Operator: Shortly. We are just waiting for everyone to connect. Good afternoon, everyone. We will begin shortly. Good afternoon, everyone, and welcome to Seco's nine months 2026 results and business update. Before I hand over to your host today, please be advised there will be an opportunity to ask questions at the end of the presentation. In order to do so, please use the raise hand function on your screen, or for those signing in, it is star nine on your keypad. I now have pleasure handing over to Marco Letizia, Seco's Head of Corporate Development and Investor Relations. Please go ahead, Marco. The floor to you.
Marco Letizia: Good morning. Good afternoon, everyone. Thank you very much for joining us today for Seco's nine months 2026 earning call. As usual, our CFO, Lorenzo Mazzini, will cover the key items of our financial results, followed by our CEO, Max Mauri, who will share with you a detailed update on our strategy, as well as some trends in our business.
Marco Letizia: About our nine months 2026 numbers, please let me highlight that the Q3 shows a clear acceleration of our growth. Q3 2026 net sales reached EUR 59.6 million, up 24% year on year, in line with the guidance we previously provided. The first nine months of 2026 show a solid performance by our group amid supply challenges.
Marco Letizia: To be specific, nine months 2026 net sales were EUR 158.3 million, up 8% year on year, with Clea recurring revenues at EUR 7.5 million, up 18% year on year, and reaching 75% of the Clea total in the Q3.
Marco Letizia: Gross profit margins stood at 53.6%, showing good resilience amid the increase in memory prices, while adjusted EBITDA margin reached 21%, a significant improvement of 224 basis points versus the H1 2026, with the Q3 at EUR 14.7 million, which was a record high, or a 24.7% margin. We will go into more detail on each of these KPIs in a moment, but the two key messages we want to share are clear.
Marco Letizia: The first one is that we are accelerating on our strategic priorities as shown by the Qiyang and Fannal acquisitions, which will strengthen our positioning in Asia Pacific, the launch of Clea 2.0, which will simplify AI deployment and should boost our software revenues, and the reinforcement of our silicon and channel partnerships to scale up our off-the-shelf Edge AI business.
Marco Letizia: The second message is that strong momentum is building. On top of the Q3 2026 acceleration, diversified order intake trends remain supportive, and our design wins and pipeline are at an all-time high. I will now hand over to Lorenzo for the presentation of our financial results.
Lorenzo Mazzini: Thank you, Marco, and good afternoon to you all. Before looking at the nine months results shown on this slide, I would like to focus on the quarter just ended. Q3 2026 was a very strong quarter for the group, our best ever. We recorded about EUR 60 million in sales amid severe component shortage.
Lorenzo Mazzini: We were able to protect our profitability at the gross margin level, holding it at approximately 53%, despite the spike in the cost of electronic components. Seco benefited from over 10 percentage points of operating leverage, which boosted our EBITDA margin to nearly 25%, up from 19% in Q2 2026. Despite the strong growth and the need to finance working capital due to limited component availability, we generated positive cash in the quarter. Excluding the one-off CapEx for the new plants.
Lorenzo Mazzini: All in all, this Q3 paves the way for Seco's future growth and profitability path. Moving to our sales breakdown for the first nine months of 2026, I would like to draw your attention also in light of our acquisition of Qiyang, the strong growth in the APAC region, up 26% year on year.
Lorenzo Mazzini: This growth was mainly driven by new customer wins, proof that our company still has significant potential in this market. From a product standpoint, Clea recurring revenues grew strongly, up 18% year on year. Looking at our profitability in the Q3 of 2026, EBITDA margin reached almost 25%, driven mainly by operating leverage. This quarter is a perfect example of how additional sales convert into profit on our current OpEx base.
Lorenzo Mazzini: Compared to the previous quarter, we benefited from more than 10 percentage points of operating leverage, thanks to approximately EUR 10 million in additional sales. As for the adjustment to EBITDA, this mainly relates, as usual, to the fair value, actuarial value of our stock option plans. Passing through net financial position, excluding one-off CapEx, increased by about EUR 5 million in the first nine months due to the buildup of inventories.
Lorenzo Mazzini: We built strategic stocks of critical memory components to secure deliveries to our customers. I want to highlight that in the Q3, we generated about EUR 1 million in cash, excluding one-off CapEx, despite the challenging procurement lead times we are experiencing. This is a strong achievement considering the significant growth we recorded, and obviously, we have to finance. Overall, financial leverage remained under control up to the end of September 2026, at around one times EBITDA.
