Shelly Group SE (SLYG) Earnings Call Transcript & Summary

Welcome, ladies and gentlemen, to the earnings call of Shelly Group SE regarding the full year figures of 2025. I would like to welcome the company's CEO, Wolfgang Kirsch; and Co-CEO, Dimitar Dimitrov, who will guide you through the presentation in a moment, followed by a Q&A session via audio line and chat. And with that, I hand over to you, Mr. Kirsch.

Yes. Thank you very much, and welcome, everybody, to the trading update for the fiscal year '25 of Shelly Group. I've just been promoted because I'm as well only co-CEO and not just Dimitar as my copilot, so we are running this company together. As a quick reminder, what we are doing, for the newcomers among you, we are making buildings smart. We are optimizing energy. We are making buildings safe, and we have more and more products to really cover everything that you need in your house, apartment or bigger building for offices and others. And what is still missing will soon come. So today, we will run you through the highlights of '25 through the details of our financial '25, and we will give an outlook for '26 with our guidance and a couple of information as well about new products coming, and some updates that Dimitar will present at the end. So Dimitar and I will run through this presentation, and let me directly start with the highlights from last year. We have reached, with revenue and EBIT, our promises, our guidance for 2025. We have grown in all regions above the market. To remind you, we expect or estimate the market to grow 10% to 15%, and we are significantly above that. That is not a big surprise. That's something that we did in all the last quarters. I think the last 30 quarters, we always were on our promises, and there are no negative surprises so far. We continue to expand our distribution in all countries in do-it-yourself and in professional. We started 2 years ago, our installer network, and we have significantly scaled that. Dimitar will talk about that in a minute. We have local organizations. Last year, we added our Polish subsidiary with 5 people in May last year. They are starting -- or they started to deliver in Q4. And Benelux, we onboarded in October last year with 4 people, and we have more that we started at the beginning of this year. We are accelerating our growth, especially outside of DACH. DACH was performing good, but now we are much more balanced geographically across Europe. We have a strong increase in cloud activations. Our installed base expansion as well monetizes in the long term. One thing is the premium app. We have more premium app users and more premium revenue than the year before. And we have as well an increasing number of repeat buyers. So everyone that we can track -- we cannot track everyone, but everyone that we can track, we see people are coming back more often and buying more devices and adding more devices to their cloud. Our customer satisfaction that we measure since a while ago in NPS increased a little bit for the overall Shelly solution to a level of 56, which is a very good number. And the NPS for the Shelly app, and that's something that is really important for us, reached the level of 37 after mid-20s last year and after close to 0 the year before. So this is really making significant steps and we expect this to continue, especially with the things that Dimitar will show you at the end of the presentation. And we estimate 5.6 million households are using Shelly devices. We know that we have 2.7 million cloud users, that increased by 46% in the last 12 months. And why are we estimating the households? Because we can only exactly measure the users that give us all the data, that have their data in our cloud. And one of the beauties of our systems is that not everyone is forced to use our cloud. People can use other clouds or no cloud at all. We have 38,000 premium app users. That's a plus of 61%, and our installer network grew 494% to 5,300 installers, and it's continuing to grow. Now to the financial performance. With EUR 149.7 million, we reached our revenue targets. We are in the middle of the guideline around about with 40% growth. Once again, if the market is growing 15%, that would mean we are outperforming the market 2.5x with this growth rate. Our EBIT grew to EUR 37.7 million, 43%, a little bit above that. Here, I have to say that this is the adjusted EBIT because you all know that we started in 2022, a management share program that is now finished in 2025, and we had to make the accruals for that. It's an amount of EUR 7.4 million. That is absolutely cash neutral for the company because this will done in the course of the next years over small capital increases. So no huge and immediate effect and no cash effect for the company. And our cash in total is around about on the level of last year. I come back to this during the presentation with the free cash flow chart. If we look to the quarters last year, no big surprises. All the quarters were growing. Beginning of last year, we said that we expect the growth coming more from the second half of the year and accelerating quarter-over-quarter. That's exactly what happened. We will have a similar development this year, maybe even a bit more push to H2 due to product launches and a couple of other effects that we will explain during this call. But this is -- if you ask me, that's a perfect job. As well the EBIT chart, everything looks in the right direction. So we are increasing our EBIT. The EBIT margin in total last year, the adjusted EBIT margin was 25.2%. You know that we are always talking about a 25% EBIT margin around 25%, that is our target. So we are exactly on the target or even a little bit above, and we expect to stay in this corridor around 25% for the coming years. The regional share, DACH is end of last year or in the total year 2025, sorry, is on 42% revenue share, was growing 27%. So as well, DACH was outperforming the market 2x. I would assume that the market in DACH is not growing 15% currently due to the lack of construction that's a little bit slowing down. And that's why we are here as well outperforming the market very nicely with 2 to 3x. The Rest of Europe growing above that level and has now a share of 50% of total revenue, and that shows that our systems, our products are working in all countries and not only in DACH. So we already proved that our products are liked by customers all across Europe and all across the world. Rest of the World. Typically, we say Rest of the World for us is opportunistic. Our main markets are in Europe. But with a 9% revenue share and with the highest growth rate in that region, and that's mainly Asia and the United States, we are more than happy with that development and especially the U.S. is still on a small level, but is showing very nice progress and some promising developments for this year. A bit too early to say that everything will be super good, but in the course of the year, we will update you on that. And if things materialize that we see currently and that we prepared last year, that looks as well very promising. So we are more balanced than we have been before and we reduced with this, if you want, a little bit the weight, a bit too high weight of DACH and show that we work everywhere. On the free cash flow, we have solid cash situation. We generated EUR 5.3 million from operations. We have more than EUR 4 million investments in R&D. And then we have some currency effects. We have paid a dividend last year. And of course, we always stress that working capital is still something that we have to optimize. I would really love to have the CFO development a little bit higher, but we made good progress, and we are not suffering here too much, but there is something to optimize in the course of '26 and '27. It's nothing that can happen from one day to another. We have reduced our stock level a little bit by the end of the year. We have relatively high receivables. And that is something that, of course, comes from more professional distributors, from retailers that asked for 60, 90 days payment terms. If you have a distributor in between that as well needs to stop products and need to finance that, that is something that we have to balance better and maybe we have been a little bit too generous on that level. But in general, we are in a very solid cash position. We have 78%, close to 80% equity ratio, and that's still very outstanding numbers. If you look to more details, I will not go into everything here. Already in the last call, I've mentioned that we have a little shift between gross profit and especially sales and marketing expenses if it comes to [ MDF ]. So we have not -- you see that in '24, this was a huge shift -- the shift towards MDFs. That is something that is balancing out a little bit with the margin. And we feel quite comfortable with the development that we see here. Our margin is stable around 58%, and we do not expect this to drop in the course of the year. And we see as well, once again, the 25.2% adjusted EBIT margin. It's a very good development, and we are really proud that we could achieve all our targets. And now Dimitar with some things about products.

