Shelly Group SE (SLYG) Earnings Call Transcript & Summary

Welcome to Co-CEO, Dimitar Dimitrov, Co-CEO, Wolfgang Kirsch, who will start with the presentation shortly. After the presentation, we will move forward with the Q&A session. With this, and at start, Mr. Wolfgang Kirsch, the stage is yours.

Yes. Thank you very much, and thank you. Thanks to all of you for joining our H1 earnings call. On behalf of Dimitar Dimitrov and myself we are really happy to show you and to lead you through all our numbers and give some more information. As usual, I will start with the highlights. Dimitar will talk about product and product-related stuff, then we go a bit more into financial details and give an outlook for the rest of the year. We make smart building solutions where we make building smart. We are talking about more Smart Buildings than Smart Home because we are moving as well into new segments. We will cover that as well during the presentation, as well as general chart that you have already seen a couple of times since 2018, when we sold the first Shelly device, we have sold now EUR 15.5 million by the end of June of this year, EUR 6.7 million in the last 12 months, which shows that we are accelerating our growth. Shelly devices are used in more than 3.3 million households, and we have around about half of that, a little bit less using our cloud as well, and that's as well increasing relatively fast. Our cloud rating increased as well. That is something very important for us, as well, if we come back later to the premium version of the cloud, you will see some first results there as well. So let me come to the highlights of 2024. We are continuing to deliver all our KPIs, revenue, EBIT targets were met in the first half of the year. The revenue growth is above the market in all regions. We think and all the market researchers say that the market is growing by 15% to 20%. We are outperforming that. We have successfully enlarged and continue doing it, our distribution channels. We have significant growth of our addressable customer ownership. You've seen this with the application. You will see this later with the premium app development. We have started with an installer finder. We have some positive developments here to make it easier for customers that are not self-installing to find the right person helping them. We have made an acquisition of assets of the company producing smart locks. We have will come back to that. That will enlarge our portfolio and will help us to reach all our ambitious targets. Now to the numbers. In the first half of the year, our revenue grew by 49% to EUR 41.8 million. That is above the market. Once again, the market is expected to grow 15% to 20%. That means with 49%, we are outperforming the market clearly. Our EBIT is in line or even a little bit above our own expectations of EBIT are 25%. We have reached an EBIT margin of 25.8%, which is a little bit, again, a little bit above our own additions that actually we set for 2026, not already for 2024, but we have reached them in 2023, and we'll continue being on that level or around that level. So, EBIT growing 54.9% in the first half of the year, our cash goes mainly in the working capital. So you see that we have a reduction of cash, although we have a positive EBIT and positive net profit in the first half of the year, you will later see why this is happening, and this is something that we are not actively managing because we are 100% revenue driven and want to keep that speed as well, but we come to this point later in the presentation as well. We are growing our distribution landscape with a lot of partners in the do-it-yourself area. We are moving more and more into do-it-yourself chains like [indiscernible] more and more companies like Hornbach with more and more countries. They all plan to take us in not only 1 or 2, but in all of the regions. On the professional side, we have as well some very good developments. We are working with Rexel in some regions already. We've finally signed contracts with them in 2 very big countries, in Germany and in the U.K. which should help us to grow business in the professional section as well. Something that is very interesting for us, some very first steps into these markets. That's -- when I mentioned at the beginning, we are not only smart home, we are smart buildings. We have some co-operations with different regions and some test projects in different regions, one of them in Italy, together with Amazon , Alexa and Zucchetti. Zucchetti is an Italian, relatively big Italian software development company. They have developed a fleet management system that means the software that can do things that our application is not able to do, for example, steering a whole hotel that is equipped with Alexa and with Shelly devices room by room and as a total. So we are moving into this business in Italy, the U.K. and in Spain. We have some first project in smart properties. So working with builders that build houses with a lot of our partners, equip them with Alexa, equip them with Shelly devices. We have some senior living projects in Germany. We will make a road show to see our living facilities together with Alexa in the second half of this year. And we have one project that is very, very promising with a company called [indiscernible]. They operate homes for handicap people. They have found out that with the combination of Alexa and Shelly, they can make the life of the people much easier. At the same time, they can save costs because if someone has a problem and pushes the emergency button just because the light has to switch much better and easier, more reliable to do that with Alexa and Shelly combination. First, concepts very positive. They will roll this out to all their facilities. For us, this is the next step into visibility and will help us to get more business in this area. So now we talk about products or Dimitar talks about products switch here, by the way.

