Xplora Technologies AS (XPLRA) Earnings Call Transcript & Summary

All right. It's 8 sharp. We are live here in this very room, plus online. Welcome to everyone. Have a look, the room is full. We expect more than 100 people to join online. The interest is increasing. It's fantastic to be here today. Peter, we might need to extend the room for next time, right? All right. The team from Xplora, welcome you all. We have a very exciting agenda today. A lot is going on even behind the scene as we speak. So we very much look forward to share everything with you today. We will first do a quite efficient review of the Q3 results. That will be done by myself, Knut and Kjetil, then we will have a very short coffee break, if required, and we will move straight into our capital market update. The agenda for the Q3 is, as always, first, highlights of the quarter because we have some very important thing we would like to highlight, then Knut will guide you through the financial details. Kjetil, on behalf of the group, plus extra update from Doro will give you a market and performance update. And we have some post-quarter updates from last quarter since a lot is going on in the company. So we will give you some updates in that regard, plus the outlook, which is also slightly updated. That's the agenda for today. If you look at the number at a glance, just a high-level number, Knut will go through in more detail, of course. First time, we surpassed NOK 0.5 billion worth of revenue, NOK 510 million, up 103% of which we have a recurring revenue at NOK 90 million, up almost 20% as well year-on-year. And our subscription base ended at 443,000, up 36%. Pay attention, we'll come into that a little bit more to our gross profit, up 122% to NOK 263 million, and we ended with a strong EBITDA, up NOK 41 million to NOK 72 million and also a cash balance very strong, NOK 426 million, up 141% year-on-year. That's the high-level number. And of course, Knut will guide you through in detail. Then I would like to emphasize 3 particular things that has been very important for accomplishment in this quarter, and actually, in fact, throughout this full year. And we have our friends from Doro here today, and I would very much like to start with one of these updates operationally from Doro. It's related to sales. When we acquired Doro for a long time, it's been a very, very steady both sale as well as revenue, although slightly declining. That was something we looked into when we acquired, but it was very, very, very steady. So over the last couple of months in the capacity we have been able to, the team has been working very hard in order to potentially change and pivot that development. For that reason, we are very proud on behalf of the Doro team as well that we have now been able to turn this around and now yielding a 16% increase to a growing revenue trend, which is very, very strong. Kjetil will take you through some of the details and the driver behind why we have managed to do that shift. Very important. Very important because why Doro is selling twice as many SIM-enabled units as Xplora. We'll come back to why we on Xplora managed over 400,000 subscription. Remember, if we can increase the sale of twice the high sales volume, this is the basis on which we'll start to attach SIM card. It has huge impact if we can grow that volume. Moving on to Xplora, 2 things I would like to emphasize from this quarter as well. One of the things that we also have been working very hard and very dedicated throughout the last quarter is to really optimize our channel mix. As you know, we are selling in retail, in telco and our own channel. The channel we make the most money and the channel we are able to drive the highest conversion of SIM card is our own channels. We have full control. For that reason, in particular, in the German market, which is the market we are selling the most total volume, we have worked very disciplined to try to shift from a high retail and telco volume to a slightly higher portion being from our own channel with a high attach rate, a high conversion to SIM card. As you can see on this graph, if we go a little bit back in time from the traditional retail channel, let's say, 2023, the highest portion in white comes from the retail or the telco channel. Now going into this quarter, the biggest percentage part of the sales are now coming from our own channel. Even that can mean that the total volume can go a little bit down, but the profit is significantly higher, and we are driving more SIM. And we wake up with one objective to hit 1 million subscription. The second thing I would like to emphasize operational is that we are also very, very dedicated to increase our gross profit. One of the things we can do that, sell more product with high margin and SIM. The second, to reduce our COGS for every product we are selling. Our main product line, our main product, X6Play. We have built a new platform with different components, allowing us to reduce the COGS and increase our gross profit. For that reason, if we summarize some of the key highlights for Xplora. As you can see, starting from the left, focusing on very much on the sellout in the market. This quarter has been the highest quarter in the company history with a number of products being sold and activated in the market. The demand has never been higher, and we have never sold as many products and activated them in the market. The reason why we have this difference in sell into the channel and the sell-out in the market is simply because of the shift from focusing more on our own channel. Feel free to ask question about that when we can speak after, but that's been a very important point. The sellout is also the volume sold in the market where we can attach and monitor the SIM conversion rate. When we started some years ago, our conversion rate was roughly 25%. Of 100 products we were selling, 25 would have been activated with our own SIM card. This is a crucial number. Today, this conversion percent is 38%, meaning of every 100 units we are selling and activated in the market, 38 will be activated with Xplora SIM card. So based on all the volume we are selling, the conversion rate, that is why that is driving this record high subscription base now at 443,000 in total. So I just wanted to highlight those 3 very, very important things. Going forward, we just wanted to provide an update to the market as well in this regard. We would like both the market, but also internally, we are measuring our success based on 3 high-level, most important KPI. The number one is our ability to increase and continue to grow our gross profit. That is really the measurement of a strong and healthy business performance. The second KPI, we are measuring our own success is driven by our ability to increase our subscription base and our annualized recurring revenues. And the third is our ability that really reflects the underlying ability to generate cash, our EBITDA minus the CapEx. That will be the 3 measurements we will make ourselves responsible to deliver on. Also, we have listened and received some feedback from the market as well. Previously, we gave you some updates in the quarter, some more detailed updates every other quarter. From now, going forward, we will be transparent and share all the information every single quarter. The only reason why we did it every other quarter is because of all the fluctuation in channel optimization and so forth. But going forward, every quarter, you will, of course, get the detailed P&L and balance, but we'll also provide a very detailed breakdown of both market, on channel, on product, subscription, activation, both regards sell-out and sell-in. In our keynote, we will focus on our sell-out and activation. But in our report, you will find all information so you can make all your own estimates and analysis. So we hope this is a good update and hope we have answered some of the requests coming. Now Knut will take you through some more of the details.

