Bittium Oyj (BITTI.HE) Earnings Call Transcript & Summary

Okay. Welcome, everyone, to this Bittium's Capital Market Day 2025. My name is Karoliina Malmi. I'm the Head of Communications and Sustainability at Bittium. I'm very excited to see so many familiar faces here today, but also the new ones. And I would also like to extend my warm welcome to the audience online. I'll be your host today, and my mission is to make sure that you have an inspiring and interesting day ahead of you. We have prepared a lot of interesting materials for you. And before I let this show get started, let's go through the agenda of today. So first, our CEO, Petri Toljamo will talk about the strategy. After that, we move to Engineering Services with Jari Inget, followed by Medical presentation by Niina Huikuri. And then we'll have a short 10-minute break for coffee, refill, stretching legs and so forth. Then we continue with Defense & Security with Tommi Kangas. And finally, summary and closing, our CEO, Petri Toljamo. And as you can see, we have reserved time for questions and answers after each presentation. So we can focus on one team at a time. And the audience here can ask the questions on spot and the audience online, you have a chat box, which you can use for the questions, and I will moderate them here. And again, the presentations will be recorded and everything will be online at bittium.com afterwards. So -- and afterwards, of course, we have setup of our products and services. And so those who are here, you're welcome to join us for networking and discussions and all of our business heads will be presenting their offering for you over there. But let's get started. I'll welcome Petri Toljamo, our CEO, to the stage with me.

Thank you, Karoliina. And I would like to also welcome all of you to the Bittium's Capital Market Day 2025, and I'm delighted to see we have a lot of people here at the Sanomatalo. First, a few words about myself. So my name is Petri Toljamo. I started the CEO 1st of April this year, but the company is not unknown for me. I have been with the Board of the Directors 60 years prior to my CEO role at Bittium. Prior to Bittium, I have been working most of my career with the international clients and led the global businesses. Here, we have our team, leadership team. So since I joined, we made a few changes. Today, Tommi, Niina and Jari will be presenting also here. And then we have also Teemu Hannula, who recently joined as the VP Operations for Bittium. So this is the team -- will be responsible for to drive the growth for Bittium over this strategic period. Then let's go for the -- our team for the strategy, which is accelerating international growth. And first, about the Bittium team. I think I -- Yes, sorry for this one. So first, let's talk about the Bittium in general, what we are about today. So we are offering products and services, and we want to operate in the growing markets where advanced technology provides a competitive advantage. So we are 40 years old company. We have more than 500 employees. Our net revenue -- net sales was last year, EUR 85.2 million, and we made EUR 8.6 million profit, and we are operating in 3 different business segments. Then I would like to share some of the things we have accomplished over the last 40 years. So first, we start with the Defense & Security. So we have more than 75,000 users in our tactical communication solutions. So the customer base is coming from the government, soldier, military, national safety and different businesses and the maintenance. Our tactical communication solutions are currently being used in 5 different countries as a part of this defense command and control systems. And also for our Tough Mobile, we received the highest classification security classification, NATO certification in 2024. We have -- our solutions has been used in more than 50 countries, and we have designed the world's first satellite cellular mobile phone. Then let's look at the Engineering Service. We have completed more than 500 different engineering projects. Also, there are more than 50 million Bittium designed devices currently used in the world, and we have been forerunner in the -- since the [ TSM ] times. And then the Medical. So we have pretty much received the golden standard status with our Faros, the cardiac device. There are more than 300 published clinical articles in the world. Also, there's more than 30 sales permits, and we have sold more than 600,000 devices, which is pretty remarkable achievement. Then just to complete the overview on the business segments. So Engineering Services is 17% of our revenue, Medical 23% and the remaining 60% comes from this Defense & Security. We believe that I think we are in an excellent position to accelerate the growth. And I think we are in excellent position. And so first, this has been the Bittium's DNA for the last 40 years that we want to be a technology forerunner with the high-end reliable solutions. And I think this is the core we want to also maintain for the next strategic period. Then we have been talking about the momentum. There's a momentum in all of our business segments, but of course, especially in the Defense, and we want to really capture some growth from those segments. Strong balance sheet will help us to enable the opportunities what we have in our hands. Then let's look at the growth drivers. We believe that there are strong market drivers supporting growth in all of our business segments. Increasing geopolitical tension and security threats, growing defense funds, modernization of tactical communication, rising demand for secure, high-quality data transfer. And this is not just a growth driver for the Defense & Security, but also for the other -- our Engineering Service business as well. Aging population and increasing health care cost is driving also the growth in our Medical segment. And IoT, of course, it's applicable for the many of our segments. With respect to this defense market, our view is that there's 3 different stages. First, after the Ukraine war started, everybody was buying ammos and the guns. And now in the second phase, I think the people were buying the vehicles and the tanks and the others. But the third phase is the modernization of the tactical communication solutions. And we believe that this phase has started. And this is not just a kind of phase that will go fast away. We believe it's between 10 or 20 years that the modernization of the communication systems will take. And I think we are in a good position there. Looking at the financial development. So last year, our Defense & Security business grew more than 40%, which, of course, contributed to overall growth of Bittium. For this year, on the slide, you can see the kind of actuals from the first half and also then the kind of the lower end of our guidance. So our guidance is from EUR 95 million to EUR 105 million. We are still holding the outlook for the year, but for the illustration purposes, this is showing the EUR 95 million. But it shows the positive trend that we are on the growth track. On the balance sheet side, like I mentioned, this is really -- we have a strong balance sheet and it's supporting our growth. Let's then look at the strategy itself. So I think Elektrobit sold automotive business to Continental with the brand. And since that -- after that, we had to reinvent ourselves and then we launched the Bittium brand. And since that from 2015 to '23, we have been really focusing on the develop the products for the Defense, Security and the Medical. And there has been very heavy investments what we have made there. And the intention has been that we want to transform ourselves to the product kind of a company. Then '23, '24, the previous year was 2 years, then they made a profitability restoring and they started to make preparations for the growth. Now the current status is that there's a strong momentum and technological leadership in the defense market and like mentioned, supporting megatrends in all segments. And we want to -- we have started to our expansions for the geographical reach. And of course, the transformation from the R&D house to customer-centric international product houses is ongoing. And now the next phase is this accelerating international growth, which I will talk more on the next slide. So this was -- the new strategy was launched this morning. There are 4 pillars, which are the most important cornerstones in our strategy. So let's first look at this accelerating international sales and developing strategic partnerships for growth. And just here, I want just to highlight that this doesn't mean that we are only adding own people when we want to grow abroad, but this also means that we are recognizing in order to get the global reach, we also need to also develop strategic partnerships in order to help us to grow further. Then like I said, Bittium has been technological forerunner, and this is something we want to make sure that it will remain. But we understand the market is moving fast and the environment is changing. New kind of capabilities are needed increasingly, namely software and AI capabilities -- and we want to integrate that more deeply now in our internal capabilities, but most importantly, also for our offering. And we launched also today that we acquired a stake from the Marshall.ai company. And why this is meaningful for us is that they are actually excellent on the deep learning and AI. And with their help, we want to integrate their AI capabilities to our tactical communication radios as well as potentially also for the medical device. And why this is different than the others is that their technology can operate without the cloud connectivity on the device. And when you are in the battlefield on the war, you cannot trust that you have really the base stations and the cloud connectivity is there. Third element is this expanding to new markets and the verticals, especially in the Defense & Security, and we also want to make sure that we are exploring the inorganic growth opportunities. But like mentioned earlier, and we are not in a hurry, I think we have a good runway for our existing products. There are a lot of opportunities, but we don't want to limit ourselves with that we wouldn't be looking at this inorganic growth as well. Then we also want to transform to a data-driven scalable product operational mode. And why this is important is that while we scale the business, we don't want to scale the cost at the same time. The first 2 bullets will be explained more deeply in the part of the business segment presentation. So I'll cover the numbers 3 and 4 here in a little bit more detail. So what we are looking for this expansion to new markets. Of course, like I said, there's a runway for the existing businesses, but we want to also look at adjacent markets to really drive the synergies and expedite the growth. And like I mentioned, this MarshallAI with their help and also with through other potential partnering, we want to also take these capabilities to our tactical communication and medical products. And with respect to inorganic growth, we really want to also look at that angle as well and see if there are possibilities for us. And this transformation, the one cornerstone in previous strategy was this production scalability. It's still valid, but we want to look at this much more comprehensively to look at the complete operational model, what we have in the Bittium, and we want to make sure that it will be kind of a modern data-driven solution. And this is something that we are now planning. And over the next years, we will go into implementation with this system. I think then it's time for the Q&A.

Yes. Thank you, Petri, for the presentation. First, I would like to ask at this point already, is there any questions from the audience? So yes, Kimmo, can you wait for the microphone?

It's Kimmo Stenvall from OP Markets. About the M&A landscape you raised again, it's -- so is there any or big capability lacks that you don't have? So why the M&A as we have understood that you have such good products and good offering? And another question on the same topic, how you make sure that you are not overpaying the target because I think that the market is quite expensive at the moment.

