Shelly Group SE ($SLYG)

Welcome to the conference call of Shelly Group SE. I would like to welcome the company's Co-CEO, Wolfgang Kirsch; and CFO, Iliyana Krushkova, who will guide you through the presentation in a moment, followed by a Q&A session via chat. And with that, I hand over to you, Mr. Kirsch.

Yes. Thank you very much, and a warm welcome from my side as well. It's a big pleasure to introduce Iliyana to all of you. That's the first time she is in one of these calls and events with us, with me. Honestly, I prefer her to be sitting here instead of Dimitar. That's a bit boring, so that's much nicer. Together, we will give you a quick update for the ones that are new, who we are, what we do, then Iliyana will run through the financials. They are already a bit older from end of the year. And then at the -- in the next step, I will talk a bit about what is coming next and how do we see our way towards platform and what can you expect after 2026 from us as a company. So for the newcomers, the ones that are not that familiar with Shelly Group, we are doing everything to make your home smart, safe, to automize your home and especially to optimize your energy consumption in combination with solar systems or with variable energy tariffs or simply to reduce your energy bill by 30%. That's a business that is more and more growing, and that's a category that is more and more growing with the market that is in general quite positive with 10% development -- 10%, 15% development every year compared to our growth rate last year of around 40%. How does this work? So we have plug-and-play devices that need no big installation that you just put in the socket or that are battery operated. Our bread and butter devices are what we call in-wall or retrofit that are installed behind the wall switch and make it smart, including energy consumption once again and timers and automization and whatever. We have Pro devices that would be used more in new constructions. If you build a building, a house completely from scratch, in a central installation box on the DIN rail, that is much better for later maintenance. We have quite new in our assortment for a bit more than a year with a very good success. We have what we call on-wall devices, that is tablets and surfaces in different sizes to steer your home. And of course, as in the past, you can steer everything with your smart home with a normal remote control or with Alexa, Google or Samsung SmartThings voice controllers. We are more or less everywhere in the world. We sell to more than 100 countries. We have now 10 subsidiaries all across Europe -- sales subsidiaries, 8 of them in -- sorry, across the world, 8 of them in Europe. We opened 4 of them beginning of this year. They will start to deliver in the second half of the year. And we have our sales subsidiary, sales and marketing subsidiary, in the United States and in China. In China, that's more or less something that comes with the presence there, that is mainly built for controlling our factory but starting to sell there and create some visibility on a very good level as well. But United States and Asia both, for us, is more opportunistic. Our home turf is Europe and we see a huge potential there still to come. Some key numbers from last year. We ended the year with being in roundabout 5.6 million households. That is 33% more than a year ago. That is an estimation because we make assumptions from our cloud users to people that are not using our cloud. End of last year, we had 2.7 million cloud users, more than -- 46% more than a year ago. From these cloud users, 38,000 are paying a monthly subscription. That is an increase of 61%, and that generated EUR 800,000 in the last year. And an important development, of course, is onboarding more installers, going more into professional business. We started that in 2024 with end of 2024 900 installers, end of 2025 we had 5,300, and this is rapidly growing as well in this year. And with this, I hand over to Iliyana to talk about some boring numbers.

