Ascom Holding AG (ASCN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Ascom's 2026 Half Year Results Conference. My name is Kalina Scott, Chief Financial Officer of Ascom. On behalf of David Hale, our Chief Executive Officer, and myself, thank you for joining us today. Before we begin, let me briefly cover a few housekeeping items. First of all, this conference is being recorded. [Operator Instructions] With that, I'm pleased to hand over to David Hale, CEO of Ascom. David, over to you.

Good morning, everyone. And as Kalina mentioned, today, very happy to welcome you to the conference this morning. I'm going to go ahead and put the slides up on the screen. Thank you. So we have quite a good agenda lined up this morning. We're going to talk to you about the results of the first half of 2026, and I'm going to go through some first highlights. I will hand it over then to Kalina, who will go into details behind the financials. Then, I will come back for a bit of a strategic update. We'll give -- confirming the outlook and the guidance for the year. And then we will open it up, as Kalina mentioned, for questions and answers. So let's go ahead and jump right into the highlights for 2026 first half. I know you've already seen the press release. So let's get right into the details. We continue to see really the structural demand drivers, I would say, pulling the market in every market we're in because in these markets, governments are really trying to rein in the cost on health care, in particular, to drive productivity, but also to offset staff shortages. And really, as a result, what they're doing is, they're taking their investments and they're really focusing them on digitization, which is our sweet spot. And I'll go through this region by region in a moment. But that market pull is what's driving for us what you're going to see, a solid growth on orders and growth on revenue as well, constant currency, in every region that we are in. And our focus is really, how do we capture that -- our unfair share of that growth and doing that without needing to scale our cost at the same rate as the growth. And so, you see that also in the improved EBITDA and the EBITDA margin, if you compare that to 2025. So, as a result, we are confirming our guidance for full year for 2026, and I'll come back to that specifically in a moment. If you look at really the -- where -- if I go into the financials a little bit deeper, incoming orders, very solid, 15% up at constant currency over half 1 2025; an increased order backlog, and that includes some frame agreements or some multiyear contracts because what we see is a lot of our customers are -- as they drive some of the consolidation in their markets, they're trying to really standardize on certain solutions and then roll those out across their systems. So from a revenue perspective, I know we said at the full year 2025 results conference that we would likely be flattish first half. We're actually up 3% at constant currency, and again, positive revenue growth in each of the 3 regions. And as mentioned before, in part, thanks to the synergies that we're starting to see now from this regional model that was deployed last year, and of course, a real drive and focus on cost discipline, what we're seeing is, we can scale that revenue faster than the cost, and that's what's contributing also to the improved EBITDA and EBITDA margin. From a market perspective, as already mentioned, the demand is really there, and that demand represents different opportunities for Ascom in 3 of our markets, and we'll talk about that in a moment. But our strategy of really leading with workflow orchestration and integration into different existing systems, Ascom or other, is really resonating both with customers, as well as with our partners, who