Qt Group Oyj

[Abrupt Start] Qt Group’s Q4 and Full Year 2024 Results Presentation. My name is Hertta Narvanen, I am the Communications Lead at Qt Group, and I’m here today with our CEO, Juha Varelius; and our CFO, Jouni Lintunen, who will be sharing the results.

After the presentation, we have some time for questions, first, starting from the room and, if time permits, then from the conference line. But let’s dive right into it.

Juha, please go ahead.

Thank you. Thank you and good day to everyone.

My name is Juha Varelius, and I’m going to go through the business highlights and then Jouni financials, and then I’m going to talk about the outlook and guidance for 2025. So, our net sales on Q4 grew 15.5% and reached the €68.5 million, and our growth was 14.2% on comparable currencies.

EBITA margin was 45.8% and €31.4 million, which is an increase of 21%. So, this obviously highlights the fact that our business is very scalable and it is very profitable business, although, of course, we are not very happy about the growth rate.

We would have liked to have a faster growth for the Q4 and for the whole year. Well, what we actually can see for the whole year is that our revenue was mostly impacted on the distribution license sales.

Our distribution license sales grew only about 2% on the overall year. A year ago, when I was here, I said that the distribution license revenue is going to be growing not as fast as the year before.

The 2023 growth was very fast growth. We had clients launching big projects.

So the comparable figure was big, but yet we were expecting for the whole year a faster growth on distribution licenses. Also, we saw that our consultancy revenue was pretty much stable.

So the – we have quite – we had quite a large chunk of revenue that was basically flat during the year, and that, of course, impacted our overall growth. So the – if I look on the developer licenses, developer licenses were doing significantly better, of course, because the whole company was doing 16% and on a whole year.

And if I look at the QA business, it was growing on a healthy rate. So I’ve said before that the QA business is like Qt 2.0, and that it basically is, if we look on the state where it is, the rate it’s growing and its EBITA contribution, obviously, that’s the area where we are investing the most at the moment.

Our profitability was on a very high level. We had, well, close to 900 people, December 31 increase of 11 people on the Q4, and we are going to continue on the – on our investment plan.

So we’re not slowing down on our recruitment this year either, and they are mainly going to go – they are more going on the QA side than they are going into Qt side. So the overall was €209 million, 15.7% comparable currencies and EBITA was 34%.

And like I said, the distribution license and consultancy sales was the – where we had struggles. As that – now you can see from the financials that that represents like one-third of the revenue.

Obviously, that slows down the overall performance of a company, and whereas that means that the developer license sales has been doing favorably. If I look on the regions, APAC is doing good, and Europe was pretty much flat, and U.S.

is also on a slow side. If I look on the distribution license sales, where we see the biggest challenges in our customers, that’s basically on the consumer electronics side, and then we see automotive fluctuations in certain regions and certain regions are doing pretty well.

And well, that’s kind of self-evident that we can see where that is coming. If I look the – well, I’m going to talk about the future outlook after Jouni goes through the financials.

We continue our growth investments. We actually – we haven’t – we have a longer-term plan where we’re going, what we’re going to be investing, and we are executing on that.

So the – of course QA, like I said, it’s like a Qt 2.0. So in its €30-something-million revenue, we’re still heavily investing on R&D and product and so on and so forth.

Well, QA portfolio development, we are adding more products all the time. And the question about M&A, we are looking actively to do M&A.

We didn’t do last year. We just weren’t able to finalize anything, but that lookout still continues.

So, we’re looking for new products to add in our portfolio. And then, we’ve done some launches on AI, information security and so on.

The strengthening our ecosystem; well, we have a great partnership with Infineon. That’s the latest one where we cooperate on sales on a global space.

That’s basically that concentrates around the MCU. We’ve been very happy about it, and we see that it’ll strengthen our sales efforts going forward, and we’ve seen a trade developments, for example, in APAC on that.

Then there is Qualcomm, LG. LG is a long time customer of ours and a strategic partner.

We are expanding our educational license base. So for us, the – it’s not only revenue, it’s also growing the ecosystem.

We have quite a lot of activities on that, and we are doing – we’re trying to work – we’re not trying, we’re working very hard to get the community growing and having it bigger. And then strong growth in Qt Academy users, which is our effort to educate people how to use Qt.

So, that all goes into the fact that we are also growing the Qt ecosystem. So, overall, if we look where Qt is today on embedded market, we can – we see us, that on the segment where we are, we have a very solid and robust environment.

So, if I look in the earlier days when we started on Qt, we had quite a lot of smaller competition. And if I look where we are now and where they are today, we’ve really – we have a really solid foundation in embedded space where we operate.

