Qt Group Oyj

Good afternoon and welcome to the Qt Group's First Quarter 2025 Results Presentation. My name is Heli Jamsa, IR lead.

And with me today are CEO, Juha Varelius; and CFO, Jouni Lintunen, to present the results. After the presentations, we will first have questions in the room and if time allows, then we'll continue with questions on the lines.

But please go ahead, Juha. The floor is yours.

Thank you. Good day, everyone.

My name is Juha Varelius. And like said; I'm going to go first through business highlights, Jouni then on financials and then the outlook for the rest of the year.

So if we look our quarter, our net sales grew only 4.8% and of course that was a disappointment. We were expecting quite a bit more, but the challenge was the environment was very challenging for us.

Our EBITA margin was 17.9%. And well, we're not -- our EBITA, Jouni will talk about it more, but of course our EBITA goes very well hand-in-hand with our revenue because we are in a product business.

So given on that, we are not -- it's always a question that are we going to be reducing our investments for the future? And the answer is no, we don't do such decisions based on one quarter.

So what we saw during the quarter. If I look on an overall perspective, we had softness more in Europe and U.S.

and less so in Asia Pacific. So in APAC we were doing better and the market was not that soft over there.

Overall if I look on the renewals and how people were renewing, they were renewing pretty much on the same ratio as they traditionally have done. So people that have 1-year licenses renew 1 year and 3-year licenses 3 years.

So we didn't see any big impact over there or change. However, we did see people being -- customers being cautious.

They were very cautiously looking that how many licenses they need, how many they want to renew and on new sales, we saw a lot of uncertainty. We are R&D and R&D-based projects are usually that those you have a bit of a timeline that when to invest and when not to invest whereas if you have a project that's already in production, then it's going.

But on R&D where you start new projects, there is always a bit wiggle room. So in some senses, we saw a lot of uncertainty and we saw that pretty much on all our revenue streams.

If I look on Qt market, we did see of course industries like defense and medical, they're doing a lot better. In our automotive market, the market is very challenging in the Western markets whereas in China not so much.

And on consumer electronics and industrial automation, there were cautiousness as well on decision-making. So we do have some industries that are doing globally well and then we have a whole bunch of industries where this uncertainty is affecting.

Then if we look on our testing market, which is we talk about QA market testing, software testing. That was going on pretty much as planned and kind of makes sense because that goes more into the production.

So that is when there is already a software and it needs to be tested. So that's the -- we didn't see that much effect on this market uncertainty over there.

So basically people on some industries are waiting or pushing a bit forward and the decision-making is slower on starting bigger projects on specific industries. So in some industries like I said on defense, there are no delays whatsoever.

If I look and compare this to COVID, I kind of see the COVID times, then we saw an immediate stop. I mean we saw factories closing down and whatnot.

So this is not something like that, but we see a bit of the same behavior and same sort of the cautiousness over there. And so I think that if this continue, say, a bit longer this situation, we kind of think that we may see similar type of the environment where when the demand starts picking up again, that then there is a shortage of some parts and the supply chain disturbances because the supply chains are very long at the moment as we know.

So to build a product, the parts are coming globally here and there and then the investments are slowing down and people don't know what's happening. We think that the first effect we're going to be seeing is the problems in the supply chains in that respect.

How long do we think that this is going to last? Well, now we know that all the tariffs are on a 90-day pause so of say that the 1st of June or 1st of July should be that that's the end game.

I think that the uncertainty will start clearing out once we start seeing that where we're heading, then the things will clear out. But definitely we're expecting that our first half is going to be, in that sense the situation will continue.

We don't expect this to continue forever. And well, that's more of a future outlook when I talk after Jouni, but we don't expect this to last more than a few months because at the end of the day, all the products and services our customers are building, eventually they need to build them.

It's a matter of that when do they start and on what volume they will be doing it. So like I said already in the beginning, we will continue our long-term investments.

So we have the same plan that we've had and we are looking like 3 years ahead what we're going to be doing. If I now look currently, obviously we are on a percentage-wise investing more on the quality assurance because it's a smaller business for us.