we continue to build out. So for 2026, we confirm that guidance of low-to-mid single-digit revenue growth at constant currency with an EBITDA margin of between 10% and 12%. I mentioned some of the drivers are different for the demand in each of the region. And so, I want to go just a moment into that because it's a little bit different, depending on which region that you're looking at, even if the demand drivers behind it are quite similar. If you -- if I start with the U.S.A., for us, it's really a share capture play because what we see is, as that health care consolidation continues, it's really driving our customers to look for scalable platforms because what they're trying to do is reduce their cost. But to do that, they know they need to digitize. They know they need to move into smart hospitals, enabled by this digitization. And so, they're really channeling the investments in that area. Something in the U.S. called concept of virtual nursing is gaining significant traction, and we are serving as a communications platform in many instances for that. But if you look at the overall market, that pull is really in the area where Ascom plays. And given the size of Ascom in the U.S. today versus the size of the market, that's really for us an opportunity to take share and take the market demand pull there. Even on the enterprise side also, the critical infrastructure organizations, we see they're also really prioritizing these kind of platform investments that they can scale across their systems as well, and they're really looking for kind of this resilience. And our arguments, our selling point in this area is really around lone worker safety, and that really resonates with them. If you go to Region North and the European part of Region South, it's really more about, from an Ascom perspective, leveraging the installed base, the customer base that we have to upgrade and expand their relationships. Pretty much across the region, you have hospital modernization projects going on. You have government-funded digitization projects, health care programs being pulled out, and the customers are really pushing also for that platform approach to be able to decomplexify their own IT landscape. So they're looking for someone who can provide them that complete solution, which Ascom does. We really have an offering in each of the areas that they're looking for in terms of clinical workflow around the patient bedside. And when we can bring that to them in one solution that we can integrate into their platform, that also helps them decomplexify their own IT landscape. And both in Region North and in the European part of Region South, we have a pretty strong customer base in most of the markets on which we can play. So it's a lot about upselling our potential. We've already landed. How do we take that land and expand now out into other categories? If I look at the Middle East, Asia part of Region South, it's really more around capturing a lot of that investment that's going in. So they're doing actually quite a bit of hospital builds, modernization of the infrastructure, expansion of their infrastructure. And so, we tend to partner up there, and we'll talk about that a little bit later. And together, we can bring in a real solution that resonates with them across the breadth of the Ascom offering. And so, I would just -- again, different dynamics in each of the regions. But from an Ascom perspective, the demand, and that's what I find quite -- the structural demand is really pulling the Ascom solutions, and we're able to play a lot in that space. So I'm going to hand it over to Kalina, and she is going to walk you through the financial results in a little bit more detail in the first half. And then, I'll come back and talk a little bit more about the strategy. Kalina?