Thank you very much, Sten. Good morning, everyone. Before I start, I think you should also remember a year ago, where we also announced our quarterly earnings, and we said we had the highest quarterly revenue and EBITDA ever recorded. And we are there again. So we are doing it in a very consistent way to present a huge increase on all our metrics. If you look at the Q3 numbers, as they are reported, you see that, as Sten said, we reached NOK 510 million in revenue. This is up 103%, doubling. Gross margin is up with 5% points, EBITDA up 133%. These are very strong numbers for the quarter. And as you can see in the quarter, year-over-year, NOK 13 million in CapEx for the group. Last year, we had only Xplora and it was NOK 6 million, ending out in an EBITDA after CapEx now on NOK 59 million compared to NOK 25 million a year ago. The other part in these numbers in the Q3 2025 number, we have one-off and that's the NOK 4.6 million related to the senior -- the change in the senior management, happening in July, where Kjetil took over and Julian left the company. More important is actually to see if we compare what a pro forma Doro and Xplora last year compared to how we are doing together now. And as you can see, we have also an increase in revenue, both in the quarter of 8% year-over-year and also year-to-date, 10%. That's the revenue line. When you look at the gross profit, as Sten said, that's even more important. We have a 14% increase in gross profit from NOK 231 million to NOK 263 million. And year-to-date, we have an increase in gross profit of 21%. The gross margin is continuing to increase and 2 parts. It's -- of course, it's related to profitability on the products, the COGS but it's also partly related to us having more and more subscription in our accounts. The EBITDA reported was NOK 72 million in Q3 2025. If we adjust it for the one-off, approximately NOK 5 million, we have adjusted EBITDA of NOK 76 million in the quarter. And the CapEx is also a bit lower in Q3 compared to a pro forma a year ago, meaning that the EBITDA after CapEx is NOK 59 million compared to NOK 56 million for the pro forma 2024. Sten have already gone through some of this, but you can clearly see on the chart on the left side, how big increase the group has achieved compared to last year. And you can see the light color there is related to the service -- the device -- the Senior contribution. You can also see the gross profit. It's changing a little bit over time. Of course, in Q1, it's the quarter where we have the highest service revenue percentage compared to our -- the rest of the revenue. So that's also why it's higher. But you can see over the period, it's actually a 5% increase year-over-year. And on the last chart here, you can see that we ended on NOK 72 million in the quarter compared to NOK 31 million a year ago, and I put up a small white square, where the one-offs are presented. When it comes to the segment, the Kids & Youth segment that was -- is basically Xplora. The revenue is flat year-over-year. But as Sten said initially, and Kjetil is going to go more into, this is the sell-in revenue numbers and the activated watches and the sell-out is showing an even higher increase. Service revenue continued to have a very high gross margin. It's still above 80%. We have been very steady on 83%, and now it's continuing to be above 80%. So it's very steady even though we are increasing every month with a subscription update. One year ago, we had an ARR of NOK 301 million. Now we are on NOK 358 million. I think the main thing here is the gross profit is increasing with -- from NOK 118 million to NOK 129 million, and the main portion here is, of course, the gross margin. When it comes to the Senior segment or the Doro, they are having a full report since they are listed on NASDAQ Stockholm. So there, you can see all the details on Doro. The revenue is increasing with 17% year-over-year. And they continue to have a very strong development in the gross profit year-over-year. So far, we have not recorded relevant levels of service revenue, but that will be implemented in the report as we go forward. When it comes to the P&L, I think the key part here is related to the finance items that is now negative with NOK 8 million. We have interest and admin fee for the loan of NOK 14 million, and we have a noncash positive currency effect of NOK 10 million on the acquisition loan. That's the 2 main items in the financial expenses line. Still, we have some implication year-to-date of the currency impacts, mainly from Q1 and Q2 in these numbers. But in -- from Q2 to Q3, the exchange rate has more or less been quite stable, not the same fluctuations as we have seen in Q1 and Q2. We continue to focus on our operating expenses. There is -- the key item that is changing is actually that we are spending more money on marketing in order to push more products out in the market, and you can see that in particular in Doro. Beside that, it's more or less on the same levels as in Q2. When it comes to the balance sheet, there are a few items here I would like to address in particular. The cash continues to be very strong, NOK 426 million compared to NOK 530 million last quarter. We have done 2 things in the quarter. One is that we have paid down about NOK 62 million on the acquisition loan. That's one thing. And the other part is that we have continued to increase the inventory of approximately NOK 40 million, NOK 20 million in Doro and NOK 20 million in Xplora. Key reason for the increase in inventory is, of course, we are preparing for the -- usually the biggest quarter is the Q4 quarter. So it's very important that we have the right level of inventory in both companies when we are preparing for the Q4 season. You see also that we have split out that part of our acquisition loan that has gone from NOK 960 million in the previous report. Now it's NOK 890 million. We have split it out in 2 parts, long term and then short term. In the NOK 300 million here, that consists of 3 parts. I think this is quite important to address. One is that it's part of the working capital financing. That's one part. That has usually been split in one line. In the NOK 300 million, it's -- you can see all the details in the note. It's NOK 66 million that is linked to the working capital funding in this amount. And in this amount, it should usually -- it's a one item in addition that usually are there is the Innovation Norway loan. But in Q3, that was the final pay down on the Innovation Norway loan. So we don't have that anymore. So all in all, we have, in the next 12 months, we are planning to pay down further on the acquisition loan. That's because we need to balance the cash and have the optimized financial platform on how we are operating. And we believe that we have quite good and strong cash position so that we are able then to pay down on our loan. I basically gone through the majority of the cash flow items as well. I think I should stop there. Thank you very much.

