Net Insight AB (publ) (NETI-B.ST) Earnings Call Transcript & Summary

Okay. Welcome, everyone, to this Capital Markets Day with Net Insight. My name is Andreas Joelsson. I'm the responsible analyst at DNB Carnegie for the coverage of Net Insight. So again, welcome, everyone. We have a busy schedule. We will start now with an introduction of the company and some financials. And then we will move into the media segment around half past 1. And after that, we will have a Q&A session for the media side. Then we will have a short break. And around quarter to 3, we will start with the time synchronization segment, have a small Q&A and then some closing remarks and a final Q&A. So plenty of time to ask questions. And if you want to ask a question here in the room, please allow us for some time to hand you a microphone so everyone online can hear your question as well. With that, I leave it to you, Crister, to introduce and to present your team.

Thank you, Andreas, and welcome to Net Insight's Capital Market Day. As Andreas mentioned, we have a small agenda for today. I will do a small introduction to Net Insight, and then we are moving over to the financial and that's Cecilia Hojgard Hook will handle that. And then we're moving into media. And that's Andreas Eriksson, our Chief Commercial Officer. And then we have the coffee break. Unfortunately, you online need to take your own coffee break, but we will have coffee in this room. So sorry for that. And then we're moving over to time synchronization, and that will be headed by Per Lindgren, Head of Synchronization and our CTO for the group. And then in the end, we have, of course, an open question-and-answer session as well. Okay. Let's get started then. So Net Insight, in a nutshell, what is Net Insight is -- Net Insight is the live sports and media transport specialist with a unique product now moving into the 5G time synchronization. And we are using our technology to broaden our offering into the market. So that's the [indiscernible] Net Insight in the nutshell that we will present today. If we go a little bit more deeper into Net Insight, I mean, we actually founded in the end of 1990s, 1997. And we have plus 500 customers globally. So we are definitely a global company with a footprint in all regions, and we have company customers in close to 90 different countries. We are plus 200 in the company. We have people in like Asia, Singapore, of course, in Europe and in U.S. So we have a footprint globally with people locally, like salespeople and tech sales locally in the regions like in Middle East, like in Spain, in Australia and so on. So we have -- where we have our customer, we have a local representation. If we look into our 3 major product areas, we have like managed network. We will go into that more deeply into the presentation during the media session, what managed network are. But as you can see, we have the most well-known companies in the media industries are our customer. And we have had many of them for more than 10 to 15 years. So they are very loyal to us, and we have a stickiness in our product that they stay with us. The unmanaged is more cloud-based or on the open Internet is the market within media that are expanding, growing the most right now. And as you can see, we have a number of well-known brands as well. And of course, we have many customers that are in managed and unmanaged at the same time, of course, because they are coming together. And then we have the unique solution on the time synchronization, and we are focusing right now on 5G. And you can see a number of customers that we already have signed up. We launched a product in Q2 last year. So we have been a little bit more than 2 years selling the final product. Before that, we have like a more media-specific product, but that was not the product that we can use all the time. So now we have the specific 5G product that we launched last year. If you just look a little bit into the region sales, you can see that Europe are our largest region. U.S. or Americas, as we are saying, that's the key focus area for us to grow. We see that we have a growth potential in Americas. If we look at Europe, we have probably the highest market share in Europe, if you look on all the 3 regions, but we have a growth opportunity in Americas. And then we have APAC that are like much smaller than the rest of the regions, but definitely important for us as well. And if you look into the product groups that we have, the largest one is the hardware part. I mean we are coming from the hardware moving over to the software, and that's likely a transition that we are seeing, and we will see that over time. And so we have software, and support and services. So that's the 3 product areas that we have. We will move into that a little bit more deeper further on. So why invest in Net Insight then? I mean we have a very strong innovation power in the company, showing that we have used our technology to move into different market and product segments like the time synchronization. So that's something that we really have in the company, and we continuously come up with products that are in the front end, both in the media, but also in other market segments as well. We definitely are a trusted partner. We are trusted to be a partner to the big events globally in the media industry. And now we're starting to get trusted in the 5G network -- 5G as well because time synchronization is a crucial product for the operator to have a stable network. We are a leading player in the media industry, and we see potential, of course, in the unique use GPS-independent time synchronization. We are a company focused on growth. And as you can see, if you look in the numbers, if you go back to 2020, we have a stable growth, and we are still focused very much on the growth -- to have a growth strategy. And we are well positioned to benefit from the structural change in the market, the growth trends in the market. We will go into that a little bit further on into the presentation, and I will also cover that. So we are trying to find the growth pocket in the industry that we are -- in the market that we are established. So like in the media, like the unmanaged is the growth pocket we have been in the IP. And if you look at the profitability, and Cecilia will cover that a little bit further on, but we have a global customer base. We have a probability to scale our business with -- we have 70% gross margin, so we can scale our business. So we are, therefore, really focused on growth because that's the key to like increase EBIT and to really come into the higher numbers. So we have had a good, solid profit even though that we are investing heavily in new technology, both in media, but specifically, of course, in the 5G time synchronization market. So we can continuously based on our cash flow, we can invest in new product and new market segments. We are financially stable, low debt-to-equity ratio or no debt at all, and we can fund our growth through our cash flow that we have. So moving into the market transformation in short terms. We see a rapid transition from historic technology over to IP and cloud-based service. And that we have invested the last 5 years into, and we see the traction coming from those 2 parts in the market for our product portfolio. We see also that this transition from satellite to IP-based cloud-based service. We see that definitely in the U.S. because some frequence is taking away from the satellite moving the need to move content from satellite over to IP cloud. Cost reduction, or I think all markets, all industries have a focus on the cost reduction. But in our industry, we see transitioning technology that will give the customer a possibility to lower the cost, and that's like very remote production. And we were one of the first company to move into remote production, and it's really low in the cost for service provider and broadcasters, and we are really into that -- in that part of the market. Capacity, we see an increased demand for increased capacity definitely in media, and we are leading that part. I mean we were the first company in 2018 that launched the first 100-gig product in media. And now we have launched the 400-gig product. So we are definitely leading in capacity, and that's important for our customer, and that's also lowering the costing -- the cost for our customer. Time synchronization is an increased demand for synchronization in many different industries. We have now focused on 5G, but we see a number of different industries need time synchronization, and we can use our unique technology that we have. And we are looking into grow our addressable market with new products in use also existing products to move into other market segments. So then in a nutshell, what is the strategy that we are looking on. We are well positioned on the in growth segment and to broaden the addressable market. And we have 2, we have managed and unmanaged, and those are the 2 parts that we have within the media. Americas, that I mentioned, is really a growth opportunity for us. And sports leagues and events, we will come into that, but that's our key market, and we are focusing more on that to get a more push from the sports leagues and the content owner to use our product, but that's our sweet spot. Time synchronization has a phenomenal opportunity that we have really to grow our revenue, and that's a new market segment that are really coming into the 5G, but in many different industries as well. We are focused on recurring revenue that is growing, and we will continue to grow while we are moving into software and cloud-based service. We would like to move into adjacent market segment with existing product, but also launched new products, and that's both in the media and in the time synchronization. So both our product lines will have opportunities to develop new products to move into other market segment. And we have a fantastic scale and opportunity in our business. So if we look into our financial targets, we are looking to have 15% growth per year and looking for an EBIT margin for 20% and that's 2027. So that's our long-term financial target that we set 2022 to 2027, and we are heading towards them. So that was like in a very short introduction, and now we should try to go in a little bit deeper into that. But we start with Cecilia, and we'll take you through the financial numbers.

Okay. So financials, we will start looking at our last 5 years and see the development during these years. And if we start with revenue, we have had during the last 5 years, we have an average of 10% yearly growth, and this is a result of our recent investment in product development. Alongside our media development, we launched, as Crister said, the time synchronization and there, we expect revenue growth going forward. Looking at the right chart, we see the distribution between our regions. And during the period, we have a growing presence in Americas. And Americas is a strategic focus area for us. And that is the addressable market in Americas is larger than EMEA, so we have a potential to scale and capture new opportunities there. So after 16 consequent quarters of growth, the trend was broken temporarily in Q4 '24. And this was due to weakened market and absence of budget orders in Q4. In Q1, the geopolitical situation was further deteriorated with increased macroeconomic uncertainty, threats of tariffs from the U.S., and we have significant FX headwinds, resulting in a decrease of 20%. Then going into Q2, we returned with more normalized revenue levels, and we actually had a 4% growth in comparable currencies and if we adjust the software order we had last year. Throughout these quarters, we see that the market activity has remained high, but we see that there is a caution in the market, and that is still existing. So profitability, and we start with gross margin, and we have a gross margin that through the years and periods has remained high, around 70%. At this margin, levels amplifies the impact of revenue fluctuations on overall profitability, so we can scale when we grow the revenue. Operating expenses has increased during the last years, driven by the strategic investment in our organization for time synchronization, cloud and IP. If we look at these expenses as a percentage of revenue, we have demonstrated that we can decrease and scale through '21, we had 49% of our operating expenses of revenue to 45% in '24. We have had a positive profitability trajectory with EBITDA margin, improving our solid net sales growth and improved scalability. For the last 3 quarters, this trend has been interrupted due to the lower revenues and FX headwinds. To mitigate this, we implemented a cost reduction program in Q2 that is targeting savings of SEK 30 million. And continuing forward, it's going to be a high focus to have cost efficiency going forward. So now to R&D. And for a company like us that have -- is built on innovation, it's important to secure future growth by investing on R&D. And through the last years, we have invested 25% to 30% of our revenue in R&D development. If we're looking at long term, we expect this figure to decrease and our long-term target is to have approximately 20% R&D invested from the revenue. So to some financial performance figures. And starting with the earnings per share, we had a positive development, but this was temporarily offset by the low revenue and FX headwinds in Q2, as you have seen on the EBITDA. Working capital, during this 5 years period, we have increased working capital. And the first shift was between '22 and '23, and that was mainly driven by the prepaid NRE that we had received from Türk Telekom. Then we have a new shift, and that is from this year, where we had increase from 20% to 24%, and that is due to a bit longer payment terms on a few larger orders. When we go further this year, working capital is to increase more due to the last time buy of FPGAs that we have done. Those will secure a lower component cost going forward. Then to net cash. And if we look at net cash, it has declined from 2021. And that is the long term, it was primarily due to the buyback of shares, which we have done about SEK 240 million. In short term, that is the capital tied up in working capital. Now per Q2, we have available cash, that is both net cash and credit facility of close to SEK 200 million. Looking at the last 3 quarters, economic and geopolitical risk has increased. The macroeconomic environment has declined. We have had increase of import tariffs. Our products is still extent on the tariffs to U.S., but this has increased uncertainty, and we see resulting in longer decision-making processes and risk of order being moving forward. We have also had FX headwinds with the krona, Swedish krona that has strengthened against U.S. dollar and euro. We continue to hedge our positions and the cost reduction program was also part of mitigating the FX headwinds. Looking at electronic components, the life cycle of FPGAs has shortened during the last years. And we have looked close into securing the component supply going forward. So the last time buying that we have done now this year is to secure the demand on our high-capacity products. And this also, as I said priorly, will securing a lower component cost going forward. So now to media.