Yes. What I can say for the product is very positive development because we're going very fast and releasing new products and new services. But also in the second quarter, we showed something very important to our customers and our partners. But Shelly is much stable than the bigger company related to the Internet and service outages over the world. In July '19, when there was a voltage, there is no single Shelly customers affected. This is basically because we with the back-out company with deep software understanding and the network infrastructure. We are completely independent from the big services, which also not only is not helping us for the such availability, higher reliability, but also save significant amount of cost because we don't pay until the third-party services for this except hosting the machines as we say, it happens in Belgium, and this is opacity for that. But except that everything else is made from ourselves. Next, something which is important, already for 2024, we have 11 new product updates from the all these venture to the new generation of the products. We have 19 new products which we released in the market and we have a completely on new product category. This is compared with the year ago, we are going much faster even the criteria of the quality. We need to certify this product not just for Europe, but also for United Kingdom, Australia, Austria and United States for so under some any regulations. Our outlook in our pipeline e is 40 to 60 new different products, which is coming, and they will be ready to enter the year or very early beginning of next year. But what I can say that development is going very well and is growing to have more and more power to develop new products and services. Something which is important for the long time working for the solutions for the smart walks. One very good option is the company really has amazing work by technology, by service. But fortunately, the company source more and they don't have opportunity to reach the right market for the products. This is the first one. The second one, they make small auditor mistakes with the manufacturing and the partners. They're going to start selling their assets. What we've seen that just [indiscernible] intellectual purpose, a good customer base. Now we're working very closely first to continue the production. The second one is to integrate the complete solution with a Shelly solution. We're working also to decrease the production cost during our [indiscernible], using our production facility in China. We're expecting the first results for this asset acquisition to be visible at the beginning of 2025. But this is a completely new I'll say, the new target and the new potential because of Smartbox at the moment is something which is not created directly with the home automation, but it's like the smart phone, which gives us one more option and also give us options to our client, to combine between our devices and the work devices, which also should soon they will be also powered by Shelly. In the last quarter, in the beginning in the half of the year, our visibility in Europe is significantly increased. We can head up there is no [indiscernible] in the Europe, which not make an article for our products. Most of our products is rated to the 5 stars in different categories. A lot of third parties and distributors, especially in the one which is selling the investors and our systems, they explicitly recommended the Shelly devices and some of them recommended only Shelly devices to work together with their own equipment, which gives to their customers' additional possibility of additional opportunity to sell energy, committing to control the system. Something which is very prestigious for us that Shelly is nominated for the Golar computer from Computer Bild, Germany. Even though we don't make a computer, they go only for the PC or Laptops, they're also [ averating ] the services related to IT services. We are #1 in the DACH region related to the new energy, controlling [indiscernible], which for us is very important to find that we don't come the right way. Also something which is important. A year ago, we had no idea about our installs. We know that some of these towers using Shelly devices, but we know that we are mostly indoor. For that one, we start with our educational programs and our academies. We start to work with them more and more electricians or the Europe. Then the first lot is here because just for the Germany, Austria, Switzerland, Denmark, you can see that our electrician already is our database. They received the information about the new devices. They receive information about the additional educated materials. If somebody which make a big buildings or on automate the home. Now we can recommend some installs by the experience to help him, which is important. Now going on with financial demands.

