Shelly Group SE ($SLYG)

Welcome to the Q1 Earnings Call 2026 of Shelly Group AG. I would like to welcome the company's CEO, Wolfgang Kirsch; Co-CEO, Dimitar Dimitrov; and CFO, Iliyana Krushkova, who will guide you through the figures 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 our side as well to the trading update for Q1 '26 of Shelly Group. For the first time, we are 3 people in this call. So we hope that we can manage between the 3 of us. We have, as usual, Dimitar Dimitrov and myself. And now we have Iliyana Krushkova. For the first time, as she joined us as CFO in January this year, we thought it's about time that you see her and that she takes over the numbers or the big part of the numbers from my side. And hopefully, she can as well answer all your questions afterwards much better than Dimitar and I did this in the past. So I will start with the typical update or information about what Shelly is doing for the newcomers. We are more and more with our products able to equip your whole home, the safety and security part. We are very strong in energy management, integration of solar systems of flexible energy tariffs and of course, the core automation that is roller shutters, that is lighting, that is all other devices and more to come over time. Today's agenda, I will lead through some highlights from Q1, then Iliyana will present the financials. Then Dimitar will, as usual, talk about products and a little bit about platform and give an outlook of what will come in the next couple of weeks. And then I will come back with some details about the guidance and some plans for financials and a couple of other information. So highlights. Revenue and EBIT grew above our internal plan. So we are positively not surprised, but we are positive after Q1 because we expected a little bit more headwind. The gross margin made a very nice jump, and that is really good because we have as well additional costs. Gross margin is overs supporting the cost development because, as you know, we have opened a couple of country subsidiaries. We are continuing to expand our do-it-yourself and Pro network through all countries, and that leads to a strong Pro adoption. So you will see later how many new Pro customers we have onboarded. We have opened in Q1 4 subsidiaries or 4 full organizations in the U.K., in Iberia, Spain and Portugal, in France and in Italy. That means the geographic expansion continues and is strengthening our local presence in European markets. And besides that, of course, we are still in the U.S., and we are in Asia with our Shenzhen, China office. Customer ownership is something that is more and more important for us. We grew our cloud user base. We have as well -- we expect a long-term monetization from this in a couple of areas. We'll talk later about that. Our premium app users are increasing as well. We are very careful with that, talk a bit in detail about that later. And with the Pro installer onboarding as well, this ecosystem is developing in a very nice way. End of Q1, we had 2.9 million cloud users, that is 40% more than 12 months ago. The 6.2 million households is always an estimation because we cannot really know that number because that is a lot of home assistant users or other platform users. And this is something that our customers like. That's not a weak point. That is something that drives really revenue because our customers love that they are not forced to use our application. Premium app users grew by 44%, and we have -- we had 6,700 installers in our installer portal, and that is a very nice development. Even in Q1, we grew by 1,400 compared to the end of the year. So that is really taking speed, and we are very confident that end of the year, we will have a very big number standing here. If you see some of the logos of new customers or customers that are already onboarded in Q1 or that are in the pipeline where we are in initial discussions. Some of them, of course, we have showed you already last year like OB in Germany is onboarding now. We had some very first steps in the last year, but the real onboarding is happening now and as well the rollout with a couple of the others. On the right-hand side, on the Pro channel, it's quite filled. In most of the regions, we have a lot of discussions and very positive feedbacks from Pro distributors. So that's as well an important step. And that fits to development of the Pro installers at the same time. So having said that, I pass the word to Iliyana to talk about the strong financials.

Thank you very much, Wolfgang, and good morning, everyone. I'll start with the financial highlights for Q1. We -- it was a very strong quarter for us financially. We recognized EUR 33.3 million of revenue, which was 26% year-on-year growth. It was mostly driven by the continued demand in all across the core markets. It was, at the same time, coupled with very strong growth in our underlying operating performance as shown by EBIT here, which was EUR 8.6 million for the quarter, another strong quarter in terms of growth, 30% year-on-year. This was the effect of a very nice expansion in the gross profit margin, which was offsetting the increased spend in sales and marketing and the international expansion in general. In terms of cash, our cash position improved to EUR 19.8 million at the end of Q1, which was a 19% year-on-year increase. And at the same time, it was 44% better than our ending cash at the end of 2025, which is also a notable improvement. Going over the cash flow bridge itself, you will note that our most substantial contributor was our operating cash flow of EUR 8 million for Q1, which was actually double the amount of operating cash flow that we had in Q1 2025. It was the effect of stable collections. We managed to collect EUR 33.8 million from clients, which was EUR 0.5 million more than our new billings for the same quarter. And also, it was -- collections were 46% better than collections in Q1 2025. So overall, in terms of collection, it was a pretty stable quarter. In Q1 as well, we also acquired the equipment for our new production facility in Bulgaria and also continue to invest in innovation and R&D. All of this investment spend was entirely financed by operating cash flow. And you will note that our financing outflows were mostly limited to the ongoing lease payment that we have. And our overdraft utilization remained unchanged. So in summary, we managed to add EUR 6 million of new cash to our balance sheet in Q1 '26, and it was as a result of our strong operating cash flow financing the entire investment outflows, and we continue to maintain a positive net cash position at the end of Q1. In terms of our P&L performance, once again, revenue increased by 26% year-on-year, which was driven by the consistent demand across all markets. At the same time, gross profit increased in nominal terms by 43%. This was especially strong performance, and it was mostly driven by favorable product mix for the sales in Q1 and to a much lesser extent by certain reclassifications of MDF costs that were previously shown as goods of sales, but those were negligible for the impact on the gross profit margin. The gross profit margin, once again, it was more than sufficient to offset the intensified spend in sales and marketing, which was strongest in our core markets, most notably in DACH. But also, it was -- there was an increase in marketing and sales related to the international expansion that we had in the 4 new markets mentioned by Wolfgang already, Iberia, the U.K., Italy and France. And also, it should be noted that our presence in the Netherlands and in Poland took place later in 2025. So it also has some impact on the Q-on-Q performance here, both in terms of sales and marketing and also on the G&A increase side. G&A increase, you will note that it increased by 37% once again due to the additional headcount, the new teams that we have in the new locations and also the new headcount that we added in HQ over the course of 2025. As a result, once again, EBIT was strong by almost 26% margin, which is slightly better than our internal target of 25%. And net income also increased nicely by 34% year-on-year, reaching EUR 7.5 million for Q1. Once again, to summarize, it was a pretty strong first quarter for Shelly Group, and it laid some comfortable foundation to approach and to deliver on the annual guidance. So I will now pass to Dimitar for some more exciting developments on platform and product.