Let's get into the media area and a little bit deep dive here. I think to really understand the media side of Net Insight. I think it's very important to understand the context in which we operate. This just highlights a few of those things. And I think the thing -- number one to really kind of point out here is that we're in the live sport areas, as Crister was saying, and we deal with the largest events, the largest leagues globally. So what this means is that there's a lot of value at stake. The deal -- the value of the rights deals are very high, big significant investment being put into the area. And billions of viewers basically depend on Net Insight product to deliver live sports to the audience around the world. So really, really quite critical in the value chain in terms of where we are. We know that when you look at live sports, if you look at it from a media rights perspective, if you're a broadcaster and a streaming provider, really what drives viewers to the services is the live sports. That's where you do not compromise. So very strategic position for a company like us to be in. I think the other thing to then mention is what do we then do in this. We've done -- have developing and continue to develop tailored technology for this live sports use case, predominantly high-quality standards is an absolute must. You cannot have a single glitch in terms of the viewer experience, very kind of high standard from the customers. And then where failing cannot be done. You cannot have a black unit if you have major events or a large league. So again, very, very high demand, which we have delivered on for many years now. I think the other thing to mention when you look at what's happening in our ecosystem is that when you think about a viewer these days, it used to be that it's very much an appointment viewing situation, you will tune into a football game or a football match and you will view for a couple of hours. What's happening now with the viewer is that actually it's a 360 experience. As a viewer, you need to feel and fuel them with content all the time in between the matches during the matches. So the demand from the viewers are much higher. And that's a great thing for us because it means more content to come out from the different leagues from the events where we're active. So a good thing for us. If we move into some of the trends, Crister highlighted a few of them in his part. Again, I talked about the consumer changing behavior. I think that's really one core thing, which I talked about in terms of how consumption of live sports and media is nowadays done. So that's continued to be something which opens up opportunity for all our portfolio. The satellite transition. So historically, as many of you will know, live sports and live Media has been transmitted over satellite. Since many years now, it's been a move from that into fiber, quality guaranteed fiber, which has been core for what Net Insight monetized for many years. What's very exciting now is starting to be another transition from satellite to cloud or Internet-based delivery where our unmanaged portfolio is coming into play in a very neat and positive way. So that's the other change that we now see. Crister highlighted a change even in the U.S., which further fuels this opportunity, that is the close down of certain spectrums that's currently being used for satellite will now need to be freed up and used for 5G in the U.S. that further accelerates the opportunity for us in the satellite to cloud and Internet delivery change. So that's again another positive. Crister highlighted the remote production use case. So if you look here in this simplistic way of looking at, when you think historically how production had been done, you've had an outside broadcast bus park next to the venue. So that means all the camera feeds coming from the venues congregates into 1 place. There is a production happening. So you create sort of a production feed that will then go on to the broadcasters around the world has bought the right. So that was sort of the historical way of doing it. With remote production, these changes. So instead of having a bus park at the venue, you will take all those camera feed and transport into central location somewhere else in the center of a country or so forth. So you bring up much more feeds from the venue. So that's a benefit for us then because in the first historical use case, we still have a role to play and have played, but the requirement and capacity and the number of feeds was lower. Now with remote production, the capacity increases. First of all, more feeds need to be brought out. But typically, you might even bring sort of high -- uncompressed higher volumes of content out from the venues, which further drives the need for our equipment in a bigger way. So that's in a simplistic way how you can think about the remote production. On the other side, when you talk about high capacity, we all know that there's been a change from SD to HD to 4K to 8K. So requirement from the viewer to have even better cap quality when they watch live sports increasing. And also, of course, the providers, the streaming providers and the broadcasters want to make sure they bring out the best possible viewing experience. So that's, again, something that is then driving requirement on the capacity where we have historically monetized with being first on 100 gig. And now end of this year, beginning of next year, we start with the 400 gig, which basically increases the capacity. So we have our platform follows the requirements coming from the industry, which is a positive. New compression technology, of course, we're dealing with large volumes of content. And sometimes you need to basically compress it so that you can transport it over fiber networks and so forth. There's now some new compression technologies coming up, which is positive for us because it means that we can add new compression technologies to our existing platform and go and sell that to our existing customer base. So that's again something we can -- kind of a trend which we can benefit and take advantage of. And then lastly, I'm sure you heard before that this change has been an ongoing change to more IP standards, which again opens up for opportunity for us because it means we can upgrade our existing customers, but also we can break into new customers when there's a compelling event to actually do some change in their technology stack, which is a trend which we can again benefit from. So in summary, well positioned. This transformation of the landscape is -- we're well positioned to take opportunity of it. So if I then zoom out and we look at the entire landscape here in which we operate, what does the value chain look like? So if you go from left to right, again, as I said, it starts with a venue, sporting stadium of sort and then bring that all feeds. So that's a venue transport. We're bringing all the feed from the venues into a production facility of sort. Next step is then to bring that content out, what we then call a contribution transport, different use case. One simple way to think about it is for a big international venue or event need to bring together into one place and then you need to be transported out to all the broadcasters around the world, which has bought the rights for that specific event. So that's basically the next step. After that, then you're in what we call contribution and production area. Then when you move on to primary distribution, primary distribution really is about, first of all, packaging up all this content. And this kind of end product of that is really a linear TV channel. It could be a streaming service where you packaged up all the different content that needs to be brought together. So that's really what the main thing that's happening in the prime distribution step of the value chain. Then we mapped out our customer categories or our customer segments. So media service providers is one of our core, that's our core segment. Then we have customers from broadcasters will be in TV4, BBC and ESPN, these kind of players. We have the OTT/streamers, which sometimes the OTT/streamers are now some of the companies like the one and others, which are focusing very much on that area, but also the large global streamers, which we see around the world. And production companies are companies that produce on behalf typically of broadcasters for leagues. So that's another segment. And then you have the rights holders. Rights holders is the owner of the sports property. So the kind of the core owner of the sports property. And then you have the pay TV operators, which are further down the stream, which are the ones that sort of historically been packaging up all the live TV and all this content coming in and presenting it to the end customers. So that's kind of in a nutshell how our customer base is being mapped out. If you look at the market split, our assessment is around 40% of the market is with the managed service provider -- sorry, the media service providers and 30% with broadcast with the remaining 30% split across the other customer segments. So that's kind of very high level how the market landscape in which we operate looks like. Just to bring this to life, and as I said before, that our position as Net Insight is very much -- we're very -- in our core market is up on the left-hand side in the contribution production area, but we see opportunities as well for us to be active, and we are active on the primary distribution side, but sort of the core is up in this part. And to bring this to life, and this would be an example of how this will be looking like if you look at the large global sporting events. As I mentioned, you will -- there will be a lot of games and activities, sporting activities will happen on the venue. All those camera feeds will need to be brought into one single place. Typically, that's done in something that's called an International Broadcast Center, an IBC, so a central part in that specific country. So this part we're active in. So this is the whole venue transport we talked about in the first step there to the IBC. And then you have -- then onwards there is a contribution transport which I talked about. So this will be then for a rights taker in Sweden, rights taker in U.K., rights taker in the U.S. so across the world, which have bought the media rights for that specific content, they will need to get access to the content. We also then do this technology solution for transporting that to the end destination. So that's kind of an example of what this looks like from our perspective. And then as you can see, it could either be an on-site production, production happening in the country or in that specific event or it can be remote production when the production is happening at the home destination or a central location. So we have those 2 use cases. If we then move on to look at sort of our strategy and then we look at -- when we look at the market, we can see that we have a total addressable market of around SEK 5 billion, but with an opportunity for us to expand into other adjacent areas and to increase our target market. When you look at the lower left, the dark blue, that's the core market. That's the -- what we call managed, what Crister referred to when he talked about the managed area. So that's the core market for us where we have it's about sort of SEK 4 billion, SEK 5 billion market growing 4 to 7%, and we have a strong market share around 10% to 14%. So that's the core market. If you look at light blue, that's what we refer to when we talk about the unmanaged. The unmanaged again is, for instance, when you run a live sporting service across, let's say, Internet, and we then provide an overlay service on top of that so that we can have higher guarantees than Internet is effectively best effort, but we can create more of a guarantee on the service that our customers can provide on top of Internet. So that's what happens in unmanaged, the satellite to cloud transition, all in the unmanaged area that I mentioned. So that's sort of where you can sort of position that trend. And then on top of it, we have the yellow area, which is extension of the current markets. This is sort of the things I'm talking -- was talking about when I talked about new compression areas where we can extend our current platform, effectively do a major feature on top of the platform we already have and go and sell it to our existing customers, which is of course quite attractive because it's customers we already have, so we can come up with new things in that area and go and provide that to the existing customers we have. That's an attractive kind of proposition then for us and something we can go and execute on. So those 3 are sort of the core. And then you can see sort of mint color here is other adjacent areas that we think there has some potential for us to enter into new markets. But that can give you a sense of where we are, some adjacent areas and a few layers in terms of growth opportunities. If we then zoom in around the competitive landscape, what does it actually look like? And we have divided it up into managed and unmanaged still. So if you start with the managed area, you have 2 sets of competitor groups. You have one similar to us, only provide transport and compression. So that's very similar to our position. That's where we are. You also have our competitors that are providing a broader set of solutions. They might be doing transportation compression as a part of the portfolio, but that's a small part of the entire portfolio. So those are the 2 groups in the managed area. And here, you will find companies like Evertz being more a company in the first part here. And then Appear and Media Links are companies and competitors we meet, which are in the second category. If we then move on to unmanaged and talk about that area, sort of similar, 2 different groups. You have the group number one is the ones which have more of an end-to-end offering. They offer a more complete solution in the unmanaged area. That's where we sit. So we provide a set of different products that can be combined to total solutions. So that's segment number one. Segment number two is companies that are very focused on just one component of the ecosystem. So that's the other one. So again, some examples here in the end-to-end offering, you'll have companies like Haivision and Ateme. And in the individual component, you find companies like Zixi and Techex as a few examples. If you don't move on to think about the customer. What's the customer demands requirement buying and how do we fit? I think the first thing to say is that we feel that if you look at how the customer, the buying patterns, the requirement they have, we feel well positioned to kind of go after those opportunities. I think the first thing to highlight is the drivers. Why do they -- do a customer buy effectively? They buy for a few reasons. Number one will be they need to increase the capacity of the network. So that will be one thing or just increase the capabilities of their core network. So that will be one. And this could be driven by some of the things we mentioned could be that they need to be able to transport 4K, more capacity. They want to go remote to remote production, another reason to invest in the capacity. The second driver will be if, let's say, a media service provider bought -- have won another deal, they want a league that they should be supporting, for instance, then they need to go and buy equipment to be able to build out to all those new venues. That will be something will they come to us and want us to supply equipment for that. And then thirdly, of course, there's a general maintenance and upgrades of a network that need to happen at all point in time. So there's always a sort of a maintenance CapEx budget that all customers have allocated so they make sure they keep buying. So those will be the 3 main use cases for when they buy. Our equipment, as I mentioned in the first slide, is critical. It's critical for our customers to deliver on the requirements they have from their customers and from their viewers. So again, a very strategic position to have. It's worth noting that, of course, there is an element of opportunity for a customer to sweat the assets. Not everything will be mission-critical to buy. So when we talk about sometimes a deal might move and so forth what Cecilia [ move ], this could be sort of the reason that they might just decide to sweat the asset. It will not be applicable if they want a deal, need to be built out. So in many use cases, it's not applicable, but some use case, it will be applicable. The third thing to highlight here, I think, is quite important as well. Crister talked about some of the cost aspect and so forth. We're really well positioned to go after the proposition around a customer that have high requirement and total cost of ownership. So what we're talking -- when you think about service providers as an example, if you look at their whole cost base, they, of course, need to buy equipment. So that will be the first thing. If you look at us, we typically can offer more complete solutions in our offerings, which means that for a competitive option, they might need to buy from more vendors, might be more costly. It for sure will be more complicated to operate. So that will be kind of one thing to think about. Build networks, we know that Net Insight offering our products are easy to deploy and stand up and configure and be prepared for production. That's another thing which is part of our -- the requirement from the customer and then also something we are good at. Operations. So when you then are actually up and running from a service perspective, you have 2 key cost drivers. Number one is the team. The operations team that are operating the solution, our solutions are known for being easy to operate. So the number of people and the number of staff a service provider need in order to run our services, we know are less than some of the other players. Number two, is a service provider need to go out and buy capacity from a telco, for instance, in order to run these services. And we know that with our solutions, we can make them more cost effective and cost efficient. They just not need as much capacity with some of our solutions. So I think when you then add it all up, the buying, the building, and the running of solution that whole total cost of ownership for a customer, that's something we have a very key strength in. And I think this summarizes up our value proposition, why a customer buying from us. Crister talked a lot about the customer base we have, the brand and so forth. I think it's clear that the customer brand, the trust in the brand, the trust in our product, the quality they know they will get from us is well acknowledged in the industry. So I think that's a really good foundation to stand on. Also how we work with the customers. When you think about, again, going back to the live sports area, when you have a major event that's being delivered and so forth, when you have no time, if something goes wrong, you've got to be quick at fixing it. That's where our support comes in. So that extended offering they will get through us, I think, is something that's well recognized in the industry, how they get the support if something goes wrong and they need help. We talked about the easy to operate network. So I think that's another thing that comes with our offering and our value proposition. And then when you think about the core offerings we have, if you look at some of the key differentiating factor, we were first with the 100 gig, now we're coming 400 gig. So that's been something we've really been focused on. And then the scalability of the products and the quality of them, first, the quality, the robustness of them is very, very important, something that is a hallmark of Net Insight. And the scalability, that's the ability to quickly scale up because if you think about a large event, many endpoints that you need to manage and then you need to deliver them to many places. If you think about the example on the major events, quickly becomes quite a complex large network, and this is what we are really strong at, the ability to scale. And I talked at length, I think, in the previous slide around the total cost of ownership, which is something that is part of our core value proposition that we can have a low TCO. So to wrap it up then, 3 things. Again, well positioned in the sports and media market in transformation. I think that's the core part. And I think we're in a really good position when you think about the growth trends we have talked about, and we have a global strong position with all the customers that we have and the reputation we have in the industry is really an excellent starting point. The other thing is the opportunity to grow. We think we can grow within our existing customer base and gain market share and continue to sort of chew more of that pie, but also to increase the target market on top of that in quite a logical way. And to finish off, then I think we can see that the alignment with how the customers want to buy, the requirements they have, the demand they have is really well aligned with our value proposition and then some of the uniqueness that comes with the Net Insight offering end-to-end. So that's the summary of the media side. So I think that was all on the media side. So I think then Andreas for a few maybe questions and I may have some answers as well.