And now we are expanding that space using QA into the testing market. So, overall, if I think the last year – well, of course, I mean, it’s fair to say we’re not happy about it, right?

We were expecting a higher growth. If I look on a big scheme that the – which on a yearly level that the – where we were behind our targets, that’s the – that’s pretty much mainly on the distribution license sales.

So that is the segment where we thought that we would be doing better. So people are still investing.

Our customers are still investing. They are buying developer licenses, and they are continuing their projects.

I’m going to talk about a bit more about the future outlook after the financials, obviously, with the situation. Even though we think that the 2024 was not that great, and now we have 2025, well, I don’t think that the market has gone a whole lot better just because the calendar year changed, but more about that in a while.

So, over to you, Jouni.

Thank you, Juha, and welcome from my behalf as well to the Qt results presentation. You have pretty well covered already the net sales part.

Just a couple of words of repetition though. We grew by 15.5% in Q4 in net sales.

And the FX impact, mainly USD was positive €0.7 million this time, and coming from the fact that last year in ‘23, USD was devaluating at the same time, and this year, we saw a strengthening. Well, no news that the license sales and consulting was the driver of the growth, and specifically the license sales because there is an ongoing softness because of the market in the consulting side.

For the full year, there was no impact from FX pretty much and the net sales grew by 15.7%. And same kind of story continues that it’s coming from the developer licenses, where we saw the kind of consistent development.

In distribution licenses, we saw 1.9% increase in net sales, and that’s reflecting the – or mirroring the kind of uncertainty at the customer markets. We do see maintenance revenue going up after a couple of years of decline and that reflects the kind of conclusion of the subscription license conversions, and then it will be trending with the – kind of in line with the license sales.

We expect to see going forward as well, big impact from the FX. Majority – more than 50% of our sales are in USD and also timing of the large deals, Even though the overall volume has gone up, the timing of large deals still makes differences between the quarters and even calendar years.

When it comes to the P&L, we see the first line there in the expense side, the materials services, it’s reflecting, mirroring the consulting softness, and that’s one way as well to kind of compensate or mitigate the risks from consulting volume changes. So, we level off about kind of resources by using external consultants where need be.

Our personnel expenses went up on annual level, 12%, which reflects the overall headcount increase. In Q4, our headcount went up by pretty much the same ratio, 12%.

However, the personnel expenses were up by 8%, which is a sign that there were some reversals of bonus accruals then done in Q4. No major changes in depreciation.

It’s not any capital extensive business we are at. So roughly €3.5 million annual level also expected going forward.

And the slight increase in other operating expenses is coming from customer-facing activities and like putting efforts into new market entries as well at the same time. Q4 EBITA was up by 21% to €31.4 million.

And the full-year EBITA is 34.1% compared to 30.6% last year. And the amortization of intangible assets coming from the acquisitions, its run rate is €8 million a year, and that leads us to full year EBIT operating profit of €63.2 million or 30.2%.

Our financial items are positive. There was a reduction of the earn-out liability from Axivion of €6.7 million roughly.

And that is coming from the fact that the – that acquisition, in a way, in short run, didn’t meet the set targets that was kind of agreed on the – at the time of the acquisition. And then, the effective tax rate is roughly 19%, and we expect that to be at 20%, around that level going forward as well.

Full year net profit, €57.3 million or 27% and the EPS for the year is at €2.26. When it comes to the balance sheet side, there is no major fluctuation over there.

First of all, the operating cash flow was pretty good actually in ‘24, €54 million. And then, if you look at the assets in more detail, you see that the ending cash was up by like €31 million to €65 million despite the fact that we repaid the €60 million loan as well earlier in Q1.

Our receivables is up roughly €7 million – €6 million, €7 million, and that’s very much in line with the volume development of the last quarter of the year. And as a positive note there as well, there’s a €3.2 million reduction in the contract assets bucket as well year-on-year.

Liabilities are down somewhat, driven by the repayment of the loan and also the reduction of the earn-out liability that we booked now in the second half of ‘24. That’s probably the main topics from the numbers.

So I will hand it over back to Juha, who will talk about the outlook and guidance for the year.

Thank you. Thank you.

So if we look at the long term, as we discussed the – a bit after last year, my expectation – well, on the long term, obviously, nothing has changed. People are still buying developer licenses.

Graphical user interfaces are coming, more and more devices. We see more and more kind of sub-segments that are getting into graphical use interfaces.

We see the existing customers doing next iterations and so on. So, we see – on a market perspective, we see that the market is still growing many, many years to come.

And the – also the software is coming increasingly complex, needs more and more testing and we see quite a lot of customers doing manual testing. So again, we see quite a bit of the – we see quite a bit similarities to Qt because when we started Qt, the – one of the main competitors was the fact that people didn’t – the customers weren’t using any tools, they were doing it by themselves, and then they changed into our tools and were much more productive.