Yes. Thank you very much. Welcome to everybody. So there is a few slides where I can show what's happening from the development side. Not everything, but in the time which we have, I can try to explain, to show what's happening. The first slide, which is very important, you can see that the -- on '25, that 55% of revenue is generated from our latest product generation, Gen3, Gen4. But why this is important? Because this has changed significantly the foundation of the people, what they use in their houses. Our latest generations, they generate more revenue. They are much more cost effective. The margin is better. And on top of that, they deliver significantly more value for the customer, for the customers which use them, which help us to keep the leading position against competitors. From the same time, I think this is also proven what we see in the previous slide because as you see now, our customers continuously and much faster, starts increasing device in their houses. So the new devices are more capable and more -- and delivering more value and more services help them to understand what else can be done in the houses, help them to optimize their energy consumption even better and also give them opportunity to place and to control much more points in their houses, not just for lighting and power measurement, but almost everything to be controlled via Shelly devices. And something which is obviously important, we're counting from the cloud side, the real time activations of the devices. And we've seen that compared with '24 to '25, we have a 38% continuous growth of the activation of the end customers. This is -- as the bar says not all devices because we've seen that many and many devices also start to be used from the third-party platforms, and they not connect to the cloud. But the numbers is similar. And this kind of the activation graph shows exactly the trends and how it's going. Something which is important to know, for a very long time, we doesn't show the numbers, but now we can show them how many customers start using the premium app even if it doesn't push the customers, even that we deliver them enough content without paying, we've seen that more and more customers is above 61% more compared to '24 start using our premium application. And we've seen that the interest is increasing. Now with the new features, which I will show in the next slides, we will see that the premium customers, which have a much more benefit, and we're expecting this to drive from the close to 1 million to 2 million to double number of the our receive -- our revenue coming from the subscriptions and for the customers who's choosing our premium app. Something which is important, and that is our next very -- the potential where we will expect a huge growth and the Shelly to be used almost everywhere, the electricians. A few years ago or even a year ago, we doesn't have such a database. We have less than 1,000 electricians which using -- which install Shelly devices. Now we have registered and certified over 5,000 of them. We have a contact of them, we have almost monthly newsletter and personal contact with them, asking them about the demand, talking to them about the challenges and help them to improve our devices and also to simplify their work after. And this is the huge transition because this help electricians to be not just wiring cables and place the devices, but we help them how they can dive into the IoT world, in the smart home, how they can provision and use devices, how they promote them to their customers. And something which is very important, we just launching in the last month, the cashback program, which help us additional electricians to share with us their projects. So if somebody have a project and upload the project with the detailed information, what kind of Shelly devices in use, they can ask for the cash back, partially for the amount which we paid them back, which -- but this for us is a very important data collection. And this, for us, help us also to keep connection very warm and close with our installers and electricians. And also something which are also promising now is [ WiFi ]. We -- for the first time, we start to -- are using the data from our customers to offer additional services. In Germany, this is together with Verivox, we start off with comparing the prices from the local electricity provider based on their consumption in our application and to give them option to choose and to switch directly from our application their energy provider. This is the -- this, at the moment, is a proof of concept, which is working, which is start creating revenue and also based on that, our revenue is coming from the commission when the customers decide to switch to somebody else. But for us, that is the most important sign that there is a way, and maybe we're the first one in the -- from the old companies which providing such a monitoring and services for the smart home, which can really use the data in favor of the customers and also with additional services for the energy providers and companies which are offering the appliances. And now it's back to Wolfgang. Thank you.