Yes, that would be good. Thanks a lot for the presentation. Again, if you have a question, just raise your hand, and we will come with a microphone, and we have already 1 question. Hang on 1 second.

Good presentation. A quick question. You said you had 10% to 14% market share in managed services. Number one, how has that developed over time? And why? And then two, maybe it was you or Crister saying that you had like 0 churn. Is that right or very few customer losses?

Yes. And maybe if there is sort of historical -- I mean, I think -- first of all, yes. I think on the churn side, yes, I think we have -- we tend to be very sticky -- tend to be very sticky because I think what we see and hear from the customers is that when we get deployed and when we start to operate and work with them, they tend not to want to leave. So I think you have a very high level of churn. I think, Crister, I don't know if you want to comment on the historical maybe more.

Yes. We are sticky because we are using like software upgrade when we went from 100 gig to 200 gig with a software upgrade. Now we're moving up to 400, also a software upgrade, which means that they can use the chassis and everything installed in the network and the software upgrade. So that's really sticky. And we can see our 600 series product has been in the market in 2008, and it's still the same chassis, but here -- but this new service in the product. So that makes it very sticky because we can lower the cost for the customer if they need to change the new technology or upgrade the network. The zero churn, I don't think that we have been saying that, but we have extremely low churn. But probably I need to look at -- I don't know if we -- I don't have any historical number, but it's very few customers that are leaving us. And our major customer have been with us for the last 10, 15 years. So we have very low churn. But we also have been able to take new customer with a new IP product that we have been coming out with. That's a market that we haven't been able to penetrate with the historically technology that we have. But today, we are agnostic with our own technology and IP. So that means also for customers that would like to move over to IP, they don't need to do a forklift upgrade. They can move over from our existing technology, our own technology to IP. And we see many of our customers are keeping the technology that we have developed, but they still can have an IP-based solution for transport. So by that, we have less churn, I think, than I can guess another competitor. But if you look at that, we have low churn definitely.

And the 10% to 15%, is that something that's been roughly that number for a long time? Or has it come up or down?

As Cecilia was showing all the way back to 2020, we have 10% increase in growth. So definitely -- and the market have been increased by 4% to 5%. So we've definitely been taking market share in the last 4, 5 years.

Also, if you have questions from online, you have a place on the website to write that question, and I can read it out from here. If I may ask, I would probably have thought that we have moved quite far from satellite to IP-based. But can you give some indication of the penetration of IP-based solutions versus the more traditional solutions?

Yes. I think -- I mean, you're right. I mean, I think as always, things take more time than you would have thought. I think when you think about the Internet-based delivery in the more recent few years where that's been more a drive I think really coming out of COVID was when we could see that, that was starting to kind of take off in a more meaningful way. And I think what happened was that it's all about it need to be economically viable. When you think about the strength of satellites, it's the one-to-many use case, you uplink once and you can distribute to many endpoints. That use case was not really viable with fiber, the high-end fiber, but with Internet-based, that started to really take off in that use case, which was really good for us, of course, because that then means we can start to come into the unmanaged area in a bigger way. When you think about the managed side of -- I think that has further developed, if you like. I think then fewer and fewer will have -- rely on a sort of site satellite use case in that, especially when you need to bring out what doesn't work when you need to bring out big volumes of content, which is now required, satellite is unviable as a transportation means. So I think that's continuing when you look at all the major capacity and if you need to do remote production and so forth, you can only do that over fiber. So I think it's -- but still more, I mean, remote production is not a common place. So it's good penetration, but room to grow even in that transition, which is encouraging for us.

So I watched the Ryder Cup last night. And if you compare -- if you make the transportation through satellite or through traditional solutions versus the IP cloud-based? What kind of savings and benefits do you get as your customer?

Yes. I think one of the benefits -- it might be if you look at the like-for-like, you might want to have to save a coin or so on just doing the like-for-like. But I think this comes back to the viewing experience that nowadays is required. You want much more content out, which could -- which means that typically an event like that, you'll bring out the main video feeds, actual footage, if you like, the core kind of content. But then you would want to have the commentators, you want to have -- maybe hear from the players, you want to bring much more content out because now you're sitting, viewing your main screen, but equally, you're looking at your second screen and want some more content. So I think as our customer, they can now provide much more -- much richer experience that is, I think, demanded by the viewers these days, but it's also a monetization opportunity because think about a second screen opportunity, if you can fuel that with content and you have eyeballs going there, not just on the main screen, you can sell advertisement on that screen, for instance, as well. So further monetization opportunity as well as giving the viewers a much greater experience. So I think it's -- that's the kind of thing I would see if you looked at a Ryder Cup. So a much, much broader set plus an opportunity to save costs as well at the same time.

And when you look at the installed base that you have out with the customers, sometimes we see some larger software upgrades and orders coming in. How do you see that play out over the next, let's say, 5 years? Do -- should we expect an increased amount of software in your revenue mix?

I think so. I think as Crister was saying, I think that's what we're definitely seeing that there is an opportunity to roll out. And we can see it on both the managed as well as the unmanaged that the component around software is becoming -- is increasing. And I think it's interesting when you think about the whole unmanaged area because then we can run things on a commercial, off-the-shelf hardware, for instance, we actually make money on the software gives us more flexibility, gives us a quicker time to market with new offerings and so forth and also makes it easier for customers to upgrade. We don't need to change the hardware all the time. So absolutely, and that will be something we'll see more of going forward.

And why do you think we haven't seen that much of that yet? Is it still -- or...

Yes. No, I think when you look at the managed area, it still has been quite a big -- because of the demands, if you look at the technical requirements, I think solving the use cases, which we have talked about on a pure software has been quite hard or if not to say impossible in terms of being able to deliver on the capacity and so that we need to do. That's on the managed side. But we can see it becomes -- it started to change more and more there. If you look at the unmanaged side, that's much more software-centric. And I think then I think the reason we might have not seen it is that, that market is really now starting to take off. And I think that will be the 2, I think, explanations to what's been happening and how this will evolve over time.

Any question from -- yes.

