Xplora Technologies AS (XPLRA) Earnings Call Transcript & Summary

All right. Good morning, everyone, and welcome to our first half year and Q2 results presentation. I would like to open this quarter by saying how proud I am of the full Xplora team. In the market with a slight reduced or softer consumer instruments, once again, we have proven something really, really important. Our business strategy works very well, which we will present, but also the team's ability to execute in such a market. We have surpassed a very important milestone, more than 0.5 million subscription. We have improved our gross margin, and we have increased our EBITDA after CapEx by more than 50% or 50% this half year. For the presentation today, we will have quite a lot of the team members on the stage to present because we would like to do a little bit more deep dive to give you even more insight than a normal presentation. I will start to do an intro with some highlights, but I will actually take a little bit more behind the scene as well this time. Then, of course, Knut will guide you through all of the financial results and details, then Gro will take us through our business unit from Kids and Youth products. And then Tommy will guide you through the full Senior update from previous store because now also Kjetil will be on the floor to give you the latest and greatest insight from the latest Emporia acquisition, both eventually to be one division from Senior. Q3 will be the first time we will report these or those numbers. At the end, I will take you through the normal road ahead. Before going into some of the details from this first half year and the quarter, of course, as normal, I will go -- just go you through the high-level number. First half year, we had a group revenue of almost NOK 800 million, flat from last year. Our recurring service revenue up 13% to NOK 182 million. Gross profit also up to NOK 433 million. And as I said, our subscription base, we are halfway to our goal for NOK 1 million, we passed NOK 500,000. Our EBITDA, and please pay attention to this. The reported EBITDA for the first half year, NOK 76 million, up 11%, underlying it's 89%. We'll come back to these details. But as we are acquiring companies, there will be one-off costs. And as we discussed with you guys and the market previous quarter, we will make sure to give you the details so you can follow the underlying performance of the company, hence, the NOK 89 million. EBITDA after CapEx, as I said in the introduction, up 50% this first half year to NOK 56 million and still a very strong and healthy cash balance of NOK 537 million. All right. Would like your attention to the following: As we have mentioned a couple of quarters, we would like the market to really put the standard and follow our performance for the following three KPIs. Our ability to deliver strong gross profit growth, of course, our subscription base and our overall service revenue. And like we said as well, for a tech company, follow our EBITDA after CapEx. And that's why we said initially as well in quite a demanding, challenging overall consumer market it's very strong to deliver on these three key KPIs. I now would like to take you through how we are planning and how we have the right tools to continue to perform on these KPIs in the next quarter to come as well. Starting with the first one. How do we foresee to continue to be a strong growth company in the months and years to come. We have provided ourselves three very important tool to make sure we can continue to grow. And when we are saying growing, it should be profitable growth. Please remember that as well. We'll come back to that. Number one, we will showcase and demonstrate to you today how we actually have further improved our retail model. As you all know, we are now where we would have liked to be one or too quarters ago when it comes to the Senior Connect implementation. We'll talk a lot about that today. However, we have invested that time very wisely because we have developed the same incentive tools and point of sale, which we now can utilize for all our product portfolio, meaning we have stronger tools to continue to grow our business across all products within the retail. We'll showcase that a little bit later, a new post model for all our products. Also, as a consequence of acquiring Emporia, not only are we adding a lot to our unit base selling our product but we are also now extending in the future into two new markets with a strong brand and a position, Switzerland and Austria. And of course, one way for us to continue to grow is to extend into new markets, particularly in a market we're a category leader. Also, we are optimizing our product portfolio. As we know, historically, new product means more sale. We have now acquired two companies with a fleet of great products. And what we have been doing this first half year is to make sure that all these products now going forward, can be used across multiple category. One of the biggest growing category, the used category is one example. We will pay particular attention to one of the products that came with the acquisition of Emporia, the new 5G product, I'm sure Kjetil will present. So we have provided ourselves some tools in Q2, to make sure Xplora is a growth company. The second one of the KPI we said is our ability to continue