Yes. So if I just explain on the tactical communication system, so we want to be the provider of the complete solution, which includes the kind of the mobile IP core and the radios and the various other products. And you are absolutely right, we have pretty comprehensive portfolio already, and there's a runway for us to grow. But in order us to remain as a global provider and in order to grow faster, we want to also look if there are some other synergistic areas close to our products in the domain of the tactical communication systems. And you are right that at this stage, there's high valuations on the -- especially in the defense market. And -- but I mentioned earlier that we are not in a hurry. I think that we have a good plans, good products and good opportunities in our hands, but I want to keep it there as an option if we are able to find something. And we will look different use cases, which are close to our business or it can be -- help us to enter into certain market reach, which will help us to kind of win the opportunities on that specific market. So it is not just from the product point of view that why we are looking to M&A as well.

Thank you, Kimmo. Any other questions? Juha?

I'm Juha Kinnunen from Inderes. I'm not sure if this was already covered, but I'm just wondering about the kind of like what kind of company will Bittium be? Is it going to be a product business basically in the future? Or will there be licensing deals? And of course, there will be services, I understand that. But I guess the growth will come through products?

Yes. I think the main growth driver is the products, what we have there. But I think that we will be a product company or solution company, but it will include the services as well.

Yes. And in products, you will need software to make them competitive. I'm just wondering what kind of competence do you have in software right now? And is it going to be something that you need to strengthen a lot in order to also be very good at that field?

Yes. I think there are already quite many software engineers in Bittium. And I think the Bittium strength has been focused mostly on the embedded software. And of course, these expansions, what we have launched today, they will help us also to go beyond the normal kind of embedded software, we will also go to embedded AI. And I think there's also partnerships which will help us to strengthen the software. But in general, the software is a theme for us that we want to -- we need to become more stronger there and increasingly also include the software to our products also and these licensing deals are also possible also in the future.

All right. And just this is a question about whether you are going to talk about the targets later on? Or should I wait for until that or...

I think at the end, I will cover the targets, the long-term targets. So maybe we leave those questions at the end.

Okay. If no further questions at this point, there will be several opportunities to ask questions. I would like to thank you, Petri, for the first part. And then I'll invite Jari Inget to stage. So welcome, Jari.

Okay. Good afternoon. My name is Jari Inget, and I'm leading Bittium's Engineering Service business segment. And I have been in the company over 25 years, working all the time in our service business, having various roles during my career. And I have been working closely with our international customers in the North America and in many European countries. And then Engineering Service. So we are extremely customer-orientated. And our mission is simple. We provide engineering services that bring our customers' ideas to life. And a little bit about the Engineering Service. So what it is in our company. So we are providing high-technology product design service to our customers. So we help our customers to develop their own products. And service business is the business that has been in the company from the beginning. So our service business have evolved among the market needs during the past 40 years, but 2 main expertise that we have in the house has been there all the time. So the first one is wireless connectivity know-how like 5G or satellite. And the second one is design of embedded devices and embedded device is portable, battery-powered small gadget-size device. And today, our core offering is based on these 2 expertise, and we are focused to 3 industry segments. So the first one is telecom, where we help our technology company customers to develop their products like satellite terminals or base station radios. The second one is IoT, where we help our industry customers to develop their products and services. And in IoT, we have a number of different industry verticals like medical technology companies, transportation, logistics or power tools. And then the third one is defense where we help our customers to develop their next-generation mission-ready products using the latest high technology. And our financial development. So market has been challenging for us past 2 years as our customers' business has been affected by the overall economic situation. So what has helped us is that we have customers from different industry segments, like I explained, like defense, which is growing. And also our focus is heavily to international customers. So last year, our net sales was EUR 14.3 million, which equals 17% share of the Bittium total net sales, and our OP has been around between 8% to 10% during the last 2 years. And our order book in second quarter this year was strong. And growth drivers for us. So today, wireless connectivity is everywhere and devices are connected to cloud to enable new use cases and services. And majority of these devices are having 4G or 5G connectivity, which design is not that straightforward and it require radio know-how what we can offer to our customers. And technologies are evolving all the time and development of that requires high technology know-how, which takes years to accumulate. And then new growth driver for us, like Petri already mentioned, the AI. So for us, it will be the edge or embedded AI, which means that the AI inference, the AI model is run on the device. So it has now evolved to a situation where technology is available and the real use case deployments can be made. And also very important for us is defense sector growth. So Western countries, defense budgets are growing, especially in Europe. How we are bringing value to our customers. So we have productized our services and our services are aligned to normal product life cycle, where we can help our customers in every step in their product creation and finally, keep the product competitive in the market after launch. And our productized services are more customer-orientated and easier to approach by our customers. And I give you one example, which is not exactly related for the development. So for example, in launch phase, we can take care of the product official certification and market approvals related to the wireless radios. And our focus is in turnkey product development, which are covering all these phases where we take full responsibility of the product design, including hardware or software or other design areas. And below are excellent customer references from global companies, and all of them have technically complex products. So from IoT Industry segment, there is KONE, GE Healthcare and iLOQ and from Telecom, Nokia, Verizon and Terrestar Solutions. And how we are enhancing our offering and focusing to new sectors. So enhancing offering, embedded AI, productized services and partner ecosystem and also heavy focus for the defense segment. Then AI. So I can say that the AI is the hottest technology today and is our key focus area as well. So we are focusing to edge or embedded AI, which means that the AI model is run on the device, not in the data centers like in ChatGPT or Microsoft Copilot cases. And technology is today available. So it means that the microprocessors have required calculation power with limited power consumption, making on-device intelligent possible. And there is clearly market pull. There are needs in use cases, especially when real-time performance is needed like in voice commands or there's no data connectivity to back end, like in remote mining use case or in many defense use cases, we need to maintain radio silence. And we have deep knowledge of several industry verticals, and we can quickly adapt to understand customer business and use cases. So this is extremely important with the AI as well, how we are going to develop the right solution to customer. And there is excellent synergy with our existing core offering because developing next-generation user experience requires a solution where hardware, embedded software, connectivity, embedded AI model are integrated into one optimized product. And that's why we can optimize the overall product features and cost. So we are ramping up the team, and we are utilizing the partners. So today, we announced partnership with Qualcomm or Qualcomm's company Edge Impulse, which has become a leading edge AI platform to be used in the R&D. And then another key focus area is new market for us, so defense. And clearly, there is market pull. So defense forces need to increase their performance and new solutions are required. And many of those new solutions required to utilize the latest technology, which means that you need to develop total new products. We can leverage our strong brand, our excellent references from the Defense business segment, and we have a huge amount of industry-specific know-how already at the company. So we can easily open the first door when we engage with the customers. So our core offering is the same, design of wireless embedded devices, and we will differentiate with embedded AI. And in customers, we are targeting Defense segment OEMs in Europe. And here, we have a wide range of different customers as we are not focused on one specific area like in our Defense business is related for tactical communication. So there are a number of different areas and customers that we can target. So one product example could be like we could develop this kind of soldier-worn sensor fusion device to increase situational awareness. Then productized services. So enabling a more customer-orientated offering. So selling just know-how is not enough. We need to resonate what customer really needs. So this will enhance our customer understanding of our services and help them to make buying decisions. And also, we are adding more focus to product maintenance phase because typically, maintenance phase lasts like 10 to 15 years, but the design of the product -- design phase is like 1 to 3 years. And finally, partner ecosystem. So we focus to be a world-class partner to our customers and bring real value through a wider and more comprehensive offering. So we have partners for our [ core ] offering, like industrial design or EMS company, which manufactures the prototypes. And in today's software-centric world, we have added partners also to complement our offering, for example, in cloud software area. So this will enable better customer service and competitiveness as we can offer more from us with the turnkey solution. Then a summary. So everything is based on our strong core offering related to the wireless technology and embedded devices. So that will be the backbone. And we are seeking both growth and competitiveness with enhanced offering. So embedded AI will be our key focus. Productized services resonates what customer really needs and partner ecosystem, value creation through a wider and comprehensive offering. And also defense sector, that will be our main growth driver. So it's a new focus area for us. We are a recognized brand already in the defense, which helps us. And our target customers are defense OEMs in Europe, especially in other countries. Thank you.

Thank you, Jari. Any questions online for Jari now? Can you -- the microphone is over here -- behind.

[indiscernible], investor. I was wondering what kind of deals you are making in Engineering Services? Are they sort of fixed price deals or hourly invoiced deals? And also interested if you can open the -- like the billing rate of your staff.

Yes. So of course, our kind of focus is to have a lot of work to everybody working here in our organization. But how we are operating, it's more like that we are -- you can calculate development work like 3 or 6 months ahead. So we are offering this kind of fixed prices or hourly-based projects, which we can estimate correctly. So we are not kind of offering project that we develop something from the scratch because there are a lot many -- so many unknowns. So that's why we have different product phases. And together with the customer, we are making the first phase and then make an offer for the next phase that will have the agile both for the customer side as well.