Thank you. Long-term goal of 15% -- at least 15% increase in sales per year, and you have had 10% average for the last couple of years. Just mathematically speaking, I mean, was it 2023 to 2027, the growth needs to be 30% or something for the next 2 years. Any thoughts around that?

I mean, the numbers that Cecilia was showing is from 2019. So we were 2020 to 2027, and we say average growth per year with 15%. So if you calculate from 2020, we have a higher growth than 10%. So we have been saying like per year. And -- but the EBIT level is that we should reach the 20% in the end of 2027. That's the target that we've been setting. The otherwise we were 15% per year. So we need to calculate it back from 2020 and not from 2019.

And we have a question from the audience regarding the new compression products. Has there been high interest from existing customers for that offering? And is the market share from existing customers the same in compression as in managed networks?

So I think when you look at what we refer to compression, it's actually something new that we have not brought them -- I mean the specific one is what we haven't brought that to market yet. I think it's first just to clarify sort of -- it's one of these sort of growth opportunities which we can see. So I think that maybe answers the question in a way. But to further elaborate on that, what we see is kind of compelling if were to sort of bring a product and offering out in that area is that we can bring it to our existing customer base, which would be -- it's a logical upsell on top of the platform we already have. They get access to more compression -- other compression technologies, which we do not provide. So I think it's quite compelling strategically for us to go after that opportunity.

And when it comes to overall competition, you showed the picture of the competitors. Where do you stand out? What's your edge versus the others? And likewise, what do they have that you would like to have?

I think what's -- a couple of things that stand out. But Crister was saying, we have sort of a technology, which is sort of the core invention of the company, which is providing a lot of the value what we talked about in terms of total cost of ownership and easy to operate. But I think what's really interesting is that it's sort of the DNA of the company as well. So when we now bring out, let's say, unmanaged, which is not building on that new technology, actually, we bring all those DNAs with us, easy to manage, easy to stand up services and thinking about the total cost of ownership as well also in those scenarios. So I think that's something that will continue to be kind of an edge, I think, and a USP. And I think it's also partly the combination of it. If you think about having a really strong reputation in terms of a brand and the quality of the products and what we do and the understanding what it takes to deliver in this live sports world that we're active in, you couple that with again, easy to use, the TCO as well as some key features in terms of being first with 100 gig, 400 gig and some of those. I think the combination makes also for the key thing we win. Of course, sometimes you win on one or the other. But I think the elements of bringing it all together is a very attractive proposition in the market. I think if you look at the other aspect of your question then with competitors, I think it really depends. I think sometimes certain customer segment, I think we are very strong in the managed or the media service providers because that's really where we have some of our core edge, because the scale of the networks they run is very high, suits us. The end-to-end, they really have all the components of the cost stack that I talked about, which we can deliver well on. And we delivered well historically, which means there is no reason they continue to buy from us. So I think that's where I think that when you look at maybe other segments, which we had on the map, then we see a growth opportunity for us in the broadcast area. And that's probably something what do we want, it would be great for us to really penetrate, let's say, in a bigger way, the U.S. market, the broadcast market and so forth, which we want to do, but that's maybe what we then would want to have. But I don't see that when we -- if we look at the whole map, having managed, unmanaged is good because you can break into new customer from different angles. And then adding the things we had in the plan in terms of feature, I think we will be quite complete in a way. But I think, as always, you got to keep breaking into new customers and so forth in all the segments. I think that's something we need to continue to focus on.

And that competition seems to be quite harsh if we take the large deal that you took earlier this year. You even said in the release that it was highly competitive.

Yes, it was. It was. And I think what we can see is the market, and we say we're a top 5 in the market, but continue to be a fragmented market. And I think that's the important context. So there are a few. So it's not just a matter of there'll be 3 large ones or 4 large ones, which might have another industry. It's quite a set of competitors, which we are competing against. So Absolutely. Still competition to win against.

And the target that the group has of above 15% growth on average, you represent 90% of the company. So a lot depends on you. What do you see is needed for the growth to pick up again besides maybe a better macro?

No, absolutely. I think when you -- again, if I -- first of all, with our existing customers, if our existing customers, let's say, the large service provider continue to be quite successful as they've been relative to their peers, that means that we are well aligned in terms of growing with our existing customer base. I think that will be kind of one thing we would sort of -- which will be beneficial for our growth, of course, because then we -- and that's something we have seen. I think the other thing we're really driving hard is to break into new customers. So we know which customers across the globe we want to get into, which we believe are going to be some of the winners and will continue to spend money and win in their marketplace. So it's a little bit about backing the right horse, I think, the existing ones as well as breaking into the new ones that really matters. So I think those are -- that's probably kind of part of the core thing. And of course, in order to do that, you need a strong offering, you need to make sure you have the right to play in all the different areas. I think what's been really interesting now when we have the managed and unmanaged is that when you think about a customer, you can break into the managed share, the unmanaged share, there's many different ways to get into a new customer. And the more tools you have in the toolbox to do that, the better. And we actually -- we haven't sort of publicly announced it, but we won recently a large European service provider where we actually managed to break in through the unmanaged area, and we're then lining ourselves up for going after the managed area. So I think this just gives you some sense of the dynamics between the offerings. And I think we will need to make sure we have the right strength in all the areas so we can break in and sort of do a land and expand strategy with our new customers.

Any question from the audience? This is a great opportunity. We got a question that I have a little bit hard time understanding, but can you explain what collaboration with a partner that you apparently had what that brought into Nimbra Edge? I don't know exactly what that...

Was that the reason trying to think which one you're thinking about. Yes, okay. Okay. Yes. So okay, that's a good question. Yes. So when you think about the unmanaged area, you have a few layers. You have sort of a layer, which we call technically orchestration, like a management layer. You can control and manage your network. So that's sort of one part, make sure each box is up and running and the links in between is all working, so sort of a management layer. And then we have devices which you can put, let's say, at the venue or at the receiving end. So some -- that's sort of -- that's the other part. But then on top of that, we are looking into value-added services. So value-added services is really down to sort of some manipulation of the content. So this is -- the partnership there is around the transcode area. So when you think about you transport, the content, but then also you might want to do some tweaks and changes to it. You might want to change the format. You might want to do some manipulation of it. So we -- that's one partnership we had on top of it. And it's quite an interesting proposition because the customer might want to come to us and say, let's -- can you provide a whole service and then we integrate someone like NETINT into our offerings, and we can provide also a total solution. So these are kind of things we're actually looking into in terms of the whole managed share, where we can have some smart value-added services on top of our core offerings, where we're in there working with the customer, they want something more that we can provide through a partnership. So this is what this partnership and collaboration is about. And I think we will see more of it. We were not going to -- we're going to be pretty surgical and focused and selective about the areas we go in and try to do value-added services around, but that's one of them, and we have a few others which we are looking into as well to sort of add to the portfolio. So that's the logic to that one.

And maybe this can be a good opportunity to just walk us through the structure of a typical deal where you install your products and then what happens, what type of software and support do you have connected to the contracts in general?

Yes. So yes. So as you say, typically then we will sell the equipment, so the hardware/software piece. So that will be the core of it. In some instances, we'll do some configurations on setting up some of the equipment. So that might be something we might do, and then we get some kind of professional service or product [ and ] service around that. And then we could -- sometimes we even help with some of the installation. And then after that, we'll move into -- and they put it into production, it's up and running operational and then we have the support revenue stream kicking in then, which is a normal sort of ongoing support, which we get a percentage of the installed base on. So that's in very simple terms the offering and how much we always do -- I mean, the bare minimum is the hardware, software, actually tech and support. That's always there. But the other thing might depend on customer opportunity and what the customer wants. But we also see -- actually, that's part of the stickiness sometimes where they feel we can -- we're pretty -- we're well placed with our own equipment to actually install and configure and seldom help them with some of that. And I think that's what we have seen that, that could also be an area where we can add some more around it that makes it more competitive because due to the fact that we can provide some product [ and ] services, we're -- that's something we're looking into more and more how we can add more value around it on top of just the core product of what we have.

Perfect.

Yes.

So what is the biggest challenge you see ahead to reach the goals that you actually give us today?

I think it comes back to some of these areas. I think it's a matter of making sure we continue to break into new customers. I think that's one thing. And I think that's one of the, I guess, the challenge because you need to displace someone else fundamentally. So of course, that's part of it. I think that's something we see. I think we got some encouragement in terms of the tools and the options we now have available in terms of breaking in, but I think that will be -- that will be one. And then we need to make sure we bet on the right horses as well and make sure we're well positioned to ride on the growth of our customer base. I think there will be one. I think for us to -- I mean, it's maybe a challenge, but it's at least something we want to make sure we succeed in is to -- as Crister and I have been talking about is the U.S., really can scale up the U.S. in a meaningful way. I think that will be critical. I think keeping the customers we have and so forth is going pretty well. I mean it's quite sticky. So I think more expanding in the markets as well as bringing out some of the new offerings we have succeeding and scaling up the unmanaged area, I think, would be one of them as well. And so that's what we need to succeed with as well.

So do you see the American customers being tougher to get into? And how would actually the market look like in 3 years? Is that a big difference compared today? Or is something continue as usual sort of...

Yes. I think what we can see now, and that's been part of -- there's been some -- in the U.S. market, there's been a lot of consolidation among the broadcasters going on at the moment. So that's been one thing which has been -- which need to sort of come to conclusion and settle down. I think that will be part of the requisite to actually kind of succeed that. But I think it's a matter of in the European market, we've been present for kind of longer. We have a broader go-to-market and a bigger customer base there. So I think it's not something that we don't think we can succeed with in the U.S. But of course, the conditions for the customer base need to settle down and then we can go after that market even more. Crister, if you...

I think I can add -- I mean, the U.S. market is very IP-based, always full IP. And we had our own technology based on IP and everything, but they didn't see that it's full IP. So what now when we develop our new IP-based product platform, we have the tools to really go after the major customer in U.S. that are very IP-based. And we see also when we are coming closer to them, they get interesting in our offering that Andreas is talking about -- that we get from our historically technology. So by that, I think that we have a good chance to take some of the larger customer in U.S. But that's really the challenge in the U.S. It's not that many customer in the U.S., if you compare it with Europe, you have a number of customer in each country. But if you look at the U.S. market, it's very large customer, not that many. So we had to really -- we have the tools now with the IP-based product that we have, really to go after them, and we have the cloud-based product that we can also come in with a new technology that they need to invest in, so we can gradually come into those customer. And we have seen that we have had success with some of the larger one that we had used the cloud-based product to come in the first phase and then they get interesting in our hardware as well. So that's, I think, the reason why we had lower market share in U.S. is that because we haven't had a full IP-based portfolio that we have right now.