So good morning, everyone. I will start by talking a bit about Xplora's smartwatch sales numbers and continue with Xplora's service sales number and then give some update on Doro's sales figure in handsets. Just elaborating on what Sten started with talking about in his introduction, is that we have the highest number of activated watches in the quarter ever. So we activated 174,000 watches. 27% of those came from the Nordic markets and 72% from the rest of the European markets with Germany being by far the biggest one. If you look at the last 12 months, units sold versus activations, you see that we have sold 485,000 in the latest 12 months -- 465,000 and then 502,000 have been activated. And it's activated number of watches, which is important for the services uptake. And here again, you see Q3 '25 with 174,000 activated watches compared to 162,000 in the same quarter last year. So that's a growth of approximately 8%. Just to elaborate a little bit on the definition of activated watches, it's actually the first-time usage by the end consumer. And if you want to compare that to, let's say, the revenue, it's actually the sell-out on the Xplora web shop on Amazon. And it's the -- also the activated watches from the telco and retailers, which may be then different from the revenue figure on the last item there. The service attachment rate, this is the rolling 12 months figure. That means that when we say 38% in Q3 '25, that's the average of the latest 12 months. So it increased by 3 percentage points compared to the same quarter last year, which, again, is the highest number ever. I remember 2 years ago, we talked about aiming for 25% attachment rate. Now we are at 38%. So a very, very steep growth. All right. Let me talk a little bit about the service subscription base, a 36% year-over-year growth to 443,000. There are 4 different services. The mobile subscription is the most important one in terms of both ARPU and revenue. We increased that to 291,000. That's an increase of almost 50,000 or 20%. The Nordics has surpassed 200,000, and that's up 13,000 year-over-year. And Germany had 58,000, doubling the service subscription base. year-over-year by the end of the quarter. And we announced in the latest update on the numbers that we have surpassed 60,000 in Germany. The premium activity platform now contributes to roughly 31% -- $31 million annual revenue with a very high margin. And that's the value-added service related to the Goplay platform. So we have 104,000 users. It's either bundled on top of the mobile tariff plan or it's sold individually through the Xplora app, meaning that also non-Xplora connectivity users subscribe to this service. Then we have the revenue from our telco partners where we have 35,000 B2B subscriptions, meaning then when we sell smartwatches to a telco. We have agreements with several telcos that pay us a license fee for that service. So we have 35,000 service on that business model. And then latest service is the service fee, where we have 12,000 users. That's now in Spain and the Nordic countries. So if you want to use a SIM card sold in retail or web or Amazon in Sweden, with a different SIM card than Xplora's then you have to pay a service fee. So that's just to secure that we get revenue from all watches that are not sold to a telco in the Nordics and in Spain, so it's just an enabler to further drive the growth. All right. Service revenue, 19% growth year-over-year to NOK 90 million in the quarter. So that's another milestone, a nice number. And the annual recurring revenue is at NOK 358 million. The service revenue from markets outside the Nordics keep gaining share. So in the quarter, it was 21%, and that's up 6 percentage points from the previous year. And again, referring to Germany, continued the strong growth in the quarter, with 104% growth and has now become our third biggest service revenue market after Norway and Sweden, accounting for NOK 11.5 million in the quarter. All right. Then on Doro. We have already said multiple times that there is growth in the number of sold handsets, mobile phones, feature phones and smartphones, with 16%, going from 281,000 to 326,000. And that is, of course, very important for the attachment rate and the possibility to sell Doro Connect. And we also see this light green color that we doubled the sale of smartphones. So it has been a successful introduction of the Aurora smartphone series. There are some comments on the various regions, but we have really outstanding performance in several of the markets, Nordics, 45% growth, huge sales in the U.K. and in France. There are operators now transferring from 2G to 4G, that has really driven the revenue. The market where we have a potential to significant growth for next year is Germany. We have discontinued the operation of our daughter company, IVS, which was an internal distributor. So that is some of the explanation why the numbers in Germany are not as strong as they could be, but that's only a potential for next year. And we know from Xplora that it's the company's biggest market. So we have set some expectations for next year. So I think in total for the Doro business, 17% growth on revenue, 16% in the number of sold devices, 1 percentage point growth in the gross margin. I'll come back to the press in the Capital Markets Day section on the connectivity part, but we have launched 3 new operations. We have an attachment rate above what we indicated last time. And if you read the quarterly report, you will find that the order reserve for Q4 has increased to NOK 137 million compared to NOK 74 million in the same quarter last year. So almost then doubling the order reserve for Q4. So I think we have ticked most of the boxes. Thank you.

Thank you, Kjetil. All right. We have a couple of post-quarter updates and within our outlook. If technology and everything work as it should, I will look in to Knut for a second and see if he gives me the heads up. Let's come back to that. When it comes to post quarter, I think it's fair to say, it was really 3 items, a lot of you were expecting or hoping for when you come into this room this morning. The one was kind of, how does the conversion rates go when it comes to Doro SIM? Are we able to get our SIM cards into retail store? And as we were reporting so late in the quarter, we should have some visibility into Q4. So we knew we kind of had to address those 3 very important questions. And without any further ado, I think some of the team with Doro, the e-com team have not been sleeping for many hours during the last couple of weeks. But we are very happy with the result when it comes to the SIM conversion on our Doro SIM. As you recall from Q2, we had only launched in 1 market, Sweden. And the current conversion data point, the reference point we decided to share was 13%. And then we said, our goal going into Q3 is to extend into more of the Nordic markets, hopefully, all the Nordic market and then showcase a number that is higher than 13%. We have now, for the last x number of weeks been live in Sweden, in Norway and Finland. Kjetil will address later in the Capital Market Day regard Denmark and more of the market. And the current trending number is consistency of above 25% in our own channel. Early days, we have still a lot of potential opportunity and optimization, but it's a very strong number. If you compare this with the early days when we went international in Xplora, it's a very strong number. And if you recall, 10% of all the Doro SIM-enabled product, 10% conversion, eventually yields NOK 300 million additional EBITDA in year 2. Maybe even more exciting is that great sales team at the Doro N has now managed to secure 900 retail store that's going into 2026, we'll have a Doro product with a pre-installed SIM card, 900 retail store. That's phenomenal work and it allows us to sleep better going into Christmas, knowing that we will have a solid footprint of distribution, good data point on own channel and a good starting point for rolling out our product in retail as well. And we expect Q4 to be even stronger than the number we are presenting here today. Are we live with the release, Knut? You should take a look at your phone to the stock exchange for Xplora. We have also, since we're speaking about Doro, finally, I'm almost shaking when I'm telling this because it's been so much work. We have finally surpassed the 90% threshold. So yes, a lot of work, some delays, fair to say, but we are now there. Particular, the best thing with this, in fact, is actually finally, we can work even closer with the Doro team, get all the team members to relax a little bit more. We will have a good progress now to implement. So that's fantastic. So a lot of good highlights in this regard. We have done some slight updates on our outlook statement. This is, of course, as always, related to the near-term future. We will continue to focus on annual growth in the kids category. Based on this update, we are now really focusing on preparing a retail rollout and launch with Doro product with pre-kitted SIM, and, of course, also implement full global e-com with Doro. One of the requests from the shareholder or multiple of the shareholder last time was to see a more detailed granular rollout plan. I know Kjetil will have that after the break. So we will have a look into this. And as we said, we will be extremely disciplined related to driving service revenue growth and increased profitability. That will be our #1 guidance and also, of course, to secure the path to 1 million subscription and scale into new market and verticals. I will explain in detail what we mean by that because we are going to make some big impact, which you will see in the Capital Market Day. And I know for both the company, for our ability to really drive and maximize shareholder value, as you also saw early this morning, part of our Q3 release we have now also made a decision in -- with the Board that we will, over the next 12 months now start the assessment in order to uplist the company at a more appropriate exchange, again, in order to really maximize the value, shareholder value and ability to grow going forward. So of course, that's also now stated on the outlook. So I hope that was some good news. We will take only 5 minutes coffee break, and then we will move straight into capital market update, and we do all the Q&A at the end as we expect some questions from the Capital Market Day as well. So we will start in 5 precisely. Feel free to refill coffee, water. See you again soon. [Break]