And the billing rate, can you open that?

Well, of course, like I said, it will be -- it is high, of course. Without high billing rate, we couldn't make 8% to 10% OP.

Any further questions? Yes, in front. Kimmo?

It's Kimmo Stenvall. About the billing rate, as you mentioned, it's high at the moment. So what is the maximum revenue you can reach from this headcount that you're having at the moment? Yearly revenue?

You mean yearly...

Revenue, yes, yes. How much sales, how much you can make with the headcount you are having at the moment?

So last year, we made EUR 14.3 million and year before that EUR 17 million. And we have also announced that some of our personnel are working in Defense business segment project to help them to develop their devices and projects.

Any further questions to Jari?

Juha from Inderes. I'm just wondering about -- like you seem to have a very good position in defense because of your know-how and Bittium as a brand. But is it possible that some of the projects won't come to you because of the competitive products or probably not competitive, but could be competitive in the future or something like this?

Well, of course, we make sure that we are not developing products that are competing with our own product portfolio or strategy. But like I mentioned, it's a huge area of defense. There are a lot of other than tactical communication there.

So basically, I'm just wondering because many of these clients are huge, and they have tactical communications that's part of their portfolio, but they are comfortable buying from Bittium Engineering Services to other areas. That's what I was trying to ask.

My understanding that, yes, because there are -- those are huge companies. So there are a lot of different business areas and sectors and such in those companies. So we haven't faced that issue.

All right. And then about growth, what kind of potential do you see for the growth of this business area? And what is the kind of -- what's holding you back?

Yes, we are not disclosing the business segment-specific growth estimates. But of course, so in Bittium, all in all, in every segment, we expect growth and profitable growth, yes. Any further questions? Okay. Thank you, Jari, very much. And now we move to Medical business segment, and I welcome Niina Huikuri to stage.

