Q2 2026 Shelly Group SE Earnings Call

Speaker #1: Welcome, ladies and gentlemen, to the earnings call of Shelly Group S.A. regarding the H1 figures of 2026. I would like to welcome the company's CEO, Wolfgang Kirsch, CEO, Dimitar Dimitrov, and CFO, Ilyana Krushkova, who will guide you through the presentation in a moment, followed by a Q&A session via audio line, and chat.

Speaker #1: And with that, I hand over to you, Mr. Kirsch.

Speaker #2: Yes, thank you very much, and good morning, everyone. Today we are here in Sofia, Ilyana and myself, Dimitar is traveling abroad and that's why he is joining separately.

Speaker #2: But we are all three together with a bit more place as we had the last time. So I'd start with the typical chart, and I want to add something here to the normal start that we are a smart home company, sorry, and building automation company, because last meetings showed that we are more understood as a building management company especially with the new products that we are launching, that we already launched, and the software solutions that we added.

Speaker #2: That is much wider than the typical normal understood smart home market. That makes one apartment smart. We have more and more solutions that go much wider and that opens a much bigger market for us for the next year.

Speaker #2: So that's something important to note, that we are more and more building management, energy management, and not that much the smaller things that everyone is selling some smart plugs and other things.

Speaker #2: That's an important change, and development. I will run you through some highlights, and at the end some operational topics. Ilyana will talk about the financials, and Dimitar has a couple of charts about product development and roadmap updates.

Speaker #2: That leads to the highlights. In the first half of the year, we have reached our internal targets for EBIT and for revenue. Our gross profit is a little bit over the target, and that helps us, of course, as well with the bottom line, with the EBIT.

Speaker #2: Mainly, this is driven by a very good optimization of supply chain. We have shipped a lot of our products not as in the future via airplanes, but on trains and ships, and that is optimizing gross profit a little bit, 1 to 2 percentage points.

Speaker #2: Quite visible, and gives us a little bit of more room to move as well in the second half of the year. Our installer network, you know that this is one of our key KPIs, is growing quite strongly.

Speaker #2: We come to some numbers in a minute. Amazon business was a bit an issue in the last 12 months. We are back on track with Amazon, but we are selling indirect now to Amazon, which gives us a better control over the prices that Amazon is using, and we have calmed down the price situation in the market a lot since we make that move.

Speaker #2: And we see that we are back on a growing track. We have signed an important new contract with a 10-year European broadline distributors. There are three big ones in Europe and one is really focusing more and more on building management products, and we signed with this company for all European countries.

Speaker #1: We are back on track with Amazon, but we are selling indirectly now to Amazon, which gives us better control over the prices that Amazon is using, and we have calmed down the price situation in the market a lot since we made that move.

Speaker #2: And in the DACH region especially, we have onboarded a new distributor specialized in do-it-yourself chains because we see that there is a lot of room to move in do-it-yourself, especially in the German market, because the market is still very fragmented.

Speaker #1: And we see that we are back on a growth track. We have signed an important new contract with a 10-year European broadline distributor. There are three big ones in Europe, and one is really focusing more and more on building management products. We signed with this company for all European countries.

Speaker #2: It's not only OB Hornbach, Bauhaus, there are five, six other players and we want to onboard with all of them. And for this, we need someone who has already contracts and is in those channels.

Speaker #2: Our customer base continues to grow, cloud users continues to grow, that gives us a lot of opportunities for long-term monetization. And we are growing as well in the premium app.

Speaker #1: And in the DACH region especially, we have onboarded a new distributor specialized in do-it-yourself chains, because we see that there is a lot of room to move in do-it-yourself, especially in the German market, because the market is still very fragmented.

Speaker #2: We think in the second half of the year with the launch of cameras, this will grow faster. And our installer base is very important to strengthen our pro business.

Speaker #1: It's not only OBI, Hornbach, Bauhaus—there are five or six other players, and we want to onboard with all of them. And for this, we need someone who has already contracted and is in those channels.

Speaker #2: The important thing here is not only onboarding them, we now have to activate and we are planning a lot of activities to train them and to motivate them more to use Shelly devices as well in their bigger projects.

Speaker #1: Our customer base continues to grow, and cloud users continue to increase. That gives us a lot of opportunities for long-term monetization. We are also seeing growth in the premium app.

Speaker #2: So that's about, oh, sorry, I have one more. All key indicators, like household number of cloud users, premium app users in the last 12 months grew above 30%.

Speaker #1: We think in the second half of the year, with the launch of cameras, this will grow faster. And our installer base is very important to strengthen our Pro business.

Speaker #2: The important number here. We have now, by the end of June, 8,600 installers in our installer portal, visible on our website. So visible for customers as well.

Speaker #1: The important thing here is not only onboarding them; we now have to activate, and we are planning a lot of activities to train them and to motivate them more to use Shelly devices as well in their bigger projects.

Speaker #2: That's in the last 12 months, an increase of 237%, and that's a huge accomplishment by all the teams. And as I said, now we start more and more activating them, training them on different levels, and as well we have some nice developments in our application, like mass integration of products that is very helpful for installers and helps them to make to integrate Shelly products more in their big projects.

Speaker #1: That's about it—oh, sorry, I have one more point. All key indicators, like the number of household cloud users and premium app users in the last 12 months, grew by more than 30%.

Speaker #1: The important number here: we have now, by the end of June, 8,600 installers in our installer portal, visible on our website—so visible for customers as well.

Speaker #2: That leads to the highlights and to Ilyana.

Speaker #1: That's in the last 12 months, an increase of 237%. And that's a huge accomplishment by all the teams. And as I said, now we are more and more activating them, training them on different levels, and as well, we have some nice developments in our application, like mass integration of products that is very helpful for installers and helps them to integrate Shelly products more in their big projects.

Speaker #3: Good morning. From me as well. I'll start with the financial headline. Our H1 performance was pretty strong in terms of revenue. It came in at 68.3 million, which was 26% growth year on year.

Speaker #3: And in terms of operating profit, which is our EBIT here, it was 17.7, with year on year growth of 46%. The EBIT margin also improved and it was 26%, which was also an improvement from last year when it was 22.6%.

Speaker #1: That leads to the highlights and to Ilyana.

Speaker #2: Good morning from me as well. I will start with the financial headline. Our H1 performance was pretty strong in terms of revenue. It came in at €68.3 million, which was 26% growth year-on-year.

Speaker #3: In terms of cash, our liquidity position also improved substantially. We had almost 32 million of cash at the end of Q2, which was a 72% improvement year on year, and it also added a net cash inflow of approximately 18 million since the beginning of the year.

Speaker #2: And in terms of operating profit, which is our EBIT here, it was €17.7 million, with year-on-year growth of 46%. The EBIT margin also improved, reaching 26%, which was an increase from last year, when it was 22.6%.

Speaker #3: So in summary, all the three key indicators, revenue, operating profit, and cash, moved nicely together in the first half of the year. Breaking down into the quarterly developments, revenue consistently grew in both quarters since the beginning of 2026.

Speaker #2: In terms of cash, our liquidity position also improved substantially. We had almost €32 million of cash at the end of Q2, which was a 72% improvement year on year.

Speaker #2: And it also added a net cash inflow of approximately €18 million since the beginning of the year. So, in summary, all three key indicators—revenue, operating profit, and cash—moved nicely together in the first half of the year.

Speaker #3: In the first quarter, we booked 33.3, which was 26% growth year on year. And in Q2, it was slightly higher, 35 million, with year on year growth of 26%.

Speaker #3: Both quarters were higher than 25% growth, and also the two-year compound growth rate was also running in the high 20s, which is also supporting our guidance for revenue.

Speaker #2: Breaking down into the quarterly developments, revenue consistently grew in both quarters since the beginning of 2026. In the first quarter, we booked €33.3 million, which was 26% growth year on year.

Speaker #3: And it is also a testament to the consistent delivery model that is now successful and it is supported by the same drivers that we've been discussing.

Speaker #2: And in Q2, it was slightly higher, 35 million, with year on year growth of 26%. Both quarters were higher than 25% growth. And also the two-year compound growth rate was also running in the high 20s, which is also supporting our guidance for revenue.

Speaker #3: The growth of the installer base, the consistent channel execution, and also the growth of the professional installers network. The EBIT quarterly developments were also positive.

Speaker #3: First quarter EBIT was 8.6 million of 29% year on year growth in the second quarter. It was slightly better, 9.1 million which was notable improvement of 65% compared to the comparative period of last year.

Speaker #2: And it is also a testament to the consistent delivery model that is now successful, and it is supported by the same drivers that we've been discussing.

Speaker #2: The growth of the installer base, the consistent channel execution, and also the growth of the professional installers' network. The EBIT quarterly developments were also positive in the first quarter.

Speaker #3: Both quarters above our midterm target of 25%. So we are comfortable that we have the proper foundations to the year-end guidance on operating profit level as well.

Speaker #2: EBIT was €8.6 million, a 29% year-on-year growth in the second quarter. It was slightly better at €9.1 million, which was a notable improvement of 65% compared to the same period last year.

Speaker #3: The profit margin that is stable around 26% also show pretty good operating leverage, meaning that we are growing the revenues but the additional investments on the operating cost side are substantially covered by the positive gross profit movements.

Speaker #2: Both quarters are above our midterm target of 25%. So we are comfortable that we have the proper foundations for the year-end guidance on the operating profit level as well.

Speaker #3: I will now go over the cash flow developments before I go back to some additional P&L comments. On the cash flow side, it was also a pretty positive first half of the year for us.

Speaker #2: The profit margin, which is stable at around 26%, also shows pretty good operating leverage, meaning that we are growing the revenues, but the additional investments on the operating cost side are substantially covered by the positive gross profit movements.

Speaker #3: We started the year with cash position of 13.7 million, and we managed to realize operating cash flow of 22.3 million. Which was much better than the same period last year.

Speaker #2: I will now go over the cash flow developments before I go back to some additional P&L comments. On the cash flow side, it was also a pretty positive first half of the year for us.

Speaker #3: It was triple the operating cash flow of the same period of last year. We had substantial investments in related to our new production facilities in Bulgaria, and also we continued to intensively invest in our R&D operations.

Speaker #2: We started the year with a cash position of €13.7 million, and we managed to realize operating cash flow of €22.3 million, which was much better than the same period last year.

Speaker #3: So you see here investments flow of 3.2 million. We also had a modest outflow in terms of financing, which was related to scheduled repayments for leases and existing loan facilities.

Speaker #2: It was triple the operating cash flow of the same period last year. We had substantial investments related to our new production facilities in Bulgaria.

Speaker #3: As a result. That increase at the end of H1 was 18.2 million, and our cash position once again almost reached 32 million, which is very close to the bottom of our mid of our year-end target for cash, which was 35 to 45 million at the end of December.

Speaker #2: And also, we continued to intensively invest in our R&D operations. So, you see here an investment flow of €3.2 million. We also had a modest outflow in terms of financing, which was related to scheduled repayments for leases and existing loan facilities.

Speaker #3: It is a pretty good and pretty stable balance sheet, as our equity ratio exceeded 80% in the first half of the year, meaning that we are in a good position to further support investments on the R&D side.

Speaker #2: As a result, that increase at the end of H1 was €18.2 million, and our cash position once again almost reached €32 million, which is very close to the bottom of our year-end target for cash, which was €35 to €45 million at the end of December.