On testing, we see quite a bit of manual testing in the market. So the – that’s kind of the outlook.

If I look into bit more detail, if I look on the consultancy business, I don’t expect the consultancy business to grow substantially from last year. And the reason for that is that we – our consultancy is mainly helping people on our customers, new customers, getting started, making sure that the kit really works, and then we also solve difficult performance issues and such.

So we don’t aim to do just the kind of a body shopping in consultancy. So if our customers just need – if they just need more hands, we do have lots of partners that we usually direct our customers to go to.

And the amount of consultancy people we have now, I think we can sufficiently say that we can supply that support that our product sales needs. So that’s going to be pretty much flat or very small growth, I would say, this coming year.

If I look on the distribution licenses as of now, I think the view now is that they’re going to grow – they’re going to grow from last year. And when I say to grow, I’m expecting them to grow more than 2%.

Do I expect them to grow on the – we have a new guidance of 15% to 25%. So do I expect them to be – they are probably lower than that 20%, but they are above of 10%, I would say, roughly.

And when – saying this, the – now comes the disclaimer. And the disclaimer is that if we look at the market environment now, I’ve said before that our Automotive segment is like 15% to 20% of the revenue.

And if you – if we look at the market situation now, well, we have in the works, we have in the air that there might be tariffs coming to Western automakers to U.S. and the U.S.

automakers are obviously having trouble in selling in China. That’s basically the – I think that that’s one slowing factor.

If I look last year that where our – in automotive, obviously, we are also working in APAC and on that part of the world, our Automotive segment is doing very well. If I look into other industries, I would say that last year, the consumer electronics was the one that was slowing down.

If I look this year, well, the expectation, of course is, as you know, that in Europe and in States, the consumer spending will start growing. Inflation is coming down and the interest rates are coming down.

But the – of course, there is a certain risk in the market. So, when I said that the – where do we expect the distribution license revenue to grow?

We have taken into consideration that this market environment that we are currently. So, that’s our estimation that things will stay fairly challenging as they are at the moment.

If that changes to a positive outlook, obviously, then it’s a more positive outlook. But when we say that it’s going to grow more than last year, but it’s not going to go skyrocket means that the – we’re looking – this is the outlook we are having now in the market.

If I look on the developer license sales, I do expect it to continue as last year and the year before. So, it’s on a healthy way going forward.

So I don’t expect any slowdowns over there. And this is the fact that we’ve very often talked about that we do have Fortune 500 companies and they do have long-term plans for their product development and product launches and we don’t see any slowdown on that.

That’s a – they need to be growing because the – otherwise, there wouldn’t be any new products coming into the market. If I look the – then the QA, the combination that we can offer, software development tool and testing together, that works very well.

Strategically, that’s a good combination. If I look at our product portfolio that we have, if we have – in the middle, we have Qt open source and commercial usage on embedded.

Then on the front, we have the – we can think that Axivion is actually for – well, it’s architecture verification, but it’s also static code testing, so the developers can test the code while they are already building something. It’s a very good tool for the architecture verification, one of the kind.

And that is actually needed when you build something and you add all the time all kinds of stuff, all kinds of features on your software, you need to be able to control your architecture. Otherwise, at some point, you lose the control and then everything is going to get very slow.

Static code, the developers can test while they are building the code and making sure that they don’t have bugs, works very well. And then comes Squish at the end, where you can do testing of the actual user interface and see that everything works.

So – and when you do changes on your software, you can do that testing. And we’ve been very happy.

Squish has been gaining attraction. So, we can sell Squish to our commercial customers, to open- source users, and then we can sell Squish to outside of Qt ecosystem, mainly Java and Windows users.

And there, we see quite a lot of manual testing. So, our competition is manual testing to convince people to use automation.

And when we all the time talk about the lack of engineers, so, of course, it’s a very compelling thing that if you can do something automatically and put the engineers working on something more productive. On Axivion, we bought that like 1.5 years later.

The – I think that what we’ve seen on that is that the – of course, it comes a bit – it follows Squish, but there is that lag, it’s a bit behind. What we’ve seen on Axivion is that the first deal usually is a fairly small one.

It’s like a €50,000 deal, and then the expansion deal is like a €0.5 million deal when people expand. We also – the churn on Axivion product has been very, very small.

So the people that start using Axivion are actually very happy about it and then they expand the usage. This year, main focus for us is to get those small deals in the United States.

And in APAC on Axivion and on Squish, we are expanding, like I said, outside of Qt ecosystem and concentrating on selling to Qt customers, whether they are open source or commercial customers. Over there, on our penetration on the open source is still relatively – it’s a low double-digit number.

