HMS Networks AB (publ) (HMS) Earnings Call Transcript & Summary

All right. Good morning, and good afternoon, everyone. My name is Joakim Nideborn. I hold the position as CFO of HMS Networks. And today, we're going to have an investor briefing as we call it. And just a quick introduction to what we're going to talk about. So this is -- there will be nothing new in this meeting, no comments on recent trading. We will go over what we presented in the last quarterly report, the Q4 report that we released 2 weeks ago. And I will also start by giving the introduction to HMS. And I'll also talk about our recent acquisition, Red Lion Controls. I'll try to do like this. I will hold a presentation for some 25 minutes going on first HMS as a business, then our strategic objectives, Red Lion Controls and financial updates. And I hope that we will have some 35 minutes left for Q&A. So today, I only have one screen. So I would like to ask all of you to go on mute for -- during my presentation. And then if you can raise your hand if you have a question, I'll try to take you one by one. And if you have more questions, you can get back in the line. This normally works pretty well. We've done this now for a year or so. And I think it will be a nice session for us where everybody should have the opportunity to ask questions. And with that, I'm going to start the introduction to HMS Networks. Starting with our mission statement to enable valuable data and insights to allow our customers to increase productivity and sustainability. I think that's really a pretty good description of what we are trying to do within the business. Just some quick facts before we get into more detail. over 400,000 machines that are continuously being connected to our cloud systems and supervised through that solutions. We say that we are working in the field of industrial communications technology, which is a pretty wide definition, I'm saying, we are active in a pretty small niche within this area, and I'll try to explain that better to you today exactly what that is. We try to be in the front of technology. And today, we have an offer within 5G that we've been working over some time. Today, not a lot of business yet, but it's an interesting offer for the future. Also try to adapt to use AI. And I think a lot of people are talking about Internet of Things. That's something we've been doing for many, many years to try to connect these various machines to different Internet solutions. Today, we are about 800 employees, about 1/3 in R&D, 1/3 in sales and 1/3 in manufacturing and supporting functions. We do have business in 18 countries, our own offices, and we have distributors and partners in roughly 50 more countries. Our headquarters is on the West Coast in South Sweden in Halmstad, where the company also was founded about 30 years ago. And as you will see in a minute, we just reached about SEK 3 billion in sales in 2023 with an EBIT margin just above 25%. And the last 10 years, we managed to do a CAGR of 20% growth. And you can actually pick pretty much any base you want, you'll get to about the same number with a 20% growth. So I think it's been a good growth journey for the company the last -- actually throughout the whole period, the company has been around. Now let's get into our business. So we have pretty much 2 main areas in our business. We work within the area of industrial automation and building automation. Within industrial automation, we are particularly strong within the manufacturing industry. This is about 70% or so of our business, and you'll basically find our solutions in any factory. And on top of that, we also do some work within transportation infrastructure, where you could see our -- we have a big part of our business within applications like AGVs for material handling and those type of applications. We're in power and energy, where we do, for instance, battery energy systems, where we do the communication for that. And then we also have a separate business within building automation, where we connect air conditioning equipment to building management systems to enable a seamless exchange of information basically. And what we find is interesting in between all these businesses is that the communication is pretty similar regardless of where you find our solutions. So it's pretty much a generic offering in terms of what verticals we are working with. Trying to go a bit deeper in this, trying to explain what we're doing. So we are dividing the Industrial Automation business in 2 areas, what we call control-centric and information-centric. And let's have a look at the control-centric business first, which also is the largest part of our business. And what we're trying to do here is to enable real-time control of various manufacturing processes by connecting, for instance, a robot or a similar application to a local network so that you can exchange information between the different systems that you're trying to connect. And this might sound simple, but it's a little bit tricky on the shop floors because you're not using necessarily one standard. We see a lot of different standards, up to 30 different standards that are being used for information exchange in these environments, which is quite different if you go to an office environment. And there are several reasons for this. There are legacy reasons. There are also different requirements in different environments that calls for different type of standards. You might be surprised to see that the majority of the business here is actually wired applications, so it's not so much wireless. We see wireless growing good the last couple of years, and we started to develop a wireless offering the last 10 years or so, but still the majority of the volumes would be on wired applications. And the reason for that is that this is