Tyrväinen: Okay, good. Thanks.

Speaker #1: Yeah. And you know, as as you know, the you know, always in our business, the you know, the well, the quarters do fluctuate. Then the other fact that we do have is the that large part of the quarter sales actually comes into last two weeks.

Juha Varelius: As you know, always in our business, well, the quarters do fluctuate. The other fact that we do have is that large part of the quarter sales actually comes into last two weeks, the Q4 is insane. We do large part of the year result is actually done in the probably the three last weeks of December. I don't know why all this buying tends to go towards the end of the year, and it's towards the end of the quarter, but that's very typical for us. At the same time, of course, seeing what's happening, sensing where we're moving and all of that, I say that the underlying performance, underlying environment and whatnot, it is getting better.

Speaker #1: And then the fourth quarter is insane. So, you know, a large part of the yearly result is actually done in the, you know, probably the last three weeks of December.

Speaker #1: And so that's the—and I don't know why all this buying tends to go towards the end of the year and towards the end of the quarter, but that's very typical for us.

Speaker #1: But at the same time, of course, you know, seeing what's happening, sensing where we're moving and all of that, I say that the underlying performance, underlying environment and whatnot, it is getting better.

Speaker #1: So the and I have no doubts that the with this cost savings that the we're going to be on a very healthy EBITDA numbers next year.

Juha Varelius: I have no doubts that with this cost savings, that we're going to be on a very healthy EBITDA numbers next year, even with the very modest revenue growth. When I say the 30%, I'm not expecting that there needs to be a huge top-line growth. That, of course, as you know, affects a lot because the top line basically drops directly into our bottom line. Even with the very modest revenue growth, we're going to have a very healthy EBITDA next year. If we're going to have a decent growth, then it's going to be even better. Yes.

Speaker #1: Even with the very modest revenue growth—so when I say the 30%, I'm not expecting that there needs to be a huge top-line growth.

Speaker #1: And that, of course, as you know, affects a lot because more of the top line basically drops directly into our bottom line. So even with very modest revenue growth, we're going to have a very healthy EBITDA next year.

Speaker #1: And if we're going to have decent growth, then it's going to be even better. Yes.

Speaker #2: Hey, Antti Loira from Inderes. You mentioned in the report that new product sales were going well in defense, aviation, and medical. And I guess that prompted two questions.

Antti Luiro: Hey, Antti Luiro from Inderes. You mentioned in the report that new product sales were going well in the defense, aviation, and medical.

Antti Luiro: Hey, Antti Luiro from Inderes. You mentioned in the report that new product sales were going well in the defense, aviation, and medical. I guess that prompted two questions. First one is that which products are kind of flying the best on the new product side in these segments? The second one is you've kind of broadened your product portfolio quite a bit in the last years, IAR did one step to that as well. Where are the different products you have in your portfolio in terms of their maturity, I guess, compared to the kind of not legacy Qt, but yeah, the Qt framework?

Antti Luiro: I guess that prompted two questions. First one is that which products are kind of flying the best on the new product side in these segments? The second one is you've kind of broadened your product portfolio quite a bit in the last years, IAR did one step to that as well. Where are the different products you have in your portfolio in terms of their maturity, I guess, compared to the kind of not legacy Qt, but yeah, the Qt framework?

Speaker #2: First one is that which products are kind of flying the best on the new product side in this segments? And then the second one is you've kind of broadened your product portfolio quite a bit in the last years.

Speaker #2: And IAR did one step to that as well. Where are the different products you have in your portfolio in terms of their maturity? I guess compared to the, kind of, not legacy Q2, but yeah, the Q2 framework.

Speaker #1: Well, if we talk about defense and medical and whatnot, they're kind of all regulated markets—safety-critical markets. And our whole portfolio fits in there very well.

Juha Varelius: Well, if we talk about defense, medical, and whatnot, they're kind of all regulated markets, safety-critical markets, and our whole portfolio fits in there very well. I mean, IAR and the Qt and so our whole portfolio fits into that particular segment. We are actually seeing some light in automotive as well. Just to give you an idea, that if we're successful closing some deals in automotive this year, we're going to talk about that revenue in 2028, right? If we're successful closing those automotive deals now, we're going to see the revenue starting accumulating in 2028 so that you actually see them on numbers. This is kind of the cycle.

Speaker #1: I mean, you know, IAR and the Q2, and so our whole portfolio fits into that particular segment. We are actually seeing some light in automotive as well.

Speaker #1: And just to give you an idea, if we're successful in closing some deals in automotive this year, we're going to talk about that revenue in 2028.

Speaker #1: Right. So if we're successful closing those automotive deals now, we're going to see the revenue starting to accumulate in '28, so that you actually see them on the numbers.

Speaker #1: So this is kind of a — this is kind of the cycle. We did invest in defense already many years ago. But the 10% sentiment was something that you didn't want to put on a website because it was kind of a — it was not well received.