Yes. So now back to the borrowing numbers. You'll see that chart. That's why I go directly to the next one. Here, we are showing the revenue development quarter-over-quarter as well, yes, sorry, a bit boring, but quite good for us. So you see that revenue is continuously growing. In the second quarter of 2024, it accelerated a little bit. So if we take the 49% for the full first half of the year, in the first quarter, we grew 45.5% in the second quarter, 52.7%. So the growth is accelerating. With this, we are a little bit above our own expectations and on a good way to reach the annual targets. Important for us as well, I mentioned a couple of times that we want to keep our around 25% EBIT margin level. after 6 months, 25.8% in the second quarter as well here, a small acceleration. We grew the EBIT EUR 66.4 million, so even above the revenue speed. We are not expecting to and not targeting to increase the EBIT margin to 28% or 30% because we are really doing everything to reach our revenue targets to overachieve the revenue targets if possible. We don't want to sacrifice margin, but we are not planning to grow margin continuously faster than the revenue. That's very important for us. If you look to the regions, the DACH region is staying our strongest region. It's always around the 50%. In the first 6 months of this year, DACH was growing. Germany, Austria, Switzerland was growing 62.8%, significantly above the average, which is something that on the one hand side, we like. On the other hand side, we would like to see the rest of Europe growing faster. But as well here, rest of Europe, 37.2%. I remind you, once again, the market is 15% to 20%, which means that as well here, we are outperforming this to market and the rest of the world on a very small level of study, 4.4%. Why is that growing over proportionally. We think this is coming mainly from huge visibility. We showed a couple of charts. Computer Bild nomination is something that proves that we are visible. All the tech magazines are writing about us. A lot of installers have interest to work with our products. More and more retailers are carrying or all retailers are basically carrying our products. That gives a huge visibility combined with a good product quality, a lot of recommendations, and that is accelerating. We think that the same will happen after an onboarding phase in the rest of Europe as well and in other regions of the world as well. It always takes 2, 3 years until we have reached a certain level in the country and then what I usually call the hockey stick effect comes. So it starts slow and then it really goes up and accelerate, and we expect this to happen in more and more countries in Europe and not only in the DACH region. This is the first time that we showed some numbers about our premium, we always said it's still on a very low level, but we get constantly questions asked about how is the development? Are we happy? We can say we are happy and satisfied with the development. In the first 6 months of the year, we had 13,000 paying users. That led to a revenue from premium services of EUR 200,000 we expect with all the calculations in the development, we see that this will be around about EUR 600,000 by the end of the year and for the next 2 years, we expect this to round about double year-over-year. We as well, and I told you at the very beginning, we did a lot for the rating of our Sunland application that is now rated with 4.7 or 4.8%. It was only at 3% or even below 3. So not satisfying. We did a lot in the first 6 months of this year. At the same time, now we start to actively promote the premium app. We are still the small team of developers making the premium have better because we see it works, and now we will start to invest more. The good news here is that more or less revenue equals gross margin because we have some very small additional costs, but Delta mentioned the quality of our cloud and the way managing the cloud that leads to a very high profitability in this section. So we expect this to grow. This in 2026, EUR 2.5 million revenue or more or less a profit is something that is quite amazing for us. The cash flow, that's the only chart that shows a lot of red, which is not alarming for us. We still have enough cash, EUR 10.5 million cash on the bank account by the end of June. As I said at the very beginning, we are investing as much as possible in growth. We are not actively managing in a good way, and I'll come to this in a second, our working capital. If we go through this line, we have increased our inventory by EUR 4.2 million. We have EUR 2 million higher prepayments to factories mainly in China, mainly for chips that we need for the second half of the year. We have higher customer receivables, EUR 2.3 million more, which comes, of course, from a more and more professional distribution because if you work with bigger distributors, they all have to give payment terms to the wholesalers to their electricians. So they usually demand 30 or even more days of payment terms and no one is paying upfront anymore or only very few number of customers. We have increased our shares in Shelly Tech that was planned that already have at the beginning of the year and Shelly Asia. That's the company that is controlling our Asian factory. That was a minority shareholding. Now we have the majority as well because we start selling as well in the Asian area, still on a very low level but quite promising. We want to consolidate that, of course, and that's why we increased the number of shares there. We have activated EUR 800,000 of R&D investments. We have paid out a dividend that happened a year ago in July. This year, it happened already in June of EUR 2.3 million. We still have an equity ratio of 88.8%, so all this is very promising. We have secured just in case, although we do not expect to have a need for that, we have secured a small bank line. If we need to run over the 0 line or below the 0 line, we are safe on that way as well. But we expect that the cash stays on this level, round about until the end of the year. So now having said that, we are not actively working our working capital. One of the questions that is constantly asked by investors is, what about working capital? As I said, usually the answer is we are a growth case. So we invest whatever we can we grow, and we prefer to have high stocks and high availability and not losing a Euro of revenue. This year, especially, we have a couple of changes on generation. We switched from 2 to Gen 3 devices and soon we will