Thank you, Iliyana. Hello, everybody. Let's -- my part is just to present what's happening this quarter and what is upcoming. What -- the first about the installed base and monetization acceleration. We continue -- the people, our customers continue growing their device in their houses. Compared with the year ago, the same customers install almost 50% more device in their houses, which means that we have a sustainable growth also from existing customers. And as you know, this is one of the main drivers also for the company because acquiring the customer is the one thing, but also make this customer satisfied and to install more and more devices in their houses. This is something very positive feedback for us and for what we're doing and where we're developing the new trends and new devices. The key product pipeline already, as we talk, the Plug M, this is one of the most attractive devices at the moment, which is selling very well. And I also published in our Facebook page information that there is a special factory and production for this device to make it cost optimized and to making the huge quantity and to reach in the next months close to 1 million pieces production per month because we're expecting these demands to increase in the next months. And this, by the way, is one of the first products which is a direct competitor for many others, let's say, even the price point with some Asian manufacturers, but keeping all kind of the good and the features capable for all the rest of the Shelly devices in the price point, by the way, is under EUR 10. And this is for us our door opener for the new customers and which will be easier for them without need any kind of electrical installation. And the second one, which we launched in this quarter is the famous presence sensors, which is really showing -- going in the completely different generation of the motion sensors because they not only detect that there is somebody in the room, but also detecting how many people is in the room, can measure the heart rate, the breathing of the people, can exactly say the positioning of the people in the room. Soon, there will be more updates. We also allow these sensors to detect the fall detection. And this is the sensor, which, by the way, is one of the sensors which is the mostly wanted and asking for the senior living companies and to provide them the service using such a presence sensor with the positioning and the vital parameter reading. In Q2, as we said in the previous earnings call, we decided a little bit to postpone some of the products, especially for the cameras because driven by AI revolution also increasing significantly the price of the chips and especially for the camera chips and memory. But we're already done. And from that, I can tell you in the end of this week, the first batch production for the cameras will begin, and we're expecting them to be available on stock to end of the second quarter. On top of that, we're working on the completely new flood sensor, which can detect any kind of the liquid, not just water or not just specialized liquid, but really everything in very small form factor. We're extensively working and soon, we will be also start selling our next version of the lock, which is much more advanced and fast compared with the first one. And by the way, also is coming the new version of the locks, which extend the range and make them compatible to every kind of the locking mechanism of the European and U.S. doors. And the breakers, breakers is also in production, we expected them to be delivered in our warehouse beginning of June. So they will be available during June, which is completely new area, which we prepared and we're expecting the huge growth and going in the completely new direction, the connected protection, not just not only automation of the households. And I doesn't want to go deeper because we will take a significant time for the second half of the year when we expand almost everything in our portfolio with the breakers, with equipped outdoors and indoor cameras, the different kinds and the power strips for the United Kingdom, for United States. This is something which we're expecting to drive our revenue and our profit and our future for the second half of the year. And of course, we cannot show everything because part of the product and part of the new ones which we're planning for is we prefer to keep them hidden because of competition, but there is also some big things which are also coming, not only these products which are showing here. About the long-term hardware and software development. From the hardware side, as you've seen, we're working exactly on the range as we talked about the smart locks, smart cameras, we're jumping with the smart cameras into monitoring and security and the completely new batch of the sensors because now we rebuild and we make completely new motion, doors, humidity and any kind of the environment sensors, which can be used also for the security and working very extensively to offer the full security pack very soon on the market. The circuit breakers and HVAC shell, this is everything which we're doing before. Now is going with a much faster speed because it's ready. But something which is most more important, what we're doing from the software side because if before the Shelly is mainly recognized to automate the smartphones because the application -- our applications is made for home usage. Now using the AI features, using the new platforms which are working for them for more than a year, now probably we can extend the coverage to our device for almost everything from the professional to the industrial automation. And we've seen first signs that this one is highly appreciated from the installers and from the electricians, where they can exactly offer the specific service and the platform to their customers without to be dependent to our interfaces or even sometimes to our cloud. About the Shelly X, something which is also important, the number of products is increasing. Now there is more 30-plus active discussions with the new distributions. But also we have a significant number of the products which is increasing. And by the way, what we've seen, not only us, but also manufacturers is quite happy with the results from selling the devices powered by Shelly X. And also, we've seen that the revenue coming from the selling the devices with the device which we're selling through our network powered by Shelly X is increasing significantly compared with the previous year. So we continue the expansion for Shelly X, we're expecting scaling and monetization to be much faster until now. Something which is important. There's a question which we ask us many times, the factory -- the factory is ready. The factory is ready for the production. We start making some test production. We decide that because the factory, by the way, is very capable and very fast and can produce the high-quality devices, is completely automated. We decided also to start production not only for the Shelly X modules, but also to start production partially for our devices, especially Bluetooth/Zigbee devices, the devices for the security. We will produce from this factory in Plovdiv. We expect to go in the full production cycles until end of June because now there's a preparation, now the testing, now we -- the team is training and also we're choosing the right bulk of the devices which can produce in positive. So at least our target is the old modules, which need to be delivered in Europe and also almost 100% of the Bluetooth and Zigbee devices which could be automated and made without additional -- with not so much invoice and the human to be involved in production to be done to end of the second quarter. And after that, we need to stop to produce these devices only here in Bulgaria. And something which is important because what I've seen, maybe there is not a good understanding what exactly we're doing. We're preparing on the 2nd of June, the special webinar for the investors, where not on the -- not from the geek explanation, but also from the much more customer-oriented and investor-oriented explanation and examples, we can show to everybody what exactly we're doing with the premium application, what is the advantage for the customers, what mean our fleet management system and how the AI can drive us to another direction. We can show you the different kind of the platforms, which is related to the city lightings in different regions related to the completely building automation systems and something which our partners, electricians installers by everybody and even the end customers completely to rebuild how they're managing and monitoring their appliances, houses and buildings, can do that even on the city level, which is completely new area and direction, which we're working and expecting also this. And also, we want to answer the questions how this could be monetized. We can show some interesting data from our devices how about our customers, how much they spend, how much energy we're controlling and also a little bit a deep dive for the future when we talk about the energy contract, not only automation, but also opportunity Shelly to be one of the companies which offering not only the device, but also energy contract to the customers using these platforms. And now -- I will finish now.