Many thanks, David. I will take you through the financials, starting with the highlights that we had in the first half of 2026. Most importantly, our incoming orders have increased by 14.6% at constant currencies. This brings our order backlog to CHF 345 million, which is a very healthy book-to-bill ratio of 1.25x. Revenue increased by 2.6% versus H1 of 2025 at constant currencies. And after translation to the Swiss franc, it has remained flat. We have continued our focus on cost discipline and also on efficiency. And this has led to the fact that we have yet again increased EBITDA margin and also EBITDA in terms of Swiss francs. We had good cash conversion, and we returned CHF 13.3 million to shareholders in the first half of 2026, which is substantially more than what we did in the past, and this through a combination of dividend and the share buyback. Despite this, we have a strong cash position, which is making us resilient towards some supply chain bottlenecks that we observe at the moment. Let's start with a review of the incoming orders. These increased by 14.6% at constant currencies. And as you can see, they increased predominantly in projects, products and services, which is good news because this means that these projects in the future are also going to pull more maintenance and support contracts. So this is a very good development that we saw in the first half. In terms of regions, we see that all regions grew order intake. Most strongly, the orders grew in Region North, especially in the Nordic countries, Sweden, Denmark and Norway. In Region South, the orders grew by 11% -- sorry, by 22% in Region South; in Region North, by 11%. In Region South, we saw the strongest growth in Germany, Switzerland, as well as in Asia. In U.S. and Canada, we saw growth at constant currency of 3%. But given the substantial devaluation of the dollar to Swiss franc, this converted to a negative number in Swiss franc. Going over to the backlog. We see that the backlog increased by 11.8% at constant currencies. And we also see that approximately 67% is converting to revenue beyond 2026. This is normal for Ascom. We have quite a lot of multiyear contracts. But nevertheless, it gives us also good visibility for the second half of 2026, as well as a good backing for the coming years. In terms of split, we see that the backlog has grown both in products, projects and services, as well as in maintenance and support contracts. Net revenue increased at constant currencies by 2.6%, as you can see on the graph. Unfortunately, as you are well aware, we had quite some headwinds, especially from the U.S. dollar devaluating almost 9% compared to the Swiss franc, as well as the euro. So in the end, this resulted in actual currency in a flat revenue development. When we look at the net revenue split, we see that it increased in constant currency, both in maintenance and support, as well as in project, products and services. So here, we see a balanced development. And similarly, when we look at the regional split, we see that every region grew in constant currency. In Region North, it was predominantly driven by Sweden and Denmark; in Region South, by Germany and also Middle East and also Central and Eastern Europe. The U.S.A. delivered revenue growth of 4% in U.S. dollar. And after conversion, it resulted in minus 5%. Maybe just a side comment on this is that sometimes, we comment on the development of software. Software grew half year-on-half year from 13.1% in the previous half year to 14.4% and is actually -- you can see it in all regions and also as part of maintenance and support and as part of projects, products and services. Going towards the product and loss -- profit and loss statement. We already commented on net revenue. Then, going over to gross profit, here, you see a small decline in terms of gross margin compared to the first half year of 2025, which is due to a product mix with less mobility and more project work. So for us, this is not a matter of concern. Then, going down towards the cost items, what is reflected in the profit and loss statement is really our cost discipline. You see that the marketing and sales costs have reduced substantially, as well as the general and administration costs have reduced also. And this is also substantially due to the reorganization, which we did in 2025 in order to become more efficient in these areas. On the other hand, the costs for research and development have grown as we see the necessity to invest in product and in innovation. As a result, our EBITDA increased by 11.6% or 1.1 percentage points, and also our net profit demonstrated a very positive development. Looking towards the cash flow. Our operating cash flow was quite good with CHF 14 million. This represents 104% cash conversion. So I think this is a healthy level for Ascom. And we see that this year, the result of the dividend and the share buyback is CHF 13.3 million, which was returned to shareholders. This led to a slightly lower cash position at the 30th of June, but I think this is still a very strong net cash position and gives us good confidence in the financial stability of the company. A few other comments on the balance sheet. In terms of net working capital, the net working capital has reduced to -- from December, which is typical. We have this kind of seasonality in our business. It has increased slightly compared to June 2025. This is due to 2 reasons. On the one hand, we had higher trade receivables. And this is, in fact, just a reason because we had quite a lot more revenue in the months of May and June. It is -- we had CHF 5 million more revenue in these 2 months. So this development in the trade receivables is not a reason for concern. And we also have approximately CHF 2 million more inventory. This is something that we do deliberately in order to secure the material that we need for sales because we do observe some supply chain bottlenecks, especially for semiconductors. The other topic I need to mention is the equity. You see a reduction in equity, and this is due to the fact that we have bought back 3 million shares as part of the share buyback program. And moving over directly to this point, the 3 million shares have been repurchased at an average share price of CHF 4.47. Over the entire period of the share buyback, which started in May 2025, we have paid CHF 13.4 million for these shares. And the intention is to cancel these shares through a capital reduction by using Ascom's capital band. Finally, just an overview of the main key metrics that we follow for 2026 compared to 2025. You see the very strong development of incoming orders, 15% in constant currencies, 11% in Swiss francs. A very good situation with the backlog, 12% higher in constant currencies and 11% in Swiss francs. Net revenue with 2.6% increase in constant currency. EBITDA, 12% higher than the prior year period. Net working capital has increased, just as I mentioned before, but not an area of concern. And capital expenditure is, at the moment, lower than it was in the first half of 2025. However, for the full year, we expect to be on a similar level compared to 2025. With this, I hand over back to David.

