Qt Group Oyj

Thank you. Hello, everyone.

My name is Juha Varelius, CEO of Qt, and we're going to go through the Q1, pretty much the same agenda, business highlights, market trends, and then Ann will talk about financials and then outlook guidance for rest of the year. If I look at the Q1, our net sales ended up EUR 52.7 million, an increase of 11.6% and on comparable currencies 18.4%.

And we're pretty happy on that. EBITDA margin, 9.6% and EUR 5 million on Q1, and that was pretty much on target as well.

ARR, which is the new measure we are now telling EUR 155 million. So the increase of 32.7% in comparable currencies.

So that takes away the one- and three-year licenses and whatnot. And of course, we have the IAR in these figures.

So overall, a kind of a typical first quarter, which is usually very slow for us and fourth quarter being the best and busiest quarter, which then reflects on the first quarter numbers. So if we, well, foundations for long-term growth, I'm going to comment here a bit.

So the developer license demand remains strong. We look at our industries, the defense is nowadays, the probably strongest one, medical and other industrial, they are all doing really well.

And automotive industry, obviously, is suffering specifically in Western markets. In China, the automotive market is doing good, but the Western automotive market is suffering and the growth overall is very slow over there.

If I look on the regional trend, we have APAC. APAC was actually last year pretty much on our plans.

It is still continuing pretty much on our plan. So we are happy with APAC.

That's a pretty robust execution over here over there. And in EMEA, we have rather volatile situation where the European export companies are suffering, and that comes mainly from exports to U.S.

The tariffs keep on going up and down. And there is some uncertainty, which is shown in decision-making.

But if I look on the first quarter, our EMEA overall was showing pretty robust execution and it was growing as well. In America, is actually the only region where we are performing according to plan, and that was pretty much in same thing last year.

I'm going to talk about a bit of AI, but when I usually say that AI, we don't see the AI effect in our demand. Well, we don't, when we discuss with customers, of course, in safety critical industries like medical, they don't want to use AI.

They want to do, it's very careful that what type of software goes into devices. Same goes pretty much on defense sector on many devices; in automotive a bit more.

If we look and we discuss, we actually discussed quite a bit of, with our customers that how are you using AI, how are you utilizing AI. We see that developers are using AI, but they're coding, how they use it is that they use it to code with Qt Framework.

So they are utilizing Qt Framework in their coding when they're using the AI. That's what we see.

Believe it or not, I've been getting quite a lot of questions about AI and its effect on Qt. So we've done customer surveys also.

It's not only my own discussions. It's, we've done customer surveys that we put an external company interviewing customers that how is your use of AI and how does that effect?

And how do you see the effects on Qt and the answer being that, yes, we utilize it or we don't use it at all or the AI usage is forbidden. So, there are some companies that they actually forbid using AI, but we didn't get any responses that AI is replacing us.

I understand that everything develops, but that is as of today. So if I look our execution on regions, it's fair to say that if APAC and EMEA is executing pretty well and all the headwind we're basically getting against our own plans is coming from United States, it's more than the AI effect basically.

IAR, we are still happy with the acquisition. And I'm sure we're going to continue being happy with the acquisition.

The big theme for IAR, obviously, is that it's on perpetual licensing. And we are selling, we're changing that into subscription licensing.

And when we do that, the perpetual license, obviously is more expensive when we go on subscription, which is on a yearly base billable license, the price is less. So the IAR revenue is decreasing this year and the profitability is also suffering.

When looking at things in the beginning of the year, I was wondering it was a bit slow start. It was going very well in the U.S.

and somewhat good in EMEA and slower in APAC. But now if we look overall, the subscription change, we did set a pretty aggressive target, and we are on that target now.

So I'm happy on the execution on the subscription change on IAR. That puts pressure on the IAR profitability this year, but that means that more aggressive we can be this year on the subscription, the more it will grow next year.

So we're going to do as aggressive as we can and take the hit now and then have a healthy growth. Of course, it's a license business, which means that the profitability will follow next year.

IAR integration is proceeding as planned. We've laid the operational foundations unified organizations, aligned core systems, established data sharing across teams.