switch to Gen 4 devices, that makes our life as well a little bit more complicated. We are close to finalizing the implementation of SAP that will give us a lot of advantages and planning more detailed information. then we can start to work on a reduction on our stock. Today, we have 4 to 5 months of stock here in Sofia plus all the prepayments that we have to do to China. We want to reduce that. We will start as well negotiating payment terms or longer payment terms, more payment terms with Chinese suppliers and U.S. suppliers. We are working in Silicon Labs as well on the chip side. We will have a more restrictive customer payment terms as far as this is possible. We always are factoring as an option, our receivables are insured. So we are already in discussion with some companies that had a very interesting interest rate are offering factoring. We don't want to do that, if not needed, but that could be as well an option. On the margin side, because that's the second question that you are always asking, is our margin sustainable? We think yes. On the one hand side, we did not, in the last 1.5 years, we did not increase with single price, although competition is doing that. So we would have the possibility to increase the prices slightly and still keep a very aggressive positions or acquisitions in the market. We are not doing that because as well here, we want to push revenue as much as possible. But we are now building a dedicated procurement department because we have the right size to do so here in Sofia and in China that will, on the one hand side, have a better planning. We'll have more negotiations with refectories and suppliers to use our economies of scale to reduce the price. The better stock steering leads as well to better margins. If you have the right products available in the right quantity, you can sell them less at higher prices, don't have to compromise anything here. we think that now, of course, it's complicated with the war going around the Suez Canal, we are not able to ship that much with sea freight. But if we move to sea freight, we can have a lot of economies and it all comes with a better planning and can reduce the stock at the same time using sea freight can increase our margin significantly. So we are talking about some percentage points that are available here. So that's all things that we want to use to secure our margin to stabilize our margin not necessarily to increase it above to 25%, but to have some reserves that we can invest in more growth or used to stabilize the EBIT margin and the gross margin. That's the profit and loss. I think we do not go through that just one line, maybe the net income, EUR 9.2 million. You know that in this area, we have a lot of tax advantages, low tax rate. So it increased by 58% in the first 6 months. That's as well a very interesting number. Now about this year. So I made a comparison here about at the same time of the year after 6 months, where have we been in the last 2 years compared to this year in the achievement of our annual targets. In 2022, after 6 months, we have reached 38.4% of our annual target. In '23, at the same time, 37.4%. this year, we are at 39.8%. With this we feel safe to confirm our annual target of EUR 105 million. We have a little bit of a reserve. But you know that we as well have a very important fourth quarter with Black Friday with a lot of Christmas season effects, and we don't want to gamble and increase our target now. So the 105 million, we feel comfortable. We have a small reserve. Everything should be fine reaching the target, hopefully, a little bit more but we will see. We will give more details and more information in a planned Capital Markets Day that we want to hold on the 5th of November in Frankfurt. This is the day where we want to go much more in strategic updates, financial deep guides inform you about our ambition 2030, what does this mean for revenue for households for a lot of information to give you a good feeling that we are constantly growing and not just a company that is booming and pushing, but that keeps the promises. We will as well give some information about road map and some product demonstration fees there. So look forward, save the day already 5 of 11. Hopefully, this will be confirmed, but right now, everything looks nice, should not be holiday season and no other big events. So that hopefully a lot of you can attend. We will do this in a combined form. So physically in Frankfurt as well as a video stream, but as more of you are in Frankfurt and can touch the product and well as personal contact to us, I think that would be very helpful. So that leads to the summary already. We have reached our revenue and EBIT target in H1. We are even a little bit above. All regions grow above the market. That's something we are very proud of. We want to keep that speed. This growth is sustainable. We see that we continue growing in DACH where we are quite strong already but as well outside of DACH. There are not a lot of competitors that can say that. There are a lot of regional players that have problems to leave their home country. We see that our products work as well in Italy, in Spain, in the Benelux, in Nordics and in other regions of Europe and in the world. We continue to expand regionally. We continue to expand from do-it-yourself to the professional market. In some regions, we are well ahead of that. Our best region and professional market is well above 30% professional share already. So we see the product works, the product work in that environment as well. We have a wider range of products as we had before, now with the entrance in Smart Home business, so it's Smart Locks business. Our cloud and our premium app is additional potential that we start to use now, and you see that we have some first results. We confirm the guidance for this year, EUR 105 million revenue and EUR 26 million of EBIT as well as the EUR 26 million goal of plus EUR 200 million revenue and plus EUR 50 million EBIT. We started to implement this year the first measures to optimize working capital, and we will really start this in 2025, and we hope to see some first effects on working capital as well. Although we are still in a very comfortable cash situation and do not see any problem that we run out of money. That's all. We are ready for questions. If you want to download the presentation, you can do it here or you can do it from the Montega platform and always happy if you subscribe to our newsletter to get more information. Now I'm listening to your questions.