Yes. Thanks, Dimitar. I can only recommend that you join this presentation on the 2nd of June. I have seen all the parts of it, of course, and it's absolutely amazing what you can do with Shelly devices with the help of the software. And I will come back to this at the end of my part once again. That's the financials. They all look in the right direction. Iliyana has explained this in detail. Now to the country performance. And we see that in this quarter, last quarter, if you remember, last quarter '25, DACH was a bit weak in the development that turned around, a little bit extreme, if you want. So DACH is driving in the first quarter, the revenue development. Rest of Europe is even a little bit negative. This has 2 main reasons. One reason is that in Q1 last year, and that's why we added '24 here, we had a big jump in revenue in one of our big countries outside of DACH, and this is normalizing here. And we expect as well that this trend is normalizing over the year. So that's nothing that will stay like this in Q2, Q3, Q4. This is something that will turn around, just comes from this onetime effect that we had beginning of last year in one of the regions. The second reason is, and that is something that is more and more something we think about, how do we continue reporting because we know that a lot of products in Europe, not outside of Europe, but in Europe are going across the borders. So we cannot 100% say that what we sell to Germany stays in Germany, what we sell to Italy stays in Italy. And we know that some countries are more exporting than activating. So that's something that we think about how to manage that. It's legal in Europe or it's possible legally with a huge effort to control that. We are not able to do that. And that shows that the demand is everywhere in the European countries. That's a positive thing. The negative thing is that, of course, besides this, the problem in reporting that causes as well trouble with distributors if products are imported to their region. In general, looking to the right side, and that's a very positive news. Rest of the world is still on a small level with EUR 3.7 million in Q1, but growing by more than 80%. And we hope that in the next quarters, Q2, Q3, we can report very positive news, especially from the U.S. We have a couple of good initiatives there that look like they are materializing if that happens. I don't want to say we have a breakthrough there, but we are on an excellent way, and that supports, of course, the growth in the rest of the world, but as well the growth of the whole group because numbers start to be visible to a certain degree. Premium application. We have a target this year to reach EUR 2 million revenue to reach 80,000 users. We are on a good way. We already have 41,000 users after 1 quarter. So the 80,000, we should be able to overachieve that. On the revenue side, we have a bit a strange curve, if you want. In the last year in Q1, we changed our accounting to a deferred booking of the annual revenues coming from the premium applications. And as you know, we always stress that we are very careful not overpushing this because there are not a lot of good examples for paid versions of smart home applications. But having said that, we will start in June and end of the year with cameras and end of the year, the second camera will come and customers are more used to pay a monthly subscription for cameras and for additional features, AI features in the camera, than they are used to pay for smart home applications. So we think that our camera launch will support that development, and we are confident that we reach probably more than the 80,000 users and the 2 million revenue should be as well something that is feasible. I come back to the guidance. And I show you here a bit longer-term picture for one reason. What we all should not forget, when we issued our long-term guidance, that was at the beginning of 2023 with Q1 numbers 20 -- before we published Q1 numbers 2023 on a basis of EUR 48 million revenue in 2022. We said that in '26, we will make around EUR 200 million -- everyone looked at us and said, you are completely crazy. We are on a very good way to achieve this target. And that is 4x the revenue, EUR 50 million to EUR 200 million, 4x the revenue in that short period of time. On the EBIT side, we came from EUR 10 million EBIT in '22, and we said we will make EUR 50 million EBIT in '26, and we are even more confident that this number will happen. So we are on an excellent way. That is 5x the EBIT. When we did this, everyone said, you are completely crazy, that's not going to happen. And a lot of you now ask us when we will increase our guidance for this year because this is not ambitious anymore. Of course, the percentage growth goes down because the basis is much higher. I come in a second to a different outlook. On the cash side, we have to admit that this has never been a KPI or something that we looked at in a lot of details as long as we were able to pay all our invoices, to pay -- to have enough money on the bank account to pay -- to make the prepayments to the factories. Everything was fine. We did not pay a big attention on that. So our working capital -- or sorry, our cash more or less went directly into the working capital. We plan to change that, and we have already changed that in Q1. Iliyana has showed some of the numbers and commented on some of the numbers. So for