Juha Varelius: We did invest in defense already many years ago, the sentiment was something that you didn't want to put that on a website because it was not well received that somebody does defense work. Now you're seeing being patriotic if you do that, but the few years back. Our position in defense is a constant deliberate work that's been carried out for the past five years. Into your question that all our products are, in that sense, pretty mature. That's why particularly on embedded we're so successful because if you think our customers that they start a project and they do whatever they do, usually the lifespan of their product is like 10 years, and they don't want to buy a product that they do get the updates every three weeks or whatnot that they have to do.

Speaker #1: That somebody does defense work. Now you're seen as being patriotic if you do that. But a few years back... So our position in defense is a constant, deliberate work that's been carried out for the past five years.

Speaker #1: So, in answer to your question, all our products are, in that sense, pretty mature. And that's why, particularly on embedded, we're so successful. Because if you think about our customers, when they start a project and do whatever they do, usually the lifespan of their product is like 10 years.

Speaker #1: And they don't want to buy a product where they get updates every three weeks or whatnot, that they have to do. So, if you look at Q2, for example, we do a couple of major releases a year.

Juha Varelius: If you look Qt, for example, we do couple major releases a year, and we have a lot of people using the old versions of Qt. That's one of the cornerstones on this embedded, that people can trust that we are here, we're going to be here in next 10 years, and our products are mature, that they can rely on them. They can use our products for the whole life cycle of the product, and that's one of our competitive edges. If you go on web technologies, it's a different story, but on embedded, that's it. I would say that we've had a kind of a new product and let's see how that works. We do have our design tooling, and during this fall we're going to come out with a new versions of that design tooling.

Speaker #1: And we have a lot of people using the old versions of Q2. And that's one of the cornerstones on this embedded—that people can trust that we're here.

Speaker #1: We're going to be here in the next 10 years, and our products are mature, so they can rely on them. They can use our products for the whole life cycle of the product.

Speaker #1: And the that's of our one of our competitive edges. If you go on a web technologies, it's a different story. But on embedded, that's that's it.

Speaker #1: I would say that the we've had a kind of a the new product and let's see how that works. We do have our design tooling.

Speaker #1: And during this fall, we're going to come out with new versions of that design tooling. It's kind of a—it's kind of a—it's a mature product in a way that we've had it for a long time.

Juha Varelius: It's a mature product in a way that we've had it for a long time, but now it's going to have AI functionalities and whatnot. It's kind of revamped totally, and it's going to be a bit of a new product launch as a whole. It's a mature product, but it's going to be a new release. Like I said, on embedded, people actually, our customers respect the fact that we've been around, our products are very robust, tested, and we don't have to do updates very often to them, and they can rely on them for a long time. That's a good portfolio, and that fits very well into functional safety critical segment. Really resonates over there. How do we add our portfolio in the future remains to be seen.

Speaker #1: But now it's going to have AI functionalities and whatnot, so it's kind of revamped totally, and it's going to be a bit of a new product launch.

Speaker #1: As a whole, it's a mature product, but it's going to be a new release. But like I said, on embedded, our customers actually respect the fact that we've been around, and our products are very robust and tested.

Speaker #1: And we don't have to do updates very often to them, and they can rely on them for a long time. So that's a good portfolio.

Speaker #1: And that fits very well into the functional safety, safety-critical segment. It really resonates over there. So how we add to our portfolio in the future remains to be seen.

Speaker #1: I think we're going to be doing acquisitions also in the future, adding products into our portfolio. AI, of course, is changing this scene in a way that— I mean, you know, if AI improves a bit, if you think for an electric bike manufacturer, for example, you know, we do have lots of engineers in-house as well.

Juha Varelius: I think we're going to be doing acquisitions also in the future, adding products into our portfolio. AI, of course, is changing this scene in the way that, I mean, if AI improves a bit, if you think for electric bike manufacturer, for example, we do have lots of engineers in-house as well. We have all these tools. If using AI, we might be able to offer a more vertically ready-made software than we're doing today. We already do have these customers globally, and we are definitely a market leader in this. Is our next acquisition going to be adding the portfolio in this development process, or is it going to be a product or service that actually enables us to be more vertically integrated? That remains to be seen.

Speaker #1: We have all these tools. If, you know, using AI, we might be able to offer a more vertically ready-made software than we're doing today.

Speaker #1: And we already do have these customers globally. And and we are a definitely market leader in this this. So is our next acquisition going to be adding to portfolio in this development process or is it going to be is it going to be a product or service that the actually enables us to be more vertically integrated the that remains to be seen.

Speaker #2: Maybe continuing on that, and thinking of the angle of revenue potential in these different products. I guess we've been talking about quality assurance for quite a while, and that could be kind of the next Q2.

Antti Luiro: Maybe continuing on that and changing the angle of revenue potential in these different products. I guess we've been talking about quality assurance for quite a while, and that could be kind of the next Qt.

Juha Varelius: Yeah.

Speaker #2: And is is that kind of do you see that product being passed? It's kind of faster growth phase already or is that still in the very kind of.

Antti Luiro: Do you see that product being past its fastest growth phase already, or is that still in the very early phases?

Speaker #1: No, it's still in the early phases. Yeah. It's still in the early phases. Yeah. So definitely, if you, you know—not, this is of course, you need to, you know, disclaimer that don't think about the timings.