We acquired 2 products and we're putting there more efforts on R&D and the sales, product management, marketing and so forth. But we continue our investments on Qt technology as well.

So in that sense, we don't see any changes on longer-term growth. We haven't seen -- if I look the overall the market, we haven't seen any increase on our churn rates.

Our churn rates are pretty much the same that they traditionally have been over the 10 years. We haven't seen any new competitors or competing technologies or such.

So in that sense, we don't see on the -- in the market, we don't see any changes on demand nor on our competitive situation at the moment. So basically all the disturbance we have is the market turmoil around us, which is a bit different in different regions.

We had personnel end of March, 888 and that's going to increase again during this year and I think we're going to be close to 1,000 when the year ends or around 1,000 give or take. With these words, I'll give over to Jouni and I'll continue with the future outlook after him.

All right. Thank you, Juha.

My name is Jouni Lintunen, CFO for Qt. And I welcome from my behalf as well to the earnings call.

I'll dig a little bit deeper in the numbers by going through the income statement and then some words about the balance sheet. And as we saw, the net sales was growing by 4.8%.

We get a little bit of tailwind from FX by EUR 0.6 million. And at the same time, you remember, we've been transitioning from the perpetual license mode into subscription during past 4, 5 years' time.

And now from now on, we are going to be seeing the maintenance bucket growing pretty much aligned with the license revenue growth going forward. Obviously there will be some quarterly fluctuations as well on that.

Our materials and services, we see a growth of EUR 0.4 million and that's driven by some consulting projects for which we used more external resources than compared to like a current general run rate and there's no kind of a major. In some projects, we level our resources by using external consultants and that's kind of 1 way of mitigating the margin for us when the volumes fluctuate.

We grew, as Juha said, by roughly 20 employees in Q1, by 82 year-on-year in 12 months' time, which is pretty much a run rate we've been seeing for 2, 3, 4 years as well. This is very much aligned with the headcount increase or personnel expenses increase as well what we see in our P&L.

And we are putting selective investments in place specifically into quality assurance testing business, primarily into R&D, marketing and sales. Well, one of our targets is new customer acquisition and then as well we have increased some headcount in our ventures team for kind of new opportunities.

Depreciation, slight increase and that's driven because of some extensions of the rent agreements and expansion of the space. No major difference in that and there's a little bit of offset in the other operating expenses on that.

And then other operating expenses pretty much proceeding or developing as planned. Plenty of efforts into marketing, into R&D, third-party project execution and so on.

Also we have recruited quite a few employees as well at the same time, which shows here if we use any external consultants. So this leads us to EBITA margin of 17.9%, down by close to 5 points from -- around 5% from last year's.

No change obviously in amortization, which is coming from the froglogic and Axivion acquisitions, which then brings us to EUR 6.5 million EBIT, earnings before interest and taxes, result. There was a slight negative item in financial expenses and that's driven pretty much because of the negative USD development in our terms.

Our effective tax rate was somewhere around 20.5%, which with the current setup is where it's supposed to be. And the net profit for the period is 10.5% and EPS EUR 0.20.

Similarly, quite limited changes all in all as well in the balance sheet side. Well, we are collecting the funds like last quarter bookings from last year, which shows in operative cash flow, which is pretty much the same magnitude as last year's EUR 17 million for the first quarter.

And then the other kind of asset buckets, we do see overall the pretty consistent development on trade receivables and contract assets, which both are kind of accounts receivable buckets towards our customers. Trade receivables obviously down because of the first quarter revenues being lower than last year.

At the same time, we saw a reduction in the contract assets as well by EUR 1.3 million in Q1. Very little changes in equity and liabilities side.

I guess worth mentioning probably EUR 0.8 million interest-bearing liabilities going up. That's because of the lease liabilities we have increased now and there's an offset on the asset side then at the same time.

But I think that's the most topical items from the financials. So I will hand it over back to Juha to go through the outlook and guidance for the year.

Well, I was already touching a bit on this. Well, the long-term prospects, they haven't really changed.

The number of displaced devices, they will be growing and the growing AI will be generating more software to be tested. So that's not going to go anywhere.