Yes. So Dimitar will come back later with an outlook for '26 and a couple of new features that we have in the application. But now let me first go back to '23. In 2023, beginning of 2023, we gave out the 3 years guidance. We said we will do this one time. At that time, we came from a basis in 2022 of EUR 47 million revenue. And we said we will do EUR 200 million in 2026. And at that time, a lot of people among you had big doubts that we will deliver that and said that this is a bit too bold and will this really happen. We said, step by step, we will deliver and step by step, we will develop that. In the last year, we confirmed that we are on the way to EUR 200 million. And we gave out the guidance of EUR 145 million to EUR 155 million, we reached more or less exactly the middle of the guidance. We keep our EBIT on the promised high level, around 25%, which was as well an increase compared to 2022, and now we are almost there. And I had a couple of questions, will we now start with a new 3 years or even long-term guidance. We will not. That's what we said from the very beginning. We did this just one time to show everyone that we are thinking long term, that we are delivering against our long-term goals, and this is what we are planning to continue. For 2026, we confirm the EUR 200 million or now we open a corridor. So we say we will be between EUR 195 million and EUR 205 million. We are a little bit careful here because last year, we had a couple of late coming products, a couple of surprises. That's something that you can never avoid in R&D, was simply a bit too much last year. But we are confirming the EUR 200 million. We see some possibilities. That's why we opened this up to EUR 205 million, which is as well EUR 205 million, EUR 206 million, EUR 204 million is the consensus of all the analysts. And we expect an EBIT that is somewhere between EUR 47 million and EUR 52 million. So that is more or less on the level of EUR 25 million once again. The growth rate with this is going a little bit down to 34%. But in percentage is one thing, percentage on higher amounts are more complicated and more challenging to reach. So that's a normal effect. But with the 34%, we would once again outperform the market 2 to 2.5, maybe 3x, that is our challenge and our demand and promise for the coming year or for this year. Where shall this come from? And we have a couple of growth drivers. So one is what Dimitar explained. We see that the existing customers, a bigger and bigger proportion of existing customers, and we can only monitor this for the cloud. So this is not the total amount. We expect a similar behavior from other customers as well. But from cloud customers, we see that more than half of customers that had an account already last year are expected to add 3, 4 devices, let me say it like this, to their solution. Some of this is coming from new product categories, some is existing product categories, but this is something that is constantly driving and increasing our revenue. We have the market growth. So we expect the market once again to grow 10% to 15%. We have a product growth coming from new product categories and from product expansion, not only from upgrading and updating of products. And we have a geographical expansion. So I already told you that last year, in May, we opened our Polish subsidiary with a full team, the Benelux in October. And this year, we started the year with implementing and onboarding 4 country managers in 4 countries. So we have finally appointed a person for the U.K. We have appointed a person for Iberia, for France and for Italy. In some of these countries, we already had small teams with one sales manager. This is already on the way to be increased and improved. We have hired more people for Italy, we have hired more people for France already and for U.K. as well. In Nordics, our Nordic subsidiary is delivering nice growth rates constantly. And here, we have onboarded, in this month, 3 people, 3 salespeople for Sweden only. Sweden for us is a very big and very important country in that region, and we expect that to continue growing and to deliver the constant growth that we expect in Nordics. So we have now 8 markets in Europe, 8 countries in Europe with a full team on board or almost full team on board that should be completed in the next couple of weeks and months. And we expect them to deliver significant revenue growth in the second half of this year. So that is as well pushing something to the second half. So we expect the first half of the year to be moderate in growth and the second half of the year to deliver growth from new countries and from a couple of other initiatives. And some of them is coming from products. And I will give back to Dimitar so that he can talk a little bit about the high-level road map.

Yes, when I talk about the products, I don't want to jump into the details, but this is the new categories which we are driving at the moment and products will be released in the first half of 2026. The first one is the cameras. To be honest, we have a little bit delay with the cameras because we're expecting indoor camera to be done to the end of the '25. But during a little bit consideration about the RAM flash memory price and everything, we need to rearrange a little bit the chipset, which we'll use there, which cause additional delay, but not so much. So we're expecting in only at the end of the Q1, the cameras to be on the market. And in the Q2, we need to deliver then in the high volumes. But after all the camera for the outdoor is coming, for the second half of 2026. The circuit breakers, as you see, we passed all certification tests and now they're in the mass production. So they will reach the market, and this will be completely change -- mind changing for the electricians because we offer them the measurement protection connected devices in the single -- in the very now units for them as a breaker. The locks, now we released the -- another version, much more simpler version of the lock, the pure version, which will be competitive with much more doors. And also, there is coming the full series of the different locks, including the third-party locks, but which will be completely equipped with our Shelly technology. For the plugs and strips, there is coming a lot of the new devices and they are already on the market in the -- not in the so high quantity, but now the quantity is rising. We see the demand is coming bigger and bigger every week. The TRVs, the entry series, there will be a new version of the TRV also, and not only one, but there will be also the HVAC thermostat for the room controlling. Monitoring and security. Presence Sensor, BLU Presence Sensor, we also extend this line. So this is the overall product portfolio, not in the exact prototypes, but what we will drive further this year. Something which is very important, we decided to have a door enter -- door opener device, which everybody can buy without thinking twice. And this is our volume driver. So we've seen that when the people start with Shelly, they stick to Shelly. They want to buy more and more and install and automate their house even deeper. And for us, what is important, to deliver technology to everybody else. And this is the perfect plug and play device. This device, we're expecting to sell in millions of pieces for the -- in 2026. It's already on the market in the small quantity, and a huge quantity, especially delivering to distributors and everybody, this will be done end of the quarter. And really, we're expecting this to give opportunity more customers just to start into using our ecosystem. This will position us also for the -- not only the company, not only for the electricians and not the company or for the geeks, but for everybody which want to do a little bit more using the high-quality devices and link in our infrastructure. And something which is next to this one. We know that for the most of the customer, the monitoring, making sense and controlling their home is the big challenge, especially for the people which are not so tech savvy. Now there is a solution. We launched this week, not next, this week, end of this week, most powerful AI assistant made ever for the smart home. I can show some examples, but idea of this assistant is not like now more people is much more familiar with Alexa and Google where they are very limited what they can do. We're talking about very deep analysis, direct connection with the -- from the -- assistants to the Shelly hardware, analyzing data and give us very smart responses. And there is, for example, some analyses. So you can ask assistant, customers can ask assistant for any device statuses. And in real time, the assistant will contact, connect to the device or to our cloud, analyzing the data and give us or to the customers what's exactly happening and how the equipment is working, when it's working for the last time, something which is not just simple status check. A lot of the smart context which we build in, in the Shelly AI, this is the best assistant which we develop by ourselves and continuously increasing the capability of the assistant. So there is a really deep historical analysis in the scenes creation. Until now, the customers need to use scripting and until now, they need to use lots of menus to go in between. To make a scene now, no matter a simple text and simple context without explicitly say for what devices you want to do something, without need to say in which rooms, you can just say what you want. And then based of all data, the assistant will do that for the customers. So this is definitely democratizing the way and the interest to the smart home for the -- even for the customers, which doesn't have such skills. And there is some more and more examples. By the way, soon, we will see and we will publish how this can be done in WiFi and everybody can do that. But it's controlling and telling to the assistant and asking, for example, a question about the historical related with the person in the house, the assistant is there and something which is important, at the same time is very secure, and this is not bridge the people personally because the data is here. We're just analyzing the data. And this data can be used only for the customers which generate it. There is no third-party sharing of the data. There is no [ non-anonymous ] approach to the external servers. Everything is happening in there and the customer is completely secure. It's just, as I say, same analysis based on the customer data and giving back to them, not -- to nobody else. And just a small comparison what we built for the -- and now what we launch, even compared with the big names here, nobody of them can have a hardware access to the smart home devices than our assistant can really deep in that. There is no real time historical analysis when we can do that and give us very reliable answer to the customers. There is not natural language control, just few languages, then our assistant support almost every language in this world. And nobody -- and there is no assistant which is capable to create a very complex scenes than our one is almost without limitation. And in all of that, just completely change the way how the customers who're controlling can manage their houses. And that is really -- there is no somebody which is close to what we're doing now. In summary, I think, Wolfgang, the last turn? Yes.