We are combining sales efforts with the IAR sales and onwards. I've done a few integrations in my career, and I'm pretty happy, I'm pretty confident that this integration is going to go well.

And you can always sense it from the company that's been bought. All the IAR people that I've met, they are anxious.

They are happy for this merge. They are keen on working together and the mood is very good.

So I do expect that this integration will be successful going forward. Well, as you know, there is war on Iran and, as a matter of fact, the high oil price is affecting in, not only on gas pump and maybe inflation and whatnot, the oil effects on the price of a glass and paint and numerous different products, which our customers are using for their production.

And that is the thing that makes them cost conscious that their production prices will go up because of this oil, and it's not directly to oil like paint, for example. We do have our long-term customer relationships; they are very solid.

So we've done and we're doing like on the second quarter big renewals with our very long-standing customers. So our customer relationships are like years and 10 years and 15 years.

So, once companies start using Qt, they are usually so happy with it that they extend the usage and the customer relationships are extremely long. That's a foundation for our business.

We've, despite doing these cost-cutting measures we are doing now, our product is very competitive, and that's, of course, something that we tend to keep good care of. Well, of course, there can't be a presentation in today's world, not talking about AI.

So here is a bit of a snapshot that the, what we're doing in different products. We do have definitely, specifically, there is Qt Framework.

Sometimes we kind of think that Qt is a set of tools. It is a lot of tools, too, but it's foremost, it's a Framework.

And Framework is something that developers like to use because there are reasons for using it and also AI likes to use it. We do follow, for example, our competitors and what are they doing on AI, what kind of functionalities they have in their products and frameworks and whatnot.

And I can say that we are at least on par or better in what capabilities we are offering. That basically goes on Qt, Squish, AXIVION, and across QT Group.

I have always been questions that do we use AI in our own work. And yes, of course, we do throughout the company, we use AI in, pretty much in each and every department, which means that the, it is being utilized as a tool.

Do I see that AI is replacing office people or our R&D people per se in today's world? No, I don't.

It's a tool that makes our people more efficient, but it's not replacing at this point of time. So, if we look a bit of these products, on Framework side, like I said, it's, we see it as a tool for developers to be more efficient.

In larger terms, if we think we do have different kind of skills, AI assistance on Qt Framework to help developers using Qt. And also, we see that we've enabled the general AI language models to learn from Qt so that developers can actually use AI.

I know that I've said this sometime in my earlier presentations that nowadays, we, the first step actually in this world, it's a bit of like on Internet that if you have an Internet site, you need to make sure that Google finds you. Well, on AI world, you need to make sure that AI finds you.

If developers want to develop something and the AI doesn't find your framework, then, you know, it doesn't find right. So, we've made sure that with these general language models, they do know how to use Qt, developers can use Qt and AI agents do find it.

And there, we have a one trade benefit compared to our some proprietary competitors, that Qt is open source and has 1.5 million developers out there. So, there is a ton of material that AI can learn from that how to code with Qt and how to be better on Qt.

So, I think that that was kind of the first step we did on that. You probably are going to have a question that what about pricing?

And I have nothing more going to go more towards a consume-based pricing models where whatever is being produced using Qt, the payment, the license payment is based on that. And that's the logic behind that is that now we have per developer seats, but if a developer is using AI, which is using Qt Framework, we see that's also payable.

We've had actually discussions with some of the clients that are doing that already, and there seems to be no problem in that, that it's payable. The matter is that how it's measured, what is the pricing and all that.

And we're working on it. And on that sense, the pricing will change in the future.

Well, Squish is very tightly integrated into Qt. So, I know it's a bold statement.

But if you develop something with Qt, there is really no reason whatsoever not to use Squish for that testing. They're so well integrated and they work so well together.

Over there, we have a AI generated test script exploring applications. Vision IQs, Squish Vision is visual testing that adapts into interface, the changes in the interfaces, and that's been very well received.

On Axivion, well, it's more like on a partners we work with NVIDIA and Qualcomm and the likes on different types of solutions. Axivion is a very complex, very good product.