Speaker #3: And also the most recent dividend distribution in July. One note maybe additionally on collections. Behind the operating cash flow, we managed to collect approximately 703.5 million of from clients, which was 57% better than the previous the same period of previous years.

Speaker #2: It is a pretty good and pretty stable balance sheet, as our equity ratio exceeded 80% in the first half of the year, meaning that we are in a good position to further support investments on the R&D side.

Speaker #2: And also the most recent dividend distribution in July. One note, maybe additionally on collections: behind the operating cash flow, we managed to collect approximately €703.5 million from clients, which was 57% better than the same period in previous years.

Speaker #3: And our receivables actually improved very well compared to December. So in terms of receivables, they decreased the total receivables decreased by 16% compared to December, and they were 66 million at the end of June.

Speaker #3: Breaking down the receivables between the clients' receivables and the advances, they both decreased by 12 and by 38% respectively, both of them releasing cash to support the operating cash flow in the first half of the year.

Speaker #2: And our receivables actually improved very well compared to December. So, in terms of receivables, they decreased—the total receivables decreased by 16% compared to December.

Speaker #3: At the same time, our inventory increased to 24 million from 19.5 at the end of December, which is also an anticipated build-up in line with preparation for the second half launches and the generally stronger second half in terms of sales.

Speaker #2: And they were €66 million at the end of June. Breaking down the receivables between the clients' receivables and the advances, they both decreased by 12% and by 38%, respectively, both of them releasing cash to support the operating cash flow in the first half of the year.

Speaker #3: So in terms of day sales outstanding, they fell by additional 21% in Q2, and now they reached 147, which is a cumulative improvement of 45 days compared to last year.

Speaker #2: At the same time, our inventory increased to €24 million from €19.5 million at the end of December, which is also an anticipated build-up in line with the preparation for the second half launches and the generally stronger second half in terms of sales.

Speaker #3: And in general, the cash conversion reached 255 days, which is also a good improvement compared to Q1 and when it was 267 days. And this indicator is also progressing well towards our year-end target that is in the range of 220 and 240 days.

Speaker #2: So, in terms of days sales outstanding, they fell by an additional 21% in Q2, and now they have reached 147, which is a cumulative improvement of 45 days compared to last year.

Speaker #3: Going back to the overview of the P&L, once again, revenues increased 26% year on year to 68.3 million, gross profit increased slightly faster, by 39% year on year, which is a 5% improvement in terms of gross profit compared to the same period last year.

Speaker #2: And in general, the cash conversion reached 255 days, which is also a good improvement compared to Q1, when it was 267 days. This indicator is also progressing well towards our year-end target, which is in the range of 220 to 240 days.

Speaker #3: This improvement in gross profit allowed us to cover our intensive spend in terms of sales and marketing, and also administration costs. You will see that sales and marketing increased by 50%, and administrative costs increased by 52% year on year.

Speaker #2: Going back to the overview of the P&L once again, revenues increased 26% year on year to €68.3 million. Gross profit increased slightly faster, by 39% year on year.

Speaker #3: On the sales and marketing side, we should note that there is a substantial variable component to that, and it is directly related to revenue.

Speaker #2: Which is a 5% improvement in terms of gross profit compared to the same period last year. This improvement in gross profit allowed us to cover our intensive spend in terms of sales and marketing and also administration costs.

Speaker #3: And these are our marketing development funds, which increased substantially this year compared to last year. So if we take this out of the calculation, then the sales and marketing would have increased only by 11% year on year.

Speaker #2: You will see that sales and marketing increased by 50%, and administrative costs increased by 52% year on year. On the sales and marketing side, we should note that there is a substantial variable component to that.

Speaker #3: In terms of administration, we continue to see here a steep increase compared to previous year. This was also the situation in Q1. And it is expected to remain in similar levels until the end of the year, until it levels out, because the international expansion and our investments in administration of this expansion started only at the end of 2025.

Speaker #2: And it is directly related to revenue. These are our marketing development funds, which increased substantially this year compared to last year. So, if we take this out of the calculation, then sales and marketing would have increased only by 11% year on year.

Speaker #3: I'm most intensively in the beginning of 2026. So now comparing to the previous period, it's a very different situation, and you will take at least a couple of more quarters until it goes down to more efficient and sustainable ratios to revenue.

Speaker #2: In terms of administration, we continue to see here a steep increase compared to the previous year. This was also the situation in Q1, and it is expected to remain at similar levels until the end of the year, until it levels out.

Speaker #2: Because the international expansion and our investments in the administration of this expansion started only at the end of 2025, and most intensively at the beginning of 2026.

Speaker #3: Despite the increased marketing spend and the international expansion, our EBIT margin remained stable at 26% throughout the first two quarters of the year, and it net income also increased by 51% year on year to 15.4 million, with the net income margin improving from 19.

Speaker #2: So now, compared to the previous period, it's a very different situation. And it will take at least a couple more quarters until it goes down to more efficient and sustainable ratios to revenue.

Speaker #3: 18.9 to 22.6 year on year. And the earnings per share came in at 85 cents in the first half of 2026 compared to 56 last year, also a pretty good improvement in earnings per share.

Speaker #2: Despite the increased marketing spend and the international expansion, our EBIT margin remained stable at 26% throughout the first two quarters of the year. Net income also increased by 51% year on year to €15.4 million, with the net income margin improving from 19%.

Speaker #3: In summary, growth is visible on the top line, but it is also supported by sustainable profitability, and cash is also looking good and working capital going back to normalized level.

Speaker #2: 18.9 to 22.6 year on year. And the earnings per share came in at $0.85 in the first half of 2026, compared to $0.56 last year.

Speaker #3: So a pretty good first half of the year on the financial side. I'm passing back to Gold Bank. Oh, to Digital. Sorry.

Speaker #2: Also, a pretty good improvement in earnings per share. In summary, growth is visible on the top line, but it is also supported by sustainable profitability.

Speaker #1: Thank you very much. This is about the product line and how we're doing with the R&D. First, thank you for everybody and welcome on our quarterly call.

Speaker #2: And cash is also looking good, and working capital is going back to a normalized level. So, a pretty good first half of the year on the financial side.

Speaker #1: In the first year and the first half of the year, we released the big portion of the project of the products. We have something which is targeting the first customers, the entry customers with our program, which is in a very affordable price in the market, in the price point under 10 euro.

Speaker #2: I'm passing back to Wolfgang.

Speaker #1: To Dimitar.

Speaker #2: Oh, to Dimitar, sorry.

Speaker #3: Thank you very much. This is about the product line and how we're doing with R&D. First, thank you to everybody, and welcome to our quarterly call.

Speaker #1: But also on the same time, we targeting the professionals and the professional customers as we see involving presented at over close to 9,000 electricians.

Speaker #1: It's already part of our network. And this is exactly the target for the circuit breakers for the fully automated and smart circuit breakers which we launched first half of the year, we've seen the significant demand for them, and we continue developing in this line also another as we say the smart protected solution which will continue and more products will be released to end of the year.

Speaker #3: In the first year and the first half of the year, we released a big portion of the project of the products. We have something which is targeting the first customers, the entry customers, with our program, which is at a really affordable price in the market.

Speaker #3: In the price point under €10. But also, at the same time, we're targeting professionals and professional customers. As you see, Wolfgang presented that there are close to 9,000 electricians.

Speaker #1: So this is not the all released product, but this is the main product which we released. The camera, you know the camera is postponed based of the some chip shortage and the price increase beginning of the year.

Speaker #3: It's already part of our network, and this is exactly the target for the circuit breakers—for the fully automated and smart circuit breakers, which we launched in the first half of the year.

Speaker #1: We rebuilt the camera, and we'll be and is not launched in the first half of the year, but it's ready to be launched. It's in the mass production now, and soon we'll go on the market.

Speaker #3: We've seen the significant demand for them, and we continue developing in this line—also, another, as we say, the smart protected solution, which we will continue, and more products will be released by the end of the year.

Speaker #1: We'll reflect the results in the Q3 and Q4 end of the year. And also as we thought about R&D, there is a new mini circuit breakers which is completely capable to replace the existing breakers without additional room into the breaker box.

Speaker #3: So, this is not all released products, but this is the main product which we released. The camera, you know, the camera is postponed because of some chip shortage and the price increase at the beginning of the year.

Speaker #3: We rebuilt the camera. And it will not be launched in the first half of the year, but it's ready to be launched. It's in mass production now.

Speaker #1: This is our next product into the professional line. The outdoor camera, which is ongoing project, we targeting this camera to be released end of the year, end of the Q4.

Speaker #3: And soon we'll be on the market. We'll reflect the results in Q3 and Q4, at the end of the year. And also, as we thought about R&D, there is a new mini circuit breaker which is completely capable of replacing the existing breakers without requiring additional room in the breaker box.

Speaker #1: For the heating seasons, we have a new choices. The new TRV, which is will be much more price efficient than the existing one. And we'll extend the range of the walks.

Speaker #1: Of the walks, yeah. Based of this one, there is a more than 20 different products which will be released on the end of the year.

Speaker #3: This is our next product in the professional line: the outdoor camera, which is an ongoing project. We're targeting this camera to be released at the end of the year, the end of Q4.

Speaker #1: But we cannot show them all of them here on the presentation. This is the key products which is not exist before in our portfolio.

Speaker #3: For the heating seasons, we have TRB, which will be much more price efficient than the existing one. And we'll extend the range of the walks.

Speaker #1: And about something which is interesting as we start counting in our company, how exactly the AI affect to the internal development. We know that currently we extensively working with the professionals to use the AI implementing our devices integrate and then to different solution.

Speaker #3: Of the walks, yeah. Based on this one, there are more than 20 different products which will be released at the end of the year.

Speaker #1: And this is quite successful, and we've seen very high interest and adoption from the from them. But internally, the company extensively using the AI and as you can see, 70% of the cost at the moment is AI generated.

Speaker #3: But we cannot show them all here in the presentation. These are the key products, which did not exist before in our portfolio.

Speaker #3: And something that's interesting as we start counting in our company is how exactly AI affects internal development. We know that currently, we are extensively working with professionals to use AI, implementing it in our devices and integrating them into different solutions.

Speaker #1: Our developers is mainly concentrated to make a code review to prove the AI work to train the AI to go better because we targeting end of the year to reach at least 90% of the code to be AI generated.

Speaker #1: And this, of course, this is coming with the with much more much better efficiency with almost double the results and the speed of development as you see, reduction time for the products or documentation is based of the AI is made by AI.

Speaker #3: And this is quite successful. We've seen very high interest and adoption from them. Internally, the company is extensively using the AI, and as you can see, 70% of the cost at the moment is AI-generated.

Speaker #3: Our developers are mainly concentrated on making code reviews to prove the AI's work and to train the AI to become better. Because we're targeting the end of the year to reach at least 90% of the code to be AI-generated.

Speaker #1: And also we're working with a local company about the prototyping and simulation of the our future devices. And now this is happening 44% faster than before that because we doesn't need to do everything from scratch.

Speaker #3: And this of course this is coming with the with much more much better efficiency with almost double the results and the speed of development as you see 50% faster reduction time for the products.

Speaker #1: We can use the AI to simulate the different environment. We can use many things also from the AI to help us to improve the reliability of the devices.

Speaker #1: So about the code review, it's interesting job because from one side, our developers make a code review of the code generated for AI, but at the same time, AI helping all developers and make a in life code reviews and give to our developers and report to our developers some bugs, security possible issues, and everything which need to be fixed after that.