To give a bit more light, I think that first of all in general, this is our product portfolio where we offer software development and testing. That's a very compelling offer and that resonates very well.

So we can sell our testing tools into Qt commercial users and also Qt open source users. And if look the other way around, if we look at our competition on the testing side, they tend to be offering services for developers.

So this combination of developer and testing, that's a good strategic move and that works very well. On our testing, we increased our addressable market because with our test tools, you can use them also on Windows, Java, so other languages than Qt only.

So the addressable market is bigger. So we see over there, like I've said many times, that our testing business is like Qt 2.0.

So it has a long, long runway to grow going forward and we see that our products are very good over there. Axivion on the static code testing.

So during the development and the architecture testing will be needed even more and on functional safety solutions. Axivion is a very good product and we see a pickup over there on these segments and that will increase going forward.

Squeeze on the other hand on automating the user interface testing and automatic code testing, there is a very growing market. So we don't see any changes over there.

Like I said on the Qt, we don't see from a competitive point of view, it's pretty much the same and the feedback we get from our product and from our users is that the product is very good. So in that, there we do see no changes.

Going forward I think that for some of our customers, specifically the ones that are having manufacturing business that they're selling their products either to APAC to China market or in the U.S. market, there is a great uncertainty that what's going to be the cost, how big of a volumes they should be expecting and where all this is going.

And that uncertainty I think will last at least until the summer, maybe even further. But at some point, of course this uncertainty has to go away and people have to make decisions in this uncertainty anyways.

It affects specifically in our case, we do have 70 industries. So it does not affect all of our industries, but it does affect.

So for example, the automotive industry is in some challenges on the western part of the world, also the U.S. manufacturers.

Over there it's not only that where do you manufacture, but in car manufacturing, the supply chains are very long. So the parts are coming throughout the world.

So that alone will increase the cost plus then there is tariffs on the end user product. So that is one of the challenging industries we have.

The industry automation, a bit challenging. Consumer electronics of course depending on what products we talk about.

And then like I said on medical and medical devices, on defense and whatnot; very little effect if none in that sense because everybody is investing all they can and there is a great demand for their products at the moment. So what is our guess now or our estimation.

Well, I mean everybody knows that this situation has been very fluid. It tend to change day by day.

So in that sense, I mean it's very hard to make scenarios where it's going. I think at the end of the day, things have to -- market will just force things to start getting a bit clearer as we go towards the summer and the uncertainty will be less.

Also at some point, we need to start making decisions even in these uncertain times because business needs to continue. So in that sense, I think that the first half will be a bit of challenging.

But the second half, we do expect a bit smoother ride when it comes to a market. Jouni was there mentioning on our profitability.

Well, it's obvious when the revenue comes down, our profitability comes down because we don't adjust our investments or our costs based on the quarterly fluctuations. We play on a longer play and there we do see lots of runway for both Qt and for our QA products to continue to grow.

What comes on the M&A, we do actively look for acquisition targets and we don't give any timeline guidance because the deals will come when they come. But we do still see that we do have a very unique position because we do have our own sales.

We do have our local sales offices throughout the world and we have Fortune 500 companies that are spending a lot of money on software development, R&D so that we can add value and we can bring more efficiency to their development processes. That's basically what we are looking when we are looking to acquisitions.

So we're looking to buy new products into our portfolio. We're not building a portfolio of businesses to add revenue.

It's that we always look products that would add synergies to our whole offering. Well, it's kind of a disclaimer that weakening of the global economic situation may also affect the solvency of companies, customers.

I actually don't see that a huge risk in our case because we deal very big companies mainly. But of course that for some smaller companies is a possibility.

So we changed our net sales growth to 10% to 20%. And why to 10%?

Well, basically like I said, the first half of the year is going to be tough so I think that the 15% to 25%. And do we have a plan to be on a 25%?

That looks challenging at the moment. Do we have a plan to be close to 20%?

Yes, we do. So if the things don't get totally out of the loop so to say, then we do have a path to be on 20%.

And do I feel confident that we're going to end somewhere in between? Yes, definitely so at this point of time.