Okay. Let me summarize before what you just presented because I have seen presentations at CES last year. So CES 2025 about AI in smart home. And this was all prototypes and none of the prototypes is on the market. There were some companies trying to convince us to use their solution, that was not working, that is not working until today. So a lot of companies are talking about what AI can do in smart home. There is no solution on the market that is really doing it. And we all know Alexa, say -- you can say switch on the light, but if you ask Alexa how the energy consumption yesterday was, there is no information. So we are really a big step ahead, and this is something that will push the adoption of our app and of the premium app in the next step. So that leads to the summary of last year and the outlook for this year. So summary, last year, we have achieved all our targets despite some headwinds. So Dimitar said some products are delayed and some products were significantly delayed and are coming now and come now as well in bigger quantities. We started in 2023, we started the installer onboarding. End of last year, we had 900. We have onboarded more than 4,000 in 2025 successfully, and we expect this to continue. We see a very big demand here. And we have new countries launched in 2025 with Poland and with Benelux. And we see that our initial steps towards recurring revenue is working, and we have a continued improvement of customer satisfaction. For 2026, we confirm our guidance that we gave out beginning of '23. So we will end between EUR 195 million and EUR 205 million and between -- revenue and between EUR 47 million and EUR 52 million EBIT. We have built organizations now across 8 European countries with adding 4 countries beginning of this year already. They will be fully operational in the next couple of weeks and deliver in the second half of the year. We have a product road map that supports our next growth phases with new categories like cameras. We are going in the entry price level to get new first-time customers. As well, this is more weighted towards the second half of the year with higher quantities because it will take a while to get the production ramped up for these new categories. And we have the AI initiatives that Dimitar just showed that will bring us once again one step ahead of competition, and that's all quite promising, and it makes us really confident that we will deliver once again against our promises and against the guidance. So thank you very much. We are now ready for questions. And as usual, if you want to have the presentation, you can get it from our website or just scan the QR code. And if you want to have more information, just scan the QR code and subscribe to our investors newsletter. Now happy to answer questions.

[Operator Instructions] We have already received a question by [ Vasil ].

I have 3 questions. My first question is for Wolfgang. This EUR 100 million that are in the report, plus the EUR 20 million overdraft, what will we use them for? Acquisition or share buybacks?

Yes. EUR 100 million...

EUR 100 million, yes, which we moved from the subsidiaries to the -- yes.

Okay. We might be prepared for a future capital increase. There are no concrete plans. But that was the reason to move the money upwards to the holding and not leave that in the subsidiaries. That is just a preparation. There are no concrete plans about the capital increase, but that enables us in the future to do something or share split or whatever we might do. That's not concrete. It's just an enabler to do so because otherwise, we would have done this in different steps and this is just preparing.

Okay. And my next question is again to Wolfgang. You are going to receive a big bonus of shares this year. We are very happy about that. Are you planning to sell them?

So first of all, I will receive the shares in the second half of the year, and I will receive the shares in very small proportions. So this is not everything coming this year. The shares will be given out over the course of the next years. And I would probably sell part of the shares that I will get this year. And then I'm planning to keep a lot of the shares because I'm confident that selling the shares at a much later stage will increase the value.

Sounds great. And my next question is to Dimitar. Obviously, Shelly is facing a transition from a hardware company to a software company. Where are we in this transition according to you? What's your opinion?

