Trifork Group AG (TRIFOR) Earnings Call Transcript & Summary

Okay, let's start. My name is Frederik Svanholm from Trifork Investor Relations. Today, we will present our second quarter 2024 results, and CEO, Jorn Larsen; and CFO, Kristian Wulf-Andersen will be providing a presentation of approximately 35 minutes, followed by Q&A. Before we start, a bit of practical information. First, I would like to inform everyone that this presentation is recorded, and it will be made available in its full length on our IR webpage later today. Second, I would like to inform you that, if you want to download the presentation, you will be able to find it on the front page of our investor website. And third, we invite you to ask questions and engage with management after the presentation. [Operator Instructions] And I'll make sure to give everyone a chance to ask their question within the allocated time. Before we get started, we have to present this disclaimer. Okay, let's jump to the presentation. I now hand it over to Group CEO, Jorn Larsen. Jorn, please go ahead.

Thank you so much, Frederik. So thank you all for joining. We experienced in the first half and in Q2 a condition for Trifork that was not the best in our history. Now, so then it's set. We also yesterday morning adjusted our guidance. So we will see how that looks in a moment. And when that is set, we still expect and look into a year of growth. And here you see, like always, when we present the development since 2007 and now to H1 and Q2 2024. And we still see that, we expect growth for the year. However, not as big as we have seen in previous years. I will talk about what has been difficult in Q1 and Q2, and also talk about how we see the future, which might be more important since the past is the past. Let's move on to the next Page. So also here we track, it's not as pretty as the former slide. You know that over the years, we have seen a profit grow and sometimes leveling out. And this year, we will expect a slight lower EBITDA than we... [ Technical Difficulty ]

I think we lost Jorn's voice. Let's move on.

Frederik, what did you say?

Yes, I just said, I think we lost you for a little bit. The voice was gone.