And our EBITA on that is going to be between 30% to 40% and that's of course driven very much on the fact that how do we generate revenue. To give you a bit of an idea how do we plan is that we're going to be looking -- probably next month already, we're going to be looking into that what's the rough revenue we're looking next year and where do we roughly think we're going to be.

Now we start hiring those people already during the second half because for example salespeople. If you need a certain amount of salespeople for 2026, you need to hire them in 2025.

They need to be onboarded, they need to be up and running so that they are already there. So that kind of gives you an idea of the timing of our business.

So we need to think already now that what is the investment level for next year to make next year wherever we want to be. So that's kind of the scale.

So in a sense, slow-moving business. When it comes to new customer acquisition, that's also a slow-moving business.

So usually we from the first meeting, 6 months to make a deal with the first customer and usually those first customer deals are small even though the company is bigger and then they start expanding and expanding the usage. So in that sense, we always take a look like a 3-year view, a 1-year ahead view all the time and we make our investments based on that to give you a bit of a highlight.

Why did we change the 15% to 10% on the lower end? Well, that's basically that we see a lot of turmoil and where we are at this point I think that lowering the lower end makes it -- that's a more feasible estimation at this point of time.

So with that, I say thank you. And then we have lots of our customer logos over there,

And Matti has, at Carnegie, question #1a.

It's Matti Riikonen, Carnegie. Just getting back to Q1, could you explain what happened in Q1 actually?

I think most of the market participants were expecting that Q1 would be fairly normal for you still because in Q4 you said that there would be some postponed deals having a positive revenue effect on Q1. Now obviously if that happened, then of course new sales must have been extremely poor.

So what was kind of explaining the so small growth in Q1?

Yes. Well, on the slipped deals, you can always say -- you can say on each quarter that there is a slipped deal because there is always a slipped deal.

So when I look the quarter, there is always the -- if I look at the pipeline, I have kind of my hand figure that how much we're going to close and what percentage is going to go forward, right? So the slipped deals, there's always -- on each quarter there are slipped deals and then they close in the next quarter for whatever reasons.

Then the other is that we usually have the -- well, first and third quarter are usually a bit slow. Second quarter and fourth quarter specifically are very big quarters and fourth quarter is a really big one for us.

So that's kind of the seasonality. And then on each quarter what we see is that the first 2 quarters are very slow and January is usually very slow traditionally.

For some reason people close a lot of deal in the fourth quarter and then the first quarter people get back to work and whatnot. So January is usually very slow and then it starts picking up.

Each quarter is like the last month is very busy and the last 2 weeks are very busy. That's where we make most of our business on each quarter.

Why is that? I don't know, but that's always been the case that it's very back-end heavy.

So what happened this year? You're absolutely right.

We had some deals coming over from the fourth quarter. We had consulting coming, finishing consulting, we started on a fourth quarter.

So all that was in there. And so in that sense, it went okay.

But yes, the new sales and the renewals were okay. They were pretty much on plan.

So the new sales towards the end of the quarter, yes, that was slow and all kinds of reasoning, but that was basically slow. If I look into there, do I see that projects being canceled or projects being deleted or whatnot, I don't see that behavior in our customers.

But no decision-making, slow quarter. You can always of course think that should have we been able to do better?

Probably yes. Should have we been able to close better?

Then on the other hand, we've been in this business for 10 years or longer. So of course you can always operate better, but the new sales was really suffering.

It was slow. And if I look now, well, obviously again on the second quarter; April is slower, May is lower and then June is really busy and the last 2 weeks of June are really busy and that's where the result for the second quarter is made.

But if I look now, yes, I do see some slowness still over there, yes.

Okay. And then when you said that testing and quality assurance business was roughly meeting your expectations, doesn't that also mean that then the rest of the business like Qt ecosystem, developer license sales and also distribution license sales; they must have fallen to negative.

And could you just clarify which of those; I mean is it the royalties that are coming heavily down or is it the new developer license sales which is coming heavily down or is it both?

Well, I would say that, yes, we see a slowness on new developer license sales, yes. So all in all, that's where we see a slowness.

Yes, absolutely. So we see that the -- I would say that we see on the kind of hesitation that let's wait a little before we kick off, right?

That's what we see.