No, I can tell you, we make a very capable hardware. At the moment, we use it and the use case is limited by the software platforms and the UI and really what we can do and what we can deliver. Now with -- we are much more capable to -- not exactly to switch to the software company to combine the strengths. And from the -- I think from this year, that will be one of the significant changes that you can see not -- and maybe we can start to report not only smart home users and smart buildings, but maybe also some smart city projects, maybe some industrial projects because the device is capable to do that. Now on top of that, we power them with different interfaces, quality options, customers to interact and to use them. And this is one of the big changes. And of course, yes, that's -- switching to the -- from the retail, not switching, adding now and going into the professional channels, not only retail channels, this immediately create the demand for the software services. How they will be driven are, for example, we can decide to "Hey, guys, if you use our platform, we can give you device for free and then you can pay the subscription." Or complete opposite version, "If you buy enough number of devices, then the platform we give you for free." This is the both completely in 2 different ways. And I think we'll -- depends on the projects, we are completely free to switch between from one to another and to be somewhere in the middle.

We have another question by Mr. Specht.

Yes. Three additional ones from my end. First, on your distribution, are there any news on existing or new channels you're planning? We all know that, let's say, Amazon Europe was a problem last year. Can you give us an idea of how negotiations are progressing? And then second one on competition. Do you notice any easing of pricing pressure, especially from your Far East competitors? That used to be nasty, at least in 2024 and early 2025. And the last one, on your own production, the plant in Sofia, can you tell us if the start of mass production is still on track as you planned it for, I guess, March this year?

Okay. I will answer the first 2 questions. And the last question is for Dimitar. So first to distribution channels. We are -- especially with going into the countries with organizations, we see that we have a much deeper knowledge about where should we sell our products, what are the right channels, and that's for retail and for professional channels. That's what we saw in Poland. That's what we see currently in the Netherlands, and we expect this to happen in all the countries where we are. So to have a much wider distribution with new retail channels, if you want. I mean, the channel is do-it-yourself stores, physical stores, online. So that will continue and will accelerate with having people on the ground in the countries. The second part of this question was about Amazon. Amazon behavior did not change. Our direct negotiations with Amazon are somewhere stuck in the middle. So we are not giving up because they ask more and more and more and more. What we see is that Amazon is buying products from our wholesalers. So -- and we see this with -- from 2 different angles. On the one side, we say, okay, our products will be sold on Amazon, not directly from us to Amazon, but from wholesalers to Amazon or from wholesalers or distributors on the Amazon Marketplace. So the channel is still available for our customers. That's important because it's an important channel for smart home, do-it-yourself. And that will balance the revenue a little bit out and will reduce and will avoid the dependency from us to Amazon. So we will not go into the trap and just say yes to everything that they are demanding. And that is -- that's -- in a lot of cases, that's simply ridiculous what is happening there. And we are not the only brand. We know that, talking with current and former competitors, that everyone has the same problem. And so we see that products are sold and the revenue is done on Amazon via third parties. We make more profit there. So we are happy with that development.

About the price pressure and competition, I can join there. Okay. So what we can see, there's more competitors than 3 years ago. Nobody has cost us, but they're copying the device form factor, they try to copy some of the features still with the, let's say, Chinese approach or the -- or with the approach which probably this will -- some customers will be interested from. What we do, as we see, and I think exactly, with the new Plug M, which is going on the market, probably there will be not only from this plug. During the year, we can add something else. We want to fight for the customer, and this is trying to fight for the first time customers. Because we very good now. And if you ask me, there is no customer switch later or there is just a few from all these millions, which start with Shelly and then change to something else. Just because after that, they understand that something else, it doesn't work and cannot deliver the value from the money. But for us, it's important for the people which doesn't know, which they just buy because of price. We need to catch them because after that, they will continue ordering the devices, yes. And the second question about the factory, everything is going on time. Let's say, our internal opening day is 25th of March. This will happen. All machines is delivered. Now they are under assembling, the one assembling, the -- everything is completely prepared. And the production will start -- some trial production we're expecting to start beginning of the April. But also to be concrete, this is not replaced anyhow our production facility in China. This is -- the factory is made only for the modules, for the third parties, for the chip with the device, which doesn't require any handmade work and everything to be 100% automated, which, by the way, is not a big part of the devices. But this is the -- our -- the factory is made explicitly for the chip -- for manufacturing and delivery.

We are moving on to [ Mr. Howaldt ]. We can unfortunately not hear you, Mr. Howaldt. And I guess we should move on for now until you sorted the microphone out.

Sorted it out.

There we go. Perfect.

Sorry. Complicated, a lot of permissions and so on. Two questions. One is in relation to the reserve for the share-based payments. You did say it's not cash relevant. Can you remind us why? And then this accounting treatment this year is different from last year. Can you maybe explain why that's the case? And what we should expect next year? And then one question to Dimitar about -- around memory prices. Maybe if you could elaborate a little bit more how this is influencing the camera introduction and how you will, well, replace it or otherwise?

Yes. Of course. So let me start with why is this cash neutral. It's actually even a little bit cash positive for the company because the shares will be given out in the course of our employee share program, and we have the chance to buy them at the nominal price of the share. And this will happen in the next years in small proportions because we cannot give out a huge number or this huge number of shares in one shot. So this will be really -- in really small steps over the next years, but there are no costs involved for the company. The company actually gets couple of euros for the nominal capital of the shares. So that's one point. The second is the treatment. We have disclosed every year in our accounting, the treatment of this in agreement with our auditors, Deloitte. In the first years, it was not clear because the program is relatively complicated. That's what I have to admit, and it took me as well a while to understand how this is constructed. And now we are clear that this is at the end. We are clear how much we earn. We did not get the maximum. We get a nice proportion of the possible maximum. And that's why Deloitte this year agreed to make an accrual for that and not in the years before. Does this answer the question?