So good afternoon, everyone. My name is Niina Huikuri. I started as the Senior Vice President of Bittium's Medical segment in the beginning of May. So I've been here for about 5 months now. I worked in the medical devices sector almost all of my career, so over 20 years. Always in commercial roles. Most of the time was spent nearly 12 years at the world's biggest, today, third biggest medical devices company called Johnson & Johnson MedTech. I had 120,000 colleagues worldwide. During my almost 12 years, I worked in different franchises and different specialty areas. But most of my time, I spent in the cardiology division and especially the electrophysiology division, so almost 8 years. First, I led the sales in Finland and then I led the commercial teams in the Nordic countries. After that, I transferred into a small-cap medical devices company called Optomed in their IPO process. And I led business development, product management and marketing globally. And I was a part of the team that established their U.S. subsidiaries and hired the team and started commercial operations there. After 5 years at Optomed, I transferred into a start-up in the orthopedic segment, and then I joined Bittium. So our vision. Our vision is to improve people's health by providing world's most reliable biosignal measuring solutions, powered by technological innovations and partnerships. And when you make biosignal measuring devices, the #1, the most important thing is that your signal quality is excellent. If you have any cardiologist looking at an EKG signal, their most -- most thing that they're concerned over is how clear is the signal because if the signal is not clear, you cannot make a diagnosis. When we look at Bittium Medical, our revenue has been around EUR 20 million. We have -- last year had about 100 employees. As Petri mentioned, our Faros device has reached the golden standard position. What does it mean? Because in medical devices, you always have to validate everything you say in clinical trials. There's over 300 published peer-reviewed articles about Faros. And if there's a new company that wants to come into this segment, they compare their signal quality against Faros because Faros is considered the best in the world. We have 4 segments. We have said that we have 4 segments. We have the cardiac segment, which is our core; remote EKG monitoring. Then we have a sleep segment. So we have home sleep apnea tests in -- as products in this domain. Then we have our neurology segment where we have continuous EEG monitoring devices called BrainStatus. Then we also have a product called NeurOne, which is more for research purposes. Then we also sell devices to a partner, EMG devices to a partner who does early diagnosis of Parkinson's disease. But because of the size of the company and there's expertise expected in all the specialty areas, in this next strategy period, we will focus on the cardiac domain and on the sleep domain. It doesn't mean that we don't have excellent products in all the segments, but we do. But in medical devices, you don't always have to be the first to enter the market, and I will talk about that a bit later. Our financial development in the past years. So our revenue has declined from '23 to '24. And the main reason for this is that the reimbursement sums in the EKG monitoring business, which is our core in the U.S. have declined. And because the reimbursement sums have declined, then also pricing on all of the products sold on that domain have declined. And our operating profit has been negative due to us just focusing on too many segments at one time. Then when we look at growth drivers in the Medical domain, people are aging and the aging population is bigger than it used to be a decade ago. People also live longer and they're more focused on their health. When you look at the number of different health kind of consumable devices that measure some of your health, you have your ring and you have your watch and you have a lot of products coming out to kind of on the consumer side, it tells us how much people are more interested in their health. But then there's a burden on the other end. There's not enough doctors to diagnose everyone, all of the people in the elderly domain population, especially not in the hospitals. Because when you think about diseases that are diagnosed with our products like arrhythmias, especially atrial fibrillation, which is [Foreign Language] in Finnish, it is one of the most common arrhythmia. And it is the prevalence, so how many people have it highly increases with age. And now in the guidelines, it said that everyone over 65 who has some symptoms arrhythmia should be kind of tested if they have atrial fibrillation. And it's not the atrial fibrillation, which is the problem, it is what it causes. And atrial fibrillation is one of the biggest causes of stroke. Then when we look at sleep apnea, for example, it has grown in the recent years. And also a lot of clinical trials have published data that sleep apnea, if you don't diagnose it, it's not only that it's dangerous for you if you have sleep apnea and you don't know it, but also it causes a lot of other systemic diseases, cardiovascular disease, neurological diseases, which are much more expensive to treat. So a lot of different health organizations starting from World Health Organization have put a lot of focus in early detection, especially on the diseases which can be diagnosed with our products, atrial fibrillation and then sleep apnea. Then another factor, which is also driving our market is digitalization and AI because it takes a doctor a very long time to analyze the data from bios signals. If you've ever seen anyone analyze EKG, a long period of that time, it takes you hours. But now that we have AI-powered analytics systems, that hours' time is minutes. And then we're also, again, saving health care resources by bringing in technology. Okay. Then when we talk about market factors, which impact medical device commercialization. In the general public, when people speak, they usually think that the main blocker in selling medical devices is regulatory approvals, and it's actually not the case. So when we start, when we think about when you're a doctor, there's always a current care guidelines for everything you do. Otherwise, young doctors wouldn't know how to diagnose their patients. If your product or the procedure you do is not in the current care guidelines, it is a very long journey for you to get into the guidelines with clinical data. Guidelines are country-specific. So there is no one guideline globally. They differ country to country. And if you want to make any changes into this, you need to have a very big key opinion leader network, which means you have to work with the best doctors in this domain for you to change guidelines. The next part is, of course, regulatory approvals in European countries, which is healthcare is funded by the public, so taxpayers' money, the regulatory approval is kind of one process. In the U.S. with FDA, it's one process. But when we think about China, India, Japan, Middle East countries, Canada, they're all separate processes, and you have to do it country by country. So if we want to globally scale, you have to do all of these processes in each and every country. Then comes clinical validation, which is your evidence to selling medical devices. Sometimes you don't need them in your regulatory approval process. So people tend to skip because they're expensive and they take time. But then you have nothing to sell on because that is the only real data that healthcare professionals believe in, and it's the only kind of data you need for to get you through this entire process. Then comes reimbursement. I think this is by far the biggest blocker in medical device sales. It's not regulatory approvals. And this means that reimbursement has 3 parts. It has coding. If you don't have coding, hospitals cannot order your product. Then comes reimbursement, does someone pay for it? Does insurance companies in the U.S. pay for it? Does taxpayer money pay for it? And then the next part is the sum, how much for its value is it reimbursed? If you don't have this, then you don't commercialize because then patients would have to pay outside of their own pocket. Then comes competitive landscape, of course. And this, again, in the medical devices domain, if you want to compare your device to your competitor, you cannot just say I'm better. You have to prove it in a clinical trial. You have to do a head-to-head comparison and say, well, I'm better, and I've actually proved that I'm better. Then the last part is sales channel strategy. If you think about the healthcare domain, it is person-to-person sales. It has been like that since the beginning, and no one has been able to change that. So if you do all of this great work on your regulatory, on your guidelines, your clinical validation, you actually have to have someone walking into Sotkamo Healthcare Center and saying, we have this great system. We have this great product, and it's good for the patients. That means a lot of sales force. So therefore, depending on the level of healthcare where your service or your product is used, it really has a big impact on the sales channel availability. And when we think about our products, neurology segment, very much in the beginning, continuous EEG monitoring, not guidelines everywhere. Most of it is in the U.S. If you think about Holter monitoring or remote EKG monitoring, Holter monitoring was established in the '50s. Every hospital would know what the Holter monitor is. Then when we think about our sleep apnea, new -- these home tests came to the market in 2000, we are limited in clinical validation. So we have product in different categories on different spectrum of kind of the pathway towards a global commercialization. Then coming to our sales channels. As I said, the level of healthcare really directs which sales channel do you choose. In our cardiac and our sleep domain, especially in the cardiac domain, we have decided to focus on strategic partnerships. And the reason why we have done this is that we need to have a company big enough like J&J, 120,000 employees, who has someone who goes to the hospital everywhere, everywhere in the country where you want to dominate. But to be good in these relationships, there has to be a gain for both. So when you select these, it's not just I select that, but you have to think about where there's a win-win for both companies. And with Boston Scientific, they're not interested in diagnostics because it's a much smaller market. They're hugely interested in the treatment business, which is catheter ablation. That drives the market. That's where all the money is. And the more patients they diagnose, the more patients they can treat with their ablation business. Therefore, the relationship with this partner is healthy. In Europe, we work with different service providers because remote EKG monitoring always needs someone to look at the data. The device itself does not do a diagnosis. You have the device, then you have the software for analyzing it, but then you need the cardiologist to say, do I have arrhythmias or don't I have arrhythmias. And therefore, our sales channel is companies -- big companies that provide these types of services. Going more into remote EKG. What is remote EKG monitoring? You can also see ECG, same thing, just different spelling. The standard is the 12-lead EKG. I think almost everyone in the room probably at least once have had a 12-lead EKG. It is -- it was established way back in the 1900s. And it's great because it has kind of leads on your chest, on your legs and your hands. So it covers the entire heart, all of the chambers. So you know what kind of arrhythmia you have, where does it originate from. But it has a problem because arrhythmias like atrial fibrillation, they come and go. You can have it today and you don't have any in 2 weeks. So for that 2-minute period of measurement with the 12-lead EKG, you don't probably catch it. Therefore, came the Holter device, which has been the standard for long-term measurement. But if any one of you has ever worn a Holter device, it's a huge machine here with a lot of cables on your chest, and it makes a big noise. You cannot shower with it, you barely can sleep with it. So even with that device, you don't do a lot of long-term monitoring. So then came these next-generation Holter monitoring like we have, our Faros device. They're called, in general, the patch EKG. There, it's lightweight. You can shower, you can sleep, it's quiet. You can wear it for long durations, and you don't remember that you have it on. And the longer the measurement, the better your diagnostic yield is. Then there's products like event recorders where you just have symptoms and you put your thumbs on the device and it gives you record your EKG. And then you have loop recorders, which are installed inside your heart in a surgical procedure. Then you also have consumer products, wearables, and there's a lot of questions that will this take over your market? No, it actually feeds into our market because always in healthcare, you need some kind of documentation of your arrhythmia before you get referred to treatment. And with these devices, they're not there yet. As they're not medical grade products, there is no documentation. So when your Apple Watch says that I have atrial fibrillation, when you go, you see a doctor, they say, well, let's do a patch EKG. Looking at the market, as I said, almost 70%, 2/3 of all arrhythmias are atrial fibrillation and the numbers have grown 130% since 1990. It's not -- the kind of arrhythmia itself, it's not dangerous for you, but what it causes is stroke, especially on the elderly population. And Holter monitoring in general, you use it to diagnose palpitations, dizziness, chest pain or something related to your heart. And the market, depending on the report is valued between USD 5 billion and USD 9 billion, and it's growing about 10%. And when you think about the size of the market, includes all the products I listed before. And when you think about loop recorders, one costs USD 10,000. And then Holter monitors, the traditional ones, they're everywhere. You go to a clinic anywhere and they'll have an Holter monitoring device. So the market is big because the treatment is so standard. When you look at the patient pathway, the patient pathway goes so that you have symptoms, you get a referral, then you go to your primary care clinic or the device gets sent to your home, then you do the measurement depending on what's the expectation, what do you have. Then you take your device back to the healthcare clinic or send it back and then a cardiologist has to do an analysis on your data with the help of software. Here, when you look at Bittium products, we're excellent in devices. We sold over 600,000 devices globally. We're among the top 3 global players in this domain with our Faros product. It's clinically validated everywhere. So we've been excellent. We have great channel partner in the U.S. We work with main providers in Europe. Where we haven't been so great at is because it consists of the device, which is this, then also the singular-use patch. We also have cables, and because we haven't excelled in this, this is material science. We've excelled in this. Therefore, we haven't been successful in commercializing the entire product portfolio. Also when thinking about software, today, all the analytics systems have great AI, and that's something where we need to partner because we do not -- it takes a long time and a lot of money to develop a great analytics product and take it through regulatory approval. And there's a lot of companies that have done that. So for us, it's reasonable to partner so that we have a holistic system to sell to our customers globally. Moving on to the sleep apnea, sleep domain. There are 3 types of sleep apnea -- Yes, there are 3 main types of sleep apnea. One, the most common when we talk about sleep apnea, this is what we talk about, 90% of the cases is obstructive sleep apnea. So it means that your airways get blocked during sleep. Then there's another called central sleep apnea, which means your brain doesn't tell your diaphragm to breathe. And then there is a complex case, which is a combination of these both. Sleep prevalence, much higher than arrhythmia prevalence. 1 billion people in the world have sleep apnea. If you're over 60, your chances of having it over 60%. If you're obese, if your BMI is over 30, 70% of the people have sleep apnea. And it's not only the disease which makes your life difficult, it is what it causes in the future. Market, a bit shy of EUR 3 billion, growing almost kind of between 10% to 17% depending on the report. So a huge, big growing market globally. But why the market numbers are not on the same level as in the arrhythmia part? Because this came to the market in 2000. Medical people still think it's new. Sleep apnea detection. There are kind of 3 bigger -- big ways to diagnose sleep apnea. The gold standard is polysomnography, PSG, which is kind of in the lab, in hospital, someone watching you the entire time. Done, sleep test. Measures everything, EEG, EKG, EMG, how do you breathe, what's your kind of oxygen levels, but because you have to do that inside a hospital with someone watching you, it's blocking -- so many people have sleep apnea, so they don't get diagnosed. So then these new tests, home sleep apnea test came to the market. And there's always also different types on this. Type 2 means that you have the same tests as you have in the hospital, but you do it at home. Then the most common, by far, most common, ResMed has a product, Philips has a product is type 3 sleep apnea, and that's where our Respiro belongs to. And what does it measure? It has, of course, your airflow. It looks at your breathing and it looks at your oxygen saturation, looks at your heart rate. Then there's also some screening tools, which are sometimes used if you don't have any other kind of devices to diagnose sleep apnea. Then there's also type 4, which are kind of next-generation new products coming to the market, but they're a little bit like in the cardiac domain on the consumer side and the reimbursement on those products is not very well yet established. Patient pathway, very similar to when you looked at the kind of arrhythmia patient pathway. You have symptoms, you get referred, this gets sent to -- really depends on the country, get sent to your home or you go to your primary care, they place it, then you measure it for 1 to 2 nights, device sent back. Also a pulmonologist is looking at your data, you have your analytics software. Here in Respiro, we have excellent analytics, AI-based -- excellent AI-based analytics system. And when you think about Respiro in kind of if you compare it to other products, it is good that it's this more traditional, which is reimbursed and well known. But the kind of good part on it, it's very small, kind of small in size, so it's convenient for the patient. When we look at our strengths, so making biosignal measuring devices is difficult. There's a lot of Chinese companies who wanted to enter the market, but they haven't succeeded because of their signal quality. We're excellent in that. We're credible. Our Faros has been clinically validated everywhere and our sales channel is excellent. Partnerships, Boston Scientific couldn't ask for a better partner because there's a gain for both ends. We have a very good ecosystem network who help us in biosignals. And in the future, we already started developing another ecosystem for material science, so that will be good in these disposable parts for future continuous revenue. And then when you look at these 2 segments, there are synergies. Patient pathways are the same, done on the same level of healthcare, always needs a specialist to analyze the data, has a software component. So for us, in the size of the company we are, it's easy to carry 2 segments which have similarities than taking segments like neurology, which is done in intensive care, which is completely different than these 2 segments. So looking at the future, what will we do? We will strengthen our cardiac business. The status we have gained is excellent. In the short term, we will bring new devices for a partner in the U.S. and for outside of U.S. business. We will focus on cost effectiveness because that's one competitive edge in the market due to declining reimbursements. And we will also focus a lot on bringing this patch technology to the level where our devices are for continuous revenue. Then we will also partner and cooperate in analytics so that we'll have an AI-based analytics system for our customers globally. Then in the medium run, we are bringing out the next-generation EKG monitoring device. In Respiro, our kind of biggest dilemma has been that we haven't heavily invested in clinical trials. We're at the stage. It is now approved in Europe. We're at the stage where we work with very big strategic partners, multiple, and we're in pilot phase with them. Because of our thin clinical evidence, they don't buy it immediately. They want to test it in several pilots. They're all ongoing, and we will have more results out of those next year. Then also, the U.S. is 50% of the medical devices market. So -- and also as in the cardiac domain, we want to excel and scale, we need to exist with other domains in the U.S. market. Our product at the moment does not reach a higher reimbursement rate. So we have to do some modifications to the product prior to taking it through FDA clearance. And as I said, we have interesting products in the neurology domain, but the market is in the early phase. So -- and it's in the U.S. So we will evaluate the market and think how the product will be competitive at point in time in the future in the U.S. market. Summarizing, we're excellent in the cardiac domain. We want to strengthen this by bringing new products to our partner in the U.S. to our outside of U.S. customers and to have a complete offering, not only excel in devices. We need to expand our global reach with our sleep apnea portfolio, and these pilots are an excellent start towards building that global reach. We need to be in the U.S. biggest medical devices company -- country in the world with other products than only our remote EKG product. And when we select our kind of strategic partnerships, we need to be good. We need to sell partners that there's a game in both ends. And this doesn't say that we only work with the global major players. We can have also local strategic partners in each and every of the region, but we have to select them well. Because for us, to make it to every healthcare center in the world, there's 280,000 primary care physicians only in the U.S., we would never be profitable. So last slide, summary, focusing on 2 segments only for profitable growth. Bringing new products to partners globally, having the full portfolio in the cardiac domain, strengthening clinical validation in sleep apnea, conducting excellent pilots, looking at the neurology segment in the long run because I know there's potential in the product. Thank you very much.