So basically you haven't seen that kind of weakness or softness in the distribution license revenue if I understand correctly.

No, not that big, no. But of course this is the going forward so when we give this guidance 10% to 20%, my expectation is that's where we're going to see softness as well.

Growing softness, let's put it this way, because obviously I mean the economy is slowing down basically. That's what's happening now.

All right. Then my final question is related to the margin guidance.

You kept it at 30% to 40%. And is it because you think that some of the growth investments that you have been planning for this year might not come as large as you perhaps considered in the beginning of the year because if you have a lower top line outlook in which you are investing in next year or is it other costs that you can manage?

Well, I think that as we've looked into it, if we get the revenue in as we are foreseeing now, the top line will take care of the EBIT basically. So I'm not expecting that I have to start cutting down on any on our growth investments really on the second half.

So the second half revenue will get us. As you know, our fourth quarter EBIT will be way over guidance, I mean the overall year guidance as it is always like our fourth quarter EBITA is usually very high and so that's what I expect to happen this year as well.

Jaakko Tyrvainen from SEB. I could follow up on Matti's discussion about the Q1 performance and just to confirm and clarify that you didn't see major changes in renewing rates.

So all the licenses that were coming up to renewals, those were renewed or did you see customers renewing perhaps a bit less?

Yes, I did, yes. Not very many customers.

So customers are renewing, but it used to be like the customers renewed whatever they had, right? And now customers are looking very carefully that how many do we need?

Well, to put this in a perspective, like 99% of the customers need whatever they already have. So I see very little customers that are taking less.

So our renewal business is pretty much where we expect it to be. But what do I see is that I see like in a COVID that the CFOs are starting to run the business.

So the CFOs are looking that hey, we need to be cautious on cash flow, we need to strengthen our cash position and we need to be tight on costs because who knows what's coming, right, and that's what we see. But then like I said, maturity like almost all of our customers, they renewed what they had.

They're continuing their plans. And that kind of makes sense because if you have something in production, it actually doesn't matter what's going to happen, right?

I mean you're going to produce whatever you were planned because you already have all the parts coming in, you have all the factory facilities, whether you do it on your own or if you're sub-contracting and whatnot. So if you have something already going, you're going to continue no matter what and then you hope that the best will happen.

That's basically a bit of our -- if we take a global view and forget Qt for a moment, that's a bit of our problem because China is producing a lot of goods. They were thinking selling in the U.S.

and those will be done and they're going to go somewhere else. So we might have a whole bunch of very cheap Christmas gifts, toys in this year.

And that kind of adds on the equation, what will Europe do if we start seeing a big flood of Chinese products coming into our market. So that's what we see on renewals business that people are continuing.

What we see is cautiousness into that, hey, if we are now to kick off a new production, on what volumes and can we postpone that decision a little. Well, we know for a fact that these decisions can be postponed a little, but they can't be postponed like a year.

We don't see cancellations. So we just see that people are a bit hesitant and that kind of makes sense too because if you're in the business of making TVs, you got to have a new model next year as well.

It's just a question that on what volume.

Okay. And then another confirmation.

Did you say that your distribution license revenue grew in the first quarter?

I said that it was pretty much where we expect it to be. And I think that we're going to have more challenges on the distribution license sales as we go forward.

So in the first quarter, we didn't see that much. The distribution license revenue was where we were expecting it to be.

I think that we're going to see more turbulence around that as the year goes further depending on how this environment is developing. So the softness we see was on the developer license sales, yes.

Okay. And in your thinking regarding the guidance downgrade, how do you split that between developer licenses and distribution licenses?

Do you think that distribution licenses will be impacted more than the developer licenses?

No, I don't. At the end of the day, I think that for this year the distribution licenses we're going to be getting, of course there is some pressure downwards.

But usually these products are already in production, in development and whatnot so they're going to end up somewhere. I don't know where, but they're going to end up somewhere.

But of course there will be pressure on that one as too. So basically if you think of that guidance, how we did that?

Well, we pretty much know the bigger deals that we see for this year. And then we see our pipeline and we see that how much pipeline we develop per week basically and those ratios.