Thank you, Kalina. I wanted to come back and give a brief update on the strategy from Ascom perspective. I think the -- first of all, a couple of key messages before we dive in. One, as Kalina already mentioned, software is -- as a proportion of the revenue, is continuing to grow, and that is a key part of the drive that we have ongoing right now, really to move from a software-enabled services provider, more to a services-enabled software provider. Vendor-neutral integration and really our open app platform is proving to be a real differentiator that is resonating with our customers. And sometimes, I get the question, is vendor-neutrality really a differentiator? Is that really important? It is because customers do not want to be locked into closed systems. And our open platform connects alarms, devices, sensors, workflows across different ecosystems, be them Ascom or not Ascom. And that gives customers flexibility, and it really supports our partner collaboration effort. And if you think about nurse call in particular, you remember, these systems run for 10 to 15 years. And so, when a hospital decides to implement a modern clinical workflow solution, they can't just change out all of their nurse call systems overnight. So the fact that we integrate both with ours but also with the competitors, for them, is a huge advantage from a transition perspective, gives them control over the timing and the deployment cycle. And on the medical device side, where we do the integration of all the clinical data, you will rarely come across a customer that has chosen one supplier for their bedside medical devices. They typically have quite a few of those. And so, they're always wanting somebody who can integrate with each one of those. And that's something that Ascom does very well and is recognized by the customers, and it makes a differentiation in our offering. And finally, mobility. Mobility remains strategic in that because it's part of our way of being able to enable and deliver some of these clinical workflows to our -- to the clinicians or to the caregivers or to the workers in our enterprise segment, so very important from a part of the total portfolio purview. So if you look at that, again, what our solutions are really addressing today is that productivity and workflow efficiency that customers are trying to drive, be that health care or enterprise. In health care, it happens to be one of the areas that is the most strained, and then you compound that by workforce shortages. I'm in Asia this week traveling with customers, and they're all talking about how do we move from, in the ICU, a ratio of 1:1 -- 1 nurse, 1 patient -- to 1:2 or 1:3, not just from a productivity perspective, but from a workforce shortage perspective. And that really gives us a play in this, what we call, mission-critical communication needs. This vendor-neutral platform in an environment that is highly regulated gives the opportunity to that customer to have that real workflow drive, as well as a road map for where they're going to go. So we talked earlier about the importance of the health care consolidation. When they're doing that, they're not buying a product that they can just install and forget. They're buying a solution that they want to be able to then roll out across their system. And that rolling out takes time, and they want a company that's going to come with them on that journey that has a vision and a view of how their platform and solutions will develop and has the capabilities from a regulatory perspective also to follow. And a company the size of Ascom with our global footprint, that brings credibility to that offering. We also sit at the crossroads of quite a bit of data. And again, tied back to the vendor neutrality, that's quite important for the customers that we can leverage that data that we see all of that data that's coming in and, together with the customer, can turn that data into actual insights that they can use to drive better outcomes. And that open platform approach is really what is helping drive that. That -- we have an open API. We have integration of third-party algorithms and solutions. So we reduce, for the customer, their risk of being locked into a closed system, which they're really counting on. So if you -- our strategy, I would say, hasn't really changed. It's really about how do we help these organizations respond, respond faster and consistently and improve their outcomes really when every second counts. And we kind of break that into 4 categories: integrate, whether it's acute care, long-term care, enterprise, how do we integrate all that data, take the data that's coming in, orchestrate the workflow, communicate it back out to the proper person so that they can then be enabled to make the right decision. And that communicate is really a key part of that offering, and that's where that mobility platform plays a key role for us. On the integration side, if you think about it, we're connecting and integrating alarms, medical devices, sensors across a variety of IT systems and even IT ecosystems. And that vendor-neutral platform, the fact that we can integrate across different systems based on standards is something