to grow our subscription base. We reached the halfway mark. We are on track on our NOK 1 million target for '29. If you recall back to our Capital Market Day, we said 4 to 5 years to go for NOK 1 million. We are on track for that for '29. We also stay very firm and let me just underline that 1 more time, very firm on the commitment that part of that NOK 1 million in '29 should be 200,000 SIM subscription for Senior. That is one of them, and we stay very firm on that. Even though there are small numbers, for the current online sales for Senior Connect and our one pilot store. We also stay very firm on the current data points we are seeing to continue on the communicated attach rate of 20% based on the data we have today, online and the retail store combined. Small number, but what we know is the following: if it works in one store, it will work in more store. We need the time to execute. And as well, we have received the feedback. We actually have potentially the best point-of-sale solution within the category. When it comes to how easy it is for a retailer, to connect and activate our SIM card. Like I said, not only for Senior but for the whole range of our product. So we know this POS word is, well, we find it easy to understand, but we have received quite a lot of questions. What is it? You have talked a lot about this POS system. And I would start by saying something very clear. It was a lot more work than we have ever thought, hands down, it was because we have done it for wearable products for kids. We got a lot of waivers. We didn't even have to have a POS system in the store. SIM card was pre-installed, customer activated it on our website, it was super simple. Now we had to have the same solution as Telenor, Astellia as all these giants. So when a customer buy a product with our SIM card in a retail store, the seller needs to have all the details. They need to have all their margin. It needs to be a provisioning system, so the retailer know exactly how much money they are making and it's a lot of background work. It was more than we expected. That's why I said initially, we are now where we ideally have hoped to be a couple of quarters ago, but the model is salable, and it's a lot easier now to implement in other retailers. But like I said, when we saw all the work for doing this for the Senior product, we made sure that we have multiple work streams in parallel, because what we did was to make sure that not only can we use this system for the Senior product. But like I said, we can use it for all our products. The image in the middle is simplified just how a retail salesperson are getting this in the store when they are selling the product. So they can say, see how much money they are making, fill in all the name and make sure everything is activated in the back end. Why is this important for all our products? Let me try to explain because it's very important for our investors to understand this fully. Historically, when we have sold a smart watch for kids, the retailer have no relationship to a SIM card being inside that product. We have sold them a smartwatch with a margin, and that's it. What we are now doing, we are still selling them, this smartwatch with a pre-installed SIM card. However, when they are now selling that product, they will have the ability to select SIM plans from Xplora so they can further improve their margin, meaning that we are able to allow them to select a more profitable SIM plan for us. And then we can give them some additional incentives to sell more Xplora products. That will be a very strong tool, particular outside of the Nordics. And why is this particularly important in the market where you see the consumer are spending less money. It's very important for our ability to really incentivize the retail salespeople to sell product, and we have more flexibility on price. So just wanted to repeat what is the POS system. It has taken longer time. We are now where we really would like to be and we can use it across all our products. The last point before we go into the financial update is, like we said, also one measurement as a tech company, our ability to deliver strong EBITDA after the CapEx and the synergy we are now having with our current two acquisition, is already we have executed the first plan of redundancies, roughly 25 people in the first integration. And we have also articulated to the market that we expect roughly NOK 50 million as a direct operational cost reduction that will have a direct impact on our P&L. Timing-wise for that, we will see the full effect in 2027. Put it very simple. If the business is exactly the same next year as this year, it will be a NOK 50 million reduction or NOK 50 million increase on the EBITDA compared to similar years. It's a huge effect on that synergy. And as Kjetil will come back to as well, the original plan for Doro when we acquired, was to start the development of a 5G product. With the acquisition of Doro, it's now done. Kjetil will present and that alone has a direct CapEx effect over the time of that product of NOK 40 million. Hence, why we are seeing -- we are in a very, very good place to continue to fuel our EBITDA in the year to come. So just wanted to take you a little bit behind the curtain about some of these drivers, before Knut now will guide you through the financial updates.