And over there, I think that, that is something that AI is not going to be replacing in any matter and it does so specific job. And like I said, across Qt Group, we are using AI extensively and looking at efficiencies over there.

On the future outlook, I'm going to come back and talk about a bit about these changes we're doing currently. But before that, Ann will talk about some financials.

Yes. Let's talk about the financials.

Yes. As Juha said, we had a growth of 11.6%.

The exchange rate impact in this quarter was EUR 2.7 million, 18.4% at comparable currencies, not too bad. We had distribution licenses there was about, was 2.3% growth and developer licenses and consulting were about flat compared to last year.

The maintenance revenue almost tripled compared to last year. This is, of course, the IAR effect because IAR has a higher share of maintenance revenue, specifically as we are pushing all of the developer licenses into the balance sheet with subscription transformation going from perpetual to subscription.

Then the ARR, as Juha also said, it was EUR 155.9 million. There is some IAR effect in this, too.

The growth at comparable currencies, there was a currency effect of 4.5%. So the growth at comparable currencies was 32.7%.

We have a very stable customer base, and therefore, we have a very stable IAR growth, ARR growth, I was going to say, not IAR growth. It's difficulties.

Too many Rs, yes, too many short. The organic growth anyway of the ARR was 11.5%, which is a very stable growth over time also for the Qt Group without IAR.

Then also the IAR transfer into subscription is going to push this further then because more of the perpetual revenue will then go into being annual recurring revenue. So, this, I think this number shows that Qt has a very stable customer base and a very stable business and solid business.

Then looking at the expenses, you can see that the costs grew a bit, they grew by 23% compared to last year. Part of it is because IAR has a lower profitability and also because we are pushing down the revenues because with the subscription transformation.

But the personnel costs then they grew by 26% almost. So, it was 1,120 people at the end of Q1.

That was a growth with 232 people, which is almost the number of IAR employees. So basically, that is what we grew with.

But now we have the cost implementation project, and we will, are aiming to cut about EUR 20 million. So, then we are moving towards where we were in 2025.

See if we will reach that. There is also, of course, some costs in other costs, external services and so is obviously targeted first, consultants, marketing, various things like that.

But there are also other things that is part of the integration that will, over time, generate cost savings. That will not happen very quickly, but it's, IAR has 13 offices around the world in pretty much the exact same spot as QT has.

So just merging the offices and the legal entities, which are also in the same spots will over time, save money also under other costs. The profitability is then was around EUR 5 million EBITDA.

So the margin was 9.6%, and that is basically because of IAR's lower profitability, and the need for efficiency work around the cost side. So a little look at the balance sheet then.

We have goodwill of EUR 166 million or EUR 167 million. Most of that, EUR 122 million older acquisitions, froglogic and Axivion mostly, but, and then on the other intangible assets, you have the other technologies from those acquisitions.

It is technology acquisitions, brand acquisition and customers as it is split in the PPA. IAR has EUR 87 million of those intangible assets and froglogic and Axivion has been written off over time.

They're written off over 10 years. So those are lower values now and are at EUR 9 million versus EUR 17 million.

Also as I remember mentioning to you last time, I also has EUR 6 million of capitalized assets, capitalized development assets. It's the IAS 38, where we treat development work into specific assets and we capitalized in the balance sheet.

This will, over time, not happen anymore or will be synchronized to doing it the same way as the Qt Group does it. But for the Q1, we had capitalized EUR 0.4 million then.

So that affects the P&L and also increases the balance sheet. Other noncurrent assets is mainly the right-of-use assets, which are our premises around the world.

assets like furniture and stuff in those locations. Trade receivables, basically we have a healthy cash balance of EUR 56 million compared to EUR 80 million last year.

It is lower. We also have, because of that, we have interest-bearing debt in the balance sheet of EUR 143.5 million.

Bank loan of that is EUR 135.3 million, and that refers to the IAR acquisition, which will be amortized over time. And the rest of that interest-bearing debt is basically leasing debt related to those IFRS 16 assets.

Under other receivable and other short-term liabilities, still we have those EUR 5.2 million that refers to the acquisition of the last IAR shares. That arbitration process is still ongoing in Sweden, and we hope that it will be closed soon, but it's a little unclear when it will happen.