Lorenzo Mazzini: Thank you for your attention. I will now hand over to Max, who will continue with the business update. Thank you very much.
Max Mauri: Lorenzo, thank you very much. Let me now go through what are, in my view, the key highlights of this Q3. It marked a clear acceleration of our profitable growth. Net sales are up 24% year-on-year and 19% quarter-on-quarter. The growth gets even stronger as we move down to the P&L.
Max Mauri: The adjusted EBITDA is up 38% year-on-year in Q3, EBIT and net income more than double. The adjusted EBITDA margin is about 25% and is up 18.7% in the H1. Behind these numbers, the business fundamentals are solid. Clea recurring revenue is up 30% year-on-year in Q3. Our core end markets are growing fast, like aerospace and defense, which is up 59% in the quarter. Medical is up 44% and industrial 19%.
Max Mauri: Geographically speaking, US grew in amazing ways, 62%, and also German market has bounced back strongly, around 14%. Our book-to-bill is in the range of 1.2, as well as our backlog, which is up 42%. In short, the business is healthy and is gaining speed. I think now, I would like to describe a very clear message.
Max Mauri: Reaching EUR 60 million in revenue unlocks operating leverage. In fact, the adjusted EBITDA grew significantly during the last quarter, and it was up 56% versus the Q2. I think this is how the operating leverage works. The strong momentum is now driving our P&L performance. Let me now step back and speak about what is happening in our market.
Max Mauri: We are really entering into the AI era right now, and if you look all the data, you will see a strong inflection point that is moving the business in a very positive way. But what are the key reasons about it? I think Edge AI is the most important one because you will see the Edge AI working with real-time intelligence, lower cost data, as well as the Physical AI adoption.
Max Mauri: All these such of trend are really providing us a clear advantage and boost across many verticals, like aerospace defense, robotics, energy, medical, as well as fitness equipment. I think we are really well-positioned in terms of technology, product, and offering to cover extremely well this market. Our strategy is to capture this opportunity. How? It is simple. One scalable Edge AI portfolio applied across many high-growth verticals.
Max Mauri: A comprehensive catalog of hardware with AI built in, designed to anticipate the evolving needs of our end markets. Some of these verticals are already growing faster, like defense and aerospace, and I think some of them will show in the 2027s a strong growth, like smart energy, robots, and drone, which are completely new for Seco as an end market.
Max Mauri: We continue to serve our core market, like industrial, HMI, AI PC for medical, healthcare, smart vending, smart HMI. All these such of product altogether are really representing a stronger line card that we can leverage on. What these markets have in common is the longer customer relationship. Average contract is in the range of 5 years, and more than 10 years in defense, medical, and transportation. We work with the best technology partner in the world, like Intel, NXP, Qualcomm, MediaTek.
Max Mauri: We are really a strong ecosystem, which also together with Arduino and Raspberry Pi, represent very clear fundamentals of our technology path. This kind of ecosystem is giving us a lot of flexibility. It reduces our risk, and it drives our growth. We are confident. We are confident about the future because Seco is actually enabling the AI adoption in the market.
Max Mauri: We offer a unified stack hardware, software, and AI, and this is an Edge AI system. Together with the Clea framework and the algorithm that we published in our Clea marketplace, all in all, is giving us the opportunity to serve many vertical market, like the Physical AI, for example, in a very unique way, combining end-to-end solution that can really meet customer needs and scale in volume faster.
Max Mauri: I think in addition to that, over this stack, we have what our customer value most, the co-engineering and customization, flexibility, faster time to market, local for local manufacturing, and stronger supply chain management. This is giving us overall a clear advantage point on the competition, and this is where this such of strong offering is starting to pay off.
Max Mauri: At the center of this offering, there is our framework software, Clea, and we have now launched the Clea 2.0, our new agentic framework built to deploy AI, Edge AI at scale. Clea is actually offering a unique value proposition to really deploy our models within 2 click into each and every device, both a Seco device and a non-Seco device hardware. I think it includes the open source operating system and more than 150 ready-to-use algorithms.
Max Mauri: This is again our strong offer in the software side, which also supports all the solution for cybersecurity, and it's giving to customers also the opportunity to test it for free for the next 6 months. This is our strategy, how we want really to accelerate adoption. This is where we are planning to convert customers from the free to pay usage.