Speaker #3: All documentation based on the AI is made by AI. Also, we're working with a local company on the prototyping and simulation of our future devices.

Speaker #3: And now this is happening 44% faster than before, because we don't need to do everything from scratch. We can use the AI to simulate the different environment.

Speaker #3: We can use many things also from the AI to help us to improve the reliability of the devices. So about the code review, it's interesting job because from one side our developers make a code review of the code generated for AI.

Speaker #1: So we can say that the very big bunch of the agent is working into the company and to help us to speed up the development.

Speaker #1: And yeah, for that dozen number, as you see, there is another one that's about the UI design at the moment and UX design very soon we're targeting to have a completely new UI AI generated application, but not only this one.

Speaker #3: But at the same time, AI is helping all developers and making wise code reviews, and giving to our developers and reporting to our developers some bugs, possible security issues, and everything which needs to be fixed after that.

Speaker #1: Currently, we develop more than different 10 portals for our customers, and every which is delivering to them the tower solution. For them, based of the AI generated UI and UX.

Speaker #3: So we can say that a very big bunch of the agents is working in the company and helping us to speed up the development.

Speaker #3: And yeah, that does a number. As you see, there is another one that's about the UI design at the moment in UX design. Very soon, we're targeting to have a completely new, AI-generated UI application.

Speaker #1: And also we successfully implement AI into the physical testing the devices. So this is our first prior the physical AI, which physically testing the devices in the long term, in the different environments.

Speaker #3: But not only this one. Currently, we develop more than 10 different portals for our customers, and every one is delivering to them the tower solution.

Speaker #1: And there is one big room is completely controlled by AI and all testings between the devices is happening inside in this room and everybody can see because it's the speed is incredible.

Speaker #3: For them, based of the AI generated UI UX. And also we successfully implement AI into the physical testing the devices. So this is our first try the physical AI which physically testing the devices in the long term.

Speaker #1: Currently, we're on the early stage and only 26% because this is the physical AI in something is completely new. But at the end, as we're working in the physical world, our device is working in the physical environment.

Speaker #1: And this is the best way we to test our devices. And very short, this is for me only for the second quarter. Now go back to operations and to work.

Speaker #3: In the different environments. And there is one big room that is completely controlled by AI, and all testings between the devices are happening inside this room, and everybody can see because the speed is incredible.

Speaker #1: Thank you very much.

Speaker #2: Yes. So I think I do not have to repeat the H1 results. All numbers are going in the right direction, especially the cash development that has been a point of critic in the at the end of the year, and we promise to work on that.

Speaker #3: Currently, we're on the early stage and only 26% because this is the physical AI inserting is completely new. But at the end, yes, we're working in the physical world.

Speaker #3: Our device is working in the physical environment. And this is the best way we to test our devices. And very short, this is for me only for the second quarter.

Speaker #2: We show that we deliver here against our promises. If we go to the regions, we see a quite balanced view on DACH versus rest of Europe.

Speaker #2: So rest of Europe is coming very close to the DACH numbers. We have made an adjustment here that I have to explain because if you remember in the last calls already, I said that we have more and more cross-border shipment.

Speaker #3: Now go back to operations and to logging. Thank you very much.

Speaker #1: Yes. So I think I do not have to repeat the H1 results. All numbers are going in the right direction, especially the cash development, which has been a point of critique at the end of the year.

Speaker #2: So we cannot really just take our numbers from accounting what did we invoice to country like Poland because some products are shipped directly back to Germany.

Speaker #1: And we promise to work on that. We show that we deliver here against our promises. If we go to the regions, we see a quite balanced view on DACH versus the rest of Europe.

Speaker #2: Because distributors have their warehouses there and the invoice address there. So we made some adjustments to take at least the big movements out. For example, for the Amazon marketplace, the proportion that is sold in Germany is not 100% invoice to Germany because some of the warehouses are in other regions.

Speaker #1: So, the rest of Europe is coming very close to the DACH numbers. We have made an adjustment here that I have to explain, because if you remember, in the last calls already, I said that we have more and more cross-border shipment.

Speaker #2: But if we look at the picture that we see here, we are on a good way to balance DACH and the rest of Europe.

Speaker #1: So we cannot really just take our numbers from accounting – what did we invoice to a country like Poland – because some products are shipped directly back to Germany.

Speaker #2: Very important development is what we see in the rest of the world, especially in the United States. I mentioned in the last meetings that we are in contact with a distributor in the US.

Speaker #1: Because distributors have their warehouses there and the invoice is addressed there. So, we made some adjustments to take at least the big movements out. For example, for the Amazon marketplace, the proportion that is sold in Germany is not 100% invoiced to Germany because some of the warehouses are in other regions.

Speaker #2: We still not onboarded him, but we have signed a contract now and we expect the first orders in Q4. And we expect the ramp up then in 27, but that looks all very positive and in general, the US is on an excellent way still on a relatively low level, but developing in a nice speed.

Speaker #1: But if we look at the picture that we see here, we are on a good way to balance DACH and the rest of Europe.

Speaker #1: A very important development is what we see in the rest of the world, especially in the United States. I mentioned in the last meetings that we are in contact with a distributor in the US.

Speaker #2: Otherwise, you would not reach the average growth in this region of above 60%. That's almost three times the growth speed of the rest of the group.

Speaker #2: And I would say we accelerate this in 2027 even to a higher speed. So that these three regions at one point, end of 27, beginning of 28 should be completely balanced between DACH, rest of Europe, and rest of the world to reduce the dependency on one of the regions.

Speaker #1: We have not onboarded him yet, but we have now signed a contract. We expect the first orders in Q4, and we anticipate the ramp-up in 2027.

Speaker #1: But that looks all very positive. And in general, the US is on an excellent path—still at a relatively low level, but developing at a nice speed.

Speaker #2: The premium app is as well developing in a good speed above 30% more users. And revenue grew above 70%. There's still a way to go to the end year numbers that we have planned with 2 million euros.

Speaker #1: Otherwise, you would not reach the average growth in this region of above 60%. That's almost three times the growth rate of the rest of the group.

Speaker #1: And I would say we accelerate this in 2027, even to a higher speed, so that these three regions, at one point—end of 2027, beginning of 2028—should be completely balanced between DACH, rest of Europe, and rest of the world, to reduce the dependency on one of the regions.

Speaker #2: On the other hand, with the camera launch, the first cameras will be shipped in August. So in Q3, then we have a free trial period for cloud usage and then we expect that at least part of the customers will not use local storage.

Speaker #2: They will use the cloud storage and that should boost the revenue for our cloud services and premium services. So as well here, we feel on a good way.

Speaker #1: The Premium app is also developing at a good speed, with over 30% more users, and revenue grew by more than 70%. There's still a way to go to reach the year-end numbers we have planned, with 2 million euros.

Speaker #2: And with a wider portfolio of cameras with the outdoor camera coming end of the year, for the next years, we see that we are in a good direction about this.

Speaker #1: On the other hand, with the camera launch, the first cameras will be shipped in August—so in Q3. Then, we have a free trial period for cloud usage.

Speaker #2: We already confirmed our guidance for revenue and EBIT and for the first time, we have guided as well the cash position because of the comments from your side end of the year or beginning of this year.

Speaker #1: And then we expect that at least part of the customers will not use local storage. They will use cloud storage. And that should boost the revenue for our cloud services and premium services.

Speaker #2: So we confirm where we are. We still have a way to go, but the way to go is similar than it has been in the last years.

Speaker #1: So as well here, we feel we are on a good way. And with a wider portfolio of cameras, with the outdoor camera coming at the end of the year, for the next years, we see that we are in a good direction about this.

Speaker #2: I have to come back to our big proportion of do-it-yourself business that is depending on Black Friday revenues, that is depending on Christmas business.

Speaker #1: We already confirmed our guidance for revenue and EBIT, and for the first time, we have also guided the cash position because of the comments from your side at the end of last year or the beginning of this year.

Speaker #2: For us, the fourth quarter counts for as two quarters. So we typically think in five quarters. On top of this, we will see more effects from our country expansion and from the roadmap that Dimitar has already presented.

Speaker #1: So we confirm where we are. We still have a way to go, but the way to go is similar to what it has been in the last years.

Speaker #2: We feel quite comfortable. We are a bit closer on the EBIT side and I think I do not have to talk about the cash position anymore because we are almost there.

Speaker #1: I have to come back to our large proportion of do-it-yourself business. That is dependent on Black Friday revenues. That is dependent on Christmas business.

Speaker #2: I would not think that we make the next step already in Q3 because Q3 is balanced a little bit with Black Friday preparations and some other things.

Speaker #1: For us, the fourth quarter counts as two quarters, so we typically think in five quarters. On top of this, we will see more effects from our country expansion and from the roadmap that Dimitar has already presented.

Speaker #2: But end of the year, we are very optimistic that we will reach what we have promised. So that all looks good. Once again, H2 is really heavy for us and is a very important half of the year as it has been in the last years.

Speaker #1: We feel quite comfortable. We are a bit closer on the EBIT side, and I think I do not have to talk about the cash position anymore because we are almost there.

Speaker #2: I already said in the last calls, we don't really like that. We would have a more balanced view over the quarters that we would like much more because it's easier to anticipate, but the situation is as it is and we have to manage that.

Speaker #1: I would not think that we make the next step already in Q3, because Q3 is balanced a little bit with Black Friday preparations and some other things.

Speaker #1: By the end of the year, we are very optimistic that we will reach what we have promised. So that all looks good. Once again, H2 is really heavy for us and is a very important half of the year, as it has been in the last years.

Speaker #2: And we hope that in 27 and 28, we will have less product launches that are pushed to Q4 and that everything balances a little bit better out because this is something that no one really likes.

Speaker #2: So that leads to the summary. Once again, revenue and EBIT on target. We have a very strong improvement in the working capital efficiency. We have onboarded more than 1,900 installers in only one quarter.

Speaker #1: As I already said on the last calls, we don't really like that. We would much prefer to have a more balanced view over the quarters, because that's much easier to anticipate.

Speaker #1: But the situation is as it is, and we have to manage that. And we hope that in 2027 and 2028, we will have fewer product launches that are pushed to Q4, and that everything balances a little bit better, because this is something that no one really likes.

Speaker #2: In the first quarter, we already had a very good number with onboarding 1,400. So it really accelerates. And we are starting a lot of campaigns and a lot of initiatives to really not only onboard them and to have an address and the number and show them on the website, but to turn them in revenue generators.

Speaker #1: So that leads to the summary. Once again, revenue and EBIT are on target. We have seen a very strong improvement in working capital efficiency. We have onboarded more than 1,900 installers in only one quarter.

Speaker #2: There are a lot of plans in all regions that started already. We have new distributors signed that always causes some trouble as you can imagine, especially in our biggest region in DACH.

Speaker #1: In the first quarter, we already had a very good number with onboarding 1,400. So it really accelerates. And we are starting a lot of campaigns and a lot of initiatives to really not only onboard them, and to have an address and the number and show them on the website, but to turn them into revenue generators.

Speaker #2: Because so far, we had one exclusive distributor for this region. Now we have three distributors for that region. So the big player that's a company called Alzo.

Speaker #2: That's one of the top three online sorry, broadline distributors. Plus a smaller company that is specialized on do-it-yourself business that causes some friction, but we see more positive effects than negative effects, especially if we look a little bit more in the midterm.