But those money is referred for that. I guess I can end the presentation on the financials by saying that looking at the balance sheet and saying that we have a pretty healthy balance sheet still with a high share of equity.

It is over 50%, even though we made quite a few acquisitions over the years. So with that, I guess I will end and hand over to Juha for the outlook.

So, outlook. Well, on IAR, the big thing, obviously, is the subscription change.

Our plan is to transition in the next three years. And as that goes as planned, the year-on-year, that's going to be a decrease on IR revenue in '26 and '27 onwards, it's going to be growing and then continue the growth.

We did an aggressive plan. We are on that plan.

So, it seems that, well, it goes in the United States, it's so typical way of doing business that the transition is no problem in EMEA, a bit slower and in APAC slowest. As a matter of fact, the same we had on Qt at one point.

But now seeing a few months this year, how it's been going, I have no doubt whatsoever that we're going to be successful on that over the next three years. We do have this operational reorganization announced in April, where we said that we're looking to improve our cost base by EUR 20 million.

Well, again, maybe taking away questions around that. As you know, in Finland, we have this period of negotiations.

And during the period of negotiations, we are negotiating and now we are in that negotiation period. So there are no decisions being made in Finland and the negotiations, I think, well, the minimum time is six weeks, I think we still have two, three weeks to go.

There's really nothing I can comment on that part on that negotiation is ongoing. What comes to other countries, we are doing that in the United States and Europe.

based on the local legislation, but I'm confident that we're going to be able to reach that EUR 20 million cost saving we're looking for, and that includes the overall other cost savings and personnel cost savings. We're also doing those structural changes in a way that it would not affect on the sales targets that we have.

Since we are in, already on the second quarter, we do believe that once these negotiations are done, obviously, in some countries, we've been progressing faster, we're going to get savings already for this year. Once they're done and whatnot, then we can announce that, what is the outcome of those negotiations.

But we do expect to get savings already for this year, and we do expect to have a EUR 20 million full year savings on 2027. Well, the challenges in market environment continue, but like I was explaining in APAC, APAC has actually been performing on plan last year and now in the beginning of this year.

So I have no reason to believe that, that's going to change in any particular way. The outlook is good.

Pipelines look good. The execution over there is good.

In Europe, we've had this headwind on these large companies we have that do have large export business, whether to China or the United States. But that's kind of a leveling off in EMEA.

I was pretty happy about it. And in U.S.

I think, well, we've had a lot of headwind last year and whatnot, but that's leveling off now. So we do expect that we're going to get the operational efficiency in the U.S.

back on its normal track as well going forward. If I look different parts of the business.

There is a consulting business is not a huge part of our business, as you know, but that's kind of performing on a lower end. So they are a bit behind what we were expecting.

License sales is doing fine, which is a good sign. And the deviation we're getting, if I look year-on-year comparisons, the only deviation we're getting is going to be on the distribution licenses.

And as you know, the distribution license sales comes that when new projects are starting, companies may do prebuys companies or they launch a big product group, then there are other distribution licenses being bought. Distribution license growth is not very, how would I say, it's not stable on quarter-on-quarter Instead, it fluctuates quite a bit, and that is the fluctuation we are having on year-on-year.

Although when we are looking on the whole year distribution license estimate, what we are having, what we did our budget and what we were budgeting for the whole year, it looks like that the whole year is going according to plan pretty much. Well, I talked about AI.

I talked about the market environment. I talked about the different regions.

As we get the better performance and execution in the United States, we're going to get a healthier growth also on the business. IAR integration is going well.

I don't see any problems over there, although the revenue is coming down, but it's a deliberate decision we've made, and I don't see any cultural problems over there. On the contrary, I see two teams really wanting to work together.

So I am not doubtful at all that, that integration is going to go pretty well. And of course, it helps that the, both are global companies and, but the headquarters are in, there is a Nordic culture in both companies.

So the cultural fit is kind of there naturally. Long term, well, the need for software, the need for products being differentiated by software, software defining the value of products, that's not going to go anywhere.