And when we look at the market slide that you had on the total addressable market. And first of all, when Crister and Cecilia talked about scalability, is that also your view that the media unit has this kind of scalability? And secondly, is that related to moving into these new areas besides the core network that where you are coming from?

Yes. No, I think when you look at the scalability of us, I think we have -- we do a lot of direct, but also a lot of indirect with partners around the world. So I think that provides us with the scalability opportunity. So if they're well set up, well trained and so forth, they can scale without us needing to sort of add necessarily salespeople and so forth to be able to go after that opportunity. So I think absolutely, there is an in-built opportunity for us to scale. And also what Crister talked about, when you look at many markets, it's not a massive amount. When you think about reach, you can reach them within -- with not so many -- so many people, if you like, you can actually get into them. It's more about getting really traction getting into the customers. So I think, yes, it's absolutely scales with the -- with our sort of set up. And we're investing now more into making sure that the salespeople as well as the channel is well equipped and trained and set up so that they can -- we can continue to scale with them. So that's kind of part of the scaling idea for us as well. So that's the scale and lever we can pull.

And when you look ahead, do you see that the R&D budget that you have covers everything you need? Or do you see any need for additional acquisitions?

I think we -- I mean, I think we have said that we -- per the guidance that we've given, that's really where we continue. And I think -- yes, we think that we can then reallocate and move around, make sure we have room to invest in the areas where we need to be present in that area. So that's the current view.

Great. With that, I think we take a coffee break, and we will be back in 30 minutes with the time synchronization unit. Thank you. [Break]

Okay. Welcome back to Net Insight's Capital Market Day. My name is Per Lindgren, one of the co-founders, also Group CTO, and I'm going to talk about our time synchronization business. You might think time synchronization is niche and a bit nerdy, but actually, it's a very fundamental function in many critical services and industries today. And I think, most of you started to read about it even in the newspapers. You could have seen it in both the Swedish newspapers, but also like New York Times had a big article about GPS under attack. We've seen it even in Financial Times. And time synchronization up until today has been very much handled through GPS or satellite-based synchronization. And we can see there's been now reports both from U.S. saying that if we lose GPS for 1 day, the cost for society is $1 billion. So it's quite big money. And now last year, U.K. came out with a report saying a 7-day outage of GPS would represent a loss of $7 billion or GBP 7 billion. And that does not include loss of revenue for 5G operators or that power utilities would go down or anything like this. This is just pure direct societal costs. If you're interested, you can also go into gpsjam.org. There was a big jamming incident here in Sweden, where most of Southern Sweden was jammed during Christmas this year or last year. And this is just some of the map where you can see the red dots are representing jamming incidents. So time synchronization, and that means it's becoming more and more important that we can find backup or resilience to GPS today. And most operators and the industries are looking for network-based synchronization. This is something Net Insight has done for over 20 years in the TV networks. So we built over 20 national mission-critical TV networks around the world based on network-based time synchronization. So National TV was considered mission-critical services in many countries, and therefore, you needed a backup to GPS. So it's something we built 20 -- 15 years ago. But roughly 5 years ago, some of our customers came to us when we're starting doing deployment of 5G services, and they say, we -- one of them was Türk Telekom in Turkey. And when they were doing the pilots in Turkey, that was during the Syria crisis. So they actually experienced this GPS jamming firsthand because they were situated between Russia and Syria at the time. So they said we can't rely on GPS. So we need a network-based synchronization. And they asked us, could we actually use what we've been using in the media networks to also synchronize the 5G base station. So we did a pilot and trial with them, and that ended up in us signing a big agreement with them, which was signed end of 2021, where the worth of that agreement was roughly EUR 20 million, and they also invested EUR 5 million in NRE fee to financing the product development and to take forward a product that was more optimized for the 5G telecom markets. So a very good start of the synchronization business. And then the product, which we call Zyntai was then released like Crister has mentioned in April 2024. So it's been on the market now, a little bit less than 18 months. And we'll come back to where we stand on that. So the biggest market of time synchronization is definitely in the 5G telecom market, and that's our primary focus. But over time, we also see capability that we can move into other adjacent markets with in essence, the same product and the same product functionality that we deliver in the 5G sync telecom market. So we both are in the enterprise market. When we're moving now into IP and cloud media, definitely time synchronization becoming critical also in the media industry. You need to timestamp every video packet, every audio packet you send as IP packets. And also in the finance and banking industry, there are actually mandates that you need to timestamp every online transaction with a timestamp so we can correlate and go back and see what happened. Data centers today, a lot of the critical services in the data centers need accurate time synchronization, et cetera. So the good thing for the operators is these are typically existing enterprise customers to them. So we actually tell the 5G operators, this is a monetization opportunity for you. So you can actually take the investment you do for providing a more resilient synchronization network for your 5G services, and you can monetize that by selling that to your existing enterprise customers. So our go-to-market for enterprise is not -- we will not go directly, perhaps the exception of some of our big existing media customers, but we'll go through what we call Time as a Service operators. And they sell into their existing enterprise customers. It's been a strategy being very successful in the media industry, like Andreas mentioned, 60%, 70% of the revenue in our media is coming from media operators or service providers. So this is very -- well, they sell into the broadcasters and production companies. So it is a similar strategy, or they have 2 TAS operators that are now trialing the solution towards their customers. So that's, we believe, is a very interesting way to reach that market. Government also interesting -- the government market consists of 2 parts. One is the more civil societal services like blue light first responder networks. And the other part is, of course, is the military and defense industry. So for the latter part, a lot of that is for them to be able to triangulate and provide positioning services. And the foundation to do that is you need to have very accurate time synchronization. So we see increased interest in this, but also the blue light networks is moving into the 5G. So 5G infrastructure will become mission-critical for all the first responder and blue light networks in the future. So again -- and time synchronization is critical for that to have high uptime and security -- high security. The utility market is also interesting, especially because now with all the renewable energy sources like wind power plant, when there's a lot of wind, you generate a lot of energy power into the power grids. And then when the wind stops blowing, you get fluctuations in the network because now you're not generating any power. And this fluctuation, if they continue in the grids, they can cause outages. So you want to control and monitor those and use something called phase monitoring measurement units. And these also require microsecond timing accuracy. So it's already an existing market in the -- also in the power utility industry. The interesting thing with this industry, it's moving into digital transformation. So in 3, 5, 7 years, most of those power grids will be digital substations. And when you do that, every substation needs time -- very accurate time synchronization. So we believe in 5 years' time, this market might be as big as the 5G telecom market. So how is the Net Insight solution positioned in the market? So you can say, if you want to build a network based -- national network based synchronization network, you need to upgrade all your routers, switches, optical switches in the network with hardware-assisted timestamping, using a protocol called PTP. And PTP is standard for distributing time over IP networks. So here, we have all the Ciscos, Junipers, Cienas, Huawei, et cetera, in the network. So they are now providing that as a hardware function in their line cards. And then you have the sync vendors that providing the clocks, the sync servers, the GPS receivers and some of the biggest [ areas ] like Oscilloquartz and Microchip, but it's quite a fragmented market. And typically, you need both for this. You need both the servers and the sync part. And then you need this hardware function in all the routers and switches in your network to distribute this across the network. So when we spoke to Türk Telekom, we said, we have looked into this approach, but we have roughly 120,000, I think it was, line cards in our network and less than 1/3 of them are PTP enabled. So it's a huge forklift upgrade for us to enable all our network in PTP. And we also said it's very complex because all of a sudden, we have 120,000 components in our network that is part of us distributing the time in our network. So when we do any upgrade or thing like this, it's -- we don't know what's going to happen. So that's the reason they came to us. You can see we are -- we can act as a standard sync server. So we have GPS functionality, and we provide PTP to the network. But what we have, which is different from others is that we can create an overlay and connect our [ sync tech ] products to distribute the time over existing networks. You don't need to do this forklift upgrade. So consider you have -- you want to distribute time for New York to Los Angeles. So in a standard way, you would need to upgrade or make sure that you -- every router or every optical switch on the way has this PTP functionality. And in many cases, you don't typically own every router or an optical switch on the way. You're typically leasing, you just want to lease IP capacity [ end-to-end ]. So it's very hard to do this and very complex and it takes typically a very long time. With the Zyntai here, you put a Zyntai in New York, connect your clock source. And then we distribute time, and we set up an IP connection of a few megabits and we just distribute time as a function over existing IP networks. And at the other end, we just distribute time, PTP signal out to the clients. So they just see it as a standard PTP signal. And that's the uniqueness of our products. So that means, typically, we are able to provide network-based time over existing networks. So -- and we do it without having to forklift upgrade all the networks. And typically -- instead of that typically taking months or even a very long time to establish that PTP connection, we can do it in a couple of hours, yes, putting out the Zyntai boxes. And then we have the monetization opportunity that since it's quite easy to put up a Zyntai, you can put that Zyntai in an arena, in a bank or in a data center and just provides standard PTP to the clients in those facilities. And you don't need to think about the underlying network. It's just an IP connection like any other function and service in an IP network. So it's quite clear benefits for most of the operators. And that's also why we've had some success in a short -- in a quite short time. So how big is the market? Well, we did in 2022, a report together with Kearney. So they looked into the mobile market, the 5G market. And the [ interesting ], we're moving from 4G. 4G synchronization was all frequency. Frequency is quite simple over IP networks to do frequent synchronization. Moving to 5G, you need to have phase and time. So in 4G rollouts, typically, the cost of implementing synchronization is less than 1% and in many cases, significantly less. But we move into 5G, Kearney said, typically, the cost will be around 1% to 3%. And this is what we call NSAs, something called nonstand-alone 5G. So this is when you're actually using your 4G core. And if you're following Ericsson, they talk a lot about stand-alone -- 5G stand-alone, and that's -- that opens up -- the big promise of 5G was not just to be a little bit faster consumer service than 4G because that -- they don't make any money out of that. The big problem is that 5G will become the critical infrastructure for all enterprise services and critical societal services like the blue light, et cetera. So for that, typically, we're talking about 5G stand-alone, and that starts to happen now. And that's why also Ericsson is getting more excited. And you can see on a lot of the analyst reports that 5G figure has been a little bit slower the last years, but they now see a bigger growth again, both on the 5G infrastructure market and the RAN market. And it's typically because of the stand-alone market. So when we go to stand-alone, again, time synchronization will become even more critical, both because some of the functions in 5G stand-alone need very accurate time, but also because it's a critical service that they sell -- the operators will sell to the enterprise. So security, uptime, SLAs become more important. So typically, what Kearney said is that the market for 5G synchronization 2025 is around SEK 1 billion and CAGR will be around 25%. That means we'll reach roughly $2 billion market by 2029. So if you look at what does that mean for Net Insight. If we sell to a small operator or a large operator, what's the value for Net Insight, what's the opportunity, customer value? So we -- there are around 800 operators, mobile operators in the world. So we categorize them into small, medium and large. And we -- when we announced, for example, Free Sweden, that is typically categorized as a small operator, that frame agreement we announced was worth around $3 million or SEK 30 million. So I would say the value for Net Insight over 3 to 5 years over the rollout period is somewhere between SEK 15 million and SEK 35 million for a small operator. Medium operator is a little bit bigger than -- perhaps we're talking about 20,000, 25,000 base stations and upwards. That will then be the next range. A large operator like Türk Telekom, we said the value of that contract we signed was worth around $20 million or EUR 20 million. And roughly EUR 5 million was an NRE fee for us to finance the product development. But the total value was EUR 20 million for Net Insight. So we believe large operator is somewhere between 75 million to 200 million. So it's -- every opportunity here is quite large. Of course, it's not going to be the first order. Of course, they will start with more a trial order that will move into field trials, et cetera. But once you move into rollout phase, the opportunity value is quite large per operator. So that is interesting.