Max Mauri: Here, in the next few slide, you will see a lot of our product, indeed, and the core message of this slide is basically along many different kind of chipset and the product we developed and we have ready to sell a lot of new product, all of them with Clea built in. This is super important to continue to unlock value and to continue to unlock the powerful of our business model. How we want to scale our go-to-market as 2 engines.
Max Mauri: The first engine is our channel and our silicon partner, a real growth multiplier. We are strengthening our off-the-shelf business through the channel ecosystem. We are scaling and enlarging it significantly. On top, we are working with all the major silicon vendors to accelerate customer access, and it is working very well. We are expanding channel enablement and joint go-to-market initiative.
Max Mauri: The second engine is, of course, Clea and adoption and the AI utilization that we think we can continue to accelerate. This business model, of course, generates recurring revenue and incremental value for the company. I think this is basically almost all for this slide, so we can move it to the acquisition that we did in China. Basically, let me introduce Qiyang Technology.
Max Mauri: Qiyang is a high-growth company with strong R&D capabilities, 20 years of activities, more than 80 people, and more than 40 of them in R&D. The company is based in Hangzhou, where also Fannal and Seco are based. Therefore, we are expecting to combine all in all together, extracting significant benefits and synergies out of it.
Max Mauri: For 2026, we did, of course, an extensive due diligence, and based on the data, we are expecting to have EUR 18 million coming from revenue from Qiyang. I think those EUR 18 million should be added to the consensus also for 2027, because we are going to consolidate it very soon.
Max Mauri: Qiyang is also having a very nice profitability, which is in the range of mid-teens, and it is serving a lot of cool markets, like, for example, robotics, industrial automation, medical energy, and heavy charger, as well as smart agriculture. Its product include the development boards, computer module, as well as HMI and terminals that are really fitting well with the entire product portfolio of the group as well as with our future strategy.
Max Mauri: So we have signed a binding agreement to acquire a 60% stake for EUR 9 million plus EUR 3 million of earn-out, and it corresponds to a very convenient purchasing price, which is 5.1 times the 2026 EBITDA. So which is the rationale behind it? The rationale is first to expand our presence in a fast-growing region like APAC, and giving us the access to new end market and customers.
Max Mauri: Second, it gives us a strong local R&D presence. This is fundamental basically to reach a lot of customers and a lot of requests that we are having in the region. I think also it is important to enlarge our R&D capability and the offering to customize product for the customer. Third, together with Fannal, it gives us a unique industrial and technology infrastructure to build a local end-to-end offering.
Max Mauri: Fourth, it unlocks a lot of cross-selling and upselling opportunity between Fannal and Seco in China. Fifth, it brings purchasing and operational synergies, as I already mentioned. Finally, it creates a center of excellence, reinforcing our brand recognition and market penetration in the region. All this drives value generation. At the same time, we are increasing our stake in Fannal up to 100% under the binding agreement we signed. Basically, you know the story. We acquired Fannal in 2018.
Max Mauri: It was a EUR 2.5 million revenue company. We grew the business significantly over the last 8 years, and now we really decide to get all the business back to Seco because we see the company continue growing in a very, very nice way. I think also, we did a good acquisition. We will buy the 45% stake in Fannal for EUR 23 million, 5.3 times the 2026 EBITDA.
Max Mauri: We will also buy the Simest stake in Seco Asia at, I would say, the nominal value, because this is due to a contract we signed during the 2019 to finance basically that acquisition at that time. Fannal, you know it. It is a high-quality cash generative asset. It has delivered a superior value creation already, so it is a very nice investment, definitely.
Max Mauri: I think also the results of the company having an EBITDA around 28.5% during the 2025, it really brings value to all the Seco shareholders. I think putting it all together, Seco, Qiyang, and Fannal, we are building a stronger presence in the region, a center of excellence to reinforce our positioning.
Max Mauri: There is a strong geographical fit because the Asia Pacific region is one of the most attractive growth areas, and this operation basically strengthens our sales organization in the region, and it gives us market access, broader customer base, cross-selling and upselling opportunity, and with a good exposure also to high-potential sectors like energy and robots that are fitting completely the Seco vision and our future growth strategy.