Yes. And how -- what should we expect in terms of accounting treatment in the next years?

So I would, of course, dream about that the shareholders give me another incentive program like that, but currently, there is nothing. So for the next years, there is no planned treatment. So currently, that's it. We will discuss in the next couple of weeks and months what is a possible long-term incentive for the next years, but there is nothing planned currently.

So for the existing shares, that will be, as Wolfgang was saying, partially, every year, the company will make a capital increase for the management with a limited number of shares because this also by regulation, we are limited how much this could be and these shares will be given to the management. This is done so step by step. But it's not accounting effect, yes. That's important. About your last question, I would tell you, when we start develop the cameras in the middle -- we start middle of '25. And our first camera, we are targeting to be in the basic camera with price of the affordable price, for example, below 30 for the end customer, but to be capable to do many things with limited AI features, most connected to the Shelly infrastructure with all kind of the APIs, what we built and everybody which is used now. But then we decided, okay, we can be a little bit generous with the RAM and the camera could have 256 megabyte of RAM, which could give us options in the future to add some additional features into the camera or, for example, camera doesn't require to have an SD card, everything could be stored into the RAM between customers see it, some events. This is how we decide. Unfortunately what, end of the year, the RAM prices start increasing. By the way, this is not the same memory which we're using for the rest of the Shelly devices. Especially this is -- the rest of Shelly devices is not affected from the RAM prices. There the price is stable. But for the cameras, exactly camera using the memory, which is affected from the price increase. And then we see what's happening, then December, December, we decided to launch it or to rebuild because the RAM prices doubled and more. And this going into the range, let's say, below 30, maybe will go above or cost to 50, which is not -- we decided that we will be not so successful selling in the numbers, in volumes. And there is no additional benefit for us there, just customers need to pay more. And then we decide to rebuild it, to remove some features and to make from 256 to 128 megabytes flash to be enough for the first camera, which unfortunately takes time. It takes time now in January, we do that. But in February, now you know that the Chinese New Year, I mean, they cannot start production. Now production will start after the Chinese New Year, maybe next week. And this is the delay, but delay is because we decided that it's most important to deliver the affordable product in affordable price without additional cost for the customers. And this is the situation, yes.

Okay. And just -- so with this somewhat slimmed-down version compared to your original ambition, are you still sort of leading -- will you be leading in terms of...

Definitely, yes, yes, yes. I'll tell the only difference with this one. In the first version, the customer doesn't need to add SD card into the camera if they want a camera to store events, and they can see them directly because there's additional 101 to 128 RAM inside on the camera, and they can -- they doesn't need to do that. Now the only difference, by the way, is that they need the SD card if they want to store more than 3 minute events into the camera. And the camera will come in with the SD cards on a site. So the customers just need to push and use it. But this required the whole PCB rewiring, there is no SD card swap before that. Now we need to add it. We need to decrease the RAM. We need to make changes from that side is coming. And only this is the difference.

We're having another question by [ Mr. Kawai ].

Can you hear me now?

Yes, perfectly.

Okay. Sorry, I just want to understand how you make use of -- the question is to Dimitar. Thank you for presenting the new AI feature. How do you make use of AI? Do you see cost savings for coding or you don't need to hire more engineers? Or are you -- it's going to accelerate the launch of new products, hardware and software? Any detail would be very helpful for us.

I can answer. Currently, 70% of our code is made by AI. We doesn't need more engineers. We need to increase the knowledge, how to use AI existing engineers. For that, there is a little bit changes in the -- also in the hiring side. We decided to hire much more salespeople and the business developers because with the AI, we can build everything much faster and much -- and cost effective. But after that, we need people to sell this one to the customers. So -- and this is the change in general more because we increased the power of the team and we will hire a limited number of engineers, much limited than before. This help us a lot and helping every day more and more developing -- adding, for example, new silicons to be support for Shelly OS, which before does require 6 months, once tried, required us a little bit more than 2 weeks. And yes, that's the direction. I think that every company which doesn't start using that, it's -- will be in trouble. Something on top, which is very, very important, because our open APIs and because the well basic knowledge of the AI about Shelly. If you ask any AI, they know about Shelly, they know about the features, they know how to control devices, they know everything about our devices. This give enormous power opportunity for everybody else, which want to use Shelly devices in their one use cases just to start and make it right away. So I think this is our top, let's say, we are the top beneficial companies from the hardware company for the AI at worldwide because there is no other company which AI can build from the device to the platform and just to control multiple devices, except Shelly devices. There's just no way. We are the only company. I mean the mix between our the modern hardware capability, the well knowledge for the AI and the much more powerful AI, which is itself, this is something which I cannot -- I expect a lot. I cannot say how much, but I expect really this synergy to bring our -- us in a complete different level.

In the next 3 or 6 months, we will keep you updated on what is coming there, and you will be surprised.

We have another question in our chatbox. Let me read that out loud for you, by [ Mr. Schnitz ]. Could you please explain why operating profit growth in 2025 was relatively limited compared to '24 despite strong revenue growth? We see a significant increase in administrative and operating expenses, which appears to have presumed margins. What were the key drivers behind this? Also, could you provide more detail on the quality of operating cash flow, particularly given the apparent impact of tax refunds and how underlying cash generation compares to '24?