Okay, I hope it doesn't happen again. Then let me know. So here you see the updated guidance for 2024. So an expectation of EUR 215 million to EUR 220 million in revenue, resulting in an approximately 5% total growth, and EBITDA of EUR 31 million to EUR 34 million and that results in a margin of 14.1% to 15.8%. We do maintain our mid-term guidance and let's move on. So, as you know, we have the Trifork segment, we have the Trifork Labs segment. And in the last quarter of '23 and the Q1 of '24, we did see some of our long-lasting loyal customers reducing their work with us due to geopolitical tension and wars. Because if you produce a product, let's say a big American company, and you're on the world market, then for consumer goods in particularly, we have seen a softening of the market and also markets where you cannot sell to anymore due to the conflicts and wars. And that has had an effect in Q1 and in Q2 for Trifork. And in that period, we have had to learn how to intensify our business development to new customers. And we have mitigated some of that lost business, but not all, as you can see in our result. But we are on a good track to land more business. Also, I want to touch on the public business. Going into the Q1 and Q2, we did not have as many public contracts that we couldn't deliver to. But now, as you can also see our announcements, the past days, we have actually landed some nice contracts, some big contracts, and for the total revenue of Trifork, the sum of the contracts and the framework agreements we have landed, should be plenty sufficient for us to look at more bright into '25 and the end of maybe the last 1 or 2 months of '24. But it will kick in for '25, '26, '27, these new contracts. So I'm very happy with how the development has been in the quarter for the future of public business. Then if you look at labs, you will see in our report that we have actually, once again, upgraded our fair value assessment. And we will have a talk a little bit later on our labs. And as challenging it has been in the early months of this year for our Trifork segment, as positive it has actually been in our labs. So we have a number of our lab companies that are doing extremely well, and has found a really good traction in the market. And that makes me a fairly optimistic person sitting here today. And let's move on. So here's our little cockpit. And normally, I will start from the right. And so the head count, we have still grown the company. So we are actively refining the organization. We are investing continuously in business development, but we are also onboarding tech talent where we need them. We have also off-boarded people that, unfortunately, we don't have a use for anymore or didn't really cope with the change in the environment. It can also be a market that has declined where we just have to adjust accordingly to what we do and what we see in the market. But actually, we have seen a continuous uptake in our YouTube channel. And I will talk more about Inspire and GOTO in a moment. So for the Q2, we have seen a decrease in organic revenue compared to Q2, the year before in '23 of just short of 7%, which is of course, the problem in this report and for the year of '24. We also see that we have a lower margin that comes as an effect of more investment and some bench time. So people not being fully utilized due to loss of work of the reason I talked about before. And that is what it is. So overall in Q2, if we take out, you can say, the license sales and other agreements, we did see some growth in core business, meaning delivering work to our customers. But overall, we saw this decline compared to the '23 Q2. Let's move on. Inspire. So, we had a number of strategic initiatives going into the year and also what we announced on the Capital Market Day in May. And the first review is Inspire. So we have had a lot of activities on Inspire in the matter of going out to customers, and showing them what new technology can do. And we have seen a 6 month period and a Q2 that has been very active on innovation. So our Vision AI has seen more pilots and more business. Our Vision Pro, we are growing a nice pipeline and a backlog of work in spatial computing and together with Apple. And that goes really well for us. And also, we have had many events, like never before. And, of course, that also has a cost. We have attended more trade shows. We have hosted events. And we have done this together with major global technology partners such as NVIDIA, SAP, Apple, Porsche, Microsoft, and Lenovo. And we have never before been so close to these large brands. But these large brands are also key for us to develop business in new territories like the U.S., for instance. Also, we hit a milestone for the YouTube channel of more than 1 million subscribers on GOTO Online. And as I've mentioned many times before, we should constantly review what potential this could have, but more about that in the future. But now I'll just mention it one more time. Let's go into Build. So for Build, we saw for sure a weaker than expected development in work. And that is what it is. For the public market, I just mentioned I'm pretty bullish on the years to come because we did win significant work that yet has to be delivered. And in the private market, I think we are situated to win new engagements. We get more and more insight and visibility into what is the effect of approaching new customers. And there is still a lot of market for us out there. So any new company we visit, with our ride-along and inspirational work, we can turn into a list of opportunities. And we have a high hit rate of actually landing these opportunities and start delivering value and software to the customers, but also to us. Let's move into Run. So Run is always the more steady part. But also here, we have a seasonality effect of selling less, actually EUR 3.2 million less third-party software licenses. And that is, of course, a negative for the quarter. But we have also onboarded. So the nature of Run for us, for instance, in hosting and operation, is that if we onboard more business, it actually has this short-term negative effect on our revenue and our business, because onboarding is something that has some investment from our side, and then we harvest over a longer period, the contract period of the operation agreement. So it's actually, for the future, a positive thing, even though it hits the Q4 in a negative way. We also have a strategic priority to review our cyber and business area in cyber and security. And as you know, we have also indicated in the report that we are continuously looking at what can we do. And it has been providing negative results because it, to some degree, has more in nature of a lab company because it's a product and platform investment, and it needs to have a critical mass of customers before it can become profitable. And this is something, although, we have landed new companies and customers, it's still not on a break-even level. And so we still think about exactly what can we do, and we might be tempted to do something with a partner to take in some investment, or something of that sort, but still keep it close to the group. As you also know, we keep our lab companies close to the Trifork Group and we are harvesting the synergy effect of having these companies in the group. Let's move on. So from a people point of view, we still see a growth, but it also represents, to a large degree, the change in number of FTEs, bringing in the right capabilities and also tuning some of the capabilities that we had in the markets that we saw were more and more soft. We have seen a sick