All right. Let's -- it's wonderful to see all the good mood. I think the 90 helped. Let's get started for Part 2 of today, our Capital Markets Day or updates. The way we were planning to present this today is for me to start with a little recap very, very short on our previous Capital Market Days. Then the main event on my end is to take you through the future product strategy, our new grid. And then we will be guested by Sanghyo Kim, our CTO, that will give you a very important platform update, our CMO, Lise will provide you how we are planning to launch some of the product. I will be showcasing in our product strategy. And then Kjetil, as he mentioned previously, he will give you even more update, exciting news from Doro and a little bit more of the detail. Then Knut and me will end with a slight recap summary, and then move into the Q&A section. So before we go into the new and exciting things, just wanted to highlight very briefly if we move just a couple of years back in time into 2023, we had our first Capital Market Day. The markets were terrible. We -- it was very tough times, and we introduced our 9-3-2 strategy, which basically meant we didn't do anything at all, whatsoever, except selling the 3 products we had in the 9 market we had, introducing a SIM card with 2 price point. We had a lot of exciting items on our road map. We had a lot of very exciting plans. The markets were rough and the market 1 year before said, you should just grow. Don't think about too much the earnings as long as you grow. It was the message to every single company on Euronext stock exchange. Although when the market changed, everyone said, well, profit is really the only thing that can drive a company. So we had to pivot. So we introduced this strategy. We explained that to the market, and we said we will not do anything new before we have proved to the market, we are able to turn loss into profit. And in 1 year, with that strategy being very disciplined, we were able to turn negative NOK 30 million to positive NOK 30 million. That was the key element on that Capital Market Day. Luckily, we were able to turn that around. And then 1 year later, when we had demonstrated our ability to turn negative into positive on an EBITDA level and really introduce the product we had in the market we had with 2 price points on the SIM, we then said now is the time to think forward where the company would like to go. And we introduced the road to 1 million then saying we are now allowing ourselves to look into new markets such as youth and senior ending up with the acquisition of Doro, and we had a plan at that time, we said 4 to 5 years. Our ambition is to then reach 1 million subscription. All right. But we are actually trending a little bit above these trajectory. Things are actually going very, very well. After the acquisition of Doro, we have had a lot of synergy already, and we feel we are getting into the right way. So it's time to have a viewpoint even beyond that 1 million and beyond the remaining 3 years of this strategy. So today, we invited you to the Capital Market Day in order to showcase what that means and how we foresee the company in the future to continue to grow, secure the path to 1 million, but also beyond that 1 million. So the theme today, Lise will show you more about that later, is to rethink different. And although, as Knut said, when I said our biggest move so far, loaning NOK 1 billion to buy a company is actually maybe financially our biggest move, but from a product and strategy, this is by far our biggest move in order to reach forward. And before I show you the product grid, just to be very clear on how can we the ease -- well, not operationally, but technically, the easiest way for us to grow the business -- it's 2 different way, we can do this. One, we can add more SIM enablers. So having more products where we can preinstall the SIM card, that's the best way for us to grow definitely because it will potentially give us more SIMs to reach 1 million and above. So that's one way. The second way is, of course, also to introduce a new market where we set up an MVNO, allowing us to tap into new geographical market, also with pre-installed SIM card. So we can either introduce more SIM enablers or we can extend our market footprint. If we then take 1 step back and when Kjetil presented, we have now 443,000 subscriptions. That has really been done by having smartwatches, 3 in number. In fact, it's really 3 different price points because the value proposition is really the same. A mobile phone in the form factor of a smartwatch, you can put it on your hand. From a quality perspective, screen resolution, et cetera, et cetera, it has 3 different price points. So you can really argue that from a value proposition, it's really 1 product or 1 proposition over the last couple of years that has allowed us to drive 443,000 SIM subscriptions. So thinking about this from a strategic point of view, the next step for us is really to extend this full product grid, allowing us to have many, many more different value proposition to offer the market. So we have more different products, more different mobile device product where we can preinstall our SIM card. That's why we call it rethink different because our competitors, the market in general are more or less just adding more smart watches that are more or less the same, next generation, maybe a little bit better camera, maybe a little bit better screen or battery life. But it's the same proposition. So the differentiation is not that big. So going into the future, instead we would like to have a product grid that is actually 12x the size of course, with Doro than what we have today. If we recall really with this 1 proposition has yielded 443,000 SIMs today going into the future. These are army of soldiers that will go into the market and fight the battle to win the war and the subscriptions. So what we are doing, we are splitting up the kids smartwatches for the youngest kids. Lise will demonstrate to you in the second, our new concept with smart feature phones, and we will also extend, which Sanghyo will explain a little bit later, how we are attacking the smartphone category, growing political concern, huge demand should be and come in this category. And of course, Kjetil has already presented the strategy with Doro as well. So this will be our product grid going into the future. And 4 of these products are already in the market today. Today is actually the announcement date of this. The reason why we have set up the product here is that after the break, everyone can come down and have a look and play around with the product. It's a beautiful design new product. I will allow you to present it. It's wonderful. But a lot of new things coming, and this is the next product to come. And as Sanghyo will explain as well going into first half of next year, we're extending into a business-to-business model with our guardian application into Samsung phones and more, he will demonstrate that. Then into Q1 '27, we are really utilizing the synergy effect from the Doro team, allowing us now to multiply the value of this product, also extending them into the kids feature phone with hardware that is already being produced. We optimize it, huge synergy effect as well, Q1 '27, and we will come with a completely new value proposition into the entry-level category of the youngest kids, allowing us to have very different price point and a very different way to target the market, hopefully to address even more SIM card and services. We need to have something to come as well up at the end with a revised premium strategy as well. That will come later. If we then move into the second area of expansion, we just said SIM enablers. Now it's the MVNOs. For the new audience, our current MVNO service strategy is -- we have a SIM card, a basic SIM connectivity, price points averaged around EUR 10 per month. As Knut said, our target has always been to have roughly 80% margin. And as Kjetil present, one of our biggest success over the last 1 year is our roughly 100,000 premium subscription on top of very high margin and increasing the stickiness to the product. So that's what we're selling into the market. We all -- we got a lot of question, is it easy to set up an MVNO? Is it something the competitors can do? And how does that work? So we just wanted to emphasize a couple of these elements. Technically, yes, anyone can do it. Is it easy? Not very much. And is it possible for everyone to achieve it? Not at all, because the threshold for the telco partners around the globe, threshold is very high. They expect volume, we have a lot of volume. So we have a huge competitive advantage going into a new market with a legacy of almost 0.5 million subscriptions already. So a high barrier to take a wholesale agreement from a telco and there is a lot of technicalities that is required as well to make it happen. We have done it successfully in these 9 markets. And the status so far is, like we said, 400-plus thousand subscription with an annualized recurring revenue of NOK 358 million. What we are presenting today is the objective for the next 5 years. The team is getting themselves ready from a technical and commercial point of view to over the next 5 years, our plan is to extend into 4 to 5 new markets. We see an increased interest from multiple markets in Europe, potentially even beyond where our product lineup now having both kids, youth and senior to really be attracted to get our product into those markets. Of course, we'll never go into new market unless we can have our fair share of the service revenue. So in order for the market to understand the business, the strategy and to be able to really calculate the business case and modeling, our current footprint, 9 markets, 1 product proposition, have driven 443,000 subscriptions. Going into the future, we are technically 12x increasing the width of that proposition with more product and enablers and increasing over the next 4 to 5 years, 50% of the current MVNO footprint. And as Sanghyo will present, we are putting a lot of effort into building software feature application, also using AI in order to really promote more premium services so we can increase our ARPU stickiness and revenue from services. Take it away.