Juha Varelius: No, it's still in the early phases.

Antti Luiro: Yeah.

Juha Varelius: It's still in the early phases. Definitely, this is, of course, a disclaimer that don't think about the timings, but if we think on a product life cycle, Qt obviously is much further down the road on the growth. IAR is going to grow quite a lot due to this subscription change. It can almost double its revenue just through this subscription. That's the likelihood. If it was 40-something, just the subscription change will be 80-something when it's done, and of course, that's going to take 2 years. How to get organic growth after that is a good question because it's very well integrated into functional safety-critical, but not used so much elsewhere.

Speaker #1: But if we think on a product life cycle, the Q2 obviously is is the the you know, much further down the road on on on the growth.

Speaker #1: IAR is well, IAR is basically going to grow quite a lot due to subscription change. Is it you know, is it you know, it can almost double its revenue basically.

Speaker #1: Just due to this subscription. That's that's the likelihood. So the you know, if it was 40 something the just the subscription change will be 80 something when it's done.

Speaker #1: And of course, that's going to take three years. How to get organic growth after that is a good question, because it's very well integrated into functional safety—safety critical—but not used so much elsewhere.

Speaker #1: Else and and so I think that the during the next three years, that's going to be the question that the what's going to be the strategy for IAR to find organic growth.

Juha Varelius: I think that during the next 3 years, that's going to be the question, what's going to be the strategy for IAR to find organic growth and where? On testing market, definitely. We bought EUR 12 million revenue. It's definitely a EUR 100 million business on the course of the years. How to grow beyond that, then a good question. This is always good to remember that when we started with Qt, we were probably in a EUR 20 million region or something like that. The people were saying that, Well, if you can throw a tools business into EUR 100 million, you're like a wizard. Because the EUR 50 million more like it. Well, we got into EUR 100 million, and now we're in the EUR 200 million, and it's still growing.

Speaker #1: And we're on testing the market. Yeah, definitely. I mean, you know, we bought it in—we bought $12 million in revenue. It's definitely a $100 million business over the course of the years.

Speaker #1: How to grow beyond that. It's the then a good question. And and this is always a good to remember that the you know, I tell we when when we when we started with Q2, we were probably in a 20 million region or something like that.

Speaker #1: The people were saying that, well, if you can throw a tools business into $100 million, then you know, you're like a wizard, right? Because the, you know, $50 million—more like it.

Speaker #1: Well, then we got into $100 million, and now we're in the $200 million, and it's still growing, right? So, when I say that, I see that Squeeze, the testing business, can grow into $100 million.

Juha Varelius: When I say that I see that the testing business can grow into EUR 100 million, it's the view I have now. Of course, it will go beyond that, and how and where are we going to position it? If you think on testing the Qt potential market, if I looked only at the developers, it's probably EUR 1.5 billion if I look at the testing market, because it's not only the Qt technology, it's also other languages. The potential market is like a double, basically. That's kind of the size I'm envisioning. If you add all that together, with the current portfolio, you should be able to build a full EUR 500 million business with a very, very profitable operations. Well, that needs new markets. Don't forget, we're not in South America. We're not in Africa.

Speaker #1: You know, it's the view I have now. Of course, it will go beyond that. And how, and where, and where are we going to position it?

Speaker #1: So if you think on testing, the Q2 potential market, if I looked only at the developers, it's probably one and a half billion. If I look at the testing market, because it's not only the Q2 technology, it's also other languages.

Speaker #1: So it's like a the the potential market is like a double. Basically. So the that's that's kind of the size I'm envisioning. So if you add all that together, you know, with the current portfolio, you should be able to build a four 500 million business with a very very profitable operations.

Speaker #1: And what's beyond that? Well, then that needs new markets. I mean, don't forget, we're not in South America. We're not in Africa.

Speaker #1: You know, there are a lot of markets where we're not at this point in time, and there are use cases evolving all the time and whatnot.

Juha Varelius: There are a lot of markets where we're not at this point of time, and there are use cases evolving all the time and whatnot. Technology is evolving. Of course, the opportunities will grow as we go forward. We need to do this IAR integration. We need to pay a bit of a debt away, we're looking for new acquisitions. We definitely want to be a growth company also in the future. Hey, time's up. Thank you very much for participating in this Q2. We had a very good quarter, and I'm happy with the results, and I think that we're going into the right direction, and really looking forward to seeing you again and really looking forward to building the business going forward in the H2 of the year and next year. Thank you very much.

Speaker #1: Technology is evolving, so of course, the opportunities will grow as we go forward. But we are, you know, we're looking for—we need to do this IAR integration.

Speaker #1: We need to pay a bit of the debt away, and then we're looking for new acquisitions. So we definitely want to be a growth company also in the future.

Speaker #2: Hey, time's up. Thank you very much for participating in this second quarter. We had a very good quarter, and I'm happy with the results.

Speaker #2: And I think that the we're going into right direction and really looking really looking forward seeing you again and really looking forward the building the business going forward in the second half of the year and next year.

Speaker #2: Thank you very much.

Operator: The host has ended this call. Goodbye

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