Thank you, Niina. Then it's time for questions for Medical side. So any questions from the audience?

Excellent presentation. You talked about ongoing pilots that are doing -- the big partners are doing clinical trials with the sleep apnea device Respiro. Any -- could you provide any kind of time line, any kind of...

Yes, I can provide a time line. They've started with multiple partners, and we will get results by next Q1 or Q2.

All right. Excellent. And then if I may continue on the same time line, when can we expect kind of sales growth coming through? If these are possible, of course, that requires that they have positive results and they are very happy, but...

Contracting with big corporations, I don't know if you've done that. It doesn't happen overnight, no matter how much both parties want it. So I think after these pilots, the next question is how long does the contracting part take if this is something that they want to include into their portfolio. So there's no development work in that respect needed if the results of the pilots are successful. It's more about how legal can do their paperwork.

Fair enough. And could you also provide maybe some color on that? Are these in the U.S., meaning that you are also making some work towards FDA approval?

For sleep apnea, you mean?

Yes.

Yes. Well, currently, the product -- because there's different reimbursement codes for home sleep apnea tests in the U.S. And currently, our product does not have features like you can -- in the analytics part of the system that you can track total sleep time, for example. So there are some features that needs product development work before we can start our process into the U.S. for the product to be commercially viable also in the U.S. market. So we are taking the steps. We've analyzed the market. We've analyzed the reimbursement. We know what kind of product would be successful in the market. So now we have to look at timing from these pilots and then that work next year.

All right. One more for me. I'm just wondering because you said that sleep apnea has an excellent analysis with AI capabilities and then you have all the product and you said that this is something that requires partnering. So you should -- is it so different that you don't know the...

Yes. Well, it is different. Making -- because when you think about sleep apnea detection is that it says yes or no, do you have obstructive sleep apnea. But when you come to arrhythmias, there's a lot of lethal arrhythmias, which originate from your ventricles. When you do an analytic system, the risk level is also higher because the risk of having these different arrhythmias is that elevates the risk. So making a product with very good AI to detect all of these kind of dangerous arrhythmias is difficult. It's more difficult than making analytics for sleep apnea. And there's a lot of university centers, a lot of kind of smaller companies that excel in this. And the regulatory process is also much higher, much -- because so much more focus on it because of the risk level.

Perfect. Any further questions here? Then we have also questions online. Yes. So how do you see -- I think you covered this, but I'll ask anyway. So how do you see, for example, Apple Watch entering the market and detecting also sleep apnea?

As I explained before, in both domains, there are a lot of these consumer-grade products wanting to enter the market. But because in many kind of in healthcare, you always need -- there's always a pathway, and you always need a report. So you need to track your data, certain amount of, for example, atrial fibrillation, you need at least 30 seconds of continuous atrial fibrillation documented on an EKG for you to get treated. None of the products do that at the moment. All they do is they say, well, you might have this and you go to your physician and then they refer you to one of our tests. I'm not saying that in the next 10 years, it's not -- it will always be the case. But thinking about healthcare in general and the speed of it in different times, I'm not concerned over this strategy period.

Good. Thank you. Another question on sleep apnea side. So it seems difficult to complete in sleep apnea, which today is really duopoly between huge players like ResMed and Philips. So what is our -- your edge and uniqueness with this business?

Simplicity of the product, that's what we're focused on, user-friendliness for the patient and very good analytics system, very easy to use, very clear, which shortens the time for diagnosis from the kind of referring pulmonologist.

Thank you. And also, where do you see the growth will come in Medical?

In the EKG domain out of the new product launches and a new redefined sales strategy. And in the sleep apnea domain from hopefully, very successful pilots and the results and the future out of those.

Okay. Thank you. Any further questions here? Okay. No questions at this point. So Niina, thank you very much for your presentation. And now we will take a short break for refill coffee, take a fresh air and stretch your legs. We'll be back -- Actually, I got advised to be back in 15. So we'll take a 15-minute break now. Thank you.

Thank you. [Break]

Okay. Welcome back, everyone. And before we continue, I'd like to remind our audience online also, you can place your questions any time on the chat box and after the presentations, we will present here. But I would like to invite now Tommi Kangas, Head of Defense & Security business segment on stage. So welcome, Tommi.