Okay. So 12 enablers, 50 more MVNOs and new feature, someone need to make it happen. This is where our R&D kicks in. So probably it might be good to start with what we have presented a year ago. A year ago, in the tech update, it is all about multi-tenant framework that we are adopting it. What is multi-tenant? Before multi-tenant, it was all about Xplora kids watch, application, platform, all designed for only Xplora kids watch but now we need to scale up our opportunities. So that means we need to have opportunity to add more verticals, smart device and new features, MVNOs into our platform. So that's why the multi-tenant architecture is required to easily accommodate all different devices and MVNOs eventually, we can cover more user segments. That's multi-tenants we presented about a year ago. Then after that, what happened? This is what happened, last 12 months. So from the app, we improved all the user experience. It is not about just the design change, but allowing all different smart device to be able to connect through our family IoT platform. Then in our family IoT platform, adopted robust multi-tenant architecture. Now we support not only kids, but also effectively expanded to youth and senior that Kjetil will present more. So all around, we have more extended proposition from the single platform and application. Then let's -- a little bit about kids, just recap around what is our core value proposition. Always, it is about the safety from the safe phones and messaging that authorized contact by the guardians and SOS safe zone. And even our current platform is processing 4 million messages per week and actually, more than 4.5 billion health activities we are processing every week. So imagine how our platform is robust and stable and more scalable enough to process this data. And of course, it's coming more from also Doro friends. Interesting figure here is 30%. What it is? It is about the stickiness. How often parents actually using our service, it is 30%. Is it good or bad? Just in comparison, the similar health fitness applications such as Fitbit and Strava, typically around 20%. So you can imagine how it is really higher than industry standard. This gives us great opportunity for Xplora to introduce something new through this stickiness, high loyalty parents on our Xplora ecosystem. Then youth. It is everything about how we can win the children. There are so many applications already in the market, parent controls, screen time management and management. But the 1 challenge, children they are so smart to bypass or such parent control, very easily. Go to YouTube searching, there is a way to bypass. Even you can ask ChatGPT or Gemini, how can I bypass it? That's why we didn't only focus on what should be the parent control. We actually more focused on how we can avoid such bypassing, deeply integrate into the system. So that's why we partnered with HMD and developed our own product that showcase this should be the safe phone for children. So this proposition actually addressing 65% of parents actually demanding currently safe phone for children. So hopefully, this product can fly over this year. Then a little bit more about, okay, what is the value proposition in a youth. So always our core value proposition, safety, safety, safety. One from the safe core and messaging with authorized contacts and, of course, location, in addition to that, when it comes to smartphone, it is more about screen time management and app management. So parents or guardian can control how long children should use the app, and which app they should hide or unhide. So again, this parent control feature probably exist in many other apps. But hidden again, here is children cannot bypass. That's the most important feature deeply integrated into the system. But is it only one product with HMD we developed or our new product developed? No, again, our platform multi-tenant strategy where our technology should be able to easily and effectively expand more product so that our consumer, customer can have more option to choose. So that's why we evolved our technology to integrate into Samsung smartphone as well. It is not just the application layer. Still, it is a very deep system integration into the Samsung. So again, children cannot bypass, but having exactly the same value proposition I presented. So let me -- believe it -- seeing is believing. So let me show you how it works. So here is kids phone and guardian phone and you see on the top the list of device, all in one place, from the Fusion X1 and the new -- our feature phone and Samsung phone, always location is one of our core value proposition, with location history, safety zone and also live tracking. So always, it's the same across our smart device today and also future. Then if you scroll down, there is a main menu. First, school mode. In the kids phone, Snapchat, typical, children can play Snapchat. But when I click into the school mode, then if I enable it, it will immediately in a real-time block the screen. And even when they try again, it will block. But if I disable it in a real time, it allows to play Snapchat. So that's how it works very in real time, together. Then app management, there are 2 features, app time control and app hide and unhide. So app timer, you can control how long they should use. And in the hide app, you can see the list of apps that you can hide or unhide pre-installed app in the smartphone. Then what happened if a children download the new app? Of course, we have a solution. Here, kids, go to the PlayStore, download the app. As soon as it downloads and install, first thing the system, what it's doing is blocking and then send a notification to the guardian so that guardian can actually control, hide or unhide. So if you go the list again and if you find what's the new installation, here, you can see the new app. So then I'll show you how it works. So if you click, okay, I allow, it will real-time show the app. If I disable it, in the real time, it automatically hidden. So it is all in real time, deeply integrated into the system. So one more thing about website. Website, of course, is important. So I will show you a demo. But first, I need to actually enable the browser first. So I will enable browser, so you see the browser pops up. And I added YouTube as a block list. So if children try to reach to YouTube, then it blocks. Then, of course, if I remove the block list, then children can actually access the website again. So currently, we are also considering to integrate with the open database, consolidate by the all the parent association, what should be the website that actually children shouldn't access. So we can actually integrate into our database so that it can have more rich database for the -- safe for the children. So as you see, a lot of parent, guardian control feature deeply integrated into the system, trying to avoid children bypassing. Is it enough? As I'm a parent with 2 early teens, no. I'm still hungry, right? So that's why we're investing a lot into how we can actually improve more safety measurement for children. But also now with the Doro for senior, basically entire family. So that's why we introduced Safe AI. I know it's nowadays becoming controversial, yes, AI, a lot of money. Do you need more money? Maybe yes, maybe not, but leave it us then. Our definition of Safe AI is not we want to compete with Google or other big names, maybe yet. But what we are doing, let me explain in this way. All our great products needs battery inside, without battery, of course, our smartphone or kids watch doesn't work. Does that mean Xplora should invest in developing battery? No. Our goal is actually finding the right solution to create a value for the family so that we can actually provide a more secured and safe family solutions and service. So that's why we are not investing in actually core AI, like a battery, but we are investing in how we can improve or introduce more stronger safeguard in between native AI and the family. That's where we are investing in. So we are currently in the development or some of the feature already in the pilot test stage so that hopefully, we can introduce you early next year. But let me show you how it can be integrated into our key products from the smartphone and new product, Lise will present. And of course, Senior is also important family member, we should provide more safety measurement. In the smartphone, basically when incoming message contains inappropriate message, then it is automatically blocked. So this is deeply integrated into the system as well. And even outgoing message. So I'm trying to send my kids, trying to send a picture in a -- picture to send to someone else. Then still, we can block and even guide them why this is not inappropriate behavior. Then, of course, senior most important thing is a scam call protection, which Kjetil can introduce more in the later. So all this together, why are we doing this? It is, of course, the family safety and also providing more connection in a proper secured way so that our consumer can see the value and also it increase willing to pay as a part of the premium so that we can increase the ARPU in our business. So now altogether, we are now evolving into not only IoT platform. We are evolving into global family eco system from the application we are becoming family hub to access our ecosystem and robust platform to be able to support kids, youth, senior and something more because I have a dog. I need something. And all different devices that effectively integrate into our platform. So all this, we can provide family more secure communication and intelligent protection and helping them to engage in more so that we can bring traditional family value again. So that's how we're actually working on in the R&D and now I invite Lise to the stage to show you amazing product launch plan.