Thank you so much for the second presentation. We're moving now to the Q&A session. [Operator Instructions] We have a first question from Bastian.

So 3 questions for me in total, but I ask them one by one. The first for Dimitar. So we have seen quite a rapid pace of pack development, especially this year and also in the second half. Do you plan to continue that in 2025 and the year following that?

Yes, definitely I can tell there is 2025 will be a year of the generation for the muscular devices, which means the more capability, more protocols and much use for devices. This is something which is where we're going. On top of that, we have a plan also to increase the line, maybe to go a little bit more into the retail sector, not only for electricians, for the household devices, which are [indiscernible]. Yes. But there's a lot. With the team with increasing capacity, we can now and we're working on that in 2025, 2026. We know that our advantages, our deep knowledge about the IoT, controlling and all these things which most of our players doesn't work to help on that.

So one on the G&A side. You've previously flagged the ramp-up in personnel over, yes, 2023, especially. We've seen quite some positive developments in the G&A margin. Do you expect to grow that under proportionately in the future as well. So that the majority of the personnel ramp-up is over for now with obviously quite some additions, but in headcount. But yes... Further leverage there?

Yes. We will add more head count. We have around the world worldwide around about 250 people now, 120 of them are working in technology, so in R&D, in support functions and quality control and others. We will have less headcount growth as in the last years, but we will have some people in Western Europe, especially in sales, local people that are, of course, Western Euro with much higher tax rates that are a bit more expensive, but will not be that much. Although we expect that to grow the head count, we think that salaries will grow under proportional to the revenue development. But we have a lot of investments in marketing, mainly in events that we participate in. So this year, we have in Germany alone, we have EFA coming in September. We had Light and Building already very successful for us. In the U.S., we have been at CES. We have been in IoT in Barcelona, and we have 4 or 5 more smaller trade shows to come that we will participate. We are planning this for next year, and there will be a lot like a very interesting market for us, just as an example, is Turkey. There is a Light and Building event in Turkey this year, and we will participate there. So that costs a lot of money, but it brings as well a lot of visibility for new markets. So in general, once again, salaries, I think the percentages or the salaries will grow under proportionally because we are not hiring that much people anymore. Of course, we have to pay as well higher salaries to the existing people in the next year. But we are not planning to increase our EBIT margin. So everything that we have on top will go 100% into growth visibility, marketing measures, hiring people in Western European countries that know the country is much better.

One follow-up on that on the marketing side. This also includes paid search like Google Advertising & Co, right?

Yes. But it's a relatively small proportion. It's much more is the trade show or is what we invest in influencers. Some of the influencer things are unpaid, some are paid. That gives us a much better visibility on payback than just the pure Google search. But yes, we have some Google Search and Facebook and Instagram as well where we invest, and we see some very good return on investment there.

Then last one for me on the Rest of World segment, which seemed to decelerate a bit in the growth rate in Q2. Can you maybe flag the drivers here? What you leave us to accelerate in H2 and next year?

Let me put it like that. Our core market is Europe. Whatever happens in other countries, of course, we take. As I mentioned, especially Asia because we increased our share in Shelly Asia to be able to consolidate this because, we see some very positive developments there. We have now started after we have been contacted by Amazon Australia last year and now we were able to start there because it needs certifications for the product and a couple of other stuff. Now we have been contacted by Amazon Japan. They want to work with us and sell our products because they see the success in other regions. That's all fine, but we cannot do everything at the same time. So I think rest of the world with plus 30% growth compared to a market that is 16% to 20% is very good. At a certain point, we will maybe after we have covered all new countries with people and we see the right development there. we will have a clearer focus on other regions. But right now, we get more growth out of us. We have areas like United Kingdom is one of the biggest markets for smartphone products in Europe, and we are at the very beginning here. We see nice growth rates, but it's the very beginning. So we can get much more there, much closer to where we are than from our range.

We have another question from Mr. Kanzai.

I just want to understand the selling average price development, how much of the sales growth coming from the average price? Then Dimitar, you mentioned that you're going to have a lot more products coming up in fiscal year '24 and '25. Do you expect more price increase because of the new products, this price development would be interesting for me.

Okay. So I have to admit, I did not make that calculation yet. But just some good guesses. We have our most revenue product is a quite expensive product. That's an energy meter. That's the category that is driving the market that increased our average selling price. In numbers, the most sold product are different ones, that normal relay, the plug that have a relatively low price. At the same time, as we have more expensive products, and you mentioned that we have something in the pipeline because we talked a couple of times about the TRV that will be there for the heating season. That's a product that is above average price that will increase the average price. We as well have some Bluetooth devices that are below the average price that will reduce it. So we will see that's what we think a little increase in the average selling price, but not a huge jump.

We have another question from Stefan.

I was wondering if you can say something about your enthusiast community development and your trends on the influencer front. That's one of the core strengths of your company that you have all these fans doing free marketing and advising others on how to use the chips another one.