leave of 3% of the first 6 months, and that is slightly higher. So there are some of these, you can say, technical consequences that results slightly negative on our profitability. So I hope people will remember to do their morning push-ups and the green juice and getting the sleep and all that stuff. So this is a message to all our colleagues. Stay healthy. There's no reason to be sick. And as I already mentioned, we have had a very high level of activity together with our partners and to prime our pipeline for the future. And also, let's move on. I think we have something to say about our M&As that's coming here. So interesting development also in a positive way for 3 tactical acquisitions. So for the FTE point of view, it's not a big change. It's around 30 people in the group, and we welcome all these new colleagues. But what they represent is something truly cool. So we have actually already brought a case story from Spantree that I will revert to in a moment, so you can see what kind of work they do. So we consider Chicago as our center point of gravity in the U.S. for our expansion that I'm, by the way, happy with how it goes. And then Sapere, we onboarded because it was the missing piece in the puzzle for us to deliver full stack in the space of productivity tools deployed on Apple devices, communicating with SAP business systems. And Sapere are experts in the business technology platform that is a new generation of SAP. So this is a leap into the future, and I'm quite positive and bullish on the development. And this is in the area of smart enterprise. Also, for planning, we know that a lot of companies around the world, they do plan their work and the resources, and a lot of workflow is planned in Excel. And I personally know the founder and the guy who wrote Excel, and I'm 100% sure that he never anticipated people to use Excel for what it's used for today. And it's not a very effective tool. And here we have an advanced technology for planning. So if you know someone who do planning in Excel, please give us a call. We have a better option for you. Let's move on. So here we have an interesting case story from Spantree, and it's from a tech startup in FinTech in the U.S. And I met the founder 2 weeks ago, and he's a really interesting guy. He has a very successful startup. Already hundreds of customers are using the innovative trading platform for option trading, and they also have a new product underway. This company has the licenses to perform this kind of trading in the U.S., and hopefully we will also see them entering Europe, and maybe we can become a partner for the European markets. This is super advanced stuff with high volumes of data and a lot of data processing and visualizing, and this all has to be done with very low level of latency. And we are an innovation partner to SpiderRock. So maybe look into that, if you know someone, who are in the trading business. Let's move on. Also, for something interesting about registration of ships. So around the world, there are a lot of ships carrying the cargo, the basic resources that we need in the production facilities around the world. So there's a lot of cargo being shipped around the world, as we all know, and all these ships need to be registered somewhere, and there are these niches of places where this is happening. And one of the companies, this one is based in the U.S., of the Marshall Islands, and they have more than 5,000 large ships registered in the database, and we are an innovation partner to them as well. So maybe let's move on. So I will go very fast over the next pages here. So FinTech, we have seen a slight positive development, which is good. We don't complain about that. Next, Digital Health. So as you also know from last year, last year was a little bit hard year to compete with because we did see rapid growth in Digital Health. And that has, as you see here, leveled out in the first 6 months of this year. And Q2 saw a negative of 4%. But that, again, is something we needed to do. We needed to take some breather because our customers and the organization had been quite stressed over the past year. But I think we are ready to leap forward again, and we hopefully will announce some new customer developments over the next quarters. Let's move on. Smart Building is one of the business areas here that has been hit the hardest from these major industrial manufacturers that developed products into the building industry and into real estate. And this is what we see a consequence here. So we have also reviewed how we do business in Smart Building, and we will talk more about that in the future. Let's move on. Smart Enterprise here that I'm happy has seen some growth because this is where we really think we can drive business development and where we can land new business. And this is also, what you see as a consequence here that we've seen an 8% growth in Q2. And for the 6 months as well, we have seen a growth. So a trend that is positive. And this is here where the better we are at business development, the more we can go and pitch. And here we have thousands and thousands of potential customers in the markets we are. So it's really us and our ability to land business that is driving this. Let's move on. Cyber Protection is, you can say, one of the big negatives here. And this is also why it is in our strategic priorities to see how we can make this a good story for Trifork. It's necessary. And there are an increasing amount of cyber threats and attacks. But we have not yet been able to show real growth and profitability in this area, as I also mentioned in the beginning. Let's move on. Cloud Operation is mainly impacted by onboarding a number of new customers. So we expect to see that, this is back on the growth track fairly soon again, of the reasons that I mentioned before. Let's move on. So I think I already talked about all these things. So we have maybe the #4 bullet, I did not talk too much about. But in the period of the last 12, 18 months, we have invested in IP development and we have also formed more platforms and products in IP. And in the U.S., the way we develop business there, we are more on the IP side over what we have done in Europe in the past, because we believe that in the future, Trifork needs to balance in a better way what we deliver as IP and platforms and then pair it with professional services and time and material. So this is a trend that, I like to see more of, and that we need to have. But then we need to have these products and platforms in play. I think this is it from this page. And as I mentioned in the beginning, as you can say, challenging, but maybe also in a good way. We are in another place today than we were 9 months ago. I think we are a way stronger company set-up for future growth. But that was the Trifork segment. In the Trifork Lab segment, a number of these startups have really found a good track for growth, and some of them shows nothing less than truly impressive growth and business. And you can see in our report how we value these businesses. And we upgraded also the fair value assessment, which my personal view is a conservative assessment of the value here. Let's move on. ESG is very important for us and for the world. However, it also comes with a cost because implementing ESG in a company like Trifork do have an impact on profitability. But we take it very seriously. And also, we are now for the first time actually leaning out and promising positive developments for the future, as you can see here. You can study this yourself, if you want. Let's move on. So with this, I'd like to hand over the word to Kristian.