Thank you. Good morning, everyone. So you've seen our business strategy from Sten, you've seen our product road map from Sanghyo. And I'm now going to give you some insight and flavor of how we are taking this to market. So someone once told us to think different. They said technology should be able to -- should be available for everyone, not just a few. But perhaps we took it a little too far. Do children need free access to the Internet, social media and chat groups? Do children need a chatbot to talk to? We don't think so. They need friends, not followers. We make sure our kids don't run into traffic, we teach them to look both ways, not to talk to strangers. But then we let them loose on the Internet alone. In a universe, even we adults struggle to understand. We need to rethink. Children shouldn't have to adapt to technology made for adults, rather technology must adapt to children. And this is why Xplora makes smartwatches and phones for kids that let us talk when we need to. No feed, no scrolling, no distractions, just technology that helps kids stay kids a little longer. There's a fierce ongoing public debate around children, teens, smartphones, screens and social media. We're seeing strong movements in schools to limit phone use completely and restrict access to social media for tweens and for teens. And governments are stepping in as well. Australia is leading the way. They're banning social media for the under 16s. This is coming into force now in December. And the Nordics are looking to follow suit as well, introducing a 15-year-old limit for social media, and the EU is also looking into regulation. And let's be clear, the market isn't just ready for change. It's actually demanding it, both parents and children. In a recent survey across 84 countries, 10,000 parents of children's ages 8 to 11, found that over half of parents regret giving their child a smartphone. Nearly half believe the smartphone use has actually changed their child's personality. And 65% of parents are calling for a child-friendly phone but are really struggling to find good options. And it's not just the parents. The kids are asking for help as well. 40% of children worry that they use their phone too much. And over half of them have been approached by strangers online or experienced online bullying. So there's a clear call to action from parents, from governments, from schools and some movements are even calling for a complete ban on phones for children and young teens. But here's the thing, somewhere in between those extremes lies a better option, one where kids can be kids, even as they enter the digital world. 30 years ago, Apple inspired the world to think differently with its legendary think different advertising campaign, sparking a generation of innovation. Today, we need to think differently about how technology and algorithms impact our children and our youth. Apple has been a pioneer in innovation and to pay tribute to Apple, while it's also challenging the status quo, we in Xplora have developed our own take on their iconic advertising film, Here's to the crazy ones. And we've done this with the hope of inspiring us all to provide children with a safe digital childhood. So let's take a look. [Presentation]