We're going to see that more, not less. So in that sense, I do see that there is lots of growth potential going forward.

We're not changing our full year estimate as of now. And it's kind of, so we're saying that we're going to grow at least 10% year-on-year in comparable currencies and operating profit at least 15%, and like I said last time, that's the, we're not giving a range.

We're getting a bottom. We're giving a floor.

I'm very confident that we can reach those numbers, so there's no reason to change them. And yet again, of course, the fourth quarter is the biggest quarter.

So remains, that's where really the difference is made at the end of the day. But as we look forward, I think that this market is pretty stable stage at the moment and things are going forward.

Well, of course there is always this disclaimer that, well, what's going to happen in Iran? Well, who knows.

But I think it's there's going to be so much pressure from elsewhere. Asian markets depend on that oil export and whatnot.

So I don't think that we just, there are so many parties that can't afford that conflict to go on forever. So it's going to be sorted out.

But yes, it's fair to say that we kind of have, we're used to the fact that there is a bit of a surprise every quarter, at least either tariffs or war somewhere or whatnot. So let's assume that, that will continue this year, but life goes on.

I'm happy with start for the year and things are going in better direction. So the, I think we're going to have a decent year going forward.

And with these cost savings and then IAR turning into growing revenues, 2027 numbers are, I think they're going to look pretty good. And with that, thank you.

It's Matti Riikonen, Carnegie. A couple of questions.

I'll take them one by one. You mentioned that already last year and also this year, the U.S.

has been a kind of problem with the execution. What have you done and what will you do also going forward to kind of amend that so that it would be in the growth again as your internal plans probably suggest?

Well, we've done people changes. We've done a bit of an organizational change over there, and there are personal changes quite a bit.

And those are probably the biggest ones we've done. And then there is a bit of a special emphasis on bigger accounts, there's been more top management involvement and these type of things.

So the pretty difficult measures when you have issues. But I would say that, so we've had a management change in U.S.

in U.S. sales, and we've changed also a bigger structure.

There's been changes in mid management and those are the biggest changes. We don't see a need for, all the encounters we've had with customers over there been not product related, I would not say.

So there is, I'm not alarmed by the fact that our product would not be competitive and whatnot. And then unfortunate headwinds that have nothing to do with our own doings, but not naming any customers, but some customers did have quite aggressive plans building new platforms for their next product generations with different power plants and whatnot, and they were put on hold and these type of things did happen over there so that they affected quite a bit on our performance over there.

So that's basically those, the sales basically those been affecting most of our performance.

Right. Then you mentioned that many of your customers are in the savings mode.

How do the customers save? Do they just buy less licenses?

Do they get discounts from you? Or do they just postpone purchasing?

Well, when there is uncertainty, then there is postponements. Like I said, I mean, there have been some really big postponements on that there were plans to build a totally new platform for the next set of products, software platform for the next set of product line and then expand that to all products.

And then it was decided that, well, let's not do that. Let's continue with the old one and try to hang on.

So there are those kind of things. If you not referring to any particular region or company or country, but it's been on the news that specifically automotive makers been postponing their electric vehicle initiatives going forward and instead continuing that let's continue with the old ones.

That's what we've been seeing quite a bit. On medical, they [Break] not at all or defense again, but in automotive and in consumer business.

Then another is that people calculate really carefully that how many developer licenses they need and whatnot. And that's kind of where people are more cautious.

And of course, then when there is uncertainty, even there is a higher cost, people tend to buy one-year licenses, prefer over three-year licenses. And then we have, which is kind of, I know this is, so that's the maturity, right?

Then we do have industries and we do have customers that would like to buy like a 10-year license because they want to make sure that Qt is available and they have a license and there are limited price increases and whatnot, so they have control over it because they know that they are going to be using Qt for the next 10 years.

All right. Then finally, you talked about IAR and the license model change.

What kind of attractions are you offering the customers that you would like to shift to the continuous licensing model from perpetual. So does it mean that just to trigger as many customers as possible to change, you offer some kind of discount and then try to find the remedies in the next year pricing increases.

Could you just discuss a bit how are you going to drive this change? Because obviously, you need customers to move.