Okay. Hello. My name is Tommi Kangas, and I'm Senior Vice President of Defense & Security business segment. I have a long history at Bittium. I've been working already more than 27 years for the same company. I have been in several positions. I've been heading -- at the last to last position, what I have had, I have been heading businesses that is R&D Services, what Jari is now heading and now the last 2 years, I have been heading Defense & Security business segment. I've been involved in management team for more than 6 years. So let's go to this Defense & Security strategy. So our vision, we have a comprehensive solutions to ensure the resilient and security needed to modernize critical defense and communication capabilities. The entire system offering in both Defense and Security is the key for us. We will challenge our big competitors in the future, and we are already now challenging them. Defense & Security offers tactical command and control systems, including radio core elements and user radios, waveforms and tactical management systems, software solutions and security offers the most secure communication systems, including software and hardware solutions. Defense & Security numbers in 2024, our net sales was EUR 51.6 million, and our operating profit was EUR 8.6 million. Our TAC WIN is used in 5 different countries. And Tough Mobile and all the other security systems are used by 75,000 users in different authorities organizations at the moment. We have employees around 233, and we have in very aggressive growth path at the moment. So Defense & Security development highlights. I will show you some history of the Defense & Security. At the moment, we are ahead technically and commercially. We are ready to respond to market opening. So we started with Finnish Defense Forces. We have a long cooperation history with them. We started in 1998 with some research projects. We made the frame agreement for TAC WIN system in 2017. And Tough SDR framework agreement was signed and started the deliveries for Finnish Defense Forces in 2020. We signed a partnership agreement with Finnish Defense Forces in last year's November. And this is a very important milestone for us also in the cooperation with Finnish Defense Forces. a4ESSOR consortium, where Bittium has been a member, started development of ESSOR waveform in 2009. There are 6 different countries developing that waveform. And we succeeded to win first international customer, Estonia for TAC WIN system in 2016. And we won Austrian Armed Forces as a new defense customer in 2018 for our TAC WIN system, and we are still delivering those deliveries for them at the moment. And last but not least, Croatian Navy delivery started in 2022. And now we are delivering communication system also to land forces in Croatia. So we have done all the coastal area of Croatia, and now we are going inside the country, I would say so. And we have a cooperation framework agreement with BAE Systems. It has been signed in 2024. Our target is U.K., but in the same time, we are targeting international customers with BAE Systems. And we have also common research projects with Lockheed Martin in the area of situational awareness in Battlefield, and we use there also artificial intelligence. And we -- actually, there is also this Indra letter of intent signing last summer. So that's also ongoing very good faith at the moment. And then about the security side. So Tough Mobile smartphone -- first Tough Mobile smartphone was launched in 2014. And the second one, Tough Mobile 2 launch was in 2019. And we just launched our Tough Mobile 3 in the DSEI exhibition 2 weeks ago. Okay. Let's go to the financial development. Again, it was already mentioned in the couple of slides before, but let's go to again. So Defense & Security growth was around 42% in 2024 compared to the previous year. And our operating profit grew to EUR 11 million. And the Defense & Security share of net sales is around 60% at the moment. And we expect significant growth in next years and further coming years. All right. So growth drivers for Defense & Security. This is both [indiscernible] segment. Geopolitical pressure is increasing. Defense fundings are increasing. Command and control systems modernizations is starting in many countries, and they are ongoing already. Ongoing wars have proven the need for air defense modernization and autonomous systems and artificial intelligence. Development cycles are faster. Changes are needed quickly in use in the battlefield. It means that there is some kind of a 3-month development cycle when you need to develop the new features for your devices so that you can defend yourself again. Hybrid networking is coming also. 5G, 6G and satellite communications are complementing tactical communications. And global cybersecurity threats are growing. There are physical access, networking eavesdropping, network attacks and also malicious applications. Governmental customers are looking for sovereign solutions. It means that they are looking for manufactured -- designed and manufactured in Europe kind of solutions. These things are driving market growth and demand for tactical and secure communication solutions. We have a strong market outlook. Geopolitical situation in Europe and Middle East, governments are increasing defense budgets. NATO countries plan to raise their defense spending targets to 5% of gross domestic product by 2035, where 3.5% comes to -- goes to resource core defense requirements and to meet the NATO capability targets. And 1.5% will go to critical infrastructure, defense networks, ensure civil preparedness and resilience, innovate and strengthen the defense industrial base. Countries are requiring sovereignty, national radios, meaning domestic origin requirements. And this means -- for example, for us, it means life cycle services sales adding. And hybrid networking solutions will be complementing tactical communication systems. So they will not replace anything, but they will complement those systems. Okay. Let's go to the Defense then a bit deeply. About our product portfolio. So core network products consist of TAC WIN. It means Tactical Wireless IP Network products, Tough VoIP, Voice Over IP solutions, waveforms, tactical management systems. And then this is extended by user devices like SDR vehicle radios, soldier radios and tactical 5G solutions. This whole system is maintained by life cycle services that we launched this year. And then a bit more about life cycle services, which are essential part of our customers' operations in defense. Bittium provides its customer life cycle services to support customer sovereignty requirements. We offer trainings, maintenance, spare parts, on-site support, extended warranty and many other services that end customers need to fulfill their sovereignty requirements. This is the illustration about how our customers use tactical communication systems and devices in different situations and [indiscernible] in the battlefield. There are land forces, Navy, artillery, ground-based air defense and hybrid network components. Our products create the comprehensive tactical communication system, entire system. Core network by TAC WIN, it's core net means that there is a mesh network behind the battle on the battlefield. And then we add there these SDRs as extensions to vehicles and dismounted soldiers. Waveforms creates the automatic routing between the nodes. So it's the communication waveform. There are 3 different waveforms, and I will explain those a bit more later. And tactical management software tools for planning and management of moving troops. And user branch-specific networks can be deployed as a stand-alone, meaning that this one number can be deployed as one stand-alone or then this can be seamlessly connected with the TAC WIN backbone network. And this network can cover whole country. For example, Finland, we can cover whole Finland with this network. All right. So let's go to the strengths. Defense entire systems. Our strengths are entire system offering, including backbone network, VoIP solutions, radios and tactical management tools. And usually, our competitors are offering mainly only radios. We have the comprehensive tactical network solution. We have the most modern SDR radios. We have commercialized 3 separate waveforms for communication. Bittium is the first in ESSOR waveform commercialization. It means that we have been developing together the specification of ESSOR waveform and now we have commercialized, put that in the radios, and it's a sellable product at the moment for Bittium. And additional waveforms can be added to our radio system based on the country's needs. So we can add the additional waveforms and like importing the waveform -- new waveform in the radio. And we are scaling up our production at the moment. We are ready for bigger volumes. We have tested our system in Finland with Finnish Defense Forces in the most demanding environment what we can have. Okay. So accelerating international growth. So Bittium has 4 main pillars in defense strategy. First, technological forerunner as software as an enabler, accelerating international sales and developing strategic partnerships for growth, expanding to new markets and verticals, exploring inorganic growth opportunities and sharpened market focus, utilizing the operational directions of defense alliances. I will explain this more in the next slides what it means. So technological forerunner, further strengthen the technology leadership position in technical communications for defense. We built our tactical network as a core and standard in the defense sector on top of which additional complementary solutions can be integrated. We will strengthen the offering through focused R&D, and we will further enhance electronic warfare capabilities in our research and development projects. We will utilize artificial intelligence and Bittium-led tactical network technology will be further scaled up to the hybrid network capability networks. Accelerating international sales, increase international sales capabilities by adding own salespeople and partnering. Bittium U.K. sales office was opened in beginning of August. And we are growing also sales in Europe, sales team in Europe. We will select more specialized partners to the new target countries and Bittium will develop new business models based on the trends of countries' needs and sovereignty will be as a main factor there. We will adapt to countries customized winning concepts, and we will strengthen our position as a global provider in tactical communication solutions. And these are related to the sales channel. So we have 3 main sales approaches. Based on alliances' operational directions, meaning like NATO and North and Europe and additionally individually attractive large countries, for example, in Asia. We are targeting these countries' common procurement programs. We have 3 main channels: direct sales in Finland for Finnish Defense Forces, local integrators in the countries where it's needed this kind of a local language know-how, culture and contact networks. And then we have large system providers for air defense, artillery and autonomous systems, where our communication system is a part of whole integrated defense system, for example, air defense system. Expanding to new markets and verticals. So MarshallAI is a first step for us in this path. So Bittium will further strengthen the offering through strategic acquisitions of complementary offering to support Bittium product use cases. We have a good basis for developing AI further in our products. In cooperation with MarshallAI, we can develop secure and efficient AI solutions and added services, especially for -- to Bittium tactical network radios, such as counter-UAS and services or other surveillance activities. We have identified already some areas where we'll implement AI in defense and software development and offering. We will utilize artificial intelligence, both in product development and in operative products. We will develop, we will grow and maintain our AI know-how. Sharpened market focus on accelerating international growth through developing partnerships and a sales focus on NATO North operational direction, Europe as well as selected countries in Asia. And this operational direction means some alliances like NATO direction of the operation in the battlefield or in the bigger picture, like, for example, Finland sees to East, and we can have alliance from NATO who can cover us also. Finnish Defense Forces is important customer and partner for us, but they are also very highly appreciated reference in the defense market. We can use Finnish defense forces as a support in internationalization. For example, we can invite international customers to visit Finnish defense forces, and they can showcase then our system, total system in use in Finnish Defense Forces operative. Okay. Let's go then to the Security business. Earlier, our security strategy was to provide devices with software. In our new strategy, we will be comprehensive security solutions provider with a focus -- software focus complemented with devices. Our solutions can be integrated on multiple hardware platforms. We provide Bittium Secure operating system and dual board solution for Bittium Tough Mobile, Android, iOS and Windows. We have extended our offering to tactical systems, rotors and military radios and hybrid networks also. And we have launched a new Tough Mobile 3 in the DSEI this year. This is still prototype, but I can show you this in the next room. And this is ultra-secure 5G Android device. Bittium Secure hardware and software solutions has been integrated into this device. So we have co-developed this with HMD Finland. And manufacturing will be in Europe. And sales will start now. And this device with the software solutions will be available for deliveries in next year. And our sales channels in Security business. So we have our product offering, Tough Mobile 2 and Tough Mobile 3, Secure Suite and Secure Call. Then we have 2 main sales channels, direct sales, and local agents. And again, there is the same need in Defense, so need for the local language know-how, culture and contact networks. And our main customer types are governmental customers, technology integrators and software-only customers. Our competitive advantage in security is, first of all, our security reputation is important. We are based in Finland, in Europe, and we are also NATO member. We have long-term experience in security communication solutions. We have produced devices and secure software solutions since 2014 already. Our entire security system is including security software solutions, quantum-safe products and ultra secure devices. And our most modern product, Tough Mobile 3 with 5G, it will be certified to NATO restricted confidential level. And in Security business, Bittium has 3 main pillars. So first of all, security software as a core. Bittium will further strengthen the technology leadership position in ultra secure software in Security. And Bittium will build its security software as a core, deployable to other commercial hardware products and platforms. New Tough Mobile 3 is co-developed with HMD Finland. There is a Bittium technology inside, and HMD will manufacture these devices in Europe. We will accelerate our international sales. We have revised our go-to-market plan. Bittium will further strengthen the international sales. We will utilize more secure communications specialized resellers. We will expand software licensing and application sales, and we will expand also to defense applications and use cases, like I said already in the previous slides. Okay. This is the summary of the business -- whole Defense & Security business. Keeping technology and market leadership in defense and security, tactical network as a core, integrating complementary hybrid networking solutions, accelerate international sales, develop strategic partnerships and seek inorganic growth. And we will utilize also mergers and acquisitions for inorganic growth as one tool. Transform security strategic from device with software to comprehensive security software solutions complemented with devices. New Tough Mobile 3 has been added in our offering. And market focus in defense alliances, operational directions and in security, more specialized resellers. Thank you.

Thank you, Tommi. And now we can move to questions and answers. I have quite many here, but let's take the first from the audience if we have from first here.

My name is [indiscernible]. I'm here as a private investor. I have a question concerning your agreements with -- in the U.K. and also in Spain, which you announced some time ago. Are there -- could you comment anything on the volumes? Or has business actually started? Or is it just nice written words on a piece of paper? Or have deliveries already started?