Yes, thank you, Jorn. So now, I will deep dive a little bit more into the financials and the financial development. Jorn already talked into this overall, but just here stating that overall we had this decrease in license revenue from third-party licenses and hardware of EUR 3.2 million in Q2. And this is also what you then see that, if taking that out, then it was more or less a flat development, a small growth. You see here also the inorganic part of growth. So that's the 1.6% in the quarter coming from the past acquisitions. One acquisition that Jorn mentions, Spantree, was done in June. So it didn't have a lot of effect on the inorganic growth part in the second quarter or in the first half. So it's primarily the acquisition from Chapter 5 in 2023 that is impacting in the first period here. As you see, then the downscaling, et cetera, that was from existing customers, not canceling contracts, but downscaling on budgets. And so the new revenue is what kept the revenue to the same level and a little plus taking this hardware effect into account. As usual, we don't report any revenue from the lab companies, so that's not included in the consolidated numbers here. Looking into the Trifork segment and adjusted EBITDA, where we also guide, then the explanations to the decrease in margins in the first 6 months and also second quarter is primarily related to the investments that Jorn already talked about, but also to lower utilization in the period. That said, as Jorn also talked into, we now see that you're starting to deliver on some of the framework agreements now in the public sector as well. We want some new ones. That's maybe not going to impact so much the new ones in the second half, but that was more loaded to 2025. So what's in the current forecasts for the remaining part of the year is really on the contracts that we are ongoing on right now. So based on that, the margins are expected to increase in the second half compared to the first half. Then in relation to the Trifork Group performance where we guide on EBIT, overall it's a result based on the development in the EBITDA margin. In here, we also have the cost of running the labs business. That's as planned. So that's roughly EUR 1 million in the first half here and also expected EUR 1 million in cost in the second half. But overall, it's a direct effect. We did have a little additions on depreciation and monetization based on the new headquarters we moved into and the new acquisitions. That's not the primary reason here. Then looking into segment performance, overall, as you see here, you see an Inspire segment with minus EUR 1 million. I'll come back to that and compare it to last year, but still a loss in the first half year, whereas the second quarter was a break-even. You see the margins in Build and Run lower than in 2023, but I'll come back into the details there. The other segment that we have is according to plans and a little less than it was in the same period last year. Looking then more detail into Inspire performance, as you see the group revenue, not a lot, but from 2.7% to 2.9% for the first half. As I said before, EBITDA in the quarter was a break-even. And we looked into the half year, and the EUR 1 million loss, then still EUR 0.2 million was related to the restructuring that we did in Q1. So now we're on a better track cost-wise than we were in the same period last year. For the remaining part of the year, we expect to break even or a loss of EUR 0.5 million. So that will mean minus 1% to minus 1.5% for the full year. Then looking into the Build performance, as you see here, and Jorn briefly talked into it as well, is that we all saw a positive development, so a small growth. Part of that was inorganic, as you see in the orange circles, and then part of that was organic as well. So despite the loss of customers primarily here in the Build-based business, then we actually managed to onboard new customers and increase revenue here. EBITDA margins, again, decreased based on the same explanations as we talked about before. The Run performance, as Jorn also mentioned, is where we were impacted the most by the hardware and third-party license sales in this quarter. So that was also a hard quarter to compare to last year. But taking that out, then the underlying business in Run was a growth of 1.5% in Q2 and 1.8% in the first 6 months. We expect this to improve as well in the second half and also improve the margins. Overall, we always present how the revenue is then distributed in between license support, third-party licenses, et cetera, and here you can see that when compared to Q2 '23, there really was a high level of third-party licenses and hardware in that quarter. Looking into Labs performance and then in numbers, then overall EBT for the Trifork Labs segment was EUR 1.9 million for the first half, and there was EUR 600,000 and plus in the second quarter. Looking into the book value then on the right-hand side here, we see that we did increase our investment in the current portfolio, so that's according to plans. We added 1 new lab company, Rokoko Care, which is within Digital Health, and then overall the book value increased to EUR 73.4 million. Also receiving dividends, so exit proceeds and dividends increased as well with EUR 0.5 million in this period. Cash flow and financial position, then we still have a positive operation on cash flow. As I talked about before, we had some investment activities, so outflow there, and then balanced by financing activities of a net EUR 1 million. Overall, the interest bearing debt was EUR 44.8 million, as you see here, equal to a leverage of 1.6x. We expect the leverage to go a little down in the second half based on additional earnings and potential proceeds as well from other activities. This was what we wanted to present, so now I guess, Frederik, we will open for Q&A.