So there is a substantial room to grow in that segment going forward. So, not only the QA actually expands our addressable market, but at the same time, we can sell it to our Qt ecosystem, and we’re still on early phases on that.

So we do have a target that the QA business will hit €100 million revenue in a few years. I’ve not given any timelines.

This time, I’d have not given a year, but it’s not that far, and it’s very profitable. So the – we’re very happy with our testing business, and we’re very happy of this product portfolio and how it fits together.

So, all in all, the – there is a growing market, there is a market need for our products. And what I see is that the – on a short term, obviously, there is a – as we all know, there is a lot of uncertainty.

The – how the European economy is going to be developing, I think that’s where we see the biggest challenge. We see that the APAC economy is going to be growing.

I mean, of course, there is China growing 5% or 6% or is that disappointment? I think that if we were growing in Europe, 6%, everybody would be happy.

But the economy over there is growing. The industries where we operate in APAC, in Japan, China, Korea and India, they are growing.

So we see that the – that’s going to be good. Europe is a bit of a question mark.

We think that the – one way or the other U.S. will be growing.

In the U.S., I think that we can be also more efficient. If I see our execution over there, we have a bit of room to improve in that particular market.

And then we have this uncertainty that the – what’s going to happen with tariffs and whatnot. So it’s – all this talk and if you want to put it in a very – one sentence, this year, the biggest risk is on distribution licenses.

I don’t expect that we’re going to see any big fluctuations how our developer licenses are growing and going forward. So that’s basically the big picture.

And if I look on the distribution licenses, it relates very much how the economy is going in those target markets or how the economy is going in the target markets where our customers are selling their products. So in automotive, obviously it’s a global play for our customers.

And now what we see is that there is a very strong supply of electric vehicles from China. There is an oversupply on what they build over there, and that’s going to – one way or the other, it’s going to be floating into Western markets.

And yet on the China market, it’s going to be very – first of all, it’s going to be very difficult to sell the traditional power line vehicles, which is diesel and benzine engines. I mean it’s going to be more electric play.

And many of the Western manufacturers are behind on that race in – as we can see. So the – for our Western companies, it’s going to be a challenge to sell in China, and there comes oversupply towards Western countries.

So, that’s basically it. And on Automotive, obviously, we work on all 3 continents.

So it’s kind of a mixed bag for us in that sense. Guidance for 2025.

Well, we’ve set our guidance to 15%, 25%. We’ve changed that from the 20% to 30%.

And well, there is this uncertainty. The run times are not at this time growing that fast.

So I think that the – well, that’s pretty much where we’ve been operating now in the recent years. And the EBITA percent will be 30%, 40%, which means that the – we do see that we will continue this very, very profitable growth.

So, all in all, I see that the – looking into – if we look few years ahead, I actually think that, well, this – at some time – at some day, the economy will start picking up also in Europe, and it will start picking up globally. And then we are in a very good position.

But even in this – if things stay like this, we will be able to deliver a very strong growth with a very high profitability. And strategically, if I look at our products and the competition where we are, we see that we are in a very strong position.

Our product and the feedback from the customers is very, very good and – on both products. So, our product portfolio, the strategic fit to that product portfolio to our target customers is pretty much superior.

And – so all depends on that how can we deliver that message? How can we sell?

How can we get new customers? That’s one thing.

We very often look on the revenue and what’s happened on the revenue. And then we know that the new customers, they usually – when a new customer comes in, whether it’s QA or testing or Qt customer, the first deal is always fairly small.

So the – of course, we do want to accelerate the new customer acquisition, but last year, that was on a good level. So that didn’t slow down at all.

It was a good level and I think that we’re going to continue. So, we do attract new customers at a very good rate.

And they don’t show on the revenue so well because, like I said, every time – even if it’s a big, big company, when they start a new project, they only take like 10 or 20 licenses and the first deal is fairly small. We talk about €50,000 or €100,000 deals.

So that new customer acquisition never shows on revenue at first. Then on the following years, they expand the usage, which they usually do.

And then the next deals are bigger deals. They can be hundreds of thousands or million, some deals are even millions, what we’ve seen.

We also see that our churn is very stable and very small. And usually, when that happens, it’s the fact that it’s a medium-sized customer that has done 1 project, the project ends and then there is no need for any of the tools.

We see quite a lot of – quite little churn that people would change from our product to something else. And of course, Jouni didn’t mention, but our balance sheet is very healthy.

So we don’t activate any R&D. We put everything.

So this profitability is – we book everything as a cost. So R&D expenses, we always book as a cost.

We don’t activate that. So, with that, I think that it’s going to be a challenging year, but we expect it to be a better year than this – the last one was.