The fan base in our core market is continuing to grow by around about 10%, 15%, 20% every quarter. So not proportionally to revenue because some of them are adding more devices to their solution and some after they have sold their issues, asked their questions, got all the answers they are not active anymore. But we are doing more and more in the new territory. So I mentioned United Kingdom. That is the core market for us or start to be a core market for us with a huge potential. So we will go there in these platforms. We will contact specifically the influencers that we want to work with to build the same as we have in other regions. It's not easy because what happened in the DACH region, mainly and in some others, it happened. It was not something that we planned like that. You cannot recopy that to other regions. But we see that continuing this way with influencers and these YouTubers, the right co-operations with the right newspapers that leads to a lot of visibility and lead as well to a lot of new videos that people make in the techno. It's growing very well on the 2 ways. For example, on Sunday, we published something about related to the new device in the community. For this first time ever, we've seen that just for the 48 hours, we reach our 100,000 engagements to the post and share to almost every in other smart home and enthusiasm on the Facebook, which has never happened before. Also, the main grouping Facebook is close to the 100,000 people. Our form is increasing and the general form is still more or less, let's say that if you combine all kinds of channels, we're reaching maybe 300,000 people which are very actively working on Shelly devices. On other side, with the Shelly economy, what we've seen in very positive development of the most enthusiastic customers, they they're on the different knowledge level. They can help not only with wiring, but now they can help many customers also with some software developments, [indiscernible] or new size devices. The setting more than 10,000 people is finished successfully the academy, which means they spend almost 2 months more to 6 hours per week online, an additional 4 to 6 hours to prepare onsite for the next exam and for the next lessons, which is a very huge development because now we have more and more deep educated people, how about the Shelly ecosystem and Shelly devices.

You were talking about the focus on the Europe region. I'm just wondering if there's any spillover in terms of competition from other large international markets where in the U.S., if you have a big business, obviously, that means economies of scale. As you say, the product traveled quite well. So what do you see on the competitive front as you're not covering all of these large international markets that also already have large volumes in the product category.

Just by competitors, we didn't see nothing for the last year or half year. There are some prices. There is a copycat of our devices, which with some companies, even Chinese, even Europe, they try to sell for Shelly is not just how the device looks like. It's a very huge ecosystem with everything which we propose and these trials are completely successful. But what we've seen that at the moment is very important competitors, they see what we do and they try to follow. They are still behind us, we're moving faster and faster. But yes, we see that at the moment, Shelly is the leading innovator for the smart home and smart buildings worldwide. No direct pressure, especially in the open market from somebody, just tries I can say the successful copy of the devices. In United States, the movement is not of a lot of Chinese companies selling here every month, we can see a different kind of the product is on the market, nothing which is extremely different innovative. We've seen that in the United States, the people start to care much more about the PV systems. They're looking for monitoring, they start looking and asking us for the solutions, which is never happened before, maybe because the energy prices or something, but let's see to what will happen in the next month, but nothing which is, let's say, something which we need to tell or something, and don't forget, we're a company which is scared about everything. We care about everything. When we see something some way happens to limitedly go there, check it in details, and we prefer to react and to do something from them not to wait until after that to see how to complete somebody . This is the age of the company.

Yes. It's not so easy to copy a success to other countries or regions. One example is a very successful company in Sweden called [ Plate ]. They do around about EUR 50 million revenue in Sweden only. So they are super successful dominating the Swedish market. They have problems to copy their success or to continue their success in the Nordics countries already. We know from Rexel and other partners that they address them in Austria and in Germany and they were rejected because products are expensive, products are more complicated than ours. So we have a couple of advantages to enter markets easier and earlier and [ Fletch ] and there are a couple of other examples as well. They go very strong in the installer market, which we do as well, but only as a second step for us and always do yourself first and do it yourself first is easier than convincing the installer that is used to install a product for 10 or 20 years already to change the product. It takes just longer. So do just a first and then professionalism is our success formula. That work, there is one more thing that we can say on the competitor side. One, very famous brands, one very famous competitor, Fibaro Polish company will vanish completely. They have been bought by a NICE group, NICE is doing home automation as well, but more on the automation side, like [ Gera ] Motors or motors for the blind or a couple of other things. They bought Fibaro, the Fibaro brand will completely vanish. There will be NICE products only, but not the same product because they are not investing in R&D for NICE in Fibaro anymore. So no idea what they want to do, why they bought the company in the first place, but they will completely vanish. We see that they are selling out their existing stock, which might create a little bit of pressure on margins. But so far, we expect that this pressure will be higher than it actually is because even if they reduce their prices significantly, they are still more expensive than we are. But that will have an end very soon because they stop the brand will not exist there. There are a lot of small brands that are not doing that well that suffer if we talk to them and we ask them how they see the market. They all say, "Oh, it's very complicated, and the market is not growing. Our information is the market is growing, and we are outperforming the market, so we don't get it.

We have another question from [ Melanie Tissue ].

I would like to ask a little bit more, if you can give us a lot more color on how you see the progress and how we should think of investors on Shelly X more about initial to the consumers or initially to OEMs with contracts that you are going to produce a number of models for them for the, I don't know, European market? Or how we should see that? The reason I'm always excited with Shelly X because I believe this has extraordinary potential, even could be eclipsed the revenues of the existing core products. So I would like to see that it's aligned with what you see as well. Any color on that would be very beneficial.