the end of this year, we expect a cash that is somewhere between EUR 35 million and EUR 45 million. Of course, this is always as well a matter of do we pay a dividend, do we not pay a dividend? Do we have bigger investments? So what might happen there that has an effect on that, but it should be a significant jump from the level that we kept the last years to the end of this year, that is what we have in our plans. And looking at the first results end of Q1. And here, we look at the working capital specifically, and we look at the cash conversion cycle. Even with the high level of receivables that we had end of '25, our cash conversion cycle was a little bit better than it was in 2024. After 1 quarter in '26, we are 10 days better with our cash conversion cycle, so 267 days. We have reduced as well the receivable level a little bit, the days of the receivables a little bit. And for the end of the year, we expect something between 220 to 240 days of cash conversion cycle. So we want to continue making significant steps quarter-over-quarter to bring the receivables on a good level. That will take 1 or 2 more quarters, but the number end of the year is, from our point of view, a very solid one. What are we doing? We control the payments. We are continuing collecting receivables from customers. We are controlling as well that the sales team is not able to give over proportional long payment terms without the agreement of Iliyana. Processes are in place that this is impossible. Our stock level is on a good level. So we expect to keep it there. And we are working with our Chinese main suppliers to reduce the prepayment to an acceptable level, and there are ways doing this even with the support of Chinese government and banks in China. So we are confident that we reach this level of 220 to 240 days, which would be significantly better than a year ago. And then, of course, in the coming years, this should continue to be optimized and is from now on our third KPI besides revenue and EBIT. To close this part, we will not give another long-term guidance. We will not this year or beginning of next year, give you a 3 or 4 years guidance. But what we already did end of '24 in our Capital Market Day in Frankfurt, we gave a long-term outlook. And we said, let's say, that the '26 numbers are in. They are not yet in, but we are confident. Guidance is confirmed, EUR 200 million roundabout. After '26, the market is expected to continue growing with 10%, 15%. And here, we just add our regional development. We now have 8 organizations in Europe, 6 of them are relatively new. And of course, we expect that they deliver significantly overproportional to market development in their regions. And that leads without taking a number, you can make your own calculation, sorry, that leads to Shelly core business in 2030. On top of this, Dimitar touched upon new categories. And yes, we already have HVAC products. We have TRV, but that's categories that we are significantly improving and increasing so that we expect additional revenue on top of the 10%, 15% coming from the new product categories. Smart circuit breakers is basically not existing in the market, something that is very new. And the platform is something that will not only enable software and recurring revenues, but it will as well push the hardware revenue because a lot of these functions are only able with the Shelly hardware architecture. So this is the platform and the basis of what enables us to run platforms to go into city lighting and everything else. That's something that we did not want to add today because it takes 30 minutes to 1 hour minimum to go through this. And once again, on the 2nd of June, join the presentation of Dimitar, that will definitely be something that is interesting to see and that no one else is able to do. So that leads to the summary. Q1, we have met our targets. We are even a little bit above our targets in revenue and EBIT. We have made a first progress in working capital development, reducing the receivables a little bit. Just in this quarter, we have onboarded 1,400 installers. So that is amazing, and we continue to onboard them. We have an operation buildup in 4 additional markets. We have mentioned them already. Recurring revenue improved, and we expect that this improves even more. We confirm the guidance around the EUR 200 million, so EUR 195 million to EUR 205 million -- around EUR 50 million EBIT, EUR 47 million to EUR 52 million EBIT. We plan to further improve our cash flow and the measures are implemented and are on track. And we gave you a clear target for this year. Key products will support the 2026 growth, especially in H2. Do we like that? No, we do not like that. But as a matter of fact, we cannot just have wishful thinking and say when should products be there. So everything that we do with the country organizations and with products will support heavily the H2 development. We hope that in '27, this will be a bit more balanced over the year. The AI initiatives are helping us to -- on the one hand side, to be faster in software development. And as well, we expect that this helps to push our ecosystem with a premium user application. And we have a very positive outlook in our third region, rest of the world. So hopefully, in the next quarters, we can report very positive things about that. So solid Q1 and positive for the year '26. And now we are ready for your questions.