[indiscernible].

No, that's total value over the rollout period. So that can be like for years. Then we also categorized and prioritized all the different operators, mobile operators in the world. So we both looked at what type of operators they are. Are they incumbents, are they challengers, what type of buying pattern do they have? But we also looked at what type of networks they have. Some of them have very homogeneous. They own all their fiber, and they invested in a single platform. That makes it easier to provide time than if you have a more heterogeneous network with many different vendors, fiber, IP/MPLS, microwave, et cetera. It becomes much more complex and difficult arena. And perhaps you don't even own all your infrastructure because you're leasing capacity. Over 60% of the operators, even more, I think 78% of the operators are leasing capacity from others. That means you're not owning the routers and optical switches, means you're not controlling the distribution of time across your network. So there, an overlay solution like ours is much more interesting, of course, because then all of a sudden, you regain control and sovereignty of your critical function like synchronization. So this part is our prime focus. And the interesting part that the challenges with heterogeneous networks, that's only 20% of world's 800 operators, but it represent a quite large part of the total addressable market for us. So we don't need to go after all the operators at once. So a little bit also where are we now? As I said, we signed a contract with Türk Telekom back in, I think it was November 2021. We released the products April 2024. So in essence, we had around 18 months to do the trials and start getting in the customers. As you can see in the beginning, our focus is very much in Europe, and we also went into North America, but we're starting to get more traction also outside our core markets and especially now in APAC. And APAC is quite -- not all countries in APAC, but selected countries in APAC is actually on the front line of 5G development, especially the 5G stand-alone development. So it is interesting, and this is definitely a global market opportunity for us. We also was interesting, we also had our first media customer this summer that actually bought Zyntai, and it's going to be used for syncing all the events and stadiums in a big live sports event this winter. So it's also good that we can move into and have -- make use of existing customer base. I know we get a lot of questions from you, why don't we see big upticks, big ramp-up. But it is a process to sell into telecom operators. It's -- you move from sales discussion, you get interest, you move into PoC . Typically, you need to go into lab trials to certify the products. And today, there's a lot of security compliance. You need to comply with all the security guidelines, et cetera. Before they move you -- and then you have to -- we have successful PoC in the lab trials to move into field trial in the live network in the real deployments. And then after that, typically move into first pilot installation, a more commercial pilot installation. So we have today started 28 PoCs. This quarter, we're starting another 2 quite -- with 2 quite large operators. And success -- we haven't failed on any PoCs. There are no failures in the technology. And I think that's based -- reason for that is it's based on -- it's not new technology. It's more the product that is new. And then we have roughly then over 15 commercial customers today. So we have a conversion rate of around 50%, which I think is pretty good. Most of these are still in commercial trials, commercial pilot phase. 4 of them have now reached a rollout phase. So it's -- of which 3 are with 5G operators. So it's a little bit step by step because once you're here also and decided, okay, now we want to do go use your products for our synchronization. It's still a lot of things. We need to do the network planning. We need to do the negotiation with the procurement. And in some cases, there's also budgeting because the rollout is budgeted for next year, et cetera, right? So there is some time that we even from going from being selective PoC until we have go into full rollout, it can be 12 to 24 months before we start seeing rollout. So typically, you'll see 2 phases or 3 phase, PoCs, commercial trial orders and then rollout phase. Again, when you -- operator has said that I want to go away from just relying on GPS. And I think there's a big difference. When we started talking to operators 3, 4 years ago, most wasn't really aware that now I move to 5G, I need time synchronization. So that was quite unknown for the C level at many other operators. That's totally different today. They're quite aware that they need time synchronization, and they're quite aware of the vulnerabilities of GPS. So we are in a totally different position today. And you can say it's [indiscernible] are due to the geopolitical situation. It's not just in Europe. We have a lot of geopolitical conflicts around the world, unfortunately. But that makes that -- a lot of the operators see that they need to move to a network-based synchronization for backup and for higher resilience. And that's now further fueled by the moving into 5G stand-alone and enterprise services. Again, they need more secure, more uptime to be able to provide SLAs because we're talking about industrial automation, mining, ports, even self-driving cars. If that's relying on the 5G network, it needs to be very secure and very resilient. So how do you build? As I said, first, people looking at, I put large cesium clocks at the end, and I use this PTP. I upgrade my network to be able to provide PTP out to the base stations. Most operators realize that's a huge cost and it's a huge complexity because there is 100,000 of components involved in that. And when you upgrade your network, what's going to happen. So the good thing is you get full GNSS resilience if you get -- lose GPS, but the high -- the network cost can be very, very high for most operators. There are still some that have done this. But the more common approach people look into is some type of hybrid. How can I combine this PTP more in the access where I typically upgraded to my 5G radio access networks that are PTP-enabled. But I've now put a sync server from these Silicones or Microchip or Net Insight. And I put this in all the regions and for a small operator, that means a few hundreds, a big operator means a few thousands of those sync servers. And at each site, I also then put as a reference, I then need to have the GPS because I can't put Oscilloquartz at all those sites, and I still need to collect all those sites. That's a problem if you have not PTP-enabled network, you can't connect them. So you're still reliant on GPS. What you do is you put a more expensive clock there for holdovers. So if you lose GPS at that site, instead of having perhaps a few hours, I'll hold over until you start to getting degradation in your service, you might have 1 or 2 days. But that extra clock like a rubidium clock to be able to handle 2 days is probably $5,000 if you have thousands of those. That's quite a big investment just in talks. And it's still dependent on GPS, right? So you're not getting the full GNSS resilience. So that's -- but the good thing is we can -- the Zyntai can be one of the sync servers. So we are a standard sync server in that respect. So the base station will see Zyntai as a standard PTP grandmaster as it's called, but the interesting thing is we can add as a value add that we now add that overlay function, and we get full GNSS resilience. Because all of a sudden, we can actually get the time from the central clocks out to these regions, but without having to upgrade the full network. And the good thing also, now we get the holdover from the networks. We don't need expensive holdover clocks at all those sites, and we might not even need GPS antennas at all the sites either. So the cost advantage is quite big. So typically, the total cost of implementing this solution would be in our -- in the calculation of customer typically half the cost if you include all the holdover clocks, et cetera, and you get the GNSS resilience as well. So that was a little bit on the positioning and what is our value proposition when going to 5G operated customers. We also get some questions. Can you scale this quickly and that's always a challenge, but partners is very key to us in this. And we now signed 17 partners already. We signed now 7 partners in the last 8 months, and these last partners are a little bit larger local or regional system integrators that can help us both reselling, but also helping us in the rollout and implementation phase out in the network. So this will be important to us, and we believe already in 2027 more than 50% of our sales will go through partners, which is more than that you typically see in the media industry. We also got questions on time as a service operators. I talked about this as quite interesting to us because we don't need them to talk to all the enterprise customers, but it's still an interesting segment for us. And as I said, it's been a strategy that was very successful for us in the media industry to instead sell to operator, and they become like an indirect sales partners to us, like a channel into the enterprise customers because they typically already have these enterprise customers as customers of their enterprise services. So -- and also, it's for a 5G operator, if they invest in the infrastructure for 5G, there's typically a different department within the operators then selling service to the enterprise. But they can now sell time as a value-added service to a bank or to a media company. So it's interesting to them, and they're definitely getting much more interesting when they see this is not just a cost. It's actually a monetization opportunity as well. Benefits to that, yes, of course, we have 1 point of contact and 1 point of sales instead of having to talk to all the end customers. And also -- and then we also -- is this a cannibalization, but it's typically not. I see it as totally 100% complementary to our direct go-to-market strategy, especially because we are going to the 5G operators. The 5G operators, they want to control their sync functionality because it's a critical function to them. They don't want to buy that from a competitor. So -- but selling into the enterprise market, that's probably not where we want to go as the next step. If for us, probably the more interesting adjacent markets would be more government and utility market over time. But our focus is very much today on the 5G operators. So to summarize, time synchronization is quite interesting market. It's becoming more and more important, more important than people realize. It's critical for a lot of societal functions. At the same time, it's traditionally handled through GPS, but because of geopolitical situation, most -- both governments, operators, power utilities, they realize they need some resilience to GPS. And we have a very interesting solution to that because we can both provide that GPS resilience over an existing IP network, and we can do it at quite low cost, lower cost than traditional implementations. It's not like a red ocean, new product, new customers. It's based on technology that we have developed for over 20 years. Of course, it's a new market for us, a new customer. But in many cases, it's operators like Türk Telekom that we have worked with on the media side, but we now need to go into their mobile side. So we get some leverage on that. But of course, it's one of the challenges we have that we're now moving into the mobile organization in these big customers. So that what makes it, it takes a little bit longer time than, of course, if this have been existing customers to ours. I said, we're in a good position now. We released products nearly 18 months ago. It's stabilized, it's stable products. We have 15-plus commercial customers, and we also have quite a good order book. We have SEK 140 million in the order book to be delivered in the coming years. So again, an interesting market. It is long sales cycles, but we are also in that process. We're getting -- we have moved now, use this 18 months to move from PoCs into field trials, into commercial pilots and moving closer to rollouts in some of those cases. At the same time, of course, we're also building up the pipeline and adding more PoC customers. So I think this is a very interesting business opportunity, growth opportunity for Net Insight going forward, and it's a good complement to the existing core media network, where we already see that we are very well positioned, as you heard. So personally, I think it can be interesting times in the time synchronization market. So thanks.

Thank you, Per. And we open up for questions again. So yes, please.

I have a few questions, but I'll start with one and leave maybe return later. On Türk Telekom, 5G auctions in Turkey are about to happen and et cetera. Can you comment on that? Have delivery started, et cetera?