Thank you, Sten. Good morning. I will guide you through the financial update, and I will focus on some of the key numbers. Repeating what Sten said, the EBITDA of the CapEx for the first half was NOK 56 million and that's up 50%. That's a very important figure because it shows that we are focusing on the profitability in the business. This is why are we also focusing on CapEx. CapEx is mostly for a tech company like Xplora capitalizing of R&D costs. Meaning that if you capitalize something, you put it in the balance sheet and you reduce the cost in the P&L. So that's why we is very focused on these metrics. For the first half, it was a flat revenue development, NOK 798 million compared to NOK 802 million, but the gross profit was increased to NOK 433 million because we had small increase in the gross margin of 1%. Going to Q1. The majority of the EBITDA of the CapEx was actually generated in Q2, NOK 38 million compared to NOK 36 million a year ago. The Device revenue was down in the quarter with 13% but the Service revenue was up with 10%. Even though the total revenue is down, we still were able to have a flat gross profit because the gross -- overall gross margin increased from 50% to 54% in the quarter. Two reasons. One, we had a favorable product mix in both segments, both in the Kids -- in the Children and Youth segment and in the Senior segment. And also, we had -- I think there -- we are talking about one-offs, and we have a few one-offs every quarter that we need to specify. So it's clear what will be a specific number. So in last year, we had a transaction cost of the Doro acquisition of NOK 2 million in the quarter. In the first half, it was NOK 13 million. And in addition, we had also a provision in Doro for closing down IVS. That's NOK 9 million. So in this quarter, we had NOK 3 million that we have spent to acquire Emporia, and we have also a provision for redundancy costs of NOK 9 million, NOK 12 million in total. And this provision of redundancy cost is linked to the 25 FTEs that Sten mentioned. So if you say then the EBITDA reported was NOK 49 million. Adjusted for these one-offs, we came to NOK 61 million then a slight increase in EBITDA in the quarter. We have then -- this slide shows a lot of notes. But if we can focus on a few of them, we have the CapEx in the quarter, NOK 11 million compared to NOK 15 million a year ago. The main reason why the CapEx is down is that we have now the opportunity to optimize our R&D project and see what would be the future product portfolio of the Xplora family. This is one reason why the CapEx is down. Last year, we had also some CapEx related to the Aurora launch in Doro. When it comes to the total group revenue for Q2, it ended on NOK 422 million. That is down NOK 40 million year-over-year and it's mainly related to a decrease in Doro revenue that we will come back to. Gross profit, flat for the quarter, even though we have a group revenue, of course, it's because of the gross margin. And the EBITDA is then before adjustment down NOK 2 million year-over-year. When it comes to segment, the Children & Youth segment, we had an increase with NOK 11 million year-over-year, from NOK 216 million to NOK 226 million. And the service revenue then is the most important factor in our gross margin. It's 80% gross margin on average in the service revenue. And the average annual recurring revenue ended on NOK 359 million. The service revenue is down from NOK 92 million to NOK 90 million in the quarter, and you can link the majority of this decrease to exchange rates. So if we adjust for the exchange rate, we have a small increase in that number as well. In the Children & Youth, the gross profit increased with NOK 13 million, 10% in the quarter. And of course, the main part is linked to the improved gross margin. You can see that there is a reduction in gross profit compared to Q1, and that's also because that in Q1, the portion of service revenue is much higher than in the other quarters. When it comes to the Senior segment, we had a decrease of 20% in the quarter. Tommy will get a little bit more into it. But a year ago, Doro launched the full new product pallet with [ Levo ] and Aurora during the first half. So they had a very strong Q2. And we ended the quarter of NOK 198 million in Q2. Gross profit keeps keeps to be good, and that's mainly because of the product mix in the quarter. So profit before loss improved to NOK 8 million from a loss of NOK 23 million a year ago. Please note that the NOK 61 million was linked to mainly noncash exchange rate expenses on the loan. But still, we have a positive profit before income tax in the quarter. When it comes to the expenses, we had NOK 180 million in expenses in the quarter and at exactly the same amount as we had one year ago. And even the last 12 months operating cost, it's continuing to be declining, and we are still focusing, of course, to do this in the coming quarters. When it comes to the balance sheet, I would like to pay attention to one item and that's the inventory. The inventory is up. And the main reason for that is that now we are sending more goods by both instead of airfreight. We are saving a lot of money on doing that, and that is, of course, also impacting the gross margin. The inventory level is quite important to have available now when it's a bit of uncertain global situation. And we are also then preparing for the back-to-school and the last two quarters of the year. Cash flow. I think we should mention at least one thing. We have now settled the remaining Doro minority shares. So we have spent NOK 30 million on those fees. I think that's the major part in the cash flow. And we ended then on a cash plus NOK 3 million to NOK 537 million for the year. Thank you, Gro.