You cannot just order them to move.

Yes, that is true. So I mean, majority of the change comes from the fact that if you think from perpetual license sales on perpetual license sales, it means that you only have new customer sales.

because the ones that bought the perpetual, they already have a license and they're never going to buy, right? So for the new customers, for the typical IAR sales, which has been new customer sales, it's kind of easy that the subscription is the only one available.

Well, then comes, so for the new sales, no questions really. This is just that you have a new customer, and this is how it goes.

For existing customer that has a perpetual and is buying new ones, then the discussion is that, well, what is this licensing change? And then it's a discussion about the, that you have this perpetual license versus you have a new license.

But when you have a new license, of course, you can call it discount, but it's the perpetual license is always has been more expensive, less. But we're not pricing it in a way that hey, that here is a price, take this and get a first year 40% discount.

That's not the way we do it. And then they are, when you go on this new licensing model, then you are entitled for the fact that when there are updates and whatnot, you are capable of having those.

And so that's basically the route to go. So which means I don't know I think, well, it's less than 10% on Qt base that are still on the old licensing model.

But on Qt, and they'll probably never change. They built something 10 years ago, and they're just maintaining it and they will never upgrade to anything.

When we did it on Qt, we introduced 6.0, and we told to customers that 6.0 is with subscription. If you want to have the latest version, then you have to roll into this subscription.

That's the only model. If you want to stay in the old versions, you can stay with the old terms and conditions.

And nowadays, maturity of the people have changed and over time. So it's a really small fraction at Qt base that hasn't changed.

And those are typically customers that they've built something one-off and then they are just maintaining it and they change it, they're staying in the old. Usually, people do want to get into new versions.

Then another thing is that when we did this at Qt, we were maybe not, well, obviously, we were not the last one since there is IAR. But nowadays, I think it is so typical model of buying software and subscription that you don't have to kind of explain it.

I mean all the software is in subscription mode now. And now the next change is going to be then on a consumption-based usage, which IAR is moving towards as well.

I mean, our whole group, of course.

Jaakko Tyrvainen from SEB. On the ARR growth during the quarter, meaning the quarter-on-quarter growth of 2.4%.

Could you elaborate a bit how much of this was driven by old Qt licenses and on the other hand, quality assurance tools and as well as IAR. Did the transformation to subscription had positive or negative effect?

You mean the IAR shift to subscription? We don't disclose these BU numbers.

So, I don't even have them out of my head that the, what were those, but I can say that they were all growing. So the IAR obviously contributed, but not the, more than half of the, everybody was contributing.

So all the ARRs are growing, but we're not disclosing those separately. So I don't have those numbers in my head.

But they are all growing. So it's not something that is coming only from IAR.

Okay. And still on ARR, did you say, did you say that Qt organic growth was 11.5% year-over-year.

Yes.

Then on the distribution licenses, which had a pretty nice quarter, but you are referring to certain volatility. Do you have any visibility to that volatility over the summer quarters?

Summer quarters, summer months. Yes.

Well, I mean, I would say that it's, last year on second quarter, the distribution license revenue was exceptionally high if I look on the overall. And I think we're more going to be on a normal level.

We're going to be more on a flat level. I mean, Q1, Q2 on the distribution licenses are going to be pretty much the same, maybe a bit higher on, but if I compare last year on the Q1 and Q2 numbers, there is, there were big distribution license deals last year.

So that's actually the biggest effect. If I look on all the other numbers, I think the consulting is going to be a bit soft developer license will be less year-on-year than they were last year.

And yet again, they tend to fluctuate. So, the guidance we're giving on distribution licenses for the whole year, I do, with the visibility I have, we're going to be pretty much on the same level than we were last year.

I mean last year on distribution licenses were very good. This year, we're going to be a few million below or somewhere over there.

But the biggest deviation on this year is going to come on this Q2.

Good. And then lastly, on the AI topic, just to confirm, so you're stating that you're not seeing customers possibly downsizing their teams and thus the number of licenses because of the AI efficiencies, that's just them, if so, that's just them kind of squeezing overall costs?