Yes. I can say if you ask for us and same for me, we've seen a very huge opportunity for Shelly. So we've seen also a very huge interest for the partners, which when we talk with them about options to the shared equity system through the Shelly X modules. What we're doing now, we just decided not to show something which is not ready yet means there is no results. This is not the first half of the year, this is second half of the year, which this is not the time to show in this earnings call. But yes, at the moment, we're working with at least 5 partners and the first device on the way. The process is a little bit complicated, of course, because first they send us the product, we see then we help them to integrate the Shelly X as part of their appliances. Then we send them back a module. They make some initial production, they make some tests. They need to change a little bit there on ecosystem to implement the different kinds of technology. But what we expect in the end of the third quarter, beginning of the fourth quarter because it's not qualified for this because of them also the first powered by Shelly X module to be available on the market. Definitely, that will be for end of the year, even though the suppliers because this is the appliances, not just the small devices. This is the point on the big one then you need at least 4 to 6 months to rearrange the production. What we've seen and what we know with this very first products, we expect that from 2025, the market will boom. The most of the interest now is still coming from China because even though there's a European companies, they're using China manufacturers for their own devices. Also, this is direct competition of [ Tuya ], which many supplier manufacturers. They're not happy with the technology and not happy with the services which they have from Tuya and they're looking for a successor. We are here, and there is no successor at the moment. They know somebody which can go then to offer them similar services. As we see, for example, for the TV for the energy medium, when Huawei say, okay, the only Shelly device for the TV when we see that the only Shelly devices as a part of our ecosystem. We are completely ported from the any TV manufacturer over the world, even in Europe or China, will they ask us, can we implement your solution at a part of our solution. We expect the same results in '25 when the first product powered by Shelly will be available for sale in the market.

As you said, this can be a complete game changer for the company. We are a bit careful and shy to promise or to overpromise. If we would tell you now with which very good names, we are in context, you would immediately make your calculation. But this takes all time. So for these companies, it's as well needs a lot of effort, need some time, needs as well as decision to go away from Tuya and to change this partner. Once they did this, this is a very sustainable development because it's as complicated for them to move to us, it's to leave us. So that again, this can be a huge business for us. We think that this will be huge, but we are really careful because we don't want to over promise.

No, I'm sure that maybe we can show some numbers, and we will have some guidance for this business end of '25 from middle of 25%. But at the moment, we for the market before we've seen the customer reaction, the other manufacturers reactions, everything is the expectations which are huge.

We have another question from BMN Kiri.

All this information we connect from the devices for so many years. At one point, do you plan this information to be put on a blockchain somehow?

No.

We bought this new company in the Netherlands. Do you plan to the market of flat management of the Airbnbs, the huge consumer of lockers and the whole thing. Do you plan to reach this market?

Yes. I mean the smart lock market is huge. In Europe, there are players like Nuki and other and Nuki was very successful in the Netherlands, but only in the Netherlands. They made first steps to Germany, but they did not have the money to be accepted to the channels that we already have. So now we will sell to our existing customers. We will sell via our existing channels. They then will, of course, sell to Airbnb operators and others because that's a huge target group. But it's not only one that's office buildings, it's private homes, if the Airbnb users the market of smart locks is big and is supposed to continue growing in the next 8 to 10 years. That's the number that we have. This is already said that this locked deal was just an equity because the company went in bankruptcy. We got the assets, the stock and spare parts and the intellectual property and customer assets at a very low price that is more or less self-financing more or less with the sales of the stock. That's a shortcut because we were anyhow looking around to have our whole smart lock. Now we have a very nice designed smart lock. We have a good technology. We will integrate that initially solution and then offer it to the Shelly customers, and that should be a good success. With Airbnb, of course, that's part of the business, but it's not something where we go now to Airbnb and offer them because the Airbnb owners, they look for such solutions, and that's where we expect as well part of the revenue one.

The reason I'm asking this question is for -- exactly for this -- hope for your new environment, I think that's what I'm asking.

Okay.

And last thing for Mr. Wolfgang, this event, we do every 3 months. Can we share links to all those 300,000 fans?

No. This is an event for event for investors and shareholders and not for someone who bought Shellys. That's a completely different story. As everyone has just the Montega platform and then a go, but we will not ask 300,000 fans, please join our earnings call. I think this would not be the...

And also just imagine that they much more care about the next product development, what about this product take issue with that product.

We have another question from [indiscernible]

Yes. So I have a question regarding your new end markets. You stated at the beginning that you are now a smart building solutions provider and notably for the open-end markets, but you needed to go with [ Zucchetti ] for this end market, so you have a partnership. So do you think it will have an impact on margins? Do you plan at some time to have to be alone in offering your solutions?