Speaker #1: There are a lot of plans in all regions that have already started. We have new distributors signed, and that always causes some trouble. As you can imagine, especially in our biggest region, DACH, because so far we had one exclusive distributor for this region.

Speaker #2: And our expansion in new markets, there is some room to grow, not all markets are performing excellent, but the balance is very positive as you have seen in the rest of Europe.

Speaker #1: Now, we have three distributors for that region. The big player is a company called Alzo. That's one of the top three broadline distributors.

Speaker #2: Development. So for the second half of the year, the guidance is confirmed. We continue to improve our cash flow and we are on an excellent way there.

Speaker #1: Plus, a smaller company that is specialized in the do-it-yourself business causes some friction. But we see more positive effects than negative effects, especially if we look a little bit more in the midterm.

Speaker #2: Camera launch is ahead. Dimitar already said that the product is a must production now and we expect the first deliveries. The pro circuit breakers are in mass production now because the first batch has already been sold.

Speaker #1: Regarding our expansion into new markets, there is still some room to grow. Not all markets are performing excellently, but overall, the balance is very positive, as you have seen in the rest of Europe.

Speaker #2: The demand is quite good and other products will support our second half revenue development. The geographic expansion will continue and will as well contribute to the H2 delivery and the revenue.

Speaker #1: Development. So for the second half of the year, the guidance is confirmed. We continue to improve our cash flow, and we are on an excellent way there.

Speaker #2: AI is Dimitar talked about what we do internally, but AI as well helps us with making our services much better for customers and opens a lot of doors, especially in building management, energy management, retail outlets.

Speaker #1: Camera launch is ahead. Dimitar already said that the product is in mass production now, and we expect the first deliveries. The Pro circuit breakers are in mass production now because the first batch has already been sold.

Speaker #1: The demand is quite good, and other products will support our second-half revenue development. The geographic expansion will continue and will also contribute to the H2 delivery and the revenue.

Speaker #2: We have one first project in big retail chains not selling the products, but optimizing their energy consumption and monitoring their stores. And we think that with projects like this that we will soon communicate a lot more will come in the future.

Speaker #1: AI, as Dimitar talked about what we do internally, also helps us make our services much better for customers and opens a lot of doors, especially in building management, energy management, and retail outlets.

Speaker #2: So positive outlook that's the last point. For the rest of the world, United States finally, I would say we have more than just light at the end of the tunnel.

Speaker #2: It's on a very good way and we expect especially in 27 to accelerate the growth there because the foundation is done and we see as well good development in Australia.

Speaker #1: We have one first project in a big retail chain, not selling the product, but optimizing their energy consumption and monitoring their stores. And we think that with projects like this, that we will soon communicate, a lot more will come in the future.

Speaker #2: Still on a small level, but with a very good potential. So that's the end of our presentation and now we have time for your questions.

Speaker #1: So, positive outlook—that's the last point. For the rest of the world, United States, finally, I would say we have more than just light at the end of the tunnel.

Speaker #1: Yes. Thank you very much for your presentation. Ladies and gentlemen, now it's your turn. We are opening the Q&A session and for a dynamic conversation, please click on the race excuse me, click on the race hand button for questions via audio line.

Speaker #1: It's on a very good way. And we expect especially in 2027 to accelerate the growth there because the foundation is done. And we see as well good development in Australia still on a small level, but with a very good potential.

Speaker #1: If you're dialing in by phone, please press Starkey 9 to raise your hand and Starkey 6 to activate your microphone. You're also welcome to put your questions in our chat box and I will read them out loud for you.

Speaker #1: So that's the end of our presentation, and now we have time for your questions.

Speaker #1: We have already received two risen hands, one by Mr. Brach. I just sent you an invitation to unmute yourself and you may do so now.

Speaker #2: Yes. Thank you very much for your presentation. Ladies and gentlemen, now it's your turn. We are opening the Q&A session. And for a dynamic conversation, please click on the race excuse me.

Speaker #3: Good morning, everyone. Some questions for me the first one is on the indirect Amazon strategy. Is it correct that you say your product to a third party sellers, which then sell the items independently on Amazon?

Speaker #2: Click on the 'Raise Hand' button for questions via the audio line. If you're dialing in by phone, please press star key 9 to raise your hand and star key 6 to activate your microphone.

Speaker #2: You're also welcome to put your questions in our chat box, and I will read them out loud for you. We have already received two raised hands.

Speaker #3: Right. Okay. And do you plan on expanding that strategy? I increasing the number of sellers or expand the revenue with the current third party sellers you have and do you control things like pricing and availability of these?

Speaker #2: One for Mr. Brach. I just sent you an invitation to unmute yourself, and you may do so now.

Speaker #3: Good morning, everyone. Some questions for me. The first one is on the indirect Amazon strategy. Is it correct that you sell your product to third-party sellers, which then sell the items independently on Amazon?

Speaker #2: Yeah. So first, we decided to move to Amazon Marketplace completely. Because the Amazon vendor account was a very fast growing account and a machine where you can easily push revenues.

Speaker #1: That's right.

Speaker #3: Right. Okay. And do you plan on expanding that strategy? Increasing the number of sellers, or expanding the revenue with the current third-party sellers you have?

Speaker #2: But the price is very high because Amazon is setting prices however they want. Which anyhow, I mean, we have a legal situation to respect, which is their full right.

Speaker #3: And do you control things like pricing and availability of these products?

Speaker #2: But they reduced prices constantly and others are complaining and then they come back and that's the worst point. They come back to us for margin compensation that we were not willing to pay.

Speaker #1: Yeah. So first, we decided to move to the Amazon Marketplace completely, because the Amazon vendor account was a very fast-growing account and a machine where you can easily push revenues.

Speaker #2: You all know this situation. That's why we decided to move to Amazon Marketplace. We have our own marketplace account that we are fully controlling and where we are as well able to fully control prices.

Speaker #1: But the price is very high because Amazon is setting prices however they want. Which, anyhow, I mean, we have a legal situation to respect, which is their full right.

Speaker #2: And we have third party sellers three, four, five big ones that we are supporting making the business on Amazon Marketplace. Here we are not fully allowed to control prices because we cannot tell them what they how they have to sell on Amazon Marketplace.

Speaker #1: But they reduced prices constantly, and others are complaining. Then they come back, and that's the worst point—they come back to us for margin compensation that we were not willing to pay.

Speaker #2: But let's say we are in a good cooperation with these guys and they cannot make crazy prices because simply they don't have enough margin to do so.

Speaker #1: You all know this situation. That's why we decided to move to Amazon Marketplace. We have our own marketplace account that we fully control, and where we are also able to fully control prices.

Speaker #2: So that is a very good step. What will happen next is that we have to optimize the way of how to handle Amazon Marketplace.

Speaker #1: And we have third-party sellers—three, four, five big ones—that we are supporting, making the business on Amazon Marketplace. Here, we are not fully allowed to control prices because we cannot tell them how they have to sell on Amazon Marketplace.

Speaker #2: And there are a couple of ideas. That's a bit too early to talk about that, how we could do that. Are we organizing this more by regions?

Speaker #2: Are we organizing this by product categories? That's something that we will still develop and we are working with our Amazon team on the right strategy for that.

Speaker #1: But let's say we are in good cooperation with these guys, and they cannot make crazy prices because, simply, they don't have enough margin to do so.

Speaker #2: That will be something that will be implemented in 27. And we'll give us a better control over this channel. That is a very important channel that we cannot neglect.

Speaker #1: So, that is a very good step. What will happen next is that we have to optimize the way we handle Amazon Marketplace.

Speaker #2: But we somehow have to control what's going on there. And we are happy with the current development. As I said, we are back on track and price wars on the market stopped a little bit and that is positive for everyone.

Speaker #1: And there are a couple of ideas. It's a bit too early to talk about that. How could we do that? Are we organizing this more by regions?

Speaker #1: Are we organizing this by product categories? That's something that we will still develop, and we are working with our Amazon team on the right strategy for that.

Speaker #3: Okay. Great. Thank you. My second question is on the products you launched in Q2. You already mentioned the circuit breakers being in mass production.

Speaker #1: That will be something that will be implemented in 2027, and will give us better control over this channel. That is a very important channel that we cannot neglect.

Speaker #3: How was the customer response on that and also on the launch of smart locks and flood sensors and what is the estimated revenue impact you expect in H2 from all the new products you launched in H1 and also the ones who will come in the future?

Speaker #1: But we somehow have to control what's going on there, and we are happy with the current development. As I said, we are back on track, and price wars on the market have stopped a little bit, and that is positive for everyone.

Speaker #2: I will start and Dimitar can add. Let me start, Dimitar. We are not disclosing revenues by product categories exactly. Because we do not want to wake up sleeping dogs.

Speaker #3: Okay, great, thank you. My second question is on the products you launched in Q2. You already mentioned the circuit breakers being in mass production.

Speaker #2: But we are quite happy with all the launches. And Dimitar can talk about the breakers. We typically get small quantities at the beginning. We sell them via our web shop or with some selected distributors, feedback was very positive.

Speaker #3: How was the customer response on that, and also on the launch of smart locks and flood sensors? And what is the estimated revenue impact you expect in H2 from all the new products you launched in H1, and also the ones that will come in the future?

Speaker #2: Our new flood sensors, we have two different ones. They are selling like crazy. And customer feedback is extremely positive. And the door locks, that's a long lasting thing.

Speaker #1: I will start, and Dimitar can add. Let me start, Dimitar. We are not disclosing revenues by product categories exactly, because we do not want to wake up sleeping dogs.

Speaker #2: We sold some quantities. We still have to learn our lessons because the doors in Europe are different. The channels are a little bit different.

Speaker #1: But we are quite happy with all the launches. And Dimitar can talk about the breakers. We typically get small quantities at the beginning. We sell them via our web shop or with some selected distributors. Feedback was very positive.

Speaker #2: That's not the typical electrician selling a door lock. That's other channels. And Dimitar, you wanted to say something on that, please.

Speaker #4: Yeah. Just about the breakers. Yes, that I can say that without because we don't talk about the quantities, but usually we doubling the quantity every slowly.

Speaker #1: Our new flood sensors—we have two different ones—are selling like crazy, and customer feedback is extremely positive. And the door locks, that's a long-lasting thing.

Speaker #4: We increase the quantities. From by what happens now, the production of the breakers until the end of the year is fully booked. So we are now looking how to increase the production because the interest is it's coming faster.

Speaker #1: We sold some quantities. We still have to learn our lessons because the doors in Europe are different. The channels are a little bit different.

Speaker #1: That's not the typical electrician selling a door lock. That's other channels. And Dimitar, you wanted to say something on that, please.

Speaker #4: And it's quite big even compared to our expectations. It looks like this is the product is the market is demanding for a very long time.

Speaker #4: Yeah. Just about the breakers—yes, that I can say, because we don't talk about the quantities. But usually, we are doubling the quantity very slowly.

Speaker #4: And we should continue to work in that direction. But exact revenue, it's I think we really doesn't disclose it. Yeah.

Speaker #4: We increase the quantities. From what happens now, the production of the breakers until the end of the year is fully booked. So we are working on how to increase production because the interest is coming faster.

Speaker #3: Okay. Perfect. Thank you very much.

Speaker #1: Thank you very much as well. We're moving on to Mr. Specht. I just sent you an allowance to unmute yourselves. Mr. Specht, can you hear us?