Thank you, Wolfgang. Good afternoon, everyone. I am happy to join today and to guide you through the financial performance for 2025 and also for the guidance for 2026. So going back to our 2025 results, this was a very successful year for us. We generated revenue of EUR 149.7 million, which was in line with our guidance for the year. This was 40% growth year-on-year. And also, it led to a 3-year average of 41% growth, which have in mind that our market is growing by about 10% to 15%. This meant that the company was growing 2.5% (sic) [ 2.5x ] faster than the market overall. In addition to that, at the same time, we had very healthy profitability margins. Our EBIT in 2025 was EUR 37.7 million, which was again a very nice year-on-year growth rate of about 43%. You should note here that we are showing adjusted EBIT. This is excluding a onetime accrual for the management share-based accrual that we had to do at the end of 2025, and it was related to a plan that we introduced in 2022. So once again, a onetime accrual that we are excluding here in order not to distort the underlying operating performance of the company. So once again, a very strong performance, also supported by stable liquidity and cash position. Our cash remained stable throughout 2025 despite some active investments in R&D and also the annual dividend payment that took place in the summer. In terms of cash position, we already saw some additional improvement in the first quarter of 2026. This is something that we already announced a couple of weeks ago with our preliminary results for Q1. Our cash position increased by 45% as at the end of March and cash reached almost EUR 20 million at the same date. Going back a couple of years ago when we provided our guidance for the 3-year period, it might have seemed a bit ambitious with revenue guidance exceeding EUR 200 million and EBIT guidance exceeding EUR 50 million, at the same time preserving healthy stable margins around 25%. Now from today's perspective and having already shared our 2025 actuals, basically the recent financials are a testament that these ambitious targets were also very much within reach, and the momentum that we had in 2025 served as confirmation that we are on the right track in terms of long-term guidance and that our delivery was consistent both in terms of executing on our revenue targets and also delivering some stable and sustainable profitability results. Going back to the present days, now our 2026 guidance is confirmed. We, once again, expect EUR 195 million to EUR 205 million of top line growth, which is about 34% year-on-year. And at the same time, with corresponding increase in the profitability, we expect EBIT to reach EUR 50 million or within the range of that. Once again, our focus will be to deliver and to execute on the top line guidance. At the same time, there will be substantial focus on preserving healthy margins and sustainable profitability during the year, with also additional focus on liquidity and cash. So I am looking forward to reporting that we have successfully reached these targets in 2026 as well. Now going back to Wolfgang for the revenue strategy.