Yes. So the deliveries has not yet been started in massive volumes. So we have agreement with BAE Systems in U.K. the frame contract, and we are planning to target this let access program in U.K., which has not yet been launched. And we are -- they are actually late already 1 year for that RFQ. So we are prepared for that. But in the same time, we are also seeking for the opportunities with BAE Systems in international markets, not only in U.K. And then about Spain. So as everyone knows already, we signed this letter of intent, and we are negotiating with -- in a good faith with them -- with Indra at the moment, and we are proceeding there also, but not yet ready, I would say so.

Thank you. Any other questions?

[indiscernible] Westin. Can you comment shortly, but don't tell everything about drones and then also a couple of words. All NATO countries, the army, they want to come to Finland to have a field test of their own troops. So you don't need to go to market anymore. You go with them with your devices and then they send you orders. It's just -- yes, and I like this Secure Phone strategy.

About the drones. So our target is to provide communication devices and solutions for our customers. If it's related to drones, we can do that. But we are staying in the communication systems. We are not preparing and manufacturing drones. And what was the next question? I don't remember.

All NATO countries come to Finland. And you can market to them. You don't need to travel there. They come here. Everybody comes.

It's not so easy to only demonstrate in Finland. It's helpful, of course. We can -- like I said, we can invite the international countries like NATO countries to visit Finland and Finnish Defense Forces will showcase their whole M18 system in operative use, and they can kind of prefer that also, but we need to make the sales work also. We need to make this traveling abroad all the time. I'm having quite many hours in airplane at the moment.

Any further questions?

[indiscernible] Private investor. Can I buy this kind of Tough 3 phone next year?

Yes. We have not yet planned the sales channel for individual users. But I think that at the moment, at least Tough Mobile 2 is for sale in some web pages.

Yes, they are.

So we can maybe arrange that kind of sales channel that where we can sell also for individual users. But it's mainly targeted for governmental users, of course.

Can you elaborate that a little bit why we are targeting the governmental and not the private users?

Yes. So the governmental users, the device is so secure and it's meant for this kind of group users, for example. It's one thing what we use. And of course, if you are individual user, you can -- may not be able to use all the feature of the security software and Secure Call and so on. If you don't have this kind of the other end with the same device.

Yes. Good. Any further questions from here? In the middle, meanwhile, I'll ask, there are quite many questions here regarding the Indra. When can we expect any news? And how is it moving forward? And what's Bittium's role in negotiations now? So can you talk a little bit more about the Indra?

Yes. As I already said, we are negotiating at the moment with Indra. We are proceeding in a good faith, but I cannot say any time schedules because it's not yet clear for me exactly. And also, it's not possible to introduce here all the time schedules. But we are going forward with very aggressive time schedule at the moment. We are negotiating with them all the days at the moment.

Okay. Then about the SDR radios. So there are plenty of large defense players having SDR radio offering. Many of them also ESSOR partnership. So will this become a market where domestic players provide their tactical communication radios to their own countries? Or if so, so what's Bittium's role in that at the moment?

Yes. At the moment, we have the most modern SDR radios in the market. And as I presented here, we also have implemented ESSOR waveform as only industrial player in the market at the moment. So that's for our benefit in the market. Of course, there are a couple of competitors, for example, in Europe, who are participating in ESSOR development, but they have not been yet able to productize that. So that's our benefit at the moment. And we may come and go also to these kind of countries would have already some national radios. We can offer there because we have this ESSOR available.

Yes. So there are further questions regarding the ESSOR. Maybe you can tell a little bit what is ESSOR? Who are the partners? And what are we developing?

Okay. So ESSOR waveform is a kind of common waveform for European armies -- meant for European armies, and there are 6 different countries, Finland, and then there is Poland, Germany, Italy, France and Spain. So these countries are participating at the moment. There are also some other countries going to participate this, but I'm not sure if it's yet public.

Yes. Further to this, and so the ESSOR waveform can be used also in radio. So it's not mainly backbone?

No, not -- it is used in our -- for example, in our TAC WIN radio -- Between our TAC WIN radio and SDR radio. It can be utilized in that area. And then we have TAC WIN and narrowband waveforms for communicating in the mesh network, so meaning the TAC WIN nodes -- between the TACWin nodes. So this is a kind of additional part for extending radio communication in the battlefield. And of course, we can then -- when somebody else -- some other country will develop this ESSOR waveform, we can communicate together with the different manufacturers' radios also because of the same waveform.

Yes. Further, so will NATO countries cooperate more on the procurement going forward. So will this benefit the big players or Bittium?

Okay. So NATO is one alliance, but we have also other alliances like [ CEF ] in U.K., and we have NORDEFCO meaning this Nordic countries. And I think that this all will benefit Bittium quite well because we are cooperating with Finnish defense forces which have already operating system available and they can promote that what it does for the NATO countries, for the [ CEF ] countries and for the NORDEFCO countries.

Okay. And can you tell what is your strategy going forward regarding cooperation. So the -- with Indra, we provided the licensing model, perhaps licensing of technology. So what is the strategy here?

The strategy here is, of course, that like I said already, we have these integrators in the countries, but we may grow also this kind of common purchase, procurement programs. And of course, we are targeting those very, very aggressively that we can go, for example, for some [ CEF ] cooperation purchase programs and so on.

Okay. Then one more about the ESSOR. Is it -- do you know if it's possible to use ESSOR waveform in drones?

Yes, of course, it is.

Of course, it's the waveform as the other ones as well. Okay. Any -- like I said, I have a couple of questions here. So if you want to ask questions, please raise your hand. So I'll know. So tell me how significant is the newly launched life cycle services? How -- which part of -- is it a Bittium portfolio? And what's the meaning for Bittium?

So we productize that service in the beginning of this year. But of course, we have sold that service already earlier. But now we just productize that, that we can have some kind of package for customers who can buy that package then for their services and select their different items, what they can or what they need to have in order to keep their sovereignty. For example, it's not yet a massive part of our business, but I think that it will be coming and it will be increasing heavily when this sovereignty requirement will come more accurate. I cannot say any numbers here.

Yes. Of course. Yes. Okay. Then I move to Tough Mobile 3 or devices part, security part. So for me, what about Nokia's new HMD phone. So is there something for Bittium there?

I don't know yet might be, but I'm not sure yet. We have now made the deal with the HMD and they are manufacturing our device and -- or they aim to manufacture our device. And we can offer, of course, our secure software solutions for every customer. So there will be possibility to provide our secure software solutions also we at this HMD device to other customers.

Is there anything unique on Bittium Tough Mobile 3 compared to maybe other devices with the same similar intentions?

I would say so that the unique part of this device offering is the security software what we have. And also, the other thing is that we have implemented our security hardware solutions inside HMD device. This is not available from the other competitors.

Okay. Okay. Any questions from the audience? Thank you -- or Juha, yes, please.

Juha from Inderes. Maybe this is a difficult question, probably uncomfortable. But the European market, how many countries actually have a modern command and control system currently, like comparable to Finland or what you are delivering to Finland?

I would say that no other countries have this modern than Finland has at the moment. But of course, they have modernized those already. Some countries have modernized their communication systems already, but mainly the countries are now starting the modernization of the tactical communication systems.

Yes, that was going to be the next question. So how many countries are going to do it in the next couple of years or the next decade or how many trials, and I'm missing the word right now.

Request for quotations. I would say so that there will be plenty of -- I'm not I will not say any numbers for the countries because they will -- they are raising new countries all the time, all the time. So I would say so that there is plenty of countries, who will be starting the modernization. And there are already several countries already now where we are talking about the RFQs, RFIs or demonstrations.

All right. Good enough. Finally, let's say that war in Ukraine ends tomorrow. And for somehow, we get like a peaceful time to Europe and everything looks a little bit better. Do you think that the defense boom, all the spending that is in the books now is going to drop? Or is it just going to happen anyway because we have the Eastern neighbor that we have?

I would say that absolutely not -- they will not end the defense budget when the war ends, but they will be prepared all the time because they know what is this -- our Eastern neighbor nature, how they act. So they will be preparing all the time some wars also, if they will end up this Ukrainian war, which will be end up somewhere.

Thank you, Juha. And while you were asking, there is also coming a new question here, which I still present. So can you tell there are many questions. Is the mystery country, Spain. Is this Indra deal the same thing that the country that was launched this summer.

No.

Thank you. That was all I needed.

It is not the same country.

It's not the same country. Perfect. Thank you, Tommi, very much. Now we move to summary, closing. So I'll invite Petri, welcome.