Speaker #4: And it's quite big, even compared to our expectations. It looks like this is the product the market has been demanding for a very long time.

Speaker #4: And we should continue to work in that direction. But exact revenue—it's, I think, we really don't disclose it. Yeah.

Speaker #5: Yes. Hello. Can you hear me well?

Speaker #1: Yes. Hello.

Speaker #5: Okay. Hello. Thanks for taking my questions. I have three additional ones. First, on the stocking for the important Black Friday week call it, what are your impressions currently?

Speaker #3: Okay. Perfect. Thank you very much.

Speaker #2: Thank you very much as well. We're moving on to Mr. Specht. I just sent you an allowance to unmute yourselves. Mr. Specht, can you hear us?

Speaker #5: We learned about some supply chain issues. Are you currently sure that you will have the quantities you desire for the, let's say, most important product categories?

Speaker #5: And what do you expect from the new distribution partners? Will they do a, let's say, initial big stocking that could help you for Q3 Q4 revenues?

Speaker #5: Yes, hello. Can you hear me well?

Speaker #2: Yes. Hello.

Speaker #5: Okay. Hello. Thanks for taking my questions. I have three additional ones. First, on the stocking for the important Black Friday week, call it.

Speaker #5: Or do you expect a, let's say, a soft stocking from the new names? The second one, on your production plant in Plovdiv, how is that developing?

Speaker #5: What are your impressions currently? We learned about some supply chain issues. Are you currently sure that you will have the quantities you desire for, let's say, the most important product categories?

Speaker #5: Is the ramp up developing accordingly to your plans? That would be interesting. And then for sure, the elephant in the room, the confirmed talks with Schneider Electric.

Speaker #5: And what do you expect from the new distribution partners? Will they do, let's say, an initial big stocking that could help you with Q3 and Q4 revenues?

Speaker #5: Can you give us any information what's going on here?

Speaker #2: So maybe I start again. So the supply chain, I would say our key products, our bread and butter products that we that carried the revenue in the last years, we have already on stock or they are coming without any problems.

Speaker #5: Or do you expect, let's say, a soft stocking from the new names? The second one, on your production plant in Plovdiv—how is that developing?

Speaker #5: Is the ramp-up developing according to your plans? That would be interesting. And then, for sure, the elephant in the room: the confirmed talks with Schneider Electric.

Speaker #2: That's existing products. For the new products, there is still a question how fast can we ramp up the camera development or camera production? So we will get the first 100,000 pieces in the next couple of days or weeks.

Speaker #5: Can you give us any information on what's going on here?

Speaker #2: And then we see how fast we can ramp up. There is always a small risk. But we think that as in the past, we can control that risk.

Speaker #1: So maybe I start again. So the supply chain I would say our key products, our bread and butter products that we that carry the revenue in the last years, we have already on stock or they are coming without any problems.

Speaker #2: On the breakers, Dimitar already said, demand is higher than what we can produce currently. But the problem always is if a product comes late, the ramp up of production is it can be one of the issues.

Speaker #1: That's the existing product. For the new products, there is still a question of how fast we can ramp up camera development or camera production. So, we will get the first 100,000 pieces in the next couple of days or weeks.

Speaker #2: But we think that we feel that we are good with controlling that. We had similar issues in the last years. And so far, we as well were able to manage a chip shortages and delivery problems and pricing so far we are fine.

Speaker #1: And then we see how fast we can ramp up. There is always a small risk, but we think that, as in the past, we can control that risk.

Speaker #2: On the new distributors, they already ordered the first product. That will not be crazy high volumes because they will as well see how fast they can sell out and onboard new customers because the idea is not that they deliver to the same customers that we had before.

Speaker #1: On the breakers, Dimitar already said demand is higher than what we can produce currently. But the problem always is, if a product comes late, the ramp-up of production can be one of the issues.

Speaker #2: So retailers or distributors that we had before that they open new doors. So that is I think this is a very positive impact. There can as well be a negative impact because if you open new doors, some other doors might close at least a little bit because someone is not happy with what we do here.

Speaker #1: But we think that, we feel that we are in good shape in the last years. And so far we as well were able to manage chip shortages, delivery problems, and pricing.

Speaker #1: So far, we are fine. On the new distributors, they have already ordered the first product. That will not be crazy high volumes, because they will also see how fast they can sell out.

Speaker #2: And we need to balance that. We will be able to say more after IFA because IFA is very important as well for order taking for Black Friday.

Speaker #1: And onboard new customers, because the idea is not that they deliver to the same customers that we had before—so retailers or distributors that we had before—but that they open new doors.

Speaker #2: Not only in DACH, all across Europe. So after IFA, we know how much do we have in the order books and how will not only the second quarter sorry, the third quarter, but as well the fourth quarter.

Speaker #1: So, I think this is a very positive impact. There can also be a negative impact because if you open new doors, some other doors might close, at least a little bit, because someone is not happy with what we do here.

Speaker #2: And Dimitar, about factory in Plovdiv and Wolfgang Specht, has been with me in the factory. So maybe Wolfgang, you can confirm that the factory exists?

Speaker #5: Absolutely.

Speaker #2: And that the machines are there and they are warmed up and they are preparing production and now Dimitar can add something.

Speaker #1: And we need to balance that. We will be able to say more after IFA, because IFA is very important as well for order taking for Black Friday.

Speaker #4: So yeah, about the first point, just in order the currently the whole electronics market is under pressure. It's under pressure because the AI and because the shortage of wafers for the chip, some components, you know that the last year, for example, the main materials like a cup or aluminum and everything is increasing twice and sometimes three times.

Speaker #1: Not only in DACH, but all across Europe. So after IFA, we know how much we have in the order books and how not only the third quarter, but also the fourth quarter, will look.

Speaker #1: And Dimitar, about the factory in Plovdiv—and Wolfgang Spech has been with me in the factory. So maybe, Wolfgang, you can confirm that the factory exists?

Speaker #4: This is make additional pressure. We fighting with everything. We're working with everything. For some devices, we do replacement. Something which is high and it doesn't see but really we manage over 100 devices per year, something to be changed.

Speaker #1: And that the machines are there, they are warmed up, and they are preparing for production. And now Dimitar can add something.

Speaker #4: So yeah, about the first point, just to know that the currently the whole electronics market is under pressure. It's under pressure because the AI and because the shortage of wafers for the chip, some components you know that the last year, for example, the main materials like a copper aluminum and everything is increasing twice and sometimes three times.

Speaker #4: On top of what you see as a new development. So it's very extensive area in the world there. It's going there. But it's if somebody tell me, okay, if somebody tell that it's absolutely completely sure that there will be no surprises for the supply chain, this is not true.

Speaker #4: This makes additional pressure. We are fighting with everything. We're working with everything. For some devices, we do replacements. For something which is high and doesn't sell, but really, we manage over 100 devices per year—something always needs to be changed.

Speaker #4: Or probably they doesn't produce so much and they have everything. For the companies like us which have a which produce a millions, then the supply chain is challenging all the time.

Speaker #4: But we are sure that we can solve it. We're working on that. Surprises is of course could be expected at any time. But this is nothing new.

Speaker #4: On top of what you see as a new development. So it's very extensive here in the world there. It's going there. But if somebody tells me, okay, if somebody tells that it's absolutely completely sure that there will be no surprises.

Speaker #4: This is for the last five years, seven years is the same and now it's continuing like that. About the second lot of factory in Plovdiv, yes, it's going well.

Speaker #4: We start our plan is to move all not only the modules, but also the all Zigbee devices to be produced in Plovdiv because these devices doesn't require hands work.

Speaker #4: For the supply chain, this is not true. Or probably they doesn't produce so much and they have everything. For the companies like us which have a which produce a millions, then the supply chain is challenging all the time.

Speaker #4: It could be the production could be fully automated. It's at the moment we make a trial production for each of these devices. So we expect this we to move completely them from China to Bulgaria enter the year beginning of the next year.

Speaker #4: But we are sure that we can solve it. We're working on that. Surprises, of course, could be expected at any time, but this is nothing new.

Speaker #4: This is for the last five years; seven years is the same, and now it's continuing like that. About the second lot of the factory in Plovdiv—yes, it's going well.

Speaker #4: Of course, China will be all the time our backup if we need more quantity or if you have an issue with the production here, they could help us.

Speaker #4: We start. Our plan is to move not only the modules, but also all the Zigbee devices to be produced in Plovdiv, because these devices don't require hand work.

Speaker #4: But this is initially it's planned like that. So for me, it's going well and the production now we produce 10,000 pieces for each of the Zigbee devices.

Speaker #4: It could be that the production could be fully automated. At the moment, we make a trial production for each of these devices. So we expect to move them completely from China to Bulgaria at the end of the year or beginning of next year.

Speaker #4: Just to train the personnel the people there and to see do we need some polishing the production procedures.

Speaker #5: Yeah. About the elephant in the room, first I thought you talk about me. But I'm happy that you don't talk about me, although sometimes I feel like the elephant in the room.

Speaker #4: Of course, China will always be our backup if we need more quantity, or if you have an issue with the production here, they could help us.

Speaker #5: But seriously, you're all professionals and you know that as a public listed company, we cannot comment on ongoing things. We have confirmed because there was there were rumors in the market.

Speaker #4: But this is initially, it's planned like that. So for me, it's going well, and in production now, we produce 10,000 pieces for each of the Zigbee devices.

Speaker #5: We have confirmed that we have contact to Schneider that they have an idea to exchange about possible offer and something that lies on the side of the bidder.

Speaker #4: Just to train the personnel—the people there—and to see if we need some polishing of the production procedures.

Speaker #5: What he will finally do and how this process will continue. So we are not allowed to and able to comment on that point. Sorry for that.

Speaker #1: Yeah, about the elephant in the room—at first, I thought you were talking about me. But I'm happy that you weren't talking about me, although sometimes I do feel like the elephant in the room.

Speaker #5: Thanks a lot.

Speaker #1: But seriously, you're all professionals, and you know that as a publicly listed company, we cannot comment on ongoing things. We have confirmed because there were rumors in the market.

Speaker #1: Thank you so much. Another is in hand by Mr. Despress. You may unmute yourself now. I just sent you an invitation.

Speaker #1: We have confirmed that we have contact with Schneider, that they have an idea to exchange about a possible offer and something that lies on the side of the bidder.

Speaker #5: Can you hear me now?

Speaker #1: Yes, perfectly. Hello, good morning.

Speaker #5: Hi. So Alexander from Bada Europe. I have two questions, please. So the first one is on your change of methodology on the revenue geographic split.

Speaker #1: What he will finally do and how this process will continue—we are not allowed or able to comment on that point. Sorry for that.

Speaker #5: I just wanted to know what would have been the gross rate of rest of Europe without the change. To know a bit how much cross-border sales are you making from the DACH region.

Speaker #5: Thanks a lot.

Speaker #2: Thank you so much. Another raised hand by Mr. Despress. You may unmute yourself now. I just sent you an invitation.

Speaker #5: And then the second one is on the energy cost. You were telling us, I think last quarter, that you were moving more and more from air freight to train freight to reduce the cost.

Speaker #5: Can you hear me now?

Speaker #2: Yes, perfectly. Hello, good morning.

Speaker #5: Hi. This is Alexander from BADA Europe. I have two questions, please. The first one is on your change of methodology on the revenue geographic split.

Speaker #5: So is this transition going?