Thank you, Knut. So in the Children & youth category, we see growth despite a softening consumer markets. And this is underpinned by structural tailwinds for Safe Kids technology. In the regulatory market, we see greater focus on child safe, age appropriate technology with parent controls. And in the parent perspective, we see a growing preference for connected but controlled technology that gives kids independent without unrestricted access to social media and smartphones. So with that, we end up on a growth of 11% year-over-year when it comes to unit sales. We ended at 171,000 units per first quarter. Our biggest markets are growing. And in Q2, we see a slight decrease of 1% year-over-year, and this ties back to what Knut already said about the partners and distributors holding a little less inventory. If we look at sellout numbers, though, we do experience growth also in this area of unit sales. We ended up at 127,000 total activations per Q2, this is up 3% across all channels and the service attach rate is also slightly up, ended at 38%, this means that 38% of all devices from Xplora that end up in customer hands and consumer hands, pay a service fee, and Xplora Connect monthly fee or a revenue share fee through our telco partners in the market. So keep in mind, premium services are not included in this attach rate. If we dig further into the subscription numbers, Sten already mentioned, we are over halfway to 1 million subscriptions. We passed 502,000 subscriptions per Q2. This is up 108,000 subscriptions year-over-year, at 27% growth, and all subscriptions types are growing, both mobile subscriptions from Xplora Connect, which still represent by far, the biggest share of subscriptions at 310,000 subscriptions. But as I said, we see growing subscription rates across all types of subscriptions. If we look at Service revenue, Service revenue for Q2 is up 10% year-over-year. We ended at NOK 90 million in Q2. And we also see as both Knut and Sten mentioned increasing annual recurring revenues, where we ended up at NOK 359 million by the end of Q2. What it is worth mentioning here is that we see an increasingly diversified growth across markets when it comes to Service revenue. What does this mean? It means that a larger share of our markets take up the growth. The growth is particularly high in Germany. This is good because it's also our biggest opportunity in the current market for extended growth. It does impact the ARPU, which is slightly down from earlier when a bigger share of the service revenue was tied to the Nordics only. This means, and you can see the market the ARPU mix here, it is lower in, for example, Germany or outside the Nordics, most importantly in Germany, simply because the prices of subscriptions in Germany are lower than in the Nordics, not only for us but generally for the market. And with an increasing share of Service revenue coming from outside the Nordics, this is a trend that we are comfortable with simply because the growth opportunity outside the Nordics is much bigger. So to wrap up, we continue to grow in the Children & Youth category. We have good momentum into the second half. We are now well into our second biggest sales season in the year, back-to-school. And if we look at the current numbers from the markets where we are already into back-to-school, the Nordics, specifically, we see strong numbers, Germany, particularly worth mentioning started back-to-school on Monday. We are also nudged into the second half by the point-of-sale system that has been implemented or piloted with the Doro products. We have silently piloted this point-of-sale system in 10 stores over the summer for the Xplora side of the business, and we see that the model is scalable, and we will continue to implement this over the course of the rest of the year. This is with particular focus on the Nordics now initially, simply because retail is such an important part of our sales in the Nordics. And last but not least, we see early signals of cross-sales across Doro and Xplora -- former Doro and Xplora where we have closed new contracts in both retail and telco, in France, Belgium and the U.K. over the last -- or into Q3, actually. So with that, I want to pass it on to Tommy. Thank you.