All right. Interesting day. Hopefully, you have all enjoyed about the presentation. I think at this time, we wanted to make this different in the last, we have been really for R&D-focused house. And now we have really put efforts on making changes to the leadership team and making sure that is commercialization, customer-driven, customer focus market and opportunities are really visible. And hopefully, you have been able to get more information about the business for your potential investment decision. So just to summarize what we have heard today and how we are believing and seeing is that we are really committed to building a sustainable, safer, healthier future. So Bittium is in a very strong position to accelerate international growth. And all these -- what we -- in the markets and strong balance sheet, those are supporting both organic and inorganic growth opportunities. Also, all of our business segments are well positioned for the growth based on this updated strategy you heard today and also the investments that we are doing will focus scale on our business, developing new opportunities and international sales channels. And with all these opportunities we have in our hands for the growth, the net sales are expected to grow clearly faster and operating profits to improve. And therefore, just to summarize first the current outlook. So we are holding the forecast EUR 95 million to EUR 105 million for the top line and EUR 10 million to EUR 13 million for the operating results. And like I said, so now this is September and this is the best judgment that we have in the company and we are holding the forecast. And as we have heard all these different elements of the growth story. So we are raising the bar, we are raising the long -- new long-term financial targets. So Bittium is expecting that net sales growth will be from 15% to 30% annually and also the operating profit level to be at from 10% to 20%. And just to note that some growth is also expecting the inorganic growth. I think just want to make a comment that we have big runway for our existing products. So we are not just expecting that there will be one large acquisition that will solve the top-line growth problem. Actually, it's quite opposite. We are seeing this potential acquisition as a more kind of complementary type of nature. Then the Bittium dividend policy. There is no change compared to past. So we are following the dividend policy that takes into account net income, financial situation and also need for capital and financing growth. What that basically means is that we are following the kind of same kind of approach that we want to be a dividend payer. But of course, as you have heard, the high ambitions for the growth as well, we want to make sure that we are able to finance the growth aspirations as well. Investment calendar for this year after the CMD. So the one is still left, the third quarter will be published on the 24th of October this year. And I think it's again time for the Q&A.

Yes, for the final Q&A. And towards the end, I found my mistake on the slide, so actually, the gentleman found it. So the profitability or the net sales growth for the coming years 20% to 30%. Thank you for -- following my strong number on the slide, it was originally 20% to 30% annual growth rate, so apologizes and thanks, gentlemen. So the first mistake. But now time for questions. So first one to start here.

First, I have to ask, it's not that long when we had a strategy update from Bittium. It was like 9 to 10 months ago. The growth target was 10% and the EBIT margin target was over 10%. Also the growth target was over. And of course, we are over it, if we had 20% to 30%, but still a big change. The market was already good and defense, okay, maybe some things have changed compared to Israel. But why has there been such a significant change in your own ambition level and the target?

I think the main growth driver is obviously defense here. And I think that -- if we look at the market in general, I think the market has kind of accelerated in a way that you are right in the past, there was something already growing on the defense side, but now it looks like that a little bit from Israeli companies out. Of course, this is not something we have not got any written confirmation, but based on the market information we have, it seems to be that the payout. But also like Tommi was explaining that we have actually invested a long time for these products in collaboration with the Finnish defense forces. And now those are finally both technically and commercially ready. And we have seen now starting to see now that other competitors, if you exclude the Elbit they are also starting to struggle, whether they have a technical problem or delivery problems, Bittium seems to be now considered as amongst those one big players. Also, the announcement with the Indra seems to be causing a lot of positive movement for us in the market. In the past, maybe Bittium was a small player. But hey, now because the one of the large countries like Spain is really considering Bittium, they start to think it must be somehow good. So I would say that the market actually has evolved and accelerate. I think that's the most biggest reason. And that's -- but of course, I'm bringing the commercialization experience. You have seen today also a little bit different approach for the presentation. We have also Niina, we have brought a lot of new people, and it's everything is to support the commercialization and the customer focus and the drive. So the intention is to increase the clock speed in the company. So that is kind of -- and since I joined, we have started to make a significant move. You have seen some announcements, the MarshallAI, also the Qualcomm with negotiation with Indra, and also the HMD with the Tommi. So I think these are finally moving to the directions that we can say that, hey, now it's the time to update the financial targets to be higher.

Excellent. One question regarding the targets. They are long-term targets, of course, but you have a strategy period here. So should I -- when I think about this, should I think about it like you will read this during, hopefully, each and every year of this strategy period? Or should I think about it like okay, you are moving towards them and 1 year might be lower and 1 year might be higher?

So I think we have given the outlook for this year. And the intention is that we are targeting to reach every year, of course, then. But of course, the '26 is also partly the transition there. But that's the intention that we would be reaching. And that's why we are also trying to seek this M&A as opposed one potential tool in the long run that we will even increase the aspirations to higher.

And finally, about this target here because that was 2027 next year. You said that there are a lot of costs related to Internet sales and all that. So are you kind of saying that you will reach the EBIT margin target also 2027?

I think that we intend...

Sorry, 2026.

Yes. I think that's the kind of our initial target for us to reach. And I think you might get impression that going accelerate the international business that you need to add a lot of salespeople, but a lot of what you heard today is actually, we are doing that a lot of through the partnering. And we have already done significant improvements on the capability of the sales this year. So everything we have now announced as the financial target is already noticing needed requirements to grow the business. So we want to grow the top line profitably. That's really the intention here.

If I may ask one more, I will just think like how fast does defense have to grow? How many kind of new countries do you have to reach in order to achieve your targets?

I think that this is something we have not displayed in detail, but I think the Finland itself, I think currently signed a frame agreement, it was close to EUR 200 million just for the SDR radios, which we are about to start. So depending on the size of the country, I would say that in average country, one deal per year would be enough. But of course, our aspirations are much higher.

Thank you. And the next question also here online.

Thank you. Great plans. I really like them. But if I look at your personnel, the amount of your personnel is very small. So how can you recruit more from all of university? And is your organization low, so you can manage it through -- I think so, I'm guessing, it is very low. Can you comment on both of these?

Yes. I think with respect to numbers, the employees, so the transition is more and more product business. So while we scale the revenue and the profits, we don't want to necessarily hire similar amount of the people we have. Of course, some of needed, especially on the defense side to support the growth initiatives. But I'd like to remind that we have invested -- Bittium has invested almost EUR 200 million to R&D last 10 years. So most of the investments are already behind. Of course, we have to keep the -- make sure that our hardware and software is competitive and we are going to also add -- strengthen the AI and other capabilities. But the big portion of the platform development is behind. That's -- and now the market is opening up. And our organization in general. So I introduced you the leadership team. And there has been a lot of changes also under the leaders we have in the leadership team. So I think that there has been a lot of changes, and I'm really comfortable at the moment for the organization we have to face this growth challenge.

Thank you. Okay. If I may start here. Medical R&D 30% of sales is very high. What should we think of R&D going forward in both medical and defense?

In how big portion is that...

In the future, yes.

I think at the peak, we were investing more than 30% compared to the revenue. And I think we are now at 16% range. And we haven't set or defined exact number for the -- what would be need to be the percentage. But I would say that proportionally to the revenue, it will still remain roughly at the same level of 15% to 20%. But of course, the absolute euros will grow as we need to also invest on the future development as well.

Yes. Thank you. So further for Medical, the medical business seems to subscale a little. So how should we think about the capital allocation and R&D going forward there? I guess, you already answered that too, unless you want to...

No, no. I think on the Medical, I think we reduced our cost by EUR 2 million annual cost earlier this year. And Niina was explaining the sharpened focus. So it means that we are going to invest, but we're not so broadly than in the past. So it's all -- everything -- all the investments are related to customer case or market need, not just in the R&D widely in general.

Yes. Okay. Then about the defense side. So will the amounts of deliveries grow to the Finnish defense forces as well from the previous one because the Finnish defense budget or fund was raised to billions?

I think we have not disclosed any customer-specific delivery numbers, but I want to highlight that after the second half, we was more than EUR 40 million backlog, and most of that came from the defense side. But like I said, not disclosing any specific customer needs.

Yes. There are as I see not big synergies between Defense & Security business and the Medical business. So neither on sales initiatives or R&D. So given the strength of the defense market at the moment and your strong technical position here, why not streamline the organization and focus more on defense and security?

Like we have heard today. So actually, a lot of the further investments is actually focused on the defense. But I see one of potential is also in the Medical side. And I explained that we want to be in the businesses which are scalable and there's competitive advantage coming from the technology. And that's -- and the markets are big enough and there's a growing market. So Medical is fulfilling all these requirements. So there may not be that big synergies between the businesses, but overall, the fit for the big teams portfolio, I think it's -- the requirements are there.

Yes. Thank you. Then a question regarding the dividend distribution and policy in general. Is it possible that dividends would be paid at some point quarterly in the future? And could the dividend distribution be such that half of the profit would be paid as dividends and the other half would be invested into growth? Or what the distribution ratio should be? Or what do you think about it?

Yes. I think this dividend policy is really a question for the Board of the Directors and not for me to decide.

Yes. That's true, but we send the regards.

But we want to be in a position to pay dividends. That's my...

Of course. Yes. So I think I've reached my questions here at the moment. Any questions from the audience? If not, then I'd say that's it for today. I thank you all for participating, and we will continue with the people team here in the next room, all of our business segment heads will be presenting their offering there. But yes, thank you on my behalf.

Okay. Also, thank you from my side as well. I think this has been really interesting day for me and good questions all from you. So looking forward to now execute the plans and the targets we set today. So thank you.

Thank you.