And we hope that this uncertainty will go away as quickly as possible, because the uncertainty always – it usually doesn’t reject the decision-making, but it slows it down. So, if we are going to have 20% tariffs, let’s have them right now, so we know where to operate.

But when things are moving and there is a lot of uncertainty that tends to slow down the decision-making in our customers. Usually, it’s slow down.

It’s very seldom that the projects get shutdown completely. It does happen, but it’s very rare.

So, our product goes into – it goes into situation where customers have decided to build something and they have manufacturing – they’ve designed the product, they have manufacturing parts ordered, all that. So shutting down something because there is uncertainty of market is usually not what happens, but delays can happen, and that is – that’s why the uncertainty is never good.

So, with that, over to questions. Thank you.

Thank you. Hi, Jaakko Tyrväinen from SEB.

I’ll start with a bit short-term question. We are now in the middle of Q1 and with all the disclaimer that I understand that your sales is always tilted towards the end of the quarter, but you had some postponing deals in Q4.

Have you already been landing those deals during the first months of Q1, i.e., how strong Q1 performance we should expect, remembering that Q1 last year was also a bit slow?

Well, yes, Q1 is always slow. I mean, the Q4 is substantially strong quarter for us every time and then everything is closed, and you have a Christmas and New Year’s over there.

And it seems to be a slow start, not with us, but with our customers. So, Q1 is usually a very slow – January is awfully slow month for us.

And then it starts picking up. Q2 is a lot better.

And on Q2, I must say that the – do remember that the comparable on Q2 this year – last year, we had a big deal on Q2. So, the comparable number is very tough this year.

And then, Q3 is slower and Q4 is – it’s in its own world. So, that’s basically what you can expect.

On these bigger deals, some we’ve closed. The biggest ones we haven’t and the far out the biggest one, I think that that’s going to be more like a Q2 or Q3 deal.

There is still a negotiation going on, on that. Will that be closed?

For sure, but yes, it’s not going to be on Q1.

Excellent. Thank you.

Then on the softness in distribution licenses, have you analyzed what has been the kind of impact of the inventory cycles – the inventory cycles of the end product itself and on the other hand, customers having inventories of your distribution licenses?

We haven’t now – at this point, we haven’t been able to do that. But the, in general, I think that this uncertainty has the effect that that people are trying to secure cash flow.

So – and there is uncertainty. So, people are more on distribution licenses, like I’ve said, is that the – some customers, they report afterwards that how many devices they’ve been sending and then they pay us and then some people buy upfront pre-buy and then they buy again when they’ve used the pre-buy that we’ve seen that the tendency is away from the pre-buy and the afterwards reporting.

But what’s actually the inventory cycle? I don’t know.

We do have very many sources of the runtime revenue. So, it’s a bit of a time consuming.

This is not knowledge now, but the – and I don’t see how this is going to be affecting. But I would think that the – in this current situation when there is a risk of tariffs to export to United States, it would make sense to send stuff over there now and build up the inventory.

But is that really happening? I don’t know.

But I mean – if I would be in charge, I would be sending big inventory in the U.S. right now.

But is that happening? I don’t know.

So, I mean, don’t take this as a guidance or anything? But the – I mean, just when you think about it, I mean, it would make sense.

But of course, there is a cost of inventory as well. But the – yes, so I can’t answer to that.

but like I said that the – on industries, medical is going very steady. Defense, unfortunately, is going very steady, and it’s doing well.

If I look at the – what’s not going – well, the industrial automation is – it’s unclear segment in that sense that there is quite a lot of stuff that’s a bit slow and if I looked at which one is really slow, it’s the consumer electronics. In our automotive, it kind of balances, like I said, that APAC is doing well and the rest of the world, not so.

Okay. Then on the license maturity mix and splits and perhaps looking at the renewing 3-year licenses, which has much higher revenue recognition, and I’m referring to the renewing ones.

If you compare ‘24 to ‘25, are you expecting more 3 year or more or less 3 year licenses to be renewed?

Well, Jouni can add flavor. But what we see is that the – when we went into the subscription and first time they came into renewal, then we highlighted that there is a risk that we don’t know how people would be renewing.

But it seems to be that the people that – what they have bought that they renew. So, we don’t expect there to be much fluctuation.

So, if someone has bought a 3-year license, they are going to renew 3-year license. That’s how it seems to be working.

And there is very little fluctuation on that. When something big happens like when there was COVID when – well, Ukraine war started, then we saw for a short while that the 1 year – on new sales, you can see that fluctuation that 1 year licenses are more when there is lots of uncertainty.

On a longer term, it seems that the fluctuation hasn’t changed. It’s pretty stable now.

I may add to the maturity mix on renewals. If you remember, like ‘21 was very slow in conversions then – sorry, 2020 was low, ‘21 high again and ‘22 high.