Yes. So before reporting the numbers, that will be Iliyana's pleasure, we have to deliver the Plan 2026. And here, just a quick update how we are planning to do that. So going back to EUR 150 million roundabout in '25, we reported already with the '25 results that we have repeat buyers. So in average, you can say that every customer having a cloud account adds 2 devices in average to his account. So actually, half of the customers adding 4, so that means mathematically we will sell roundabout 5 million devices to existing cloud users this year, repeat buyers. We come back to the market growth, 10% to 15% growth as well expected this year. In some regions, maybe it's a little bit lower. In others, it's a little bit higher, but this 10% growth rate of the market in general, that should give us some tailwind, stays. We have a very strong product road map that unfortunately was a little bit delayed as well from '25. So we have some product categories arriving, like cameras, we are expecting middle of the year. We expect more door locks. We will finally launch middle of the year our smart circuit breaker line. And we have a couple of products in the entry price level that will open new accounts, cloud accounts that later go back to the repeat buyer section and will deliver additional revenue in second half of 2026, hopefully already, but definitely in '27 and '28. And we have the geographical expansion with the 4 more countries that we onboarded this year. Historical information from Poland, from the Netherlands as well from the DACH region show that typically in-country organization takes like 6 months to start to deliver. So we expect all of those 4 countries to deliver a strong development in the second half of the year, and that all should lead to the EUR 195 million to EUR 205 million. So that's EUR 200 million as we already announced in 2023 for this year. So that all looks quite positive. And what should happen after that? I will repeat a couple of things that we have presented in our Capital Market Day at the end of 2024, a little bit as a long-term outlook. But here, what will happen after 2030? So let's say the EUR 200 million for 2026 are given. The market is supposed to continue growing with 10%, 15%. We have our regional development because if we started just this year or last year in a country, that, of course, should deliver more growth in the next year. And that is what we see as the Shelly core business for 2030. Additionally to that, we have identified a couple of categories that are really important for us and where we will have more than just product renewals, so updates of products moving from GEN 4 to GEN 5 at a certain point. So more things that will be substantial. I come back to this in a second. And we develop more and more in the direction to become a platform for software, but as well for Software-as-a-Services and for other services that you will see in a second. And that leads to our 2030 expectations that -- sorry, but I leave to you to make your calculations and assumptions. Will the market be 10% or will it be 15%? Will we continue outperforming the market twice or will it be even more? That's something that is typically the job of an analyst to make these assumptions. So -- but what does this mean if I talk about Shelly becomes more and more a platform? It means on the one hand side, on the hardware side, that we have a lot of products that we still missed to complete now your home. So to be able to equip almost everything that you have in your home and make it smart. We started with smart locks with a small acquisition that we did in '24. We have updated the existing products in '25. And finally in '26, we will have more products arriving that are in the core of the market. The first smart lock that we had was at a selling price of EUR 349, EUR 299 in one version. The one that is currently shipping on the way to Europe to our warehouse will be EUR 199, and in the second half of the year, we will have products from EUR 99 to EUR 149, and that's really the hotspot of the market. So we expect big revenues coming from this. I mentioned a couple of times that we planned already last year to start with cameras. Finally, the first camera will come in end of the Q1 this year and will deliver revenues in Q3, and the second one will come in Q4. We have already devices like door and window sensors and humidity sensors, but we will extend this line and we will have a full category of monitoring and security devices, knowing that security, like alarm systems, is a category that is growing significantly in Europe. We will have something here at the entry line, easy to install, self-install, but that will offer full services as well. I mentioned the smart circuit breakers. That's a category that is completely new where we have almost no competitor or very limited competition. Products are in final certification. The first ones are certified already. So we are very confident that we can launch the products in end of Q2, beginning of Q3. HVAC. So that is heating and air conditioning solution. Currently, we have a couple of devices that can as well be used to control an air condition. We have battery-operated humidity and temperature sensors. We have only one TRV, so the radiator valve. We will have a full family of products that we will develop in the next years. And so this will be an own category that we expect to deliver significant revenue growth. That's all on the hardware side. And one special thing that the ones of you that are familiar with Shelly already, we have Shelly X. That is the Shelly chip on a module that we offer to third parties to make their devices smart. That will, of course, enlarge significantly the hardware platform that we can then use to monetize later with other services. Last year, we have made the first proof of concept. This year, we are in the first bigger project with important customers in -- as well in Europe. Like garage door manufacturers, motor manufacturers for garage doors and shading systems, that we are very close to implement the Shelly X solution in their solutions. That will really enlarge our business. We are in good contact and good negotiations with household appliance manufacturers. So that looks very promising. Once again, after we -- last year, we showed first proof of concept with some small quantities with Chinese companies. Now we are making the next step in bigger businesses, and that is something that should really start to deliver in '27. So all this leads to software business, and this is the real secret. So do not forget that Iliyana presented that we make 25% EBIT margin with hardware. Not a lot of companies are doing that. There are 1 or 2 competitors that are as good as we are, but there are a lot of smaller companies and other -- as well bigger companies in smart home that are not profitable or definitely not making this 25%. So we are in a very healthy state already now. But with everything that we have in the pipeline, we already have our premium application. I mentioned -- or I think we did not mention that we made EUR 800,000 revenue last year. This year, we expect EUR 2 million. And of course, we expect with the cameras an acceleration of the usage of premium app and selling storage as well to the customers. Customers of cameras, users of cameras are used to pay something for having an online storage much more than smart home application users are used to pay something for a smart home application. So that for us is the cameras are -- is an accelerator for selling more premium account and get more recurring revenue. We mentioned end of '24 that we are working on a fleet management system. It's almost ready. And not only that, the fleet management system is ready, we are using a lot of AI in our coding team already. We are able to make tailor-made versions of the fleet management system for each customer or special usage groups in absolutely no time. In the past, something like this took a year, now it takes 4 weeks. And that is only possible because of the architecture of our Shelly devices. It's not working with other smart home devices as easy as with ours. So that's a big advantage of the basic architecture of Shelly devices. Fleet management systems are -- is something that can be used for multi-location operations, like a hotel with hundreds of hotel rooms where every customer should have the possibility with his smartphone to steer his room temperature, light, et cetera. But the central hotel manager should be able to steer the hotel. This can be used for storage locations. We have a version of that for multi-location energy management. If someone is operating more power plants, solar power plants than one, this can be used. It can be used in retail stores. If someone wants to monitor, operate and remote control the energy consumption of a retail store. So all this is something that is ready and will be launched in a very short period of time as well as a couple of other projects that we will announce in the very short term. Data monetization, 2.7 million households -- sorry, cloud accounts by the end of the year deliver a lot of data, and we are starting to have the first cooperations to use this data to monetize this, the data that we have there. One of the possibilities is energy contracts. We had a proof of concept that worked in the German market end of last year. On a very small scale, we are offering to our customers a tailor-made energy contract because we know their energy consumption. We know how much they pay for their energy contract because they give us the data. And we can -- in the application, we can offer them a specific energy contract and show them how much money they can solve -- they can save. And then on top, if they use more Shelly devices, they can reduce the energy consumption. Here, we have ideas to have in the future, maybe even a Shelly-branded energy contract, variable energy contracts. That's something that is a good trend in some European countries that can be used with Shelly devices already now. So all this creates from the hardware that will be extended in all use areas of your home as well in industrial use cases, in retail use cases, and then with a lot of software solutions on top, this creates a full platform that will hook the customer onto the Shelly services and will deliver a lot of additional income from Software-as-a-Service solutions, from premium application. So this is a generator for additional margin, additional revenue and profitability that should really be visible starting '27 and then ramping up until 2030. So that's the story about Shelly, and now we are both ready for your questions.