For too long, different has meant faster, louder, more online. We believe different should mean better, better for kids, better for families and better for growing up. So while Apple celebrated the great minds who changed the world, we celebrate the small ones who still believe that they can. And as proof of that belief, today, we are very proud and excited to be revealing our new phone, XploraOne. XploraOne is a safe, simple, purposeful starter phone from children ages 8 to 11. It gives kids safe independence without Internet access, no social media, no apps. It lets them call, send messages and share safely and gives parents peace of mind through GPS tracking and functionality to approve messaging and calling. Parents decide who their children can call and when, and this helps build both healthy digital habits and also gives parents peace of mind. And let's be clear, this is not a smartphone. This is a feature phone or we call it a smart feature phone because it's actually smarter. It's not a dumb phone, like some people call these phones. It's a smarter phone. There's no social media, as I said, there is no Internet. It's just the right amount of freedom and built on the safest technology. And actually, it looks pretty nifty as well. It's very cute. It has a camera. It has a flashlight, and a calculator. But this is not a phone made for entertainment. And actually, we think it works best when it's not in their hands, but safely tucked away in their pocket. And our vision is to be the company that works every day to provide children and young people with safe digital onboarding, a step-by-step process. We believe in the right tech at the right time, guiding children from 5 to 15 along in this digital journey where we gradually increase their access. Starting with the watches for the youngest segment. The next step is then over to XploraOne, and we frankly believe that XploraOne is a phone that should be able to last them through primary school. They don't need anything more than that. And we've seen this trend also in other countries in the U.S. There's been this movement called wait till 8, wait till eighth grade with the smartphone. In the U.K., you move on to secondary school in year 7. That's when you start walking to school alone, that's when you start taking the bus. That is when you need a phone. So this little thing is enough to last you until you are about 12 years old. And we're tech optimists, right? So we believe in responsible use, sorry. And that's why we have -- when they're ready around, when they turn teens to move on to the smartphone, but as Sanghyo demonstrated, a very controlled smartphone on the Xplora app, where parents can really control easily access, timing, et cetera. So guiding parents and children through this digital journey with boundaries with support and age-appropriate access is where we really come in and play. So today is a big day. We're launching, rethink different, which you just saw, and we're revealing XploraOne. The campaign tagline is made to stay in their pocket, and it will be supported by a PR and media outreach program across the Nordics and internationally. And we're also running an integrated marketing program across all channels, both paid advertising and organic promotion. Next week, we are hosting an event in Oslo to discuss how we best protect children in a digital world. And we're very excited to welcome a pretty distinguished panel. We have the Minister of Children and Families from Norway coming. We have another Member of Parliament coming, and we have parent organizations such as Smartphone Free Childhood attending as well. XploraOne will be on sale in Q1 on xplora.com, our websites in the Nordics and Germany as well as on Amazon. So let me leave you with this. Think different inspired our generation. With rethink different, our goal is to protect the next generation. Children deserve technology that's designed for them, not algorithms that are designed for addiction. Xplora as a company, we take on the responsibility that other tech firms shy away from. And XploraOne is a big step forward for Xplora, but even more importantly, for families everywhere. Thank you.

All right. Then I will give you an update on the progress on Doro and Doro Connect specifically. I've always been fascinated by the construction of oil rigs. And what we are doing here is also massively complex. It's not something that you can see, but there is a massive back-end system behind. So when we say that we have got access to a telco's network with signing a deal, it's a massive work of producing and programming all the different systems. So actually, what we do is that we get access to a telco network, but then we have to build everything to make that into actually being a usable function. And there is a difference from the mobile connectivity setup that we have with Xplora. It's much more simplified compared to what we are now doing for the Doro and also for the youth phones. Most of these customers, they already have an existing subscription. That means that they will want to keep their mobile number, but they get a new SIM cards. So just as an example, there is like a clearing house for the mobile number portability. We have to build that actually in Finland. So we get some surprises, but we are in the -- basically following the plan. So on November 5, we relaunched what we launched in Sweden, in the mid of June, where we have a much more smooth process when it comes to buying the service. At the same date, we also then launched on the web shop in Norway, Finland. So we have now 3 operations on Doro's web shops. And as we already have commented on, we have reached a target with the attachment rate above 25%. And then we will launch 2 big markets, 1 on December 3, the U.K. on the direct to -- direct consumer channel, and also then a week later in France, and these are Doro's 2 biggest markets. Then on the 6th of December, we will launch on Amazon in Sweden. So the goods are already shipped in to Amazon. They are ready to start sale. And then we will also then in the beginning of next year, launch on Amazon U.K. and France operation. And the reason why we can't do that in parallel with the web shop is that we have to have the SIM card and everything ready before we can ship it into Amazon. And in Q4, Amazon have very long lead times when it comes to accepting goods. So that will follow then after New Year. And then we are very happy to announce that we have signed up a lot of large retail chains with combined more than 900 retail stores. Of course, they also have their online channels. And we will then start after the busy Q4 period in Q1 with rolling this out into the retail stores. So basically, to simplify a bit, what has to happen in the retail stores is that we have to put in place a retail SIM subscription activation system. That is something that all the telcos have with the retailers. So when they want to sell the SIM card, they need to take the customer data, then they need to take the payment information, and they also need to do a customer verification, ID verification process. So that needs to be put in place. We need to distribute all the SIM cards. And of course, we need to train all the shop employees, so they actually sell the Doro SIM card. But then we will gradually roll this out in our markets and also the retail just past the new year. What we then launched with the value proposition is very similar for the connection to the mobile phones. So Doro is very much about always secure, easy-to-use personal support, transparent tariffs. These elderly people very often are exposed to scan, so full transparency on the price plans and fees and everything, so they not are getting lured into something. And always, as long as I've been in the telco industry, the network is important, both when it comes to capacity and network coverage. And we operate these Doro subscriptions, and on the same networks as we do for the Xplora mobile subscription plan. So we have the leading European telcos as our suppliers on the network itself. And what I just started with explaining, the seamless transfer of the mobile number. They may have had the mobile number all their life. And of course, they want to maintain that number. So that mobile number portability function is also a very important part. So this is what we have launched with. And you may have seen it already, but we had a starting offer on the web shop in Sweden, Finland and Norway, where we also have the opportunity then to combine the sales of Doro Connect with the right either a feature phone or a smartphone. And then building the right packages, reflecting the usage of the elderly person. And of course, the ARPU from these price plans also vary from market to market, just like you know from Xplora. But in general, the price plan, meaning the ARPU is higher compared to smart watches. So here you see some examples from the Swedish market where the price for the feature phone subscription is NOK 149 million, while for the smartphone, it's NOK 279 million. All right. Then we are trying to replicate the learning that we have had so successful with the Xplora premium, the kids activation service. We see there is an opportunity for the elderly to add some new services on top of the basic connectivity, both to differentiate and actually to have a higher ARPU. And we have defined 12 personalized add-ons for the elderly, sentence around 3 themes. One is the safety aspect. The other is the assistance aspect. They need help very often with their phone and also health, movement being active. We know that is good for everyone. So 12 services have been then developed in cooperation between the Doro team and the Xplora team. So taking the experiences from Doro, knowing what the customers are looking for with what Sanghyo presented with the technical capability to implement these services and build platform and apps. So here, we have visualized how this will look like on a Doro smartphone. So you see on the left-hand side that you have like 4 different functions. One is, for instance, to share your screen because you just like you know from your IT support, sometimes you get stuck and you have your IT department to take over your screen and do things for you. This is actually what the elderly person is then enabling their caretaker, their daughter or son to do. So that means that I can take over the screen. And then in the middle there, then you can see some of the services. For instance, you turn on scam protection here on the upper green button. And that means that when there is an incoming call like an insurance policy scam, you get a notification saying, okay, this is a warning, do you want to end it, to block it or to answer it. So these are examples of what the caretaker actually then can do. And you can also block, let's say, calls and SMSs that you predict are scams. And then there is also a very advanced function when it comes to tracking. And that works also on features phones, meaning it's very often that people with dementia, they get lost or they don't even dare to leave their flat or house because they are scared of getting lost. And that is something which really a big social program -- problem. And here, you can actually track where the elderly person is, where he has been, and you can set also notification areas. So it's an advanced, let's say, map tracking function. But of course, we want to make a business out of this. So on the left-hand side, you have a traditional Doro Connect plan with various price points. And then we are adding on the premium service that I just described, which will bring additional ARPU and centered around these 3 topics that I just described. These services can also be sold through the Doro and Xplora app, meaning that we can get this premium revenue not only from the customers who buy Doro Connect, you can also get it from customers who have bought their Doro phone with a telco or with another MVNO or with a retailer with any price plans. So we can sell it through the app, and we have quite good reference figures from that also from Xplora. So it's not only an ARPU on top of the connectivity part, it's also a potential ARPU from all phones that are in the market, both feature phones and smartphones. So that opens up some new possibilities that have evolved during this process. Thank you.