Speaker #2: So first, cross-border, without this adjustment, rest of Europe says would be higher. Because currently we see that products are via the distributors that are selling on Amazon Marketplace are delivered to Germany and sold on Amazon there.

Speaker #5: I just wanted to know, what would have been the gross rate for the rest of Europe without the change? Also, to know a bit about how much cross-border sales you are making from the DACH region.

Speaker #5: And then the second one is on energy costs. You were telling us, I think last quarter, that you were moving more and more from air freight to train freight to reduce the cost.

Speaker #2: You know that in Europe, Amazon Germany is the biggest Amazon place. UK is the second biggest. And all the other countries are way behind.

Speaker #2: So we have distributors that are not receiving the products in Germany but selling them back to Germany. And that was the allocation that we made.

Speaker #5: So is this transition going?

Speaker #2: So rest of Europe would be even higher if we show that and Germany a bit lower because of this significant thing. We always had some small adaptations because if you delivered to Amazon, Amazon has warehouses all across Europe and then shipping back to Germany as well.

Speaker #1: So first, gross border, without this adjustment, Rest of Europe sales would be higher because currently we see that products via the distributors that are selling on Amazon Marketplace are delivered to Germany and sold on Amazon there.

Speaker #2: So we made some allocations because we got the exact numbers from Amazon and we used this methodology for now as well. So that's to the cross-border sales and the adjustments.

Speaker #1: You know that in Europe, Amazon Germany is the biggest Amazon marketplace. The UK is the second biggest, and all the other countries are way behind.

Speaker #1: So we have distributors that are not receiving the products in Germany but selling them back to Germany. And that was the allocation that we made.

Speaker #2: And the second question was, about the supply chain. I cannot exactly tell you. We can prepare that for the next quarter. I think we have shipped round about one third, maybe 40% of our deliveries with ship or train in the first half of the year.

Speaker #1: So, the rest of Europe would be even higher if we show that, and Germany a bit lower because of this significant thing. We always had some small adaptions, because if you delivered to Amazon, Amazon has warehouses all across Europe and then shipping back to Germany as well.

Speaker #2: And we have an increase of or a reduction of cost of goods that is round about one to 1.5% looking to a Yana. Is this make this sense?

Speaker #1: So, we made some allocations because we got the exact number from Amazon, and we used this methodology for now as well. So that's regarding the cross-border sales and the adjustments.

Speaker #2: Yeah. So one to one and a half percent improvement. That means if theoretically we would ship everything with alternative methods, our calculation was it could increase the gross profit gross margin, sorry, by two to three percent.

Speaker #1: And the second question was about the supply chain. I cannot exactly tell you—we can prepare that for the next quarter. I think we have shipped around one third, maybe 40%, of our deliveries by ship or train in the first half of the year.

Speaker #2: We will never be able to ship 100% with train or ship. So maybe 1.5, 2% is what we can reach. But it depends as well as how fast do we need the products because we always prefer to make the revenue instead of having 1% higher margin.

Speaker #1: And we have an increase or a reduction of cost of goods that is around about 1% to 1.5%, looking to Jana. Does this make sense?

Speaker #4: Oh, currently what I can add, something which we do, we optimize our air freight prices because we doesn't deliver with such a not with a speed service but with a little bit slower service.

Speaker #1: Yeah. So, a 1 to 1.5 percent improvement. That means if, theoretically, we would ship everything with alternative methods, our calculation was it could increase the gross profit—gross margin, sorry—by 2 to 3 percent.

Speaker #4: Then we cheap definitely currently we doesn't do anything because time is too long. But we train, for example, the breakers, the EV chargers, the all big appliances which is heavy is coming only with the train.

Speaker #1: We will never be able to ship 100% by train or ship. So maybe 1.5%, 2% is what we can reach. But it also depends on how fast we need the products, because we always prefer to make the revenue instead of having a 1% higher margin.

Speaker #4: For the small relays, we still using the air freight. But on the optimized prices. So in the future, probably we can do something beginning of next year.

Speaker #4: Oh, currently what I can add, something which we do, we optimize our air freight prices because we don't deliver with such a—not with a speed service, but with a little bit slower service.

Speaker #4: But I think now, especially for the last quarter, the season of the high sales, this we will be still maybe use the air transportation.

Speaker #4: Currently, we definitely don't do anything by ship because the time is too long. But we use train, for example, for the breakers, the EV chargers, and all big appliances which are heavy—those are coming only with the train.

Speaker #5: Yeah. Especially with the new launched products because otherwise we would not get them on time.

Speaker #4: Yeah.

Speaker #5: Thank you very much.

Speaker #1: Thank you. We have one more risen hand by Mr. Dremchev. I just sent you a request to unmute yourself. You may do so now.

Speaker #4: For the small relays, we are still using air freight, but at optimized prices. So in the future, probably we can do something at the beginning of next year.

Speaker #3: For me.

Speaker #1: Yeah, we could just quickly hear you, but you're.

Speaker #4: But I think now especially for the last quarter, the season of the high sales this we will be still mainly use the air transportation.

Speaker #5: Okay. Do you plan to manufacture smart devices for the military industry?

Speaker #2: No. I don't know if Dimitar has something in his mind, but not to my knowledge.

Speaker #1: Yeah, especially with the newly launched products, because otherwise we would not get them on time.

Speaker #4: No, no, I don't. No, no, no. He doesn't plan to smart devices in the industry, no. Not drones, no.

Speaker #4: Yeah.

Speaker #5: Thank you very much.

Speaker #2: Thank you. We have one more raised hand by Mr. Dremchev. I just sent you a request to unmute yourself. You may do so now.

Speaker #2: Maybe they could use our door and window sensor for the tank doors or I don't know what. No, no plans.

Speaker #5: Okay, thank you.

Speaker #5: Hear me?

Speaker #1: Thank you so much. So we're moving on to our chat box in which we have a couple of questions. The first one is, will there come 2030 targets?

Speaker #2: Could just quickly hear you, but you're...

Speaker #1: Okay. Do you plan to manufacture smart...

Speaker #5: devices for the military industry?

Speaker #1: No, I don't know if Dimitar has something in his mind, but not to my knowledge.

Speaker #2: No. I repeat what I said in the last calls. We had for one time, we had a long-term guidance about three or four years.

Speaker #4: No, no, I don't. No, no, no. I don't plan to use smart devices in the industry, no. Not wrong, no.

Speaker #2: And now we will go to the practice that to my knowledge, every bigger company is using. So not giving two, three, four years targets, but one year targets that we typically will announce at the beginning of the year.

Speaker #1: Maybe they could use our door and window sensor for the tank doors, or I don't know what. No, no plans.

Speaker #5: Okay. Thank you.

Speaker #2: Thank you so much. So, we're moving on to our chat box, in which we have a couple of questions. The first one is: Will there come 2030 targets?

Speaker #2: So once we know how 2026 is finished, we will give our targets for 2027.

Speaker #1: All right. Thank you so much. The next question. The H1 results remain strong. The collection period appears to have improved compared with previous periods.

Speaker #1: No, I repeat what I said in the last calls. We had, for one time, a long-term guidance about three or four years.

Speaker #1: Is this mainly the result of changes in your customer mix, credit policy, or internal working capital management? And do you expect this improvement to be sustainable?

Speaker #1: And now we will go to the practice that, to my knowledge, every bigger company is using. So, not giving two-, three-, or four-year targets, but one-year targets that we typically will announce at the beginning of the year.

Speaker #3: Yes. You have seen that in the last year, almost half of our receivables were in the three to six months maturity bucket, which is to the longer end of that maturity profile.

Speaker #1: So, once we know how 2026 is finished, we will give our targets for 2027.

Speaker #2: All right. Thank you so much. The next question: The H1 results remain strong. The collection period appears to have improved compared with previous periods.

Speaker #3: Now we have consciously changed that and you will see that this has now reduced to 13% at the end of June. And now the majority of the receivables are they sit in the up to three months maturity bucket.

Speaker #2: Is this mainly the result of changes in your customer mix, credit policy, or internal working capital management? And do you expect this improvement to be sustainable?

Speaker #3: And this is something that was a part of our working capital improvements. We have substantially increased the credit control in the company. And we are as much as possible sticking to the standard payment terms that we have.

Speaker #6: Yes. You have seen that in the last year, almost half of our receivables were in the three to six months maturity bucket, which is at the longer end of that maturity profile.

Speaker #3: And the situation that we had in December was very specific and it was related to supporting the sell out at that period. And now it has been going back to normal.

Speaker #6: Now, we have consciously changed that, and you will see that this has now reduced to 13% at the end of June. And now, the majority of the receivables sit in the up to three months maturity bucket.

Speaker #3: So we do not expect that we will see again such extended such substantial amounts of extended payment terms. There could be exceptions with reasons, of course, but we are trying as much as possible to stick to the standard payment terms and to keep our receivables in the up to three months maturity bucket.

Speaker #6: And this is something that was part of our working capital improvements. We have substantially increased credit control in the company, and we are, as much as possible, sticking to the standard payment terms that we have.

Speaker #3: Right now, we don't have any substantial amounts that are in terms of aging profile that are substantially overdue. So this is also being very closely monitored.

Speaker #6: The situation that we had in December was very specific, and it was related to supporting the sell-out during that period. Now, it has been going back to normal.

Speaker #3: You will probably have seen that there is no change in the impairment of receivables. So the decrease that we have in the accounts receivable, it's not due to write-offs, but it is entirely due to collections.

Speaker #6: So we do not expect that we will see again such extended such substantial amounts of extended payment terms. There could be exceptions with reasons, of course, but we are trying as much as possible to stick to the standard payment terms and to keep our receivables in the up to three months maturity bucket.

Speaker #3: So in short, yes, we can expect that this development is sustainable and that there will be substantial focus on this topic in the upcoming quarters as well.

Speaker #6: Right now, we don't have any substantial amounts, in terms of aging profile, that are substantially overdue. So this is also being very closely monitored.

Speaker #2: Ilyana has implemented two important processes in finance. One is every payment term that is longer than the contractual payment term will be customer needs her approval.

Speaker #6: You will probably have seen that there is no change in the impairment of receivables. So, the decrease that we have in accounts receivable is not due to write-offs, but is entirely due to collections.

Speaker #2: And the second is a very simple thing following up if someone does not pay on time. So overdue payments are much better under control than they have been before.

Speaker #2: And these are the two elements that led to the situation that we currently have. And I do not see any reasons why this should change.

Speaker #6: So, in short, yes, we can expect that this development is sustainable and that there will be substantial focus on this topic in the upcoming quarters as well.

Speaker #1: Thank you so much. We have another question. Congratulations on the H1 results. Could you provide more detail on the new distribution contract signed with the pan-European broadline distributor?

Speaker #1: Ilyana has implemented two important processes in finance. One is that every payment term that is longer than the contractual payment term with the customer needs her approval.

Speaker #1: Specifically, which markets it covers and whether France is included. Separately, could you give an update on the status of the wholesale or retail distribution discussing a discussions in France?

Speaker #1: And the second is a very simple thing: following up if someone does not pay on time. So overdue payments are much better under control than they were; elements that led to the situation that we currently have.

Speaker #2: Yes. So first of all, the contract with Algoo is about all European countries. And they are present in all countries where we are present.

Speaker #1: And I do not see any reasons why this should change.

Speaker #2: So this covering the UK, it covers France, it covers Benelux, Spain, Portugal, Italy, in some countries they are stronger, in some they are not that strong.