Exactly. Thank you very much. Ladies and gentlemen, we're opening the Q&A session, and you're very welcome to ask your questions in our chat and I will read them out loud for you. We have already received a question by [ Mrs. Vasileva ]. She's asking, what is your 2027 guidance?

We will communicate the 2027 guidance beginning of 2027 as every normal company is doing. We one time did this 3-year guidance or model, 3-year guidance to give confidence to the market. But normally, and that's -- correct me if I'm wrong, but that's common sense that you give a 1-year guidance. So we are not communicating now '27. That's why what I said in my presentation, you can make your calculations. If you take the EUR 200 million will be reached, and we are confident that we will reach the revenue around the EUR 200 million, market growth next year, 10%, 15%, so in '27, 10%, 15% again. Usually, we were outperforming the market 2 to 3x, so you can make your own calculation. So forgive me, please, that we are not coming back to a 2- or 3-year guidance anymore. We will guide 1 year after the other.

Thank you so much and thank you for the question. So far, we have not gotten any more questions in our chat box. So ladies and gentlemen -- with that said, I just received a question from [ Mr. Cuza ]. He's asking, what are the main challenges you're facing in the sales process for Shelly X cooperation?

Main challenges. Main challenges is, if you want, is it needs an individual integration in each and every of the solution, and that takes some time. And the second one is, if you talk to bigger companies that have their own R&D team, they typically fight, I would say, a lost fight because every big company is -- I don't want to drop any names here, but the engineers say, guys, we have our own solution, we are almost there, we can do it, we already invested millions in this development. And then if the management wants to use a solution from Shelly or from someone else in the market, they are fighting against it. So that's internal fights that the big companies have, but the more of them give up and join systems that prove to work, the easier it will be. So we need to show the first cases in Europe with European companies to motivate other European companies to go that way, and we feel on a very good way about that. And I mentioned already garage door motor manufacturers that will integrate that solution. That's a huge market itself, but that's as well a case that we can show to others that we are able to do that.

Thank you so much. We received another question by [ Mr. Carrier ]. He's asking, can you give us an update on the launch of country teams in Italy, Iberia, France, U.K. and Nordics?