Thank you very much, Gro. Very proud work alongside with growth. And also, we are in exciting times within the whole group, across the Xplora products across the Doro Senior products. While we are maintaining the business, we're also building the future. And let me talk about the numbers first. So if we look into first half 2026, we ended up at NOK 443 million. Compared to first half 2025, we are down with 7%. Looking into specifically the Q2 numbers, we ended up at NOK 198 million, down with 20%. And as mentioned, also previously by Sten, looking into 2025 was an exceptional year. We had a lot of Sunset activities going on in several markets, including also, as Knut mentioned, a new portfolio, so we could pick it back on the Sunset activities. Looking into where we are right now, Sunset, we have in Nordics, basically in the end state, as you can see on the slide, FRABEL still ongoing, closing down 2G and 3G networks towards the end of the year. And looking into rest of the Europe, mainly U.K. and Germany, 2G networks still available, but 3G network has been closed down. Also, what we can also communicate the normalized annual device volumes within the Senior segment, we're talking about around 1 million. 2025, we ended up in 1.3 million, where we utilized the Sunset activities that was taking place across the different markets. And this 1 million is also in line with the baseline for the acquisition of Doro. Also, as you can see on the right side, rest of the Europe, we are then strengthening the Senior segment in the DACH region, where we're coming in with strong sales in Germany. We have Austria, we have also Switzerland, and Kjetil will talk more about that. Looking into unit sales specifically, we are talking about 241,000 in Q2. Majority, as you can see, is feature phone and then smartphones on top of that. If you look into first half, we could see that we are slightly down compared to previous years of 4%. However, what we are proud of, we have managed to maintain the average sales price and also increase the margins for our smartphones. And also, we have managed to maintain the average sales price for a feature phone and also slightly higher margin. That has led us to increase of the gross profit of 4 percentage points in Q2 '26 compared to Q2 '25. And we're also proud that we have delivered NOK 99 million as gross profit in Q2. So that we are when it comes to the business. Looking to the future. This is actually what we have been waiting for. We are extremely, extremely proud of where we are today. As Sten mentioned, yes, we are where we would like to be previously, but we have learned a lot and what we are doing, we are building the foundation for the future. More important to build a solid foundation, so we can also pick it back and also improve our business going forward. And in the spirit of our purpose as a company where it is to build a safer, healthier digital lives for all generation, for the family, we have completed the pilot together with Power. You can see the feedback on the slide from Power that we have successfully completed the technical pilot, coming more to that in a minute. You can see some images. For those of you who have not visited the pilot store that we've had in Hamar. You can see how nicely the products are being displayed and also how we're communicating the connectivity subscriptions in the store to increase the visibility. Deliberately, we didn't do any significant marketing, and that's something that we also agreed upon with the client that is coming in the next phase to really secure that we're building a foundation that we can then build on for the future. And again, as mentioned, the point-of-sale system is being utilized across the group that we have invested in. Okay. So technical pilot, what does that mean? That means that you are pilot and assessing many different parts of the platform and deposits, which means the staff on the retail floor can really go through the different steps towards -- together with the end consumers, activation needs to work. The contract signing needs to work, the provisioning needs to work. There is a number of flows that needs to work. As mentioned previously, what we are also extremely proud of is Yes, we spend a bit more time, but we have a state-of-the-art point-of-sale system. And that's the feedback that we received from our customers. And that's super crucial and super important because at the moment of the dialogue between the stop at the retailer and the customer. It needs to be efficient. It needs to be simple. It needs to be straightforward. We have evaluated all these different processes in the technical pilot. We are very proud of that. Looking into the time line, what is the next step? Pilot completed for Norway. Now in September, we're starting with the full rollout, and that will be done in different phases. And then after that, we will then optimize the business as part of running normal business. In Sweden, we are doing preparations for a technical pilot, do a similar thing what we did in Norway. We have learned a lot together with the customers, replicate that. Short pilot in Sweden, and then we will do further rollout in Sweden. What you can see on the right side of the slide, we will now start with marketing activities. From an Xplora perspective, we will launch a campaign Connect With, because it's all about connection. How can we support consumers out there to connect with family, friends, parents, children, grandchildren, that's key. That will