Max Mauri: I think we are building all around our very nice hub that we owned in Hangzhou, giving us also a lot of synergies in terms of logistic cost production as well as supply chain management. Now to wrap up on this business update, let me show you the last figures on our order intake. The momentum continue.
Max Mauri: Our incoming backlog is clearly improving, up 42% year on year with an October basically update. Our book-to-bill ratio is well above 1. I think we have a very consistent performance over time. More important, I think the pipeline of our business, which is all-time high, is really showing a good conversion from pipeline to design win. We just secured a fairly large design win into the drones market, which is really, really nice to have back, looking at the 2027.
Max Mauri: In fact, we are expecting to be in a position, thanks to all the foundations that are now in place, thanks what we are doing on Edge AI and Physical AI, to provide and guide the market in December about the entire 2027 expectation. So we will provide an official guidance later in December. Why? Because the visibility is improving, and we have a solid backlog, a solid projection, solid number, and therefore we feel very confident in sharing it with the market. Thank you very much for your attention. We are now happy to take your questions.
Operator: Thank you to the speakers today. We now have an opportunity for questions. As a reminder, if you would like to ask a question, please use the raise hand function on your screen, or for those dialing in, it is star 9 on your keypad. Once your name is announced, please remember to unmute your line and state your company name before asking your question. Thank you. The first question today comes from Marco Vitale. Please, Marco, go ahead.
Marco Vitale: Good afternoon. It is Marco from Mediobanca. Thank you for taking my question. Couple from my side. The first is on the outlook. I understand you will provide a detailed guidance on 2027 later on. My question is on 2026. If you could provide us some, say, also qualitative information on what we expect for the last quarter of the year.
Marco Vitale: Should we expect similar trends as in Q3 with, say, around EUR 60 million top line and volume growth underpinning margin expansion? The second one is on, to come back on the acquisition you announced in the APAC region. Should we expect this area to be a growing contributor to your growth profile, and how the transaction fits with your, say, narrative of European leaders within Western companies? We are wondering why the rationale of expanding in Asia at this time. Thank you.
Max Mauri: Yeah. Thank you, Marco, for your questions. Let me start from the last one. Yes, we are a European company, but we want to scale the market globally. To scale the market globally, you need to increase your presence in two regions that are strategic for capture the growth of our market. One is, of course, US, and the other is, of course, the Asia Pacific.
Max Mauri: Having such strong infrastructure, both on industrial and R&D side in Asia Pacific, it means that you are positioning Seco as a unique competitor coming from Europe that can really go there, capturing market and securing business, accelerating further our growth path as a company. That is the strategy. Basically, as Lorenzo outlined in his presentation, looking the Q3 results of this year, we already underpin a strong growth in the region.
Max Mauri: Therefore, that was, in my opinion, a move that really will unlock a lot of potential, because we are already having and receiving a lot of inquire, request from customers in the region. Before Qiyang, we were not able to fulfill their request locally because the lack of R&D team. That was the rationale behind basically the acquisition.
Max Mauri: Returning back to your questions, yes, we will be more or less in line with the Q3 results also in Q4. We are expecting to have a similar, more or less, a similar quarter. I cannot be so specific because all the difficulties that we have on the supply chain. Looking the orders and the backlog that we have, we can for sure having same kind of quarters. Our components are arriving as we speak, so we are really running into the end of the quarter.
Max Mauri: Let's be a bit cautious on it, but in general, yes, we are more or less in line with this quarter.
Marco Vitale: Clear. Thank you.
Operator: Thank you, Marco, for your question. The next question now comes from Bharath Nagaraj. Please, Bharath, go ahead.
Bharath Nagaraj: Thank you. Thanks for the presentation, and congrats on the strong quarter. I have a few questions, please. Just going back to the China, focus on China, the emphasis that you are laying now on serving the local Chinese customers. Firstly, how should we think about the contribution from Seco China growing in the future years? How much should we think about how big could it get, basically, as a portion of the group?
Bharath Nagaraj: Secondly, could you speak a bit about the competition in Seco China, who you will be up against, and why you think you can win there? The second question is around how many customers are currently trialing Clea 2.0, or how many customers are you in conversations with currently who might start trial soon?
Bharath Nagaraj: Are they using the 150 plus algorithms that are available there, or are they mainly using the functionality and environment to build their own algos? I will start with these two questions, please.