really real time. So we're talking about maybe 1 or 2 milliseconds of latest in order to get these applications to work. And then the wireless standards are simply not fast enough at this point in time. We also do have an offer for network monitoring and diagnostics of different networks to make sure that your network is working properly. And of course, you would like to know upfront if you have a problem with your network, so you can try to correct that before you get downtime. So I think what's really characterizing this offer is reliability and robustness. It needs to cost money when your network goes down. Otherwise, you will probably not find HMS products in those solutions. The other area that we call information centric, it's a little bit different. It's not so much about driving the real-time control. It's more about getting insights, understanding what your manufacturing processes are doing. You might want to optimize your overall equipment efficiency and your work force with this productivity and to increase sustainability. And the main offer we have here is remote connectivity to allow you to remotely connect to a certain device to make adjustments to source code and to do maintenance from where we are basically in the world. You can also do the sort of opposite to take data from the machine and send it out to a cloud application where you can do analytics of that data and try to learn more about and get better insights about your manufacturing processes. So to this, we also sell a cloud solution where you can -- you get a free version with some basic functionality and then you can choose to upgrade and pay for an SLA and get some more functionality. Of course, this is something that I think is highly interesting and that we're investing in actually quite a bit for the moment to try to build that part of the business to increase the SaaS revenues that today are rather small, but we see good potential in that going forward. So this is really about collecting data from various streams and try to get insights in your business. And some people will refer to this as industrial IoT, that could be one word to try to describe what we're trying to do here. And then finally, the building automation offer, which is actually quite similar to this control-centric offer, but it's completely different technologies within the buildings, different standards that are being used and also slightly different applications. Where we are particularly strong is to connect the air conditioning equipment to building management systems to allow that to communicate with the rest of the building systems so that you could have, for instance, if you go out of a room, air conditioning shut down or goes down a little bit, you don't necessarily have to be cooling the building during night and to make sure that you don't have cooling and heating at the same time, things like that, quite simple in reality, but -- or in reality, not so simple to get it done. And the same -- pretty much the same problem we're trying to solve that you have different type of protocols in these buildings, and you would like to try to bridge this in order to better communicate between the machines. If we look at our go-to-market and our customer groups, we say that we are working with 2 types of customers. To the left, you have our makers and to the right, we have our users. And why we make this distinguishment is because we have completely different ways of going to market, which I'll try to show you on this slide. So if we stay to the left with the makers, we categorize these customers in 2 different parts, the device manufacturers that makes a smaller device. And how do you define that? Well, it's not black and white between a device manufacturer and machine builder. Normally, a device manufacturer is -- a device is a bit simpler. We normally say it's less than 1 cubic meter. And you typically want to connect to these different networks. That will be typically the solution that we try to get in place for these type of applications. We sell on a design win business model, meaning that we -- once we have this design win, we've been specified in with the customer and it becomes part of the bill of material from the customer, meaning that we'll have sales for quite some years once that design win has been won. Here, we go always direct to the customer with our own sales force. And this is also one reason that we can hold a pretty strong gross margin. Of course, on the other hand, the sales cost is quite significant in this part of the business, representing 44% of the business, so the largest part of our business. Then going to the machine builder. Here, we have a bit of a wider offering. We sell a lot of this remote access, also various gateways to connect machines to the networks that you have in the factories. And here, you're not necessarily part of the bill of material, but often you specify as a standard as an option to these machines. So if you want to have remote access, normally, you will pick our solution in that case. A little bit less sticky than the device manufacturer business. The way we go to market here is a combination of some direct sales on the bigger customers and then distribution on the smaller ones. All in all, this is about 25% of our revenues last year. And then to the right, you have the users of the automation system, which is actually the user that is producing something. And here, we have sort of a different offering. We sell a lot of gateways, problem solvers. Also this area with network monitoring goes primarily into these end users, quite often sold through a system integrator that get a task to upgrade a factory or a manufacturing line, and they will buy a bunch of our products to get that done in a smooth way. 31% of our revenues, this is mostly smaller