Okay. Can we take that off-line maybe? There was a lot of questions, and I'm happy to answer this, especially when we have Iliyana in the call. But in general, I don't understand the question exactly. What about the generating or the gross profit? Gross profit is stable. Is this a question about cash flow, so free cash flow from operations? Or what exactly is the question? So maybe we can take that offline at a later stage if this is -- because it's a bit complex and it needs maybe half an hour a call to go through all that.

Absolutely. So we're moving on to Mr. Anderson.

I'm sorry, just come back and we can answer that off-line. I think that's easier than going through all the details now with the ping pong that is a bit complicated.

Absolutely. And you always have the opportunity to also ask questions at a later time to Investor Relations. So Mr. Anderson asked, could you mention the activities in the U.S.A.? Do you have people in the U.S.A. that work with the market? What is the expectation of sales in the coming years?

Yes. So first of all, yes, we have a team in the U.S. And second, we are not disclosing individual U.S. numbers. And as I said, we are quite confident that we are on a good way, but we are not reporting the U.S. completely separately. And we will keep that for a while. Our core market is Europe, and U.S. and Asia is, I typically say, is opportunistic. We had a couple of good meetings with potential distributors that can be big, but I want to avoid that we raise expectations here that we cannot fulfill at a later stage. So it looks good. U.S. is on a good way, growing over-proportionally with a good potential that we have another breakthrough this year and in the next year, will take some time, but please, we will not change our reporting.

We have another question by [ Mr. Allenton ]. He's asking, can you give some more flavor regarding the Nordic market, particularly the Swedish market that you mentioned as important? What are you seeing there? Any price pressure from local players there?

No. I mean the Swedish market is a market that is well advanced. Our Nordic market in general is well advanced, if it comes to smart home compared to other European markets. And we are -- I said already, we have a Nordics organization that was, so far, 3 people. Three people for four countries in Nordics is not enough. Especially in Sweden, we have a very good demand from wholesalers in Sweden. So the local players there, Ahlsell, Onninen and a couple of others. And we have one very good competitor, Plejd, you all know them as well a public listed company, that is delivering EUR 50 million or EUR 60 million revenue in Sweden. That shows how big the potential is. Now if we compare, because you asked about price pressure, if we compare our products to Plejd, I would say our products are -- most of the devices are less than half the price. And I want to be careful what I say, but Plejd is not really smart. That's a very simple solution, excellent, solid for installers, but compare the level of smartness with our devices, we are out-competing them by far. And that's one reason why we, first of all, see demand from wholesalers that want to build up Shelly as an alternative, and they see that we can do much more at lower prices. And for this, we need people. And that's why we have put 3 people on the ground in the Nordics team. So they are reporting to our Nordic sales manager, and we expect that not from one day to another, but over time, that can deliver significant revenues in Sweden and the Nordics.

I can add something. What we've seen in the Sweden market, there is very high revenue. And also the main player, it's mainly related to the lighting control, roller shutter control. But we're also seeing also in our market that we are strong in the power management and monitoring. So this part also is missing, but we have a very well-educated market, which we don't know, let's say, Plejd have their role and this is very important there. But we can act next to this -- the power management energy monitoring with all kind of the -- with our devices, which will deliver another service in the market, in the market which you already know what means automation and what means something to be used. So this is important that we've seen, huge market, well educated with a big gap and potential demand, especially in the services where we are stronger.

We have another question by [ Mr. Polansky ]. Congrats for this development. Two questions for me. The AI Assistant will be available only to premium users, is that right? What is the market share of Shelly in smart home market in Europe and Germany? Quick third one, can you make a brief comment on the quality of the receivables? Are there more delays or something like that?

On the first, the assistant will be available now for the first touch to everyone. Then we will continue -- then the premium customers, they will have almost unlimited on the fair usage access to the AI system, but for everybody else, they can ask it and they can do their scenes or they can use it a few times a day, a different kind of the usage and limitations. Yes. About the second question, I can tell you, you can try to ask somebody, it's not clear exactly what mean and what kind of the market in Europe. First, what I can tell you, nobody except us currently have 4,000 new household on a daily basis. There is nobody. And it's not comparable with nobody. Maybe our all other together reach such a number, the new households on the daily basis. There is probably nobody have smart devices connecting over 20,000 to 30,000 new devices every day connect to the cloud or users start using it. There is no one also. But if you put in this calculation, Alexa, Google, I don't know, smart TVs, is that one. If you talk about the in general relays, it's a different situation. When we talk about the smart relays, then I can tell you that we have a huge percentage of the market share. So the problem is that currently, there is no real and still not real market analyses, which could tell us what exactly is our percentage.

I can add to this. We are using -- we're using market data from Statista, that I always have problems with to trust them, but that's the best data that is available. And if you take the total market, everything, including high-end office buildings and all the big brands like Legrand, Gira, Siemens, ABB, our market share is -- in this market, our market share is relatively low. If you take the do-it-yourself market, and there is no data about the do-it-yourself market itself, I would say, in Germany, revenue-wise, we are #2, maybe #2 or #3. Pieces wise, we are #1 because one of the big players in the German market is Homematic. They are doing, in Germany alone or in the DACH region alone, more than EUR 100 million revenue, but their devices are twice as expensive as ours. So if we take the numbers of devices, we are leading in do-it-yourself. If we are -- if we look at the revenue, we are not yet the #1 and we are aiming, of course, for the #1 position. And that is a bit different country by country, and it's different product category by product category. Dimitar presented it, the price entry version of our plug, that is a product that will bring us much closer to the Chinese competitors and where the mass market in that segment is. And that's one more road for us to become a leader in this category as well.

The last question...