Max Mauri: Yeah. Starting from China, we do expect China will contribute around more or less EUR 50 million as a revenue in the region, just combining Fannal, Qiyang, and the Seco China that we have now. So, of course, when we will provide the 2027 guidance, we will also give you a lot of granularity about end market and geographical area as well.
Max Mauri: So we will be more specific over there. But you can consider more or less around EUR 20 million each between Fannal and Qiyang, and around EUR 5 or EUR 6 million coming, even more, EUR 7 million coming from Seco China. So we will close the book on a pro forma basis, the 2026, with around EUR 46, EUR 47 million in the region. And that is basically a good starting point in my mind to look at the 2027 and 2028.
Max Mauri: Regarding Clea, we will disclose results about the promotion that we are doing later because we want to consolidate number. We just started, basically. We started from a week. So we want to consolidate numbers. We want to review it carefully before sharing. But what I can anticipate is inside the Clea 2.0, there are a console that is giving us the full visibility across all the metrics of the customers.
Max Mauri: So we are really able to see how the customers are using it, how many devices they are connecting, how many algorithms they are deploying, if those algorithms are coming from our app store or those algorithms are coming from their own models. So we will be transparent as we go with the market, of course, and we will provide updates once the numbers will be more accurate, I would say.
Bharath Nagaraj: Sure, sure. Thank you. Just a couple of quick questions from me as well, please. In terms of the order book that you currently see and the conversations you are having with customers, how do we size the quantum of orders across your chip collaborations that you have, like Qualcomm ecosystem versus Intel, et cetera? And the second one is more around the modeling question for the tax for the full year, because I think you said it is a theoretical tax that you have used, and what kind of cash conversion are we talking about for the full year? Thank you.
Max Mauri: All right. On the second question, I will hand over to Lorenzo in a while. The first one, I think it is better because I think it also can be helpful to share some numbers about the pipeline, because the pipeline is really representing our future. Pipeline and design win. Pipeline and design win, there is a stronger contribution of Qualcomm, which is around 50% of the total.
Max Mauri: This is based on a lot of new product that we launched, we just launched, like, for example, the QCS6490 chipset, as well as IQ8. Only on IQ8, we have around 70 new customers that are actually getting the early sample that we are shipping right now, and potentially they can beef our future growth already by the H2 2027 onwards. Intel and NXP are the other two where we are stronger.
Max Mauri: I would say around 20% each. The remaining part is fragmented in between MediaTek and others, chip maker. Again, I think the new generation, all in all, of AI models that we are launching, we just launched on the market, like the Qualcomm and NXP and Intel one, as well as MediaTek, all of them are getting a lot of traction in the market with a lot of new logo.
Max Mauri: In terms of end market, I think also the Physical AI market, and in Physical AI, in my mind, there are not only robots, but also drones. Well, this market is really growing fast, and this really get traction into the design win. We already secured over five new logo in this specific end market. Therefore, we are expecting to see benefits out of it in 2027, but even stronger actually in 2028.
Max Mauri: I pass the floor now to Lorenzo to cover the questions on the taxes.
Lorenzo Mazzini: Yes. Thank you, Max. Regarding taxes and the other question on cash generation that you ask, I would say that I am really happy on the cash generation performance of the group up to on the nine months, up to the Q3, actually. We increased net financial position after one-off CapEx by only EUR 5 million.
Lorenzo Mazzini: Please consider that in these nine months, it is like we had one-off overall investments of EUR 25 million, because as you know, if you look at our balance sheet, we invested EUR 20 million on the inventory to finance the stock to face the really difficult shortage environment scenario that happened in 2026. Moreover, then these EUR 5 million that we invested in order to finish and conclude our plant in Monte San Savino. Monte San Savino, this is a place close to Arezzo.
Lorenzo Mazzini: I would say that if we take off from our balance sheet these one-off items of EUR 25 million, I would say that 2026 cash generation respect to the EBITDA in terms of EBITDA cash conversion is more than 50%. I would say, and I am happy that in Q3, despite the growth, we generate cash of EUR 1 million.
Lorenzo Mazzini: I want, and I am pretty sure with the action we are doing and due to the fact we invested and make the stock of memory in order to deliver products to our customer in the first part of the year, that we can continue also in the last quarter of the year with such path. Regarding taxes, I would say that we are working on many actions in order to be most efficient for the year end.