quantities, could also be projects. If you have a bigger factory, that's going to be upgraded, but normally smaller quantities, and this primarily goes through distribution or e-commerce. Looking at some growth rates and drivers for these different categories. So you have control-centric. Here, we have about 8% growth for the coming 5 years. And how do we get to that number? We basically look at various industry reports and try to narrow it down on those subsegments that are most similar to what we do. It's not a one-to-one match. So it's not super simple, but we try to do that. We do the same every year, and it's been proven to be quite right in the past. So I think you can expect some 8% organic CAGR in this business for the coming 5 years. Then going over to information-centric, which is a faster-growing offer, also with some more competition. I think in the control centric, it's pretty stable. You have a handful of competitors that we meet quite often, but not necessarily a lot of new entrants. In the information-centric business, there is a lot of potential. We see a 15% organic growth, and it's really popular to try to get that data understanding to connect more and more devices to Internet. The largest challenge is the security, of course, with cybersecurity, which is getting more and more challenging, especially after the Russia and Ukraine situation where we see more and more attacks. And of course, people are getting a bit cautious to try to open up that channel to your factories, even if they win in getting all the data out so you can understand your processes better is worth something. And then to the right, you have the building automation offer, which is also driven by a lot of digitalization, energy savings. Now with higher energy prices the last couple of years, it's been a good driver to really try to push that efficiency in new buildings. This is about a 10% growth in this business on the coming years. All right. Let's go over to strategic objectives. I see I'm a bit behind. I'll try to speed up a little bit. We launched this framework in the Capital Markets Day in September 2023, quite similar to what we had before. I think the news was that we added the last 2 parts with operational efficiency and sales excellence. For us, organic growth has always been priority 1. So we've been trying to focus on a combination of organic growth and mergers and acquisitions. That's been the -- we said when we launched this plan in 2020 that, that would be equal parts in getting the growth for 2025. And I must say now with the Red Lion acquisition, I think we're pretty much there with equal parts in growth from the organic part and the mergers and acquisitions part. And then we have -- around all this, we have our people agenda that we think is super important. We spend a lot of time on this, and we have a lot of KPIs and making sure that our people like it and being developed within the company. We say that happy high-performing employees will create loyal customers, and that's what we're trying to achieve, of course. And of course, also the planet focus to try to minimize CO2 emissions, not only for the company, but also supporting our customers on that. I think here, we have some ambitious targets. I'll get to in the next slide to do as good as we can. If we go to operational efficiency, what we've done is we've done a lot of investments the last 2, 3 years. We've been changing ERP system, rolling out the same ERP system in all our companies. Of course, we do that to get some efficiency in trying to have the same processes working in the same ways, trying to consolidate where we do things. We've also been investing a lot in sales tools to get a more digital customer journey where we're starting to get effects quite soon when we have the latest releases in these projects, which also takes us into the sales excellence part where we say that we've been investing, building a really strong sales force in many countries at the moment. So the last few years, we've been investing a lot in building that market presence. And now we want to make sure that we do that as efficient as possible and really get the best out of these investments. So I think we have some interesting things going on, on the internal agenda for the last -- for the coming years on these areas. And then just looking at our targets. So we communicated in the Capital Markets Day that we will set up to science-based targets to commit to the Paris Agreement. And that's in progress as we speak, and we hope to be able to come back and confirm that we have been approved to this initiative. And we also set an agenda to triple what we call the HMS effects, basically the savings that we do for our customers. And here, we saved 1 million tonnes in CO2 for our customers in 2022 and 2023. And now we said that we're going to triple that for 2030. So of course, we need to make better products and we need to sell to more customers in order to achieve that. On the people side, people and customer side, we have an NPS target for our customers of 50. We actually managed to reach that 51 on average in 2023. So really good to see. We also have a customer NPS target of 50, where we have been on that level before. We have been a bit short on that for the last 2 years with some delivery challenges and long lead times through the component shortage situation. So we're working hard to get back to this number now. And then we also have a target to have more than 30% female managers, which might seem not too ambitious, but we're trying to do the best we can here. We want to have an equal workplace. And we started from, I think, 16% when we set this target. And now we're 22%, 23% female managers. So we have some way to go for 2025. And then, of course, we need to set a new target after that to become even better. On the growth side, so growth and profitability, we increased the EBIT target from 20% to 25% on the Capital Markets Day last year. And we also added a plus to our SEK 5 billion target to reach SEK 5 billion in sales by 2025. We're all engineers. We thought that was pretty funny to use a pie target instead of just saying SEK 3 billion. And now we added this plus, meaning that we should get to SEK 5 billion organically and then the plus would be all the M&A that will come on top. And now we just happened to sign a pretty big deal here in December in 2023. There will be a big plus on that. So let me go into that, the acquisition of Red Lion Controls that I'm sure a lot of people have questions about. A quick intro, and then we can come back to this to the Q&A. So Red Lion is a U.S.