Yes, thank you, Kristian. I would like you guys to limit yourself to 2 questions initially and then get back in the queue, and that way we hopefully can let everyone get a chance to ask their questions. [Operator Instructions] And let's start with Poul Ernst Jessen from Danske Bank. Poul?

I have then 2 questions. First is on the guidance for the full year. You downgraded this year twice now, first time just 3 weeks after you gave the guidance ahead of the CMD. And then now, what makes you more certain now that there are visibility into the second half than earlier? That's the first question.

Yes, but maybe I can start on that. So, you could say when we did the downgrade the last time, it was related to us not being able to deliver on some of the contracts, or that the contracts didn't start in the pace that we expected. Now, we have seen those contracts started to ask for delivery. So, we are in a pace where we see an uptake in the revenue from the framework agreements that we have in our books. So, that's part of it. We also now have seen, and I expect, or I guess initially, we didn't expect, you could say latency on new customers to be as long as it did. So, it took longer to get started with the new engagements. This we have, once again, now seen. So, especially in the U.S., we have seen uptake now in the revenue on the new customers. So, that's what also makes us more confident in the level that we guide on now.

And do you need more new revenue to deliver the full year, or is it based on what you already can see?

I'd say, what we guide on now is based on what we already see. So, yes, you could say in that way, I would say solid in that way.

Okay. The second question is on the Run where you are planning to divest or deconsolidate the Cyber Protection. If I just calculate, you have total Cyber Protection in Build and Run of about 5% of revenue. How is this split between the 2 just to get an indication of how much you want to deconsolidate, and do you have any idea by when?

Yes. So...

Maybe I can take that question, because -- yes, I would like it to happen sooner rather than later because, as you can see, it has a negative impact on our EBITDA. Of course, deconsolidating will have a negative impact on our revenues, which we promised to grow. So, of course, we have considered that because we don't really want to change our guidance again in a negative way this year. So, we have carefully thought about the impact, when it will happen. So, Poul, it's already counted into this new guidance. So, this cutting away some of our business is included into that.

Yes, but how much should we expect to take out of the model in the second half? Is it EUR 2 million or EUR 3 million that is going to be divested here?