Last question about receivables. If I understood that right, we have no problem with the quality of the receivables. We have a problem with the level of the receivables. So I said, we are a little bit too generous. And we had a lot of demand from wholesalers. And this is the chain. If you work with a distributor like Leroy Merlin or Hornbach, OBI, Bauhaus, all those guys, they typically ask for 60, 90 days payment terms. And now if you have a distributor in between that needs as well to stock 30 or 60 days, that sums up to a big amount. We have to rework that, but we have no problem with the quality. Most of our receivables are insured, so that there is no issue and the ones that are undisputed, so that there is no 0 risk like with Amazon, they will pay. The question is just sometimes they just pay 30 days late for whatever reason, but they paid, they have enough money. So there is no risk in the receivables. It's just too high.

We have another question by [ Mr. Rusa ]. He says, thanks both of you for the great results. Mr. Dimitrov, you mentioned starting the production of your own chip. Can you open the door by sharing in advance, something that is coming up on the horizon?

Sorry, can you repeat what -- opening the door for what, the starting of production in Shelly chip?

Or you mean the Shelly X, Shelly X, maybe?

No, this is the modules. No, no, this is the modules. Meaning the factory we'll not build -- we'll make the chips. We will make modules from chip, excuse me, it's maybe -- it's my wrong. But it's -- okay, there is a Shelly chip from the 2 years ago, and there is a 2 version of the chips of the Shelly modified chips for Shelly and produced only for us. Maybe more of them will come in. But using this chip to -- in the factory to make modules, which will be delivered to the third-party companies for -- to automate their own appliances. Because you've seen that at the moment, we have -- for the first time, the -- it is the Nordic company for the light solution. For the spotlights and we automate them. Then now we are preparing the production with one of the biggest European lights manufacturer also to make their devices smart, with which we acquire the modules. And if there is a question where this is developed, how we can secure the supply chain, what about controlling the addition of the quality or the -- from the security reason or for the -- everything that can be -- then we can deliver it from the Europe. If -- when you're working with some Chinese appliance manufacturers, they are asking to build -- to develop the devices and building Shelly technology, then we can do that in China. So we have 2 different sources. It depends on the customer requirements and place of the delivery.

Due to time, we have one last question by [ Mr. Richoff ]. What is the current Pro installers share of total revenue? How do you plan to manage the margin impact of the cashback program or the impact will be only marginal?

Can you repeat the first part of the question? I didn't get that.

What is the current Pro installers share of total revenue? How do you plan to manage the margin impact of the cashback program?

So for the first question, we can only give you an estimation. We always talk about 70% do-it-yourself, 30% installer share because you cannot get this number out of the channel revenue because the installers buy from Amazon, they buy from their dedicated wholesaler. We know from Hornbach and other do-it-yourself chains that they estimate their revenue to be around about 30% of Shelly revenue done with installers. So that's a lot of guesswork. We typically run once a year, a survey with our customers. Then we get some data, but that's as well not a hard number. We see that this number is relatively solid because we see as well that our share of Pro devices is increasing, of course, with solar installations and electro meters and things like that. So now the effect of the installer kick back, that's something that we will find out. But I can tell you that we have enough room in the margin of Pro devices to do that. And if we see that we are a bit too generous with CapEx, we can reduce that in a very short period of time because no one says that this is a program that will run forever. But it is a door opener in especially in the project business. That's what Dimitar explained, the installer has to report his project that he's doing, and that is a door opener into bigger businesses. But we have enough room for margin adjustments. So this will not have a negative impact on the overall and the average gross margin.

I think something which is very important. And in one moment, it's most important when a well profitable company, when the business is developing well and faster, it's most important not working for today results. And with [indiscernible], we share this opinion that if we can connect or to deliver twice of more products for the -- even for the same revenue, we will be happy because we will know what mean this in the future. If we can make, I don't know, 1 million house new households in a quarter, even without increasing the results, this later will give us a huge opportunity. And by the way, even that maybe is not completely -- I don't synchronize with volume, but believe me, if you're not playing as a public company, and we believe that -- and we plan to -- and we want to lead the market which we can do that now, we will stop looking for the numbers, how much is the revenue and how much is the profit because it's a very clear and financial is very good. We can dominate on the market much faster. But of course, as a public and requirements and expectations, we need to be one and for that and we need to balance in between in how much households you want to be together tomorrow and how to show really the good results, and this is the time, let's say, also internal fighting and what we can do. So we can do the -- take the both of them to do the best. But also, we know that the potential, this -- our company to be in every house in Europe to have at least one more -- one device in their households and millions of millions of households to equipped with Shelly. This is something which we can do with the proper planning and managing the company and products, yes, of course, yes.

Ladies and gentlemen, due to time, we will come to the end of today's earnings call. Thank you very much for your interest in Shelly Group SE. A big thank you also to you, Mr. Kirsch and Mr. Dimitrov, for your presentation and your time. If your question was not answered in this call or should you have any further questions at a later time, please feel free to contact Investor Relations at Shelly Group SE. I wish you all a successful day and handing over to you, Mr. Dimitrov, once again, for your closing remarks.

Closing remarks, I may be I tell them just before then, but yes. So thank you very much for everybody. Thank you very much for your trust. I think everything which we now deliver, and it's because it's not new, but everybody, our partners, our shareholders, our employees is -- believe that we can do that. And I'm sure that this year, 2026, next year, 2027, that will be a remarkable year with lots of challenges, but also with lots of positive news for all of you and for us. And thank you very much. See you in the next...

Quarter.

Quarter, yes. Thank you.