-based company with the majority of the sales, 84% of sales in the U.S. they have 3 main offerings, which is called Access, which is quite similar to the HMS offering within control and information centric with industrial gateways, some protocol converters and routers and access points for -- also for remote access. This is about just less than 20% of the business. And here, we have some overlap, some new products, but also some overlap in this area with the HMS offering. And then something we found really interesting is this Connect offer that Red Lion has with Ethernet switches, something that we've been trying to develop ourselves and find it difficult to enter that market since it's been -- I think that was consolidated a couple of years ago, and those players who are in there keep that in just basically. And this is something that we believe that we can sell quite easily together with the remote access products and gateway products, you will need a lot of switches if you're going to connect the factory, you will have a lot of those access points that you need to have connected. So I think this is a perfect match with the portfolio that we have, just above 30% of the Red Lion sales. And then finally, you have a visualized offering, which primarily consists of human machine interfaces, HMI as it's called with acronym and also some panel meters, which are a bit simpler displays to illustrate information. What's interesting with the HMI is today, you have a lot of connectors to the PLCs, the control systems in this industrial automation landscape. So you actually do quite similar things that we do with our gateways, but you also add a panel on top and you have this middle layer, which is pretty good to also push information to cloud solutions, if you want. So I think this brings us a little bit forward in the value chain, and we're pretty excited to get started to integrate this business. I actually came from the U.S. today, just this morning, I have been talking to this team, how we should get going in for the coming months. We hope this business -- this deal can close in early second quarter, something like that, and then we can really get started on this. The business has been around for some time, more than 50 years, about 400 employees on 4 development centers, 300 of the employees is in the U.S. and for us, a great play to get that platform in the United States. Red Lion has a larger part of their sales outside the manufacturing landscape. So we think that's also quite interesting to be able to get into -- to get a footprint into some new areas like water and wastewater, where we have some business, but not a lot. Also oil and gas is a strong business for Red Lion in the U.S. So all in all, about SEK 1.4 billion in sales the last 12 months ending in Q3 last year, June 55% gross margin and about adjusted EBIT margin of 21%. So not quite at the 25% EBIT target of HMS, but still a solid earnings in this company. And what we're after is really to get this footprint in the U.S. And here, we also get a perfect match, we think, in terms of product offering. And we'll be able to cross-sell some of the HMS solutions in the Red Lion channels and vice versa. We also think that we can take some of these products to Europe where we have a strong position in HMS. We believe that the Americas and the European market is about the same size in terms of market size. And as you can see to the left, we've been having a much stronger position in Europe compared to Americas. And now we're getting not fully equal shares, but I think we're getting really a position in the Americas that we would like to have to build from. And then just a few financial metrics on this. So purchase price, $345 million for us, by far, the largest acquisition we have done. And when we do the math on this, we see that this will be accretive to earnings per share pretty much from closing. In terms of financing, we're going into this being debt-free. And we're going to take on some $225 million on debt, and we have given the Board a mandate actually 2 weeks ago to call for a directed issue to get in the final $120 million equivalent -- $120 million equivalent to finance this whole thing. So after this -- after the directed issue and after the deal has closed, we expect to be on leverage about 2x net debt to EBITDA. And then before I open up for questions, a few comments on the fourth quarter and 2023. I think the year has been quite bumpy for us. We had a good start in terms of order intake, and we saw a pretty big change in the market after the first 2 quarters. We're not so surprised about that. We've been having great order intake, building up a huge backlog, much larger than what we've ever seen before due to the component situation and the long lead times. And now we see when this is now getting better, we see that a lot of companies are adjusting their inventory levels. And this is actually leading to less orders pretty much. We saw this trend pretty clearly in Americas already in Q2. And now we actually see that