be our key message when we're running the marketing campaigns going forward. And on top of that, we will do some activities together with the client as well. We will do co-marketing, in-store videos. We will include our offering and value that we're bringing to the table in the Power newsletter to all their consumers. We will do Meta campaigns and also additional in-store and digital activations. So a lot of things will happen as we now roll out to more stores. That's the foundation that we're building. And I would like to take the opportunity to also say kudos to the whole team within the group, a lot of collaboration from sales, from finance, from tech, from marketing and business management. Well done guys. So was one milestone that we're very, very proud of, building the foundation. The second milestone. We've talked about this. How can we stand strengthening our offering even further towards the consumer, utilizing the assets that we have within the group. This is actually what we are doing. So we have now done a soft launch of premium services within our smartphone category that will then gradually expand into the portfolio and also into our feature phone. We have worked with seniors for many, many years. And we know what they're struggling with. And we know also what is important for them. We have also recently done some market research to validate also the activities that we are doing and the areas that we are addressing, as you can see on this slide. Safety, crucial, assistant, crucial. They want to get support. But at the same time, they want to feel independent. And the Health category is also a very important category for the seniors. So on the left side, you can see scan protection. We are introducing scan protection into our portfolio and into our offering towards the seniors as of now. Remote control. We all have experience of most likely tech support to family members or to the senior family members, "Hey, can you help me? I have problems with my phone. I manage the changes setting. I can't find it or I want to do this, can you help me out, right? I've done that a lot to watch my parents. Now my kids are the tech support to my parents. That's usually how it works. What we are now adding an opportunity for you to support your parents remotely. You don't have to visit them physically, which means remotely change settings or remotely guide them through the device, extremely proud of that. And health, we're also starting to introduce the opportunity for seniors to share how much they are moving, how many steps they're collecting, family and friends can see that. So what I will show you a short video of a couple of images just to give you some glimpse of what we have implemented in our smartphones. As I mentioned, we are now introducing into the market as a soft launch. On the left side, you will see the Senior device. And on the right side, you will see the family member device. A family member could be a child, it could be a grandchild or even a friend. So let's start. So scan protection very important feature for the seniors. On the left side, you can see an example that is a call is coming in. And it's basically scam call. The service detects based on a database that we have, this is scam, the caller being blocked. It's been highlighted also into the menu to the senior and also to the guardian. Example of remote assistance, you can see the same images on both screens, which means both are accessing the same screen. And location, you can see here that -- as a family member, you will be able to also see the location of seniors. You can also add a safety zones as well, which means you can get notification if a senior is moving out on produce settings. And this is also an example of remote settings, where you, as a family member, can change the settings in the device. And this is being now introduced in our Smartphone segment. We are introducing that. And then after that, we will introduce that in our Feature Phone segment coming that towards end of September, beginning of October. And then we will then gradually roll that out across the different markets. With that said, as I mentioned, we're building the foundation. We're managing operations. At the same time, we're building foundation for the future. which means that this is contributing also to the evolution of the Doro brand that previously was recognized as a strong hardware brand for the seniors. Now we're extending that to include connectivity, extending that to include premium services, which means that you have a complete package. And as Sten mentioned previously, we now have a different toolbox in terms of how to address the consumer needs and also how to support the different markets out in the market. So basically, what we are focusing going forward. Rollout, Doro Connect in Norway together with Power. I'm very proud of that, preparing the launch and pilot of Retail in Sweden, together with Power. We're also planning to broaden the channels, as I talked about today, and also expand the market in the key markets. And now we're going into an ongoing operation to drive it as a normal part of our business to expand our services and our connectivity across the different markets. And last but not least, the introduction of premium services, starting with a soft launch in our Smartphones. Now we also extend that to our Feature Phones, and then we will do commercial launch towards the end of September and beginning of October. With that said, thank you very much, guys. Kjetil.