No, we are working here with Zucchetti in Italy. We are working very close with Alexa, Amazon because that's a strategic direction for Alexa. [indiscernible] and Alexa and Amazon are separated in that case. So that's funny enough. Some of the projects, we did direct with the installer or with the institution, not via Amazon online platform. So that Alexa team is pushing that. They go to hotels. And when they go to hotels, their main target was to put an Alexa in every hotel room, and then they found out that the first thing that customers are doing is not ordering a hamburger from the restaurant. The first thing they do is they say Alexa, switch the lights on. Then they found out that it's not working, they need a device. Now Alexa sees in the Alexa cloud and in our cloud, how reliable our devices are, how often they are used together with Alexa, how good the integration is, and that's why they are recommending Shelly devices. That led to a closer partnership. Now if you go to a hotel, that's where Zucchetti comes in the game, they wanted the hotel ones to have a solution where the concierge or the reception can see all 100 hotel rooms and want to be able to reduce the temperature and the light in each of these rooms. It is a bit complicated with normal Shelly. So maybe the Zucchetti partnership needs to fleet management solution that we can use for other occasions as well, but has no impact on our margin.

We have 2 or 3 other questions from our chest. One from Asaf Nathan. He would like to know if you could elaborate on this deal. Do you think in the back -- and do you plan to target [ electric growth ] and other regions?

So that's one part. So in the Nordics, we did a lot it was kind of a pilot region for the installer market. We trained a lot of installers, a couple of thousands already. we have, in some of the countries, Finland and Denmark, especially we have a lot of new schools. That is something that I would say the school especially is not visible now. That is something that will be visible in 1 or 2 years. We started a year ago if the new electricians are going to these schools for 2 or 3 years, depending on the country, when they come back, this will pay back. So that's a midterm investment. The training of the installer is a short-term investment, and we see that this works in Nordic regions, we already have, I think, 37 -- 35% or 37% professional share, which is huge. In other regions, we are on 20%, we go in the direction of 25%, but we see a huge potential in that and that is something that will help us to continue growing in the next years. That's all not very short term, that's midterm or long term.

Then we have another question from [indiscernible]. If you could elaborate on this clean, how has the new chip business started so far?

No, let's say there is no new chip business. The new chip is mainly used in our devices. And now we are using for the modules, which we make for the appliance manufacturers and buildings supported by Shelly. We doesn't sell the chip itself, we'll make it for just for our use at the moment, which means nobody can buy just a chip. Nobody can use except us or except buying the whole service, which means the operational system, call technology, connectivity and everything else.

[Operator Instructions] There's another question from [ Jonathan Simons ] . He would like to know how the transition to Amazon Pro in the lot of countries is going? If you could please tell us what about the Smart Control premium.?

The Smart?

The Smart Control Premium.

The Smart Control we mentioned in the call. So we said that we have made 200,000 [indiscernible] assisting questions and has been applied from the premium app is contributing with EUR 200,000 to the revenue, which is more or less full profit. We expect 600,000 by the end of this year and then doubling each year-over-year in the next years. For the Amazon business, Amazon professional is. [Audio Gap]

Welcome back. I think there was a problem with the internet connection we lost you for a moment. Welcome back.

Because of the connection, well, maybe because the call is set for 1 hour. Okay.

If you could just say the last sentence for everyone I think that will be great. People were talking about the Smart Control Premium.

I said the Amazon, I don't know what you understood. The Amazon B2B business is developing proportionally with the B2B with the installer business in the different countries. We do not expect to grow this over proportionally because at a certain point, the installers make pressure to the wholesalers, why they have to buy this product on Amazon and cannot buy it from [indiscernible] or others. That's what we have from the wholesalers, which is the reason why some of them are signing a contract with us because they want to have to go anywhere. At the end, I said we are not disclosing details on the Amazon business because that would cause too much trouble on our distribution side. With Amazon or with [indiscernible] that's why we are a bit careful with disclosing too much details about the business.

Yes. Thank you so much for the answer. thank you, everyone, for your attention. We are coming now to the end of today's earnings call. I have to -- thank you to the leadership team to both of you and sites. Should any questions arise in the future, please do not hesitate to contact the Investor Relations management team, or the leadership team. I wish you a beautiful day from Hamburg now. Thank you so much. I'm giving the last word and final remarks to both of you, Mr. Dimitrov or Mr. Kirsch.

So thank you very much for attending. Thanks as well for the interesting questions. And thanks for your constant support. Some of you, I think, I might see next week at the Hamburg. So hopefully, a lot of you and then we can have some intent, of course, if not just reach out. Always open to have a special call and to answer your questions as well directly. Thank you very much.

Thank you. Goodbye.