Americas -- the Americas business are coming out of this. So the inventory adjustments are more or less done, where we see still a lot of impact in Europe and Japan, where Q3 and Q4 have been quite weak in this order intake with the inventory adjustment still going on. And we expect that to continue for maybe 1 or 2 quarters still quarters more into 2024. We also communicated that we're investing in our Ewon business, which is this information-centric business. And we're starting a pretty big development project to have the next generation of remote access being developed. And this will actually target a bit of a different customer group, also with some larger manufacturers than what we've been doing before. We've been having a really strong position with small and medium-sized machine builders. Now we're trying to add some more features to go to the larger ones. We talked already about the acquisition of Red Lion. So I'm not going to talk more about that right now. And then for the full year, I think I actually commented on most on this. A couple of things that we did within the company as well. We've implemented a new ERP. I touched upon that to gain this efficiency. We rebranded the recent acquisition of Procentec and fully integrated that into our business of Anybus, and we talked also about the updated financial targets. So just some quick glance at the numbers. I'm not going to go through everything in detail. You see here on the graph to the upper left, order intake, and you see what's been happening, really strong development up until Q2 2022, then it's been a bit more flat. And now in the last 2 quarters, you see this reduction in order intake. So if you look at the numbers, it looks quite dramatic with an organic decline in Q4 of 34% for the year of 24%. But I would like to maybe show this slide instead. Some of you might have seen this already. We've been showing this now for 3 years actually. And what we've been trying to do throughout this whole period when we saw this aggressive order placement from our customers is trying to show what do we feel is the underlying market and what do we see has been boost orders, as we call it, the light blue. And then now you have the green in the last couple of quarters with this reduction. So if you look at this, you see that, yes, for sure, we are down a little bit in underlying order intake, but it's not a lot. So I think if you believe in this whole exercise we've been trying to do, you'll see that, yes, the market is down, but it's not so dramatic as it might look when you look at the reported numbers. Looking at the sales, it's much more stable, obviously. And then we have our big built-up order book to thank for this. And here, we see still a quite solid development of SEK 760 million. Now we had a strong Q4, as you see in the graph in Q4 2022. So we actually have an organic decrease of 3%. But still, we think it's a pretty solid quarter. For the full year, we do 15% organic growth. We managed to pass the SEK 3 billion. And all in all, quite happy with the development, we must say. And just to comment on this because I think this is a key item, how the backlog has been developing. And you see also the order backlog to the bottom left. We've been up to -- we were at SEK 1.4 billion closing 2022. Now we're down to less than SEK 800 million in backlog. So pretty steep reduction here. I'll try to also illustrate to the right if you put this in relation to the net sales. We're starting in a ratio of about 0.2 backlog divided by rolling 12 months net sales. And then we were up to in the middle of 2022, 0.65, and now we're starting to get down to this 0.2 again, being at 0.26 towards the end of the year. So what this tells us is basically that we're pretty much back to a normal backlog. And for the sales to be growing, I think now we should be having -- we need to see the order intake really coming back strong to sustain that. In terms of profitability, we had some onetime costs in Q4 for this acquisition, and we also made a small restructuring program. And all in all, the underlying profitability were SEK 194 -- sorry, SEK 193 million, which is 25.3% in the quarter. Adjusted results for the year was SEK 777 million and SEK 25.7 million. So we're managing to beat this 25% target, which we think is really positive. A big contributor to that is the gross margin. So we managed to increase about 2 percentage points to 65.3% in Q4. For the full year, we had 65%, also then increased by 2%. So we're super happy with that. And I think that's a quality standard that we managed to continue to build this gross margin. We do have some help from FX tailwinds on that. And of course, the volume, the growing volume is helping us. But then I think we've also been doing a good job in managing prices throughout this turbulent time. And here, you see for maybe a comment that is worth mentioning is also in the pace in which we're investing. So we've been investing a lot in the business. If we take the full year, we're actually growing our operational expenditures by 20% organically, which is, of course, a lot. But you also see that we've been taking down that pace in Q4. So we only grow 3% organically in Q4. And I said on the Q4 call that we will see an increase in OpEx for next year, but it will not be too dramatic. So I think we will slow that down and we'll be a bit careful in what we do, given that we feel the order intake is a bit soft and will probably be a bit soft in the beginning of the year before all customers are coming back and ordering as normal again. So I think I'm going to hold it there, and I'm going to open up for questions. So I'm just going to ask you to please raise your hand if you have questions. And I'll try to help you to ask those questions. So please raise your hand if you have questions.