So, we don't disclose that. The only thing we disclose is how we adjust the guidance. And so it's not just -- so, the guidance is 2 things. It's the current business and it's a business we know we will lose when we deconsolidate, but we have not disclosed that number exactly. So, I don't think we can answer it precisely, but you have to estimate that from what we say.

Now, next questions will come from Yiwei Zhou from SEB. Yiwei, please go ahead.

I will also ask 2 questions here. Firstly, it's on the margin decline in the Run business, because we understand this is not a utilization game in this segment and then you mainly explained the revenue decline due to hardware and a third-party license income. But those businesses should carry a very low margin, which means you should have actually a positive impact on the margin for the segment in total. And you mentioned a little bit about the negative margin in the Cyber Protection business. Is it the main reason for expanding the margin decline here? Or would you also confirm that the contract customer you are onboarding does not carry a lower margin for the long term?

Yes, exactly. So, the main contributors here are the negative from the Cyber business. So, that's a major part. But the other one is those 4 big customers we are onboarding in operation that I said in the beginning has a short-term negative impact on margin. Okay, so that is...

Can you confirm that your expectation for those contracts is also as high as the existing business or is it for the long-term?

Yes, that is my expectation.

Great. And my next question is on those framework agreements. What I understand is you still need to fight for the projects. So, what makes you confident that you will be able to win the projects and also start up, you mentioned, in the last 2 months of 2024 and also 2025?

Yes, so some of the contracts we have won are won in a way that we are contracted to be the only delivery company. Others, we do it together with someone. But still, it's a split between -- a guaranteed split between 2 organizations, us and someone else. And then 2 major ones are framework agreements where we do have to compete on work. And so, there is more uncertainty on how much will fall our way and how much will go to a colleague.

Okay. So the contract you mentioned, that is -- is it also part of the framework agreement or is it separate?

I mean, there's probably a handful of contracts. Some we have disclosed. Some we cannot disclose. But some is -- so, 2, just to take a number. 2 are disclosed, which are framework agreements where we have to compete at work. But there's also agreements in the public space where we are definitely contracted to deliver.

Okay, great, great. And can I just follow-up? So, the guidance, the new guidance for this year is based on the contracts which have been sort of confirmed, not the potential engagements or projects in the framework agreement?

No, so when we get into growing and winning new business for '25, '26, we are -- we are, as always, we are restricted in how much we can grow the organization and how much we can win. But now for the public segment, what I said in the beginning, I think we have won. We will, of course, continue to win business. But I think we have enough potential to see a growth in '25, '26 for the public sector.

I think we have a little bit of a misunderstanding here. I'm asking about your new guidance for 2024. Is there any potential projects under the framework agreement? Is it included in your guidance?

Yes, so, but we -- as mentioned earlier, I don't expect that to have a huge positively impact this year, because it will be late in the year before we actually start ramping up and delivering work. And, of course, we do need some growth, as you can see in our guidance. So, that is the level of expectation we have from these agreements. It's already considered in. There might be, I mean, if it goes faster with landing work, there might be a positive effect. But this is a realistic view on what we believe it can carry of revenue this year.

Currently, we do not have any other raised hands, but I'll just give it a little moment and see if anyone else wants to ask a question. Yes, we have Poul Jessen from Danske back in line. Poul, please go ahead. And make sure to unmute yourself.

Okay. It's done now?

Yes.

2 questions. One is on the medium-term guidance. You state that you confirm the medium-term guidance. If I assume medium-term is 3 years, then you have 10% to 15% growth CAGR on organic growth. In the first year now, you get 1% to 3% growth. That means you must put a lot of pressure on the '25, '26 to get to 10% to 15% growth over the period. Do you see a significant acceleration in growth when you get into '25, '26? That must be at the upper end of the CAGR or above to get into the range.

Yes, I mean, it is, as you've seen in the past, and what we documented in the past, this is actually what we have done. So we do believe in an improved environment, you could say, in relation to growth. We have seen the effect of what we've been doing now. So losing momentum at some customers, actually we were able to increase that by new customers. So we do believe that we have a better potential for growth now than we had 2 years ago. So we do believe that, and this is our intention, to meet those expectations overall.