And now, we saw increase in ‘24 from the renewals initially done in ‘21. And we will keep on seeing high level of renewals also at ‘25 when it comes to the renewals from – initially from ‘22.

Okay. So, there was a promise.

We will see high. Thank you.

Yes, probably not a major increase though, but it’s going to be on high level.

Okay, yes, disclaimer came. Yes, so the – yes, people seem to be – churn is low.

It’s very constant – constantly low and people seem to be renewing what they have been buying. So, that’s what we see and that’s what we do expect.

And of course this is kind of – that’s what makes our business so nice. I mean okay, first people buy a first project, then we do expansion deals, they expand, they use it and then they go into renewal.

And they are going to – and many of our customers have been with us, say, a very, very long time. And so that’s – I think it was in early days of Qt, I said 2016, 2017, I said that this business is – it’s not going to be like crash and burn.

It’s not going to go down very quickly. I mean if something really bad would happen would be that our revenue growth goes flat and then the existing users will be there, and this would be a very profitable business for a very long, long time.

And we don’t see that happening. We actually see the opposite that we do get new logos and new customers all the time because we are coming a bit of a reference in this embedded world that the Qt is good.

Excellent. That’s not all from me, but I will hand over the microphone.

Okay. Good.

Thank you.

Hi. It’s Matti Riikonen, Carnegie, a couple of questions also from my side.

Let’s talk about costs. You had roughly 12% headcount increase in ‘24.

Also fixed costs roughly increased by 12%. Did you curb your spending last year when you noticed that top line is not going to grow as fast as you expected, or was that 12% increase in your plans?

Yes. We haven’t stalled any of our investment plans, not at all because we still – we see lots of growth opportunities.

We see long-term growth opportunities. So, we are investing, as planned.

And on QA, we obviously – we are investing the – basically, I would say that on QA because we bought two companies, they had like – they didn’t have very many people. They were fairly small.

So, the – I would say that the limiting factor over there has been that if you have 30 people, you can think that how many people they can hire, and that’s more of the limiting factor. So, we tried to accelerate that growth as much as possible.

And no, we did not slowdown at all.

Then going forward to ‘25, do you plan to have a similar fixed cost increase for this year as well, taking into account that your top line growth target is now 15% so that there would be kind of room to absorb the extra cost with your low end of top line guidance?

Well, the guidance is 15% to 25%, so not 15%. But would you want to answer to that, Jouni?

Sure. I mean we are continuing the investments heavily into the growth areas specifically.

And I do not expect to see any kind of de-scalability in a way. However, I mean we want to see the kind of increased revenues outperforming in a way that we will see not any decline in our profitability in this regards.

Alright. Fair enough.

Then a couple of questions about top line growth and the drivers there. You already talked about the distribution license revenue side.

And I just want to kind of clarify regarding the contract renewals. Do you think that the growth contribution from the renewals would be roughly the same as it was in ‘24, or would it be increasing in ‘25?

Well, on these terms, it’s going to be roughly the same. I mean no major difference.

Alright. So, in absolute terms, growing, but in relative terms, not a great kind of growth increase as you expected now?

Well, it’s part of our plan for this year altogether.

Sure. Then you talked positively about the testing and quality assurance business.

So, it has tripled last year since the revenue that you acquired it from. Do you think that it would be too much to expect €50 million net sales from that business in ‘25 already?

You have talked sometimes about the €50 million target being achieved, of course earlier than the €100 million, but in fairly close proximity. Is it too much to ask from ‘25?

Well, I would say that – well, we don’t give guidance on that specific. And obviously, it’s on – its earlier phases, giving exact guidance at this point of time is, on small numbers, it’s a bit difficult.

But I would say that the – if everything goes really well this year, yes, that is achievable. But that would be the top range of it.

And then we come to the point that the bigger deals on QA, I see on Axivion and on Squish, they can be as high as 1.5 million or even slightly bigger. So, if you think that you lose couple of those and then all of a sudden, you are in 45.

And so it’s the timing, right. So, that’s always good to keep in mind that a couple of big deals can really swing that.

But if everything goes like on movies, then yes, that would be – you could expect something like that on a high-end, yes. Sure.

Alright. Thanks for that.

And then finally, when you think about the distribution license business and the growth in ‘25, do you expect any large customer programs going live with net new volumes this year, or is it more like flat and then the cycle just decides what it does?

Well, I mean it’s a living creature. If you think about on license sales, the people continue using the licenses, they have their developers, they may start new projects and then they need more licenses on that, and that’s very solid.

If you think the life cycle of a distribution license, something is launched and it’s big and then it’s being sold and then it gradually – so, it goes down. So, the – if we look at the distribution license portfolio, there are things going down and slowing and dying and new ones coming in all the time.