So [Foreign Language], that's good morning or Hi, Hello in Austrian version of Germany. I relocated to [indiscernible] In Austria earlier this summer, just when we did the closing or a couple of weeks before. Since we haven't consolidated the company yet, we'll do that as of next quarter. I will focus today to give you a little bit of background about the company, but also broadly present our new 5G base products. Some few words about Emporia. It is a family business before we acquired it. So it was founded in 1991, in Linz. Linz is just in between, between Vienna and Salzburg. And it's a lot of industry aluminum, chemistry. So it's a city and an area with a lot of things happening in Austria. The company has currently around 65 employees. And it's a special list in Senior Mobile Technology. Over the years, the business has sold around 16 million devices and there are currently 3 million active users of the products. The key markets are partly complementary to Doro and that was one of the reasons why we acquired the business. The company's market leader in Germany has a very strong business in Austria, but also present with good volume in Switzerland, in Italy, in Belgium and in the Netherlands. That means the majority of the of the sales volume is on top and not in any way competing with the Doro business. So it's -- the brand is the the market leader for senior phones in the DACH region, meaning Germany, Austria and Switzerland. And it's a European design. The products are as all of the electronics manufactured in China. When it then comes to product. Sten mentioned the CapEx of developing a new 5G product is high. One thing is the initial development, but you also have to continue investing throughout the life cycle of the product. So it's a roughly NOK 40 million CapEx effect that we got actually incorporated in the enterprise value when we acquired the business. I will play a 15-second video just to show you the product, and then I'll talk about the product and why this is unique. [Presentation]

Now, you probably wonder, Sten ask me what on earth is this. Actually, the situation with the toast and the butter, it always lands on the butter side. And everyone thinks because of the weight of the butter, but that's not true. And it was actually the Nobel pieces for physics and other scientific areas. But actually, in 1996, there was one guy who actually did a study on this and was rewarded an alternative Nobel price. And it was not by FIFA, by the way. And it actually is about gravity and rotation. When you lose a toast, it rotates halfway and lands on butter side. We'll have to have a 2.5 meter high table to have a full rotation. And it's very similar when you use the phone, you have it on your chest and then you lose it. And then it lands either on the edge or on the screen and it cracks or it breaks. And we are selling products to elderly people, who are getting a little bit slippery. So what happens, and you know it yourself, you buy a new phone, because you don't are patient enough to wait for those 3 hours, it takes to repair the glass or because of the battery. With this product, we have bumpers. We have a special cover, and we have a replaceable battery. So the bumpers are on each edge, there is a rubber bumpers meaning that when you lose it, and if it lands on the edge, it will not break. And it has this smart cover that I will come to us next. And that actually you remove the back the flip side of the phone, and then you click in this smart cover, and it also protects the phone. So then we have two elements of screen protection. And this is a patented solution from Emporia. You can also see that when you close it on the left-hand side here, those translucent bubbles here, they actually change the interface of the phone. So even with a closed cover, you can operate the phone by answering and even a torch and hanging up. So it has a function beyond just protecting the phone. That means that we have done something which is quite unique, it is the only phone on the market where actually we offer 12 months display warranty. And then it costs roughly EUR 150 to EUR 200 if you go to a repair shop and replace your broken glass. So it has a high value for the customer. And that has been -- when I will come to the media reviews, you will see that most of them are about this feature. So it is a phone that varies quite a lot from a traditional mobile phone. But of course, one thing is the safety, which is two unique factors that I referred to, but it also have some other features. Many people talk about panic button, call it, no-panic button, I'll explain that in a moment. It as wireless charging. It will have an SD card for storing photos and other data. Many elderly people, they are not so familiar with storing in the cloud. So actually, it has a big memory card, to store data. So this is the no-panic button. It's actually the red one, and you can program it. So it's just not that you can program it to call someone. But actually, you can use it also for Google and Gemini. So that means that you could use a -- program that button to operate the phone over voice control speaking instead of typing and you can program it as a direct access to whatever you like. When it comes to the user interface, I mean, a lot of -- I mean, most people have had a smartphone or a feature phone for many, many years. So that means that you are perhaps when you get older, your fingers are getting a bit slower and you have cold fingers and you're not seeing so well anymore. Then you want to switch to this kind of device with this on the left-hand side. Very few fields that you can press. But one of the fields, this eye icon is the info center, where you actually get all