Yes, I can. I mean in some of the countries, like in Italy, we already had one salesperson before we hired our country manager beginning of the year. We have onboarded now one person for technical support in local country language, and we are onboarding now the marketing person so that the base team is fully equipped. We will hire more salespeople. What is good, very good in Italy? It was already before having Giuseppe on board, it was our second biggest country, so we have a very good visibility there. And now Giuseppe is opening new business -- new sales channels, doing a lot with installer channels, with professional wholesalers. So that is on a very good way and they delivered good results in Q1. In Iberia, we were, so far, we were stronger in Portugal than we were in Spain. So a bit interesting situation. Our country manager is a person that knows the country, an internal from Shelly, speaking fluently Spanish. He opened the office there. He has onboarded already a technical support guy, sales guy and someone for marketing and delivered immediately the expected results for Q1. So that's on a very good way. But of course, we have higher expectations for the rest of the year. France, we are at the very beginning, so we had no organization, no salesperson in France as well as no big customer. We did some revenues via Amazon. Always a bit complicated to say that what you sell to France stays in France. We saw before we started with our own operation some good cloud activations, so more activated devices than we actually sold to France. So that means that France was a country imported -- where customers imported products or bought products in other countries to activate them in the cloud. We have now a 2-man team. We have the country manager and the marketing person. We will -- we identified already the target customers. We are close to signing the first bigger contract with some of these target customers. We as well are developing a very important product that's only relevant for the French market that will be launched in Q3. That will open a lot of doors there. And now we are looking for one more salesperson and the technical support guy. First quarter was a bit slow. We expect the second quarter to be better, and France will be a typical country where we expect deliveries of significant revenues in Q3 and Q4. U.K. was country #4. We had already one salesperson in the U.K. We already had one distributor. Now we have the country manager as well as someone knowing the country quite well. He lives -- a Bulgarian team member who moved now to the U.K., lived in the U.K. before, has a working permit there, knows the country in and out. We have onboarded technical support and marketing and now signing more distributor contracts and build on the solid basis that we already had. But we expect good visible development in Q2 and then mainly Q3 and Q4. Nordics is -- was a country where we were already present, but we announced beginning of the year that we have onboarded 2 or 3 more people for Sweden, especially because we were not that much present in Sweden. And some of you might know that in Sweden we have a very competitive player with Plejd doing an excellent business, especially in the professional business. And we think that we can take a piece of the Swedish cake with having these people onboarded now, and we get very positive feedback from installers and as well wholesalers. And here as well, that's a typical thing where we expect payback in Q3 and Q4. The other countries, Poland, we already started in May last year. They are on a very good way. The team is working excellent. They are delivering very good. In Netherlands, we started in October. They started to deliver end of Q1. We expect better results in Q2. And then, as I said, it typically takes 6 months, Q3, Q4, we should see the ramp-up for the Netherlands as well.

Thank you. We received another question, which will be our last question due to time by [ Mr. Schunitz ]. He says, congratulations on your inclusion in the SDAX. You recently said in an interview that the TecDAX is waiting. What are the requirements for inclusion and when could that happen?

That's a very good question. It depends, of course, on the trading with our share. The share price needs to increase a little bit. All the other criteria are fulfilled, so we are qualified as business for TecDAX. And if I remember this right, the share price should go up by like around 40%, 50%, and then we would be in. We are on the waiting list. And once again, we fulfill all the other criteria. We are in premium segment. We fulfill all reporting, all compliance requirements. That's the same, by the way, for SDAX as for TecDAX. It's just because there are a couple of companies that are in -- even in DAX and in TecDAX, the bar is a little bit higher on the market cap side. But we are confident that with everything that we presented today, that the day will come. If this is still in '26, '27 could be a good moment to be in.

Perfect. Thank you. Well, with no further questions, I would say we come to the end of today's call. Thank you very much for your interest in Shelly Group SE and a big thank you also to you, Mr. Kirsch and Mrs. Krushkova, for your presentation and your time. If you should have any further questions at a later time, please feel free to contact Investor Relations. I wish you all a successful day, and I'm handing over to you, Mr. Kirsch, once again for your closing remarks.

Yes. Thank you very much for attending, for listening, for listening some of you the repeated time the Shelly story that is still very thrilling and very interesting. And do not forget, on the 12th of May, we have our earnings call where we will show and explain Q1 results. Hope to see a lot of you in this call as well. So thank you very much.

Thank you.