All right. I think we are quite good on time. Over the last months, we have listened or at least tried to listen related to what our investors, stakeholders have wondered, what is the questions? We wanted today to kind of take a glimpse into the future, allowing everyone to better understand the company, both in terms of the numbers we are presenting in the future and how we are thinking for the future. So with that, we actually just wanted to settle in and repeat the outlook before we go into the Q&A. Outlook as what I said just after the Q3, but also, again, just wanted to reemphasize the very important notes we published this morning related to our strong results, but also related to the company and the Board's decision, related for us now to start the process to explore within the next 12 months, the right stock exchange for us in order to continue to maximize shareholder value and make sure that the company is set up right in order to execute on this quite ambitious growth strategy and also with the message that was published this morning related to now exceeding finally the 90%. So to summarize, the company has delivered a very solid result. We have a very solid platform, financially and from a product and execution point of view, and we now will introduce our new product grid, expanding 12x the differentiation in value proposition, 4 to 5 new MVNO markets to grow into the future. And we have also showcased a little bit more details about both services and products. All in all, we're in a good place. We are very optimistic. We are proud. And with that, as usual, we are all here to -- so before we go into the Q&A, actually, we have Doro team members here, Sanghyo, our CTO and more. Feel free to join us afterward, touch the product, play around, try them. We will assist you and make it -- so you can really get a better feeling of it because that's the product we are selling. So stay tuned for that after and please stay. But with that, let's move into the Q&A session to round this up, and as normal, I will have Kjetil and Knut on the stage. Of course, Sanghyo and Lise is here as well if there are some additional questions, but we are all ready to receive questions. As normal, let's start with everyone or all the questions online, and we can move into questions from the audience.

How is the progress for Doro Connect subscription in Sweden. Maybe, Kjetil, you can tell a little bit about the movement in Sweden since that's a couple of weeks more versus the rest of Nordic, feel free.

Yes. No, as I said, we relaunched it on November 5. And I think the attachment rate between the 3 Nordic countries is more or less the same. But we are really looking forward to introducing it into also the retailers. A substantial number of those retailers mentioned are in the Nordic countries. But we also clearly have to -- just like we have done with Xplora to optimize the buying process. We learn. It's a different online system compared to what we have in Xplora. So we also have to learn and test, and we see that the attachment rate figures they improve along with that work.

Next one. I'll include the start here. Fantastic number. Thank you. Could you give some guidance on the yearly CapEx level going forward? That's a fair question related to that metrics. Knut?

So we -- as you see, we have a lot of plans going forward, and we need, of course, to balance this with what we have available to invest in. That's also why we are going to focus on one of the key measures, EBITDA after CapEx. So that is complete transparency on these numbers. We have so far had around NOK 20 million in CapEx for the Xplora side, a little bit more on the Doro side. But I think we will keep it there as the XploraOne phone that is 100% developed by HMD. So the majority of that CapEx is, of course, then done by HMD. I think I do not want to guide more on that.

I can also add, I think, the great synergy effect between the Doro team and Xplora team that we also see some yielding results from in the future as well, that allows us actually to bring more product and services to the market just by that effect as well. Then we have like 3, 4 questions on the fly related to the stock exchange notes. Can you please clarify which stock do you have any preference and how to do this? Yes. In short, as we published, we will start the process. As we also mentioned, the goal is to have that settled within 12 months, and we will, of course, make a very clear analysis related to where or how this will be best suited for the company to future growth within the target of 12 months. Is there any particular focus on various market, the total market versus any particular market in particular? Or how is U.S. related to the rest of the market? So I think the key answer to address that it's been very crucial for us now to address, first of all, to pivot Doro into slightly decline to a growth and in order for Xplora to achieve the highest sell-out in the company history on a high-level number that's been more important than what particular market is growing individually. It's been very important to drive the high level number. And then going forward, we'll, of course, continue to grow all markets. Lise mentioned for example, that we see a huge attention in the U.K. market related to the new product. So we will be quite financially cynical related to focusing on the market that are yielding the best results so we can drive the highest possible top line volume in that regard or gross profit. Yes, one more question. Is the 25% conversion related to the 13% you showcased last quarter? And the answer to that is yes. So it's still related to the 13% we presented on Q2. That's the question from the online. Then if any question. Well, let me start by Petter, feel free.

First of all, congratulations on passing the 90% threshold. I have a few questions related to Doro, you have a 25% conversion now in all channels. Can you just remind us how much of the revenue in Doro that is from that channels?

In the initial days, we said roughly 10% from that channel in the volume. I don't know if we have any more new insight, but that was the reference point.

Yes. It keeps increasing. So Doro has in the last 2 consecutive years, had a growth in the D2C channels as a share of the total revenue. So it's...

So it's fair to assume that it's higher than 10% now.

Yes, a little bit higher.