your Whatsapp messages, SMSs, notifications, instead of going into Whatsapp, SMS and all these different applications, you get all of that in the info time, right? But then you can easily slide a phone and get what you see on the right-hand side, we see the regular interface from Google, which you also can customize. So you can very easily switch between a phone, a regular smartphone and a phone that has fewer tiles, specifically made for elderly people, right? So that transition from having used a smartphone for many, many years and suddenly because of your age and whatever, you have to have a simpler device, you can simply switch between. So it's not entirely for elderly people. And then it comes with Android 16 and also with upgrades of the Android system for next 5 generations. It has both near field communication and fingerprint sensor, which means that you can continue to do online banking, as you have done with your previous phone and all public services. So I mean, today, especially in some markets without this functions you are really stuck. And it has another important feature for elderly people. It's the Bluetooth [indiscernible] With the integrated ASHA protocol, which is a standard for hearing devices. So it automatically switches Bluetooth into your hearing device if you use one, and exceptionally good sound quality. So you see there are a lot of functions that are designed for elderly people, and it's not just an ordinary phone and it's a solution that you can use both as a traditional phone and also for people who have certain needs. When we launched this Ference, we had in Germany and in Austria, 57 publication. We sold out the entire first batch as soon as we got them in. We launched it together with Swiss, which is known for being the toughest operator in Europe to work with. Sales was good that we had to ship in another batch that just arrived. Yes, today, no money in [indiscernible] And then we are continuing to ship out. So this different publications reached 23 million potential readers in Germany and Austria. And you see a lot of this is about the uniqueness of having no fear of falling as a person or losing the phone. And it comes also with the 1-year warranty. So a lot about the features I just talked about. So a lot of product presentation for me this time. Next time will be much more about numbers and how the business is operating.

Thank you, Kjetil. So I will wrap it up with two slides because we are almost on time, on the hour. So very excited about the foundation Tommy mentioned, growing quite optimistic going into a strong season in and we cannot wait to see the financial output from Kjetil, which we look forward to report in the coming Q3. We are, in fact, building Europe's leading family IoT company. Just wanted to highlight to you our combined annual device sales, like Tommy mentioned, the foundation in Doro roughly 1 million. Xplora historically have had 0.5 million. And I expect Kjetil to soon get back on track to previous height on roughly 300,000 from Emporia. Just please bear in mind Emporia had 240,000 units last year. They have had limited financial actors. So we expect the number to grow eventually back to those numbers, but we now see roughly 1.8 million asset base before further growth. And currently, a active market in Europe, one in the U.S. But like I said originally, we do add two new growth engines by adding these two markets eventually Emporia represents. And also now we have like Knut said, financially, huge benefits of having all these hardware platform. We can utilize across multiple markets. And as we know, more product to sell means more cash in the bank and revenue. For the outlook to end, of course. We will continue. The market is where it is. We know the markets are changing. It's all about us having more products, strong strategies to execute. We will continue to focus on our three main KPIs, gross profit growth subscription and EBITDA after CapEx. Like we mentioned, please pay attention to our sharpening retail model, how this will implicate hopefully both more sales, but a higher conversion rate with Sims. Emporia will, short term, of course, add revenue. Short term, it means plus/minus on the EBITDA financial side. When you are calculating, we can have a discussion about that afterwards as well, but it also will help us add the synergy effect of [ NOK 50 million ] reduced OpEx comparing apple-to-apple going into 2027. And we stay very firm on the 1 million path. We are on track. And even though we have been some delays with the Senior implementation, we do feel very strongly about the end game of 200,000 subscription when we reach 2029. And as Knut said as well, we are also on the path to constantly deliver more than 100,000 net subscription on the Kids and Youth. Keep in mind, we could now also have more product, and we are tapping into this very exciting market with Youth as well. So I think that basically wraps up bang-on 10. And I'm pretty sure there are some questions at the end. So Knut, Kjetil, join me on stage. We will have the rest if there are some questions as well. We could want Tommy. Go ahead shoot.

Let's start online and then we do the audience afterwards. So it seems like device gross margin was quite high this quarter compared to previous quarter. What can we expect going forward on gross margin device sales?

I can take that one. When it comes to gross margin, we had a very good and strong gross margin this quarter, mainly because of the product mix. So we are still aiming for the plus 40% gross margin target that we have stated for some time. And we will try to keep the overall gross margin at historical levels. We do not see any big change in those going forward.