And then we look now that we saw the first quarter where it ended up and we're looking at the second quarter and the whole year. We kind of felt that the -- so there is quite a lot of deviation still because there is so much uncertainty.

We kind of felt that keeping 15% to 25%, did we see that we can get into 25% after slow start of the year. We felt that well, that's not feasible anymore, right?

We felt that keeping a 25% guidance given the slow start in the year would be kind of a bit unrealistic. So we were looking if all the stars are aligned and everything goes very well, can we be close to 20%?

Yes, we can, right? And well, there are lots of the English impressions that what if and things go wrong, which is also of the possibility.

We look at can the 15% be in pressure and sure. So then we kind of felt that well, 10% to 20% guidance is a fair guidance given the slow start of the year.

But that's where we are at the moment. So I don't see -- of course I'm not happy for the first quarter.

I mean that goes without saying. Do I see this year as it is?

Now do I see that this year is going to be a disaster? Well, no.

Do I see on a 3-year path that are we going to be on the long-term targets where we think we want to be? Yes, I think we can get there.

Is this year going to be kind of a disaster? No.

Is this year going to be a bit of a not so good year? Well, that's what it looks like now.

This is going to be not so good year. It's not going to be a total disaster and it's not going to be where we want it to be, but that's how it looks now given that the things don't get any worse than this.

And I mean the first 100 days of this year, I mean whatever can happen.

So it seems. If I may still continue.

In Q4, you said that there were some material deal postponements and you previously commented that you are perhaps expecting this to take place in the second quarter or in the third quarter. What is your thoughts now on these deals?

Are you seeing risk of further postponements or reductions of the scope or even total cancellations of those deals?

We haven't seen cancellations really. I mean of course sometimes you have 1 or 2 here and there.

But I mean in general in a big scheme of things, how many deals we have and how many transactions we have. I haven't seen big cancellations, not at all.

The reductions, yes, to some extent we see reductions and very much now I do actually expect that on the first half of this year, we're going to see reductions. So people will start their projects, but they will start smaller than they were anticipating.

So that's basically what we do expect to see. And what comes on the big deals we talked about on Q4, yes, they are very much in the works.

It's going to happen on -- my best guess is that Q3 probably, but let's see how it plays out. But yes, so these kind of postponements we do see.

And so basically this year I think that we're going to do pretty much the deals we were thinking of, but the scale will be smaller.

It's Antti Luiro from Inderes. Maybe a question looking back at the last few years and give your thoughts on your growth trend.

I mean looking at the rolling numbers evening out the quarters, you've had growth of some 25% to 50% per year 3, 4 years back and now we're at somewhere like 10% to 15% and I think there's probably many drivers to it. But now in Q1, at the end of that, we maybe just had the soft start of the trade war and the customers were still on their toes with investments.

So if you think of your product portfolio maturing and the effect that has on your growth versus maybe customers becoming more cautious overall, how do you think of the growth trend and the drivers behind it?

Yes. It's a very good question.

I think well, the first thing that comes to mind is that why the percentages are more difficult is that the base number is increasing. It's easier to make 25% growth on EUR 10 million than 25% growth on EUR 100 million.

So that's obviously. But we always talk about percentages, but the company has grown substantially what it was few years back.

So of course that's affecting. If I look the -- well, if we go really far down the history, we were selling developer licenses and then we said that we're going to introduce this distribution license and basically everybody told us that that's not going to work.

No one's going to pay you distribution licenses. Well, but that happened, right, and that number of devices has been growing.

If I look back then, I saw basically and we were also talking to automotive. I mean it was automotive, automotive, automotive.

To the extent that some people thought that we are only in the automotive industry because it was the automotive introducing the infotainment systems in Mercedes, the digital cockpits and whatnot; and everybody were very excited about what's happening in automotive. Now if I look, it's the even Leopard tanks are having graphical screens.

They have a digital cockpit inside the tank. And the medical industry has come there.

So it was the -- well, maybe this started from mobile really. The Apple iPhone was the first graphical user interface that people got very excited about it and then it was automotive.

But nowadays, I think it's everywhere. So in that sense, I see that the market has grown substantially and the number of industries where do we see now for example.