Yes. Thank you very much also from my side. Ladies and gentlemen, we now start the Q&A. I have seen that there is one in our Q&A already by Stefan. He's asking, to what extent are you using factoring to reduce accounts receivable?

Right now, we are not using any factoring whatsoever.

All right. Thank you very much. In our chat box, there are no other questions right now. There is one raised hand by Bastian.

Some questions from my side. The first 2 are on the product side. You launched the Plug M. And yes, mentioned 1 million per month in production. So it seems like the launch was quite successful. Could you give us any like customer feedback, early feedback? And also was your expectation that mostly new customers would pick up this product fulfilled? Or is the split between new and existing customers rather the same than your other products?

So the existing customers, they will come, they order the device, but attractive price under EUR 10 with this price, we target new customers because we want they to try without worry about the cost, pricing, anything. And also, we want really to go in the level when if somebody just thinking to prefer what to buy, something from SONOFF or Aqara or even Tapo from TP-Link, they to choose our one because we offer new features. And that's very interesting because currently, just for a week, we are #1 in all platforms. You know that we doesn't sell in Amazon as a vendor, but we're selling our devices as a seller. And if you open the Amazon and looking for the Plug M, you will see that immediately this device take the first place by selling. And compared with everybody else, the numbers which Amazon reporting is 5x better than others as a sellout from the Plug Ms. This device is especially made to be -- it's high quality, but lower cost. We invest a lot to prepare the production cycles to prepare the materials and to negotiate the better price for the materials. And something which is important because I just came back from China, there is a factory, as we say internally factory #4 is made only to produce the Plug Ms. And it's still developing because, let's say, I can say maybe 30% at the moment of the manufacturing of the Plug M it's automatic. Therefore the rest need a manual operation. We're expecting to end of June over 50% to be completely automated and probably maybe end of the year to be 70%. Automation will help us additionally to improve the pricing. So even though our price, we have a good margin for this device. We can offer good conditions for our distributors. And currently, this is offered mainly through our channel. Distributors just touch it right now because we need to receive the first huge quantity and to deliver to everybody. And yes, to be honest, we're expecting demand to reach, especially for the -- after summer months to reach 1 million pieces per month for which one we need to prepare the factory, for which one we need to prepare the enough raw materials for the device. And yes, that's the target. This is the product, which is, let's say, the door opener for everybody else. And we've seen at the moment that this is working very well for the very first signs because from all teams inside are listening that sales is -- the sales is more than they expected before significantly.

Okay. The next question on the product side. Do you see the new products? And with that, I mean, the Plug M, but also later in the quarter, the new smart lock and the indoor camera to already have a meaningful contribution in Q2. So a higher revenue growth in Q2 compared to Q1? Or is that mostly H2, what we are seeing?

No, I don't -- I don't expect it to be significant. I tell why, because the first batch of camera will be produced in June. We will start selling in June. But usually, what we're doing, this is something which is for us, the security and the feedback from the customers is most important than exactly to reach the revenue. Even though the revenue is lower, we prefer customers to be satisfied because next quarter, this will be immediately compensated. The first batch of camera will be produced in the small quantity, small quantity, maybe, let's say, something 20,000 to 50,000 cameras. And because the camera is also -- the first camera is not AI camera. It's the basic camera oriented to the mass customers with all kind of the AI features on the cloud, not built into the camera. We doesn't expect this significantly to change the revenue and to be the revenue driver. For the breakers also the first ones, they will come, but also is the first batch. So usually, what we are doing. The first batch is for the different devices, let's say, 5,000 to 50,000 pieces, depends on the preparation and it depends on the internal testing. And now we're targeting something 15,000, 20,000 for every new device to be produced. When this happens, we're waiting about 2 to 4 weeks for the customers' feedback, something need to be improved, what do we need to do, what is the -- because then the device is coming in the 1,000 different environments, something which even with tests, we cannot reproduce, fully reproduce. And then we start with the huge batches, which is 100,000 per month, 100,000 batches or, for example, 1 million. This is exactly what happens with the Plug M. By the way, Plug M is ready from the beginning of March. But the first batches, which is, I think, something about 20,000, 25,000, reached the market just in the beginning or the middle of April. And now we start production in a huge quantity and huge number of the device, and we expect this in the end of June Plug M to have a significant effect on the revenue and also the second half of the year to be much more significant. So no, from the new products, I doesn't expect this one, which I present, which will be launched in the Q2 to have significant impact on the revenue. We can do that, but we doesn't want to do that because really the sustainability of the products and the customer satisfaction is most important thing for the company and for us.

Okay. Great. Understood. And then my second question would be on marketing, quite a step-up in that department. Was it primarily like brand marketing, performance marketing or also more trade fairs you visited? So maybe a little bit on the marketing mix there.

It was a combination of many factors, but you should also note that what we see currently in Q1 in terms of increase in sales and marketing is a reflection of the investment that was done gradually throughout the entire 2025. So as I mentioned, there was new establishments in 2025. Now in 2026, we also have 4 new teams in the local markets in Western Europe. And in addition to that, there was additional marketing spend that is supporting general brand recognition and also the distribution channel. So this is a combination of all of that, and you should bear in mind that it is accumulated effect that we see now in Q1 when we compare to Q1 last year.

Okay. And if we look at the more mature markets like Germany, was there also a step-up in marketing spend? Or was it roughly on a similar ratio compared to last year?

We are not reporting these numbers individually, Bastian, as you know.

I can tell you just it depends because the main events, for example, Light + Building when we have a huge booth with almost more than 20 people from our team there. If this is covered from our German office, then this significantly increased the German expansion for the marketing, which is artificial because this is made from the company as a holding and everybody from all countries. But so many things is fluctuating and we doesn't spend for the tens of millions, this to be significant. For example, I can tell now to be really visible in one event, we need to spend something close to 300, 500, for example, especially if the events in the United States were coming close to 1 million because everybody expected to have a big booth. We expect lot of the customers. We need really room to welcome them and to talk with them. And this is -- for this one, even -- we doesn't report because this will be some kind of -- the numbers they will not reflect the reality.