Yes. That is, they are squeezing costs everywhere, and now they're going to be squeezing more because if you think the automotive manufacturers, like I said, glass is going to cost more, plastic is going to cost more, paint is going to cost more.

So the automotive manufacturers because of this oil prices being so high, their manufacturing cost per car is going to go, it's just the physical cost is going to go much higher. And on top of that, they have tariffs, right?

So it's going to be a big issue for them. And also other manufacturing companies on medical defense, whatnot, it's no issue at all.

So it varies industry by industry. And it's not only our own internal discussions.

So we hired an external consultant, and he may on many aspects, but one was AI, and he made a massive amounts of calls and interviews on customers on our customers interviewing the use of AI and the effects on AI. So developers are using AI to be more productive and whatnot, but we don't see layoffs over there in this embedded world.

When we look on the web technologies, right? So that's a bit different story.

Waltteri from Danske Bank. About the pricing model change that we have discussed today.

If you don't see any kind of impact on demand from AI, then why do you also say that you will change the pricing model? What's the reason for that?

Well, we don't see any layoffs of developers. But of course, we see developers using AI.

So if you think that the old world developers, well, the company, the only way to extend building more software would have been hiring more developers. Now the same developers are using AI.

So from our perspective, we see that there is more use of Qt Framework, and that's where the world is going. We see more and more that happening in the future.

And I think that more and more the new customers will be such that developer will be asking from AI that I want to build something like this, let's use Qt or what should I use? And then the AI is probably proposing that, hey, let's use Qt and then they start building something.

That's where the sort of the consumption-based usage is going to go. So if our customers and then our customers start using automated tools to generate code as well, it's kind of, from our point of view, it's pretty logic that, well, hey, you need to pay for that, too, right?

So then the question is on the long run, this is, well, we really, of course, this is going to be developing. That's for sure.

There is a couple, a few things, first of all, that are going to be issues going forward using AI. One is this consume-based pricing.

And the other is that if you use AI on Qt, you build something with Qt using AI and you don't pay a license, who owns the code, right? So kind of that if you use AI building software and AI goes and uses frameworks and code being built before, does it make your code and you have automatically copyright for it?

No, because many times AI just copes code. If you do proprietary code and you take open source components, put it into the proprietary code and then say that this is my proprietary code, well, you're violating the open source rule.

Can you be certain that you actually have right for that software, that's one. Then the other is that, like I said, nowadays, all the AI companies are losing money like a ton, right?

At some point, of course, they will lure us to use AI and we start using AI and get the benefits of it. But the cost of using AI will increase at some point, right?

Otherwise, these AI companies will never get their money back that they are investing, in billions and billions. So the pricing will change and then the dynamics that what is really the benefit of AI will change.

Now we get to use for everything pretty much free of charge, right? And so that's going to change a bit.

And then the third is really that what is the behavior because how it's going to go. So far, I usually see that people want more and then they want even more.

So if you think that you have 10 developers doing code and then you start using AI, are you happy that you generate the same old level of code and you fire, you get rid of five developers and you stay on the same level? Or do you keep the 10 developers and generate a lot more code and do a lot more products.

In the history of people, they usually want more and they develop more. So this kind of a thinking that AI is going to come and the productivity is going to get much higher without any coders.

Well, that's not going to be the case. I mean the assumption that AI comes and all the software coders daily work will change and the simple things will get simpler and they will get done by the automated by AI, there are many things and hurdles we go forward, but it's going to be an interesting time.

What we don't discuss very often is that we see that, well, there is a threat here and there and whatnot. Of course, we can turn this coin around that assume that AI is so powerful that it does all the coding.

So what would it mean to us? Well, we do have these customers that we know that what hardware configurations they are doing.

We do know that what they want to put and build on their products. And we do know that we do have tools that we can let them that, hey, design what you want, if AI does everything, we can become a solution provider.

We can start selling total solutions, right? I mean this doesn't necessarily mean all threats to you.

I'm not saying that we're going into that direction. All I'm saying is that, of course, this will give also opportunities for us to expand our business going forward.

Right. Maybe two quick ones.