Yes. Good question. Yes, that auction has been delayed for nearly 2 years now. But yes, the good news is that they now set the auction date for October this year, and we were down there 2 weeks ago, talking about how to start doing the network planning. And yes, they started installations. And they are convinced that they will now start to roll out. The minister also said that the launch day of commercial 5G services from all 5G operators in Turkey should be April next year, so they need to really start rolling out to be ready.

And you mentioned also you had another Turkish operator on one of the slides. If you have -- just to clarify, if you have one operator in a country using your solution, is there any hurdles for another operator to use the same?

No, no. There's no exclusivity or anything like that. So it's like our media business.

We have a question here. You have been, as a company, quite optimistic that we should see more orders coming in the second half of this year. What's the status on that part?

Yes. I think we said 2 things. First, we said that we believe we're going to see growth from first half of the year into the second half and that we definitely see. And we also said that we'll see -- start to see deployments from those trials that is going on by the end of this year or beginning of early 2026. So I think we stand firm on both those.

Good. And do you -- are there potentially bigger clients in the process through standardizing your PTN technology through ITU? And how important is this in the sales cycle?

Yes. It's -- I think the important thing is we can sell our solution as a standard PTP Grandmaster. I think that's like you saw in that solution. I think that's number one key. Of course, many telecom operators want to see standardized technology in the network. So -- but -- and therefore, we started the ITU process that, it was I think last year. And the ambition is to have that first phase of the standardization ready by mid next year. So I think the important for most operators is that process is underway. And -- but of course, I mean standardization is always important in the telecom industry.

And what do you think it would mean if you get that standardization?

I don't see it as a big difference, a big breakthrough. I think it's important, but it's not a do or die or anything like that. It's important, as I said, because from a base station point of view, this is a standard PTP Grandmaster functionality. It's the add-on functionality that now is based on our PTN, which -- and the standardization process called enhanced partial timing support. So -- and of course, a lot of the proposals for that standard is based on the PTN technology that we are using.

Another question from the online audience. Are all 28 proof of concepts still ongoing or have some decided to move on with other solutions?

I said 50% of those have moved into commercial trials or pilot phases. So they've moved further down the line. The rest of the 50%, some of them are still ongoing. Some are a little bit in a wait-and-see situation where we said that this looks really interesting, but we're waiting until we are going to invest. But I think, as I said, 50% conversion rate, I think, is very, very good.

And what could be the reason for waiting if this is because you do a good pitch and why are they hesitant?

No, I think have a reading a big analyst firm on the telecom side that they made a survey, I think, like 18 months ago, and they asked all the operators. Are you going to move to network-based synchronization? And at that time, it was 44% that say, yes, we will move into network-based synchronization. I think that figure is higher now, but it's still a process. And as I said, I think it's also when you move into adding critical services into your 5G network, then it becomes critical. And then some customers, of course, have more realizing that GPS is a direct threat to them today because they're getting tax and jamming and spoofing in their countries. So they need that resilience. So of course, they are more prone to invest short term. I would say, yes, I see, I need to do it, but I can wait 12 more months. So it's -- but I think -- as I said, I think everyone will go there and do a network-based synchronization. And actually, it's not all bad, right, that they have not already invested in network-based synchronization because our solution getting stronger and getting more awareness for every day out there.

Can you comment a little bit on the relative cost base between sync and media? Is it 50-50, 40-60, just to get a flavor of...

I might have to -- you mean for the operational expenses. I know that Media has a much higher expense rate. The good thing also, of course, we are public companies. So we need to have an admin, the economics, IT, adding 20 engineers on sync doesn't mean we need to add 2, 3 more people on the admin side. So it's actually good from an economics of scale perspective that we can -- that part that we need to have as a fixed cost as a public company, we can leverage also for more...

You've grown number of employees, I think, 50% over the last couple of years. So there must be quite a lot of costs associated with sync. Can you just give a flavor, 1/3 or 25% or...

We haven't been communicated exact cost on the sync side. But if you look into the numbers, you can see increase, I think, between -- on the R&D side between '21 to '22, you see a jump in the numbers, '22 to '23, and that was mainly the reason that we start to invest in sync. So definitely, we have invested quite aggressively into the R&D, and we are building out the front-end sales part. So we are investing quite significantly into the sync, of course. And -- but it's not like we haven't communicated the exact number into the market, but you can look into the numbers and see where we have increased.

But as a follow-up on that, if you look at the sort of gross margin long term and EBIT margin long term, is the potential bigger in sync than in media?

I mean you can see the gross margin is fairly the same on the sync side as the media side. And so of course, if we start to get traction and increase the revenue on sync will help us tremendously on the EBIT side, of course, for the whole company. So today, it's quite pushed down based on the investment that we are doing right now. But we can see that the license fees that we get from the sync side is larger or higher than we get from the media side, so that's something that we will -- even though this is a rollout phase for next 2 to 4 years, you saw the numbers on the different operator. We also have a license fee coming in and support rolling as long as they have the installation of the product in the network.

Okay, sorry.

But the conversion rate is what we are right now. So I mean it's not that we will -- of the 28 PoCs that we have just the 50% conversion rates, they are still in the phase of moving into that. So you should not see that this 50% drop off, they are still in the phase of moving into that part that they are moving in.

And if we take that slide with the operators that has started engaging with you, and you split them into the small and medium and large, where are they?

I haven't made a math on that, but it's quite spread. We have a number of quite large operators in doing PoCs, as I said, 2 large ones, starting PoCs also this quarter. So -- and we have a small and we have medium. And we want the mix because typically, the smaller are a little bit faster to do in the process because the larger tend and to have more procurement, larger procurement processes. But we also, of course, want some of those big ones as flagship reference customers and, yes.

And you mentioned there was a question online. If Türk Telekom order was SEK 220 million, of which SEK 50 million was development, are they seen as a large operator in comparison to, for instance, Verizon or AT&T. Is 200 the largest you could get?

No. Well, I would -- they are doing a full-blown rollout so that they are -- but I would categorize them somewhere small, large or large to mid, midsize that are there somewhere. They are definitely larger company, mobile operators out there.

Can Zyntai be used for AI as a data center synchronizer?

As AI. We are looking -- well, you can say what's important in AI is time securitization is important also in AI, especially if you have distributed data centers and databases. And we're also looking at AI because what we're doing is we're collecting hundreds of metrics from each of those sync servers in the network. And that gives us a very good feeling for how -- what is the health of the network. And this is something we're getting feedback from the operators. It's very interesting because you get real-time health monitoring probes of the status and health of the network. So this is something we look in to explore further on in our journey. So -- and when you start doing that, we're starting talking about huge data lakes that definitely where AI would be very beneficial.

Another question online. You say that it takes 12 to 24 months from the first PoC to roll out. Is that since Zyntai was launched? Because you've had a lot of PoCs from -- for more than 24 months from what I've understood following the company, the recent years.

Yes. I think the good news for us was that we had our media products. So some of the customers that wanted to test, we could deliver the -- our media products for them to test. But of course, that was not media standardized, and they wanted to test the real thing. And also, we need to go through the certification in their labs to all the security guidelines that the new product handle that. So except for some exceptions, all of them wanted to test the Zyntai, not the old Nimbra products. It was still good for us because we were able to go out and talk about it before we actually had the real product on the market. It created a lot of awareness for us.

And an obvious question when you are talking about partners, why wouldn't Ericsson or Nokia be a good partner because they have the relationship already?

I think, I mean, they have their own sync solutions based on the standard PTP. And I've been working with Ericsson for many, many years. And that's a huge company, right? Sync is quite niche for them. And I think if we win a couple of really big ones, then we might get into discussions with these companies as well because then we are complementary to their solutions. I don't see that as happening in the near term. And I don't think that's not calculated in our figures.

And if you take that slide again with all the operators that you -- and companies that you've signed. If all of those would become customers, how big would the order book be?

I think I had a compound figure there, right? So let's go back to that one. But it's big, right? It's -- there you have it. Yes. So if we win all of those somewhere around $2 million to $5 billion.

But that's the total addressable market? So the ones that you have now...

In the pipeline or in the [ PUCs ]?

Yes.

Any you can do the math backwards, right? It's significant, right? So 28 -- even if all of them would be small, that's decent size, and some of them are also medium and large. So I'll leave that to you to do the math.

We will. Any final question on the time sync? And see if I have something. One thing that pops up sometimes is that the spoofing and jamming is maybe in more emerging markets and the war zones perhaps. Is there a risk that the market will be tilted towards that type of geographies?

I think the difference, as said, definitely, the security concern has been one of the drivers and definitely fueled by this GPS jamming that we see in conflict zones. But it's not just Europe and Ukraine, unfortunately, anymore, and we see it in many parts of the world. But I think what's interesting now is with moving to 5G stand-alone, there's also a business driver for moving to a more resilient sync. It's not just spoofing and attacks. So you need to have high uptimes and relying only on GPS and GPS antenna is a single point of failure. No operators, one single point of failures in the network when they have critical infrastructure. So I think we're moving now into business drivers instead of your security drivers. So I think that's important for us.

And maybe a very trivial question, but how does it work? When you have the chart telecom order and you have a quite large part of the order book still remaining and the rollout starts again. Do you recognize the revenue once you have installed the product? And is the product physical hardware or is it more software?

That's a good question. We recognized revenue when we deliver the products. So when we ship it from Sweden to Turkey, that's recognized revenue. And the products is a little bit like the media, it is both hardware and software licenses. And then on top of that, we have the support and also like a subscription of the software. So that's -- that they can buy a subscription for getting all the software updates and upgrades in the future as well. So it's a combination of those 4 different parts.

Very good. Any final question on the time sync unit? If not, we take some -- do you want to say some concluding remarks?

Yes. I mean we have some very short conclusion on the strategic initiative. I think we've been talking about that during the presentation, but just to wrap up. I mean we see that we can expand the market share in managed and IP and definitely in unmanaged that our like core that we're working on that Andreas were explaining. And then of course, we have the time synchronization that are extremely interesting to get growth from. And then we have the recurring revenue, I mean, we have recurring revenue coming from the cloud and the licenses that we have, and we are moving more and more over to software. And also, as Per were explaining on the time synchronization, we have the same, but that's a larger number and a higher number license fee coming in from the synchronization compared with the media. And then we see opportunities to move into adjacent market segments, both with the system product that we have in media, and in the 5G synchronization, and we see opportunities as Andreas saying in that also invest in new products to move into new market segments. And then we have the same scalability and can scale the business. And remember, if you look into the number, even though that we have increased the revenue quite dramatically the last 3 to 5 years, haven't increased the back end, the R& D that much compared with investment, even though that we have increased heavily into synchronization. So as Andreas is saying that we can have the same-ish number on R&D even that we are investing in new products. We have done the 400 gig investment in the last 1.5 years, then we can move over to invest in new product as well to broaden the market. So that's the good thing with our business model is that we can scale it. We have the footprint. We have the salespeople out in the market. We have a quite stable R&D cost and by 70% gross margin, we can really scale the business. So that's the -- we haven't touched into like looking into M&A and that's a little bit further ahead before we are doing that, but that's, of course, an opportunity. The partnerships that Andreas we're looking into that we can use more partners to enhance our product moving to other segment, even though that we don't need to invest in new product solution. We can use partner to use the solution that they have and integrate the team into our products, mainly then on the unmanaged. So I think I will stop here and see if we have more questions.