Okay. And then on the Q2 performance, where you had 7% negative organic growth, let's say, minus 1% if you adjust for the hardware and third-party license. But you also had tailwind from more working days. So then you would be down at some minus 5%, minus 6%. That's among the worst or the lowest level among all the peers who has reported so far. Any specific issue why you are more sensitive than other IT consultant companies?

I would like to see...

Well, I think, Poul, maybe I can just take a quick. So, I mean, quarter-by-quarter, we always say that the quarter is what it is. We are doing the best every day. All our colleagues also on this call, we know that they're doing the best. Hopefully, they are selling to some customer while listening to this call. So we do the best. But if you recall a year back -- we did better than some peers. And I just think it's just a part of reality that it is not like the whole industry is in perfect sync. We are slightly different. This is also why we can exist and coexist next to each other. So we don't follow exactly the same path at the same time.

And then maybe looking into the first half, then you could say if it's balanced, if it was overestimated, the impact of less working days in Q1 versus Q2, maybe that was like that. Not sure, but at least looking into the first half, then I don't think you -- I think we are very much more like the peers, more or less.

Okay. And then about capacity, many of your competitors have been reducing capacity more or less started by the end of last year. If we look at U.S., then you are increasing the number of people also adjusted for the acquisitions you have done. Is that because you have a long-term view that business will come back and therefore you sacrifice near-term or how are you looking at that?

Yes, that is the short answer, but also a good part of that growth is into taking more control of our own destiny in business development. So we have upgraded our business development capabilities, and also we have developed these platforms and IP, and you know some where it's a big play on a very scalable business, it will belong in labs, and this is why we consider cyber maybe to be there, but there are a lot of IP that we develop in a collaboration with our customers, but sometimes also we need to lean in a little bit and this 6 months has been very busy on innovation. So I've never seen in the 20 year, 8 year of the history of Trifork, where we have seen, so many new developments in Vision AI, digital trend platform, data platform and Vision Pro. So when you have so many new things, then it is also causing, there needs to be someone doing it. These innovation products do not just come up from the ground by themselves, it's people developing them. And so we have prepared ourselves for growth, but also if you remember from our Capital Market Day, we among our many hundreds of customers, we know now and it's the work led by Morten and his sales team, we have analyzed what potential do we have to sell more of our products and services to our already existing customers because in areas we only sell 2 out of many services and products to our customers. And of course, we need to do better on that, but we need to also polish the product and platforms to a higher degree and that takes some people. So you can say, we -- it's part of that, it's part of business development and it's a belief in the future.

Okay. And how much of your guidance for this year? Maybe it's a question about what I asked before, how much of the guidance is inorganic this year?

That you can, Kristian can calculate for you.

Yes, it's 3.7% in the second half.

Currently, we do not have any other questions. I'll just see. Okay, we got a question from Mikkel Rasmussen from ABG. Mikkel, please unmute yourself and go ahead.

I just have a very brief question on the licenses and hardware. I know, it's very lumpy by nature, but is this just a timing effect, meaning we should expect it in Q3 or Q4 or are they gone for the year?

It's always a timing effect. So a lot of times when we onboard new customers, then potentially hardware sales would be in that, if it's a new engagement, with a new customer. And when that is going to happen, we can never say precisely. And if it's one for the other, same goes for especially Cyber Protection. When you're looking into solutions, which are not on the cyber operation tender or security operation tender. So, it's not because it's lost, but it's just -- you could say seasonality. So, whenever a license then is renewed, that could be in 1 year, in 2 years, or it could be even 3 years. So that will always be more fragile in relation to when and how.

I'll see, if there's any other questions. That does not seem to be the case. So I will conclude this session and thank you all for your interest in Trifork. Please do not hesitate to reach out to me, Kristian or Jorn, if you have any questions or requests. Thank you so much.