I have one question from Gustav.

Yes. Just in terms of Intesis, I mean, just curious how you look upon the underlying market for sort of building automation systems, given the increased focus on energy efficiency, are you seeing any regulatory tailwinds in any geographies playing in here to sort of intensify the growth rate for this segment going forward? Or are you expecting it to be around the 10% as you sort of referred to earlier on the slide there?

No, I think there is a lot of regulations going on that is working in our favor. But what we have said is basically with that going on, we think that we will have a 10% organic growth rate on that business over time. We've been having some really good years in that Intercept business, and it's maybe one of the brightest outlooks that I think we have in the group for that. I think we're very well positioned. The competition is not too fierce. There are a few players in there, but not too many. And with all those regulations going on, for instance, in Spain, you're only allowed to cool a certain amount of degrees, and you need to be able to prove that. And also you have like in various -- I think it's in France, you have supermarket applications where you need to be able to show that you have a cold chain. So you need to be able to show that you have kept the temperature low over time. And then you need to have this type of connected systems in order to be able to extract that data and show that that's going on. So I think there's a lot of things that are working well for us. But that 10% is our view on everything included basically. All right. So I have a question from [ Angus ].

I was just wondering, previously, you sort of alluded to the fact that you are lacking Ethernet solutions and Red Lion has, of course, filled that hole in your sort of portfolio. Are there any other holes that you see within your existing portfolio that you want to plug either internally or through M&A in the future?

Good question. I think you're right in the statement. What we are looking into a little bit, we're always looking into this information-centric solution. We feel that there is this remote access and remote data. I think that is something that will grow very nicely for the coming years. And we solve it very well for PLC systems. So that we do very well. But there might be other ways to connect those systems that we can work with. We've also been discussing if we should add sensors to the offering to try to go a bit further and we can put a lot of sensors in place and connect that information as well. We feel though that the competition there is a bit more fierce. So not necessarily the first choice. And then we've also -- we talked in the Capital Markets Day about cybersecurity, see if we can do something to support our customers there as well. This is still a quite immature business in terms of the operational technology from a cybersecurity perspective is quite far behind the IT space. So it's not a core -- it's not necessarily a core area, but it could be an interesting add-on for us in the future as well. So that's something we're trying to monitor as well. All right. I have another question from Gustav.

Yes. Maybe just a bit on the Ethernet switches there and your comment on Red Lion. Did I understand you correctly that you sort of will bundle the Ethernet switch into your current sales offering? And so this will sort of raise your average selling price that it will include the switch now? Or how should I interpret this? And then maybe just a follow-up. Will this be material to your sales then? And how does this compare to your current offering? Do you not offer the Ethernet switch at all now?

Yes. So good question. So we do have -- we actually have developed a few switches ourselves, but we're not super successful in that. So you will -- if you make a big infrastructure project that you typically see on the system integrator side, I mean you will need a bunch of switches in order to connect all your devices. You need to connect those into something, right? So you put a lot of switches in place to be able to connect devices and then you aggregate it upwards in like a network structure. So those customers are already buying these products from someone. And we think it's a perfect fit for us to come and say, "Hey, guys, we can offer the whole suite for you. So you don't have to go to someone else. We'll offer it for you." And since a lot of people put a lot of emphasis on that remote access, I think that is probably seen as a more value-added offering compared to the switch offering. We think this is a perfect situation to try to just go with that as well to the customers. And I think we have pretty good relations with a lot of those customers. So it will be an interesting area to explore, especially in Europe where we have strong relations and don't necessarily sell this software today. So I have another question from [ Angus ].