Lorenzo Mazzini: We are applying and we successfully applied for the patent box, leveraging on many intangible assets on which the group is investing. I would say that to give you a proxy, you can consider that the group can close better respect the 15% of tax rates respect to our earning before taxes. This is, I would say, my expectation. Thank you, Max.
Bharath Nagaraj: Thank you very much.
Operator: Thank you. We will now take the next question from Arianna Terazzi. Please, Arianna, go ahead.
Arianna Terazzi: Arianna Terazzi from Intesa Sanpaolo speaking. Thank you for the presentation, Max, and congrats on the results. My first question regards component shortage scenario. You built strategic inventories over the last quarter to mitigate shortages. First, I would ask you if you could quantify this impact on the strong revenue growth, if possible. How much was driven by price increases, if possible?
Arianna Terazzi: Going to Qiyang, to what extent is Qiyang already covered on memories and semiconductors? Do they have the same visibility and inventory strategy as Seco, or is there any action needed, required after the acquisition to cover this topic? More in general, if you could help us in understanding if there are any issues or topics we should be aware about on Qiyang working capital profile. Also, you spoke about synergies across the Chinese companies. Could you help us in quantifying them?
Arianna Terazzi: Thank you.
Max Mauri: All right. Regarding the memories, for example, from the stock that we did in the today memories price, it has been already marked another increase about in between 30% and 40%. It was really profitable and good to make and build the stock at the right moment, because it is providing us the capability to not increase so fast the price.
Max Mauri: Our price and the component of the price increase in the performance of the quarter is very limited. We will increase our price as we go into 2027 gradually, because as I told you, the price of the memory are really increasing month by month, unfortunately. We will continue to monitor carefully the market. We are continuing also to acquiring significant stock of memory when they are available at a convenient price, with two clear goals.
Max Mauri: One is to protect and defend our margin, and second, to avoid to stress our customers to very large price increase. Regarding Qiyang, they have managed the memories in the same way how we did it, which is definitely good because we discover we are fully aligned how to see the market in that case. Also, their supply chain in Asia is quite strong.
Max Mauri: Talking about future synergies, I would mention that having access via Qiyang of this such of supply chain will offer benefits for the entire bill of materials cost of our portfolio of product, providing us a competitive price against competition. Looking at the market more specifically, the Chinese market was basically dominated, and it is dominated by Advantech, which is our main competitor. Luckily, there are many customers that are looking for having another supplier, another partner.
Max Mauri: And luckily, we have a lot of request and opportunity that via Qiyang and our local team, we can really address faster and with more effectiveness in terms of discussion, results, velocity, culture comprehension, same time zone, same language. It will speed up significantly our operation in the area.
Arianna Terazzi: Thank you.
Operator: Thank you, Arianna. Moving on to the next question. We will now take the question from Hala Mawaj. Please, Hala, go ahead.
[Analyst] (Goldman Sachs): Hi. This is Hala Mawaj from Goldman Sachs. Thanks for the presentation, and congrats on another quarter of great results. I just have a few questions on Physical AI, just going back to that. You have given guidance on 2027, which has been very helpful, but if we look at beyond 2027, do you have any inputs on how we should think about the pace of growth beyond that, whether that is on volumes or revenue specifically?
[Analyst] (Goldman Sachs): And how much of the overall Seco revenue do you think by the end of the decade could be from Physical AI specifically? And then my follow-up would be on margins again for Physical AI. Our understanding of it is that it is going to be dilutive to gross margins, but not dilutive to EBITDA margins. Is that a fair assumption to make, or should we think about it a different way?
[Analyst] (Goldman Sachs): Thank you very much.
Max Mauri: Right. First of all, we guided the market on Physical AI already in 2027, just regarding a single name, which is Neura, which is, of course, a stronger Seco partner and the biggest achievement we did in the space. But it is not the only one. As I said, we secured over five different, including Neura, different design wins in the space, and it is growing. We have, I would say, a quite impressive pipeline on that space. Looking at 2027, we will be more specific in terms of end markets projection when we will communicate the guidance. In general, Physical AI, which is represented by humanoids, robots, and drones, is a market that is not growing like the rest of our business, but it is much, much faster.
Max Mauri: Looking ahead at 2027, you should think to apply a multiple to the 2027 results, basically, in that market, because this company are growing by a factor X. I cannot be more specific than it, but that is the way how you should look this end market. I think this end market will count significantly already from 2028 and going forward as a total on the revenue of the group, which actually will become the first end market for Seco already in 2028.