So, it’s this kind of a bucket of revenue in a sense. So – because customers always have old products and eventually, they are going to kill them and then they are going to launch new products a bit before.

So, to be able to even stay flat, you need new programs starting all the time, right, and to be able to grow. But yes, of course, we do have very large number of big and smaller customers over there and we do see new additions all the time.

Alright. Thank you.

That’s all from me.

Hi, Waltteri Rossi from Danske Bank. Few questions, about the 3-year licenses and deal slippage you mentioned in Q4, are these two actually connected?

And were these slipped deals, in fact, 3-year license deals, like to a large extent?

Sorry, were they…

Were the slipped deals 3-year license deals?

Oh, 3-year license deals, well, yes, we have a couple in the works over there. That’s basically the – what we see is the uncertainty over there that the – some of our customers around the year-end, they have put kind of a spending on hold and they are reviewing what’s happening on the market and whatnot.

And when you think about the product development type of a cycle, you can – in the beginning of product development, you can always postpone that development, the launch of a development, obviously. And so we see that.

And then we have one major big deal that the – I think we are going to – we are definitely going to close that during this year, but what’s going to be the timing of it. And that’s kind of the situation now.

Usually, when we have a bigger deal, it’s quite seldom that they would die because they are the so far end of the process. And at the end of the day, in a project, we represent fairly small part of the cost, so.

Alright. Thank you.

About the developer licenses, how much of the growth is – or last year came from price increases and how much from volume increases?

We didn’t think – now I am – we didn’t – on developer, now I need to ask – we didn’t – sorry.

Like 5% increase.

5% increase, yes. Okay.

Yes, because, yes, I was thinking that not a whole lot. Yes.

And are you expecting to do similar kind of price increases this year as well?

On some product portfolios, yes, the – on developer license – well, on developer licenses, the – let’s say, yes, but let’s see how they go through. Yes.

Well, yes, you can probably expect something like 5% because on general, if we look our three markets the – you can still see the inflation. In the U.S., the inflation is higher.

You are in a 3%, 4% range, right. So, over there, yes, in APAC, yes, higher inflation in Europe, really in the roads, so the – yes.

Alright. Thanks.

Then still a few more. You kind of already touched upon this, but did you have any major customer losses during the year regarding developer licenses or cancellations?

No.

Okay. So, basically all the churn that you are seeing is coming from medium-sized customers?

Yes, small. So, I mean at the end of the day, we do have also like start-up.

We do have a start-up company license even and we have from start-ups, small companies and whatnot. So, the – on these big, big – our big important customers, no, not at all, but we do see, of course, on some segments, we do see that the cost control has come to a very strict.

We see that the top management is putting controls on spending on some of our big customers, and then we see segments where that’s not the case. So, obviously, on defense, the case is more that how to accelerate faster and how to be able to invest faster and whereas on automotive, you can see that the cost control is there more in place.

Okay. Just to follow-up on that.

If you take automotive, for example, and your large customers there, have they reduced the number of licenses they get from you, or…?

No, it’s more on the fact that, do they – how do they start new projects at the moment, but are they doing the existing projects, are they scaling down, not at all. And at the end of the day, I mean they do have their manufacturing facilities and whatnot.

So, we don’t – that, we don’t see. But what we see over there, obviously, is that some of our customers haven’t been selling cars as much as used to and some of our customers are actually accelerating.

Alright. Thanks.

One last for now, what challenges have you had in the U.S. execution?

You have mentioned that twice.

I said, well, it’s – this is more like an operational issue. If I looked at the – how our sales been performing in other parts of the world, I think that we can do better with the – overall, if we are looking internal ratios like number of sales guys, how much they are selling and whatnot.

So, these type of things. So, I think that we can improve efficiency over there.

Alright. Thank you.

Hey, Antti Luiro from Inderes. A future-oriented question, so if you think about the opportunities for Qt in the long-term, what are the kind of most exciting ones for you?

Obviously, QNA [ph] is now ongoing, but is there another wave you are sort of looking at then?

Yes.

Care to elaborate?

Well, if I look at the current portfolio, where we are at now, can we more than double this revenue, can we more than double the revenue where we are at now with this current portfolio, yes, we can. And even a bit beyond, I would say.

Well, on a longer term, yes, can it be 3x the current revenue, yes, it can. What is – and that’s probably we are – and now we are talking about long-term, so a bit of a disclaimer.

But can we double, triple the current, but can we go beyond that, well, obviously not. And then the big question is that the – now on embedded, we have this combination that we have a very good development tool and very good testing around it, and it works really well.