And it's sales and marketing costs. So it's not only marketing costs. It's not that we now invest millions in Google or whatever or for big events. It's as well the teams that we build up and offices and a lot of things that are in the general cost. By the way, Bastian, if we invest -- if we continue investing that much in marketing and it leads to a stable 60% gross margin, I would be super happy.

Thank you so much from my side as well. We have 9 other questions in our Q&A. One from Ian. Are there any developments with Amazon?

Yes, we can tell you we have absolutely no problems with Amazon because we make no business with Amazon.

Let's say, as a direct business, as a vendor, as a seller, you can find our products. We're working as a seller directly there just using them as a marketplace as every other platform in the world. Also, we do that with our partners who do that as a seller. I think we almost closed the last vendor account through one of our partners, I think, in February or March. And yes, there is also -- it is not easy to do that because -- but for the future, this is important and we need to go in that direction. And working for more partners, for the new partners. We now instead investing money in Amazon, which you don't know where they're going. And instead they pushing us for more margins and revenue, we prefer to working with more partners, which do the activity in Amazon, and this will continue by that way.

And we have to continue optimizing that because currently, that creates as well a bit trouble because someone buying products for one country, ships it to others, sells it on a different marketplace. We are more and more controlling that. So in general, we are on a good way. And we think that having now found the way to be on Amazon Marketplace direct and as well indirect, that really helps to control the market a little bit more and creates less trouble in the market and hopefully stabilizes the margin for everyone.

Thank you so much. There is another question from Jimmy Landerman. He's asking, last quarter, you mentioned you were working with one of the biggest European lights manufacturer to make the devices smart. Anything you can update us on about this?

Yes. Development take a time. The certification take a time. For example, at least one product to be certified usually take between 45 to 60 days. So the process is ongoing. By the way, we will start one box packaging, the boxes plus our devices in a single package very soon. But probably for the lighting -- this will happen beginning of the second quarter, maybe end of June, he will start selling the devices. We're already selling some lighting devices powered by Shelly. He's selling these devices powered by Shelly. But we look for something much bigger, which will be present in the second half of the year together. But really, developments take a time. When we start to talk about the new products and new product lines, new partnership, usually before product to meet the stores took about 9 to 12 months. It depends on the complexity of the product.

All right. Thank you so much. Another question from Mark. He's asking, what initiatives are you optimistic at USA...

Mark, I think you have asked this question already 20 times. We are in the process of signing with a new distributor. Contract is ready. Just some very small details to be done, then we will fill his warehouse and the systems. And we already had very promising meetings with his customers that are bigger do-it-yourself retail chains in the U.S. We do not expect that in one shot, we will be in all their stores because it's a very big chain. It's not Home Depot, but it's a chain that fits much better to us. And then, of course, that step-by-step rolling out to all their network, that's something that will take some time, but that is very promising. On the other hand, we are already -- and we communicated that we are already in 30 stores of a chain called Microcenter -- physical stores, and they are selling very well. So that's -- we have not a special presentation. We are in their normal shelves every day, and they are reordering. So this as well gives very positive signals that we are on a good way in the United States. So if the sell-out is good in a physical store. And this is the first time that we are in -- even though it's only 30 stores -- in physical stores in the U.S. So that's very positive.

All right. Markus also asking, can you speak a little bit about when you expect significant numbers from Shelly X?

I can tell about the numbers, significant numbers is -- let's say, when you start with somebody like lighting at the moment, it's easy to sell 1 million modules. But 1 million modules from the prices which we -- which the module is, let's say, something between EUR 3 and EUR 4 is not so significant compared with everything else. But I think something which is much more significant at the moment is that many of the manufacturers are asking us, okay, guys, we can give a Shelly X module. But on top of that, can you help us for distribution to your channels? And in this case, we're playing the 2 routes. The first one, we're selling them the module, which is not so expensive in the total amount, but for another one, playing as their one wholesale distributor, presenting -- giving them access to our channels. Of course, this is -- there is a fee for this one for them. And because the product itself is much more expensive than the module, we create additional significant revenue. Maybe next time because we are not ready at the moment, we can present exactly numbers how much we make as a revenue from the Shelly X products. The number is good. And because this is -- this is the EV chargers, there is -- currently there is HVAC systems. There is really the things which -- the price of the end customer product is much higher. And we also is on the part of the chain of this product to reach the customers.

Thank you very much. We have one question by Mr. As we consider the company's long-term strategy, could you share your perspective on your continued tenure with the company and the factors that guide your commitment?

Can I hear that again?

Of course. As we consider the company's long-term strategy, could you share your perspective on your continued tenure with the company and the factors that guide your commitment?

You mean my personal commitment to the...

Yes, yes.

Okay. I mean I've signed a new contract that started beginning of the year for 3 years. So that's '26, '27, '28. That is the current horizon. Then I said as well in the last calls when this question was asked or in the shareholder assembly that I do not say that I will not sign another contract for maybe 1 more year or twice 1 more year. But at a certain point, I start to be as well ready for retirement. And I don't want to be the blocker for future developments. This does not mean that I'm not fully committed to develop and to bring the company on the track to 2030 and beyond. But I cannot -- I mean, everyone has a day when he has to see that he has to retire. I hope this answers the question.