It's not that long ago if you bought a motorcycle or a scooter that the cluster was really kind of a clumsy black and white and whatnot, you see that industry picking up. So now we see a lot of scooters done in India for example and the next the next-generation clusters will be a lot nicer because they are using great tools.

So in that sense and then I see new iterations of product innovation all the time coming. So I see that on Qt market, the market has grown and the efficiency requirement is there and there is no reason to explain.

I mean you see these interfaces in vending machines, you see them pretty much everywhere. So that's what has happened that the market has pretty much exploded.

So we're being a cross-platform tool from very low end to very high end, we can address that whole market pretty much and that's really the success that we've enjoyed. The other is that we have the local offices.

So we've been able to talk Korean in Korea and we've been able to talk Japanese in Japan whereas many of our competitors, they stayed on -- they relied on reseller networks and they relied on 1 industry or 1 function or whatnot. So if I look back then when we were EUR 20 million, EUR 30 million on revenue, the competition is pretty much still there.

right? So we've really grown our market share on embedded and you don't get that research, but are we the market leader or are we definitely one of the gorillas on the embedded software development market?

Yes, we are and we are a well-known brand in that particular market and whatnot. So no doubt about that we were very successful in the strategy work.

Then if you think this business, like I said, that we think already now that how many people we need next year for different things. So the embedded business is typically relatively slow moving.

And the decision-making on embedded businesses, I mean there are big decisions that we're going to start doing this kind of a product and on what volume, where to manufacture, what are the target markets, what are the target prices and whatnot. So it's a slow process.

So embedded is typically very slow-moving business area whereas on web, if you look on the web technologies, the prices are usually like EUR 30 or EUR 100 per month. The technologies come and go and they get high volumes and then they die as quickly whereas on embedded, you talk about developer licenses being thousands of euros per year per developer and it's quite a bit slower moving.

So when we see that things slow down a bit, we're not that worried about it because the big trend will keep on moving and that's why we don't kind of change. So back to your question that do I see slowness in the maturity of our product?

No, not yet. Will it be there someday?

Definitely, it will be there someday. But at the end of the day where we are as of today on a global scale and how many companies that are developing these things, yes, I think there is still quite a lot of room to grow on Qt.

But on Qt technology, definitely someday it will start having the maturity. But I don't think with these numbers, we're pretty far from that.

Yes, right. So I guess maturity obviously has gone up quite significantly in the last 3 or 4 years with your market share going up.

But with the last tail of the market and the market being rather slow, you don't see kind of a rapid slowdown in growth?

No, no. And when we do reach that point obviously, then the new sales will slow down, but the renewals will stay.

But I mean if you look at the number of customers, the number of licenses we have on a global scheme of things; when you start dividing our Qt revenue per country, let's put it this way. If you think that we operate on 3 continents and you start dividing our revenue per country and whatnot, it's relatively.

If I look at our revenue for example from China, given the market size we are like this big in China or in the United States for that matter or in any other given market. So yes, we do have in this scheme, we have a relatively -- we've been able to break through and we have a bit different strategy than many of our competitors.

The other part from the having our own sales network, we also have this cross-platform approach where you can actually use Qt on different industries whatnot. That's different than what our competition did.

Yet this is different than our competition did that we can offer the testing and the developing tools. So we kind of are hard to compare directly to competition in that sense.

But of course, let me continue, someday it will mature. That's why we're having products that will grow.

I mean that's product portfolio management. So of course QA is now small.

One day it's going to be EUR 100 million and beyond and we're looking new products into our product portfolio so that the whole company will be growing. So it's the product portfolio management in that sense, you can also take it that way.

So our intention is to keep on growing even when Qt start maturing whenever that happens.

Maybe following up on that expansion part. Within QA business, you mentioned that Axivion has been tougher to sell because it's a bit of a different product than the testing tools that you have.

Have you cracked that yet and been able to speed up the adoption?

Yes, we have cracked. Yes, we are on that path, yes.

So we've signed very big customers.

One last question.

Matti has the question 1b.

It's Matti Riikonen, Carnegie. Two small questions.