And we are on a very robust position on embedded, right. So, now the question is that do we strengthen our position on embedded even further, or would we take steps into web and mobile environment.

And web and mobile environment are totally different environments because there you usually have products come and go, you have lots of free products, you have lots of €20, €30 monthly payments, not like our embedded in that respect is different. On embedded, the licenses are more expensive and whatnot.

What would be the entry strategy going in there, let’s see. Do we have a long-term plan or long-term planning and what’s going to be our next step, yes, it’s a very acute discussion inside the company.

And yes, of course we are thinking our steps in a way that we can continue this growth even after these current products, after we have doubled or tripled the revenue with these existing products that we still have a way to grow. And that gives you maybe some idea that how we view this.

I think it’s going to be a combination of developing, testing and some other things around it surrounding the security probably. Do I see that we are going to go well beyond than doubling or tripling this revenue on longer term, yes, definitely, that’s absolutely no doubt.

And then if I look on a longer term that the – is the amount of how AI is going to be affecting, well, AI is definitely going to be doing kind of a simpler. AI will be doing simpler software.

And then the more complex software, you still need human touch in that and there we can help. And then if you think on AI, on simpler software, all the software needs to be tested and specifically AI software needs to be tested because you can always – you have to always remember that AI can do good things or bad things.

So, if you put AI doing something, you better have somebody to look over it, what has been done, and there you need the testing. That’s why I am so excited about the testing.

But don’t get me wrong, I am excited about Qt. It’s been a great journey with Qt and they have really – yes it’s – so I like Qt very much, but I like the testing.

Well, if you look at my career, I have usually been in building and growing new initiatives. So, that’s kind of the nature.

That’s why I talk so much about the QA. But Qt has – Qt still has a long runway to go, no doubt.

Alright. Thanks.

I think we are like two minutes overtime. But Felix, do you still want to ask some?

I am happy to answer. Yes, we can go overtime.

I mean if they don’t kick us out here.

Yes. Thanks for squeezing me in.

A couple of quick ones, I think it sounds like you are speaking a bit more about focusing on new customer acquisition in 2025. So, where do you see – in terms of the customer verticals, where do you see the biggest potential for landing new customers?

And what was the ballpark total number of customers in 2024 end?

That I don’t have now top of my mind, where do I see still growth, obviously we do have pretty good representation on the – in the automotive market, but there are still a few to capture. I think it was 2 years or 3 years ago, I said that we are in China and the place is full of small EV manufacturers and I think that they are going to consolidate.

Well, that’s what we have been seeing. We still have – we do have a fairly good position over there, but we can – there are still few to go.

On medical, on the specific thing where we are, there we have a pretty heavy market share, but we can grow on that a bit. On defense, we have lots of room to grow.

And then comes this consumer electronics. And then obviously, we do have these big players, but there is a huge number of smaller players to grow into.

And I would say that that’s basically the ballpark. So, we have on each, these are our strong segments.

We do have a fairly strong position on defense. There is more room to grow.

And then consumer electronics, which means at the same time that some of those are going into kind of smaller companies from these giant companies. And then obviously, we do still have quite a lot of room to grow into – in big companies.

So, if I look at a big company that how many divisions are using Qt and how many are not, we still have room to grow over there, too. So, we concentrate on to – internally, we talk about new logos, and when we talk about new logo, a big new division in a big company, it’s also considered new logo.

Okay. And then you also mentioned that over time, you have taken share of these customers’ in-house solutions over time.

But if you look at your total addressable market today, how large of a portion is still controlled by in-house solutions?

Well, we see less in-house solutions now than we saw in 2016, obviously, but we also see that we had competition then. And we see that that competition is kind of fading away and we are coming in place.

So, I do see, like I said, I do see easily that the Qt – if we don’t put QA aside, I can see easily that we can double the Qt revenue still going forward in the coming years. No doubt on that.

So – and we also see that there are – this kind of started in the automotive. That’s why we talk so much about the automotive because automotive was the first building the IVIs and clusters and whatnot.

Then – and medical was, if you go in a surgery always touchscreen and whatnot. I think originally, actually, this started from aviation.

It was a class cockpits on airplanes that – which was even before automotive, but it’s a very small segment. And yet then we have been seeing more and more industries coming into this and smaller and smaller devices are having these graphical user interfaces, and there is still a lot of room to go on that.

And then obviously, they are doing the next iterations. But we still have big companies that we are not in all of their divisions and/or not all of their product portfolios and whatnot.

I mean at the end of the day, the biggest benefit you get using Qt when you are using Qt on all your programs, all your products because then you can shift developers smoothly from one project to another, and some customers are doing that. A large majority of customers are not there yet.

Okay. Thank you.

Thank very much and thank you to everyone. Sorry, 6 minutes over.