I guess so. Okay. We have 3 questions by Harry Boon. I will read them one by one. He's asking, please, can you share the difference in profit margin between each generation, Generation 1, 2, 3, 4 of products?

No, no, no. We don't share this information because it's sensitive for the competitive side of view, we don't want to present the product mix exactly which one is the most selling products, which one we make money for which one we -- because this is a different direction, it is changing also time to time. It depends on our target for entering in some markets. So -- but definitely, this is a very, very internal information and under the protected rights.

All right. Thank you very much. His second question is, please, could you share what is the contribution of relays to total sales? And how much is coming from plug and play?

Same here.

Yes. No, sorry, really, we cannot disclose this information. We don't want to because...

No. I think Jeff Bezos once said that the margin of his competitors are his opportunity. And we don't want to lead competition to copy our device. They even -- they anyhow try visually to copy our devices, and we don't want to push them more to do so because -- and they are anyhow jealous because a lot of competitors we talk to, they do not really understand how we are able to make 60% or 55% or 60% gross margin and 25% EBIT because they are far away from that. Most of them, not all. There are, of course, a handful that is doing as well excellent.

All right. Very understandable. His third question is, please, can you provide more color on the ramp-up of new products? How long does it take for a new product to contribute meaningfully to sales?

Yes, I can tell you when you start developing the product, usually one product currently is developed for 6 months to reach the certification stage. The certification stage take about additional 2 months. And then the products could be produced in the, as we say, the golden batch quantities. This means about 1,000, 2,000 pieces only. And these pieces are sent to our main customers. This testing internally, testing for the partners, for the distributors, from the installers, we give it to them to test. These tests take a month. When this is done, we are already, I think, on month 9, we start producing the first batch of the product. This is the average time because for some product, probably maybe we need 1 or 2 months less. For some of them, we need 1 or 2 months more. There is a product, for example, which took more than a year. I cannot share which one because we are still not on the market. It is not presented, the product which took so long time. But especially, there are such products also which took, for example, 12 months to be developed, at least 3 months to be certified, something which I can share with you. For example, for more than almost 1 year, we're working for the next generation of the Pro series and Pro devices. Currently, we still doesn't want to disclose when it will be released because we want they to be highly certified, no matter VDE, CB, all the big to be certified and to get a stamp on them. By the way, unfortunately, each of them need 3, 4 months certification. They have a 3-, 4-month certification process. So -- and this is prolonged, sometimes they return it back. We need to fix it. So this is the process. But let's say, average is the 9 months before we to start the first production. That's the period which we have now.

Then it takes another 6 months to have significant revenues because what I said before is we have the first test batch, we wait 4 weeks. Next production cycle is another 4 to 6 weeks, then we have shipment depending if we use airfreight or train. So significant revenues, I would say, 6 months after launch. For some devices, we can accelerate that, but that is the safe side.

All right. Thank you very much. I think we have time for 2 more questions. One is by He's asking, among your new clients, you mentioned Leroy Merlin in France. When will the launch of this new retailer become apparent?

What we did now is we filled all the -- we fulfilled all the technical requirements because to be present in France in the retail, you need to be on a special platform. Now I forgot the name, we should have asked our French guy, where they can pull all the data from this platform. That is done. So now we had a couple of meetings already about terms and conditions, looks very positive. I expect this to happen not in June anymore, hopefully, before the French go to their famous long summer break. If not, it will happen after their summer break. You never know. But it looks very good. We are with Leroy in Italy on a very good level. We are -- we started in Spain. And now we expect in another country to be as well present. And as well with the second chain Bricoman, I think that they operate in France with the same group that is going in parallel. And by the way, we are developing a special product that the French market is working for. I don't know if we can disclose Pilot. That is a product that is only needed in France, and we developed this in a very short period of time. That's a door opener for all these channels. That's something that enables the French energy providers to remote control the usage for water heating. That is a very big consumer of electricity in France.

Yes, that's an example. We developed this product for 1.5 months. Now pass certification for another 1.5 months. And we're ready to -- and we start producing the first batch for testing. So the product is for less than 5 months, we developed this product, especially for the French market. But this is more exclusion than usually the regular time for the development. We cannot develop so fast so many products because some of them need much extensive working and the special parts requirements, producing these parts, especially for us, it takes time, yes.

All right. Thank you very much. One last question from Mr. Jimmy Landerman again. What is the price strategy for the smart circuit breakers? How will price compare to standard non-smart breakers? And what is the key functionality of them you expect will make end customers and installers to embrace them?

Okay. First one, they will be significantly expensive than the normal breakers because normal breakers, it's very cheap. You can buy them for EUR 2, EUR 3, sometimes EUR 5. For some special one, could be a little bit more, but not in the range of the smart breakers. So they will be significantly higher than the normal one. We doesn't expect in this stage everybody to replace all the breakers with the smart one. We're expecting for the beginning electricians to install the smart breakers on the really critical environment and equipment which need to be monitored and controlled remotely. What the breaker can do and why? First one, okay, always connected to the Internet, always connect to the local customer environment or to the customer application using the Internet or not. This is the same for the other devices. They can be controlled locally and remotely. The second one, the breakers are enough smart, for example, detecting the overvoltage, overcurrent and switch off the circuit in case if the equipment can be damaged behind him. When the normal delivery of the energy is restored, the breaker can switch on back and to deliver the energy to the equipment. The next one, for example, the breakers can execute the schedule, something which is important because some of the big appliances, they cannot be switched safely with the relays and even sometimes with the contactors. So with the breakers, you can do that. You can isolate the whole places when somebody working remotely and to be sure that nobody can switch it on because we can set the breakers to not completely to be to protect the area. And if somebody tries to switch it on, breakers do not allow that. So this is the main things for the breakers, but it's most important that really -- and also another, measuring the consumption, giving the information now that people need, for example, to put next to the breaker. To execute this one, you need the breaker, you need contactor and you need the power measurement unit with measuring how much current and voltage is going through these lines. Now you need a single device, the breaker, everything is built in. And this is the beauty because combining this one, let's say, we will be much more expensive than the regular breakers, but combining breakers, contactors, relays to controlling the contactors and power meters as a single unit, then we will be significantly cheaper from what is the solution on the market right now.