Sort of on the other side of that question, what sort of opportunity or what extra amount of growth do you think you can get by selling from your existing portfolio into a new market through Red Lion, so out in the U.S., how much of a sort of positive impact is that going to have?

We're not ready to answer that question yet. I think we do that exercise and look at the synergies. We have a few hypothesis, but I think we need to get back when we don't even have the keys to the company yet. So I think we'll have to get back when we have our arms around that a bit more.

Cool. I guess whilst I'm still on the line, could I sort of dig into the -- your relationships with some of the IoT platforms? I noticed that you have a relationship with PTC's ThingWorx where your devices directly link up into their platform. Is this ThingWorx doing the same thing as NetBiter Argos? Or is this a completely separate offering? And are they -- so is one sort of potentially a threat to the other, if that makes sense?

Yes. I think -- so I'm not an expert at ThingWorx, but I think there's not too much overlap. And I think ThingWorx takes on where we end our offer basically. So if you want to do more stuff on the cloud side, we don't offer a lot of that. We basically transport the data for you, and then you can do whatever you want with the data yourself. So I think it's a good complement to ThingWorx. That's my understanding.

Okay. And do you have any other sort of partnerships with companies who are maybe trying to build out this idea of a digital twin within factories? And are your devices quite integral to these sorts of solutions?

Yes. So I think we have a few partners. So we have what we call a solution partner network where you have companies that typically sell some -- they have their own IP, doing something with the data, selling those services. But in order to do that, they need to get the data. And a lot of IT companies think it's really difficult to understand this OT world. So everything that they shop for we call operations technology, right? So different standards in different environment than what you see in the IT landscape. So they just want to get that data from OT to IT and then they're fine, then they know what to do. So they tend to use our solutions to get that deal. And then they do what they do, right? So today, we don't have a lot of solutions on the IT side. You'll get some basic functions with our Talk2M cloud that we have in the Ewon business. But for the more advanced customers, they tend to do something on top of that.

Okay. I guess if we could -- if I can maybe ask about 5G and the sort of themes that you're seeing there and how exposed you are to that and how big you think 5G is going to become in terms of industrial communication and how much growth that could add to your business in the sort of medium term?

Yes. I think that's -- it's a very good question, very valid and very difficult to answer, to be honest. I think what we've been -- we took a position quite early in 5G. So we've been working with this. I think we were actually exploring that already when I started 6, 7 years ago. And a couple of -- since a couple of years ago, we have some proof-of-concept products out. So a lot of customers are testing that. What is a bit tricky though is, first of all, it's rather expensive. But it is an interesting offer because it's -- the latency is much lower than with 4G or with Wi-Fi solutions. So you can actually do more. You can actually get closer to these control-centric applications also with 5G, given that the latency is lower. And I think for some businesses, it makes sense if you have a lot of moving applications like an AGV, for instance, in -- if you have like a warehouse setting, then I think it's a perfect example where it would be a fit. But most of the time, if you have -- let's say, you have a robot or something, I mean, you still need to power it up with a power cord. So the value from getting from -- to get to wireless is not necessarily so high in those type of applications. But I think for us, we've been trying to take a position as a thought leader. We've been doing a lot of testing. We've been doing some work with Boston Dynamics. Doug, you might have seen on YouTube, communication there. So I think we've been rather successful in getting some cool applications going. But to get scale to really get this proven, I think it's probably a couple of years out. So I think Staffan has been saying -- our CEO have been saying all the time, it will be beyond 2025 before it will be in the volumes. I mean, today, we do maybe $1 million in revenues on 5G products. So it's just testing at the moment. But for us, it's been important to take a position and show that we have these solutions. We're going to be there and test them and make sure that the next generation things that HMS is a part of that. So I think I'm going to have to pass on the market potential. But of course, I'm sure eventually, there will be a huge potential, but it's difficult to say at this time since it's not really -- it's not been taken off yet. All right. Any more questions? Just raise your hand if you have questions. All right. No more questions. This was a quiet group. I'm not used to that. All right. But then I take it as everything is crystal clear with the presentation. And I'd like to thank all of you for participating in the call, and I wish you all a good day, and thanks for the interest in HMS. See you later. Thank you.