We have talked to automotive revenue share earlier and you have been saying that it's roughly between 10% and 20%, let's put it as 15%. How much of that is developer license revenue and how much is distribution license revenue?

Just trying to get a feel how important automotive segment is for you in terms of distribution license revenue.

Well, we haven't disclosed that number. Since you ask it, I don't even have it in my mind now.

But we've actually said that the automotive is 15% to 20% as a whole and that includes the whole thing out of total. And if you think that how important it is so it is important obviously and kind of fluctuates a bit.

But we do have -- well, there is Hyundai Motor Group on the screen and GM and Ford and whatnot and Mercedes-Benz. So we do have automotive companies that are currently on a challenging environment because of these tariffs and then we do have also automotive customers in China and they seem to be having no issues whatsoever so they are going full ahead.

And then we have whole other automotive customers that are not in this. We don't disclose their names.

So I would say that the overall, yes, we're going to be seeing softness over there. Is it going to be meaningful?

Well, it's going to be 1 part. Like I said, we are having softness in consumer electronics as well so it all kind of goes together.

So it's not something that it's going to slow us down completely, if you like. And like I said, on the runtime revenue, all the production that is going on now, for example those cars will be manufactured.

They may not be sold, but they will be done.

All right. And finally, who is your biggest competitor in terms of comparable revenue I mean comparable to your revenue?

Well, see, we do have competition on Qt development side and that's usually a vertical. So we have competition in -- we do have competition in automotive, but we don't see those in industrial automation at all and so forth.

So it's kind of hard to compare. And then we have competition on the testing side, but they are usually only on testing side.

So we're kind of unique in that sense that on Qt side, we are cross-platform, 70 different industries, no similar type of company over there. And on testing, again testing is a very fragmented market.

So there are a lot of testing companies. So hard to find a comparable over there.

The ones that I've seen are usually like development tool companies. There are some, I can't remember the name.

There is one private equity company. They've been kind of building a portfolio of tools so they have lots of small tools put together and that's kind of a bigger entity.

But sorry, I can't give you any better answer than that on the companies. I'm unfortunately on a very tight schedule so we have to stop really at 2.

So this is going to be the last question.

Just have 1 and it's easy.

And it's going to be last one.

How you are seeing generally AI impacting your Qt developer license business in the long term? Are you seeing for example some risk of someone providing AI-powered tool that has the similar outcomes that Qt has now and budgets brings better efficiency to clients or will Qt actually be the one providing such tool?

And in that case, would you be kind of able to monetize the more effective tool?

That was not easy nor short to give an answer. Well, on the testing side, I see that when you use AI for generating software, that needs to be tested as a whole because AI can be good or bad and it can be bad intentionally.

So you can never kind of trust it. So you have to test it all.

So I see that the testing bit will grow on AI. Then AI, as I see it today, I see this best body at work.

So if you have to be creative, you can ask from AI. If you want new ideas, if you want to get your e-mail better, you can use AI.

I actually used AI when I wanted to write a very polite e-mail, but then I figured out that everybody knew that it was AI done not me because it was so far from me. And I'm not saying I'm impolite, but I'm saying that after a while you can realize when something is done -- when the text has been done using AI.

So basically the -- but it's a good body to help you in your work whatever you do, creating content or whatnot. And it can definitely create -- you can put it on development creating simple development and doing simple development tasks for example for you or you can put it writing a test script for you.

And then you view the test script and then you do the testing, these type of things. So it's a great helper and I think that that's where it's going to be.

Will you be able to do simple tasks with it, sort of simple coding? Absolutely, you will be able to do that.

On embedded, do I see that? So you can use it to even enhance your efficiency on Qt.

Will it be doing kind of an embedded software for car like an infotainment? Not kind of in the foreseeable future, let's put it this way.

So you're going to have AI helping being a part of Qt, helping developers being more efficient. But I kind of see that it's a really good work buddy for you.

It can help you on many different ways. When you do your analyst work, I mean there are AI that it can help you a lot gathering data and sorting out data and whatnot.

At the end of the day, you're still going to be looking at it and making the conclusions. Thank you very much.

Thank you all over there on the other side and I wish you a very nice springtime.