Speaker #2: Thank you so much. We have another question. Congratulations on the H1 results. Could you provide more detail on the new distribution contract signed with the pan-European broadline distributor?

Speaker #2: Italy is not one of their core countries. Of course, they are strong in Germany. They are as well strong in France. And in UK and Nordics.

Speaker #2: Specifically, which markets does it cover, and is France included? Separately, could you give an update on the status of the wholesale or retail distribution discussions in France?

Speaker #2: So covers all European countries. And the distribution in France, we have implemented our French team beginning of the year. We expect visible revenues in the second half of the year.

Speaker #1: Yes. So, first of all, the contract with Algoo is about all European countries, and they are present in all countries where we are present.

Speaker #2: We are onboarding Leroy Merlin now. We are as well onboarding some other distributors. We can have a deep dive on that in one of the next calls.

Speaker #1: So, this covers the UK, it covers France, it covers Benelux, Spain, Portugal, and Italy. In some countries, they are stronger; in some, they are not that strong.

Speaker #2: But contracts are signed and we expect that Algoo is only one of them as well. We have contract signed with do-it-yourself specialized distributors and online specialized distributors.

Speaker #1: Italy is not one of their core countries. Of course, they are strong in Germany. They are also strong in France, and in the UK and Nordics.

Speaker #2: So we expect that France is a growing significantly in the supporting with this as well the rest of Europe. Development.

Speaker #1: So, it covers all European countries. Regarding distribution in France, we implemented our French team at the beginning of the year. We expect visible revenues in the second half of the year.

Speaker #1: All right. Thank you very much. The next question is, can you comment on the 9.2.9 million cloud users that is flat over the last few months and the page users seem to move slow?

Speaker #1: We are onboarding Leroy Merlin now. We are also onboarding some other distributors. We can have a deep dive on that in one of the next calls.

Speaker #2: That's rounding issues. So we are rounding to 100,000 euros sorry, 100,000 customers. And that is just a rounding thing. So they are not flat.

Speaker #1: But contracts are signed, and we expect that Algoo is only one of them. As well, we have contracts signed with do-it-yourself specialized distributors and online specialized distributors.

Speaker #2: They are increasing, not significantly, but they are increasing over the last 12 months, more than 30%. And so a couple of hundred thousands in the last quarter, it was, I don't know, close to 100,000.

Speaker #1: So we expect that France is growing significantly in supporting this, as well as the rest of Europe, in development.

Speaker #2: Just a rounding effect, nothing else. So nothing to worry about.

Speaker #2: All right. Thank you very much. The next question is: Can you comment on the 2.9 million cloud users, which has been flat over the last few months, and the paid users seem to be moving slowly?

Speaker #1: Thank you so much. The next question is, will the contract manufacturer be stopped in China? How much will the transition cost?

Speaker #2: Do you want to answer or I shall answer? I can answer no. It will not be stopped. Because that will remain one of our the question was if we will stop with our contract manufacturer in China.

Speaker #1: That's rounding issues. So we are rounding to 100,000 euros—sorry, 100,000 customers. And that is just a rounding thing, so they are not flat.

Speaker #2: Because now we are moving production to there is no plan to stop opposite. We will strengthen the relationship with our partner because it's a very reliable partner over the years.

Speaker #1: They are increasing—not significantly, but they are increasing. Over the last 12 months, more than 30%. And so, a couple of hundred thousand, and in the last quarter it was, I don't know, close to 100,000.

Speaker #2: And moving part of the production to Plovdiv does not mean that we will significantly reduce his volumes. Additional volumes will go to Plovdiv. And over the years, we will see but there are definitely no plans to stop.

Speaker #1: It's just a rounding effect—nothing else. So, nothing to worry about.

Speaker #2: All right. Thank you so much. The next question is: Will the contract manufacturer be stopped in China? How much will the transition cost?

Speaker #2: And there are no additional costs with that.

Speaker #1: All right. Thank you very much. Another question is, you said there are markets that perform weaker than others. Could you please share which they are and what are the challenges there?

Speaker #1: Do you want to answer or shall I answer? I can answer: no, it will not be stopped, because that will remain one of our—the question was if we will stop with our contract manufacturer in China.

Speaker #1: Because now we are moving production there, there is no plan to stop—quite the opposite. We will strengthen the relationship with our partner, because it's been a very reliable partner over the years.

Speaker #2: No. We are reporting in rest of Europe. We are not reporting in individual countries. And we as well do not want to tell our competitors where we are performing well.

Speaker #1: And moving part of the production to Plovdiv does not mean that we will significantly reduce his volumes. Additional volumes will go to Plovdiv. And over the years, we will see.

Speaker #2: And which is completely normal. We are I mean, some countries we started in January, February. Others we started in November, October, November last year.

Speaker #1: But there are definitely no plans to stop, and there are no additional costs with that.

Speaker #2: We have we see that country just to give you one example, we are performing quite well in Poland. We are exactly on plan. We have five people team there on board now.

Speaker #2: All right. Thank you very much. Another question is: you said there are markets that perform weaker than others. Could you please share which they are, and what the challenges are there?

Speaker #2: We started in May last year. And we see that it took nine months for them to find the right ground to develop new customers.

Speaker #1: No, we are reporting in the rest of Europe. We are not reporting in individual countries. And we also do not want to tell our competitors where we are performing well.

Speaker #2: They have a very nice portfolio. Everything is fine. So some countries are a bit late. There is no country where I would say currently we are not we are not performing at all.

Speaker #2: Some are a little bit behind target. And the question is, are they what's the target too high? There is no country that is in trouble.

Speaker #1: And which is completely normal. I mean, in some countries we started in January or February. In others, we started in October or November last year.

Speaker #2: But we will not go deeper in the reporting than we currently do.

Speaker #1: We have—we see that a country, just to give you one example, we are performing quite well in Poland. We are exactly on plan.

Speaker #1: All right. Thank you so much. Another question is, can you speak a little more about AI collaborations? What demand you see for devices from maybe data centers or other verticals?

Speaker #1: We have a five-person team there on board now. We started in May last year, and we see that it took nine months for them to find the right ground to develop new customers.

Speaker #2: Yeah. I can this question but okay. The main cooperation with AI and its opportunity the customers to integrate our devices in their own infrastructure no matter what is it.

Speaker #1: They have a very nice portfolio. Everything is fine. So, some countries are a bit late. There is no country where I would say currently we are not performing at all.

Speaker #2: Data center or just facility management or city management, no matter the different buildings, monitoring the machines or buildings, the facilities, everything. So the AI help us this in that direction because until now customers need to use the much more expensive platforms, color platforms, the third-party integrators, electricians, they cannot do that by themselves.

Speaker #1: Some are a little bit behind target, and the question is: are they underperforming, or was the target too high? There is no country that is in trouble.

Speaker #1: But we will not go deeper in the reporting than we currently do.

Speaker #2: All right, thank you so much. Another question is: can you speak a little more about AI collaborations? What demand do you see for devices from maybe data centers or other verticals?

Speaker #2: Now we working very hard then to show them that this is completely possible. They doesn't need technical knowledge to deliver to their quiet clients the products exactly made for them.

Speaker #1: Yeah, I can answer this question. But okay. The main cooperation with AI and its opportunity is to allow customers to integrate our devices into their own infrastructure, no matter what it is.

Speaker #2: Towered by UI, UX, statistic, and everything. And this is going very well at the moment. We see in the first integration and this is opening completely new markets from us.

Speaker #1: Data center or just facility management, or city management—no matter the different buildings, monitoring the machines or building facilities, everything. So, the AI helps us in that direction.

Speaker #2: But it's they using everywhere. Also, we know that many devices using in data centers. We use that it's not exactly it's hard to count them.

Speaker #2: Because currently we are not project-oriented company. We don't know what from what exactly our devices used. Big part device you know more than 40% of our devices.

Speaker #1: Because until now, customers needed to use the much more expensive platforms, color platforms, the third-party integrators, electricians—they could not do that by themselves. Now, we are working very hard to show them that this is completely possible.

Speaker #2: We never seen after the sale out after we sell them because they are connected to the isolated from the internet platforms or in the customer's local solutions.

Speaker #1: They don't need technical knowledge to deliver to their quiet clients the products exactly made for them. Powered by UI, UX, statistics, and everything. And this is going very well at the moment.

Speaker #2: So they are not connected to our cloud. And this is the big part of the ourselves which is going into different direction which we exactly we know but it's hard to be counted how much is it exactly.

Speaker #1: We see in the first integration, and this is opening completely new markets for us. But they're using it everywhere. Also, we know that many devices are being used in data centers.

Speaker #3: Yeah. Data center is a bit the magic word currently. Everyone wants to be mentioned together with data centers. I think we have much more to win on businesses that are much closer to us.

Speaker #1: We use that, it's not exactly—it's hard to count them, because currently we are not a project-oriented company. We don't know from what exactly our devices are used.

Speaker #3: Dimitar mentioned city lighting. We have retail projects with retail chains with several of them. Airbnb projects, hotel projects. So that is something that is much closer that might not sound as fancy as data centers.

Speaker #1: Big part device you know more than 40% of our devices. We never seen after the sale out after we sell them because they are connected to the isolated from the internet platforms or in the customers local solutions.

Speaker #3: But I think the data center bubble yeah, we could boost, I don't know, messages around and say, oh, we are used in data centers as well.

Speaker #1: So they are not connected to our cloud. And this is the big part of ourselves which is going in a different direction, which we know exactly, but it's hard to be counted how much it is exactly.

Speaker #3: But our big business is somewhere else currently. And that's much closer to normal life because if we see how far away cities are from being smart and lighting smart.

Speaker #1: Yeah, 'data center' is a bit of a magic word currently. Everyone wants to be mentioned together with data centers. I think we have much more to win in businesses that are much closer to us.

Speaker #3: We have some contacts to some German regions and if we show them what we are able to do, they are all completely flashed. Now that all takes time because they are not moving fast.

Speaker #1: Dimitar mentioned city lighting. We have retail projects with retail chains, with several of them. Airbnb projects. Hotel projects. So that is something that is much closer.

Speaker #3: That's public organizations. But they have nothing. So we don't talk about fancy stuff. We talk about very basic things. And for them, this is magic.

Speaker #3: And this is very close business that can materialize in a couple of quarters. And it's much, much bigger than data centers for us.

Speaker #1: That might not sound as fancy as data centers. But I think the data center bubble, yeah, we could boost, I don't know, messages around and say, oh, we are used in data centers as well.

Speaker #1: Thank you so much. Another question is, with tighter credit control, are you seeing any evidence of lower sales growth? Not in the current financials, of course, but more on the forward-looking basis.

Speaker #1: But our big business is somewhere else currently, and that's much closer to normal life. Because if we see how far away cities are from being smart—and lighting smart—

Speaker #1: We have some contacts in certain German regions, and if we show them what we are able to do, they're all completely flashed. Now, that all takes time because they are not moving fast.

Speaker #2: Finally, we will see.

Speaker #3: So we have to balance and so far we try to balance two things, revenue and EBIT. And now we have to balance revenue, EBIT, and working capital.

Speaker #1: Those are public organizations, but they have nothing. So we don't talk about fancy stuff—we talk about very basic things. And for them, this is magic.

Speaker #3: So far we do not see big impacts. We hope that it stays like that. But that's something that is our daily business that we have to manage.

Speaker #1: And this is very close business that can materialize in a couple of quarters. And it's much, much bigger than data centers for us.