I think we do. So now we take questions overall basically. You have a cost-reduction program, SEK 300 million that we are yet to see during the second half. Can you explain a little bit why you ended up at SEK 30 million? That was the right size to take and not more?

Should I take it or -- we look into the -- and look forward on the forecast and see what we -- on the FX that we saw the like taking down the revenue for us that we need to protect us for. And we saw also that take a little bit so that the market were a little bit hesitant. So therefore, we'll look into that analyze what can be like reasonable to take down and then we look in and so the SEK 30 million was like a number that we could take in the first phase. But as we were saying that we are looking into like making sure that we have the right cost level towards what the market is developing those on uncertainties, but also on the FX, of course. So -- and I think it was a good move of doing that. I mean we have been growing the organization in the last 3 to 4 years, and then we took an overview of the organization. And so there was a good opportunities to do some scaling and taking away a little bit of cost that we have in the organization. So the SEK 30 million was still like the first phase of what we are doing. And then we are always looking into cost over going forward.

And looking at the financial targets, the 15% CAGR, how is that built up? If you split it into media and time sync, what is needed in order to...

I mean of course, we saw when we set that target, we of course, that they seem could take quite a substantial part of the growth, even though that we have had a good growth on the media side. We saw the delay in the rollout of the Türk Telekom network with a little bit taking down the growth that we had expected. So the short term was coming from media as we also had good traction on. And the second phase of growth is coming from sync. Even though that we continue to see good potential of growth in the media side, and we will continue to push that. So that was the combination that we were looking into when we set the target. The EBITDA level is more or less the same that we saw that we are building up the revenue coming from sync. And we saw like in the second half of the period, it should kick in and increase the EBITDA level. And of course, everyone understand that if you look at the overall EBITDA level, it's been taken down by the investment that we have done on the sync side. So the media is really do well, and it's generating a lot of cash that we can invest in like in the sync side.

And when you look into the second half and also into 2026. You have taken some good orders announced and perhaps also not announced orders in the media side, you have new product launches. Can you say something about the difference in the 400 giga product versus the 100 giga product and how that impact? And then also on the time sync, we asked before about the positive tone you have had towards the second half. What do you see besides the Türk Telekom deal restart...

Should we start on the 400 gig side because I think that's a quite an interesting part. Do you see the benefits with 400? Would you like to take that, Andreas? Compared with 100 that we launched?

Yes. I think what's interesting when you think about the 100 to 400 gig, as we talked about, we talked about the total cost of ownership, I think this comes with different things. First of all, so there are some requirements, I think, to move, have more capacity in the network. That's number one. I think the other thing we see is that if you look at -- if you're a service provider go out and buy 100 gig link, there is a threshold at some point still to be established where actually you're better off going to 400 and then buying multiple 100 gigs, if you see. So actually, you can hypothetically you can buy, let's say, 200 gig links to the same price as 400, so you get 200 gigs for free in terms of capacity. So that's kind of total cost of ownership will drive investments. That's one of them. 4K, all the user experience will also drive. So there's a multiple of drivers around increased capacity. So I think that's important to kind of think about that's multiple drivers for the 400 gig. I think then also for us, I think when you think about one other part of the value proposition we talked about having products that differentiates and cut through against our competitors. Being first, we were first with 100 gig now. We're sort of first with 400 gig. I think certain areas has been important for us to lead in. This is one of them. So there is a level of brand awareness, market reputation and cutting through against competitors with the 400 gig as well. So that's maybe less monetary benefit post some of the other ones, which is more clearly directly addressing the total cost of ownership for our customers. So that's probably the commentary on if you want to add, Crister.

Yes. I mean the rumor at IBC, the big media fire a few weeks ago, and that maybe it varies between regions. But what we hear from our customers, our service providers at the 400 connection costs as much as 100 today. which means that this is lowering the cost immediately for service providers to move over to 400 because they will take down the cost dramatically. And at the same time, if they're moving over to 400-gig, the density, the number of services that we can run on the same [ transfer ] the same card will increase dramatically with the new product, the 400. So you get lower cost for transmission and you can run a lot more services on the product on the 400 card. And they don't need to put in a new rack. They use the same rack as they have today which means that this is the TCU that you're talking about is really helping the big service provide to more 400. And we will start to ship the 400 products in Q4.

And on the time sync, the positive tone you have had towards the second half, partly related to restarting the rollout in Turkey, but is there something else as well?

Yes. I mean, as Per was saying, I mean we have seen traction on the PUCs coming in. We see attraction they're moving through this process to doing the rollout. So nothing has changed since we communicated the positive signal that we saw on the market. So we see that we will start to roll out hopefully, hopefully then this year, beginning of next year. The first rollout on the customer that we see is coming through this threshold to come to a rollout phase. So it's -- and still, it's great to see that more and more will start as Per was saying, it's 2 new [ PUC ] this quarter. It's great to see that we add new [ PUCs ] until the new customers that would like to test our product. So it's a good traction in the market.

If you had a windfall of, let's say, $50 million and you had to spend it on R&D. What area would you spend it on?

I think you need to help me. No, I think that -- I mean, definitely, we have opportunities in the media side, as Andreas was saying, that we can develop adjacent product in the same market or customer segment that we are into. So I think that would be the first phase to accelerate that to broaden our portfolio for existing customer. And then we see like an interesting part that we can move with existing products into new customer segments that probably require more front-end resources to move into new customer segments, but we will use the same product that it has. So I think that's the 2 parts. The third part, I think it will be even accelerate unmanaged, push even harder. I mean we have a tremendous good cloud-based products that are well established in the market good reputation, good feedback from the customer. What we're now doing is like the 400 product that we have. It is -- that also in a managed product that we are broadening that portfolio, so we should accelerate that into to more product -- is a bigger product portfolio within unmanaged. We have that on our product road map, but we should accelerate that. Sync, I think it's this moving -- going from 5G into more gasoline to as Per was describing in his picture. And we know this is a number of new customer segment that we can move into, but then we need to have more front-end people running into these different segments in the market. So that have been obvious next step for the sync, accelerate that. Be more aggressive and more people running into those customer segments and then be prepared for the Power Grid segment, when do we see that increased attention to the GPS independent solutions to prepare us for that. I have missed anything? A wish list to add anything more? SEK 50 million is a quite substantial number.

I guess if you combine CapEx and R&D, it's roughly SEK 100 million. Would you say that, that is a good level for the coming years as well?

To increase, you mean?

No. To keep.

To keep. Yes. I mean I think Cecilia is saying that we don't see that we will increase the R&D budget compared with revenue, it will go down. So we see the target is like 20% of revenue.

Yes. And we have one question on the cash flow. You highlighted that it will -- you will tie up more capital to working capital, and it has been negative for quite some time now. Can you reassure us that you don't need a new issue?

In the cash flow, as you said, the working capital has been tied up during Q1 and Q2. And the one that we are doing now that would be tied up and you will see in the figures in Q3 and Q4 is the last time buy. And as we see now, we have the cash that we need. So it's nothing that we see that we need extra cash for that.

And the component costs would come down. By how much will it come down?

We haven't communicated now, but that's the [ EBITDA ] is definitely the highest cost components on the cards. So that's quite a substantial number. So that will come down. It's not dramatic, but it's visible for us absolutely.

And a question from the audience. How much does the tariff discussion in the U.S.A. hurting the business?

I mean, extremely hard to say exactly the number, but we definitely see uncertainties in the U.S. And of course, we consistently look at into the tariff. It's a little bit less turbulence right now. But if you go back a quarter, it was very, very turbulent. We didn't know exactly from day-to-day what will happen and the customer didn't do that either. So I think that the tariff is much more under control. But even though that Cecilia was saying, it's a cautious market.

Yes. I think that it was more problematic in Q2 -- Q1 and Q2 when we didn't know. Would we continue to be extent? Or would we be included in was now in August when it was 15% for the whole of EMEA. So I think that now when we have confirmed that we are extent right now, it's clear for our customers. But of course, everything can change. So we need to follow that all the time.

And question on the synchronization. You say that 4 are now into rollout phase. How -- which months starts the first volume batches to when do they start to be shipped?

We cannot just communicate that exactly with the month it will be.

Week?

Week, day. No, I mean again. I mean we see a positive trend. And we see that, as we have communicated, we see like increased revenue in the second half, and we see rollout end this year, beginning of next year.

Another question on how do you view stock dividend in the near future?

Stock dividend? Yes. I mean we have the AGM and that we can buy back shares for SEK 50 million, and the Board communicated in Q2 that they haven't taken any decision. So that's up to the Board to decide if they would like to do that or not.

And one question that usually pops up from time to time is how management is incentivized how does that look like in Net Insight? And what KPIs are you measured on?

Yes. I mean we have just launched a share incentive program with measurements that Cecilia can communicate, you remember that?

Two of them are aligned with our long-term targets, so it's growth and EBITDA and the next one is ROCE, return on capital employed. So it's quite linked to our performance, and it's 1/3 divided.

And what's the ROCE target?

It's return on ...

Capital employed, yes?

Yes.

But what's the target?

No, we can't -- we haven't gone out with that.

One other question on the media side basically. If customers can delay orders, does that mean that it's more nice to have rather than need to have products?

I can comment on that. I think it comes back to -- it depends on the use case. We talked about the different reasons for our customer buying. I think in some instances -- many instances they need to buy because they want a contract. They need to be built out to more venues, and so of course, new rights deal has been taking place. So they need to build out -- but of course, when you look at maintenance investments and so forth, it's also an element of do you do this year? Or do you wait? Of course, there's always an element of that for that part. But you can -- as I explained, there's a number of other drivers, which are important or mission-critical driven by the business and so forth. And again, failing is not an option in our industry to make sure nothing breaks. So I think, yes, it's machine-critical. It's not a nice to have by any means. But -- but having said that, sometimes you might want to sweat the asset and take some risk explore share service provider and prioritize investing in one area post another. So of course, there is always an element of juggling your CapEx budget that you have. But for sure, we will always be mission-critical, I think.

And it can be combined. So like when you... [Audio Gap]