All right. Thank you very much. Well, due to time, we will come to the end of today's earnings call.

May I just ask a question. Do we have some financial questions that are open? I mean we have a couple of more minutes. It's not on our side. It's just last time we said we don't answer all questions. And then there was an issue afterwards. Is there something that is burning from your side that we should answer?

I mean there is one for you, Mr. Kirsch. When will you give a forecast for 2027?

That's easy, 2027 beginning.

And one for Mr. Dimitrov. There is high inflation in Bulgaria and around the world. You're focusing on Shelly, but when will you focus on increasing our dividend?

I will answer that. So we have our shareholder assembly in the near future in June, and we are only paying a dividend with respect to our old and loyal Bulgarian shareholders. In general, we would not pay a dividend at all because we are not a dividend share. If you grow your share price by 30%, 40%, 50% in a year and then you pay EUR 0.10 of dividend, a lot of shareholders ask me exactly the opposite question, when do you stop paying dividends? So the invitation will go out in the next 2 weeks, I think, for the shareholder assembly that is end of June, and then you will see what we do there.

All right. Thank you. The last question we can just do now as well. It's from Alexander Des. He says, could we have some information on transportation costs, please?

No, I don't know the exact numbers. I know there is very -- is day-to-day difference. There is no significant increase for us for the transportation, which are currently we're switching -- not currently. In our long term, we try for the heavy devices and the big devices to deliver them through train or oversea, but we're preferring train because the price is not so high than the sea and also is coming faster than overseas with the ships. But we doesn't see -- and that's something which, okay, maybe a little bit more rumors on the market and the transportation cost, but we doesn't see some significant sign.

I can add some more color here. In general, the transportation prices are going up. We have 2 effects that is driving that down. One is a volume effect. So we are negotiating with our logistic companies because of our higher volume, we are negotiating lower prices and that keeps it at least stable for us. And then the second reason is what Dimitar just said. In the past, we almost had everything flying into Europe, Bulgaria. And now we discovered last year, and we tried and started with a very good success that train transportation takes 30 to 45 days. So that's an acceptable time gap if everything works well, if it's not for very new products that we desperately need. And that costs 10% of the transportation by airfreight. And then there is another advantage if we go on the ship, a very small one, but that delays even more. So we are optimizing the transport way, and we are negotiating with logistic companies, and that's why we see a chance in the logistic cost to -- that's part of our cost of goods to increase the margin a little bit instead of a threat from the logistic cost.

I think something which maybe nobody directly seen that in the last -- in the first quarter, end of the first quarter or beginning of March, we decreased the price of some of our devices. Everybody increase, we decrease because we see that we can do that. Even that, we have such a good margins, which means that currently, we try to be much more competitive with one of the main devices. You can check. I cannot want to talk exactly device by device, what we are doing and what we're targeting with that. But if the transportation cost is increasing significantly, our devices are wide. So we can compensate. We have a room to increase the device prices. But for us, as the main target of the company, currently, #1 is to acquire more customers. And with the margins which we have and keeping these margins, even sometimes I think this is a little bit harder. We need to because we need to acquire more and more customers, it's better to invest more in marketing because we are in the growing stage, especially in the countries outside of Germany, we need -- if you want to be successful, we need to put significant money for the marketing investment for the company, for the brand awareness for the new products, reaching the first level customers because what we've seen, the first device never was for our customers. They continue buying after our devices, and this should be our main driver and target for the future. But that is good that in combination, this is giving us the good profit and the good margins, and that's just -- we can do all together.

All right. Thank you very much. Well, with no further questions, now we can close the earnings call for today. Thank you very much for your interest in Shelly Group AG, and a big thank you also to you, Mr. Kirsch, Mr. Dimitrov and Mrs. Krushkova for your presentation and the time you took to answer all those questions. Should you have any further questions at a later time, please feel free to contact Investor Relations at Shelly Group AG. I wish you all a successful day, and I'm handing over to you, Mr. Dimitrov, once again for your closing remarks.

Okay. Thank you for your participation for everybody. We try to answer all questions to be much more, let's say, transparent, openly talking and explaining a little bit more from the business, how it's going in the process, how it is going inside. Of course, as a growing company and trying different direction, working with different partners, exploring opportunities. But what I can tell you, we will make a mistake. That's definitely sure. If we doesn't make the mistakes, we will never be the company which is leading the market and which found the right direction before everybody else. So we try to limiting this one, I think, successfully managing the company, sustainability, growth and everything. And what we can promise that will be a lot of surprises from us in the future, and we can do the best to -- for the long term delivering sustainability and to continue leading the smart home market in Europe and, okay, hopefully, also in the world. Yes. Thank you very much.