Max Mauri: That is for sure. I think regarding the margin, you are completely right. The way you described the margin evolution is exactly in line with our expectation. We will have a much lower gross profit on this vertical, but due to the fact that this vertical is around very few part numbers, we will have an accretive contribution to the EBITDA margin.
Max Mauri: Looking at the gross profit margin, we will have a negative effect. Looking at the EBITDA margin, we will have net a positive contribution.
[Analyst] (Goldman Sachs): Thanks very much. That is very, very helpful. Thank you.
Operator: Thank you, Hala. We will now take the next question from Aleksandra Arsova. Please, Aleksandra, go ahead.
Aleksandra Arsova: Hi, good afternoon. Thank you for your presentation. A couple of follow-up questions on my end. The first one is again on 2027. Of course, we will wait for the official guidance, but since you mentioned during your Q3, sorry, your Q2 results, that you expect roughly EUR 270 million in revenues in 2027, is this still, let us say, fair expectation or at least a floor?
Aleksandra Arsova: This is the first one. Especially if you expect some other, let us say, contracts or design wins you mentioned before to enter in this, potentially enter in the guidance. The second one is actually a clarification maybe on the backlog and book-to-bill, since the book-to-bill seems very solid also in this first 9 months.
Aleksandra Arsova: But it seems to me that it has decelerated a little bit vis-à-vis what you reported in the H1 without presentation, despite Neura entering in the backlog accounting, in my understanding at least. Can you maybe explain a little bit the dynamics behind this deceleration in the book-to-bill and how do you expect it to evolve over the coming months? Thank you.
Max Mauri: All right. Let me start from the backlog. In the backlog, Neura is not in yet. Therefore, all the numbers that you are looking are with Neura at zero, because we will receive the orders from Neura this week, literally. So, are not included in the numbers that you are looking.
Max Mauri: There is no deceleration, because this is not correct, because there was an acceleration during the last quarter of the year. Therefore, the comparison is, even if we still growth into the backlog, the growth year-on-year is a bit less because the last quarter and H2 2025 was already stronger in terms of order intake. Therefore, you are thinking about having a deceleration, which is not correct.
Max Mauri: Looking the numbers in absolute terms, the backlog is growing, and it is not including, again, the Neura orders that are coming this week. Actually, we received one today, and we are expecting more during the week. About the first question, in the count that you mentioned, and it was not a guidance, it was my comment on the consensus.
Max Mauri: I think you are in some way not including Qiyang, that should be included because we did it. Therefore, the EUR 270 million that you are mentioning are clearly without Qiyang. On top of it, yes, I can confirm that significant winning on design win as well as new logo that I mentioned will impact positively our guidance for 2027, and in December, we will fully disclose it.
Aleksandra Arsova: Very helpful. Yeah. Thank you.
Max Mauri: I do not know, Aleksandra, is that was clear or
Aleksandra Arsova: Yeah, yeah, very clear. Thank you. Very helpful.
Max Mauri: Okay. Thank you to you.
Operator: Thank you, Aleksandra, for your question. Currently, there are no questions queued, so we will wait just a few moments to give everyone the opportunity to ask a question. I see that there is a follow-up question from Bharath Nagaraj. Please, Bharat, go ahead.
Bharath Nagaraj: Hi. Sorry, I just have a quick follow-up, please. On the underlying OpEx cost base, which has obviously increased, I think you made some investments, what should we kind of assume for the quarters going ahead? Thank you very much.
Max Mauri: This is a question for Lorenzo. Lorenzo, please.
Lorenzo Mazzini: Yes, thank you. Thank you, Bharat. I would say if you take a look to our OpEx performance in Q3, it is a really good level on which you can
Bharath Nagaraj: Okay
Lorenzo Mazzini: stick to our OpEx for the next quarter. We gain for sure efficiency on personnel costs with respect to Q2, and for sure, a part of it, we will be able to continue on this path.
Bharath Nagaraj: Very good. Thank you very much. Congrats again.
Max Mauri: No, thank you very much to all for your time. It has been a pleasure. We will be on street in the forthcoming week to have a roadshow with investor. Anyway, if you have further questions, feel free to drop down an email to our investor relations team. Thank you very much again.
Lorenzo Mazzini: Thank you.
Operator: This presentation will now come to a close. Thank you.
Operator: Goodbye.