that gives the customer an opportunity to decomplexify their own IT infrastructure, which is what they're looking to do. From an orchestration perspective, you take that data and you can unify the operational and the clinical workflow layer with alert management, with workflow orchestration. I can prioritize. I can define an escalation logic. So from a customer perspective, they have this one shared data model, and a hospital in country 1 is not the same as a hospital in country 2, is not the same as a hospital in country 3. So we can provide them a standardized solution, but that then they can configure to their own workflows. And then, on top of that, they can build with us an analytics foundation, AI-ready. That architecture is actually ready for them to start building out some of the AI capabilities. And then, from a communication perspective, communicating that to the right caregivers, be that actually directly the alert, dashboards, control panels that they can use then to be able to choose where they interact and when, and that allows them, really from a decision support perspective, to provide the right outcome to the right person at the right time. And that's really the objective we're trying to enable our customers to be able to do. As you know, we're in 3 areas, and we've really started to get more focused and disciplined around what we want to do in each of those 3 areas. And in acute care, it's really about how do we strengthen our development and our go-to-market partners. We work very closely with many of the key medical device manufacturers, thus the vendor-neutral platform, and also with health care infrastructure, large project partners because in many of our markets, in particular, in the growth markets, Middle East and Asia, we have a lot of large system integrators or infrastructure builders where we're able to provide a complete solution that they can then bring to the customer as a part of that overall build proposal. In the more mature markets, the electronic medical record integration is absolutely key. Epic is one of the leading players in that area. We have seamless integration with Epic, certified by Epic and back for our customers is a big plus. In long-term care, we've really kind of narrowed down and said where our play is going to be is when we can provide Software-as-a-Service kind of cloud-based solution. It's easier, it's less complex deployment for the customers and for Ascom. This is a market that is not necessarily used to investing in IT and IT infrastructure. And so, when you can bring to them something that optimizes their workflow that doesn't require a large amount of complexity on their side from an IT perspective, that's really what they're willing to value and pay for. And when we work with partners, then we either bring that to SaaS providers that are already providing a bunch of solutions to these customers or we'll work with principally large private chains that have a real clinical IT focus. And then, on the enterprise side, we've narrowed it down to 3 areas that we're going to be focusing on going forward. One is secure establishments. One is critical infrastructure. And then, the third one is manufacturing. And that's where really our value proposition of lone worker safety, mission-critical communication that really resonates. I know historically, we've tried and dabbled and played around a couple of other areas. But if you look at the Ascom value proposition and the problem that the customer is trying to solve, it is really those 3 areas that fit best with what we bring to the table. Underpinning each of those 3 areas, there are some kind of core business fundamentals that we're going to be reinforcing: our marketing muscle; our project manage -- project cost management and project deployment; and then, as we move towards this platform and platform deployment, making sure that also on our side, we're able to support a customer from cloud operations and readiness perspective. Just on the note of the marketing muscle, if you will, I'm happy to announce that we will have a new person joining the Executive Committee of Ascom starting September 1. Her name is Lisa Reck, and she is going to be head of our marketing. She will be based in our Gothenburg office and comes with quite an extensive background in marketing across a couple of health care sectors with quite a bit of experience both in the European and the U.S. markets, which for us is extremely important in looking for that. So moving in the right direction on the marketing side. And then, finally, I just wanted to share a couple of -- to come back to this -- the importance of partners in building out these partners, some wins that we've been able to drive over the first half that really exemplify what we're looking for as we go forward. One has been HSO, which is the Southeastern Health Authority in Norway. It's actually one of the largest health care organizations in the Nordics. They have about 40 hospitals across 70 sites with a patient and catchment area of about -- a little bit more than 3 million people. And this is exactly what I was mentioning before. They want to standardize and roll out, across their health