First, the Western Automotive, do you think that, that business will ever recover for you to the point where it was like two years ago? And roughly how much is automotive of sales today versus two years ago?

Well, is the amount of vehicles going to be the demand for vehicles is going to be about the same that it was in previous years. I think overall in that market, if we ever get into this vision that I think it was 10 years ago or so that there was predictions that in two years, we're all going to be driving self-driving cars.

Well, I have an old Volvo, but I can tell that I drove myself. It's been taking some time.

But I mean, if we do get in a world that we have a lot of self-driving cars, then you could assume an idea that instead of maybe you have a car, but while you're at work, your car goes and re-rent it to Uber. So your car is driving people around and then comes to pick you up.

So is there then a need for total amount of cars that's been sold as of today? Well, of course, not, but that change is going to take a long time.

Would there be a bit of a consolidation in car manufacturers? So let's say, five years from now, are we having the same automotive manufacturers as we are having today?

Probably not. So there is going to be a consolidation.

That we probably will see how that will be evolving. The automotive is now, I should know this, that it was around 20% a long time ago.

Now it's substantially less. And defense is the biggest vertical we have, medical right after it and industrial, third.

If I looked at what the automotive market is growing this year, probably the market growth probably like flat or 2%. That's my educated guess.

European car manufacturers are in real trouble with the tariffs and the competition in China. And so is U.S.

car Ford GM, they're not doing very well, as you know. So it's going to be a struggle.

But are people still buying cars? Do they need about the same amount of cars?

Yes. But when self-driving comes, then that's going to change the world, but many, many years ahead.

So it depends on that do we get the deals back at that point with the new players? I think we do.

Maybe one quick one. On IAR, I'm not sure if you said how much IAR sales were of Q1, if you said, I missed it, but could you please repeat?

And once again, the SaaS transformation that IAR is going through, did it already have an impact on Q1 on its sales?

Well, IAR impact on subscription sales is having impact all the time because the revenue compared to last year, IAR revenue is going down. So yes, it's having effect on Q1.

It's having, it's going to have effect on the whole year. And then next year, we do expect double-digit growth on IAR.

But this year, we expect it to go down, and it is going down compared to last year. So, and the subscription change being going very well, which means that the downward pressure on IAR revenue is at its highest, let's put it this way, and on profitability as well, which means that next year, more aggressive we can be this year, more the growth is going to be next year.

So it's definitely with this change rate, the IAR growth next year is going to be double digit, probably starting with Qt. But this is not a promise.

It's the first quarter. Let's see towards the end of the year.

But it's going to be double-digit growth next year and very healthy over there. And then the IAR profitability will swing back and the year after that, it's going to be on a very healthy level.

So we have no reason at this point doubt that that's not going to happen. On IAR revenue, no, we do, there are too many Rs.

We do tell the ARR, but we are not disclosing the different BUs. So yes, I didn't say it.

You didn't miss it. Well, you can ask one.

Yes, we can go a bit over time. if it's the easy one.

All right. Perfect.

I don't know if it's an easy one, but I'll ask you anyway. Antti Lyytikainen from Inderes.

On the ARR organic growth of 11.5%, just to drill down on the number, is there any kind of one-off positive effect from IAR's transition to subscriptions kind of boosting that number? Or is that kind of not in the numbers?

IAR, that is the growth at comparable currencies.

Okay. Thank you.

We're over time now. Thank you very much for coming.

We're relatively happy on the profitability and the, and the development on the first quarter. Second quarter, we see consulting being on a bit soft.

Developer license is doing very well. Year-on-year comparison on distribution, there's going to be quite a lot less sales on last year.

But if we look at the distribution license on the whole year, it's going pretty much where we were predicting so last year and a bit below from last year. And we are not changing the guidance.

We're pretty confident that we're going to meet those numbers over the course of the year. And the integration is going well.

We've done a lot of work in the U.S. to turn that around, and we're seeing first signs that, that is also happening.

So looking forward, we're pretty confident that this year is going to be okay year and a change year and means that when we build this foundation 2027, we're going to get back on track with the very healthy profitable numbers and sales growth as well. With that, thank you.