Speaker #3: All three buckets.

Speaker #1: All right. Thank you so much. Another question. Thanks for the great results of the entire team as always. Mr. Kirsch, in recent years, the company has achieved very good results in many areas.

Speaker #2: Thank you so much. Another question is: with tighter credit control, are you seeing any evidence of lower sales growth? Not in the current financials, of course, but more on a forward-looking basis.

Speaker #1: What have you failed to achieve in these few years? And what are you personal goals for the company in 2027 and 2028?

Speaker #1: Finally, we will see. So, we have to balance, and so far we try to balance two things: revenue and edit. And now we have to balance revenue, edit, and working capital.

Speaker #3: That's a very good question. So I will not talk about numbers. And I will not mix up my personal goals with company goals. Because that's something that might be completely different.

Speaker #1: So far, we do not see big impacts. We hope that it stays like that. But that's something that is our daily business that we have to manage.

Speaker #3: So my personal goal might be to have a very nice boat on the Mediterranean Seas has nothing to do with and it's not one of my goals.

Speaker #1: All three buckets.

Speaker #2: All right. Thank you so much. Another question. Thanks for the great results of the entire team, as always. Mr. Kirsch, in recent years, the company has achieved very good results in many areas.

Speaker #3: But it's has nothing to do with the company goals. So what we are working on now and what we are not fast enough is to making the new countries scale and run up.

Speaker #2: What have you failed to achieve in these few years? And what are your personal goals for the company in 2027 and 2028?

Speaker #3: We need to optimize our organization in a couple of areas. We did great things in the R&D structure in the finance structure. We see very good developments in marketing as well.

Speaker #1: That's a very good question. So, I will not talk about numbers, and I will not mix up my personal goals with company goals, because that's something that might be completely different.

Speaker #3: But some of these things from my point of view are not fast enough, which is not a big surprise because I'm never happy with the speed.

Speaker #3: But this is something that we have to do in a good way to continue growing in the speed as we did in the last years.

Speaker #1: So, my personal goal might be to have a very nice boat on the Mediterranean Sea. It has nothing to do with, and it's not one of my goals.

Speaker #3: So that means we have to build an organization that at the end and that's what every manager and every CEO has to do. And that is the same for Dimitar as for me.

Speaker #1: But it has nothing to do with the company goals. So, what we are working on now and what we are not fast enough at is making the new countries scale and ramp up.

Speaker #3: We have to build a company that can survive without us. And I think we did a good job doing that. Four years ago, without Dimitar heading the R&D team, the company would be gone.

Speaker #1: We need to optimize our organization in a couple of areas. We did great things in the R&D structure and in the finance structure. We see very good developments in marketing as well.

Speaker #3: And now Dimitar correct me if you see that different at least the big proportion of things work as well if he's not there. And this is something that we have to continue building.

Speaker #1: But some of these things, from my point of view, are not fast enough—which is not a big surprise, because I'm never happy with the speed.

Speaker #3: Because otherwise the risk depending on one or two people in the company is too big. We need to strengthen our lower and middle management to make them stronger and able to run the company even if something happens with us.

Speaker #1: But this is something that we have to do in a good way to continue growing at the same speed as we did in the last years.

Speaker #1: So that means we have to build an organization at the end, and that's what every manager and every CEO has to do. And that is the same for Dimitar as for me.

Speaker #3: That's my personal target for the company if you want.

Speaker #1: Thank you very much. We have 15 more questions in the queue. And we're over time right now. I would say we do two more.

Speaker #1: We have to build a company that can survive without us, and I think we did a good job doing that. Four years ago, without Dimitar heading the R&D team, the company would be gone.

Speaker #1: Is that all right for you, gentlemen?

Speaker #3: Yeah. Can you cluster them somehow so that we are not.

Speaker #1: It's on different topics. I can send you the ones afterwards if that's good.

Speaker #1: And now, Dimitar, correct me if you see that differently – at least a big proportion of things work as well if he's not there. And this is something that we have to continue building.

Speaker #3: That would make sense that we can answer them and can put them on our website.

Speaker #1: Amazing. So I would go for two more. One about Shelly X. Is Shelly X sales starting to take off? Are any new big customers or partners going to be onboarded?

Speaker #1: Because otherwise, the risk of depending on one or two people in the company is too big. We need to strengthen our lower and middle management to make them stronger and able to run the company, even if something happens with us.

Speaker #1: That's my personal target for the company, if you want.

Speaker #2: So I can ask I can answer there is a two big customers which will be onboarded very soon. Unfortunately, as I said before, the biggest customers is not so flexible.

Speaker #2: Thank you very much. We have 15 more questions in the queue, and we're over time right now. I would say we do two more.

Speaker #2: Is that all right for you, gentlemen?

Speaker #2: And they're going slower than we expect. But yeah, very soon. I just cannot don't want to disclose the names. But in Q3, 20 of the Q3, there will be two big customers a well-known German names.

Speaker #1: Yeah. Can you cluster them somehow so that we are not...

Speaker #2: They're on different topics. I can send you the ones afterwards, if that works.

Speaker #1: That would make sense. Then we can answer them and put them on our website.

Speaker #2: Amazing. So I would go for two more. One about Shelly X. Is Shelly X sales starting to take off? Are any new big customers or partners going to be onboarded?

Speaker #2: Which will start using the Shelly X modules. And many other the small ones we continue there will be new biggest EV chargers. There will be very soon there will be HVAC system which using our modules it's coming the battery system which will with the Shelly module building.

Speaker #3: So I can answer. There are two big customers which will be onboarded very soon. Unfortunately, as I said before, the biggest customer is not so flexible.

Speaker #2: But this is coming mainly from China. From but there is a two big names in Germany which will start using our modules. Very soon.

Speaker #1: All right. Thank you very much. And the last question for today. Would be, in what new countries besides the US do you plan to enter an H2 2006 2026 or in 2027?

Speaker #3: And they're going slower than we expect. But yeah, very soon. I just cannot—don't want to disclose the names. But in Q3, in Q3, there will be two big customers, well-known German names.

Speaker #3: Which will start using the Shelly X modules. And many of the other small ones, we continue. There will be new, bigger EV chargers. Very soon, there will be an HVAC system which will use our modules—it's coming.

Speaker #3: So in 2006, there is no plan for the second half of the year because we just onboarded four new countries beginning of the year.

Speaker #3: Don't forget that. And we are now present with organizations in local organizations in eight European countries. Plus the United States, plus Asia. There are a couple of countries on our watch list that are developing quite nicely without having a local team.

Speaker #3: The battery system, which we are building with the Shelly module—but this is coming mainly from China. But there are two big sales in Germany, which will start using our modules.

Speaker #3: So that's I don't want to mention names here. But that's something that is on our list for 2027. Not yet decided. But we might start in 2027 first half in one or two more countries with a local team.

Speaker #2: All right, thank you very much. And the last question for today would be: In what new countries, besides the US, do you plan to enter in H2 2026 or in 2027?

Speaker #3: But once again, not having a local team does not mean that we are not doing revenues. We don't have a local team in Australia, development is quite nice.

Speaker #1: So, in 2006, there was no plan for the second half of the year because we had just onboarded four new countries at the beginning of the year.

Speaker #3: We have no local team in South Africa development is very nice. We have no local team in Greece development is very nice. So and as soon as we see that it makes sense the revenue reached a certain level and it's better to have a local presence then we will make that move.

Speaker #1: Don't forget that. And we are now present with organizations, local organizations, in eight European countries, plus the United States, plus Asia. There are a couple of countries on our watch list that are developing quite nicely without having a local team.

Speaker #3: But there is nothing that is concrete in that we can disclose by now.

Speaker #1: All right. Thank you very much. I guess we will come to the end of today's earnings call due to time. Thank you very much for your interest in Shelly Group SA and a big thank you also to you, Mr. Kirsch.

Speaker #1: So that's—I don't want to mention names here. But that's something that is on our list for 2027. Not yet decided, but we might start in 2027, first half, in one or two more countries with a local team.

Speaker #1: Mr. Dimitrov and Mrs. Kroshkova for your presentation and the time you took to answer all of these questions. If your question was not answered in this call or should you have any further questions at a later time, please feel free to contact Investor Relations at Shelly Group SA.

Speaker #1: But once again, not having a local team does not mean that we are not doing revenues. We don't have a local team in Australia.

Speaker #1: Development is quite nice. We have no local team in South Africa. Development is very nice. We have no local team in Greece. Development is very nice.

Speaker #1: I wish you all a successful day. And I'm handing over to you, Mr. Dimitrov, and Mr. Kirsch and Mrs. Kroshkova once more for your closing remarks.

Speaker #1: So, as soon as we see that it makes sense, the revenue reached a certain level, and it's better to have a local presence, then we will make that move.

Speaker #1: But there is nothing concrete that we can disclose right now.

Speaker #3: Before Dimitar makes the closing remark, please do not forget to send us the open questions.

Speaker #1: I will.

Speaker #2: All right, thank you very much. I guess we will come to the end of today's earnings call due to time. Thank you very much for your interest in Shelly Group SE, and a big thank you also to you, Mr. Kirsch.

Speaker #3: And we will as soon as possible I don't know if we manage today or tomorrow we will publish them on our website. Next to the presentation and next to the video that you can see about today's presentation.

Speaker #3: And now I hand over to Mr. President.

Speaker #2: Mr. Dimitrov and Mrs. Krushkova, thank you for your presentation and the time you took to answer all of these questions. If your question was not answered on this call, or should you have any further questions at a later time, please feel free to contact Investor Relations at Shelly Group SE.

Speaker #2: Being on a tight dice in this questions I will answer them. Most of them is related to the some markets expansions and everything how it's going to US.

Speaker #2: So the question which is usually regional we doesn't want to we don't want in details. But we will try to do the best and answer us in details as we can.

Speaker #2: I wish you all a successful day. I’m now handing over to you, Mr. Dimitrov, and Mr. Kirsch and Mrs. Krushkova once more for your closing remarks.

Speaker #2: So thank you everybody for this I know this is the there is a many question which we have but we cannot answer. But by the way to be honest for many of the question we cannot answer still because everything is in processing to the company.

Speaker #1: Before Dimitar makes the closing remark, please do not forget to send us the open questions.

Speaker #2: I will.

Speaker #1: And we will, as soon as possible—I don't know if we will manage it today or tomorrow—publish them on our website next to the presentation and next to the video that you can see about today's presentation.

Speaker #2: It's about the development we've seen that is going well. We solved the old challenges which we facing as a fast growing company which is most important for us.

Speaker #1: And now, I hand over to Mr. President.

Speaker #3: Being on our side, I've seen these questions. We will answer them. Most of them are related to some markets, expansions, and everything—how it's going in the US.

Speaker #2: And yeah, what I can say I think currently we expecting to continue delivering until in the future also the same with the same speed or similar one as now.

Speaker #3: So, the question, which is usually regional—we don't want to go into details. But we will try to do our best and answer it in as much detail as we can.

Speaker #3: So thank you everybody for this I know this is the there's the many question which we have. But then we cannot answer. But by the way, to be honest, for many of the question we cannot answer still because everything is in processing to the company.

Speaker #3: It's about the development. We've seen that it's going well. We solved the old challenges which we were facing as a fast-growing company, which is most important for us.

Speaker #3: And yeah, what I can say, I think currently we are expecting to continue delivering into the future also, with the same speed or a similar one as now.