systems, one framework. So we were able to win a multimillion framework agreement. It's a 7-year agreement. It covers the existing facilities, as well as 2 new hospital projects that they're going to build. It's the integrated health care platform from our side, so nurse call, critical alarms, staff safety. And what really pulled that over the finish line and convinced them was our ability to really deliver that on a fully integrated health care communication and safety platform. And that is exactly what they were looking for because they want to decomplexify their own -- decomplexify and standardize what they're rolling out. And we did that in partnership with an IT partner in this case, so Sykehuspartner, which is the partner of HSO for all of their IT solutions. A second example would be the Eastern General Hospital in Singapore. This is one of Singapore's leading health care institutions. It's about 1,400 beds. This includes, again, a large part of the Ascom solutions. So we have our nurse call system, Telligence. We have our Unite platform, our mobility solutions. And here, we work together with the prime contractor, Honeywell. So this is where I was talking to you before about a contractor that gets the entire build, they also want to simplify their life. So when they have one provider that could provide a substantial part of the clinical information system that they're looking for, in this case, that was Ascom, that is -- that gives us a chance to win there as well. Third one is again on the health care side, and again, in our growing markets, so in Saudi this time. And this is in the ICU space, so back to this medical device integration. It also includes, in this case, tele-ICU remote patient monitoring. And the first phase is covering around 300 ICU beds, around about 60 of their hospitals. And this is going to serve them as a blueprint, as the foundation for what they want to roll out across the Kingdom of a tele-ICU program. And again, partnership here is critical. So we've been partnering with GE HealthCare, all the way back to 2013. And so, our medical device integration platform, Digistat, complements the GE HealthCare portfolio. And together, that gives us really a differentiated offering that we were able to propose together to the Saudi Ministry of Health. The fourth one is in the U.K. This is with one of our SaaS partners, so with Nourish. Nourish is providing software services to multiple long-term care facilities across the U.K. I think they have more than 300,000 beds actually that they're providing, which is about 1/3 of all the care homes that they're providing services to. And Ascom is Nourish's exclusive alarm management partner for the long-term care market. So again, we work with them to bring that part of the offering to the table as a part of their bigger offering that they want to take to their customers. And then, finally, in the enterprise segment, we talked about secure establishments just a moment ago. So we were able to also win the Swedish Prison and Probation Service, a long-standing customer relationship. So this goes back to what we talked about in the Region North and Region South Europe part, being able to leverage our customer relationship where we're already in there to expand the offering that we have with them, in this case, again, working with a system integrator, so ISG, which is a big Swedish technology company that's focused on security, surveillance systems. And our solution from Ascom really covered one of the key areas that they were looking for. And this is important for us because this is one new correctional facility that Sweden actually has a government program running right now to build almost 17 new correctional facilities over the next 5 to 7 years. And so, now, with this as a blueprint, we're in a really good position to bring that to the Swedish enterprise secure establishment. So I just wanted to give you kind of an update on where we're headed. Again, I don't think you'll see -- we're not changing the strategy. What we're doing is, focusing and really setting out to execute on that strategy as we go forward. If I move to the outlook for the year, so again, guidance 2026 that we already brought you at the full year results, we confirm. So low-to-mid single-digit revenue growth at constant currency and the EBITDA margin of 10% to 12%. As mentioned, we have a strong order backlog. We think that's a good start to the second half of '26, and we're confident about that guidance and really think we are well positioned now to capitalize on these opportunities because, again, the market is really pulling in that direction and in a direction that is very aligned with where Ascom's solution and product portfolio. So yes, there's challenges in the market. Geopolitical tensions will probably remain through the second half of the year. But we think we are really quite well set right now to finish the second half of the year as we move into and start to get really following that for '27. So that's what we had for you today. I'm going to hand it back over to Kalina, and we're going to open up the question-and-answer session. [Operator Instructions] Kalina, you're also on mute.

[Operator Instructions] I see that we already have a couple of questions. First one coming from Jorn Iffert.

Maybe while he is unmuting -- I don't hear the question. Do you?

No.

No. So maybe while he is unmuting, we do have 2 questions that have been asked also in the chat. So maybe we can go ahead and start with those from [ Christoph ]. Thank you, [ Christoph ]. You had 2 questions in the chat. One was around supply chain constraints for semiconductors. How will that impact further business? And what measures have you taken to counter this problem? The main thing that we're seeing right now is, from a semiconductor perspective, that the boom around AI is really increasing dramatically the demand for semiconductors. That has 2 outcomes for us. The first one is that we have worked with our suppliers, and as Kalina mentioned, to secure some stock of critical components in advance to make sure that we have some stock to get through this, and you saw a little bit of that reflected in the inventory increase. And then, the second one, just in terms of how that will impact the further business, we have also, as you can imagine, high demand equals challenging prices. We have, together with, I think, almost everyone in the industry, been actively managing our prices vis-a-vis our end customers to take those things into account. The second question you had asked was, you said you expect a further increase in the share of software revenue. What are your midterm goals here? We haven't actually stated, and I don't think we would be ready quite today to state an ultimate goal for software as a percentage of revenue. Our goal is, though, to continue increasing that. And again, moving -- today, we're more a software-enabled services business. And so, we have projects that are heavy on the project side, relatively speaking, and light on the software side. And by moving to these common components and to a platform offering, that's going to allow us to really transition more towards a software company that's enabled by services where that software will take on a larger percentage of the revenue, and that's also part of the way that we will continue to improve the margin as we go forward. But I don't have today a midterm goal that I'm not quite comfortable sharing with just yet. I don't know if you wanted to add anything, Kalina?

No, nothing to add from my side.

And I see [ Jorn ] is here now. Just needs to come off mute. There we go.

Yes, now it's working. I'm not sure I was blocked before. It's Jorn from UBS. The first question would be, please, can you give us the update what the organic sales in the health care segment was in the first half? Second question, please, your gross profit margin was down due to mix. At the same time, software sales seem to improve. So what can you really actually do that the rising share of software sales also becomes gross profit margin-accretive as this should be a key driver for the midterm profitability expansion? And the third question, please, on your order intake, which was pretty strong. How would have the order intake would look like in terms of organic growth if just the orders for the next 12 months would have been reflected year-over-year?

Can I start with the last question? It's a little bit easier -- not easier, easier and complicated at the same time. On these multiyear agreements, what they are is, they're frame agreements that then a customer calls down. And by calling down, I mean, they give you a frame agreement that says we're going to build, I don't know, 5 hospitals over the next 7 years or we're going to roll out these mobility devices over the next 7 years. But what they don't tell you is -- or not 7 -- 3 to 5 generally. What they don't tell you is, we're going to do 100 in year 1 and 100 in year 2 and 100 in year 3. Depending on the market -- Germany is one area where we have quite a bit of these frame agreements that run 3 years. Typically, they tend to call them down a little bit faster than they would have said at the beginning. So I'd be hesitant to say if it's 3 years, it's 1/3, 1/3, 1/3 to be fully transparent. But it really depends a little bit on the market. The second thing that you need to recognize in there is that in that order, if it's a multiyear agreement, you have the software, you have the project revenue that's in there, and you have the customer service, the service agreement revenue that's in there. So the service agreement revenue has the advantage of being multiyear and will continue on long after the project keeps going, but that's a part of that order number as well. It's not a significant -- it's not the most significant part typically because service is, as I'm sure you know, a percentage of the total value of the deal that you've done, but it's still in that number. And then, the -- now, I forgot the second and the third questions, but I stick [indiscernible] the topic.

One of the questions -- so the other question was on the development of the gross profit margin. And indeed, in the gross profit, we have material costs and personnel costs most broadly, right? And then, it depends a bit on the mix of what we have sold during this half year. So sometimes, it is going to be more hours that relate to projects. And it also depends on the stage of the projects because very often, we sell first the hours. And then, in the end, we deliver the mobility, right? And here, we have varying levels of gross profit on these topics. Obviously, mobility has higher gross profit as it does not contain any hours of work, which is just being delivered. So it is basically then just the margin minus material. So that's why it is -- what we see now in H1, I would not say that this is some kind of negative trend. This is not the case. It is just the situation that we stand -- that we see now with the product mix in H1 between projects and mobility.

And the first question was back around health care versus the other segments, if I remember correctly. Kalina, maybe you want to comment on that one?

Yes. In the first half year, we grew predominantly in health care, so more strongly in health care and basically flat on enterprise, whereby we need to consider that enterprise also includes, in our definition, OEM. And last year, we had a very high base on OEM because we had unusually high demand from our OEM customers, where this year, it was normalized. But health care grew stronger. I think this is what we see.